UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
☒ ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the year ended January 31, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
MAMAMANCINI’S
HOLDINGS, INC.
(Exact
name of registrant as specified in its charter)
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
25
Branca Road
East
Rutherford, NJ07073
(Address
of Principal Executive Offices)
(Former
name or former address, if changed since last report)
(201)531-1212
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act: None
Securities
Registered Pursuant to Section 12(g) of the Act:
Title of Each Class Trading Symbol Name of Each Exchange on which registered
Common Stock, par value $0.00001 MMMB NASDAQ
Indicate
by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐ Accelerated filer ☐ Emerging Growth Company ☐
Non-accelerated filer ☐ Smaller reporting company ☒
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The
aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on July 30, 2021, based on
a closing price of $2.78 was approximately $47,602,151.
As
of April 28, 2022, the registrant had 35,758,792 shares of its common stock, 0.00001 par value per share, issued and outstanding.
Documents
Incorporated by Reference: None.
Table
of Contents
PART I 3
ITEM 1. BUSINESS. 3
Item 1A. Risk Factors 9
Item 1B. Unresolved Staff Comments. 9
Item 2. Properties. 9
Item 3. Legal Proceedings. 9
Item 4. Mine Safety Disclosures. 9
Item 6. Selected Financial Data. 11
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 15
Item 8. Financial Statements. 16
Item 9A. Controls and Procedures. 16
Item 9B. Other Information. 16
PART III 17
Item 10. Directors, Executive Officers and Corporate Governance. 17
Item 11. Executive Compensation. 24
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. 31
Item 15. Exhibits, Financial Statements Schedules 32
SIGNATURES 33
FORWARD
LOOKING STATEMENTS
Included
in this Form 10-K are “forward-looking” statements, as well as historical information. Although we believe that the expectations
reflected in these forward-looking statements are reasonable, we cannot assure you that the expectations reflected in these forward-looking
statements will prove to be correct. Our actual results could differ materially from those anticipated in forward- looking statements
as a result of certain factors, including matters described in the section titled “Risk Factors.” Forward-looking statements
include those that use forward-looking terminology, such as the words “anticipate,” “believe,” “estimate,”
“expect,” “intend,” “may,” “project,” “plan,” “will,” “shall,”
“should,” and similar expressions, including when used in the negative. Although we believe that the expectations reflected
in these forward-looking statements are reasonable and achievable, these statements involve risks and uncertainties and we cannot assure
you that actual results will be consistent with these forward-looking statements. We undertake no obligation to update or revise these
forward-looking statements, whether to reflect events or circumstances after the date initially filed or published, to reflect the occurrence
of unanticipated events or otherwise.
PART
I
Item
1. Business.
Our
History
MamaMancini’s
Holdings, Inc. (formerly Mascot Properties, Inc.) was incorporated in the State of Nevada on July 22, 2009. Mascot Properties, Inc.’s
(“Mascot”) activities since its inception consisted of trying to locate real estate properties to manage, primarily related
to student housing, and services which included general property management, maintenance and activities coordination for residents. Mascot
did not have any significant development of such business and did not derive any revenue. Due to the lack of results in its attempt to
implement its original business plan, management determined it was in the best interests of the shareholders to look for other potential
business opportunities.
On
February 22, 2010, MamaMancini’s LLC was formed as a limited liability company under the laws of the state of New Jersey in order
to commercialize our initial products. On March 5, 2012, the members of MamaMancini’s, LLC, holders of 4,700 units (the “Units”)
of MamaMancini’s LLC, exchanged the Units for 15,000,000 shares of common stock and those certain options to purchase an additional
223,404 shares of MamaMancini’s Inc. (the “Exchange”). Upon consummation of the Exchange, MamaMancini’s LLC ceased
to exist and all further business has been and continues to be conducted by MamaMancini’s Inc.
On
January 24, 2013, Mascot, Mascot Properties Acquisition Corp, a Delaware corporation and wholly-owned subsidiary of the Company (“Merger
Sub”), MamaMancini’s Inc., a privately-held Delaware Corporation headquartered in New Jersey (“Mama’s”)
and David Dreslin, an individual (the “Majority Shareholder”), entered into an Acquisition Agreement and Plan of Merger (the
“Agreement”) pursuant to which the Merger Sub was merged with and into Mama’s, with Mama’s surviving as a wholly-owned
subsidiary of the Company (the “Merger”). The transaction (the “Closing”) took place on January 24, 2013 (the
“Closing Date”). Mascot acquired, through a reverse triangular merger, all of the outstanding capital stock of Mama’s
in exchange for issuing Mama’s shareholders (the “Mama’s Shareholders”), pro-rata, a total of 20,054,000 shares
of the Company’s common stock. As a result of the Merger, the Mama’s Shareholders became the majority shareholders of Mascot.
