UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

Amendment No. 1

(Mark One)

þ		ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 333-136167

UFOOD RESTAURANT GROUP, INC.

(Exact name of registrant as specified in its charter)

Nevada		20-4463582
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

255 Washington Street, Suite 100
Newton, Massachusetts 02458
(Address of principal executive offices) (Zip Code)

(617) 787-6000
Registrant’s telephone number

Securities registered under Section 12(b) of the Exchange Act:

Title of each class		Name of each exchange on which registered
None		None

Securities registered pursuant to Section 12(g) of the Act:

Common stock, $.001 par value per share
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer o		Accelerated filer o		Non-accelerated filer o		Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The aggregate market value of the common stock held by non-affiliates of the registrant was approximately $10,176,259 based on the last sale price of the common stock as of June 27, 2010 (the last business day of the most recently completed second fiscal quarter). Shares held by each officer and director and by each person who owns 10% or more of the outstanding common stock have been excluded in that such person may be deemed to be affiliates. The determination of affiliate status is not necessarily a conclusive determination for other purposes.

There were 40,581,557 shares of our Common Stock issued and outstanding as of April 7, 2011

DOCUMENTS INCORPORATED BY REFERENCE

None.

 

 

EXPLANATORY NOTE

Our annual report on Form 10-K of UFood Restaurant Group, Inc. (“UFood”, “we”, “our”, “us”, or the “Company”) for the year ended January 2, 2011, was originally filed with the Securities and Exchange Commission (the “SEC”) on March 21, 2011, and this Amendment No. 1 is being filed solely to include responses to the items required by Part III. This Amendment No. 1 does not reflect events occurring after March 21, 2011, the date of the filing of our original Form 10-K, or modify or update those disclosures that may have been affected by subsequent events.

As required by Rule 12b-15 promulgated under the Securities and Exchange Act of 1934, our Chief Executive Officer and Chief Financial Officer are providing Rule 13a-14(a) certifications dated April 19, 2011 in connection with this Form 10-K/A and written statements pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated April 19, 2011.

TABLE OF CONTENTS

		Page
PART III
Item 10. Directors, Executive Officers and Corporate Governance			4
Item 11. Executive Compensation			6
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			10
Item 13. Certain Relationships and Related Transactions, and Director Independence			12
Item 14. Principal Accounting Fees and Services			13
PART IV
Item 15. Exhibits and Financial Statement Schedules			13
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART III

DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS

Our executive officers and directors are as follows:

Name		Age				Position
George Naddaff			81			Chief Executive Officer and Chairman of the Board of Directors
Charles Cocotas			75			President and Chief Operating Officer, Director
Irma Norton			43			Chief Financial Officer
Robert C. Grayson			65			Director
Mark Giresi			52			Director
Richard Golden			57			Director
Keith Mueller			51			Director

Background of Officers and Directors

George Naddaff has been our Chairman and Chief Executive Officer since December 18, 2007. Prior to the merger, Mr. Naddaff was the Chief Executive Officer of KnowFat Franchise Company (“KnowFat”), a predecessor to the Company, since February 2004, its CEO since September 2007 and its Chairman of the Board since March 2004. From February 1986 to February 2004, he was Chief Executive Officer of Business Expansion Capital, Inc., an investment firm located in Newton, Massachusetts. From 1997 to 2001, he held various management positions (including acting Chief Executive Officer) at Ranch*1, Inc., a franchisor of quick service restaurants with its headquarters in New York, New York. Mr. Naddaff is one of the founders of KnowFat Franchise Co., Inc. with more than 40 years of experience in the franchise industry. In addition to Boston Chicken, Mr. Naddaff has been significantly involved with several other successful concepts including the founding of Mulberry Child Care Centers, which had over 90 company-owned childcare centers when it was sold to Kindercare, America’s largest chain. George also founded Living and Learning Schools, which operated more than 50 upscale childcare facilities and was sold to Kindercare in 1980. In addition, he founded VR Business Brokers, the nation’s largest business brokerage franchise with over 350 offices, which was acquired in 1986 by Christies, LLP, London. In 1984, as a director and investor in Sylvan Learning Centers, Mr. Naddaff helped launch their franchising effort which today has over 1100 units. Mr. Naddaff is a serial entrepreneur and franchise leader, which are excellent attributes to be the Chairman of Board and CEO of our Company.

