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”), Joseph Epstein Food Enterprises, Inc., a New Jersey corporation(“JEFE”), and MMMB Acquisition, Inc., a Nevada corporation and wholly owned subsidiary of MamaMancini’s (“Merger Sub”), completed the merger contemplated by the Agreement and Plan of Merger (“Merger Agreement”) by and among MamaMancini’s, JEFE, and Merger Sub, dated as of November 1, 2017. Pursuant to the terms of the Merger Agreement, JEFE has merged with and into Merger Sub, with Merger Sub continuing as the surviving entity and a wholly owned subsidiary of MamaMancini’s.
Under the terms of the Merger Agreement and in connection with the merger, the Company acquired all assets of JEFE. The consideration for the transaction was (a) the extinguishment of the Inter-Company Loan between the parties, (b) the assumption by the Company of all JEFE accounts payable and accrued expenses, (c) assumption by the Company of certain third-party loans to JEFE and (d) indemnification of Carl Wolf with respect to his collateralization of a bank loan to JEFE in the amount of approximately $250,000. As a result of the transaction, (i) the Company became the sole shareholder of JEFE, which became a wholly-owned subsidiary of the Company (ii) following the Closing, JEFE’s financial statements as of the Closing will be consolidated with the Consolidated Financial Statements of the Company (collectively, the “Merger Transaction”). No cash or stock was exchanged in connection with the transaction.
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 Merger Transaction. The unaudited pro forma combined condensed statements of operations, which are referred to as the unaudited pro forma statements of operations, for the year ended January 31, 2017 and the nine months ended October 31, 2017, combine the historical consolidated statements of operations of MamaMancini’s and JEFE, giving effect to the Merger Transaction, as if they had been completed on February 1, 2016, the beginning of the earliest period presented. The unaudited pro forma condensed combined statements of operations for the nine months ended October 31, 2017 were derived from the unaudited condensed consolidated financial statements of MamaMancini’s for the nine months ended October 31, 2017, and the unaudited condensed financial statements of JEFE for the period from February 1, 2017 through October 31, 2017. The unaudited pro forma condensed combined balance sheet, which is known as the unaudited pro forma balance sheet, combines the historical balance sheets of MamaMancini’s and JEFE as of October 31, 2017, giving effect to the Merger Transaction, as if they had been completed on October 31, 2017. The historical financial statements of JEFE have been adjusted to reflect certain reclassification and other conforming adjustments in order to align to MamaMancini’s condensed financial statement presentation.
Effective November 1, 2017, MamaMancini’s and JEFE completed the Merger Transaction whereby JEFE became a wholly-owned subsidiary of MamaMancini’s. In accordance with the guidanceunder Accounting Standards Codification Topic 805: BusinessCombinations, the Merger transactions areaccounted for as areorganization ofentities under common control. The assets and liabilities of JEFE transferred between entities under common control were recorded by MamaMancini’s based on JEFE’s historical cost basis.
Assumptions and estimates underlying the adjustments to the unauditedproforma financial statements, which are referred to as the pro forma adjustments, aredescribed in the accompanying notes. The historical consolidated financial statements have been adjusted in the unaudited pro forma financial statements to give effect to proforma events that are(1)directly attributable to the Merger Transaction; (2)factually supportable; and (3) with respect tothe unaudited proforma statements of operations, expected tohave acontinuing impact onthe combined results of MamaMancini’s and JEFEfollowing the Merger Transaction. The unaudited pro forma financial statements have been presented for illustrative purposes only and are not necessarily indicative ofthe operating results and financial position that would have been achieved had the Merger Transactionoccurred onthe dates indicated. Further, the unaudited pro forma financial statements donot purport to project the future operating results orfinancial position ofthe combined company following the Merger Transaction. The unaudited pro forma financial statements include assets and liabilitiesof JEFEadjusted for MamaMancini’s historical cost basis.The final purchase price allocation may be materially different than that reflected in theproforma purchase price allocation presented herein.
