What changed in this filing

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Item 1. Financial Statements

2024-12-16 compared with 2024-09-10 · 168 added, 145 removed, 505 unchanged (38% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

July 31, 2024

Condensed Consolidated Balance Sheets as of July 3 1 , 2024 (unaudited) and January 31, 2024

Condensed Consolidated Statements of Operations for the Three and Six Months Ended July 31 , 2024 and 2023 (unaudited)

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended July 3 1 , 2024 and 2023 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Six Months Ended July 31 , 2024 and 2023 (unaudited)

October 31, 2024

Condensed Consolidated Balance Sheets as of October 31, 2024 (unaudited) and January 31, 2024

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended October 31, 2024 and 2023 (unaudited)

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended October 31, 2024 and 2023 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 31, 2024 and 2023 (unaudited)

Notes to Condensed Consolidated Financial Statements (unaudited)

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(In thousands, except share and per share data)

July 31, 2024 January 31, 2024

October 31, 2024 January 31, 2024

Current Assets:

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Line of credit — —

Term loan – net of current 1,730 3,003

Operating lease liabilities – net of current 2,309 2,515

1 unchanged sentence

Promissory note – related party, net of current 750 2,250

Term loan – net of current 2,228 3,003

Total long-term liabilities 6,064 8,830

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120,000 shares authorized;

23,400 issued as of July 31, 2024 and January 31, 2024, respectively, 0 shares outstanding as of July 31, 2024 and January 31, 2024, respectively

23,400 issued, 0 shares outstanding

Series B Preferred stock, $ 0.00001 par value;

200,000 shares authorized;

0 and 0 issued and outstanding as of July 31, 2024 and January 31, 2024 respectively

0 and 0 issued or outstanding

Preferred stock, $ 0.00001 par value;

19,680,000 shares authorized;

no shares issued and outstanding

0 shares issued or outstanding

Common stock, $ 0.00001 par value;

250,000,000 shares authorized;

37,663,041 and 37,488,239 shares issued as of July 31, 2024 and January 31, 2024, respectively, 37,433,041 and 37,258,239 shares outstanding as of July 31, 2024 and January 31, 2024, respectively

37,815,955 and 37,488,239 shares issued as of October 31 and January 31, 2024, respectively, 37,585,955 and 37,258,239 shares outstanding as of October 31 and January 31, 2024, respectively

Additional paid-in capital 24,584 23,278

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For the Three Months Ended

July 31, For the Six Months Ended

October 31, For the Nine Months Ended

2024 2023 2024 2023

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(in thousands)

For the Period from May 1, 2024 through July 31, 2024

For the Period from August 1, 2024 through October 31, 2024

Preferred Stock Series B Preferred Stock Common Stock Treasury Stock Additional

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Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Equity

Balance, May 1, 2024 - $ - - $ - 37,488 $ - ( 230 ) $ ( 150 ) $ 23,490 $ ( 2,994 ) $ 20,346

Balance, August 1, 2024 - $ - - $ - 37,663 $ - ( 230 ) $ ( 150 ) $ 24,293 $ ( 1,846 ) $ 22,297

Stock based compensation - - - - 145 - - - 280 - 280

Stock issued for the exercise of options and warrants - - - - 8 - - - 11 - 11

Issuance of shares for director settlement - - - - 68 - - - 450 - 450

Net income - - - - - - - - - 410 410

Balance, July 31, 2024 - $ - - $ - 37,663 $ - ( 230 ) $ ( 150 ) $ 24,293 $ ( 1,846 ) $ 22,297

For the Period from May 1, 2023 through July 31, 2023

Balance, October 31, 2024 - $ - - $ - 37,816 $ - ( 230 ) $ ( 150 ) $ 24,584 $ ( 1,436 ) $ 22,998

For the Period from August 1, 2023 through October 31, 2023

Preferred Stock Series B

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Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Equity

Balance, May 1, 2023 - $ - 55 $ - 36,485 $ — ( 230 ) $ ( 150 ) $ 22,798 $ ( 8,685 ) $ 13,963

Balance, August 1, 2023 - $ - - $ - 37,343 $ — ( 230 ) $ ( 150 ) $ 22,912 $ ( 6,964 ) $ 15,798

Stock based compensation - - - - - - - - 110 - 110

Stock issued for the exercise of options and warrants 25 - - - 37 - 37

Conversion of series B preferred stock to common stock - - ( 55 ) - 819 - - - - - -

Series B Preferred dividend - - - - - - - - - ( 21 ) ( 21 )

Net income - - - - - - - - - 2,009 2,009

Balance, July 31, 2023 - $ - - $ - 37,344 $ — ( 230 ) $ ( 150 ) $ 22,912 $ ( 6,964 ) $ 15,798

For the Period from February 1, 2024 through July 31, 2024

Balance, October 31, 2023 - $ - - $ - 37,368 $ — ( 230 ) $ ( 150 ) $ 23,059 $ ( 4,955 ) $ 17,954

For the Period from February 1, 2024 through October 31, 2024

Preferred Stock Series B Preferred Stock Common Stock Treasury Stock Additional

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Net income - - - - - - - - - 2,111 2,111

Balance, July 31, 2024 - - - - 37,663 - ( 230 ) ( 150 ) 24,293 ( 1,846 ) 22,297

For the Period from February 1, 2023 through July 31, 2023

Balance, October 31, 2024 - $ - - $ - 37,816 $ - ( 230 ) $ ( 150 ) 24,584 $ ( 1,436 ) $ 22,998

For the Period from February 1, 2023 through October 31, 2023

Preferred Stock Series B

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Net Income - - - - - - - - - 5,153 5,153

Balance, July 31, 2023 - - - - 37,344 - ( 230 ) ( 150 ) 22,912 ( 6,964 ) 15,798

Balance, October 31, 2023 - $ - - $ - 37,368 $ - ( 230 ) $ ( 150 ) 23,059 $ ( 4,955 ) $ 17,954

See accompanying notes to the condensed consolidated financial statements.

