Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 31, 2020 | Sep. 11, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | MamaMancini's Holdings, Inc. | |
Entity Central Index Key | 0001520358 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 33,717,101 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jul. 31, 2020 | Jan. 31, 2020 |
Current Assets: | ||
Cash | $ 1,698,586 | $ 393,683 |
Accounts receivable, net | 2,793,527 | 3,727,887 |
Inventories | 1,758,761 | 1,246,417 |
Prepaid expenses | 256,634 | 252,268 |
Total current assets | 6,507,508 | 5,620,255 |
Property and equipment, net | 3,077,439 | 2,805,843 |
Operating lease right of use assets, net | 1,422,687 | 1,490,794 |
Deposits | 20,177 | 20,177 |
Total Assets | 11,027,811 | 9,937,069 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 2,570,473 | 3,552,790 |
Term loan | 184,497 | 423,799 |
Operating lease liability | 136,976 | 126,516 |
Finance leases payable | 184,570 | 105,126 |
Total current liabilities | 3,076,516 | 4,208,231 |
Line of credit - net | 2,497,348 | 2,997,348 |
Operating lease liability - net | 1,298,625 | 1,372,349 |
Finance leases payable - net | 573,012 | 315,234 |
Notes payable - related party | 641,844 | |
Total long-term liabilities | 4,368,985 | 5,326,775 |
Total Liabilities | 7,445,501 | 9,535,006 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Preferred stock | ||
Common stock, $0.00001 par value; 250,000,000 shares authorized; 33,517,101 and 31,991,241 shares issued and outstanding as of July 31, 2020 and January 31, 2020 | 336 | 321 |
Additional paid in capital | 18,229,615 | 16,695,352 |
Accumulated deficit | (14,498,141) | (16,144,110) |
Less: Treasury stock, 230,000 shares at cost, respectively | (149,500) | (149,500) |
Total Stockholders' Equity | 3,582,310 | 402,063 |
Total Liabilities and Stockholders' Equity | 11,027,811 | 9,937,069 |
Series A Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Preferred stock |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jul. 31, 2020 | Jan. 31, 2020 |
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 19,880,000 | 19,880,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 33,517,101 | 31,991,241 |
Common stock, shares outstanding | 33,517,101 | 31,991,241 |
Treasury stock, shares | 230,000 | 230,000 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 120,000 | 120,000 |
Preferred stock, shares issued | 23,400 | 23,400 |
Preferred stock, shares outstanding | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Income Statement [Abstract] | ||||
Sales-net of slotting fees and discounts | $ 10,384,484 | $ 8,099,445 | $ 21,485,403 | $ 15,464,269 |
Costs of sales | 7,170,403 | 5,408,049 | 14,543,722 | 10,401,819 |
Gross profit | 3,214,081 | 2,691,396 | 6,941,681 | 5,062,450 |
Operating expenses: | ||||
Research and development | 25,857 | 24,509 | 55,338 | 49,835 |
General and administrative | 2,381,459 | 2,215,945 | 5,103,624 | 4,082,107 |
Total operating expenses | 2,407,316 | 2,240,454 | 5,158,962 | 4,131,942 |
Income from operations | 806,765 | 450,942 | 1,782,719 | 930,508 |
Other expenses | ||||
Interest | (61,648) | (87,284) | (126,050) | (203,896) |
Amortization of debt discount | (5,350) | (5,350) | (10,700) | (12,638) |
Total other expenses | (66,998) | (92,634) | (136,750) | (216,534) |
Net income before income tax provision | 739,767 | 358,308 | 1,645,969 | 713,974 |
Income tax provision | ||||
Net income | $ 739,767 | $ 358,308 | $ 1,645,969 | $ 713,974 |
Net income per common share - basic | $ 0.02 | $ 0.01 | $ 0.05 | $ 0.02 |
Net income per common share - diluted | $ 0.02 | $ 0.01 | $ 0.05 | $ 0.02 |
Weighted average common shares outstanding - basic | 32,262,375 | 31,947,763 | 32,128,298 | 31,907,676 |
Weighted average common shares outstanding - diluted | 33,543,565 | 31,981,806 | 33,409,488 | 34,941,719 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited) - USD ($) | Series A Preferred Stock [Member] | Common Stock [Member] | Treasury Stock [Member] | Additional Paid In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Jan. 31, 2019 | $ 320 | $ (149,500) | $ 16,547,287 | $ (17,580,255) | $ (1,182,148) | |
Balance, shares at Jan. 31, 2019 | 31,866,241 | (230,000) | ||||
Stock options issued for services | 23,098 | 23,098 | ||||
Common stock issued for services | $ 1 | 71,874 | 71,875 | |||
Common stock issued for services, shares | 125,000 | |||||
Net income | 713,974 | 713,974 | ||||
Balance at Jul. 31, 2019 | $ 321 | $ (149,500) | 16,642,259 | (16,866,281) | (373,201) | |
Balance, shares at Jul. 31, 2019 | 31,991,241 | (230,000) | ||||
Balance at Apr. 30, 2019 | $ 320 | $ (149,500) | 16,564,544 | (17,224,589) | (809,225) | |
Balance, shares at Apr. 30, 2019 | 31,866,241 | (230,000) | ||||
Stock options issued for services | 5,841 | 5,841 | ||||
Common stock issued for services | $ 1 | 71,874 | 71,875 | |||
Common stock issued for services, shares | 125,000 | |||||
Net income | 358,308 | 358,308 | ||||
Balance at Jul. 31, 2019 | $ 321 | $ (149,500) | 16,642,259 | (16,866,281) | (373,201) | |
Balance, shares at Jul. 31, 2019 | 31,991,241 | (230,000) | ||||
Balance at Jan. 31, 2020 | $ 321 | $ (149,500) | 16,695,352 | (16,144,110) | 402,063 | |
Balance, shares at Jan. 31, 2020 | 31,991,241 | (230,000) | ||||
Stock options issued for services | 49,975 | 49,975 | ||||
Common stock issued for exercise of options | 7,200 | 7,200 | ||||
Common stock issued for exercise of options, shares | 12,000 | |||||
Common stock issued for exercise of warrants | $ 15 | 1,477,088 | 1,477,103 | |||
Common stock issued for exercise of warrants, shares | 1,513,860 | |||||
Net income | 1,645,969 | 1,645,969 | ||||
Balance at Jul. 31, 2020 | $ 336 | $ (149,500) | 18,229,615 | (14,498,141) | 3,582,310 | |
Balance, shares at Jul. 31, 2020 | 33,517,101 | (230,000) | ||||
Balance at Apr. 30, 2020 | $ 321 | $ (149,500) | 16,722,457 | (15,237,908) | 1,335,370 | |
Balance, shares at Apr. 30, 2020 | 31,991,241 | (230,000) | ||||
Stock options issued for services | 22,870 | 22,870 | ||||
Common stock issued for exercise of options | 7,200 | 7,200 | ||||
Common stock issued for exercise of options, shares | 12,000 | |||||
Common stock issued for exercise of warrants | $ 15 | 1,477,088 | 1,477,103 | |||
Common stock issued for exercise of warrants, shares | 1,513,860 | |||||
Net income | 739,767 | 739,767 | ||||
Balance at Jul. 31, 2020 | $ 336 | $ (149,500) | $ 18,229,615 | $ (14,498,141) | $ 3,582,310 | |
Balance, shares at Jul. 31, 2020 | 33,517,101 | (230,000) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 1,645,969 | $ 713,974 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 319,078 | 370,052 |
Amortization of debt discount | 10,700 | 12,638 |
Share-based compensation | 49,975 | 29,943 |
Amortization of right of use assets | 68,107 | 42,958 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 934,360 | (12,770) |
Inventories | (512,344) | (68,524) |
Prepaid expenses | (4,366) | (159,239) |
Accounts payable and accrued expenses | (982,317) | 3,503 |
Operating lease liability | (63,264) | (42,958) |
Net Cash Provided by Operating Activities | 1,465,898 | 889,577 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Cash paid for fixed assets | (189,287) | (89,525) |
Net Cash Used in Investing Activities | (189,287) | (89,525) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayment of term loan | (250,002) | (808,335) |
Repayments of related party notes payable | (641,844) | |
Proceeds from promissory note | 330,505 | |
Repayment of promissory note | (330,505) | |
Borrowings (repayments) of line of credit, net | (500,000) | 65,314 |
Repayment of capital lease obligations | (64,165) | (31,213) |
Proceeds from exercise of options | 7,200 | |
Proceeds from exercise of warrants | 1,477,103 | |
Net Cash Provided by (Used in) Financing Activities | 28,292 | (774,234) |
Net Increase in Cash | 1,304,903 | 25,818 |
Cash - Beginning of Period | 393,683 | 609,409 |
Cash - End of Period | 1,698,586 | 635,227 |
SUPPLEMENTARY CASH FLOW INFORMATION: | ||
Income taxes | ||
Interest | 128,913 | 253,763 |
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Operating lease liability | 1,599,830 | |
Finance lease asset additions | 401,387 | 254,166 |
Common stock issued for services to be rendered | $ 71,875 |
Nature of Operations and Basis
Nature of Operations and Basis of Presentation | 6 Months Ended |
