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. [ ]
PART
I
Item
1. Business.
Our
History
MamaMancini’s
Holdings, Inc. (formerly Mascot Properties, Inc.) was incorporated in the State of Nevada on July 22, 2009. Mascot Properties, Inc.’s
(“Mascot”) activities since its inception consisted of trying to locate real estate properties to manage, primarily related
to student housing, and services which included general property management, maintenance and activities coordination for residents. Mascot
did not have any significant development of such business and did not derive any revenue. Due to the lack of results in its attempt to
implement its original business plan, management determined it was in the best interests of the shareholders to look for other potential
business opportunities.
On
February 22, 2010, MamaMancini’s LLC was formed as a limited liability company under the laws of the state of New Jersey in order
to commercialize our initial products. On March 5, 2012, the members of MamaMancini’s, LLC, holders of 4,700 units (the “Units”)
of MamaMancini’s LLC, exchanged the Units for 15,000,000 shares of common stock and those certain options to purchase an additional
223,404 shares of MamaMancini’s Inc. (the “Exchange”). Upon consummation of the Exchange, MamaMancini’s LLC ceased
to exist and all further business has been and continues to be conducted by MamaMancini’s Inc.
On
January 24, 2013, Mascot, Mascot Properties Acquisition Corp, a Delaware corporation and wholly-owned subsidiary of the Company (“Merger
Sub”), MamaMancini’s Inc., a privately-held Delaware Corporation headquartered in New Jersey (“Mama’s”)
and David Dreslin, an individual (the “Majority Shareholder”), entered into an Acquisition Agreement and Plan of Merger (the
“Agreement”) pursuant to which the Merger Sub was merged with and into Mama’s, with Mama’s surviving as a wholly-owned
subsidiary of the Company (the “Merger”). The transaction (the “Closing”) took place on January 24, 2013 (the
“Closing Date”). Mascot acquired, through a reverse triangular merger, all of the outstanding capital stock of Mama’s
in exchange for issuing Mama’s shareholders (the “Mama’s Shareholders”), pro-rata, a total of 20,054,000 shares
of the Company’s common stock. As a result of the Merger, the Mama’s Shareholders became the majority shareholders of Mascot.
Immediately following the Closing of the Agreement, Mascot changed its business plan to that of Mama’s. On March 8, 2013, Mascot
received notice from the Financial Industry Regulatory Authority (“FINRA”) that its application to change its name and symbol
had been approved and effective Monday, March 11, 2013, Mascot began trading under its new name, “MamaMancini’s Holdings,
Inc.” (“MamaMancini’s” or the “Company”) and under its new symbol, “MMMB”.
On
November 1, 2017, MamaMancini’s, Joseph Epstein Food Enterprises, Inc., a New Jersey corporation (“JEFE”), and MMMB
Acquisition, Inc., a Nevada corporation and wholly owned subsidiary of MamaMancini’s (“Merger Sub”), completed a merger
transaction whereby JEFE merged with and into Merger Sub, with Merger Sub continuing as the surviving entity and a wholly owned subsidiary
of MamaMancini’s. Under the terms of the Merger Agreement and in connection with the merger, the Company acquired all assets of
JEFE. The consideration for the transaction was (a) the extinguishment of the Inter-Company Loan between the parties, (b) the assumption
by the Company of all JEFE accounts payable and accrued expenses (c) assumption by the Company of certain third-party loans to JEFE totaling
approximately $782,000 and (d) indemnification of Carl Wolf with respect to his collateralization of a bank loan to JEFE in the amount
of approximately $250,000. As a result of the transaction, (i) the Company became the sole shareholder of JEFE, which became a wholly-owned
subsidiary of the Company. No cash or stock was exchanged in connection with the transaction.
Our
Company
MamaMancini’s
roots go back to our founder Dan Dougherty, whose grandmother Anna “Mama” Mancini emigrated from Bari, Italy to Bay Ridge,
Brooklyn in 1921. Our products were developed using her old-world Italian recipes that were handed down to her grandson, Dan Dougherty.
Today we market a line of all-natural specialty prepared, frozen and refrigerated foods for sale in retailers around the country. Our
primary products include beef and turkey meatballs, meat loaf, chicken, sausage-related products and pasta entrees, all with slow cooked
Italian Sauce.
Our
products are all natural, contain a minimum number of ingredients and are generally derived from the original recipes of Anna “Mama”
Mancini. Our products appeal to health-conscious consumers who seek to avoid artificial flavors, synthetic colors and preservatives that
are used in many conventional packaged foods.
The
United States Department of Agriculture (the “USDA”) defines all natural as a product that contains no artificial ingredients,
coloring ingredients or chemical preservatives and is minimally processed. The Company’s products were submitted to the USDA and
approved as all natural. The Food and Safety and Inspection Service (“FSIS”) Food Standards and Labeling Policy Book (2003)
requires meat and poultry labels to include a brief statement directly beneath or beside the “natural” Label claim that “explains
what is meant by the term natural i.e., that the product is a natural food because it contains no artificial ingredients and is only
minimally processed”. The term “natural” may be used on a meat label or poultry label if the product does not contain
any artificial flavor or flavoring, coloring ingredient, chemical preservative, or any other artificial or synthetic ingredient. Additionally,
the term “all natural” can be used if the FSIS approves your product and label claims. The Company’s product and label
claims have been approved by the FSIS to contain the all-natural label.
Additionally,
the Company has recently commenced marketing of certain “meatless” versions of its product line under a Trademark Licensing
Agreement with Beyond Meat, Inc.
Our
products are principally sold to supermarkets and mass-market retailers. We currently have 29 different product offerings which
are packaged in different sized retail and bulk packages. Our products are principally sold in multiple sections of the supermarket,
including hot bars, salad bars, prepared foods (meals), sandwich, as well as cold deli and foods-to-go sections. Our products are also
sold in the frozen food and fresh meat sections. We sell directly to both food retailers and food distributors.
Finally,
we also sell our products on QVC through live on-air offerings, auto ship programs and for everyday purchases on their web site. QVC
is the world’s largest direct to consumer marketer.
During
the year ended January 31, 2021, the Company earned revenues from two customers representing approximately 41% and 13%
of gross sales. During the year ended January 31, 2021, these two customers represented approximately 23% and 14%
of total gross outstanding receivables, respectively. During the year ended January 31, 2020, the company earned revenues from three
customers representing approximately 46%, 11% and 10% of gross sales. As of January 31, 2020, three customers represented approximately
34%, 16% and 8% of total gross outstanding receivables, respectively.
The
Company continually reviews its accounts in order to focus on maximum performance, and as a result periodically eliminates under-performing
accounts.
Industry
Overview
Our
products are considered specialty prepared foods, in that they are all natural, taste great, are authentic Italian and are made with
high quality ingredients. The market for specialty and prepared foods spans several sections of the supermarket, including frozen, deli-
prepared foods, and the specialty meat segment of the meat department.
Our
Strengths
We
believe that the following strengths differentiate our products and our brand:
|
●
|
Authentic
recipes and great taste. Our products are founded upon Anna “Mama” Mancini’s old-world Italian recipes. We
believe the authenticity of our products has enabled us to build and maintain loyalty and trust among our current customers and will
help us attract new customers. Additionally, we continuously receive positive customer testimonials regarding the great taste and
quality of our products.
|
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●
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Healthy
and convenient. Our products are made only from high quality natural ingredients, including domestic inspected beef, whole Italian
tomatoes, genuine imported Pecorino Romano, real eggs, natural breadcrumbs, olive oil and other herbs and spices. Our products are
also simple to prepare. Virtually every product we offer is ready-to-serve within 12 minutes, thereby providing quick and easy meal
solutions for our customers. By including the sauce and utilizing a tray with our packaging, our meatballs can be prepared quickly
and easily.
|
|
|
|
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●
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Great
value. We strive to provide our customers with a great tasting product using all-natural ingredients at an affordable price.
Typical retail prices for 16 oz. packages ranges from $4.99 to $7.99, and $5.99 to $9.99 for bulk products sold in delis or hot bars.
We believe the sizes of our product offerings represent a great value for the price.
|
|
|
|
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●
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New
products and innovation. Since our inception, we have continued to introduce new and innovative products. While we pride on ourselves
on our traditional beef and turkey meatballs and meat loaf, we have continuously made efforts to grow and diversify our line of products
while maintaining our high standards for all natural, healthy ingredients and great taste.
|
Customers/Management
|
●
|
Strong
consumer loyalty. Many of our consumers are loyal and enthusiastic brand advocates. Our consumers trust us to deliver great-tasting
products made with all-natural ingredients. Consumers have actively communicated with us through our website and/or social media
channels. We believe that this consumer interaction has generated interest in our products and has inspired enthusiasm for our brand.
We also believe that enthusiasm for our products has led and will continue to lead to repeat purchases and new consumers trying our
products.
|
|
|
|
|
●
|
Experienced
leadership. We have a proven and experienced senior management team. Our Chief Executive Officer and Chairman, Carl Wolf, has
been with us since inception and has over 35 years of experience in the management and operations of food companies. Mr. Wolf was
the founder, majority shareholder, Chairman of the Board, and CEO of Alpine Lace Brands, Inc., a public company engaged in the development,
marketing and distribution of cheese, deli meats and other specialty food products, which was sold to Land O’Lakes, Inc. In
addition, the other members of our board of directors also have significant experience in the food industry.
|
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:
|
●
|
Increase
product placements in the perimeter within retail locations. We strive for product placements in the perishable departments of
retail locations. We believe adding shelf placements within the supermarkets that carry our products will increase customer awareness,
leading to more consumers purchasing our products and expanding our market share.
|
|
|
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●
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Increase
Sales in “Fresh” Section. Increase sales in the “Fresh” section (in the perimeter of the retainer), where
there is significant sales growth and higher margins, over products in the “Frozen” section which are showing zero to
negative growth.
|
|
●
|
Increase
retail locations. We intend to increase sales by expanding the number of retail stores that sell our products in the mainstream
grocery and mass merchandiser channels.
|
|
|
|
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●
|
Increase
Overall Sales. We have an experienced sales staff and now employ one full time Vice President of Sales as well as our Co-Founder
Dan Dougherty, Carl Wolf, our Chief Executive Officer and Chairman, and Matthew Brown, our President, each of whom is involved with
selling to, and managing sales with, major supermarket chains. In addition, the Company has contracted with an independent consultant
to manage sales opportunities in the food service area as well as an independent person to solicit sales in colleges and universities
and independent delicatessens,
|
|
|
|
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●
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Expand
food brokerage network. We currently work with retail food brokers nationwide and intend to add additional food brokers to increase
our geographical coverage in the United States to approximately 90%.
|
|
|
|
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●
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Enhance
awareness through marketing. We have increased our social media activity with Facebook, Twitter, Pinterest, and YouTube. We also
engage with consumers through newsletter mailings, blogs, and special projects, including a bank of recipe videos and contests and
giveaways. Targeted consumer merchandising activity, including virtual couponing, on-pack couponing, mail-in rebates, product demonstrations,
and co-op retail advertising will continue into the future in order to increase sales and generate new customers.
|
|
|
|
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●
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Adding
new products. Our market research and consumer testing enable us to identify attractive new product opportunities. We intend
to continue to introduce new products in both existing and new product lines that appeal to a wide range of consumers.
|
|
|
|
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●
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Maintain
a Strong Relationship with QVC. The Company currently offers various lines through QVC and intends to increase its product line
offerings offered through QVC.
|
|
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●
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Increase
Media Exposure. Increase the visibility of Dan Dougherty (Mancini) in the media as a product spokesman.
|
|
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●
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“Club
Stores”. The Company is aggressively pursuing sales to “Club Stores”.
|
|
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●
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The
Company is actively pursuing sales to Canada through a designated agent who is handling all necessary compliance issues.
|
Pricing
Our
pricing strategy focuses on being competitively priced with other premium brands. Since our products are positioned in the authentic
premium prepared food category, we maintain prices competitive with those of similar products and prices slightly higher than those in
the commodity prepared foods section. This pricing strategy also provides greater long-term flexibility as we grow our product line through
the growth curve of our products. Current typical retail prices for 16 oz. packages range from $4.99 to $7.99, and $5.99 to $9.99 per
pound for prepared food products sold to delis or hot bars. Increases in raw materials costs, among other factors, may lead to us consider
price increases in the future.
Suppliers/Manufacturers
As
of January 31, 2021, approximately 70% of our products are internally produced by the Company’s wholly-owned subsidiary,
Joseph Epstein Food Enterprises, Inc (“JEFE”). Approximately 10% are manufactured on an outsourced basis. None of our raw
materials or ingredients are directly grown or produced by us. From time-to-time we negotiate with other manufacturers to supplement
the Company’s manufacturing capability. We currently purchase modest quantities from other manufacturers. All of the raw materials
and ingredients in our products are readily available and are readily ascertainable by our suppliers. We have not experienced any material
shortages of ingredients or other products necessary to our operations and do not anticipate such shortages in the foreseeable future.
