SOURCE: MamaMancini's Holdings, Inc.

September 14, 2015 09:00 ET

MamaMancini's Reports Financial Results for Fiscal Second Quarter

Sales Increased 22% to $2.7 Million; Cash Flow From Operations Improved $754,000 From Prior Year

EAST RUTHERFORD, NJ--(Marketwired - Sep 14, 2015) - MamaMancini's Holdings, Inc. (the "Company" or "MamaMancini's") (OTCQB: MMMB), a marketer of specialty pre-prepared, frozen and refrigerated all natural food products (as defined by the United States Department of Agriculture), today announced its financial results for the three months ended July 31, 2015.

Business and Financial Highlights

  • Sales increased 22% compared to fiscal second quarter 2015, net of an approximate 10% decrease in sales from termination of underperforming accounts
  • Cash Flow from Operating Activities was ($427,000) an improvement of$754,000 from prior year
  • Net loss for the fiscal quarter ended July 31, 2015 was $(1,011,000), or $(0.04) per basic and diluted share
  • Successfully launched products on QVC, the world's leading video and e-commerce retailer, selling out of meatballs in consecutive appearances
  • Hired executive chef Christopher Styler to develop new products and expand offerings for QVC
  • Signed agreements with major new accounts including but not limited to select Northeast locations in Costco Wholesales' international chain of membership warehouses
  • Outlook of operating cash flow break-even in the fall of 2015

Carl Wolf, Chief Executive Officer of MamaMancini's, commented, "Our solid, double-digit revenue growth is the direct result of our efforts to add new accounts, expand our product line and grow our average revenue per client by increasing the number of locations we serve. At the same time, our improved brand recognition is enabling us to shift to a more selective approach, focusing efforts on accounts with higher growth potential and higher margins and terminating certain lower margin agreements. Our recent launch with QVC, the introduction of our Jumbo Meatball at Costco warehouses, and entrance into the prepared food sections of retailers and food service accounts are helping expand our reach into larger markets."

Mr. Wolf added, "We are executing on our growth strategy and pruning our portfolio of underperforming accounts in order to efficiently increase our operating cash flow. By focusing on high-quality accounts such as QVC we are positioning the company for improving financial results."

Summary Financial Results
Sales, net of slotting fees and discounts, were $2.7 million for the fiscal quarter ended July 31, 2015, an increase of 22% from $2.2 million for the fiscal quarter ended July 31, 2014. The increase in sales is primarily related to the Company's execution of its expansion strategy. The Company has sold into approximately 10,500 retail and grocery locations as of July 31, 2015, compared to approximately 8,600 locations at July 31, 2014.

Gross profit was $648,000, or 23.7% of sales for the three months ended July 31, 2015 compared to $659,000, or 29.3% of sales in the year ago period. Gross profit for 2015 includes charges for changeover to new product sizes and disposition of obsolete inventory and under utilization of production facilities. The summer season is a lower demand period for prepared meatballs and The Company elected to work inventories lower as well. Gross Profit adjusted for the charges described in this paragraph would have been 31%. The Company expects that plant utilization and gross profit will run at higher rates for the rest of the fiscal year.

Net loss for the fiscal quarter ended July 31, 2015 was $(1,011,000), or $(0.04) per basic and diluted share, compared to a net loss of $(793,000), or $(0.03) per basic and diluted share, in the prior year. The change in net loss was mainly attributable to a $57,000 one-time legal charge for non-operating financing activities, and an increase in non-operating expenses of $211,000, consisting of debt fees, debt discount amortization and interest expense to support the Company's growth efforts. Please refer to the Company's 10Q for the quarter ending July 31, 2015, which was filed on September 14, 2015, for more detailed information on the Company's balance sheet, operations and cash flow.

Cash Used in Operating Activities for the three months ended July 31, 2015 was ($427,000) compared to ($1.18) million in the prior year period, an improvement of $754,000. This includes cash expenses of $245,000 related to inventory write-downs, under utilized production facilities, liquidation sales and promotions related to the transition to new packaging and termination of underperforming accounts, and one time legal fees in relations to non-operating financing activities.

