SOURCE: MamaMancini's Holdings, Inc.

December 11, 2015 09:00 ET

MamaMancini's Reports Financial Results for Fiscal Third Quarter

Cash Flow From Operations Improved $1.2 Million From Prior Year

EAST RUTHERFORD, NJ--(Marketwired - Dec 11, 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 October 31, 2015.

Fiscal Third Quarter 2015 Business and Financial Highlights

  • Cash used in operating activities was ($131,000) an improvement of $1.2 million from ($1,341,000) in the prior year.
  • Net operating loss was ($358,000), an improvement of $390,000 over the prior year period.
  • Net loss of ($996,000) or ($0.04) per basic and diluted share, compared with ($774,000) or ($0.03) per basic and diluted share. The loss in the third quarter of 2015 includes a write-off of non-operating debt restructuring expense of $380,000, other non-cash charges of $92,000 and interest expense of $145,000.
  • Gross profit margin increased to 30% of sales compared to 28% in the same period last year.
  • Sales were down 14% from prior year. Prior year sales included 23% of negative margin accounts which have been eliminated. The Company foresees positive year-over-year sales growth in calendar 2016.
  • Subsequent to quarter end, on November 20, 2015, the Company completed a convertible preferred equity financing which resulted in gross proceeds of $2.23 million and $1.83 million in net proceeds. The financing which began in June, 2015, included investment by the Company's management of $1.0 million.
  • The Company does not foresee a need to issue additional equity in the near future.
  • Positive cash EBITDA (excluding stock compensation) of $25,000 for the month of October 2015.
  • The Company expects operating cash earnings (excluding non-cash expenses) to be break-even going forward.

Carl Wolf, Chief Executive Officer of MamaMancini's, commented, "Our continued focus on lowering operating expenses, pruning underperforming accounts from our portfolio and expanding our distribution footprint of high-quality retailers is resulting in positive outcomes for our business. During the third quarter, we delivered a higher gross margin and substantially decreased our operating and net losses. By adjusting our pricing, eliminating unprofitable accounts and prudently spending on sales and marketing, our new sales have improved margin profiles and are setting us on a path to achieve break-even from an operating cash flow perspective in the fall of 2015.

Mr. Wolf added, "We are committed to achieving and sustaining profitable growth by expanding our distribution footprint and increasing product placements with our retailers in order to increase our operating cash flow. Just last month we received new authorizations for distribution representing over 2,200 new product placements, in additional locations within the Safeway, Albertsons, Randalls, Associated Grocers, Whole Foods and Lowes Supermarkets retail chains at locations across the United States. We expect to place new products in each of these supermarkets by the end of January, 2016."

"Our relationship with QVC also remains strong with the expansion of our all natural products from two to seven since September 1st," concluded Mr. Wolf. "Our relationship with QVC allows us to reach into millions of households across the country in a relatively short period of time. The QVC audience responds extremely well each time Dan Mancini makes an appearance and we are encouraged by the opportunities for additional sales from this important distribution channel."

Summary Financial Results
Sales, net of slotting fees and discounts, were $3.2 million for the fiscal quarter ended October 31, 2015, a decrease of 14% from $3.8 million for the fiscal quarter ended October 31, 2014. The decrease in sales is primarily related to the Company's deliberate termination of certain unprofitable accounts, which accounted for 23% of sales in the prior year. The Company has sold into approximately 10,150 retail and grocery locations as of October 31, 2015, compared to approximately 10,500 locations at October 31, 2014.

Gross profit was $1.0 million, or 30% of sales, for the three months ended October 31, 2015 compared to $1.1 million, or 28% of sales, in the year ago period.

Net loss for the fiscal quarter ended October 31, 2015 was ($976,000), or ($0.04) per basic and diluted share, compared to a net loss of $(774,000), or ($0.03) per basic and diluted share, in the prior year.

Cash Used in Operating Activities for the three months ended October 31, 2015 was ($131,000) compared to ($1.3) million in the prior year period, an improvement of $1.2 million.

Subsequent to the end of the third quarter, on November 20, 2015 the Company completed a convertible preferred equity financing (the "Offering") which began on June 8, 2015, resulting in $1.8 million in net proceeds. The Company's management was responsible for investing $1.0 million in the Offering. With the proceeds from the Offering, and the refinancing of the Company's note with Manatuck Hill Partners, LLC, the Company does not foresee raising additional equity capital in the near future.

