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Item 7. Management’s Discussion and Analysis

2026-04-14 compared with 2025-04-08 · 67 added, 60 removed, 76 unchanged (63% of the section changed)

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

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.

We have omitted discussion of the earliest of the three years covered by our consolidated financial statements presented in this report because that disclosure was already included in our Annual Report on Form 10-K for our fiscal year ended January 31, 2025 , filed with the SEC on April 15, 2025.

You are encouraged to reference Part II, Item 7, within that report, for a discussion of our financial condition and results of operations of the fiscal year ended January 31, 2025 compared to the fiscal year ended January 31, 2024.

THE FOLLOWING DISCUSSION OF OUR FINANCIAL CONDITION 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 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 10,000 grocery, mass, club and convenience stores nationally.

is a leading marketer and manufacturer of fresh deli-prepared foods, found in over 12,000 grocery, mass, club and convenience stores nationally.

The Company’s broad product portfolio, born from MamaMancini’s rich history in Italian foods, now consists of a variety of high-quality, fresh, clean and easy to prepare foods to address the needs of both our consumers and retailers.

Our vision is to become a one-stop-shop deli solutions platform, leveraging vertical integration and a diverse family of brands to offer a wide array of prepared foods to meet the changing demands of the modern consumer.

Results of Operations for the Years Ended January 31, 2025 and 2024

The following table sets forth the summary of the consolidated statements of operations for the years ended January 31, 2025 and 2024 (in thousands):

For the Years Ended

Recent Developments

On September 2, 2025, Crown 1 Foods, Inc., a wholly owned subsidiary of the Company, acquired substantially all of the assets of Crown I Enterprises, Inc.

("Crown 1"), a full-service manufacturer of value-added proteins and ready-to-heat meals, for a $17.3 million cash payment.

On September 2, 2025, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with the purchasers named therein (the “Purchasers”) for the private placement (the “Private Placement”) of approximately 2.7 million shares (the “Shares”) of the Company’s common stock, par value $0.00001 per share (the “Common Stock”), at a purchase price of $7.50 per share.

The Private Placement resulted in net proceeds of approximately $18.9 million to the Company.

The proceeds from the Private Placement were used to pay for expenses related to the acquisition of the Crown 1 Business and repayments of debt.

Recent Trends

We continue to monitor commodity costs so that we can purchase ingredients, packaging and other materials required for production.

A variety of other factors may impact the cost and availability of raw materials.

Although, almost all our inputs are sourced domestically and our manufacturing facilities are all in the United States, we continue to expect that recent tariff volatility will have a limited and manageable impact on the Company.

We address commodity costs primarily through competitive sourcing procedures and manufacturing and overhead cost control.

While certain ingredient costs have recently declined, we continue to face higher fuel and freight expenses as well as rising labor costs, all of which have negatively impacted profitability.

The Company looks to offset rising costs through increasing efficiencies and price increases to our customers.

Market dynamics, promotional incentives, or other factors may cause our pricing actions to lag changes in supply and commodity costs.

Results of Operations for the Fiscal Years Ended January 31, 2026, and 2025

The following table sets forth the summary of the consolidated statements of operations for the fiscal years ended January 31, 2026 and 2025 (in thousands):

For the Fiscal Years Ended

January 31, 2026 January 31, 2025

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Other Income (Expenses) $ (261) $ (171)

Income Tax Provision $ (995) $ (2,008)

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

Income Tax Expense $ (1,565) $ (995)

Net Income $ 5,286 $ 3,711

For the years ended January 31, 2025 and 2024, the Company reported net income of approximately $3.7 million and $6.6 million, respectively.

The change in net income between the years ended January 31, 2025 and 2024 reflects strong revenue growth offset by manufacturing inefficiencies related to the capital improvement project at the Company's Farmingdale, New York facility and increased costs of commodities, primarily the cost of chicken, and other materials.

For the fiscal years ended January 31, 2026 and 2025, the Company reported net income of approximately $5.3 million and $3.7 million, respectively.

The change in net income between the fiscal years ended January 31, 2026 and 2025 reflects strong revenue growth and the acquisition of the Crown 1 Business in September 2025, as well as enhanced operational and procurement efficiencies, partially offset by increased costs of commodities, primarily the cost of proteins.

Net Sales increased by approximately 39% to $171.7 million for the year ended January 31, 2026, from $123.3 million for the year ended January 31, 2025.

The increase is due to higher volume of sales of existing products due to higher production capacity, introductions at new customers, introduction of new products at existing customers and successful pricing actions to recover the increased cost of commodities.

Approximately $21.4 million of this increase is due to higher volume of sales.

Sales volume increased due to higher production capacity, introductions at new customers, and successful promotional activities.

Approximately $3.8 million of this increase is due to pricing actions taken due to increasing costs.

