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Mama's Creations, Inc. - Quarter Report: 2021 October (Form 10-Q)

 
 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarter ended: October 31, 2021

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Transition Period from ___________ to ____________

 

Commission File Number: 000-54954

 

MamaMancini’s Holdings, Inc.

(Exact name of Registrant as specified in its charter)

 

Nevada   27-0607116
(State or other jurisdiction of incorporation)   (IRS Employer ID No.)

 

25 Branca Road

East Rutherford, NJ 07073

(Address of principal executive offices and zip Code)

 

(201) 531-1212

(Registrant’s telephone number, including area code)

 

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 (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months, 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 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:

 

Large accelerated filer Accelerated filer
       
Non-accelerated filer Smaller reporting company
       
    Emerging Growth Company

 

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

 

As of December 10, 2021, there were 35,751,792 shares outstanding of the registrant’s common stock.

 

 

 

 
 

 

TABLE OF CONTENTS

 

    Page
PART I – FINANCIAL INFORMATION
     
Item 1. Financial Statements. F-1
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 1
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 7
     
Item 4. Controls and Procedures. 7
     
PART II – OTHER INFORMATION
     
Item 1. Legal Proceedings. 7
     
Item 1A. Risk Factors. 7
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 8
     
Item 3. Defaults Upon Senior Securities. 8
     
Item 4. Mine Safety Disclosures. 8
     
Item 5. Other Information 8
     
Item 6. Exhibits. 9
     
Signatures   10

 

 
 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

MAMAMANCINI’S HOLDINGS, INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2021

 

  Page(s)
   
Condensed Consolidated Balance Sheets as of October 31, 2021 (unaudited) and January 31, 2021 F-2
   
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended October 31, 2021 and 2020 (unaudited) F-3
   
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Period from August 1, 2021 through October 31, 2021 and the Period from August 1, 2020 through October 31, 2020 (unaudited) F-4
   
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Period from February 1, 2021 through October 31, 2021 and for the Period February 1, 2020 through October 31, 2020 (unaudited) F-5
   
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 31, 2021 and 2020 (unaudited) F-6
   
Notes to Condensed Consolidated Financial Statements (unaudited) F-7

 

F-1

 

 

MamaMancini’s Holdings, Inc.

Condensed Consolidated Balance Sheets

 

   October 31, 2021   January 31,2021 
   (unaudited)     
Assets          
           
Current Assets:          
Cash  $4,539,920   $3,190,560 
Accounts receivable, net   3,961,348    3,973,793 
Inventories   1,614,738    1,195,211 
Prepaid expenses   595,071    519,887 
Total current assets   10,711,077    8,879,451 
           
Property and equipment, net   3,177,021    2,963,602 
           
Intangibles   87,639    87,639 
           
Operating lease right of use assets   1,536,927    1,352,483 
           
Deferred tax asset, net   361,660    744,973 
           
Deposits   23,156    20,177 
Total Assets  $15,897,480   $14,048,325 
           
Liabilities and Stockholders’ Equity          
           
Liabilities:          
Current Liabilities:          
Accounts payable and accrued expenses  $4,269,206   $3,707,111 
Operating lease liability   188,590    147,684 
Finance leases payable   226,111    190,554 
Total current liabilities   4,683,907    4,045,349 
           
Operating lease liability – net of current portion   1,383,960    1,218,487 
Finance leases payable – net of current portion   422,326    474,743 
Total long-term liabilities   1,806,286    1,693,230 
           
Total Liabilities   6,490,193    5,738,579 
           
Commitments and contingencies (See Note 10)   -      
           
Stockholders’ Equity:          
Series A Preferred stock, $0.00001 par value; 120,000 shares authorized; 23,400 issued as of October 31, 2021 and January 31, 2021, 0 and 0 shares outstanding as of October 31, 2021 and January 31, 2021   -    - 
           
Preferred stock, $0.00001 par value; 19,880,000 shares authorized; no shares issued and outstanding   -    - 
           
Common stock, $0.00001 par value; 250,000,000 shares authorized; 35,751,792 and 35,603,731 shares issued and outstanding as of October 31, 2021 and January 31, 2021   359    357 
Additional paid in capital   20,575,338    20,535,793 
Accumulated deficit   (11,018,910)   (12,076,904)
Less: Treasury stock, 230,000 shares at cost, respectively as of October 31, 2021 and January 31, 2021   (149,500)   (149,500)
Total Stockholders’ Equity   9,407,287    8,309,746 
Total Liabilities and Stockholders’ Equity  $15,897,480   $14,048,325 

 

See accompanying notes to the condensed consolidated financial statements

 

F-2

 

 

MamaMancini’s Holdings, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

 

             
   For the Three Months Ended
October 31,
   For the Nine Months Ended
October 31,
 
   2021   2020   2021   2020 
                 
Sales-net of slotting fees and discounts  $10,852,682   $9,684,195   $33,230,666   $30,766,700 
                     
Costs of sales   8,123,517    6,773,662    23,787,864    21,317,384 
                     
Gross profit   2,729,165    2,910,533    9,442,802    9,449,316 
                     
Operating expenses:                    
Research and development   33,866    30,765    87,843    86,103 
General and administrative   2,694,098    2,092,640    7,916,646    6,793,366 
Total operating expenses   2,727,964    2,123,405    8,004,489    6,879,469 
                     
Income from operations   1,201    787,128    1,438,313    2,569,847 
                     
Other income (expenses)                    
Interest   (8,731)   (45,822)   (26,710)   (171,872)
Amortization of debt discount   -    (7,164)   -    (17,864)
Other income   -    -    37,704    - 
Total other income (expenses)   (8,731)   (52,986)   10,994    (189,736)
                     
Net income (loss) before income tax provision   (7,530)   734,142    1,449,307    2,380,111 
                     
Income tax (benefit) provision   (2,075)   -    391,313    - 
                     
Net income (loss)  $(5,455)  $734,142   $1,057,994   $2,380,111 
                     
Net income (loss) per common share                    
– basic  $(0.00)  $0.02   $0.03   $0.07 
– diluted  $(0.00)  $0.02   $0.03   $0.07 
                     
Weighted average common shares outstanding                    
– basic   35,728,821    34,225,446    35,683,484    32,832,450 
– diluted   35,728,821    35,725,984    36,176,949    34,322,988 

 

See accompanying notes to the condensed consolidated financial statements

 

F-3

 

 

MamaMancini’s Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

 

For the Period from August 1, 2021 through October 31, 2021

 

   Shares      Shares      Shares             
   Series A
Preferred Stock
   Common Stock   Treasury Stock   Additional
Paid In
   Accumulated   Stockholders’ 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Equity 
                                     
Balance, August 1, 2021   -   $-    35,725,041   $359    (230,000)  $(149,500)  $20,555,657   $(11,013,455)  $      9,393,061 
                                              
Common stock issued for services   -    -    -    -    -    -    18,933    -    18,933 
                                              
Stock options issued for services   -    -    -    -    -    -    748    -    748 
                                              
Common stock issued for exercise of options   -    -    26,751    -    -    -    -    -    - 
                                              
