Mama's Creations, Inc 8-K/A, filed Mar 15, 2022
Mama's Creations, Inc. (MAMA)
About this 8-K/A
Mama's Creations, Inc filed this 8-K/A on March 15, 2022, reporting on events of December 23, 2021.
Items reported
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (zip code)
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS
Item 9.01 Financial Statements and Exhibits
As reported on our Current Report on Form 8-K filed with the Securities and Exchange Commission on December 30, 2021, on December 29, 2021, MamaMancini’s Holdings, Inc. (the “Company”) closed the acquisition of T&L Creative Salads, Inc. and Olive Branch LLC (the “Acquisitions”) that was the subject of those certain Asset Purchase Agreements and Plan of Merger (the “APA’s”) with T&L Creative Salads, Inc. and Olive Branch LLC dated December 23, 2021. At closing, in accordance with the APA’s, T&L Creative Salads, Inc. and Olive Branch LLC were acquired by a newly-formed wholly-owned subsidiary of the Company, T&L Acquisition Corp, a Nevada corporation. As a result of the Merger, T&L Creative Salads, Inc. and Olive Branch LLC became wholly-owned subsidiaries of the Company.
The purpose of this amended filing is to enclose the audited financial statements of T&L Creative Salads, Inc. and Olive Branch LLC for the years ended December 31, 2020 and 2019, the unaudited financial statements for T&L Creative Salads, Inc. and Olive Branch LLC for the periods ended September 30, 2021 and 2020, and pro forma financial statements, as required.
Exhibits
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MamaMancini’s Holdings, Inc. | ||
| a Nevada corporation | ||
| Date: March 14, 2022 | By: | /s/ Carl Wolf |
| Carl Wolf | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| 3 |
EXHIBIT 99.1
T & L CREATIVE SALADS, INC.
FINANCIAL REPORT
DECEMBER 31, 2020
WITH INDEPENDENT AUDITORS’ REPORT
T & L CREATIVE SALADS, INC.
FOR THE YEAR ENDED DECEMBER 31, 2020
C O N T E N T S
| Page | |
| INDEPENDENT AUDITORS’ REPORT | 1-2 |
| FINANCIAL STATEMENTS: | |
| Balance Sheet | 3 |
| Statement of Income and Retained Earnings | 4 |
| Statement of Cash Flows | 5 |
| Notes to Financial Statements | 6 - 11 |
| SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS: | |
| Independent Auditors’ Report on Supplementary Information | 12 |
| Schedule of Cost of Goods Sold | 13 |
| Schedule of Operating Expenses | 14 |
DeVito & Co., LLC
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
T & L Creative Salads, Inc.
148 Allen Boulevard
Farmingdale, NY 11735
Report on the Financial Statements
We have audited the accompanying balance sheet of T & L Creative Salads, Inc., as of December 31, 2020, and the related statement of income and retained earnings and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
26 Columbia Turnpike Suite 105, Florham Park, NJ 07932 Phone 201-440-1491 Fax 973-295-6552
info@devitocpa.com .. www.devitocpa.com
| 1 |
DeVito & Co., LLC
CERTIFIED PUBLIC ACCOUNTANTS
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of T & L Creative Salads, Inc. as of December 31, 2020, and the results of its operations and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
DeVito & Co., LLC
Florham Park, NJ
March 7, 2022
| 2 |
T&L CREATIVE SALADS INC.
BALANCE SHEET - DECEMBER 31, 2020
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and Cash Equivalents | 1,026,091 | |||||||
| Accounts Receivable - Net of Allowance for Doubtful Accounts of $150,000 | 1,347,548 | |||||||
| Inventory | 776,932 | |||||||
| Total Current Assets | 3,150,571 | |||||||
| PROPERTY AND EQUIPMENT: | ||||||||
| Machinery and Equipment | 3,723,943 | |||||||
| Leasehold Improvements | 1,668,962 | |||||||
| Total | 5,392,905 | |||||||
| Less: Accumulated Depreciation | 2,813,889 | 2,579,016 | ||||||
| OTHER ASSETS | ||||||||
| Related Party Loans | 916,527 | |||||||
| Other Assets | 12,863 | 929,390 | ||||||
| TOTAL ASSETS | 6,658,977 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Current Portion of Long Term Debt | 336,138 | |||||||
| Accounts Payable and Accrued Expenses | 515,788 | |||||||
| Total Current Liabilities | 851,926 | |||||||
| LONG TERM DEBT - Net of Current Portion | 2,106,344 | |||||||
| COMMITMENTS AND CONTIGENCIES | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common Stock - No Par Value, 200 Shares Authorized, 30 Shares Issued and Outstanding | 3,000 | |||||||
| Retained Earnings | 3,697,707 | |||||||
| TOTAL STOCKHOLDERS’ EQUITY | 3,700,707 | |||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 6,658,977 | |||||||
See notes to financial statements.
| 3 |
T&L CREATIVE SALADS, INC.
STATEMENT OF INCOME AND RETAINED
EARNINGS FOR THE YEAR ENDED
DECEMBER 31, 2020
| NET SALES | 18,963,494 | |||
| COST OF GOODS SOLD | 16,619,835 | |||
| GROSS PROFIT | 2,343,659 | |||
| OPERATING EXPENSES | 1,780,909 | |||
| INCOME FROM OPERATIONS | 562,750 | |||
| INTEREST EXPENSE | 89,023 | |||
| NET INCOME BEFORE TAXES | 473,727 | |||
| STATE AND CITY TAXES | 30,561 | |||
| NET INCOME | 443,166 | |||
| RETAINED EARNINGS - Beginning | 3,356,039 | |||
| LESS: DIVIDEND | (101,498 | ) | ||
| RETAINED EARNINGS - Ending | 3,697,707 |
See notes to financial statements.
| 4 |
T&L CREATIVE SALADS, INC.
FOR THE YEAR ENDED DECEMBER 31, 2020
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Income | 443,166 | |||||||
| Adjustments to Reconcile Net Income to Net Cash | ||||||||
| Provided by Operating Activities: | ||||||||
| Depreciation and Amortization | 447,002 | |||||||
| Bad Debt | 25,000 | |||||||
| Net Change in Operating Assets and Liabilities: | ||||||||
| Accounts Receivable | 727,646 | |||||||
| Inventory | (67,239 | ) | ||||||
| Accounts Payable and Accrued Expenses | (735,171 | ) | ||||||
| Net Cash Provided by Operating Activities | 397,238 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of Property and Equipment | (63,333 | ) | ||||||
| Advances of Related Party Loans | (100,076 | ) | ||||||
| Dividend | (101,498 | ) | ||||||
| Net Cash Used by Investing Activities | (264,907 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Advances of Long Term Debt - PPP Loan | 796,042 | |||||||
| Payment of Long Term Debt | (417,613 | ) | ||||||
| Net Cash Provided by Financing | 378,429 | |||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 953,926 | |||||||
| CASH AND CASH EQUIVALENTS - Beginning | 72,165 | |||||||
| CASH AND CASH EQUIVALENTS - Ending | 1,026,091 | |||||||
See notes to financial statements.
| 5 |
T&L CREATIVE SALADS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations:
T & L Creative Salad, Inc. (“T&L”) was organized under the laws of the State of New York on March 2, 1988 and has elected to be taxed as a S Corporation on January 1, 2001. The company has a year-ended December 31.
T&L is a premier gourmet food manufacturer and distributor. The company manufactures a full line of foods for retail food chains and mass market club stores, delis, bagel stores, caterers and distributors. T&L uses high-quality meats, seafood and vegetables, prepared to meet the standards set forth by the USDA and the FDA. T&L actively sells its salads and prepared products to over 250 delis, bagel shops, smaller retail accounts and food distributors in the New York metropolitan area, representing over 35% of T&L’s current sales volume.
Basis of Presentation:
The financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
Use of Estimates:
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates and assumptions impact, among others, an allowance for doubtful accounts, inventory obsolescence, and other unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.
Cash and Cash Equivalents:
T&L considers all highly liquid debt instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents.
| 6 |
T&L CREATIVE SALADS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Risks and Uncertainties:
T&L operates in an industry that is subject to intense competition and change in consumer demand. T&L’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. T&L 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 T&L competes, including a potential general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with T&L’s distribution of the product. These factors, among others, make it difficult to project T&L’s operating results on a consistent basis.
T&L maintains cash balances at various financial institutions, in which deposits are insured by a federal agency up to $250,000. At various times, cash balances at these institutions may exceed the insurance limits.
Accounts Receivable:
Trade accounts receivable are reported at the amount management expects to collect from outstanding balances. Differences between the amount due and the amount management expects to collect are reported in the results of operations of the year in which those differences are determined, with an offsetting entry to a valuation allowance for trade accounts receivable. Balances which are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. As of December 31, 2020 the Company had a Allowance for Doubtful Accounts of $150,000.
Inventory:
Inventory is stated at the lower of cost, or market, as determined by the first-in, first-out method (FIFO) valuation method. Inventories on December 31, 2020, consist of Raw Material, Work in Process and Finished Goods.
Property and Equipment:
Property and equipment are recorded at cost. Depreciation is provided using accelerated and straight-line methods over the estimated useful lives of the assets.
| 7 |
T&L CREATIVE SALADS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Income Taxes:
T&L is treated as a S Corporation for federal and state income tax purposes. Consequently, T&L does not pay federal and state income taxes, but does pay city taxes. Instead, the stockholders’ include T&L’s taxable net income or loss on their personal tax returns.
T&L adopted the income tax standard for uncertain tax positions. As a result of the implementation, T&L has evaluated its tax position and determined it has no uncertain tax positions as of December 31, 2020. T&L classifies interest and penalties related to income tax liabilities, if applicable, as a component of income tax expense.
T&L’s federal income tax returns for 2018, 2019 and 2020 are subject to examination by the IRS and other state taxing authorities for three years after they were filed.
Revenue Recognition Policy:
T&L derives its revenues primarily from the sale of finished products to supermarkets and mass-market club stores, delis, bagel stores, caterers and distributors, contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, revenue recognition occurs when the goods are transferred to its customers. T&L reports all amounts billed to a customer in a sale transaction as revenue. Under the new revenue guidance, T&L elected to treat shipping and handling activities as fulfillment activities, and the related costs are recorded as selling expenses in general and administrative expenses in the statement of operations. Incidental items that are immaterial in the context of the contract are recognized as expense.
T&L 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. T&L derives these estimates principally on historical utilization and redemption rates. T&L does not receive a distinct service in relation to the advertising, consumer incentives and trade promotions.
| 8 |
T&L CREATIVE SALADS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Revenue Recognition Policy: - (continued)
Payment terms in T & L’s invoices are based on the billing schedule established in contracts and purchase orders with customers. T & L recognizes the related trade receivable when the goods are shipped. Expenses such as slotting fees, sales discounts, promotions and allowances are accounted for as a direct reduction of revenues.
T&L does not have any significant financing components as payment is received at or shortly after the point of sale. Costs incurred to obtain a contract will be expensed as incurred when the amortization period is less than a year.
Variable Consideration:
The nature of T & L’s business gives rise to variable consideration, including rebates, allowances, and returns that generally decrease the transaction price which reduces revenue. These variable amounts are generally credited to the customer, based on achieving certain levels of sales activity, product returns or price concessions.
Variable consideration is estimated at the most likely amount that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that the significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are estimated based upon historical experience and known trends.
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:
Advertising costs are charged to operations when incurred. Advertising expense for the period ended December 31, 2020 was approximately $11,000.
Subsequent Events:
Management has evaluated subsequent events and transactions through March 7, 2022, the date the financial statements were available to be issued, 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.
The company’s assets were sold in December 2021.
| 9 |
T&L CREATIVE SALADS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 2 - RELATED PARTY LOANS AND TRANSACTIONS:
Related Party Loans represents unsecured interest free advances to stockholders.
T&L conducts business as a contract packager and manufacturer for a related company. Related company sales and accounts receivable for December 31, 2020, was $607,647 and $32,907, respectfully.
T&L leases its facility from related parties on a month-to-month basis. Lease expense for the year ended December 31, 2020, was $114,824. It also shares office and warehouse space with a related company.
NOTE 3 - LONG-TERM DEBT:
| Long-term debt consists of the following: | ||||
| Notes Payable Installment Agreements – Payable in monthly installments in the aggregate of approximately $35,000 that include interest ranging from 4.5% to 5.0%, maturing through February 2025. | 1,646,440 | |||
| Note Payable SBA PPP | ||||
| Unsecured Interest payable at 1.00%, maturing May 2022. | 796,042 | |||
| 2,442,482 | ||||
| Less: Current Portion | 336,138 | |||
| TOTAL LONG-TERM DEBT | $ | 2,106,344 |
These loans are secured by the Stockholders personal guarantees, a UCC-1 Blanket on all company assets and a 2nd mortgage on real property.