Immediately following the Closing of the Agreement, Mascot changed its business plan to that of Mama’s. On March 8, 2013, Mascot
received notice from the Financial Industry Regulatory Authority (“FINRA”) that its application to change its name and symbol
had been approved and effective Monday, March 11, 2013, Mascot began trading under its new name, “MamaMancini’s Holdings,
Inc.” (“MamaMancini’s” or the “Company”) and under its new symbol, “MMMB”.
On
November 1, 2017, MamaMancini’s, Joseph Epstein Food Enterprises, Inc., a New Jersey corporation (“JEFE”), and MMMB
Acquisition, Inc., a Nevada corporation and wholly owned subsidiary of MamaMancini’s (“Merger Sub”), completed a merger
transaction whereby JEFE merged with and into Merger Sub, with Merger Sub continuing as the surviving entity and a wholly owned subsidiary
of MamaMancini’s. Under the terms of the Merger Agreement and in connection with the merger, the Company acquired all assets of
JEFE. The consideration for the transaction was (a) the extinguishment of the Inter-Company Loan between the parties, (b) the assumption
by the Company of all JEFE accounts payable and accrued expenses (c) assumption by the Company of certain third-party loans to JEFE totaling
approximately $782,000 and (d) indemnification of Carl Wolf with respect to his collateralization of a bank loan to JEFE in the amount
of approximately $250,000. As a result of the transaction, (i) the Company became the sole shareholder of JEFE, which became a wholly-owned
subsidiary of the Company. No cash or stock was exchanged in connection with the transaction.
On
December 23, 2021, the Company announced the signing of definitive agreements for two acquisitions – T&L Creative Salads, Inc.
(“T&L”) and Olive Branch, LLC (“OB”), which are related gourmet food manufacturers based in New York. The
Closing of these transactions occurred and the transactions were completed on December 29, 2021. The Company acquired T&L and OB
for a combined purchase price of $14.0 million, including $11 million in cash at closing and $3 million in a promissory note.
The promissory note requires annual principal payments of $750,000 payable on each anniversary of the closing, together with accrued
interest at a rate of three and one-half (3.5%) per annum. The maker of the Note is T&L Acquisition Corp, a wholly-owned subsidiary
of the Company, and it is guaranteed by the Company. The maker has a right of set-off against the balance due for any matters which are
the subject of an indemnification under the transaction agreements. The cash payment was funded through cash on hand and a $7.5 million acquisition loan from M&T Bank (see below). Anthony Morello, Jr. will remain as CEO of T&L Acquisition
Corp.
On
December 29, 2021, the Company entered into a Multiple Disbursement Term Loan (“Loan”) with M&T Bank for the original
principal amount of $7,500,000 payable in monthly installments over a 60-month amortization period. The Maturity Date of the Loan is
January 17, 2027. Interest is payable the unpaid Principal Amount of the Loan at a variable rate per annum based on the
Company’s Senior Funded Debt/EBITDA Ratio (as defined in the Credit Agreement between Borrower and Bank) established with respect
to the Borrower as of the date of any advance under the Loan as follows: if the Senior Funded Debt/EBITDA ratio is: (i) greater than
2.00 but less than or equal to 2.50, 4.12 percentage point(s) above one-day (i.e., overnight) SOFR (as defined); (ii) greater than 1.50
but less than or equal to 2.00, 3.62 percentage points above one-day SOFR; or (iii) 1.50 or less, 3.12 percentage points above one-day
SOFR. In all events set forth at subsections (i) through (iii) in the preceding sentence, if SOFR shall at any time be less than 0.25%,
one-day SOFR shall be deemed to be 0.25% and the foregoing margins shall be applied to the SOFR Index Floor.
All
of the proceeds of the Loan were utilized to fund the acquisition of T&L and OB.