Conference Call
The Company will hold its quarterly earnings call on December 14, 2015 at 10:00am 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 until January 14, 2016 at 11:59PM ET. For the replay, please dial 1-877-660-6853 (domestic) or 1-201-612-7415 (international) and use access code 13626775.

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, 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, King Kullen, Food Town, Kroger, Safeway, Albertsons, Lowes, Nash Finch, Spartan Stores, Shoppers, Marsh's Supermarkets, Central Markets, Weis Markets, Ingles, and The Fresh Market.

Forward Looking Statements

This press release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may," "future," "plan" or "planned," "will" or "should," "expected," "anticipates," "draft," "eventually" or "projected." You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in the Company's 10-K for the fiscal year ended January 31, 2015 and other filings made by the Company with the Securities and Exchange Commission.

   
   
MamaMancini's Holdings, Inc.  
Condensed Consolidated Balance Sheets  
   
    October 31,     January 31,  
    2015     2015  
    (unaudited)        
Assets  
                 
Assets:                
Cash   $ 386,974     $ 854,995  
Accounts receivable, net     1,379,444       2,233,211  
Inventories     324,871       301,170  
Prepaid expenses     144,939       107,242  
Deposit on property and equipment     -       -  
Due from related party     -       -  
Due from manufacturer - related party     2,099,785       2,213,037  
Deposit with manufacturer - related party     -       -  
Deferred offering costs     10,021       -  
Total current assets     4,346,034       5,709,655  
                 
Property and equipment, net     1,118,885       1,124,745  
                 
Debt issuance costs, net     40,286       101,197  
Total Assets   $ 5,505,205     $ 6,935,597  
                 
Liabilities and Stockholders' Equity (Deficit)  
                 
Liabilities:                
Accounts payable and accrued expenses   $ 924,869     $ 1,216,436  
Line of credit     1,077,299       1,409,098  
Term loan     120,000       120,000  
Promissory note     139,559       -  
Total current liabilities     2,261,727       2,745,534  
                 
Term loan - net of current     350,000       440,000  
Promissory note - net of current portion     219,273       -  
Notes payable - related party     125,000       -  
Convertible note payable - net of current portion and debt discount     2,540,000       1,587,447  
Total long-term liabilities     3,234,273       2,027,447  
                 
Total Liabilities     5,496,000       4,772,981  
                 
Commitments and contingencies                
                 
Stockholders' Equity (Deficit)                
Series A Preferred stock, $0.00001 par value; 120,000 shares authorized; 12,100 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; 26,151,533 and 26,047,376 shares issued and outstanding, respectively    
263
     
260
 
Additional paid in capital     13,863,545       12,766,116  
Common stock subscribed, $0.00001 par value; 66,667 and 66,667 shares, respectively     1       1  
Accumulated deficit     (13,705,104 )     (10,603,761 )
                 
Less: Treasury stock, 230,000 and 0 shares, respectively     (149,500 )     -  
Total Stockholders' Equity (Deficit)     9,205       2,162,616  
                 
Total Liabilities and Stockholders' Equity (Deficit)   $ 5,505,205     $ 6,935,597  
                 
                 
See accompanying notes to the condensed consolidated financial statements  
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MamaMancini's Holdings, Inc.  
Condensed Consolidated Statements of Operations  
                         
    For the Three Months Ended     For the Nine Months Ended  
    October 31, 2015     October 31, 2014     October 31, 2015     October 31, 2014  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
                                 
                                 
Sales - net of slotting fees and discounts   $ 3,237,780     $ 3,759,698     $ 9,330,259     $ 8,592,615  
                                 
Cost of sales     2,255,649       2,705,436       6,754,980       6,076,565  
                                 
Gross profit     982,131       1,054,262       2,575,279       2,516,050  
                                 
Operating expenses                                
  Research and development     33,877       28,967       77,435       71,959  
  General and administrative expenses     1,306,413       1,773,678       4,480,159       4,643,417  
    Total operating expenses     1,340,290       1,802,645       4,557,594       4,715,376  
                                 
