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, 2023
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 Capital Market
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 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 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 ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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 29, 2022, based on
a closing price of $1.46 was approximately $28,822,546.
As
of April 26, 2023, the registrant had 36,317,857 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. 11
ITEM 2. PROPERTIES. 11
ITEM 3. LEGAL PROCEEDINGS. 11
ITEM 4. MINE SAFETY DISCLOSURES. 11
ITEM 6. [RESERVED]. 12
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 17
ITEM 8. FINANCIAL STATEMENTS. 17
ITEM 9A. CONTROLS AND PROCEDURES. 17
ITEM 9B. OTHER INFORMATION. 18
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURSDICTIONS THAT PREVENT INSPECTIONS 18
PART III 19
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. 19
ITEM 11. EXECUTIVE COMPENSATION. 27
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. 33
ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES. 34
SIGNATURES. 35
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.) (the “Company” or “MamaMancini’s”) 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.” 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” or “T&L Creative Salads”) and Olive Branch, LLC (“OB” or “Olive Branch”),
which are related gourmet food manufacturers based in New York. The closing of these transactions occurred and was completed on December
29, 2021. The Company acquired T&L and OB for a combined purchase price of $14.0 million, including $11.0 million in cash at closing
and $3.0 million in a promissory note (the “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 Note holder
is T&L Acquisition Corp, a wholly-owned subsidiary of the Company, and it is guaranteed by the Company. The Note holder 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.
remained as President of T&L.
On
December 29, 2021, the Company entered into a Multiple Disbursement Term Loan (the “Loan”) with M&T Bank for the original
principal amount of $7,500,000 payable in monthly installments over a 60-month period. The maturity date of the Loan is January 17, 2027.
Interest is payable on the 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 the Company and M&T 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) Secured Overnight Financing Rate (“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.
On
June 28, 2022, the Company acquired a 24% minority interest in Chef Inspirational Foods, LLC (“CIF”), a leading developer,
innovator, marketer and sales company selling prepared foods, for an investment of $1.2 million. The investment consists of $500,000
in cash and $700,000 in the Company’s common stock. The Company also was granted the option to purchase the remaining seventy-six
percent (76%) interest in CIF within one year of June 28, 2022. The option purchase price is an additional $3.8 million, of which $3.5
million would be paid in cash and $300,000 in common stock, which would be paid within a two-year period from the date of the option
exercise.
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 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.
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. MamaMancini’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.
Our
products are principally sold to supermarkets, club chains, and mass-market retailers. We currently have more than 50 product offerings
across our beef, chicken, salad and olive portfolios which are packaged in different sized retail and bulk packages. Our products are
principally sold in the deli section 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 fresh meat section. 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 and Olive Branch, are related premier gourmet food manufacturers based in New York. T&L offers
a full line of protein, salad and sandwich products 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 as well as chicken strips. 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.
On
June 28, 2022, the Company acquired a 24% minority interest in CIF, a leading developer, innovator, marketer and sales company selling
prepared foods.
Industry
Overview
Our
products are considered specialty prepared foods, in that they 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 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 brands:
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:
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 range from $5.99 to $9.99, 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, 2023, approximately 90% of our products are internally produced in our East Rutherford, NJ or Farmingdale, NY Facilities.
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 trials, 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 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 pre-packaged food industry based on our products’ niche market, there can be no assurances that we do not
compete with the entire 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”,
“The Meatball Lovers Meatball”, “The Original Meatball in a Cup”, and “Mac N’ Mamas”. 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 Mama’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 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 Food and Drug Administration’s (“FDA”) Food
Safety Modernization Act was signed into law. The law increased 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. Mama’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 Mama’s change its 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 facilities are 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 facilities 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:
The
loss of our largest customers would significantly reduce our revenue and adversely affect our results of operations.
During
the year ended January 31, 2023 two customers represented approximately 37% or our gross revenues and during the year ended January 31,
2022 three customers represented approximately 58% of our gross revenue. The loss of our largest customers would significantly reduce
our revenue, which would have a material adverse effect on our results of operations. We can provide no assurance that these customers
will continue to place orders in the future.
We
depend on the services of key personnel, and may not be able to operate and grow our business effectively if we lose their services or
are unable to attract qualified personnel in the future.
We
rely heavily on our senior management team, due to their broad experience with consumer focused companies, to identify internal expansion
and external growth companies. Our ability to retain senior management and other key personnel is therefore very important to our future
success. We have employment agreements with our senior management, but these employment agreements do not ensure that they will not voluntarily
terminate their employment with us. In addition, our key personnel are subject to non-solicitation and confidential information restrictions.
We do not have key man insurance for any of our current management or other key personnel. The loss of any key personnel would require
the remaining key personnel to divert immediate attention to seeking a replacement. Competition for senior management personnel is intense,
and fit is important to us. Our inability to find a suitable replacement for any departing executive officer or key employee on a timely
basis could adversely affect our ability to operate and grow our business.
