Group 1 - Rocky Mountain Chocolate Factory Inc. has appointed Charles Arnold to its Board of Directors, where he will serve as Chair of the Audit Committee [1][3] - Charles Arnold has over 20 years of experience in corporate finance, including roles in public and private companies, and has served as CFO of Abernathy Holdings since June 2021 [2][3] - The appointment follows the resignation of Brett Seabert, and the Board expressed gratitude for his contributions over the past seven years [3] Group 2 - Rocky Mountain Chocolate Factory is an international franchiser and producer of premium chocolates and confectionery products, with over 260 stores in the U.S. and several international locations [5] - The company was recognized as one of America's Best Retailers 2023 by Newsweek in the chocolate and candy stores category [5]

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 ...

Financial Data and Key Metrics Changes - Total revenue for the quarter was $6.6 million, unchanged from the prior year, with product sales at $4.7 million compared to $4.8 million [39] - Net loss from continuing operations improved 68% to $1 million or $0.16 per share, compared to a net loss of $3.2 million or $0.51 per share in the prior year [40] - Adjusted EBITDA loss was $600,000 compared to an adjusted EBITDA of $700,000 in the previous year [40] - Total product and retail gross profit was $0.4 million with a gross profit margin of 7.6%, down from 23.3% due to lower production volume and higher costs [19] Business Line Data and Key Metrics Changes - Retail sales at company-operated stores increased 17% to $309,000 compared to $263,000, driven by the reopening of the Corpus Christi store [39] - Same-store sales for the Durango store were up 7% year-over-year, while same-store sales at all domestic locations increased 2.3% [39] - Royalty and marketing revenue increased to $1.5 million from $1.4 million [39] Market Data and Key Metrics Changes - The company experienced a tripling of transaction volume and more than doubling of sales in e-commerce compared to the same period last year [35] - E-commerce and specialty retail sales are expected to exceed total sales from these channels for all of fiscal 2023 in the second half of fiscal 2024 [32] Company Strategy and Development Direction - The company is executing a Strategic Transformation Plan focused on doing more with less, simplifying operations, and amplifying the brand [10] - A brand refresh was unveiled to enhance the customer experience and attract new consumers [13] - The company aims to reduce underperforming SKUs by 25% to align product offerings with consumer preferences [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic plan, indicating that foundational improvements are being made for long-term growth and profitability [42] - The company anticipates that the combination of e-commerce and specialty retail sales will lead to outsized results in the back half of the fiscal year [32] - Management acknowledged challenges such as high temperatures impacting consumer demand for chocolate but remains optimistic about future performance [16] Other Important Information - The company ended the quarter with a cash balance of $4 million, down from $4.7 million at the end of fiscal 2023, primarily due to equipment purchases [20] - The company remains debt-free and has renewed its line of credit with Wells Fargo for potential future financing needs [26] Q&A Session Summary Question: What was spent on the Corpus Christi store refresh and what are franchisees being encouraged to spend? - The refresh involved minimal spending, focusing on operational improvements rather than extensive renovations [44] Question: How much of total revenue does e-commerce represent? - E-commerce was about 12-13% of total sales in fiscal year 2023, with expectations for significant growth in fiscal 2024 [47] Question: Can you discuss cash on hand and future financing needs? - The company has a strong cash position and does not foresee a need for long-term financing, but has options available if necessary [48] Question: How far along is the company in its transformation process? - Management feels they have made significant progress, likening the process to being in the later innings of a game [49]

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 ...