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.

9

        Dependence on Key Customers. During the years ended December 27, 2008 and December 29, 2007, Trader Joe’s accounted for 19% 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 31% of our net sales for the year ended December 27, 2008 and 55% of our net sales for the year ended December 29, 2007. The loss of a substantial portion of our sales to Trader Joe’s would have a material adverse affect on our company.

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

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

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

        Our Operating Results Vary Quarterly and Seasonally. We have often recognized a slightly greater portion of revenues in the second and third quarter of the year 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.

        Reliance on a Limited Number of Key Personnel. Our success is significantly dependent on the services of David Mintz (age 77), Chief Executive Officer, and Steven Kass (age 57), 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, together with our Chief Financial Officer, Steven Kass, hold 2,850,440 shares of common stock representing approximately 55% of the outstanding shares, permitting them to elect all members of the Board of Directors and thereby effectively control the business, policies and management of our company.

10

        We are Subject to Risks Associated with International Operations. In fiscal 2008 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:

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

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

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

Risks Related to Economic Pressures

        Our business may be negatively affected by the current global credit crisis. The current economic climate, and particularly the increased difficulty in securing credit, could impact the ability of our customers to purchase our products. Certain of our retail customers who have seen significant dampening of consumer demand, could face increased financial pressures that could impact their ability to purchase our products and make payments in a timely manner. The extent of the impact, if any, of the global credit crisis, will depend on a number of factors, including whether the U.S. economy, and the global economy generally, enter into a prolonged recession as a result of the deterioration of the credit markets.

        A material change in consumer demand for our products could have a significant impact on our business. We are a consumer food products company and rely on continued demand for our products. To achieve business goals, we must develop and sell products that appeal to consumers. If demand and growth rates fall substantially below expected levels or our market share declines significantly in these businesses, our results could be negatively impacted. This could occur due to unforeseen negative economic or political events or to changes in consumer trends and habits.

11

        Our business faces cost pressures which could affect our business results. Our costs are subject to fluctuations, particularly due to changes in commodity prices, raw materials, cost of labor, foreign exchange and interest rates. Our costs during most of 2008 were impacted by higher commodity and freight costs. Therefore, our success is dependent, in part, on our continued ability to manage these fluctuations through pricing actions, cost savings projects and sourcing decisions. In the manufacturing and general overhead areas, we need to maintain key manufacturing and supply arrangements, including any key sole supplier and manufacturing plant arrangements.

        We face risks related to the current credit crisis. The current uncertainty in the global economic conditions resulting from the recent disruption in credit markets pose a risk to the overall economy that could impact consumer and customer demand for our products, as well as our ability to manage normal commercial relationships with our customers, suppliers and creditors. If the current situation deteriorates significantly, our business could be negatively impacted, including such areas as reduced demand for our products from a slow-down in the general economy, or supplier or customer disruptions resulting from tighter credit markets.

        None.

        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 $80,000 in both fiscal 2008 and 2007. Our management believes that the Cranford facility will continue to satisfy our space requirements for the foreseeable future.

        We are not a party to any material litigation.

        No matters were submitted to a vote of security holders during the fourth quarter of fiscal year ended December 27, 2008.

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PART II

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

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

The closing price for our common stock on March 23, 2009, as reported on the American Stock Exchange, was $1.49.

Holders of Record

        As of March 23, 2009, there were approximately 604 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 2,000 shareholders.

Dividends

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

13

Equity Compensation Plans

The following table sets forth, as of December 27, 2008, certain information related to our compensation plans under which shares of our common stock are authorized for issuance.

1993 Stock Option Plan

        The 1993 Stock Option Plan (the “1993 Plan”) provides for the grant to key employees of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and for the grant of non-qualified stock options to key employees and consultants. The 1993 Plan had a term of ten years and terminated in 2003. No grants have been made under the 1993 Plan since 2003, and no further grants of options can be made under the 1993 Plan. As of March 23, 2009, none of our executive officers and directors held options to purchase shares of common stock under the 1993 Plan.

