Mama's Creations, Inc. (MAMA) FY 2023 MD&A

Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

THE
FOLLOWING DISCUSSION OF OUR PLAN OF OPERATION AND RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND
RELATED NOTES TO THE FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS REPORT. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT
RELATE TO FUTURE EVENTS OR OUR FUTURE FINANCIAL PERFORMANCE. THESE STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER
FACTORS THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE
RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. THESE RISKS AND OTHER
FACTORS INCLUDE, AMONG OTHERS, THOSE LISTED UNDER “FORWARD-LOOKING STATEMENTS” AND “RISK FACTORS” AND THOSE INCLUDED
ELSEWHERE IN THIS REPORT.

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Results
of Operations for the Years Ended January 31, 2023 and 2022

The
following table sets forth the summary of the consolidated statements of operations for the years ended January 31, 2023 and 2022:

For
the years ended January 31, 2023 and 2022, the Company reported net income (loss) of $2,302,674 and $(251,926), respectively. The change
in net income (loss) between the years ended January 31, 2023 and 2022 reflects strong sales and same-customer product additions, normalization
of costs for commodities, other materials, freight as well as improvements in manufacturing efficiencies.

Sales:
Sales, net of slotting fees and discounts increased by approximately 98% to $93,187,621 during the year ended January 31, 2023, from
$47,083,740 during the year ended January 31, 2022. Sales for the year ended January 31, 2023 include a full year of operations of T&L
Creative Salads and Olive Branch. For the year ended January 31, 2022 T&L Creative Salads and Olive Branch included the period beginning
December 29, 2021 to January 31, 2022.

Gross
Profit: The gross profit margin was 21% and 25% for the years ended January 31, 2023 and 2022, respectively. The Company continues
to identify procurement efficiencies and cost savings through stronger buying power created through the acquisitions of T&L Creative
Salads and Olive Branch.

Operating
Expenses: Operating expenses increased by 41% during the year ended January 31, 2023, as compared to the year ended January 31, 2022.
Operating expenses decreased as a percentage of sales to 18% in 2023 compared to 25% in 2022. The $4,825,502 increase in total operating
expenses is primarily attributable to the following:

Other
Income (Expenses): Other expenses increased by $615,141 to $653,362 for the year ended January 31, 2023 as compared to $38,221 for
the year ended January 31, 2022. For the year ended January 31, 2023, other income (expenses) consisted of $633,889 in interest expense
on the Company’s financing arrangements and $22,121 in amortization of debt discount. For the year ended January 31, 2022, other
expenses consisted of $73,487 in interest expense incurred on the Company’s financing arrangements offset by other income of $37,704.

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Liquidity
and Capital Resources

The
following table summarizes total current assets, liabilities and working capital at January 31, 2023 compared to January 31, 2022:

As
of January 31, 2023, we had working capital of $3,795,610 as compared to working capital of $2,653,189 as of January 31, 2022, an increase
of $1,142,421. The increase in working capital is primarily attributable to an increase in cash of $3,527,785, an increase of inventories
of $745,088 based on robust sales increases, and an increase in prepaid expenses and other current assets of $174,460 partially offset
by better cash management which resulted in a decrease in accounts receivable of $562,671 and an increase in accounts payable and accrued
liabilities of $2,192,359.

Net
cash provided by operating activities for the year ended January 31, 2023 was $5,509,162 compared to net cash provided by operating activities
for the year ended January 31, 2022 of $909,841. The net income (loss) for the years ended January 31, 2023 and 2022 was $2,302,674 and
$(251,926), respectively. During the year ended January 31, 2023, net income was affected by non-cash adjustments of $1,715,397 and
by changes in operating activities which provided cash of $1,490,965. During the year ended January 31, 2022, net income was affected
by adjustments to net income of $1,345,727 offset by changes in operating activities which used cash of $183,960.