Theunaudited pro forma financial statements, although helpful in illustrating the financial characteristics of the combined company under one set ofassumptions, donot reflect the benefits of expected cost savings (or associated costs to achieve suchsavings), opportunities to earn additional revenue, or other factors that may result as aconsequenceofthe MergerTransactionand,accordingly, do notattempt to predict or suggestfuture results. Further, the unaudited pro forma financial statements donot reflect (i) any other acquisition subsequent to the balance sheet date presented or(ii) the effect ofany regulatory actions that may impact the results of the combined partnership following the Merger Transaction.
Theunauditedproforma financial statements have been developed from and should be readinconjunction with:
| ● | the accompanying notes to the unaudited pro forma financial statements; | |
| ● | thehistorical audited consolidated financial statements of MamaMancini’sfor the year endedJanuary 31, 2017inMamaMancini’s AnnualReportonForm 10-K, filed with the SEC onMarch 23, 2017, and incorporated by reference into this document; | |
| ● | thehistorical unaudited condensed consolidated financial statements ofMamaMancini’sas of and for the nine months endedOctober 31, 2017, included inMamaMancini’sQuarterly Report onForm 10-Q and incorporated by referenceinto this document; | |
| ● | thehistorical audited financial statements ofJEFEfor the year ended December 31, 2016; and | |
| ● | thehistorical unaudited condensed financial statements ofJEFEasof and for thetenmonths ended October 31, 2017, incorporatedbyreference into this document. | |
| ● | The pro forma financial statements include the impact of the merger of Joseph Epstein Food Enterprises, Inc. (“JEFE”) as if they occurred at the inception of each relevant period reported. JEFE has a calendar year-end, however JEFE’s 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.
Pro Forma Combined Balance Sheets
October 31, 2017
(Unaudited)
| MamaMancini | Joseph Epstein Foods | Eliminations | Combined Balance | |||||||||||||
| Current Assets | ||||||||||||||||
| Cash | 558,633 | 17,627 | 576,260 | |||||||||||||
| Accounts receivable | 2,859,190 | - | 2,859,190 | |||||||||||||
| Inventories | 361,111 | 733,687 | 1,094,798 | |||||||||||||
| Prepaid expenses | 97,957 | 25,497 | 123,454 | |||||||||||||
| Due from manufacturer - related party | 1,537,724 | - | (1,537,724 | ) | - | |||||||||||
| 5,414,615 | 776,811 | (1,537,724 | ) | 4,653,702 | ||||||||||||
| Property , plant, and equipment | 2,111,053 | 404,591 | 2,515,644 | |||||||||||||
| Deposits | 94,060 | 17,036 | 111,096 | |||||||||||||
| Total Assets | 7,619,728 | 1,198,438 | (1,537,724 | ) | 7,280,442 | |||||||||||
| Current Liabilities | ||||||||||||||||
| Accounts payable and accrued expenses | 1,006,216 | 2,723,226 | 3,729,442 | |||||||||||||
| Due to related party | - | 1,537,724 | (1,537,724 | ) | - | |||||||||||
| Line of credit, net | 2,303,920 | - | 2,303,920 | |||||||||||||
| Term loan | 165,540 | - | 165,540 | |||||||||||||
| Note payable, net | 1,807,182 | - | 1,807,182 | |||||||||||||
| 5,282,858 | 4,260,950 | (1,537,724 | ) | 8,006,084 | ||||||||||||
| Term loan, net of current | 634,460 | - | 634,460 | |||||||||||||
| Note payable | - | 250,000 | 250,000 | |||||||||||||
| Notes payable - related party | 117,656 | 532,000 | 649,656 | |||||||||||||
| 752,116 | 782,000 | 1,534,116 | ||||||||||||||
| Total Liabilities | 6,034,974 | 5,042,950 | (1,537,724 | ) | 9,540,200 | |||||||||||
| Shareholders’ Equity | ||||||||||||||||
| Common stock | 318 | - | 318 | |||||||||||||
| Additional paid in capital | 16,145,954 | - | 16,145,954 | |||||||||||||
| Common stock subscribed | 1 | - | 1 | |||||||||||||
| Accumulated deficit | (14,412,019 | ) | (3,844,512 | ) | (18,256,531 | ) | ||||||||||
| Treasury stock | (149,500 | ) | - | (149,500 | ) | |||||||||||
| Total shareholders’ equity | 1,584,754 | (3,844,512 | ) | (2,259,758 | ) | |||||||||||
| Total liabilities and shareholders’ equity | 7,619,728 | 1,198,438 | (1,537,724 | ) | 7,280,442 | |||||||||||
MamaMancini’s Holdings, Inc.