Jul. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations and Basis of Presentation | Note 1 - Nature of Operations and Basis of Presentation Nature of Operations MamaMancini’s Holdings, Inc. (the “Company”), (formerly known as Mascot Properties, Inc.) was organized on July 22, 2009 as a Nevada corporation. The Company has a year-end of January 31. The Company is a manufacturer and distributor of beef meatballs with sauce, turkey meatballs with sauce, beef meat loaf, chicken parmesan and other similar meats and sauces. In addition, the Company continues to diversify its product line by introducing new products such as ready to serve dinners, single-size Pasta Bowls, bulk deli, packaged refrigerated and frozen products. The Company’s products were submitted to the United States Department of Agriculture (the “USDA”) and approved as all natural. The USDA defines all natural as a product that contains no artificial ingredients, coloring ingredients or chemical preservatives and is minimally processed. The Company’s customers are located throughout the United States, with large concentrations in the Northeast and Southeast. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jul. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Basis of Presentation The condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“ US GAAP The unaudited financial information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the opinion of management are necessary to fairly state the financial position of the Company and the results of its operations for the periods presented. This report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended January 31, 2020 filed on April 23, 2020. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The condensed consolidated balance sheet at January 31, 2020 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the interim periods presented are not necessarily indicative of results for the year ending January 31, 2021. Principles of Consolidation The condensed consolidated financial statements include all accounts of the entities as of the reporting period ending date(s) and for the reporting period(s). All inter-company balances and transactions have been eliminated. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following: allowance for doubtful accounts, inventory obsolescence and the fair value of share-based payments. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates. Risks and Uncertainties The Company operates in an industry that is subject to intense competition and change in consumer demand. The Company’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. The Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the grocery industry, (ii) general economic conditions in the various local markets in which the Company competes, including a potential general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project the Company’s operating results on a consistent basis. Cash The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company held no cash equivalents at July 31, 2020 and January 31, 2020. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company generally does not require collateral to support customer receivables. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. As of July 31, 2020 and January 31, 2020, the Company had reserves of $2,000. Inventories Inventories are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) valuation method. Inventory was comprised of the following at July 31, 2020 and January 31, 2020: July 31, 2020 January 31, 2020 Raw Materials $ 714,172 $ 893,204 Work in Process 180,360 37,764 Finished goods 864,229 315,449 $ 1,758,761 $ 1,246,417 Property and Equipment Property and equipment are recorded at cost net of depreciation. Depreciation expense is computed using straight-line methods over the estimated useful lives. Asset lives for financial statement reporting of depreciation are: Machinery and equipment 2-7 years Furniture and fixtures 3 years Leasehold improvements * (*) Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever period is shorter. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations. Leases In February 2016, the FASB issued ASU 2016-02 “ Leases” On February 1, 2019, the Company adopted ASC 842 using the modified retrospective approach and recognized a right of use (“ROU”) asset and liability in the consolidated balance sheet in the amount of $1,599,830 related to the operating lease for office and warehouse space. As part of the adoption the Company elected the practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to: 1. Not separate non-lease components from lease components and instead to account for each separate lease component and the non-lease components associated with that lease component as a single lease component. 2. Not to apply the recognition requirements in ASC 842 to short-term leases. 3. Not record a right of use asset or right of use liability for leases with an asset or liability balance that would be considered immaterial. Fair Value of Financial Instruments For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Company’s short-term financial instruments approximates fair value due to the relatively short period to maturity for these instruments. Research and Development Research and development is expensed as incurred. Research and development expenses for the three months ended July 31, 2020 and 2019 were $25,857 and $24,509, respectively. Research and development expenses for the six months ended July 31, 2020 and 2019 were $55,338 and $49,835, respectively. Shipping and Handling Costs The Company classifies freight billed to customers as sales revenue and the related freight costs as general and administrative expenses. Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition Revenue from Contracts with Customers (Topic 606)—Narrow-Scope Improvements and Practical Expedients The Company adopted this guidance and related amendments as of the first quarter of fiscal 2019, applying the full retrospective transition method. As the underlying principles of the new standard, relating to the measurement of revenue and the timing of recognition, are closely aligned with the Company’s current business model and practices, the adoption of ASU 2014-09 did not have a material impact on the consolidated financial statements. In addition, the adoption of ASC 606 did not impact the previously reported financial statements in any prior period nor did it result in a cumulative effect adjustment to retained earnings. The Company’s sales predominantly are generated from the sale of finished products to customers, contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, this occurs when the goods are shipped to the customer. Revenues are recognized in an amount that reflects the net consideration the Company expects to receive in exchange for the goods. The Company reports all amounts billed to a customer in a sale transaction as revenue. Under the new revenue guidance, the Company elected to treat shipping and handling activities as fulfillment activities, and the related costs are recorded as selling expenses in general and administrative expenses on the consolidated statement of operations. The Company promotes its products with advertising, consumer incentives and trade promotions. These programs include discounts, slotting fees, coupons, rebates, in-store display incentives and volume-based incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to the transaction price based on amounts estimated as being due to customers and consumers at the end of a period. The Company derives these estimates principally on historical utilization and redemption rates. The Company does not receive a distinct service in relation to the advertising, consumer incentives and trade promotions. Payment terms in the Company’s invoices are based on the billing schedule established in contracts and purchase orders with customers. The Company generally recognizes the related trade receivable when the goods are shipped. Expenses such as slotting fees, sales discounts, and allowances are accounted for as a direct reduction of revenues as follows: For the Six Months Ended July 31, 2020 July 31, 2019 Gross Sales $ 21,816,491 $ 15,658,081 Less: Slotting, Discounts, Allowances 331,088 193,812 Net Sales $ 21,485,403 $ 15,464,269 Disaggregation of Revenue from Contracts with Customers. For the Six Months Ended July 31, 2020 July 31, 2019 Northeast $ 6,257,552 $ 5,032,954 Southeast 6,642,906 4,046,018 Midwest 2,937,245 1,981,774 West 3,412,840 2,713,142 Southwest 2,565,948 1,909,692 Total revenue $ 21,816,491 $ 15,658,081 Cost of Sales Cost of sales represents costs directly related to the production and manufacturing of the Company’s products. Costs include product development, freight-in, packaging, and print production costs. Advertising Costs incurred for producing and communicating advertising for the Company are charged to operations as incurred. Producing and communicating advertising expenses for the three months ended July 31, 2020 and 2019 were $288,152 and $413,973, respectively. Producing and communicating advertising expenses for the six months ended July 31, 2020 and 2019 were $670,100 and $756,795, respectively. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC Topic 718, “ Compensation – Stock Compensation” “ASC 718” The Company recognizes all forms of share-based payments, including stock option grants, warrants and restricted stock grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest. Share-based payments, excluding restricted stock, are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. Stock-based compensation expenses are included in cost of goods sold or selling, general and administrative expenses, depending on the nature of the services provided, in the condensed consolidated statement of operations. Share-based payments issued to placement agents are classified as a direct cost of a stock offering and are recorded as a reduction in additional paid in capital. For the three months ended July 31, 2020 and 2019, share-based compensation amounted to $22,870 and $12,686, respectively. For the six months ended July 31, 2020 and 2019, share-based compensation amounted to $49,975 and $29,943, respectively. For the six months ended July 31, 2020 and 2019, when computing fair value of share-based payments, the Company has considered the following variables: July 31, 2020 July 31, 2019 Risk-free interest rate 0.37 % 1.84 - 2.29 % Expected life of grants 3.5 years 3 - 3.5 years Expected volatility of underlying stock 125 % 129 - 150 % Dividends 0 % 0 % The expected option term is computed using the “simplified” method as permitted under the provisions of ASC 718-10-S99. The Company uses the simplified method to calculate expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The expected stock price volatility for the Company’s stock options was estimated using the historical volatilities of the Company’s common stock. Risk free interest rates were obtained from U.S. Treasury rates for the applicable periods. Earnings (Loss) Per Share Earnings per share (“EPS”) is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to Section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share. For