Charles A. Cocotas has been our President and Chief Operating Officer and a director since December 18, 2007. Mr. Cocotas joined KnowFat as a consultant in May 2007. In September 2007 he was appointed as UFood’s President and Chief Operating Officer. From 1999 to 2007, Mr. Cocotas was principal of the Charles A. Cocotas Restaurant Consulting firm in Massachusetts. Mr. Cocotas has served as Executive Vice-President with International Dairy Queen. Inc, Chief Operating Officer of Churchs Fried Chicken, was the original President/Chief Operating Officer of Boston Chicken, Inc., President/CEO of TCBY, Inc., and Chairman of the Board/CEO of Best Friends Pet Care, Inc. He is an experienced executive with more than 35 years experience in the restaurant industry, which included the launch of start-up ventures as well as turn-arounds with established corporations operating both Company and franchise restaurants. Mr. Cocotas’ leadership experience, particularly as a food operator for over three decades, and extensive functional skill set give him an appreciation for business practices that are vital to the success of a developing company such as ours.

Irma Norton joined KnowFat as its Controller in November 2004 and became our Chief Financial Officer in April 2009. Most recently (from September 2002 through October 2004), Ms. Norton was the controller for Handmade Bow Company, a privately held consumer products company. Prior to that position, from March 1990 through October 1995, Norton was the CFO for the Dunkin’ Donuts master franchisee in Mexico. Ms. Norton holds a B.A. degree in Accounting from University of Guadalajara in Mexico and is a graduate of the distinguished Executive Management Program of ITAM in Mexico City.

Robert C. Grayson has been a director of KnowFat since 2004 and a director of UFood since 2007. Since 1992 Mr. Grayson has been President and Chief Executive Officer of RC Grayson and Associates, a retail-oriented consulting firm in New York City. Mr. Grayson served initially as an outside consultant to Tommy Hilfiger Corp., a wholesaler and retailer of men’s sportswear and boyswear, and later accepted titles of Chairman of Tommy Hilfiger Retail, Inc. and Vice Chairman of Tommy Hilfiger Corp. From 1970 to 1992, Mr. Grayson served in various capacities for Limited Inc., including President and CEO of Lerner New York from 1985 to 1992, and President and CEO of Limited Stores from 1982 to 1985. He also serves as a director of Kenneth Cole Productions, St. John Knits, Lillian August Inc., and Stax Incorporated. Mr. Grayson’s leadership roles in the retail industry, consumer marketing, research and development, retail technology have made him an integral member of our Board.

Mark Giresi has been a director of KnowFat since December 6, 2007, and a director of UFood since 2007. From February 2000 until May 2008, Mr. Giresi worked for Limited Brands where, as Executive Vice President, he was responsible for the retail operation of Victoria’s Secret, Bath & Body Works, Express and The Limited, as well as real estate, store design and construction and loss prevention functions. Most recently, he led the strategic growth of Victoria’s Secret and Bath & Body Works outside of the United States. Prior to Limited Brands, Mr. Giresi spent almost 16 years at Burger King Corporation, where he held several executive positions including Senior Vice President of U.S. Franchise Operations and Development and Worldwide General Counsel. Mr. Giresi holds a Bachelor of Sciences degree in accounting from Villanova University and a Juris Doctorate degree from Seton Hall Law School. He also serves as a director of NXT Nutritional Holdings, Inc. His extensive experience in retail, food and franchising industries has been a tremendous contribution to our board.

