SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934.

                   For the fiscal year ended December 30, 2006

[_]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934.

                         COMMISSION FILE NUMBER: 1-9009

                               TOFUTTI BRANDS INC.
                 (Name of small business issuer in its charter)
                 ----------------------------------------------

          DELAWARE                                     13-3094658
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

 50 JACKSON DRIVE, CRANFORD, NEW JERSEY                                 07016
(Address of principal executive offices)                              (Zip Code)

                                 (908) 272-2400
                           (Issuer's telephone number)

              SECURITIES REGISTERED UNDER SECTION 12(B) OF THE ACT:

         TITLE OF EACH CLASS           NAME OF EACH EXCHANGE ON WHICH REGISTERED
COMMON STOCK, PAR VALUE $.01 PER SHARE          AMERICAN STOCK EXCHANGE

           SECURITIES REGISTERED UNDER SECTION 12(G) OF THE ACT: NONE

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (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 [_]

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

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

                               Yes [_]     No [X]

     Issuer's revenues for its most recent fiscal year: $19,465,000

     The aggregate market value of voting stock held by non-affiliates computed
by reference to the closing sale price of such stock, as reported by the
American Stock Exchange, on March 23, 2007 was $7,701,000.

     As of March 23, 2007, the issuer had 5,653,467 shares of Common Stock, par
value $.01, outstanding.

Transitional Small Business Disclosure Format

                               Yes [_]     No [X]

<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>         <C>                                                                                       <C>
PART I                                                                                                 3
   ITEM 1.   DESCRIPTION OF BUSINESS                                                                   4
   ITEM 2.   DESCRIPTION OF PROPERTY                                                                  15
   ITEM 3.   LEGAL PROCEEDINGS                                                                        15
   ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                      15
PART II                                                                                               16
   ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                                 16
   ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS    16
   ITEM 7.   FINANCIAL STATEMENTS                                                                     22
   ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE     23
   ITEM 8A.  CONTROLS AND PROCEDURES                                                                  23
   ITEM 8B.  OTHER INFORMATION                                                                        25
PART III                                                                                              26
   ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
   16(A) OF THE EXCHANGE ACT                                                                          26
   ITEM 10.  EXECUTIVE COMPENSATION                                                                   28
   ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
   MATTERS                                                                                            29
   ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                           31
   ITEM 13.  EXHIBITS                                                                                 31
   ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                   33
SIGNATURES                                                                                            35
</TABLE>

<PAGE>


                           FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-KSB contains various "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 within the
Private Securities Litigation Reform Act of 1995, as amended. Such
forward-looking statements reflect our current view with respect to future
events and financial results. Forward-looking statements usually include the
verbs "anticipates," "believes," "estimates," "expects," "intends," "plans,"
"projects," "understands" and other verbs suggesting uncertainty. 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. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date hereof. We undertake no obligation to publicly release any
revisions to these forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events. We
have attempted to identify additional significant uncertainties and other
factors affecting forward-looking statements in the Risk Factors section which
appears in Item 1. Description of Business.


                                       3
<PAGE>


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

GENERAL

     We are engaged in the development, production and marketing of TOFUTTI(R)
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.

     Due to the closure of our main frozen dessert manufacturing facility by its
owner in July 2005, we concentrated most of our efforts during 2005 and 2006 in
securing new production facilities that offered us the same quality, cost and
ability to manufacture the same variety of products that we had at our previous
principal production facility. As part of that process, we eliminated a number
of frozen dessert products that did not fit into our long term plans, both in
terms of market acceptance and profitability. The elimination of these products
adversely affected our sales in 2006, but when coupled with our new product
introductions in 2007, will enhance the visibility of our remaining products and
result in increased inventory turnover in 2007. At the end of the fourth quarter
of 2006, we introduced two new dessert items, Key Lime Pie Cuties and the no
sugar-added Mint by Mintz stick novelty.

     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.


                                       4
<PAGE>


FROZEN DESSERTS

     o    Premium TOFUTTI(R) 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: Vanilla, Chocolate
          Supreme, Wildberry Supreme, Vanilla Almond Bark(R), Vanilla Fudge,
          Chocolate Cookie Crunch and Better Pecan(R). Premium TOFUTTI soft
          serve mix is available in three flavors: Vanilla, Chocolate, and
          Peanut Butter. TOFUTTI in three gallon bulk cans is available in
          Vanilla, Chocolate Supreme and Vanilla Almond Bark.

     o    LOW FAT TOFUTTI offers the calorie-conscious consumer a creamy dessert
          that is 98% fat free and has less than 120 calories per serving. Sold
          nationally in pints, LOW FAT TOFUTTI is offered in a number of flavors
          including Chocolate Fudge, Coffee Marshmallow, and Vanilla Fudge.

     o    TOFUTTI CHEESECAKE SUPREME PINTS, available in three flavors, contain
          rich, creamy premium vanilla TOFUTTI with a taste of our dairy free
          BETTER THAN CREAM CHEESE(R) added to give it a cheesecake flavor, and
          are swirled with either a blueberry, strawberry, or chocolate sauce.

     o    TOFUTTI CUTIES(R), our best selling product, are bite size frozen
          sandwiches combining a Vanilla, Cookies and Cream, Chocolate, Peanut
          Butter, Mint Chocolate Chip, Wild Berry, or Coffee 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 products, they are completely trans fat free,
          including the wafers. For those individuals who cannot have chocolate,
          our TOTALLY VANILLA TOFUTTI CUTIE is vanilla TOFUTTI between two
          vanilla wafers, while our KEY LIME CUTIE combines tangy lime-flavored
          TOFUTTI between two vanilla wafers. Using the same vanilla wafers, we
          have also introduced the WAVE CUTIETM in three different flavors -
          blueberry, strawberry or chocolate sauce blended with creamy vanilla
          TOFUTTI.

     o    TOTALLY FUDGE POPS(R), 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
          TREATS(TM) have only 30 calories per bar. Both TREATS are ideal for
          anyone on either a low fat or low carb diet.

     o    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.


                                       5
<PAGE>


     o    TOFUTTI KIDS(TM), a frozen dessert treat aimed at the children's
          market, are bullet-shaped stick novelties made with creamy premium
          vanilla TOFUTTI with a taste of our dairy free BETTER THAN CREAM
          CHEESE added to give them a cheesecake flavor, surrounded with real
          fruit ice. A multi-pack product, they come in strawberry, orange, and
          lime flavors in each package.

     o    TOFUTTI MONKEY BARS(TM) are stick novelties that feature a rich
          chocolate center surrounded By peanut butter flavored TOFUTTI, dipped
          in a rich chocolate coating.

     o    HOORAY HOORAY BARS (TM) are no sugar added stick novelties that
          combine creamy vanilla TOFUTTI with a chocolate center covered in a
          thick dark chocolate coating.

     o    MARRY ME BARS(TM) are stick novelties that feature creamy vanilla
          TOFUTTI surrounded with 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

     o    BETTER THAN CREAM CHEESE(R) 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. The 8 oz. retail packages are
          available in Plain, French Onion, Herbs & Chives, Smoked Salmon,
          Garlic & Herb, and Garden Veggie. The plain version is also available
          in 30 lb. bulk boxes.

     o    SOUR SUPREME(R) 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 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.

     o    For consumers concerned with their fat and calorie intake, 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. The BETTER THAN CREAM CHEESE comes in plain and cheddar
          flavors, while the SOUR SUPREME comes in plain and salsa flavors.

     o    TOFUTTI SOY-CHEESE SLICES(TM) offer consumers a delicious nondairy,
          vegan alternative to regular cheese slices. Available as individually
          wrapped slices in 8 oz. packages, TOFUTTI SOY-CHEESE SLICES are sold
          in most health food stores and select supermarkets and come in two
          types: Mozzarella and American.


                                       6
<PAGE>


OTHER FOOD PRODUCTS

     o    TOFUTTI PIZZA PIZZAZ combines a delicious pan crust, zesty sauce and
          TOFUTTI totally dairy free BETTER THAN 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.

     o    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. We also sell BLUEBERRY BLINTZES, which have an
          added blueberry sauce in the cheese center. Our BLINTZES can be served
          hot, warm, or slightly chilled as a main meal or a snack.

     o    EGG WATCHERS(R) is a fat free replacement for whole eggs that has the
          taste, nutrition, and versatility of whole eggs without the fat and
          cholesterol and with 60% less calories. EGG WATCHERS can be used in
          virtually all recipes that require whole eggs. It appeals to those
          consumers who are concerned about lowering dietary cholesterol and fat
          levels, but do not want to give up the great taste and good
          nutritional values of whole eggs.

     o    TOFUTTI COOKIES are made with all natural ingredients and unbleached
          flour. The 16 oz. packages are available in Peanut Butter, Oatmeal
          Raisin, Chocolate Chip, and TOFIGGY(R) fig bars. Like all TOFUTTI
          products, they are completely dairy and cholesterol free and can be
          found in select supermarkets and health food stores.