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(in thousands)

For the Six Months Ended July 31,

For the Nine Months Ended October 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Changes in operating assets and liabilities:

Allowance for doubtful accounts - 140

Allowance for credit losses - 140

Accounts receivable ( 708 ) ( 1,170 )

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CASH FLOWS FROM INVESTING ACTIVITIES:

Cash paid for fixed assets ( 2,740 ) ( 253 )

Purchase of fixed assets ( 5,022 ) ( 671 )

Cash paid for investment in Chef Inspirational Foods, LLC, net - ( 646 )

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Issuance of stock for director settlement $ 450 $ -

Receipt of fixed assets for deposits which were previously placed $ 533 $ -

Receipt of fixed assets for deposits previously paid $ 937 $ -

See accompanying notes to the condensed consolidated financial statements.

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Notes to Condensed Consolidated Financial Statements

July 31, 2024

October 31, 2024

Note 1 - Nature of Operations and Basis of Presentation

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Mama's Creations, Inc.

(together with its subsidiaries, the “Company”), (formerly known as Mama Mancini's Holdings, Inc.

(together with its subsidiaries, the “Company”, "we", "our", or "us"), (formerly known as Mama Mancini's Holdings, Inc.

and Mascot Properties, Inc.) was organized on July 22, 2009 as a Nevada corporation.

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Our subsidiary MamaMancini’s Inc.

(“MamaMancinis”) is a marketer, manufacturer and distributor of beef and turkey meatballs with sauce, grilled, roasted and breaded chicken, sausage and peppers, and other similar meats and sauces.

(“MamaMancini's”) is a marketer, manufacturer and distributor of beef and turkey meatballs with sauce, grilled, roasted and breaded chicken, sausage and peppers, and other similar meats and sauces.

In addition, the Company continues to diversify its product line by introducing new products such as ready to serve meals, single-serve pasta bowls, bulk deli, and packaged refrigerated protein products.

MamaMancini's products feature many all-natural meals that were submitted to the United States Department of Agriculture (the “USDA”) and approved as "all-natural".

The USDA defines "all-natural" as a product that contains no artificial ingredients, coloring ingredients or chemical preservatives and is minimally processed.

MamaMancini's products feature many all-natural meals that were submitted to the United States Department of Agriculture (the “USDA”) and approved as "all-natural." The USDA defines "all-natural" as a product that contains no artificial ingredients, coloring ingredients or chemical preservatives and is minimally processed.

Our subsidiary T&L Acquisition Corp.

is a premier gourmet food manufacturer based in New York.

T&L Acquisition Corp.

DBA T&L Creative Salads (“T&L”) and Olive Branch (“OB”) offer a full line of foods for retail food chains and club stores, delis, bagel stores, caterers and provision distributors.

T&L Acquisition Corp., under the brands T&L Creative Salads (“T&L”) and Olive Branch offers a full line of foods 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 Food and Drug Administration ("FDA").

Olive Branch concentrates on selling olives, olive mixes, and savory products to a limited number of large retail customers, primarily in pre-packaged containers.

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.

In 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 consisted of $ 500 thousand in cash and $ 700 thousand in the Company’s common stock.

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On June 28, 2023, the Company completed the acquisition of the remaining 76 % of CIF, in accordance with the terms of the Membership Interest Purchase Agreement dated June 28, 2023 by and among the Company, Siegel Suffolk Family, LLC, and R&I Loeb Family, LLC (the “Sellers”) for approximately $ 3.7 million, including approximately $ 1 million in cash at closing and a $ 2.7 million 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 (which was made during the three months ended July 31, 2024), and a payment of $ 1.5 million in common stock of the Company on the second anniversary of the closing date.

The promissory note required a principal payment of $ 1.2 million in cash on the first anniversary of the closing date (which was made during the three months ended July 31, 2024), and requires a payment of $ 1.5 million in common stock of the Company on the second anniversary of the closing date.

The following presents the unaudited results of operations for the period February 1, 2023 through June 28, 2023 of CIF (in thousands):

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On July 31, 2023, the Company filed an amendment to the Articles of Incorporation with the Secretary of State of the State of Nevada to change the Company’s name from “MamaMancini’s Holdings, Inc.” to “Mama’s Creations, Inc.” (the “Name Change”).

The Name Change, which was approved by the Company’s stockholders at its annual meeting on July 31, 2023, did not alter the voting powers or relative rights of the Company from its origins as a home style, old-world Italian food company to a "one stop shop" including all-natural specialty prepared refrigerated foods for sale in retailers around the country.

On July 31, 2023, the Company also amended and restated its Amended and Restated Bylaws, solely to reflect the name change (as amended, the “Second Amended and Restated Bylaws”).

The Name Change, which was approved by the Company’s stockholders at its annual meeting on July 31, 2023, did not alter the voting powers or relative rights of the Company.

Note 2 - Summary of Significant Accounting Policies

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Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, the accompanying Condensed Consolidated Financial Statements of the Company and its subsidiaries, which are unaudited, include all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of July 31, 2024, and the results of its operations and its cash flows for the periods presented.

The unaudited Condensed Consolidated Financial Statements herein should be read together with the historical Consolidated Financial Statements of the Company for the years ended January 31, 2024 and 2023 included in our Annual Report on Form 10-K for the year ended January 31, 2024 (the "2024 Form 10-K").