Richard Golden is currently a private investor in a number of emerging companies and takes an active role in overseeing the investments. From 2007 to mid-2010, he was a Managing Director of Alumni Capital Network, a private equity firm specializing in buying and building small to mid-sized businesses. He managed the fund-raising for the firm’s $68 million fund and served on the Board of the company. Previously, he spent 28 years with Accenture in various executive management roles as well as managed large-scaled business improvement projects for Global 1000 companies, concentrating on airlines, manufacturers and retailers. His management positions included Country Managing Director — Sweden and Finland; Managing Director of the Retail Industry in Europe and Africa; Chief Operating Officer for the Products Market Unit; and Corporate Chief of Staff where he helped manage the transition of Accenture from a global partnership to an international corporation. Mr. Golden’s contribution to our Company is his vast experience in leadership roles and fund-raising activities that have made him a critical member of our Board.

Keith Mueller currently serves as Advisor to BookKeeping Express, the only national franchise providing book keeping services to small and medium-sized businesses, and Cate Street Capital, the owner and developer of a New Hampshire based bio-mass power plant that is intended to provide 65 megawatts of clean energy starting in 2010. He also held a number of management roles during his 27 years at Accenture and focused on large clients in the utility Industry. Some of experiences include leading the utilities practice in North America that had over $800 million in revenues and 1,000 people and building an outsourcing practice from start-up to over $500 million in revenue in four years with over 4,000 individuals. Mr. Mueller’s brings to our board a deep understanding of business strategy and during his tenure as a member he has gained additional expertise in the restaurant industry.

There are no family relationships among our executive officers and directors. None of our executive officers or directors has, during the past five years:

	(a)		had any petition under the federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer appointed by a court for the business or property of, such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
	(b)		been convicted in a criminal proceeding or subject to a pending criminal proceeding;
	(c)		been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or any federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities; or
	(d)		been found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Future Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers, directors and persons who own more than ten percent of the issued and outstanding shares of Common Stock to file reports of beneficial ownership and changes in beneficial ownership with the SEC and to furnish copies of all Section 16(a) forms to the Company. Form 3 filings are known to be late for each of the following directors, officers and beneficial owners of more than 10 percent of any class of equity securities of the Company: George A. Naddaff, Charles A. Cocotas, Irma Norton, Robert C. Grayson, Mark A. Giresi, Richard Golden and Keith Mueller.

Nominations to the Board of Directors

Stockholders may recommend individuals to the Nominating and Corporate Governance Committee of the Board of Directors for consideration as potential director candidates by submitting their names, together with appropriate biographical information and background materials, to the Nominating and Corporate Governance Committee, c/o Corporate Secretary, UFood Restaurant Group, Inc., 255 Washington Street, Suite 150, Newton, MA 02458.

Code of Ethics

We have a Code of Ethics that governs all of our employees, including our CEO, CFO, principal accounting officer or persons performing similar functions. We will provide a copy of our Code of Ethics free of charge to any person upon written request to us at the following address: 255 Washington Street, Suite 150, Newton, MA 02458 Attn: Chief Financial Officer.

Board of Directors

The Board of Directors currently consists of six members. Directors serve until their successors are duly elected or appointed. On February 12, 2008, the Board of Directors designated a Compensation Committee, Audit Committee and Nominating and Corporate Governance Committee of the Board. Mark Giresi, Robert Grayson and Keith Mueller are members of the Compensation Committee, Mark Giresi and Richard Golden are members of the Audit Committee, and Robert Grayson is a member of the Nominating and Corporate Governance Committee of the Board.

Audit Committee Financial Expert

Our Board of Directors has determined that there is no financial expert serving on our Audit Committee. Since we are not a listed issuer as that term is defined in Rule 10A-3 under the Exchange Act, we are not required to have a financial expert serving on our Audit Committee.

Item 11.		Executive Compensation

EXECUTIVE COMPENSATION

Summary Compensation Table

The table below sets forth, for the last two fiscal years, the compensation earned by our Chief Executive Officer and the other executive officers who received annual compensation in excess of $100,000. Each of the named executive officers (the “Named Executive Officers”) is entitled to certain payments in connection with resignation, retirement or other termination, as described more fully under the heading “Agreements with Executive Officers and Consultants.”