Future maturities of long-term debt are as follows:
Year Ending December 31, | ||||
| 2021 | 336,138 | |||
| 2022 | 1,138,938 | |||
| 2023 | 358,648 | |||
| 2024 | 375,125 | |||
| 2025 | 233,633 | |||
| Thereafter | $ | 2,442,482 | ||
| 10 |
T&L CREATIVE SALADS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 4 - 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.
T&L has operating truck and automobile leases with monthly aggregate payments of $9,559 plus fuel, maintenance and excess mileage fees which expires in October 2022 and April 2023.
Aggregate minimum annual lease payments are as follows:
Year Ending December 31, | ||||
| 2021 | 114,704 | |||
| 2022 | 114,704 | |||
| 2023 | 38,235 | |||
| $ | 267,643 | |||
Lease expenses was approximately $115,000 for the year ended December 31, 2020 and is reported with the Other Factory Overhead in these financial statements.
NOTE 4 - COMMITMENTS AND CONTINGENCIES:
T&L is obligated to pay a consulting fee, the sum of $2,250 weekly to the founder and former stockholder, commencing July 23, 2018 and for each week thereafter for the remainder of the founders’ life. The consulting payments terminate in full upon the death of the founder. Due to the sale of T&L’s assets in December 2021 a final lump sum of approximately $1.4 million dollars was paid as full consideration of any remaining consulting obligation.
NOTE 5 - CONCENTRATIONS OF BUSINESS RISK:
T&L has major customers that aggregated approximately 59% of total revenue and 80% of total accounts receivable as of December 31, 2020.
NOTE 6 - RETIREMENT PLAN:
T&L sponsors a 401(k) and profit-sharing plan which covers all employees who meet certain age and eligibility requirements. The Company does not match contributions but may make a discretionary contribution. No discretionary contributions were made for the year ended December 31, 2020.
NOTE 6 – OTHER MATTERS:
Covid - 19 Pandemic:
As a means of aiding businesses hurt by the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law in March 2020 in response to the coronavirus emergency. The CARES Act provided a variety of payroll tax relief options to employers as an incentive to retain employees during the coronavirus emergency. These funds are being administered as loans and are backed by the Small Business Administration through the Paycheck Protection Program (PPP). These loans are eligible for forgiveness if certain payroll, rent and other facility expenses are met over an 8- or 24-week period after the loan is received. The Company received a Paycheck Protection Program Loan on May 6, 2020, for $796,042. On June 11, 2021, the Company received forgiveness of the loan, with accrued interest, therefore the loan will be included as income on the financial statements as PPP Loan Forgiveness for the year ended December 31, 2021.
| 11 |
DeVito & Co., LLC
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS’ REPORT ON SUPPLEMENTARY INFORMATION
Board of Directors
T & L Creative Salads, Inc.
148 Allen Boulevard
Farmingdale, NY 11735
We have audited the financial statements of T & L Creative Salads, Inc. as of and for the year ended December 31, 2020, and our report thereon dated March 7, 2022, which expressed an unmodified opinion on those financial statements, appears on pages 1 through 2. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedules of costs of goods sold and operating expenses, which is the responsibility of management, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has not been subjected to the auditing procedures applied in the audits of the financial statements and, accordingly, we do not express an opinion or provide any assurance on it.
DeVito & Co., LLC
Florham Park, NJ
March 7, 2022
26 Columbia Turnpike Suite 105, Florham Park, NJ 07932 Phone 201-440-1491 Fax 973-295-6552
info@devitocpa.com .. www.devitocpa.com
| 12 |
T & L CREATIVE SALADS, INC
SCHEDULE OF COST OF GOODS SOLD
FOR THE YEAR ENDED DECEMBER 31, 2020
| INVENTORY - Beginning | 709,693 | |||
| Purchases | 10,945,179 | |||
| Cost of Labor | 2,631,708 | |||
| Depreciation | 447,002 | |||
| Other Factory Overhead | 2,663,185 | |||
| Total Cost of Goods Available for Sale | 17,396,767 | |||
| Less: INVENTORY - Ending | 776,932 | |||
| TOTAL COST OF SALES | 16,619,835 |
| 13 |
T & L CREATIVE SALADS, INC.
SCHEDULE OF OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2020
| Payroll | 772,740 | |||||
| Payroll Taxes | 64,170 | |||||
| Selling | 343,781 | |||||
| Legal and Pofessional | 273,045 | |||||
| Insurance | 213,051 | |||||
| Telephone | 18,547 | |||||
| Computer and Internet | 58,939 | |||||
| Office | 32,649 | |||||
| Miscellaneous | 3,987 | |||||
| TOTAL OPERATING EXPENSES | 1,780,909 |
| 14 |
OLIVE BRANCH FOODS, LLC.
FINANCIAL REPORT
DECEMBER 31, 2020
WITH INDEPENDENT AUDITORS’ REPORT
OLIVE BRANCH FOODS, LLC.
FOR THE YEAR ENDED DECEMBER 31, 2020
C O N T E N T S
| Page | |
| INDEPENDENT AUDITORS’ REPORT | 1-2 |
| FINANCIAL STATEMENTS: | |
| Balance Sheet | 3 |
| Statement of Income and Members’ Equity | 4 |
| Statement of Cash Flows | 5 |
| Notes to Financial Statements | 6-9 |
| SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS: | |
| Independent Auditors’ Report on Supplementary Information | 10 |
| Schedule of Cost of Goods Sold | 11 |
| Schedule of Operating Expenses | 12 |
DeVito & Co., LLC
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Olive Branch Foods,
LLC 148 Allen Boulevard
Farmingdale, NY 11735
Report on the Financial Statements
We have audited the accompanying balance sheet of Olive Branch Foods, LLC as of December 31, 2020, and the related statement of income and members’ equity and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
26 Columbia Turnpike Suite 105, Florham Park, NJ 07932 Phone 201-440-1491 Fax 973-295-6552
info@devitocpa.com .. www.devitocpa.com
| 1 |
DeVito & Co., LLC
CERTIFIED PUBLIC ACCOUNTANTS
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Olive Branch Foods, LLC as of December 31, 2020, and the results of its operations and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
DeVito & Co., LLC
Florham Park, NJ
March 7, 2022
| 2 |
OLIVE BRANCH FOODS LLC
BALANCE SHEET - DECEMBER 31, 2020
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and Cash Equivalents | 67,587 | |||||||
| Accounts Receivable - Net of Allowance for Doubtful Accounts of $5,000 | 366,540 | |||||||
| Inventory | 193,757 | |||||||
| Total Current Assets | 627,884 | |||||||
| PROPERTY AND EQUIPMENT: | ||||||||
| Machinery and Equipment | 68,415 | |||||||
| Less: Accumulated Depreciation | 68,415 | - | ||||||
| OTHER ASSETS: | ||||||||
| Related Party Loans | 185,717 | |||||||
| TOTAL ASSETS | 813,601 | |||||||
| LIABILITIES AND MEMBERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts Payable and Accrued Expenses | 569,585 | |||||||
| Total Current Liabilities | 569,585 | |||||||
| COMMITMENTS AND CONTIGENCIES | ||||||||
| MEMBERS’ EQUITY | 244,016 | |||||||
| TOTAL LIABILITIES AND MEMBERS’ EQUITY | 813,601 |
See notes to financial statements.
| 3 |
OLIVE BRANCH FOODS, LLC
STATEMENT OF INCOME AND MEMBERS’ EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2020
| NET SALES | 3,322,141 | |||
| COST OF GOODS SOLD | 2,973,323 | |||
| GROSS PROFIT | 348,818 | |||
| OPERATING EXPENSES | 81,473 | |||
| NET INCOME | 267,345 | |||
| MEMBERS’ DEFICIT - Beginning | (23,329 | ) | ||
| MEMBERS’ EQUITY - Ending | 244,016 |
See notes to financial statement.
| 4 |
OLIVE BRANCH FOODS, LLC
FOR THE YEAR ENDED DECEMBER 31, 2020
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Income | 267,344 | |||||||
| Adjustments to Reconcile Net Income to Net Cash | ||||||||
| Provided by Operating Activities: | ||||||||
| Depreciation | 20,830 | |||||||
| Net Change in Operating Assets and Liabilities: | ||||||||
| Accounts Receivable | (125,336 | ) | ||||||
| Inventory | (88,223 | ) | ||||||
| Accounts Payable and Accrued Expenses | 11,300 | (181,429 | ) | |||||
| Net Cash Provided by Operating Activities | 85,915 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of Property and Equipment | (20,830 | ) | ||||||
| Advances to Affiliates | (2,831 | ) | ||||||
| Security Deposit | 5,000 | |||||||
| Net Cash Used by Investing Activities | (18,661 | ) | ||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 67,254 | |||||||
| CASH AND CASH EQUIVALENTS - Beginning | 333 | |||||||
| CASH AND CASH EQUIVALENTS - Ending | 67,587 |
See notes to financial statements.
| 5 |
OLIVE BRANCH FOODS, LLC. NOTES
TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations:
Olive Branch Foods, LLC (“OBF”) was organized under the laws of the State of New York on June 1, 2015 as a Limited Liability Company.
OBF is a distributor in the New York metropolitan area of olives, olive mixes, and savory products to a limited number of large retail customers, primarily in pre-packaged containers.
Basis of Presentation:
The financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
Use of Estimates:
The process of preparing financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.
Cash and Cash Equivalents:
OBF considers all highly liquid debt instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents.
Risks and Uncertainties:
OBF operates in an industry that is subject to intense competition and change in consumer demand. OBF’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. OBF 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 OBF competes, including a potential general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with OBF’s distribution of the product. These factors, among others, make it difficult to project OBF’s operating results on a consistent basis.
| 6 |
OLIVE BRANCH FOODS, LLC. NOTES
TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
OBF maintains cash balances at various financial institutions, in which deposits are insured by a federal agency up to $250,000. At various times, cash balances at these institutions may exceed the insurance limits.
Accounts Receivable:
Trade accounts receivable are reported at the amount management expects to collect from outstanding balances. Differences between the amount due and the amount management expects to collect are reported in the results of operations of the year in which those differences are determined, with an offsetting entry to a valuation allowance for trade accounts receivable. Balances which are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable.
Inventory:
Inventory is stated at the lower of cost, or market, as determined by the first-in, first-out method (FIFO) valuation method. Inventories on December 31, 2020, consist of Raw Material, Work in Process and Finished Goods.
Property and Equipment:
Property and equipment are recorded at cost. Depreciation is provided using accelerated and straight-line methods over the estimated useful lives of the assets.
Income Taxes:
OBF is treated as a Partnership for federal and state income tax purposes. Consequently, OBF does not pay federal and state income taxes. Instead, the stockholders’ include OBF’s taxable net income or loss on their personal tax returns.
OBF adopted the income tax standard for uncertain tax positions. As a result of the implementation, T & L has evaluated its tax position and determined it has no uncertain tax positions as of December 31, 2020. OBF classifies interest and penalties related to income tax liabilities, if applicable, as a component of income tax expense.
OBF’s federal income tax return for 2018, 2019 and 2020 are subject to examination by the IRS and other state taxing authorities, generally for three years after it was filed.
| 7 |
OLIVE BRANCH FOODS, LLC. NOTES
TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Revenue Recognition:
OBF derives its revenues primarily from the sale of finished products to supermarkets and mass-market club stores, delis, bagel stores, caterers and distributors, contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, revenue recognition occurs when the goods are transferred to its customers. OBF reports all amounts billed to a customer in a sale transaction as revenue. Under the new revenue guidance, OBF elected to treat shipping and handling activities as fulfillment activities, and the related costs are recorded as selling expenses in general and administrative expenses in the statement of operations. Incidental items that are immaterial in the context of the contract are recognized as expense.
OBF 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. OBF derives these estimates principally on historical utilization and redemption rates. OBF does not receive a distinct service in relation to the advertising, consumer incentives and trade promotions.
Payment terms in the OBF’s invoices are based on the billing schedule established in contracts and purchase orders with customers. OBF recognizes the related trade receivable when the goods are shipped. Expenses such as slotting fees, sales discounts, promotions and allowances are accounted for as a direct reduction of revenues.
OBF does not have any significant financing components as payment is received at or shortly after the point of sale. Costs incurred to obtain a contract will be expensed as incurred when the amortization period is less than a year.
