Item 1. Business
Item
1. Business.
Our
History
MamaMancini’s
Holdings, Inc. (formerly Mascot Properties, Inc.) (the “Company” or “MamaMancini’s”) was incorporated in
the State of Nevada on July 22, 2009. Mascot Properties, Inc.’s (“Mascot”) activities since its inception consisted
of trying to locate real estate properties to manage, primarily related to student housing, and services which included general property
management, maintenance and activities coordination for residents. Mascot did not have any significant development of such business and
did not derive any revenue. Due to the lack of results in its attempt to implement its original business plan, management determined
it was in the best interests of the shareholders to look for other potential business opportunities.
On
February 22, 2010, MamaMancini’s LLC was formed as a limited liability company under the laws of the state of New Jersey in order
to commercialize our initial products. On March 5, 2012, the members of MamaMancini’s LLC, holders of 4,700 units (the “Units”)
of MamaMancini’s LLC, exchanged the Units for 15,000,000 shares of common stock and those certain options to purchase an additional
223,404 shares of MamaMancini’s Inc. (the “Exchange”). Upon consummation of the Exchange, MamaMancini’s LLC ceased
to exist and all further business has been and continues to be conducted by MamaMancini’s Inc.
On
January 24, 2013, Mascot, Mascot Properties Acquisition Corp, a Delaware corporation and wholly-owned subsidiary of the Company (“Merger
Sub”), MamaMancini’s Inc., a privately-held Delaware Corporation headquartered in New Jersey (“Mama’s”)
and David Dreslin, an individual (the “Majority Shareholder”), entered into an Acquisition Agreement and Plan of Merger (the
“Agreement”) pursuant to which the Merger Sub was merged with and into Mama’s, with Mama’s surviving as a wholly-owned
subsidiary of the Company (the “Merger”). The transaction (the “Closing”) took place on January 24, 2013 (the
“Closing Date”). Mascot acquired, through a reverse triangular merger, all of the outstanding capital stock of Mama’s
in exchange for issuing Mama’s shareholders (the “Mama’s Shareholders”), pro-rata, a total of 20,054,000 shares
of the Company’s common stock. As a result of the Merger, the Mama’s Shareholders became the majority shareholders of Mascot.
Immediately following the Closing of the Agreement, Mascot changed its business plan to that of Mama’s. On March 8, 2013, Mascot
received notice from the Financial Industry Regulatory Authority (“FINRA”) that its application to change its name and symbol
had been approved and effective Monday, March 11, 2013, Mascot began trading under its new name, “MamaMancini’s Holdings,
Inc.” and under its new symbol, “MMMB”.
On
November 1, 2017, MamaMancini’s, Joseph Epstein Food Enterprises, Inc., a New Jersey corporation (“JEFE”), and MMMB
Acquisition, Inc., a Nevada corporation and wholly owned subsidiary of MamaMancini’s (“Merger Sub”), completed a merger
transaction whereby JEFE merged with and into Merger Sub, with Merger Sub continuing as the surviving entity and a wholly owned subsidiary
of MamaMancini’s. Under the terms of the Merger Agreement and in connection with the merger, the Company acquired all assets of
JEFE. The consideration for the transaction was (a) the extinguishment of the Inter-Company Loan between the parties, (b) the assumption
by the Company of all JEFE accounts payable and accrued expenses (c) assumption by the Company of certain third-party loans to JEFE totaling
approximately $782,000 and (d) indemnification of Carl Wolf with respect to his collateralization of a bank loan to JEFE in the amount
of approximately $250,000. As a result of the transaction, (i) the Company became the sole shareholder of JEFE, which became a wholly-owned
subsidiary of the Company. No cash or stock was exchanged in connection with the transaction.
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On
December 23, 2021, the Company announced the signing of definitive agreements for two acquisitions – T&L Creative Salads, Inc.
(“T&L” or “T&L Creative Salads”) and Olive Branch, LLC (“OB” or “Olive Branch”),
which are related gourmet food manufacturers based in New York. The closing of these transactions occurred and was completed on December
29, 2021. The Company acquired T&L and OB for a combined purchase price of $14.0 million, including $11.0 million in cash at closing
and $3.0 million in a promissory note (the “Note”). The promissory note requires annual principal payments of $750,000 payable
on each anniversary of the closing, together with accrued interest at a rate of three and one-half (3.5%) per annum. The Note holder
is T&L Acquisition Corp, a wholly-owned subsidiary of the Company, and it is guaranteed by the Company. The Note holder has a right
of set-off against the balance due for any matters which are the subject of an indemnification under the transaction agreements. The
cash payment was funded through cash on hand and a $7.5 million acquisition loan from M&T Bank (see below). Anthony Morello, Jr.
remained as President of T&L.