Sales/Brokers
Our
products are sold primarily through a commission broker network. We sell to large retail chains who direct our products to their own
warehouses or to large food distributors.
The
Company increased its sales management efforts with the result that the Company is now actively soliciting business with almost every
major retail supermarket chain in the country. MamaMancini’s products are currently sold nationwide, with its greatest concentration
in the Northeast and Southeast. In April 2019, the Company initiated a major sales effort into the food service, convenience store, export
and special projects areas.
Marketing
The
majority of our marketing activity has been generated through promotional discounts, consumer trial, consumer product tastings and demonstrations,
in-store merchandising and signage, couponing, word of mouth, consumer public relations, social media, special merchandising events with
retailers and consumer advertising.
Based
on the Company’s metrics for determining brand awareness, which includes market studies and analysis of consumer recognition of
the MamaMancini’s brand, the Company believes that brand awareness for MamaMancini’s has grown in the past 12 months.
Investments
- Meatball Obsession
During
2011 the Company acquired a 34.62% interest in Meatball Obsession, LLC (“MO”) for a total investment of $27,032. This investment
is accounted for using the equity method of accounting. Accordingly, investments are recorded at acquisition cost plus the Company’s
equity in the undistributed earnings or losses of the entity. At December 31, 2011 the investment was written down to $0 due to losses
incurred by MO. The Company’s ownership interest in MO has decreased due to dilution. At January 31, 2021 and 2020, the
Company’s ownership interest in MO was 12% and 12%, respectively. One of our directors, Steven Burns, serves as the Chairman of
the Board of Directors of Meatball Obsession. As of December 31, 2019, MO had wound down and ceased operations. Major accounts were transitioned
to MamaMancini’s as a part of the wind down.
Competition
The
gourmet and specialty pre-packaged and frozen food industry has many large competitors specializing in various types of cuisine from
all over the world. Our product lines are currently concentrated on Italian specialty foods. While it is our contention that our competition
is much more limited than the entire frozen and pre-packaged food industry based on our products’ niche market, there can be no
assurances that we do not compete with the entire frozen and pre-packaged food industry. We believe our principal competitors include
Quaker Maid, Hormel, Rosina Company, Inc., Casa Di Bertacchi, Inc., Farm Rich, Inc., Mama Lucia, Buona Vita, Inc., Taylor Farms and Kings
Command.
Intellectual
Property
Our
current intellectual property consists of trade secret recipes and cooking processes for our products and four trademarks for “MamaMancini’s”,
“Mac N’ Mamas”, “Sunday Dinner” and “The Meatball Lovers Meatball”. The recipes and use of
the trademarks have been assigned in perpetuity to the Company.
We
rely on a combination of trademark, copyright and trade secret laws to establish and protect our proprietary rights. We will also use
technical measures to protect our proprietary rights.
Royalty
Agreement
In
accordance with a Development and License Agreement (the “Development and License Agreement”) entered into on January 1,
2009 with Dan Dougherty relating to the use of his grandmother’s recipes for the products to be created by MamaMancini’s,
Mr. Dougherty granted us a 50-year exclusive license (subject to certain minimum payments being made), with a 25-year extension option,
to use and commercialize the licensed items. Under the terms of the Development and License Agreement, Mr. Dougherty shall develop a
line of beef meatballs with sauce, turkey meatballs with sauce and other similar meats and sauces for commercial manufacture, distribution
and sale (each a “Licensor Product” and collectively the “Licensor Products”). Mr. Dougherty shall work with
us to develop Licensor Products that are acceptable to us. Upon acceptance of a Licensor Product by us, Mr. Dougherty’s trade secret
recipes, formulas methods and ingredients for the preparation and production of such Licensor Products shall be subject to the Development
and License Agreement. In connection with the Development and License Agreement, we pay Mr. Dougherty a royalty fee on net sales.
USDA
approval / Regulations
Our
food products, which are manufactured both in our own manufacturing facilities and in third-party facilities, are subject to various
federal, state and local regulations and inspection, and to extensive regulations and inspections, regarding sanitation, quality, packaging
and labeling. In order to distribute and sell our products outside the State of New Jersey, the third-party food processing facilities
must meet the standards promulgated by the U.S. Department of Agriculture (the “USDA”). Our manufacturing processing facilities
and products are subject to periodic inspection by federal, state, and local authorities. In January 2011, the FDA’s Food Safety
Modernization Act was signed into law. The law will increase the number of inspections at food facilities in the U.S. in an effort to
enhance the detection of food borne illness outbreaks and order recalls of tainted food products. The facilities in which our products
are manufactured are inspected regularly and comply with all the requirements of the FDA and USDA.
We
are subject to the Food, Drug and Cosmetic Act and regulations promulgated thereunder by the FDA. This comprehensive regulatory program
governs, among other things, the manufacturing, composition and ingredients, packaging, and safety of food. Under this program, the FDA
regulates manufacturing practices for foods through, among other things, its current “good manufacturing practices” regulations,
or GMP’s, and specifies the recipes for certain foods. Specifically, the USDA defines “all natural” as a product that
contains no artificial ingredients, coloring ingredients or chemical preservatives and is minimally processed. The Company’s products
were submitted to the USDA and approved as “all natural”. However, should the USDA change their definition of “all
natural” at some point in the future, or should MamaMancini’s change their existing recipes to include ingredients that do
not meet the USDA’s definition of “all natural”, our results of operations could be adversely affected.
The
FTC and other authorities regulate how we market and advertise our products, and we are currently in compliance with all regulations
related thereto, although we could be the target of claims relating to alleged false or deceptive advertising under federal and state
laws and regulations. Changes in these laws or regulations or the introduction of new laws or regulations could increase the costs of
doing business for us or our customers or suppliers or restrict our actions, causing our results of operations to be adversely affected.
Quality
Assurance
We
take precautions designed to ensure the quality and safety of our products. In addition to routine third-party inspections of our manufacturing
facilities, we have instituted regular audits to address topics such as allergen control, ingredient, packaging and product specifications
and sanitation. Under the FDA Food Modernization Act, both our own manufacturing facilities and each of our contract manufacturers are
required to have a hazard analysis critical control points plan that identifies critical pathways for contaminants and mandates control
measures that must be used to prevent, eliminate or reduce relevant food-borne hazards.
Our
manufacturing facility is certified in the Safe Quality Food Program. These standards are integrated food safety and quality management
protocols designed specifically for the food sector and offer a comprehensive methodology to manage food safety and quality simultaneously.
Certification provides an independent and external validation that a product, process or service complies with applicable regulations
and standards.
We
work with suppliers who assure the quality and safety of their ingredients. These assurances are supported by our purchasing contracts
or quality assurance specification packets, including affidavits, certificates of analysis and analytical testing, where required. The
quality assurance staff within our manufacturing facility and within our contract manufacturers conduct periodic on-site routine audits
of critical ingredient suppliers.
Where
You Can Find More Information
The
public may read and copy any materials the Company files with the U.S. Securities and Exchange Commission (the “SEC”) at
the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0030. The SEC maintains an Internet website (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
Item
1A. Risk Factors
Smaller
reporting companies are not required to provide the information required by this item. Notwithstanding, in addition to risk factors highlighted
in previous reports, the Company adds the following additional risk factor:
We
could be substantially affected by the Coronavirus (COVID-19) pandemic
In
December 2019, an outbreak of a novel strain of coronavirus (COVID-19) originated in Wuhan, China, and has since spread to a number of
other countries, including the United States. On March 11, 2020, the World Health Organization characterized COVID-19 as a pandemic.
In addition, as of the time of the filing of this Annual Report on Form 10-K, several states in the United States have declared states
of emergency, and several countries around the world, including the United States, have taken steps to restrict travel. While all of
our operations are located in the United States, we participate in a national supply chain, and the existence of a worldwide pandemic,
the fear associated with COVID-19, or any, pandemic, and the reactions of governments around the world in response to COVID-19, or any,
pandemic, to regulate the flow of labor and products and impede the travel of personnel, may impact our ability to conduct normal business
operations, which could adversely affect our results of operations and liquidity. Disruptions to our supply chain and business operations,
or to our suppliers’ or customers’ supply chains and business operations, could include disruptions from the closure of supplier
and manufacturer facilities, interruptions in the supply of raw materials and components, personnel absences, or restrictions on the
shipment of our or our suppliers’ or customers’ products, any of which could have adverse ripple effects on our manufacturing
output and delivery schedule. If we need to close any of our facilities or a critical number of our employees become too ill to work,
our production ability could be materially adversely affected in a rapid manner. Similarly, if our customers experience adverse business
consequences due to COVID-19, or any other, pandemic, demand for our products could also be materially adversely affected in a rapid
manner. Global health concerns, such as COVID-19, could also result in social, economic, and labor instability in the countries and localities
in which we or our suppliers and customers operate. Any of these uncertainties could have a material adverse effect on our business,
financial condition or results of operations.
Item
1B. Unresolved Staff Comments.
Not
applicable.
Item
2. Properties.
Our
principal executive office is located at 25 Branca Road East Rutherford, NJ 07073. We currently lease 24,213 square feet of space located
in East Rutherford, NJ from Joseph Branca Partnership, Ltd for a current rental of $17,454 per month. The lease term runs through
March 31, 2024 with renewal options through March 31, 2029. In addition, we lease an additional 1,077 square feet of space at 355 Murray
Hill Parkway from CLN Associates, LLC for a current rental of $1,817 per month.
Item
3. Legal Proceedings.
We
are not currently involved in any litigation that we believe could have a materially adverse effect on our financial condition or results
of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries,
threatened against or affecting our Company, our common stock, any of our subsidiaries or of our Company’s or our Company’s
subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
Item
4. Mine Safety Disclosures.
Not
applicable.
PART
III
Item
10. Directors, Executive Officers and Corporate Governance.
Directors
and Executive Officers
The
following table discloses our directors and executive officers as of April 23, 2020.
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
Carl
Wolf
|
|
77
|
|
Chief
Executive Officer and Chairman of the Board of Directors
|
|
|
|
|
|
Matthew
Brown
|
|
52
|
|
President
and Director
|
|
|
|
|
|
Lawrence
Morgenstein
|
|
70
|
|
Chief
Financial Officer
|
|
|
|
|
|
Steven
Burns
|
|
60
|
|
Executive
Vice President and Director
|
|
|
|
|
|
Alfred
D’Agostino
|
|
67
|
|
Director
|
|
|
|
|
|
Thomas
Toto
|
|
66
|
|
Director
|
|
|
|
|
|
Dean
Janeway
|
|
77
|
|
Director
|
|
|
|
|
|
Patrick
Connor Haley
|
|
30
|
|
Director
|
|
|
|
|
|
Michael
Stengel
|
|
65
|
|
Director
|
Carl
Wolf has over 40 years of experience in the management and operations of companies in the food industry. Mr. Wolf has served as
Chief Executive Officer and Chairman of the Board of MamaMancini’s from February 2010 through the Present. Mr. Wolf was the
founder, majority shareholder, Chairman of the Board, and CEO of Alpine Lace Brands, Inc., a NASDAQ-listed public company with over
$125 million in wholesale sales. He also founded, managed, and sold MCT Dairies, Inc., a $60 million international dairy component
resource company. Other experience in the food industry includes his role as Co-chairman of Saratoga Beverage Company, a publicly
traded (formerly NASDAQ: TOGA) bottled water and fresh juice company prior to its successful sale to a private equity firm. Mr. Wolf
served an advisor to Mamma Sez Biscotti, a snack and bakery product company (which was sold in a later period to Nonnis, the largest
biscotti company in the United States) from 2002 to 2004. Previously he served as Director and on the Audit and Development
committees of American Home Food Products, Inc. a publicly-traded marketer Artisanal Brand Cheeses, from 2007 to 2009. Mr. Wolf also
served as Chairman of the Board of Media Bay, which was a NASDAQ listed public company. Media Bay was a direct seller of spoken word
through its audio book club and old-time radio classic activities and download spoken content, from 2002 to 2004.
Mr.
Wolf received his B.A. in 1965 from Rutgers University (Henry Rutgers Scholar) and his M.B.A. in 1966 from the University of Pittsburgh
(with honors).
In
evaluating Mr. Wolf’s specific experience, qualifications, attributes and skills in connection with his appointment to our board,
we took into account his numerous years of experience in the food industry, as a serial entrepreneur in growing business, his knowledge
of publicly traded companies, and his proven track record of success in such endeavors.