Since August 31, 2015 through September 11, 2015, the Company completed the closing of an additional $185,000 of its private placement offering of convertible preferred stock.

Conference Call
The Company will hold its quarterly earnings call on September 16, 2015 at 8:30a.m. ET. Interested parties may participate in the call by dialing 1-877-407-9124 (domestic) or 1-201-689-8584 (international) 5-10 minutes prior to the start time. The conference call will be available for replay starting at 12 p.m. EDT on September 16, 2015 and ending on October 16, 2015 at 11:59 p.m. EDT. For the replay, please dial 1-877-660-6853 (domestic) or 1-201-612-7415 (international) and use access code 13611395

About MamaMancini's
MamaMancini's is a marketer and distributor of a line of beef meatballs with sauce, turkey meatballs with sauce, chicken meatballs with sauce, pork meatballs with sauce, and other similar Italian products. The Company's sales have been growing on a consistent basis as the Company expands its distribution channel, which includes major retailers such as Costco, Publix, Shop Rite, Price Chopper, A&P, Waldbaums, Food Emporium, Harris Teeter, SaveMarts, Luckys, Lunds/Byerly's, SuperValu, Raley's, BJ's, Whole Foods, Shaw's Supermarkets, Kings, Key Foods, Stop-n-Shop, Giant Stores, Giant Eagle, Food Town, Kroger, Winn Dixie Shoppers, Marsh's Supermarkets, Bi-Lo, Central Markets, Weis Markets, Ingles, and The Fresh Market.

   
Financial Tables Follow  
   
MamaMancini's Holdings, Inc.  
Condensed Consolidated Balance Sheets  
   
    July 31,     January 31,  
    2015     2015  
    (unaudited)        
Assets  
                 
Assets:                
Cash   $ 396,936     $ 854,995  
Accounts receivable, net     1,216,347       2,233,211  
Inventories     330,259       301,170  
Prepaid expenses     128,891       107,242  
Due from manufacturer - related party     2,202,127       2,213,037  
Deferred offering costs     19,021       -  
Total current assets     4,293,581       5,709,655  
                 
Property and equipment, net     1,087,843       1,124,745  
                 
Debt issuance costs, net     67,014       101,197  
Total Assets   $ 5,448,438     $ 6,935,597  
                 
Liabilities and Stockholders' Equity  
                 
Liabilities:                
Accounts payable and accrued expenses   $ 1,169,173     $ 1,216,436  
Liabilities to be settled in stock     49,347       -  
Line of credit     1,051,162       1,409,098  
Term loan     120,000       120,000  
Convertible note payable - net of debt discount     1,730,117       -  
Total current liabilities     4,119,799       2,745,534  
                 
Term loan - net of current     380,000       440,000  
Convertible note payable - net of current portion and debt discount     -       1,587,447  
Total long-term liabilities     380,000       2,027,447  
                 
Total Liabilities     4,499,799       4,772,981  
                 
Commitments and contingencies                
                 
Stockholders' Equity                
Series A Preferred stock, $0.00001 par value; 120,000 shares authorized; 10,000 and 0 shares issued and outstanding, respectively    
-
     
-
 
Preferred stock, $0.00001 par value; 20,000,000 shares authorized; no shares issued and outstanding    
-
     
-
 
Common stock, $0.00001 par value; 250,000,000 shares authorized; 26,085,916 and 26,047,376 shares issued and outstanding, respectively    
260
     
260
 
Additional paid in capital     13,657,960       12,766,116  
Common stock subscribed, $0.00001 par value; 66,667 and 66,667 shares, respectively     1       1  
Accumulated deficit     (12,709,582 )     (10,603,761 )
Total Stockholders' Equity     948,639       2,162,616  
                 
Total Liabilities and Stockholders' Equity   $ 5,448,438     $ 6,935,597  
                 
   
MamaMancini's Holdings, Inc.  
Condensed Consolidated Statements of Operations  
                                 
      For the Three Months Ended       For the Six Months Ended  
      July 31, 2015       July 31, 2014       July 31, 2015       July 31, 2014  
      (unaudited)       (unaudited)       (unaudited)       (unaudited)  
                                         