        The term of any option granted under the 1993 Stock Option Plan was fixed by the Board of Directors at the time the options were granted. All options granted under the 1993 Stock Option Plan had up to 10-year terms and vesting periods that ranged from one to three years from date of grant.  The exercise price of any options granted under the 1993 Stock Option Plan was the fair market value at the date of grant.

2004 Non-Employee Directors’ Stock Option Plan

        Our shareholders adopted the 2004 Non-Employee Directors’ Stock Option Plan (the “2004 Directors’ Plan”) on June 3, 2004. The purpose and intent of the 2004 Directors’ Plan is to attract and retain the best available individuals as non-employee directors of the company, to provide additional incentive to non-employee directors to continue to serve as directors and to encourage their continued service on the Board. All options granted under 2004 Directors’ Plan are “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 2004 Directors’ Plan is currently administered by our Board of Directors, which in the future may delegate such administration to a committee of directors. Subject to the provisions of the 1993 Plan and applicable law, the Board or the Committee has the authority, to determine, among other things, to whom options may be granted, the number of shares of common stock to be covered by each option, the exercise price for each share, the vesting period of the option, and the terms, conditions and restrictions thereof, to construe and interpret the 2004 Directors’ Plan, to prescribe, amend and rescind rules and regulations relating to the 2004 Directors’ Plan, and to make all other determinations deemed necessary or advisable for the administration of the 2004 Directors’ Plan.

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        As of March 23, 2009, options to purchase 61,000 shares of our common stock were granted under the 2004 Directors’ Plan. The term of any option granted under the 2004 Directors’ Plan was fixed by the Board of Directors at the time the options were granted, provided that the exercise period was not to be longer than five years from the date of grant.  All options granted under the 2004 Directors’ Plan have up to five-year terms and have vesting periods that range from one to three years from the grant date.  The exercise price of any options granted under the 2004 Directors’ Plan is the fair market value at the date of grant. As of March 23, 2009, our non-employee directors as a group, consisting of three persons, held options to purchase 51,000 shares of common stock under the 2004 Directors’ Plan, and a former non-employee director held options to purchase 10,000 shares under the 2004 Directors’ Plan.

Sales of Unregistered Securities

        There were no sales of unregistered securities during fiscal 2008.

Purchase of Equity Securities By the Issuer and Affiliates

        Our Board of Directors first instituted a share repurchase program in September 2000 which, after several amendments, has to date authorized the repurchase of 1,850,000 shares of our common stock at prevailing market prices.

        The following table sets forth for the thirteen weeks ended December 27, 2008 (the fourth quarter of fiscal 2008), certain information with respect to the purchase by us of shares of our common stock.

        Not applicable.

15

The following is management’s discussion and analysis of certain significant factors which have affected our financial position and operating results during the periods included in the accompanying audited financial statements.

Critical Accounting Policies

        Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The policies discussed below are considered by management to be critical to an understanding of our financial statements because their application places the most significant demands on management’s judgment, with financial reporting results relying on estimation about the effect of matters that are inherently uncertain. Specific risks for these critical accounting policies are described in the following paragraphs. For all of these policies, management cautions that future events rarely develop exactly as forecast, and the best estimates routinely require adjustment.

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

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

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        Income Taxes. The carrying value of deferred tax assets assumes that we will be able to generate sufficient future taxable income to realize the deferred tax assets based on estimates and assumptions. If these estimates and assumptions change in the future, we may be required to record a valuation allowance against deferred tax assets which could result in additional income tax expense. Upon the adoption of FASB Interpretation No. 48, or FIN 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109,” January 1, 2007, we recognized a liability of $150,000 with respect to our uncertain tax positions, including related interest or penalties, which resulted in a direct charge to retained earnings. Our federal and state tax returns are open to examination for the years 2004 through 2007, however, the Internal Revenue Service commenced an examination of our federal income tax returns for 2005, 2006 and 2007 in 2009.

Recent Accounting Pronouncements

        In December 2007, the FASB issued SFAS No. 141(revised 2007), Business Combinations, which will become effective for business combination transactions having an acquisition date on or after January 1, 2009. This standard requires the acquiring entity in a business combination to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date to be measured at their respective fair values. The Statement requires acquisition-related costs, as well as restructuring costs the acquirer expects to incur for which it is not obligated at acquisition date, to be recorded against income rather than included in purchase-price determination. It also requires recognition of contingent arrangements at their acquisition-date fair values, with subsequent changes in fair value generally reflected in income. We do not expect the adoption of SFAS No. 141 to have a material effect on our company, as no acquisitions are currently contemplated.