Matthew
Brown has over 30 years of experience in the sales and marketing of products in the food industry. Beginning in February 2010 through
the present, he has served as President of MamaMancini’s. From April 2001 until January of 2012, he served as the President of
Hors D’oeuvres Unlimited, overseeing the day-to-day operations of their food manufacturing business. He previously worked as a
marketing associate from September 1993 to December 1998 at Kraft Foods, Inc., where he dealt with numerous aspects of the company’s
marketing of their food products.
Mr.
Brown received his B.A. from the University of Michigan in 1991 and his M.B.A. from the University of Illinois in 1993.
In
evaluating Mr. Brown’s specific experience, qualifications, attributes and skills in connection with his appointment to our board,
we took into account his numerous years of experience in sales and marketing, and his proven track record of success in such endeavors.
Lawrence Morgenstein has been Chief
Financial Officer of the Company since April 1, 2018. He has been previously employed as Controller for Emerging Power, Inc. from
July 7, 2016 through January 12, 2018. He was also employed by Elaut USA, Inc. from April 4, 2013 through July 3, 2016. He was
controller of Mama Mia Produce from March 2010 to April 2013. Mr. Morgenstein was Corporate Controller & VP of Finance. Mr.
Morgenstein holds a BS in Economics from Rider University in 1972. He further holds an MBA from Rutgers University GSB in 1976.
Steven
Burns has over 30 years of experience in the management and operations of various companies. Mr. Burns has served as a director of
MamaMancini’s from February 2010 through the present, and joined the company as Executive Vice President on February 1, 2020. Additionally,
beginning in 2006 leads PointProspect which oversees investments and services in real estate, clean and efficient energy sources, high-quality
and healthy food services, and healthcare technology. Prior to that, for a period of 24 years he worked at and was senior executive at
Accenture where he led the U.S. Health Insurance Industry Program comprised of approximately 600 professionals. He also has sat on various
financial committees and boards of directors throughout his career.
Mr.
Burns received his B.S. in Business Management from Boston College in 1982.
In
evaluating Mr. Burns’ specific experience, qualifications, attributes and skills in connection with his appointment to our board,
we took into account his numerous years of experience in serving on board of directors, his knowledge of running and managing companies,
and his proven track record of success in such endeavors.
Alfred
D’Agostino has over 34 years of experience in the management and ownership of food brokerage and food distribution companies.
Mr. D’Agostino has served as a director of MamaMancini’s from February 2010 through the Present. Beginning in March 2001
and still presently, he serves as the President for World Wide Sales Inc., a perishable food broker that services the New York / New
Jersey Metropolitan and Philadelphia marketplace. Prior to this he worked from September 1995 until February 2001 as Vice- President
of the perishable business unit at Marketing Specialists, a nationwide food brokerage. Previously, from February 1987 until August 1995
he worked as a Partner for the perishable division of Food Associates until its merger with Merket Enterprises.
Mr.
D’Agostino received his B.S. in Business Management from the City College of New York in 1974.
In
evaluating Mr. D’Agostino’s specific experience, qualifications, attributes and skills in connection with his appointment
to our board, we took into account his numerous years of experience in the food brokerage and other food related industries, his knowledge
of running and managing companies, and his proven track record of success in such endeavors.
Patrick
Connor Haley is the Founder and Managing Partner of Alta Fox Capital Management, LLC, an investment manager based in Fort Worth,
Texas. Previously, he was a consumer and technology focused Analyst at Scopia Capital Management LP. Mr. Haley has been recognized in
numerous circles as an emerging thought leader in the small and micro-cap space and is currently a top-ranked member on microcapclub.com.
Mr. Haley is a frequent panelist at small and micro-cap conferences, including the LD Micro and Planet Microcap Showcase, and has been
interviewed in a number of publications and podcasts for his views on the small and micro-cap market.
Mr.
Haley received an A.B. in Government, magna cum laude, from Harvard College.
In
evaluating Connor Haley’s credentials for appointment to our Board, we took into account his direct experience in technical analysis
of small public companies and advising them through strategic growth initiatives, and the navigation of business strategies in the best
interest of maximizing shareholder value.
Dean
Janeway has served as a director of MamaMancini’s since 2012. Mr. Janeway is an executive with more than 40 years of broad
leadership skills and extensive experience in the areas of corporate strategy, business development, operational oversight and financial
management. From 1966 through 2011, Mr. Janeway served in various positions at Wakefern Food Corp., the largest retailer- owned cooperative
in the United States. From 1966 through 1990, Mr. Janeway advanced through various positions of increasing responsibility including positions
in Wakefern’s accounting, merchandising, dairy-deli, and frozen foods divisions. From 1990 through 1995 Mr. Janeway provided oversight
for all of Wakefern’s procurement, marketing, merchandising, advertising and logistics divisions. From 1995 until his retirement
in 2011, Mr. Janeway served as President and Chief Operating Officer of “Wakefern” providing primary oversight for the company’s
financial and treasury functions, human resources, labor relations, new business development, strategic acquisitions, government relations,
corporate social responsibility, sustainability initiatives and member relations. Mr. Janeway previously served as the chairman for the
National Grocers Association from 1993 through 2001. From 2009 through the present, Mr. Janeway has served as the Chairman of the Foundation
for the University of Medicine and Dentistry of New Jersey.
Mr.
Janeway received his B.A. in Marketing from Rutgers University, and his M.B.A from Wharton School of Business, University of Pennsylvania.
The
Board of Directors determined that Mr. Janeway’s qualifications to serve as a director include his notable business and leadership
experience in the all areas of management, particularly in the food industry. He also has experience in the area of whole sale wholesale
distribution, due to his past position at Wakefern and his knowledge of running and managing companies and his proven track record of
success in such endeavors will be invaluable to the Company going forward.
Michael
Stengel is a tenured hospitality industry veteran, bringing over 40 years of executive leadership experience with Marriott International
to the MamaMancini’s Board of Directors. At Marriott, he was instrumental to the Company’s convention network strategy, overseeing
135 Convention venues including the Gaylord Brand. Michael, as Senior Vice President of Gaylord Hotels and The Convention Resort Network
(CRN) at Marriott, oversaw significant food and beverage operations within his portfolio of managed hotels and being responsible for
well over $1.5 billion in revenue. Mr. Stengel has had direct responsibility for P&L operations for numerous enterprises and is completely
familiar with financial management of public companies.
Mr.
Stengel has received a B.S. Law and Justice from Rowan University, a Cornell University Hospitality Certificate, and an executive MBA
with Marriott sponsor by the University of Maryland.
The
Board determined that Mr. Stengel’s qualifications to serve as a director include his multi-faceted financial responsibility and
experience in the food and hospitality business and his success in building organizations into large-scale, highly profitable operations.
Thomas
Toto has over 32 years of experience in the management and ownership of food brokerage and food distribution companies. Mr. Toto
has served as a director of MamaMancini’s from February 2010 through the Present. Beginning in June 2009 and still presently, he
serves as the Senior Business manager for World Wide Sales Inc., a perishable food broker that services the New York / New Jersey Metropolitan
and Philadelphia marketplace. Prior to this he worked from September 2007 until May 2009 as a Division President for DCI Cheese Co.,
a company that imported and distributed various kinds of cheeses. Previously from March 1993 until September 2007 he was the President
and owner of Advantage International Foods Corporation, where he ran the day to day operations of importing and distributing cheeses
around the world.
Mr.
Toto received his B.A. from Seton Hall University in 1976 and his M.B.A. from Seton Hall University in 1979.
In
evaluating Mr. Toto’s specific experience, qualifications, attributes and skills in connection with his appointment to our board,
we took into account his numerous years of experience in the food brokerage and other food related industries, his knowledge of running
and managing companies, and his proven track record of success in such endeavors.
Family
Relationships
Mr.
Matthew Brown, our Chief Operating Officer, is the son-in-law of Mr. Carl Wolf, our Chief Executive Officer.
Board
Committees and Charters
Our
board of directors has established the following committees: an audit committee, a compensation committee and a nominating/corporate
governance committee. Copies of each committee’s charter are posted on our website, www.mamamancini’s.com. Our board of directors
may from time to time establish other committees.
Audit
Committee
The
purpose of the Audit Committee is to oversee the processes of accounting and financial reporting of the Company and the audits and financial
statements of the Company. The Audit Committee’s primary duties and responsibilities are to:
|
●
|
Monitor
the integrity of the Company’s financial reporting process and systems of internal controls regarding finance, accounting and
legal compliance.
|
|
|
|
|
●
|
Monitor
the independence and performance of the Company’s independent auditors and the Company’s accounting personnel.
|
|
|
|
|
●
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Provide
an avenue of communication among the independent auditors, management, the Company’s accounting personnel, and the Board.
|
|
|
|
|
●
|
Appoint
and provide oversight for the independent auditors engaged to perform the audit of the financial statements.
|
|
|
|
|
●
|
Discuss
the scope of the independent auditors’ examination.
|
|
|
|
|
●
|
Review
the financial statements and the independent auditors’ report.
|
|
|
|
|
●
|
Review
areas of potential significant financial risk to the Company.
|
|
●
|
Monitor
compliance with legal and regulatory requirements.
|
|
|
|
|
●
|
Solicit
recommendations from the independent auditors regarding internal controls and other matters.
|
|
|
|
|
●
|
Make
recommendations to the Board.
|
|
|
|
|
●
|
Resolve
any disagreements between management and the auditors regarding financial reporting.
|
|
|
|
|
●
|
Prepare
the report required by Item 407(d) of Regulation S-K, as required by the rules of the Securities and Exchange Commission (the “SEC”).
|
|
|
|
|
●
|
Perform
other related tasks as requested by the Board.
|
The
Audit Committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities, and it has direct access
to the independent auditors as well as anyone in the organization. The Committee has the ability to retain, at the Company’s expense,
special legal, accounting, or other consultants or experts it deems necessary in the performance of its duties.
Our
Audit Committee consists of Mr. Toto who serves as Chairman, Mr. D’Agostino, Mr. Janeway and Mr. Stengel Mr. Stengel is our Audit
Committee financial expert as currently defined under applicable SEC rules.
Compensation
Committee
The
Compensation Committee’s responsibilities include, but are not limited to, the responsibilities which are required under the corporate
governance rules of NASDAQ, including the responsibility to determine compensation of the Chairman of the Board, the Chief Executive
Officer (“CEO”), the President and all other executive officers. The Compensation Committee’s actions shall generally
be related to overall considerations, policies and strategies.
The
following are specific duties and responsibilities of the Compensation Committee:
|
●
|
Review
the competitiveness of the Company’s executive compensation programs to ensure (a) the attraction and retention of corporate
officers, (b) the motivation of corporate officers to achieve the Company’s business objectives, and (c) the alignment of the
interests of key leadership with the long-term interests of the Company’s stockholders.
|
|
|
|
|
●
|
Review
and determine the annual salary, bonus, stock options, other equity-based incentives, and other benefits, direct and indirect, of
the Company’s executive officers, including development of an appropriate balance between short-term pay and long-term incentives
while focusing on long-term stockholder interests.
|
|
|
|
|
●
|
Determine
salary increases and bonus grants for the Chairman of the Board, the CEO, the President and all other executive officers of the Company.
|
|
|
|
|
●
|
Review
and approve corporate goals and objectives for purposes of bonuses and long- term incentive plans.
|
|
|
|
|
●
|
Review
and approve benefit plans, including equity incentive plans, and approval of individual grants and awards.
|
|
|
|
|
●
|
Review
and approve employment or other agreements relating to compensation for the Chairman of the Board, the CEO, the President and the
other executive officers of the Company.
|
|
|
|
|
●
|
Review
and discuss with management the Company’s CD&A and recommend to the Board that the CD&A be included in the annual report
on Form 10-K and/or proxy statement in accordance with applicable SEC rules.
|
|
●
|
If
required by SEC rules, provide a Compensation Committee Report on executive compensation to be included in the Company’s annual
proxy statement in accordance with applicable SEC rules.
|
|
|
|
|
●
|
Perform
an annual evaluation of the performance of the Chairman of the Board, the CEO, the President and the other executive officers.
|
|
|
|
|
●
|
Perform
an annual review of non-employee director compensation programs and recommend changes thereto to the Board when appropriate.
|
|
|
|
|
●
|
Plan
for executive development and succession.
|
|
|
|
|
●
|
Review
and approve all equity-based compensation plans and amendments thereto, subject to any stockholder approval under the listing standards
of NASDAQ.
|
|
|
|
|
●
|
Recommend
an appropriate method by which stockholder concerns about compensation may be communicated by stockholders to the Committee and,
as the Committee deems appropriate, to respond to such stockholder concerns.
|
|
|
|
|
●
|
Perform
such duties and responsibilities as may be assigned by the Board to the Committee under the terms of any executive compensation plan,
incentive compensation plan or equity-based plan.
|
|
|
|
|
●
|
Review
risks related to the Company’s compensation policies and practices and review and discuss, at least annually, the relationship
between the Company’s risk management policies and practices, corporate strategy and compensation policies and practices.
|
Our
Compensation Committee consists of Mr. D’Agostino who serves as Chairman, and Mr. Dean Janeway and Mr. Toto.