In addition, the acquisition of the Crown 1 Business contributed approximately $23.2 million of net sales in fiscal year 2026.

Gross Profit:

The gross profit margin was 25% and 29% for the years ended January 31, 2025 and 2024, respectively.

The decrease in gross profit margin is due to inefficiencies related to the capital improvement project at the Company's Farmingdale, New York facility and increased costs of commodities, primarily chicken, and other materials.

The gross profit margin remained relatively flat at 25% for the fiscal years ended January 31, 2026 and 2025, respectively.

Operating Expenses:

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The approximate $10.3 million increase in total operating expenses is primarily attributable to the following:

• Commission and royalty expenses rose by approximately $1.8 million due to increased sales.

As a percentage of revenue, commission and royalty expenses remained consistent at 3%;

• Advertising expenses increased by approximately $1.3 million due to new digital strategies and an enhanced focus on marketing to help drive increased velocities of our existing products;

• One-time legal settlement expense of approximately $900 thousand, due to the Settlement Agreement with directors;

• Commission and royalty expenses rose by approximately $568 thousand due to increased sales;

• Professional fees increased by approximately $474 thousand due to increased corporate activity due to the growth of the Company and fees associated with Sarbanes-Oxley 404(b) implementation;

• Amortization of intangible assets increased by approximately $463 thousand due to the CIF Acquisition in the prior fiscal year;

• Office and computer-related expenses increased by approximately $300 thousand due to growth of the company, increased office space, and investment in new software to drive efficiencies;

• Travel-related expenses increased by approximately $170 thousand, due to a larger sales team and increased travel to national retailers;

• Freight-related expenses increased by approximately $71 thousand due to increased sales offset by load-sharing between the Company's two manufacturing facilities;

• Insurance expenses decreased by approximately $204 thousand due to consolidation of policies.

• Freight-related expenses increased by approximately $1.6 million due to increased sales, partially offset by the benefit of load-sharing between the Company's manufacturing facilities.

As a percentage of revenue, freight-related expenses remained consistent at 3%;

• Professional fees increased by approximately $1.7 million due to increased corporate activity, which included approximately $1.3 million of transaction-related expenses associated with the acquisition of the Crown 1 Business;

• Payroll-related expenses increased by approximately $3.7 million due to new executive hires and performance related compensation increases;

• Insurance expenses increased by approximately $362 thousand due to increased sales and corporate size;

• Office and computer-related expenses increased by approximately $932 thousand due to growth of the company and investment in new software to drive efficiencies;

• These increases were partially offset by a decrease in director-related expenses of approximately $1.0 million, mainly due to a one-time legal settlement expense of approximately $900 thousand, in the prior fiscal year.

Other Income (Expenses):

Other expenses decreased by approximately $373 thousand to approximately $171 thousand for the year ended January 31, 2025, as compared to approximately $544 thousand for the year ended January 31, 2024.

The decrease is mainly due to a decrease in net interest expense of approximately $290 thousand, which was a result of lower debt balances outstanding as well as higher interest earned on Company cash balances.

Other expenses increased by approximately $90 thousand to approximately $261 thousand for the year ended January 31, 2026, as compared to approximately $171 thousand for the year ended January 31, 2025.

The increase is mainly due to other income in the prior year of $104 thousand.

Liquidity and Capital Resources

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Working Capital $ 24,310 $ 4,852 $ 19,458

As of January 31, 2025, we had working capital of approximately $4.9 million as compared to working capital of approximately $6.9 million as of January 31, 2024, a decrease of approximately $2.0 million.

The decrease in working capital is primarily attributable to a decrease in cash of approximately $3.9 million, which was used to purchase approximately $5.1 million of property plant and equipment, an increase in operating lease liabilities of approximately $414 thousand, and an increase in Promissory notes – related parties of approximately $300 thousand, offset by an increase in inventory of approximately $1.5 million due to increased sales, and a decrease in accounts payable and accrued expenses of approximately $373 thousand due to lower accrued taxes.

As of January 31, 2026, we had working capital of approximately $24.3 million as compared to working capital of approximately $4.9 million as of January 31, 2025, an increase of approximately $19.5 million.

The increase in working capital is primarily attributable to an increase in cash of approximately $12.8 million, an increase in accounts receivable of approximately $4.9 million, and an increase in inventory of approximately $4.8 million.

These increases were partially offset by an increase in accounts payable and accrued expenses of approximately $5.7 million and an increase in operating lease liabilities of approximately $0.8 million.

Long-term Requirements:

As of January 31, 2025, we have $0 outstanding under our Line of Credit Agreement, with a maximum capacity of $5.5 million, and approximately $2.9 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, 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 6.

In addition, we have a promissory note with a balance of $1.5 million with the sellers of CIF as discussed in Item 8, Note 6.

