|                                  
|----------------------------------
|SECURITIES AND EXCHANGE COMMISSION
|Washington,
 D.C. 20549           
|Form 10-K                         

|                                                       |                                                                                           
|------------------------------------------------------ | ------------------------------------------------------------------------------------------
|x                                                      | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934.    
|                                                      
|For the fiscal year ended January 1, 2011             
|                                                      
|o                                                      | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 THE SECURITIES EXCHANGE ACT OF 1934.
|                                                      
|Commission File Number: 1-9009                        
|                                                      
|TOFUTTI BRANDS INC.                                   
|(Exact name of registrant as specified in its charter)

|                                                               |                                     
|-------------------------------------------------------------- | ------------------------------------
|Delaware                                                       | 13-3094658                          
|(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
|                                                               |                                     
|50 Jackson Drive, Cranford, New Jersey                         | 07016                               
|(Address of principal executive offices)                       | (Zip Code)                          
|                                                              
|(908) 272-2400                                                
|((Registrants telephone number, including area code)         
|                                                              
|Securities registered pursuant to Section 12(b) of the Act:   

|                                        |  |                                          
|--------------------------------------- |  | -----------------------------------------
|Title of each class                     |  | Name of each exchange on which registered
|                                        |  |                                          
|Common Stock, par value $0.01 per share |  | NYSE AMEX                                

Securities registered pursuant to Section
12(g) of the Act: None

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.

Yes o   No
x

Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.

Yes o   No
x

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 x   No
o

Indicate by
check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, 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 o   No
o

Indicate by
check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not 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-K or any amendment to
this Form 10-K. o

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

|                           |                      |                          |                             
|-------------------------- | -------------------- | ------------------------ | ----------------------------
|Large Accelerated
 Filer o | Accelerated
 Filer o | Non-Accelerated
 Filer o | Smaller
 Reporting Company x

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


Yes o   No x


The aggregate
market value of the voting stock held by non-affiliates of the Registrant as of
the most recently completed second fiscal quarter: $5,791,331.46

As of April 8, 2011, the issuer had 5,176,678 shares of common stock, par value $0.01,
outstanding.

---



TABLE OF CONTENTS

|           |                                                                                                               |  |   
|---------- | ------------------------------------------------------------------------------------------------------------- |  | --
|PART I     |                                                                                                               |  | 4 
|Item 1.    | Business                                                                                                      |  | 4 
|Item 1A.   | Risk Factors                                                                                                  |  | 10
|Item 1B.   | Unresolved Staff Comments                                                                                     |  | 14
|Item 2.    | Properties                                                                                                    |  | 14
|Item 3.    | Legal Proceedings                                                                                             |  | 14
|Item 4.    | (Removed and Reserved)                                                                                        |  | 14
|PART II    |                                                                                                               |  | 15
|Item 5.    | Market for Registrants Common Equity, Related Stockholder Matters
 and Issuer Purchases of Equity Securities |  | 15
|Item 6.    | Selected Financial Data                                                                                       |  | 17
|Item 7.    | Managements Discussion and Analysis of Financial Condition and
 Results of Operations                        |  | 17
|Item 7A.   | Quantitative and Qualitative Disclosures about Market Risk                                                    |  | 21
|Item 8.    | Financial Statements and Supplementary Data                                                                   |  | 22
|Item 9.    | Changes In and Disagreements With Accountants on Accounting and
 Financial Disclosure                         |  | 23
|Item 9A.   | Controls and Procedures                                                                                       |  | 23
|Item 9B.   | Other Information                                                                                             |  | 25
|PART III   |                                                                                                               |  | 25
|Item 10.   | Directors, Executive Officers and Corporate Governance                                                        |  | 25
|Item 11.   | Executive Compensation                                                                                        |  | 27
|Item 12.   | Security Ownership of Certain Beneficial Owners and Management and
 Related Stockholder Matters               |  | 29
|Item 13.   | Certain Relationships and Related Transactions, and Director
 Independence                                    |  | 30
|Item 14.   | Principal Accountant Fees and Services                                                                        |  | 30
|PART IV    |                                                                                                               |  | 32
|Item 15.   | Exhibits and Financial Statement Schedules                                                                    |  | 32
|SIGNATURES |                                                                                                               |  | 33

1

---



Explanatory Note



We
    are restating our financial statements for the fiscal year ended January
    2, 2010 due to errors in recording certain income tax items in the proper
    period.  We
deemed the error to be material per Staff Accounting Bulletin No. 108, which
requires a restatement for the year ended January 2, 2010.

Management, upon being advised by our
Independent Auditor of the issue, as part of our Sarbanes Oxley policy regarding internal controls over financial reporting, immediately
reported this issue to our Audit Committee, which promptly requested management to conduct a detailed review.

As
    previously reported, we have identified material weaknesses in our internal
    control over financial reporting.  The material weaknesses include
    a lack of sufficient resources and an insufficient level of monitoring and
    oversight and a lack of segregation of duties due to the limited size of
our accounting department.

On
    April 1, 2011 management and our Audit Committee reviewed management’s findings and our Audit Committee concluded that restating the financial statements
for the year ended January 2, 2010 and the opening retained earnings balance as of December 28, 2008 is required. The effects of
these restatements are included in this Annual Report on Form 10-K for the fiscal year ended January 1, 2011.  We
have determined that previously reported amounts in our 2009 and 2010 quarterly
filings on Form 10-Q need not be restated since there was no impact on 2009 and
2010 revenues, operating income, pre-tax income, net income or cash flows for
the quarterly periods presented.

The correction of the error noted above
was an adjustment to beginning retained earnings as of December 28, 2008 in the amount of approximately $143,000.

For
    additional detail on the restatement please see Footnote 6, Restatement
of Financial Statements.

2

---



INTRODUCTION

We
are engaged in the development, production and marketing of TOFUTTI® brand
nondairy frozen desserts and other food products. TOFUTTI products are
nondairy, soy-based products which contain no butterfat, cholesterol or
lactose.

As
used in this annual report, the terms we, us and our mean Tofutti Brands
Inc., unless otherwise indicated.

Statements
made in this annual report concerning the contents of any contract, agreement
or other document are summaries of such contracts, agreements or documents and
are not complete descriptions of all of their terms. If we filed any of these
documents as an exhibit to this annual report or to any previous filling with
the Securities and Exchange Commission, you may read the document itself for a
complete recitation of its terms.

Except
for the historical information contained in this annual report, the statements
contained in this annual report are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and the Private
Securities Litigation Reform Act of 1995, as amended, with respect to our
business, financial condition and results of operations. Such forward-looking statements
reflect our current view with respect to future events and financial results.
We urge you to consider that statements which use the terms anticipate,
believe, do not believe, expect, plan, intend, estimate,
anticipate and similar expressions are intended to identify forward-looking
statements. We remind readers that forward-looking statements are merely
predictions and therefore inherently subject to uncertainties and other factors
and involve known and unknown risks that could cause the actual results,
performance, levels of activity, or our achievements, or industry results, to
be materially different from any future results, performance, levels of
activity, or our achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are also included in Item 1.
Business and Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. Except as required by applicable law, including the securities laws of
the United States, we undertake no obligation to publicly release any update or
revision to any forward-looking statements to reflect new information, future
events or circumstances, or otherwise after the date hereof. We have attempted
to identify significant uncertainties and other factors affecting
forward-looking statements in the Risk Factors section that appears in Item 1A.
Risk Factors.

We
operate on a fiscal year ending on the Saturday closest to December 31. Fiscal
years for the financial statements included herein are the fifty-two week
period ended January 1, 2011 and the fifty-three week period ended January 2,
2010.

3

---



PART I

|        |          
|------- | ---------
|Item 1. | Business.

GENERAL

We
are engaged in the development, production and marketing of TOFUTTI® brand
nondairy frozen desserts and other food products. TOFUTTI products are
nondairy, soy-based products which contain no butterfat, cholesterol or
lactose. Our products are 100% milk free yet offer the same texture and
full-bodied taste as their dairy counterparts. Our products are also free of
cholesterol and derive their fat from soy and corn, both naturally lower in
saturated fat than dairy products.

We
were organized under the laws of the State of New York in 1981 and became a
Delaware corporation in 1984. Our registered office and principal executive
offices are located at 50 Jackson Drive, Cranford, New Jersey 07016, our
telephone number is 908-272-2400 and our email address is info@tofutti.com. Our
address on the Internet is www.tofutti.com. The information on our website is
not incorporated by reference into this annual report.

STRATEGY

Our
objective is to be a leading provider of nondairy, soy-based food products,
primarily frozen desserts and soy-cheese products, to supermarkets and health
food stores in the United States and abroad. We intend to continue to introduce
new products that offer good taste while containing no butterfat, cholesterol
or dairy to these markets. We focus our marketing efforts toward those
consumers who find our products essential to their everyday diets because of
health, lifestyle or religious reasons. As part of this strategy, we seek to
achieve brand awareness through product innovation, eye-catching packaging,
trade advertising and a strong word-of-mouth marketing program. We believe that
our ability to offer a wide range of nondairy, soy-based parve kosher products
will continue to provide us with a competitive advantage.

TOFUTTI PRODUCT LINE

We
offer a broad product line of nondairy soy-based products. Our products include
frozen desserts, nondairy cheeses and spreads, other frozen food products and
several dry grocery items.

Frozen Desserts

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|w | Premium TOFUTTI® nondairy frozen dessert,
 available in prepacked pints, three-gallon cans, and soft serve mix, is sold
 nationally in supermarkets, health food stores, retail shops, and
 restaurants. Premium TOFUTTI was
 the first nondairy frozen dessert to be marketed to the general public
 through supermarkets. We currently offer seven flavors of premium, hard
 frozen TOFUTTI in pints. Premium
 TOFUTTI soft serve mix is
 available in Vanilla. TOFUTTI in
 three gallon bulk cans is available in three flavors.                                       
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|w | TOFUTTI
 CUTIES®, our best
 selling product, are bite size frozen sandwiches combining a Vanilla, Cookies
 and Cream, Chocolate, Mint Chocolate Chip or Wild Berry filling between two
 chocolate wafers. Half the size of traditional ice cream sandwiches, TOFUTTI CUTIES offer consumers a portion
 controlled treat. Unlike ice cream sandwiches, CUTIES are totally dairy free, without butterfat or
 cholesterol, yet with the same great taste that makes ice cream sandwiches
 one of the best selling novelties in the freezer case. Like all our frozen
 dessert

4

---



|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                         | products, they are
 completely trans fat free, including the wafers. For those individuals who
 cannot have chocolate, we offer our TOTALLY
 VANILLA TOFUTTI CUTIE, while our KEY
 LIME CUTIE combines tangy lime-flavored TOFUTTI between two vanilla wafers.                                                                                                                                                                                                                      
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|w                        | WOW
 CUTIES combine
 three TOFUTTI flavors-Vanilla,
 Chocolate and Cranberry into one full size sandwich.                                                                                                                                                                                                                                                                                                                                                                           
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|w                        | YOURS
 TRULY cones have a
 generous scoop of creamy vanilla TOFUTTI
 set in a chocolate-coated crispy cone, then covered in deep, rich chocolate
 and topped with a crispy chocolate cookie crunch.                                                                                                                                                                                                                                                                                 
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|w                        | TOTALLY
 FUDGE POPS®, CHOCOLATE FUDGE TREATS, and COFFEE BREAK TREATS are stick novelties that offer the
 consumer the same taste as real fudge or coffee bars. The TOTALLY FUDGE POPS, made with organic
 sugar and with no gluten added, have 70 calories and 1 gram of fat per bar,
 while fat free, no sugar added CHOCOLATE
 FUDGE TREATS and COFFEE BREAK
 TREATSTM have only 30 calories per bar. Both products
 appeal to anyone on either a low fat or low carb diet.      
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|w                        | CHOCOLATE
 COVERED FLOWERS, a
 frozen dessert stick novelty, combine a dark chocolate coating over a blend
 of frozen flower and fruit nectars for a portion controlled treat.                                                                                                                                                                                                                                                                                                      
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|w                        | MINT BY
 MINTZ are no sugar
 added stick novelties shaped just like TREATS,
 with a mint-flavored TOFUTTI
 center, covered with a thick, dark chocolate coating.                                                                                                                                                                                                                                                                                                                    
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|w                        | MARRY ME
 BARSTM are stick novelties that feature creamy
 vanilla TOFUTTI surrounded by a
 dark chocolate coating. Made with organic sugar and with no gluten added, MARRY ME BARS satisfy important diet
 requirements of certain consumers with that great TOFUTTI taste.                                                                                                                                                                                                         
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Nondairy Cheese Products
|                        
|w                        | BETTER
 THAN CREAM CHEESE®
 is similar in taste and texture to traditional cream cheese, but is milk and
 butterfat free and contains no cholesterol. It is as versatile as real cream
 cheese, whether spread on a bagel, used as a dip for snack items, such as
 crackers or chips, or used in any favorite recipe. It is available in 8 oz.
 retail packages or 30 lb. bulk boxes for food service customers.                                                                    
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|w                        | SOUR
 SUPREME® is similar
 in taste and texture to traditional sour cream, but is milk and butterfat
 free and contains no cholesterol. SOUR
 SUPREME has the versatility of sour cream with the added benefit
 of being dairy free. The 12 oz. retail packages are available in plain and
 guacamole. The plain version is also available in 30 lb. bulk boxes. Like BETTER THAN CREAM CHEESE, SOUR SUPREME is
 sold nationally in most health food stores and select supermarkets.
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|w                        | TOFUTTI also offers versions of BETTER THAN CREAM CHEESE and SOUR SUPREME without partially
 hydrogenated fat and no trans fatty acids. They are also made with organic
 sugar and are available in most health food stores. Non-hydrogenated fat BETTER THAN CREAM CHEESE is available in
 three flavors and the plain flavor is also available in 30 lb. bulk boxes.                                                                                                              
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|w                        | TOFUTTI
 SOY-CHEESE SLICESTM offer consumers a delicious nondairy,
 vegan alternative to regular cheese slices and contain no trans fatty acids.
 Available as individually wrapped slices                                                                                                                                                                                                                                                                                          

5

---



|                    |                                                                                                                                                                                                                                                                                                                       
|------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                    | in 8 oz. packages, TOFUTTI SOY-CHEESE SLICESare sold in
 most health food stores and select supermarkets and come in two types:
 Mozzarella and American.                                                                                                                                                             
|                    |                                                                                                                                                                                                                                                                                                                       
|Other Food Products
|                   
|w                   | TOFUTTI
 PIZZA PIZZAZ
 combines a delicious pan crust, zesty sauce and TOFUTTI totally dairy free mozzarella cheese into a
 completely authentic, yet healthy pizza. TOFUTTI
 PIZZA PIZZAZ is sold three squared slices to a package and is
 available in freezer cases in select supermarkets and health food stores.
|                    |                                                                                                                                                                                                                                                                                                                       
|w                   | TOFUTTI
 BLINTZES are frozen
 crepes filled with TOFUTTI BETTER THAN
 CREAM CHEESE that are dairy and cholesterol free, yet taste just
 like real cheese blintzes. Our BLINTZES
 can be served hot, warm, or slightly chilled as a main meal or a snack.                                                              

Planned 2011 Product Introductions

We
intend to introduce the following new products in 2011:

BETTER THAN RICOTTA CHEESE®, our dairy free
ricotta cheese alternative will be introduced in the second quarter.

We
also intend to release what we believe will be the first dairy-free,
sugar-free, frozen dessert that incorporates Stevia as the sweetening agent. We
expect that this product will be commercially available during the third
quarter.