Our
Company
MamaMancini’s
roots go back to our founder Dan Dougherty, whose grandmother Anna “Mama” Mancini emigrated from Bari, Italy to Bay Ridge,
Brooklyn in 1921. Our products were developed using her old-world Italian recipes that were handed down to her grandson, Dan Dougherty.
Today we market a line of all-natural specialty prepared, frozen and refrigerated foods for sale in retailers around the country. Our
primary products include beef and turkey meatballs, meat loaf, chicken, sausage-related products and pasta entrees, all with slow cooked
Italian Sauce.
Our
products are all natural, contain a minimum number of ingredients and are generally derived from the original recipes of Anna “Mama”
Mancini. Our products appeal to health-conscious consumers who seek to avoid artificial flavors, synthetic colors and preservatives that
are used in many conventional packaged foods.
The
United States Department of Agriculture (the “USDA”) defines all natural as a product that contains no artificial ingredients,
coloring ingredients or chemical preservatives and is minimally processed. The Company’s products were submitted to the USDA and
approved as all natural. The Food and Safety and Inspection Service (“FSIS”) Food Standards and Labeling Policy Book (2003)
requires meat and poultry labels to include a brief statement directly beneath or beside the “natural” Label claim that “explains
what is meant by the term natural i.e., that the product is a natural food because it contains no artificial ingredients and is only
minimally processed”. The term “natural” may be used on a meat label or poultry label if the product does not contain
any artificial flavor or flavoring, coloring ingredient, chemical preservative, or any other artificial or synthetic ingredient. Additionally,
the term “all natural” can be used if the FSIS approves your product and label claims. The Company’s product and label
claims have been approved by the FSIS to contain the all-natural label.
Additionally,
the Company has recently commenced marketing of certain “meatless” versions of its product line under a Trademark Licensing
Agreement with Beyond Meat, Inc.
Our
products are principally sold to supermarkets and mass-market retailers. We currently have 29 different product offerings which are packaged
in different sized retail and bulk packages. Our products are principally sold in multiple sections of the supermarket, including hot
bars, salad bars, prepared foods (meals), sandwich, as well as cold deli and foods-to-go sections. Our products are also sold in the
frozen food and fresh meat sections. We sell directly to both food retailers and food distributors.
Finally,
we also sell our products on QVC through live on-air offerings, auto ship programs and for everyday purchases on their web site. QVC
is the world’s largest direct to consumer marketer.
On
December 29, 2021 MamaMancini’s made two acquisitions which expand the company’s core product lines, and access to specific
markets. T &L Creative Salads, Inc. (“T&L”) and Olive Branch, LLC, are related premier gourmet food manufacturers
based in New York. T&L offers a full line of foods for retail food chains and club stores, delis, bagel stores, caterers and provision
distributors. T&L uses high-quality meats, seafood and vegetables, prepared to meet the standards set forth by the USDA and the FDA.
T&L
sales are spearheaded by a line of chicken products, including grilled and breaded chicken breasts, chicken strips as well as a kosher
salad line. T&L’s SQF level 2 state-of-the-art USDA facility in Farmingdale, New York has positioned it to expand its operations
nationally into MamaMancini’s network of retailers and Club Stores. T&L actively sells its salads and prepared products to
over 250 delis, bagel shops, smaller retail accounts and food distributors in the New York metropolitan area, representing over 35% of
T&L’s current sales volume.
Olive
Branch started operations six years ago as a separate company to concentrate on selling olives, olive mixes, and savory products to a
limited number of large retail customers, primarily in pre-packaged containers. Olive Branch products are manufactured at the same facility
as T&L in Farmingdale, NY.
Industry
Overview
Our
products are considered specialty prepared foods, in that they are all natural, taste great, are authentic and are made with high quality
ingredients. The market for specialty and prepared foods spans several sections of the supermarket, including frozen, deli- prepared
foods, and the specialty meat segment of the meat department.
Our
Strengths
We
believe that the following strengths differentiate our products and our brand:
Customers/Management
Our
Growth Strategy
We
are actively executing a strategy to build our brand’s reputation, grow sales and improve our product and operating margins by
pursuing the following growth initiatives:
● “Club Stores”. The Company is aggressively pursuing sales to “Club Stores”.
