# Mama's Creations, Inc.: Form 10-Q for the period ended Apr 30, 2024

- Company: [Mama's Creations, Inc.](/companies/mama.md) (CIK 1520358)
- Form: 10-Q
- Filed: 2024-06-11
- Accepted by EDGAR: Jun 11, 2024, 16:11 ET
- Period: 2024-04-30
- Accession: 0001628280-24-027669
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1520358/000162828024027669/mama-20240430.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1520358/000162828024027669/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-04-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-02-01 to 2024-04-30 | $29.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-02-01 to 2024-04-30 | $22.4m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-02-01 to 2024-04-30 | $7.5m | us-gaap:GrossProfit |
| Research and development | 3 months, 2024-02-01 to 2024-04-30 | $104.0k | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2024-02-01 to 2024-04-30 | $6.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-02-01 to 2024-04-30 | $773.0k | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-02-01 to 2024-04-30 | $127.0k | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2024-02-01 to 2024-04-30 | $179.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-02-01 to 2024-04-30 | $553.0k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-02-01 to 2024-04-30 | $0.01 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-02-01 to 2024-04-30 | $0.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-02-01 to 2024-04-30 | 39,328,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-02-01 to 2024-04-30 | $3.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-02-01 to 2024-04-30 | $1.1m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-04-30 | $13.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-04-30 | $25.4m | us-gaap:AssetsCurrent |
| Total assets | at 2024-04-30 | $47.2m | us-gaap:Assets |
| Current liabilities | at 2024-04-30 | $18.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-04-30 | $26.9m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-04-30 | $20.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 11,159 characters.

THE FOLLOWING DISCUSSION OF OUR PLAN OF OPERATION AND RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND RELATED NOTES TO THE FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS REPORT. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT RELATE TO FUTURE EVENTS OR OUR FUTURE FINANCIAL PERFORMANCE. THESE STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. THESE RISKS AND OTHER FACTORS INCLUDE, AMONG OTHERS, THOSE LISTED UNDER “FORWARD-LOOKING STATEMENTS” AND “RISK FACTORS” DETAILED IN OUR MOST RECENT ANNUAL REPORT ON FORM 10-K, OTHER PRIOR COMPANY FILINGS AND THOSE INCLUDED ELSEWHERE IN THIS REPORT.

### Overview

Mama’s Creations, Inc. (“Mama’s,” “Mama’s Creations” or the “Company”) is a leading marketer and manufacturer of fresh deli prepared foods, found in over 8,000 grocery, mass, club and convenience stores nationally. The Company’s broad product portfolio, born from MamaMancini’s rich history in Italian foods, now consists of a variety of high-quality, fresh, clean and easy to prepare foods to address the needs of both our consumers and retailers. Our vision is to become a one-stop-shop deli solutions platform, leveraging vertical integration and a diverse family of brands to offer a wide array of prepared foods to meet the changing demands of the modern consumer.

### Results of Operations for the Three Months Ended April 30, 2024 and 2023

The following table sets forth the summary of the condensed consolidated statements of operations for the three months ended April 30, 2024 and 2023 (in thousands):

|  | For the Three Months Ended April 30, 2024 | April 30, 2023 |
| --- | ---: | ---: |
| Net sales | $29,838 | $23,121 |
| Cost of Sales | $22,375 | $16,750 |
| Gross Profit | $7,463 | $6,371 |
| Operating Expenses | $6,690 | $4,428 |
| Other Expenses | $(41) | $(163) |
| Income tax expense | $(179) | $(525) |
| Income from equity method investment in Chef Inspirational Foods, LLC | $— | $146 |
| Net Income | $553 | $1,401 |

For the three months ended April 30, 2024 and 2023, the Company reported net income of approximately $0.6 million and $1.4 million, respectively. The change in net income between the three months ended April 30, 2024 and 2023 is due to the to the changes in net sales, cost of sales and operating expenses described below.