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. All of our products
are sold by independent unaffiliated food brokers to distributors and sometimes
on a direct basis to retail chain accounts. Food brokers act as our agents
within designated territories or for specific accounts and receive commissions,
which average 5% of net collected sales. Certain key domestic accounts and all
international accounts are handled directly by us. Our products are also sold
in approximately twenty-five other countries.

We
currently sell our frozen dessert products in most major markets in the United
States, including Atlanta, Baltimore, Boston, Charlotte, Chicago, Cincinnati,
Cleveland, Dallas, Denver, Detroit, Houston, Kansas City, Los Angeles, Miami,
Milwaukee, Minneapolis, New York, Orlando, Philadelphia, Phoenix, Portland,
Richmond, San Francisco, Seattle, St. Louis, Tampa and Washington, D.C.

We
currently distribute all of our products by common carrier or by allowing
customers to pick-up products from outside storage facilities. We do not own,
lease or otherwise maintain any vehicles involved in the shipping of our
products. From our co-packing facilities, we either ship direct to our
customers or we ship to outside public storage facilities from which our
customers are able to pick-up products. Use of outside storage facilities in
several key locations in the United States allows us to provide our customers
with products in a timely fashion.

In
addition to ice cream distributors, our products are handled by almost every
major national and regional natural and/or gourmet specialty distributor in the
country. We distribute our products through thirty (30) distributors in the
national health food market.

6

---



Our
sales to health food distributors in fiscal 2010 increased to approximately
$9,078,000, or 51% of total sales, as compared to approximately $8,896,000, or
48% of total sales, in fiscal 2009. In fiscal 2010, sales to Trader Joes
increased to approximately $3,377,000, or 19% of sales, as compared to
approximately $3,205,000, or 17% of sales in fiscal 2009. Our sales to the
kosher market decreased to approximately $798,000, or 5% of sales, in fiscal
2010, from sales of approximately $832,000, or 4% of sales, in fiscal 2009.

The
following table presents the geographical breakdown of our sales in our largest
domestic markets for the last two fiscal years.

|                      |  |                                     |       |                                     |  |       |   |                    |       |  |  |    |  
|--------------------- |  | ----------------------------------- | ----- | ----------------------------------- |  | ----- | - | ------------------ | ----- |  |  | -- | -
|                      |  | Fiscal Year
 ended
 January 1, 2011 |       | Fiscal Year
 ended
 January 2, 2010 | 
|                      |  |                                     |       |                                     | 
|                      |  | Sales                               |       | % of
 total
 Sales                  |  | Sales |   | % of
 total
 Sales |      
|                      |  |                                     |       |                                     |  |       |   |                    |      
|                      |  | (Dollars in thousands)              |      
|California            |  | $                                   | 4,178 |                                     |  | 24    | % | $                  | 4,245 |  |  | 23 | %
|Midwest               |  |                                     | 2,536 |                                     |  | 14    | % |                    | 3,095 |  |  | 17 | %
|New England           |  |                                     | 2,992 |                                     |  | 17    | % |                    | 2,785 |  |  | 15 | %
|Metropolitan New York |  |                                     | 2,425 |                                     |  | 14    | % |                    | 2,395 |  |  | 13 | %
|Florida               |  |                                     | 977   |                                     |  | 6     | % |                    | 1,109 |  |  | 6  | %
|Mid-Atlantic          |  |                                     | 891   |                                     |  | 5     | % |                    | 844   |  |  | 5  | %
|Northwest             |  |                                     | 723   |                                     |  | 4     | % |                    | 820   |  |  | 4  | %
|Rocky Mountains       |  |                                     | 386   |                                     |  | 2     | % |                    | 448   |  |  | 2  | %
|Southeast             |  |                                     | 320   |                                     |  | 2     | % |                    | 780   |  |  | 4  | %
|Southwest             |  |                                     | 207   |                                     |  | 1     | % |                    | 186   |  |  | 1  | %
|Upstate New York      |  |                                     | 199   |                                     |  | 1     | % |                    | 227   |  |  | 1  | %

During
fiscal 2010, we shipped TOFUTTI nondairy products to distributors in Australia,
Bermuda, Brazil, Canada, China, England, Israel, Mexico and Panama. Our
distributor in England is our master distributor for all of Europe and part of
the Middle East, excluding Israel, and sells our products to approximately
twenty other countries. Sales to foreign distributors decreased to
approximately $1,652,000, or 9% of sales, in fiscal 2010, as compared to
approximately $2,023,000, or 11% of sales, in fiscal 2009. We conduct all of
our foreign business in U.S. dollars. Therefore, our future export sales could
be adversely affected by an increase in the value of the U.S. dollar against
local currencies, which could increase the local currency price of our
products.

COMPETITION

TOFUTTI
frozen desserts compete with all forms of ice cream products, yogurt-based
desserts and other soy-based frozen desserts. We believe that we are a leader
in the nondairy frozen dessert product market and offer the most complete line
of nondairy frozen dessert products. Other soy-based frozen dessert products
are presently being sold throughout the United States by established
manufacturers, distributors of ice cream and other frozen dessert products. The
ice cream and frozen dessert industry is highly competitive and most companies
with whom we compete are substantially larger and have significantly greater
resources than us. Our other products also face substantial competition from
both nondairy and dairy competitive products marketed by companies with
significantly greater resources than we have. We believe that we are able to
compete effectively due to our ability to offer an array of non-dairy frozen
dessert and other food products that contain no butterfat, cholesterol or

7

---



lactose and are 100%
milk-free, yet offer the same texture and full-bodied taste as their dairy
counterparts.

PRODUCT DEVELOPMENT

All
of our current products were developed internally in our own laboratory. David
Mintz, our Chief Executive Officer, devotes a substantial amount of his time
and effort to new product development and product reformulation. In fiscal 2010
and 2009, our product development expenses were approximately $563,000 and
$581,000, respectively. These amounts do not include any portion of Mr. Mintzs
salary, and since they cannot be directly associated with any specific
customers or products, they are considered part of operating expenses. All
product development costs are expensed as incurred.

PRODUCTION

We
believe that all of our products are produced under the strictest quality
control procedures that are available in each manufacturing facility used by
us. These quality control procedures include, but are not limited to, the
cleaning processes utilized prior to running our products; spot line
inspections during production; in-house laboratory testing as required by
government agencies; supervision of all our production by our kosher
supervisory service; and random testing by outside independent laboratories to
ensure that our internal quality control procedures and guidelines are being
properly followed.

All
of our products are produced by co-packers to whom we supply certain key
ingredients and packaging for the manufacturing processes. Our co-packing
facilities are fully licensed and must comply with all state and federal laws
and regulations. We currently utilize six co-packers. Our co-packers
manufacture and package our products and, in certain instances, warehouse such
products pending shipment. For certain key product categories, such as nondairy
frozen desserts and nondairy cheeses, we have more than one co-packer. In
selecting an appropriate co-packer, we take into account all of the preceding
factors, plus cost considerations such as product processing fees and freight
and warehouse expenses.

During
the years ended January 1, 2011 and January 2, 2010, we purchased approximately
31% and 28%, respectively, of our finished goods from Ice Cream Specialties,
our primary frozen dessert novelty co-packer; 21% and 19%, respectively, from
Franklin Foods, our BETTER THAN CREAM CHEESE
and SOUR SUPREME co-packer; 8% and
6%, respectively, from our blintz co-packer; and 6% and 7%, respectively, from
our frozen dessert pint co-packer.

Relationship with Co-Packers

We
do not have any written production agreements with our co-packers and do not
anticipate that we would encounter any material difficulty in obtaining
alternative production sources, at a comparable cost, if one or all of our
co-packers decide to terminate their relationships with us. Nevertheless, any
disruption in supply could have a material adverse effect on our company.

In
order to protect our formulas, we have entered into confidentiality arrangements
with our co-packers and certain of their employees. All of our employees,
including officers, sign similar confidentiality agreements. There can be no
assurance that such confidentiality arrangements can or will be maintained, or
that our 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.

8

---



Kosher Certification

KOF-K
Kosher Supervision, or KOF-K, of Teaneck, New Jersey provides us with our
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. Approval
of the manufacturing facilities we use include periodic inspections, and in
most cases, on-site supervision of actual production. We believe that our
ability to successfully market and distribute our products is dependent upon
our continued compliance with the requirements of rabbinical certification. All
TOFUTTI products meet the requirements for certification as kosher-parve.

Product Recall

At
the beginning of the second quarter of 2009, we were notified by the FDA that
several consumers filed complaints claiming that they had experienced skin rash
symptoms after eating vanilla Cuties that were produced at an ancillary
production facility. The suspect product was identified as having been produced
by our smaller ice cream novelty facility that only produced vanilla Cuties. We
stopped making product at this facility in January 2009. No illness or serious
injury was reported and no further reports have been received since early April
2009. While we were investigating the complaints, 12 pallets shipped from the
suspect lots were recalled. The bulk of these 12 pallets were recalled.
Investigation and reports from distributors and store visits indicate that none
of the suspect product was available for sale. However, to make certain that
there would be no further issues with product made at this facility, we put on
hold any vanilla Cuties that were produced by them and disposed of all
of the remaining product manufactured by that facility. In May 2009, at the
request of the FDA, we issued a recall notice for the suspected lots. We have
reviewed our quality control procedures at our remaining co-packing facilities
to ensure compliance with all food-processing safety rules and regulations. The total cost of this recall was
approximately $376,000, of which $291,000 was attributable to product that was
destroyed and which impacted our cost of sales in 2009 and a $62,000 reduction
is sales relating to product returns and disposal. While we had no insurance
coverage for the actual product destroyed, we received $40,000 from our
insurance carrier in March 2010.

TRADEMARKS AND PATENTS

We
have registered our trademark, TOFUTTI®, and other trademarks for our frozen
desserts and other products in the United States and approximately thirty-five
foreign countries. We believe our trademarks are an important means of
establishing consumer recognition for our products and we will vigorously
oppose any unauthorized use of our trademarks. We are not currently involved in
any trademark litigation.

Although
we believe that our formulas and processes are proprietary, we have not sought
patent protection for such technology. Instead, we are relying on the
complexity of our technology, on trade secrecy laws and on confidentiality
agreements. We believe that our technology has been independently developed and
does not infringe the patents of others.

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

9

---



product that we seek to
market does not conform to an applicable standard, special permission to market
such a product is required.

Our
United States product labels are subject to regulation by the United States
Food and Drug Administration, or the 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. Our labels, ingredients and
manufacturing processes are subject to inspection by the FDA. We believe that
we are in compliance with current labeling requirements and conduct periodic
reviews to make certain that such compliance is on-going.

The
Food, Drug and Cosmetic Act, the Food Safety Modernization 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 safety, health
and environmental 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. Our
Cranford, New Jersey facility is subject to inspection by the New Jersey-Kosher
Enforcement Bureau and the New Jersey Environmental Health Services. We believe
that we and our distributors and co-packers are in compliance in all material
respects with governmental regulations regarding our current products and have
obtained the material governmental permits, licenses, qualifications and
approvals required for our operations. Our compliance with Federal, state and
local environmental laws has not materially affected us either economically or
in the manner in which we conduct our business. However, there can be no assurance
that our company, our distributors and our 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 our products to consumers.

New
government laws and regulations may be introduced in the future that could
result in additional compliance costs, seizures, confiscations, recalls or
monetary fines, any of which could prevent or inhibit the development,
distribution and sale of our products. If we fail to comply with applicable
laws and regulations, we may be subject to civil remedies, including fines,
injunctions, recalls or seizures, as well as potential criminal sanctions, which
could have a material adverse effect on our business, results of operations and
financial condition.

EMPLOYEES

On
January 1, 2011 and on January 2, 2010, we employed eight persons on a
full-time basis. We consider our relations with our employees to be good. We do
not have any collective bargaining agreements with our employees.

|         |               
|-------- | --------------
|Item 1A. | Risk
 Factors.

Investing in our common stock involves a high degree
of risk and uncertainty. You should carefully consider the risks and uncertainties
described below before investing in our common stock. If any of the following
risks actually occurs, our business prospects, financial condition and results
of

10

---



operations could be harmed. In that case, the value of our
common stock could decline, and you could lose all or part of your investment.

Risks Related to Our Business

We Rely on Independent Distributors for a Significant
Portion of Our Sales.The success of our business depends, in large
part, upon the establishment and maintenance of a strong distribution network.
In 2010, one of our major distributors, Tree of Life, Inc., was purchased by
Kehe Food Distributors, another of our major distributors. Although we believe
that the business associated with any of our primary distributors can be
readily transferred to other distributors or directly to supermarket warehouses
if necessary, no assurance can be given that a change in distributors would not
be disruptive to our business, which could have a material adverse effect on our
business and results of operations.

We
Depend on Several Key Suppliers to Produce Our Products. We do not produce any of our own products.
During the years ended January 1, 2011 and January 2, 2010, we purchased
approximately 31% and 28%, respectively, of our finished goods from Ice Cream
Specialties, our primary frozen dessert novelty co-packer; 21% and 19%,
respectively, from Franklin Foods, our BETTER THAN CREAM CHEESE and SOUR
SUPREME co-packer; 8% and 6%, respectively, from our blintz co-packer; and 6%
and 7%, respectively, from our frozen dessert pint co-packer. These producers are required to comply with
FDA regulations and federal and state agencies relating to the production of
food products. Although we believe that there will be no problem in continuing
to obtain finished goods from our current or alternative sources in the future,
any disruption in supply could have a material adverse effect on our company.

Our
Business May Be Negatively Affected by the Current Economic Climate.
The current economic climate, and
particularly the increased difficulty in securing credit, could impact the
ability of our customers to purchase our products. Certain of our retail
customers who have seen significant dampening of consumer demand, could face
increased financial pressures that could impact their ability to purchase our
products and make payments in a timely manner. The continued high unemployment
levels in the U.S. and the lingering effects of the global credit crisis, will
impact the ability of our customers to purchase our products.

A
Material Change in Consumer Demand for Our Products Could Have a Significant
Impact on Our Business.We
are a consumer food products company and rely on continued demand for our
products. To achieve business goals, we must develop and sell products that
appeal to consumers. If demand and growth rates fall substantially below
expected levels or our market share declines significantly in these businesses,
our results could be negatively impacted. This could occur due to unforeseen
negative economic or political events or to changes in consumer trends and
habits.

Our
Business Faces Cost Pressures Which Could Affect Our Business Results. Our costs are subject to fluctuations,
particularly due to changes in commodity prices, raw materials, cost of labor,
foreign exchange and interest rates. Therefore, our success is dependent, in
part, on our continued ability to manage these fluctuations through pricing
actions, cost savings projects and sourcing decisions. In the manufacturing and
general overhead areas, we need to maintain key manufacturing and supply
arrangements, including any key sole supplier and manufacturing plant
arrangements.

We
Face Risks Related to the Recent Credit Crisis.The continuing uncertainty in global economic
conditions resulting from the widespread contraction in late 2008 and 2009 pose
a risk to the overall economy that could impact consumer and customer demand
for our products, as well as our ability to manage normal commercial
relationships with our customers, suppliers and creditors. If the current
situation deteriorates significantly, our business could be negatively
impacted, including such areas as reduced demand for our products from a
slow-down in the general economy, or supplier or customer disruptions resulting
from tighter credit markets.

11

---



We
Operate in a Competitive Environment.
The frozen dessert and health food markets are highly competitive. The ability
to successfully introduce innovative products on a periodic basis that are
accepted by the marketplace is a significant competitive factor. In addition,
many of our principal competitors are large, diversified companies with
resources significantly greater than ours. We expect strong competition to
continue, including competition for adequate distribution and competition for
the limited shelf space for the frozen dessert category in supermarkets and
other retail food outlets.