Nominating/Corporate
Governance Committee
The
Nominating/Corporate Governance Committee’s responsibilities include, but are not limited to, the responsibilities which are required
under the corporate governance rules of NASDAQ, including the responsibilities to identify individuals who are qualified to become directors
of the Company, consistent with criteria approved by the Board, and make recommendations to the Board of nominees, including Stockholder
Nominees (nominees whether by appointment or election at the Annual Meeting of Stockholders) to serve as a directors of the Company.
To fulfill its purpose, the responsibilities and duties of the Nominating/Corporate Governance Committee are as follows:
|
●
|
Evaluate,
in consultation with the Chairman of the Board and Chief Executive Officer (“CEO”), the current composition, size, role
and functions of the Board and its committees to oversee successfully the business and affairs of the Company in a manner consistent
with the Company’s Corporate Governance Guidelines, and make recommendations to the Board for approval.
|
|
|
|
|
●
|
Determine,
in consultation with the Chairman of the Board and CEO, director selection criteria consistent with the Company’s Corporate
Governance Guidelines and conduct searches for prospective directors whose skills and attributes reflect these criteria.
|
|
|
|
|
●
|
Assist
in identifying, interviewing and recruiting candidates for the Board.
|
|
|
|
|
●
|
Evaluate,
in consultation with the Chairman of the Board and CEO, nominees, including nominees nominated by stockholders in accordance with
the provisions of the Company’s Bylaws, and recommend nominees for election to the Board or to fill vacancies on the Board.
|
|
●
|
Before
recommending an incumbent, replacement or additional director, review his or her qualifications, including capability, availability
to serve, conflicts of interest, and other relevant factors.
|
|
|
|
|
●
|
Evaluate,
in consultation with the Chairman of the Board and CEO and make recommendations to the Board concerning the appointment of directors
to Board committees and the selection of the Chairman of the Board and the Board committee chairs consistent with the Company’s
Corporate Governance Guidelines.
|
|
|
|
|
●
|
Determine
the methods and execution of the annual evaluations of the Board’s and each Board committee’s effectiveness and support
the annual performance evaluation process.
|
|
|
|
|
●
|
Evaluate
and make recommendations to the Board regarding director retirements, director re-nominations and directors’ changes in circumstances
in accordance with the Company’s Corporate Governance Guidelines.
|
|
|
|
|
●
|
Review
and make recommendations to the Board regarding policies relating to directors’ compensation, consistent with the Company’s
Corporate Governance Guidelines.
|
|
|
|
|
●
|
As
set forth herein, monitor compliance with, and at least annually evaluate and make recommendations to the Board regarding, the Company’s
Corporate Governance Guidelines and overall corporate governance of the Company.
|
|
|
|
|
●
|
Assist
the Board and the Company’s officers in ensuring compliance with an implementation of the Company’s Corporate Governance
Guidelines.
|
|
|
|
|
●
|
Develop
and implement continuing education programs for all directors, including orientation and training programs for new directors.
|
|
|
|
|
●
|
Annually
evaluate and make recommendations to the Board regarding the Committee’s performance and adequacy of this Charter.
|
|
|
|
|
●
|
Review
the Code of Ethics periodically and propose changes thereto to the Board, if appropriate.
|
|
|
|
|
●
|
Review
requests from outside the Committee for any waiver or amendment of the Company’s Code of Business Conduct and Ethics and recommend
to the Board whether a particular waiver should be granted or whether a particular amendment should be adopted.
|
|
|
|
|
●
|
Oversee
Committee membership and qualifications and the performance of members of the Board.
|
|
|
|
|
●
|
Review
and recommend changes in (i) the structure and operations of Board Committees, and (ii) Committee reporting to the Board.
|
|
|
|
|
●
|
Make
recommendations annually to the Board as to the independence of directors under the Corporate Governance Guidelines.
|
|
|
|
|
●
|
Review
and make recommendations to the Board regarding the position the Company should take with respect to any proposals submitted by stockholders
for approval at any annual or special meeting of stockholders.
|
|
|
|
|
●
|
Regularly
report on Committee activities and recommendations to the Board.
|
|
|
|
|
●
|
Perform
any other activities consistent with this Charter, the Company’s Certificate of Incorporation and Bylaws, as amended from time
to time, the NASDAQ company guide, and any governing law, as the Board considers appropriate and delegates to the Committee.
|
Our
Nominating/Corporate Governance Committee consists of Mr. Janeway who serves as Chairman, Mr. D’Agostino, Mr. Haley and Mr. Toto.
Code
of Business Conduct and Ethics
Effective
January 21, 2014, the Board of Directors (the “Board”) of MamaMancini’s Holdings, Inc. (the “Company”)
adopted a Code of Ethics (the “Code of Ethics”) applicable to the Company and all subsidiaries and entities controlled by
the Company and the Company’s directors, officers and employees. Compliance with the Code of Ethics is required of all Company
personnel at all times. The Company’s senior management is charged with ensuring that the Code of Ethics and the Company’s
corporate policies will govern, without exception, all business activities of the Company. The Code of Ethics addresses, among other
things, the use and protection of Company assets and information, avoiding conflicts of interest, corporate opportunities and transactions
with business associates and document retention.
Involvement
in Certain Legal Proceedings
During
the past five years no director, person nominated to become a director, executive officer, promoter or control person of the Company
has: (i) had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer
either at the time of the bankruptcy or within two years prior to that time; (ii) been convicted in a criminal proceeding or been subject
to a pending criminal proceeding (excluding traffic violations and other minor offenses); (iii) been subject to any order, judgment,
or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or (iv) been found
by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
Compliance
with Section 16(A) of the Exchange Act
Section
16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more of
a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in beneficial
ownership with the SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and regulations of
the SEC to furnish the Company with copies of all reports filed by them in compliance with Section 16(a).
Based
solely on our review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities
Exchange Act of 1934, as amended, the reports required to be filed with respect to transactions in our common stock during the period
covered by this Annual Report on Form 10-K, were timely.
Legal
Proceedings
There
are no material proceedings to which any director or officer, or any associate of any such director or officer, is a party that is adverse
to our Company or any of our subsidiaries or has a material interest adverse to our Company or any of our subsidiaries. No director or
executive officer has been a director or executive officer of any business which has filed a bankruptcy petition or had a bankruptcy
petition filed against it during the past ten years. No director or executive officer has been convicted of a criminal offense or is
the subject of a pending criminal proceeding during the past ten years. No director or executive officer has been the subject of any
order, judgment or decree of any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities during the past ten years. No director or officer has been found by a court
to have violated a federal or state securities or commodities law during the past ten years.
Item
11. Executive Compensation
The
following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid
by us during the years ended January 31, 2021 and January 31, 2020.
Name and
Principal
Position
|
|
Year(5)
|
|
|
Salary ($)
|
|
|
Bonus ($)
|
|
|
Stock Awards ($)
|
|
|
Option Awards ($)
|
|
|
Non-Equity Incentive Plan Compensation ($)
|
|
|
Non-Qualified Deferred Compensation Earnings
($)
|
|
|
All Other Compensation ($)
|
|
|
Totals ($)
|
|
Carl Wolf
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEO/Chairman(1)
|
|
|
2021
|
|
|
$
|
190,003
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
190,003
|
|
|
|
|
2020
|
|
|
$
|
190,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
190,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matt Brown
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President(2)
|
|
|
2021
|
|
|
$
|
190,617
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
190,617
|
|
|
|
|
2020
|
|
|
$
|
211,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
211,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven Burns
|
|
|
2021
|
|
|
|
191,666
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
191,666
|
|
Executive VP (3)
|
|
|
2020
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence Morgenstein
CFO(4)
|
|
|
2021
|
|
|
$
|
136,458
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,682
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
143,140
|
|
|
|
|
2020
|
|
|
$
|
132,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4,058
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
136,058
|
|
|
1.
|
Mr.
Wolf was appointed as Chief Executive Officer of the Company on January 24, 2013.
|
|
|
|
|
2.
3.
|
Mr.
Brown was appointed as President of the Company on January 24, 2013.
Mr
Burns was appointed Executive Vice President of the Company in 2019
|
|
|
|
|
4.
|
Mr. Morgenstein was appointed as Chief Financial Officer on April 1, 2018. Upon appointment to this position, Mr. Morgenstein was granted
7,500 options to purchase common stock. The options had a grant date fair value of $7,083. On April 1, 2019, Mr. Morgenstein was granted
an additional 7,500 options to purchase common stock with a grant date fair value of $4,694. On October 1, 2019, Mr. Morgenstein was granted
an additional 7,500 options to purchase common stock with a grant date fair value of $4,058. On April 1, 2020, Mr. Morgenstein was granted
an additional 7,500 options to purchase common stock with a grant date fair value of $7,617.
|
2021
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
STOCK
AWARDS
Name
(a)
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(b)
|
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
I
|
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)
|
|
|
|
Option
Exercise
Price
($)
I
|
|
|
Option
Expiration
Date
(f)
|
|
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)
(g)
(9)
|
|
|
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
(h)
|
|
|
|
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
(i)
|
|
|
|
Payout
Value
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
(j)
|
|
Carl
Wolf
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief
Executive Officer(1)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matthew
Brown
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
Burns
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Vice President; Director(3)
|
|
|
50,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.39
|
|
|
4/13/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
1.05
|
|
|
6/27/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.80
|
|
|
9/3/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.52
|
|
|
7/30/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alfred
D’Agostino
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director(4)
|
|
|
50,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.39
|
|
|
4/13/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
1.05
|
|
|
6/27/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.80
|
|
|
9/3/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.52
|
|
|
7/30/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas
Toto
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director(5)
|
|
|
50,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.39
|
|
|
4/13/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
1.05
|
|
|
6/27/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.80
|
|
|
9/3/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.52
|
|
|
7/30/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean
Janeway
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director(6)
|
|
|
50,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.39
|
|
|
4/13/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
1.05
|
|
|
6/27/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.80
|
|
|
9/3/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.52
|
|
|
7/30/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence
Morgenstein(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief
Financial Officer
|
|
|
7,500
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.73
|
|
|
11/30/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.74
|
|
|
3/31/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
2,500
|
|
|
|
0
|
|
|
$
|
0.70
|
|
|
9/30/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500
|
|
|
|
5,000
|
|
|
|
0
|
|
|
$
|
1.16
|
|
|
3/31/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brent
Smith(8)
|
|
|
6,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.60
|
|
|
5/2/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
1.38
|
|
|
11/2/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chris
Styler(8)
|
|
|
18,000
|
|
|
|
-
|
|
|
|
0
|
|
|
$
|
0.60
|
|
|
5/2/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
1.38
|
|
|
11/2/2027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dan
Mancini (Dougherty)(8)
|
|
|
18,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.60
|
|
|
5/2/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.52
|
|
|
7/30/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Emma
Rosario(8)
|
|
|
3,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.60
|
|
|
5/2/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
1.38
|
|
|
11/2/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric
Felice(8)
|
|
|
12,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.60
|
|
|
5/2/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
1.38
|
|
|
11/2/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joe
Smith(8)
|
|
|
18,000
|
|
|
|
-
|
|
|
|
0
|
|
|
$
|
0.60
|
|
|
5/2/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
1.38
|
|
|
11/2/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
Kaminsky(8)
|
|
|
6,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.60
|
|
|
5/2/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
1.38
|
|
|
11/2/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pete
de Pasquale(8)
|
|
|
6,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.60
|
|
|
5/2/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Priscilla
Goldman(8)
|
|
|
6,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.60
|
|
|
5/2/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rich
Franco(8)
|
|
|
6,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.60
|
|
|
5/2/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
1.38
|
|
|
11/2/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott
Shaffer(8)
|
|
|
18,000
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
0.60
|
|
|
5/2/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
Mr.
Wolf was appointed as Chief Executive Officer of the Company on January 24, 2013
|
|
|
2.
|
Mr.
Brown was appointed as President of the Company on January 24, 2013
|
|
|
3.
|
Mr.
Burns was appointed as a director of the Company on January 24, 2013
|
|
|
4.
|
Mr.
