Rocky Mountain Chocolate Factory(RMCF) - 2023 Q3 - Quarterly Report

Financial Performance - Revenues increased by 11.4% from $8.5 million in Q3 2021 to $9.5 million in Q3 2022[87] - Revenues increased by 3.3% from $24.0 million for the nine months ended November 30, 2021, to $24.8 million for the nine months ended November 30, 2022[105] - Factory sales rose by 14.2% to $7.3 million, driven by a 13.0% increase in sales to franchised and licensed retail stores[88][89] - Factory sales increased by 4.1% from $16.6 million for the nine months ended November 30, 2021, to $17.3 million for the nine months ended November 30, 2022[106] - Retail sales at Company-owned stores increased by 2.7% during the nine months ended November 30, 2022, compared to the same period in 2021[108] Profitability - Basic loss per share improved from a loss of $0.24 in Q3 2021 to a loss of $0.03 in Q3 2022[87] - The net loss decreased from $1.5 million in Q3 2021 to $212,000 in Q3 2022[87] - Basic earnings per share decreased from a net loss of $0.11 per share for the nine months ended November 30, 2021, to a net loss of $0.64 per share for the nine months ended November 30, 2022[105] - The loss from operations increased from $1.1 million for the nine months ended November 30, 2021, to a loss from operations of $2.6 million for the nine months ended November 30, 2022[105] - The net loss increased from $701,000 for the nine months ended November 30, 2021, to a net loss of $4.0 million for the nine months ended November 30, 2022[105] Costs and Expenses - Total costs decreased by 7.4% from $10.3 million in Q3 2021 to $9.6 million in Q3 2022[94] - Total costs and expenses increased by 9.7% from $24.6 million for the nine months ended November 30, 2021, to $27.0 million for the nine months ended November 30, 2022[112] - General and administrative expenses increased to 31.5% of total revenues in the nine months ended November 30, 2022, compared to 27.4% in the same period of 2021[118] - Sales and marketing costs increased by 35.2% from $1.2 million for the nine months ended November 30, 2021, to $1.6 million for the nine months ended November 30, 2022[112] - Retail operating expenses increased from 59.1% to 60.2% of retail sales for the nine months ended November 30, 2022, primarily due to higher salaries and wages, and utilities[119] Margins - Factory gross margin improved to 22.9% in Q3 2022 from 22.2% in Q3 2021, attributed to higher prices despite increased labor and material costs[96] - Retail gross margin remained stable at 62.3% for both Q3 2022 and Q3 2021[97] - Retail gross margins decreased from 65.8% during the nine months ended November 30, 2021, to 62.6% during the nine months ended November 30, 2022[115] Cash Flow and Working Capital - Working capital decreased by $2.3 million to $7.4 million as of November 30, 2022, compared to $9.7 million as of February 28, 2022[125] - Cash and cash equivalents decreased by approximately $4.4 million to $3.2 million as of November 30, 2022, primarily due to severance payments and an increase in inventory[126] - Investing activities used cash of $787,824 during the nine months ended November 30, 2022, primarily for property and equipment purchases[128] - There were no cash flows from financing activities for the nine months ended November 30, 2022, compared to cash used of $61,276 in the prior year[129] Other Financial Information - The company incurred approximately $764,000 and $2.9 million in costs associated with a contested solicitation of proxies during the three and nine months ended November 30, 2022, respectively[84] - Other income dropped significantly to $9,600 for the nine months ended November 30, 2022, from $176,500 in the same period of 2021[121] - Income tax expense was $1.4 million on a loss before income taxes of $2.6 million for the nine months ended November 30, 2022[123] - As of November 30, 2022, the company had purchase obligations of approximately $36,000 for future commodity purchases[130]