																						Non-Equity				Nonqualified
Name and																						Incentive				Deferred				All Other
Principal														Stock				Option				Plan				Compensation				Annual
Position(s)		Year				Salary				Bonus				Awards				Awards				Compensation				Earnings				Compensation				Total
(a)		(b)				(c)				(d)				(e)				(f)(1)				(g)				(h)				(i)(2)				(j)
George Naddaff,			2010			$	301,620			$	-0-			$	0			$	691,961			$	-0-			$	-0-			$	30,000			$	1,023,581
Chairman and CEO			2009			$	301,485			$	-0-			$	7,500			$	212,000			$	-0-			$	-0-			$	7,500			$	528,485
Charles A. Cocotas			2010			$	201,620			$	-0-			$	-0-			$	271,788			$	-0-			$	-0-			$	-0-			$	473,408
President and COO			2009			$	201,485			$	-0-			$	-0-			$	43,200			$	-0-			$	-0-			$	-0-			$	244,685
Irma Norton			2010			$	136,215			$	-0-			$	-0-			$	56,278			$	-0-			$	-0-			$	-0-			$	192,493
CFO			2009			$	133,409			$	10,000			$	-0-			$	4,465			$	-0-			$	-0-			$	-0-			$	147,874
Thomas Mackey			2010			$	150,000				-0-			$	-0-			$	52,870			$	-0-			$	-0-			$	10,950			$	213,820
SVP of Operations			2009			$	150,000				-0-			$	-0-			$	7,170			$	-0-			$	-0-			$	10,950			$	168,120

The salary of Mr. Naddaff is currently $300,000, and the salary of Mr. Cocotas is currently $220,000.

Agreements with Executive Officers

The Company entered into an employment contract with Mr. Naddaff on October 15, 2007 that provides: (i) the term of his employment agreement is for three years; (ii) the base salary for Mr. Naddaff is $300,000, plus benefits; (iii) Mr. Naddaff was granted options to purchase 1,500,000 of our shares under the Equity Incentive Plan; and (iv) if a Mr. Naddaff’s employment is terminated by the Company without cause, or by Mr. Naddaff as a result of a constructive termination by the Company, or as a result of Mr. Naddaff’s death or disability, then the Company is obligated to pay severance (consisting of salary and benefits as in effect at the time of termination) to Mr. Naddaff (or Mr. Naddaff’s legal representatives) for a period equal to the lesser of 12 months or the then-remaining balance of the employment term. The options referenced above have an exercise price of $1.00 per share, have a term of ten years and vest over a three-year period as follows: Mr. Naddaff’s options to purchase (i) 500,000 shares vested upon the grant of the options and (ii) 1,000,000 shares vest in equal monthly amounts of approximately 27,778 shares over a three year period through December 17, 2010. In addition to the foregoing, upon our consummation of the sale of any franchise restaurant, we will pay Mr. Naddaff a fee of $10,000. To the extent any franchise transaction is a part of an Area Development Agreement, the fee will be payable to Mr. Naddaff upon consummation of the franchise sale as follows: (i) $5,000 in cash and (ii) the remaining portion in a number of shares of our common stock having an aggregate value of $5,000 on the date such fee is due. Mr. Naddaff’s employment agreement provides for severance (consisting of base salary and benefits continuation) for a period of up to 12 months upon termination of the executive without cause. On May 1, 2008, the Board of Directors granted to Mr. Naddaff options to purchase 1,000,000 shares of the Company’s Common Stock, exercisable at $1.23, which options were fully vested. These options were not granted pursuant to a compensation plan, but instead represent non-qualified stock options. All options granted to Mr. Naddaff were canceled on May 13 2009 and he received a new grant with the same amount of options to purchase shares of the Company’s common stock under the 2007 Stock Option Plan, at an exercise price of $0.20 with the same vesting schedule as the canceled options. On June 30, 2010, the Company amended its employment agreement with George Naddaff to extend the employment period through October 15, 2013. As part of the amendment of the agreement, Mr. Naddaff received non-qualified stock options to purchase 3,250,000 shares of the Company’s common stock at an exercise price of $0.19. One half of options vested on the date of grant and the other half vest over a period of three years.