Pro Forma Combined Statement of Operations
For the Nine Months Ended October 31, 2017
(Unaudited)
| MamaMancini | Joseph Epstein Foods | Eliminations | Combined Balance | |||||||||||||
| Sales, net | 19,714,090 | 13,443,949 | (13,443,949 | ) | 19,714,090 | |||||||||||
| Cost of sales | 13,443,949 | 13,047,131 | (13,443,949 | ) | 13,047,131 | |||||||||||
| 6,270,141 | 396,818 | - | 6,666,959 | |||||||||||||
| - | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| Research and development | 77,647 | - | 77,647 | |||||||||||||
| General and administrative | 5,251,090 | 504,032 | 5,755,122 | |||||||||||||
| 5,328,737 | 504,032 | 5,832,769 | ||||||||||||||
| Income from operations | 941,404 | (107,214 | ) | - | 834,190 | |||||||||||
| Other Expense | ||||||||||||||||
| Interest expense | 528,969 | 42,615 | 571,584 | |||||||||||||
| Amortization of debt discount | 56,457 | - | 56,457 | |||||||||||||
| 585,426 | 42,615 | 628,041 | ||||||||||||||
| Net income (loss) | 355,978 | (149,829 | ) | - | 206,149 | |||||||||||
| Less preferred dividends | (91,565 | ) | - | (91,565 | ) | |||||||||||
| Net income (loss) available to common shareholders | 264,413 | (149,829 | ) | - | 114,584 | |||||||||||
| Net income (loss) per common share - basic | 0.00 | |||||||||||||||
| Net income (loss) per common share - diluted | 0.00 | |||||||||||||||
| Weighted average common shares outstanding - basic | 29,152,736 | |||||||||||||||
| Weighted average common shares outstanding - diluted | 30,932,182 | |||||||||||||||
MamaMancini’s Holdings, Inc.
Pro Forma Combined Statement of Operations
For the Year Ended January 31, 2017
| MamaMancini | Joseph Epstein Foods | Eliminations | Combined Balance | |||||||||||||
| Sales, net | 18,048,792 | 11,555,976 | (11,555,976 | ) | 18,048,792 | |||||||||||
| Cost of sales | 11,555,976 | 10,924,150 | (11,555,976 | ) | 10,924,150 | |||||||||||
| 6,492,816 | 631,826 | - | 7,124,642 | |||||||||||||
| Operating Expenses | ||||||||||||||||
| Research and development | 144,013 | - | 144,013 | |||||||||||||
| General and administrative | 5,941,794 | 581,187 | 6,522,981 | |||||||||||||
| 6,085,807 | 581,187 | 6,666,994 | ||||||||||||||
| Income from operations | 407,009 | 50,639 | - | 457,648 | ||||||||||||
| Other Expense | ||||||||||||||||
| Interest expense | 667,623 | 61,484 | 729,107 | |||||||||||||
| Amortization of debt discount | 28,526 | - | 28,526 | |||||||||||||
| 696,149 | 61,484 | 757,633 | ||||||||||||||
| Net income (loss) | (289,140 | ) | (10,845 | ) | - | (299,985 | ) | |||||||||
| Less preferred dividends | (204,921 | ) | - | (204,921 | ) | |||||||||||
| Net income (loss) available to common shareholders | (494,061 | ) | (10,845 | ) | - | (504,906 | ) | |||||||||
| Net income (loss) per common share - basic | (0.02 | ) | ||||||||||||||
| Net income (loss) per common share - diluted | (0.02 | ) | ||||||||||||||
| Weighted average common shares outstanding - basic | 27,100,316 | |||||||||||||||
| Weighted average common shares outstanding - diluted | 27,100,316 | |||||||||||||||
MamaMancini’s Holdings, Inc.
