What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-06-14 compared with 2021-12-14 · 170 added, 175 removed, 91 unchanged (79% of the section changed)

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PRIOR COMPANY FILINGS AND THOSE INCLUDED ELSEWHERE IN THIS REPORT.

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

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

Three Months Ended

October 31, 2021

October 31, 2020

Sales - Net of Slotting Fees and Discounts

Operating Expenses

$ (2,727,964 )

$ (2,123,405 )

Other Expenses

Income Tax Benefit

Net (Loss) Income

the three months ended October 31, 2021 and 2020, the Company reported net loss of $5,455 and net income of $734,142, respectively.

The change between the three months ended October 31, 2021 and 2020 was mainly the result of a decrease in gross profit percentage (as

discussed below) and an increase in operating expenses (principally freight).

Sales, net of slotting fees and discounts increased by approximately 12% to $10,852,682 during the three months ended October 31,

2021, from $9,684,195 during the three months ended October 31, 2020.

The increase was mainly to major customer volume increases.

The gross profit margin was 25% for the three months ended October 31, 2021 compared to 30% for the three months ended October

The change in gross profit margin is due to increases in raw material costs, packaging costs and in-bound freight costs.

Operating expenses increased by 29% during the three months ended October 31, 2021, as compared to the three months

ended October 31, 2020.

Operating expenses as a percentage of sales was 25% in 2021 and 22% in 2020.

The $601,458 increase in

total operating expenses is primarily attributable to the following:

and Freight of $311,482 mainly due to transportation rate increases;

and promotion of $103,275;

and related expenses of $60,402 due to salary adjustments and additional accounting payroll, and senior operational management hire;

fees of $42,500 due to the increase in the number of directors, an increase in compensation to each director and an additional shareholder

meeting of $11,437.

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

Other expenses decreased by $44,255 to $8,731 for the three months ended October 31, 2021 as compared to $52,986 during

the three months ended October 31, 2020.

For the three months ended October 31, 2021, other expenses consisted of $8,731 in interest

expense incurred on the Company’s financing arrangements.

For three months ended October 31, 2020, other expenses consisted of

$45,822 in interest expense incurred on the Company’s financing arrangements and the Company recorded $7,164 of amortization expense

related to the debt discount.

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

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

Nine Months Ended

October 31, 2021

October 31, 2020

of Operations for the Quarter ended April 30, 2022 and 2021

following table sets forth the summary of the condensed consolidated statements of operations for the quarter ended April 30, 2022 and

For the Three Months Ended

April 30, 2022

April 30, 2021

Sales - Net of Slotting Fees and Discounts

Operating Expenses

$ (8,004,489 )

$ (6,879,469 )

Other Income (Expenses)

Income Tax Provision

the nine months ended October 31, 2021 and 2020, the Company reported net income of $1,057,994 and $2,380,111, respectively.

change in net income between the nine months ended October 31, 2021 and 2020 was mainly the result of a decrease in gross profit percentage

(as discussed below) and the income tax provision of $391,313 recorded during the nine months ended October 31, 2021 compared

to $0 during the nine months ended October 31, 2020.

Sales, net of slotting fees and discounts increased by approximately 8% to $33,230,666 during the nine months ended October 31, 2021,

from $30,766,700 during the nine months ended October 31, 2020.

The increase in sales can be attributed to major customer volume increases.

The gross profit margin was 28% for the nine months ended October 31, 2021 compared to 31% for the nine months ended October

The change in gross profit margin is due to increases in raw material costs, packaging costs and in-bound freight costs.

Operating expenses increased by 16% during the nine months ended October 31, 2021, as compared to the nine months ended

October 31, 2020.

Operating expenses increased as a percentage of sales to 24% in 2021 compared to 22% in 2020.

The $1,125,020 increase

in total operating expenses is primarily attributable to the following:

and Freight of $582,556 due to increased transportation rate increases;

and related expenses of $177,427 due, bonuses paid to executives;

addition of senior personnel in operations and accounting personnel;

fees of $108,972 due to the increase in the number of directors, an increase in compensation to each director and an additional shareholder

meeting of $11,437;

up-listing costs of $80,000.

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

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

the quarters ended April 30, 2022 and 2021, the Company reported net income of $103,697 and $631,524, respectively.

change in net income between the quarter ended April 30, 2022 and 2021 reflects continued downward pressure on gross margin percentage

from inflated materials and freight expenses, increased interest costs associated with acquisitions.

Sales, net of slotting fees and discounts increased by approximately 112% to $21,830,580 during the quarter ended April 30,

2022, from $10,313,400 during the quarter ended April 30, 2021.