We
Depend on a few Key Customers for a Significant Portion of Our Sales.During
the fiscal years ended January 1, 2011 and January 2, 2010,Trader Joes
accounted for 19% and 17% of our net sales, respectively. In addition, a
significant portion of our sales are to several key distributors, which are
large distribution companies with numerous divisions and subsidiaries who act
independently. Such distributors as a group accounted for 40% of our net sales
for the fiscal year ended January 1, 2011 and 29% of our net sales for the
fiscal year ended January 2, 2010. The loss of a substantial portion of our
sales to Trader Joes would have a material adverse affect on our company.

We
Rely on a Limited Number of Key Executives to Manage our Business.
Our success is significantly dependent on the services of David Mintz (age 79),
Chief Executive Officer, and Steven Kass (age 59), Chief Financial Officer. The
loss of the services of either of these persons could have a material adverse
effect on our business.

Our
Principal Shareholder Has the Ability to Control the
Policies and Management of Our Company.
Our Chairman of the Board and Chief Executive Officer, David Mintz, holds
2,630,440 shares of common stock representing approximately 50.8% of the
outstanding shares, permitting him to elect all members of the Board of
Directors and thereby effectively control the business, policies and management
of our company.

Product
Liability Suits, if Brought, Could Have a Material Adverse Effect on Our
Business.From time to time in the normal course of
our business, we become subject to product liability claims. If a product
liability claim exceeding our insurance coverage were to be successfully
asserted against us, it could harm our business. We cannot assure you that such
coverage will be sufficient to insure against claims which may be brought
against us, or that we will be able to maintain such insurance or obtain
additional insurance covering existing or new products. As a marketer of food
products, we are subject to the risk of claims for product liability. We
maintain general product liability and umbrella insurance coverages and generally
require that our co-packers maintain product liability insurance with us as a
co-insured. Similarly, most of our customers require us to name them as
additional insureds as well, and in some cases we are required to sign hold
harmless and indemnification agreements.

Continuing
Need to Introduce New Products. The successful
introduction of innovative products on a periodic basis has become increasingly
important to our sales growth. Accordingly, the future degree of market
acceptance of any of our new products, which may be accompanied by significant
promotional expenditures, is likely to have an important impact on our future
financial results.

Our
Operating Results Vary Quarterly and Seasonally. We
have often recognized a slightly greater portion of revenues in the second and
third quarter of the year. Our expense levels are substantially based on our
expectations for future revenues and are therefore relatively fixed in the
short-term. If revenue levels fall below expectations, our quarterly results
are likely to be disproportionately adversely affected because a
proportionately smaller amount of our expenses vary with our revenues. 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 nondairy frozen desserts. Sales to our major
customers fluctuate widely from period to period and there is no way to
accurately predict that their sales pattern from one year will be repeated in
the corresponding period of the next fiscal year. Due to the foregoing factors,
in some future quarter our operating results may be below the expectations of

12

---



investors. In
such event, it is likely that the price of our common stock would be materially
adversely affected.

The
Absence of Patent Protection Could Adversely Affect Our Results of Operations.We
rely upon the confidentiality of our formulas and our know-how rather than upon
patent protection since patent protection may not be available for the recipes
or manufacturing processes for any of our food products. There is no assurance
that such confidentiality can or will be maintained or that our know-how cannot
be obtained by others or that others do not now possess similar or even more
effective capabilities. The failure to maintain the confidentiality of our
know-how could adversely effect our operating results.

We
are Subject to Risks Associated with International Operations. In fiscal 2010
approximately 9% of our revenues were from international sales. Although we
continue to expand our international operations, we cannot be certain that we
will be able to maintain or increase international market demand for our
products. To the extent that we cannot do so in a timely manner, our business,
operating results and financial condition will be adversely affected.
International operations are subject to inherent risks, including the
following:

| |   |                                                                                                  
| | - | -------------------------------------------------------------------------------------------------
| |  | the impact
 of possible recessionary environments in multiple foreign markets;                   
| |   |                                                                                                  
| |  | longer
 receivables collection periods and greater difficulty in accounts receivable
 collection;
| |   |                                                                                                  
| |  | unexpected
 changes in regulatory requirements;                                                  
| |   |                                                                                                  
| |  | potentially
 adverse tax consequences; and                                                       
| |   |                                                                                                  
| |  | political
 and economic instability.                                                             

We
May Be Adversely Affected by Fluctuations in Currency Exchange Rates.
Our foreign transactions are always in U.S. dollars, and to date we have not
engaged in any currency hedging transactions intended to reduce the effect of
fluctuations in foreign currency exchange rates on our results of operations.
Therefore, our future export sales could be adversely affected by an increase
in the value of the U.S. dollar, which could increase the local currency price
of our products. Although exposure to currency fluctuations to date has not had
a material adverse effect on our business, there can be no assurance such
fluctuations in the future will not have a material adverse effect on revenues
from international sales and, consequently, our business, operating results and
financial condition.

Our
Stock Price is Subject to Volatility. The market price
of our common stock has been subject to fluctuations in the past and may be
subject to wide fluctuations in the future in response to announcements
concerning us or our competitors, quarterly variations in operating results,
the introduction of new products or changes in product pricing policies by us
or our competitors, general market conditions in the industry, developments in
the financial markets and other factors.

We
Do Not Intend to Pay Cash Dividends. Our policy is to
retain earnings, if any, for use in our business and, for this reason, we do
not intend to pay cash dividends on our shares of common stock in the foreseeable
future.

We
May Fail to Maintain Effective Internal Controls in Accordance with Section 404
of the Sarbanes-Oxley Act of 2002, Which Could Have an Adverse Effect on our
Financial Results and the Market Price of Our Ordinary Shares.The Sarbanes-Oxley Act of 2002 imposes certain
duties on us and our executives and directors. Our efforts to comply with the
requirements of Section 404 have resulted in increased general and
administrative expense and a diversion of management time and attention, and we
expect these efforts to require the continued commitment of resources.
Section 404 of the Sarbanes-Oxley Act requires us to provide managements
annual review and evaluation of our internal control over

13

---



financial reporting and in future years a statement by management that
its independent registered public accounting firm has issued an attestation
report on our internal control over financial reporting, in connection with the
filing of our Annual Report on Form 10-K for each fiscal year. The
rules governing the standards that must be met for management to assess our
internal control over financial reporting are complex and require significant
documentation, testing and possible remediation to meet the detailed standards
under the rules. If we fail to
maintain the adequacy of our internal controls, we may not be able to ensure
that we can conclude on an ongoing basis that we have effective internal
controls over financial reporting. Failure to maintain effective internal
controls over financial reporting could result in investigation or sanctions by
regulatory authorities, and could have a material adverse effect on our
operating results, investor confidence in our reported financial information,
and the market price of our ordinary shares.

|         |                            
|-------- | ---------------------------
|Item 1B. | Unresolved
 Staff Comments.
|         |                            
|         | None.                      
|         |                            
|Item 2.  | Properties.                

Our
facilities are located in a one-story facility in Cranford, New Jersey. The
6,200 square foot facility houses our administrative offices, a warehouse,
walk-in freezer and refrigerator, and a product development laboratory and test
kitchen. Our lease agreement expired on July 1, 1999, but we continue to occupy
the premises under the terms of that agreement, subject to a six month
notification period for us and the landlord with respect to any changes. We
currently have no plans to enter into a long-term lease agreement for the
facility. Our rent expense was $81,000 in both fiscal 2010 and 2009. Our
management believes that the Cranford facility will continue to satisfy our space
requirements for the foreseeable future.

|        |                   
|------- | ------------------
|Item 3. | Legal Proceedings.

We
are not a party to any material litigation.

|        |                        
|------- | -----------------------
|Item 4. | (Removed and Reserved).

14

---



PART II

|        |                                                                                                               
|------- | --------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity,
 Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our
common stock has traded on the NYSE AMEX under the symbol TOF since October 29,
1985. Each share ranks equally as to dividends, voting rights, participation in
assets on winding-up and in all other respects. No shares have been or will be
issued subject to call or assessment. There are no preemptive rights,
provisions for redemption or for either cancellation or surrender, or
provisions for sinking or purchase funds.

The
following table sets forth the high and low sales prices as reported on the
NYSE AMEX for the two most recent fiscal years:

|                    |  |   |      |  |     |     
|------------------- |  | - | ---- |  | --- | ----
|Quarter
 Ended      |  |   | High |  | Low |     
|                    |  |   |      |  |     |     
|                    |  |   |      |  |     |     
|March 28,
 2009     |  | $ | 2.22 |  | $   | 0.88
|                    |  |   |      |  |     |     
|June 27,
 2009      |  |   | 1.97 |  |     | 0.71
|                    |  |   |      |  |     |     
|September
 26, 2009 |  |   | 1.64 |  |     | 1.10
|                    |  |   |      |  |     |     
|January 2,
 2010    |  |   | 1.84 |  |     | 1.21
|                    |  |   |      |  |     |     
|April 3,
 2010      |  |   | 1.65 |  |     | 1.32
|                    |  |   |      |  |     |     
|July 3, 2010        |  |   | 4.33 |  |     | 1.40
|                    |  |   |      |  |     |     
|October 2,
 2010    |  |   | 3.75 |  |     | 2.10
|                    |  |   |      |  |     |     
|January 1,
 2011    |  |   | 2.58 |  |     | 1.83

The closing
price for our common stock on April 8, 2011, as reported on the NYSE AMEX, was
$2.31.

Holders of Record

As
of April 8, 2011, there were approximately 571 direct holders of record of our
common stock. Based upon the most recent census performed by our stock transfer
agent, brokerage houses and other financial institutions hold our common stock
for approximately an additional 1,586 shareholders.

Dividends

We
have not paid and have no present intention of paying cash dividends on our
common stock in the foreseeable future.

Equity Compensation
Plans

The
following table sets forth, as of January 1, 2011, certain information related
to our compensation plans under which shares of our common stock are authorized
for issuance.

15

---



|                                                           |  |                                                                                                      |  |                                                                                     |       |                                                                                                                                                      |  |        |  | 
|---------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------- | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------ |  | 
|Plan Category                                              |  | Number of securities 
 to be issued upon 
 exercise of outstanding 
 options, warrants and rights(a) |  | Weighted-average 
 exercise price of
 outstanding options, 
 warrants and rights(b) |       | Number of securities
 Remaining available
 for future issuance
 under equity compensation 
 plans (excluding securities 
 reflected in column (a)(c) | 
|Equity Compensation Plans Approved by Security Holders     |  | 51,000                                                                                               |  |                                                                                     | $2.90 |                                                                                                                                                      |  | 49,000 | 
|                                                          
|Equity Compensation Plans Not Approved by Security Holders |  |                                                                                                     |  |                                                                                     | n/a   |                                                                                                                                                      |  |       |  | 

2004 Non-Employee
Directors Stock Option Plan

Our
shareholders adopted the 2004 Non-Employee Directors Stock Option Plan (the
2004 Directors Plan) on June 3, 2004. The purpose and intent of the 2004
Directors Plan is to attract and
retain the best available individuals as non-employee directors of the
company, to provide additional incentive to non-employee directors to continue
to serve as directors and to encourage their continued service on the Board. All options granted under 2004
Directors Plan are non-qualified stock options. The maximum aggregate number
of shares of common stock which may be issued under the 2004 Directors Plan is
100,000 shares.

The
2004 Directors Plan is currently administered by our Board of Directors, which
in the future may delegate such administration to a committee of directors.
Subject to the provisions of the 2004 Directors Plan and applicable law, the
Board or the Committee has the authority, to determine, among other things, to
whom options may be granted, the number of shares of common stock to be covered
by each option, the exercise price for each share, the vesting period of the
option, and the terms, conditions and restrictions thereof, to construe and
interpret the 2004 Directors Plan, to prescribe, amend and rescind
rules and regulations relating to the 2004 Directors Plan, and to make
all other determinations deemed necessary or advisable for the administration
of the 2004 Directors Plan.

The
term of any option granted under the 2004 Directors Plan was fixed by the
Board of Directors at the time the options were granted, provided that the
exercise period was not to be longer than five years from the date of grant.
All options granted under the 2004 Directors Plan have up to five-year terms
and have vesting periods that range from one to three years from the grant
date. The exercise price of any options granted under the 2004 Directors Plan
is the fair market value at the date of grant. As of April 8, 2011, our non-employee directors as a group,
consisting of five persons, held
options to purchase 51,000 shares of common stock under the 2004
Directors Plan.

Sales of Unregistered Securities

There
were no sales of unregistered securities during fiscal 2010.

Purchase of Equity Securities By the Issuer
and Affiliates

Our
Board of Directors first instituted a share repurchase program in September
2000 which, after several amendments, has to date authorized the repurchase of
2,200,000 shares of our common stock at prevailing market prices. Based on such
authorization we may purchase an additional 381,000 shares of

16

---



common stock.
We have not purchased any shares of our common stock since the first quarter of
fiscal 2009 in order to conserve our cash.

|                 |                                                                                        
|---------------- | ---------------------------------------------------------------------------------------
|Item 6.          | Selected Financial Data.                                                               
|                 |                                                                                        
|Not
 applicable.
|                 |                                                                                        
|Item 7.          | 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 audited financial statements.

Critical Accounting Policies

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 recognize revenue when goods are
shipped from our production facilities or outside warehouses and the following four criteria have been
met: (i) the product has been shipped and we have no significant remaining
obligations; (ii) persuasive evidence of an arrangement exists; (iii) the price
to the buyer is fixed or determinable; and (iv) collection is probable. We
record as deductions against sales all trade discounts, returns and allowances
that occur in the ordinary course of business, when the sale occurs. To the
extent we charge our customers for freight expense, it is included in revenues.
The amount of freight costs charged to customers has not been material to date.

Accounts
Receivable. The majority of our accounts
receivables are due from distributors (domestic and international) and
retailers. Credit is extended based on evaluation of a customers financial
condition and, generally, collateral is not required. Accounts receivable are
most often due within 30 to 90 days and are stated at amounts due from
customers net of an allowance for doubtful accounts. Accounts outstanding
longer than the contractual payment terms are considered past due. We determine
whether an allowance is necessary by considering a number of factors, including
the length of time trade accounts receivable are past due, our previous loss
history, the customers current ability to pay its obligation, and the
condition of the general economy and the industry as a whole. We write-off
accounts receivable when they become uncollectible, and payments subsequently
received on such receivables are credited to the bad debt expense account. We
do not accrue interest on accounts receivable past due.

Inventory.Inventory is stated at lower of cost or market
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

17

---



established
and subsequent changes in facts and circumstances do not result in the
restoration or increase in the newly established cost basis.

Income
Taxes. The carrying value of deferred tax
assets assumes that we will be able to generate sufficient future taxable
income to realize the deferred tax assets based on estimates and assumptions.
If these estimates and assumptions change in the future, we may be required to
record a valuation allowance against deferred tax assets which could result in
additional income tax expense. 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.

Recent
Accounting Pronouncements

Accounting
Standards Updates that became effective after December 31, 2010 are not
expected to have a significant effect on our financial position or results of
operations.

Results of Operations

Fiscal Year Ended January 1, 2011 Compared
with Fiscal Year Ended January 2, 2010

We
operate on a fiscal year ending on the Saturday closest to December 31. Fiscal
years for the financial statements included in this report are the fifty-two
week period ended January 1, 2011 and the fifty-three week period ended January
2, 2010.

Net
sales for the fiscal year ended January 1, 2011 were $17,713,000, a decrease of
$904,000, or 5%, from net sales of $18,617,000 for the fiscal year ended
January 2, 2010. The reduction in sales was caused by the general economic
conditions and the discontinuance of a number of slower moving, less profitable
products, primarily frozen dessert products, during 2010. Additionally, due to
local economic conditions in certain countries we do business in and a general
decline in frozen dessert sales internationally, our international sales
declined by more than $350,000. We believe our sales will improve during fiscal
year 2011 with the planned introduction of new products and price increases
that will be instituted throughout 2011.