On February 12, 2008, the Board of Directors approved an employment agreement with Mr. Cocotas. The agreement provides: (i) for an initial term of two years; (ii) for a base salary of $200,000 per year, plus benefits; (iii) that Mr. Cocotas is entitled to receive options to purchase 200,000 shares of the Company’s Common Stock, exercisable at $1.00 per share of Common Stock, which options shall vest in equal amounts on the first day of each month for twenty-four months following the date of the employment agreement; and (iv) that if Mr. Cocotas’ employment is terminated by him for good reason (as defined in the agreement) or by the Company because of his permanent disability (as defined in the agreement), the Company is obligated to pay severance, consisting of base salary, for a six month period. On May 1, 2008, the Board of Directors granted to Mr. Cocotas options to purchase 300,000 shares of the Company’s Common Stock, exercisable at $1.23, which options shall vest monthly over the remaining period of his employment agreement. These options were not granted pursuant to a compensation plan, but instead represent non-qualified stock options. All options granted to Mr. Cocotas were canceled on May 13 2009 and he received a new grant with the same amount of options to purchase shares of the Company’s Common stock under the 2007 Stock Option Plan, at an exercise price of $0.20 with the same vesting schedule of the canceled options. On June 30, 2010, the employment agreement for Mr. Cocotas was amended to extend the term to continue through January 22, 2013. In connection with the execution of this amendment, the Company granted non-qualified stock options to purchase 1,205,673 shares of the Company’s common stock at an exercise price of $0.19 per share. One half of the options vested upon the date of the grant and the other half of the options shall vest in equal amounts on the first day of each month for thirty-six months following the date of the grant.

Summary Compensation Table

Outstanding Equity Awards at Fiscal Year End
January 2, 2011

The following table sets forth certain information, as of January 2, 2011, concerning securities authorized for issuance under the our Equity Incentive Plan.

Equity

Incentive

Plan

Awards:

No. of

No. of

Number of

Securities

Securities

Securities

Underlying

Underlying

Underlying

Unexercised

Unexercised

Unexercised

Option

Option

Options (#)

Options (#)

Unearned

Exercise

Expiration

Name

Exercisable

Unexercisable

Options

Price

Date

George Naddaff

5,100,694

1,399,306

(1)

-0-

$

0.19

April 30, 2018

Charles A. Cocotas

1,892,238

519,110

-0-

0.19

April 30, 2018

Irma Norton

302,580

168,750

-0-

0.19

February 11, 2018

Thomas Mackey

290,000

168,750

-0-

0.19

February 11, 2018

2004 Stock Option Plan

UFood Grill did not grant any options or other stock awards under the 2004 Stock Option Plan to any named executive officer in 2010 or 2009.

2007 Equity Incentive Plan

The 2007 Plan was approved in contemplation of the Merger. There were no awards under the 2007 Plan prior to December 18, 2007, the Closing Date of the Merger. Awards of ISO’s, non-qualified stock options, stock appreciation rights, restricted stock units, restricted stock or performance units may be made under the 2007 Plan of up to a maximum of 9,000,000 shares of Common Stock to employees, directors, consultants and agents of the Company. The Company believes awards under the 2007 Plan align the interests of its employees with those of its shareholders. At January 2, 2011, 5,884,990 stock options were outstanding under the 2007 Plan.

Activity under the 2007 Plan from December 28, 2008, through January 2, 2011 is presented below:

										Weighted
						Weighted				Average
						Average				Remaining				Aggregate
		Number of				Exercise				Contractual				Intrinsic
Options		Shares				Price				Term				Value
Outstanding at December 28, 2008			2,845,920			$	1.22				8.8				-0-
Granted			3,979,990			$	0.20				8.2
Canceled			(2,360,920	)		$	1.22
Forfeited			(545,000	)		$	1.11
Outstanding at December 27, 2009			3,919,990			$	0.20				8.2				-0-
Granted			2,070,000			$	0.16				9.3
Canceled			—			$	—
Forfeited			(105,000	)		$	0.20
Outstanding at January 2, 2011			5,884,990			$	0.19				7.9			$	200,500