On
December 29, 2021, the Company entered into a Multiple Disbursement Term Loan (the “Loan”) with M&T Bank for the original
principal amount of $7,500,000 payable in monthly installments over a 60-month period. The maturity date of the Loan is January 17, 2027.
Interest is payable on the principal amount of the Loan at a variable rate per annum based on the Company’s Senior Funded Debt/EBITDA
Ratio (as defined in the Credit Agreement between the Company and M&T Bank) established with respect to the Borrower as of the date
of any advance under the Loan as follows: if the Senior Funded Debt/EBITDA ratio is: (i) greater than 2.00 but less than or equal to
2.50, 4.12 percentage point(s) above one-day (i.e., overnight) Secured Overnight Financing Rate (“SOFR”) (as defined); (ii)
greater than 1.50 but less than or equal to 2.00, 3.62 percentage points above one-day SOFR; or (iii) 1.50 or less, 3.12 percentage points
above one-day SOFR. In all events set forth at subsections (i) through (iii) in the preceding sentence, if SOFR shall at any time be
less than 0.25%, one-day SOFR shall be deemed to be 0.25% and the foregoing margins shall be applied to the SOFR Index Floor.
All
of the proceeds of the Loan were utilized to fund the acquisition of T&L and OB.
On
June 28, 2022, the Company acquired a 24% minority interest in Chef Inspirational Foods, LLC (“CIF”), a leading developer,
innovator, marketer and sales company selling prepared foods, for an investment of $1.2 million. The investment consists of $500,000
in cash and $700,000 in the Company’s common stock. The Company also was granted the option to purchase the remaining seventy-six
percent (76%) interest in CIF within one year of June 28, 2022. The option purchase price is an additional $3.8 million, of which $3.5
million would be paid in cash and $300,000 in common stock, which would be paid within a two-year period from the date of the option
exercise.
Our
Company
MamaMancini’s
roots go back to our founder Dan Dougherty, whose grandmother Anna “Mama” Mancini emigrated from Bari, Italy to Bay Ridge,
Brooklyn in 1921. Our products were developed using her old-world Italian recipes that were handed down to her grandson, Dan Dougherty.
Today we market a line of all-natural specialty prepared refrigerated foods for sale in retailers around the country. Our primary products
include beef and turkey meatballs, meat loaf, chicken, sausage-related products and pasta entrees.
Our
products are all natural, contain a minimum number of ingredients and are generally derived from the original recipes of Anna “Mama”
Mancini. Our products appeal to health-conscious consumers who seek to avoid artificial flavors, synthetic colors and preservatives that
are used in many conventional packaged foods.
The
United States Department of Agriculture (the “USDA”) defines “all natural” as a product that contains no artificial
ingredients, coloring ingredients or chemical preservatives and is minimally processed. MamaMancini’s products were submitted to
the USDA and approved as all natural. The Food and Safety and Inspection Service (“FSIS”) Food Standards and Labeling Policy
Book (2003) requires meat and poultry labels to include a brief statement directly beneath or beside the “natural” label
claim that “explains what is meant by the term natural i.e., that the product is a natural food because it contains no artificial
ingredients and is only minimally processed”. The term “natural” may be used on a meat label or poultry label if the
product does not contain any artificial flavor or flavoring, coloring ingredient, chemical preservative, or any other artificial or synthetic
ingredient. Additionally, the term “all natural” can be used if the FSIS approves your product and label claims. The Company’s
product and label claims have been approved by the FSIS to contain the all-natural label.
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Our
products are principally sold to supermarkets, club chains, and mass-market retailers. We currently have more than 50 product offerings
across our beef, chicken, salad and olive portfolios which are packaged in different sized retail and bulk packages. Our products are
principally sold in the deli section of the supermarket, including hot bars, salad bars, prepared foods (meals), sandwich, as well as
cold deli and foods-to-go sections. Our products are also sold in the fresh meat section. We sell directly to both food retailers and
food distributors.
Finally,
we also sell our products on QVC through live on-air offerings, auto ship programs and for everyday purchases on their web site. QVC
is the world’s largest direct to consumer marketer.