At
the beginning of the second quarter of 2009, we were notified by the FDA that
several consumers filed complaints claiming that they had experienced skin rash
symptoms after eating vanilla Cuties that were produced at an ancillary
production facility. The suspect product was identified as having been
produced by our smaller ice cream novelty facility that only produced vanilla
Cuties. We stopped making product at this facility in January 2009. No illness
or serious injury was reported and no further reports have been received since
early April 2009. While we were investigating the complaints, 12 pallets
shipped from the suspect lots were recalled. To make certain that there would
be no further issues with product made at this facility, we put on hold any
vanilla Cuties that were produced by them and disposed of all of the remaining
product manufactured by that facility. In May, 2009, at the request of the FDA,
we issued a recall notice for the suspected lots. We have reviewed our quality
control procedures at our remaining co-packing facilities to ensure compliance
with all food-processing safety rules and regulations. The total cost of this
recall was approximately $376,000, of which $291,000 was attributable to
product that was destroyed and which impacted our cost of sales in 2009 and a
$62,000 reduction is sales relating to product returns and disposal. While we
had no insurance coverage for the actual product destroyed, we received $40,000
from our insurance carrier in March 2010.

18

---



Our
gross profit in fiscal 2010 decreased by $180,000, or 3%, while our gross
profit percentage increased to 31% in fiscal 2010 from 30% in fiscal 2009. This
was a result of the elimination of slower moving, lower profit products. The
entire frozen dessert industry was subject to significant price increases to
certain key ingredients and packaging, due mainly to supply shortages as a
result of political events in certain foreign countries, the general economic
situation here in the United States and the fluctuating cost of petroleum, from
which a number of our packaging items are produced.

Freight
out expense increased slightly to $981,000 in fiscal 2010 from $974,000 in
fiscal 2009, because of increased fuel costs. The increase in freight out
expense was mitigated in part because we now ship our frozen dessert novelties
from our current frozen dessert co-packer in Indiana to the West Coast, which
is more cost-effective than shipping them from our third-party Mountville,
Pennsylvania warehouse or from our former frozen dessert novelties
manufacturers location. Additionally, in some instances we increased the
minimum size of orders to customers where we paid the freight, which reduced our
shipping costs. Finally, we also began offering pick-up allowances to our
customers, which while high enough to encourage them to pick up their orders
still cost us significantly less than if we had paid for shipping the products
ourselves. While we anticipate that our gross profit will increase due to
increased unit sales and higher sales prices in 2011, we do not expect that our
gross profit percentage will improve materially due to promotional allowances
associated with the planned introduction of new products, expected ingredient
and packaging cost increases, and a significant anticipated increase in the
cost of fuel.

Selling
and warehousing expenses decreased by $115,000 to $1,553,000 for fiscal 2010
from $1,668,000 in fiscal 2009. This decrease was caused primarily by a $74,000
decrease in outside warehouse rental expense, a $60,000 decrease in payroll
expense, a $10,000 decrease in automobile, travel and entertainment expense,
and a $13,000 decrease in commission expense. These decreases were offset by an
increases in bad debt expense of $49,000. We anticipate that with the exception
of commission expenses and outside warehouse rental expense, which are variable
to sales, all other selling expenses in 2011 should remain relatively consistent
with our expenses in 2010.

Marketing
expenses were virtually unchanged in fiscal 2010 at $504,000 as compared to
$503,000 in fiscal 2009. Increases in public relations expense of $25,000 and
artwork and plates expense of $8,000 were offset by a decrease in promotion
expense of $27,000. We expect marketing expenses to remain close to the same
level in fiscal 2011.

Product
development expenses decreased to $563,000 in fiscal 2010 as compared to
$581,000 in fiscal 2009. The decrease was caused primarily by a decrease in
payroll costs of $4,000, lab and supplies expense of $6,000 and equipment
repair expense of $5,000. We expect that product development costs in 2011 will
remain consistent with fiscal 2010 costs.

General
and administrative expenses were $2,020,000 for fiscal 2010 as compared with
$2,035,000 for fiscal 2009, a slight decrease of $15,000. The decrease was
primarily due to a $46,000 decrease in payroll expense and an $18,000 decrease
in outside fees and professional services. These decreases were partially
offset by an increase in telephone and postage expense of $13,000, automobile,
travel and entertainment expense of $10,000 and IT expense of $17,000. We
anticipate that professional fees and outside services, which include legal and
accounting fees, will increase in fiscal 2011 primarily due to the costs
associated with the mandatory implementation of the requirement to file our financial
    reports with the Securities and Exchange Commission in XBRL (eXtensible Business
    Reporting Language). Our management expects that general and administrative
    expenses in 2011 will remain consistent with fiscal 2010 expenses.

Overall,
total operating expenses in fiscal 2010 decreased to $4,640,000, a decrease of
$147,000, or 3%, from total operating expenses in fiscal 2009.

19

---



Income
before income taxes decreased by $33,000 to $802,000 in fiscal 2010 as compared
with $835,000 in fiscal 2009, primarily as a result of our lower revenues and
gross profit, which was partially offset by the reduction in operating
expenses.

Income
taxes for the 2010 fiscal period were $340,000 compared to $329,000 in fiscal
2009, and our income tax rate was 42% for the 2010 year compared to 39% in the
2009 fiscal year.

Liquidity and Capital Resources

At
January 1, 2011, our working capital was $4,420,000, an increase of $474,000
from January 2, 2010. Our current and quick acid test ratios, both measures of
liquidity, were 4.3 and 3.0, respectively, at January 1, 2011 compared to 4.1
and 2.6, respectively, at January 2, 2010.

At
January 1, 2011, our accounts receivable decreased by $123,000 to $1,338,000
from January 2, 2010, reflecting both an increase in cash collections, as
evidenced by a significant reduction in average days outstanding, and a
decrease in sales in the fourth quarter of the fiscal year ended January 1,
2011. The average number of days outstanding for accounts receivable in fiscal
2010 was 35 days as compared to 38 days in fiscal 2009.

At
January 1, 2011, our inventories decreased to $1,697,000 from $1,931,000 at
January 2, 2010. The decrease in our inventories is due both to a reduction in
sales and the discontinuation of a number of slower moving products, along with
their ingredient and packaging inventories. Refundable and deferred income
taxes decreased from $408,000 at the end of fiscal 2009 to $186,000 at January
1, 2011 due to the reclassification of tax assets. Accounts payable and accrued
expenses increased by $65,000 to $1,345,000 at January 1, 2011, from $1,280,000
at January 2, 2010, reflecting an increase in our purchases of ingredients,
packaging and finished goods at the end of 2010 to be on hand for the start of
2011 sales and production.

Our
Board of Directors first instituted a share repurchase program in September
2000 and has to date authorized the repurchase of 2,200,000 shares of our
common stock at prevailing market prices. As of January 1, 2011, we had
repurchased 1,806,000 shares at a total cost of $5,280,000, or an average price
of $2.92 per share. We have not repurchased any shares since the thirteen week
period ended March 28, 2009 in order to conserve our cash position.

|                                                |  |                   |   |                 |  |  |  |   |       |   | 
|----------------------------------------------- |  | ----------------- | - | --------------- |  |  |  | - | ----- | - | 
|Cash Flows                                      |  | Fiscal Year ended |  
|                                                |  |                   |  
|                                                |  | January 1, 2011   |   | January 2, 2010 | 
|                                                |  |                   |   |                 | 
|                                                |  | (In thousands)    |  
|                                                |  |                   |  
|                                               
|Net cash
 provided by operating activities      |  |                   | $ | 1,115           |  |  |  | $ | 1,189 |   | 
|Net cash
 (used in) financing activities        |  |                   |   |                |  |  |  |   | (14   | ) | 
|Net increase
 in cash and cash equivalents      |  |                   |   | 1,115           |  |  |  |   | 1,175 |   | 
|Cash and
 cash equivalents at beginning of year |  |                   |   | 1,413           |  |  |  |   | 238   |   | 
|                                                |  |                   |   |                 |  |  |  |   |       |   | 
|Cash and
 cash equivalents at end of year       |  |                   | $ | 2,528           |  |  |  | $ | 1,413 |   | 
|                                                |  |                   |   |                 |  |  |  |   |       |   | 

Cash
provided by operating activities was $1,115,000 for the fiscal year ended
January 1, 2011 compared with cash provided by operating activities of
$1,189,000 for the fiscal year ended January 2, 2010. In the fiscal year ended
January 1, 2011, our cash flow from operating activities reflected net income
of $462,000, a $123,000 decrease in accounts receivable, a $234,000 decrease
    in inventories, a

20

---



$222,000
decrease in refundable and deferred income taxes, and a $65,000 increase in
accounts payable and accrued expenses.

We
did not use any funds in financing activities in the fiscal year ended January
1, 2011, compared to $14,000 used in financing activities in the fiscal year
ended January 2, 2010 for the repurchase of 12,665 shares of common stock.

As
a result of the foregoing, our cash and cash equivalents increased to
$2,528,000 at January 1, 2011 from $1,413,000 at January 2, 2010.

We
believe our existing cash and cash equivalents on hand at January 1, 2011, and
the cash flows expected from operations will be sufficient to support our
operating and capital requirements during the next twelve months.

Contractual
Obligations

We
have no contractual obligations at January 1, 2011.

Inflation and Seasonality

We
do not believe that our operating results have been materially affected by
inflation during the preceding two years. There can be no assurance, however,
that our operating results will not be affected by inflation in the future. 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 nondairy frozen desserts during those periods.

Market Risk

We
will invest our excess cash, should there be any, in highly rated money market
funds which are subject to changes in short-term interest rates. We do not
believe that our foreign currency exposure is significant as our export sales
are transacted in U.S. dollars. We did not enter into any foreign exchange
contracts in the year ended January 1, 2011.

Off-Balance Sheet
Arrangements

None.

|         |                                                            
|-------- | -----------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about Market Risk.

Not
applicable.

21

---



|        |                                             
|------- | --------------------------------------------
|Item 8. | Financial Statements and Supplementary Data.

Index to Financial Statements

|                                                          |  |          
|--------------------------------------------------------- |  | ---------
|Reports of Independent Registered Public Accounting Firms |  | F-1 - F-2
|                                                          |  |          
|Financial
 Statements:                                    |  |          
|                                                          |  |          
|Balance Sheets                                            |  | F-3      
|                                                          |  |          
|Statements of Income                                      |  | F-4      
|                                                          |  |          
|Statements of Changes in Stockholders Equity             |  | F-5      
|                                                          |  |          
|Statements of Cash Flows                                  |  | F-6      
|                                                          |  |          
|Notes to Financial Statements                             |  | F-7      

22

---



Report of
Independent Registered Public Accounting Firm

To the Board of
Directors and Stockholders of
Tofutti Brands, Inc.

We have
audited the accompanying balance sheet of Tofutti Brands, Inc. (the Company)
    as of January 1, 2011, and the related statements of income, stockholders equity,
    and cash flows for the fiscal year then ended. 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 audit.

We conducted
our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides 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 the Company as of January 1, 2011,
and the results of its operations and its cash flows for the fiscal year then
ended, in conformity with U.S. generally accepted accounting principles.

We also have audited the adjustments described in Note 6 that were applied
to restate the January 2, 2010 financial statements to correct an error.  In our opinion,
such adjustments are appropriate and have been properly applied. We were not engaged to audit,
review, or apply any procedures to the January 2, 2010 financial statements of the Company other
than with respect to the adjustments and, accordingly, we do not express an opinion or any
other form of assurance on the January 2, 2010 financial statements taken as a whole.

/s/
EisnerAmper LLP
EisnerAmper LLP
Edison, New Jersey
April 11, 2011

F-1

---



Report of Independent Registered Public Accounting Firm

To the Board of
Directors and Stockholders of
Tofutti Brands, Inc.

We have audited, before the effects of the adjustments
    for the correction of the  error described in Note 6, the accompanying balance
    sheet of Tofutti Brands, Inc. (the Company) as of January 2,
    2010, and the related statements of income, stockholders equity, and
    cash flows for the fiscal year then ended. The financial statements are
    the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted
our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
    statements are free of material misstatement. The Company is not required
    to have, nor were we engaged to perform, an audit of its internal control
    over financial reporting. Our audit included consideration of internal control
    over financial reporting as a basis for designing audit procedures that are
    appropriate in the circumstances, but not for the purpose of expressing an
    opinion on the effectiveness of the Companys internal control over
    financial reporting. Accordingly we express no such opinion. An audit also
    includes examining, on a test basis, evidence supporting the amounts and
    disclosures in the financial statements, assessing the accounting principles
    used and significant estimates made by management, as well as evaluating
    the overall financial statement presentation. We believe that our audit
    provides a reasonable basis for our opinion.

In our
opinion, except for the error described in Note 6, the January 2, 2010 financial
    statements present fairly, in all material respects, the financial position
    of the Company as of January 2, 2010, and the results
    of its operations and its cash flows for the fiscal year then ended in conformity
    with U.S. generally accepted accounting principles.

We were not engaged to audit, review, or apply any procedures
to the adjustments for the correction of the error described in Note 6 and, accordingly,
we do not express an opinion or any other form of assurance about whether such adjustments
are appropriate and have been properly applied. Those adjustments were audited by EisnerAmper LLP.

/s/ Amper,
Politziner & Mattia, LLP
Amper,
Politziner & Mattia, LLP

Edison, New JerseyApril 2, 2010

F-2

---



TOFUTTI BRANDS INC.
BALANCE SHEETS
(In thousands, except for share and per share data)

|                                                                                                                                                                             |  |                  |       |                            |   |       | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ----- | -------------------------- | - | ----- | 
|                                                                                                                                                                             |  | January 1,
 2011 |       | January 2,
 2010, restated |  
|                                                                                                                                                                             |  |                  |       |                            |  
|Assets                                                                                                                                                                       |  |                  |       |                            |   |       | 
|Current assets:                                                                                                                                                              |  |                  |       |                            |   |       | 
|Cash and cash equivalents                                                                                                                                                    |  | $                | 2,528 |                            | $ | 1,413 | 
|Accounts receivable, net of allowance for
 doubtful accounts and sales
 promotions of $320 and $538, respectively                                                            |  |                  | 1,338 |                            |   | 1,461 | 
|Inventories, net                                                                                                                                                             |  |                  | 1,697 |                            |   | 1,931 | 
|Prepaid expenses                                                                                                                                                             |  |                  | 16    |                            |   | 13    | 
|Refundable income taxes                                                                                                                                                      |  |                  |      |                            |   | 109   | 
|Deferred income taxes                                                                                                                                                        |  |                  | 186   |                            |   | 299   | 
|                                                                                                                                                                             |  |                  |       |                            |   |       | 
|Total current assets                                                                                                                                                         |  |                  | 5,765 |                            |   | 5,226 | 
|                                                                                                                                                                             |  |                  |       |                            |   |       | 
|                                                                                                                                                                             |  |                  |       |                            |   |       | 
|Fixed assets
 (net of accumulated amortization of $38 and $33, respectively)                                                                                                 |  |                  | 10    |                            |   | 15    | 
|Other assets                                                                                                                                                                 |  |                  | 16    |                            |   | 16    | 
|                                                                                                                                                                             |  |                  |       |                            |   |       | 
|                                                                                                                                                                             |  | $                | 5,791 |                            | $ | 5,257 | 
|                                                                                                                                                                             |  |                  |       |                            |   |       | 
|                                                                                                                                                                             |  |                  |       |                            |   |       | 
|Liabilities and Stockholders Equity                                                                                                                                         |  |                  |       |                            |   |       | 
|Current liabilities:                                                                                                                                                         |  |                  |       |                            |   |       | 
|Accounts payable                                                                                                                                                             |  | $                | 260   |                            | $ | 164   | 
|Accrued expenses                                                                                                                                                             |  |                  | 585   |                            |   | 616   | 
|Accrued officers compensation                                                                                                                                               |  |                  | 500   |                            |   | 500   | 
|                                                                                                                                                                             |  |                  |       |                            |   |       | 
|Total current liabilities                                                                                                                                                    |  |                  | 1,345 |                            |   | 1,280 | 
|                                                                                                                                                                             |  |                  |       |                            |   |       | 
|                                                                                                                                                                             |  |                  |       |                            |   |       | 
|Commitments and contingencies                                                                                                                                                |  |                  |      |                            |   |      | 
|                                                                                                                                                                             |  |                  |       |                            |   |       | 
|Stockholders equity:                                                                                                                                                        |  |                  |       |                            |   |       | 
|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 5,176,678 shares at
 January 1, 2011, and 5,176,678 shares at January 2, 2010 |  |                  | 52    |                            |   | 52    | 
|Additional paid-in capital                                                                                                                                                   |  |                  | 7     |                            |   |      | 
|Retained earnings                                                                                                                                                            |  |                  | 4,387 |                            |   | 3,925 | 
|                                                                                                                                                                             |  |                  |       |                            |   |       | 
|Total stockholders equity                                                                                                                                                   |  |                  | 4,446 |                            |   | 3,977 | 
|                                                                                                                                                                             |  |                  |       |                            |   |       | 
|Total liabilities and stockholders equity                                                                                                                                   |  | $                | 5,791 |                            | $ | 5,257 | 
|                                                                                                                                                                             |  |                  |       |                            |   |       | 

See accompanying notes to financial
statements.