Variable Consideration:
The nature of the OBF’s business gives rise to variable consideration, including rebates, allowances, and returns that generally decrease the transaction price which reduces revenue. These variable amounts are generally credited to the customer, based on achieving certain levels of sales activity, product returns or price concessions.
Variable consideration is estimated at the most likely amount that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that the significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are estimated based upon historical experience and known trends.
| 8 |
OLIVE BRANCH FOODS, LLC. NOTES
TO FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
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:
Advertising costs are charged to operations when incurred. Advertising expense for the period ended December 31, 2020 was approximately $1,000.
Subsequent Events:
Management has evaluated subsequent events and transactions through March 7, 2022, the date the financial statements were available to be issued, 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.
The company’s assets were sold in December 2021.
NOTE 2 - RELATED PARTY LOANS AND TRANSACTIONS:
Related Party Loans represents unsecured interest free advances to members.
OBF conducts business with a contract packager and manufacturer which is a related company. Related company purchases and accounts payable for December 31, 2020, was $607,647 and $32,907, respectfully.
OBF has no operating building lease but shares office and warehouse space with a related company.
NOTE 3 - 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.
NOTE 4 - CONCENTRATIONS OF BUSINESS RISK:
The company had major customers for the period ended December 31, 2020, that aggregated approximately 90% of its revenue. Accounts receivable due from these major customers was approximately 90% of the company’s total accounts receivable as of December 31, 2020.
| 9 |
DeVito & Co., LLC
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS’ REPORT ON SUPPLEMENTARY INFORMATION
Board of Directors
Olive Branch Foods, LLC
148 Allen Boulevard
Farmingdale, NY 11735
We have audited the financial statements of Olive Branch Foods, LLC as of and for the year ended December 31, 2020, and our report thereon dated March 7, 2022, which expressed an unmodified opinion on those financial statements, appears on pages 1 through 2. Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The schedules of costs of goods sold and operating expenses, which is the responsibility of management, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has not been subjected to the auditing procedures applied in the audits of the financial statements and, accordingly, we do not express an opinion or provide any assurance on it.
|
|
| DeVito & Co., LLC | |
| Florham Park, NJ | |
| March 7, 2022 |
26 Columbia Turnpike Suite 105, Florham Park, NJ 07932 Phone 201-440-1491 Fax 973-295-6552
info@devitocpa.com .. www.devitocpa.com
| 10 |
OLIVE BRANCH FOODS, LLC
SCHEDULE OF COST OF GOODS SOLD
FOR THE YEAR ENDED DECEMBER 31, 2020
| INVENTORY - Beginning | 105,534 | |||
| Purchases | 1,954,281 | |||
| Depreciation | 20,830 | |||
| Contract Packaging | 616,155 | |||
| Other Costs - Overhead | 470,280 | |||
Total Cost of Goods Available for Sale | 3,167,080 | |||
| Less: INVENTORY - Ending | 193,757 | |||
TOTAL COST OF GOODS SOLD | 2,973,323 |
| 11 |
OLIVE BRANCH FOODS, LLC
SCHEDULE OF OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2020
| Selling | 61,020 | |||
| Insurance | 9,325 | |||
| Filing Fees | 1,650 | |||
| Office | 3,855 | |||
| Miscellaneous | 5,623 | |||
TOTAL OPERATING EXPENSES | 81,473 |
| 12 |
T & L CREATIVE SALADS, INC.
FINANCIAL REPORT
DECEMBER 31, 2019
WITH INDEPENDENT AUDITORS’ REPORT
T & L SALADS, INC.
FOR THE YEAR ENDED DECEMBER 31, 2019
C O N T E N T S
| Page | |
| INDEPENDENT AUDITORS’ REPORT | 1-2 |
| FINANCIAL STATEMENTS: | |
| Balance Sheet | 3 |
| Statement of Income and Retained Earnings | 4 |
| Statement of Cash Flows | 5 |
| Notes to Financial Statements | 6 - 12 |
| SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS: | |
| Independent Auditors’ Report on Supplementary Information | 13 |
| Schedule of Cost of Goods Sold | 14 |
| Schedule of Operating Expenses | 15 |
DeVito & Co., LLC
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
T & L Creative Salads, Inc.
148 Allen Boulevard
Farmingdale, NY 11735
Report on the Financial Statements
We have audited the accompanying balance sheet of T & L Creative Salads, Inc., as of December 31, 2019, and the related statement of income and retained earnings and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
26 Columbia Turnpike Suite 105, Florham Park, NJ 07932 Phone 201-440-1491 Fax 973-295-6552
info@devitocpa.com .. www.devitocpa.com
| 1 |
DeVito & Co., LLC
CERTIFIED PUBLIC ACCOUNTANTS
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of T & L Creative Salads, Inc. as of December 31, 2019, and the results of its operations and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
|
|
| DeVito & Co., LLC | |
| Florham Park, NJ | |
| March 4, 2022 |
26 Columbia Turnpike Suite 105, Florham Park, NJ 07932 Phone 201-440-1491 Fax 973-295-6552
info@devitocpa.com .. www.devitocpa.com
| 2 |
T&L CREATIVE SALADS, INC.
BALANCE SHEET - DECEMBER 31, 2019
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and Cash Equivalents | 72,165 | |||||||
| Accounts Receivable - Net of Allowance for Doubtful Accounts of $150,000 | 2,100,194 | |||||||
| Inventory | 709,693 | |||||||
| Total Current Assets | 2,882,052 | |||||||
| PROPERTY AND EQUIPMENT: | ||||||||
| Machinery and Equipment | 3,660,610 | |||||||
| Leasehold Improvements | 1,668,962 | |||||||
| Total | 5,329,572 | |||||||
| Less: Accumulated Depreciation | 2,368,303 | 2,961,269 | ||||||
OTHER ASSETS | ||||||||
| Related Party Loans | 816,451 | |||||||
| Other Assets | 14,279 | 830,730 | ||||||
| TOTAL ASSETS | 6,674,051 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Current Portion of Long Term Debt | 488,436 | |||||||
| Accounts Payable and Accrued Expenses | 1,250,959 | |||||||
| Total Current Liabilities | 1,739,395 | |||||||
| LONG TERM DEBT - Net of Current Portion | 1,575,617 | |||||||
| COMMITMENTS AND CONTIGENCIES | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common Stock - No Par Value, 200 Shares Authorized, 30 Shares Issued and Outstanding | 3,000 | |||||||
| Retained Earnings | 3,356,039 | |||||||
| TOTAL STOCKHOLDERS’ EQUITY | 3,359,039 | |||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 6,674,051 |
See notes to financial statements.
| 3 |
T&L CREATIVE SALADS, INC.
STATEMENT OF INCOME AND RETAINED
EARNINGS FOR THE YEAR ENDED
DECEMBER 31, 2019
| NET SALES | 16,991,391 | |||
| COST OF GOODS SOLD | 14,918,823 | |||
| GROSS PROFIT | 2,072,568 | |||
| OPERATING EXPENSES | 1,586,508 | |||
| INCOME FROM OPERATIONS | 486,060 | |||
| INTEREST EXPENSE | 102,622 | |||
| NET INCOME BEFORE TAXES | 383,438 | |||
| STATE AND CITY TAXES | 15,790 | |||
| NET INCOME | 367,648 | |||
| RETAINED EARNINGS - Beginning | 3,039,085 | |||
| LESS: DIVIDEND | (50,694 | ) | ||
| RETAINED EARNINGS - Ending | 3,356,039 |
See notes to financial statements.
| 4 |
T&L SALADS, INC.
FOR THE YEAR ENDED DECEMBER 31, 2019
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Income | 367,648 | |||||||
| Adjustments to Reconcile Net Income to Net Cash | ||||||||
| Used by Operating Activities: | ||||||||
| Depreciation and Amortization | 496,340 | |||||||
| Bad Debt | 25,000 | |||||||
| Net Change in Operating Assets and Liabilities: | ||||||||
| Accounts Receivable | (1,273,775 | ) | ||||||
| Inventory | (209,693 | ) | ||||||
| Accounts Payable and Accrued Expenses | 550,068 | |||||||
| Net Cash Used by Operating Activities | (412,060 | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of Property and Equipment | (142,832 | ) | ||||||
| Dividend | (50,694 | ) | ||||||
| Net Cash Used by Investing Activities | (193,526 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Advances of Note Payable - Bank | 121,804 | |||||||
| Repayment of Related Party Loans | 20,222 | |||||||
| Net Cash Provided by Financing | 142,026 | |||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (95,912 | ) | ||||||
CASH AND CASH EQUIVALENTS - Beginning | 168,077 | |||||||
CASH AND CASH EQUIVALENTS - Ending | 72,165 |
See notes to financial statements.
| 5 |
T & L CREATIVE SALADS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations:
T & L Creative Salad, Inc. (“T&L”) was organized under the laws of the State of New York on March 2, 1988 and has elected to be taxed as a S Corporation on January 1, 2001. The company has a year-ended December 31.
T&L is a premier gourmet food manufacturer and distributor. The company manufactures a full line of foods for retail food chains and mass market club stores, delis, bagel stores, caterers and distributors. T&L uses high-quality meats, seafood and vegetables, prepared to meet the standards set forth by the USDA and the FDA. T&L actively sells its salads and prepared products to over 250 delis, bagel shops, smaller retail accounts and food distributors in the New York metropolitan area, representing over 35% of T&L’s current sales volume.
Basis of Presentation:
The financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
Use of Estimates:
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates and assumptions impact, among others, an allowance for doubtful accounts, inventory obsolescence, and other unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.
Cash and Cash Equivalents:
T&L considers all highly liquid debt instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents.
| 6 |
T & L CREATIVE SALADS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Risks and Uncertainties:
T&L operates in an industry that is subject to intense competition and change in consumer demand. T&L’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. T&L 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 T&L competes, including a potential general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with T&L’s distribution of the product. These factors, among others, make it difficult to project T&L’s operating results on a consistent basis.
T&L maintains cash balances at various financial institutions, in which deposits are insured by a federal agency up to $250,000. At various times, cash balances at these institutions may exceed the insurance limits.
Accounts Receivable:
Trade accounts receivable are reported at the amount management expects to collect from outstanding balances. Differences between the amount due and the amount management expects to collect are reported in the results of operations of the year in which those differences are determined, with an offsetting entry to a valuation allowance for trade accounts receivable. Balances which are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. As of December 31, 2019 the Company had a Allowance for Doubtful Accounts of $150,000.
Inventory:
Inventory is stated at the lower of cost, or market, as determined by the first-in, first-out method (FIFO) valuation method. Inventories on December 31, 2019, consist of Raw Material, Work in Process and Finished Goods.
Property and Equipment:
Property and equipment are recorded at cost. Depreciation is provided using accelerated and straight-line methods over the estimated useful lives of the assets.
| 7 |
T & L CREATIVE SALADS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Income Taxes:
T&L is treated as a S Corporation for federal and state income tax purposes. Consequently, T&L does not pay federal and state income taxes, but does pay city taxes. Instead, the stockholders’ include T&L’s taxable net income or loss on their personal tax returns.
T&L adopted the income tax standard for uncertain tax positions. As a result of the implementation, T&L has evaluated its tax position and determined it has no uncertain tax positions as of December 31, 2019. T&L classifies interest and penalties related to income tax liabilities, if applicable, as a component of income tax expense.
T&L’s federal income tax returns for 2017, 2018 and 2019 are subject to examination by the IRS and other state taxing authorities for three years after they were filed.
Revenue Recognition Policy:
T&L derives its revenues primarily from the sale of finished products to supermarkets and mass-market club stores, delis, bagel stores, caterers and distributors, contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, revenue recognition occurs when the goods are transferred to its customers. T&L reports all amounts billed to a customer in a sale transaction as revenue. Under the new revenue guidance, T&L elected to treat shipping and handling activities as fulfillment activities, and the related costs are recorded as selling expenses in general and administrative expenses in the statement of operations. Incidental items that are immaterial in the context of the contract are recognized as expense.
T&L 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. T&L derives these estimates principally on historical utilization and redemption rates. T&L does not receive a distinct service in relation to the advertising, consumer incentives and trade promotions.
| 8 |
T & L CREATIVE SALADS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Revenue Recognition Policy: - (continued)
Payment terms in T & L’s invoices are based on the billing schedule established in contracts and purchase orders with customers. T & L recognizes the related trade receivable when the goods are shipped. Expenses such as slotting fees, sales discounts, promotions and allowances are accounted for as a direct reduction of revenues.
