Rocky Mountain Chocolate sells Durango property for $6.6M
The Durango sale’s net proceeds repaid approximately $6.6 million of debt, alongside a separate $2.0 million working-capital loan.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
Rocky Mountain Chocolate Factory, Inc. (RMCF) reported fiscal second-quarter 2027 revenue of $6.652 million, compared with $6.823 million in fiscal second quarter 2026. Net loss was $1.281 million versus $662,000, and EBITDA loss was $712,000 versus $133,000. Non-GAAP adjusted gross margin was $655,000 (12.3%), compared with $205,000 (4.0%).
On October 16, 2026, the company sold its Durango property to American Heritage Legacies, LLC, controlled by Interim CEO Allen Harper’s family, for $6.6 million and began leasing it back. Net proceeds repaid approximately $6.6 million of principal and accrued interest on the Notes; the company reported $0.3 million in prepayment penalties and related costs and no further obligations under the Notes. The repaid debt bore 12% annual interest. RMCF also received the full $2.0 million Alpine Bank term loan for working capital, due October 16, 2028, at a variable rate of prime plus 1.00%, with a 6.00% floor and a ceiling at the lesser of 24.00% or the maximum rate permitted by law.
A board strategic committee is exploring alternatives, including a possible sale, merger, business combination or going-private transaction. RMCF reported expressions of interest from third parties and said there can be no assurance the review will result in a transaction.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- None.
Negative
- Moderate pointNet loss widened to $1.281 million from $662,000.
Filing Explained
The Alpine loan is secured by substantially all of RMCF’s assets and an assigned deposit account of approximately
8-K Event Classification
Key Figures
Key Terms
Adjusted Gross Margin financial
EBITDA loss financial
sale-leaseback financial
cross-defaults financial
Earnings Snapshot
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were RMCF’s fiscal second-quarter 2027 results?
What interest rate applies to RMCF’s Alpine Bank loan?
What collateral secures RMCF’s Alpine Bank loan?
What restrictions does RMCF’s Alpine Bank loan agreement include?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported):
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation |
(Commission File Number) | (IRS Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(
Registrant’s telephone number, including area code:
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12) | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b -2 of this chapter).
Emerging growth
company
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
On October 16, 2026, Rocky Mountain Chocolate Factory, Inc. (the “Company”) entered into a Business Loan Agreement (the “Loan Agreement”), a Promissory Note (the “Alpine Note”) and a Commercial Security Agreement (the “Security Agreement” and, together with the Loan Agreement and the Alpine Note, the “Loan Documents”) with Alpine Bank, a Colorado banking corporation (“Alpine Bank”), providing for a $2.0 million term loan (the “Alpine Loan”). The full amount of the Alpine Loan was funded on October 16, 2026, and the Company intends to use the proceeds for working capital.
The Alpine Loan matures on October 16, 2028. The Company is required to make monthly payments of accrued interest beginning November 16, 2026, with all outstanding principal and accrued interest due at maturity. The Alpine Loan bears interest at a variable rate equal to the JP Morgan Chase Bank prime rate plus 1.00%, subject to a floor of 6.00% per annum and a ceiling of the lesser of 24.00% per annum or the maximum rate permitted by law, and the interest rate increases to 24.00% upon an event of default. The Company may prepay the Alpine Loan at any time without penalty. In connection with the Alpine Loan, the Company paid a $20,000 loan origination fee and a $30,000 cash collateral fee to the Colorado Housing and Finance Authority (“CHFA”).
The Company’s obligations under the Alpine Loan are secured by a security interest in substantially all of the Company’s assets and personal property pursuant to the Security Agreement, and are further secured by an assignment to Alpine Bank of a deposit account of approximately $1.0 million held by CHFA at Alpine Bank.
The Loan Agreement contains customary representations, warranties and affirmative and negative covenants, including restrictions on the Company’s ability, without Alpine Bank’s consent, to incur additional indebtedness, grant liens, merge or consolidate, sell assets outside the ordinary course of business, and pay dividends, repurchase shares or make other restricted payments, as well as a requirement that the Company maintain its deposit accounts, including its primary operating account, with Alpine Bank. The Loan Documents also contain customary events of default, including, among others, payment defaults, covenant defaults, cross-defaults, insolvency events, a material adverse change in the Company’s financial condition, and any change in ownership of 25% or more of the Company’s common stock. Upon an event of default, Alpine Bank may declare all outstanding amounts immediately due and payable and exercise its other remedies under the Loan Documents.