MARKETING AND DISTRIBUTION

     TOFUTTI products are sold and distributed across the United States and
internationally, and can be found in gourmet specialty shops, kosher
supermarkets, natural/health food stores, and national and regional supermarket
chains. Generally, most 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, Denver, Detroit, 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 allows
us to provide our customers with products in a timely fashion in Canada and
several key locations in the United States.


                                       7
<PAGE>


     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 forty (40) distributors in
the national health food market.

     Our sales to health food distributors in 2006 were $11,956,000, or 61% of
total sales, as compared to $10,675,000, or 57% of sales, in 2005. In 2006,
sales to Trader Joe's were $4,402,000, or 23% of sales, as compared to
$3,686,000, or 20% of sales, in 2005. We also continue to have a strong presence
in the kosher market, with sales of $1,293,000, or 7% of sales, in 2006, an
increase from sales of $1,237,000, or 7% of sales, in 2005.

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

              FISCAL YEAR ENDED   FISCAL YEAR ENDED
              DECEMBER 30, 2006   DECEMBER 31, 2005
               ---------------    ---------------
                           % OF              % OF
                           TOTAL             TOTAL
               SALES       SALES  SALES      SALES
               ------      -----  ------     -----
                     (DOLLARS IN THOUSANDS)
               ----------------------------------

West Coast     $6,199       32%   $5,498       30%
New England     2,769       14%    2,447       13%
New York        2,689       14%    2,882       15%
Midwest         1,600        8%    1,652        9%
Southeast       1,214        6%    1,074        6%
Florida         1,169        6%    1,328        7%
Mid Atlantic    1,158        6%    1,141        6%
Southwest         646        3%      608        3%

     For the past several years including the greater part of 2006, Eskimo Pie,
a wholly-owned subsidiary of Cool Brands International, handled the supermarket
distribution of our nondairy frozen dessert products in the metropolitan New
York City area and throughout the southeastern United States, mostly in Florida.
In November 2006, Eskimo Pie sold their New York City distribution system to
Calip Ice Cream, an independent ice cream distributor, and their Florida
distribution business to Southwest Traders, a major West Coast food distributor.
Both companies, as part of the terms of sale for their respective areas of
distribution, assumed the distribution of our nondairy frozen dessert products.
In February 2006, Southwest Traders, no longer wishing to distribute ice cream
product in Florida, completely shut down their facilities there. At the same
time that Southwest terminated their operations in Florida, we transferred over
the supermarket distribution of our product in Florida and other mutually agreed
to areas of the southeastern United States to Edy's Grand Ice Cream, a
subsidiary of the Dreyers Ice Cream Company. The sudden changeover in our
distributors in the metropolitan New York City area and Florida contributed
significantly to the sales decline in these two geographical regions in 2006.


                                       8
<PAGE>


     During 2006, we shipped TOFUTTI nondairy products to distributors in
Australia, Bermuda, Canada, 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 increased to $1,777,000, or 9% of
sales, in 2006, as compared to $1,653,000, or 9% of sales, in 2005. Our
international sales were adversely impacted by unfavorable economic and
political conditions in some of the countries where we sell our products. 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, 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 have the most
complete line of nondairy frozen dessert products. Other soy-based frozen
dessert products are presently being sold in both soft serve and hard frozen
form throughout the United States by established manufacturers and distributors
of ice cream and other frozen dessert products. The ice cream and frozen dessert
industry is highly competitive and most companies with whom 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 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 are developed internally in our own laboratory.
During the last two years, David Mintz, our Chief Executive Officer, has devoted
a substantial amount of time and effort to the development of new products and
the reformulation of our current products. In fiscal 2006 and 2005, our product
development expenses were $477,000 and $416,000, 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 made 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.


                                       9
<PAGE>


     All of our products are manufactured 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 seven co-packers. Our
co-packers manufacture and package our products and, in certain instances,
warehouse such products pending shipment. With some co-packers, ownership of the
products stays with the co-packer until the product is sold. With other
co-packers, we are responsible for the purchase of ingredients and packaging
used in the manufacture of our products. 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.

     In October 2004, H. P. Hood, the parent company of Kemps Foods, Inc.,
announced it was closing the Kemps' Lancaster, Pennsylvania facility that had
produced our non-dairy frozen dessert products for the previous twenty years.
The Lancaster facility ceased operations on July 21, 2005. We relocated the
production of most of our frozen dessert products to the Ellsworth Ice Cream
Company facilities in Saratoga Springs, New York. We also transferred the
production of some of our frozen dessert products to Kemps Foods' facility in
Minnesota as well. During the fourth quarter of 2006, we ceased manufacturing at
the Kemps Foods' facility in Minnesota and moved that frozen dessert production
to Leiby's Dairy in Tamaqua, Pennsylvania.

     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
contract manufacturers decide to terminate their relationships with us.

     In order to protect our formulas, we have entered into confidentiality
arrangements with our contract manufacturers 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.

     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.

TRADEMARKS AND PATENTS

     We have registered our trademark, TOFUTTI(R), and other trademarks for our
frozen desserts and other products in the United States and approximately
thirty-six 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.


                                       10
<PAGE>


     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 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 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.


                                       11
<PAGE>


     The FDA published the final rule amending the Nutritional Labeling
regulations to require declaration of "Trans Fatty Acids" in the nutritional
label of conventional foods and dietary supplements on July 11, 2003. The final
rule became effective on January 1, 2006. Additionally, an allergen labeling law
was passed and signed on August 3, 2004. This law requires certain allergens to
be clearly labeled by January 1, 2006. All the necessary packaging changes were
made in a timely fashion.

     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 December 30, 2006 we employed ten persons on a full-time basis, and on
December 31, 2005, we employed nine 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.

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
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.

     RELIANCE ON INDEPENDENT DISTRIBUTORS. The success of our business depends,
in large part, upon the establishment and maintenance of a strong distribution
network. Although we believe that the business associated with any of our
primary distributors can be readily transferred to other distributors 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.

     DEPENDENCE ON KEY SUPPLIERS. We do not produce any of our own products.
During the years ended December 30, 2006 and December 31, 2005, we purchased
approximately 19% and 5% of our finished goods, respectively, from Ellsworth Ice
Cream Company, our frozen dessert co-packer, we purchased 15% and 14% of our
finished goods, respectively, from Franklin Foods, our Better Than Cream Cheese
and Sour Supreme co-packer, and we purchased approximately 10% and 47% of our
finished goods, respectively, from Kemps Foods, our former frozen dessert
co-packer. As a result of the changes in arrangements with our co-packers, we
increased our responsibilities for purchasing certain raw materials during 2006
on the behalf of our suppliers, and as a result of the transition, we increased
our stocking of certain finished goods, raw materials and packaging. Although we
believe that there will be no problem in continuing to obtain these finished
goods from these companies or alternative sources in the future, any disruption
in supply could have a material adverse affect on our company. In addition, we
have not had to process such volume of inventory purchases in the past , and we
do not yet have sufficient personnel and procedures in place to monitor and
process such activities. We are attempting to have our co-packers purchase all
ingredients themselves in the future to simplify this process, however, there
are no assurances this can be accomplished.


                                       12
<PAGE>


     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.

     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.

     DEPENDENCE ON KEY CUSTOMERS. During the years ended December 30, 2006 and
December 31, 2005, Trader Joe's accounted for 23% and 20% 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
58% of our net sales for the years ended December 30, 2006 and December 31,
2005. The loss of a substantial portion of our sales to Trader Joe's would have
a material adverse affect on our company.

     PRODUCT LIABILITY SUITS, IF BROUGHT, COULD HAVE A MATERIAL ADVERSE EFFECT
ON OUR BUSINESS. 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 agreements.

     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 and in the last month, or even weeks, of a quarter. 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
investors. In such event, it is likely that the price of our common stock would
be materially adversely affected.


                                       13
<PAGE>


     RELIANCE ON A LIMITED NUMBER OF KEY PERSONNEL. Our success is significantly
dependent on the services of David Mintz (age 75), Chief Executive Officer, and
Steven Kass (age 55), Chief Financial Officer. The loss of the services of
either of these persons could have a material adverse effect on our business.

     CONTROL OF THE COMPANY. Our Chairman of the Board and Chief Executive
Officer, David Mintz, holds 2,630,440 shares of common stock representing
approximately 48% of the outstanding shares, permitting him as a practical
matter to elect all members of the Board of Directors and thereby effectively
control the business, policies and management of our company.

     WE ARE SUBJECT TO RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. In 2006
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:

     o    the impact of possible recessionary environments in multiple foreign
          markets;

     o    longer receivables collection periods and greater difficulty in
          accounts receivable collection;

     o    unexpected changes in regulatory requirements;

     o    potentially adverse tax consequences; and

     o    political and economic instability.

     WE MAY BE ADVERSELY AFFECTED BY FLUCTUATIONS IN CURRENCY EXCHANGE RATES.
Since our foreign transactions are always in U.S. dollars, we do not currently
engage 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.