T&L does not have any significant financing components as payment is received at or shortly after the point of sale. Costs incurred to obtain a contract will be expensed as incurred when the amortization period is less than a year.
Variable Consideration:
The nature of T & L’s business gives rise to variable consideration, including rebates, allowances, and returns that generally decrease the transaction price which reduces revenue. These variable amounts are generally credited to the customer, based on achieving certain levels of sales activity, product returns or price concessions.
Variable consideration is estimated at the most likely amount that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that the significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are estimated based upon historical experience and known trends.
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:
Advertising costs are charged to operations when incurred. Advertising expense for the period ended December 31, 2019 was approximately $7,600.
| 9 |
T & L CREATIVE SALADS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Subsequent Events:
Management has evaluated subsequent events and transactions through March 4, 2022, the date the financial statements were available to be issued, 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.
The company’s assets were sold in December 2021.
NOTE 2 - RELATED PARTY LOANS AND TRANSACTIONS:
Related Party Loans represents unsecured interest free advances to stockholders.
T&L conducts business as a contract packager and manufacturer for a related company. Related company sales and accounts receivable for December 31, 2019, was $388,000 and $200,833, respectfully.
T&L leases its facility from related parties on a month-to-month basis. Lease expense for the year ended December 31, 2019, was $114,824.
NOTE 3 - LONG-TERM DEBT:
| Long-term debt consists of the following: | ||||||||
| Notes Payable Installment Agreements – Payable in monthly installments in the aggregate of approximately $35,000 that include interest ranging from 4.5% to 5.0%, maturing through February 2025. | 1,889,053 | |||||||
| Note Payable Bank - Line of Credit | ||||||||
| Interest payable at 5.00%, maturing 2025 | 175,000 | - | ||||||
| 2,064,053 | ||||||||
| Less: Current Portion | 488,436 | |||||||
| TOTAL LONG-TERM DEBT | $ | 1,575,617 |
| 10 |
T & L CREATIVE SALADS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
NOTE 3 - LONG-TERM DEBT: (continued)
These loans are secured by the Stockholders personal guarantees, a UCC-1 Blanket on all company assets and a 2nd mortgage on real property.
Future maturities of long-term debt are as follows:
Year
Ending | ||||
| 2020 | 488,436 | |||
| 2021 | 327,835 | |||
| 2022 | 342,896 | |||
| 2023 | 358,648 | |||
| 2024 | 375,125 | |||
| 2025 | 171,113 | |||
| Thereafter | $ | 2,064,053 | ||
NOTE 4 - 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.
T&L has operating truck and automobile leases with monthly aggregate payments of $9,559 plus fuel, maintenance and excess mileage fees which expires in October 2022 and April 2023.
Aggregate minimum annual lease payments are as follows:
Year Ending December 31, | ||||
| 2020 | 114,704 | |||
| 2021 | 114,704 | |||
| 2022 | 114,704 | |||
| 2023 | 38,235 | |||
| $ | 382,347 | |||
Lease expenses was approximately $115,000 for the year ended December 31, 2019 and is reported with the Other Factory Overhead in these financial statements.
| 11 |
T & L CREATIVE SALADS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
NOTE 4 - COMMITMENTS AND CONTINGENCIES: (Continued)
T&L is obligated to pay a consulting fee, the sum of $2,250 weekly to the founder and former stockholder, commencing July 23, 2018 and for each week thereafter for the remainder of the founders’ life. The consulting payments terminate in full upon the death of the founder. Due to the sale of T&L’s assets in December 2021 a final lump sum of approximately $1.4 million dollars was paid as full consideration of any remaining consulting obligation.
NOTE 5 - CONCENTRATIONS OF BUSINESS RISK:
T&L has major customers that aggregated approximately 59% of total revenue and 80% of total accounts receivable as of December 31, 2019.
NOTE 6 - RETIREMENT PLAN:
T&L sponsors a 401(k) and profit-sharing plan which covers all employees who meet certain age and eligibility requirements. The Company does not match contributions but may make a discretionary contribution. No discretionary contributions were made for the year ended December 31, 2019.
| 12 |
DeVito & Co., LLC
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS’ REPORT ON SUPPLEMENTARY INFORMATION
Board of Directors
T & L Creative Salads, Inc.
148 Allen Boulevard
Farmingdale, NY 11735
We have audited the financial statements of T & L Creative Salads, Inc. as of and for the year ended December 31, 2019, and our report thereon dated March 4, 2022, which expressed an unmodified opinion on those financial statements, appears on pages 1 through 2. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedules of costs of goods sold and operating expenses, which is the responsibility of management, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has not been subjected to the auditing procedures applied in the audits of the financial statements and, accordingly, we do not express an opinion or provide any assurance on it.
|
|
| DeVito & Co., LLC | |
| Florham Park, NJ | |
| March 4, 2022 |
26 Columbia Turnpike Suite 105, Florham Park, NJ 07932 Phone 201-440-1491 Fax 973-295-6552
info@devitocpa.com .. www.devitocpa.com
| 13 |
T & L CREATIVE SALADS, INC
SCHEDULE OF COST OF GOODS SOLD
FOR THE YEAR ENDED DECEMBER 31, 2019
| INVENTORY - Beginning | 500,000 | |||
| Purchases | 10,065,387 | |||
| Cost of Labor | 2,052,029 | |||
| Depreciation | 496,340 | |||
| Other Factory Overhead | 2,514,760 | |||
| Total Cost of Goods Available for Sale | 15,628,516 | |||
| Less: INVENTORY - Ending | 709,693 | |||
| TOTAL COST OF SALES | 14,918,823 |
| 14 |
T & L CREATIVE SALADS, INC. SCHEDULE OF OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2019
| Payroll | 612,789 | |||||||
| Payroll Taxes | 76,958 | |||||||
| Selling | 364,323 | |||||||
| Legal and Pofessional | 241,427 | |||||||
| Insurance | 212,151 | |||||||
| Telephone | 18,894 | |||||||
| Computer and Internet | 10,124 | |||||||
| Office | 25,903 | |||||||
| Miscellaneous | 23,939 | |||||||
| TOTAL OPERATING EXPENSES | 1,586,508 |
| 15 |
OLIVE BRANCH FOODS, LLC.
FINANCIAL REPORT
DECEMBER 31, 2019
WITH INDEPENDENT AUDITORS’ REPORT
OLIVE BRANCH FOODS, LLC.
FOR THE YEAR ENDED DECEMBER 31, 2019
C O N T E N T S
| Page | |
| INDEPENDENT AUDITORS’ REPORT | 1-2 |
| FINANCIAL STATEMENTS: | |
| Balance Sheet | 3 |
| Statement of Operations and Members’ Deficit | 4 |
| Statement of Cash Flows | 5 |
| Notes to Financial Statements | 6-9 |
| SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS: | |
| Independent Auditors’ Report on Supplementary Information | 10 |
| Schedule of Cost of Goods Sold | 11 |
| Schedule of Operating Expenses | 12 |
DeVito & Co., LLC
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Olive Branch Foods, LLC 148 Allen Boulevard
Farmingdale, NY 11735
Report on the Financial Statements
We have audited the accompanying balance sheet of Olive Branch Foods, LLC as of December 31, 2019, and the related statement of operations and members’ deficit and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
26 Columbia Turnpike Suite 105, Florham Park, NJ 07932 Phone 201-440-1491 Fax 973-295-6552
info@devitocpa.com .. www.devitocpa.com
| 1 |
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Olive Branch Foods, LLC as of December 31, 2019, and the results of its operations and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
DeVito & Co., LLC
Florham Park, NJ
March 4, 2022
| 2 |
OLIVE BRANCH FOODS LLC
BALANCE SHEET - DECEMBER 31, 2019
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and Cash Equivalents | 333 | |||||||
| Accounts Receivable - Net of Allowance for Doubtful Accounts of $5,000 | 241,204 | |||||||
| Inventory | 105,534 | |||||||
| Total Current Assets | 347,071 | |||||||
| PROPERTY AND EQUIPMENT: | ||||||||
| Machinery and Equipment | 47,584 | |||||||
| Less: Accumulated Depreciation | 47,584 | - | ||||||
| OTHER ASSETS: | ||||||||
| Related Party Loans | 182,886 | |||||||
| Security Deposit | 5,000 | 187,886 | ||||||
| TOTAL ASSETS | 534,957 | |||||||
| LIABILITIES AND MEMBERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts Payable and Accrued Expenses | 558,286 | |||||||
| Total Current Liabilities | 558,286 | |||||||
| COMMITMENTS AND CONTIGENCIES | ||||||||
| MEMBERS’ DEFICIT | (23,329 | ) | ||||||
| TOTAL LIABILITIES AND MEMBERS’ DEFICIT | 534,957 | |||||||
See notes to financial statement.
| 3 |
OLIVE BRANCH FOODS, LLC
STATEMENT OF OPERATIONS AND MEMBERS’ DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 2019
| NET SALES | 1,104,966 | |||
| COST OF GOODS SOLD | 1,347,387 | |||
| GROSS LOSS | (242,421 | ) | ||
| OPERATING EXPENSES | 98,076 | |||
| NET LOSS FROM OPERATIONS | (340,497 | ) | ||
| MEMBERS’ EQUITY - Beginning | 317,168 | |||
| MEMBERS’ DEFICIT - Ending | (23,329 | ) |
See notes to financial statement.
| 4 |
OLIVE BRANCH FOODS, LLC
FOR THE YEAR ENDED DECEMBER 31, 2019
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Loss from Operations | (340,497 | ) | ||||||
| Adjustments to Reconcile Net Loss to Net Cash | ||||||||
| Provided by Operating Activities: | ||||||||
| Depreciation | 29,159 | |||||||
| Bad Debt Allowance | 5,000 | |||||||
| Net Change in Operating Assets and Liabilities: | ||||||||
| Accounts Receivable | 4,166 | |||||||
| Inventory | 20,433 | |||||||
| Accounts Payable and Accrued Expenses | 314,514 | 373,272 | ||||||
| Net Cash Provided by Operating Activities | 32,775 | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of Property and Equipment | (29,159 | ) | ||||||
| Advances to Affiliates | (25,549 | ) | ||||||
| Net Cash Used by Investing Activities | (54,708 | ) | ||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (21,933 | ) | ||||||
| CASH AND CASH EQUIVALENTS - Beginning | 22,266 | |||||||
| CASH AND CASH EQUIVALENTS – Ending | 333 |
See notes to financial statements.
| 5 |
OLIVE BRANCH FOODS, LLC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations:
Olive Branch Foods, LLC. (“OBF”) was organized under the laws of the State of New York on June 1, 2015 as a Limited Liability Company.
OBF is a distributor in the New York metropolitan area of olives, olive mixes, and savory products to a limited number of large retail customers, primarily in pre-packaged containers.
Basis of Presentation:
The financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
Use of Estimates:
The process of preparing financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.
Cash and Cash Equivalents:
OBF considers all highly liquid debt instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents.
Risks and Uncertainties:
OBF operates in an industry that is subject to intense competition and change in consumer demand. OBF’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. OBF 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 OBF competes, including a potential general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with OBF’s distribution of the product. These factors, among others, make it difficult to project OBF’s operating results on a consistent basis.
OBF maintains cash balances at various financial institutions, in which deposits are insured by a federal agency up to $250,000. At various times, cash balances at these institutions may exceed the insurance limits.
| 6 |
OLIVE BRANCH FOODS, LLC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Accounts Receivable:
Trade accounts receivable are reported at the amount management expects to collect from outstanding balances. Differences between the amount due and the amount management expects to collect are reported in the results of operations of the year in which those differences are determined, with an offsetting entry to a valuation allowance for trade accounts receivable. Balances which are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable.
Inventory:
Inventory is stated at the lower of cost, or market, as determined by the first-in, first-out method (FIFO) valuation method. Inventories on December 31, 2019, consist of Raw Material, Work in Process and Finished Goods.
Property and Equipment:
Property and equipment are recorded at cost. Depreciation is provided using accelerated and straight-line methods over the estimated useful lives of the assets.
Income Taxes:
OBF is treated as a Partnership for federal and state income tax purposes. Consequently, OBF does not pay federal and state income taxes. Instead, the stockholders’ include OBF’s taxable net income or loss on their personal tax returns.
OBF adopted the income tax standard for uncertain tax positions. As a result of the implementation, T & L has evaluated its tax position and determined it has no uncertain tax positions as of December 31, 2019. OBF classifies interest and penalties related to income tax liabilities, if applicable, as a component of income tax expense.