*Net sales:* Net Sales increased by approximately 29.1% to $29.8 million during the three months ended April 30, 2024, from $23.1 million during the three months ended April 30, 2023. The increase in sales is due to both volume gains, successful pricing actions, and the acquisition of CIF in June 2023. Volume gains were driven by increased demand at existing customers, successful trade and marketing promotions, same-customer cross-selling, and product additions.

*Cost of sales:* Cost of sales increased by approximately 34% to $22.4 million or 75% of Net Sales during the three months ended April 30, 2024, from $16.8 million or 72% of Net Sales during the three months ended April 30, 2023. The increase in cost of sales as a percentage of Net Sales is due to increases in commodity costs, in particular the price of chicken, partially offset by improvements in procurement and manufacturing efficiencies.

*Gross Profit Margin:* The gross profit margin was 25% and 28% for the three months ended April 30, 2024 and 2023, respectively. The decrease in gross profit margin between the three months ended April 30, 2024 and 2023 is due to increased commodity costs, partially offset by customer price increases and manufacturing efficiencies.

*Operating Expenses:* Operating expenses increased by 51% during the three months ended April 30, 2024, as compared to the three months ended April 30, 2023. The $2.3 million increase in total operating expenses is primarily attributable to the following:

- One time legal settlement expenses of approximately $900 thousand, due to the Settlement Agreement with directors (see Note 9)
- Payroll and Related Expenses inclusive of stock-based compensation increased by approximately $271 thousand mainly related to increased sales and administrative personnel expense and additional stock-based compensation;
- Advertising expenses increased by approximately $204 thousand due to new strategies and enhanced focus to drive increased velocities of our existing products;
- Amortization of intangible assets increased by approximately $278 thousand due to the acquisition of CIF, which was completed in June 2023;
- Professional fees and director fees increased by approximately $166 thousand due to the growth of the Company and the use of consultants to achieve manufacturing efficiencies as well as information technology integration; and
- Freight related expenses increased by approximately $140 thousand due to increased sales.

*Other Expenses:* Other expenses decreased by approximately $122 thousand to $41 thousand for the three months ended April 30, 2024, as compared to $163 thousand for the three months ended April 30, 2023. The decrease is primarily due to interest income in the current year of approximately $92 thousand.

### Liquidity and Capital Resources

We finance our operations with internally generated funds, supplemented by credit arrangements with third parties and, potentially, capital market financing.

#### Working Capital

The following table summarizes total current assets, liabilities and working capital at April 30, 2024 compared to January 31, 2024 (in thousands):

|  | April 30, 2024 | January 31, 2024 | Change |
| --- | ---: | ---: | ---: |
| Current Assets | $25,369 | $23,566 | $1,803 |
| Current Liabilities | 18,522 | 16,690 | 1,832 |
| Working Capital | $6,847 | $6,876 | $(29) |

As of April 30, 2024, we had working capital of approximately $6.8 million as compared to working capital of approximately $6.9 million as of January 31, 2024, relatively. The slight decrease in working capital is primarily attributable to an increase in cash of approximately $2.0 million, and an increase of accounts receivables of approximately $0.2 million, largely offset by a decrease of inventory of approximately $0.3 million, and an increase in accounts payable and accrued expenses of approximately $1.8 million.

#### Long-Term Requirements

As of April 30, 2024, we have $0 outstanding under our Credit Agreement and approximately $4.2 million outstanding under our Term Loan Agreement with M&T Bank. The Term Loan Agreement has a maturity date of January 17, 2027. In addition, we have payments of $750 thousand (plus accrued interest) due on December 29, 2024 and 2025 pursuant to promissory notes issued to the sellers of T&L and Olive Branch, as discussed in Item 1, Note 6. In addition, we have a promissory note of $2.7 million with the sellers of CIF (as discussed in Note 1). Of the $2.7 million, a payment of $1.2 million is due on June 28, 2024, and $1.5 million is payable in common stock on June 28, 2025. We also have operating leases for offices and other facilities used for our operations and finance leases comprised primarily of machinery and equipment, as discussed in Note 10.