F-3

---



TOFUTTI BRANDS INC.
STATEMENTS OF INCOME(In thousands, except for per share data)

|                                             |  |                                     |        |                                     |   |        | 
|-------------------------------------------- |  | ----------------------------------- | ------ | ----------------------------------- | - | ------ | 
|                                             |  | Fiscal year
 ended
 January 1, 2011 |        | Fiscal Year
 ended
 January 2, 2010 |  
|                                             |  |                                     |        |                                     |  
|                                             |  |                                     |        |                                     |   |        | 
|Net sales                                    |  | $                                   | 17,713 |                                     | $ | 18,617 | 
|Cost of
 sales                               |  |                                     | 12,271 |                                     |   | 12,995 | 
|                                             |  |                                     |        |                                     |   |        | 
|Gross profit                                 |  |                                     | 5,442  |                                     |   | 5,622  | 
|                                             |  |                                     |        |                                     |   |        | 
|                                             |  |                                     |        |                                     |   |        | 
|Operating
 expenses:                         |  |                                     |        |                                     |   |        | 
|Selling and warehousing                      |  |                                     | 1,553  |                                     |   | 1,668  | 
|Marketing                                    |  |                                     | 504    |                                     |   | 503    | 
|Product development costs                    |  |                                     | 563    |                                     |   | 581    | 
|General and administrative                   |  |                                     | 2,020  |                                     |   | 2,035  | 
|                                             |  |                                     |        |                                     |   |        | 
|                                             |  |                                     | 4,640  |                                     |   | 4,787  | 
|                                             |  |                                     |        |                                     |   |        | 
|                                             |  |                                     |        |                                     |   |        | 
|Income
 before income taxes                  |  |                                     | 802    |                                     |   | 835    | 
|                                             |  |                                     |        |                                     |   |        | 
|Income taxes                                 |  |                                     | 340    |                                     |   | 329    | 
|                                             |  |                                     |        |                                     |   |        | 
|                                             |  |                                     |        |                                     |   |        | 
|Net income                                   |  | $                                   | 462    |                                     | $ | 506    | 
|                                             |  |                                     |        |                                     |   |        | 
|                                             |  |                                     |        |                                     |   |        | 
|Weighted
 average common shares outstanding: |  |                                     |        |                                     |   |        | 
|Basic                                        |  |                                     | 5,177  |                                     |   | 5,177  | 
|                                             |  |                                     |        |                                     |   |        | 
|Diluted                                      |  |                                     | 5,177  |                                     |   | 5,177  | 
|                                             |  |                                     |        |                                     |   |        | 
|                                             |  |                                     |        |                                     |   |        | 
|Net income
 per common share:                |  |                                     |        |                                     |   |        | 
|Basic                                        |  | $                                   | 0.09   |                                     | $ | 0.10   | 
|                                             |  |                                     |        |                                     |   |        | 
|Diluted                                      |  | $                                   | 0.09   |                                     | $ | 0.10   | 
|                                             |  |                                     |        |                                     |   |        | 

See accompanying notes to financial statements.

F-4

---



TOFUTTI BRANDS INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY 
Fiscal Years ended January 1, 2011 and January 2, 2010, Restated(In thousands, except for share data)

|                                                  |  |              |           |                              |   |                     |  |                              |     |   |   |       |   |   |       |  
|------------------------------------------------- |  | ------------ | --------- | ---------------------------- | - | ------------------- |  | ---------------------------- | --- | - | - | ----- | - | - | ----- | -
|                                                  |  | Common Stock |           | Additional
 Paid-In
 Capital |   | Retained 
 Earnings |  | Total
 Stockholders
 Equity |    
|                                                  |  |              |           |                              |   |                    
|                                                  |  | Shares       |           | Amount                       |   |                     |  |                             
|                                                  |  |              |           |                              |   |                     |  |                              |     |   |  
|                                                  |  |              |           |                              |   |                     |  |                              |     |   |   |       |   |   |       |  
|Balances,
 December 27, 2008, as originally filed |  |              | 5,189,343 |                              | $ | 52                  |  | $                            |    |   | $ | 3,564 |   | $ | 3,616 |  
|Adjustments                                       |  |              |          |                              |   |                    |  |                              |     |   |   | (143) |   |   | (143) |  
|Balances, December 27, 2008, as restated          |  |              | 5,189,343 |                              | $ | 52                  |  | $                            |    |   | $ | 3,241 |   | $ | 3,473 |  
|Stock
 compensation expense                       |  |              |          |                              |   |                    |  |                              | 12  |   |   |      |   |   | 12    |  
|Stock
 purchases and retirements,
 net            |  |              | (12,665   | )                            |   |                    |  |                              | (12 | ) |   | (2    | ) |   | (14   | )
|Net income
 for year ended January 2,
 2010       |  |              |          |                              |   |                    |  |                              |    |   |   | 506   |   |   | 506   |  
|                                                  |  |              |           |                              |   |                     |  |                              |     |   |   |       |   |   |       |  
|Balances,
 January 2, 2010                        |  |              | 5,176,678 |                              |   | 52                  |  |                              |    |   |   | 3,925 |   |   | 3,977 |  
|Stock
 compensation expense                       |  |              |          |                              |   |                    |  |                              | 7   |   |   |      |   |   | 7     |  
|Net income
 for year ended January 1,
 2011       |  |              |          |                              |   |                    |  |                              |    |   |   | 462   |   |   | 462   |  
|                                                  |  |              |           |                              |   |                     |  |                              |     |   |   |       |   |   |       |  
|Balances,
 January 1, 2011                        |  |              | 5,176,678 |                              | $ | 52                  |  | $                            | 7   |   | $ | 4,387 |   | $ | 4,446 |  
|                                                  |  |              |           |                              |   |                     |  |                              |     |   |   |       |   |   |       |  

See accompanying notes to financial
statements.

F-5

---



TOFUTTI BRANDS INC. 
STATEMENTS OF CASH FLOWS(In thousands)

|                                                                                                   |  |                                      |       |                                      |   |       |  
|-------------------------------------------------------------------------------------------------- |  | ------------------------------------ | ----- | ------------------------------------ | - | ----- | -
|                                                                                                   |  | Fiscal Year
 ended
 January 1,
 2011 |       | Fiscal Year
 ended
 January 2,
 2010 |  
|                                                                                                   |  |                                      |       |                                      |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                              |  |                                      |       |                                      |   |       |  
|Net income                                                                                         |  | $                                    | 462   |                                      | $ | 506   |  
|Adjustments to reconcile net income to net
 cash flows provided by (used in) operating activities: |  |                                      |       |                                      |   |       |  
|Amortization                                                                                       |  |                                      | 5     |                                      |   | 4     |  
|Provision for bad debts and sales
 promotions                                                      |  |                                      | 60    |                                      |   | 10    |  
|Stock compensation expense                                                                         |  |                                      | 7     |                                      |   | 12    |  
|Deferred taxes                                                                                     |  |                                      | 113   |                                      |   | 25    |  
|Change in assets and liabilities:                                                                  |  |                                      |       |                                      |   |       |  
|Accounts receivable                                                                                |  |                                      | 63    |                                      |   | 103   |  
|Inventories                                                                                        |  |                                      | 234   |                                      |   | 403   |  
|Prepaid expenses                                                                                   |  |                                      | (3    | )                                    |   | 6     |  
|Income taxes refundable                                                                            |  |                                      | 109   |                                      |   | 303   |  
|Accounts payable and accrued expenses                                                              |  |                                      | 65    |                                      |   | (183  | )
|                                                                                                   |  |                                      |       |                                      |   |       |  
|Net cash flows provided by operating
 activities                                                   |  |                                      | 1,115 |                                      |   | 1,189 |  
|                                                                                                   |  |                                      |       |                                      |   |       |  
|                                                                                                   |  |                                      |       |                                      |   |       |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                              |  |                                      |       |                                      |   |       |  
|Purchase of common stock                                                                           |  |                                      |      |                                      |   | (14   | )
|                                                                                                   |  |                                      |       |                                      |   |       |  
|Net cash flows used in financing activities                                                        |  |                                      |      |                                      |   | (14   | )
|                                                                                                   |  |                                      |       |                                      |   |       |  
|                                                                                                   |  |                                      |       |                                      |   |       |  
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                                            |  |                                      | 1,115 |                                      |   | 1,175 |  
|                                                                                                   |  |                                      |       |                                      |   |       |  
|CASH AND CASH EQUIVALENTS, AT BEGINNING OF
 YEAR                                                   |  |                                      | 1,413 |                                      |   | 238   |  
|                                                                                                   |  |                                      |       |                                      |   |       |  
|CASH AND CASH EQUIVALENTS, AT END OF YEAR                                                          |  | $                                    | 2,528 |                                      | $ | 1,413 |  
|                                                                                                   |  |                                      |       |                                      |   |       |  
|                                                                                                   |  |                                      |       |                                      |   |       |  
|SUPPLEMENTAL CASH FLOW INFORMATION:                                                                |  |                                      |       |                                      |   |       |  
|Income taxes paid                                                                                  |  | $                                    | 5     |                                      | $ | 5     |  
|                                                                                                   |  |                                      |       |                                      |   |       |  

See accompanying notes to financial
statements.

F-6

---



TOFUTTI BRANDS INC. 
NOTES TO FINANCIAL STATEMENTS
(In thousands, except for share and per share data)

|        |                                                                            
|------- | ---------------------------------------------------------------------------
|NOTE 1: | DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
 POLICIES

Description of Business
- Tofutti Brands Inc. (Tofutti or the Company) is engaged in one business
segment, the development, production and marketing of nondairy frozen desserts
and other food products.

Fiscal Year - The
Company operates on a fiscal year ending on the Saturday closest to December
31. Fiscal years for the financial statements included herein are the fifty-two
week and fifty-three week fiscal periods ended on January 1, 2011 and January
2, 2010, respectively.

Estimates and Uncertainties
- The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America 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. Significant estimates include
allowance for doubtful accounts, sales promotion accruals and inventory
reserves. Actual results could differ from those estimates.

Revenue Recognition
- Revenue is recognized when goods are shipped from production facilities or
outside warehouses to customers. Revenue is recognized when the following four
criteria under ASC 605 have been met: the product has been shipped and the
Company has no significant remaining obligations; persuasive evidence of an
arrangement exists; the price to the buyer is fixed or determinable; and
collection is probable. Deductions from sales for promotional programs,
manufacturers charge-backs, co-operative advertising programs and other
programs are recorded as reductions of revenues and are provided for at the
time of initial sale of product. Freight charged to customers is included in
revenues, and has generally been insignificant.

Concentration of Credit/Sales Risk
- Financial instruments that potentially subject the Company to concentration
of credit risk consist primarily of cash and unsecured trade receivables.
During the year, the Companys cash balance at a financial institution exceeded
the FDIC limit of $250. Management believes that the financial institution is
financially sound and, accordingly, minimal credit risk exists.

The Company
performs ongoing evaluations of its customers financial condition and does not
require collateral. Management feels that credit risk beyond the established
allowances at January 1, 2011 is limited.

During the
fiscal years ended January 1, 2011 and January 2, 2010, the Company derived
approximately 91% and 89%, respectively, of its net sales domestically. The
remaining sales in both periods were exports to foreign countries. The
Companys sales to one customer represented 19% of net sales during fiscal 2010
and 17% of net sales during fiscal 2009. The accounts receivable balance of one
customer represented approximately 11% of total accounts receivable at January
1, 2011 and 29% of total accounts receivable at January 2, 2010. In addition, a
significant portion of the Companys sales are to several key distributors,
which are large distribution companies with numerous divisions and subsidiaries
who act independently. Such distributors as a group accounted for 40% and 29%
of the Companys net sales for the fiscal years ended January 1, 2011 and
January 2, 2010. The significant increase to 40% in fiscal 2010 is due to one
of our larger independent distributors, Kehe Food Distributors, purchasing
another, Tree of Life, Inc., in 2010. Sales to Tree of Life were not included in
the group of distributors in fiscal 2009, but are included in fiscal 2010 due
to the merger with Kehe Food Distributors.

Accounts Receivable
- The majority of the Companys accounts receivables are due from distributors
(domestic and international) and retailers. Credit is extended based on
evaluation of a customers financial condition and, generally, collateral is
not required. Accounts receivable are most often due

F-7

---



TOFUTTI BRANDS INC. 
NOTES TO FINANCIAL STATEMENTS(In thousands, except for share and per share data)

within 30 to
90 days and are stated at amounts due from customers net of an allowance for
doubtful accounts. Accounts outstanding longer than the contractual payment
terms are considered past due. The Company determines its allowance by
considering a number of factors, including the length of time trade accounts
receivable are past due, the Companys previous loss history, the customers
current ability to pay its obligation to the Company, and the condition of the
general economy and the industry as a whole. The Company writes-off accounts
receivable when they become uncollectible, and payments subsequently received
on such receivables are credited to the bad debt expense. The Company does not
accrue interest on accounts receivable past due.

Cash and Equivalents
- The Company considers all highly liquid investments with original maturities
of three months or less to be cash equivalents.

Inventories -
Inventory is stated at lower of cost or market 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.

The Company
purchased approximately 31% and 28% of its finished products from one supplier
and 21% and 19% of its finished products from another supplier during the periods
ended January 1, 2011 and January 2, 2010, respectively.

Fixed Assets - Fixed
assets consist of leasehold improvements. Amortization is provided by charges
to income using the straight-line method over the useful life of ten years.

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. The Company
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.

Net Income Per Share
- Basic earnings per common share has been computed by dividing net income by
the weighted average number of common shares outstanding. Diluted earnings per
share has been computed by dividing net income by the weighted average number
of common shares outstanding, including the dilutive effects of stock options.
For the fiscal years ended January 1, 2011 and January 2, 2010, stock
equivalents of 51,000 shares and 61,000 shares, respectively, were excluded
from the diluted earnings per share calculations since the effect was
anti-dilutive, because the strike price of these options was greater than the
quoted market value at such date.