the Three Months Ended July 31, 2020 July 31, 2019 Numerator: Net income attributable to common stockholders $ 739,767 358,308 Effect of dilutive securities: — — Diluted net income $ 739,767 $ 358,308 Denominator: Weighted average common shares outstanding - basic 32,262,375 31,947,763 Dilutive securities (a): Series A Preferred - - Options 492,672 34,403 Warrants 788,518 - Weighted average common shares outstanding and assumed conversion – diluted 33,543,565 31,981,806 Basic net income per common share $ 0.02 $ 0.01 Diluted net income per common share $ 0.02 $ 0.01 (a) - Anti-dilutive securities excluded: - 6,777,164 For the Six Months Ended July 31, 2020 July 31, 2019 Numerator: Net income attributable to common stockholders $ 1,645,969 713,974 Effect of dilutive securities: — — Diluted net income $ 1,645,969 $ 713,974 Denominator: Weighted average common shares outstanding - basic 33,128,298 31,907,676 Dilutive securities (a): Series A Preferred - - Options 492,672 34,043 Warrants 788,518 - Weighted average common shares outstanding and assumed conversion – diluted 33,409,488 31,941,719 Basic net income per common share $ 0.05 $ 0.02 Diluted net income per common share $ 0.05 $ 0.02 (a) - Anti-dilutive securities excluded: - 6,777,164 Income Taxes Income taxes are provided in accordance with ASC No. 740, “ Accounting for Income Taxes Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company is no longer subject to tax examinations by tax authorities for years prior to 2017. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“ CARES Act 2017 Tax Act “NOLs In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to the income tax provision. Related Parties The Company follows subtopic ASC 850-10 for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20, the related parties include: (a) affiliates of the Company (“Affiliate” means, with respect to any specified person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person, as such terms are used in and construed under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. Recent Accounting Pronouncements In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”. In August 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes (ASU 2019-12, “ Income Taxes Simplifying the Accounting for Income Taxes income Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying condensed consolidated financial statements. Subsequent Events The Company evaluates subsequent events and transactions that occur after the balance sheet date for potential recognition or disclosure. Any material events that occur between the balance sheet date and the date that the financial statements were issued are disclosed as subsequent events, while the financial statements are adjusted to reflect any conditions that existed at the balance sheet date. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jul. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 3 - Property and Equipment: Property and equipment on July 31, 2020 and January 31, 2020 are as follows: July 31, 2020 January 31, 2020 Machinery and Equipment $ 3,653,857 $ 3,176,638 Furniture and Fixtures 107,255 89,443 Leasehold Improvements 3,029,508 2,933,865 6,790,620 6,199,946 Less: Accumulated Depreciation 3,713,181 3,394,103 $ 3,077,439 $ 2,805,843 Depreciation expense charged to income for the three months ended July 31, 2020 and 2019 amounted to $159,285 and $189,567, respectively. Depreciation expense charged to income for the six months ended July 31, 2019 and 2018 amounted to $319,078 and $370,052, respectively. |
Investment in Meatball Obsessio
Investment in Meatball Obsession, LLC | 6 Months Ended |
Jul. 31, 2020 | |
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
Investment in Meatball Obsession, LLC | Note 4 - Investment in Meatball Obsession, LLC During 2011, the Company acquired a 34.62% interest in Meatball Obsession, LLC (“MO”) for a total investment of $27,032. This investment is accounted for using the equity method of accounting. Accordingly, investments are recorded at acquisition cost plus the Company’s equity in the undistributed earnings or losses of the entity. At December 31, 2011, the investment was written down to $0 due to losses incurred by MO. The Company’s ownership interest in MO has decreased due to dilution. At July 31, 2020 and January 31, 2020, the Company’s ownership interest in MO was 0% and 12%, respectively. As of December 31, 2019, MO had wound down and ceased operations. Major accounts were transitioned to the Company as a part of the wind down. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jul. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 5 - Related Party Transactions Meatball Obsession, LLC A current director of the Company is the chairman of the board and shareholder of Meatball Obsession LLC (“MO”). For the three months ended July 31, 2020 and 2019, the Company generated approximately $0 and $3,911 in revenues from MO, respectively. For the six months ended July 31, 2020 and 2019, the Company generated approximately $0 and $33,248 in revenues from MO, respectively. As of July 31, 2020 and January 31, 2020, the Company had a receivable of $0 and $1,604 due from MO, respectively. WWS, Inc. Alfred D’Agostino and Tom Toto, two directors of the Company, are affiliates of WWS, Inc. For the three months ended July 31, 2020 and 2019, the Company recorded $12,000 and $12,000 in commission expense from WWS, Inc. generated sales, respectively. For the six months ended July 31, 2020 and 2019, the Company recorded $24,000 and $24,000 in commission expense from WWS, Inc. generated sales, respectively. Notes Payable – Related Party During the year ended January 31, 2016, the Company received aggregate proceeds of $125,000 from notes payable with the CEO of the Company. The notes bear interest at a rate of 4% per annum and matured on December 31, 2016. The notes were subsequently extended until January 2024. As of July 31, 2020 and January 31, 2020, the outstanding principal balance of the notes was $0 and $109,844, respectively. The Company received advances from the CEO of the Company which bear interest at 8%. The advances are due on January 2024. At July 31, 2020 and January 31, 2020, there was $0 and $400,000 of principal outstanding, respectively. The Company received advances from an entity 100% owned by the CEO of the Company, which bear interest at 8%. The advances are due on January 2024. At July 31, 2020 and January 31, 2020, there was $0 and $132,000 of principal outstanding, respectively. For the three months ended July 31, 2020 and 2019, the Company recorded interest expense of $11,775 and $11,881, respectively, related to the above related party notes payable. For the six months ended July 31, 2020 and 2019, the Company recorded interest expense of $23,550 and $22,769, respectively, related to the above related party notes payable. At July 31, 2020 and January 31, 2020, there was $0 and $2,863, respectively, of accrued interest on the above related party notes. Other Related Party Transactions During the three months ended July 31, 2020 and 2019, the Company reimbursed an entity 100% owned by the CEO of the Company for certain investor relation conference expenses totaling $0 and $0, respectively. During the six months ended July 31, 2020 and 2019, the Company reimbursed an entity 100% owned by the CEO of the Company for certain investor relation conference expenses totaling $14,570 and $15,722, respectively. During the three and six months ended July 31, 2020, members of the board of directors and the CEO exercised 940,807 warrants with exercise price of $1 in exchange for 940,807 shares of common stock. |
Loan and Security Agreement
Loan and Security Agreement | 6 Months Ended |
Jul. 31, 2020 | |
Debt Disclosure [Abstract] | |
Loan and Security Agreement | Note 6 - Loan and Security Agreement M&T Bank Effective, January 4, 2019, the Company entered into a $2.5 million five-year note with M&T Bank at LIBOR plus four points with repayments in equal payments over 60 months. The new facility is supported by a first priority security interest in all of the Company’s business assets and is further subject to various affirmative and negative financial covenants and a limited Guaranty by the Company’s Chief Executive Officer, Carl Wolf. The Company recorded $89,321 as a debt discount and will be amortized over the remaining life of the note using the effective interest method. There was unamortized debt discount of $7,164 and $17,864 as of July 31, 2020 and January 31, 2020, respectively. The outstanding balance on the term loan was $191,661 and $441,663 as of July 31, 2020 and January 31, 2020, respectively. Effective, January 4, 2019, the Company has arranged a new $3.5 million working capital line of credit with M&T Bank at LIBOR plus four points with a two-year expiration. On January 29, 2020, the facility was amended to increase the total available balance to $4.0 million as well as extend the maturity date to June 30, 2022. The facility is supported by a first priority security interest in all of the Company’s business assets and is further subject to various affirmative and negative financial covenants and a limited Guaranty by the Company’s Chief Executive Officer, Carl Wolf. Advances under the line of credit are limited to eighty percent (80%) of eligible accounts receivable (which is subject to an agreed limitation and is further subject to certain asset concentration provisions) and fifty percent (50%) of eligible inventory (which is subject to an agreed dollar limitation). All advances under the line of credit are due upon maturity. The outstanding balance on the line of credit was $2,497,348 and $2,997,348 as of July 31, 2020 and January 31, 2020, respectively. Future maturities of all debt (excluding debt discount discussed above in Note 6) are as follows: For the Twelve Months Ending July 31, 2021 $ 191,661 2022 2,497,348 $ 2,689,009 |