#### Cash Flows

The following table summarizes the key components of our cash flows for the three months ended April 30, 2024 and 2023 (in thousands).

|  | For the Three Months Ended April 30, 2024 USD | 2023 USD |
| --- | ---: | ---: |
| Net Cash Provided by Operating Activities | $3,641 | $1,612 |
| Net Cash (Used in) Investing Activities | (1,144) | (145) |
| Net Cash (Used in) Financing Activities | (476) | (586) |
| Net increase in cash | 2,021 | 881 |
| Cash, beginning of period | 11,022 | 4,378 |
| Cash, end of period | $13,043 | $5,259 |

#### Operating activities

Net cash provided by operating activities for the three months ended April 30, 2024 was approximately $3.6 million, which consisted of (i) net income of approximately $0.6 million, (ii) non-cash expenses of approximately $1.2 million, and (iii) changes in operating assets and liabilities of approximately $1.9 million.

Net cash provided by operating activities for the three months ended April 30, 2023 was approximately $1.6 million, which consisted of (i) net income of approximately $1.4 million, (ii) non-cash expenses of approximately $0.6 million, and (iii) changes in operating assets and liabilities of approximately $(0.4) million.

#### Investing activities

Net cash used in investing activities for three months ended April 30, 2024 was approximately $1.1 million and consisted of purchases of machinery and equipment.

Net cash used in investing activities for three months ended April 30, 2023 was approximately $0.1 million and consisted of purchases of machinery and equipment.

#### Financing activities

Net cash used in financing activities for the three months ended April 30, 2024 was approximately $0.5 million and consisted of approximately $0.4 million of payments on the Term Loan and approximately $0.1 million payments on finance leases.

Net cash used in financing activities for the three months ended April 30, 2023 was approximately $0.6 million and consisted of approximately $0.4 million of payments on the Term Loan, approximately $0.1 million of payments on the line of credit, and approximately $0.1 million payments on finance leases.

#### Liquidity and capital requirements outlook

Although the expected revenue growth and control of expenses leads management to believe that it is probable that the Company’s cash resources will be sufficient to meet its cash requirements through at least the next twelve months, based on current and projected levels of operations, the Company may require additional funding to finance growth or achieve its strategic objectives. If such financing is required, there can be no assurance that financing will be available in amounts or on terms acceptable to the Company, if at all. In the event funding is not available on reasonable terms, the Company might be required to change its growth strategy and/or seek funding on an alternative basis, but there is no guarantee it will be able to do so.

### Recent Accounting Pronouncements

As of the filing date of this report, there were no significant changes in our critical accounting estimates from those discussed in our 2024 Form 10-K. See Note 2 of Notes to Unaudited Condensed Consolidated Financial Statements for accounting pronouncements issued but not yet adopted that may impact the Company’s consolidated financial position, earnings, cash flows or disclosures.

### Critical Accounting Estimates and Policies

As of the filing date of this report, there were no significant changes in our critical accounting estimates from those discussed in our 2024 Form 10-K. See Note 2 of Notes to Unaudited Condensed Consolidated Financial Statements for accounting pronouncements issued but not yet adopted that may impact the Company’s consolidated financial position, earnings, cash flows.

## Market risk

As filed, 187 characters.

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

## Controls and procedures

As filed, 3,019 characters.

#### Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, who serves as our principal executive officer and our principal financial officer, respectively, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well-designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Due to the inherent limitations of control systems, not all misstatements may be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Controls and procedures can only provide reasonable, not absolute, assurance that the above objectives have been met.

As of April 30, 2024, we evaluated, with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, at the reasonable assurance level, in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

#### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15, that occurred during our last quarter to which this Quarterly Report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 212 characters.

There have been no material changes to the risk factors previously reported in our 2024 Form 10-K. See the risk factors set forth in our 2024 Annual Report on Form 10-K under the caption "Item 1A - Risk Factors."

Filed Jun 11, 2024.
Source: SEC EDGAR, the filing index for accession 0001628280-24-027669. Last ingested by Listed: Oct 30, 2026, 12:04 ET. No prices; not investment advice.