Rocky Mountain Chocolate Factory(US:RMCF)2025-01-14 22:38Revenue and Sales Performance - Revenues increased by 2.5% from $7.7 million for the three months ended November 30, 2023, to $7.9 million for the same period in 2024[118]. - Durango product and retail sales rose by 4.6%, or $0.3 million, primarily due to price increases[120]. - Franchise fees increased by 97.6% to $81,000 compared to $41,000 in the prior year[119]. - Total revenues remained consistent at $20.7 million for both periods, with Durango product and retail sales increasing by 2.8% to $16.9 million[134][135]. Cost and Expenses - Total cost of sales increased by 4.8% to $6.0 million from $5.8 million in the previous year[122]. - Total gross margin was $675,000, with a gross margin percentage of 10.0%, slightly down from 10.2% in the prior year[125]. - General and administrative expenses increased to 18.1% of total revenues, up from 17.3% in the previous year[128]. - Total gross margin decreased to $936,000, representing a gross margin percentage of 5.5%, down from 7.9% in the prior year[137][140]. - Franchise costs increased to 56.0% of total royalty and marketing fees and franchise fee revenue, up from 44.1% in the previous year[141]. Profitability and Loss - The company reported a basic loss per share of $(0.11) for the three months ended November 30, 2024, compared to $(0.12) in the prior year[118]. - Basic loss per share improved from $(0.51) for the nine months ended November 30, 2023 to $(0.47) for the nine months ended November 30, 2024[133]. - The Company reported a consolidated net loss of $3.2 million for the nine months ended November 30, 2024, compared to a net loss of $2.6 million in the prior year[150]. - Operating loss decreased slightly from $3.3 million for the nine months ended November 30, 2023 to $3.2 million for the same period in 2024[133]. Cash Flow and Financing - Cash flows from financing activities increased to $6.9 million for the nine months ended November 30, 2024, compared to $1.0 million in the same period of 2023[153]. - Working capital improved to $6.9 million as of November 30, 2024, up from $1.5 million as of February 29, 2024[148]. - The Company entered into a New Credit Agreement for $6.0 million, with part of the proceeds used to repay a previous credit agreement[155][157]. - Cash and cash equivalents decreased from $2.1 million to $1.1 million primarily due to cash used in operating activities during slow selling periods[149]. - The Company entered into a securities purchase agreement on August 5, 2024, issuing 1,250,000 shares at $1.75 per share, totaling approximately $2.2 million in proceeds[159]. Operational Challenges - Total other income (expense) was $(0.1) million, primarily due to interest expense on the new credit agreement[131]. - As of November 30, 2024, the Company had purchase obligations of approximately $3.2 million, primarily for future purchases of commodities for manufacturing[162]. - Inflationary factors, including rising costs of ingredients and labor, directly impact the Company's operations, with no assurance of passing these costs to customers[163]. - The Company experiences seasonal fluctuations in sales, with the strongest sales typically occurring during key holidays and the summer vacation season[165]. Strategic Actions - The company completed the sale of its U-Swirl subsidiary for $2.75 million, focusing on enhancing its confectionery franchise business[109].