     COMPLIANCE WITH CORPORATE GOVERNANCE REGULATIONS COULD INCREASE THE COST OF
OUR OPERATIONS. As a result of changing laws, regulations and standards relating
to accounting, corporate governance and public disclosure, the costs of being a
public company in general have increased in recent years. The Sarbanes-Oxley Act
of 2002 requires changes in some of our corporate governance and securities
disclosure or compliance practices. We expect that the on-going implementation
of these regulations will further increase our legal compliance costs and will
make some activities more time consuming. We are presently evaluating and
monitoring regulatory developments and cannot estimate the magnitude of
additional costs we may incur as a result of such developments. When we are
required to implement Section 404 of the Sarbanes-Oxley Act of 2002, which
governs internal controls and procedures for financial reporting, we will need
to expend significant management time and financial resources to comply with the
applicable requirements. This and other proposed legislation may increase the
fees of our professional advisors and our insurance premiums.


                                       14
<PAGE>


     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.

ITEM 2. DESCRIPTION OF PROPERTY.

     Our facilities are located in a modern 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 $76,000 in 2006. 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. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     No matters were submitted to a vote of security holders during the fourth
quarter of fiscal year ended December 30, 2006.


                                       15
<PAGE>


                                    PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     Our common stock has traded on the American Stock Exchange under the symbol
TOF since October 29, 1985. The following table sets forth the high and low
sales prices as reported on the American Stock Exchange for the two most recent
fiscal years:

QUARTER ENDED                                HIGH                   LOW
-------------                                ----                   ---

April 2, 2005                               $3.45                 $3.05
July 2, 2005                                 3.33                  3.10
October 1, 2005                              3.35                  3.00
December 31, 2005                            3.16                  2.90
April 1, 2006                                3.10                  2.75
July 1, 2006                                 3.20                  2.75
September 30, 2006                           2.97                  2.70
December 30, 2006                            3.45                  2.80

     As of March 23, 2007, there were approximately 618 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 1,547 shareholders. We have not
paid and have no present intention of paying cash dividends on our common stock
in the foreseeable future.

ITEM 6. MANAGEMENT'S DISCUSSION OR PLAN OF OPERATION.

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.


                                       16
<PAGE>


     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 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 expense 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 allowance for doubtful accounts. We do not accrue interest on
accounts receivable past due.

     ALLOWANCE FOR INVENTORY OBSOLESCENCE. We are required to state our
inventories at the lower of cost or market price. We maintain an allowance for
inventory obsolescence for losses resulting from inventory items becoming
unsaleable due to expiration of product shelf life, loss of specific customers
or changes in customers' requirements. Based on historical and projected sales
information, we believe our allowance is adequate. However, changes in general
economic, business and market conditions could cause our customers' purchasing
requirements to change. These changes could affect our ability to sell our
inventory; therefore, the allowance for inventory obsolescence is reviewed
regularly and changes to the allowance are updated as new information is
received.

     RECOVERABILITY OF DEFERRED TAX ASSETS. 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.

RESULTS OF OPERATIONS

FIFTY-TWO WEEKS ENDED DECEMBER 30, 2006 COMPARED WITH FIFTY-TWO WEEKS ENDED
DECEMBER 31, 2005

     Net sales for the fifty-two weeks ended December 30, 2006 (fiscal 2006)
were the highest ever in the history of Tofutti. For fiscal 2006, net sales were
$19,465,000, an increase of $852,000, or 4%, from net sales for the fifty-two
weeks ended December 31, 2005 (fiscal 2005), which were $18,613,000.


                                       17
<PAGE>


     Sales increased in all product categories and most customer categories.
Sales to several of our major customers were significantly higher than in the
corresponding period in fiscal 2005. 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. These sales increases were due to higher volumes of
products sold and modest price increases. The sales volume increase was driven
by promotional specials and consumer advertising in certain key markets. This
increase was partially offset by a loss of sales in a few instances when we were
temporarily out of stock of certain items when transferring our frozen dessert
production to new facilities and by the replacement of distributors in
California and the Southwest.

     Our gross profit in fiscal 2006 increased by $600,000, or 12%, due
primarily to the increase in sales. Our gross profit percentage increased to 29%
in 2006 from 27% in 2005. In order to improve our gross profit percentage, we
initiated a series of price increases that were completed at the end of 2006,
and we realized increased manufacturing efficiencies in our new co-packer
facilities. Our gross profit percentage continues to be adversely affected by
increasing freight expenses. During fiscal 2006, our freight out expense was
$1,689,000 as compared to $1,263,000 in fiscal 2005, an increase of $426,000 or
34%. We do not anticipate a significant reduction in the cost of shipping
expense as world oil prices show no signs of abating in the foreseeable future.
Additionally, 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 cost of petroleum,
from which a number of our packaging items are produced. Although we anticipate
that our gross profit will increase due to increased unit sales and higher sales
prices in 2007, our gross profit percentage will not improve materially due to
promotional allowances associated with the planned introduction of new products
and continued high freight expenses. We also expect ingredient costs for certain
key items and packaging costs to continue at their current high levels.

     Selling and warehousing expenses increased by $170,000 to $1,442,000 for
fiscal 2006 from $1,273,000 in fiscal 2005. This increase was caused primarily
by a $44,000 increase in commissions and a $258,000 increase in outside
warehouse rental, which were partially offset by a decrease in travel and
entertainment expenses of $53,000 and bad debt expense of $117,000. The increase
in outside warehouse rental expense was a result of the build up of finished
goods inventory during the transition to our new principal frozen dessert
manufacturing facilities to ensure adequate supplies of products during the
transition period. We anticipate that with the exception of commission expenses
and outside warehouse rental expense, which are variable to sales, all other
selling expenses in 2007 should remain relatively consistent with our expenses
in 2006.

     Marketing expenses decreased by $83,000 in fiscal 2006 to $544,000 as
compared to $627,000 in fiscal 2005. This decrease is primarily attributable to
a $82,000 decrease in expenses for artwork and plates, a $51,000 decrease in
magazine and newspaper advertising expense and a $38,000 decrease in point of
sale material expense, all of which were offset by an $85,000 increase in
television and radio advertising. We expect marketing expenses to remain
consistent with fiscal 2006 expenses or increase modestly in fiscal 2007.


                                       18
<PAGE>


     Product development expenses increased to $477,000 in fiscal 2006 as
compared to $416,000 in fiscal 2005. The increase was due mainly to an increase
in payroll costs of approximately $54,000, due to the hiring of additional
personnel. Our management expects that product development costs will remain
consistent with fiscal 2006 cost in fiscal 2007.

     General and administrative expenses were $1,988,000 for fiscal 2006 as
compared with $2,057,000 for fiscal 2005, a decrease of $69,000 or 3%. The
decrease was due primarily to a decrease of $88,000 in legal fees and travel and
entertainment expense of $57,000, which were partially offset by an increase in
payroll expense of $36,000. Included in our general and administrative expenses
for 2006 was $19,000 in stock-based compensation expense as a result of our
adoption of SFAS No. 123R. We anticipate that increases in professional fees and
outside services, which include legal and accounting fees, will increase in
fiscal 2007 primarily because they are associated with the costs required for us
to become compliant with the internal controls provisions of The Sarbanes-Oxley
Act.

     Overall, total operating expenses in fiscal 2006 increased to $4,451,000,
an increase of $78,000, or 2%, from total operating expenses in fiscal 2005.

     Operating income increased by $522,000 to $1,129,000 in fiscal 2006 as
compared with $607,000 in fiscal 2005 as a result of the increase in our sales,
which resulted in a higher gross profit.

     There was no interest income for the fifty-two week period ended December
30, 2006 as compared with interest income of $9,000 for the fifty-three week
period ended December 31, 2005. This was primarily attributable to the lack of
excess cash available for investment.

     Income taxes for the current fiscal period were $512,000, or 45% of taxable
income, compared to $264,000, or 43% of taxable income, in fiscal 2005. We
believe that our effective tax rate will continue to approximate our historical
tax rate of 40-43% during fiscal 2007.

COMPLIANCE WITH SECTION 404 OF SARBANES-OXLEY ACT

     Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (the Act),
beginning with our Annual Report on Form 10-KSB for our 2007 fiscal year, we
will be required to furnish a report by our management on our internal control
over financial reporting. This report will contain, among other matters, an
assessment of the effectiveness of our internal control over financial reporting
as of the end of our fiscal year, including a statement as to whether or not our
internal control over financial reporting is effective. This assessment must
include disclosure of any material weaknesses in our internal control over
financial reporting identified by management. If we identify one or more
material weaknesses in our internal control over financial reporting, we will be
unable to assert our internal control over financial reporting is effective.

     Management acknowledges its responsibility for internal controls over
financial reporting and seeks to continually improve those controls. In order to
achieve compliance with Section 404 of the Act within the prescribed period, we
will proceed with our performance of system and process documentation and the
evaluation needed to comply with Section 404, which is both costly and
challenging.