Net loss   -    -    -    -    -    -    -    (5,455)   (5,455)
Balance, October 31, 2021   -   $-    35,751,792   $359    (230,000)  $(149,500)  $20,575,338   $(11,018,910)  $9,407,287 

 

For the Period from August 1, 2020 through October 31, 2020

 

   Series A
Preferred Stock
   Common Stock   Treasury Stock   Additional
Paid In
   Accumulated   Stockholders’ 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Equity 
                                     
Balance, August 1, 2020   -   $-    33,517,101   $336    (230,000)  $(149,500)  $18,229,615   $(14,498,141)  $    3,582,310 
                                              
Stock options issued for services   -    -    -    -    -    -    1,460    -    1,460 
                                              
Common stock issued for exercise of warrants   -    -    1,250,740    12    -    -    1,258,852    -    1,258,594 
                                              
Net income   -    -    -    -    -    -    -    734,142    734,142 
Balance, October 31, 2020   -   $-    34,767,841   $348    (230,000)  $(149,500)  $19,489,657   $(13,763,999)  $5,576,506 

 

See accompanying notes to the condensed consolidated financial statements

 

F-4

 

 

MamaMancini’s Holdings, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

 

For the Period from February 1, 2021 through October 31, 2021

 

   Series A
Preferred Stock
   Common Stock   Treasury Stock   Additional
Paid In
   Accumulated   Stockholders’ 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Equity 
                                     
Balance, February 1, 2021   -   $-    35,603,731   $357    (230,000)  $(149,500)  $20,535,793   $(12,076,904)  $    8,309,746 
                                              
Common stock issued for services   -    -    -    -    -    -    18,933    -    18,933 
                                              
Stock options issued for services   -    -    -    -    -    -    1,534    -    1,534 
                                              
Common stock issued for exercise of options   -    -    148,061    2    -    -    19,078    -    19,080 
                                              
Net income   -    -    -    -    -    -    -    1,057,994    1,057,994 
Balance, October 31, 2021   -   $-    35,751,792   $359    (230,000)  $(149,500)  $20,575,338   $(11,018,910)  $9,407,287 

 

For the Period from February 1, 2020 through October 31, 2020

 

   Series A
Preferred Stock
   Common Stock   Treasury Stock   Additional
Paid In
   Accumulated   Stockholders’ 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Equity 
                                     
Balance, February 1, 2020   -   $-    31,991,241   $321    (230,000)  $(149,500)  $16,695,352   $(16,144,110)  $      402,063 
                                              
Stock options issued for services   -    -    -    -    -    -    51,435    -    51,435 
                                              
Common stock issued for exercise of options   -    -    12,000    -    -    -    7,200    -    7,200 
                                              
Common stock issued for exercise of warrants   -    -    2,764,600    27    -    -    2,735,670    -    2,735,697 
                                              
Net income   -    -    -    -    -    -    -    2,380,111    2,380,111 
Balance, October 31, 2020   -   $-    34,767,841   $348    (230,000)  $(149,500)  $19,489,657   $(13,763,999)  $5,576,506 

 

See accompanying notes to the condensed consolidated financial statements

 

F-5

 

 

MamaMancini’s Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

       
   For the Nine Months Ended 
   October 31, 2021   October 31, 2020 
         
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income  $1,057,994   $2,380,111 
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation   572,238    489,109 
Amortization of debt discount   -    17,864 
Share-based compensation   20,467    51,435 
Amortization of right of use assets   163,141    102,943 
Change in deferred tax asset   383,313    - 
Changes in operating assets and liabilities:          
Accounts receivable   12,445    39,975 
Other receivable   -    - 
Inventories   (419,527)   (313,870)
Prepaid expenses   (75,184)   (38,784)
Security deposits   (2,979)   - 
Accounts payable and accrued expenses   562,095    (111,024)
Operating lease liability   (141,206)   (99,747)
Net Cash Provided by Operating Activities   2,132,797    2,518,012 
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Cash paid for fixed assets   (657,607)   (304,048)
Cash paid for intangibles   -    (16,284)
Net Cash Used in Investing Activities   (657,607)   (320,332)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Repayments of term loan   -    (441,663)
Repayments of related party notes payable   -    (641,844)
Proceeds from promissory note   -    330,505 
Repayment of promissory note   -    (330,505)
Borrowings of line of credit, net   -    (2,347,348)
Repayment of finance lease obligations   (144,910)   (110,562)
Proceeds from exercise of options   19,080    7,200 
Proceeds from exercise of warrants   -    2,735,697 
Net Cash Used in Financing Activities   (125,830)   (798,520)
           
Net Increase in Cash   1,349,360    1,399,160 
           
Cash - Beginning of Period   3,190,560    393,683 
           
Cash - End of Period  $4,539,920   $1,792,843 
           
SUPPLEMENTARY CASH FLOW INFORMATION:          
Cash Paid During the Period for:          
Income taxes  $-   $- 
Interest  $28,748   $174,735 
           
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Finance lease asset additions  $128,050   $401,387 
Operating lease asset additions  $347,585   $- 
Software subscription liability in accounts payable and accrued expenses  $-   $71,355 

 

See accompanying notes to the condensed consolidated financial statements

 

F-6

 

 

MamaMancini’s Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

October 31, 2021

 

Note 1 - Nature of Operations and Basis of Presentation

 

Nature of Operations

 

MamaMancini’s Holdings, Inc. (the “Company”), (formerly known as Mascot Properties, Inc.) was organized on July 22, 2009 as a Nevada corporation. The Company has a year-end of January 31.

 

The Company is a manufacturer and distributor of beef meatballs with sauce, turkey meatballs with sauce, beef meat loaf, chicken parmesan and other similar meats and sauces. In addition, the Company continues to diversify its product line by introducing new products such as ready to serve dinners, single-size Pasta Bowls, bulk deli, packaged refrigerated and frozen products. The Company’s products were submitted to the United States Department of Agriculture (the “USDA”) and approved as all natural. 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 customers are located throughout the United States, with large concentrations in the Northeast and Southeast.

 

Note 2 - Summary of Significant Accounting Policies

 

Basis of Presentation

 

The condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

 

The unaudited interim financial information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the opinion of management are necessary to fairly state the financial position of the Company and the results of its operations for the periods presented. This report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended January 31, 2021 filed on April 21, 2021. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The condensed consolidated balance sheet at January 31, 2021 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the interim periods presented are not necessarily indicative of results for the year ending January 31, 2022.

 

Principles of Consolidation

 

The condensed consolidated financial statements include all accounts of the entities as of the reporting period ending date(s) and for the reporting period(s). All inter-company balances and transactions have been eliminated.

 

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.

 

F-7

 

 

Risks and Uncertainties

 

The Company operates in an industry that is subject to intense competition and change in consumer demand. The Company’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure.

 

The Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the grocery industry, (ii) general economic conditions in the various local markets in which the Company competes, including a potential general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project the Company’s operating results on a consistent basis.

 

Cash

 

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company held no cash equivalents at October 31, 2021 and January 31, 2021.