The options outstanding and exercisable at January 2, 2011 were as follows:

		Options Outstanding								Options Exercisable
						Weighted
						Average
						Remaining
Number of		Exercise				Contractual				Number of
Options		Price				Term				Options				Exercise Price
3,814,990		$	0.20				7.2				3,800,439			$	0.20
2,070,000		$	0.16				9.3				2,070,000			$	0.16

Administration

The Compensation Committee of the Board, or the Board in the absence of such a committee, will administer the 2007 Plan. Subject to the terms of the 2007 Plan, the Compensation Committee has complete authority and discretion to determine the terms of awards under the 2007 Plan.

Grants

The 2007 Plan authorizes the grant to participants of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, performance grants intended to comply with Section 162(m) of the Internal Revenue Code, as amended, and stock appreciation rights, as described below:

	•		Options granted under the 2007 Plan entitle the grantee, upon exercise, to purchase a specified number of shares from us at a specified exercise price per share. The exercise price for shares of common stock covered by an option cannot be less than the fair market value of the common stock on the date of grant unless agreed to otherwise at the time of the grant.
	•		Restricted stock awards and restricted stock units may be awarded on terms and conditions established by the compensation committee, which may include performance conditions for restricted stock awards and the lapse of restrictions on the achievement of one or more performance goals for restricted stock units.
	•		The compensation committee may make performance grants, each of which will contain performance goals for the award, including the performance criteria, the target and maximum amounts payable and other terms and conditions.
	•		The 2007 Plan authorizes the granting of stock awards. The compensation committee will establish the number of shares of common stock to be awarded and the terms applicable to each award, including performance restrictions.
	•		Stock appreciation rights (SARs) entitle the participant to receive a distribution in an amount not to exceed the number of shares of common stock subject to the portion of the SAR exercised multiplied by the difference between the market price of a share of common stock on the date of exercise of the SAR and the market price of a share of common stock on the date of grant of the SAR.

Duration, Amendment and Termination

The Board has the power to amend, suspend or terminate the 2007 Plan without stockholder approval or ratification at any time or from time to time. No change may be made that increases the total number of shares of common stock reserved for issuance pursuant to incentive awards or reduces the minimum exercise price for options or exchange of options for other incentive awards, unless such change is authorized by our stockholders within one year. Unless sooner terminated, the 2007 Plan would terminate ten years after it is adopted.

Other Equity Awards

On June 30^th, 2010 the Company’s Board of Directors awarded to its vendors, executives, Board of Directors and employees, non-qualified stock options to purchase 7,703,673 shares of the Company’s common stock with an exercise price of $0.19. The vesting schedule varies from one year to three years. As a result of this grant, the Company will recognize an expense in the total amount of $1,519,255 over the vesting period. At January 2, 2011 there was $850,281 of total unrecognized compensation cost related to non-vested options granted outside of any Plan. This cost will be recognized over approximately 30 months.

Director Compensation

On February 12, 2008, our Board of Directors approved the following compensation for non-employee directors:

(a) Each non-employee director shall be granted non-qualified options to purchase 100,000 shares of common stock at an exercise price equal to the closing stock price on February 11, 2008. Such grant shall represent a tri-annual retainer for the 2008, 2009 and 2010 fiscal years. The options granted shall vest weekly over 36 months and shall expire February 11, 2018.

(b) Each non-employee director who serves as chairman of the Audit, Compensation or Nominating and Corporate Governance committee shall receive an annual grant of non-qualified options to purchase 3,000 shares of common stock. All other members of each committee shall receive an annual grant of non-qualified options to purchase 2,500 shares of common stock.

On June 30^th, 2010, each Director was issued non-qualified stock options to purchase 500,000 shares of the Company’s common stock with an exercise price of $0.19. The vesting schedule is monthly over one year. As a result of this grant, the Company will record an expense of $394,400 over the vesting period. Our directors are reimbursed for reasonable and necessary out-of-pocket expenses incurred in connection with their service to us, including travel expenses.