On
December 29, 2021 MamaMancini’s made two acquisitions which expand the company’s core product lines, and access to specific
markets. T &L Creative Salads and Olive Branch, are related premier gourmet food manufacturers based in New York. T&L offers
a full line of protein, salad and sandwich products for retail food chains and club stores, delis, bagel stores, caterers and provision
distributors. T&L uses high-quality meats, seafood and vegetables, prepared to meet the standards set forth by the USDA and the FDA.
T&L
sales are spearheaded by a line of chicken products, including grilled and breaded chicken breasts as well as chicken strips. T&L’s
SQF level 2 state-of-the-art USDA facility in Farmingdale, New York has positioned it to expand its operations nationally into MamaMancini’s
network of retailers and club stores. T&L actively sells its salads and prepared products to over 250 delis, bagel shops, smaller
retail accounts and food distributors in the New York metropolitan area, representing over 35% of T&L’s current sales volume.
Olive
Branch started operations six years ago as a separate company to concentrate on selling olives, olive mixes, and savory products to a
limited number of large retail customers, primarily in pre-packaged containers. Olive Branch products are manufactured at the same facility
as T&L in Farmingdale, NY.
On
June 28, 2022, the Company acquired a 24% minority interest in CIF, a leading developer, innovator, marketer and sales company selling
prepared foods.
Industry
Overview
Our
products are considered specialty prepared foods, in that they taste great, are authentic and are made with high quality ingredients.
The market for specialty and prepared foods spans several sections of the supermarket, including deli-prepared foods, and the specialty
meat segment of the meat department.
Our
Strengths
We
believe that the following strengths differentiate our products and our brands:
●
Authentic
recipes and great taste. Our MamaMancini’s 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.
●
Healthy and convenient.
Our products are made only from high quality natural ingredients, including domestic inspected beef, whole 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 products can be prepared quickly and easily.
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●
Great value. We
strive to provide our customers with a great tasting products using all-natural ingredients at an affordable price. Typical retail
prices range from $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.
●
New products and innovation .
Since our inception, we have continued to introduce new and innovative products. While we pride 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. Examples of new product offerings released in fiscal 2022
include Meal For One ready to eat home meals and our Meatballs in a Cup snack. Our new lines of chicken cutlets, breaded chicken
products, gourmet pasta salads and savory olive products will be a natural extension to our national customers and club stores.
●
Key Market Concentration.
Through the acquisition of T&L Creative Salads, MamaMancini’s is deeply established in the New York-New Jersey-Connecticut
tristate metro market with strong new distribution to deli’s, independent end retailers, bagel shops and provision distributors.
MamaMancini’s products will fit well into the needs of this market and gives us the opportunity to extend the brand. In addition,
our legacy MamaMancini’s national distribution footprint allows our T&L and Olive Branch products to gain broader national
distribution.
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. In September of 2022, Adam L. Michaels was named Chief Executive Officer
(“CEO”) of MamaMancini’s and was subsequently named Chairman of the Board effective February 1, 2023. Adam is an
experienced food industry executive and former management consultant with broad experience transforming consumer-focused companies.
Previously, Adam served with Mondelez International, a multinational food and beverage company with operations in over 150 countries.
In addition, Anthony Gruber was named Chief Financial Officer (“CFO”) in September of 2022. Anthony Gruber is a financial
executive with significant experience leading and optimizing finance organizations in the consumer products arena. Previously, Anthony
served as Chief Financial Officer of De’Longhi America, Inc., the North American subsidiary of the Italian appliance manufacturer
DeLonghi S.P.A. known for its espresso machines. Anthony also served as Vice President of Finance and Chief Financial Officer of
Richemont North America, Inc., the North American subsidiary of the Swiss-based luxury goods company, where he managed all finance
activities for North America and was integral in integrating brands into its shared service platform.
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:
●
Build Breadth
& Depth of Distribution: MamaMancini’s, T&L Creative Salads & Olive Branch are still underpenetrated in existing
sales channels, under-SKU’d in existing stores and have the potential to enter new channels. We will leverage our strong brand,
superior quality and high-touch service to list more of our items in existing customers as well as enter new customers. In addition,
we will be leveraging our existing customer relationships to cross-sell our newly acquired brands, thereby driving larger consumer
baskets, expanding promotional opportunities, and driving down freight charges, as we are shipping more Mama’s items to the
same locations.