 

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At October 31, 2021, the Company had $4,298,390 in cash balances that exceed federally insured limits.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company generally does not require collateral to support customer receivables. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. As of October 31, 2021 and January 31, 2021, the Company had reserves of $2,000.

 

Inventories

 

Inventories are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) valuation method. Inventory was comprised of the following at October 31, 2021 and January 31, 2021:

 

   October 31, 2021   January 31, 2021 
Raw Materials  $845,801   $746,013 
Work in Process   130,551    88,955 
Finished goods   638,386    360,243 
Inventories  $1,614,738   $1,195,211 

 

Property and Equipment

 

Property and equipment are recorded at cost net of depreciation. Depreciation expense is computed using straight-line methods over the estimated useful lives.

 

Asset lives for financial statement reporting of depreciation are:

 

Machinery and equipment   2-7 years 
Furniture and fixtures   3 years 
Leasehold improvements   -* 

 

(*) Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever period is shorter.

 

F-8

 

 

Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations.

 

Intangible Assets

 

The Company accounts for acquired internal-use software licenses and certain costs within the scope of ASC 350-40, Intangibles - Goodwill and Other - Internal-Use Software as intangible assets. The Company capitalized $87,639 of costs incurred in the year ended January 31, 2021 to implement cloud computing arrangements. Acquired internal-use software licenses are amortized over the term of the arrangement on a straight-line basis to the line item within the condensed consolidated statements of operations that reflects the nature of the license. The Company did not record amortization for the software license since the license has yet to be implemented as of October 31, 2021.

 

Additionally, the Company evaluates its accounting for fees paid in an agreement to determine whether it includes a license to internal-use software. If the agreement includes a software license, the Company accounts for the software license as an intangible asset. Acquired software licenses are recognized and measured at cost, which includes the present value of the license obligation if the license is to be paid for over time. If the agreement does not include a software license, the Company accounts for the arrangement as a service contract (hosting arrangement) and hosting costs are generally expensed as incurred.

 

Leases

 

In February 2016, the FASB issued ASU 2016-02 “Leases” (Topic 842) which amended guidance for lease arrangements to increase transparency and comparability by providing additional information to users of financial statements regarding an entity’s leasing activities. Subsequent to the issuance of Topic 842, the FASB clarified the guidance through several ASUs; hereinafter the collection of lease guidance is referred to as ASC 842. The revised guidance seeks to achieve this objective by requiring reporting entities to recognize lease assets and lease liabilities on the balance sheet for substantially all lease arrangements.

 

As part of the adoption the Company elected the practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to:

 

  1. Not separate non-lease components from lease components and instead to account for each separate lease component and the non-lease components associated with that lease component as a single lease component.
     
  2. Not to apply the recognition requirements in ASC 842 to short-term leases.
     
  3. Not record a right of use asset or right of use liability for leases with an asset or liability balance that would be considered immaterial.

 

Fair Value of Financial Instruments

 

For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Company’s short-term financial instruments approximates fair value due to the relatively short period to maturity for these instruments.

 

Research and Development

 

Research and development is expensed as incurred. Research and development expenses for the three months ended October 31, 2021 and 2020 were $33,866 and $30,765, respectively. Research and development expenses for the nine months ended October 31, 2021 and 2020 were $87,843 and $86,103, respectively.

 

F-9

 

 

Shipping and Handling Costs

 

The Company classifies freight billed to customers as sales revenue and the related freight costs as general and administrative expenses.

 

Revenue Recognition

 

The Company’s sales predominantly are generated from the sale of finished products to customers, contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, this occurs when the goods are shipped to the customer. Revenues are recognized in an amount that reflects the net consideration the Company expects to receive in exchange for the goods. The Company reports all amounts billed to a customer in a sale transaction as revenue. The Company elected to treat shipping and handling activities as fulfillment activities, and the related costs are recorded as selling expenses in general and administrative expenses on the condensed consolidated statement of operations.

 

The Company promotes its products with advertising, consumer incentives and trade promotions. These programs include discounts, slotting fees, coupons, rebates, in-store display incentives and volume-based incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to the transaction price based on amounts estimated as being due to customers and consumers at the end of a period. The Company derives these estimates principally on historical utilization and redemption rates. The Company does not receive a distinct service in relation to the advertising, consumer incentives and trade promotions.

 

Payment terms in the Company’s invoices are based on the billing schedule established in contracts and purchase orders with customers. The Company recognizes the related trade receivable when the goods are shipped.

 

Expenses such as slotting fees, sales discounts, promotions and allowances are accounted for as a direct reduction of revenues as follows (see Note 11):

 

   October 31, 2021   October 31, 2020 
   For the Three Months Ended 
   October 31, 2021   October 31, 2020 
         
Gross Sales  $11,165,524   $10,016,932 
Less: Slotting, Discounts, Promotions and Allowances   312,842    332,737 
Net Sales  $10,852,682   $9,684,195 

 

 

       
   For the Nine Months Ended 
   October 31, 2021   October 31, 2020 
         
Gross Sales  $34,373,119   $31,833,423 
Less: Slotting, Discounts, Promotions and Allowances   1,142,453    1,066,723 
Net Sales  $33,230,666   $30,766,700 

 

The following table disaggregates gross revenue by significant geographic area for the three and nine months ended October 31, 2021 and 2020:

 

   October 31, 2021   October 31, 2020 
   For the Three Months Ended 
   October 31, 2021   October 31, 2020 
Northeast  $3,542,894   $3,304,422 
Southeast   4,338,967    2,894,971 
Midwest   1,155,233    1,204,936 
West   952,910    1,475,143 
Southwest   1,175,520    1,137,460 
Total revenue  $11,165,524   $10,016,932 

 

 

       
   For the Nine Months Ended 
   October 31, 2021   October 31, 2020 
Northeast  $10,270,568   $10,558,410 
Southeast   13,220,822    8,863,856 
Midwest   3,515,194    3,819,765 
West   3,818,925    4,381,561 
Southwest   3,547,610    4,209,831 
Total revenue  $34,373,119   $31,833,423 

 

Cost of Sales

 

Cost of sales represents costs directly related to the production and manufacturing of the Company’s products. Costs include product development, freight-in, packaging, and print production costs.

 

Advertising

 

Costs incurred for producing and communicating advertising for the Company are charged to operations as incurred. Producing and communicating advertising expenses for the three months ended October 31, 2021 and 2020 were $196,495 and $99,297 respectively. Producing and communicating advertising expenses for the nine months ended October 31, 2021 and 2020 were $441,556 and $366,499 respectively.

 

F-10

 

 

Stock-Based Compensation

 

The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation” (“ASC 718”), which establishes financial accounting and reporting standards for stock-based employee compensation. It defines a fair value-based method of accounting for an employee stock option or similar equity instrument.

 

The Company recognizes all forms of share-based payments, including stock option grants, warrants and restricted stock grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest.

 

Share-based payments, excluding restricted stock, are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. Stock-based compensation expenses are included in cost of goods sold or selling, general and administrative expenses, depending on the nature of the services provided, in the condensed consolidated statement of operations. Share-based payments issued to placement agents are classified as a direct cost of a stock offering and are recorded as a reduction in additional paid in capital.