The foregoing description of the Loan Documents does not purport to be complete and is qualified in its entirety by reference to the full text of the Loan Agreement, the Alpine Note and the Security Agreement, copies of which are filed as Exhibits 10.1, 10.2 and 10.3, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
As previously disclosed in the Current Report on Form 8-K filed by the Company on October 6, 2026 (the “Prior 8-K”), the Company entered into a Contract to Buy and Sell Real Estate (Commercial) (the “Purchase Agreement”) and a Commercial Lease (the “Lease”) with American Heritage Legacies, LLC (“AHL”), a company controlled by the family of Allen Harper, the Company’s Interim Chief Executive Officer, providing for the sale-leaseback of the Company’s property at 265 Turner Drive, Durango, Colorado (the “Durango Property”). On October 16, 2026, the Company completed the sale of the Durango Property to AHL for $6.6 million, and the Lease commenced.
The Company used the net proceeds to repay in full approximately $6.6 million of principal and accrued interest outstanding under the Notes (as defined in the Prior 8-K), and the Company has no further obligations under the Notes.
The foregoing description of the Purchase Agreement and the Lease does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement and the Lease, which were filed as Exhibits 10.1 and 10.2, respectively, to the Prior 8-K and are incorporated herein by reference.
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Item 2.02. Results of Operations and Financial Condition.
On October 19, 2026, the Company issued a press release (the “Release”) reporting its results of operations for the three months ended August 31, 2026. A copy of the Release is attached hereto as Exhibit 99.1.
The information contained in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be deemed incorporated by reference into any other filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language included in such filing, except as expressly set forth by specific reference in such filing.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The disclosures set forth in Item 1.01 of this Current Report on Form 8-K are incorporated into this Item 2.03 by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number |
Description | |
| 10.1 | Business Loan Agreement, dated October 16, 2026, between Rocky Mountain Chocolate Factory, Inc. and Alpine Bank. | |
| 10.2 | Promissory Note, dated October 16, 2026, issued by Rocky Mountain Chocolate Factory, Inc. to Alpine Bank.* | |
| 10.3 | Commercial Security Agreement, dated October 16, 2026, between Rocky Mountain Chocolate Factory, Inc. and Alpine Bank. | |
| 10.4 | Contract to Buy and Sell Real Estate (Commercial), effective September 30, 2026, between Rocky Mountain Chocolate Factory, Inc. and American Heritage Legacies, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 6, 2026). | |
| 10.5 | Commercial Lease, dated October 1, 2026, between American Heritage Legacies, LLC and Rocky Mountain Chocolate Factory, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 6, 2026). | |
| 99.1 | Press release of Rocky Mountain Chocolate Factory, Inc., dated October 19, 2026. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Portions of this exhibit (indicated by [***]) have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: October 19, 2026 | ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. | |
| By: | /s/ Carrie Cass | |
| Carrie Cass | ||
| Chief Financial Officer | ||
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Exhibit 99.1
Rocky Mountain Chocolate Factory Reports Fiscal Second Quarter 2027 Financial Results
Management to Host Conference Call Monday at 5:00 p.m. ET
DURANGO, Colo., October 19, 2026 (GLOBE NEWSWIRE) -- Rocky Mountain Chocolate Factory, Inc. (Nasdaq: RMCF) (the “Company” or “RMCF”), America’s Chocolatier® since 1981, is reporting financial and operating results for its second quarter of fiscal 2027, which ended August 31, 2026.
“Since stepping into the Interim CEO role, I have been encouraged by the way our leadership team has come together around a shared set of priorities for the business,” said Allen Harper, Interim CEO. “With COO David Denker leading our day-to-day operations, our teams are increasingly aligned across the business. That alignment is strengthening accountability and decision-making as we build a stronger organization and position Rocky Mountain Chocolate Factory for sustainable growth and long-term shareholder value.”
David Denker, Chief Operating Officer, added, “During the second quarter, we made progress improving production and execution across the business. August was our highest production and shipping month of the calendar year. Increasing production volume from our Durango facility remains a key priority as we prepare for the holiday season. Enhancements to our reporting platform, combined with our ERP capabilities, are providing our teams with greater visibility into demand, inventory and production requirements. These operational improvements, together with our continued focus on production efficiency and execution, contributed to the recovery in gross margin during the quarter. We believe there is additional opportunity to build on this progress as we move through the holiday season.”
Mr. Denker continued, “The acquisition of Chino Hills in July 2026 expanded our company-owned store base to five locations, while new franchised stores opened in Folsom, California, and Tinton Falls, New Jersey. As we grow our footprint and continue to enhance operations, we remain focused on consistent execution, supporting our franchisees and preserving the product quality and longstanding recipes that distinguish Rocky Mountain Chocolate Factory.”