        In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51, which will become effective for us January 1, 2009, with retroactive adoption of the Statement’s presentation and disclosure requirements for existing minority interests. This standard will require ownership interests in subsidiaries held by parties other than the parent to be presented within the equity section of the consolidated balance sheet but separate from the parent’s equity. It will also require the amount of consolidated net income attributable to the parent and the noncontrolling interest to be clearly identified and presented on the face of the consolidated income statement. Certain changes in a parent’s ownership interest are to be accounted for as equity transactions and when a subsidiary is deconsolidated, any noncontrolling equity investment in the former subsidiary is to be initially measured at fair value. We do not anticipate the implementation of SFAS No. 160 will significantly change the presentation of our financial statements.

        In February 2008, the FASB issued FASB Staff Position (“FSP”) No. 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Its Related Interpretive Accounting Pronouncements That Address Leasing Transactions, which became effective for us on December 30, 2007. This FSP excludes FASB Statement No. 13, Accounting for Leases, and its related interpretive accounting pronouncements from the provisions of SFAS No. 157. Implementation of this standard did not have a material effect on our financial statements.

        In February 2008, the FASB issued FSP No. 157-2, Effective Date of FASB Statement No. 157, which delays our January 1, 2008 effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until January 1, 2009. Implementation of this standard is not expected to have a material effect on our financial statements.

        In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities – An Amendment of FASB Statement No. 133” (“SFAS No. 161”), which amends and expands the disclosure requirements of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” to require qualitative disclosure about objectives and strategies in using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about the underlying credit-risk-related contingent features in derivative agreements. SFAS No. 161 is intended to improve financial reporting by requiring transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under SFAS No. 133; and how derivative instruments and related hedged items affect its financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years beginning after November 15, 2008. Implementation of this standard did not have a material effect on our financial statements.

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Results of Operations

Fifty-two Weeks Ended December 27, 2008 Compared with Fifty-Two Weeks Ended December 29, 2007

        We operate on a fiscal year ending on the Saturday closest to December 31. Fiscal years for the financial statements included herein are the fifty-two week period ended December 27, 2008 and the fifty-two week period ended on December 29, 2007.

        Net sales for the fifty-two weeks ended December 27, 2008 were $19,609,000, an increase of $459,000, or 2%, from net sales of $19,150,000 for the fifty-two weeks ended December 29, 2007.

        Although sales increased in fiscal 2008, our gross profit in fiscal 2008 decreased by $100,000, or 2%, while our gross profit percentage decreased to 27% in fiscal 2008 from 29% in fiscal 2007. 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. This was partially offset by an increase of freight out expense, which was only marginal despite significant increases in the cost of fuel throughout most of 2008, to $1,430,000 in fiscal 2008 from $1,411,000 in fiscal 2007. This marginal increase is attributable in part to the fact that shipping our frozen dessert novelties from our new ice cream co-packer in Indiana to the West Coast is more cost-effective than shipping them from our third-party Mountville, Pennsylvania warehouse or from our former frozen dessert novelties manufacturer’s location, and in part because in some instances we increased the minimum size of orders to customers where we paid the freight, which reduced our shipping costs. While we anticipate that our gross profit will increase due to increased unit sales and higher sales prices in 2009, our expected gross profit percentage will not improve materially due to promotional allowances associated with the planned introduction of new products. 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 $1,826,000 for fiscal 2008 from $1,656,000 in fiscal 2007. This increase was caused primarily by a $71,000 increase in payroll costs due to the hiring of an additional person in sales and an $81,000 increase in bad debt expense. We anticipate that with the exception of commission expenses and outside warehouse rental expense, which are variable to sales, all other selling expenses in 2009 should remain relatively consistent with our expenses in 2008.

