DURANGO, Colo., June 28, 2024 (GLOBE NEWSWIRE) -- Rocky Mountain Chocolate Factory Inc. (Nasdaq: RMCF) (the "Company", "we", or "RMCF"), an international franchisor and producer of premium chocolates and other confectionery products, including gourmet caramel apples, today announced that Charles Arnold has been appointed to the Company's Board of Directors ("the Board"), where he will serve as Chair of the Audit Committee. Mr. Arnold is a seasoned corporate finance executive with over 20 years of experience ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 29, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number: 001-36865 Rocky Mountain Chocolate Factory, Inc. (Exact name of registrant as specified in its c ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Rocky Mountain Chocolate Factory, Inc. as of November 30, 2023, detailing financial performance, position, and cash flows, including the impact of the U-Swirl divestiture [Consolidated Statements of Operations](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For the three and nine months ended November 30, 2023, the company reported increased losses from continuing operations and decreased total revenue, with the consolidated net loss improving due to a gain from discontinued operations Consolidated Statements of Operations Highlights (unaudited) | Metric ($ in thousands) | Three Months Ended Nov 30, 2023 | Three Months Ended Nov 30, 2022 | Nine Months Ended Nov 30, 2023 | Nine Months Ended Nov 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $7,697 | $8,825 | $20,691 | $22,285 | | **Loss from Operations** | $(775) | $(199) | $(3,327) | $(2,942) | | **Net Loss from Continuing Operations** | $(757) | $(196) | $(3,283) | $(3,634) | | **Earnings (loss) from Discontinued Operations** | $0 | $(16) | $704 | $(334) | | **Consolidated Net Loss** | $(757) | $(212) | $(2,579) | $(3,968) | | **Net Loss per Share (Basic)** | $(0.12) | $(0.03) | $(0.40) | $(0.63) | [Consolidated Balance Sheets](index=7&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) As of November 30, 2023, total assets decreased to **$21.3 million** from **$22.0 million**, driven by reduced cash, while total liabilities increased due to a **$1.0 million** line of credit draw, and stockholders' equity declined Consolidated Balance Sheet Highlights (unaudited) | Metric ($ in thousands) | November 30, 2023 | February 28, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,082 | $4,717 | | Total current assets | $10,080 | $11,205 | | **Total Assets** | **$21,280** | **$21,987** | | Line of credit | $1,000 | $0 | | Total current liabilities | $7,079 | $5,010 | | **Total Liabilities** | **$8,999** | **$7,617** | | **Total Stockholders' Equity** | **$12,282** | **$14,370** | [Consolidated Statements of Cash Flows](index=9&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the nine months ended November 30, 2023, net cash used in operating activities was **$2.6 million**, with investing activities using **$1.1 million** and financing activities providing **$1.0 million**, resulting in a **$2.6 million** net decrease in cash Cash Flow Summary (unaudited, for nine months ended Nov 30) | Cash Flow Activity ($ in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,564) | $(3,583) | | Net cash provided by (used in) investing activities | $(1,071) | $(788) | | Net cash provided by financing activities | $1,000 | $0 | | **Net Decrease in Cash and Cash Equivalents** | **$(2,635)** | **$(4,371)** | [Consolidated Statement of Changes in Stockholders' Equity](index=10&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20CHANGES%20IN%20STOCKHOLDERS'%20EQUITY) Stockholders' equity decreased by **$2.1 million** from February 28, 2023, to November 30, 2023, primarily due to a consolidated net loss, partially offset by equity compensation - Total stockholders' equity declined by **$2.1 million** over the nine-month period, from **$14,370,164** on February 28, 2023, to **$12,281,518** on November 30, 2023[19](index=19&type=chunk) - The decrease was primarily due to a consolidated net loss of **$2,579,448**, partially offset by stock-based compensation of **$490,802**[19](index=19&type=chunk) [Notes to Interim (Unaudited) Consolidated Financial Statements](index=11&type=section&id=NOTES%20TO%20INTERIM%20(UNAUDITED)%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes detail the U-Swirl subsidiary sale, a breach of a loan covenant, revenue recognition, stock-based compensation, and a full valuation allowance against deferred tax assets - The company sold its U-Swirl subsidiary, and its historical results are now reported as discontinued operations, with the sale completed on May 1, 2023, for **$2.76 million** in total consideration, resulting in a gain on disposal of **$634,790**[22](index=22&type=chunk)[88](index=88&type=chunk)[92](index=92&type=chunk) - As of November 30, 2023, the company was not in compliance with a financial covenant in its credit agreement