MamaMancini's Holdings, Inc.

On March 1, 2021, the Company amended its existing lease with the landlord for a new premise with a greater square footage. Upon cancellation of the existing lease, the Company wrote-off the net right of use asset and corresponding lease liability of $22,870. The Company recorded a right of use asset and related liability of $347,585 for the new space which will be occupied over a 60-month period.

On December 7, 2020, the Company experienced a fire at its plant in a spiral oven. The spiral oven was rebuilt and was fully put back into service in late February 2021. The estimated loss is approximately $656,700 which includes loss of business, the rebuild of the spiral oven, additional expenses to clean plant and lost material and packaging. During the three months ended April 30, 2021, the Company received $67,426 relating to business interruption insurance which was recorded as a component of costs of sales on the condensed consolidated statement of income. The Company received the remaining amount of proceeds for the property damage claim, resulting in other income of $91,312. This amount was offset by repairs and maintenance expense of $12,475 as well as the costs of additions and parts of the oven and roof totaling $47,669. The insurance claim remains open in order for the Company to review for additional business income losses.

For the three months ended April 30, 2021 and 2020, the Company reported a net income of $631,524 and $906,202, respectively. The change in net income between the three months ended April 30, 2021 and 2020 was mainly the result of a decrease in gross profit of $117,269 (discussed below) and the income tax provision of $247,949 recorded during the three months ended April 30, 2021 compared to $0 during the three months ended April 30, 2020.

Other Income (Expenses): Other income (expenses) increased by $97,026 to income of $27,274 for the three months ended April 30, 2021 as compared to expenses of $(69,752) during the three months ended April 30, 2020. For the three months ended April 30, 2021, other income (expenses) consisted of $(10,430) in interest expense incurred on the Company’s financing arrangements which was offset by the net insurance proceeds relating to the property damage claim of $37,704. For three months ended April 30, 2020, other expenses consisted of $(64,402) in interest expense incurred on the Company’s financing arrangements. In addition, the Company recorded $(5,350) of amortization expense related to the debt discount.

Net cash used in all financing activities for the three months ended April 30, 2021 was $27,578 as compared to $330,296 provided for the three months ended April 30, 2020. During the three months ended April 30, 2021, the Company received proceeds of $19,080 from the exercise of options. These cash in-flows were offset by payments of $46,658 paid for finance lease payments. During the three months ended April 30, 2020, the Company received proceeds of $330,505 from the Paycheck Protection Program promissory note and the Company’s net borrowings on its line of credit increased by $150,000 over the prior year comparable period. The Company returned the $330,505 received from the Paycheck Protection Program in May 2020. These cash in-flows were offset by payments on its term loan of $125,001 and $25,208 paid for capital lease payments.