Mama's Creations, Inc.
For the period ended Jan 31, 2025. Filed Apr 8, 2025.
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FY2025 · Filed Apr 8, 2025
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Item 8. Report of Independent Registered Public Accounting Firm
Stockholders of Mama’s Creations, Inc.
Opinion of the Financial Statements
We have audited the accompanying consolidated balance sheet of Mama’s Creations, Inc. (the Company) as of January 31, 2025, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the fiscal year ended January 31, 2025, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2025, and the results of its operations and its cash flows for the fiscal year ended January 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 31, 2025 based on criteria established in Internal Control–Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated April 8, 2025 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of the existence of material weaknesses.
We also have audited the adjustments to the fiscal 2024 and 2023 consolidated financial statements of the Company to retrospectively apply the change in accounting related to the Company’s adoption of ASU 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures as described in Notes 2 and 13. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review or apply any procedures to the fiscal 2024 and 2023 consolidated financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the fiscal 2024 and 2023 consolidated financial statements taken as a whole.
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Variable Consideration Related to Customer Incentives
As described in Note 2 to the financial statements, the Company recognizes revenue net of estimates for variable consideration related to customer incentives in the form of discounts, slotting fees, coupons, rebates, in-store display incentives and volume-based incentives. The estimated portion of variable consideration at period-end amounted to $0.6 million as of January 31, 2025. Customer incentives are estimated at period-end based on historical experience and assumptions of future promotional activity.
We identified the auditing of variable consideration related to customer incentives as a critical audit matter. Specifically, variable consideration is estimated based on historical experience and assumptions of future promotional activity. Auditing these estimates involved especially challenging and subjective auditor judgment due to the level of uncertainty involved in management’s assumptions.
The primary procedures we performed to address this critical audit matter included:
Evaluating the appropriateness of the Company’s estimation methodology and testing significant inputs and assumptions used in the calculations;
Developing an expectation for estimated variable consideration and the allowance for customer incentives using sales data, historical activity of customer incentives as a percentage of revenue, and activity subsequent to period end; and
Inquiring and obtaining information from management and sales department representatives to assess historical activity and assumptions of future promotional activity.
/s/UHY LLP
We have served as the Company’s auditor since 2024.
New York, New York
April 8, 2025
Stockholders of Mama's Creations, Inc.
Opinion on the Financial Statements
We have audited, before the effects of the adjustment to retrospectively apply the change in accounting for ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures described in Notes 2 and 13, the accompanying consolidated balance sheets of Mama's Creations, Inc. (the Company) as of January 31, 2024 and 2023, and the related statements of operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended January 31, 2024, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements, before the effects of the adjustments to retrospectively apply the change in accounting for ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures described in Notes 2 and 13 (the 2024 financial statements before the effects of the adjustments discussed in Notes 2 and 13 are not presented herein), present fairly, in all material respects, the financial position of the Company as of January 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended January 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the change in accounting for ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures as described in Notes 2 and 13 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by other auditors.To the Board of Directors and
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. We determined that there are no critical audit matters.
/s/Rosenberg Rich Baker Berman, P.A.
We have served as the Company’s auditor from 2011 to 2024.
