Mama's Creations, Inc.MAMA

Mama's Creations, Inc. Income Taxes Disclosure

10-KFiled Apr 8, 20253 min read
Income Tax Provision
The Company's income tax provision / (benefit) consists of the following (in thousands):
January 31, 2025January 31, 2024
Federal
Current$764 $1,451 
Deferred192 251 
State and Local  
Current(14)342 
Deferred53 (36)
Income tax provision$995 $2,008 
The Company had U.S. federal net operating loss carryforwards (NOLs) of approximately $0.0 million and $0.0 million at January 31, 2025 and 2024, respectively, available to offset taxable income through 2034. The Company also has state NOLs of approximately $8.0 million and $8.8 million at January 31, 2025 and 2024, respectively, available to offset future taxable income through 2036.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future generation of taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. There was no valuation allowance on the Company's deferred tax assets as of January 31, 2025 and 2024.
The Company evaluated the provisions of ASC 740 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740 prescribes a comprehensive model for how a company should recognize, present, and disclose uncertain positions that the Company has taken or expects to take in its tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability is recognized (or amount of net operating loss carry-forward or amount of tax refundable is reduced) for unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740.
If applicable, interest costs related to the unrecognized tax benefits are required to be calculated and would be classified as “Other expenses – Interest” in the consolidated statements of operations. Penalties would be recognized as a component of “Selling, general and administrative expenses.”
No interest or penalties on unpaid taxes were recorded during the years ended January 31, 2025, 2024 and 2023. As of January 31, 2025, 2024, and 2023, no liability for unrecognized tax benefits was required to be reported. The Company does not expect any significant changes in its unrecognized tax benefits in the next year.
We are subject to taxation in the United States and various states. As of January 31, 2025, tax years for January 31, 2022, 2023, and 2024 are subject to examination by the tax authorities.
The Company’s deferred tax assets and liabilities consisted of the effects of temporary differences attributable to the following (in thousands):
Deferred Tax AssetsYear Ended
January 31, 2025		Year Ended
January 31, 2024
Net operating loss carryforwards$16 $24 
Stock-based compensation149 52 
Acquisition costs86 98 
Capitalized start-up and organization costs8 16 
Right of use liability802 722 
Inventory53 47 
Bad debt22 23 
Capitalized R&D costs178 114 
Accrued payroll239 387 
Total deferred tax assets1,553 1,483 
Deferred Tax Liabilities
Fixed assets590 225 
Intangibles(80)46 
Right of use asset785 709 
Total deferred tax liabilities1,295 980 
Net deferred tax asset$258 $503 
The expected tax provision (benefit) based on the statutory rate is reconciled with actual tax provision (benefit) as follows:
Year Ended
January 31, 2025		Year Ended
January 31, 2024
US Federal statutory rate21.0 %21.0 %
State income tax, net of federal benefit2.1 3.3 
Adjustments to deferred tax assets(1.1)0.4 
Non-deductible expenses - restricted stock units - vested(4.9)(1.2)
Non-deductible expenses - section 162(m) adjustment3.5 - 
Non-deductible expenses - others0.2 - 
Income tax provision (benefit)20.8 %23.5 %
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About Income Taxes Disclosures

The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.

Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.

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