Mama's Creations, Inc.MAMA
Mama's Creations, Inc. Leases Disclosure
Leases
The Company determines if an arrangement contains a lease at inception. Right of Use ("ROU") assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.
The Company’s leases consist of office space, manufacturing space and machinery and equipment. The Company utilized a portfolio approach in determining the discount rate. The portfolio approach takes into consideration the range of the term, the range of the lease payments, the category of the underlying asset and the Company’s estimated incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of lease
payments. The Company also considered its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating the incremental borrowing rates.
The lease term includes options to extend the lease when it is reasonably certain that the Company will exercise that option. Future obligations relating to the exercise of renewal options are included in the measurement if, based on the judgment of management, the renewal option is reasonably certain to be exercised. Factors in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of leasehold improvements, the value of the renewal rate compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option is not exercised.
Leases with a term of 12 months or less are not recorded on the balance sheet, per the election of the practical expedient under ASC 842 "Leases."
The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company recognizes variable lease payments in the period in which the obligation for those payments is incurred. Variable lease payments that depend on an index or a rate are initially measured using the index or rate at the commencement date, otherwise variable lease payments are recognized in the period incurred.
During the year ended January 31, 2025, the Company entered into the Fourth Amendment of Lease for its offices at 355 Murray Hill Parkway, East Rutherford, NJ. The amended lease has a termination date of January 31, 2030. The amended lease has monthly rent of approximately $10 thousand to $12 thousand. In accounting for the lease, the Company wrote off its existing right of use asset and lease liability of approximately $124 thousand and recognized a right of use asset of approximately $631 thousand.
During the year ended January 31, 2025, the Company amended and subsequently extended its lease for 25 Branca Road, East Rutherford, NJ twice. The first amended lease had a termination date of August 31, 2024. With the initial amendment of the lease, the Company wrote off approximately $897 thousand of the existing right of use asset and lease liability. On August 21, 2024, the Company amended its lease at 25 Branca Road. The amended lease has monthly rent of approximately $36 thousand until February 28, 2026, with a renewal option to extend the lease until August 31, 2029. The monthly rent during the renewal option ranges from approximately $38 thousand to approximately $42 thousand. As a result of this lease the Company recognized a right of use asset and a lease liability of approximately $615 thousand. In addition, on December 26, 2024, the Company amended the lease again with an effective date of February 1, 2025. This amended lease expanded the space available to the Company, has a monthly rent from approximately $73 thousand to approximately $84 thousand from February 1, 2025 to January 31, 2030, and required an initial direct payment of approximately $200 thousand. On the effective date of the lease, the Company will recognize a right of use asset and lease liability of approximately $4.2 million.
The components of lease costs were as follows (in thousands):
| January 31, 2025 | January 31, 2024 | ||||||||||
| Finance Leases | |||||||||||
| Depreciation of assets | $ | 386 | $ | 257 | |||||||
| Interest on lease liabilities | 115 | 62 | |||||||||
| Operating Leases | 709 | 572 | |||||||||
| Total net lease cost | $ | 1,210 | $ | 891 | |||||||
Supplemental balance sheet information related to leases was as follows (in thousands):
| January 31, 2025 | January 31, 2024 | ||||||||||
| Operating Leases | |||||||||||
| Operating lease ROU assets | $ | 3,376 | $ | 2,889 | |||||||
| Current operating lease liabilities, included in current liabilities | $ | 848 | $ | 434 | |||||||
| Non-current operating lease liabilities, included in long-term liabilities | 2,600 | 2,515 | |||||||||
| Total operating lease liabilities | $ | 3,448 | $ | 2,949 | |||||||
| Finance Leases | |||||||||||
| Property and equipment at cost | $ | 2,551 | $ | 2,187 | |||||||
| Accumulated depreciation | (919) | (610) | |||||||||
| Property and equipment, net | $ | 1,632 | $ | 1,577 | |||||||
| Current obligations of finance lease liabilities, included in current liabilities | $ | 345 | $ | 367 | |||||||
| Finance leases, net of current obligations, included in long-term liabilities | 1,199 | 1,062 | |||||||||
| Total finance lease liabilities | $ | 1,544 | $ | 1,429 | |||||||
Supplemental cash flow and other information related to leases was as follows:
| January 31, 2025 | January 31, 2024 | ||||||||||
| Cash paid for amounts included in the measurement of lease liabilities (in thousands) | |||||||||||
| Operating cash flows from operating leases | $ | (1,597) | $ | 340 | |||||||
| Financing cash flows from finance leases | 397 | 272 | |||||||||
| ROU assets obtained in exchange for lease liabilities (in thousands) | |||||||||||
| Operating leases | $ | 2,119 | $ | - | |||||||
| Finance leases | 511 | 1,270 | |||||||||
| Weighted average remaining lease term (in years) | |||||||||||
| Operating leases | 5.32 | 6.57 | |||||||||
| Finance leases | 4.53 | 4.49 | |||||||||
| Weighted average discount rate: | |||||||||||
| Operating leases | 6.38 | % | 4.85 | % | |||||||
| Finance Leases | 7.74 | % | 6.74 | % | |||||||
Maturities of lease liabilities for each of the succeeding fiscal years are as follows (in thousands):
| For the fiscal years ended | Finance Leases | Operating Leases | Total Maturities of Lease Liabilities | |||||||||||
| 2026 | $ | 454 | $ | 1,468 | $ | 1,922 | ||||||||
| 2027 | 406 | 1,512 | 1,918 | |||||||||||
| 2028 | 398 | 1,591 | 1,989 | |||||||||||
| 2029 | 302 | 1,635 | 1,937 | |||||||||||
| 2030 | 179 | 1,486 | 1,665 | |||||||||||
| Thereafter | 117 | 519 | 636 | |||||||||||
| Total undiscounted future lease payments | 1,856 | 8,211 | 10,067 | |||||||||||
| Less: imputed interest | (312) | (1,258) | (1,570) | |||||||||||
| Total present value of future lease liabilities | $ | 1,544 | $ | 6,953 | $ | 8,497 | ||||||||
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About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.