Adverse
developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance
by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and its
financial condition and results of operations.
Actual
events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional
counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors
about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems.
For example, on March 10, 2023, Silicon Valley Bank (“SVB”), was closed by the California Department of Financial Protection
and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”), as receiver. Similarly, on March 12,
2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership. Although a statement by the Department of the Treasury,
the Federal Reserve and the FDIC stated that all depositors of SVB would have access to all of their money after only one business day
of closure, including funds held in uninsured deposit accounts, borrowers under credit agreements, letters of credit and certain other
financial instruments with SVB, Signature Bank or any other financial institution that is placed into receivership by the FDIC may be
unable to access undrawn amounts thereunder. If any of our counterparties to any such instruments were to be placed into receivership,
we may be unable to access such funds. In addition, if any parties with whom we conduct business are unable to access funds pursuant
to such instruments or lending arrangements with such a financial institution, such parties’ ability to pay their obligations to
us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected. In this regard, counterparties
to SVB credit agreements and arrangements, and third parties such as beneficiaries of letters of credit (among others), may experience
direct impacts from the closure of SVB and uncertainty remains over liquidity concerns in the broader financial services industry. Similar
impacts have occurred in the past, such as during the 2008-2010 financial crisis.
Inflation
and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest
rates below current market interest rates. Although the U.S. Department of Treasury, FDIC and Federal Reserve Board have announced a
program to provide up to $25 billion of loans to financial institutions secured by certain of such government securities held by financial
institutions to mitigate the risk of potential losses on the sale of such instruments, widespread demands for customer withdrawals or
other liquidity needs of financial institutions for immediate liquidity may exceed the capacity of such program. There is no guarantee
that the U.S. Department of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event
of the closure of other banks or financial institutions, or that they would do so in a timely fashion.
Although
we assess our banking relationships as we believe necessary or appropriate, our access to funding sources and other credit arrangements
in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by
factors that affect us, the financial institutions with which we have arrangements directly, or the financial services industry or economy
in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations
under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services
industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry.
These factors could involve financial institutions or financial services industry companies with which we have financial or business
relationships, but could also include factors involving financial markets or the financial services industry generally.
The
results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on our
current and projected business operations and our financial condition and results of operations. These could include, but may not be
limited to, the following:
●Delayed
access to deposits or other financial assets or the uninsured loss of deposits or other financial assets;
●Loss
of access to revolving existing credit facilities or other working capital sources and/or the inability to refund, roll over or extend
the maturity of, or enter into new credit facilities or other working capital resources;
●Potential
or actual breach of contractual obligations that require us to maintain letters or credit or other credit support arrangements; or
In
addition, any further deterioration in the macroeconomic economy or financial services industry could lead to losses or defaults by parties
with whom we conduct business, which in turn, could have a material adverse effect on our current and/or projected business operations
and results of operations and financial condition. For example, a party with whom we conduct business may fail to make payments when
due, default under their agreements with us, become insolvent or declare bankruptcy. Any bankruptcy or insolvency, or the failure to
make payments when due, of any counterparty of ours, or the loss of any significant relationships, could result in material losses to
us and may material adverse impacts on our business.
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 6,072 square feet of space at 355 Murray Hill
Parkway from CLN Associates, LLC for a current rental of $9,032 per month. We currently lease 20,188 square feet in a fully contained
facility at 148 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., President of T&L as well as individuals related to Mr. Morello.
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 material litigation. 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 period from February 2021 to July
2022 and NASDAQ for the period from July 2022 to January 2023. 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, 2022 High Low
Fiscal Year Ended January 31, 2023 High Low
The
market price of our common stock, 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 26, 2023, there were approximately 69 record holders of our common stock and there were 36,317,857 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
Series
A 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 converted to Company Common Stock on February 13, 2020 and no shares of Series A Preferred Stock are currently issued
and outstanding.
Series
B Preferred Stock. The holders of Series B Preferred Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for such purpose, an accruing cumulative dividend, in preference to any dividend on the Common
Stock, at an annual rate of eight percent (8%) of the Original Purchase Price, payable monthly. As of January 31, 2023 there are 54,600
shares of Series B Preferred stock 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
The
following table provides information concerning equity compensation arrangements as of January 31, 2023:
(1)
Consists of the MamaMancini’s Holdings 2021 Incentive Stock and Award Plan.
Recent
Sales of Unregistered Securities
Below
is a list of securities sold by us from February 1, 2022 through January 31, 2023 which were not registered under the Securities Act.
Name of Purchaser Issue Date Security Shares Consideration
The
securities issued in the abovementioned transactions were issued in connection with private placements 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 and Rule 506 of Regulation
D.
Repurchases
of Securities
During
the quarter ended January 31, 2023, the Company did not repurchase any Company securities.