OBF’s federal income tax return for 2017, 2018 and 2019 are subject to examination by the IRS and other state taxing authorities, generally for three years after it was filed.
| 7 |
OLIVE BRANCH FOODS, LLC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Revenue Recognition:
OBF derives its revenues primarily from the sale of finished products to supermarkets and mass-market club stores, delis, bagel stores, caterers and distributors, contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, revenue recognition occurs when the goods are transferred to its customers. OBF reports all amounts billed to a customer in a sale transaction as revenue. Under the new revenue guidance, OBF elected to treat shipping and handling activities as fulfillment activities, and the related costs are recorded as selling expenses in general and administrative expenses in the statement of operations. Incidental items that are immaterial in the context of the contract are recognized as expense.
OBF 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. OBF derives these estimates principally on historical utilization and redemption rates. OBF does not receive a distinct service in relation to the advertising, consumer incentives and trade promotions.
Payment terms in the OBF’s invoices are based on the billing schedule established in contracts and purchase orders with customers. OBF recognizes the related trade receivable when the goods are shipped. Expenses such as slotting fees, sales discounts, promotions and allowances are accounted for as a direct reduction of revenues.
OBF does not have any significant financing components as payment is received at or shortly after the point of sale. Costs incurred to obtain a contract will be expensed as incurred when the amortization period is less than a year.
Variable Consideration:
The nature of the OBF’s business gives rise to variable consideration, including rebates, allowances, and returns that generally decrease the transaction price which reduces revenue. These variable amounts are generally credited to the customer, based on achieving certain levels of sales activity, product returns or price concessions.
Variable consideration is estimated at the most likely amount that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that the significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are estimated based upon historical experience and known trends.
| 8 |
OLIVE BRANCH FOODS, LLC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
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:
Advertising costs are charged to operations when incurred. Advertising expense for the period ended December 31, 2019 was approximately $1,565.
Subsequent Events:
Management has evaluated subsequent events and transactions through March 7, 2022, the date the financial statements were available to be issued, 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.
The company’s assets were sold in December 2021.
NOTE 2 - RELATED PARTY LOANS AND TRANSACTIONS:
Related Party Loans represents unsecured interest free advances to members.
OBF conducts business with a contract packager and manufacturer which is a related company. Related company purchases and accounts payable for December 31, 2019, was $607,647 and $32,907, respectfully.
OBF has no operating facility lease, but shares office and warehouse space with a related company.
NOTE 3 - 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.
NOTE 4 - CONCENTRATIONS OF BUSINESS RISK:
The company had major customers for the period ended December 31, 2019, that aggregated approximately 90% of its revenue. Accounts receivable due from these major customers was approximately 90% of the company’s total accounts receivable as of December 31, 2019.
| 9 |
DeVito & Co., LLC
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITORS’ REPORT ON SUPPLEMENTARY INFORMATION
Board of Directors
Olive Branch Foods, LLC 148 Allen Boulevard
Farmingdale, NY 11735
We have audited the financial statements of Olive Branch Foods, LLC as of and for the year ended December 31, 2019, and our report thereon dated March 4, 2022, which expressed an unmodified opinion on those financial statements, appears on pages 1 through 2. Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The schedules of costs of goods sold and operating expenses, which is the responsibility of management, is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has not been subjected to the auditing procedures applied in the audits of the financial statements and, accordingly, we do not express an opinion or provide any assurance on it.
DeVito & Co., LLC
Florham Park, NJ
March 4, 2022
26 Columbia Turnpike Suite 105, Florham Park, NJ 07932 Phone 201-440-1491 Fax 973-295-6552
info@devitocpa.com .. www.devitocpa.com
| 10 |
OLIVE BRANCH FOODS, LLC
SCHEDULE OF COST OF GOODS SOLD
FOR THE YEAR ENDED DECEMBER 31, 2019
| INVENTORY - Beginning | 125,967 | |||
| Purchases | 1,047,326 | |||
| Depreciation | 29,159 | |||
| Other Costs - Overhead | 250,469 | |||
| Total Cost of Goods Available for Sale | 1,452,921 | |||
| Less: INVENTORY - Ending | 105,534 | |||
| TOTAL COST OF GOODS SOLD | 1,347,387 |
See independent auditors’ report on supplementary information.
| 11 |
OLIVE BRANCH FOODS, LLC
SCHEDULE OF OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2019
| Selling | 65,397 | |||
| Insurance | 7,109 | |||
| Filing Fees | 1,927 | |||
| Bad Debt | 5,000 | |||
| Office | 5,957 | |||
| Miscellaneous | 12,686 | |||
TOTAL OPERATING EXPENSES | 98,076 |
See independent auditors’ report on supplementary information.
| 12 |
EXHIBIT 99.2
T & L CREATIVE SALADS, INC.
FINANCIAL REPORT
SEPTEMBER 30, 2021
WITH INDEPENDENT ACCOUNTANTS’
REPORT
See independent auditors' report on supplementary information.
T & L CREATIVE SALADS, INC.
FOR THE NINE MONTHS THEN ENDED SEPTEMBER 30, 2021
CONTENTS
| Page | ||
| INDEPENDENT ACCOUNTANTS’ REPORT | 1 | |
| FINANCIAL STATEMENTS: | ||
| Balance Sheet | 2 | |
| Statement of Income and Retained Earnings | 3 | |
| Statement of Cash Flows | 4 | |
| Notes to Financial Statements | 5 - 11 | |
| SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS: | ||
| Independent Accountants’ Report on Supplementary Information | 12 | |
| Schedule of Cost of Goods Sold | 13 | |
| Schedule of Operating Expenses | 14 |
See independent auditors' report on supplementary information.
DEVITO &Co., LLC
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT ACCOUNTANTS’ REVIEW REPORT
Board of Directors
T & L Creative Salads, Inc.
148 Allen Boulevard
Farmingdale, NY 11735
Report on the Financial Statements
We have reviewed the accompanying financial statements of T&L Creative Salads, Inc., which comprise the balance sheet as of September 30, 2021, and the related statements of income and stockholders’ equity, and cash flows for the nine months then ended, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements, as a whole. Accordingly, we do not express such an opinion.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error.
Accountants’ Responsibility
Our responsibility is to conduct the review engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion.
Accountants’ Conclusion
Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in accordance with accounting principles generally accepted in the United States of America.
DEVITO & Co., LLC
Florham Park, NJ
March 12, 2022
26 Columbia Turnpike Suite 105, Florham Park, NJ 07932 Phone 201-440-1491 Fax 973-295-6552
info@devitocpa.com . www.devitocpa.com
| 1 |
T & L CREATIVE SALADS, INC. BALANCE SHEET - SEPTEMBER 30, 2021
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash
and Cash Equivalents | 376,755 | |||||||
| Accounts
Receivable - Net of Allowance for Doubtful Accounts of $150,000 | 1,631,440 | |||||||
| Inventory | 737,136 | |||||||
| Total Current Assets | 2,745,331 | |||||||
| PROPERTY AND EQUIPMENT: | ||||||||
| Machinery and Equipment | 3,747,940 | |||||||
| Leasehold Improvements | 1,672,446 | |||||||
| Total | 5,420,386 | |||||||
| Less: Accumulated Depreciation | 2,993,077 | 2,427,309 | ||||||
| OTHER ASSETS | ||||||||
| Related Party Loans | 916,602 | |||||||
| Other Assets | 12,154 | 928,756 | ||||||
| TOTAL ASSETS | 6,101,396 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Current Portion of Long Term Debt | 307,900 | |||||||
| Accounts Payable and Accrued Expenses | 942,046 | |||||||
| Total Current Liabilities | 1,249,946 | |||||||
| LONG TERM DEBT - Net of Current Portion | 1,083,337 | |||||||
| COMMITMENTS AND CONTIGENCIES | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Common
Stock - No Par Value, 200 Shares Authorized, 30 Shares Issued and Outstanding | 3,000 | |||||||
| Retained Earnings | 3,765,113 | |||||||
| TOTAL STOCKHOLDERS’ EQUITY | 3,768,113 | |||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 6,101,396 | |||||||
See notes to financial statements.
| 2 |
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE NINE MONTHS THEN ENDED SEPTEMBER 30,
2021
| NET SALES | 17,208,607 | |||||||
| COST OF GOODS SOLD | 16,325,216 | |||||||
| GROSS PROFIT | 883,391 | |||||||
| OPERATING EXPENSES | 1,362,227 | |||||||
| LOSS FROM OPERATIONS | (478,836 | ) | ||||||
| OTHER INCOME (EXPENSES): | ||||||||
| PPP LOAN FORGIVINESS | 796,042 | |||||||
| INTEREST EXPENSE | (51,733 | ) | ||||||
| TOTAL OTHER INCOME | 744,309 | |||||||
| NET INCOME BEFORE TAXES | 265,473 | |||||||
| STATE AND CITY TAXES | 23,443 | |||||||
| NET INCOME | 242,030 | |||||||
| RETAINED EARNINGS - Beginning | 3,697,707 | |||||||
| LESS: DIVIDEND | (174,624 | ) | ||||||
| RETAINED EARNINGS - Ending | 3,765,113 |
See notes to financial statements.
| 3 |
T & L CREATIVE SALADS,INC.
FOR THE NINE MONTHS THEN ENDED SEPTEMBER 30, 2021
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Income | 242,030 | |||||||
| Adjustments to Reconcile Net Income to Net Cash | ||||||||
| Used by Operating Activities: | ||||||||
| Depreciation and Amortization | 179,897 | |||||||
| Bad Debt | 25,000 | |||||||
| PPP Loan Forgiviness | (796,042 | ) | ||||||
| Net Change in Operating Assets and Liabilities: | ||||||||
| Accounts Receivable | (308,892 | ) | ||||||
| Inventory | 39,796 | |||||||
| Accounts Payable and Accrued Expenses | 426,258 | |||||||
| Net Cash Used by Operating Activities | (433,983 | ) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of Property and Equipment | (27,481 | ) | ||||||
| Advances to Related Party Loans | (75 | ) | ||||||
| Dividend
| (174,624 | ) | ||||||
| Net Cash Used by Investing Activities | (202,180) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Payment of Long Term Debt | (255,203 | ) | ||||||
| Net Cash Used by Financing | (255,203 | ) | ||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (649,336 | ) | ||||||
CASH AND CASH EQUIVALENTS- Beginning | 1,026,091 | |||||||
CASH AND CASH EQUIVALENTS- Ending | 376,755 |
See notes to financial statements.
| 4 |
T & L CREATIVE SALADS, INC.
STATEMENTS SEPTEMBER 30, 2021
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations:
T & L Creative Salad, Inc. (‘T&L”) was organized under the laws of the State of New York on March 2, 1988 and has elected to be taxed as a S Corporation on January 1, 2001. The company has a year-ended December 31.
T&L is a premier gourmet food manufacturer and distributor. The company manufactures a full line of foods for retail food chains and mass market club stores, delis, bagel stores, caterers and distributors. T&L uses high-quality meats, seafood and vegetables, prepared to meet the standards set forth by the USDA and the FDA. T&L actively sells its salads and prepared products to over 250 delis, bagel shops, smaller retail accounts and food distributors in the New York metropolitan area, representing over 35% of T&L’s current sales volume.
Basis of Presentation:
The financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
Use of Estimates:
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates and assumptions impact, among others, an allowance for doubtful accounts, inventory obsolescence, and other unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.
Cash and Cash Equivalents:
T&L considers all highly liquid debt instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents.
| 5 |
T & L CREATIVE SALADS, INC.
NOTES TO FINANCIAL
STATEMENTS SEPTEMBER 30, 2021
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Risks and Uncertainties:
T&L operates in an industry that is subject to intense competition and change in consumer demand. T&L’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. T&L 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 T&L competes, including a potential general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with T&L’s distribution of the product. These factors, among others, make it difficult to project T&L’s operating results on a consistent basis.
T&L maintains cash balances at various financial institutions, in which deposits are insured by a federal agency up to $250,000. At various times, cash balances at these institutions may exceed the insurance limits.
Accounts Receivable:
Trade accounts receivable are reported at the amount management expects to collect from outstanding balances. Differences between the amount due and the amount management expects to collect are reported in the results of operations of the year in which those differences are determined, with an offsetting entry to a valuation allowance for trade accounts receivable. Balances which are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. As of September 30, 2021 the Company had a Allowance for Doubtful Accounts of $150,000.
Inventory:
Inventory is stated at the lower of cost, or market, as determined by the first-in, first-out method (FIFO) valuation method. Inventories on September 30, 2021, consist of Raw Material, Work in Process and Finished Goods.