Sales included the first full quarter from the acquisition of T&L

Creative Salads, Inc.

and Olive Branch LLC in December 2021.

Sales for MamaMancini’s, Inc.

also rose modestly during the three

months ended April 30, 2022 versus the prior year comparative period.

During the quarter, MamaMancini’s Inc.

and T&L Salads

were quickly able to gain product portfolio synergies by adding new products to existing customers, particularly in club stores.

Gross Profit:

The gross profit margin was

18% for the quarter ended April 30, 2022 compared to 32% for the quarter ended April 30, 2021.

The T&L Creative Salads and

Olive Branch LLC acquisition created a different financial model with lower gross margin percentage.

In addition, continued inflation

of raw materials, packaging and freight costs have out-paced price increases in the quarter.

Management believes the balance between

inflationary costs and price increases will begin to balance in the quarter ended July 31, 2022 and gross profits will

begin to return to targeted levels.

Operating expenses increased by 44% during the quarter ended April 30, 2022, as compared to the quarter ended April

Operating expenses decreased as a percentage of sales to 16% in 2022 compared to 24% in 2021.

The $1,107,136

increase in total operating expenses is primarily attributable to the following:

charges rose $298,237 due to increased Finished Goods transportation rate increases and fuel surcharges;

and Promotion expenses rose $60,840 based on key promotions primarily at club stores;

and Related Expenses rose by $363,592 related to the acquisition of T&L Creative Salads management and office salaries, additional

accounting staff at MamaMancini’s and severance pay expenses;

Fees rose $134,288 due to higher Auditing Fees related to the additional complexity of the acquisitions and added third-party accounting

and technical expertise to augment staffing shortfalls;

Expenses rose $104,531 to account for the acquisition of T&L Creative Salads and Olive Branch LLC.

Income (Expenses):

Other income (expenses) increased by $200,730 to income of $10,994 for the nine months ended October 31, 2021

as compared to expenses of $(189,736) during the nine months ended October 31, 2020.

For the nine months ended October 31, 2021, other

income (expenses) consisted of $(26,710) in interest expense incurred on the Company’s financing arrangements which was offset

by the net insurance proceeds relating to the property damage claim of $37,704.

For nine months ended October 31, 2020, other expenses

consisted of $(171,872) in interest expense incurred on the Company’s financing arrangements and the Company recorded $(17,864)

of amortization expense related to the debt discount.

Other expenses increased by $155,165 to $127,891 for the quarter ended April 30, 2022 as compared to income

of $27,274 during the quarter ended April 30, 2021.

For the quarter ended April 30, 2022, other income (expenses) consisted of $124,251

in interest expense on the Company’s financing arrangements and $3,640 in amortization of debt discount.

For the three

months ended April 30, 2021, other income (expenses) consisted of $(10,430) in interest expense incurred on the Company’s financing

arrangements which was offset by the net insurance proceeds relating to the property damage claim of $37,704.

and Capital Resources

following table summarizes total current assets, liabilities and working capital at October 31, 2021 compared to January 31, 2021:

October 31, 2021

following table summarizes total current assets, liabilities and working capital at April 30, 2022 compared to January 31, 2022:

April 30, 2022

January 31, 2022

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Working Capital

of October 31, 2021, we had working capital of $6,027,170 as compared to a working capital of $4,834,102 as of January 31, 2021, an increase

As of April 30, 2022, we had working capital of $4,192,469

as compared to working capital of $2,653,190 as of January 31, 2022, an increase of $1,539,279.

The increase in working capital

is primarily attributable to an increase in cash of $70,662, an increase in accounts receivable of $1,370,867 and increase of inventories

of $1,277,898 based on robust sales increases, an increase in prepaid expenses of $229,239 and increases in the short term portion

of lease payables of $52,312 offset by an increase in accounts payable and accrued liabilities of $1,069,320 and increases

in the term loan of $261,635.

Net cash used in operating activities for the quarter

ended April 30, 2022 was $1,343,013 compared to net cash provided by operating activities for the quarter ended April 30.2021

of $1,434,768.

The increase in working capital is primarily attributable to an increase in cash of $1,349,360 and an increase in inventory

These amounts were offset by an increase in accounts payable and accrued expenses of $562,095 and an increase in current

portion of lease obligations of $76,463.

cash provided by operating activities for the nine months ended October 31, 2021 and 2020 was $2,132,797 and $2,518,012, respectively.

The net income for the nine months ended October 31, 2021 and 2020 was $1,057,994 and $2,380,111, respectively.

cash used in all investing activities for the nine months ended October 31, 2021 was $657,607 as compared to $320,332 for the nine months

ended October 31, 2020, respectively, to acquire new machinery and equipment and leasehold improvements.

