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Item 7. Management’s Discussion and Analysis

2024-04-24 compared with 2023-04-26 · 141 added, 221 removed, 17 unchanged (96% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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” AND THOSE INCLUDED

ELSEWHERE IN THIS REPORT.

of Operations for the Years Ended January 31, 2023 and 2022

following table sets forth the summary of the consolidated statements of operations for the years ended January 31, 2023 and 2022:

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” AND THOSE INCLUDED ELSEWHERE IN THIS REPORT.

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.

Recent Developments

On June 28, 2023, the Company completed the acquisition of the remaining 76% of Chef Inspirational Foods, LLC (“CIF”), a leading developer, innovator, marketer and sales company selling prepared foods for approximately $3.7 million , including approximately $1.0 million in cash at closing and $2.7 million in a promissory note (the "CIF Acquisition").

The promissory note requires a principal payment of $1.2 million in cash on the first anniversary of the closing date, and a payment of $1.5 million in common stock of the Company on the second anniversary of the closing date.

The CI F Acquisition was accounted for as an asset acquisition as substantially all of the fair value was concentrated in customer relationships.

The Company had previously acquired a 24% minority interest in CIF in June 2022.

Results of Operations for the Years Ended January 31, 2024 and 2023

The following table sets forth the summary of the consolidated statements of operations for the years ended January 31, 2024 and 2023 (in thousands):

For the Years Ended

January 31, 2023

January 31, 2022

January 31, 2024 January 31, 2023

Sales - Net of Slotting Fees and Discounts $ 103,284 $ 93,188

Gross Profit $ 30,333 $ 19,418

Operating Expenses $ 21,443 $ 16,595

$ (16,596,608 )

$ (11,771,106 )

Other Expenses

Income Tax Benefit (Provision)

Income from equity method investment in Chef Inspirational

Net Income (Loss)

the years ended January 31, 2023 and 2022, the Company reported net income (loss) of $2,302,674 and $(251,926), respectively.

in net income (loss) between the years ended January 31, 2023 and 2022 reflects strong sales and same-customer product additions, normalization

of costs for commodities, other materials, freight as well as improvements in manufacturing efficiencies.

Sales, net of slotting fees and discounts increased by approximately 98% to $93,187,621 during the year ended January 31, 2023, from

$47,083,740 during the year ended January 31, 2022.

Sales for the year ended January 31, 2023 include a full year of operations of T&L

Creative Salads and Olive Branch.

For the year ended January 31, 2022 T&L Creative Salads and Olive Branch included the period beginning

December 29, 2021 to January 31, 2022.

Other Income (Expenses) $ (544) $ (653)

Income Tax Provision $ (2,008) $ (9)

Income from equity method investment in Chef Inspirational Foods, LLC $ 223 $ 143

Net Income $ 6,561 $ 2,304

For the years ended January 31, 2024 and 2023, the Company reported net income of approximately $6.6 million and $2.3 million, respectively.

The change in net income between the years ended January 31, 2024 and 2023 reflects strong revenue growth, normalization of costs for commodities and other materials, freight optimization, improvements in manufacturing efficiencies, as well as the CIF Acquisition, which allowed the Company to sell its products to the end retailer, wholesaler, and/or distributor.

Sales - Net of Slotting Fees and Discounts:

Sales, net of slotting fees and discounts increased by approximately 11% to $103.3 million for the year ended January 31, 2024, from $93.2 million for the year ended January 31, 2023.

The increase is due to higher volume of sales and introduction of new products at existing customers, successful pricing actions, and the acquisition of Chef Inspirational Foods, LLC, which allowed the Company to sell its products to the end retailer, wholesaler, and/or distributor.

Gross Profit:

The gross profit margin was 29% and 21% for the years ended January 31, 2024 and 2023, respectively.

The Company continues

to identify procurement efficiencies and cost savings through stronger buying power created through the acquisitions of T&L Creative

Salads and Olive Branch.

The increase in gross profit margin is due to normalization of commodity costs, successful pricing actions, higher utilization and investments in the Company's manufacturing facilities, as well as the CIF Acquisition.

Operating Expenses:

Operating expenses increased by 29% during the year ended January 31, 2024, as compared to the year ended January 31, 2023.

Operating expenses decreased as a percentage of sales to 18% in 2023 compared to 25% in 2022.