                                       19
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

     At December 30, 2006, our working capital was $3,965,000, an increase of
$292,000 from December 31, 2005. Our current and quick acid test ratios, both
measures of liquidity, were 3.0 and 1.4, respectively, at December 30, 2006
compared to 2.3 and 1.3 at December 31, 2005. At December 30, 2006, accounts
receivable decreased by $559,000 to $2,084,000 from December 31, 2005,
reflecting an increase in cash collection in December 2006. Accounts receivable
in 2005 also included amounts billed to our co-packers (at cost) for raw
material products purchase on their behalf of approximately $340,000. The
average number of days needed to collect our receivables in fiscal 2006 was 44
days as compared to 42 days in fiscal 2005. At December 30, 2006, inventories
increased to $2,992,000 compared to $2,045,000 at December 31, 2005. The
increase in our inventory, reflects the build up of products to have available
during the transition to our new production facilities, which was completed in
February 2007. Accounts payable decreased by $731,000 to $711,000 at December
30, 2006 from $1,442,000 at December 31, 2005, reflecting a reduction in
purchases of ingredients and packaging. Accrued expense decreased by $202,000 to
$277,000 at December 30, 2006 from $479,000 at December 31, 2005, reflecting the
payment of accrued professional fees associated with the litigation from 2004 in
2006.


         CASH FLOWS                                    YEARS ENDED
                                                   --------------------
                                                 DECEMBER 30, DECEMBER 31,
                                                     2006        2005
                                                   -------      -------
                                                   (DOLLARS IN THOUSANDS)
                                                   --------------------

Net cash (used in) operating activities            $  (619)     $  (642)
Net cash (used in) financing activities               (348)        (301)
Net (decrease) in cash and cash equivalents           (967)        (943)
Cash and cash equivalents at beginning of period     1,256        2,199
Cash and cash equivalents at end of period             289        1,256

     Our Board of Directors first instituted a share repurchase program in
September 2000 which has to date authorized the repurchase of 1,500,000 shares
of our common stock at prevailing market prices. From September 2000 through
January 1, 2005, we purchased a total of 1,118,700 shares at a total cost of
$3,419,000 or $3.05 per share. From January 2, 2005 through December 31, 2005,
we purchased an additional 94,600 shares at a cost of $301,000, bringing the
cumulative total through December 31, 2005 to 1,213,300 shares for a total cost
of $3,785,000 or an average of $3.12 per share. During the period January 1,
2006 through January 20, 2006, we purchased an additional 128,800 shares at a
cost of $386,000 an average of $3.00 per share bringing cumulative totals to
1,342,100 shares for a total cost of $4,171,000 or an average of $3.11 per
share. We have made no additional stock purchases from January 20, 2006 through
the filing date of this report.


                                       20
<PAGE>


     On February 26, 2007, our Board of Directors authorized us to enter into a
transaction with Steven Kass, our Chief Financial Officer, whereby Mr. Kass
surrendered 175,000 of his stock options that were expiring on February 27,
2007,in consideration for a purchase price of $2.3325 per share, reflecting a
25% discount from the $3.11 closing price of the Common Stock on February 26,
2007. After subtracting the underlying $.6875 per share exercise price of the
options, this resulted in a net buyback price to our company of $1.645 per
share, or $287,875. Concurrently, Mr. Kass exercised 150,000 options that were
expiring on February 27, 2007 at an exercise price of $.6875 per share
($103,125) and 70,000 options that were expiring on July 30, 2007 at an exercise
price of $.9375 per share ($65,625), for a combined total purchase cost of
$168,750, resulting in a net payment to Mr. Kass of $119,125.

     Because we are now purchasing more of the ingredients and packaging used in
the production of our frozen dessert products and maintaining larger finished
goods inventories to improve customer service, we have established a $1,000,000
line of credit with Wachovia Bank. Any money borrowed under the line of credit
will be at the prime rate of borrowing and any such loans will be secured by the
assets of our company. Although management believes that we will be able to fund
our operations during 2007 from current resources, there is no guarantee that we
will be able to do so, and therefore, we established this facility to support
short-term cash flow constraints, if necessary. This agreement will expire on
April 30, 2007, but can be renewed for an additional one-year term with the
consent of both parties. There can be no assurances that this facility will be
extended.

     We have no contractual obligations at December 30, 2006.

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.

OFF-BALANCE SHEET ARRANGEMENTS

     None.


                                       21
<PAGE>


ITEM 7. FINANCIAL STATEMENTS.

                          INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm                      F-1

Financial Statements:

Balance Sheets                                                               F-2

Statements of Income                                                         F-3

Statements of Changes in Stockholders' Equity                                F-4

Statements of Cash Flows                                                     F-5

Notes to Financial Statements                                                F-6


                                       22
<PAGE>


                              REPORT OF INDEPENDENT
                        REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Tofutti Brands Inc.

We have audited the accompanying balance sheets of Tofutti Brands Inc. as of
December 30, 2006 and December 31, 2005, and the related statements of income,
changes in stockholders' equity and cash flows for the fifty-two weeks ended
December 30, 2006 and December 31, 2005. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Accounting
Oversight Board (United States). Those standards require that we plan and
perform an 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 audits 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 includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tofutti Brands Inc. as of
December 30, 2006 and December 31, 2005, and the results of its operations and
its cash flows for the fifty-two weeks ended December 30, 2006 and December 31,
2005, in conformity with United States generally accepted accounting principles.

The Company adopted the provisions of Statement of Financial Accounting No.
123(R) "Stock Based Compensation" as of January 1, 2006.

                                           /s/ AMPER, POLITZINER & MATTIA, P.C.

Edison, New Jersey
March 29, 2007


                                     F - 1
<PAGE>


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

<TABLE>
<CAPTION>
                                                               DECEMBER 30,  DECEMBER 31,
                                                                   2006         2005
                                                                  ------       ------
<S>                                                               <C>          <C>
ASSETS
Current assets:
     Cash and equivalents                                         $  289       $1,256
     Accounts receivable, net of allowance for doubtful
        accounts of $243 and $291, respectively                    2,084        2,643
     Inventories                                                   2,992        2,045
     Prepaid expenses                                                  2           51
     Deferred income taxes                                           558          577
                                                                  ------       ------
                Total current assets                               5,925        6,572
                                                                  ------       ------

Fixed assets (net of accumulated amortization of
        $19 and $14)                                                  29           34
Other assets                                                          16           16
                                                                  ------       ------
                                                                  $5,970       $6,622
                                                                  ======       ======

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                             $  711       $1,442
     Accrued expenses                                                277          479
     Accrued officers' compensation                                  500          500
     Income taxes payable                                            472          478
                                                                  ------       ------
                Total current liabilities                          1,960        2,899
                                                                  ------       ------

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 5,433,467 shares at December 30,
         2006 and 5,542,267 shares at December 31, 2005               54           55
     Additional paid-in capital                                       56           --
     Retained earnings                                             3,900        3,668
                                                                  ------       ------
                Total stockholders' equity                         4,010        3,723
                                                                  ------       ------
                Total liabilities and stockholders' equity        $5,970       $6,622
                                                                  ======       ======
</TABLE>

                 See accompanying notes to financial statements.


                                     F - 2
<PAGE>


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

<TABLE>
<CAPTION>
                                    FIFTY-TWO WEEKS    FIFTY-TWO WEEKS
                                         ENDED             ENDED
                                    DECEMBER 30, 2006  DECEMBER 31, 2005
                                    -----------------  -----------------
<S>                                      <C>               <C>
Net sales                                $19,465           $18,613
Cost of sales                             13,885            13,633
                                         -------           -------
          Gross profit                     5,580             4,980
                                         -------           -------

Operating expenses:
  Selling and warehousing                  1,442             1,273
  Marketing                                  544               627
  Product development costs                  477               416
  General and administrative               1,988             2,057
                                         -------           -------
                                           4,451             4,373
                                         -------           -------

Operating income                           1,129               607

Interest income                               --                 9
                                         -------           -------
Income before income taxes                 1,129               616

Income taxes                                 512               264
                                         -------           -------

Net income                               $   617           $   352
                                         =======           =======

Weighted average common shares
    outstanding:
   Basic                                   5,432             5,604
                                         =======           =======
   Diluted                                 5,992             6,185
                                         =======           =======

Net income per share:
   Basic                                 $  0.11           $  0.06
                                         =======           =======
   Diluted                               $  0.10           $  0.06
                                         =======           =======
</TABLE>

                 See accompanying notes to financial statements.