Loss from operations     (358,159 )     (748,383 )     (1,982,315 )     (2,199,326 )
                                 
Other expenses                                
  Interest expense     (145,252 )     (25,426 )     (393,314 )     (68,770 )
  Amortization of debt discount     (79,400 )     -       (261,670 )     -  
  Amortization of closing costs     (12,622 )     -       (52,996 )     -  
  Loss on debt extinguishment     (380,089 )     -       (380,089 )     -  
    Total other expenses     (617,363 )     (25,426 )     (1,088,069 )     (68,770 )
                                 
Net loss     (975,522 )     (773,809 )     (3,070,384 )     (2,268,096 )
                                 
Less: preferred dividends     (20,000 )     -       (30,959 )     -  
                                 
Net loss available to common stockholders   $ (995,522 )   $ (773,809 )   $ (3,101,343 )   $ (2,268,096 )
                                 
Net loss per common share - basic and diluted   $ (0.04 )   $ (0.03 )   $ (0.12 )   $ (0.09 )
                                 
Weighted average common shares outstanding -basic and diluted    
26,147,207
     
25,815,200
     
26,096,965
     
25,331,766
 
                                 
See accompanying notes to the condensed consolidated financial statements  
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MamaMancini's Holdings, Inc.  
Condensed Consolidated Statements of Cash Flows  
             
    For the Nine Months Ended  
    October 31, 2015     October 31, 2014  
                 
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss   $ (3,070,384 )   $ (2,268,096 )
  Adjustments to reconcile net loss to net cash used in operating activities:                
    Depreciation     209,884       101,541  
    Amortization of debt issuance costs     52,996       107,088  
    Amortization of debt discount     261,670       -  
    Share-based compensation     114,504       264,347  
    Loss on extinguishment of debt     380,089       -  
Changes in operating assets and liabilities:                
(Increase) Decrease in:                
  Accounts receivable     853,767       (1,282,651 )
  Inventories     (23,701 )     (53,626 )
  Prepaid expenses     (37,697 )     (67,632 )
  Due from manufacturer - related party     113,252       (635,152 )
Increase (Decrease) in:                
  Accounts payable and accrued expenses     256,306       103,205  
    Net Cash Used In Operating Activities     (889,314 )     (3,730,976 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Cash paid for fixed assets     (204,024 )     (264,670 )
    Net Cash Used In Investing Activities     (204,024 )     (264,670 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from issuance of preferred stock     560,000       -  
Proceeds from issuance of common stock     -       1,180,003  
Proceeds from common stock subscribed     -       100,000  
Stock issuance costs     (266,672 )     (149,213 )
Deferred offering costs     (10,021 )        
Proceeds from demand notes     650,000       -  
Proceeds from notes payable - related party     125,000       -  
Debt issuance costs     (11,191 )     (29,984 )
Borrowings (repayment) of line of credit, net     (331,799 )     979,275  
Borrowings from term loan     -       600,000  
Repayment of term loan     (90,000 )     (10,000 )
    Net Cash Provided By Financing Activities     625,317       2,670,081  
                 
Net Decrease in Cash     (468,021 )     (1,325,565 )
                 
Cash - Beginning of Period     854,995       1,541,640  
                 
Cash - End of Period   $ 386,974     $ 216,075  
                 
SUPPLEMENTARY CASH FLOW INFORMATION:                
Cash Paid During the Period for:                
  Income taxes   $ -     $ -  
  Interest   $ 363,647     $ 43,344  
                 
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:                
                 
Stock issuance costs paid in the form of warrants   $ 84,547     $ 171,981  
Conversion of demand notes to preferred stock   $ 650,000     $ -  
Stock issued for debt discount on convertible note   $ 39,600     $ -  
Accrued dividends   $ 30,959     $ -  
Repurchase of common stock amendment of convertible note   $ 149,500     $ -  
Accrued interest reclassified to principal balance of convertible note   $ 220,000     $ -  
Promissory note issued for accounts payable   $ 358,832     $ -  
Deferred offering costs in accounts payable   $ -     $ 5,400  
Debt issuance costs in accounts payable   $ -     $ 13,337  
                 
                 
See accompanying notes to the condensed consolidated financial statements  
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