        Marketing expenses increased by $204,000 in fiscal 2008 to $557,000 as compared to $353,000 in fiscal 2007. This increase is primarily attributable to a $30,000 increase in television advertising expense for a pilot program in one of our consumer markets and a $194,000 increase in newspaper advertising expense partially offset by a decrease in artwork and plates expense of $26,000. Newspaper advertising expenses increased due to additional costs incurred for advertising in some new advertising venues. We expect marketing expenses to decrease in fiscal 2009.

        Product development expenses increased to $590,000 in fiscal 2008 as compared to $481,000 in fiscal 2007. The increase was caused primarily by increases in payroll costs of $48,000, lab costs and supplies of $34,000 and professional fees and outside services of $19,000. Our management expects that product development costs in 2009 will remain consistent with fiscal 2008 costs.

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        General and administrative expenses were $2,014,000 for fiscal 2008 as compared with $2,233,000 for fiscal 2007, a decrease of $219,000 or 10%. The decrease was primarily due to a $272,000 decrease in stock-based compensation expense as a result of the accounting charge associated with a modification and cash pay-out for the redemption of a stock option, which was considered additional compensation expense for financial reporting purposes in fiscal 2007. This decrease was partially offset by increases in payroll costs of $38,000 and professional fees and outside services of $45,000. We anticipate that professional fees and outside services, which include legal and accounting fees, will increase in fiscal 2009 primarily due to the costs associated with compliance with the internal controls provisions of The Sarbanes-Oxley Act. Our management expects that general and administrative expenses in 2009 will remain consistent with fiscal 2008 expenses.

        Overall, total operating expenses in fiscal 2008 increased to $4,987,000, an increase of $264,000, or 6%, from total operating expenses in fiscal 2007. Total operating expenses in fiscal 2007 were impacted by $272,000 in stock-based compensation expense included in our general and administrative expenses for 2007, the result of an accounting charge associated with a modification and cash pay-out for the redemption of a stock option. Had we not incurred that charge, the increase in total operating expenses from 2007 to 2008 would have been $536,000, or 11%.

        Income before income taxes decreased by $364,000 to $435,000 in fiscal 2008 as compared with $799,000 in fiscal 2007 as a result of our reduced gross profit and higher operating expenses.

        Income taxes for the current fiscal period were $218,000, or 50% of taxable income, compared to $334,000, or 42% of taxable income, in fiscal 2007. The increase in our effective tax rate in fiscal 2008 was due to permanent differences as well as an increase to our FIN 48 liability.

Liquidity and Capital Resources

        At December 27, 2008 , our working capital was $3,581,000, a decrease of $876,000 from December 29, 2007. Our current and quick acid test ratios, both measures of liquidity, were 3.4 and 1.2, respectively, at December 27, 2008 compared to 3.6 and 2.1, respectively, at December 29, 2007. We believe our existing cash and cash equivalents on hand at December 27, 2008 , and the cash flows expected from operations will be sufficient to support us for at least the next twelve months.

        At December 27, 2008 , accounts receivable decreased by $417,000 to $1,574,000 from December 29, 2007, reflecting an increase in cash collections and a slight reduction in sales in the fourth quarter of the fiscal year ended December 27, 2008. The average number of days used to collect our gross accounts receivable in fiscal 2008 was 38 days as compared to 46 days in fiscal 2007. At December 27, 2008 , inventories increased to $2,334,000 from $1,552,000 at December 29, 2007. The increase in our inventories is due to a buildup in finished goods levels to support our anticipated sales in 2009. Accounts payable and accrued expenses decreased by $236,000 to $1,463,000 at December 27, 2008, from $1,699,000 at December 29, 2007, reflecting a reduction in our purchases of ingredients, packaging and finished goods in the fourth quarter.

        Our Board of Directors first instituted a share repurchase program in September 2000 which has to date authorized the repurchase of 1,850,000 shares of our common stock at prevailing market prices. As of December 29, 2007, we had repurchased 1,342,100 shares with a total cost of $4,171,000, or an average price of $3.11 per share. During fiscal 2008, we repurchased an additional 464,124 shares for $1,110,000 or an average price of $2.39. Through March 23, 2009, we have repurchased an additional 12,665 shares for $14,000, bringing the total number of shares cumulatively purchased to 1,818,889 at a total cost of $5,294,000, or an average price of $2.91 per share.

