SEC Company Response from Mama's Creations, Inc. (MAMA) (CIK 0001520358) (MAMA) — Mar 11, 2013
Mama's Creations, Inc. (MAMA) (CIK 0001520358)
Date: March 11, 2013 · CIK: 0001520358 · Accession: 0001493152-13-000381
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-174445
Referenced dates: February 26, 2013
Letter
Division of Corporation Finance Mascot Properties, Inc. Form 8-K Filed January 30, 2013 File No. 333-174445
Dear Ms. Block:
By letter dated February 26, 2013, the staff (the “Staff,” “you” or “your”) of the U.S. Securities & Exchange Commission (the “Commission”) provided Mascot Properties, Inc (the “Company,” “we,” “us” or “our”) with its comments to the Company’s Current Report on Form 8-K, filed on January 30, 2013 (the “Current Report”). We are in receipt of your letter and set forth below are the Company’s responses to the Staff’s comments. For your convenience, the comments are listed below, followed by the Company’s responses.
Business of Mama Mancini’s, page 3
1. Please include in a separately captioned subsection the disclosure relating to description of properties called for by Item 102 to Regulation S-K. Refer to Item 3 to Form 10. See also CF Disclosure Guidance: Topic 1, available on our website at
http://www.sec.gov/divisions/corpfin/guidance/cfguidance- topic1.htm.
Response: We have updated our disclosure accordingly.
Overview, page 3
2. Please balance this section by disclosing your net losses for the last two fiscal years, your negative cash flows, and your net accumulated losses. Also, please disclose that your auditor has expressed substantial doubt regarding your ability to continue as a going concern.
Response: The Form 8K/A has been updated to include net losses for the last two fiscal years, the negative cash flows, and the net accumulated losses. Also, we included disclosure that our auditor has expressed substantial doubt regarding our ability to continue as a going concern.
3. Please define or clarify what you mean by “all natural” and disclose, if true, that there is no precise generally accepted or FDA-approved definition of “all natural.”
Response: The United States Department of Agriculture (the “USDA”) defines “all natural” as a product that contains no artificial ingredients, coloring ingredients or chemical preservatives and is minimally processed. The Company’s products were submitted to the USDA and approved as “all natural” (reference numbers 2759048, 2759049 and 2759050).
4. Please revise to state as a belief that you market an “upscale line” of food or substantiate that statement to us.
Response: We have updated our disclosure accordingly.
5. Please clarify what is “food to go” sections of stores. For example, is the store selling the food already cooked and ready to eat or does the consumer have to cook or heat it up, for instance?
Response: “Food to Go” sections of supermarkets contain food already cooked and ready to heat for eating (in some instances no heating is required).
6. Please clarify by what is meant by the statement that you have over “16,000 placements of products,” in retail locations. For instance, does this mean that your product can be found in over 16,000 stores? We note your disclosure on page 10, as well, that you have over 16,000 locations on retail shelves. Please revise to clarify throughout, as necessary.
Response: MamaMancini’s products are located in 4,000 retail locations with an average of four different items per retail location totaling 16,000 spots on shelves in the 4,000 retail locations.
Product Development, page
7. Please clarify if these to be developed products are to be developed pursuant to the Development and License agreement or if they are considered “Other Products,” under that agreement. Also, clarify if these products are also based upon Ms. Mancini’s traditional recipes or advise.
Response: The products under development are both based upon Ms. Mancini’s traditional recipes and new recipes derived from the original recipes. All products currently under development are included in the Development and License Agreement.
Key Product Attributes, page 9
8. Please substantiate that your ingredients are of the “highest quality” and provide us with the basis for your belief that customers view your products “as a healthy alternative.” In the alternative, please revise to clarify those statements are your beliefs.
Response: MamaMancini’s believes its ingredients are high quality. The Company’s products are made from high quality components which are more costly than components we can substitute in our products. We use only domestic inspected beef, turkey, pork and chicken, whole Italian tomatoes, only genuine Imported Pecorino Romano, real eggs and other ingredients which are “all natural” (see definition above”). We consider our products to be a healthy alternative to many fully processed foods in the marketplace which may contain artificial ingredients such as meat extenders and imported beef.