                                     F - 3
<PAGE>


                               TOFUTTI BRANDS INC.
                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                      (In thousands, except for share data)

<TABLE>
<CAPTION>
                                    Common Stock               Treasury Stock         Additional                     Total
                               ------------------------    ------------------------     Paid-In      Retained     Stockholders'
                                 Shares        Amount        Shares        Amount       Capital       Earnings       Equity
                               ----------    ----------    ----------    ----------    ----------    ----------    ----------
<S>                             <C>          <C>              <C>        <C>           <C>           <C>           <C>
Balances, January 1, 2005       5,636,867    $       56            --    $       --    $      162    $    3,454    $    3,672
Purchase of treasury stock             --            --        94,600          (301)           --            --          (301)
Retirement of treasury stock      (94,600)           (1)      (94,600)          301          (162)         (138)           --
Net income for period ended
December 31, 2005                      --            --            --            --            --           352           352
                               ----------    ----------    ----------    ----------    ----------    ----------    ----------
Balances, December 31, 2005     5,542,267            55            --            --            --         3,668         3,723
Purchase of treasury stock             --                     128,800          (386)           --            --          (386)
Retirement of treasury stock     (128,800)           (1)     (128,800)          386            --          (385)           --
Stock options exercised            20,000            --            --            --            38            --            38
Stock compensation expense             --            --            --            --            18            --            18
Net income for period ended
December 30, 2006                      --            --            --            --            --           617           617
                               ----------    ----------    ----------    ----------    ----------    ----------    ----------
Balances, December 30, 2006     5,433,467    $       54            --    $       --    $       56    $    3,900    $    4,010
                               ==========    ==========    ==========    ==========    ==========    ==========    ==========
</TABLE>

                 See accompanying notes to financial statements.


                                     F - 4
<PAGE>


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

<TABLE>
<CAPTION>
                                                          Fifty-two         Fifty-two
                                                         weeks ended       weeks ended
                                                         December 30,      December 31,
                                                             2006              2005
                                                           -------            -------
<S>                                                        <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                              $   617            $   352
   Adjustments to reconcile net income to net
    cash flows (used in)operating activities:
   Amortization                                                  5                  4
   (Recovery of) provision for bad debts                       (57)                72
   Stock compensation expense                                   18                 --
   Deferred taxes                                               19                 16
   Change in assets and liabilities:
       Accounts receivable                                     616             (1,101)
       Inventories                                            (947)            (1,253)
       Prepaid expenses and income taxes                        49                (37)
       Accounts payable and accrued expenses                  (933)             1,230
       Income taxes payable                                     (6)                75
                                                           -------            -------
   Net cash flows (used in) operating activities              (619)              (642)
                                                           -------            -------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from exercise of  stock options                     38                 --
   Purchase of treasury stock                                 (386)              (301)
                                                           -------            -------
   Net cash flows used in financing activities                (348)              (301)
                                                           -------            -------

NET CHANGE IN CASH AND EQUIVALENTS                            (967)              (943)

CASH AND EQUIVALENTS, AT BEGINNING OF PERIOD                 1,256              2,199
                                                           -------            -------
CASH AND EQUIVALENTS, AT END OF PERIOD                     $   289            $ 1,256
                                                           =======            =======

SUPPLEMENTAL CASH FLOW INFORMATION:
   Income taxes paid                                       $   413            $   150
                                                           =======            =======
</TABLE>

                 See accompanying notes to financial statements.


                                     F - 5
<PAGE>


                               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 periods ended on December 30 2006 and December 31,
2005, 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 Staff Accounting Bulletin No. 104 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 $100,000. 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 December 31, 2006 is limited.

During each of the years ended December 30, 2006 and December 31, 2005, the
Company derived approximately 91% of its net sales domestically. The remaining
sales in both periods were exports to foreign countries. The Company had sales
to one customer representing 23% of net sales during fiscal 2006 and 20% of net
sales during fiscal 2005. 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 58% and 38% of the Company's net sales for
the years ended December 30, 2006 and December 31, 2005. The accounts receivable
balance of one customer represented approximately 20% of total accounts
receivable at December 30, 2006.


                                     F - 6
<PAGE>


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

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 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 allowance for doubtful accounts. 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 - Inventories are stated at the lower of cost or market. Cost is
determined by the first-in, first-out method. Reserves for slow moving and
obsolete inventories are provided based on historical experience, shelf life and
product demand. The Company periodically reviews inventories and establishes
reserves for obsolescence based on forecasted sales and market trend. Management
feels that risk beyond the established reserve is limited.

The Company purchased approximately 19% and 5% of its finished products from one
supplier, 10% and 47 % from a former supplier, and 15% and 14% of its finished
goods from another supplier during the periods ended December 30, 2006 and
December 31, 2005, 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.

NET INCOME PER SHARE AND STOCK BASED COMPENSATION - 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 periods ended December
30, 2006 and December 31, 2005, stock equivalents of 30,000 shares were excluded
from the diluted earnings per share calculations since the effect was
anti-dilutive.


                                     F - 7
<PAGE>


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

<TABLE>
<CAPTION>
                                                                               Fifty-two        Fifty-two
                                                                                 Weeks            Weeks
                                                                                 Ended            Ended
                                                                               December 30,     December 31,
                                                                                  2006             2005
                                                                                 ------           ------
<S>                                                                              <C>              <C>
Net income, numerator, basic and diluted computation                             $  617           $  352
                                                                                 ======           ======

Weighted average shares - denominator basic computation                           5,432            5,604
Effect of dilutive stock options                                                    560              581
                                                                                 ------           ------
Weighted average shares, as adjusted - denominator diluted computation            5,992            6,185
                                                                                 ------           ------
Net income per share:
Basic                                                                            $ 0.11           $ 0.06
                                                                                 ======           ======
Diluted                                                                          $ 0.10           $ 0.06
                                                                                 ======           ======
</TABLE>

Through January 1, 2006, the Company accounted for stock-based compensation
using the intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
Interpretations. Accordingly, compensation cost for stock options is measured as
the excess, if any, of the quoted market price at the date of the grant over the
amount an employee must pay to acquire the stock. Because the Company grants
options at a price equal to the market price of the stock at the date of grant,
no compensation expense was recorded. As required by Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS
No. 123), the Company computed pro forma net income and earnings per share as if
the fair value method had been applied. The pro forma net income and net income
per share for the period December 31, 2005 was substantially the same as the
reported net income for that period.

On December 16, 2004, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123(R), "Share-Based Payment," which is a revision of SFAS No. 123 and
supersedes APB Opinion 25. The Company adopted SFAS No. 123(R) on January 1,
2006, which requires all share-based payments to employees, including grants of
employee stock options, to be valued at fair value on the date of grant, and to
be expensed over the applicable vesting period. In addition, companies must also
recognize compensation expense related to any awards that are not fully vested
as of the effective date. Compensation expense for the unvested awards will be
measured based on the fair value of the awards previously calculated in
developing the pro forma disclosures in accordance with the provisions of SFAS
No. 123.


                                     F - 8
<PAGE>


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

FAIR VALUE OF FINANCIAL INSTRUMENTS - SFAS No. 107, "Disclosures about Fair
Value of Financial Instruments," defines the fair value of a financial
instrument as the amount at which the instrument could be exchanged in a current
transaction between willing parties.

Cash and equivalents, accounts receivable, and accounts payable payable as of
December 30, 2006 and December 31, 2005 are stated at their carrying values. The
carrying amounts approximate fair value because of the short-term maturity of
those instruments.

FREIGHT COSTS - Freight costs to ship inventory to customers and to outside
warehouses amounted to $1,689 and $1,263 during the periods ended December 30,
2006 and December 31, 2005, 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 $137 and $109 during the periods ended December
30, 2006 and December 31, 2005, respectively.

PRODUCT DEVELOPMENT COSTS - Costs of new product development and product
redesign are charged to expense as incurred.

RECENT ACCOUNTING PRONOUNCEMENTS - In September 2006, the Financial Accounting
Standards Board, or FASB, issued Statement of Financial Accounting Standards, or
SFAS, No. 155, "Accounting for Certain Hybrid Financial Instruments-an Amendment
of FASB Statements No. 133 and 140," or SFAS 155, to simplify and make more
consistent the accounting for certain financial instruments. SFAS 155 amends
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," to
permit fair value remeasurement for any hybrid financial instrument with an
embedded derivative that otherwise would require bifurcation, provided that the
whole instrument is accounted for on a fair value basis. SFAS 155 amends SFAS
No. 140, "Accounting for the Impairment or Disposal of Long-Lived Assets," to
allow for a qualifying special-purpose entity to hold a derivative financial
instrument that relates to a beneficial interest other than another derivative
financial instrument. SFAS 155 applies to all financial instruments acquired or
issued after the beginning of an entity's first fiscal year that begins after
September 15, 2006, with earlier application permitted. Accordingly, we will
adopt SFAS 155 on January 1, 2007. The adoption of SFAS 155 is not expected to
have any effect on our financial position and results of operations.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements," or
SFAS 157. Among other requirements, SFAS 157 defines fair value and establishes
a framework for measuring fair value and also expands disclosure about the use
of fair value to measure assets and liabilities. SFAS 157 is effective beginning
the first fiscal year that begins after November 15, 2006. Accordingly, we will
adopt SFAS 157 on January 1, 2007. The adoption of SFAS 157 is not expected to
have any effect on our financial position and results of operations.