Promissory Note
Promissory Note | 6 Months Ended |
Jul. 31, 2020 | |
Debt Disclosure [Abstract] | |
Promissory Note | Note 7 – Promissory Note On April 21, 2020, the Company entered into a term note with its principal bank, M&T, with a principal amount of $330,000 pursuant to the Paycheck Protection Program (“ PPP Term Note CARES Act |
Concentrations
Concentrations | 6 Months Ended |
Jul. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentrations | Note 8 - Concentrations Revenues During the six months ended July 31, 2020, the Company earned revenues from two customers representing approximately 48% and 11% of gross sales. As of July 31, 2020, these two customers represented approximately 41% and 6% of total gross outstanding receivables, respectively. During the six months ended July 31, 2019, the Company earned revenues from three customers representing approximately 46%, 10% and 10% of gross sales. As of July 31, 2019, three customers represented approximately 41%, 12% and 11% of total gross outstanding receivables, respectively. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jul. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Note 9 - Stockholders’ Equity (A) Options The following is a summary of the Company’s option activity: Options Weighted Average Outstanding – January 31, 2020 914,000 $ 0.77 Exercisable – January 31, 2020 779,000 $ 0.71 Granted 7,500 $ 1.16 Exercised (12,000 ) $ 0.60 Forfeited/Cancelled - $ - Outstanding – July 31, 2020 909,500 $ 0.71 Exercisable – July 31, 2020 897,000 $ 0.70 Options Outstanding Options Exercisable Exercise Price Number Weighted Weighted Number Weighted $ 0.39 – 1.38 909,500 2.12 $ 0.71 897,000 $ 0.70 At July 31, 2020, the total intrinsic value of options outstanding and exercisable was $776,906 and $768,569, respectively. In June 2020, two employees exercised a total of 12,000 options at an exercise price of $0.60 per share for aggregate proceeds of $7,200. During the six months ended July 31, 2020, the Company issued to 7,500 options to an employee. The options have an exercise price of $1.16 per share, a term of 5 years, and 2-year vesting. The options have an aggregated fair value of approximately $7,617 that was calculated using the Black-Scholes option-pricing model based on the assumptions discussed above in Note 2. For the six months ended July 31, 2020 and 2019, the Company recognized share-based compensation related to options of an aggregate of $49,975 and $23,098, respectively. At July 31, 2020, unrecognized share-based compensation was $4,853. (B) Warrants The following is a summary of the Company’s warrant activity: Warrants Weighted Average Exercise Price Outstanding – January 31, 2020 6,056,664 $ 1.21 Exercisable – January 31, 2020 6,056,664 $ 1.21 Granted - $ - Exercised (1,557,103 ) $ 1.00 Forfeited/Cancelled - $ - Outstanding – July 31, 2020 4,499,561 $ 1.28 Exercisable – July 31, 2020 4,499,561 $ 1.28 Warrants Outstanding Warrants Exercisable Exercise Price Number Weighted Weighted Number Weighted $ 1.00 – 1.50 4,499,561 0.53 $ 1.28 4,499,561 $ 1.28 During the six months ended July 31, 2020, warrant holders exercised a total of 1,557,103 warrants and the Company issued 1,513,860 shares of common stock as a result of these exercises and received gross proceeds of $1,477,103. Of the 1,557,103 exercised warrants, 80,000 warrants were exercised on a cashless basis by Spartan Capital and the Company issued 36,757 shares of common stock. At July 31, 2020, the total intrinsic value of warrants outstanding and exercisable was $1,264,754 and $1,264,754, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10 - Commitments and Contingencies Litigation, Claims and Assessments From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results. Licensing and Royalty Agreements On March 1, 2010, the Company was assigned a Development and License agreement (the “Agreement”). Under the terms of the Agreement the Licensor shall develop for the Company a line of beef meatballs with sauce, turkey meatballs with sauce and other similar meats and sauces for commercial manufacture, distribution and sale (each a “Licensor Product” and collectively the “Licensor Products”). Licensor shall work with Licensee to develop Licensor Products that are acceptable to Licensee. Upon acceptance of a Licensor Product by Licensee, Licensor’s trade secret recipes, formulas methods and ingredients for the preparation and production of such Licensor Products (the “Recipes”) shall be subject to this Development and License Agreement. The Exclusive Term began on January 1, 2009 (the “Effective Date”) and ends on the 50th anniversary of the Effective Date. The Royalty Rate shall be: 6% of net sales up to $500,000 of net sales for each Agreement year; 4% of Net Sales from $500,000 up to $2,500,000 of Net Sales for each Agreement year; 2% of Net Sales from $2,500,000 up to $20,000,000 of Net Sales for each Agreement year; and 1% of Net Sales in excess of $20,000,000 of Net Sales for each Agreement year. In order to continue the Exclusive term, the Company shall pay a minimum royalty with respect to the preceding Agreement year as follows: Agreement Year Minimum Royalty to be Paid with Respect to Such Agreement Year 1 st nd $ - 3 rd th $ 50,000 5 th th th $ 75,000 8 th th $ 100,000 10 th $ 125,000 The Company incurred $125,618 and $104,380 of royalty expenses for the three months ended July 31, 2020 and 2019, respectively. The Company incurred $287,445 and $220,846 of royalty expenses for the six months ended July 31, 2020 and 2019, respectively. Royalty expenses are included in general and administrative expenses on the condensed consolidated statement of operations. Agreements with Placement Agents and Finders The Company entered into a fourth Financial Advisory and Investment Banking Agreement with Spartan Capital Securities, LLC (“Spartan”) effective April 1, 2015 (the “Spartan Advisory Agreement”). Pursuant to the Spartan Advisory Agreement, the Company shall pay to Spartan a non-refundable monthly fee of $10,000 through October 1, 2015. The monthly fee shall survive any termination of the Agreement. Additionally, (i) if at least $4,000,000 is raised in the Financing, the Company shall pay to Spartan a non-refundable fee of $5,000 per month from November 1, 2015 through October 2017; and (ii) if at least $5,000,000 is raised in the Financing, the Company shall pay to Spartan a non-refundable fee of $5,000 per month from November 1, 2017 through October 2019. If $10,000,000 or more is raised in the Financing, the Company shall issue to Spartan shares of its common stock having an aggregate value of $5,000 (as determined by reference to the average volume weighted average trading price for the last five trading days of the immediately preceding month) on the first day of each month during the period from November 1, 2015 through October 1, 2019. The Company, upon closing of the Financing, shall pay consideration to Spartan, in cash, a fee in an amount equal to 10% of the aggregate gross proceeds raised in the Financing and 3% of the aggregate gross proceeds raised in the Financing for expenses incurred by Spartan. The Company shall grant and deliver to Spartan at the closing of the Financing, for nominal consideration, five-year warrants to purchase a number of shares of the Company’s common stock equal to 10% of the number of shares of common stock (and/or shares of common stock issuable upon exercise of securities or upon conversion or exchange of convertible or exchangeable securities) sold at such closing. The warrants shall be exercisable at any time during the five-year period commencing on the closing to which they relate at an exercise price equal to the purchase price per share of common stock paid by investors in the Financing or, in the case of exercisable, convertible, or exchangeable securities, the exercise, conversion or exchange price thereof. If the Financing is consummated by means of more than one closing, Spartan shall be entitled to the fees provided herein with respect to each such closing. If the Company enters into a change of control transaction during the term of the agreement through October 1, 2022, the Company shall pay to Spartan a fee equal to 3% of the consideration paid or received by the Company and/or its stockholders in such transaction. Advisory Agreement The Company entered into an Advisory Agreement with Spartan effective June 1, 2019 (the “Advisory Agreement”). Pursuant to the agreement, the Company shall pay to Spartan a non-refundable monthly fee of $5,000 over a 21-month period. Additionally, the Company granted Spartan 125,000 shares of common stock which are considered fully-paid and non-assessable upon execution of the agreement. During the term or this Agreement, the Consultant will provide non-exclusive consulting services related to general corporate matters, including, but not limited to (i) advice and input with respect to raising capital and potential M&A transactions, (ii) identifying suitable personal for management and Board positions (iii) developing corporate structure and finance strategies, (iv) assisting the Company with strategic introductions, (v) assisting management with enhancing corporate and shareholder value, and (vi) introducing the Company to potential investors (collectively, the “Advisory Services”). The advisory agreement was terminated according to its terms on March 31, 2020. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jul. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11 – Subsequent Events The Company has evaluated subsequent events through the date the financial statements were available to be issued. Based on this evaluation, the Company has identified the following reportable subsequent events other than those disclosed elsewhere in these financials. Subsequent to July 31, 2020, a warrant holder exercised 200,000 warrants at $1.00 per share into 200,000 shares of common stock. The Company received aggregate proceeds of $200,000 upon exercise. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“ US GAAP The unaudited financial information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the opinion of management are necessary to fairly state the financial position of the Company and the results of its operations for the periods presented. This report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended January 31, 2020 filed on April 23, 2020. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The condensed consolidated balance sheet at January 31, 2020 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the interim periods presented are not necessarily indicative of results for the year ending January 31, 2021. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include all accounts of the entities as of the reporting period ending date(s) and for the reporting period(s). All inter-company balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following: allowance for doubtful accounts, inventory obsolescence and the fair value of share-based payments. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the condensed consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates. |
Risks and Uncertainties | Risks and Uncertainties The Company operates in an industry that is subject to intense competition and change in consumer demand. The Company’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. The Company has experienced, and in the future expects to continue to experience, variability in sales and earnings. The factors expected to contribute to this variability include, among others, (i) the cyclical nature of the grocery industry, (ii) general economic conditions in the various local markets in which the Company competes, including a potential general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with the Company’s distribution of the product. These factors, among others, make it difficult to project the Company’s operating results on a consistent basis. |
Cash | Cash The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. The Company held no cash equivalents at July 31, 2020 and January 31, 2020. The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company generally does not require collateral to support customer receivables. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. As of July 31, 2020 and January 31, 2020, the Company had reserves of $2,000. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) valuation method. Inventory was comprised of the following at July 31, 2020 and January 31, 2020: July 31, 2020 January 31, 2020 Raw Materials $ 714,172 $ 893,204 Work in Process 180,360 37,764 Finished goods 864,229 315,449 $ 1,758,761 $ 1,246,417 |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost net of depreciation. Depreciation expense is computed using straight-line methods over the estimated useful lives. Asset lives for financial statement reporting of depreciation are: Machinery and equipment 2-7 years Furniture and fixtures 3 years Leasehold improvements * (*) Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever period is shorter. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations. |
Leases | Leases In February 2016, the FASB issued ASU 2016-02 “ Leases” On February 1, 2019, the Company adopted ASC 842 using the modified retrospective approach and recognized a right of use (“ROU”) asset and liability in the consolidated balance sheet in the amount of $1,599,830 related to the operating lease for office and warehouse space. As part of the adoption the Company elected the practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to: 1. Not separate non-lease components from lease components and instead to account for each separate lease component and the non-lease components associated with that lease component as a single lease component. 2. Not to apply the recognition requirements in ASC 842 to short-term leases. 3. Not record a right of use asset or right of use liability for leases with an asset or liability balance that would be considered immaterial. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. The carrying amount of the Company’s short-term financial instruments approximates fair value due to the relatively short period to maturity for these instruments. |
Research and Development | Research and Development Research and development is expensed as incurred. Research and development expenses for the three months ended July 31, 2020 and 2019 were $25,857 and $24,509, respectively. Research and development expenses for the six months ended July 31, 2020 and 2019 were $55,338 and $49,835, respectively. |
Shipping and Handling Costs | Shipping and Handling Costs The Company classifies freight billed to customers as sales revenue and the related freight costs as general and administrative expenses. |
Revenue Recognition | Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition Revenue from Contracts with Customers (Topic 606)—Narrow-Scope Improvements and Practical Expedients The Company adopted this guidance and related amendments as of the first quarter of fiscal 2019, applying the full retrospective transition method. As the underlying principles of the new standard, relating to the measurement of revenue and the timing of recognition, are closely aligned with the Company’s current business model and practices, the adoption of ASU 2014-09 did not have a material impact on the consolidated financial statements. In addition, the adoption of ASC 606 did not impact the previously reported financial statements in any prior period nor did it result in a cumulative effect adjustment to retained earnings. The Company’s sales predominantly are generated from the sale of finished products to customers, contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, this occurs when the goods are shipped to the customer. Revenues are recognized in an amount that reflects the net consideration the Company expects to receive in exchange for the goods. The Company reports all amounts billed to a customer in a sale transaction as revenue. Under the new revenue guidance, the Company elected to treat shipping and handling activities as fulfillment activities, and the related costs are recorded as selling expenses in general and administrative expenses on the consolidated statement of operations. The Company promotes its products with advertising, consumer incentives and trade promotions. These programs include discounts, slotting fees, coupons, rebates, in-store display incentives and volume-based incentives. Customer trade promotion and consumer incentive activities are recorded as a reduction to the transaction price based on amounts estimated as being due to customers and consumers at the end of a period. The Company derives these estimates principally on historical utilization and redemption rates. The Company does not receive a distinct service in relation to the advertising, consumer incentives and trade promotions. Payment terms in the Company’s invoices are based on the billing schedule established in contracts and purchase orders with customers. The Company generally recognizes the related trade receivable when the goods are shipped. Expenses such as slotting fees, sales discounts, and allowances are accounted for as a direct reduction of revenues as follows: For the Six Months Ended July 31, 2020 July 31, 2019 Gross Sales $ 21,816,491 $ 15,658,081 Less: Slotting, Discounts, Allowances 331,088 193,812 Net Sales $ 21,485,403 $ 15,464,269 Disaggregation of Revenue from Contracts with Customers. For the Six Months Ended July 31, 2020 July 31, 2019 Northeast $ 6,257,552 $ 5,032,954 Southeast 6,642,906 4,046,018 Midwest 2,937,245 1,981,774 West 3,412,840 2,713,142 Southwest 2,565,948 1,909,692 Total revenue $ 21,816,491 $ 15,658,081 |
Cost of Sales | Cost of Sales Cost of sales represents costs directly related to the production and manufacturing of the Company’s products. Costs include product development, freight-in, packaging, and print production costs. |