Pro Forma Combined Statement of Operations
For the Year Ended January 31, 2016
| MamaMancini | Joseph Epstein Foods | Eliminations | Combined Balance | |||||||||||||
| Sales, net | $ | 12,603,447 | $ | 9,006,220 | $ | (9,006,220 | ) | $ | 12,603,447 | |||||||
| Cost of sales: | ||||||||||||||||
| Cost of goods sold | 9,006,220 | 8,494,544 | (9,006,220 | ) | 8,494,544 | |||||||||||
| Write-off of inventory | - | 437,800 | - | 437,800 | ||||||||||||
| Total cost of sales | 9,006,220 | 8,932,344 | (9,006,220 | ) | 8,932,344 | |||||||||||
| Gross Profit (Loss) | 3,597,227 | 73,876 | - | 3,671,103 | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| Research and development | 107,632 | - | - | 107,632 | ||||||||||||
| General and Administrative Expenses | 5,748,912 | 610,434 | - | 6,359,346 | ||||||||||||
| Total operating expenses | 5,856,544 | 610,434 | - | 6,466,978 | ||||||||||||
| Income (Loss) From Operations | (2,259,317 | ) | (536,558 | ) | - | (2,795,875 | ) | |||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest expense | 555,071 | 53,414 | - | 608,485 | ||||||||||||
| Amortization of debt discount | 261,670 | 261,670 | ||||||||||||||
| Amortization of debt closing costs | 55,471 | 55,471 | ||||||||||||||
| Loss on debt extinguishment | 380,089 | - | - | 380,089 | ||||||||||||
| Total Other Income (Expense) | 1,252,301 | 53,414 | - | 1,305,715 | ||||||||||||
| Net income (loss) | $ | (3,511,618 | ) | $ | (589,972 | ) | $ | - | $ | (4,101,590 | ) | |||||
| Less: preferred dividends | (66,992 | ) | (66,992 | ) | ||||||||||||
| Net income (loss) available to common shareholders | $ | (3,578,610 | ) | $ | (589,972 | ) | $ | - | $ | (4,168,582 | ) | |||||
| Net income (loss) per common share - basic | (0.16 | ) | ||||||||||||||
| Net income (loss) per common share - diluted | (0.16 | ) | ||||||||||||||
| Weighted average common shares outstanding - basic | 26,147,913 | |||||||||||||||
| Weighted average common shares outstanding - diluted | 26,147,913 | |||||||||||||||
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 Joseph Epstein Food Enterprises, Inc. which closed on November 1, 2017.
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 Acquisition; (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 combined balance sheet has been presented as of October 31, 2017. The unaudited pro forma combined statements of operations for the periods ended October 31, 2017, January 31, 2017 and January 31, 2016 have been presented as if the acquisition had occurred as if the Merger Transaction took place at the beginning of the periods presented, or February 1, 2016.
Under the terms of the Merger Agreement and in connection with the merger, the Company acquired all assets of JEFE. As a result of the transaction, (i) the Company became the sole shareholder of JEFE, which became a wholly-owned subsidiary of the Company (ii) following the Closing, JEFE’s financial statements as of the Closing will be consolidated with the Consolidated Financial Statements of the Company (collectively, the “Merger Transaction”). No cash or stock was exchanged in connection with the transaction.
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 2016 and 2017 and for the nine months ended October 31, 2017 are as follows:
(B) The elimination of intercompany sales and purchases for each relevant period.