Property and Equipment:
Property and equipment are recorded at cost. Depreciation is provided using accelerated and straight-line methods over the estimated useful lives of the assets.
| 6 |
T & L CREATIVE SALADS, INC.
NOTES TO FINANCIAL
STATEMENTS SEPTEMBER 30, 2021
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Income Taxes:
T&L is treated as a S Corporation for federal and state income tax purposes. Consequently, T&L does not pay federal and state income taxes, but does pay city taxes. Instead, the stockholders’ include T&L’s taxable net income or loss on their personal tax returns.
T&L adopted the income tax standard for uncertain tax positions. As a result of the implementation, T&L has evaluated its tax position and determined it has no uncertain tax positions as of September 30, 2021. T&L classifies interest and penalties related to income tax liabilities, if applicable, as a component of income tax expense.
T&L’s federal income tax returns for 2018, 2019 and 2020 are subject to examination by the IRS and other state taxing authorities for three years after they were filed.
Revenue Recognition Policy:
T&L derives its revenues primarily from the sale of finished products to supermarkets and mass-market club stores, delis, bagel stores, caterers and distributors, contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, revenue recognition occurs when the goods are transferred to its customers. T&L reports all amounts billed to a customer in a sale transaction as revenue. Under the new revenue guidance, T&L elected to treat shipping and handling activities as fulfillment activities, and the related costs are recorded as selling expenses in general and administrative expenses in the statement of operations. Incidental items that are immaterial in the context of the contract are recognized as expense.
T&L 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. T&L derives these estimates principally on historical utilization and redemption rates. T&L does not receive a distinct service in relation to the advertising, consumer incentives and trade promotions.
| 7 |
T & L CREATIVE SALADS, INC. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2021
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Revenue Recognition Policy: - (continued)
Payment terms in T & L’s invoices are based on the billing schedule established in contracts and purchase orders with customers. T & L recognizes the related trade receivable when the goods are shipped. Expenses such as slotting fees, sales discounts, promotions and allowances are accounted for as a direct reduction of revenues.
T&L does not have any significant financing components as payment is received at or shortly after the point of sale. Costs incurred to obtain a contract will be expensed as incurred when the amortization period is less than a year.
Variable Consideration:
The nature of T & L’s business gives rise to variable consideration, including rebates, allowances, and returns that generally decrease the transaction price which reduces revenue. These variable amounts are generally credited to the customer, based on achieving certain levels of sales activity, product returns or price concessions.
Variable consideration is estimated at the most likely amount that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that the significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are estimated based upon historical experience and known trends.
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:
Advertising costs are charged to operations when incurred. Advertising expense for the period ended September 30, 2021 was approximately $15,000.
| 8 |
T & L CREATIVE SALADS, INC.
NOTES TO FINANCIAL
STATEMENTS SEPTEMBER 30, 2021
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Subsequent Events:
Management has evaluated subsequent events and transactions through March 12, 2022, the date the financial statements were available to be issued, 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.
The company’s assets were sold in December 2021.
NOTE 2 - RELATED PARTY LOANS AND TRANSACTIONS:
Related Party Loans represents unsecured interest free advances to stockholders.
T&L conducts business as a contract packager and manufacturer for a related company. Related company sales and accounts receivable for September 30, 2021, was $279,290 and $-0-, respectfully.
T&L leases its facility from related parties on a month-to-month basis. Lease expense for the year ended September 30, 2021, was $132,225. It also shares office and warehouse space with a related company.
NOTE 3 - LONG-TERM DEBT:
| Long-term debt consists of the following: | ||||
| Notes Payable Installment Agreements - Payable in monthly installments in the aggregate of approximately $35,000 that include interest ranging from 4.5% to 5.0%, maturing through February 2025. | 1,391,237 | |||
| Less: Current Portion | 307,900 | |||
| TOTAL LONG-TERM DEBT | $ | 1,083,337 |
| 9 |
T & L CREATIVE SALADS, INC.
NOTES TO FINANCIAL
STATEMENTS SEPTEMBER 30, 2021
NOTE 3 - LONG-TERM DEBT: (continued)
These loans are secured by the Stockholders personal guarantees, a UCC-1 Blanket on all company assets and a 2nd mortgage on real property.
Future maturities of long-term debt are as follows:
| Nine Months Ending | ||||
| September 30, | ||||
| 2021 | 307,900 | |||
| 2022 | 312,979 | |||
| 2023 | 350,684 | |||
| 2024 | 419,674 | |||
| 1 391 237 | ||||
NOTE 4 - 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.
T&L has operating truck and automobile leases with monthly aggregate payments of $9,559 plus fuel, maintenance and excess mileage fees which expires in October 2022 and April 2023.
| 10 |
Aggregate minimum annual lease payments are as follows:
| Nine Months Ending September 30, | ||||
| 2022 | 114,704 | |||
| 2023 | 57,352 | |||
| $ | 172,056 |
Lease expenses was approximately $86,000 for the nine months then ended September 30, 2021 and is reported with the Other Factory Overhead in these financial statements. T&L is obligated to pay a consulting fee, the sum of $2,250 weekly to the founder and former stockholder, commencing July 23, 2018 and for each week thereafter for the remainder of the founders’ life. The consulting payments terminate in full upon the death of the founder. Due to the sale of T&L’s assets in December 2021 a final lump sum of approximately $1.4 million dollars was paid as full consideration of any remaining consulting obligation.
NOTE 5 - CONCENTRATIONS OF BUSINESS RISK:
T&L has major customers that aggregated approximately 60% of total revenue and 80% of total accounts receivable as of September 30, 2021.
NOTE 6 - RETIREMENT PLAN:
T&L sponsors a 401(k) and profit-sharing plan which covers all employees who meet certain age and eligibility requirements. The Company does not match contributions but may make a discretionary contribution. No discretionary contributions were made for the nine months then ended September 30, 2021.
NOTE 7 - OTHER MATTERS:
Covid-19 Pandemic:
As a means of aiding businesses hurt by the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law in March 2020 in response to the coronavirus emergency. The CARES Act provided a variety of payroll tax relief options to employers as an incentive to retain employees during the coronavirus emergency. These funds are being administered as loans and are backed by the Small Business Administration through the Paycheck Protection Program (PPP). These loans are eligible for forgiveness if certain payroll, rent and other facility expenses are met over an 8- or 24-week period after the loan is received. The Company received a Paycheck Protection Program Loan on May 6, 2020, for $796,042. On June 11, 2021, the Company received forgiveness of the loan, with accrued interest, therefore the loan is included as income on the financial statements as PPP Loan Forgiveness for the nine months then ended September 30, 2021.
| 11 |
DEVITO & Co., LLC
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT ACCOUNTANTS’ REPORT ON SUPPLEMENTARY INFORMATION
Board of Directors
T & L Creative Salads, Inc. 148
Allen Boulevard
Farmingdale, NY 11735
Our report on our review of the basic financial statements of T&L Creative Salads, Inc., for September 30, 2021, appears on page 1. This review was made for the purpose of expressing a conclusion that there are no material modifications that should be made to the financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. The information included in the accompanying schedule of cost of sales and the schedule of operating expenses is presented for purposes of additional analysis and is not a required part of the basic financial statements. The information is the representation of management. We have performed a compilation engagement of the supplementary information in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We have not audited or reviewed the supplementary information and, accordingly, do not express an opinion, a conclusion, nor provide any form of assurance on such supplementary information.
DEVITO & Co., LLC
Florham Park, NJ
March 12, 2022
26 Columbia Turnpike Suite 105, Florham Park, NJ 07932 Phone 201-440-1491 Fax 973-295-6552
info@devitocpa.com . www.devitocpa.com
| 12 |
SCHEDULE OF COST OF GOODS SOLD
FOR THE NINE MONTHS THEN ENDED SEPTEMBER 30, 2021
| INVENTORY - Beginning | 776,932 | |||
| Purchases | 12,084,996 | |||
| Cost of Labor | 2,065,728 | |||
| Depreciation | 154,086 | |||
| Other Factory Overhead | 1,980,610 | |||
| Total Cost of Goods Available for Sale | 17,062,352 | |||
| Less: INVENTORY - Ending | 737,136 | |||
TOTAL COST OF SALES | 16,325,216 |
See independent accountants’ report on supplementary information.
| 13 |
T & L CREATIVE SALADS, INC.
SCHEDULE OF OPERATING EXPENSES
FOR THE NINE MONTHS THEN ENDED
SEPTEMBER 30, 2021
| Payroll | 605,633 | |||||
| Payroll Taxes | 52,629 | |||||
| Selling | 243,883 | |||||
| Legal and Professional | 213,799 | |||||
| Insurance | 185,811 | |||||
| Telephone | 12,698 | |||||
| Computer and Internet | 22,036 | |||||
| Office | 23,518 | |||||
| Miscellaneous | 2,220 | |||||
| TOTAL OPERATING EXPENSES | 1,362,227 |
See independent accountants’ report on supplementary information.
| 14 |
OLIVE BRANCH FOODS,
LLC. FINANCIAL REPORT
SEPTEMBER 30, 2021
WITH INDEPENDENT ACCOUNTANTS’ REPORT
| 15 |
OLIVE BRANCH FOODS, LLC.
FOR THE NINE MONTHS THEN ENDED SEPTEMBER 30, 2021
CONTENTS
Page | |
| INDEPENDENT ACCOUNTANTS’ REPORT | 1 |
| FINANCIAL STATEMENTS: | |
| Balance Sheet | 2 |
| Statement of Income and Members’ Equity | 3 |
| Statement of Cash Flows | 4 |
| Notes to Financial Statements | 5-8 |
| SUPPLEMENTARY INFORMATION TO FINANCIAL STATEMENTS: | |
| Independent Accountants’ Report on Supplementary Information | 9 |
| Schedule of Cost of Goods Sold | 10 |
| Schedule of Operating Expenses | 11 |
DEVITO & Co., LLC
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT ACCOUNTANTS’ REPORT
Board of Directors
Olive Branch Foods, LLC 148
Allen Boulevard
Farmingdale, NY 11735
Report on the Financial Statements
We have reviewed the accompanying financial statements of Olive Branch Foods, LLC which comprise the balance sheet as of September 30, 2021, and the related statements of income and members’ equity, and cash flows for the nine months then ended, and the related notes to the financial statements. A review includes primarily applying analytical procedures to management’s financial data and making inquiries of management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements, as a whole. Accordingly, we do not express such an opinion.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error.
Accountants’ Responsibility
Our responsibility is to conduct the review engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we are aware of any material modifications that should be made to the financial statements for them to be in accordance with accounting principles generally accepted in the United States of America. We believe that the results of our procedures provide a reasonable basis for our conclusion.
Accountants’ Conclusion
Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in accordance with accounting principles generally accepted in the United States of America.
DEVITO & Co., LLC
Florham Park,
NJ March 12, 2022
| 26 Columbia Turnpike Suite 105, Florham Park, NJ 07932 Phone | |
| 201-440-1491 Fax 973-295-6552 | |
| inf o@devitocpa.com . www.devitocpa.com |
| 1 |
OLIVE BRANCH FOODS, LLC.
BALANCE SHEET - SEPTEMBER 30, 2021
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and Cash Equivalents | 14,695 | |||||||
| Accounts
Receivable - Net of Allowance for Doubtful Accounts of $5,000 |
447,772 | |||||||
| Inventory | 191,207 | |||||||
| Total Current Assets | 653,674 | |||||||
| PROPERTY AND EQUIPMENT: | ||||||||
| Machinery and Equipment | 68,415 | |||||||
| Less: Accumulated Depreciation | 68,415 | |||||||
| OTHER ASSETS: | ||||||||
| Related Party Loans | 183,092 | |||||||
| TOTAL ASSETS | 836,766 | |||||||
| LIABILITIES AND MEMBERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts Payable and Accrued Expenses | 388,000 | |||||||
| COMMITMENTS AND CONTIGENCIES | ||||||||
| MEMBERS’ EQUITY | 448,766 | |||||||
| TOTAL LIABILITIES AND MEMBERS’ EQUITY | 836,766 | |||||||
See notes to financial statements.
| 2 |
OLIVE BRANCH FOODS, LLC.
STATEMENT OF INCOME AND MEMBERS’ EQUITY
FOR THE NINE MONTHS THEN ENDED SEPTEMBER 30, 2021
| NET SALES | 3,608,284 | |||
| COST OF GOODS SOLD | 3,104,046 | |||
| GROSS PROFIT | 504,238 | |||
| OPERATING EXPENSES | 299A88 | |||
| NET INCOME | 204,750 | |||
| MEMBERS’ EQUITY - Beginning | 244,016 | |||
| MEMBERS’ EQUITY - Ending | 448,766 |
See notes to financial statements.
| 3 |
OLIVE BRANCH FOODS, LLC.