                                     F - 9
<PAGE>


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

In September 2006, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 108, "Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial
Statements," or SAB 108, which addresses how uncorrected errors in previous
years should be considered when quantifying errors in current-year financial
statements. SAB 108 requires registrants to consider the effect of all carry
over and reversing effects of prior-year misstatements when quantifying errors
in current-year financial statements. SAB 108 does not change the Staff's
previous guidance on evaluating the materiality of errors. It allows registrants
to record the effects of adopting SAB 108 guidance as a cumulative-effect
adjustment to retained earnings. This adjustment must be reported in the annual
financial statements for the first fiscal year ending after November 15, 2006.
The initial adoption of SAB 108 did not have a material impact on our financial
condition and results of operation.

In July 2006, the FASB issued FASB Interpretation No. 48, or FIN 48, "Accounting
for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109,"
which prescribes comprehensive guidelines for recognizing, measuring, presenting
and disclosing in the financial statements tax positions taken or expected to be
taken on tax returns. FIN 48, effective for fiscal years beginning after
December 15, 2006, seeks to reduce the diversity in practice associated with
certain aspects of the recognition and measurement related to accounting for
income taxes. We are currently assessing the impact of FIN 48 on our financial
position and results of operations and expect its impact to be less than $150.

In February 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Statement No. 155, "Accounting for Certain Hybrid Financial Instruments - an
amendment of FASB Statements No. 133 and 140" ("FAS 155"). FAS 155 amends FASB
Statements No. 133, "Accounting for Derivative Instruments and Hedging
Activities," and No. 140, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities." FAS 155 was issued to improve
financial reporting by eliminating the exemption from applying Statement 133 to
interests in securitized financial assets so that similar instruments are
accounted for similarly regardless of the form of the instruments. Providing a
fair value measurement election also results in more financial instruments being
measured at what the FASB regards as the most relevant attribute for financial
instruments, fair value. FAS 155 is effective for all financial instruments
acquired or issued after the beginning of an entity's first fiscal year that
begins after September 15, 2006. At adoption, any difference between the total
carrying amount of the individual components of the existing bifurcated hybrid
financial instrument and the fair value of the combined hybrid financial
instrument should be recognized as a cumulative-effect adjustment to beginning
retained earnings. We do not expect the adoption of FAS 155 to have a material
impact on our financial condition or results of operations.

NOTE 2: INVENTORIES

Inventories consist of the following:

                                    December 30,    December 31,
                                       2006             2005
                                      ------           ------
Finished products                     $2,100           $1,258
Raw materials and packaging              892              787
                                      ------           ------
                                      $2,992           $2,045
                                      ======           ======


                                     F - 10
<PAGE>


                               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. No grants have been made under
the 1993 Plan since 2003. A total of 2,900,000 shares were reserved for issuance
under the 1993 Plan. At December 30, 2006, 851,000 shares were subject to
outstanding options; and no additional grants may be made under the 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 "nonstatutory 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 January 1, 2005 to
December 30, 2006:

<TABLE>
<CAPTION>
                                              INCENTIVE OPTIONS               NON-QUALIFIED OPTIONS
                                           ----------------------           -----------------------
                                                           Weighted                          Weighted
                                                            Average                           Average       Aggregate
                                                           Exercise                          Exercise       Intrinsic
                                           Shares          Price ($)        Shares           Price ($)      Value ($)
                                           -------           ----           -------            ----           -----
<S>                                        <C>               <C>             <C>               <C>            <C>
Outstanding at  January 1, 2005            805,000           0.90            40,000            2.53
Granted in 2005                                 --             --            10,000            3.14
                                           -------           ----           -------            ----
Outstanding at December 31, 2005           805,000           0.90            50,000            2.65
                                           =======           ====           =======            ====
Granted in 2006                                 --             --            16,000            2.90
Exercised in 2006                               --             --           (20,000)           1.90
                                           -------           ----           -------            ----
Outstanding at December 30, 2006           805,000           0.90            46,000            3.06           1,730
                                           =======           ====           =======            ====           =====
Exercisable at December 31, 2005           805,000             --            10,000              --
                                           =======           ====           =======            ====
Exercisable at December 30, 2006           805,000             --            10,000              --           1,729
                                           =======           ====           =======            ====           =====
</TABLE>

In 2005, 10,000 non-qualified stock options were granted to a non-employee
director with a fair value at grant date of $3.60, using the following
assumptions: Dividend rate = 0%, expected life = 5, risk free interest = 3.89%
and volatility = 28%. In 2006, 16,000 non-qualified stock options were granted
to two non-employee directors with a fair value at grant date of $1.00, using
the following assumptions: Dividend rate = 0%, expected life = 5, risk free
interest = 3.89% and volatility = 63%. The intrinsic value of the 20,000 shares
exercised during 2006 was approximately $22,000 at the date of the exercise.


                                     F - 11
<PAGE>


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

The following table summarizes information about stock options outstanding at
December 30, 2006:

<TABLE>
<CAPTION>
                                    Weighted Average     Weighted
    Range of            Number       Remaining Life      Average           Number
Exercise Prices ($)   Outstanding      (in Years)    Exercise Price($)  Exercisable
-------------------     -------           ----           ------           -------
<S>                     <C>               <C>            <C>              <C>
    0.6875              325,000           0.17           0.6875           325,000
    0.9375               70,000           0.58           0.9375            70,000
    1.0625              410,000           2.25           1.0625           410,000
     3.14                10,000           3.08             3.14            10,000
     3.15                20,000           2.42             3.15            13,333
     2.90                16,000           4.42             2.90             5,333
                        -------                                           -------
  .6875-3.15            851,000           1.37             0.98           833,666
                        =======                                           =======
</TABLE>

The aggregate unrecognized stock-based compensation charge at December 30, 2006
is approximately $11,000 expected to be expensed over two years.

NOTE 4: LEASES

The Company's facilities are located in a modern 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 lease agreement expired on July 1,
1999, but it continues to occupy the premises under the terms of that agreement,
subject to a six month notification period for the landlord or for the Company
with respect to any changes. The Company currently has no plans to enter into a
long-term lease agreement for the facility. Rent expense was $76 in 2006 and $74
in 2005. 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 years ended December 30,
2006 and December 31, 2005 are as follows:


                                     F - 12
<PAGE>


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

                                 Dec. 30,       Dec. 31,
                                   2006           2005
                                   ----           ----

Current:
           Federal                 $401           $193
           State                     92             55
                                   ----           ----
                                    493            248
                                   ----           ----
Deferred:
           Federal                   16             14
           State                      3              2
                                   ----           ----
                                     19             16
                                   ----           ----

Total income tax expense           $512           $264
                                   ====           ====

A reconciliation between the expected federal tax expense at the statutory tax
rate of 34% and the Company's actual tax expense for the periods ended December
30, 2006 and December 31, 2005 follows:

                                                          Dec. 30,      Dec. 31,
                                                           2006           2005
                                                           ----           ----

Income tax expense computed at federal statutory rate      $384           $209
Permanent and other items                                    10             19
Under-accrual of prior year                                  57             --
State income taxes, net of federal income tax benefit        61             36
                                                           ----           ----
                                                           $512           $264
                                                           ====           ====

Deferred tax asset at December 30, 2006 and December 31, 2005 consist of the
following components:

                                         Dec. 30,      Dec. 31,
                                          2006           2005
                                          ----           ----

Allowance for doubtful accounts           $ 97           $116
Inventory                                  261            261
Accruals and reserves                      200            200
                                          ----           ----
Deferred tax asset                        $558           $577
                                          ====           ====


                                     F - 13
<PAGE>


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

NOTE 7: RELATED PARTY TRANSACTIONS

On February 26, 2007, the Board of Directors authorized the Company enter into a
transaction with Steven Kass, our Chief Financial Officer, whereby Mr. Kass
surrendered 175,000 of his stock options that were expiring on February 27,
2007, at a purchase price of a 25% discount from the $3.11 closing price of the
Common Stock on February 26, 2007, or $2.3325 per share. After subtracting the
underlying cost of the options, $.6875, this resulted in a net buyback price to
the Company of $1.645 per share, or $287,875.

Concurrently, Mr. Kass exercised 150,000 options that were expiring on February
27, 2007 at an exercise price of $.6875 per share ($103,125) and 70,000 options
that were expiring on July 30, 2007 at an exercise price of $.9375 per share
($65,625), for a combined total purchase cost of $168,750, resulting in a net
payment to Mr. Kass of $119,125.


                                     F - 14
<PAGE>


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

     None.

ITEM 8A. CONTROLS AND PROCEDURES.

     (a) As of the end of the period covered by this Annual Report on Form
10-KSB, we evaluated the effectiveness of the design and operation of our
disclosure controls and procedures, or Disclosure Controls, and our internal
controls and procedures for financial reporting, or Internal Controls. This
evaluation, or the controls Evaluation, was done under the supervision and with
the participation of our chief executive officer and principal financial
officer. Rules adopted by the Securities and Exchange Commission, or the SEC,
require that in this section of our Annual Report we present the conclusions of
our chief executive officer and the principal financial officer about the
effectiveness of our Disclosure Controls and Internal Controls based on and as
of the date of their evaluation.