Somerset, New Jersey
April 24, 2024
Consolidated Balance Sheets
(In thousands, except share and per share data)
| January 31, 2025 | January 31, 2024 | |
|---|---|---|
| Assets: | ||
| Current Assets: | ||
| Cash and cash equivalents | $7,150 | $11,022 |
| Accounts receivable, net | 8,131 | 7,859 |
| Inventories, net | 4,817 | 3,310 |
| Prepaid expenses and other current assets | 1,779 | 1,375 |
| Total Current Assets | 21,877 | 23,566 |
| Property, plant, and equipment, net | 9,387 | 4,436 |
| Intangible assets, net | 3,436 | 4,979 |
| Goodwill | 8,633 | 8,633 |
| Operating lease right of use assets, net | 3,376 | 2,889 |
| Deferred tax asset | 258 | 503 |
| Security deposits | 95 | 95 |
| Total Assets | $47,062 | $45,101 |
| Liabilities and Stockholders’ Equity: | ||
| Liabilities: | ||
| Current Liabilities: | ||
| Accounts payable and accrued expenses | $12,052 | $12,425 |
| Term loan, net of debt discount of $22 and $38, respectively | 1,530 | 1,514 |
| Operating leases liabilities | 848 | 434 |
| Finance leases payable | 345 | 367 |
| Promissory notes – related parties | 2,250 | 1,950 |
| Total Current Liabilities | 17,025 | 16,690 |
| Line of credit | — | — |
| Term loan – net of current | 1,342 | 3,003 |
| Operating leases liability – net of current | 2,600 | 2,515 |
| Finance leases payable – net of current | 1,199 | 1,062 |
| Promissory notes – related parties, net of current | — | 2,250 |
| Total long-term liabilities | 5,141 | 8,830 |
| Total Liabilities | 22,166 | 25,520 |
| Commitments and contingencies (Note 10 and 11) | ||
| Stockholders’ Equity: | ||
| Series A Preferred stock, $0.00001 par value; 120,000 shares authorized; 23,400 issued as of January 31, 2025 and January 31, 2024, 0 shares outstanding as of January 31, 2025 and January 31, 2024 | — | — |
| Series B Preferred stock, $0.00001 par value; 200,000 shares authorized; 0 and 0 issued and outstanding as of January 31, 2025 and January 31, 2024 | — | — |
| Preferred stock, $0.00001 par value; 19,680,000 shares authorized; no shares issued and outstanding | — | — |
| Common stock, $0.00001 par value; 250,000,000 shares authorized; 37,826,000 and 37,488,000 shares issued as of January 31, 2025 and January 31, 2024, respectively, 37,596,000 and 37,258,000 shares outstanding as of January 31, 2025 and January 31, 2024, respectively | — | — |
| Additional paid-in capital | 24,882 | 23,278 |
| Retained earnings (accumulated deficit) | 164 | (3,547) |
| Less: Treasury stock, 230,000 shares at cost | (150) | (150) |
| Total Stockholders’ Equity | 24,896 | 19,581 |
| Total Liabilities and Stockholders’ Equity | $47,062 | $45,101 |
Consolidated Statements of Operations
(in thousands, except share and per share data)
| For the Years EndedJanuary 31, | |||
|---|---|---|---|
| 2025 | 2024 | 2023 | |
| Net sales | $123,328 | $103,284 | $93,188 |
| Costs of sales | 92,795 | 72,951 | 73,770 |
| Gross profit | 30,533 | 30,333 | 19,418 |
| Operating expenses: | |||
| Research and development | 455 | 414 | 135 |
| Selling, general and administrative | 25,201 | 21,029 | 16,460 |
| Total operating expenses | 25,656 | 21,443 | 16,595 |
| Income from operations | 4,877 | 8,890 | 2,823 |
| Other income (expenses) | |||
| Interest expense | (477) | (549) | (634) |
| Interest income | 218 | — | — |
| Amortization of debt discount | (16) | (22) | (22) |
| Other income | 104 | 27 | 3 |
| Total other expenses | (171) | (544) | (653) |
| Income before income tax provision and income from equity method investment | 4,706 | 8,346 | 2,170 |
| Income from equity method investment | — | 223 | 143 |
| Income tax provision | (995) | (2,008) | (9) |
| Net income | 3,711 | 6,561 | 2,304 |
| Less: series B preferred dividends | — | (49) | (34) |
| Net income available to common stockholders | 3,711 | 6,512 | 2,270 |
| Net income per common share | |||
| – basic | $0.10 | $0.18 | $0.06 |
| – diluted | $0.09 | $0.17 | $0.06 |
| Weighted average common shares outstanding | |||
| – basic | 37,427,571 | 36,814,162 | 36,093,858 |
| – diluted | 39,418,571 | 38,381,407 | 37,313,178 |
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.