 

For the three months ended October 31, 2021 and 2020, share-based compensation amounted to $19,681 and $1,460, respectively.

 

For the nine months ended October 31, 2021 and 2020, share-based compensation amounted to $20,467 and $51,435, respectively.

 

For the nine months ended October 31, 2021 and 2020, when computing fair value of share-based payments, the Company has considered the following variables:

 

   October 31, 2021   October 31, 2020 
Risk-free interest rate   N/A    0.37%
Expected life of grants   N/A    3.5 years 
Expected volatility of underlying stock   N/A    125%
Dividends   N/A    0%

 

The expected option term is computed using the “simplified” method as permitted under the provisions of ASC 718-10-S99. The Company uses the simplified method to calculate expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.

 

The expected stock price volatility for the Company’s stock options was estimated using the historical volatilities of the Company’s common stock. Risk free interest rates were obtained from U.S. Treasury rates for the applicable periods.

 

Earnings Per Share

 

Earnings per share (“EPS”) is the amount of earnings attributable to each share of common stock. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

 

F-11

 

 

The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share.

 

       
   For the Three Months Ended 
   October 31, 2021   October 31, 2020 
Numerator:        
Net (loss) income attributable to common stockholders  $(5,455)   734,142 
Effect of dilutive securities:        
           
Diluted net (loss) income  $(5,455)  $734,142 
           
Denominator:          
Weighted average common shares outstanding – basic   35,728,821    34,225,446 
Dilutive securities (a):          
Series A Preferred   -    - 
Options   -    575,139 
Warrants   -    925,399 
           
Weighted average common shares outstanding and assumed conversion – diluted   35,728,821    35,725,984 
           
Basic net (loss) income per common share  $(0.00)  $0.02 
           
Diluted net (loss) income per common share  $(0.00)  $0.02 
           
(a) - Anti-dilutive securities excluded:   666,500    - 

 

       
   For the Nine Months Ended 
   October 31, 2021   October 31, 2020 
Numerator:        
Net income attributable to common stockholders  $1,057,994    2,380,111 
Effect of dilutive securities:        
           
Diluted net income  $1,057,994   $2,380,111 
           
Denominator:          
Weighted average common shares outstanding – basic   35,683,484    32,832,450 
Dilutive securities (a):          
Series A Preferred   -    - 
Options   493,465    575,139 
Warrants   -    925,399 
           
Weighted average common shares outstanding and assumed conversion – diluted   36,176,949    34,322,988 
           
Basic net income per common share  $0.03   $0.07 
           
Diluted net income per common share  $0.03   $0.07 
           
(a) - Anti-dilutive securities excluded:   -    - 

 

F-12

 

 

Income Taxes

 

Income taxes are provided in accordance with ASC 740, “Accounting for Income Taxes”. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expense (benefit) results from the net change during the period of deferred tax assets and liabilities.

 

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. As of October 31, 2021 and January 31, 2021, the Company recognized a deferred tax asset of $361,660 and $744,973, respectively, which is included in other long-term assets on the condensed consolidated balance sheets. The Company regularly evaluates the need for a valuation allowance related to the deferred tax asset. As of October 31, 2021 and January 31, 2021, the valuation allowance was $0 and $0, respectively.

 

The Company is no longer subject to tax examinations by tax authorities for years prior to 2019.

 

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 2017 Tax Act’. Corporate taxpayers may carryback net operating losses (“NOLs”) originating between 2018 and 2020 for up to five years, which was not previously allowed under the (“2017 Tax Act”). The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2019, 2020 or 2021. Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income 30% limit under the 2017 Tax Act for 2019 and 2020. The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act.

 

In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to the income tax provision.

 

Related Parties

 

The Company follows subtopic ASC 850-10 for the identification of related parties and disclosure of related party transactions.

 

Pursuant to Section 850-10-20, the related parties include: (a) affiliates of the Company (“Affiliate” means, with respect to any specified person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person, as such terms are used in and construed under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

 

F-13

 

 

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 condensed consolidated financial statements.

 

Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying condensed consolidated financial statements.

 

Subsequent Events

 

The Company evaluates subsequent events and transactions that occur after the balance sheet date for potential recognition or disclosure. Any material events that occur between the balance sheet date and the date that the financial statements were issued are disclosed as subsequent events, while the financial statements are adjusted to reflect any conditions that existed at the balance sheet date.

 

Note 3 - Property and Equipment:

 

Property and equipment on October 31, 2021 and January 31, 2021 are as follows:

 

   October 31, 2021   January 31, 2021 
Machinery and Equipment  $4,410,850   $3,787,321 
Furniture and Fixtures   165,728    113,112 
Leasehold Improvements   3,229,786    3,120,273 
Property and Equipment, Gross   7,806,364    7,020,706 
Less: Accumulated Depreciation   4,629,343    4,057,104 
Property and Equipment, Net  $3,177,021   $2,963,602 

 

Depreciation expense charged to income for the three months ended October 31, 2021 and 2020 amounted to $145,506 and $170,031, respectively. Depreciation expense charged to income for the nine months ended October 31, 2021 and 2020 amounted to $572,238 and $489,109, respectively.

 

Note 4 - Related Party Transactions

 

WWS, Inc.

 

Alfred D’Agostino and Tom Toto, two directors of the Company, are affiliates of WWS, Inc.

 

For the three months ended October 31, 2021 and 2020, the Company recorded $12,000 in commission expense from WWS, Inc. generated sales. For the nine months ended October 31, 2021 and 2020, the Company recorded $36,000 and $30,000 in commission expense from WWS, Inc. generated sales.

 

F-14

 

 

Other Related Party Transactions

 

During the three months ended October 31, 2021 and 2020, the Company reimbursed an entity 100% owned by the CEO of the Company for certain investor relation conference expenses totaling $0 and $0, respectively. During the nine months ended October 31, 2021 and 2020, the Company reimbursed an entity 100% owned by the CEO of the Company for certain investor relation conference expenses totaling $4,517 and $14,570, respectively.

 

During the nine months ended October 31, 2020, members of the board of directors and the CEO exercised 940,807 warrants with exercise price of $1 in exchange for 940,807 shares of common stock.

 

Note 5 - Loan and Security Agreement

 

M&T Bank

 

Effective, January 4, 2019, the Company entered into a $2.5 million five-year note with M&T Bank at LIBOR plus four points with repayments in equal payments over 60 months. The facility is supported by a first priority security interest in all of the Company’s business assets and is further subject to various affirmative and negative financial covenants and a limited Guaranty by the Company’s Chief Executive Officer, Carl Wolf. The Company recorded $89,321 as a debt discount, which was amortized over the remaining life of the note using the effective interest method. There was unamortized debt discount of $0 as of October 31, 2021 and January 31, 2021. The outstanding balance on the term loan was $0 as of October 31, 2021 and January 31, 2021.