Operating results for the three and six months ended July 31, 2024 are not necessarily indicative of the results that may be expected for the year ending January 31, 2025.

In the opinion of management, the accompanying Condensed Consolidated Financial Statements of the Company and its subsidiaries, which are unaudited, include all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of October 31, 2024, and the results of its operations and its cash flows for the periods presented.

Operating results for the three and nine months ended October 31, 2024 are not necessarily indicative of the results that may be expected for the year ending January 31, 2025.

Certain amounts in the prior years have been reclassified to conform to the current year presentation.

Principles of Consolidation

The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries.

The unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries.

All intercompany balances have been eliminated in consolidation.

Use of Estimates

The preparation of Condensed Consolidated Financial Statements in accordance with U.S.

GAAP requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes.

Such estimates and assumptions impact, among other items, allowance for credit losses, 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.

The preparation of unaudited Condensed Consolidated Financial Statements in accordance with U.S.

GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited Condensed Consolidated Financial Statements and accompanying notes.

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 Condensed Consolidated Financial Statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.

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 unaudited Condensed 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.

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Segment Reporting

For the three and six months ending July 31, 2024 and July 31, 2023, the Company was managed as a single operating segment.

For the three and nine months ending October 31, 2024 and October 31, 2023, the Company was managed as a single operating segment.

The Chief Executive Officer, who is the Company's Chief Operating Decision Maker ("CODM"), reviews financial information on an aggregate basis for purposes of allocating resources and assessing financial performance, as well as for making strategic operational decisions and managing the organization.

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Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution.

The balance at times may exceed federally insured limits.

As of October 31, 2024, the Company had approximately $ 8.5 million that exceeded federally insured limits.

Accounts Receivable and Allowance for Credit Losses

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Customer balances are written off after all collection efforts are exhausted.

The reserve for uncollectible accounts was approximately $ 93 thousand as of July 31, 2024 and January 31, 2024.

During the three and six months ended July 31, 2024 the Company did no t write off any accounts deemed uncollectible.

During the three and six months ended July 31, 2023 the Company wrote off approximately $ 140 thousand of accounts that were deemed uncollectible.

The reserve for uncollectible accounts was approximately $ 93 thousand as of October 31, 2024 and January 31, 2024.

During the three and nine months ended October 31, 2024 the Company did no t write off any accounts deemed uncollectible.

During the three and nine months ended October 31, 2023 the Company wrote off approximately $ 0 and $ 140 thousand of uncollectible accounts respectively.

The Company values its inventory at the lower of cost or net realizable value (“NRV”).

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In addition, and as necessary, specific reserves for future known or anticipated events may be established.

As of July 31, 2024 and January 31, 2024, the reserve for obsolete inventory was approximately $ 95 thousand.

As of October 31, 2024 and January 31, 2024, the reserve for obsolete inventory was approximately $ 95 thousand.

Inventories by major category are as follows (in thousands):

July 31, 2024 January 31, 2024

October 31, 2024 January 31, 2024

Raw materials and packaging $ 1,316 $ 1,159

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Leasehold improvements *

(*) Amortized on a straight-line basis over the shorter of the remaining lease term at the time the asset was placed in service or their estimated useful lives.

Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations.

(*) Amortized on a straight-line basis over the shorter of the remaining lease term at the time the assets were placed in service or their estimated useful lives.

Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss is reflected in the condensed consolidated statements of operations.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair values of the underlying net assets of an acquired business.

The Company tests goodwill for impairment on an annual basis during the fourth quarter of its fiscal year, or immediately if conditions indicate that an impairment could exist.

The Company evaluates qualitative factors to determine

if it is more likely than not that the fair value is less than its carrying value and whether it is necessary to perform goodwill impairment testing.

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

The Company tests goodwill for impairment on an annual basis during the fourth quarter of its fiscal year, or

immediately if conditions indicate that an impairment could exist.

The Company evaluates qualitative factors to determine if it is more likely than not that the fair value is less than its carrying value and whether it is necessary to perform goodwill impairment testing.

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

Other Intangible Assets

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Research and development is expensed as incurred.

Research and development expenses were $ 93 thousand and $ 197 thousand for the three and six months ended July 31, 2024, respectively, compared to $ 95 thousand and $ 166 thousand for the three and six months ended July 31, 2023, respectively.

Research and development expenses were $ 155 thousand and $ 352 thousand for the three and nine months ended October 31, 2024, respectively, compared to $ 124 thousand and $ 290 thousand for the three and nine months ended October 31, 2023, respectively.

Revenue Recognition

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Accordingly, there are 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.

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The Company’s contracts are all short term in nature;

therefore, there are no unsatisfied performance obligations requiring disclosure as of July 31, 2024 and January 31, 2024.

Expenses such as slotting fees, sales discounts, and allowances are accounted for as a direct reduction of revenues as follows (in thousands):

therefore, there are no unsatisfied performance obligations requiring disclosure as of October 31, 2024 and January 31, 2024.

Expenses such as slotting fees, sales discounts, and variable considerations are accounted for as a direct reduction of revenues as follows (in thousands):

For the Three Months Ended

July 31, 2024 July 31, 2023

October 31, 2024 October 31, 2023

Gross Sales $ 32,333 $ 29,294

Slotting Fees, Discounts & Allowances 322 625

Trade Incentives and Promotions 810 646

Net Sales $ 31,523 $ 28,648

For the Six Months Ended

July 31, 2024 July 31, 2023

For the Nine Months Ended

October 31, 2024 October 31, 2023

Gross Sales $ 91,435 $ 78,309

Slotting Fees, Discounts & Allowances 882 1,104

Trade Incentives and Promotions 1,692 1,750

Net Sales $ 89,743 $ 76,559

Disaggregation of Revenue from Contracts with Customers.