The $4,825,502 increase in total operating

expenses is primarily attributable to the following:

Related Expenses rose by approximately $2,400,000 related to the executive hires, incremental costs associated with the acquisition

of T&L Creative Salads management and office salaries;

Commission Expenses rose

by approximately $650,000 due to increased sales;

Freight related expenses

rose by approximately $650,000 due to the increase in sales

expenses rose by approximately $375,000 related to the additional costs associated with the acquisition of T&L Creative Salads;

Allowance for Doubtful

Accounts rose by $233,000 due to our anticipation of increasing macroeconomic risk.

Income (Expenses):

Other expenses increased by $615,141 to $653,362 for the year ended January 31, 2023 as compared to $38,221 for

the year ended January 31, 2022.

For the year ended January 31, 2023, other income (expenses) consisted of $633,889 in interest expense

on the Company’s financing arrangements and $22,121 in amortization of debt discount.

For the year ended January 31, 2022, other

expenses consisted of $73,487 in interest expense incurred on the Company’s financing arrangements offset by other income of $37,704.

and Capital Resources

following table summarizes total current assets, liabilities and working capital at January 31, 2023 compared to January 31, 2022:

Operating expenses increased as a percentage of sales to 21% in 2024 compared to 18% in 2023.

The approximate $4.8 million increase in total operating expenses is primarily attributable to the following:

• Payroll and Related Expenses inclusive of stock-based compensation rose by approximately $3.3 million related to executive and SG&A hires;

• Amortization of intangible assets increased by approximately $598 thousand due to the CIF Acquisition;

• Insurance expenses rose by approximately $581 thousand due to the growth of the Company and increases in coverage levels;

• Advertising expenses increased by approximately $550 thousand due to new strategies and an enhanced focus on marketing to help drive increased velocities of our existing products

• Commission Expenses rose by approximately $251 thousand due to increased sales;

• Freight-related expenses decreased by approximately $885 thousand due to the addition of dedicated logistics employees and capabilities, increased sales to major retailers, wholesalers and distributors, as well as load-sharing between the Company's two manufacturing facilities;

• Allowance for credit losses decreased by approximately $373 thousand due to our establishment of a reserve in the prior year.

Other Income (Expenses):

Other expenses decreased by approximately $109 thousand to approximately $544 thousand for the year ended January 31, 2024, as compared to approximately $653 thousand for the year ended January 31, 2023.

The decrease is mainly due to a decrease in interest expense of approximately $85 thousand, which was a result of lower debt balances outstanding as well as higher interest earned on Company cash balances.

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 January 31, 2024 compared to January 31, 2023 (in thousands):

January 31, 2024 January 31, 2023 Change

Current Assets $ 23,566 $ 15,674 $ 7,892

1 unchanged sentence

Working Capital $ 6,876 $ 3,795 $ 3,081

of January 31, 2023, we had working capital of $3,795,610 as compared to working capital of $2,653,189 as of January 31, 2022, an increase

of $1,142,421.

The increase in working capital is primarily attributable to an increase in cash of $3,527,785, an increase of inventories

of $745,088 based on robust sales increases, and an increase in prepaid expenses and other current assets of $174,460 partially offset

by better cash management which resulted in a decrease in accounts receivable of $562,671 and an increase in accounts payable and accrued

liabilities of $2,192,359.

cash provided by operating activities for the year ended January 31, 2023 was $5,509,162 compared to net cash provided by operating activities

for the year ended January 31, 2022 of $909,841.

The net income (loss) for the years ended January 31, 2023 and 2022 was $2,302,674 and

$(251,926), respectively.

During the year ended January 31, 2023, net income was affected by non-cash adjustments of $1,715,397 and

by changes in operating activities which provided cash of $1,490,965.

During the year ended January 31, 2022, net income was affected

by adjustments to net income of $1,345,727 offset by changes in operating activities which used cash of $183,960.

cash used in investing activities for the years ended January 31, 2023 was $1,093,214 as compared to $11,270,957 for the year ended January

31, 2022, respectively.

For the year ended January 31, 2023, the Company used cash of $593,214 to purchase new machinery and equipment.

In addition, the Company paid cash of $500,000 for the acquisition of a 24% minority interest in Chef Inspirational Foods, LLC.

year ended January 31, 2022, the cash used in investing activities of $862,415 was to purchase new machinery and equipment and $10,408,542

for the acquisition of T&L and Olive Branch.

cash used in financing activities for the year ended January 31, 2023 was $888,037 as compared to $8,021,154 provided by financing activities

for the year January 31, 2022.