		Stock Awards				Stock Awards
		2009				2010
Robert Grayson		$	9,377			$	98,606
Mark Giresi		$	9,377			$	98,606
Keith Mueller		$	-0-			$	98,606
Richard Golden		$	-0-			$	98,606

KnowFat did not award stock options or other compensation to its directors in 2007. Our directors are reimbursed for reasonable and necessary out-of-pocket expenses incurred in connection with their service to us, including travel expenses.

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

Securities Authorized for Issuance under Equity Compensation Plans

The Company has two share-based, shareholder-approved equity compensation plans, the 2004 Stock Option Plan (the “2004 Plan”) and the 2007 Equity Incentive Plan (the “2007 Plan”). Descriptions of these plans, and certain information regarding options issued thereunder, are presented in Note 8, Stock-Based Compensation, of our 2010 Consolidated Financial Statements below.

As of the end of fiscal year 2010, we had the following securities authorized for issuance under our equity compensation plans:

Number of securities

Number of

remaining available for

securities to be

future issuance under

issued upon

Weighted-average

equity compensation

exercise of

exercise price of

plans (excluding

outstanding

outstanding options,

securities reflected in

Plan Category

options

warrants and rights

column (a))

(a)

(b)

(c)

Equity compensation plans approved by security holders

5,917,747

(2)

$

0.19

3,115,010

(3)

Equity compensation plans not approved by security holders

8,728,673

(1)

$

0.19

0

Total

14,646,420

$

0.19

3,115,010

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following tables set forth certain information regarding the beneficial ownership of our common stock as of April 7, 2011, by (i) each person who, to our knowledge, owns more than 5% of the Common Stock; (ii) each of our directors and executive officers; and (iii) all of our executive officers and directors as a group. Unless otherwise indicated in the footnotes to the following tables, each person named in the table has sole voting and investment power and that person’s address is c/o UFood Restaurant Group, Inc., 255 Washington Street, Suite 150, Newton, Massachusetts 02458. Shares of Common Stock subject to options or warrants currently exercisable or exercisable within 60 days of April 7, 2011 are deemed outstanding for computing the share ownership and percentage of the person holding such options and warrants, but are not deemed outstanding for computing the percentage of any other person.

		Amount and
		Nature of				Percent
		Beneficial				of
Name and Address of Beneficial Owner		Ownership				Class+
George A. Naddaff(1)			7,238,968				15.14	%
Charles A. Cocotas(2)			1,992,710				4.68	%
Irma Norton(7)			315,080				*
Robert C. Grayson(3)			705,483				1.71	%
Mark Giresi(4)			605,000				1.47	%
Keith Mueller(5)			3,594,771				8.1	%
Richard Golden(6)			2,975,816				6.8	%
Directors and Executive Officers as a group(1)-(6)			17,427,829				30.0	%
Kevin Kimberlin(8)			4,483,712				9.95	%
535 Madison Avenue New York, NY 10022

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

Directors and Officers of UFood

In May 2006, KnowFat entered into an agreement with George Naddaff, Chairman and CEO, by which Mr. Naddaff received a warrant to purchase up to 184,533 shares of KnowFat common stock in exchange for Mr. Naddaff’s personal guaranty of KnowFat’s credit obligations to the Bank.

UFood’s directors have received stock option grants and reimbursement of certain expenses. See “Director Compensation” above. Two of our directors are also executive officers.

Transactions with the Placement Agent and Its Related Parties

The Company paid Garden State Securities, Inc. (“Garden State”), the placement agent retained in connection with its 2009 private placement of securities (the “2009 Offering”) (i) a commission of 10% of the aggregate subscription amount of the securities sold in the 2009 Offering, plus (ii) $50,000 for its legal fees and expenses, plus (iii) a non-accountable expense allowance equal to 3% of the aggregate subscription amount of the securities sold in the 2009 Offering. In addition, Garden State (or its assigns) received warrants to purchase a number of shares of common stock equal to twenty percent (20%) of the maximum number of shares of common stock underlying the debentures and warrants sold in the 2009 Offering. As a result of the foregoing, Garden State was paid a commission of $587,400 plus a non-accountable expense allowance of $176,220 and received warrants to purchase 5,100,000 shares of Common Stock for the March 2009 first closing, and 3,936,923 for the April 2009 second and final closing in connection with the 2009 Offering. The terms of these warrants were similar to those issued to investors in the 2009 Offering.