F-8

---



TOFUTTI BRANDS
INC. NOTES TO FINANCIAL STATEMENTS(In thousands,
except for share and per share data)

|                                                                        |  |                                      |       |                                      |   |       | 
|----------------------------------------------------------------------- |  | ------------------------------------ | ----- | ------------------------------------ | - | ----- | 
|                                                                        |  | Fiscal Year
 Ended
 January 1,
 2011 |       | Fiscal Year
 Ended
 January 2,
 2010 |  
|                                                                        |  |                                      |       |                                      |  
|                                                                        |  |                                      |       |                                      |   |       | 
|Net income,
 numerator, basic and diluted computation                   |  | $                                    | 462   |                                      | $ | 506   | 
|                                                                        |  |                                      |       |                                      |   |       | 
|                                                                        |  |                                      |       |                                      |   |       | 
|Weighted
 average shares - denominator basic computation                |  |                                      | 5,177 |                                      |   | 5,177 | 
|Effect of
 dilutive stock options                                       |  |                                      |      |                                      |   |      | 
|                                                                        |  |                                      |       |                                      |   |       | 
|Weighted
 average shares, as adjusted - denominator diluted computation |  |                                      | 5,177 |                                      |   | 5,177 | 
|                                                                        |  |                                      |       |                                      |   |       | 
|Net income
 per common share:                                           |  |                                      |       |                                      |   |       | 
|Basic                                                                   |  | $                                    | 0.09  |                                      | $ | 0.10  | 
|                                                                        |  |                                      |       |                                      |   |       | 
|Diluted                                                                 |  | $                                    | 0.09  |                                      | $ | 0.10  | 
|                                                                        |  |                                      |       |                                      |   |       | 

Stock Based Compensation
- The Company follows the provisions of ASC 718 Share-Based Payment. The Company uses the Black-Scholes
option pricing model to measure the estimated fair value of the options under
ASC 718. The compensation expense, less forfeitures, is being recognized over
the service period on a straight-line basis.

Fair Value of Financial Instruments
- The fair value of financial instruments, which primarily consist of cash and
equivalents, accounts receivable and accounts payable are stated at their
carrying values. The carrying amounts approximate fair value because of the
short-term nature of those instruments.

Freight Costs -
Freight costs to ship inventory to customers and to outside warehouses amounted
to $981 and $974 during the fiscal years ended January 1, 2011 and January 2,
2010, respectively. Such costs are included in costs of goods sold.

Advertising Costs -
The Company expenses advertising costs as they are incurred. Advertising
expenses amounted to $295 and $295 during the fiscal years ended January 1,
2011 and January 2, 2010, respectively.

Product Development Costs-Costs of new product development and
product redesign are charged to expense as incurred.

Recent Accounting Pronouncements
- Accounting Standards Updates
that became effective after December 31 are not expected to have a significant
effect on our financial position or results of operations.

|        |            
|------- | -----------
|NOTE 2: | INVENTORIES

Inventories
consist of the following:

|                             |  |                  |       |                  |   |       | 
|---------------------------- |  | ---------------- | ----- | ---------------- | - | ----- | 
|                             |  | January 1,
 2011 |       | January 2,
 2010 |  
|                             |  |                  |       |                  |  
|Finished
 products           |  | $                | 1,236 |                  | $ | 1,214 | 
|Raw
 materials and packaging |  |                  | 461   |                  |   | 717   | 
|                             |  |                  |       |                  |   |       | 
|                             |  | $                | 1,697 |                  | $ | 1,931 | 
|                             |  |                  |       |                  |   |       | 

F-9

---



TOFUTTI BRANDS INC. 
NOTES TO FINANCIAL STATEMENTS(In thousands, except for share and per share data)

|        |              
|------- | -------------
|NOTE 3: | STOCK OPTIONS

The 1993 Stock
Option Plan (the 1993 Plan) provides for the grant 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 grant of non-qualified stock
options to key employees and consultants. The 1993 Plan had a term of ten years
and terminated in 2003. No grants have been made under the 1993 Plan since
2003, and no further grants of options can be made under the 1993 Plan.

The Companys
shareholders adopted the 2004 Non-Employee Directors Stock Option Plan (the
2004 Directors Plan) on June 3, 2004. The purpose and intent of the 2004
Directors Plan is to attract and retain the best available individuals as
non-employee directors of the Company, to provide additional incentive to
non-employee directors to continue to serve as directors and to encourage their
continued service on the Board. All options granted under 2004 Directors Plan
are non-qualified stock options. The maximum aggregate number of shares of
common stock which may be issued under the 2004 Directors Plan is 100,000
shares.

The following
is a summary of stock option activity from December 27, 2008 to January 1,
2011:

|                                  |  |                              |          |                                              |  |                                        |  |                                        |         |   |  |      |  |  |     | 
|--------------------------------- |  | ---------------------------- | -------- | -------------------------------------------- |  | -------------------------------------- |  | -------------------------------------- | ------- | - |  | ---- |  |  | --- | 
|                                  |  | 1993 PLAN
 INCENTIVE OPTIONS |          | 2004 DIRECTORS PLAN
 NON-QUALIFIED
 OPTIONS |  | Total
 Aggregate
 Intrinsic
 Value ($) | 
|                                  |  |                              |          |                                              |  |                                       
|                                  |  | Shares                       |          | Weighted
 Average
 Exercise
 Price ($)       |  | Shares                                 |  | Weighted
 Average
 Exercise
 Price ($) |         |  
|                                  |  |                              |          |                                              |  |                                        |  |                                        |         |   | 
|Outstanding
 at December 27, 2008 |  |                              | 410,000  |                                              |  | 1.06                                   |  |                                        | 61,000  |   |  | 2.94 |  |  | 138 | 
|                                  |  |                              |          |                                              |  |                                        |  |                                        |         |   | 
|Exercisable
 at December 27, 2008 |  |                              | 410,000  |                                              |  |                                       |  |                                        | 44,000  |   |  |     |  |  | 161 | 
|                                  |  |                              |          |                                              |  |                                        |  |                                        |         |   | 
|Expired in
 fiscal 2009           |  |                              | (410,000 | )                                            |  | 1.06                                   |  |                                        |        |   |  |     |  |  |    | 
|                                  |  |                              |          |                                              |  |                                        |  |                                        |         |   | 
|Outstanding
 at January 2, 2010   |  |                              |         |                                              |  |                                       |  |                                        | 61,000  |   |  | 2.94 |  |  |    | 
|                                  |  |                              |          |                                              |  |                                        |  |                                        |         |   | 
|Exercisable
 at January 2, 2010   |  |                              |         |                                              |  |                                       |  |                                        | 61,000  |   |  | 2.94 |  |  |    | 
|                                  |  |                              |          |                                              |  |                                        |  |                                        |         |   | 
|Expired in
 fiscal 2010           |  |                              |         |                                              |  |                                       |  |                                        | (10,000 | ) |  | 3.14 |  |  |    | 
|                                  |  |                              |          |                                              |  |                                        |  |                                        |         |   | 
|Outstanding
 at January 1, 2011   |  |                              |         |                                              |  |                                       |  |                                        | 51,000  |   |  | 2.90 |  |  |    | 
|                                  |  |                              |          |                                              |  |                                        |  |                                        |         |   | 
|Exercisable
 at January 1, 2011   |  |                              |         |                                              |  |                                       |  |                                        | 51,000  |   |  | 2.90 |  |  |    | 
|                                  |  |                              |          |                                              |  |                                        |  |                                        |         |   | 

There were no
stock options granted in the last two fiscal years.

The following
table summarizes information about stock options outstanding at January 1,
2011:

|                              |  |                     |        |                                              |  |                                       |  |                     |      |  |  |        | 
|----------------------------- |  | ------------------- | ------ | -------------------------------------------- |  | ------------------------------------- |  | ------------------- | ---- |  |  | ------ | 
|Range of
 Exercise Prices ($) |  | Number
 Outstanding |        | Weighted Average
 Remaining Life
 (in years) |  | Weighted
 Average
 Exercise
 Price($) |  | Number
 Exercisable |     
|                              |  |                     |        |                                              |  |                                       |  |                     |     
|                              |  |                     |        |                                              |  |                                       |  |                     |      |  |  |        | 
|2.90                          |  |                     | 10,000 |                                              |  | 0.42                                  |  |                     | 2.90 |  |  | 10,000 | 
|2.90                          |  |                     | 41,000 |                                              |  | 1.83                                  |  |                     | 2.90 |  |  | 41,000 | 
|                              |  |                     |        |                                              |  |                                       |  |                     |     
|2.90                          |  |                     | 51,000 |                                              |  | 1.55                                  |  |                     | 2.90 |  |  | 51,000 | 
|                              |  |                     |        |                                              |  |                                       |  |                     |      |  |  |        | 

The aggregate
unrecognized stock-based compensation charge at January 1, 2011 is
approximately $7 expected to be expensed over the next year.

F-10

---



TOFUTTI BRANDS INC. 
NOTES TO FINANCIAL STATEMENTS(In thousands, except for share and per share data)

|        |       
|------- | ------
|NOTE 4: | LEASES

The Companys
facilities are located in a one-story facility in Cranford, New Jersey. The
6,200 square foot facility houses its 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
continues to occupy the premises under the terms of that agreement. Any changes
by either the landlord or the Company remains subject to a six month
notification period. The Company currently has no plans to enter into a
long-term lease agreement for the facility. Rent expense was $81 in 2010 and
$81 in 2009. The Companys management believes that the Cranford facility will
continue to satisfy its space requirements for the foreseeable future and that
if necessary, such space can be replaced without a significant impact to the
business.

|        |             
|------- | ------------
|NOTE 5: | INCOME TAXES

The components
of income tax expense (benefit) for the fiscal years ended January 1, 2011 and
January 2, 2010 are as follows:

|                          |  |                  |     |                  |   |     |  
|------------------------- |  | ---------------- | --- | ---------------- | - | --- | -
|                          |  | January 1,
 2011 |     | January 2,
 2010 |  
|                          |  |                  |     |                  |  
|Current:                  |  |                  |     |                  |   |     |  
|Federal                   |  | $                | 177 |                  | $ | 280 |  
|State                     |  |                  | 50  |                  |   | 74  |  
|                          |  |                  |     |                  |   |     |  
|                          |  |                  | 227 |                  |   | 354 |  
|                          |  |                  |     |                  |   |     |  
|Deferred:                 |  |                  |     |                  |   |     |  
|Federal                   |  |                  | 88  |                  |   | (21 | )
|State                     |  |                  | 25  |                  |   | (4  | )
|                          |  |                  |     |                  |   |     |  
|                          |  |                  | 113 |                  |   | (25 | )
|                          |  |                  |     |                  |   |     |  
|Total income
 tax expense |  | $                | 340 |                  | $ | 329 |  
|                          |  |                  |     |                  |   |     |  

A
reconciliation between the expected federal tax expense at the statutory tax
rate of 34% and the Companys actual tax expense for the fiscal years ended
January 1, 2011 and January 2, 2010 follows:

|                                                       |  |                  |     |                  |   |     |  
|------------------------------------------------------ |  | ---------------- | --- | ---------------- | - | --- | -
|                                                       |  | January 1,
 2011 |     | January 2,
 2010 |  
|                                                       |  |                  |     |                  |  
|Income tax
 expense computed at federal statutory rate |  | $                | 278 |                  | $ | 283 |  
|State income
 taxes, net of federal income tax benefit |  |                  | 50  |                  |   | 50  |  
|Permanent
 and other items                             |  |                  | 12  |                  |   | 26  |  
|Prior year
 items                                      |  |                  | 0   |                  |   | (30 | )
|                                                       |  |                  |     |                  |   |     |  
|                                                       |  | $                | 340 |                  | $ | 329 |  
|                                                       |  |                  |     |                  |   |     |  

Deferred tax assets for the fiscal years ended January 1, 2011 and January 2, 2010 consist of the following
components:

|                                 |  |                  |     |                  |   |     | 
|-------------------------------- |  | ---------------- | --- | ---------------- | - | --- | 
|                                 |  | January 1,
 2011 |     | January 2,
 2010 |  
|                                 |  |                  |     |                  |  
|Allowance
 for doubtful accounts |  | $                | 128 |                  | $ | 215 | 
|Inventory                        |  |                  | 58  |                  |   | 84  | 
|                                 |  |                  |     |                  |   |     | 
|Deferred tax
 asset              |  | $                | 186 |                  | $ | 299 | 
|                                 |  |                  |     |                  |   |     | 

F-11

---



TOFUTTI BRANDS INC. 
NOTES TO FINANCIAL STATEMENTS(In thousands, except for share and per share data)

The Company
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 following
table indicates the changes to the Companys uncertain tax positions for the
for the fiscal years ended January 1, 2011 and January 2, 2010 including
interest and penalties:

|                                                              |  |   |      |  
|------------------------------------------------------------- |  | - | ---- | -
|Balance at
 December 27, 2008                                 |  | $ | 444  |  
|Additions based on tax positions related to
 the current year |  |   |     |  
|                                                              |  |   |      |  
|Balance at January 2, 2010                                    |  |   | 444  |  
|Reductions based on tax positions related
 to the prior year  |  |   | (143 | )
|                                                              |  |   |      |  
|Balance at January 1, 2011                                    |  | $ | 301  |  
|                                                              |  |   |      |  

The Company
accounts for penalties or interest related to uncertain tax positions as part
of its provision for income taxes. The Company had approximately $93 of
accrued interest and penalties related to uncertain tax positions. Interest and
penalties related to uncertain tax positions are recognized as a component of
income tax expense.

The liability
at January 1, 2011 for uncertain tax positions is included in accrued expenses.
The Companys federal and state tax returns are open to examination for the
years 2007 to 2009.

|        |                                    
|------- | -----------------------------------
|NOTE 6: | RESTATEMENT OF FINANCIAL STATEMENTS

The Company is restating its financial statements for the fiscal year ended January 2, 2010 due to errors in
recording certain income tax items in the proper period.  The Company deemed the error to be material per Staff Accounting
Bulletin No. 108, which requires a restatement for the year ended January 2, 2010.

Management, upon being advised by its Independent Auditor of the issue, as part of its Sarbanes Oxley
policy regarding internal controls over financial reporting, immediately reported this issue to the Companys
Audit Committee which promptly requested management to conduct a detailed review.

As a previously reported, the Company has identified material weaknesses in its internal control
over financial reporting.  The material weaknesses include a lack of sufficient resources and an insufficient level of
monitoring and oversight and a lack of segregation of duties due to the limited size of its accounting department.

On April 1, 2011, the Companys management and Audit Committee reviewed managements findings and the
Audit Committee concluded that restating the financial statements for the year ended January 2, 2010 and the opening
retained earnings balance as of December 28, 2008 is required. The effects of these restatements are included in this
Annual Report on Form 10-K for the fiscal year ended January 1, 2011.  The Company has determined that previously
reported amounts in its 2009 and 2010 quarterly filings on Form 10-Q need not be restated since there was no impact
on 2009 and 2010 revenues, operating income, pre-tax income, net income or cash flows for the quarterly periods presented.

F-12

---



TOFUTTI BRANDS INC. 
NOTES TO FINANCIAL STATEMENTS(In thousands, except for share and per share data)

The following is a summary of the effects of these changes on the Companys balance sheet as of January 2, 2010.

|                                           |  |             |       |             |   |       | 
|------------------------------------------ |  | ----------- | ----- | ----------- | - | ----- | 
|As of January 2, 2010                      |  | As Reported |       | As Restated |  
|                                           |  |             |       |             |  
|Total Assets                               |  | $           | 5,400 |             | $ | 5,257 | 
|Retained Earnings                          |  |             | 4,068 |             |   | 3,925 | 
|Total Stockholders Equity                 |  |             | 4,120 |             |   | 3,977 | 
|Total Liabilities and Stockholders Equity |  |             | 5,400 |             |   | 5,257 | 



F-13

---



|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 9. | Changes In and Disagreements With Accountants on Accounting and
 Financial Disclosure.