The following table disaggregates gross revenue by significant geographic area for the three months ended July 31, 2024 and 2023 (in thousands):

The following table disaggregates gross revenue by significant geographic area for the three months ended October 31, 2024 and 2023 (in thousands):

For the Three Months Ended

July 31, 2024 July 31, 2023

October 31, 2024 October 31, 2023

Northeast $ 8,277 $ 9,317

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Total gross sales $ 32,333 $ 29,294

For the Six Months Ended

July 31, 2024 July 31, 2023

For the Nine Months Ended

October 31, 2024 October 31, 2023

Northeast $ 26,534 $ 27,267

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Costs incurred for advertising for the Company are charged to selling, general and administrative expenses as incurred.

Advertising expenses wer e $ 404 thousand and $ 817 thousand fo r the three and six months ended July 31, 2024, respectively, compared to $ 190 thousand and $ 399 thousand for the three and six months ended July 31, 2023, respectively.

Advertising expenses wer e $ 663 thousand and $ 1,480 thousand fo r the three and nine months ended October 31, 2024, respectively, compared to $ 380 thousand and $ 779 thousand for the three and nine months ended October 31, 2023, respectively.

Stock-Based Compensation

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The Company has granted performance stock awards ("PSUs") to certain executive officers.

Each performance stock award entitles the participant to earn shares of common stock upon the attainment of certain market conditions and certain performance goals over the applicable performance period.

Each performance stock award entitles the participant to earn shares of common stock upon the attainment of certain market conditions and/or certain performance goals over the applicable performance period.

The recognition of the compensation expense for the performance stock awards is based upon the probable outcome of the market condition and performance conditions based on the fair value of the award on the date of grant.

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Forfeitures are recognized when they occur.

There were no performance stock units that vested in the three and six months ending July 31, 2024.

There were no performance stock units that vested in the three and nine months ending October 31, 2024.

T he Company's performance against the defined goals is re-evaluated on a quarterly basis throughout the performance period and the recognition of the compensation expense is adjusted for subsequent changes in the estimated or actual outcome.

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If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service.

The Company values Restricted Stock Units ("RSUs") at the closing stock price on the date of the grant.

Earnings Per Share

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However, if the effect of any additional securities are anti-dilutive (i.e., resulting in a higher net income per share or lower net loss per share), they are excluded from the dilutive earnings per share computation.

The dilutive effect of stock options, warrants, and restricted stock is calculated using the treasury stock method and the dilutive effect of the Series B Preferred stock is calculated using the if-converted method.

The dilutive effect of stock options, warrants, and restricted stock is calculated using the treasury stock method, and the dilutive effect of the Series B Preferred stock and PSUs is calculated using the if-converted method.

The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share (in thousands, except per share data):

For the Three Months Ended

July 31, 2024 July 31, 2023

October 31, 2024 October 31, 2023

Net income attributable to common stockholders $ 410 2,009

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(a) – Anti-dilutive securities excluded — —

For the Six Months Ended

July 31, 2024 July 31, 2023

For the Nine Months Ended

October 31, 2024 October 31, 2023

Net income attributable to common stockholders $ 2,111 $ 5,104

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Deferred tax assets are adjusted for the effects of changes in tax laws and rates on the date of enactment.

As of July 31, 2024 and January 31, 2024, the Company recognized a deferred tax asset of $ 390 thousand and $ 503 thousand, respectively, which is included in other long-term assets on the condensed consolidated balance sheets.

As of October 31, 2024 and January 31, 2024, the Company recognized a deferred tax asset of $ 413 thousand and $ 503 thousand, respectively, which is included in other long-term assets on the Condensed Consolidated Balance Sheets.

The Company regularly evaluates the need for a valuation allowance related to the deferred tax asset.

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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 is effective for the Company’s fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

This update was effective for the Company’s fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

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

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Accounting for Investment Tax Credit Structures Using the Proportional Amortization Method." The amendments in this update permit reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met.

This guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal

This guidance was effective for fiscal years beginning after December 15, 2023, including interim periods within those

fiscal years.

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

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Management does not believe that any recently issued but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying condensed consolidated financial statements.

Note 3 – Property Plant and Equipment:

Property plant and equipment on July 31, 2024 and January 31, 2024 are as follows (in thousands):

July 31, 2024 January 31, 2024

Fair Value Measurements

Assets and liabilities recorded at fair value are measured using the fair value hierarchy, which prioritizes the inputs used in measuring fair value.

The levels of the fair value hierarchy are:

observable inputs such as quoted prices in active markets;

inputs other than quoted prices in active markets that are either directly or indirectly observable;

unobservable inputs for which little or no market data exists, therefore requiring the Company to develop its own assumptions.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.

The Company's financial assets that were accounted for at fair value on a recurring basis as of October 31, 2024 and January 31, 2024 were as follows (in thousands):

October 31, 2024 January 31, 2024

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Cash equivalents $ 9,168 $ — $ — $ 9,168 $ 10,912 $ — $ — $ 10,912

Total $ 9,168 $ — $ — $ 9,168 $ 10,912 $ — $ — $ 10,912

Note 3 – Property Plant and Equipment, Net:

Property plant and equipment, net on October 31, 2024 and January 31, 2024 were as follows (in thousands):

October 31, 2024 January 31, 2024

Machinery and Equipment $ 7,948 $ 4,437

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Total $ 9,849 $ 4,436

Depreciation expense was approximately $ 314 thousand and $ 606 thousand for the three and six months ended July 31, 2024, respectively, compared to approximately $ 263 thousand and $ 512 thousand for the three and six months ended July 31, 2023, respectively.

Depreciation expense was approximately $ 451 thousand and $ 1.1 million for the three and nine months ended October 31, 2024, respectively, compared to approximately $ 255 thousand and $ 767 thousand for the three and nine months ended October 31, 2023, respectively.

Note 4 – Intangible Assets, Net

Intangible assets, net consisted of the following at July 31, 2024 (dollars in thousands):

Intangible assets, net, consisted of the following at October 31, 2024 (dollars in thousands):

Amount Accumulated

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Tradename and trademarks 79 ( 75 ) 4 0.16

$ 6,497 $ ( 2,286 ) $ 4,211

Intangibles, net consisted of the following at January 31, 2024 (dollars in thousands):

Total intangible assets $ 6,497 $ ( 2,675 ) $ 3,822

Intangible assets, net consisted of the following at January 31, 2024 (dollars in thousands):

Amount Accumulated

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Tradename and trademarks 79 ( 55 ) 24 0.91

$ 6,497 $ ( 1,518 ) $ 4,979

Amortization expense was approximately $ 388 thousand and $ 768 thousand for the three and six months ended July 31, 2024, respectively, compared to approximately $ 202 thousand and $ 304 thousand for the three and six months ended July 31, 2023, respectively.

Total intangible assets $ 6,497 $ ( 1,518 ) $ 4,979

Amortization expense was approximately $ 388 thousand and $ 1.2 million for the three and nine months ended October 31, 2024, respectively, compared to approximately $ 388 thousand and $ 692 thousand for the three and nine months ended October 31, 2023, respectively.

We expect the estimated aggregate amortization expense for each of the four succeeding fiscal years to be as follows (in thousands):

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The promissory note requires annual principal payments of $ 750 thousand, payable on each anniversary of the closing, together with accrued interest at a rate of three and one-half percent ( 3.5 %) per annum.

As of July 31, 2024 and January 31, 2024, the outstanding balance under the note was $ 1.5 million, respectively, of which $ 750 thousand is recorded as Promissory notes – related parties and $ 750 thousand is recorded as Promissory notes – related parties, net of current in the Company’s Condensed Consolidated Balance Sheets.

Interest expense related to this note was approximately $ 13 thousand and $ 26 thousand for the three and six months ended July 31, 2024, respectively, compared to approximately $ 20 thousand and $ 39 thousand for the three and six months ended July 31, 2023, respectively.

As of July 31, 2024 and January 31, 2024, accrued interest was approximately $ 31 thousand and $ 5 thousand, respectively.

As of both October 31, and January 31, 2024, the outstanding balance under the note was $ 1.5 million, of which $ 750 thousand was recorded as Promissory notes – related parties and $ 750 thousand is recorded as Promissory notes – related parties, net of current, in the Company’s Condensed Consolidated Balance Sheets.

Interest expense related to this note was approximately $ 14 thousand and $ 40 thousand for the three and nine months ended October 31, 2024, respectively, compared to approximately $ 20 thousand and $ 39 thousand for the three and nine months ended October 31, 2023, respectively.

As of October 31, 2024 and January 31, 2024, accrued interest was approximately $ 44 thousand and $ 5 thousand, respectively.

Lease – Related Party

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The exercise of optional renewal is uncertain and therefore excluded from the calculation of the right of use asset.

Rent expense and other ancillary charges pursuant to the lease for the three and six months ended July 31, 2024 were approximately $ 81 thousand and $ 159 thousand, respectively, compared to $ 106 thousand and $ 171 thousand for the three and six months ending July 31, 2023 , respectively.

Rent expense and other ancillary charges pursuant to the lease for the three and nine months ended October 31, 2024 were approximately $ 81 thousand and $ 240 thousand, respectively, compared to $ 96 thousand and $ 267 thousand for the three and nine months ending October 31, 2023.

Chef Inspirational Foods, LLC – Related Party

The Company owned a 24 % minority interest in CIF until June 28, 2023, when the Company acquired the remaining interest (refer to Note 1).

For the period May 1, 2023 to July 31, 2023 and the period from February 1, 2023 to June 28, 2023, the Company recorded sales of approximatel y $ 4.3 million and $ 10.9 million with CIF, respectively .

For the period May 1, 2023 to July 31, 2023 and the period from February 1, 2023 to June 28, 2023, the Company recorded commission expense with CIF of approximately $ 29 thousand and $ 175 thousand, respectively.

For the period from February 1, 2023 to June 28, 2023, the Company recorded sales of approximatel y $ 10.9 million with CIF .

For the period from February 1, 2023 to June 28, 2023, the Company recorded commission expense with CIF of approximately $ 175 thousand, respectively.

Note 6 – Loan and Security Agreements

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The facility is supported by a first priority security interest in all of the Company’s business assets and is further subject to various affirmative and negative financial covenants.

The Company was in compliance with the covenants as of July 31, 2024 and January 31, 2024.

The Company was in compliance with the covenants as of October 31, 2024 and January 31, 2024.

Advances under the line of credit are limited to eighty percent ( 80 %) of eligible accounts receivable (which is subject to an agreed limitation and is further subject to certain asset concentration provisions) and fifty percent ( 50 %) of eligible inventory (which is subject to an agreed dollar limitation).

All advances under the line of credit are due upon maturity.

There was no outstanding balance on the line of credit as of July 31, 2024 and January 31, 2024, respectively.

During the three and six months ended July 31, 2024 the Company incurred no interest , compared to approximately $ 26 thousand and $ 47 thousand for the three and six months ended July 31, 2023, respectively.

There was no outstanding balance on the line of credit as of October 31, or January 31, 2024.

During the three and nine months ended October 31, 2024 the Company incurred no interest, compared to approximately $ 1 thousand and $ 47 thousand for the three and nine months ended October 31, 2023, respectively.

On December 29, 2021, the Com pany entered into a loan with M&T Bank for the original principal amount of $ 7.5 million payable in equal monthly principal installments over a 60 -month amortization period (the “Acquisition Note”).

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provided that in all events the rate shall not be less than the recited percentage point margin over 0 %.

As of July 31, 2024 , the outstanding balance and unamortized discount of the Acquisition Note was approximately $ 3.8 million and $ 28 thousand, respectively.

As of January 31, 2024 , the outstanding balance and unamortized discount of the Acquisition Note was approximately $ 4.6 million and $ 38 thousand, respectively.

During the three and six months ended July 31, 2024 the Company incurred interest of approximately $ 80 thousand and $ 166 thousand respectively, compared to approximately $ 118 thousand and $ 237 thousand for the three and six months ended July 31, 2023, respectively.

As of October 31, 2024 , the outstanding balance and unamortized discount of the Acquisition Note were approximately $ 3.3 million and $ 25 thousand, respectively.

As of January 31, 2024 , the outstanding balance and unamortized discount of the Acquisition Note were approximately $ 4.6 million and $ 38 thousand, respectively.

During the three and nine months ended October 31, 2024, the Company incurred interest of approximately $ 72 thousand and $ 238 thousand, respectively, compared to approximately $ 112 thousand and $ 350 thousand for the three and nine months ended October 31, 2023, respectively.

Note 7 – Concentrations

For the three months ended July 31, 2024, the Company’s revenue was concentrated in two customers that accounted for approximately 38 % and 11 % of gross revenue, respectively.

For the six months ended July 31, 2024, the Company’s revenue was concentrated in one customer that accounted for approximately 40 % of gross revenue.

For the three months ended July 31, 2023, the Company’s revenue was concentrated in three customers that accounted for approximately 18 %, 17 %, and 10 % of gross revenue, respectively.

For the six months ended July 31, 2023, the Company’s revenue was concentrated in three customers that accounted for approximately 22 %, 13 %, and 11 % of gross revenue respectively.

As of July 31, 2024, four customers represented approximately 31 %, 13 %, 11 %, and 11 % of the total gross outstanding receivables, respectively.

For the three months ended October 31, 2024, the Company’s revenue was concentrated in two customers that accounted for approximately 43 % and 10 % of gross revenue, respectively.

For the nine months ended October 31, 2024, the Company’s revenue was concentrated in one customer that accounted for approximately 41 % of gross revenue.

For the three months ended October 31, 2023, the Company’s revenue was concentrated in two customers that accounted for approximately 39 % and 12 % of gross revenue, respectively.

For the nine months ended October 31, 2023, the Company’s revenue was concentrated in three customers that accounted for approximately 22 %, 14 %, and 11 % of gross revenue, respectively.

As of October 31, 2024, two customers represented approximately 35 % and 17 % of the total gross outstanding receivables, respectively.

As of January 31, 2024, four customers represented approximately 20 %, 15 %, 13 %, and 10 % of total gross outstanding receivables, respectively.

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The Company has designated 120 thousand shares of Preferred Stock as Series A Convertible Preferred stock.

As of July 31, 2024 and January 31, 2024, no shares of Series A Convertible Preferred Stock are outstanding.

As of October 31, 2024 and January 31, 2024, no shares of Series A Convertible Preferred Stock were outstanding.

Series B Preferred Stock

The Company has designated 200 thousand shares of preferred stock, Series B Preferred Stock.

The holders of the Series B Preferred Stock shall be entitled to receive, upon liquidation, dissolution or winding up of the Company, the original issue price, plus any dividends declared but unpaid or the amount of cash, securities or other property to which such holder would be entitled to receive with respect to such shares of Series B Preferred Stock if such shares had been converted to common stock immediately prior to such liquidation.

As of October 31, 2024 and January 31, 2024, no shares of Series B Preferred Stock remain outstanding.

The holders of the Series B Preferred Stock were entitled to receive, upon liquidation, dissolution or winding up of the Company, the original issue price, plus any dividends declared but unpaid or the amount of cash, securities or other property to which such holder would be entitled to receive with respect to such shares of Series B Preferred Stock if such shares had been converted to common stock immediately prior to such liquidation.

Holders of the Series B Preferred Stock were entitled to receive cumulative cash dividends at an annual rate of eight percent ( 8 %).

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On June 22, 2023, all the holders of the Series B Preferred Stock converted the shares of Series B Preferred Stock into 819,000 shares of Common Stock of the Company.

As of July 31, 2024 and January 31, 2024, no shares of Series B Preferred Stock remain outstanding.

The Company paid dividends of approximately $ 21 thousand and $ 49 thousand for the three and six months ended July 31, 2023, respectively.

The Company paid dividends of approximately $ 0 thousand and $ 49 thousand for the three and nine months ended October 31, 2023, respectively.

Such dividends related to the Company's then outstanding Series B Preferred Stock.

Because no shares of Series B Preferred Stock were outstanding, no such dividends were paid during the three and nine months ended October 31, 2024.

Restricted Stock Units

The fair value of restricted stock units is determined based on the closing price of the Company's Common Stock on the grant date.

Restricted Stock Units generally vest on a graded basis over three years to four years of service.

The fair value of RSUs is determined based on the closing price of the Company's Common Stock on the grant date.

RSUs generally vest on a graded basis over three years to four years of service.

The terms of the RSUs include vesting provisions based solely on continued service.

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Forfeited - $ -

Outstanding – July 31, 2024 475,018 $ 2.16

During the three and six months ended July 31, 2024, the Company recognized stock-based compensation expense related to restricted stock units of an aggregate of approximately $ 197 thousand and $ 311 thousand, respectively, compared to $ 63 thousand and $ 31 thousand for the three and six months ended July 31, 2023, respectively.

Outstanding – October 31, 2024 370,328 $ 2.87

During the three and nine months ended October 31, 2024, the Company recognized stock-based compensation expense related to restricted stock units of an aggregate of approximately $ 136 thousand and $ 447 thousand, respectively, compared to $ 167 thousand and $ 98 thousand for the three and nine months ended October 31, 2023, respectively.

The restricted stock expense was recorded to selling, general and administrative expenses or cost of goods sold depending on the nature of the employee's expense on the Condensed Consolidated Statement of Operations.

As of July 31, 2024, there was unrecognized stock-based compensation of approximately $ 822 thousand related to future vesting of restricted stock units.

As of October 31, 2024, there was unrecognized stock-based compensation of approximately $ 996 thousand related to future vesting of restricted stock units.

The following is a summary of the Company’s option activity:

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Expired/forfeited ( 15,000 ) $ 1.48

Outstanding – July 31, 2024 72,500 $ 1.48 7.87 $ 445

Exercisable – July 31, 2024 7,500 $ 1.48 7.87 $ 46

During the six months ended July 31, 2024, there were 30,000 options exercised at a weighted average exercise price of $ 1.48 per share resulting in the issuance of 30 thousand shares of common stock.

Outstanding – October 31, 2024 103,806 $ 3.76 8.47 $ 388

Exercisable – October 31, 2024 0 $ — 0.00 $ —

During the nine months ended October 31, 2024, there were 37,500 options exercised at a weighted average exercise price of $ 1.48 per share resulting in the issuance of approximately 38 thousand shares of common stock.

The Company received approximately $ 55 thousand for the exercise of these options.

For the three and six months ended July 31, 2024, the Company recognized stock-based compensation expense related to options of an aggregate of approximately $ 8 thousand and $ 7 thousand, respectively, compared to $ 18 thousand and $ 41 thousand for the three and six months ended July 31, 2023.

During the nine months ended October 31, 2024 the Company granted options to purchase 38,806 shares.

The Company values stock options using the Black-Scholes option pricing model.

The grants are amortized on a straight-line basis over the requisite service period, which is generally the vesting period.

If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service.

For the nine months ended October 31, 2024, when computing the fair value of the stock options issued, the Company used the following variables:

(i) risk-free interest rate of 3.5 % , (ii) expected term of the award of 6 years, (iii) expected volatility of the underlying stock of 76 %, and (iv) no expected dividend yield.

For the three and nine months ended October 31, 2024, the Company recognized stock-based compensation expense related to options of an aggregate of approximately $ 16 thousand and $ 23 thousand, respectively, compared to $ 12 thousand and $ 53 thousand for the three and nine months ended October 31, 2023.

The stock-based compensation expense related to the options is included in selling, general and administrative expenses on the accompanying Condensed Consolidated Statements of Operations.

During the six months ended July 31, 2024, certain employees and contractors resigned from the Company, which resulted in the reversal of approximately $ 11 thousand of previously recognized stock-based compensation expense.

At July 31, 2024, there was unrecognized stock-based compensation expense related to the issuance of options of approximately $ 29 thousand.

During the nine months ended October 31, 2024, certain employees and

contractors resigned from the Company, which resulted in the reversal of approximately $ 11 thousand of previously recognized stock-based compensation expense.

At October 31, 2024, there was unrecognized stock-based compensation expense related to the issuance of options of approximately $ 213 thousand.

Performance Stock Units

During the year ended January 31, 2023, the Company issued certain PSUs to the Chief Executive Officer and Chief Financial Officer based on certain market and performance conditions of the Company compared to the respective targets.

During the three and nine ended October 31, 2024, the Company issued PSUs to the Chief Operating Officer depending on the Company's Earnings per Share compared to respective targets.

During the three and nine months ended October 31, 2024, the Company recognized stock-based compensation expense related to PSUs of approximately $ 91 thousand and $ 311 thousand, respectively.

The stock-based compensation expense related to the PSUs is included in selling, general and administrative expenses on the accompanying Condensed Consolidated Statements of Operations.

Equity issuances

On May 15, 2024, the Company entered into a Settlement Agreement with directors Alfred D’Agostino, Steven Burns, Dean Janeway and Thomas Toto (each, a “Director”) relating to certain options purported to have been granted by the Company in 2018 and 2019 (the "Purported Options") under prior leadership that exceeded the availability under the Company’s equity plan at the time of the purported grants.

On May 15, 2024, the Company entered into a Settlement Agreement with directors Alfred D’Agostino, Steven Burns, Dean Janeway and Thomas Toto (each, a “Director”), relating to certain options purported to have been granted by the Company in 2018 and 2019 (the "Purported Options") under prior management that exceeded the availability under the Company’s equity plan at the time of the purported grants.

In exchange for a release of any and all claims or rights related to the Purported Options, the Company agreed to issue each Director a payment of approximately $ 113 thousand and approximately 17 thousand shares of common stock.

In connection with the Settlement Agreement and the issuance of the shares, the Company incurred a one-time charge of approximately $ 900 thousand within selling, general and administrative expense in the three months ended April 30, 2024.

During the three and six months ended July 31, 2024 t he Company is sued 3,007 shares valued at approximately $ 20 thousand to certain employees as compensation.