The Company paid Garden State, the placement agent retained in connection with its 2010 Private Placement (i) an aggregate cash fee $344,000; (ii) warrants to purchase an aggregate of 2,243,478 shares of common stock at an exercise price equal to $0.29, and exercisable for a period of 5 years; and (iv) $37,500 for its fees and expenses.

Board Independence

Although we are not currently subject to the listing standards of any exchange or to the SEC rules pertaining to director independence, we believe that Messrs. Grayson and Giresi are “independent” directors as that term is defined by applicable listing standards of the Nasdaq stock market and SEC rules, including the rules relating to the independence standards of an audit committee and the non-employee definition of Rule 16b-3 promulgated under the Exchange Act.

Item 14.		Principal Accounting Fees and Services

The following table sets forth the fees we paid to CCR, LLP, independent registered public accounting firm, during our fiscal years ended January 2, 2011 and December 30, 2007 for: (i) services rendered for the audit of our annual financial statements and the review of our quarterly financial statements; (ii) services rendered that are reasonably related to the performance of the audit or review of our financial statements and that are not reported as audit fees; (iii) services rendered in connection with tax compliance, tax advice and tax planning; and (iv) all other services rendered.

		Year Ended
		January 2, 2011				December 27, 2009
Audit fees (1)		$	55,000			$	60,000
Audit-related fees			33,000				33,000
Tax fees (2)			17,100				17,100
All other fees (3)			7,205				-0-
Total fees		$	112,305			$	110,100

Audit Committee Pre-Approval Policies and Procedures

The Audit Committee has adopted a policy for pre-approval of audit and permitted non-audit services by the Company’s independent registered public accountants. The Audit Committee will consider annually and, if appropriate, approve the provision of audit services by its external auditor and consider and, if appropriate, pre-approve the provision of certain defined audit and non-audit services. The Audit Committee also will consider on a case-by-case basis and, if appropriate, approve specific engagements that are not otherwise pre-approved.

Any proposed engagement that does not fit within the definition of a pre-approved service may be presented to the Audit Committee for consideration at its next regular meeting or, if earlier consideration is required, to the Audit Committee or one or more of its members. The member or members to whom such authority is delegated shall report any specific approval of services at its next regular meeting. The Audit Committee will regularly review summary reports detailing all services being provided to the Company by its external auditor.

The Audit Committee approved the audit-related fees, tax fees and all other fees set forth above for the year ended January 2, 2011.

PART IV

Item 15.		Exhibits, Financial Statement Schedules

(b) Index to Exhibits

	31.1			Certification of CEO required by Section 302 of the Sarbanes-Oxley Act of 2002*
	31.2			Certification of CFO required by Section 302 of the Sarbanes-Oxley Act of 2002*
	32.1			Certification of CEO required by Section 906 of the Sarbanes-Oxley Act of 2002*
	32.2			Certification of CFO required by Section 906 of the Sarbanes-Oxley Act of 2002*

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature		Title		Date
/s/ George Naddaff   George Naddaff		Chairman of the Board and Chief Executive Officer (Principal Executive Officer)		April 18, 2011
/s/ Charles Cocotas   Charles A. Cocotas		President and Chief Operating Officer, Director		April 19, 2011
/s/ Irma Norton   Irma Norton		Chief Financial Officer (Principal Financial Officer)		April 18, 2011
Mark Giresi		Director		April 18, 2011
/s/ Robert Grayson   Robert Grayson		Director		April 18, 2011
/s/ Richard Golden   Richard Golden		Director		April 18, 2011
/s/ Keith Mueller   Keith Mueller		Director		April 18, 2011