Net
cash used in investing activities for the years ended January 31, 2023 was $1,093,214 as compared to $11,270,957 for the year ended January
31, 2022, respectively. For the year ended January 31, 2023, the Company used cash of $593,214 to purchase new machinery and equipment.
In addition, the Company paid cash of $500,000 for the acquisition of a 24% minority interest in Chef Inspirational Foods, LLC. For the
year ended January 31, 2022, the cash used in investing activities of $862,415 was to purchase new machinery and equipment and $10,408,542
for the acquisition of T&L and Olive Branch.

Net
cash used in financing activities for the year ended January 31, 2023 was $888,037 as compared to $8,021,154 provided by financing activities
for the year January 31, 2022. During the year ended January 31, 2023, the Company received net proceeds of $125,000 from borrowings
pursuant to the line of credit which were offset by payments of the term loan, related party loan, and finance lease payments of $1,293,095,
$750,000, and $235,208, respectively. In addition, during the year ended January 31, 2023, the Company received proceeds of $26,250 for
the exercise of options and $1,365,000 from the sale of Series B Convertible Preferred Stock. During the year ended January 31, 2023,
the Company paid offering costs of $64,600 and dividends on the Series B Preferred stock of $34,070. During the year ended January 31,
2022, the Company received proceeds of $19,080 from the exercise of options, $7,500,000 from borrowings from a term loan, and $765,00
from borrowings from a line of credit. These cash in-flows were offset by payments of $199,176 paid for finance lease payments and $63,750
paid in financing fees.

Although
the expected revenue growth and control of expenses lead management to believe that it is probable that the Company’s cash resources
will be sufficient to meet its cash requirements through April 26, 2024, based on current and projected levels of operations, the Company
may require additional funding to finance growth and achieve its strategic objectives. If such financing is required, there can be no
assurance that financing will be available in amounts or terms acceptable to the Company, if at all. In the event funding is not available
on reasonable terms, the Company might be required to change its growth strategy and/or seek funding on an alternative basis, but there
is no guarantee it will be able to do so.

Recent
Accounting Pronouncements

In
May 2021, the Financial Accounting Standards Board (“FASB”) issued accounting standards update ASU 2021-04, “Earnings
Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic
718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain
Modifications or Exchanges of Freestanding Equity-Classified Written Call Options”, to clarify and reduce diversity in an issuer’s
accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain
equity classified after modification or exchange. The amendments in this ASU are effective for public and nonpublic entities for fiscal
years beginning after December 15, 2021, and interim periods with fiscal years beginning after December 15, 2021. Early adoption is permitted,
including adoption in an interim period. The Company adopted the new standard on February 1, 2022 and the adoption of the new standard
did not have a significant impact on the Company’s consolidated financial statements.

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In
August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity
(“ASU 2020-06”), which simplifies an issuer’s accounting for convertible instruments by reducing the number of
accounting models that require separate accounting for embedded conversion features. ASU 2020-06 also simplifies the settlement assessment
that entities are required to perform to determine whether a contract qualifies for equity classification and makes targeted improvements
to the disclosures for convertible instruments and earnings-per-share (EPS) guidance. This update will be effective for the Company’s
fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted, but no earlier
than fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Entities can elect to adopt the new
guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is currently
evaluating the impact of the pending adoption of the new standard on its financial statements and intends to adopt the standard as of
February 1, 2024.

In
January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment
(“ASU 2017-04”). ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the requirement to compare
the implied fair value of goodwill with its carrying amount as part of step two of the goodwill impairment test referenced in Accounting
Standards Codification (“ASC”) 350, Intangibles - Goodwill and Other (“ASC 350”). As a result, an entity should
perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An
impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. However,
the impairment loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective
for annual reporting periods beginning after December 15, 2022, including any interim impairment tests within those annual periods, with
early application permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. In February
2022, we elected to early adopt ASU 2017-04, and the adoption had no impact on our consolidated financial statements. We will perform
future goodwill impairment tests according to ASU 2017-04.

Management
does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect
on the accompanying consolidated financial statements.