Fiscal Second Quarter 2027 Financial Results vs. Fiscal Second Quarter 2026
| ● | Total revenue was $6.7 million for the second quarter of fiscal 2027 compared to $6.8 million in the second quarter of fiscal 2026. Primarily due to lower Durango product sales and royalty and marketing fees which offset the increase in retail sales, driven by the larger company-owned store base and price increases. |
| ● | Total product and retail gross profit increased to $0.4 million in the second quarter of fiscal 2027 compared to a gross loss of less than $0.1 million in the second quarter of fiscal 2026. Gross margin improved to 8.0% from (0.6)%, reflecting pricing actions and production efficiencies. |
| ● | Total costs and expenses were $7.7 million in the second quarter of fiscal 2027, up from $7.3 million in the second quarter of fiscal 2026. The increase primarily reflects the larger company-owned store base and higher franchise and general and administrative costs. These increases were partially offset by lower cost of sales and sales and marketing expenses. |
| ● | Net loss was $1.3 million or $(0.14) per share for the second quarter of fiscal 2027, compared to a net loss of $0.7 million or $(0.09) per share in the second quarter of fiscal 2026. |
| ● | EBITDA loss was $0.7 million in the second quarter of fiscal 2027 compared to a loss of $0.1 million in the second quarter of fiscal 2026. |
In the fiscal second quarter, the Board formed a strategic committee, which with the assistance of its advisors, is exploring strategic alternatives that may be available to the Company. Alternatives may include, among other things, a possible sale, merger, or other business combination, or a going-private transaction. In connection with this process, the Company has received expressions of interest from third parties. There can be no assurance that this review of strategic alternatives will result in any transaction or other strategic change.
Subsequent Events
Subsequent to quarter end, the Company completed a $6.6 million sale-leaseback transaction with American Heritage Legacies, LLC for its manufacturing facility located in Durango, Colorado. The sale was completed and the lease commenced on October 16, 2026. Net proceeds from the sale of the property have been used to repay $6.6 million in debt, which bears interest at 12% per annum. In connection with the repayment, the Company incurred prepayment penalties and related costs of $0.3 million.
On October 16, 2026, the Company entered into a loan agreement with Alpine Bank, where the Company received an advance of $2.0 million for working capital purposes. The loan matures on October 16, 2028, and bears interest at the prime rate plus 1%. Additional information is included in the Company’s Quarterly Report on Form 10-Q for the quarter ended August 31, 2026.
Conference Call Information
The Company will conduct a conference call to discuss its financial results. There will be no question-and-answer session. The conference call details are as follows:
Date: Monday, October 19, 2026
Time: 5:00 p.m. Eastern time
Dial-in registration link: here
Live webcast registration link: here
Please dial into the conference call 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact the Company’s investor relations team at RMCF@elevate-ir.com.
The conference call will also be broadcast live and available for replay in the investor relations section of the Company’s website at https://ir.rmcf.com/.
About Rocky Mountain Chocolate Factory, Inc.
Rocky Mountain Chocolate Factory, Inc. is a leading franchisor, manufacturer and retailer of premium chocolates and other confectionery products. As America’s Chocolatier® since 1981, the Company produces an extensive assortment of premium chocolates, gourmet caramel apples and other handcrafted confections. Headquartered in Durango, Colorado, Rocky Mountain Chocolate Factory is ranked among Entrepreneur’s Franchise 500® for 2026. Together with its franchisees and licensees, the Company operates approximately 250 Rocky Mountain Chocolate Factory locations across the United States and internationally. The Company’s common stock is listed on the Nasdaq Capital Market under the symbol “RMCF.”
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Forward-Looking Statements
This press release includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to come within the safe harbor protection provided by those sections. These forward-looking statements involve various risks and uncertainties. The statements, other than statements of historical fact, included in this press release are forward-looking statements. Many of the forward-looking statements contained in this document may be identified by the use of forward-looking words such as “will,” “intend,” “believe,” “expect,” “anticipate,” “should,” “plan,” “estimate,” “potential,” or similar expressions. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future - including statements regarding future financial and operating results and anticipated outcomes of our business strategy and plan, our liquidity and ability to continue as a going concern, our strategic review and any resulting transaction, the anticipated benefits of the sale-leaseback of our Durango facility and our credit facility with Alpine Bank, our efforts to improve production, fulfillment and distribution and pursuit of higher-margin product opportunities are forward-looking statements. Management of the Company believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date of this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause our Company’s actual results to differ materially from historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to: inflationary impacts, changes in the confectionery business environment, seasonality, consumer interest in our products, receptiveness of our products internationally, consumer and retail trends, costs and availability of raw materials, competition, the success of our co-branding strategy, the success of international expansion efforts and the effect of government regulations. For a detailed discussion of the risks and uncertainties that may cause our actual results to differ from the forward-looking statements contained herein, please see the section entitled “Risk Factors” contained in our periodic reports, each filed with the Securities and Exchange Commission.