Market Size, page 9
9. Please describe the market for specialty prepared and frozen foods and provide market data to the extent available.
Response: We have updated our disclosure accordingly.
10. We note you provide data as of 2009. Please update that to a more recent date, to the extent practicable.
Response: We have updated our disclosure accordingly.
Sales, Marketing, and Distribution, page
11. Please disclose the geographic scope of your product distribution and whether there are any states that comprise greater than ten percent of your sales.
Response: MamaMancini’s products are mainly sold in the Middle Atlantic States and Florida, accounting for over 70% of its sales.
USDA approval / Regulations, page
12. Please discuss the USDA or FDA regulations applicable to the manufacturing and sale of “natural” and “all natural” products. Please add a risk factor describing the risks in the event the FDA was to determine that your characterization of a product as “all natural” is misleading.
Response: We have revised our disclosure accordingly.
Growth Plan, page 11
13. Please revise each of the bullet points on this page to disclose the estimated budget for each component of your growth plan. Please also discuss the material steps of each of these plans and time frames for any necessary steps. Please also balance the disclosure to indicate the need for any additional financing to complete the goals. If financing is not currently available to you, please also make that clear in this section. Provide similar balancing disclosure, as applicable to your Product Development discussion, at page 8.
Response: We have revised our disclosure accordingly.
Risk Factors, page 12
14. Please add a risk factor describing the risks that, because consumers of prepared and frozen products tend to be price conscious, they may be less willing to pay for your gourmet products during economic downturns and you may be unable to pass higher commodity and transportation costs onto consumers or advise why you do not think that is necessary.
Response: We have updated our disclosure accordingly.
We will need additional capital, page
15. Please revise here and in your Overview section to disclose the estimated amount of additional capital to implement your growth plan and to satisfy other cash needs for the next 12 months.
Response: The Company believes that it has adequate financing through September 30, 2013 to execute its current growth plan. However, in the case that the Company exceeds its expected growth, we would need to raise additional capital. There can be no assurances that we can secure additional financing on terms and conditions acceptable to the Company.
There is serious doubt regarding our ability to continue as a going concern, page 13
16. Please revise to clarify that your auditor has expressed substantial doubt regarding your ability to continue as a going concern.
Response: We have revised our disclosure accordingly.
All of our manufacturing is outsourced, page
17. Please describe in a separate risk factor, with its own risk factor subheading, any risks related to you being dependent on a related party to manufacture your product. In this risk factor, address any risks that may arise at the end date of the supply and management agreement with HDU, if applicable.
Response: We have revised our disclosure accordingly.
There has been a limited trading market, page
18. Please disclose which OTC Marketplace tier you anticipate being quoted on. Please indicate the symbol under which your Common Stock is or has been quoted on the OTC Markets. If applicable, please also provide the most recent sales price and date of trade. Similarly provide the symbol, last date of trade and price under the Risk Factor, “Our common stock is considered a penny stock,” at page 17.
Response: We have updated our disclosure accordingly.
If we fail to establish and maintain an effective internal control system, page 18
19. We note your reference to any “current internal control deficiencies.”
Please discuss the risks of any known internal control deficiencies or advise.
Response: We have updated our disclosure accordingly.
Management’s Discussion and Analysis of Financial Condition and Plan of Operation, page 19
20. Please revise the first sentence of the introductory paragraph to remove the implication that the statutory safe harbor is available for forward-looking statements made by you. In this regard, please move “within the meaning of the federal securities laws” or revise to state that the safe harbors are not available to you. We note that the statutory safe harbor is not available for forward-looking statements made by issuers of penny stock. See Section 21E(b)(1)(C) of the Securities Exchange Act of 1934.
Response: We have updated our disclosure accordingly.
Results of Operations for the Nine-Months Ended September 30, 2012 and 2011, page 19
21. Please briefly describe slotting fees and discuss the practices in your market segment with respect to the payment of slotting allowances, pay-to-stay fees, or other promotional consideration to introduce new products or to introduce products to new retailers. In the discussion, generally discuss whether or not you anticipate needing to pay slotting fees going forward. Please discuss whether you are limited by size or financial position in your ability to pay slotting allowances or similar consideration to introduce products and whether this presents a significant obstacle to your ability to expand your product placement. To the extent material, please revise the second risk factor on page 14 to describe the attendant risks.