                                         
Sales - net of slotting fees and discounts     $ 2,739,200       $ 2,249,768       $ 6,092,479       $ 4,832,917  
                                         
Cost of sales       2,091,032         1,590,904         4,499,331         3,371,129  
                                         
Gross profit       648,168         658,864         1,593,148         1,461,788  
                                         
Operating expenses                                        
  Research and development       20,479         24,091         43,558         42,992  
  General and administrative expenses       1,390,625         1,401,461         3,173,746         2,869,739  
    Total operating expenses       1,411,104         1,425,552         3,217,304         2,912,731  
                                         
Loss from operations       (762,936 )       (766,688 )       (1,624,156 )       (1,450,943 )
                                         
Other expenses                                        
  Interest expense       (124,705 )       (26,710 )       (248,062 )       (43,344 )
  Amortization of debt discount       (83,437 )       -         (182,270 )       -  
    Total other expenses       (237,370 )       (26,710 )       (470,706 )       (43,344 )
                                         
Net loss       (1,000,306 )       (793,398 )       (2,094,862 )       (1,494,287 )
                                         
Less: preferred dividends       (10,959 )       -         (10,959 )       -  
                                         
Net loss available to common stockholders     $ (1,011,265 )     $ (793,398 )     $ (2,105,821 )     $ (1,494,287 )
                                         
Net loss per common share - basic and diluted     $ (0.04 )     $ (0.03 )     $ (0.08 )     $ (0.06 )
                                         
Weighted average common shares outstanding                                        
  -basic and diluted       26,085,916         25,452,943         26,071,767         25,091,224  
                                         
   
MamaMancini's Holdings, Inc.  
Condensed Consolidated Statements of Cash Flows  
             
    For the Six Months Ended  
    July 31, 2015     July 31, 2014  
                 
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss   $ (2,094,862 )   $ (1,494,287 )
  Adjustments to reconcile net loss to net cash used in operating activities:                
    Depreciation     137,585       59,473  
    Amortization of debt issuance costs     40,374       8,431  
    Amortization of debt discount     182,270       -  
    Share-based compensation     3,055       176,100  
Changes in operating assets and liabilities:                
  (Increase) Decrease in:                
  Accounts receivable     1,016,864       (24,540 )
  Inventories     (29,089 )     (309,329 )
  Prepaid expenses     (21,649 )     (41,104 )
  Due from manufacturer - related party     10,910       (587,368 )
Increase (Decrease) in:                
  Accounts payable and accrued expenses     (58,222 )     (177,444 )
  Liabilities to be settled in stock     49,347       -  
    Net Cash Used In Operating Activities     (763,417 )     (2,390,068 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Cash paid for fixed assets     (100,683 )     (223,741 )
    Net Cash Used In Investing Activities     (100,683 )     (223,741 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from issuance of preferred stock     350,000       -  
Proceeds from issuance of common stock     -       1,180,003  
Stock issuance costs     (150,811 )     (149,213 )
Deferred offering costs     (19,021 )     -  
Proceeds from demand notes     650,000       -  
Proceeds from common stock subscribed     -       100,000  
Debt issuance costs     (6,191 )     (14,484 )
Borrowings (repayment) of line of credit, net     (357,936 )     70,637  
Repayment of term loan     (60,000 )     -  
    Net Cash Provided By Financing Activities     406,041       1,186,943  
                 
Net Decrease in Cash     (458,059 )     (1,426,866 )
                 
Cash - Beginning of Period     854,995       1,541,640  
                 
Cash - End of Period   $ 396,936     $ 114,774  
                 
SUPPLEMENTARY CASH FLOW INFORMATION:                
Cash Paid During the Period for:                
  Income taxes   $ -     $ -  
  Interest   $ 223,062     $ 43,344  
                 
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:                
                 
Stock issuance costs paid in the form of warrants   $ 76,608     $ 171,981  
Conversion of notes to preferred stock   $ 650,000     $ -  
Stock issued for debt discount on convertible note   $ 39,600     $ -  
Accrued dividends   $ 10,959     $ -  
                 

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