Pricing
Our
pricing strategy focuses on being competitively priced with other premium brands. Since our products are positioned in the authentic
premium prepared food category, we maintain prices competitive with those of similar products and prices slightly higher than those in
the commodity prepared foods section. This pricing strategy also provides greater long-term flexibility as we grow our product line through
the growth curve of our products. Current typical retail prices for 16 oz. packages range from $5.99 to $8.99, and $6.99 to $10.99 per
pound for prepared food products sold to delis or hot bars. Increases in raw material costs, among other factors, may lead us to
consider price increases in the future.
Suppliers/Manufacturers
As
of January 31, 2022, approximately 90% of our products are internally produced by the Company’s wholly-owned subsidiaries, Joseph
Epstein Food Enterprises, Inc. (“JEFE”), T&L Creative Salads, Inc. (“T&L”) and Olive Branch, LLC
(“OB”). Approximately 10% are manufactured on an outsourced basis. None of our raw materials or ingredients are directly
grown or produced by us. From time-to-time we negotiate with other manufacturers to supplement the Company’s manufacturing capability.
We currently purchase modest quantities from other manufacturers. All of the raw materials and ingredients in our products are readily
available and are readily ascertainable by our suppliers. We have not experienced any material shortages of ingredients or other products
necessary to our operations and do not anticipate such shortages in the foreseeable future.
Sales/Brokers
Our
products are sold primarily through a commission broker network. We sell to large retail chains who direct our products to their own
warehouses or to large food distributors.
The
Company increased its sales management efforts with the result that the Company is now actively soliciting business with almost every
major retail supermarket chain in the country. MamaMancini’s products are currently sold nationwide, with its greatest concentration
in the Northeast and Southeast.
Marketing
The
majority of our marketing activity has been generated through promotional discounts, consumer trial, consumer product tastings and demonstrations,
in-store merchandising and signage, couponing, word of mouth, consumer public relations, social media, special merchandising events with
retailers and consumer advertising.
Based
on the Company’s metrics for determining brand awareness, which includes market studies and analysis of consumer recognition of
the MamaMancini’s brand, the Company believes that brand awareness for MamaMancini’s has grown in the past 12 months.
Competition
The
gourmet and specialty pre-packaged and frozen food industry has many large competitors specializing in various types of cuisine from
all over the world. Our product lines are currently concentrated on Italian specialty foods. While it is our contention that our competition
is much more limited than the entire frozen and pre-packaged food industry based on our products’ niche market, there can be no
assurances that we do not compete with the entire frozen and pre-packaged food industry. We believe our principal competitors include
Quaker Maid, Hormel, Rosina Company, Inc., Casa Di Bertacchi, Inc., Farm Rich, Inc., Mama Lucia, Buona Vita, Inc., Taylor Farms, Kings
Command, DeLallo Foods, and Gourmet Boutique.
Intellectual
Property
Our
current intellectual property consists of trade secret recipes and cooking processes for our products and four trademarks for “MamaMancini’s”,
“Mac N’ Mamas”, “Sunday Dinner”, “The Original Meatball in a Cup”, “The Meatball Lovers
Meatball”, “T&L Creative Salads” and “Olive Branch Savory Products”. The recipes and use of the trademarks
have been assigned in perpetuity to the Company.
We
rely on a combination of trademark, copyright and trade secret laws to establish and protect our proprietary rights. We will also use
technical measures to protect our proprietary rights.
Royalty
Agreement
In
accordance with a Development and License Agreement (the “Development and License Agreement”) entered into on January 1,
2009 with Dan Dougherty relating to the use of his grandmother’s recipes for the products to be created by MamaMancini’s,
Mr. Dougherty granted us a 50-year exclusive license (subject to certain minimum payments being made), with a 25-year extension option,
to use and commercialize the licensed items. Under the terms of the Development and License Agreement, Mr. Dougherty shall develop a
line of beef meatballs with sauce, turkey meatballs with sauce and other similar meats and sauces for commercial manufacture, distribution
and sale (each a “Licensor Product” and collectively the “Licensor Products”). Mr. Dougherty shall work with
us to develop Licensor Products that are acceptable to us. Upon acceptance of a Licensor Product by us, Mr. Dougherty’s trade secret
recipes, formulas methods and ingredients for the preparation and production of such Licensor Products shall be subject to the Development
and License Agreement. In connection with the Development and License Agreement, we pay Mr. Dougherty a royalty fee on net sales.