19

        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 that month, 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. This is reflected as additional cash compensation expense to Mr. Kass. 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) (consistent with the original terms of the grants). The effect of these two transactions was a net cash outflow of the company to Mr. Kass of $119,125.

        We have 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 2009 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, 2009, but can be renewed for an additional one-year term with the consent of both parties. We intend to extend the facility. There can be no assurances that this facility will be extended. There were no amounts outstanding under this facility at December 27, 2008 or December 29, 2007.

Cash Flows

        Cash used in operating activities was $151,000 for the fiscal year ended December 27, 2008 compared with cash provided by operating activities of $1,041,000 for the fiscal year ended December 29, 2007 as the result of our continued investment in building inventories to support the seasonal aspect of our business and the change in production facilities. During the year ended December 27, 2008, we paid bonuses to management of $500,000 and income taxes of $4,000 and in the year ended December 29, 2007, we paid bonuses to management of $500,000.

        The $1,110,000 used in financing activities reflects the repurchase of 464,124 shares of our common stock.

        As a result of our use of $151,000 in operating activities and $1,110,000 in financing activities in the fiscal year ended December 27, 2008, our cash and cash equivalents declined by $1,261,000 to $238,000.

        We believe that we will be able to fund our operations during the next twelve months with cash generated from operations and from borrowings on our line of credit. We believe that these sources will be sufficient to meet our operating and capital requirements during the next twelve months.

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Contractual Obligations

        We have no contractual obligations at December 27, 2008.

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.

        Not applicable.

21

Index to Financial Statements

22

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 27, 2008 and December 29, 2007, and the related statements of income, changes in stockholders’ equity and cash flows for the fifty-two week periods then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit 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 27, 2008 and December 29, 2007, and the results of its operations and its cash flows for the fifty-two week periods then ended, in conformity with United States generally accepted accounting principles.

/s/ AMPER, POLITZINER & MATTIA, LLP

Edison, New Jersey
March 26, 2009

F - 1

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

See accompanying notes to financial statements.

F - 2

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

See accompanying notes to financial statements.

F - 3

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

See accompanying notes to financial statements.

F - 4

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

See accompanying notes to financial statements.

F - 5

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

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 27, 2008 and December 29 2007, 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 29, 2007 is limited.

During the fiscal years ended December 27, 2008 and December 29, 2007, the Company derived approximately 91% and 90%, respectively, of its net sales domestically. The remaining sales in both periods were exports to foreign countries. The Company had sales to one customer representing 19% of net sales during fiscal 2008 and 20% of net sales during fiscal 2007. 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 31% and 55% of the Company’s net sales for the years ended December 27, 2008 and December 29, 2007. The accounts receivable balance of one customer represented approximately 26% of total accounts receivable at December 27, 2008.

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.

F - 6

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

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.

The Company purchased approximately 30% and 15% of its finished products from one supplier and 18% and 17% of its finished goods from another supplier during the periods ended December 27, 2008 and December 29, 2007, 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. FASB Interpretation No. 48, or FIN 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” was adopted December 31, 2006. This requires the Company to measure the impact of all uncertain tax positions at the date of adoption and record a liability for the amount of potential exposure, offset by a direct charge to retained earnings. At adoption, the Company recognized a direct charge of $150 to retained earnings and accrued expenses. Thereafter, any changes to the required amount of the liability recorded to recognize the potential exposures are recognized as a charge or credit to income tax expense. The Company had approximately $25 of accrued interest and penalties related to uncertain tax positions. Interest and penalties related to uncertain tax positions are recognized as a component of income tax expense.

Net Income Per Share – Basic earnings per common share has been computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per share has been computed by dividing net income by the weighted average number of common shares outstanding, including the dilutive effects of stock options. For the periods ended December 27, 2008 and December 29, 2007, stock equivalents of 10,000 shares were excluded from the diluted earnings per share calculations since the effect was anti-dilutive, because the strike price of these options was greater than the quoted market value at such date.

F - 7

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

Stock Based Compensation -The Company follows the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123(R), Share-Based Payment.  The Company uses the Black-Scholes option pricing model to measure the estimated fair value of the options under SFAS No. 123(R). The compensation expense, less forfeitures, is being recognized over the service period on a straight-line basis.