Investor Contact
Sean Mansouri, CFA
Elevate IR
(720) 330-2829
RMCF@elevate-ir.com
Media Contact
Raymond Barrett
Director of Marketing
(305) 801-5641
rbarrett@rmcf.net
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Rocky Mountain Chocolate Factory, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| August 31, | August 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues | ||||||||||||||||
| Sales | $ | 5,310 | $ | 5,183 | $ | 10,191 | $ | 9,900 | ||||||||
| Franchise and royalty fees | 1,342 | 1,640 | 2,574 | 3,296 | ||||||||||||
| Total revenue | 6,652 | 6,823 | 12,765 | 13,196 | ||||||||||||
| Costs and Expenses | ||||||||||||||||
| Cost of sales | 4,887 | 5,216 | 9,589 | 9,608 | ||||||||||||
| Franchise costs | 784 | 552 | 1,275 | 1,147 | ||||||||||||
| Sales and marketing | 162 | 223 | 352 | 429 | ||||||||||||
| General and administrative | 1,328 | 976 | 2,608 | 1,977 | ||||||||||||
| Retail operating | 435 | 227 | 752 | 433 | ||||||||||||
| Depreciation and amortization, exclusive of depreciation and amortization expense of $232, $238, $459 and $465, respectively, included in cost of sales | 141 | 108 | 280 | 226 | ||||||||||||
| Total costs and expenses | 7,737 | 7,302 | 14,856 | 13,820 | ||||||||||||
| Loss from Operations | (1,085 | ) | (479 | ) | (2,091 | ) | (624 | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest expense | (211 | ) | (190 | ) | (419 | ) | (378 | ) | ||||||||
| Interest income | 15 | 7 | 61 | 16 | ||||||||||||
| Other (expense) income, net | (196 | ) | (183 | ) | (358 | ) | (362 | ) | ||||||||
| Loss Before Income Taxes | (1,281 | ) | (662 | ) | (2,449 | ) | (986 | ) | ||||||||
| Income Tax Provision (Benefit) | - | - | - | - | ||||||||||||
| Net Loss | $ | (1,281 | ) | $ | (662 | ) | $ | (2,449 | ) | $ | (986 | ) | ||||
| Basic Loss per Common Share | $ | (0.14 | ) | $ | (0.09 | ) | $ | (0.26 | ) | $ | (0.13 | ) | ||||
| Diluted Loss per Common Share | $ | (0.14 | ) | $ | (0.09 | ) | $ | (0.26 | ) | $ | (0.13 | ) | ||||
| Weighted Average Common Shares Outstanding - Basic | 9,447,259 | 7,786,384 | 9,418,824 | 7,764,351 | ||||||||||||
| Dilutive Effect of Employee Stock Awards | - | - | - | - | ||||||||||||
| Weighted Average Common Shares Outstanding - Diluted | 9,447,259 | 7,786,384 | 9,418,824 | 7,764,351 | ||||||||||||
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Rocky Mountain Chocolate Factory, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
| August 31, 2026 (unaudited) | February 28, 2026 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 416 | $ | 1,218 | ||||
| Accounts receivable, less allowance for credit losses of $128 and $128, respectively | 2,951 | 2,545 | ||||||
| Notes receivable, current portion, less current portion of the allowance for credit losses of $28 and $28, respectively | 63 | 59 | ||||||
| Refundable income taxes | 56 | 58 | ||||||
| Inventories | 2,588 | 4,057 | ||||||
| Prepaid expenses | 1,003 | 831 | ||||||
| Total current assets | 7,077 | 8,768 | ||||||
| Property and Equipment, Net | 8,724 | 8,775 | ||||||
| Other Assets | ||||||||
| Notes receivable | 6 | 36 | ||||||
| Goodwill | 576 | 576 | ||||||
| Intangible assets, net | 691 | 733 | ||||||
| Lease right of use asset | 1,706 | 1,310 | ||||||
| Other | 14 | 14 | ||||||
| Total other assets | 2,993 | 2,669 | ||||||
| Total Assets | $ | 18,794 | $ | 20,212 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 4,922 | $ | 5,088 | ||||
| Accrued salaries and wages | 441 | 406 | ||||||
| Notes payable | 6,780 | - | ||||||
| Gift card liabilities | 654 | 654 | ||||||
| Other accrued expenses | 286 | 64 | ||||||
| Contract liabilities | 106 | 105 | ||||||
| Lease liability | 416 | 282 | ||||||
| Total current liabilities | 13,605 | 6,599 | ||||||
| Notes payable, less current portion | 114 | 6,568 | ||||||
| Lease liability, less current portion | 1,324 | 1,054 | ||||||
| Contract liabilities, less current portion | 538 | 575 | ||||||