USDA
approval / Regulations
Our
food products, which are manufactured both in our own manufacturing facilities and in third-party facilities, are subject to various
federal, state and local regulations and inspection, and to extensive regulations and inspections, regarding sanitation, quality, packaging
and labeling. In order to distribute and sell our products outside the State of New Jersey, the third-party food processing facilities
must meet the standards promulgated by the U.S. Department of Agriculture (the “USDA”). Our manufacturing processing facilities
and products are subject to periodic inspection by federal, state, and local authorities. In January 2011, the FDA’s Food Safety
Modernization Act was signed into law. The law will increase the number of inspections at food facilities in the U.S. in an effort to
enhance the detection of food borne illness outbreaks and order recalls of tainted food products. The facilities in which our products
are manufactured are inspected regularly and comply with all the requirements of the FDA and USDA.
We
are subject to the Food, Drug and Cosmetic Act and regulations promulgated thereunder by the FDA. This comprehensive regulatory program
governs, among other things, the manufacturing, composition and ingredients, packaging, and safety of food. Under this program, the FDA
regulates manufacturing practices for foods through, among other things, its current “good manufacturing practices” regulations,
or GMP’s, and specifies the recipes for certain foods. Specifically, the USDA defines “all natural” as a product that
contains no artificial ingredients, coloring ingredients or chemical preservatives and is minimally processed. The Company’s products
were submitted to the USDA and approved as “all natural”. However, should the USDA change their definition of “all
natural” at some point in the future, or should MamaMancini’s change their existing recipes to include ingredients that do
not meet the USDA’s definition of “all natural”, our results of operations could be adversely affected.
The
FTC and other authorities regulate how we market and advertise our products, and we are currently in compliance with all regulations
related thereto, although we could be the target of claims relating to alleged false or deceptive advertising under federal and state
laws and regulations. Changes in these laws or regulations or the introduction of new laws or regulations could increase the costs of
doing business for us or our customers or suppliers or restrict our actions, causing our results of operations to be adversely affected.
Quality
Assurance
We
take precautions designed to ensure the quality and safety of our products. In addition to routine third-party inspections of our manufacturing
facilities, we have instituted regular audits to address topics such as allergen control, ingredient, packaging and product specifications
and sanitation. Under the FDA Food Modernization Act, both our own manufacturing facilities and each of our contract manufacturers are
required to have a hazard analysis critical control points plan that identifies critical pathways for contaminants and mandates control
measures that must be used to prevent, eliminate or reduce relevant food-borne hazards.
Our
manufacturing facility is certified in the Safe Quality Food Program. These standards are integrated food safety and quality management
protocols designed specifically for the food sector and offer a comprehensive methodology to manage food safety and quality simultaneously.
Certification provides an independent and external validation that a product, process or service complies with applicable regulations
and standards.
We
work with suppliers who assure the quality and safety of their ingredients. These assurances are supported by our purchasing contracts
or quality assurance specification packets, including affidavits, certificates of analysis and analytical testing, where required. The
quality assurance staff within our manufacturing facility and within our contract manufacturers conduct periodic on-site routine audits
of critical ingredient suppliers.
Where
You Can Find More Information
The
public may read and copy any materials the Company files with the U.S. Securities and Exchange Commission (the “SEC”) at
the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0030. The SEC maintains an Internet website (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
Item
1A. Risk Factors
Smaller
reporting companies are not required to provide the information required by this item. Notwithstanding, in addition to risk factors highlighted
in previous reports, the Company adds the following additional risk factor:
We
could be substantially affected by the Coronavirus (COVID-19) pandemic
In
December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China, and has since spread to a number of
other countries, including the United States. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic.