FOR THE NINE MONTHS THEN ENDED SEPTEMBER 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Income | 204,750 | |||||||
| Net Change in Operating Assets and Liabilities: | ||||||||
| Accounts Receivable | (81,232 | ) | ||||||
| Inventory | 2,550 | |||||||
| Accounts Payable and Accrued Expenses | (181,585 | ) | (260,267 | ) | ||||
| Net Cash Used by Operating Activities | (55,517 | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Advances from Affiliates | 2,625 | |||||||
| Net Cash Provided by Investing Activities | 2,625 | |||||||
| NET DECREASE IN CASH AND CASH EQUIVALENTS | (52,892 | ) | ||||||
| CASH AND CASH EQUIVALENTS - Beginning | 67,587 | |||||||
| CASH AND CASH EQUIVALENTS- Ending | 14,695 | |||||||
See notes to financial statements.
| 4 |
OLIVE BRANCH FOODS, LLC.
SEPTEMBER 30, 2021
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations:
Olive Branch Foods, LLC (“OBF”) was organized under the laws of the State of New York on June 1, 2015 as a Limited Liability Company.
OBF is a packager and distributor in the New York metropolitan area of olives and savory products into supermarkets and local distributors.
Basis of Presentation:
The financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
Use of Estimates:
The process of preparing financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.
Cash and Cash Equivalents:
OBF considers all highly liquid debt instruments purchased with a maturity of three months or less and money market accounts to be cash equivalents.
Risks and Uncertainties:
OBF operates in an industry that is subject to intense competition and change in consumer demand. OBF’s operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. OBF 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 OBF competes, including a potential general downturn in the economy, and (iii) the volatility of prices pertaining to food and beverages in connection with OBF’s distribution of the product. These factors, among others, make it difficult to project OBF’s operating results on a consistent basis.
| 5 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
OBF maintains cash balances at various financial institutions, in which deposits are insured by a federal agency up to $250,000. At various times, cash balances at these institutions may exceed the insurance limits.
Accounts Receivable:
Trade accounts receivable are reported at the amount management expects to collect from outstanding balances. Differences between the amount due and the amount management expects to collect are reported in the results of operations of the year in which those differences are determined, with an offsetting entry to a valuation allowance for trade accounts receivable. Balances which are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable.
Inventory:
Inventory is stated at the lower of cost, or market, as determined by the first-in, first-out method (FIFO) valuation method. Inventories on September 30, 2021, consist of Raw Material, Work in Process and Finished Goods.
Property and Equipment:
Property and equipment are recorded at cost. Depreciation is provided using accelerated and straight-line methods over the estimated useful lives of the assets.
Income Taxes:
OBF is treated as a Partnership for federal and state income tax purposes. Consequently, OBF does not pay federal and state income taxes. Instead, the stockholders include OBF’s taxable net income or loss on their personal tax returns.
OBF adopted the income tax standard for uncertain tax positions. As a result of the implementation, T & L has evaluated its tax position and determined it has no uncertain tax positions as of September 30, 2021. OBF classifies interest and penalties related to income tax liabilities, if applicable, as a component of income tax expense.
OBF’s federal income tax return for 2018, 2019 and 2020 are subject to examination by the IRS and other state taxing authorities, generally for three years after it was filed.
| 6 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Revenue Recognition:
OBF derives its revenues primarily from the sale of finished products to supermarkets and mass-market club stores, delis, bagel stores, caterers and distributors, contain a single performance obligation and revenue is recognized at a single point in time when ownership, risks and rewards transfer. Typically, revenue recognition occurs when the goods are transferred to its customers. OBF reports all amounts billed to a customer in a sale transaction as revenue. Under the new revenue guidance, OBF elected to treat shipping and handling activities as fulfillment activities, and the related costs are recorded as selling expenses in general and administrative expenses in the statement of operations. Incidental items that are immaterial in the context of the contract are recognized as expense.
OBF 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. OBF derives these estimates principally on historical utilization and redemption rates. OBF does not receive a distinct service in relation to the advertising, consumer incentives and trade promotions.
Payment terms in the OBF’s invoices are based on the billing schedule established in contracts and purchase orders with customers. OBF recognizes the related trade receivable when the goods are shipped. Expenses such as slotting fees, sales discounts, promotions and allowances are accounted for as a direct reduction of revenues.
OBF does not have any significant financing components as payment is received at or shortly after the point of sale. Costs incurred to obtain a contract will be expensed as incurred when the amortization period is less than a year.
Variable Consideration:
The nature of the OBF’s business gives rise to variable consideration, including rebates, allowances, and returns that generally decrease the transaction price which reduces revenue. These variable amounts are generally credited to the customer, based on achieving certain levels of sales activity, product returns or price concessions.
Variable consideration is estimated at the most likely amount that is expected to be earned. Estimated amounts are included in the transaction price to the extent it is probable that the significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration are estimated based upon historical experience and known trends.
| 7 |
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
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:
Advertising costs are charged to operations when incurred. Advertising expense for the nine months then ended September 30, 2021 was approximately $3,250.
Subsequent Events:
Management has evaluated subsequent events and transactions through March 12, 2022, the date the financial statements were available to be issued, 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.
The company’s assets were sold in December 2021.
NOTE 2 - RELATED PARTY LOANS AND TRANSACTIONS:
Related Party Loans represents unsecured interest free advances to members.
OBF conducts business with a contract packager and manufacturer which is a related company. Related company purchases and accounts payable for September 30, 2021, was
$279,290 and $-0-, respectfully.
OBF has no operating building lease but shares office and warehouse space with a related company.
NOTE 3 - 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.
NOTE 4 - CONCENTRATIONS OF BUSINESS RISK:
The company had major customers for the nine months then ended September 30, 2021, that aggregated approximately 90% of its revenue. Accounts receivable due from these major customers was approximately 90% of the company’s total accounts receivable as of September 30, 2021.
| 8 |
DEVITO & Co., LLC
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT ACCOUNTANTS’ REPORT ON SUPPLEMENTARY INFORMATION
Board of Directors
Olive Branch Foods, LLC
148 Allen Boulevard
Farmingdale, NY 11735
Our report on our review of the basic financial statements of Olive Branch Foods, LLC for September 30, 2021, appears on page 1. This review was made for the purpose of expressing a conclusion that there are no material modifications that should be made to the financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. The information included in the accompanying schedule of cost of sales and the schedule of operating expenses is presented for purposes of additional analysis and is not a required part of the basic financial statements. The information is the representation of management. We have performed a compilation engagement of the supplementary information in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We have not audited or reviewed the supplementary information and, accordingly, do not express an opinion, a conclusion, nor provide any form of assurance on such supplementary
information.
|
|
| DEVITO & Co., LLC | |
| Florham Park, NJ March 12, 2022 |
26 Columbia Turnpike Suite 105, Florham Park, NJ 07932 Phone 201-440-1491 Fax 973-295-6552
in/o@devitocpa.com • www.devitocpa.com
| 9 |
| INVENTORY - Beginning | 193,757 | |||
| Purchases | 1,252,275 | |||
| Contract Packaging | 804,204 | |||
| Other Costs - Overhead | 1,045,017 | |||
| Total Cost of Goods Available for Sale | 3,295,253 | |||
| Less: INVENTORY - Ending | 191,207 | |||
| TOTAL COST OF GOODS SOLD | 3,104,046 |
| 10 |
| Selling | 242,605 | |||
| Insurance | 20,422 | |||
| Filing Fees | 1,500 | |||
| Office | 2,677 | |||
| Utilities | 15,295 | |||
| Miscellaneous | 5,259 | |||
| Professional Fees | 11,730 | |||
| TOTAL OPERATING EXPENSES | 299,488 |
| 11 |
EXHIBIT 99.3
UNAUDITED PRO FORMA FINANCIAL STATEMENTS OF MAMAMANCINI’S HOLDINGS, INC.
References to “MamaMancini”, the “Company”, “we”, “us” and “our” mean MamaMancini’s Holdings, Inc. and its consolidated subsidiaries, unless the context otherwise requires.
Pro Forma Financial Statements
On November 1, 2017, MamaMancini’s Holdings, Inc., a Nevada corporation (“MamaMancini’s”), T&L Creative Salads, Inc. and Olive Branch LLC and T&L Acquisition Corp, a Nevada corporation and wholly owned subsidiary of MamaMancini’s (“Merger Sub”), completed the acquisitions contemplated by the Asset Purchase Agreements (“APA’s”) by and among MamaMancini’s, T&L Creative Salads, Inc. and Olive Branch LLC and Merger Sub, dated as of December 23, 2021. Pursuant to the terms of the APA’s, all assets of T&L Creative Salads, Inc. and Olive Branch LLC have been acquired by Merger Sub, a wholly owned subsidiary of MamaMancini’s.
Under the terms of the APA’s and in connection with the acquisitions, the Company acquired all assets of T&L Creative Salads, Inc. and Olive Branch LLC which were estimated to be $[amount] as of September 30, 2021. MamaMancini’s acquired T&L and OB for a combined purchase price of $14.0 million, including $11 million in cash at closing and $3 million in a four-year note to the principals of T&L. The cash payment was chiefly funded through the MamaMancini’s cash on hand and a $7.5 million long-term acquisition note from M&T Bank.
As a result of the transaction, (i) the Company (through its wholly-owned subsidiary) became the sole owner of the assets of T&L Creative Salads, Inc. and Olive Branch LLC and (ii) following the Closing, T&L Creative Salads, Inc. and Olive Branch LLC financial statements as of the Closing will be consolidated with the Consolidated Financial Statements of the Company.
The following unaudited pro forma condensed combined financial statements, which are referred to as the unaudited pro forma financial statements, have been prepared to assist in the analysis of financial effects of the acquisition transactions. The unaudited pro forma condensed statements of combined operations, which are referred to as the unaudited pro forma statements of operations, for the year ended January 31, 2021 and the nine months (commencing February 1, 2021 and ending October 31, 2021, combine the historical statements of consolidated operations of MamaMancini’s and T&L Creative Salads, Inc. and Olive Branch LLC, giving effect to the acquisition transactions, as if they had been completed on February 1, 2020, the beginning of the earliest period presented. The unaudited pro forma condensed statements of combined operations for the nine months ended October 31, 2021 were derived from the unaudited condensed consolidated financial statements of MamaMancini’s for the nine months ended October 31, 2021 and the unaudited condensed consolidated financial statements of T&L Creative Salads, Inc. and Olive Branch LLC for the period from February 1, 2021 through October 31, 2021. The unaudited pro forma condensed combined balance sheet, which is known as the unaudited pro forma balance sheet, combines the historical condensed consolidated balance sheets of MamaMancini’s and T&L Creative Salads, Inc. and Olive Branch LLC as of October 31, 2021, giving effect to the acquisition transactions, as if they had been completed on February 1, 2021. The historical consolidated financial statements of T&L Creative Salads, Inc. and Olive Branch LLC have been adjusted to reflect certain reclassification and other conforming adjustments in order to align to MamaMancini’s condensed financial statement presentation.
Effective December 29, 2021, MamaMancini’s and T&L Creative Salads, Inc. and Olive Branch LLC completed the acquisition transactions whereby the assets of T&L Creative Salads, Inc. and Olive Branch LLC were acquired by a wholly-owned subsidiary of MamaMancini’s. In accordance with the guidance under Accounting Standards Codification Topic 805: Business Combinations, the Merger transactions are accounted for as a reorganization of entities under common control. The assets and liabilities of T&L Creative Salads, Inc. and Olive Branch LLC transferred between entities under common control were recorded by MamaMancini’s based on MamaMancini’s historical cost basis.
Assumptions and estimates underlying the adjustments to the unaudited pro forma financial statements, which are referred to as the pro forma adjustments, are described in the accompanying notes. The historical consolidated financial statements have been adjusted in the unaudited pro forma financial statements to give effect to pro forma events that are (1) directly attributable to the Merger Transaction; (2) factually supportable; and (3) with respect to the unaudited pro forma statements of operations, expected to have a continuing impact on the combined results of MamaMancini’s and T&L Creative Salads, Inc. and Olive Branch LLC following the acquisition transactions. The unaudited pro forma financial statements have been presented for illustrative purposes only and are not necessarily indicative of the operating results and financial position that would have been achieved had the acquisition transactions occurred on the dates indicated. Further, the unaudited pro forma financial statements do not purport to project the future operating results or financial position of the combined company following the acquisition transactions. The unaudited pro forma financial statements include assets and liabilities of T&L Creative Salads, Inc. and Olive Branch LLC adjusted for MamaMancini’s historical cost basis. The final purchase price allocation may be materially different than that reflected in the pro forma purchase price allocation presented herein.