Critical
Accounting Policies

Our
consolidated financial statements and related public financial information are based on the application of accounting principles generally
accepted in the United States (“US GAAP”). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations
of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also
affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial
condition. We believe our use of estimates and underlying accounting assumptions adhere to US GAAP and are consistently applied. We base
our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual
results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates
made during the preparation of our financial statements.

Our
significant accounting policies are summarized in Note 3 of our consolidated financial statements. While all these significant accounting
policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined
to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater
degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and
circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated
results of operations, financial position or liquidity for the periods presented in this report.

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We
believe the following critical accounting policies and procedures, among others, affect our more significant judgments and estimates
used in the preparation of our consolidated financial statements:

Use
of Estimates

The
preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and accompanying notes. Such estimates and assumptions impact, among
others, the following: allowance for doubtful accounts, and the fair value of share-based payments.

Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of
a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered
in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results
could differ significantly from our estimates.

Goodwill

Goodwill
is not amortized in accordance with US GAAP. Instead, goodwill is reviewed annually for impairment.

Our
annual assessment date is January 31. An interim impairment test would be required whenever events or circumstances make it more likely
than not that an impairment may have occurred. The goodwill impairment test compares the fair value of a reporting unit with its carrying
amount. We would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value;
however, the loss recognized would not exceed the total amount of goodwill. Additionally, we consider income tax effects from any tax-deductible
goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.

We
have the option to perform a qualitative assessment to determine whether it is necessary to perform the quantitative goodwill impairment
test. However, we may elect to perform the quantitative goodwill impairment test even if no indications of a potential impairment exist.

Our
goodwill was $8,633,334 at January 31, 2023.

For
our annual goodwill impairment tests as of January 31, 2023, we performed a qualitative assessment which indicated that it was more likely
than not that the fair values of our reporting units exceeded their respective carrying values and, therefore, did not result in an impairment.
In addition, we do not believe we are currently at risk of goodwill impairment. Our qualitative assessments considered several factors
including (i) the business enterprise value and the excess of the fair value over carrying value, (ii) macroeconomic conditions, (iii)
industry and market considerations including industry revenue, EBITDA margins, and multiples based on business enterprise value to revenues
and to EBITDA, and (iv) the recent financial performance and budget, as well as other factors.

Management
evaluates the remaining useful life of an intangible asset that is not being amortized each reporting period to determine whether events
and circumstances continue to support an indefinite useful life. If an intangible asset that is not being amortized is subsequently determined
to have a finite useful life, it is amortized prospectively over its estimated remaining useful life.

Other
Intangibles

Amortizable
intangible assets, including tradenames and trademarks, are amortized on a straight-line basis over 3 years. Customer relationships are
amortized on a straight-line basis over 4 to 5 years.

Revenue
Recognition

The
Company recognizes revenue in accordance with FASB Topic 606, Revenue from Contracts with Customers (Topic 606).

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The
Company’s sales are generated from the sale of finished products to customers, contain a single performance obligation and revenue
is recognized at a single point in time when ownership, risks and rewards transfer. Typically, this occurs when the goods are received
by the customer. Revenues are recognized in an amount that reflects the net consideration the Company expects to receive in exchange
for the goods. The transaction price is adjusted for estimates of known or expected variable consideration, which includes consumer incentives,
trade promotions, and allowances, such as coupons, discounts, rebates, volume-based incentives, cooperative advertising, and other programs.
The Company reports all amounts billed to a customer in a sale transaction as revenue. Under the revenue guidance, the Company elected
to treat shipping and handling activities as fulfilment activities, and the related costs are recorded as selling expenses in general
and administrative expenses on the consolidated statement of operations.

Stock-Based
Compensation

The
Company uses the Black-Scholes option-pricing model to determine the fair value of equity-based grants, excluding restricted stock. In
estimating fair value, management is required to make certain assumptions and estimates such as the expected life of units, volatility
of the Company’s future share price, risk-free rates, future dividend yields and estimated forfeitures at the initial grant date.
Changes in assumptions used to estimate fair value could result in materially different results.