In addition, as of the time of the filing of this Annual Report on Form 10-K, several states in the United States have declared states
of emergency, and several countries around the world, including the United States, have taken steps to restrict travel. While all of
our operations are located in the United States, we participate in a national supply chain, and the existence of a worldwide pandemic,
the fear associated with COVID-19, or any, pandemic, and the reactions of governments around the world in response to COVID-19, or any,
pandemic, to regulate the flow of labor and products and impede the travel of personnel, may impact our ability to conduct normal business
operations, which could adversely affect our results of operations and liquidity. Disruptions to our supply chain and business operations,
or to our suppliers’ or customers’ supply chains and business operations, could include disruptions from the closure of supplier
and manufacturer facilities, interruptions in the supply of raw materials and components, personnel absences, or restrictions on the
shipment of our or our suppliers’ or customers’ products, any of which could have adverse ripple effects on our manufacturing
output and delivery schedule. If we need to close any of our facilities or a critical number of our employees become too ill to work,
our production ability could be materially adversely affected in a rapid manner. Similarly, if our customers experience adverse business
consequences due to COVID-19, or any other, pandemic, demand for our products could also be materially adversely affected in a rapid
manner. Global health concerns, such as COVID-19, could also result in social, economic, and labor instability in the countries and localities
in which we or our suppliers and customers operate. Any of these uncertainties could have a material adverse effect on our business,
financial condition or results of operations.
Item
1B. Unresolved Staff Comments.
Not
applicable.
Item
2. Properties.
Our
principal executive office is located at 25 Branca Road East Rutherford, NJ 07073. We currently lease 24,213 square feet of space
located in East Rutherford, NJ from Joseph Branca Partnership, Ltd for a current rental of $17,655 per month. The lease term runs
through March 31, 2024 with renewal options through March 31, 2029. In addition, we lease an additional 3,970 square feet of space
at 355 Murray Hill Parkway from CLN Associates, LLC for a current rental of $6,496 per month. We currently lease 20,188 square feet
in a fully contained facility at 184 Allen Boulevard, Farmingdale, NY from 148 Allen Blvd LLC for production and distribution
of T&L Creative Salads and Olive Branch products. This property is owned by Anthony Morello, Jr., CEO of T&L Acquisition
Corp, a 100% owned subsidiary of the company.
This lease term is through November 30, 2031 with the option to extend the lease for two additional ten-year terms with
current rent of $20,200 per month.
Item
3. Legal Proceedings.
We
are not currently involved in any litigation that we believe could have a materially adverse effect on our financial condition or results
of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries,
threatened against or affecting our Company, our common stock, any of our subsidiaries or of our Company’s or our Company’s
subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
Item
4. Mine Safety Disclosures.
Not
applicable.
PART
II
Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
(a)
Market Information
Our
shares of common stock are currently quoted on the NASDAQ under the symbol “MMMB” The following table sets forth (i) the
intra-day high and low sales price per share for our common stock, as reported on the OTCQB, for the fiscal years ended January 31, 2021
and January 31, 2022. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent
actual transactions.
Fiscal Year Ended January 31, 2021 High Low
Fiscal Year Ended January 31, 2022 High Low
The
market price of our common stock, like that of other early-stage companies, is highly volatile and is subject to fluctuations in response
to variations in operating results, announcements of new products, or other events or factors. Our stock price may also be affected by
broader market trends unrelated to our performance.
(b)
Holders
As
of April 28, 2022, there were approximately 75 record holders of our common stock and there were 35,758,792 shares of our common
stock issued and outstanding. This figure does not take into account those shareholders whose certificates are held in the name of broker-dealers
or other nominees. Please see SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT for information related to the holdings
of certain beneficial owners and management of the Company.
(c)
Dividends
Preferred
Stock. The holders of the Series A Convertible Preferred were entitled to receive dividends at a rate of eight percent (8%) per annum
payable quarterly in cash or Company Common Stock at the option of the holder. All outstanding shares of Series A Convertible Preferred
Stock automatically converted to Company Common Stock on July 27, 2017 and no shares of Preferred Stock are currently issued and outstanding.
Common
Stock. The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings,
if any, our capital requirements and financial position, general economic conditions, and other pertinent conditions. We have not paid
any cash dividends to the holders of our Common Stock and it is not our present intention to pay any cash dividends on our Common Stock
in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
(d)
Securities Authorized for Issuance under Equity Compensation Plans
At
the present time, we have 450,000 shares of common stock authorized for issuance under our equity compensation plan. For more information
on our equity compensation plan please refer to the Current Report on Form 8-K filed with the Securities and Exchange Commission on June
5, 2013.
Recent
Sales of Unregistered Securities
Below
is a list of securities sold by us from February 1, 2021 through January 31, 2022 which were not registered under the Securities Act.
Common
Stock:
The
Company issued an aggregate of 148,061 Shares during this period, all of which were the result of the exercise of then-outstanding stock
options.