D’Agostino was appointed as a director of the Company on January 24, 2013
|
|
|
5.
|
Mr.
Toto was appointed as a director of the Company on January 24, 2013
|
|
|
6.
|
Mr.
Janeway was appointed as a director on January 24, 2013
|
|
|
7.
|
Mr.
Morgenstein was appointed Chief Financial Officer on April 1, 2018
|
|
|
8.
|
Non-Management
employee
|
|
|
9.
|
Shares
vest upon a change of control of the Company
|
DIRECTOR
COMPENSATION
Our
executive officers who are members of our board of directors and the directors who are not considered independent under the corporate
governance rules of the New York Stock Exchange do not receive compensation from us for their service on our board of directors. Accordingly,
Mr. Wolf and Mr. Brown do not receive compensation from us for their service on our board of directors. Only those directors who are
considered independent directors under the corporate governance rules of the New York Stock Exchange receive compensation from us for
their service on our board of directors. Mr. Burns, Mr. D’Agostino, Mr. Toto and Mr. Janeway are to be paid $10,000 per annum for
their service as members of the board, payable quarterly in Company common stock.
In
April 2016, each of our directors were granted stock options to purchase 50,000 shares of the Company’s common stock at an exercise
of $0.39. All such options vested quarterly over a one-year period and originally expired 5 years from the date of grant. The exercise
period for these options have been extended for an additional two years.
In
June 2017, each of our directors were granted stock options to purchase 25,000 shares of the Company’s common stock at an exercise
of $1.05. All such options vested quarterly over a one-year period and expire 5 years from the date of grant.
In
September 2018, each of our directors were granted stock options to purchase 25,000 shares of the Company’s common stock at an
exercise of $0.80. All such options vested quarterly over a one-year period and expire 5 years from the date of grant.
In
July 2019, each of our directors were granted stock options to purchase 50,000 shares of the Company’s common stock at an exercise
of $0.52. All such options vested quarterly over a one-year period and expire 5 years from the date of grant.
There
is no formal arrangement with our board of directors for the granting of options. There is no assurance that the Company will continue
to issue options to the board of directors or on what terms such issuance would occur.
We
also reimburse all of our directors for reasonable expenses incurred to attend board of director or committee meetings.
The
following Director Compensation Table sets forth the compensation of our directors for the fiscal years ending January 31, 2021 and 2020.
Name
and
Principal
Position (a)
|
|
Year
(b)
|
|
Salary
($)
(b)
|
|
|
Bonus
($)
(b)
|
|
|
Stock
Awards
($)
(b)
|
|
|
Option
Awards ($)
(b)
|
|
|
Non-Equity
Incentive Plan Compensation ($)
(b)
|
|
|
All
Other Compensation ($)
(b)
|
|
|
Total
($)
(b)
|
|
Director
Steven
Burns (1)
|
|
2020
|
|
$
|
58,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
17,876
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
75,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
2021
|
|
$
|
10,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
10,000
|
|
Alfred
D’Agostino (2)
|
|
2020
|
|
$
|
10,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
17,876
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
27,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
2021
|
|
$
|
10,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
10,000
|
|
Thomas
Toto (3)
|
|
2020
|
|
$
|
10,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
17,876
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
27,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
2021
|
|
$
|
10,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
10,000
|
|
Dean
Janeway (4)
|
|
2020
|
|
$
|
10,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
17,876
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
27,876
|
|
1.
|
Mr. Burns was appointed as a director of the Company on January 24, 2013. He became Executive Vice President of the Company in February 2020 and as of such date is no longer considered an independent director.
|
|
|
2.
|
Mr. D’Agostino was appointed as a director of the Company on January 24, 2013.
|
|
|
3.
|
Mr. Toto was appointed as a director of the Company on January 24, 2013.
|
|
|
4.
|
Mr. Janeway was appointed as a director of the Company on January 24, 2013.
|
Employment
Agreements
Carl
Wolf
On
March 5, 2012 MamaMancini’s entered into an Employment Agreement with Mr. Carl Wolf as Chief Executive Officer for a term of 3
years. Mr. Wolf’s employment agreement automatically renews for successive one-year terms, unless the Company gives written notice
of non-renewal not less than six (6) months prior to an anniversary date or until terminated as set forth herein. Mr. Wolf’s employment
agreement was renewed for a period of one year on March 5, 2021. As compensation for his services, Mr. Wolf receives a base salary of
$190,000 per year. Such base salary is reviewed yearly with regard to possible increase. In addition, Mr. Wolf is eligible to receive
an annual bonus as determined by the Board. As part of the agreement, Mr. Wolf is subject to confidentiality provisions regarding MamaMancini’s,
and certain covenants not to compete. Mr. Wolf is also entitled to receive Termination Payments (as defined Section 11.1 of Mr. Wolf’s
Employment Agreement) in the event his employment is terminated in conjunction with the following:
Reason
for Termination
|
|
Payment
to be Received
|
Death
|
|
Termination
Payments (1)
|
Disability
|
|
Termination
Payments plus 12 months Base Salary
|
Without
Cause
|
|
Termination
Payments plus lesser of 12 months Base Salary or remaining Initial Term of employment
|
For
Cause
|
|
Termination
Payments minus any yearly bonus
|
(1)
Termination Payment equals: (i) any unpaid Base Salary through the date of termination, (ii) any Bonus for the year in which such termination
occurs prorated as of the date of termination, (iii) accrued and unpaid vacation pay for the year in which such termination occurs prorated
as of the date of termination, (iv) any sums due under any of MamaMancini’s benefit plans, and (v) any unreimbursed expenses incurred
by the Employee on MamaMancini’s behalf.
Matthew
Brown
On
March 5, 2012 MamaMancini’s entered into an employment agreement with Mr. Matthew Brown as President of MamaMancini’s for
an initial term of 3 years. Mr. Brown’s employment agreement automatically renews for successive one-year terms, unless the Company
gives written notice of non-renewal not less than six (6) months prior to an anniversary date or until terminated as set forth herein.
Mr. Brown’s employment agreement was renewed for a period of one year on March 5, 2021. As compensation for his services, Mr. Brown
receives a base salary of $186,000 per year. Such base salary is reviewed yearly with regard to possible increase. In addition, Mr. Brown
is eligible to receive an annual bonus as determined by the Board. As part of the agreement, Mr. Brown is subject to confidentiality
provisions regarding MamaMancini’s, and certain covenants not to compete. Mr. Brown is also entitled to receive Termination Payments
(as defined in Section 11.1 of Mr. Brown’s Employment Agreement) in the event his employment is terminated in conjunction with
the following:
Reason
for Termination
|
|
Payment
to be Received
|
Death
|
|
Termination
Payments (1)
|
Disability
|
|
Termination
Payments plus 12 months Base Salary
|
Without
Cause
|
|
Termination
Payments plus lesser of 12 months Base Salary or remaining Initial Term of employment
|
For
Cause
|
|
Termination
Payments minus any yearly bonus
|
(1)
Termination Payment equals: (i) any unpaid Base Salary through the date of termination, (ii) any Bonus for the year in which such termination
occurs prorated as of the date of termination, (iii) accrued and unpaid vacation pay for the year in which such termination occurs prorated
as of the date of termination, (iv) any sums due under any of MamaMancini’s benefit plans, and (v) any unreimbursed expenses incurred
by the Employee on the MamaMancini’s behalf.
Lawrence
Morgenstein
On April 1,
2018 MamaMancini’s entered into an employment agreement with Lawrence Morgenstein as Chief Financial Officer of MamaMancini’s
for an initial term of one year. Unless terminated, Mr. Morgenstein’s employment agreement automatically renews for successive one-year
terms. As compensation for his services, Mr. Morgenstein receives a base salary of $125,000 per year and is eligible for a year-end bonus
of up to $25,000. Such base salary is reviewed yearly with regard to possible increase. In addition, Mr. Morgenstein was initially granted
an option to acquire 7,500 shares of Company Common Stock. On October 1, 2019, Mr. Morgenstein was granted an additional 7,500 options
to purchase common stock with a grant date fair value of $4,058. On April 1, 2020, Mr. Morgenstein was granted an additional 7,500 options
to purchase common stock with a grant date fair value of $7,617. As part of the agreement, Mr. Morgenstein is subject to confidentiality
provisions regarding MamaMancini’s, and certain covenants not to compete.
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The
following table provides the names and addresses of each person known to us to own more than 5% of our outstanding shares of common stock
as of April 12, 2021 and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares
are owned directly and the shareholders listed possess sole voting and investment power with respect to the shares shown.
Name
of Beneficial Owner(1)
|
|
Shares
|
|
|
Percent
(2)
|
|
|
|
|
|
|
|
|
5%
or Greater Stockholders (other than Executive Officers and Directors)
|
|
|
|
|
|
|
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named
Executive Officers and Directors
|
|
|
|
|
|
|
|
|
Carl
Wolf
|
|
|
7,223,248
|
(3)
|
|
|
20.29
|
%
|
Matthew
Brown
|
|
|
5,629,921
|
(4)
|
|
|
15.81
|
%
|
Lawrence
Morgenstein
|
|
|
25,000
|
(5)
|
|
|
*
|
|
Steven
Burns
|
|
|
1,501,310
|
(6)
|
|
|
4.14
|
%
|
Alfred
D’Agostino
|
|
|
1,060,242
|
(7)
|
|
|
2.93
|
%
|
Thomas
Toto
|
|
|
896,110
|
(8)
|
|
|
2.47
|
%
|
Dean
Janeway
|
|
|
441,003
|
(9)
|
|
|
1.22
|
%
|
Patrick
Connor Haley
|
|
|
1,686,799
|
(10)
|
|
|
|
|
Michael
Stengel
|
|
|
5,000
|
(11)
|
|
|
*
|
|
All
executive officers and directors as a group (9 persons)
|
|
|
18,601,965
|
|
|
|
51.05
|
%(2)
|
*Less
than 1%
|
(1)
|
Beneficial
ownership is determined in accordance with Rule 13d-3(a) of the Exchange Act and generally includes voting or investment power with
respect to securities. In determining beneficial ownership of our Common Stock, the number of shares shown includes shares which
the beneficial owner may acquire upon exercise of debentures, warrants and options which may be acquired within 60 days. In determining
the percent of Common Stock owned by a person or entity on April 12, 2021, (a) the numerator is the number of shares of the
class beneficially owned by such person or entity, including shares which the beneficial ownership may be acquire within 60 days
of April 12, 2021 on exercise of warrants and options and (b) the denominator is the sum of (i) the total shares of that class
outstanding on April 12, 2021 (35,608,474 shares of Common Stock). Unless otherwise stated, each beneficial owner
has sole power to vote and dispose of its shares. The address of each of the holders is 25 Branca Road, East Rutherford, NJ 07073.
|
|
|
|
|
(2)
|
Figures
may not add up due to rounding of percentages.
|
|
(3)
|
The
amount includes 6,170,356 shares held jointly with Ms. Marion F. Wolf and 1,052,892 shares held directly by Mr. Wolf. Ms. Wolf is
the wife of Mr. Carl Wolf. Mr. Wolf maintains full voting control of such shares.
|
|
|
|
|
(4)
|
5,401,823
of the shares are held jointly with Ms. Karen Wolf and 228,098 shares are held by Mr. Brown. Ms. Wolf is the wife of Mr. Matthew
Brown. Mr. Brown maintains full voting control of such shares.
|
|
|
|
|
(5)
|
Includes
25,000 stock options which are currently exercisable.
|
|
|
|
|
(6)
|
This
amount includes 130,397 shares held by Steven Burns, 84,074 shares held by Milvia Burns, Mr. Burns’ wife and 1,136,839 shares
held by Point Prospect, Inc., a corporation which is wholly-owned by Steven Burns. Share total also includes options to purchase
150,000 shares of common stock.
|
|
|
|
|
(7)
|
This
amount includes 126,938 shares directly held by Alfred D’Agostino, 783,304 shares held by Alfred D’Agostino Revocable
Living Trust 11/6/2009, of which Alfred D’Agostino is the beneficial owner. Share total also includes an option to purchase
150,000 shares of common stock.
|
|
|
|
|
(8)
|
This
amount includes 679,443 held by Thomas Toto and 66,667 held by Thomas and Andrea Toto, for which Thomas Toto is the beneficial owner.