 

Effective, January 4, 2019, the Company has arranged a $3.5 million working capital line of credit with M&T Bank at LIBOR plus four points with a two-year expiration. On January 29, 2020, the facility was amended to increase the total available balance to $4.0 million as well as extend the maturity date to June 30, 2022. On June 11, 2021, the facility was amended to increase the total available balance to $4.5 million as well as extend the maturity date to June 30, 2023. On August 4, 2021, the facility was amended to increase the total available balance to $6.0 million as well as extend the maturity date to August 4, 2026. The facility is supported by a first priority security interest in all of the Company’s business assets and is further subject to various affirmative and negative financial covenants and a limited Guaranty by the Company’s Chief Executive Officer, Carl Wolf. Advances under the line of credit are limited to eighty percent (80%) of eligible accounts receivable (which is subject to an agreed limitation and is further subject to certain asset concentration provisions) and fifty percent (50%) of eligible inventory (which is subject to an agreed dollar limitation). All advances under the line of credit are due upon maturity. The outstanding balance on the line of credit was $0 as of October 31, 2021 and January 31, 2021.

 

During the nine months ended October 31, 2021 and 2020, the Company paid total interest of $0 and $58,904 to M&T Bank for the above agreements, respectively.

 

On August 3, 2021, M&T Bank approved an acquisition line of credit for $6.0 million. The Company has two years to draw the line. If the Company draws on the line, it must pay down the line in 60 months. The current pricing is 3.5% above the one-day Libor rate.

 

Note 6 – Promissory Note

 

On April 21, 2020, the Company entered into a term note with its principal bank, M&T, with a principal amount of $330,505 pursuant to the Paycheck Protection Program (“PPP Term Note”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loan is evidenced by a promissory note. The PPP Term Note bears interest at a fixed annual rate of 1.00%, with the first six months of interest deferred. The Company returned the $330,505 received from the Paycheck Protection Program on May 6, 2020, inclusive of interest.

 

Note 7 - Leases

 

The Company determines if an arrangement contains a lease at inception. Right of use (“ROU”) assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

  

F-15

 

 

The Company’s leases consist of leaseholds on office space, manufacturing space and machinery and equipment. The Company utilized a portfolio approach in determining the discount rate. The portfolio approach takes into consideration the range of the term, the range of the lease payments, the category of the underlying asset and the Company’s estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease payments. The Company also considered its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating the incremental borrowing rates.

 

On March 1, 2021, the Company amended its existing lease with the landlord for a new premise with a greater square footage. Upon cancellation of the existing lease, the Company wrote-off the net right of use asset and corresponding lease liability of $22,870. The Company recorded a right of use asset and related liability of $347,585 for the new space which will be occupied over a 60-month period.

 

The lease term includes options to extend the lease when it is reasonably certain that the Company will exercise that option. These operating leases contain renewal options for periods ranging from three to five years that expire at various dates with no residual value guarantees. Future obligations relating to the exercise of renewal options is included in the measurement if, based on the judgment of management, the renewal option is reasonably certain to be exercised. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of leasehold improvements, the value of the renewal rate compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option is not exercised. Management reasonably plans to exercise all options, and as such, all renewal options are included in the measurement of the right-of-use assets and operating lease liabilities.

 

Leases with a term of 12 months or less are not recorded on the balance sheet, per the election of the practical expedient noted above.

 

The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company recognizes variable lease payments in the period in which the obligation for those payments is incurred. Variable lease payments that depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments are recognized in the period incurred.

 

The components of lease expense were as follows:

 

   For the
Nine Months Ended
   For the
Nine Months Ended
 
   October 31, 2021   October 31, 2020 
Finance lease          
Depreciation of assets  $110,901   $102,116 
Interest on lease liabilities   26,710    26,960 
Operating leases   259,958    231,716 
Short-term lease   -    - 
Total net lease cost  $397,569   $360,792 

 

Supplemental balance sheet information related to leases was as follows:

 

   October 31, 2021   January 31, 2021 
Operating leases:           
Operating lease ROU assets  $1,536,927   $1,352,483 
Current operating lease liabilities, included in current liabilities  $188,590   $147,684 
Noncurrent operating lease liabilities, included in long-term liabilities   1,383,960    1,218,487 
Total operating lease liabilities  $1,572,550   $1,366,171 

 

F-16

 

 

Finance leases          
Property and equipment, at cost  $1,079,706   $951,656 
Accumulated depreciation   (371,271)   (260,370)
Property and equipment, net  $708,435   $691,286 
           
Current obligations of finance lease liabilities, included in current liabilities  $226,111   $190,554 
Finance leases, net of current obligations, included in long-term liabilities   422,326    474,743 
Total finance lease liabilities  $648,437   $665,297 

 

Supplemental cash flow and other information related to leases was as follows:

 

   For the Nine Months Ended October 31, 2021   For the Nine Months Ended October 31, 2020 
Cash paid for amounts included in the measurement of lease liabilities:          
Operating cash flows from operating leases  $141,206   $231,716 
Financing cash flows from finance leases   144,910    110,562 
           
ROU assets obtained in exchange for lease liabilities:          
Operating leases  $347,585   $- 
Finance leases   128,050    401,387 
           
Weighted average remaining lease term (in years):          
Operating leases   6.8    7.1 
Finance leases   3.3    4.0 
           
Weighted average discount rate:          
Operating leases   5.58%   6.54%
Finance leases   4.57%   4.60%

 

Total future minimum payments required under the lease obligations as of October 31, 2021 are as follows:

For the Twelve Months Ending January 31,     
2022 (Remaining)   $120,014 
2023    450,051 
2024    438,907 
2025    414,986 
2026    330,646 
Thereafter    670,901 
Total lease payments   $2,574,901 
Less: amounts representing interest    (372,236)
Total lease obligations   $2,202,665 

 

Note 8 - Concentrations

 

Revenues

 

During the nine months ended October 31, 2021, the Company earned revenues from three customers representing approximately 32%, 20% and 11% of gross sales. As of October 31, 2021, these three customers represented approximately 26%, 17% and 14% of total gross outstanding receivables, respectively. During the nine months ended October 31, 2020, the Company earned revenues from two customers representing approximately 45% and 11% of gross sales. As of October 31, 2020, these two customers represented approximately 30% and 11% of total gross outstanding receivables, respectively.

 

F-17

 

 

Note 9 - Stockholders’ Equity

 

Options

 

The following is a summary of the Company’s option activity:

 

    Options  

Weighted

Average
Exercise Price

 
Outstanding – January 31, 2021    869,000   $0.70 
Exercisable – January 31, 2021    859,000   $0.70 
Granted    -   $- 
Exercised    (200,000)  $0.81 
Forfeited/Cancelled    -   $- 
Outstanding – October 31, 2021    669,000   $0.66 
Exercisable – October 31, 2021    666,500   $0.66 

 

 

    Options Outstanding      Options Exercisable
Exercise Price   Number
Outstanding
  Weighted
Average
Remaining
Contractual
Life (in years)
   Weighted
Average
Exercise
Price
   Number
Exercisable
  Weighted
Average
Exercise
Price
 
$ 0.391.38   669,000   2.28   $0.66   666,500  $0.66 

 

At October 31, 2021, the total intrinsic value of options outstanding and exercisable was $1,343,821 and $1,340,046, respectively.