The
securities issued in the abovementioned transactions were issued in connection with a Consulting Agreement and were exempt from the registration
requirements of Section 5 of the Securities Act of 1933, as amended, pursuant to the terms of Section 4(2) of that Act.
Item
6. Selected Financial Data.
Pursuant
to permissive authority under Regulation S-K, Rule 301, we have omitted Selected Financial Data.
Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
THE
FOLLOWING DISCUSSION OF OUR PLAN OF OPERATION AND RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND
RELATED NOTES TO THE FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS REPORT. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT
RELATE TO FUTURE EVENTS OR OUR FUTURE FINANCIAL PERFORMANCE. THESE STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER
FACTORS THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE
RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. THESE RISKS AND OTHER
FACTORS INCLUDE, AMONG OTHERS, THOSE LISTED UNDER “FORWARD-LOOKING STATEMENTS” AND “RISK FACTORS” AND
THOSE INCLUDED ELSEWHERE IN THIS REPORT.
Results
of Operations for the Year ended January 31, 2022 and 2021
The
following table sets forth the summary statements of operations for the year ended January 31, 2022 and 2021:
For the Year Ended
For
the year ended January 31, 2022 and 2021, the Company reported net (loss) income of $(251,926) and $4,067,206, respectively.
The change in net income between the year ended January 31, 2022 and 2021 was mainly the result of a decrease in gross profit percentage
(as discussed below), one-time expenses equal to $661,293 associated with acquisition closing costs and the income tax provision
of $296,472 recorded during the year ended January 31, 2022 compared to a benefit of $744,973 during the year ended
January 31, 2021.
Sales:
Sales, net of slotting fees and discounts increased by approximately 16% to $47,083,740 during the year ended January 31, 2022, from
$40,758,605 during the year ended January 31, 2021. During the year ended January 31, 2022, the Company established a greater balance
of major customer volumes attributed to growth in sales across a strong portfolio of both national and large regional grocery chains
and club stores. Of this increase, $3,370,825 is attributable to the acquisitions in December 2021.
Gross
Profit: The gross profit margin was 25% for the year ended January 31, 2022 compared to 31% for the year ended January 31,
2021. The change in gross profit margin is due to increases in raw material costs, packaging costs and in-bound freight costs which outpaced
sales price increases during the year ended January 31, 2022. Management believes price increases will catch up to the rise in
materials and services by the end of the second quarter of fiscal year end January 31, 2023.
Operating
Expenses: Operating expenses increased by 27% during the year ended January 31, 2022, as compared to the year ended January
31, 2021. Operating expenses increased as a percentage of sales to 25% in 2022 compared to 22% in 2021. The $2,509,645 increase
in total operating expenses is primarily attributable to the following:
● NASDAQ up-listing costs of $39,000.
Other
Income (Expenses): Other income (expenses) decreased by $117,394 to $38,221 for the year ended January 31, 2022 as compared to expenses
of $155,615 during the year ended January 31, 2021. For the year ended January 31, 2022, other income (expenses) consisted of $73,487
in interest expense incurred on the Company’s financing arrangements and amortization of debt discount of $2,438 which was offset
by the net insurance proceeds relating to the property damage claim of $37,704. For year ended January 31, 2021, other expenses consisted
of $137,751 in interest expense incurred on the Company’s financing arrangements and the Company recorded $17,864 of amortization
expense related to the debt discount.
Liquidity
and Capital Resources
The
following table summarizes total current assets, liabilities and working capital at January 31, 2022 compared to January 31, 2021:
As
of January 31, 2022, we had working capital of $2,653,189 as compared to a working capital of $4,834,102 as of January 31, 2021,
a decrease of $2,180,913. The decrease in working capital is primarily attributable to a decrease in cash of $2,339,962 used for
acquisitions, an increase in accounts payable and accrued expenses of $2,772,029, increase in current portion of lease obligations
of $172,500, an increase in the related party promissory note of $759,917 and an increase in the term loan of $1,253,333. These
amounts were offset by an increase in inventory of $1,695,582 and an increase in accounts receivable of $3,653,924.
Net
cash provided by operating activities for the year ended January 31, 2022 was $909,841 compared to net cash provided
by operating activities for the year ended January 31, 2021 of $3,698,540. The net income (loss) for the year ended January
31, 2022 and 2021 was ($251,926) and $4,067,206, respectively.