●
Launch Consumer-Driven
Innovation: As we become even more consumer-focused, we seek to understand consumers’ unmet Deli needs. We will passionately
understand our consumers and develop incremental sales opportunities. We will seek to develop products that capture incremental occasions,
incremental consumer groups and incremental sales channels. For example, our new Meatballs in a Cup offering (1) provides for a “new
for us” snacking occasion incremental to our current meal offerings, (2) provides an attraction to a younger on-the-go consumer
audience, and (3) provides for an incremental sales channel with entry into the Convenience Store channel.
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●
Pursue Accretive,
Complementary Acquisitions: We will regularly identify and integrate major acquisitions in new deli categories, capitalizing
on the highly fragmented nature of the fresh prepared foods space. Ideal acquisition opportunities might bring incremental/ accretive
manufacturing capabilities, incremental capabilities within a new deli sub-category, strengthen our distribution capabilities, and/or
enhance our management capabilities. Before any additional acquisitions are contemplated, a full integration plan and synergy modeling
will be performed and presented to the Board for feedback and approval.
●
Become the One Stop
Shop Deli Solution: The Company has the potential to achieve $1B in sales through a combination of accretive acquisitions of
complementary companies and organic growth, spurred by cross-selling and new product innovation. As the Company builds national scale,
expands breadth of deli offerings and maintains exceptional quality and service, the Company will realize our vision.
Pricing
Our
pricing strategy focuses on being competitively priced with other premium brands. Since our products are positioned in the authentic
premium prepared food category, we maintain prices competitive with those of similar products and prices slightly higher than those in
the commodity prepared foods section. This pricing strategy also provides greater long-term flexibility as we grow our product line through
the growth curve of our products. Current typical retail prices range from $5.99 to $9.99, for prepared food products sold to delis or
hot bars. Increases in raw material costs, among other factors, may lead us to consider price increases in the future.
Suppliers/Manufacturers
As
of January 31, 2023, approximately 90% of our products are internally produced in our East Rutherford, NJ or Farmingdale, NY Facilities.
None of our raw materials or ingredients are directly grown or produced by us. From time-to-time we negotiate with other manufacturers
to supplement the Company’s manufacturing capability. We currently purchase modest quantities from other manufacturers. All of
the raw materials and ingredients in our products are readily available and are readily ascertainable by our suppliers. We have not experienced
any material shortages of ingredients or other products necessary to our operations and do not anticipate such shortages in the foreseeable
future.
Sales/Brokers
Our
products are sold primarily through a commission broker network. We sell to large retail chains who direct our products to their own
warehouses or to large food distributors.
The
Company increased its sales management efforts with the result that the Company is now actively soliciting business with almost every
major retail supermarket chain in the country. MamaMancini’s products are currently sold nationwide, with its greatest concentration
in the Northeast and Southeast.
Marketing
The
majority of our marketing activity has been generated through promotional discounts, consumer trials, consumer product tastings and demonstrations,
in-store merchandising and signage, couponing, word of mouth, consumer public relations, social media, special merchandising events with
retailers and consumer advertising.
Based
on the Company’s metrics for determining brand awareness, which includes market studies and analysis of consumer recognition of
the MamaMancini’s brand, the Company believes that brand awareness for MamaMancini’s has grown in the past 12 months.
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Competition
The
gourmet and specialty pre-packaged food industry has many large competitors specializing in various types of cuisine from all over the
world. Our product lines are currently concentrated on Italian specialty foods. While it is our contention that our competition is much
more limited than the pre-packaged food industry based on our products’ niche market, there can be no assurances that we do not
compete with the entire pre-packaged food industry. We believe our principal competitors include Quaker Maid, Hormel, Rosina Company,
Inc., Casa Di Bertacchi, Inc., Farm Rich, Inc., Mama Lucia, Buona Vita, Inc., Taylor Farms, Kings Command, DeLallo Foods, and Gourmet
Boutique.
Intellectual
Property
Our
current intellectual property consists of trade secret recipes and cooking processes for our products and four trademarks for “MamaMancini’s”,
“The Meatball Lovers Meatball”, “The Original Meatball in a Cup”, and “Mac N’ Mamas”. The recipes
and use of the trademarks have been assigned in perpetuity to the Company.
We
rely on a combination of trademark, copyright and trade secret laws to establish and protect our proprietary rights. We will also use
technical measures to protect our proprietary rights.