Item
6. [Reserved]
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 Years Ended January 31, 2023 and 2022
The
following table sets forth the summary of the consolidated statements of operations for the years ended January 31, 2023 and 2022:
For the Years Ended
Income Tax Benefit (Provision) $ (9,104 ) $ (296,472 )
Income from equity method investment in Chef Inspirational $ 143,486 $ -
For
the years ended January 31, 2023 and 2022, the Company reported net income (loss) of $2,302,674 and $(251,926), respectively. The change
in net income (loss) between the years ended January 31, 2023 and 2022 reflects strong sales and same-customer product additions, normalization
of costs for commodities, other materials, freight as well as improvements in manufacturing efficiencies.
Sales:
Sales, net of slotting fees and discounts increased by approximately 98% to $93,187,621 during the year ended January 31, 2023, from
$47,083,740 during the year ended January 31, 2022. Sales for the year ended January 31, 2023 include a full year of operations of T&L
Creative Salads and Olive Branch. For the year ended January 31, 2022 T&L Creative Salads and Olive Branch included the period beginning
December 29, 2021 to January 31, 2022.
Gross
Profit: The gross profit margin was 21% and 25% for the years ended January 31, 2023 and 2022, respectively. The Company continues
to identify procurement efficiencies and cost savings through stronger buying power created through the acquisitions of T&L Creative
Salads and Olive Branch.
Operating
Expenses: Operating expenses increased by 41% during the year ended January 31, 2023, as compared to the year ended January 31, 2022.
Operating expenses decreased as a percentage of sales to 18% in 2023 compared to 25% in 2022. The $4,825,502 increase in total operating
expenses is primarily attributable to the following:
● Commission Expenses rose by approximately $650,000 due to increased sales;
Other
Income (Expenses): Other expenses increased by $615,141 to $653,362 for the year ended January 31, 2023 as compared to $38,221 for
the year ended January 31, 2022. For the year ended January 31, 2023, other income (expenses) consisted of $633,889 in interest expense
on the Company’s financing arrangements and $22,121 in amortization of debt discount. For the year ended January 31, 2022, other
expenses consisted of $73,487 in interest expense incurred on the Company’s financing arrangements offset by other income of $37,704.
Liquidity
and Capital Resources
The
following table summarizes total current assets, liabilities and working capital at January 31, 2023 compared to January 31, 2022:
As
of January 31, 2023, we had working capital of $3,795,610 as compared to working capital of $2,653,189 as of January 31, 2022, an increase
of $1,142,421. The increase in working capital is primarily attributable to an increase in cash of $3,527,785, an increase of inventories
of $745,088 based on robust sales increases, and an increase in prepaid expenses and other current assets of $174,460 partially offset
by better cash management which resulted in a decrease in accounts receivable of $562,671 and an increase in accounts payable and accrued
liabilities of $2,192,359.
Net
cash provided by operating activities for the year ended January 31, 2023 was $5,509,162 compared to net cash provided by operating activities
for the year ended January 31, 2022 of $909,841. The net income (loss) for the years ended January 31, 2023 and 2022 was $2,302,674 and
$(251,926), respectively. During the year ended January 31, 2023, net income was affected by non-cash adjustments of $1,715,397 and
by changes in operating activities which provided cash of $1,490,965. During the year ended January 31, 2022, net income was affected
by adjustments to net income of $1,345,727 offset by changes in operating activities which used cash of $183,960.
Net
cash used in investing activities for the years ended January 31, 2023 was $1,093,214 as compared to $11,270,957 for the year ended January
31, 2022, respectively. For the year ended January 31, 2023, the Company used cash of $593,214 to purchase new machinery and equipment.
In addition, the Company paid cash of $500,000 for the acquisition of a 24% minority interest in Chef Inspirational Foods, LLC. For the
year ended January 31, 2022, the cash used in investing activities of $862,415 was to purchase new machinery and equipment and $10,408,542
for the acquisition of T&L and Olive Branch.
Net
cash used in financing activities for the year ended January 31, 2023 was $888,037 as compared to $8,021,154 provided by financing activities
for the year January 31, 2022. During the year ended January 31, 2023, the Company received net proceeds of $125,000 from borrowings
pursuant to the line of credit which were offset by payments of the term loan, related party loan, and finance lease payments of $1,293,095,
$750,000, and $235,208, respectively. In addition, during the year ended January 31, 2023, the Company received proceeds of $26,250 for
the exercise of options and $1,365,000 from the sale of Series B Convertible Preferred Stock. During the year ended January 31, 2023,
the Company paid offering costs of $64,600 and dividends on the Series B Preferred stock of $34,070. During the year ended January 31,
2022, the Company received proceeds of $19,080 from the exercise of options, $7,500,000 from borrowings from a term loan, and $765,00
from borrowings from a line of credit. These cash in-flows were offset by payments of $199,176 paid for finance lease payments and $63,750
paid in financing fees.
Although
the expected revenue growth and control of expenses lead management to believe that it is probable that the Company’s cash resources