Net
cash used in investing activities for the year ended January 31, 2022 was $11,270,957 as compared
to $(451,940) for the year ended January 31, 2021, respectively. For the year ended January 31,
2022, the cash used in investing activities was to acquire two new companies and purchase of additional fixed assets. For the year ended
January 31, 2021, the cash used in investing activities was to purchase additional fixed assets and intangible assets.
Net
cash used in all financing activities for the year ended January 31, 2022 was $8,021,154 as compared to $449,723 used by
financing activities for the year ended January 31, 2021. During the year ended January 31, 2022, the Company received proceeds of new
loan borrowings of $7,500,000 from a term loan and $765,000 from the Company’s line of credit. These cash in-flows
(among others of a lesser amount) were offset by payments of $199,176 paid for finance lease payments. During the year
ended January 31, 2021, the Company received proceeds of $330,505 from the Paycheck Protection Program promissory note and proceeds of
$3,787,582 from the exercise of options and warrants. These cash in-flows were offset by payments on its line of credit of $2,997,348,
payments on its term loan of $441,663, payments of $641,844 on the related party loans and $156,450 paid for capital lease payments.
The Company returned the $330,505 received from the Paycheck Protection Program in May 2020.
Although
the expected revenue growth and control of expenses lead management to believe that it is probable that the Company’s cash resources
will be sufficient to meet its cash requirements through May 27, 2023 based on current and projected levels of operations,
the Company may require additional funding to finance growth and achieve its strategic objectives. If such financing is required, there
can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all. In the event funding is
not available on reasonable terms, the Company might be required to change its growth strategy and/or seek funding on an alternative
basis, but there is no guarantee it will be able to do so. Because of the rapidly changing environment in response to COVID-19, the current
expectations of the Company may be altered as conditions change.
Recent
Accounting Pronouncements
In
December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes (ASU 2019-12, “Income
Taxes (Topic 740): Simplifying the Accounting for Income Taxes”). This guidance eliminates certain exceptions to the general
approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. This guidance
is effective for annual periods after December 15, 2020, including interim periods within those annual periods. The adoption of the new
standard did not have a significant impact on the Company’s consolidated financial statements.
In May 2021,
the FASB issued accounting standards update ASU 2021-04, “Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments
(Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own
Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written
Call Options”, to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding
equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments
in this ASU are effective for public and nonpublic entities for fiscal years beginning after December 15, 2021, and interim periods with
fiscal years beginning after December 15, 2021. Early adoption is permitted, including adoption in an interim period. The Company is
currently evaluating the effects of the adoption of ASU No. 2021-04 on its consolidated financial statements.
In August
2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU
2020-06”), which simplifies an issuer’s accounting for convertible instruments by reducing the number of accounting models
that require separate accounting for embedded conversion features. ASU 2020-06 also simplifies the settlement assessment that entities
are required to perform to determine whether a contract qualifies for equity classification and makes targeted improvements to the disclosures
for convertible instruments and earnings-per-share (EPS) guidance. This update will be effective for the Company’s fiscal years
beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal
years beginning after December 15, 2020, and interim periods within those fiscal years. Entities can elect to adopt the new guidance
through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is currently
evaluating the impact of the pending adoption of the new standard on its financial statements and intends to adopt the standard as of
January 1, 2024.
Management
does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect
on the accompanying consolidated financial statements.
Critical
Accounting Policies
Our consolidated financial statements and related public financial information are based on the application of accounting principles
generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective
interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These
estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies,
risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently
and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable
under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue
to monitor significant estimates made during the preparation of our financial statements.
Our
significant accounting policies are summarized in Note 3 of our consolidated financial statements. While all these significant
accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies
determined to be critical are those policies that have the most significant impact on our financial statements and require management
to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given
current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect
on our consolidated results of operations, financial position or liquidity for the periods presented in this report.
We
believe the following critical accounting policies and procedures, among others, affect our more significant judgments and estimates
used in the preparation of our consolidated financial statements:
Use
of Estimates
The
preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Such
estimates and assumptions impact, among others, the following: allowance for doubtful accounts, inventory obsolescence and the fair value
of share-based payments.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of
a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered
in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results
could differ significantly from our estimates.
Intangible Assets
Software
The Company accounts for acquired internal-use