 

During the nine months ended October 31, 2021, seven employees exercised a total of 200,000 options at an average exercise price of $0.81 per share for aggregate proceeds of $19,080. In June 2020, two employees exercised a total of 12,000 options at an exercise price of $0.60 per share for aggregate proceeds of $7,200.

 

For the nine months ended October 31, 2021 and 2020, the Company recognized share-based compensation related to options of an aggregate of $1,534 and $51,435, respectively. At October 31, 2021, unrecognized share-based compensation was $399.

 

Restricted Stock Units

 

During the nine months ended September 30, 2021, the Company awarded an employee a grant of 21,000 restricted stock units (“RSUs”). The RSUs will be expensed over the requisite service period. The terms of the RSUs include vesting provisions based solely on continued service. If the service criteria are satisfied, the RSUs will vest during November 2021, September 2022 and September 2023. As of October 31, 2021, there were 21,000 unvested shares.

 

For the three and nine months ended October 31, 2021, the Company recognized share-based compensation related to options of an aggregate of $18,933. At October 31, 2021, unrecognized share-based compensation was $40,497.

 

F-18

 

 

Note 10 - Commitments and Contingencies

 

Insurance Claim

 

The Company maintains insurance for both property damage and business interruption relating to catastrophic events, such as fires. Insurance recoveries received for property damage and business interruption in excess of the net book value of damaged assets, clean-up and demolition costs, and post-event costs are recognized as income in the period received or committed when all contingencies associated with the recoveries are resolved. Gains on insurance recoveries related to business interruption are recorded within “Cost of sales” and any gains or losses related to property damage are recorded within “Other income (expense)” on the condensed consolidated statements of income.

 

On December 7, 2020, the Company experienced a fire at its plant in a spiral oven. The spiral oven was rebuilt and was fully put back into service in late February 2021. The estimated loss is approximately $656,700 which includes loss of business, the rebuild of the spiral oven, additional expenses to clean plant and lost material and packaging. During the nine months ended October 31, 2021, the Company received $152,850 relating to business interruption insurance which was recorded as a component of costs of sales on the condensed consolidated statements of income. The Company received the remaining amount of proceeds for the property damage claim, resulting in other income of $91,312. This amount was offset by repairs and maintenance expense of $12,475 as well as the costs of additions and parts of the oven and roof totaling $47,669.

 

Litigation, Claims and Assessments

 

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.

 

Licensing and Royalty Agreements

 

On March 1, 2010, the Company was assigned a Development and License agreement (the “Agreement”). Under the terms of the Agreement the Licensor shall develop for the Company 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”). Licensor shall work with Licensee to develop Licensor Products that are acceptable to Licensee. Upon acceptance of a Licensor Product by Licensee, Licensor’s trade secret recipes, formulas methods and ingredients for the preparation and production of such Licensor Products (the “Recipes”) shall be subject to this Development and License Agreement.

 

The Exclusive Term began on January 1, 2009 (the “Effective Date”) and ends on the 50th anniversary of the Effective Date.

 

The Royalty Rate shall be: 6% of Net sales up to $500,000 of Net sales for each Agreement year; 4% of Net Sales from $500,000 up to $2,500,000 of Net Sales for each Agreement year; 2% of Net Sales from $2,500,000 up to $20,000,000 of Net Sales for each Agreement year; and 1% of Net Sales in excess of $20,000,000 of Net Sales for each Agreement year.

 

In order to continue the Exclusive Term, the Company shall pay a minimum royalty with respect to the preceding Agreement year as follows:

 

Agreement Year 

Minimum

Royalty

to be Paid with

Respect to Such

Agreement Year

 
1st and 2nd  $- 
3rd and 4th  $50,000 
5th, 6th and 7th  $75,000 
8th and 9th  $100,000 
10th and thereafter  $125,000 

 

F-19

 

 

The Company incurred $99,457 and $111,568 of royalty expenses for the three months ended October 31, 2021 and 2020, respectively. The Company incurred $391,433 and $399,013 of royalty expenses for the nine months ended October 31, 2021 and 2020, respectively. Royalty expenses are included in general and administrative expenses on the condensed consolidated statement of operations.

 

Agreements with Placement Agents and Finders

 

The Company entered into a fourth Financial Advisory and Investment Banking Agreement with Spartan Capital Securities, LLC (“Spartan”) effective April 1, 2015 (the “Spartan Advisory Agreement”). Pursuant to the Spartan Advisory Agreement, if the Company enters into a change of control transaction during the term of the agreement through October 1, 2022, the Company shall pay to Spartan a fee equal to 3% of the consideration paid or received by the Company and/or its stockholders in such transaction.

 

Advisory Agreements

 

The Company entered into an Advisory Agreement with Spartan effective June 1, 2019 (the “Advisory Agreement”). Pursuant to the agreement, the Company shall pay to Spartan a non-refundable monthly fee of $5,000 over a 21-month period. Additionally, the Company granted Spartan 125,000 shares of common stock which are considered fully-paid and non-assessable upon execution of the agreement. During the term of this Agreement, the Consultant will provide non-exclusive consulting services related to general corporate matters, including, but not limited to (i) advice and input with respect to raising capital and potential M&A transactions, (ii) identifying suitable personal for management and Board positions (iii) developing corporate structure and finance strategies, (iv) assisting the Company with strategic introductions, (v) assisting management with enhancing corporate and shareholder value, and (vi) introducing the Company to potential investors (collectively, the “Advisory Services”). The advisory agreement was terminated according to its terms on March 31, 2020.

 

The Company entered into an Advisory Agreement with B. Riley Securities, Inc. effective September 25, 2020 (the “B. Riley Advisory Agreement”). Pursuant to the agreement, the Company shall pay to B. Riley a non-refundable fee of $175,000 upon delivery of a fairness opinion in the event a transaction has value over $50 million ($125,000 if a transaction has a value less than $50 million). In addition, additional fees may be paid to B. Riley based on the terms of the agreement and transactions consummated. During the term or this Agreement, the Consultant will provide non-exclusive consulting services related to general corporate matters, including, but not limited to (i) advice and input with respect to raising capital and potential M&A transactions, (ii) identifying potential purchasers or targets, (iii) soliciting proposals from purchasers or targets, (iv) assisting the Company with strategic introductions and negotiations, (v) evaluating proposals, and (vi) other financial advisory and investment banking services (collectively, the “B. Riley Advisory Services”).

 

Note 11 – Impact on Previously Issued Financial Statements

 

During the audit for the year ended January 31, 2021, the Company identified and recorded a prior period adjustment related to promotion expenses that should have been recorded in the year ended January 31, 2021 as an offset to revenue as discussed in the Company’s revenue recognition policy instead of general and administrative expenses as originally recorded.

 

In accordance with the guidance provided by the SEC’s Staff Accounting Bulletin 99, Materiality and Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements the Company determined that previously issued financial statements for the three and nine months ended October 31, 2020 should be revised to reflect the correction of these errors.