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

Freight Costs – Freight costs to ship inventory to customers and to outside warehouses amounted to $1,430 and $1,411 during the periods ended December 27, 2008 and December 29, 2007, 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 $267 and $39 during the periods ended December 27, 2008 and December 29, 2007, respectively.

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

F - 8

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

Recent Accounting Pronouncements – In December 2007, the FASB issued SFAS No. 141(revised 2007), Business Combinations, which will become effective for business combination transactions having an acquisition date on or after January 1, 2009. This standard requires the acquiring entity in a business combination to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date to be measured at their respective fair values. The Statement requires acquisition-related costs, as well as restructuring costs the acquirer expects to incur for which it is not obligated at acquisition date, to be recorded against income rather than included in purchase-price determination. It also requires recognition of contingent arrangements at their acquisition-date fair values, with subsequent changes in fair value generally reflected in income. The Company do not expect the adoption of SFAS No. 141 to have a material effect on it, as no acquisitions are currently contemplated.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51, which will become effective for us January 1, 2009, with retroactive adoption of the Statement’s presentation and disclosure requirements for existing minority interests. This standard will require ownership interests in subsidiaries held by parties other than the parent to be presented within the equity section of the consolidated balance sheet but separate from the parent’s equity. It will also require the amount of consolidated net income attributable to the parent and the noncontrolling interest to be clearly identified and presented on the face of the consolidated income statement. Certain changes in a parent’s ownership interest are to be accounted for as equity transactions and when a subsidiary is deconsolidated, any noncontrolling equity investment in the former subsidiary is to be initially measured at fair value. The Company does not anticipate the implementation of SFAS No. 160 will significantly change the presentation of its financial statements.

In February 2008, the FASB issued FASB Staff Position (“FSP”) No. 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Its Related Interpretive Accounting Pronouncements That Address Leasing Transactions, which became effective for us on December 30, 2007. This FSP excludes FASB Statement No. 13, Accounting for Leases, and its related interpretive accounting pronouncements from the provisions of SFAS No. 157. Implementation of this standard did not have a material effect on the Company’s financial statements.

In February 2008, the FASB issued FSP No. 157-2, Effective Date of FASB Statement No. 157, which delays our January 1, 2008 effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until January 1, 2009. Implementation of this standard is not expected to have a material effect on the Company’s financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities – An Amendment of FASB Statement No. 133” (“SFAS No. 161”), which amends and expands the disclosure requirements of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” to require qualitative disclosure about objectives and strategies in using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about the underlying credit-risk-related contingent features in derivative agreements. SFAS No. 161 is intended to improve financial reporting by requiring transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under SFAS No. 133; and how derivative instruments and related hedged items affect its financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years beginning after November 15, 2008. Implementation of this standard did not have a material effect on the Company’s financial statements.

F - 9

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

Inventories consist of the following:

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.

The following is a summary of stock option activity from December 30, 2006 to December 27, 2008:

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. See Note 6 for discussion of 2007 stock option repurchase and exercise to an officer.

F - 10

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

In 2007, 41,000 non-qualified stock options were granted to two non-employee directors with a fair value at grant date of $2.90, using the following assumptions: Dividend rate = 0%, expected life = 5, risk free interest = 3.81% and volatility = 14.43%.

There were no stock options granted in 2008.

The following table summarizes information about stock options outstanding at December 27, 2008 :

The aggregate unrecognized stock-based compensation charge at December 27, 2008 is approximately $19 expected to be expensed over two years.

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 $80 in 2008 and $80 in 2007. 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.

The components of income tax expense (benefit) for the fiscal years ended December 27, 2008 and December 29, 2007 are as follows:

F - 11

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

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 27, 2008 and December 29, 2007 follows:

Deferred tax asset at December 27, 2008 and December 29, 2007 consist of the following components:

The Company adopted the provisions of FIN 48 on December 31, 2006, the first day of the Company’s fiscal year. As a result of the implementation of FIN 48, the Company recognized a $150 increase in the liability for unrecognized tax benefits, which was accounted for as a reduction to the December 31, 2006 balance of retained earnings. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

The Company accounts for penalties or interest related to uncertain tax positions as part of its provision for income taxes. The Company has accrued for penalties or interest for the U.S. (both Federal and State) as of December 27, 2008 and December 29, 2007. The Company believes that its unrecognized tax benefits would have an impact on the effective tax rate.