Share total also includes an option to purchase 150,000 shares of common stock.
|
|
|
|
|
(9)
|
This
amount includes 275,109 shares held by Dean Janeway and 15,894 owned by Mary Janeway & Dean Janeway Jt. Ten. Share total also
includes an option to purchase 150,000 shares of common stock.
|
|
|
|
|
(10)
|
Includes
shares held by Alta Fox Opportunities Fund, LP. Alta Fox GenPar, LP serves as general partner of Alta Fox Opportunities Fund, LP and
may be deemed to indirectly beneficially own securities held by Alta Fox Opportunities Fund, LP. Alta Fox Equity, LLC serves
as the general partner of Alta Fox GenPar, LP, which serves as general partner of Alta Fox Opportunities Fund, LP, and Alta Fox Equity,
LLC may be deemed to indirectly beneficially own securities held by Alta Fox Opportunities Fund, LP. Alta Fox Capital Management, LLC
acts as an investment adviser to, and manages investment and trading accounts of Alta Fox Opportunities Fund, LP and may be deemed to
indirectly beneficially own securities held by Alta Fox Opportunities Fund, LP. Mr. Haley is the Manager of Alta Fox Capital Management,
LLC and may be deemed to indirectly beneficially own securities held by Alta Fox Opportunities Fund, LP.
|
|
|
|
|
(11)
|
This amount includes 5,000 shares purchased by the holder in April 2021.
|
General
The
Company is authorized to issue an aggregate number of 270,000,000 shares of capital stock, of which 20,000,000 shares are preferred stock,
$0.00001 par value per share and 250,000,000 shares are common stock, $0.00001 par value per share.
Common
Stock
The
Company authorized to issue 250,000,000 shares of common stock, $0.00001 par value per share. At April 9, 2021, we had 35,608,474 shares
of common stock issued and outstanding.
Each
share of common stock has one (1) vote per share for all purposes. Our common stock does not provide any preemptive, subscription or
conversion rights and there are no redemption or sinking fund provisions or rights. Our common stockholders are not entitled to cumulative
voting for purposes of electing members to our board of directors.
Preferred
Stock
The
Company is authorized to issue 20,000,000 shares of preferred stock, $0.00001 par value per share. The Company has designated 120,000
shares of preferred stock as Series A Convertible Preferred stock. As of January 31, 2021, no shares of Series A Convertible Preferred
Stock are issued and outstanding. The Series A Convertible Preferred Stock shares were convertible, at the option of the holder, into
shares of Company Common Stock at a conversion price of $0.675 (subject to adjustment) based upon the stated value of the Series A Convertible
Preferred Stock.
Dividends
Preferred
Stock. The holders of the Series A Convertible Preferred were entitled to receive dividends at a rate of either percent (8%) per
annum payable quarterly in cash or Company Common Stock at the option of the holder. We have not paid any cash dividends to the holders
of our Common Stock. During the fiscal year ended January 31, 2020, no dividends were paid on the Company’s Series A Preferred
Stock.
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. It is our present
intention not to pay any cash dividends on our Common Stock in the foreseeable future, but rather to reinvest earnings, if any, in our
business operations.
Warrants
As
of April 9, 2021, there are no outstanding warrants to purchase of our common shares.
Options
As of April 9, 2021, there outstanding options to
purchase 869,000 shares of Company Common Stock at exercise prices ranging from $0.39 to $1.38 per share.
M&T Bank Facility
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 new 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 and will be amortized over the remaining life of the note using the effective interest method. There was unamortized
debt discount of $0 and $17,864 as of January 31, 2021 and January 31, 2020, respectively. The outstanding balance on the term loan was
$0 and $441,663 as of January 31, 2021 and 2020, respectively.
Effective, January 4, 2019, the Company has arranged
a new $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. 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 and $2,997,348 as of January 31, 2021 and 2020, respectively.
During the year ended January 31, 2021, the Company
paid total interest of $78,032 to M&T Bank for the above agreements
Item
13. Certain Relationships and Related Transactions, and Director Independence.
Two
or our directors, Thomas Toto and Alfred D’Agostino, work for World Wide Sales, Inc. (“World Wide Sales”), a perishable
food broker that services the New York / New Jersey Metropolitan and Philadelphia marketplace. Mr. D’Agostino is the
President of World Wide Sales. Pursuant to an informal arrangement, the Company has agreed to pay World Wide Sales the greater of $4,000
or 3% sales commission on net sales (sales less any promotions, credits, allowance, and short pay) to supermarket chains headquartered
in the New York Metropolitan area per month. To date, World Wide Sales has never been paid in excess of $4,000 in any month.
Director
Independence
Our
board of directors has determined that each of Messrs. D’Agostino, Toto, Janeway, Haley and Stengel is an independent director
within the meaning of the applicable rules of the SEC and the New York Stock Exchange, and that each of them is also an independent director
under Rule 10A-3 of the Exchange Act for the purpose of audit committee membership. In addition, our board of directors has determined
that Mr. Burns is an audit committee financial expert within the meaning of the applicable rules of the SEC and the New York Stock Exchange.
Item
14. Principal Accounting Fees and Services.
Audit
Fees
Audit
Fees consist of assurance and related services that are reasonably related to the performance of the audit or review of our financial
statements. This category includes fees related to the performance of audits and attest services not required by statute or regulations,
and accounts consultations regarding the application of GAAP to proposed transactions. The aggregate Audit Fees billed for the fiscal
years ended January 31, 2021 and January 31, 2020, were $64,000 and $56,920, respectively.
Audit
Related Fees
The
aggregate fees billed for assurance and related services by our principal accountant that are reasonably related to the performance of
the audit or review of our financial statements, other than those previously reported in this Item 14, for the fiscal year ended January
31, 2021 and January 31, 2020 were $0 and $0, respectively.
Tax
Fees
Tax
Fees consist of the aggregate fees billed for professional services rendered by our principal accounts for tax compliance, tax advice,
and tax planning. These services include preparation for federal and state income tax returns. The aggregate Tax Fees billed for the
years ended January 31, 2021 and January 31, 2019 were $11,115 and $7,500, respectively.
Audit
Committee Pre-Approval Policies and Procedures
Effective
May 6, 2003, the SEC adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit
related service, the engagement be:
|
●
|
approved
by our audit committee; or
|
|
|
|
|
●
|
entered
into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are
detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include
delegation of the audit committee’s responsibilities to management.
|
Our
Audit Committee pre-approved all services provided by our independent auditors for the period covered by this Annual Report on Form 10-K.
MamaMancini’s
Holdings, Inc.
Consolidated
Statements of Cash Flows
|
|
For
the Year Ended January 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
4,067,206
|
|
|
$
|
1,532,694
|
|
Adjustments
to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
663,001
|
|
|
|
640,246
|
|
Amortization
of debt discount
|
|
|
17,864
|
|
|
|
67,735
|
|
Share-based
compensation
|
|
|
52,895
|
|
|
|
93,862
|
|
Amortization
of right of use assets
|
|
|
138,311
|
|
|
|
109,036
|
|
Change in deferred tax asset
|
|
|
(744,973
|
)
|
|
|
-
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(245,906
|
)
|
|
|
(1,077,063
|
)
|
Inventories
|
|
|
51,206
|
|
|
|
101,172
|
|
Prepaid
expenses
|
|
|
(267,619
|
)
|
|
|
(42,886
|
)
|
Accounts
payable and accrued expenses
|
|
|
99,249
|
|
|
|
490,858
|
|
Operating
lease liability
|
|
|
(132,694
|
)
|
|
|
(100,965
|
)
|
Net
Cash Provided by Operating Activities
|
|
|
3,698,540
|
|
|
|
1,814,689
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Cash
paid for fixed assets
|
|
|
(419,373
|
)
|
|
|
(268,106
|
)
|
Cash
paid for intangible assets
|
|
|
(32,567
|
)
|
|
|
-
|
|
Net
Cash Used in Investing Activities
|
|
|
(451,940
|
)
|
|
|
(268,106
|
)
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Repayment
of related party notes payable
|
|
|
(641,844
|
)
|
|
|
-
|
|
Repayments
of term loan
|
|
|
(441,663
|
)
|
|
|
(2,058,337
|
)
|
Proceeds
from promissory note
|
|
|
330,505
|
|
|
|
-
|
|
Repayment
of promissory note
|
|
|
(330,505
|
)
|
|
|
-
|
|
Borrowings
(repayments) of line of credit, net
|
|
|
(2,997,348
|
)
|
|
|
385,314
|
|
Repayment
of capital lease obligations
|
|
|
(156,450
|
)
|
|
|
(89,376
|
)
|
Proceeds
from exercise of options
|
|
|
14,400
|
|
|
|
-
|
|
Proceeds
from exercise of warrants
|
|
|
3,773,182
|
|
|
|
-
|
|
Net
Cash Used in Financing Activities
|
|
|
(449,723
|
)
|
|
|
(1,762,399
|
)
|
|
|
|
|
|
|
|
|
|
Net
Increase (Decrease) in Cash
|
|
|
2,796,877
|
|
|
|
(215,726
|
)
|
|
|
|
|
|
|
|
|
|
Cash
- Beginning of Period
|
|
|
393,683
|
|
|
|
609,409
|
|
|
|
|
|
|
|
|
|
|
Cash
- End of Period
|
|
$
|
3,190,560
|
|
|
$
|
393,683
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTARY
CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Cash
Paid During the Period for:
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
Interest
|
|
$
|
174,735
|
|
|
$
|
548,894
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTARY
DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Operating
lease liability
|
|
$
|
-
|
|
|
$
|
1,599,830
|
|
Finance
lease asset additions
|
|
$
|
401,387
|
|
|
$
|
293,479
|
|
Common
stock issued for services to be rendered
|
|
$
|
-
|
|
|
$
|
71,875
|
|
Acquisition
of software via contract liability
|
|
$
|
55,072
|
|
|
$
|
-
|
|
See
accompanying notes to the consolidated financial statements
MamaMancini’s
Holdings, Inc.
Notes
to Consolidated Financial Statements
January
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
consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in
the United States of America (“US GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All material
intercompany balances and transactions have been eliminated in consolidation.
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.
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 January 31, 2021 and 2020.
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 January 31, 2021, the Company had $3,128,246 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 January 31, 2021 and January
31, 2020, 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 January 31, 2021 and January 31, 2020:
|
|
January
31, 2021
|
|
|
January
31, 2020
|
|
Raw
Materials
|
|
$
|
746,013
|
|
|
$
|
893,204
|
|
Work
in Process
|
|
|
88,955
|
|
|
|
37,764
|
|
Finished
goods
|
|
|
360,243
|
|
|
|
315,449
|
|
|
|
$
|
1,195,211
|
|
|
$
|
1,246,417
|
|
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.
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 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 January 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.
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.
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 years ended January 31, 2021 and 2020 were $110,713
and $114,626, respectively.
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
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.
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:
|
|
For the Year Ended
|
|
|
|
January 31, 2021
|
|
|
January 31, 2020
|
|
|
|
|
|
|
(as revised)
|
|
Gross Sales
|
|
$
|
42,238,702
|
|
|
$
|
35,455,541
|
|
Less: Slotting, Discounts, Promotions and Allowances
|
|
|
1,480,097
|
|
|
|
1,705,076
|
|
Net Sales
|
|
$
|
40,758,605
|
|
|
$
|
33,750,465
|
|
Disaggregation
of Revenue from Contracts with Customers. The following table disaggregates gross revenue by significant geographic area for the
years ended January 31, 2021 and 2020:
|
|
For
the Year Ended
|
|
|
|
January
31, 2021
|
|
|
January
31, 2020
|
|
Northeast
|
|
$
|
13,994,534
|
|
|
$
|
11,857,813
|
|
Southeast
|
|
|
12,780,368
|
|
|
|
8,523,577
|
|
Midwest
|
|
|
4,870,644
|
|
|
|
5,024,197
|
|
West
|
|
|
5,515,759
|
|
|
|
5,823,215
|
|
Southwest
|
|
|
5,077,397
|
|
|
|
4,226,739
|
|
Total
revenue
|
|
$
|
42,238,702
|
|
|
$
|
35,455,541
|
|
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 years ended January 31, 2021 and 2020 were $633,102 and $611,199 respectively.
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 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 years ended January 31, 2021 and 2020, share-based compensation amounted to $52,895 and $93,862, respectively.
For
the years ended January 31, 2021 and 2020, when computing fair value of share-based payments, the Company has considered the following
variables:
|
|
January
31, 2021
|
|
|
January
31, 2020
|
|
Risk-free
interest rate
|
|
|
0.00
- 0.49
|
%
|
|
|
1.52
- 2.29
|
%
|
Expected
life of grants
|
|
|
0.1
- 5.2 years
|
|
|
|
3
- 3.5 years
|
|
Expected
volatility of underlying stock
|
|
|
43
- 127
|
%
|
|
|
127
- 150
|
%
|
Dividends
|
|
|
0
|
%
|
|
|
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
(Loss) Per Share
Earnings
per share (“EPS”) is the amount of earnings attributable to each share of common stock. For convenience, the term is used
to refer to either earnings or loss per share. EPS is computed pursuant to Section 260-10-45 of the FASB Accounting Standards Codification.