Royalty
Agreement
In
accordance with a Development and License Agreement (the “Development and License Agreement”) entered into on January 1,
2009 with Dan Dougherty relating to the use of his grandmother’s recipes for the products to be created by Mama’s, Mr. Dougherty
granted us a 50-year exclusive license (subject to certain minimum payments being made), with a 25-year extension option, to use and
commercialize the licensed items. Under the terms of the Development and License Agreement, Mr. Dougherty shall develop a line of beef
meatballs with sauce, turkey meatballs with sauce and other similar meats and sauces for commercial manufacture, distribution and sale
(each a “Licensor Product” and collectively the “Licensor Products”). Mr. Dougherty shall work with us to develop
Licensor Products that are acceptable to us. Upon acceptance of a Licensor Product by us, Mr. Dougherty’s trade secret recipes,
formulas methods and ingredients for the preparation and production of such Licensor Products shall be subject to the Development and
License Agreement. In connection with the Development and License Agreement, we pay Mr. Dougherty a royalty fee on net sales.
USDA
approval/Regulations
Our
food products, which are manufactured both in our own manufacturing facilities and in third-party facilities, are subject to various
federal, state and local regulations and inspections regarding sanitation, quality, packaging and labeling. In order to distribute and
sell our products outside the State of New Jersey, the third-party food processing facilities must meet the standards promulgated by
the U.S. Department of Agriculture (the “USDA”). Our manufacturing processing facilities and products are subject to periodic
inspection by federal, state, and local authorities. In January 2011, the Food and Drug Administration’s (“FDA”) Food
Safety Modernization Act was signed into law. The law increased the number of inspections at food facilities in the U.S. in an effort
to enhance the detection of food borne illness outbreaks and order recalls of tainted food products. The facilities in which our products
are manufactured are inspected regularly and comply with all the requirements of the FDA and USDA.
We
are subject to the Food, Drug and Cosmetic Act and regulations promulgated thereunder by the FDA. This comprehensive regulatory program
governs, among other things, the manufacturing, composition and ingredients, packaging, and safety of food. Under this program, the FDA
regulates manufacturing practices for foods through, among other things, its current “good manufacturing practices” regulations,
or GMP’s, and specifies the recipes for certain foods. Specifically, the USDA defines “all natural” as a product that
contains no artificial ingredients, coloring ingredients or chemical preservatives and is minimally processed. Mama’s products
were submitted to the USDA and approved as “all natural”. However, should the USDA change their definition of “all
natural” at some point in the future, or should Mama’s change its existing recipes to include ingredients that do not meet
the USDA’s definition of “all natural”, our results of operations could be adversely affected.
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The
FTC and other authorities regulate how we market and advertise our products, and we are currently in compliance with all regulations
related thereto, although we could be the target of claims relating to alleged false or deceptive advertising under federal and state
laws and regulations. Changes in these laws or regulations or the introduction of new laws or regulations could increase the costs of
doing business for us or our customers or suppliers or restrict our actions, causing our results of operations to be adversely affected.
Quality
Assurance
We
take precautions designed to ensure the quality and safety of our products. In addition to routine third-party inspections of our manufacturing
facilities, we have instituted regular audits to address topics such as allergen control, ingredient, packaging and product specifications
and sanitation. Under the FDA Food Modernization Act, both our own manufacturing facilities and each of our contract manufacturers are
required to have a hazard analysis critical control points plan that identifies critical pathways for contaminants and mandates control
measures that must be used to prevent, eliminate or reduce relevant food-borne hazards.
Our
manufacturing facilities are certified in the Safe Quality Food Program. These standards are integrated food safety and quality management
protocols designed specifically for the food sector and offer a comprehensive methodology to manage food safety and quality simultaneously.
Certification provides an independent and external validation that a product, process or service complies with applicable regulations
and standards.
We
work with suppliers who assure the quality and safety of their ingredients. These assurances are supported by our purchasing contracts
or quality assurance specification packets, including affidavits, certificates of analysis and analytical testing, where required. The
quality assurance staff within our manufacturing facilities and within our contract manufacturers conduct periodic on-site routine audits
of critical ingredient suppliers.
Where
You Can Find More Information
The
public may read and copy any materials the Company files with the U.S. Securities and Exchange Commission (the “SEC”) at
the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0030. The SEC maintains an Internet website (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.