On
August 17, 2010 the Audit Committee of our Board of Directors engaged
EisnerAmper LLP to serve as our new independent registered public accounting
firm, after we were notified on August 16, 2010 that Amper, Politziner and
Mattia, LLP (Amper), an independent registered public accounting firm, would
not be able to stand for re-appointment because it combined its practice on
that date with that of Eisner LLP (Eisner) to form EisnerAmper LLP, an
independent registered public accounting firm. We previously filed Form 8-K on
August 17, 2010 acknowledging this change.

During
our fiscal year ended January 2, 2010 and through the date we engaged
EisnerAmper LLP, we did not consult with Eisner regarding any of the matters or
reportable events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.

The
audit report of Amper on our financial statements as of and for the year ended
January 2, 2010 did not contain an adverse opinion or a disclaimer of opinion,
and was not qualified or modified as to uncertainty, audit scope or accounting
principles.

In
connection with the audit of our financial statements for the fiscal year ended
January 2, 2010, and through August 16, 2010, there were (i) no disagreements
between us and Amper on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, which
disagreements, if not resolved to the satisfaction of Amper, would have caused
Amper to make reference to the subject matter of the disagreement in their
report on our financial statements for such year or for any reporting period
since our last fiscal year end and (ii) no reportable events within the meaning
set forth in item 304(a)(1)(v) of Regulation S-K.

|         |                         
|-------- | ------------------------
|Item 9A. | Controls and Procedures.

Evaluation of Disclosure Controls and
Procedures

Evaluation of Disclosure Controls and
Procedures. As of January 1, 2011, our companys chief
executive officer and chief financial officer conducted an evaluation regarding
the effectiveness of our companys disclosure controls and procedures (as
defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the
evaluation of these controls and procedures, our chief executive officer and
chief financial officer concluded that our disclosure controls and procedures
were not effective with respect to the material weaknesses, as described below
in our internal control over financial reporting, that have not been fully
remediated as of the end of the fiscal year 2010.

Disclosure Controls and Internal Controls.
As provided in Rule 13a-14 of the General Rules and Regulations under the
Securities and Exchange Act of 1934, as amended, Disclosure Controls are
defined as meaning controls and procedures that are designed with the objective
of insuring that information required to be disclosed in our reports filed
under the Securities Exchange Act of 1934, as amended (the Exchange Act), is
recorded, processed, designed and reported within the time periods specified by
the SECs rules and forms. Disclosure Controls include, within the definition
under the Exchange Act, and without limitation, controls and procedures to
insure that information required to be disclosed by us in our reports is
accumulated and communicated to our management, including our chief executive
officer and principal financial officer, as appropriate to allow timely decisions
regarding disclosure. Internal Controls are procedures which are designed with
the objective of providing reasonable assurance that (1) our

23

---



transactions
are properly authorized; (2) our assets are safeguarded against unauthorized or
improper use; and (3) our transactions are properly recorded and reported, all
to permit the preparation of our financial statements inconformity with
generally accepted accounting principles.

Managements
Annual Report on Internal Control Over Financial Reporting

Our management
is responsible for establishing and maintaining adequate internal control over
financial reporting. Internal control over financial reporting is a process
designed by, or under the supervision of the Chief Executive Officer and Chief
Financial Officer and effected by our board of directors, management and other
personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles.

Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

Managements
evaluation of internal control over financial reporting includes using the
Committee of Sponsoring Organizations of the Treadway Commission, or COSO,
framework, an integrated framework for the evaluation of internal controls
issued by COSO, to identify the risks and control objectives related to the
evaluation of our control environment.

Based on their
evaluation under the frameworks described above, our chief executive officer
and chief financial officer have concluded that our internal control over
financial reporting was ineffective as of January 1, 2011 because of the
following material weaknesses in internal controls over financial reporting:

| |   |                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 in
 a timely manner.
| |  
| |  | The limited
 size of the accounting department makes it impracticable to achieve an
 optimum separation of duties.                                                                                                                    

Remediation Plan

We
are continuing to seek ways to remediate these weaknesses, which stem from our
small workforce, that will not require us to hire additional personnel.

Changes in Internal Control over Financial
Reporting

No
change in our internal control over financial reporting occurred during the
quarter ended January 1, 2011, that materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.

This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Managements report was not subject to attestation by our registered public
accounting firm pursuant to the rules of the Securities and Exchange Commission
that permit us to provide only managements report in this annual report.

24

---



|         |                   
|-------- | ------------------
|Item 9B. | Other Information.

None.

PART III

|         |                                                        
|-------- | -------------------------------------------------------
|Item 10. | Directors, Executive Officers and Corporate Governance.

Our
directors and executive officers are:

|                 |  |     |  |                                                             
|---------------- |  | --- |  | ------------------------------------------------------------
|Name             |  | Age |  | Position                                                    
|                 |  |     |  |                                                             
|David Mintz      |  | 79  |  | Chairman of
 the Board of Directors, Chief Executive Officer
|Steven Kass      |  | 59  |  | Chief
 Financial Officer, Secretary and Treasurer           
|Neal S.
 Axelrod |  | 58  |  | Director                                                    
|Joseph
 Fischer  |  | 71  |  | Director                                                    
|Aaron Forem      |  | 56  |  | Director                                                    
|Philip
 Gotthelf |  | 58  |  | Director                                                    
|Reuben
 Rapoport |  | 82  |  | Director                                                    
|Franklyn
 Snitow |  | 64  |  | Director                                                    

David
Mintz has been our Chairman of the Board and Chief Executive Officer since
August 1981. Mr. Mintzs knowledge about our company and his role as the
developer of our product line is essential to the operation of our board.

Steven
Kass has been our Chief Financial Officer since November 1986 and Secretary and
Treasurer since January 1987.

Neal
S. Axelrod has been a director since August 2007. Mr. Axelrod has been a
self-employed certified public accountant in New Jersey since 1977. Mr.
Axelrods accounting and financial background enhances the breadth of
experience of the board of directors.

Joseph
Fischer has been a director since August 2007. He previously served as a
director from March 2004 until June 2007. He has been the principal in FMM
Investments, which manages private portfolios, since 1992. Prior to that and
since 1982, Mr. Fischer was the Controller of the Swingline Division of
American Brands Inc. Mr. Fishers accounting and financial background enhances
the breadth of experience of the board of directors.

Aaron
Forem has been a director since 2000. Since 1980, he has been the president of
Wuhl Shafman Lieberman Corp., located in Newark, New Jersey, which is one of
the largest produce wholesalers in the Northeastern United States. Mr. Forems
experience in the food industry and his managerial experience enhances the
breadth of experience of the board of directors.

Philip
Gotthelf has been a director since 2006. He has been President of EQUIDEX
Incorporated, a registered Commodity Trading Advisor, and EQUIDEX Brokerage
Group, a registered Introducing Broker, since 1985. He has also been publisher
of the COMMODEX System and COMMODITY FUTURES FORECAST Service since 1975 and
has authored several financial books for

25

---



Probus/McGraw
Hill, McGraw Hill and John Wiley & Sons. Mr. Gotthelfs financial
background enhances the breadth of experience of the board of directors.

Reuben
Rapoport, our former Director of Product Development who retired in April 2003,
has been a director since July 1983. Mr. Rapoports product development
background enhances the breadth of experience of the board of directors.

Franklyn
Snitow has been a director since 1987. He has been a partner in the New York
City law firm Snitow Kanfer Holtzer & Millus, LLP, our general counsel,
since 1985. Mr. Snitows legal and corporate governance background enhances the
breadth of experience of the board of directors.

All
directors 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 All of the executive officers devote their
full time to our operations.

Employment Agreements

There
are currently no employment agreements between us and any of our officers.

Family Relationships

There
are no family relationships between any of our directors and executive
officers.

Involvement in Legal Proceedings

To
the best of our knowledge, during the past ten years, none of our directors or
executive officers were involved in one of the following: (1) any bankruptcy
petition filed by or against any business of which such person was a general
partner or executive officer either at the time of the bankruptcy or within two
years prior to that time; (2) any conviction in a criminal proceeding or being
subject to a pending criminal proceeding (excluding traffic violations and
other minor offenses); (3) being subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of any competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or
banking activities; and (4) being found by a court of competent jurisdiction
(in a civil action), the SEC or the Commodities Futures Trading Commission to
have violated a federal or state securities or commodities law, and the judgment
has not been reversed, suspended or vacated.

Audit Committee
and Audit Committee Financial Expert

The
Audit Committee of the Board of Directors is comprised of Mr. Axelrod, who
serves as chairman, Mr. Gotthelf and Mr. Forem. The Board of Directors has
determined that all of the Audit Committee members are independent, as that
term is defined under the enhanced independence standards for audit committee
members in the Securities and Exchange Act of 1934. The Board of Directors has
also determined that Mr. Axelrod is an Audit Committee Financial Expert as that
term is defined in rules issued pursuant to the Sarbanes-Oxley Act of 2002.

26

---



Section 16(a) Beneficial Ownership Compliance

Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our
executive officers, directors and persons who own more than 10% of a registered
class of our equity securities to file with the Securities and Exchange
Commission initial statements of beneficial ownership, reports of changes in
ownership and annual reports concerning their ownership of common stock and
other of our equity securities, on Forms 3, 4 and 5 respectively. Executive
officers, directors and greater than 10% shareholders are required by
Commission regulations to furnish us with copies of all Section 16(a) reports
they file.

To
our knowledge, based solely on our review of the copies of such forms received
by us, or written representations from certain reporting persons that no
additional forms were required for those persons, we believe that during fiscal
2010 all persons subject to these reporting requirements filed the required
reports on a timely basis.

Code of Ethics

We have adopted a Code of Ethics for
Executive and Financial Officers. This code of ethics applies to our chief
executive officer, chief financial officer, corporate controller and other
finance organization employees.
We also adopted a Code of Conduct, which applies to all of our employees. The
Code of Ethics and the Code of Conduct are publicly available on our website at
www.tofutti.com and printed copies are available upon request. If we make any
substantive amendments to the Code of Ethics or the Code of Conduct or grant
any waivers, including any implicit waiver, from a provision of these codes to
our chief executive officer, chief financial officer or corporate
controller, we will disclose the nature of such amendment or waiver on our
website.

|         |                        
|-------- | -----------------------
|Item 11. | Executive Compensation.

The
following table sets forth information concerning the total compensation during
the last three fiscal years for our named executive officers whose total salary
in fiscal 2010 totaled $100,000 or more:

Summary
Compensation Table

|                               |  |            |      |            |  |           |  |                    |         |                     |  |                                                |  |                                |   |          |  |   |  |  |         |     |  |         | 
|------------------------------ |  | ---------- | ---- | ---------- |  | --------- |  | ------------------ | ------- | ------------------- |  | ---------------------------------------------- |  | ------------------------------ | - | -------- |  | - |  |  | ------- | --- |  | ------- | 
|Name and
 Principal 
 Position |  | FiscalYear |      | Salary ($) |  | Bonus ($) |  | Stock
 Awards
 ($) |         | Option
 Awards
 ($) |  | Non-Equity
 Incentive Plan
 Compensation 
 ($) |  | All Other 
 Compensation 
 ($) |   | Total($) | 
|                               |  |            |      |            |  |           |  |                    |         |                     |  |                                                |  |                                |   |          | 
|David Mintz                    |  |            | 2010 |            |  | 450,000   |  |                    | 350,000 |                     |  |                                               |  |                                |  |          |  |  |  |  |        |     |  | 800,000 | 
|Chief
 Executive Officer       |  |            | 2009 |            |  | 459,000   |  |                    | 350,000 |                     |  |                                               |  |                                |  |          |  |  |  |  |        |     |  | 809,000 | 
|and Director                   |  |            | 2008 |            |  | 450,000   |  |                    | 350,000 |                     |  |                                               |  |                                |  |          |  |  |  |  |        |     |  | 800,000 | 
|                               |  |            |      |            |  |           |  |                    |         |                     |  |                                                |  |                                |   |          |  |   |  |  |         |     |  |         | 
|Steven Kass                    |  |            | 2010 |            |  | 125,000   |  |                    | 150,000 |                     |  |                                                |  |                                |   |          |  |   |  |  |         |     |  | 275,000 | 
|Chief
 Financial Officer       |  |            | 2009 |            |  | 127,000   |  |                    | 150,000 |                     |  |                                               |  |                                |  |          |  |  |  |  |        |     |  | 277,000 | 
|                               |  |            | 2008 |            |  | 125,000   |  |                    | 150,000 |                     |  |                                               |  |                                |  |          |  |  |  |  | 215,000 | (1) |  | 490,000 | 

|
|
|

|    |                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The value of the
 unexercised options as of December 27, 2008 is calculated as the difference
 between the closing price of the common stock as of December 27, 2008 and the
 option exercise price.

27

---



The
aggregate value of all other perquisites and other personal benefits furnished
to each of these executive officers was less than $10,000 in both the 2010 and
2009 fiscal years.

Grants of Plan-Based Awards for Fiscal 2009

There
were no stock options awarded during the fiscal year ended January 1, 2011.

Long-Term Incentive
Plans-Awards in Last Fiscal Year

We
do not currently have any long-term incentive plans.

Director Compensation

Our
non-employee directors earned director compensation in fiscal year ended
January 1, 2011based on the number of meetings attended. Mr. Axelrod, chairman
of the audit committee, receives $1,500 per meeting attended. All other
non-employees are entitled to $500 per meeting attended. Messrs. Forem and
Snitow waive their compensation.

The
following table sets forth the compensation received by each of the Companys
non-employee directors for the year ended January 1, 2011. Each non-employee
director is considered independent under NYSE AMEX listing standards. Messrs.
Forem and Snitow waive their compensation.

|                 |  |                                        |        |                    |  |                    |  |                                                 |   |                                            |  |                                |  |           |   |  |  |   |  |  |        | 
|---------------- |  | -------------------------------------- | ------ | ------------------ |  | ------------------ |  | ----------------------------------------------- | - | ------------------------------------------ |  | ------------------------------ |  | --------- | - |  |  | - |  |  | ------ | 
|Name             |  | Fees
 Earned 
 or Paid 
 in Cash 
 ($) |        | Stock 
 Awards ($) |  | Option
 Awards ($) |  | Non-Equity
 Incentive Plan 
 Compensation 
 ($) |   | Nonqualified
 Deferred
 Compensation 
 ($) |  | All Other 
 Compensation 
 ($) |  | Total ($) |  
|                 |  |                                        |        |                    |  |                    |  |                                                 |   |                                            |  |                                |  |           |  
|Neal S. Axelrod  |  |                                        | 13,500 |                    |  |                   |  |                                                 |  |                                            |  |                               |  |           |  |  |  |  |  |  | 13,500 | 
|Joseph Fischer   |  |                                        | 1,500  |                    |  |                   |  |                                                 |  |                                            |  |                               |  |           |  |  |  |  |  |  | 1,500  | 
|Aaron Forem      |  |                                        |       |                    |  |                   |  |                                                 |  |                                            |  |                               |  |           |  |  |  |  |  |  |       | 
|Philip Gotthelf  |  |                                        | 4,500  |                    |  |                   |  |                                                 |  |                                            |  |                               |  |           |  |  |  |  |  |  | 4,500  | 
|Franklyn
 Snitow |  |                                        |       |                    |  |                   |  |                                                 |  |                                            |  |                               |  |           |  |  |  |  |  |  |       | 

Employment Agreements

We
do not currently have any employment agreements with our executive officers. We
do not anticipate having employment contracts with executive officers and key
personnel in the future.