Advertising | Advertising Costs incurred for producing and communicating advertising for the Company are charged to operations as incurred. Producing and communicating advertising expenses for the three months ended July 31, 2020 and 2019 were $288,152 and $413,973, respectively. Producing and communicating advertising expenses for the six months ended July 31, 2020 and 2019 were $670,100 and $756,795, respectively. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC Topic 718, “ Compensation – Stock Compensation” “ASC 718” The Company recognizes all forms of share-based payments, including stock option grants, warrants and restricted stock grants, at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to vest. Share-based payments, excluding restricted stock, are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to non-employees for services rendered have been recorded at the fair value of the share-based payment, which is the more readily determinable value. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized compensation cost is reversed in the period related to the termination of service. Stock-based compensation expenses are included in cost of goods sold or selling, general and administrative expenses, depending on the nature of the services provided, in the condensed consolidated statement of operations. Share-based payments issued to placement agents are classified as a direct cost of a stock offering and are recorded as a reduction in additional paid in capital. For the three months ended July 31, 2020 and 2019, share-based compensation amounted to $22,870 and $12,686, respectively. For the six months ended July 31, 2020 and 2019, share-based compensation amounted to $49,975 and $29,943, respectively. For the six months ended July 31, 2020 and 2019, when computing fair value of share-based payments, the Company has considered the following variables: July 31, 2020 July 31, 2019 Risk-free interest rate 0.37 % 1.84 - 2.29 % Expected life of grants 3.5 years 3 - 3.5 years Expected volatility of underlying stock 125 % 129 - 150 % Dividends 0 % 0 % The expected option term is computed using the “simplified” method as permitted under the provisions of ASC 718-10-S99. The Company uses the simplified method to calculate expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The expected stock price volatility for the Company’s stock options was estimated using the historical volatilities of the Company’s common stock. Risk free interest rates were obtained from U.S. Treasury rates for the applicable periods. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Earnings per share (“EPS”) is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. EPS is computed pursuant to Section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16, basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants. The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share. For the Three Months Ended July 31, 2020 July 31, 2019 Numerator: Net income attributable to common stockholders $ 739,767 358,308 Effect of dilutive securities: — — Diluted net income $ 739,767 $ 358,308 Denominator: Weighted average common shares outstanding - basic 32,262,375 31,947,763 Dilutive securities (a): Series A Preferred - - Options 492,672 34,403 Warrants 788,518 - Weighted average common shares outstanding and assumed conversion – diluted 33,543,565 31,981,806 Basic net income per common share $ 0.02 $ 0.01 Diluted net income per common share $ 0.02 $ 0.01 (a) - Anti-dilutive securities excluded: - 6,777,164 For the Six Months Ended July 31, 2020 July 31, 2019 Numerator: Net income attributable to common stockholders $ 1,645,969 713,974 Effect of dilutive securities: — — Diluted net income $ 1,645,969 $ 713,974 Denominator: Weighted average common shares outstanding - basic 33,128,298 31,907,676 Dilutive securities (a): Series A Preferred - - Options 492,672 34,043 Warrants 788,518 - Weighted average common shares outstanding and assumed conversion – diluted 33,409,488 31,941,719 Basic net income per common share $ 0.05 $ 0.02 Diluted net income per common share $ 0.05 $ 0.02 (a) - Anti-dilutive securities excluded: - 6,777,164 |
Income Taxes | Income Taxes Income taxes are provided in accordance with ASC No. 740, “ Accounting for Income Taxes Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company is no longer subject to tax examinations by tax authorities for years prior to 2017. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“ CARES Act 2017 Tax Act “NOLs In addition, the CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. The enactment of the CARES Act did not result in any material adjustments to the income tax provision. |
Related Parties | Related Parties The Company follows subtopic ASC 850-10 for the identification of related parties and disclosure of related party transactions. Pursuant to Section 850-10-20, the related parties include: (a) affiliates of the Company (“Affiliate” means, with respect to any specified person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person, as such terms are used in and construed under Rule 405 under the Securities Act); (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement”. In August 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes (ASU 2019-12, “ Income Taxes Simplifying the Accounting for Income Taxes income Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying condensed consolidated financial statements. |
Subsequent Events | Subsequent Events The Company evaluates subsequent events and transactions that occur after the balance sheet date for potential recognition or disclosure. Any material events that occur between the balance sheet date and the date that the financial statements were issued are disclosed as subsequent events, while the financial statements are adjusted to reflect any conditions that existed at the balance sheet date. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jul. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Inventories | Inventory was comprised of the following at July 31, 2020 and January 31, 2020: July 31, 2020 January 31, 2020 Raw Materials $ 714,172 $ 893,204 Work in Process 180,360 37,764 Finished goods 864,229 315,449 $ 1,758,761 $ 1,246,417 |
Schedule of Property and Equipment Estimated Useful Lives | Asset lives for financial statement reporting of depreciation are: Machinery and equipment 2-7 years Furniture and fixtures 3 years Leasehold improvements * (*) Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever period is shorter. |
Schedule of Expenses of Slotting Fees, Sales Discounts and Allowances are Accounted as Direct Reduction of Revenues | Expenses such as slotting fees, sales discounts, and allowances are accounted for as a direct reduction of revenues as follows: For the Six Months Ended July 31, 2020 July 31, 2019 Gross Sales $ 21,816,491 $ 15,658,081 Less: Slotting, Discounts, Allowances 331,088 193,812 Net Sales $ 21,485,403 $ 15,464,269 |
Schedule of Disaggregates Gross Revenue by Significant Geographic Area | The following table disaggregates gross revenue by significant geographic area for the six months ended July 31, 2020 and 2019: For the Six Months Ended July 31, 2020 July 31, 2019 Northeast $ 6,257,552 $ 5,032,954 Southeast 6,642,906 4,046,018 Midwest 2,937,245 1,981,774 West 3,412,840 2,713,142 Southwest 2,565,948 1,909,692 Total revenue $ 21,816,491 $ 15,658,081 |
Schedule of Fair Value of Share-Based Payments | For the six months ended July 31, 2020 and 2019, when computing fair value of share-based payments, the Company has considered the following variables: July 31, 2020 July 31, 2019 Risk-free interest rate 0.37 % 1.84 - 2.29 % Expected life of grants 3.5 years 3 - 3.5 years Expected volatility of underlying stock 125 % 129 - 150 % Dividends 0 % 0 % |
Schedule of Earnings Per Share, Basic and Diluted | The following table provides a reconciliation of the numerator and denominator used in computing basic and diluted net income attributable to common stockholders per common share. For the Three Months Ended July 31, 2020 July 31, 2019 Numerator: Net income attributable to common stockholders $ 739,767 358,308 Effect of dilutive securities: — — Diluted net income $ 739,767 $ 358,308 Denominator: Weighted average common shares outstanding - basic 32,262,375 31,947,763 Dilutive securities (a): Series A Preferred - - Options 492,672 34,403 Warrants 788,518 - Weighted average common shares outstanding and assumed conversion – diluted 33,543,565 31,981,806 Basic net income per common share $ 0.02 $ 0.01 Diluted net income per common share $ 0.02 $ 0.01 (a) - Anti-dilutive securities excluded: - 6,777,164 For the Six Months Ended July 31, 2020 July 31, 2019 Numerator: Net income attributable to common stockholders $ 1,645,969 713,974 Effect of dilutive securities: — — Diluted net income $ 1,645,969 $ 713,974 Denominator: Weighted average common shares outstanding - basic 33,128,298 31,907,676 Dilutive securities (a): Series A Preferred - - Options 492,672 34,043 Warrants 788,518 - Weighted average common shares outstanding and assumed conversion – diluted 33,409,488 31,941,719 Basic net income per common share $ 0.05 $ 0.02 Diluted net income per common share $ 0.05 $ 0.02 (a) - Anti-dilutive securities excluded: - 6,777,164 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jul. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment on July 31, 2020 and January 31, 2020 are as follows: July 31, 2020 January 31, 2020 Machinery and Equipment $ 3,653,857 $ 3,176,638 Furniture and Fixtures 107,255 89,443 Leasehold Improvements 3,029,508 2,933,865 6,790,620 6,199,946 Less: Accumulated Depreciation 3,713,181 3,394,103 $ 3,077,439 $ 2,805,843 |
Loan and Security Agreement (Ta
Loan and Security Agreement (Tables) | 6 Months Ended |
Jul. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Future Maturities of Debt | Future maturities of all debt (excluding debt discount discussed above in Note 6) are as follows: For the Twelve Months Ending July 31, 2021 $ 191,661 2022 2,497,348 $ 2,689,009 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jul. 31, 2020 | |
Equity [Abstract] | |
Summary of Option Activity | The following is a summary of the Company’s option activity: Options Weighted Average Outstanding – January 31, 2020 914,000 $ 0.77 Exercisable – January 31, 2020 779,000 $ 0.71 Granted 7,500 $ 1.16 Exercised (12,000 ) $ 0.60 Forfeited/Cancelled - $ - Outstanding – July 31, 2020 909,500 $ 0.71 Exercisable – July 31, 2020 897,000 $ 0.70 |
Summary of Option Outstanding and Exercisable | Options Outstanding Options Exercisable Exercise Price Number Weighted Weighted Number Weighted $ 0.39 – 1.38 909,500 2.12 $ 0.71 897,000 $ 0.70 |
Schedule of Warrants Activity | The following is a summary of the Company’s warrant activity: Warrants Weighted Average Exercise Price Outstanding – January 31, 2020 6,056,664 $ 1.21 Exercisable – January 31, 2020 6,056,664 $ 1.21 Granted - $ - Exercised (1,557,103 ) $ 1.00 Forfeited/Cancelled - $ - Outstanding – July 31, 2020 4,499,561 $ 1.28 Exercisable – July 31, 2020 4,499,561 $ 1.28 |