| Deferred income taxes | 187 | 187 | ||||||
| Total Liabilities | 15,768 | 14,983 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity | ||||||||
| Preferred stock, $0.001 par value per share; 250,000 shares authorized; 0 shares issued and outstanding | - | - | ||||||
| Common stock, $0.001 par value, 46,000,000 shares authorized, 9,518,636 shares and 9,354,620 shares issued and outstanding, respectively | 10 | 9 | ||||||
| Additional paid-in capital | 15,413 | 15,168 | ||||||
| Accumulated deficit | (12,397 | ) | (9,948 | ) | ||||
| Total stockholders’ equity | 3,026 | 5,229 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 18,794 | $ | 20,212 | ||||
5
Rocky Mountain Chocolate Factory, Inc. and Subsidiaries
Condensed Consolidated Computation of Adjusted Gross Margin
(In Thousands)
(Unaudited)
| Three Months Ended August 31, | Six Months Ended August 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Total gross margin | $ | 423 | $ | (33 | ) | $ | 602 | $ | 292 | |||||||
| Plus: depreciation and amortization | 232 | 238 | 459 | 465 | ||||||||||||
| Total Adjusted Gross Margin (non-GAAP measure) | $ | 655 | $ | 205 | $ | 1,061 | $ | 757 | ||||||||
| Total Adjusted Gross Margin (non-GAAP measure) | 12.3 | % | 4.0 | % | 20.0 | % | 14.6 | % | ||||||||
Rocky Mountain Chocolate Factory, Inc. and Subsidiaries
Condensed Consolidated Computation of EBITDA
(In Thousands)
(Unaudited)
| Three Months Ended August 31, | Six Months Ended August 31, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net loss | $ | (1,281 | ) | $ | (662 | ) | $ | (2,449 | ) | $ | (986 | ) | ||||
| Plus: depreciation and amortization | 373 | 346 | 739 | 691 | ||||||||||||
| Plus: interest | 196 | 183 | 358 | 362 | ||||||||||||
| Total | $ | (712 | ) | $ | (133 | ) | $ | (1,352 | ) | $ | 67 | |||||
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures, EBITDA loss and Adjusted Gross Margin. The Company defines EBITDA loss as net earnings before interest, taxes on income, and depreciation and amortization. The Company defines Adjusted Gross Margin as gross margin plus depreciation and amortization included in the cost of sales. Reconciliations of EBITDA loss and Adjusted Gross Margin with their most directly comparable GAAP measure is included in this press release.
These are supplemental measures of performance that are not required by, or presented in accordance with, GAAP. The Company believes Adjusted Gross Margin is useful to investors, as a supplement to gross margin and other performance measures calculated in accordance with GAAP, because it provides a measure of operating performance that is unaffected by non-cash depreciation and amortization. Management also uses Adjusted Gross Margin, rather than gross margin, to make incremental pricing decisions. The Company believes EBITDA (loss) is useful to investors because it helps them evaluate the Company’s core operating performance without the effects of financing decisions, income taxes and non-cash depreciation and amortization, and management uses EBITDA (loss) to evaluate the Company’s operating performance from period to period.
EBITDA (loss) and Adjusted Gross Margin have limitations as analytical tools because they exclude the impact of depreciation and amortization expense and, in the case of EBITDA (loss), interest and income taxes. They should not be considered in isolation or as a substitute for any measure reported under GAAP. The Company’s use of capital assets makes depreciation and amortization expense a necessary element of its costs and its ability to generate income. Because of these limitations, the Company uses EBITDA (loss) and Adjusted Gross Margin only in conjunction with GAAP measures of performance, such as net loss and gross margin. In addition, other companies may calculate similarly titled measures differently, so the Company’s non-GAAP financial measures may not be comparable to those of other companies.
6