During the year ended January 31, 2023, the Company received net proceeds of $125,000 from borrowings

pursuant to the line of credit which were offset by payments of the term loan, related party loan, and finance lease payments of $1,293,095,

$750,000, and $235,208, respectively.

In addition, during the year ended January 31, 2023, the Company received proceeds of $26,250 for

the exercise of options and $1,365,000 from the sale of Series B Convertible Preferred Stock.

During the year ended January 31, 2023,

the Company paid offering costs of $64,600 and dividends on the Series B Preferred stock of $34,070.

During the year ended January 31,

2022, the Company received proceeds of $19,080 from the exercise of options, $7,500,000 from borrowings from a term loan, and $765,00

from borrowings from a line of credit.

These cash in-flows were offset by payments of $199,176 paid for finance lease payments and $63,750

paid in financing fees.

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 April 26, 2024, based on current and projected levels of operations, the Company

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

If such financing is required, there can be no

assurance that financing will be available in amounts or terms acceptable to the Company, if at all.

In the event funding is not available

on reasonable terms, the Company might be required to change its growth strategy and/or seek funding on an alternative basis, but there

is no guarantee it will be able to do so.

Accounting Pronouncements

May 2021, the Financial Accounting Standards Board (“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.

The 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 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

February 1, 2024.

January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment

(“ASU 2017-04”).

ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the requirement to compare

the implied fair value of goodwill with its carrying amount as part of step two of the goodwill impairment test referenced in Accounting

Standards Codification (“ASC”) 350, Intangibles - Goodwill and Other (“ASC 350”).

As a result, an entity should

perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.

impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value.

the impairment loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.

ASU 2017-04 is effective

for annual reporting periods beginning after December 15, 2022, including any interim impairment tests within those annual periods, with

early application permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

2022, we elected to early adopt ASU 2017-04, and the adoption had no impact on our consolidated financial statements.

We will perform

future goodwill impairment tests according to ASU 2017-04.

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

on the accompanying consolidated financial statements.

Accounting Policies

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

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

As of January 31, 2024, we had working capital of approximately $6.9 million as compared to working capital of approximately $3.8 million as of January 31, 2023, an increase of approximately $3.1 million.

The increase in working capital is primarily attributable to an increase in cash of approximately $6.6 million, an increase in accounts receivable of approximately $1.0 million due to increased sales, and an increase in prepaid expenses and other current assets of approximately $547 thousand, due to deposits placed for machinery and equipment, partially offset by better cash management, which resulted in an increase in accounts payable and accrued expenses of approximately $3.4 million, and an increase in Promissory notes - related parties of $1.2 million due to the CIF Acquisition.

Long term Requirements:

As of January 31, 2024, we have $0 outstanding under our Line of Credit Agreement and approximately $4.5 million o utstanding under our Term Loan Agreement with M&T Bank (the "Term Loan Agreement").

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 December 29, 2025 pursuant to promissory notes issued to the sellers of T&L Creative Salads ("T&L") and Olive Branch LLC ("Olive Branch"), as discussed in Item 8, Note 5.

In addition we have a promissory note of $2.7 million with the sellers of CIF as discussed in Item 8, Note 5.

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 Item 8, Note 10.

The following table summarizes the key components of our cash flows for the years ended January 31, 2024 and January 31, 2023 (in thousands).

For the Years Ended January 31,

Net Cash Provided by Operating Activities $ 11,621 $ 5,509

Net Cash (Used in) Investing Activities (1,432) (1,093)

Net Cash (Used in) Financing Activities (3,545) (889)

Net changes in cash 6,644 3,527

Cash and cash equivalents, beginning of period 4,378 851

Cash and cash equivalents, end of period $ 11,022 $ 4,378

Net cash provided by operating activities for the year ended January 31, 2024 was approximately $11.6 million compared to net cash provided by operating activities for the year ended January 31, 2023 of approximately $5.5 million.

Net income for the years ended January 31, 2024 and 2023 was approximately $6.6 million and $2.3 million, respectively.

During the year ended January 31, 2024, net income was affected by non-cash adjustments of approximately $2.8 million and by changes in operating activities which provided cash of approximately $2.2 million.