     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 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.

     Scope of the Controls Evaluation. The evaluation performed by our chief
executive officer and principal financial officer of our Disclosure Controls and
our Internal Controls included a review of the controls' objectives and design,
the controls' implementation by our company and the effect of the controls on
the information generated for use in this Annual Report. In the course of the
Controls Evaluation, we sought to identify data errors, control problems or acts
of fraud and to confirm that appropriate corrective action, including process
improvements, were being undertaken. This type of evaluation is done on a
quarterly basis so that the conclusions concerning controls effectiveness can be
reported in our Quarterly Reports on Form 10-QSB and Annual Report on Form
10-KSB. The overall goals of these various evaluation activities are to monitor
our Disclosure Controls and our Internal Controls and to make modifications as
necessary; our intent in this regard is that the Disclosure Controls and the
Internal Controls will be maintained as dynamic systems that change (including
with improvements and corrections) as conditions warrant.


                                       23
<PAGE>


     Among other matters, we sought in our evaluation to determine whether there
were any "significant deficiencies" or "material weaknesses" in our Internal
Controls, or whether we had identified any acts of fraud involving personnel who
have a significant role in our Internal Controls. In the professional auditing
literature, "significant deficiencies" are referred to as "reportable
conditions"; these are control issues that could have a significant adverse
effect on the ability to record, process, summarize and report financial data in
the financial statements. A "material weakness" is defined in the auditing
literature as a particularly serious reportable condition where the internal
control does not reduce to a relatively low level the risk that misstatements
caused by error or fraud may occur in amounts that would be material in relation
to the financial statements and not be detected within a timely period by
employees in the normal course of performing their assigned functions. We also
sought to deal with other controls matters in the Controls Evaluation, and in
each case if a problem was identified, we considered what revision, improvement
and/or correction to make in accord with our on-going procedures.

     (b) Changes in Internal Controls. We have evaluated our internal control
over financial reporting as of the end of our fourth fiscal quarter. On March
26, 2007, our independent registered accounting firm Amper, Politziner & Mattia,
P.C., or AP&M, preliminarily informed us and our Audit Committee that they had
discovered conditions which they deemed to be material weaknesses in our
internal controls (as defined by standards established by the Public Company
Accounting Oversight Board) principally resulting from the increased volumes of
transactions necessitated when we were forced to change our co-packers, and the
change in the processing environment from obtaining finished inventory from a
turnkey supplier to an environment of having to purchase raw materials,
packaging and processing from a variety of vendors AP&M noted:

     o    a 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 statement and income tax
          assertions in a timely manner.

     o    The limited size of the accounting department makes it impracticable
          to achieve an optimum separation of duties.

     o    There are no formal documented closing and reporting calendar and
          checklists.

     o    Minutes of Board of Directors' meetings are inadequately maintained.

     It is our intention to increase the staffing level of the accounting
department as demands on our accounting staff increase.

     In accord with SEC requirements, our chief executive officer and principal
financial officer each have confirmed that, during the most recent fiscal
quarter and since the date of the Controls Evaluation to the date of this Annual
Report, there have been no significant changes in Internal Controls or in other
factors that have materially affected, or are reasonably likely to materially
affect, our Internal Controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.


                                       24
<PAGE>


     Conclusions. Based upon the Controls Evaluation, our chief executive
officer and principal financial officer have each concluded that, given the
current lack of resources, our Disclosure Controls are currently not
sufficiently effective to ensure that all material information relating to us is
made known to management, including the chief executive officer and principal
financial officer, particularly during the periods when our periodic reports are
being prepared and as of the fiscal reporting period ended December 30, 2006.
Our chief executive officer and principal financial officer also concluded that
our Disclosure Controls are currently not sufficiently effective to ensure that
information required to be disclosed in the reports that we file or submit under
the Exchange Act is accumulated and communicated to our management, including
our chief executive officer and principal financial officer, to allow timely
decisions regarding required disclosures. The primary reason for such
deficiencies is the need to engage additional accounting personnel because of
the change in our business model. We intend to take action to hire additional
staff and develop adequate policies and procedures with the enhanced staff to
ensure that adequate Disclosure Controls are in place to allow for effective and
timely management and reporting.

COMPLIANCE WITH SECTION 404 OF SARBANES-OXLEY ACT

     Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (the Act),
beginning with our Annual Report on Form 10-KSB for our 2007 fiscal year, we
will be required to furnish a report by our management on our internal control
over financial reporting. This report will contain, among other matters, an
assessment of the effectiveness of our internal control over financial reporting
as of the end of our fiscal year, including a statement as to whether or not our
internal control over financial reporting is effective. This assessment must
include disclosure of any material weaknesses in our internal control over
financial reporting identified by management. If we identify one or more
material weaknesses in our internal control over financial reporting, we will be
unable to assert our internal control over financial reporting is effective.

     Management acknowledges its responsibility for internal controls over
financial reporting and seeks to continually improve those controls. In order to
achieve compliance with Section 404 of the Act within the prescribed period, we
will shortly commence performing the system and process documentation and
evaluation needed to comply with Section 404, which is both costly and
challenging.

ITEM 8B. OTHER INFORMATION.

     None.



                                       25
<PAGE>


                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT.

     Our directors and executive officers are:

NAME               AGE        POSITION
----               ---        --------

David Mintz         75        Chairman of the Board of Directors,
                              Chief Executive Officer
Steven Kass         55        Chief Financial Officer, Secretary and Treasurer
Joseph Fischer      67        Director
Aron Forem          52        Director
Philip Gotthelf     54        Director
Reuben Rapoport     78        Director
Franklyn Snitow     60        Director

     David Mintz has been our Chairman of the Board and Chief Executive Officer
since August 1981.

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

     Joseph Fischer was appointed to our Board of Directors in March 2004. 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.

     Aron 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.

     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 Probus/McGraw Hill, McGraw
Hill and John Wiley & Sons.

     Reuben Rapoport, our former Director of Product Development who retired in
April 2003, has been a director since July 1983.

     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.


                                       26
<PAGE>


     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 five 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 FINANCIAL EXPERT

     The Audit Committee of the Board of Directors is comprised of Mr. Fischer,
who serves as chairman, Mr. Forem and Mr. Gotthelf. 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 Joseph Fischer is an Audit Committee Financial Expert as that
term is defined in rules issued pursuant to the Sarbanes-Oxley Act of 2002.

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.


                                       27
<PAGE>


     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 2006 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 10. 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 2006 totaled $100,000 or more:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                      Annual Compensation                            Long Term Compensation
                              -------------------------------------------    ------------------------------------
                                                                                    Awards              Payouts
                                                                             ------------------------  ----------
                                                                                            Securities
                                                              Other Annual   Restricted     Underlying    LTIP
    Name and Principal                                        Compensation  Stock Award(s)   Options/   Payouts      All Other
         Position             Year   Salary ($)    Bonus ($)       ($)          ($)          SARs (#)     ($)      Compensation ($)
         --------             ----   ----------    ---------   ----------    ----------      --------  ---------- ----------------

<S>                           <C>    <C>           <C>             <C>           <C>          <C>         <C>          <C>
David Mintz,                  2006   450,000       350,000(1)      --            --           --          --           --
Chief Executive Officer       2005   450,000       350,000(2)      --            --           --          --           --
  and Chairman of the Board   2004   306,000       350,000(3)      --            --           --          --           --
Steven Kass,                  2006   125,000       150,000(1)      --            --           --          --           --
Chief Financial Officer,      2005   125,000       150,000(2)      --            --           --          --           --
  Secretary and Treasurer     2004   127,000       150,000(3)      --            --           --          --           --
</TABLE>

----------

(1)  Accrued at year end and payable on or about May 1, 2007

(2)  Accrued at year end and paid on or about April 3, 2006.

(3)  Accrued at year end and paid on or about April 1, 2005.

     The aggregate value of all other perquisites and other personal benefits
furnished in each of the last three years to each of these executive officers
was less than 10% of each officer's salary for such year.


                                       28
<PAGE>


     On January 27, 2005, our Board of Directors, based on the recommendation of
the Compensation Committee, adopted a resolution increasing David Mintz's salary
by $150,000 to $450,000 effective as of January 2, 2005.

     Mr. Snitow and Mr. Forem did not receive any cash remuneration for their
services as directors in the last three years. Mr. Fischer received $3,500 in
2005 and $0 in 2006, respectively, for his services as director. Mr. Gotthelf
received $0 in 2006 for his services as director.

STOCK OPTIONS

     Neither of the officers named above in the Summary Compensation Table
received a grant of stock options nor exercised stock options in our last fiscal
year.

     The following table provides information concerning stock options held in
2006 by each of the executive officers named above in the Summary Compensation
Table.