Response: Slotting fees are required in new placements with some, but not a majority of supermarket chains that the Company does business with. They are negotiated with each chain depending upon the expected return to the Company. We believe that we have successfully negotiated such slotting fees to a relatively low expense. We have taken into account future fees currently being negotiated in preliminary negotiations for new placements. We do not believe our size or financial limitations are an impediment to being able to pay such slotting fees. We expense these fees as incurred and do not believe they are a major cost to the growth of the Company.
Gross Profit, page
22. We assume your description of a 1% decrease in gross profit is intended to describe the decrease in gross profit margin. If our understanding is correct, please revise your disclosure in both interim and annual comparative discussions in future filings.
Response: The Form 8K/A has been revised to further disclose the decrease in gross profit margin.
Operating Expenses, page
23. Please revise your disclosure in future filings to include the facts and circumstances surrounding each increase cited. Please include a draft of your proposed revised disclosure for both the interim and annual discussions.
Response: The Form 8K/A has been revised to further disclose the facts and circumstances surrounding each increase cited.
Liquidity and Capital Resources, page 21
24. Refer to the final paragraph on page 22. Please specifically state that the auditors’ report expressed substantial doubt as to your ability to continue as a going concern. Filings with such accountants’ reports must contain appropriate and prominent disclosure of financial difficulties as well as
Show Raw Text
CORRESP
1
filename1.htm
CORRESP
MASCOT
PROPERTIES, INC.
25 BRANCA ROAD
EAST RUTHERFORD, NJ 07073
March
8, 2013
Susan C. Block
Attorney-Advisor
U.S. Securities & Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549
Re:
Mascot Properties, Inc.
Form 8-K
Filed January 30, 2013
File No. 333-174445
Dear
Ms. Block:
By letter dated February 26, 2013,
the staff (the “Staff,” “you” or “your”) of the U.S. Securities &
Exchange Commission (the “Commission”) provided Mascot Properties, Inc (the “Company,” “we,”
“us” or “our”) with its comments to the Company’s Current Report on Form 8-K, filed
on January 30, 2013 (the “Current Report”). We are in receipt of your letter and set forth below are the Company’s
responses to the Staff’s comments. For your convenience, the comments are listed below, followed by the Company’s responses.
Business
of Mama Mancini’s,
page 3
1. Please include
in a separately
captioned subsection
the disclosure relating
to description
of properties
called for
by Item
102 to Regulation
S-K.
Refer to
Item
3 to Form 10. See
also CF
Disclosure Guidance:
Topic 1, available
on our website
at
http://www.sec.gov/divisions/corpfin/guidance/cfguidance-
topic1.htm.
Response:
We have updated our disclosure accordingly.
Overview,
page 3
2. Please
balance this section
by disclosing
your net losses
for the last
two fiscal
years,
your negative
cash flows, and
your
net accumulated
losses.
Also, please
disclose that
your auditor
has expressed
substantial doubt regarding
your ability
to continue as a going
concern.
Response: The Form 8K/A has been updated to include
net losses for
the last two fiscal
years,
the negative
cash flows, and
the net
accumulated losses.
Also, we included disclosure
that our auditor
has expressed
substantial doubt regarding
our ability
to continue as a going
concern.
3. Please
define or
clarify
what
you mean
by “all
natural” and
disclose, if true,
that there is no precise
generally
accepted or
FDA-approved
definition of
“all natural.”
Response: The United States Department
of Agriculture (the “USDA”) defines “all natural” as a product that contains no artificial ingredients,
coloring ingredients or chemical preservatives and is minimally processed. The Company’s products were submitted to the USDA
and approved as “all natural” (reference numbers 2759048, 2759049 and 2759050).
4. Please
revise to state
as a belief
that you
market
an “upscale
line” of food
or substantiate
that statement to us.
Response: We have updated our disclosure
accordingly.
5. Please
clarify
what is “food
to go” sections
of stores. For
example,
is the store selling
the food already
cooked
and ready
to eat or does
the consumer have
to cook or heat
it up, for instance?
Response: “Food to Go”
sections of supermarkets contain food already cooked and ready to heat for eating (in some instances no heating is required).
6. Please clarify
by what
is meant by
the statement
that
you have
over “16,000
placements of
products,” in retail
locations. For
instance, does
this mean that your
product
can be found in over
16,000 stores?
We note your
disclosure
on page
10, as well,
that you have
over 16,000 locations
on retail shelves.
Please revise
to clarify
throughout,
as necessary.
Response: MamaMancini’s products
are located in 4,000 retail locations with an average of four different items per retail location totaling 16,000 spots on shelves
in the 4,000 retail locations.
Product
Development,
page
8
7. Please
clarify
if these
to be developed
products are
to be developed
pursuant to the Development
and License
agreement
or if they
are
considered
“Other Products,”
under that agreement.
Also, clarify
if these
products
are also
based upon Ms. Mancini’s
traditional recipes or
advise.
Response: The products under development
are both based upon Ms. Mancini’s traditional recipes and new recipes derived from the original recipes. All products currently
under development are included in the Development and License Agreement.
Key
Product Attributes,
page 9
8. Please
substantiate that
your ingredients
are
of the “highest
quality”
and provide us with
the basis for
your belief
that customers
view your
products “as
a healthy
alternative.”
In the alternative,
please
revise
to clarify
those statements
are your
beliefs.
Response: MamaMancini’s believes
its ingredients are high quality. The Company’s products are made from high quality components which are more costly than
components we can substitute in our products. We use only domestic inspected beef, turkey, pork and chicken, whole Italian tomatoes,
only genuine Imported Pecorino Romano, real eggs and other ingredients which are “all natural” (see definition above”).
We consider our products to be a healthy alternative to many fully processed foods in the marketplace which may contain artificial
ingredients such as meat extenders and imported beef.
Market
Size,
page 9
9. Please
describe
the market
for specialty
prepared
and frozen
foods and provide
market data
to the extent available.
Response: We have updated our disclosure
accordingly.
10. We
note you provide
data
as of 2009. Please
update that
to a more recent
date, to the extent
practicable.
Response: We have updated our disclosure
accordingly.
Sales,
Marketing,
and Distribution, page
10
11. Please
disclose the geographic
scope of
your product
distribution and whether
there are any
states that comprise
greater
than ten percent
of your
sales.
Response: MamaMancini’s products
are mainly sold in the Middle Atlantic States and Florida, accounting for over 70% of its sales.
USDA approval
/ Regulations,
page
11
12. Please
discuss the USDA or FDA
regulations applicable
to the manufacturing
and sale
of “natural”
and “all
natural”
products.
Please
add a risk
factor describing
the risks in the event
the FDA was
to determine
that your characterization
of a product
as “all natural”
is misleading.
Response: We have revised our disclosure
accordingly.
Growth
Plan, page 11
13. Please
revise each of
the bullet points on this page to
disclose the estimated
budget for each component
of your growth
plan. Please also discuss
the material
steps of each of
these plans and time frames
for any necessary
steps. Please
also balance the disclosure to
indicate the need
for any additional financing
to complete the goals. If financing
is not currently available
to you,
please also make
that clear in this section.
Provide similar balancing
disclosure, as applicable
to your
Product Development
discussion, at page
8.
Response: We have revised our disclosure
accordingly.
Risk Factors,
page 12
14. Please
add a risk factor describing
the risks that, because
consumers of
prepared
and frozen
products tend
to be price
conscious, they
may
be less willing
to pay for
your gourmet
products during
economic downturns
and you
may be
unable to pass higher
commodity
and transportation
costs onto consumers or advise
why
you do not think that
is necessary.
Response: We have updated our disclosure
accordingly.
We
will need additional capital,
page
12
15. Please
revise here and
in your
Overview section
to disclose the estimated
amount of additional capital
to implement your
growth plan
and to satisfy
other cash needs
for the next
12 months.
Response: The Company believes that
it has adequate financing through September 30, 2013 to execute its current growth plan. However, in the case that the Company
exceeds its expected growth, we would need to raise additional capital. There can be no assurances that we can secure additional
financing on terms and conditions acceptable to the Company.
There
is serious doubt regarding
our ability
to continue
as a going concern,
page 13
16. Please
revise to clarify
that
your auditor
has expressed
substantial doubt regarding
your ability
to continue as a going
concern.
Response: We have revised our disclosure
accordingly.
All
of our manufacturing
is outsourced, page
13
17. Please
describe
in a separate
risk factor,
with its own risk
factor subheading,
any
risks related to
you being
dependent
on a related
party
to manufacture
your product.
In this risk factor,
address
any
risks that
may arise
at the end
date of the supply
and management
agreement
with HDU, if applicable.
Response: We have revised our disclosure
accordingly.
There
has been
a limited trading
market, page
18
18. Please
disclose which OTC Marketplace
tier you
anticipate
being
quoted on. Please
indicate the symbol
under which
your Common Stock is or has been
quoted on the OTC Markets.
If
applicable, please
also provide the
most recent sales price
and date
of trade.
Similarly
provide the symbol,
last date of trade
and price
under the Risk Factor,
“Our common
stock is considered
a penny
stock,”
at page
17.
Response: We have updated our disclosure
accordingly.
If
we fail to establish and maintain
an effective
internal
control system,
page 18
19. We
note your
reference
to any
“current
internal
control deficiencies.”
Please
discuss the risks of any
known internal
control deficiencies
or advise.
Response: We have updated our disclosure
accordingly.
Management’s
Discussion and Analysis
of Financial Condition and Plan
of Operation, page 19
20. Please
revise the first sentence
of the introductory
paragraph
to remove the
implication that the statutory
safe harbor
is available
for forward-looking
statements
made by
you. In
this regard, please
move “within the meaning
of the federal
securities laws”
or revise to state
that the safe harbors
are not available
to you.
We note that
the statutory
safe harbor
is not available
for forward-looking
statements
made by
issuers of penny
stock.
See Section 21E(b)(1)(C)
of the
Securities Exchange
Act of 1934.
Response: We have updated our disclosure
accordingly.
Results
of Operations
for the Nine-Months
Ended September
30, 2012 and
2011, page 19
21. Please
briefly
describe
slotting fees
and discuss the
practices
in your market
segment with respect
to the payment
of slotting allowances,
pay-to-stay
fees, or other
promotional consideration
to introduce new products
or to introduce products
to new retailers.
In the discussion, generally
discuss whether or
not you
anticipate
needing
to pay slotting
fees going
forward.
Please
discuss whether
you are
limited by
size or financial
position in your
ability
to pay slotting
allowances
or similar consideration
to introduce products
and whether this presents
a significant
obstacle to your
ability
to expand
your product
placement. To the
extent material,
please revise
the second
risk factor
on page
14 to describe
the attendant
risks.
Response: Slotting fees are required
in new placements with some, but not a majority of supermarket chains that the Company does business with. They are negotiated
with each chain depending upon the expected return to the Company. We believe that we have successfully negotiated such
slotting fees to a relatively low expense. We have taken into account future fees currently being negotiated in preliminary
negotiations for new placements. We do not believe our size or financial limitations are an impediment to being able to pay
such slotting fees. We expense these fees as incurred and do not believe they are a major cost to the growth of the
Company.
Gross
Profit, page
20
22. We
assume your
description of a
1% decrease
in gross profit
is intended to describe
the decrease
in gross profit
margin.
If our understanding
is correct,
please revise
your disclosure in both interim
and annual
comparative
discussions in future filings.
Response: The Form 8K/A has been
revised to further disclose the decrease in gross profit margin.
Operating
Expenses, page
20
23. Please
revise your
disclosure in future filings
to include the facts
and circumstances
surrounding each
increase
cited.
Please include
a draft of
your proposed
revised disclosure for
both the interim
and annual
discussions.
Response: The Form 8K/A has been
revised to further disclose the facts
and circumstances
surrounding each
increase
cited.
Liquidity
and Capital Resources,
page 21
24. Refer
to the final
paragraph
on page 22.
Please specifically
state that the auditors’
report expressed
substantial doubt as to
your ability
to continue as a
going concern.
Filings with such
accountants’ reports
must contain appropriate
and prominent
disclosure
of financial
difficulties as well
as