with Wells Fargo, requiring a current ratio of at least 1.5 to 1, as its ratio was 1.42 to 1, and a waiver has been requested but not yet received[36](index=36&type=chunk)[54](index=54&type=chunk)[144](index=144&type=chunk) - Due to recent losses, management determined it is no longer more likely than not that deferred tax assets are fully realizable, resulting in a full valuation allowance against its deferred tax assets as of November 30, 2023[87](index=87&type=chunk) Store Count as of November 30, 2023 | Store Type | Count | | :--- | :--- | | Company-owned stores | 2 | | Franchise stores - Domestic | 150 | | International license stores | 4 | | Co-branded stores | 113 | | **Total Operating** | **269** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses declining revenue and profitability for Q3 and the first nine months of fiscal 2024, driven by lower product sales and compressed gross margins, alongside decreased liquidity and a credit line covenant breach Q3 FY2024 vs Q3 FY2023 Performance | Metric | Q3 FY2024 | Q3 FY2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $7.7M | $8.8M | (12.8)% | | Durango Product Sales | $6.1M | $7.3M | (16.8)% | | Durango Product Gross Margin | 7.1% | 22.9% | (15.8) p.p. | | Loss from Continuing Operations | $(0.7)M | $(0.2)M | Increased Loss | Nine Months FY2024 vs Nine Months FY2023 Performance | Metric | Nine Months FY2024 | Nine Months FY2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $20.7M | $22.3M | (7.2)% | | Durango Product Sales | $15.6M | $17.3M | (9.6)% | | Durango Product Gross Margin | 4.8% | 19.9% | (15.1) p.p. | | Loss from Continuing Operations | $(3.3)M | $(2.9)M | Increased Loss | - General and administrative costs decreased significantly, primarily because the company incurred no costs related to a contested solicitation of proxies in the current period, compared to approximately **$764,000** in Q3 2022 and **$2.9 million** in the first nine months of 2022[98](index=98&type=chunk)[112](index=112&type=chunk)[131](index=131&type=chunk) - The company's liquidity has decreased, with working capital falling from **$6.2 million** to **$3.0 million** since February 28, 2023, and it breached its credit agreement's current ratio covenant (1.42 to 1 vs. 1.5 to 1 required), for which it is seeking a waiver from the lender[138](index=138&type=chunk)[144](index=144&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk[154](index=154&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of November 30, 2023, due to a material weakness in accounting for complex transactions, with a remediation plan underway - The CEO and CFO concluded that the company's disclosure controls and procedures were not effective as of November 30, 2023[158](index=158&type=chunk) - The ineffectiveness is due to a material weakness in internal controls, specifically the finance department's inability to properly account for complex, non-routine transactions in accordance with GAAP[156](index=156&type=chunk) - A remediation plan has been implemented, which includes retaining accounting experts, and the company expects the remediation to be complete before the end of the current fiscal year[157](index=157&type=chunk) [PART II. OTHER INFORMATION](index=44&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any pending legal actions expected to have a material adverse effect on its business or operations - The company is not currently a party to any legal proceedings that are expected to have a material adverse effect on its business, financial condition, or operating results[80](index=80&type=chunk)[161](index=161&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred in the company's risk factors since the filing of its Annual Report for the fiscal year ended February 28, 2023 - No material changes have occurred in the company's risk factors since the filing of its Annual Report for the fiscal year ended February 28, 2023[163](index=163&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[164](index=164&type=chunk) [Defaults Upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[164](index=164&type=chunk) [Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[164](index=164&type=chunk) [Other Information](index=44&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - None[165](index=165&type=chunk) [Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including amendments to bylaws and credit agreements, and certifications by the Principal Executive Officer and Principal Financial Officer - Exhibits filed include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[169](index=169&type=chunk) - Other exhibits include the Third Amended and Restated Bylaws and the Second Amendment to the Credit Agreement with Wells Fargo Bank[169](index=169&type=chunk)

Financial Data and Key Metrics Changes - Total revenue decreased to $7.7 million from $8.8 million year-over-year, primarily due to higher factory overhead and production constraints at the Durango facility [13] - Net loss from continuing operations was $0.8 million or $0.12 per share, compared to a net loss of $0.2 million or $0.03 per share in the prior year [23] - Adjusted EBITDA loss was $3 million compared to adjusted EBITDA of $1.2 million, mainly due to lower sales and gross margin [28] Business Line Data and Key Metrics Changes - Total product sales were $6.1 million, down from $7.3 million, while retail sales at company-operated stores increased by 21% to $364,000 due to the opening of a second store [14] - Franchise fee revenue decreased to $41,000 from $49,000 [1] Market Data and Key Metrics Changes - Same-store sales for company-owned stores in Durango decreased by 1.1% year-over-year, while same-store sales across all domestic locations decreased by 2.1% [1] Company Strategy and Development Direction - The company has relocated consumer packaging functions to a third-party co-packer in Utah to alleviate labor constraints and improve production capacity [16][5] - The strategic transformation plan aims to enhance operational efficiency and expand the franchise network, with a focus on e-commerce and specialty retail partnerships [11][6] - The company plans to invest $6 million to $6.5 million in capital expenditures over fiscal years 2024 and 2025 [46] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, stating that the actions taken over the past year have positioned the company for growth and profitability in fiscal 2025 [30] - The management acknowledged challenges in labor availability but emphasized that the transition to co-packing has set the stage for meeting increased demand [38][40] Other Important Information - The company ended the third quarter with a cash balance of $2.1 million, down from $4.7 million at the end of fiscal year 2023, primarily due to cash used in operations and capital expenditures [29] - The company has no long-term debt, which provides financial flexibility [29] Q&A Session Summary Question: Inventory levels and co-packaging issues - Management explained that inventory levels were managed lean due to labor challenges, which impacted the ability to ramp up production [35][36] Question: Transition to co-packing - The transition to co-packing was accelerated due to labor shortages, and the move was completed successfully despite challenges [38][40] Question: Capital spending needs - The company has spent most of its capital expenditures for the fiscal year and is planning for fiscal 2025, with a focus on becoming cash flow positive [46][47] Question: Gross margin improvements - Management indicated that while outsourcing packaging may not directly improve margins, increasing throughput will enhance overall margins [50][52]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-36865 Rocky Mountain Chocolate Factory, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of Incorporation or organization) Delaware 47-1535633 (I.R.S. Employer Identification No.) 265 Turner Drive, Durango, CO 81303 (Address of principal execu ...

Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF) Q2 2024 Earnings Conference Call October 12, 2023 8:30 AM ET Company Participants Rob Sarlls - Chief Executive Officer Allen Arroyo - Chief Financial Officer Conference Call Participants Roger Lipton - Lipton Financial Services Peter Sidoti - Siodti & Company Operator Good morning, ladies and gentlemen. Thank you for standing by. Welcome to today's conference call to discuss Rocky Mountain Chocolate's Financial Results for the Fiscal Second Quarter 2024. ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________to________ Commission file number: 001-36865 Rocky Mountain Chocolate Factory, Inc. (Exact name of registrant as specified in its charter ...

Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF) Q1 2024 Earnings Call Transcript July 13, 2023 5:00 PM ET Company Participants Rob Sarlls - Chief Executive Officer Allen Arroyo - Chief Financial Officer Conference Call Participants Roger Lipton - Lipton Financial Services Operator Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to today's conference call to discuss Rocky Mountain Chocolate Factory's financial results for the Fiscal First Quarter 2024. At this time, all particip ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 28, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number: 001-36865 Rocky Mountain Chocolate Factory, Inc. (Exact name of registrant as specified in its c ...

Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF) Q4 2023 Earnings Conference Call May 24, 2023 8:30 AM ET Company Participants Rob Sarlls - Chief Executive Officer Allen Arroyo - Chief Financial Officer Conference Call Participants Roger Lipton - Lipton Financial Services Operator Good morning, ladies and gentlemen. Thank you for standing by. Welcome to today’s conference call to discuss the Rocky Mountain Chocolate Factory’s Financial Results and new Strategic Transformation Plan. [Operator Instruction ...