During the year ended January 31, 2023, net income was affected by non-cash adjustments of approximately $1.7 million and changes in operating activities which used cash of approximately $1.5 million.

Net cash used in investing activities for the years ended January 31, 2024 was approximately $1.4 million as compared to approximately $1.1 million for the year ended January 31, 2023, respectively.

For the year ended January 31, 2024, the Company used cash of approximately $786 thousand to purchase new machinery and equipment.

In addition, the Company paid net cash of approximately $646 thousand for the CIF Acquisition.

For the year ended January 31, 2023, the cash used in investing activities of approximately $593 thousand was to purchase new machinery and equipment and $500 thousand for the acquisition of the minority interest in CIF in 2022.

Net cash used in financing activities for the year ended January 31, 2024 was $3.5 million as compared to $0.9 million for the year January 31, 2023.

During the year ended January 31, 2024, the Company had payments of the term loan, line of credit, related party loan, and finance lease liabilities of approximately $1.7 million, $890 thousand, $750 thousand, and $272 thousand, respectively.

During the year ended January 31, 2023, the Company had net borrowings from the line of credit of approximately $125 thousand and received proceeds of approximately $1.4 million from the sale of Series B Preferred Stock.

This was offset by payments of the term loan, related party loan, and finance lease liabilities of approximately $1.3 million, $750 thousand, and $235 thousand, respectively.

Although the expected revenue growth and control of expenses lead management to believe that it is probable that the Company’s cash resources will be sufficient to meet its cash requirements through April 26, 2025, based on current and projected levels of operations, the Company may require additional funding to finance growth and achieve its strategic objectives.

If such financing is required, there can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.

In the event funding is not available on reasonable terms, the Company might be required to change its growth strategy and/or seek funding on an alternative basis, but there is no guarantee it will be able to do so.

Recent Accounting Pronouncements

See Note 2 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for information regarding recently issued accounting pronouncements.

Critical Accounting Policies

Our consolidated financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“US GAAP”).

US GAAP requires the use of estimates;

assumptions, judgments and subjective interpretations

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

These estimates can also

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

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

These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition.

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

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

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

We continue to monitor significant estimates

made during the preparation of our financial statements.

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.

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

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

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

Our significant accounting policies are summarized in Note 2 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.

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

used in the preparation of our consolidated financial statements:

preparation of consolidated financial statements in conformity with US GAAP 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, and the fair value of share-based payments.

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.

is not amortized in accordance with US GAAP.

Instead, goodwill is reviewed annually for impairment.

annual assessment date is January 31.

An interim impairment test would be required whenever events or circumstances make it more likely

than not that an impairment may have occurred.

The goodwill impairment test compares the fair value of a reporting unit with its carrying

We would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value;

Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

We believe the following critical accounting policies and procedures, among others, affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

Use of Estimates

The preparation of the Consolidated Financial Statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

Such estimates and assumption s impact, among others, the following:

allowance for doubtful accounts, valuation of the CIF Acquisition (which was accounted for as an asset acquisition as substantially all of the fair value is concentrated in customer relationships) , the fair value of stock-based compensation, inventory reserves, impairment of goodwill and intangible assets, and estimates for unrealized returns, discounts, and other allowances that are netted against revenue.

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.

Goodwill is the excess of the consideration paid for a business over the fair value of the identifiable net assets acquired.

Goodwill and other indefinite lived intangible assets are not amortized.

Instead, these assets are reviewed at least annually for impairment.

The Company has the option to perform a qualitative assessment to determine whether it is necessary to perform the quantitative goodwill impairment test.

However, the Company may elect to perform the quantitative goodwill impairment test even if no indications of a potential impairment exist.

When performing its quantitative annual goodwill impairment test the Company is comparing the fair value with its carrying amounts.

The Company would recognize an impairment charge for the amount by which the carrying amount exceeds the fair value;

however, the loss recognized would not exceed the total amount of goodwill.

Additionally, we consider income tax effects from any tax-deductible

goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.

have the option to perform a qualitative assessment to determine whether it is necessary to perform the quantitative goodwill impairment

However, we may elect to perform the quantitative goodwill impairment test even if no indications of a potential impairment exist.

goodwill was $8,633,334 at January 31, 2023.

our annual goodwill impairment tests as of January 31, 2023, we performed a qualitative assessment which indicated that it was more likely

than not that the fair values of our reporting units exceeded their respective carrying values and, therefore, did not result in an impairment.