The provision at December 27, 2008 for uncertain tax positions is included in accrued expenses. The Company’s federal and state tax returns are open to examination for the years 2004 to 2007, however, the Internal Revenue Service commenced an examination of the Company’s federal income tax returns for 2005, 2006 and 2007 in 2009.

F - 12

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

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 $287.9. This is reflected as an additional cash compensation expense to Mr. Kass as a result of the modification to the option terms and repurchase by the Company. Concurrently, Mr. Kass exercised 150,000 options that were expiring on February 27, 2007 at an exercise price of $.6875 per share ($103.1) and 70,000 options that were expiring on July 30, 2007 at an exercise price of $.9375 per share ($65.7), for a combined total proceeds to the Company of $168.8. The effect of these two transactions was a net cash outflow of the Company to Mr. Kass of $119.1.

The Company established a $1,000 line of credit with Wachovia Bank in April 2006, which was renewed for an additional year effective April 30, 2007.  As of March 23, 2009, the Company has not used the line of credit. If the line of credit is drawn upon, the underlying promissory note becomes due and payable in consecutive monthly payments of accrued interest only, commencing, and continuing on, the same day of each month thereafter until fully paid.  The line of credit may be used to finance working capital of the Company and interest on the unpaid balance shall accrue at Wachovia’s Prime Rate.  The line of credit is secured by all of the personal property of the registrant including, without limitation, all accounts, equipment, accessions, inventory, chattel paper, instruments, investment property, documents, letter-of-credit rights, deposit accounts, and general intangibles, wherever located.

F - 13

        None.

Evaluation of Disclosure Controls and Procedures

        Evaluation of Disclosure Controls and Procedures. As of December 27, 2008 , our company’s chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of our company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the  Exchange Act. Based upon the evaluation of these controls and procedures, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective as of the end of the fiscal year 2008.

        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.

Management’s Annual Report on Internal Control Over Financial Reporting

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

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

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

23

        Based on their evaluation under the frameworks described above, our chief executive officer and chief financial officer have concluded that our internal control over financial reporting was ineffective as of December 27, 2008 because of the following material weaknesses in internal controls over financial reporting:

Remediation Plan

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

Changes in Internal Control over Financial Reporting

        No change in our internal control over financial reporting occurred during the quarter ended December 27, 2008, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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

        None.

24

PART III

        Our directors and executive officers are:

        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.

        Neal S. Axelrod has been a director since August 2007. Mr. Axelrod has been a self-employed certified public accountant in New Jersey since 1977.

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

        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.

25

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

Section 16(a) Beneficial Ownership Compliance

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

        To our knowledge, based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons that no additional forms were required for those persons, we believe that during fiscal 2008 all persons subject to these reporting requirements filed the required reports on a timely basis.

26

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.

        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 2008 totaled $100,000 or more:

Summary Compensation Table

        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.

27

Grants of Plan-Based Awards for Fiscal 2008

        There were no stock options awarded during the fiscal year ended December 27, 2008.

Long-Term Incentive Plans-Awards in Last Fiscal Year

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

Director Compensation

        Our non-employee directors earned director compensation in fiscal 2008 based on the number of meetings attended. Mr. Axelrod, chairman of the audit committee, receives $1,500 per meeting attended. All other non-employees are entitled to $500 per meeting attended.

        The following table sets forth the compensation received by each of the Company’s non-employee Directors for the year ended December 27, 2008. Each non-employee director is considered independent under AMEX listing standards.

Employment Agreements

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

Outstanding Equity Awards at Fiscal Year End

        The following table summarizes the options awards granted to each of the named executive officers identified above in the summary compensation table above pursuant to an Equity Incentive Plan. 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) (consistent with the original terms of the grants), for a combined total purchase cost of $168,750.

28

Outstanding Equity Awards at Fiscal Year-End