During the three and nine months ended October 31, 2024, t he Company is sued 3,007 shares valued at approximately $ 20 thousand to certain employees as compensation.

Note 9 - Commitments and Contingencies

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On March 1, 2010, the Company was assigned a Development and License agreement, dated January 1, 2009, with Daniel Dougherty (the “License Agreement”).

Under the terms of the License Agreement, the royalty rate payable by the Company is 6 % of net sales up to $ 500 thousand of net sales (as defined in the agreement) for each year under the License

Under the terms of the License Agreement, the royalty rate payable by the Company is 6 % of net sales up to $ 500 thousand of net sales (as defined in the agreement) for each year under the License Agreement;

4 % of net sales from $ 500 thousand up to $ 2.5 million of net sales for each year under the License Agreement;

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and 1 % of net sales in excess of $ 20 million of net sales for each year under the License Agreement.

In order to continue exclusivity, the Company shall pay a minimum royalty of $ 125,000 each year.

The Company incurred approximately $ 123 thousand and $ 305 thousand of royalty expenses for the three and six months ended July 31, 2024, respectively, compared to $ 129 thousand and $ 318 thousand for the three months ended July 31, 2023, respectively.

In order to continue exclusivity, the Company must pay a minimum royalty of $ 125,000 each year.

The Company incurred approximately $ 143 thousand and $ 448 thousand of royalty expenses for the three and nine months ended October 31, 2024, respectively, compared to $ 119 thousand and $ 437 thousand for the three and nine months ended October 31, 2023, respectively.

Royalty expenses are included in selling, general and administrative expenses on the Condensed Consolidated Statements of Operations.

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In April 2024, the Company's lease of additional warehouse and office space in Farmingdale, New York became effective.

The lease agreement has a five year term with monthly rent of approximately $ 16.7 thousand for the first year, increasing to approximately $ 17.2 thousand for the second year, increasing to approximately $ 17.7 thousand for the third year, increasing to approximately $ 18.2 thousand for the fourth year and increasing to approximately $ 18.8 thousand for the fifth year.

As a result of this lease the Company recognized a (right-of-use) (ROU) asset and a ROU liability of approximately $ 873 thousand.

During the six months ended July 31, 2024, the Company amended its lease for 25 Branca Road, East Rutherford, NJ.

The amended lease has a termination date of August 31, 2024, which was subsequently extended, see Note 12.

As the lease is now short term in nature the Company wrote off approximately $ 897 thousand of the ROU asset and ROU liability in the three months ended April 30, 2024.

The lease agreement has a five-year term with monthly rent of approximately $ 16.7 thousand for the first year, increasing

to approximately $ 17.2 thousand for the second year, increasing to approximately $ 17.7 thousand for the third year, increasing to approximately $ 18.2 thousand for the fourth year and increasing to approximately $ 18.8 thousand for the fifth year.

As a result of this lease the Company recognized a ROU)asset and a lease liability of approximately $ 873 thousand.

During the nine months ended October 31, 2024, the Company amended and subsequently extended its lease for 25 Branca Road, East Rutherford, NJ.

The amended lease had a termination date of August 31, 2024.

With the initial amendment of the lease the Company wrote off approximately $ 897 thousand of the ROU asset and ROU liability in the nine months ended October 31, 2024.

On August 21, 2024, the Company amended its lease at 25 Branca Road.

The amended lease has monthly rent of approximately $ 36 thousand until February 28, 2026, with a renewal option to extend the lease until August 31, 2029.

The monthly rent during the renewal option ranges from approximately $ 38 thousand to approximately $ 42 thousand.

As a result of this lease the Company recognized a ROU asset and a lease liability of approximately $ 615 thousand.

We have operating leases for offices and other facilities used for our operations.

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Supplemental cash flow and other information related to leases was as follows (in thousands):

July 31, 2024 July 31, 2023

October 31, 2024 October 31, 2023

Cash paid for amounts included in the measurement of lease liabilities

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The following table shows the weighted average lease term and weighted average discount rate for our ROU lease assets:

July 31, 2024 January 31, 2024

October 31, 2024 January 31, 2024

Weighted average remaining lease term (in years)

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Note 11 - Income Tax Provision

The Company’s effective tax rate for the three and six months ending July 31, 2024 and July 31, 2023 is 25.9 % and 25.4 %, respectively.

The Company’s effective tax rate for the three and nine months ending October 31, 2024 and October 31, 2023 is 23.8 % and 25.1 %, respectively.

Differences from the statutory rate primarily relate to state taxes.

As of July 31, 2024, the net deferred tax asset of approximately $ 390 thousand.

As of October 31, 2024, the net deferred tax asset was approximately $ 413 thousand.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon future generation for taxable income during the periods in which temporary differences representing net future deductible amounts become deductible.

The ultimate realization of deferred tax assets is dependent upon future generation of taxable income during the periods in which temporary differences representing net future deductible amounts become deductible.

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

There was no valuation allowance on the Company's deferred tax assets as of July 31, 2024 or January 31, 2024.

There was no valuation allowance on the Company's deferred tax assets as of October 31, 2024 or January 31, 2024.

The Company evaluated the provisions of ASC 740 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements.

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Differences between tax positions taken or expected to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability is recognized (or amount of net operating loss carryforward or amount of tax refundable is reduced) for unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740.

Note 12 - Subsequent Event

On August 21, 2024, the Company amended its lease at 25 Branca Road.

The amended lease has monthly rent of approximately $ 36 thousand until February 28, 2026 with a renewal option to extend the lease until August 31, 2029.

The monthly rent during the renewal option ranges from approximately $ 38 thousand to approximately $ 42 thousand.

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 1. Financial Statements