Schedule of Warrants Outstanding and Exercisable | Warrants Outstanding Warrants Exercisable Exercise Price Number Weighted Weighted Number Weighted $ 1.00 – 1.50 4,499,561 0.53 $ 1.28 4,499,561 $ 1.28 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jul. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Royalty Minimum Payment by Preceding Agreement Year | In order to continue the Exclusive term, the Company shall pay a minimum royalty with respect to the preceding Agreement year as follows: Agreement Year Minimum Royalty to be Paid with Respect to Such Agreement Year 1 st nd $ - 3 rd th $ 50,000 5 th th th $ 75,000 8 th th $ 100,000 10 th $ 125,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | Jan. 31, 2020 | Feb. 02, 2019 | |
Cash equivalents | ||||||
Accounts receivable reserves | 2,000 | 2,000 | 2,000 | |||
Right of use ("ROU") asset | 1,422,687 | 1,422,687 | 1,490,794 | |||
Right of use ("ROU") liability | 1,467,490 | 1,467,490 | $ 1,498,865 | |||
Research and development expense | 25,857 | $ 24,509 | 55,338 | $ 49,835 | ||
Advertising expenses | 288,152 | 413,973 | 670,100 | 756,795 | ||
Share-based compensation | $ 22,870 | $ 12,686 | $ 49,975 | $ 29,943 | ||
Taxable income limitations description | The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020. Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for 2019 and 2020. | |||||
Charitable deduction limit description | CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. | |||||
Adoption (Topic 842) [Member] | ||||||
Right of use ("ROU") asset | $ 1,599,830 | |||||
Right of use ("ROU") liability | $ 1,599,830 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Inventories (Details) - USD ($) | Jul. 31, 2020 | Jan. 31, 2020 |
Accounting Policies [Abstract] | ||
Raw Materials | $ 714,172 | $ 893,204 |
Work in Process | 180,360 | 37,764 |
Finished goods | 864,229 | 315,449 |
Inventories | $ 1,758,761 | $ 1,246,417 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Property and Equipment Estimated Useful Lives (Details) | 6 Months Ended | |
Jul. 31, 2020 | ||
Machinery and Equipment [Member] | Minimum [Member] | ||
Property and equipment estimated useful lives | 2 years | |
Machinery and Equipment [Member] | Maximum [Member] | ||
Property and equipment estimated useful lives | 7 years | |
Furniture and Fixtures [Member] | ||
Property and equipment estimated useful lives | 3 years | |
Leasehold Improvements [Member] | ||
Property and equipment estimated useful lives | 0 years | [1] |
[1] | Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever period is shorter. |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Expenses of Slotting Fees, Sales Discounts and Allowances are Accounted as Direct Reduction of Revenues (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Accounting Policies [Abstract] | ||||
Gross Sales | $ 21,816,491 | $ 15,658,081 | ||
Less: Slotting, Discounts, Allowances | 331,088 | 193,812 | ||
Net Sales | $ 10,384,484 | $ 8,099,445 | $ 21,485,403 | $ 15,464,269 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Schedule of Disaggregates Gross Revenue by Significant Geographic Area (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Total revenue | $ 10,384,484 | $ 8,099,445 | $ 21,485,403 | $ 15,464,269 |
Northeast [Member] | ||||
Total revenue | 6,257,552 | 5,032,954 | ||
Southeast [Member] | ||||
Total revenue | 6,642,906 | 4,046,018 | ||
Midwest [Member] | ||||
Total revenue | 2,937,245 | 1,981,774 | ||
West [Member] | ||||
Total revenue | 3,412,840 | 2,713,142 | ||
Southwest [Member] | ||||
Total revenue | $ 2,565,948 | $ 1,909,692 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Schedule of Fair Value of Share-Based Payments (Details) | 6 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Risk-free interest rate | 0.37% | |
Expected life of grants | 3 years 6 months | |
Expected volatility of underlying stock | 125.00% | |
Dividends | 0.00% | 0.00% |
Minimum [Member] | ||
Risk-free interest rate | 1.84% | |
Expected life of grants | 3 years | |
Expected volatility of underlying stock | 129.00% | |
Maximum [Member] | ||
Risk-free interest rate | 2.29% | |
Expected life of grants | 3 years 6 months | |
Expected volatility of underlying stock | 150.00% |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Accounting Policies [Abstract] | ||||
Net income attributable to common stockholders | $ 739,767 | $ 358,308 | $ 1,645,969 | $ 713,974 |
Effect of dilutive securities: | ||||
Diluted net income | $ 739,767 | $ 358,308 | $ 1,645,969 | $ 713,974 |
Weighted average common shares outstanding - basic | 32,262,375 | 31,947,763 | 32,128,298 | 31,907,676 |
Series A Preferred | ||||
Options | 492,672 | 34,403 | 492,672 | 34,043 |
Warrants | 788,518 | 788,518 | ||
Weighted average common shares outstanding and assumed conversion - diluted | 33,543,565 | 31,981,806 | 33,409,488 | 34,941,719 |
Basic net income per common share | $ 0.02 | $ 0.01 | $ 0.05 | $ 0.02 |
Diluted net income per common share | $ 0.02 | $ 0.01 | $ 0.05 | $ 0.02 |
(a) - Anti-dilutive securities excluded: | 6,777,164 | 6,777,164 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 159,285 | $ 189,567 | $ 319,078 | $ 370,052 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Jul. 31, 2020 | Jan. 31, 2020 |
Property, Plant and Equipment [Abstract] | ||
Machinery and Equipment | $ 3,653,857 | $ 3,176,638 |
Furniture and Fixtures | 107,255 | 89,443 |
Leasehold Improvements | 3,029,508 | 2,933,865 |
Property and Equipment, Gross | 6,790,620 | 6,199,946 |
Less: Accumulated Depreciation | 3,713,181 | 3,394,103 |
Property and Equipment, Net | $ 3,077,439 | $ 2,805,843 |
Investment in Meatball Obsess_2
Investment in Meatball Obsession, LLC (Details Narrative) - Meatball Obsession, LLC [Member] - USD ($) | Dec. 31, 2011 | Jul. 31, 2020 | Jan. 31, 2020 |
Percentage of equity interest acquired in business combination | 34.62% | ||
Investment in business combination | $ 27,032 | ||
Reduction in investment due to losses in affiliates | $ 0 | ||
Ownership interest percentage | 0.00% | 12.00% |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | Jan. 31, 2016 | Jan. 31, 2020 | |
Proceeds from notes payable with related party | $ 330,505 | |||||
Interest expense related party | $ 11,775 | $ 11,881 | 23,550 | 22,769 | ||
Accrued interest | $ 0 | $ 0 | $ 2,863 | |||
CEO [Member] | ||||||
Reimbursement of entity percentage | 100.00% | 100.00% | ||||
Investor relation conference expenses | $ 0 | 0 | $ 14,570 | 15,722 | ||
Board of Directors and CEO [Member] | ||||||
Warrants exercise shares | 940,807 | 940,807 | ||||
Warrants exercise price | $ 1 | $ 1 | ||||
Number of shares of common stock | 940,807 | 940,807 | ||||
Meatball Obsession, LLC [Member] | ||||||
Revenue from related parties | $ 0 | 3,911 | $ 0 | 33,248 | ||
Due from related party | 0 | 0 | 1,604 | |||
WWS, Inc. [Member] | ||||||
Commission expense | 12,000 | $ 12,000 | 24,000 | $ 24,000 | ||
CEO [Member] | ||||||
Proceeds from notes payable with related party | $ 125,000 | |||||
Notes, interest rate per annum | 4.00% | |||||
Debt maturity date | Dec. 31, 2016 | |||||
CEO [Member] | Notes Payable [Member] | ||||||
Note principal balance amount | $ 0 | $ 0 | 109,844 | |||
CEO [Member] | Notes Payable One [Member] | ||||||
Notes, interest rate per annum | 8.00% | 8.00% | ||||
Debt maturity date, description | The advances are due on January 2024. | |||||
Note principal balance amount | $ 0 | $ 0 | 400,000 | |||
CEO [Member] | Notes Payable Two [Member] | ||||||
Notes, interest rate per annum | 8.00% | 8.00% | ||||
Debt maturity date, description | The advances are due on January 2024. | |||||
Note principal balance amount | $ 0 | $ 0 | $ 132,000 | |||
Ownership percentage | 100.00% | 100.00% | ||||
CEO [Member] | Extended Maturity [Member] | ||||||
Debt maturity date, description | Extended until January 2024. |
Loan and Security Agreement (De
Loan and Security Agreement (Details Narrative) - USD ($) | Jan. 29, 2020 | Jan. 04, 2019 | Jul. 31, 2020 | Jan. 31, 2020 |
Debt discount | $ 7,164 | $ 17,864 | ||
Term loan outstanding | 191,661 | 441,663 | ||
M&T Bank [Member] | ||||
Debt instrument term | 2 years | |||
Line of credit interest rate description | Advances under the line of credit are limited to eighty percent (80%) of eligible accounts receivable (which is subject to an agreed limitation and is further subject to certain asset concentration provisions) and fifty percent (50%) of eligible inventory (which is subject to an agreed dollar limitation). | |||
Line of credit | $ 2,497,348 | $ 2,997,348 | ||
Increase total available outstanding amount | $ 4,000,000 | |||
Extend maturity date | Jun. 30, 2022 | |||
M&T Bank [Member] | LIBOR [Member] | ||||
Line of credit | $ 3,500,000 | |||
M&T Bank [Member] | Secured Promissory Note [Member] | ||||
Note payable | $ 2,500,000 | |||
Debt instrument term | 5 years | |||
Line of credit interest rate description | The Company entered into a $2.5 million five-year note with M&T Bank at LIBOR plus four points with repayments in equal payments over 60 months. | |||
Debt discount | $ 89,321 |
Loan and Security Agreement - S
Loan and Security Agreement - Schedule of Future Maturities of Debt (Details) | Jul. 31, 2020USD ($) |
Debt Disclosure [Abstract] | |
2021 | $ 191,661 |
2022 | 2,497,348 |
Future maturities of debt | $ 2,689,009 |
Promissory Note (Details Narrat
Promissory Note (Details Narrative) - USD ($) | Nov. 30, 2020 | Apr. 21, 2020 | Jul. 31, 2020 | May 06, 2020 | Jan. 31, 2020 |
Repayment of loan | $ 191,661 | $ 441,663 | |||
M&T Bank [Member] | PPP Term Note [Member] | |||||
Repayment of loan | $ 330,505 | ||||
M&T Bank [Member] | PPP Term Note [Member] | Forecast [Member] | |||||
Maturity date, description | Due in April 2022. | ||||
M&T Bank [Member] | PPP Term Note [Member] | CARES Act [Member] | |||||
Principal amount | $ 330,000 | ||||
Interest rate percentage | 1.00% |
Concentrations (Details Narrati
Concentrations (Details Narrative) | 6 Months Ended | |
Jul. 31, 2020 | Jul. 31, 2019 | |
Sales Revenue [Member] | Customer One [Member] | ||
Concentrations of risk percentage | 48.00% | 46.00% |
Sales Revenue [Member] | Customer Two [Member] | ||
Concentrations of risk percentage | 11.00% | 10.00% |
Sales Revenue [Member] | Customer Three [Member] | ||
Concentrations of risk percentage | 10.00% | |
Accounts Receivable [Member] | Customer One [Member] | ||
Concentrations of risk percentage | 41.00% | 41.00% |
Accounts Receivable [Member] | Customer Two [Member] | ||
Concentrations of risk percentage | 6.00% | 12.00% |
Accounts Receivable [Member] | Customer Three [Member] | ||
Concentrations of risk percentage | 11.00% |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Total intrinsic value of options outstanding | $ 776,906 | $ 776,906 | |||
Total intrinsic value of options exercisable | 768,569 | $ 768,569 | |||
Stock options exercise price per share | $ 1.16 | ||||
Proceeds from options exercised | $ 7,200 | ||||
Recognized share-based compensation related to options | 22,870 | $ 5,841 | 49,975 | 23,098 | |
Proceeds from exercise of warrants | 1,477,103 | ||||
Stock Options [Member] | |||||
Recognized share-based compensation related to options | 49,975 | $ 23,098 | |||
Unrecognized stock based compensation | 4,853 | $ 4,853 | |||
Warrant [Member] | |||||
Warrants exercised | 1,557,103 | ||||
Number of shares of common stock | 1,513,860 | ||||
Proceeds from exercise of warrants | $ 1,477,103 | ||||
Total intrinsic value of warrants outstanding | 1,264,754 | 1,264,754 | |||
Total intrinsic value of warrants exercisable | $ 1,264,754 | $ 1,264,754 | |||
Warrant [Member] | Spartan Capital Securities, LLC [Member] | |||||
Warrants exercised | 1,557,103 | ||||
Number of shares of common stock | 36,757 | ||||
Warrants exercised on cashless basis | 80,000 | ||||
Two Employees [Member] | |||||
Stock option exercised | 12,000 | ||||
Stock options exercise price per share | $ 0.60 | ||||
Proceeds from options exercised | $ 7,200 | ||||
Employee [Member] | |||||
Stock options exercise price per share | $ 1.16 | ||||
Number of stock option shares issued | 7,500 | ||||
Stock option term | 5 years | ||||
Stock options vesting period | 2 years | ||||
Fair value of option | $ 7,617 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Option Activity (Details) | 6 Months Ended |
Jul. 31, 2020$ / sharesshares | |
Equity [Abstract] | |
Options, Outstanding, Beginning balance | shares | 914,000 |
Options, Exercisable, Beginning balance | shares | 779,000 |
Options, Granted | shares | 7,500 |
Options, Exercised | shares | (12,000) |
Options, Forfeited/Cancelled | shares | |
Options, Outstanding, Ending balance | shares | 909,500 |
Options, Exercisable, Ending balance | shares | 897,000 |
Weighted Average Exercise Price, Beginning balance | $ / shares | $ 0.77 |
Weighted Average Exercise Price, Beginning balance | $ / shares | 0.71 |
Weighted Average Exercise Price, Granted | $ / shares | 1.16 |
Weighted Average Exercise Price, Exercised | $ / shares | 0.60 |
Weighted Average Exercise Price, Forfeited/Cancelled | $ / shares | |
Weighted Average Exercise Price, Ending balance | $ / shares | 0.71 |
Weighted Average Exercise Price, Ending balance | $ / shares | $ 0.70 |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of Option Outstanding and Exercisable (Details) | 6 Months Ended |
Jul. 31, 2020$ / sharesshares | |
Equity [Abstract] | |
Range of exercise price lower range limit | $ 0.39 |
Range of exercise price upper range limit | $ 1.38 |
Number of Options Outstanding | shares | 909,500 |
Weighted Average Remaining Contractual Life (in years), Options Outstanding | 2 years 1 month 13 days |
Weighted Average Exercise Price, Options Outstanding | $ 0.71 |
Number of Options Exercisable | shares | 897,000 |
Weighted Average Exercise Price, Options Exercisable | $ 0.70 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Warrants Activity (Details) - Warrant [Member] | 6 Months Ended |
Jul. 31, 2020$ / sharesshares | |
Warrants Outstanding, Beginning balance | shares | 6,056,664 |
Warrants Exercisable, Beginning balance | shares | 6,056,664 |
Warrants, Granted | shares | |
Warrants, Exercised | shares | (1,557,103) |
Warrants, Forfeited/Cancelled | shares | |
Warrants Outstanding, Outstanding, Ending balance | shares | 4,499,561 |
Warrants Exercisable, Exercisable, Ending balance | shares | 4,499,561 |
Weighted Average Exercise Price, Outstanding, Beginning balance | $ / shares | $ 1.21 |
Weighted Average Exercise Price, Exercisable, Beginning balance | $ / shares | 1.21 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | 1 |
Weighted Average Exercise Price, Forfeited/Cancelled | $ / shares | |
Weighted Average Exercise Price, Outstanding, Ending balance | $ / shares | 1.28 |
Weighted Average Exercise Price, Exercisable, Ending balance | $ / shares | $ 1.28 |
Stockholders' Equity - Schedu_2
Stockholders' Equity - Schedule of Warrants Outstanding and Exercisable (Details) - Warrant [Member] | 6 Months Ended |
Jul. 31, 2020$ / sharesshares | |
Number of Warrants Outstanding | shares | 4,499,561 |
Weighted Average Remaining Contractual Life (in Years) | 6 months 10 days |
Weighted Average Exercise Price, Warrants Outstanding | $ 1.28 |
Number of Warrants Exercisable | shares | 4,499,561 |
Weighted Average Exercise Price, Warrants Exercisable | $ 1.28 |
Minimum [Member] | |
Warrants Exercise Price | 1 |
Maximum [Member] | |
Warrants Exercise Price | $ 1.50 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | Jun. 01, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 |
Royalty expenses | $ 125,618 | $ 104,380 | $ 287,445 | $ 220,846 | |
Spartan Capital Securities, LLC [Member] | |||||
Percentage of fee equal to aggregate gross proceeds | 10.00% | ||||
Percentage of fees equal to aggregate gross proceeds for expenses | 3.00% | ||||
Percentage of common stock issuable | 10.00% | ||||
Percentage of fee equal to consideration paid | 3.00% | ||||
Agreement term description | If the Company enters into a change of control transaction during the term of the agreement through October 1, 2022, the Company shall pay to Spartan a fee equal to 3% of the consideration paid or received by the Company and/or its stockholders in such transaction. | ||||
Spartan Capital Securities, LLC [Member] | Financial Advisory and Investment Banking Agreement [Member] | |||||
Nonrefundable monthly fee amount | $ 10,000 | ||||
Nonrefundable monthly fee term | Through October 1, 2015 | ||||
Spartan Capital Securities, LLC [Member] | Financial Advisory and Investment Banking Agreement [Member] | At least $4,000,000 Raised Financing [Member] | |||||
Nonrefundable monthly fee amount | $ 5,000 | ||||
Nonrefundable monthly fee term | November 1, 2015 through October 2017 | ||||
Aggregate gross proceeds fee | $ 4,000,000 | ||||
Spartan Capital Securities, LLC [Member] | Financial Advisory and Investment Banking Agreement [Member] | At least $5,000,000 Raised Financing [Member] | |||||
Nonrefundable monthly fee amount | $ 5,000 | ||||
Nonrefundable monthly fee term | November 1, 2017 through October 2019 | ||||
Aggregate gross proceeds fee | $ 5,000,000 | ||||
Spartan Capital Securities, LLC [Member] | Financial Advisory and Investment Banking Agreement [Member] | $10,000,000 or More Raised Financing [Member] | |||||
Nonrefundable monthly fee amount | $ 5,000 | ||||
Nonrefundable monthly fee term | November 1, 2015 through October 1, 2019 | ||||
Aggregate gross proceeds fee | $ 10,000,000 | ||||
Spartan Capital Securities, LLC [Member] | Advisory Agreement [Member] | |||||
Nonrefundable monthly fee amount | $ 5,000 | ||||
Number of common stock shares granted | 125,000 | ||||
Year 1 [Member] | |||||
Percentage of royalty on net sales | 6.00% | ||||
Royalty revenue | $ 500,000 | ||||
Year 2 [Member] | |||||
Percentage of royalty on net sales | 4.00% | ||||
Year 2 [Member] | Minimum [Member] | |||||
Royalty revenue | $ 500,000 | ||||
Year 2 [Member] | Maximum [Member] | |||||
Royalty revenue | $ 2,500,000 | ||||
Year 3 [Member] | |||||
Percentage of royalty on net sales | 2.00% | ||||
Year 3 [Member] | Minimum [Member] | |||||
Royalty revenue | $ 2,500,000 | ||||
Year 3 [Member] | Maximum [Member] | |||||
Royalty revenue | $ 20,000,000 | ||||
Year 4 [Member] | |||||
Percentage of royalty on net sales | 1.00% | ||||
Royalty revenue | $ 20,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Royalty Minimum Payment by Preceding Agreement Year (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2020 | Jul. 31, 2019 | Jul. 31, 2020 | Jul. 31, 2019 | |
Minimum royalty to be paid | $ 125,618 | $ 104,380 | $ 287,445 | $ 220,846 |
Agreement Year 1st and 2nd [Member] | ||||
Minimum royalty to be paid | ||||
Agreement Year 3rd and 4th [Member] | ||||
Minimum royalty to be paid | 50,000 | |||
Agreement Year 5th, 6th and 7th [Member] | ||||
Minimum royalty to be paid | 75,000 | |||
Agreement Year 8th and 9th [Member] | ||||
Minimum royalty to be paid | 100,000 | |||
Agreement Year 10th and Thereafter [Member] | ||||
Minimum royalty to be paid | $ 125,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | |
Sep. 14, 2020 | Jul. 31, 2020 | Jul. 31, 2019 | |
Proceeds from warrant exercised | $ 1,477,103 | ||
Warrant [Member] | |||
Number of warrants exercised into common stock | 1,557,103 | ||
Proceeds from warrant exercised | $ 1,477,103 | ||
Warrant Holder [Member] | Subsequent Event [Member] | |||
Warrant exercise per share | $ 1 | ||
Proceeds from warrant exercised | $ 200,000 | ||
Warrant Holder [Member] | Subsequent Event [Member] | Warrant [Member] | |||
Number of warrants exercised into common stock | 200,000 | ||
Warrant Holder [Member] | Subsequent Event [Member] | Common Stock [Member] | |||
Number of warrants exercised into common stock | 200,000 |