This note 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 11.

The following table summarizes the key components of our cash flows for the years ended January 31, 2025 and January 31, 2024 (in thousands).

For the Years Ended January 31,

As of January 31, 2026, we had no balance outstanding under our Line of Credit Agreement, which has a maximum capacity of $5.5 million, and approximately $5.4 million o utstanding u nder our Term Loan Agreement with M&T Bank (the "Term Loan Agreement").

The Term Loan Agreement has a maturity date of October 1, 2030, refer to Note 8, Loan and Security Agreement for certain financial information regarding the Company's debt.

We also h ave 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 11.

The following table summarizes the key components of our cash flows for the fiscal years ended January 31, 2026 and January 31, 2025 (in thousands).

For the Fiscal Years Ended January 31,

Net Cash Provided by Operating Activities $ 11,421 $ 5,177

Net Cash Used in Investing Activities (18,965) (5,095)

Net Cash (Used in) Financing Activities (3,954) (3,545)

Net Cash Provided by (Used in) Financing Activities 20,345 (3,954)

Net changes in cash 12,801 (3,872)

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Net cash used in investing activities for the years ended January 31, 2026 was approximately $19.0 million as compared to approximately $5.1 million for the year ended January 31, 2025.

For the year ended January 31, 2025, the Company used cash of approximately $5.1 million to purchase new machinery and equipment.

For the year ended January 31, 2024, the cash used in investing activities consisted of approximately $786 thousand to purchase new machinery and equipment and $646 thousand for the acquisition of the remaining interest in CIF.

Net cash used in financing activities for the year ended January 31, 2025 was approximately $4.0 million as compared to $3.5 million for the year ended January 31, 2024.

For the year ended January 31, 2026, the Company used cash of approximately $17.3 million for the purchase of the Crown 1 Business and approximately $1.7 million to purchase new machinery and equipment.

For the year ended January 31, 2025, the cash used in investing activities consisted of approximately $5.1 million to purchase new machinery and equipment .

Net cash provided by financing activities for the year ended January 31, 2026 was approximately $20.3 million as compared to $4.0 million used in financing activities for the year ended January 31, 2025.

During the year ended January 31, 2026, the Company had net proceeds from the issuance of common stock of approximately $18.9 million and net proceeds from the issuance of notes payable of approximately $18.8 million, offset by payments on the term loan, related party loans, and finance lease liabilities of approximately $16.3 million, $0.8 million, and $345 thousand, respectively.

During the year ended January 31, 2025, the Company had payments on the term loan, related party loans, and finance lease liabilities of approximately $1.7 million, $2.0 million, and $397 thousand, respectively.

During the year ended January 31, 2024, the Company had payments on the term loan, line of credit, related party loans, and finance lease liabilities of approximately $1.7 million, $890 thousand, $750 thousand, and $272 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 at least the next twelve months, based on current and projected levels of operations, the Company may require additional funding to finance growth and achieve its strategic objectives.

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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 Estimates

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Critical accounting estimates are those estimates that, in accordance with GAAP, involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our consolidated financial statements.

Management has determined that our most critical accounting estimates are those relating to the fair value of stock-based compensation, impairment of goodwill and intangible assets, the estimates for unrealized returns, discounts, and other allowances that are netted against revenue, and the allocation of the purchase price of the acquisition of substantially all of the assets of Crown 1 Enterprises, Inc.

Although we believe that the estimates we use are reasonable, actual results reported in future periods could differ materially from those estimates.

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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 amount.

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, 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.

We perform this annual assessment during our fourth quarter or more frequently if circumstances indicate that the carrying value may not be recoverable.

When the qualitative assessment is used, we first determine if it is more likely than not impairment exists.

Factors include general economic conditions, industry factors, legal and regulatory factors and historical financial performance.

As of January 31, 2026, 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.

Amortizable intangible assets, including trade names and trademarks, are amortized on a straight-line basis over three years.

Customer relationships are amortized on a straight-line basis over periods ranging from four to five years.

Revenue Recognition

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

Qualitative And Quantitative Disclosures About Market Risk

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.

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

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

There are no reportable events under this item for the year ended January 31, 2025.

Acquisition Accounting

The Company applies the provisions of Accounting Standard Codification ("ASC") 805, " Business Combinations, " in the accounting for acquisitions of businesses.

ASC 805 requires the Company to recognizing identifiable assets and liabilities, including intangible assets of acquired businesses, at their fair value at the date of acquisition.

The excess of the purchase price consideration over the fair value of identifiable net assets acquired is goodwill.

Acquisition-related expenses are expensed as incurred, and the expenses are recorded in operating expenses in the consolidated statements of operations.

See Note 3, "Acquisition," for additional information.

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