The unaudited pro forma financial statements, although helpful in illustrating the financial characteristics of the combined company under one set of assumptions, do not reflect the benefits of expected cost savings (or associated costs to achieve such savings), opportunities to earn additional revenue, or other factors that may result as a consequence of the acquisition transactions and, accordingly, do not attempt to predict or suggest future results. Further, the unaudited pro forma financial statements do not reflect (i) any other acquisition subsequent to the balance sheet date presented or (ii) the effect of any regulatory actions that may impact the results of the combined partnership following the acquisition transactions.
The unaudited pro forma financial statements have been developed from and should be read in conjunction with:
| ● | the accompanying notes to the unaudited pro forma financial statements; | |
| ● | the historical audited consolidated financial statements of MamaMancini’s for the year ended January 31, 2021 in MamaMancini’s Annual Report on Form 10-K, filed with the SEC on April 21, 2021, and incorporated by reference into this document; | |
| ● | the historical unaudited condensed consolidated financial statements of MamaMancini’s as of and for the nine months ended October 31, 2021, included in MamaMancini’s Quarterly Report on Form 10-Q and incorporated by reference into this document; | |
| ● | the historical audited consolidated financial statements of T&L Creative Salads, Inc. and Olive Branch LLC for the year ended December 31, 2020; and | |
| ● | the historical unaudited financial statements of T&L Creative Salads, Inc. and Olive Branch LLC as of and for the nine months ended September 30, 2021, incorporated by reference into this document. | |
| ● | The pro forma financial statements include the impact of the merger of T&L Creative Salads, Inc. and Olive Branch LLC as if they occurred at the inception of each relevant period reported. T&L Creative Salads, Inc. and Olive Branch LLC have a calendar year-end, however T&L Creative Salads, Inc. and Olive Branch LLC historical information presented herein has been modified to conform to the same periods as the historical financial statements filed by the Company in Forms 10-K and 10-Q. |
MamaMancini's Holdings, Inc.
Proforma Combined Balance Sheets
October 31, 2021
(unaudited)
| MamaMancini | T&L Creative Salads | Olive Branch | Eliminations | Combined Balance | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Current Assets: | ||||||||||||||||||||
| Cash | $ | 4,539,920 | $ | 386,958 | $ | 4,307 | $ | - | $ | 4,931,185 | ||||||||||
| Accounts receivable, net | 3,961,348 | 2,224,333 | 331,691 | 6,517,372 | ||||||||||||||||
| Inventories | 1,614,738 | 874,356 | 192,041 | 2,681,136 | ||||||||||||||||
| other current asset | - | - | 385,800 | 385,800 | ||||||||||||||||
| Prepaid expenses | 595,071 | - | - | 595,071 | ||||||||||||||||
| Total current assets | 10,711,077 | 3,485,647 | 913,838 | - | 15,110,563 | |||||||||||||||
| Property and equipment, net | 3,177,021 | 2,439,463 | 36,961 | 5,653,445 | ||||||||||||||||
| Intangible assets | 87,639 | - | - | 87,639 | ||||||||||||||||
| Operating lease right of use asset, net | 1,536,927 | - | - | 1,536,927 | ||||||||||||||||
| Deferred tax asset | 349,227 | - | - | 349,227 | ||||||||||||||||
| Other receivable | - | 916,602 | 234,229 | 1,150,832 | ||||||||||||||||
| Deposits | 23,156 | - | - | 23,156 | ||||||||||||||||
| Total Assets | $ | 15,885,047 | $ | 6,841,713 | $ | 1,185,028 | $ | - | $ | 23,911,789 | ||||||||||
| Liabilities and Stockholders' Deficit | ||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Current Liabilities: | ||||||||||||||||||||
| Accounts payable and accrued expenses | $ | 4,269,206 | $ | 1,087,132 | $ | 524,135 | $ | - | $ | 5,880,473 | ||||||||||
| Operating lease liability | 188,590 | 188,590 | ||||||||||||||||||
| Finance leases payable | 226,111 | 226,111 | ||||||||||||||||||
| Total current liabilities | 4,683,907 | 1,087,132 | 524,135 | - | 6,295,174 | |||||||||||||||
| Operating lease liability, net of current | 1,383,960 | - | - | 1,383,960 | ||||||||||||||||
| Finance leases payable - net of current portion | 422,326 | - | - | 422,326 | ||||||||||||||||
| Other long term liabilities | - | 1,633,130 | - | 1,633,130 | ||||||||||||||||
| Total long-term liabilities | 1,806,286 | 1,633,130 | - | - | 3,439,416 | |||||||||||||||
| Total Liabilities | 6,490,193 | 2,720,262 | 524,135 | - | 9,734,590 | |||||||||||||||
| Commitments and contingencies | ||||||||||||||||||||
| Stockholders' Equity: | ||||||||||||||||||||
| Series A Preferred stock | - | - | - | - | ||||||||||||||||
| Preferred stock | - | - | - | - | ||||||||||||||||
| Common stock | 359 | - | - | 359 | ||||||||||||||||
| Additional paid in capital | 20,575,338 | - | - | 20,575,338 | ||||||||||||||||
| Accumulated deficit | (11,031,343 | ) | - | - | (11,031,343 | ) | ||||||||||||||
| Less: Treasury stock, 230,000 shares, respectively | (149,500 | ) | - | - | (149,500 | ) | ||||||||||||||
| Members' equity | - | - | 660,893 | 660,893 | ||||||||||||||||
| T&L Creative Salads Equity | - | 4,121,451 | - | 4,121,451 | ||||||||||||||||
| Total Stockholders' Equity | 9,394,854 | 4,121,451 | 660,893 | - | 14,177,199 | |||||||||||||||
| - | ||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 15,885,047 | $ | 6,841,713 | $ | 1,185,028 | $ | - | $ | 23,911,789 | ||||||||||
MamaMancini's Holdings, Inc.
Proforma Combined Statements of Operations
For the Nine Months Ended October 31, 2021
(unaudited)
| MamaMancini | T&L Creative Salads | Olive Branch | Eliminations | Combined Balance | ||||||||||||||||
| Sales - net of slotting fees and discounts | $ | 33,230,666 | $ | 18,258,546 | $ | 3,693,430 | $ | (279,290 | ) | $ | 54,903,351 | |||||||||
| Cost of sales | 23,787,864 | 17,190,968 | 3,357,745 | (279,290 | ) | 44,057,287 | ||||||||||||||
| Gross profit | 9,442,802 | 1,067,577 | 335,685 | - | 10,846,064 | |||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Research and development | 87,843 | 87,843 | ||||||||||||||||||
| General and administrative expenses | 7,916,646 | 1,432,727 | 64,558 | 9,413,931 | ||||||||||||||||
| Total operating expenses | 8,004,489 | 1,432,727 | 64,558 | - | 9,501,774 | |||||||||||||||
| Income from operations | 1,438,313 | (365,150 | ) | 271,126 | - | 1,344,290 | ||||||||||||||
| Other expenses | ||||||||||||||||||||
| Interest | (26,710 | ) | (1,068 | ) | - | (27,778 | ) | |||||||||||||
| Other income | 37,304 | - | - | 37,304 | ||||||||||||||||
| Other expenses | - | 116,208 | - | 116,208 | ||||||||||||||||
| Total other expenses | 10,594 | 115,141 | - | - | 125,735 | |||||||||||||||
| Net income (loss) before income tax provision | 1,427,719 | (480,290 | ) | 271,126 | - | 1,218,555 | ||||||||||||||
| Income tax provision | 403,746 | - | 1,500 | 405,246 | ||||||||||||||||
| Net income (loss) available to common stockholders | $ | 1,023,973 | $ | (480,290 | ) | $ | 269,626 | $ | - | $ | 813,309 | |||||||||
| Net income per common share - basic | $ | 0.02 | ||||||||||||||||||
| Net income per common share - diluted | $ | 0.02 | ||||||||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||||||
| - basic | 35,677,202 | |||||||||||||||||||
| - diluted | 36,196,974 | |||||||||||||||||||
MamaMancini's Holdings, Inc.
Proforma Combined Statements of Operations
For the Year Ended January 31, 2021
(unaudited)
| MamaMancini | T&L Creative Salads | Olive Branch | Eliminations | Combined Balance | ||||||||||||||||
| Sales - net of slotting fees and discounts | $ | 40,758,605 | $ | 18,539,427 | $ | 3,053,642 | $ | (607,647 | ) | $ | 61,744,026 | |||||||||
| Cost of sales | 28,019,296 | 16,312,385 | 2,690,866 | (607,647 | ) | 46,414,900 | ||||||||||||||
| Gross profit | 12,739,309 | 2,227,042 | 362,775 | - | 15,329,126 | |||||||||||||||
| Operating expenses | ||||||||||||||||||||
| Research and development | 110,713 | 110,713 | ||||||||||||||||||
| General and administrative expenses | 9,150,748 | 1,239,855 | 94,842 | 10,485,445 | ||||||||||||||||
| Total operating expenses | 9,261,461 | 1,239,855 | 94,842 | - | 10,596,158 | |||||||||||||||
| Income from operations | 3,477,848 | 987,187 | 267,933 | - | 4,732,968 | |||||||||||||||
| Other | ||||||||||||||||||||
| Interest | (137,751 | ) | - | - | (137,751 | ) | ||||||||||||||
| Other expense | - | (160,423 | ) | - | (160,423 | ) | ||||||||||||||
| Other income | - | 106 | - | 106 | ||||||||||||||||
| Amortization of debt discount | (17,864 | ) | - | - | (17,864 | ) | ||||||||||||||
| Total other expenses | (155,615 | ) | (160,317 | ) | - | - | (315,932 | ) | ||||||||||||
| Net income before income tax provision | 3,322,233 | 826,870 | 267,933 | - | 4,417,036 | |||||||||||||||
| Income tax provision | 744,973 | - | - | - | 744,973 | |||||||||||||||
| Net income available to common stockholders | $ | 2,577,260 | $ | 826,870 | $ | 267,933 | $ | - | $ | 3,672,063 | ||||||||||
| Net income per common share - basic | $ | 0.10 | ||||||||||||||||||
| Net income per common share - diluted | $ | 0.10 | ||||||||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||||||
| - basic | 35,677,202 | |||||||||||||||||||
| - diluted | 36,196,974 | |||||||||||||||||||
MAMAMANCINI’S HOLDINGS, INC.
NOTES TO PROFORMA FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRO FORMA PRESENTATION
The unaudited pro forma balance sheet has been derived from the historical financial statements of MamaMancini’s Holdings, Inc. after giving effect to the acquisition of the assets of T&L Creative Salads, Inc. and Olive Branch LLC which closed on December 29, 2021.
Historical financial information has been adjusted in the pro forma balance sheet and statements of operations to give effect to pro forma events that are: (1) directly attributable to the acquisitions; (2) factually supportable; and (3) expected to have a continuing impact on the Company’s balance sheet and results of operations.
The accompanying unaudited pro forma consolidated balance sheet have been presented as of October 31, 2021. The unaudited pro forma consolidated statements of operations for the periods ended October 31, 2021 and January 31, 2021 have been presented as if the acquisition had occurred as if the acquisition transactions took place at the beginning of the periods presented.
Under the terms of the Asset Purchase Agreements and in connection with these transactions, the Company acquired all assets of T&L Creative Salads, Inc. and Olive Branch LLC. As a result of the transaction, (i) the Company became the sole owner of the assets of T&L Creative Salads, Inc. and Olive Branch LLC, through a wholly-owned subsidiary of the Company (ii) following the Closing, T&L Creative Salads, Inc. and Olive Branch LLC financial statements as of the Closing will be consolidated with the Consolidated Financial Statements of the Company.
The unaudited pro forma consolidated statements do not necessarily represent the actual results that would have been achieved had the companies been combined at the beginning of the year, nor may they be indicative of future operations. These unaudited pro forma financial statements should be read in conjunction with the companies’ respective historical financial statements and notes included thereto.
3. PRO FORMA ADJUSTMENTS
The adjustments included in the pro forma balance sheet are as follows:
| (A) | The elimination of inter-company balances. |
The adjustments included in the pro forma statement of operations for the years ended January 2021 and for the nine months ended October 31, 2021 are as follows:
| (B) | The elimination of intercompany sales and purchases for each relevant period. |