 

As a result of the aforementioned correction of accounting errors, the relevant financial statements have been revised as follows:

 

   For the three months ended October 31, 2020 
   As Previously Reported   Adjustments   As Revised 
Statement of Income            
Sales – net of slotting fees and discounts  $9,898,991   $(214,796)  $9,684,195 
Gross profit  $3,125,329   $(214,796)  $2,910,533 
General and administrative expenses  $2,307,436   $(214,796)  $2,092,640 
Operating expenses  $2,338,201   $(214,796)  $2,123,405 
Income from operations  $787,128   $-   $787,128 
Net income  $734,142   $-   $734,142 
Basic and diluted income per share  $0.02   $-   $0.02 

 

   For the nine months ended October 31, 2020 
   As Previously Reported   Adjustments   As Revised 
Statement of Income            
Sales – net of slotting fees and discounts  $31,384,394   $(617,694)  $30,766,700 
Gross profit  $10,067,010   $(617,694)  $9,449,316 
General and administrative expenses  $7,411,060   $(617,694)  $6,793,366 
Operating expenses  $7,497,163   $(617,694)  $6,879,469 
Income from operations  $2,569,847   $-   $2,569,847 
Net income  $2,380,111   $-   $2,380,111 
Basic and diluted income per share  $0.07   $-   $0.07 

  

F-20

 

 

Item 2. 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” DETAILED IN PRIOR COMPANY FILINGS AND THOSE INCLUDED ELSEWHERE IN THIS REPORT.

 

Results of Operations for the Three Months ended October 31, 2021 and 2020

 

The following table sets forth the summary statements of operations for the three months ended October 31, 2021 and 2020:

 

   Three Months Ended 
   October 31, 2021   October 31, 2020 
       (as revised) 
Sales - Net of Slotting Fees and Discounts  $10,852,682   $9,684,195 
Gross Profit  $2,729,165   $2,910,533 
Operating Expenses  $(2,727,964)  $(2,123,405)
Other Expenses  $(8,731)  $(52,986)
Income Tax Benefit  $2,075  $- 
Net (Loss) Income  $(5,455)  $734,142 

 

1

 

 

For the three months ended October 31, 2021 and 2020, the Company reported net loss of $5,455 and net income of $734,142, respectively. The change between the three months ended October 31, 2021 and 2020 was mainly the result of a decrease in gross profit percentage (as discussed below) and an increase in operating expenses (principally freight).

 

Sales: Sales, net of slotting fees and discounts increased by approximately 12% to $10,852,682 during the three months ended October 31, 2021, from $9,684,195 during the three months ended October 31, 2020. The increase was mainly to major customer volume increases.

 

Gross Profit: The gross profit margin was 25% for the three months ended October 31, 2021 compared to 30% for the three months ended October 31, 2020. The change in gross profit margin is due to increases in raw material costs, packaging costs and in-bound freight costs.

 

Operating Expenses: Operating expenses increased by 29% during the three months ended October 31, 2021, as compared to the three months ended October 31, 2020. Operating expenses as a percentage of sales was 25% in 2021 and 22% in 2020. The $601,458 increase in total operating expenses is primarily attributable to the following:

 

Postage and Freight of $311,482 mainly due to transportation rate increases;
   
Advertising and promotion of $103,275;
   
Payroll and related expenses of $60,402 due to salary adjustments and additional accounting payroll, and senior operational management hire;
   
Director fees of $42,500 due to the increase in the number of directors, an increase in compensation to each director and an additional shareholder meeting of $11,437.

 

These expense increases were offset by minimal decreases in other expense categories.

 

Other Expenses: Other expenses decreased by $44,255 to $8,731 for the three months ended October 31, 2021 as compared to $52,986 during the three months ended October 31, 2020. For the three months ended October 31, 2021, other expenses consisted of $8,731 in interest expense incurred on the Company’s financing arrangements. For three months ended October 31, 2020, other expenses consisted of $45,822 in interest expense incurred on the Company’s financing arrangements and the Company recorded $7,164 of amortization expense related to the debt discount.

 

Results of Operations for the Nine Months ended October 31, 2021 and 2020

 

The following table sets forth the summary statements of operations for the nine months ended October 31, 2021 and 2020:

 

   Nine Months Ended 
   October 31, 2021   October 31, 2020 
       (as revised) 
Sales - Net of Slotting Fees and Discounts  $33,230,666   $30,766,700 
Gross Profit  $9,442,802   $9,449,316 
Operating Expenses  $(8,004,489)  $(6,879,469)
Other Income (Expenses)  $10,994   $(189,736)
Income Tax Provision  $(391,313)  $- 
Net Income  $1,057,994   $2,380,111 

 

2

 

 

For the nine months ended October 31, 2021 and 2020, the Company reported net income of $1,057,994 and $2,380,111, respectively. The change in net income between the nine months ended October 31, 2021 and 2020 was mainly the result of a decrease in gross profit percentage (as discussed below) and the income tax provision of $391,313 recorded during the nine months ended October 31, 2021 compared to $0 during the nine months ended October 31, 2020.

 

Sales: Sales, net of slotting fees and discounts increased by approximately 8% to $33,230,666 during the nine months ended October 31, 2021, from $30,766,700 during the nine months ended October 31, 2020. The increase in sales can be attributed to major customer volume increases.

 

Gross Profit: The gross profit margin was 28% for the nine months ended October 31, 2021 compared to 31% for the nine months ended October 31, 2020. The change in gross profit margin is due to increases in raw material costs, packaging costs and in-bound freight costs.

 

Operating Expenses: Operating expenses increased by 16% during the nine months ended October 31, 2021, as compared to the nine months ended October 31, 2020. Operating expenses increased as a percentage of sales to 24% in 2021 compared to 22% in 2020. The $1,125,020 increase in total operating expenses is primarily attributable to the following:

 

Postage and Freight of $582,556 due to increased transportation rate increases;
   
Payroll and related expenses of $177,427 due, bonuses paid to executives; addition of senior personnel in operations and accounting personnel;
   
Director fees of $108,972 due to the increase in the number of directors, an increase in compensation to each director and an additional shareholder meeting of $11,437; and
   
NASDAQ up-listing costs of $80,000.

 

These expense increases were offset by decreases in the following as well as minimal decreases in other expense categories:

 

Professional fees decreased by $65,488 due to a decrease in contractual investment banking fees.

 

Other Income (Expenses): Other income (expenses) increased by $200,730 to income of $10,994 for the nine months ended October 31, 2021 as compared to expenses of $(189,736) during the nine months ended October 31, 2020. For the nine months ended October 31, 2021, other income (expenses) consisted of $(26,710) in interest expense incurred on the Company’s financing arrangements which was offset by the net insurance proceeds relating to the property damage claim of $37,704. For nine months ended October 31, 2020, other expenses consisted of $(171,872) 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 October 31, 2021 compared to January 31, 2021:

 

   October 31, 2021   January 31, 2021   Change 
Current Assets  $10,711,077   $8,879,451   $1,831,626 
Current Liabilities  $4,683,907   $4,045,349   $638,558 
Working Capital  $6,027,170   $4,834,102   $1,193,068 

 

As of October 31, 2021, we had working capital of $6,027,170 as compared to a working capital of $4,834,102 as of January 31, 2021, an increase of $1,193,068. The increase in working capital is primarily attributable to an increase in cash of $1,349,360 and an increase in inventory of $419,527. These amounts were offset by an increase in accounts payable and accrued expenses of $562,095 and an increase in current portion of lease obligations of $76,463.