Our capital expenditures are

attributed to a Plant Expansion Project in progress since mid-2017 to expand plant capacity and efficiency to meet growing demand.

cash used in all financing activities for the nine months ended October 31, 2021 was $125,830 as compared to $798,520 used by financing

activities for the nine months ended October 31, 2020.

During the nine months ended October 31, 2021, the Company received proceeds of

$19,080 from the exercise of options.

These cash in-flows were offset by payments of $144,910 paid for finance lease payments.

the nine months ended October 31, 2020, the Company received proceeds of $330,505 from the Paycheck Protection Program promissory note

and proceeds of $2,735,697 from the exercise of options and warrants.

These cash in-flows were offset by payments on its line of credit

of $2,347,348, payments on its term loan of $441,663, payments of $641,844 on the related party loans and $110,562 paid for capital lease

The Company returned the $330,505 received from the Paycheck Protection Program in May 2020.

The net income for the quarter ended April 30, 2022 and 2021 was $103,697 and $631,524, respectively.

the three months ended April 30, 2022, net income was affected by adjustments to net income of $445,950 and offset by changes in operating

activities which used cash of $1,898,393.

During the three months ended April 30, 2021, net income was affected by adjustments to net

income of $475,832 and changes in operating activities which provided cash of $327,412.

Net cash used in investing activities for the quarter

ended April 30, 2022 was $174,007 as compared to $354,394 for the quarter ended April 30, 2021, respectively.

For the quarters

ended April 30, 2022 and 2021, the cash used in investing activities was to purchase new machinery and equipment.

Net cash provided by all financing activities for

the quarter ended April 30, 2022 was $1,587,682 as compared to $27,578 used by financing activities for the quarter ended April 30, 2021.

During the three months ended April 30, 2022, the Company received net proceeds of $1,775,000 from borrowings pursuant to the line of

credit which were offset by payments of the acquisition related term loan and finance lease payments of $129,310 and $58,008,

respectively.

During the three months ended April 30, 2021, the Company received proceeds of $19,080 from the exercise of options.

cash in-flows were offset by payments of $46,658 paid for finance lease payments.

the expected revenue growth and control of expenses lead management to believe that it is probable that the Company’s cash resources

will be sufficient to meet its cash requirements through December 14, 2022 based on current and projected levels of operations, the Company

will be sufficient to meet its cash requirements through June 16, 2024, based on current and projected levels of operations, the Company

may require additional funding to finance growth and achieve its strategic objectives.

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Accounting Pronouncements

December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes (ASU 2019-12, “ Income

Taxes (Topic 740):

Simplifying the Accounting for Income Taxes ”).

This guidance eliminates certain exceptions to the general

approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes.

This guidance

is effective for annual periods after December 15, 2020, including interim periods within those annual periods.

The adoption of the new

standard did not have a significant impact on the Company’s condensed consolidated financial statements.

May 2021, the FASB issued accounting standards update ASU 2021-04, “ Earnings Per Share (Topic 260), Debt— Modifications

and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts

in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified

Written Call Options ”, to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding

equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange.

The amendments

in this ASU are effective for public and nonpublic entities for fiscal years beginning after December 15, 2021, and interim periods with

fiscal years beginning after December 15, 2021.

Early adoption is permitted, including adoption in an interim period.

Company adopted the new standard on February 1, 2022 and the adoption of the new standard did not have a significant impact on the Company’s

condensed consolidated financial statements.

August 2020, the FASB issued ASU No.

2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

(“ASU 2020-06”), which simplifies an issuer’s accounting for convertible instruments by reducing the number of

accounting models that require separate accounting for embedded conversion features.

ASU 2020-06 also simplifies the settlement assessment

that entities are required to perform to determine whether a contract qualifies for equity classification and makes targeted improvements

to the disclosures for convertible instruments and earnings-per-share (EPS) guidance.

This update will be effective for the Company’s

fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

Early adoption is permitted, but no earlier

than fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

Entities can elect to adopt the new

guidance through either a modified retrospective method of transition or a fully retrospective method of transition.

The Company is currently

evaluating the impact of the pending adoption of the new standard on its financial statements and intends to adopt the standard as of

January 1, 2024.

does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect

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Accounting Policies

condensed consolidated financial statements and related public financial information are based on the application of accounting principles

generally accepted in the United States (“GAAP”).

consolidated financial statements and related public financial information are based on the application of accounting principles generally

accepted in the United States (“GAAP”).