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.
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 Years Ended
|
|
|
|
January
31, 2021
|
|
|
January
31, 2020
|
|
Numerator:
|
|
|
|
|
|
|
Net
income attributable to common stockholders
|
|
$
|
4,067,206
|
|
|
|
1,532,694
|
|
Effect
of dilutive securities:
|
|
|
—
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Diluted
net income
|
|
$
|
4,067,206
|
|
|
$
|
1,532,694
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding - basic
|
|
|
33,503,208
|
|
|
|
31,949,803
|
|
Dilutive
securities (a):
|
|
|
|
|
|
|
|
|
Series
A Preferred
|
|
|
-
|
|
|
|
-
|
|
Options
|
|
|
513,373
|
|
|
|
397,664
|
|
Warrants
|
|
|
-
|
|
|
|
1,991,789
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding and assumed conversion – diluted
|
|
|
34,016,581
|
|
|
|
34,339,256
|
|
|
|
|
|
|
|
|
|
|
Basic
net income per common share
|
|
$
|
0.12
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
Diluted
net income per common share
|
|
$
|
0.12
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
(a)
- Anti-dilutive securities excluded:
|
|
|
-
|
|
|
|
-
|
|
Income
Taxes
Income
taxes are provided in accordance with ASC No. 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 January 31, 2021 and 2020, the Company recognized a deferred tax asset of $744,973 and
$0, respectively, which is included in other long-term assets on the consolidated balance sheets. The Company regularly evaluates the
need for a valuation allowance related to the deferred tax asset.
The
Company is no longer subject to tax examinations by tax authorities for years prior to 2018.
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 2018, 2019 or 2020.
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.
Recent
Accounting Pronouncements
In
October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”,
which eliminates the exception that prohibits the recognition of current and deferred income tax effects for intra-entity transfers
of assets other than inventory until the asset has been sold to an outside party. The updated guidance is effective for annual periods
beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the update is permitted. The
adoption of the new standard did not have a significant impact on the Company’s condensed consolidated financial statements.
In
August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure
Requirements for Fair Value Measurement”. This update is to improve the effectiveness of disclosures in the notes to the financial
statements by facilitating clear communication of the information required by U.S. GAAP that is most important to users of each entity’s
financial statements. The amendments in this update apply to all entities that are required, under existing U.S. GAAP, to make disclosures
about recurring or nonrecurring fair value measurements. The amendments in this update are effective for all entities for fiscal years
beginning after December 15, 2019, and interim periods within those fiscal years. The adoption of the new standard did not have a significant
impact on the Company’s condensed consolidated financial statements.
In
August 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU
2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”.
The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is
a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The
Company adopted this guidance on February 1, 2020 on a prospective basis. Since
the adoption of ASU 2018-15 on February 1, 2020, the Company evaluates upfront costs including implementation, set-up or other costs
(collectively, implementation costs) for hosting arrangements under the internal-use software framework. Costs related to preliminary
project activities and post implementation activities are expensed as incurred, whereas costs incurred in the development stage are generally
capitalized. Capitalized implementation costs are amortized on a straight-line basis over the expected term of the hosting arrangement,
which includes consideration of the non-cancellable contractual term and reasonably certain renewals.
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 Company is currently
evaluating the potential impact of this guidance on its 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 January 31, 2021 and January 31, 2020 are as follows:
|
|
January
31, 2021
|
|
|
January
31, 2020
|
|
Machinery
and Equipment
|
|
$
|
3,787,321
|
|
|
$
|
3,176,638
|
|
Furniture
and Fixtures
|
|
|
113,112
|
|
|
|
89,443
|
|
Leasehold
Improvements
|
|
|
3,120,273
|
|
|
|
2,933,865
|
|
|
|
|
7,020,706
|
|
|
|
6,199,946
|
|
Less:
Accumulated Depreciation
|
|
|
4,057,104
|
|
|
|
3,394,103
|
|
|
|
$
|
2,963,602
|
|
|
$
|
2,805,843
|
|
Depreciation
expense charged to income for the years ended January 31, 2021 and 2020 amounted to $663,001 and $640,246, respectively.
Note
4 - Investment in Meatball Obsession, LLC
During
2011, the Company acquired a 34.62% interest in Meatball Obsession, LLC (“MO”) for a total investment of $27,032. This investment
is accounted for using the equity method of accounting. Accordingly, investments are recorded at acquisition cost plus the Company’s
equity in the undistributed earnings or losses of the entity.
At
December 31, 2011, the investment was written down to $0 due to losses incurred by MO.
The
Company’s ownership interest in MO has decreased due to dilution. At January 31, 2021 and January 31, 2020, the Company’s
ownership interest in MO was 0% and 12%, respectively. As of December 31, 2019, MO had wound down and ceased operations. Major accounts
were transitioned to the Company as a part of the wind down.
Note
5 - Related Party Transactions
Meatball
Obsession, LLC
A
current director of the Company is the chairman of the board and shareholder of Meatball Obsession LLC (“MO”).
For
the years ended January 31, 2021 and 2020, the Company generated approximately $0 and $53,984 in revenues from MO, respectively.
As
of January 31, 2021 and 2020, the Company had a receivable of $0 and $1,604 due from MO, respectively.
WWS,
Inc.
Alfred
D’Agostino and Tom Toto, two directors of the Company, are affiliates of WWS, Inc.
For
the years ended January 31, 2021 and 2020, the Company recorded $48,000 and $48,000 in commission expense from WWS, Inc. generated sales,
respectively.
Notes
Payable – Related Party
During
the year ended January 31, 2016, the Company received aggregate proceeds of $125,000 from notes payable with the CEO of the Company.
The notes bear interest at a rate of 4% per annum and matured on December 31, 2016. The notes were subsequently extended until January
2024. As of January 31, 2021 and 2020, the outstanding principal balance of the notes was $0 and $109,844, respectively.
The
Company received advances from the CEO of the Company which bear interest at 8%. The advances were due on January 2024. At January 31,
2021 and 2020, there was $0 and $400,000 of principal outstanding, respectively.
The
Company received advances from an entity 100% owned by the CEO of the Company, which bear interest at 8%. The advances were due on January
2024. At January 31, 2021 and 2020, there was $0 and $132,000 of principal outstanding, respectively.
For
the years ended January 31, 2021 and 2020, the Company recorded interest expense of $23,550 and $44,131, respectively, related to the
above related party notes payable. At January 31, 2021 and 2020, there was $0 and $2,863, respectively, of accrued interest on the above
related party notes.
Other
Related Party Transactions
During
the years ended January 31, 2021 and 2020, the Company reimbursed an entity 100% owned by the CEO of the Company for certain investor
relation conference expenses totaling $29,503 and $15,722, respectively.
During
the year ended January 31, 2021, members of the board of directors and officers exercised 940,807 warrants with exercise price of $1
in exchange for 940,807 shares of common stock.
Note
6 - 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 new 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 and will be amortized over the remaining life of the note
using the effective interest method. There was unamortized debt discount of $0 and $17,864 as of January 31, 2021 and January 31, 2020,
respectively. The outstanding balance on the term loan was $0 and $441,663 as of January 31, 2021 and 2020, respectively.
Effective,
January 4, 2019, the Company has arranged a new $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. 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 and $2,997,348 as of January 31, 2021 and 2020, respectively.
During
the year ended January 31, 2021, the Company paid total interest of $78,032 to M&T Bank for the above agreements.
Note
7 – 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
8 - Leases
The
Company determines if an arrangement contains a lease at inception. 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.
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.
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 Year Ended
|
|
|
For
the Year Ended
|
|
|
|
January
31, 2021
|
|
|
January
31, 2020
|
|
Finance
lease
|
|
|
|
|
|
|
|
|
Depreciation
of assets
|
|
$
|
129,104
|
|
|
$
|
100,703
|
|
Interest
on lease liabilities
|
|
|
36,169
|
|
|
|
23,130
|
|
Operating
leases
|
|
|
309,357
|
|
|
|
257,763
|
|
Short-term
lease
|
|
|
-
|
|
|
|
7,653
|
|
Total
net lease cost
|
|
$
|
474,630
|
|
|
$
|
389,249
|
|
Supplemental
balance sheet information related to leases was as follows:
|
|
January
31, 2021
|
|
|
January
31, 2020
|
|
Operating
leases:
|
|
|
|
|
|
|
|
|
Operating
lease ROU assets
|
|
$
|
1,352,483
|
|
|
$
|
1,490,794
|
|
|
|
|
|
|
|
|
|
|
Current
operating lease liabilities, included in current liabilities
|
|
$
|
147,684
|
|
|
$
|
126,516
|
|
Noncurrent
operating lease liabilities, included in long-term liabilities
|
|
|
1,218,487
|
|
|
|
1,372,349
|
|
Total
operating lease liabilities
|
|
$
|
1,366,171
|
|
|
$
|
1,498,865
|
|
|
|
|
|
|
|
|
|
|
Finance
leases
|
|
|
|
|
|
|
|
|
Property
and equipment, at cost
|
|
$
|
951,656
|
|
|
$
|
550,269
|
|
Accumulated
depreciation
|
|
|
(260,370
|
)
|
|
|
(131,266
|
)
|
Property
and equipment, net
|
|
$
|
691,286
|
|
|
$
|
419,003
|
|
|
|
|
|
|
|
|
|
|
Current
obligations of finance lease liabilities, included in current liabilities
|
|
$
|
190,554
|
|
|
$
|
105,126
|
|
Finance
leases, net of current obligations, included in long-term liabilities
|
|
|
474,743
|
|
|
|
315,234
|
|
Total
finance lease liabilities
|
|
$
|
665,297
|
|
|
$
|
420,360
|
|
Supplemental
cash flow and other information related to leases was as follows:
|
|
For
the Year Ended January 31, 2021
|
|
|
For
the Year Ended January 31, 2020
|
|
Cash
paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
|
|
|
Operating
cash flows from operating leases
|
|
$
|
132,694
|
|
|
$
|
100,965
|
|
Financing
cash flows from finance leases
|
|
|
156,450
|
|
|
|
92,928
|
|
|
|
|
|
|
|
|
|
|
ROU
assets obtained in exchange for lease liabilities:
|
|
|
|
|
|
|
|
|
Operating
leases
|
|
$
|
-
|
|
|
$
|
1,599,830
|
|
Finance
leases
|
|
|
401,387
|
|
|
|
293,479
|
|
|
|
|
|
|
|
|
|
|
Weighted
average remaining lease term (in years):
|
|
|
|
|
|
|
|
|
Operating
leases
|
|
|
6.8
|
|
|
|
7.8
|
|
Finance
leases
|
|
|
3.9
|
|
|
|
3.6
|
|
|
|
|
|
|
|
|
|
|
Weighted
average discount rate:
|
|
|
|
|
|
|
|
|
Operating
leases
|
|
|
6.54
|
%
|
|
|
6.54
|
%
|
Finance
leases
|
|
|
4.57
|
%
|
|
|
5.67
|
%
|
For
the Twelve Months Ending January 31,
|
|
|
|
2022
|
|
$
|
453,199
|
|
2023
|
|
|
422,164
|
|
2024
|
|
|
356,370
|
|
2025
|
|
|
331,193
|
|
2026
|
|
|
243,633
|
|
Thereafter
|
|
|
670,902
|
|
Total
lease payments
|
|
$
|
2,477,461
|
|
Less:
amounts representing interest
|
|
|
(445,992
|
)
|
Total
lease obligations
|
|
$
|
2,031,469
|
|
Note
9 - Concentrations
Revenues
During
the year ended January 31, 2021, the Company earned revenues from two customers representing approximately 41% and 13% of gross sales.
As of January 31, 2021, these two customers represented approximately 23% and 14% of total gross outstanding receivables, respectively.
During the year ended January 31, 2020, the Company earned revenues from three customers representing approximately 46%, 11% and 10%
of gross sales. As of January 31, 2020, these three customers represented approximately 34%, 16% and 8% of total gross outstanding receivables,
respectively.