In addition, we do not believe we are currently at risk of goodwill impairment.

Our qualitative assessments considered several factors

including (i) the business enterprise value and the excess of the fair value over carrying value, (ii) macroeconomic conditions, (iii)

industry and market considerations including industry revenue, EBITDA margins, and multiples based on business enterprise value to revenues

and to EBITDA, and (iv) the recent financial performance and budget, as well as other factors.

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 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 received

by the customer.

Revenues are recognized in an amount that reflects the net consideration the Company expects to receive in exchange

for the goods.

The transaction price is adjusted for estimates of known or expected variable consideration, which includes consumer incentives,

trade promotions, and allowances, such as coupons, discounts, rebates, volume-based incentives, cooperative advertising, and other programs.

The Company reports all amounts billed to a customer in a sale transaction as revenue.

Under the revenue 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.

Company uses the Black-Scholes option-pricing model to determine the fair value of equity-based grants, excluding restricted stock.

estimating fair value, management is required to make certain assumptions and estimates such as the expected life of units, volatility

of the Company’s future share price, risk-free rates, future dividend yields and estimated forfeitures at the initial grant date.

Additionally, the Company considers income tax effects from any tax-deductible goodwill on the carrying amount when measuring the goodwill impairment loss, if applicable.

The fair value is estimated using discounted cash flow methodologies, as well as considering third party market value indicators.

The Company’s use of a discounted cash flow methodology includes estimates of future revenue based upon budgets and projections.

The Company also develops estimates for future levels of gross and operating profits and projected capital expenditures.

The Company’s methodology also includes the use of

estimated discount rates based upon industry and competitor analysis as well as other factors.

Calculating the fair value requires significant estimates and assumptions by management.

Should the estimates and assumptions regarding the fair value of the reporting units prove to be incorrect, the Company may be required to record impairments to its goodwill in future periods and such impairments could be material.

As of January 31, 2024, there were no impairment losses recognized for goodwill.

Other Intangibles

Amortizable 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.

Revenue Recognition

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

The Company’s sales are primarily generated from the sale of finished products to customers.

Revenue is recognized when the performance obligation is satisfied, and the promised goods have been transferred.

Control transfers when the product is shipped or delivered based upon applicable shipping terms.

For each contract, the Company considers the transfer of product to be the performance obligation.

Although some payment terms may be extended, generally the Company’s payment terms are approximately 15- 30 days.

Accordingly, there is no significant financing components to consider when determining the transaction price.

The Company elected to treat shipping and handling activities as fulfillment activities, and the related costs are recorded as selling expenses in selling, general and administrative expenses on the Consolidated Statements of Operations.

The Company promotes its products with trade incentives and promotions.

These programs include discounts, slotting fees, coupons, rebates, in-store display incentives and volume-based incentives.

The trade incentives and promotions are recorded as a reduction to the transaction price based on amounts estimated as being due to customers at the end of the period.

The Company derives these estimates based on historical experience.

The Company does not receive a distinct service in relation to the trade incentives and promotions.

The Company’s contracts are all short term in nature, therefore there are no unsatisfied performance obligations requiring disclosure as of January 31, 2024.

Stock-Based Compensation

The Company uses the Black-Scholes option-pricing model or Monte Carlo simulation to determine the fair value of equity-based grants, excluding restricted stock.

In estimating fair value, management is required to make certain assumptions and estimates such as the expected life of units, volatility of the Company’s future share price, risk-free rates, future dividend yields and estimated forfeitures at the initial grant date.

Changes in assumptions used to estimate fair value could result in materially different results.

Qualitative And Quantitative Disclosures About Market Risk

are a smaller reporting company as defined in Regulation S-K of the Securities Exchange Act of 1934, as amended, and are not required

to provide the information under this item.

We are a smaller reporting company as defined in Regulation S-K of the Securities Exchange Act of 1934, as amended, and are not required to provide the information under this item.

Financial Statements.

consolidated financial statements appear at the end of this Annual Report.

Our consolidated financial statements appear at the end of this Annual Report.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

are no reportable events under this item for the year ended January 31, 2023.

There are no reportable events under this item for the year ended January 31, 2024.

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-K

Item 7. Management’s Discussion and Analysis