 

3

 

 

Net cash provided by operating activities for the nine months ended October 31, 2021 and 2020 was $2,132,797 and $2,518,012, respectively. The net income for the nine months ended October 31, 2021 and 2020 was $1,057,994 and $2,380,111, respectively.

 

Net cash used in all investing activities for the nine months ended October 31, 2021 was $657,607 as compared to $320,332 for the nine months ended October 31, 2020, respectively, to acquire new machinery and equipment and leasehold improvements. Our capital expenditures are attributed to a Plant Expansion Project in progress since mid-2017 to expand plant capacity and efficiency to meet growing demand.

 

Net cash used in all financing activities for the nine months ended October 31, 2021 was $125,830 as compared to $798,520 used by financing activities for the nine months ended October 31, 2020. During the nine months ended October 31, 2021, the Company received proceeds of $19,080 from the exercise of options. These cash in-flows were offset by payments of $144,910 paid for finance lease payments. During the nine months ended October 31, 2020, the Company received proceeds of $330,505 from the Paycheck Protection Program promissory note and proceeds of $2,735,697 from the exercise of options and warrants. These cash in-flows were offset by payments on its line of credit of $2,347,348, payments on its term loan of $441,663, payments of $641,844 on the related party loans and $110,562 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 December 14, 2022 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 condensed consolidated financial statements.

 

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 condensed 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.

 

4

 

 

Our significant accounting policies are summarized in Note 2 of our condensed 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.

 

Leases

 

In February 2016, the FASB issued ASU 2016-02 “Leases” (Topic 842) which amended guidance for lease arrangements to increase transparency and comparability by providing additional information to users of financial statements regarding an entity’s leasing activities. Subsequent to the issuance of Topic 842, the FASB clarified the guidance through several ASUs; hereinafter the collection of lease guidance is referred to as ASC 842. The revised guidance seeks to achieve this objective by requiring reporting entities to recognize lease assets and lease liabilities on the balance sheet for substantially all lease arrangements.

 

On February 1, 2019, the Company adopted ASC 842 using the modified retrospective approach and recognized a right of use (“ROU”) asset and liability in the consolidated balance sheet in the amount of $1,599,830 related to the operating lease for office and warehouse space. Results for the year ended January 31, 2021 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with the legacy accounting guidance under ASC Topic 840, Leases.

 

As part of the adoption the Company elected the practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to:

 

  1. Not separate non-lease components from lease components and instead to account for each separate lease component and the non-lease components associated with that lease component as a single lease component.
     
  2. Not to apply the recognition requirements in ASC 842 to short-term leases.
     
  3. Not record a right of use asset or right of use liability for leases with an asset or liability balance that would be considered immaterial.

 

5

 

 

Revenue Recognition

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements under Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the ASC. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Under the new guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The new guidance will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. Additionally, the guidance requires improved disclosures as to the nature, amount, timing and uncertainty of revenue that is recognized. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606)—Narrow-Scope Improvements and Practical Expedients. This update clarifies the objectives of collectability, sales and other taxes, noncash consideration, contract modifications at transition, completed contracts at transition and technical correction. The amendments in this update affect the guidance in ASU 2014-09. In September 2017, the FASB issued additional amendments providing clarification and implementation guidance.

 

The Company adopted this guidance and related amendments as of the first quarter of fiscal 2019, applying the full retrospective transition method. As the underlying principles of the new standard, relating to the measurement of revenue and the timing of recognition, are closely aligned with the Company’s current business model and practices, the adoption of ASU 2014-09 did not have a material impact on the consolidated financial statements. In addition, the adoption of ASC 606 did not impact the previously reported financial statements in any prior period nor did it result in a cumulative effect adjustment to retained earnings.

 

The Company’s sales predominantly are generated from the sale of finished products to customers, contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, this occurs when the goods are shipped to the customer. Revenues are recognized in an amount that reflects the net consideration the Company expects to receive in exchange for the goods. The Company reports all amounts billed to a customer in a sale transaction as revenue. Under the new revenue guidance, the Company elected to treat shipping and handling activities as fulfillment activities, and the related costs are recorded as selling expenses in general and administrative expenses on the consolidated statement of operations.

 

Stock-Based Compensation

 

The Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation” (“ASC 718”) which establishes financial accounting and reporting standards for stock-based employee compensation. It defines a fair value-based method of accounting for an employee stock option or similar equity instrument. The Company accounts for compensation cost for stock option plans in accordance with ASC 718.

 

The Company recognizes all forms of share-based payments, including stock option grants, warrants and restricted stock grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest.

 

Share-based payments, excluding restricted stock, are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. Stock-based compensation expenses are included in cost of goods sold or selling, general and administrative expenses, depending on the nature of the services provided, in the consolidated statement of operations. Share-based payments issued to placement agents are classified as a direct cost of a stock offering and are recorded as a reduction in additional paid in capital.

 

When computing fair value of share-based payments, the Company has considered the following variables:

 

The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant.
   
The Company has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future.
   
The expected option term is computed using the “simplified” method as permitted under the provisions of Staff Accounting Bulletin (“SAB”) 110.
   
The term is the life of the grant.
   
The expected volatility was estimated using the historical volatilities of the Company’s common stock.
   
The forfeiture rate is based on the historical forfeiture rate for the Company’s unvested stock options, which was 0%.

 

6

 

 

Advertising

 

Costs incurred for producing and communicating advertising for the Company are charged to operations as incurred.

 

Off Balance Sheet Arrangements:

 

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

We do not hold any derivative instruments and do not engage in any hedging activities.

 

Item 4. Controls and Procedures

 

(a) Evaluation of Disclosure Controls and Procedures

 

Based on evaluation as of the end of the period covered by this Form 10-Q, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(c) and 15d-15(e) under the Exchange Act) are effective to ensure that information required to be disclosed by us in report that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

(b) Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

We are currently not involved in any litigation that we believe could have a material 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 companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

Item 1A. Risk Factors.

 

Smaller reporting companies are not required to provide the information required by this item.

 

7

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

During the period between February 1, 2021 and October 31, 2021, the Company had no sales of unregistered securities.

 

Item 3. Defaults upon Senior Securities.

 

There has been no default in payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

There is no other information required to be disclosed under this item which was not previously disclosed.

 

8

 

 

Item 6. Exhibits.

 

Exhibit

No.

  Description
     
31.1   Certification of Principal Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 302 of 2002*
     
31.2   Certification of Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 302 of 2002*
     
32.1   Certification of Principal Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
     
32.2   Certification of Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
     
101.INS   Inline XBRL Instance Document**
101.SCH   Inline XBRL Taxonomy Extension Schema Document**
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document**
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document**
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Filed herewith.

** Furnished herewith.

 

9

 

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  MAMAMANCINI’S HOLDINGS, INC.
                           
Date: December 14, 2021 By: /s/ Carl Wolf
  Name: Carl Wolf
  Title: Chief Executive Officer
    (Principal Executive Officer)

 

10