       OPTION/STOCK APPRECIATION RIGHTS OR SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                Individual Grants
-------------------------------------------------------------------------------------------------------------------------------
                                Number of Securities          % of Total Options/SARs
                              Underlying Options/SARs     Granted to Employees in Fiscal    Exercise or Base      Expiration
          Name                      Granted (#)                        Year                   Price ($/Sh)           Date
--------------------------    -----------------------     ------------------------------    ----------------     --------------
<S>                                  <C>                             <C>                     <C>                   <C>
David Mintz,
Chief Executive Officer
and Chairman of the Board                 --                         $  --                         --                   --

Steven Kass,
  Chief Financial
Officer, Secretary and
Treasurer                            795,000(E)                          0                   $714,062(E)(1)        3/18/09
</TABLE>

----------

(E)  Exercisable options. See discussion in Liquidity and Capital Resources
     regarding the exercise of 395,000 stock options in February 2007.

(1)  Calculated by subtracting option exercise price from year-end market price
     of $3.05 per share.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS.

     The following tables set forth as of March 23, 2007 certain information
regarding the ownership of our common stock, $.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:


                                       29
<PAGE>


                SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.

<TABLE>
<CAPTION>

                              Name and                                      Amount and
Title of Class       Address of Beneficial Owner(1)                  Nature of Beneficial Owner(2)      Percent of Class(3)
--------------      -------------------------------                  -----------------------------      -------------------
<S>                 <C>                                                      <C>                              <C>
Common Stock        David Mintz                                              2,630,440                        46.5%
Common Stock        Financial & Investment Management Group, Ltd.              782,600(4)                     13.8%
Common Stock        Steven Kass                                                620,000(5)                     10.2%
</TABLE>

(1)  The address of Messrs. Mintz, Kass, 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
     March 23, 2007 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 5,653,467 shares issued and outstanding as of March 23, 2007.

(4)  Based on the information contained in a Schedule 13G filed by the Financial
     & Investment Management Group, Ltd. filed February 7, 2007. The address of
     the Financial & Investment Management Group, Ltd. is 111 Cass Street,
     Traverse City, MI 49684.

(5)  Includes 400,000 shares issuable upon the exercise of currently exercisable
     stock options.

                        SECURITY OWNERSHIP OF MANAGEMENT.

<TABLE>
<CAPTION>
                            Name and                          Amount and
Title of Class     Address of Beneficial Owner(1)     Nature of Beneficial Owner(2)      Percent of Class(3)
--------------     ------------------------------     -----------------------------      -------------------
<S>                <C>                                       <C>                             <C>

Common Stock       David Mintz                               2,630,440                       46.5%
Common Stock       Steven Kass                                 620,000(4)                    10.2%
Common Stock       Reuben Rapoport                              85,000                        1.5%
Common Stock       Franklyn Snitow                              71,500                        1.3
Common Stock       Aron Forem                                        0                          *
Common Stock       Joseph Fischer                               15,333(5)                       *
Common Stock       Philip Gotthelf                               3,333(6)
Common Stock       All Executive Officers and
                     Directors as a group (7
                     persons)                                3,425,606(7)                    56.4%
</TABLE>


                                       30
<PAGE>


----------

*    Less than 1%.

(1)  The address of Messrs. Mintz, Kass, 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
     March 23, 2007 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 5,653,467 shares issued and outstanding as of March 23, 2007.

(4)  Includes 400,000 shares issuable upon the exercise of currently exercisable
     stock options.

(5)  Includes 10,000 shares issuable upon the exercise of currently exercisable
     stock options.

(6)  Includes 3,333 shares issuable upon the exercise of currently exercisable
     stock options.

(7)  Includes 418,666 shares issuable upon the exercise of currently exercisable
     stock options.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The law firm of Snitow Kanfer Holtzer & Millus, LLP, of which one of
directors, Franklyn Snitow, is a partner, represented us in our legal action
against a candy manufacturer. During the fiscal years ended December 31, 2005
and December 30, 2006, we paid $47,000 and $0, respectively, in legal fees to
Snitow Kanfer Holtzer & Millus, LLP.

ITEM 13. 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
<PAGE>


10.1      Form of Loan Agreement between the Registrant and Wachovia Bank, N.
          A.(6)

10.2      Form of Promissory Note between the Registrant and Wachovia Bank, N.
          A.(6)

10.3      Form of Security Agreement between the Registrant and Wachovia Bank,
          N. A.(6)

23.1      Consent of Amper, Politziner & Mattia, P. C.

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.

(6)  Filed as an exhibit to the Registrant's Form 8-K bearing a cover date of
     April 13, 2006 and hereby incorporated by reference thereto.


                                       32
<PAGE>




ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

FEES PAID TO INDEPENDENT PUBLIC ACCOUNTANTS

     The following table sets forth, for each of the years indicated, the fees
paid to our independent public accountants and the percentage of each of the
fees out of the total amount paid to the accountants.


                                       33
<PAGE>


                                           Year Ended
                        -----------------------------------------------
                             December 30,              December 31,
                                2006                      2005
                        ---------------------      --------------------
Services Rendered        Fees       Percentages      Fees     Percentages
-----------------       -------       -------      -------      -------

Audit Fees (1)          $69,000          100%      $66,000          100%
Audit-related Fees           --           --            --           --
Tax Fees                     --           --            --           --
All Other Fees               --           --            --           --
                        -------      -------       -------      -------
Total                   $69,000          100%      $66,000          100%
                        =======      =======       =======      =======

----------

(1)  Audit fees consist of services that would normally be provided in
     connection with statutory and regulatory filings or engagements, including
     services that generally only the independent accountant can reasonably
     provide.

PRE-APPROVAL POLICIES AND PROCEDURES

     Our Audit Committee has adopted a policy and procedures for the
pre-approval of audit and non-audit services rendered by our independent public
accountants, Amper, Politziner & Mattia, P.C. The policy generally pre-approves
certain specific services in the categories of audit services, audit-related
services, and tax services up to specified amounts, and sets requirements for
specific case-by-case pre-approval of discrete projects, those which may have a
material effect on our operations or services over certain amounts. Pre-approval
may be given as part of the Audit Committee's approval of the scope of the
engagement of our independent auditor or on an individual basis. The
pre-approval of services may be delegated to one or more of the Audit
Committee's members, but the decision must be presented to the full Audit
Committee at its next scheduled meeting. The policy prohibits retention of the
independent public accountants to perform the prohibited non-audit functions
defined in Section 201 of the Sarbanes-Oxley Act or the rules of the SEC, and
also considers whether proposed services are compatible with the independence of
the public accountants.


                                       34
<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amended Report to be
signed on its behalf by the undersigned, thereunto duly authorized on March 30,
2007.

                                                     TOFUTTI BRANDS INC.
                                                     (Registrant)


                                                     /s/ David Mintz
                                                     ---------------
                                                     David Mintz
                                                     Chairman of the Board and
                                                     Chief Executive Officer


                                       35
<PAGE>


     In accordance with the Securities Exchange Act of 1934, this amended Report
has been signed below on March 30, 2007, 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/ Aron Forem
--------------
Aron Forem
Director


/s/ Reuben Rapoport
-------------------
Reuben Rapoport
Director


/s/ Franklyn Snitow
-------------------
Franklyn Snitow
Director


/s/ Joseph Fischer
------------------
Joseph Fischer
Director


/s/ Philip Gotthelf
-------------------
Philip Gotthelf
Director


                                       36
<PAGE>

                                  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)

10.1      Form of Loan Agreement between the Registrant and Wachovia Bank, N.
          A.(6)

10.2      Form of Promissory Note between the Registrant and Wachovia Bank, N.
          A.(6)

10.3      Form of Security Agreement between the Registrant and Wachovia Bank,
          N. A.(6)

23.1      Consent of Amper, Politziner & Mattia, P. C.

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.


                                       37
<PAGE>


(6)  Filed as an exhibit to the Registrant's Form 8-K bearing a cover date of
     April 13, 2006 and hereby incorporated by reference thereto.

3.1*           Certificate of Incorporation, as amended through February 1986.

3.1.1**        March 1986 Amendment to Certificate of Incorporation.

3.1.2          June 1993 Amendment to Certificate of Incorporation.

3.2*           By-laws of the Registrant.

4.1***         Copy of the Registrant's Amended 1993 Stock Option Plan.

4.2****        Tofutti Brands Inc. 2004 Non Employee Directors' Stock Option
               Plan.

23.1           Consent of Amper, Politziner & Mattia, P. C.

31.1           Certification of 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.

----------

*    Filed as an exhibit to the Registrant's Form 10-K for the fiscal year ended
     July 31, 1985 and hereby incorporated by reference thereto.

**   Filed as an exhibit to the Registrant's Form 10-K for the fiscal year ended
     August 2, 1986 and hereby incorporated by reference thereto.

***  Filed as an exhibit to the Registrant's Form S-8 (Registration No.
     333-79567) filed May 28, 1999 and hereby incorporated by reference thereto.

**** Filed as Appendix B to the Registrant's Schedule 14A filed May 10, 2004 and
     hereby incorporated by reference thereto.


                                       38