Note
10 - Stockholders’ Equity
(A)
Options
The
following is a summary of the Company’s option activity:
|
|
Options
|
|
|
Weighted
Average
Exercise Price
|
|
Outstanding
– January 31, 2019
|
|
|
626,500
|
|
|
$
|
0.77
|
|
Exercisable
– January 31, 2019
|
|
|
521,500
|
|
|
$
|
0.71
|
|
Granted
|
|
|
265,000
|
|
|
$
|
0.53
|
|
Exercised
|
|
|
-
|
|
|
$
|
-
|
|
Forfeited/Cancelled
|
|
|
-
|
|
|
$
|
-
|
|
Outstanding
– January 31, 2020
|
|
|
891,500
|
|
|
$
|
0.77
|
|
Exercisable
– January 31, 2020
|
|
|
756,500
|
|
|
$
|
0.71
|
|
Granted
|
|
|
7,500
|
|
|
$
|
0.53
|
|
Exercised
|
|
|
(24,000
|
)
|
|
$
|
0.60
|
|
Forfeited/Cancelled
|
|
|
(6,000
|
)
|
|
$
|
0.60
|
|
Outstanding
– January 31, 2021
|
|
|
869,000
|
|
|
$
|
0.70
|
|
Exercisable
– January 31, 2021
|
|
|
859,000
|
|
|
$
|
0.70
|
|
|
|
|
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
|
|
$
|
0.39
– 1.38
|
|
|
869,000
|
|
|
3.54
|
|
|
$
|
0.70
|
|
|
859,000
|
|
$
|
0.70
|
|
At
January 31, 2021, the total intrinsic value of options outstanding and exercisable was $1,021,141 and $1,011,853, respectively.
During
the year ended January 31, 2021, three employees exercised a total of 24,000 options at an exercise price of $0.60 per share for aggregate
proceeds of $14,400. No options were exercised during
the year ended January 31, 2020.
During
the year ended January 31, 2021, the Company issued to 7,500 options to an employee. The options have an exercise price of $1.16 per
share, a term of 5 years, and 2-year vesting. The options have an aggregated fair value of approximately $6,682 that was calculated using
the Black-Scholes option-pricing model based on the assumptions discussed above in Note 2.
For
the years ended January 31, 2021 and 2020, the Company recognized share-based compensation related to options of an aggregate of $52,895
and $76,191, respectively. At January 31, 2021, unrecognized share-based compensation was $1,933. In January 2021, the Company extended
all employee options for 5 years and director options that were set to expire in April 2021 for a period of two years to
April 2023 using the assumptions in Note 2.
(B)
Warrants
The
following is a summary of the Company’s warrant activity:
|
|
Warrants
|
|
|
Weighted
Average
Exercise
Price
|
|
|
|
|
|
|
|
|
Outstanding
– January 31, 2019
|
|
|
6,245,331
|
|
|
$
|
1.04
|
|
Exercisable
– January 31, 2019
|
|
|
6,245,331
|
|
|
$
|
1.04
|
|
Granted
|
|
|
-
|
|
|
$
|
-
|
|
Exercised
|
|
|
-
|
|
|
$
|
-
|
|
Forfeited/Cancelled
|
|
|
(188,667
|
)
|
|
$
|
1.57
|
|
Outstanding
– January 31, 2020
|
|
|
6,056,664
|
|
|
$
|
1.00
|
|
Exercisable
– January 31, 2020
|
|
|
6,056,664
|
|
|
$
|
1.00
|
|
Granted
|
|
|
-
|
|
|
$
|
-
|
|
Exercised
|
|
|
(3,631,733
|
)
|
|
$
|
1.09
|
|
Forfeited/Cancelled
|
|
|
(2,424,931
|
)
|
|
$
|
1.39
|
|
Outstanding
– January 31, 2021
|
|
|
-
|
|
|
$
|
-
|
|
Exercisable
– January 31, 2021
|
|
|
-
|
|
|
$
|
-
|
|
During
the year ended January 31, 2021, warrant holders exercised a total of 3,631,733 warrants and the Company issued 3,588,490 shares of common
stock as a result of these exercises and received net proceeds of $3,773,182 which included $87,000 paid to the placement agent. Of the
3,631,733 exercised warrants, 80,000 warrants were exercised on a cashless basis by Spartan Capital and the Company issued 36,757 shares
of common stock.
Note
11 - 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 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. To date, the Company has recorded approximately
$110,000 as an offset against labor expenses and $6,817 in raw material and packaging loss. The Company recorded the above $116,817 in prepaid expenses on the consolidated
balance sheets. The Company has been reimbursed
partially against the property damages for $93,870. The Company is awaiting the approval of the remaining balance of its property
losses and business income claim from the insurance carrier. As of the date of these financials, the Company does not have final
approved numbers for the loss.
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
|
|
The
Company incurred $539,801 and $463,540 of royalty expenses for the years ended January 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, the Company shall
pay to Spartan a non-refundable monthly fee of $10,000 through October 1, 2015. The monthly fee shall survive any termination of the
Agreement. Additionally, (i) if at least $4,000,000 is raised in the Financing, the Company shall pay to Spartan a non-refundable fee
of $5,000 per month from November 1, 2015 through October 2017; and (ii) if at least $5,000,000 is raised in the Financing, the Company
shall pay to Spartan a non-refundable fee of $5,000 per month from November 1, 2017 through October 2019. If $10,000,000 or more is raised
in the Financing, the Company shall issue to Spartan shares of its common stock having an aggregate value of $5,000 (as determined by
reference to the average volume weighted average trading price for the last five trading days of the immediately preceding month) on
the first day of each month during the period from November 1, 2015 through October 1, 2019.
The
Company, upon closing of the Financing, shall pay consideration to Spartan, in cash, a fee in an amount equal to 10% of the aggregate
gross proceeds raised in the Financing and 3% of the aggregate gross proceeds raised in the Financing for expenses incurred by Spartan.
The Company shall grant and deliver to Spartan at the closing of the Financing, for nominal consideration, five-year warrants to purchase
a number of shares of the Company’s common stock equal to 10% of the number of shares of common stock (and/or shares of common
stock issuable upon exercise of securities or upon conversion or exchange of convertible or exchangeable securities) sold at such closing.
The warrants shall be exercisable at any time during the five-year period commencing on the closing to which they relate at an exercise
price equal to the purchase price per share of common stock paid by investors in the Financing or, in the case of exercisable, convertible,
or exchangeable securities, the exercise, conversion or exchange price thereof. If the Financing is consummated by means of more than
one closing, Spartan shall be entitled to the fees provided herein with respect to each such closing.
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 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 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
12 - Income Tax Provision
The
income tax provision consists of the following:
|
|
January 31, 2021
|
|
|
January 31, 2020
|
|
Federal
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred
|
|
|
(184,085
|
)
|
|
|
-
|
|
State and Local
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
(560,888
|
)
|
|
|
-
|
|
Income tax benefit
|
|
$
|
(744,973
|
)
|
|
$
|
-
|
|
On
December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Reform Bill”) was signed into law. Prior to the enactment of the Tax
Reform Bill, the Company measured its deferred tax assets at the federal rate of 34%. The Tax Reform Bill reduced the federal tax rate
to 21% resulting in the re-measurement of the deferred tax asset as of January 31, 2018. Beginning January 1, 2018, the lower tax rate
of 21% will be used to calculate the amount of any federal income tax due on taxable income earned during 2019.
The
Company has U.S. federal net operating loss carryovers (NOLs) of approximately $3.8 million and $9.5 million at January 31, 2021 and
2020, respectively, available to offset taxable income through 2034. If not used, these NOLs may be subject to limitation under Internal
Revenue Code Section 382 should there be a greater than 50% ownership change as determined under the regulations. The Company plans on
undertaking a detailed analysis of any historical and/or current Section 382 ownership changes that may limit the utilization of the
net operating loss carryovers. The Company also has New Jersey State Net Operating Loss carry overs of $5.2 million and $8.8 million
at January 31, 2021 and 2020, respectively, available to offset future taxable income through 2035.
In
assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of
the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future generation for
taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this
assessment. For the years ended January 31, 2021 and 2020, the change in the valuation allowance was $(2,177,802) and $675,896, respectively.
The
Company evaluated the provisions of ASC 740 related to the accounting for uncertainty in income taxes recognized in an enterprise’s
financial statements. ASC 740 prescribes a comprehensive model for how a company should recognize, present, and disclose uncertain positions
that the Company has taken or expects to take in its tax return. For those benefits to be recognized, a tax position must be more-likely-than-not
to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return
and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A
liability is recognized (or amount of net operating loss carry forward or amount of tax refundable is reduced) for unrecognized tax benefit
because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized
as a result of applying the provisions of ASC 740.
If
applicable, interest costs related to the unrecognized tax benefits are required to be calculated and would be classified as “Other
expenses – Interest” in the statement of operations. Penalties would be recognized as a component of “General and administrative.”
No
interest or penalties on unpaid tax were recorded during the years ended January 31, 2021 and 2020, respectively. As of January 31, 2021
and 2020, no liability for unrecognized tax benefits was required to be reported. The Company does not expect any significant changes
in its unrecognized tax benefits in the next year.
The
Company’s deferred tax assets (liabilities) consisted of the effects of temporary differences attributable to the following:
Deferred Tax Assets
|
|
Year Ended
January 31, 2021
|
|
|
Year Ended
January 31, 2020
|
|
Net operating loss carryovers
|
|
$
|
1,212,466
|
|
|
$
|
2,071,751
|
|
Share-based compensation
|
|
|
-
|
|
|
|
48,684
|
|
Fixed assets
|
|
|
-
|
|
|
|
86,293
|
|
Capitalized start-up and organization costs
|
|
|
44,133
|
|
|
|
566
|
|
Right of use liability
|
|
|
571,046
|
|
|
|
-
|
|
Other
|
|
|
6,309
|
|
|
|
41,506
|
|
Total deferred tax assets
|
|
|
1,833,954
|
|
|
|
2,199,550
|
|
Valuation allowance
|
|
|
-
|
|
|
|
(2,177,802
|
)
|
Deferred tax asset, net of valuation allowance
|
|
|
1,833,954
|
|
|
|
21,748
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Liabilities
|
|
|
|
|
|
|
|
|
Fixed assets
|
|
|
708,798
|
|
|
|
-
|
|
Right of use asset
|
|
|
380,183
|
|
|
|
-
|
|
Other deferred tax liabilities
|
|
|
-
|
|
|
|
21,748
|
|
Total deferred tax liabilities
|
|
$
|
1,088,981
|
|
|
$
|
21,748
|
|
Net deferred tax asset (liability)
|
|
$
|
744,973
|
|
|
$
|
-
|
|
The
expected tax expense (benefit) based on the statutory rate is reconciled with actual tax expense benefit as follows:
|
|
Year Ended
January 31, 2021
|
|
|
Year Ended
January 31, 2020
|
|
US Federal statutory rate
|
|
|
21.00
|
%
|
|
|
(21.00
|
)%
|
State income tax, net of federal benefit
|
|
|
7.11
|
|
|
|
(8.98
|
)
|
True Up
|
|
|
5.78
|
|
|
|
(0.57
|
)
|
Change in valuation allowance
|
|
|
(65.55
|
)
|
|
|
33.72
|
|
Other permanent differences
|
|
|
9.24
|
|
|
|
(6.10
|
)
|
Income tax provision (benefit)
|
|
|
(22.42
|
)%
|
|
|
-
|
%
|
Note
13 – Revision of Prior Year Financial Statements
The
Company identified and recorded a prior period adjustment related to promotion expenses that should have been recorded in the year
ended January 31, 2020 as an offset to revenue as discussed in the Company’s revenue recognition policy instead of general and
administrative expenses as originally recorded. The adjustment was reflected as a $1,086,982 decrease in Sales net of slotting fees and
corresponding decrease in General and administrative expenses.
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 fiscal year ended January 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 year ended January 31, 2020
|
|
|
|
As Previously Reported
|
|
|
Adjustments
|
|
|
As Revised
|
|
Statement of Income
|
|
|
|
|
|
|
|
|
|
Sales – net of slotting fees and discounts
|
|
$
|
34,837,447
|
|
|
$
|
(1,086,982
|
)
|
|
$
|
33,750,465
|
|
Gross profit
|
|
|
11,071,310
|
|
|
|
(1,086,982
|
)
|
|
|
9,984,328
|
|
General and administrative expenses
|
|
|
8,873,260
|
|
|
|
(1,086,982
|
)
|
|
|
7,786,278
|
|
Operating expenses
|
|
|
8,987,886
|
|
|
|
(1,086,982
|
)
|
|
|
7,900,904
|
|
Income from operations
|
|
|
2,083,424
|
|
|
|
-
|
|
|
|
2,083,424
|
|
Net income
|
|
$
|
1,532,694
|
|
|
$
|
-
|
|
|
$
|
1,532,694
|
|
Basic and diluted income per share
|
|
$
|
0.05
|
|
|
$
|
-
|
|
|
|
0.05
|
|
Note
14 – Subsequent Events
The Company
has evaluated subsequent events through the date the financial statements were available to be issued. Based on this evaluation, the
Company has identified the following reportable subsequent events other than those disclosed elsewhere in these financials.