28

---



Outstanding Equity
Awards at Fiscal Year End

The
following table reflects that no options awards were granted to either of the
named executive officers identified above in the summary compensation table
pursuant to an Equity Incentive Plan.

Outstanding
Equity Awards at Fiscal Year-End

|              |  |                                                                           |   |                                                                             |  |                                                                                                         |  |                             |   |                          |  |                                                                     |  |                                                                           |   |                                                                                                                      |  |                                                                                                                                      |  |  |   |  |  |   |  |  |   | 
|------------- |  | ------------------------------------------------------------------------- | - | --------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------- |  | --------------------------- | - | ------------------------ |  | ------------------------------------------------------------------- |  | ------------------------------------------------------------------------- | - | -------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------ |  |  | - |  |  | - |  |  | - | 
|Option Awards |  | Stock Awards                                                              |  
|              |  |                                                                           |  
|Name          |  | Number of
 securities
 underlying
 unexercised
 options (#)
 Exerciseable |   | Number of
 securities
 underlying
 unexercised
 options (#)
 Unexerciseable |  | Equity
 incentive
 plan
 awards:
 number of
 securities
 underlying
 unexercised
 unearned
 options (#) |  | Option
 exercise
 price ($) |   | Option
 expiration
 date |  | Number
 of
 shares
 or units
 of stock
 that
 have not
 vested
 (#) |  | Market
 value of
 shares
 or units
 of stock
 that
 have not
 vested
 ($) |   | Equity
 incentive
 plan
 awards:
 number
 of
 unearned
 shares,
 units or
 other
 rights
 that have
 not
 vested (#) |  | Equity
 incentive
 plan
 awards:
 market or
 payout
 value of
 unearned
 shares,
 units or
 other
 rights that
 have not
 vested ($) | 
|              |  |                                                                           |   |                                                                             |  |                                                                                                         |  |                             |   |                          |  |                                                                     |  |                                                                           |   |                                                                                                                      |  |                                                                                                                                      | 
|David Mintz   |  |                                                                           |  |                                                                             |  |                                                                                                        |  |                             |  |                          |  |                                                                    |  |                                                                           |  |                                                                                                                      |  |                                                                                                                                     |  |  |  |  |  |  |  |  |  | 
|Steven Kass   |  |                                                                           |  |                                                                             |  |                                                                                                        |  |                             |  |                          |  |                                                                    |  |                                                                           |  |                                                                                                                      |  |                                                                                                                                     |  |  |  |  |  |  |  |  |  | 

|         |                                                                                                 
|-------- | ------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
 Owners and Management and Related Stockholder Matters.

The
following tables set forth as of April 8, 2011 certain information regarding
the ownership of our common stock, $0.01 par value, for each person known by us
to be the beneficial owner of more than 5% of the outstanding shares of common
stock, for each executive officer named in the Summary Compensation Table, for
each of our directors and for our executive officers and directors as a group:

Security ownership of certain beneficial
owners.

|                                          |  |                                            |  |                    
|----------------------------------------- |  | ------------------------------------------ |  | -------------------
|Name and 
 Address of Beneficial Owner(1) |  | Amount and 
 Nature of Beneficial Owner(2) |  | Percent of Class(3)
|                                          |  |                                            |  |                    
|David Mintz                               |  | 2,630,440                                  |  | 50.8%              

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The address of Mr. Mintz
 is c/o Tofutti Brands Inc., 50 Jackson Drive, Cranford, New Jersey 07016. Mr.
 Mintz has sole voting and/or investment power of the shares attributed to
 him.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(2) | Beneficial ownership is
 determined in accordance with the rules of the Securities and Exchange
 Commission and generally includes voting or investment power with respect to
 securities. Shares of common stock relating to options currently exercisable
 or exercisable within 60 days of April 8, 2011 are deemed outstanding for
 computing the percentage of the person holding such securities but are not
 deemed outstanding for computing the percentage of any other person. Except
 as indicated by footnote, and subject to community property laws where
 applicable, the persons named in the table above have sole voting and investment
 power with respect to all shares shown as beneficially owned by them.
|(3) | Based on
 5,176,678 shares issued and outstanding as of April 8, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

29

---



Security ownership of management.

|                                                             |  |                                           |     |                     |      |   | 
|------------------------------------------------------------ |  | ----------------------------------------- | --- | ------------------- | ---- | - | 
|Name and
 Address of Beneficial Owner(1)                     |  | Amount and
 Nature of Beneficial Owner(2) |     | Percent of Class(3) |     
|                                                             |  |                                           |     |                     |     
|David Mintz                                                  |  | 2,630,440                                 |     |                     | 50.8 | % | 
|Steven Kass                                                  |  | 220,000                                   |     |                     | 4.2  | % | 
|Reuben Rapoport                                              |  | 85,000                                    |     |                     | 1.6  | % | 
|Franklyn Snitow                                              |  | 71,200                                    |     |                     | *    |   | 
|Joseph Fischer                                               |  | 26,000                                    | (4) |                     | *    |   | 
|Neal S. Axelrod                                              |  | 16,000                                    | (5) |                     | *    |   | 
|Philip Gotthelf                                              |  | 10,000                                    | (6) |                     | *    |   | 
|Aron Forem                                                   |  | 0                                         |     |                     | *    |   | 
|All Executive Officers and
 Directors as a group (8 persons) |  | 3,058,640                                 | (7) |                     | 58.5 | % | 

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|*   | Less than
 1%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(1) | The address
 of Messrs. Mintz, Kass, Axelrod, Fischer, Gotthelf and Rapoport is c/o
 Tofutti Brands Inc., 50 Jackson Drive, Cranford, New Jersey 07016. The
 address of Mr. Snitow is 575 Lexington Avenue, New York, New York 10017. The
 address of Mr. Forem is 52-62 Cornelia Street, Newark, New Jersey 07105. Each
 of these persons has sole voting and/or investment power of the shares
 attributed to him.                                                                                                                                                                                                                                                                                                             
|(2) | Beneficial
 ownership is determined in accordance with the rules of the Securities and Exchange
 Commission and generally includes voting or investment power with respect to
 securities. Shares of common stock relating to options currently exercisable
 or exercisable within 60 days of April 8, 2011 are deemed outstanding for
 computing the percentage of the person holding such securities but are not
 deemed outstanding for computing the percentage of any other person. Except
 as indicated by footnote, and subject to community property laws where
 applicable, the persons named in the table above have sole voting and
 investment power with respect to all shares shown as beneficially owned by
 them.
|(3) | Based on
 5,176,678 shares issued and outstanding as of April 8, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(4) | Issuable
 upon the exercise of currently exercisable stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(5) | Includes
 15,000 share issuable upon the exercise of currently exercisable stock
 options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(6) | Issuable
 upon the exercise of currently exercisable stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(7) | Includes
 51,000 shares issuable upon the exercise of currently exercisable stock
 options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|         |                                                                            
|-------- | ---------------------------------------------------------------------------
|Item 13. | Certain
 Relationships and Related Transactions, and Director Independence.

None.

|         |                                        
|-------- | ---------------------------------------
|Item 14. | Principal Accounting Fees and Services.

Fees
for independent registered public accounting firms for fiscal 2010 and 2009

Set
forth below are the aggregate fees billed for each of the last two fiscal years
ended January 1, 2011 and January 2, 2010 for services rendered by EisnerAmper
LLP and Amper, Politziner & Mattia, LLP.

30

---



|                                 |  |      |        |      |   |        | 
|-------------------------------- |  | ---- | ------ | ---- | - | ------ | 
|                                 |  | 2010 |        | 2009 |  
|                                 |  |      |        |      |  
|Audit fees                       |  | $    | 94,500 |      | $ | 95,025 | 
|Audit-related fees               |  |      |       |      |   |       | 
|                                 |  |      |        |      |   |        | 
|Total Audit & Audit-related fees |  | $    | 94,500 |      | $ | 95,025 | 
|Tax fees                         |  |      |       |      |   |       | 
|All other fees                   |  |      |       |      |   |       | 
|                                 |  |      |        |      |   |        | 
|Total fees                       |  | $    | 94,500 |      | $ | 95,025 | 
|                                 |  |      |        |      |   |        | 

On
August 17, 2010 the Audit Committee of our Board of Directors engaged
EisnerAmper LLP to serve as our new independent registered public accounting
firm, after we were notified on August 16, 2010 that Amper, Politziner and
Mattia, LLP, an independent registered public accounting firm, would not be
able to stand for re-appointment because it combined its practice on that date
with that of Eisner LLP to form EisnerAmper LLP, an independent registered
public accounting firm. We previously filed Form 8-K on August 17, 2010
acknowledging this change.

Audit
fees consist of fees billed for services rendered for the audit of our
financial statements and review of our financial statements included in our
quarterly reports on Form 10-Q and services provided in connection with other
statutory or regulatory filings. During fiscal 2010 and 2009, we incurred audit
fees with Amper, Politziner, & Mattia, LLP in the amount of $26,000 and
$95,025, respectively. During fiscal 2010 and 2009, we incurred audit fees with
EisnerAmper LLP in the amount of $68,500 and $0, respectively.

Audit-related
fees consist of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of our financial
statements and not reported under Audit fees. No such fees were billed in
fiscal 2010 and 2009.

Tax
fees consist of fees billed for professional services related to the
preparation of our U.S. federal and state income tax returns and tax advice. No
such fees were billed in 2010 or 2009.


The
Audit Committee pre-approved all Audit-related fees. After considering the
provision of services encompassed within the above disclosures about fees, the
Audit Committee has determined that the provision of such services is
compatible with maintaining EisnerAmpers independence.

Pre-approval
policy of services performed by independent registered public accounting firm

The
Audit Committees policy is to pre-approve all audit and non-audit related services,
tax services and other services. Pre-approval is generally provided for up to
one year, and any pre-approval is detailed as to the particular service or
category of services and is generally subject to a specific budget. The Audit
Committee has delegated the pre-approval authority to its chairperson when
expedition of services is necessary. The independent registered public
accounting firm and management are required to periodically report to the full
Audit Committee regarding the extent of services provided by the independent
registered public accounting firm in accordance with this pre-approval and the
fees for the services performed to date.

31

---



PART IV

|         |                                                                                                                                                     
|-------- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|Item 15. | Exhibits
 and Financial Statement Schedules.                                                                                                        
|         |                                                                                                                                                     
|(a)      | Financial
 Statements                                                                                                                               
|         |                                                                                                                                                     
|         | See
 Item 8.                                                                                                                                        
|         |                                                                                                                                                     
|(b)      | Financial Statement Schedules                                                                                                                       
|         |                                                                                                                                                     
|         | None.                                                                                                                                               
|         |                                                                                                                                                     
|(c)      | Exhibits                                                                                                                                            
|         |                                                                                                                                                     
|3.1      | Certificate
 of Incorporation, as amended through February 1986.(1)                                                                                 
|         |                                                                                                                                                     
|3.1.1    | March
 1986 Amendment to Certificate of Incorporation.(2)                                                                                           
|         |                                                                                                                                                     
|3.1.2    | June
 1993 Amendment to Certificate of Incorporation.(3)                                                                                            
|         |                                                                                                                                                     
|3.2      | By-laws.(1)                                                                                                                                         
|         |                                                                                                                                                     
|4.1      | Copy
 of the Registrants Amended 1993 Stock Option Plan.(4)                                                                                        
|         |                                                                                                                                                     
|4.2      | Tofutti
 Brands Inc. 2004 Non-Employee Directors Stock Option Plan.(5)                                                                             
|         |                                                                                                                                                     
|31.1     | Certification
 by Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of
 the Securities Exchange Act, as amended.                
|         |                                                                                                                                                     
|31.2     | Certification
 by Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of
 the Securities Exchange Act, as amended.                
|         |                                                                                                                                                     
|32.1     | Certification
 by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted
 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|         |                                                                                                                                                     
|32.2     | Certification
 by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted
 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

|    |                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | 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.       
|    |                                                                                                                                                
|(2) | 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.      
|    |                                                                                                                                                
|(3) | Filed as an exhibit to the Registrants Form 10-KSB for the fiscal
 year ended January 1, 2005 and hereby incorporated by reference thereto.   
|    |                                                                                                                                                
|(4) | Filed as an exhibit to the Registrants Form S-8 (Registration No.
 333-79567) filed May 28, 1999 and hereby incorporated by reference thereto.
|    |                                                                                                                                                
|(5) | Filed as Appendix B to the Registrants Schedule 14A filed May 10,
 2004 and hereby incorporated by reference thereto.                         

32

---



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 April 11, 2011.

| |                          
| | -------------------------
| | TOFUTTI
 BRANDS INC.     
| | (Registrant)             
| |                          
| | /s/David Mintz           
| |                          
| | David Mintz              
| | Chairman of the Board and
| | Chief Executive Officer  

In
accordance with the Securities Exchange Act of 1934, this Report has been
signed below on April 11, 2011, 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 and
 Accounting Officer
|                                       
|/s/Neal Axelrod                        
|                                       
|Neal S. Axelrod                        
|Director                               
|                                       
|/s/Joseph Fischer                      
|                                       
|Joseph Fischer                         
|Director                               

33

---



|                  
|------------------
|/s/Aaron Forem    
|                  
|Aaron Forem       
|Director          
|                  
|/s/Philip Gotthelf
|                  
|Philip Gotthelf   
|Director          
|                  
|                  
|                  
|Reuben Rapoport   
|Director          
|                  
|/s/Franklyn Snitow
|                  
|Franklyn Snitow   
|Director          

34

---



EXHIBIT INDEX

|        |                                                                                                                                                      | 
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Exhibit |                                                                                                                                                      | 
|        |                                                                                                                                                      | 
|        |                                                                                                                                                     
|3.1     | Certificate of Incorporation, as amended through February 1986.(1)                                                                                  
|        |                                                                                                                                                     
|3.1.1   | March 1986 Amendment to Certificate of Incorporation.(2)                                                                                            
|        |                                                                                                                                                     
|3.1.2   | June 1993 Amendment to Certificate of Incorporation.(3)                                                                                             
|        |                                                                                                                                                     
|3.2     | By-laws.(1)                                                                                                                                         
|        |                                                                                                                                                     
|4.1     | Copy of the Registrants Amended 1993 Stock Option Plan.(4)                                                                                         
|        |                                                                                                                                                     
|4.2     | Tofutti Brands Inc. 2004 Non-Employee Directors Stock Option
 Plan.(5)                                                                             
|        |                                                                                                                                                     
|31.1    | Certification by Chief Executive Officer pursuant to Rule 13a-14(a)
 and Rule 15d-14(a) of the Securities Exchange Act, as amended.                 
|31.2    | Certification by Chief Financial Officer pursuant to Rule 13a-14(a)
 and Rule 15d-14(a) of the Securities Exchange Act, as amended.                 
|        |                                                                                                                                                     
|32.1    | Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section
 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 
|        |                                                                                                                                                     
|32.2    | Certification by Chief Financial Officer Pursuant to 18 U.S.C.
 Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
 2002.

|    |                                                                                                                                                 | 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------- | 
|   
|(1) | 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.       
|    |                                                                                                                                                
|(2) | 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.      
|    |                                                                                                                                                
|(3) | Filed as an exhibit to the Registrants Form 10-KSB for the fiscal
 year ended January 1, 2005 and hereby incorporated by reference thereto.   
|    |                                                                                                                                                
|(4) | Filed as an exhibit to the Registrants Form S-8 (Registration No.
 333-79567) filed May 28, 1999 and hereby incorporated by reference thereto.
|    |                                                                                                                                                
|(5) | Filed as Appendix B to the Registrants Schedule 14A filed May 10,
 2004 and hereby incorporated by reference thereto.                         

---