GAAP requires the use of estimates;

assumptions, judgments and subjective

interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported.

estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies,

risk and financial condition.

We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently

and conservatively applied.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable

under the circumstances.

assumptions, judgments and subjective interpretations

of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported.

These estimates can also

affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial

We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

Actual results may differ materially from these estimates under different assumptions or conditions.

to monitor significant estimates made during the preparation of our financial statements.

significant accounting policies are summarized in Note 2 of our condensed consolidated financial statements.

While all these significant

accounting policies impact our financial condition and results of operations, we view certain of these policies as critical.

determined to be critical are those policies that have the most significant impact on our financial statements and require management

to use a greater degree of judgment and estimates.

We continue to monitor significant

estimates made during the preparation of our financial statements.

significant accounting policies are summarized in Note 3 of our consolidated financial statements.

While all these significant accounting

policies impact our financial condition and results of operations, we view certain of these policies as critical.

Policies determined

to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater

degree of judgment and estimates.

Actual results may differ from those estimates.

Our management believes that given

current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect

on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

Our management believes that given current facts and

circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated

results of operations, financial position or liquidity for the periods presented in this report.

believe the following critical accounting policies and procedures, among others, affect our more significant judgments and estimates

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could differ significantly from our estimates.

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

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.

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

Results for the year ended January 31, 2021 are presented under ASC 842, while prior period amounts were not adjusted and continue

to be reported in accordance with the legacy accounting guidance under ASC Topic 840, Leases .

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:

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.

to apply the recognition requirements in ASC 842 to short-term leases.

record a right of use asset or right of use liability for leases with an asset or liability balance that would be considered immaterial.

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;

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.

guidance will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital

Additionally, the guidance requires improved disclosures as to the nature, amount, timing and uncertainty of revenue that is

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.

Company adopted this guidance and related amendments as of the first quarter of fiscal 2019, applying the full retrospective transition

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.

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 quarter ended April

30, 2022 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.

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.

Company does not amortize goodwill or indefinite-lived intangible assets.

The Company tests goodwill for impairment annually as of April

30 or if an event occurs or circumstances change that indicate that the fair value of the entity, or the reporting unit, may be below

its carrying amount (a “triggering event”).

Whenever events or circumstances change, entities have the option to first make

a qualitative evaluation about the likelihood of goodwill impairment.

If impairment is deemed more likely than not, management would

perform the two-step goodwill impairment test.

Otherwise, the two-step impairment test is not required.

In assessing the qualitative

factors, the Company assessed relevant events and circumstances that may impact the fair value and the carrying amount of the reporting

The identification of the relevant events and circumstances and how these may impact a reporting unit’s fair value or carrying

amount involve significant judgements and assumptions.

The judgement and assumptions include the identification of macroeconomic conditions,

industry and market considerations, overall financial performance, Company specific events and share price trends, an assessment of whether

each relevant factor will impact the impairment test positively or negatively, and the magnitude of an such impact.

a quantitative assessment is performed, a reporting unit’s fair value is compared to its carrying value.

A reporting unit’s

fair value is determined based upon consideration of various valuation methodologies, including the income approach, which utilizes projected

future cash flows discounted at rates commensurate with the risks involved and multiples of current and future earnings.

value of a reporting unit is less than its carrying amount, an impairment charge is recognized for the amount by which the carrying amount

exceeds the reporting unit’s fair value;

however, the loss recognized cannot exceed the total amount of goodwill allocated to that

reporting unit.

evaluates the remaining useful life of an intangible asset that is not being amortized each reporting period to determine whether events

and circumstances continue to support an indefinite useful life.

If an intangible asset that is not being amortized is subsequently determined

to have a finite useful life, it is amortized prospectively over its estimated remaining useful life.

intangible assets, including tradenames and trademarks, are amortized on a straight-line basis over 3 years.

Customer relationships are

amortized on a straight-line basis over 4 to 5 years.

Company recognizes revenue in accordance with FASB Topic 606, Revenue from Contracts with Customers (Topic 606) .

Company’s sales predominantly are generated from the sale of finished products to customers, contain a single performance obligation

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Under the new revenue

guidance, the Company elected to treat shipping and handling activities as fulfillment activities, and the related costs are recorded

guidance, the Company elected to treat shipping and handling activities as fulfilment activities, and the related costs are recorded

as selling expenses in general and administrative expenses on the consolidated statement of operations.

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

Balance Sheet Arrangements:

do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also

known as “special purpose entities” (SPEs).

Quantitative and Qualitative Disclosures About Market Risk.

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

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

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis