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 ...

Financial Data and Key Metrics Changes - For Q4 2023, total revenue increased by 5% to $8.1 million, with total factory sales rising by 6% to $6.1 million, driven by higher shipments from franchise and licensed retail stores [18] - Net loss from continuing operations was $1.9 million or $0.29 per share, compared to a net income of $0.4 million or $0.06 per share in the previous year [19] - Adjusted EBITDA decreased to $2.6 million from $4.1 million, primarily due to inventory write-downs [20][56] Business Line Data and Key Metrics Changes - Royalty and marketing revenue increased by 5% to $1.7 million, while retail sales decreased to $270,000 from $331,000 [18] - Same-store sales at all domestic locations increased by 1.5% [18] - Franchise fee revenue rose to $57,000 from $43,000 [18] Market Data and Key Metrics Changes - The company reported a significant decline in gross profit margin, with total factory and retail gross profit at $79,000 compared to $899,000, resulting in a gross profit margin of 1.2% compared to 14.7% [43] - For the full year 2023, total revenue increased by 3% to $30.4 million, but gross margin declined to 16.4% from 20.9% due to lower production volumes and inventory management efforts [44] Company Strategy and Development Direction - The company is implementing a three-part Strategic Transformation Plan aimed at streamlining operations, revitalizing the in-store experience, and enhancing digital presence [7][28] - The plan includes exiting non-core businesses, such as the frozen yogurt segment, to refocus on chocolate manufacturing and franchising [10][34] - The company aims to double revenue and factory pound volume over the next 3 to 5 years, establish a network of 250-plus revitalized chocolate shops, and increase e-commerce sales to approximately 10% of total revenue [38] Management's Comments on Operating Environment and Future Outlook - Management acknowledged past struggles due to a lack of manufacturing discipline and underinvestment in franchise stores, leading to a loss of market share [29] - The leadership team is optimistic about the transformation plan and expects to report on progress in future calls [46] - The company is focused on improving operational efficiencies and reducing costs, targeting a return to factory gross margins of 25% to 30% [17][38] Other Important Information - The company ended Q4 with a cash balance of $4.7 million, down from $7.6 million at the end of the previous fiscal year, and remained debt-free [45] - The company plans to implement a new ERP and point-of-sale system to enhance data-driven decision-making [12] Q&A Session Summary Question: Is the $1.2 million of savings already in place or will it be implemented over the next 12 months? - Management indicated that a portion of the $1.2 million savings has already been implemented, including closing unnecessary third-party warehousing and SKU rationalization [47][59] Question: What is the current price trend for chocolate and related commodities? - Management noted that sugar prices are at an 11-year high, while cocoa prices are relatively stable but still high [61] Question: Will there be a price increase for franchisees in fiscal 2024? - Management confirmed that there will be no price increase for franchisees in fiscal 2024, despite a high-single digit increase in the previous fiscal year [62] Question: What are the expected investments necessary to execute the Strategic Transformation Plan? - Management highlighted that significant capital investment will be made in manufacturing equipment and ERP systems to enhance operational efficiency [65][66] Question: How will the closure of 25 to 35 stores impact the financials? - Management stated that the financial impact of closing underperforming stores will be minimal, as these stores generally performed below average unit volume [68]

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 November 30, 2022 ☐ 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 ch ...

Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF) Q3 2023 Earnings Conference Call January 12, 2023 5:00 PM ET Company Participants Rob Sarlls - Director and Chief Executive Officer Allen Arroyo - Chief Financial Officer Operator Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to today's Conference Call to discuss the Financial Results for Rocky Mountain Chocolate Factory's Fiscal Third Quarter Ended November 30, 2022. [Operator Instructions] As a reminder, this conference is bei ...

Financial Performance - Basic earnings per share decreased from $0.03 in Q3 2021 to a loss of $0.59 in Q3 2022[85] - Revenues decreased by 5.1% from $7.9 million in Q3 2021 to $7.5 million in Q3 2022[85] - Net income decreased from $197,000 in Q3 2021 to a net loss of $3.6 million in Q3 2022[85] - Basic earnings per share decreased from a net income of $0.13 per share for the six months ended August 31, 2021, to a net loss of $0.60 per share for the same period in 2022[105] - Revenues decreased by 1.1% from $15.5 million for the six months ended August 31, 2021, to $15.4 million for the same period in 2022[105] - The company incurred a net loss of $3.8 million during the six months ended August 31, 2022, compared to a net income of $776,738 in the same period in 2021[127] Sales Performance - Factory sales decreased by 6.8% to $4.8 million, while retail sales increased by 1.8% to $796,700 in Q3 2022[86] - Same store pounds purchased by domestic franchise and licensed locations decreased by 15.4% in Q3 2022 compared to Q3 2021[87] - Same store sales at domestic Rocky Mountain Chocolate Factory locations decreased by 3.1%, while U-Swirl Frozen Yogurt cafés increased by 16.2% in Q3 2022[89] - Factory sales decreased by 2.3%, or $236,000, to $9.97 million for the six months ended August 31, 2022, primarily due to a 47.2% decrease in shipments to customers outside the franchised retail network[106][107] - Same store sales at all Company-owned locations increased by 1.1% during the six months ended August 31, 2022, compared to the same period in 2021[108] Cost and Expense Analysis - Total costs increased by 28.0% to $9.6 million in Q3 2022, primarily due to a rise in general and administrative expenses[92] - Total costs and expenses increased by 22.0% to $17.47 million for the six months ended August 31, 2022, compared to $14.32 million for the same period in 2021[112] - General and administrative expenses increased to 54.0% of total revenues for the three months ended August 31, 2022, compared to 23.5% for the same period in 2021, with costs associated with a contested proxy solicitation totaling approximately $1.8 million[99] - General and administrative expenses increased to 37.1% of total revenues for the six months ended August 31, 2022, compared to 17.5% for the same period in 2021[118] - Retail operating expenses as a percentage of retail sales rose from 56.2% in the three months ended August 31, 2021, to 59.1% in the same period of 2022, primarily due to higher salaries and utility costs[100] - Retail operating expenses as a percentage of retail sales rose from 56.2% in the six months ended August 31, 2021, to 59.3% in the six months ended August 31, 2022[119] Margin Analysis - Factory gross margin decreased to 21.3% in Q3 2022 from 26.1% in Q3 2021, attributed to increased costs and lack of Employee Retention Credits[95] - Retail gross margin decreased from 67.1% in Q3 2021 to 62.7% in Q3 2022, primarily due to rising raw material costs[96] - Factory gross margin decreased to 17.6% for the six months ended August 31, 2022, from 20.6% in the same period of 2021, primarily due to wage and material inflation[114] - Retail gross margin decreased from 67.3% during the six months ended August 31, 2021, to 62.7% during the same period in 2022, mainly due to increased raw material costs[115] Franchise and Marketing Costs - Franchise costs as a percentage of total royalty and marketing fees decreased to 27.3% in Q3 2022 from 37.2% in Q3 2021[97] - Franchise costs as a percentage of total royalty and marketing fees decreased to 26.8% in the six months ended August 31, 2022, from 34.4% in the same period of 2021[116] Cash Flow and Working Capital - Working capital decreased by $2.4 million to $7.3 million as of August 31, 2022, from $9.7 million as of February 28, 2022[125] - Cash and cash equivalents decreased by approximately $2.2 million to $5.4 million as of August 31, 2022, compared to $7.6 million as of February 28, 2022[126] - The company recorded income tax expense of $1.4 million on a loss before income taxes of $2.4 million for the six months ended August 31, 2022[123] - Investing activities used cash of $598,878 during the six months ended August 31, 2022, primarily due to purchases of property and equipment[127] - As of August 31, 2022, the company had purchase obligations of approximately $53,000 for future purchases of commodities[129] - The company believes cash flow from operations will be sufficient to fund capital expenditures and working capital requirements for FY 2023[128]

PART I. FINANCIAL INFORMATION This section presents the company's interim financial statements, management's analysis of financial performance and liquidity, and disclosures regarding market risk and internal controls [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The financial statements reveal a net loss of $114,941 for the quarter, driven by increased expenses despite a slight revenue rise, with operating cash flow significantly reduced [Consolidated Statements of Operations](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The company reported a net loss of $114,941 for the quarter, a reversal from prior-year income, due to a 14.8% increase in costs and expenses despite a 3.1% revenue growth Consolidated Statements of Operations Highlights (Three Months Ended May 31) | Financial Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | **Total Revenue** | **$7,826,572** | **$7,593,711** | **+3.1%** | | Total costs and expenses | $7,975,909 | $6,947,807 | +14.8% | | **Income (Loss) from Operations** | **($149,337)** | **$645,904** | **-123.1%** | | **Consolidated Net Income (Loss)** | **($114,941)** | **$579,805** | **-119.8%** | | Diluted Earnings (Loss) per Share | ($0.02) | $0.09 | -122.2% | - General and administrative expenses nearly doubled, increasing from **$844,821** in Q1 2021 to **$1,631,223** in Q1 2022, primarily driving the operating loss[9](index=9&type=chunk) [Consolidated Balance Sheets](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Total assets increased to $27.5 million, while cash and cash equivalents decreased to $6.0 million, offset by a new $1.3 million restricted cash balance Key Balance Sheet Figures | Balance Sheet Item | May 31, 2022 (unaudited) | February 28, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $5,989,510 | $7,587,374 | | Restricted cash | $1,344,813 | $0 | | Total current assets | $15,426,280 | $14,997,966 | | **Total Assets** | **$27,491,591** | **$26,880,761** | | Total current liabilities | $5,699,244 | $5,311,732 | | **Total stockholders' equity** | **$19,416,582** | **$19,399,926** | [Consolidated Statements of Cash Flows](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash from operating activities significantly decreased to **$11,298**, primarily due to the net loss and increased inventories, impacting overall cash flow Cash Flow Summary (Three Months Ended May 31) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $11,298 | $385,811 | | Net cash used in investing activities | ($264,349) | ($229,465) | | **Net Increase (Decrease) in Cash** | **($253,051)** | **$156,346** | [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20STOCKHOLDERS%27%20EQUITY) Total stockholders' equity slightly decreased to **$19.42 million** due to the **$114,941** net loss, reducing retained earnings for the quarter - Retained earnings decreased by **$114,941** due to the net loss, contrasting with a **$579,805** increase from net income in the prior-year period[15](index=15&type=chunk) [Notes to Interim (Unaudited) Consolidated Financial Statements](index=8&type=section&id=NOTES%20TO%20INTERIM%20(UNAUDITED)%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Key disclosures include revenue sources, store network details, **$305,000** in proxy solicitation costs, and a **$1.34 million** rabbi trust for a former CEO's termination payment - The company's revenue is derived from three main sources: sales of confectionery products to franchisees, franchise fees and royalties, and sales at Company-owned stores[19](index=19&type=chunk) - As of May 31, 2022, the company's network consisted of **338** total locations, including franchised, licensed, and company-owned stores for both Rocky Mountain Chocolate Factory and U-Swirl brands[21](index=21&type=chunk) - The company incurred approximately **$305,000** in costs during the quarter related to a stockholder's contested solicitation of proxies for the 2022 annual meeting[65](index=65&type=chunk) - The company established a rabbi trust and contributed **$1,344,813** for the termination payment to its former CEO, classified as restricted cash[66](index=66&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue increased by **3.1%** due to higher sales and royalties, but a **93.1%** surge in G&A expenses, including proxy contest costs, led to an operating loss and impacted liquidity [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Total revenues grew **3.1%** to **$7.8 million**, driven by factory sales and royalty fees, but a **93.1%** increase in G&A expenses led to a net loss Revenue Breakdown (Three Months Ended May 31) | Revenue Source | 2022 ($ thousands) | 2021 ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Factory sales | $5,157.6 | $5,040.7 | +2.3% | | Retail sales | $792.7 | $789.5 | +0.4% | | Royalty and marketing fees | $1,809.1 | $1,707.3 | +6.0% | | **Total** | **$7,826.6** | **$7,593.7** | **+3.1%** | - The increase in royalty and marketing fees was primarily due to a **3.9%** increase in same-store sales at all domestic franchise locations, with frozen yogurt cafés showing a strong **20.5%** increase[79](index=79&type=chunk) - General and administrative costs surged by **93.1%**, from **$844,800** to **$1,631,200**, mainly due to increased professional fees related to board support, CEO transition, and a contested proxy solicitation[81](index=81&type=chunk)[87](index=87&type=chunk) - Factory gross margin decreased by **70 basis points** to **14.2%**, attributed to wage and material inflation, partially offset by price increases effective May 1, 2022[83](index=83&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital stood at **$9.7 million**, but cash and cash equivalents decreased by **$1.6 million** due to a **$1.3 million** trust funding, with minimal operating cash flow - Working capital was **$9.7 million** as of May 31, 2022[92](index=92&type=chunk) - Cash and cash equivalents decreased by **$1.6 million**, largely due to a **$1.3 million** increase in restricted cash used to fund a rabbi trust for former CEO severance[93](index=93&type=chunk) - The company has a **$5.0 million** credit line, fully available as of May 31, 2022, and subject to renewal in September 2022[41](index=41&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, the registrant is exempt from providing quantitative and qualitative disclosures about market risk - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[102](index=102&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of May 31, 2022, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of May 31, 2022[103](index=103&type=chunk) - No material changes occurred in the company's internal control over financial reporting during the quarter[104](index=104&type=chunk) PART II. OTHER INFORMATION This section addresses legal proceedings, confirms no material changes to risk factors, reports on equity sales, and lists filed exhibits [Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) Management anticipates that the resolution of ordinary course legal proceedings will not materially adversely affect the company's financial condition or operations - Management believes that the resolution of various legal proceedings arising in the ordinary course of business will not have a material adverse effect on the Company's financial position, results of operations or cash flows[106](index=106&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred in the company's risk factors since the Annual Report on Form 10-K for the fiscal year ended February 28, 2022 - No material changes have occurred in the company's risk factors from those disclosed in its Annual Report on Form 10-K for the fiscal year ended February 28, 2022[107](index=107&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=27&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 reporting period - None[108](index=108&type=chunk) [Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the CEO offer letter and Sarbanes-Oxley Act certifications - Exhibits filed include the CEO offer letter and certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[113](index=113&type=chunk)

Table of Contents Rocky Mountain Chocolate Factory, Inc. (Exact name of registrant as specified in its charter) (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 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, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCH ...