Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
May 31, 2016 | Jun. 30, 2016 | |
Document Information [Line Items] | ||
Entity Registrant Name | Rocky Mountain Chocolate Factory, Inc. | |
Entity Central Index Key | 1,616,262 | |
Trading Symbol | rmcf | |
Current Fiscal Year End Date | --02-28 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Entity Common Stock, Shares Outstanding (in shares) | 5,807,288 | |
Document Type | 10-Q | |
Document Period End Date | May 31, 2016 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) - USD ($) | 3 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Revenues | ||
Sales | $ 7,024,334 | $ 7,736,163 |
Franchise and royalty fees | 2,351,865 | 2,627,859 |
Total revenues | 9,376,199 | 10,364,022 |
Costs and Expenses | ||
Cost of sales, exclusive of depreciation and amortization expense of $102,473 and $101,890, respectively | 4,699,456 | 5,163,890 |
Franchise costs | 547,713 | 603,974 |
Sales and marketing | 654,129 | 635,591 |
General and administrative | 1,240,058 | 1,328,880 |
Retail operating | 666,949 | 855,926 |
Depreciation and amortization | 325,224 | 364,850 |
Restructuring and acquisition related charges | 60,000 | |
Total costs and expenses | 8,193,529 | 8,953,111 |
Income from Operations | 1,182,670 | 1,410,911 |
Other Income (Expense) | ||
Interest expense | (47,779) | (58,890) |
Interest income | 11,697 | 13,638 |
Other Income (Expense), net | (36,082) | (45,252) |
Income Before Income Taxes | 1,146,588 | 1,365,659 |
Income Tax Provision | 414,754 | 432,300 |
Consolidated Net Income | 731,834 | 933,359 |
Less: Net income attributable to non-controlling interest | 170,400 | |
Net Income attributable to RMCF | $ 731,834 | $ 762,959 |
Basic Earnings per Common Share (in dollars per share) | $ 0.13 | $ 0.13 |
Diluted Earnings per Common Share (in dollars per share) | $ 0.12 | $ 0.12 |
Weighted Average Common Shares Outstanding - Basic (in shares) | 5,835,515 | 5,979,559 |
Dilutive Effect of Stock Options and Restricted Stock Units (in shares) | 181,742 | 235,431 |
Weighted Average Common Shares Outstanding - Diluted (in shares) | 6,017,257 | 6,214,990 |
Consolidated Statements of Inc3
Consolidated Statements of Income (Unaudited) (Parentheticals) - USD ($) | 3 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Cost of sales, depreciation and amortization expense | $ 102,473 | $ 101,890 |
Consolidated Balance Sheets (Cu
Consolidated Balance Sheets (Current Period Unaudited) - USD ($) | May 31, 2016 | Feb. 29, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 6,102,152 | $ 6,194,948 |
Accounts receivable, less allowance for doubtful accounts of $597,614 and $595,471, respectively | 3,066,125 | 3,799,691 |
Notes receivable, current portion | 322,541 | 317,248 |
Inventories, less reserve for obsolete inventory of $293,656 and $261,346, respectively | 4,940,126 | 4,840,108 |
Other | 356,289 | 286,859 |
Total current assets | 14,787,233 | 15,438,854 |
Property and Equipment, Net | 6,389,603 | 6,010,303 |
Other Assets | ||
Notes receivable, less current portion and valuation allowance of $74,979 and $75,000, respectively | 512,501 | 530,446 |
Goodwill, net | 1,046,944 | 1,046,944 |
Franchise rights, net | 5,075,610 | 5,153,363 |
Intangible assets, net | 665,069 | 419,042 |
Deferred income taxes | 1,440,736 | 1,421,655 |
Other | 260,900 | 295,118 |
Total other assets | 9,001,760 | 8,866,568 |
Total Assets | 30,178,596 | 30,315,725 |
Current Liabilities | ||
Current maturities of long term debt | 1,265,648 | 1,254,007 |
Accounts payable | 1,723,471 | 1,663,245 |
Accrued salaries and wages | 761,062 | 683,863 |
Other accrued expenses | 3,261,051 | 3,200,898 |
Dividend payable | 699,009 | 700,728 |
Deferred income | 424,290 | 502,950 |
Total current liabilities | 8,134,531 | 8,005,691 |
Long-Term Debt, Less Current Maturities | 3,509,831 | 3,831,126 |
Stockholders’ Equity | ||
Preferred stock, $.001 par value; 250,000 authorized; 0 shares issued and outstanding | 0 | 0 |
Common stock, $.001 par value, 46,000,000 shares authorized, 5,841,396 and 5,839,396 issued, and 5,826,974 and 5,839,396 outstanding, respectively | 5,841 | 5,839 |
Additional paid-in capital | 5,507,962 | 5,340,190 |
Retained earnings | 13,165,704 | 13,132,879 |
Treasury stock, 14,422 shares and 0 shares, at cost | (145,273) | |
Total stockholders’ equity | 18,534,234 | 18,478,908 |
Total Liabilities and Stockholders’ Equity | $ 30,178,596 | $ 30,315,725 |
Consolidated Balance Sheets (C5
Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) | May 31, 2016 | Feb. 29, 2016 |
Series A Preferred Stock [Member] | ||
Preferred stock, authorized (in shares) | 50,000 | 50,000 |
Undesignated Series [Member] | ||
Preferred stock, authorized (in shares) | 200,000 | 200,000 |
Accounts receivable, allowance for doubtful accounts | $ 597,614 | $ 595,471 |
Inventories, reserve | 293,656 | 261,346 |
Notes, receivable, valuation allowance | $ 74,979 | $ 75,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in shares) | 250,000 | 250,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 46,000,000 | 46,000,000 |
Common stock, issued (in shares) | 5,841,396 | 5,839,396 |
Common stock, outstanding (in shares) | 5,826,974 | 5,839,396 |
Treasury stock, shares (in shares) | 14,422 | 0 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Cash Flows From Operating Activities | ||
Net income | $ 731,834 | $ 933,359 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 325,224 | 364,850 |
Provision for loss on accounts and notes receivable | 29,400 | 36,000 |
Provision for obsolete inventory | 21,826 | 10,856 |
Loss (gain) on sale of property and equipment | (3,012) | 64,521 |
Expense recorded for stock based compensation | 167,774 | 321,033 |
Deferred income taxes | (19,081) | (95,184) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 714,221 | 766,824 |
Inventories | (179,845) | 1,111,144 |
Other current assets | (69,846) | (91,868) |
Accounts payable | 118,227 | (369,023) |
Accrued liabilities | 137,352 | 442,415 |
Deferred income | (78,660) | (129,681) |
Net cash provided by operating activities | 1,895,414 | 3,365,246 |
Cash Flows From Investing Activities | ||
Addition to notes receivable | (36,000) | |
Proceeds received on notes receivable | 80,652 | 89,204 |
Proceeds from sale or distribution of assets | 2,000 | |
Purchase of intangible assets | (272,956) | (8,204) |
Purchases of property and equipment | (634,426) | (192,182) |
Other | 28,175 | 1,838 |
Net cash used in investing activities | (832,555) | (109,344) |
Cash Flows From Financing Activities | ||
Payments on long-term debt | (309,654) | (298,939) |
Repurchase of common stock | (145,273) | (1,034,359) |
Tax benefit of stock awards | 9,859 | |
Dividends paid | (700,728) | (721,536) |
Net cash used in financing activities | (1,155,655) | (2,044,975) |
Net Increase (Decrease) in Cash and Cash Equivalents | (92,796) | 1,210,927 |
Cash and Cash Equivalents, Beginning of Period | 6,194,948 | 7,157,371 |
Cash and Cash Equivalents, End of Period | $ 6,102,152 | $ 8,368,298 |
Note 1 - Nature of Operations a
Note 1 - Nature of Operations and Basis of Presentation | 3 Months Ended |
May 31, 2016 | |
Notes to Financial Statements | |
Business Description and Accounting Policies [Text Block] | NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION Nature of Operations The accompanying consolidated financial statements include the accounts of Rocky Mountain Chocolate Factory, Inc., a Delaware corporation, its wholly-owned subsidiaries, Rocky Mountain Chocolate Factory, Inc. (a Colorado corporation), Aspen Leaf Yogurt, LLC (“ALY”) (a Colorado limited liability company), and U-Swirl International, Inc. (“U-Swirl”) (a Nevada corporation), and its 39%-owned subsidiary, U-Swirl, Inc. (“SWRL”) of which Rocky Mountain Chocolate Factory, Inc. had financial control until February 29, 2016 (collectively, the “Company”). All intercompany balances and transactions have been eliminated in consolidation. The Company is an international franchisor, confectionery manufacturer and retail operator. Founded in 1981, the Company is headquartered in Durango, Colorado and manufactures an extensive line of premium chocolate candies and other confectionery products. U-Swirl franchises and operates soft-serve frozen yogurt cafés. The Company also sells its candy in selected locations outside of its system of retail stores and licenses the use of its brand with certain consumer products. Effective March 1, 2015, the Company was reorganized to create a holding company structure. The operating subsidiary with the same name, Rocky Mountain Chocolate Factory, Inc., a Colorado corporation (“RMCF”), which was previously the public company, became a wholly-owned subsidiary of a newly formed entity, Rocky Mountain Chocolate Factory, Inc., a Delaware corporation (“Newco”), and all of the outstanding shares of common stock of RMCF, par value $0.03 per share, were exchanged on a one-for-one basis for shares of common stock, par value $0.001, of Newco. The new holding company began trading on March 2, 2015 on the NASDAQ Global Market under the symbol “RMCF”, which was the same symbol used by RMCF prior to the holding company reorganization. In January 2013, through our wholly-owned subsidiaries, including Aspen Leaf Yogurt, LLC (“ALY”), the Company entered into two agreements to sell all of the assets of its ALY frozen yogurt stores, along with its interest in the self-serve frozen yogurt franchises and retail units branded as “Yogurtini” which the Company also acquired in January 2013, to SWRL, in exchange for a 60% controlling equity interest in SWRL, which was subsequently diluted down to 39% as of May 31, 2016 following various issuances of common stock of SWRL. At that time, U-Swirl International, Inc. was a wholly-owned subsidiary of SWRL, and was the operating subsidiary for all of SWRL’s operations. Upon completion of these transactions, we ceased to directly operate any Company-owned Aspen Leaf Yogurt locations or sell and support frozen yogurt franchise locations, which was being supported by SWRL. As of May 31, 2016, the Company held a 39% interest in SWRL. The SWRL Board of Directors is composed solely of Board members also serving the Rocky Mountain Chocolate Factory, Inc. Board of Directors. In fiscal year (“FY”) 2014, SWRL acquired the franchise rights and certain other assets of self-serve frozen yogurt concepts under the names “CherryBerry,” “Yogli Mogli Frozen Yogurt” and “Fuzzy Peach Frozen Yogurt.” In connection with these acquisitions, the Company entered into a credit facility with Wells Fargo, N.A. used to finance the acquisitions of SWRL, and in turn, the Company entered into a loan and security agreement with SWRL to cover the purchase price and other costs associated with the acquisitions (the “SWRL Loan Agreement”). Borrowings under the SWRL Loan Agreement were secured by all of the assets of SWRL, including all of the outstanding stock of its wholly-owned subsidiary, U-Swirl International, Inc. Under the SWRL Loan Agreement, SWRL was subject to various financial covenants. SWRL was not compliant with the financial covenants during the year ended February 29, 2016 and the loan matured on January 16, 2016 without payment in full by SWRL. Upon the occurrence and during the continuance of an event of default, the Company was entitled to charge interest on all amounts due under the SWRL Loan Agreement at the default rate of 15% per annum, accelerate payment of all amounts due under the SWRL Loan Agreement, and foreclose on all or any portion of the security interest. As a result of the defaults, the Company issued a demand for payment of all obligations under the SWRL Loan Agreement. SWRL was unable to repay the obligations under the SWRL Loan Agreement, and as a result, the Company foreclosed on all of the outstanding stock of U-Swirl International, Inc. as of February 29, 2016 in full satisfaction of the amounts owed under the SWRL Loan Agreement. This resulted in U-Swirl International, Inc. becoming a wholly-owned subsidiary of the Company as of February 29, 2016 and concurrently the Company ceased to have financial control of SWRL as of February 29, 2016. As of February 29, 2016, SWRL had no operating assets. During FY 2016, SWRL acquired the franchise rights of “Let’s Yo!”. U-Swirl operates self-serve frozen yogurt cafés under the names “U-Swirl,” “Yogurtini,” “CherryBerry,” “Josie’s Frozen Yogurt,” “Yogli Mogli Frozen Yogurt,” “Fuzzy Peach Frozen Yogurt,” “Let’s Yo!” and “Aspen Leaf Yogurt”. The Company’s revenues are currently derived from three principal sources: sales to franchisees and others of chocolates and other confectionery products manufactured by the Company; the collection of initial franchise fees and royalties from franchisees’ sales of both confectionary products and frozen yogurt; and sales at Company-owned stores of chocolates, frozen yogurt, and other confectionery products. The following table summarizes the number of stores operating under the Rocky Mountain Chocolate Factory brand and frozen yogurt cafés at May 31, 2016: Sold, Not Yet Open Open Total Rocky Mountain Chocolate Factory Company-owned stores - 3 3 Franchise stores – Domestic stores and kiosks 3 193 196 International License Stores - 86 86 Cold Stone Creamery – co-branded 5 77 82 U-Swirl Stores (Including all associated brands) Company-owned stores - 5 5 Company-owned stores – co-branded - 3 3 Franchise stores – Domestic stores * 179 179 Franchise stores – Domestic – co-branded * 18 18 International License Stores - 8 8 Total 8 572 580 *U-Swirl cafés and the brands franchised by U-Swirl have historically utilized a development area sales model. The result is that many areas are under development and the rights to open cafés within the development areas have been established, but there is no assurance that any individual development area will result in a determinable number of café openings. Basis of Presentation The accompanying consolidated financial statements have been prepared by the Company, without audit, and reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial reporting and Securities and Exchange Commission regulations. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Certain amounts previously presented for prior periods have been reclassified to conform to the current presentation. The reclassifications had no effect on net income, working capital or equity previously reported. In the opinion of management, the consolidated financial statements reflect all adjustments (of a normal and recurring nature) which are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for the three months ended May 31, 2016 are not necessarily indicative of the results to be expected for the entire fiscal year. These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended February 29, 2016. Subsequent Events Management evaluated all activity of the Company through the issue date of the financial statements and concluded that no subsequent events have occurred that would require recognition or disclosure in the financial statements. New Accounting Pronouncements In July 2015, FASB issued ASU 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory, which changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. ASU 2015-11 defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The adoption of this guidance during the first quarter of fiscal year 2017 and prior fiscal year reclassifications did not have a material impact on the Company's consolidated financial statements. In April 2015, FASB issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs would not be affected by the amendment. The adoption of this guidance during the first quarter of fiscal year 2017 and prior fiscal year reclassifications did not have a material impact on the Company's consolidated financial statements. In November 2015, FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, entities will be required to classify all deferred tax assets and liabilities as noncurrent. This ASU will be effective for the Company beginning in its first quarter of fiscal year 2018 and early adoption is permitted. We have adopted ASU 2015-17 as of February 29, 2016 and have reported deferred tax assets and liabilities as noncurrent on the balance sheet. The prospective adoption of this guidance in the fiscal fourth quarter of 2016 did not materially affect the Company’s financial position, results of operations or cash flows. Prior periods were not retrospectively adjusted. |
Note 2 - Earnings Per Share
Note 2 - Earnings Per Share | 3 Months Ended |
May 31, 2016 | |
Notes to Financial Statements | |
Earnings Per Share [Text Block] | NOTE 2 - EARNINGS PER SHARE Basic earnings per share is calculated using the weighted-average number of common shares outstanding. Diluted earnings per share reflects the potential dilution that could occur from common shares issuable through stock options and restricted stock units. For the three months ended May 31, 2016 and 2015, 0 and 12,936 stock options were excluded, respectively, from the computation of earnings per share because their effect would have been anti-dilutive. Restricted stock units become dilutive within the period granted and remain dilutive until the units vest and are issued as common stock. |
Note 3 - Inventories
Note 3 - Inventories | 3 Months Ended |
May 31, 2016 | |
Notes to Financial Statements | |
Inventory Disclosure [Text Block] | NOTE 3 – INVENTORIES The Company held the following inventory at May 31, 2016 and February 29, 2016: May 31, 2016 February 29, 2016 Ingredients and supplies $ 2,923,230 $ 2,868,157 Finished candy 2,223,478 2,138,952 U-Swirl food and packaging 87,074 94,345 Reserve for slow moving inventory (293,656 ) (261,346 ) Total inventories $ 4,940,126 $ 4,840,108 |
Note 4 - Property and Equipment
Note 4 - Property and Equipment, Net | 3 Months Ended |
May 31, 2016 | |
Notes to Financial Statements | |
Property, Plant and Equipment Disclosure [Text Block] | NOTE 4 - PROPERTY AND EQUIPMENT, NET Property and equipment at May 31, 2016 and February 29, 2016 consists of the following: May 31, 2016 February 29, 2016 Land $ 513,618 $ 513,618 Building 4,792,001 4,784,272 Machinery and equipment 10,537,132 9,987,906 Furniture and fixtures 1,206,792 1,169,475 Leasehold improvements 1,867,757 1,862,603 Transportation equipment 438,601 438,601 Asset impairment (568,803 ) (568,803 ) 18,787,098 18,187,672 Less accumulated depreciation (12,397,495 ) (12,177,369 ) Property and equipment, net $ 6,389,603 $ 6,010,303 |
Note 5 - Stockholders' Equity
Note 5 - Stockholders' Equity | 3 Months Ended |
May 31, 2016 | |
Notes to Financial Statements | |
Stockholders' Equity Note Disclosure [Text Block] | NOTE 5 - STOCKHOLDERS’ EQUITY Cash Dividend The Company paid a quarterly cash dividend of $0.12 per common share on March 11, 2016 to stockholders of record on February 26, 2016. The Company paid a quarterly cash dividend of $0.12 per share of common stock on June 17, 2016 to stockholders of record on June 7, 2016. Future declaration of dividends will depend on, among other things, the Company's results of operations, capital requirements, financial condition and on such other factors as the Company's Board of Directors may in its discretion consider relevant and in the best long-term interest of the Company’s stockholders. Stock Repurchases On July 15, 2014, the Company publicly announced a plan to repurchase up to $3.0 million of its common stock in the open market or in private transactions, whenever deemed appropriate by management. On January 13, 2015, the Company announced a plan to purchase up to an additional $2,058,000 of its common stock under the repurchase plan, and on May 21, 2015, the Company announced a further increase to the repurchase plan by authorizing the purchase of up to an additional $2,090,000 of its common stock under the repurchase plan. During the three months ended May 31, 2016, the Company repurchased 14,422 shares under the repurchase plan at an average price of $10.07 per share. As of May 31, 2016, approximately $844,000 remains available under the repurchase plan for further stock repurchases. Stock-Based Compensation At May 31, 2016, the Company had stock-based compensation plans for employees and non-employee directors that authorized the granting of stock awards, including stock options and restricted stock units. The Company recognized $167,774 of stock-based compensation expense during the three months ended May 31, 2016 compared with $321,033 during the three months ended May 31, 2015. Compensation costs related to stock-based compensation are generally amortized over the vesting period. The following table summarizes stock option transactions for common stock during the three months ended May 31, 2016 and 2015: Three Months Ended May 31, 2016 2015 Outstanding stock options as of February 28 or 29: 12,936 12,936 Granted - - Exercised - - Cancelled/forfeited (12,936 ) - Outstanding stock options as of May 31: - 12,936 Weighted average exercise price n/a $ 14.70 Weighted average remaining contractual term (in years) n/a 0.80 The following table summarizes non-vested restricted stock unit transactions for common stock during the three months ended May 31, 2016 and 2015: Three Months Ended May 31, 2016 2015 Outstanding non-vested restricted stock units as of February 28 or 29: 181,742 237,641 Granted - - Vested - (7,820 ) Cancelled/forfeited - - Outstanding non-vested restricted stock units as of May 31: 181,742 229,821 Weighted average grant date fair value $ 12.22 $ 12.22 Weighted average remaining vesting period (in years) 2.97 3.96 The Company issued 2,000 fully vested, unrestricted shares of stock to non-employee directors during the three months ended May 31, 2016 compared to 4,000 shares issued during the three months ended May 31, 2015. In connection with these non-employee director stock issuances, the Company recognized $20,420 and $61,040 of stock-based compensation expense during the three months ended May 31, 2016 and 2015, respectively. During the three months ended May 31, 2016, the Company recognized $147,354 of stock-based compensation expense related to non-vested, non-forfeited restricted stock unit grants. The restricted stock units generally vest between 17% and 20% annually over a period of five to six years. Total unrecognized stock-based compensation expense of non-vested, non-forfeited restricted stock units, as of May 31, 2016, was $1,717,111, which is expected to be recognized over the weighted average period of 2.97 years. The Company did not recognize any stock-based compensation expense attributable to SWRL during the three months ended May 31, 2016 compared with $99,500 recognized during the three months ended May 31, 2015. |
Note 6 - Supplemental Cash Flow
Note 6 - Supplemental Cash Flow Information | 3 Months Ended |
May 31, 2016 | |
Notes to Financial Statements | |
Cash Flow, Supplemental Disclosures [Text Block] | NOTE 6 – SUPPLEMENTAL CASH FLOW INFORMATION Three Months Ended May 31, 2016 2015 Cash paid (received) for: Interest, net $ 35,045 $ 46,797 Income taxes 217,123 39,745 Non-Cash Operating Activities Accrued Inventory 240,031 205,335 Non-Cash Financing Activities Dividend payable $ 699,009 $ 713,838 Sale of assets and inventory to buyers for notes receivable: Long-lived assets $ 30,989 - |
Note 7 - Operating Segments
Note 7 - Operating Segments | 3 Months Ended |
May 31, 2016 | |
Notes to Financial Statements | |
Segment Reporting Disclosure [Text Block] | NOTE 7 - OPERATING SEGMENTS The Company classifies its business interests into five reportable segments: Franchising, Manufacturing, Retail Stores, U-Swirl operations and Other. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1 to the Company’s financial statements included in the Company’s Annual Report on Form 10-K for the year ended February 29, 2016. The Company evaluates performance and allocates resources based on operating contribution, which excludes unallocated Three Months Ended May 31, 2016 Franchising Manufacturing Retail U-Swirl Other Total Total revenues $ 1,548,035 $ 6,052,743 $ 305,576 $ 1,762,835 $ - $ 9,669,189 Intersegment revenues (1,361 ) (291,629 ) - - - (292,990 ) Revenue from external customers 1,546,674 5,761,114 305,576 1,762,835 - 9,376,199 Segment profit (loss) 670,628 1,233,006 (14,666 ) 467,779 (1,210,159 ) 1,146,588 Total assets 1,355,195 11,504,386 1,008,708 10,673,169 5,637,138 30,178,596 Capital expenditures 9,126 477,121 22 24,344 123,813 634,426 Total depreciation & amortization $ 13,656 $ 106,278 $ 3,348 $ 165,965 $ 35,977 $ 325,224 Three Months Ended May 31, 2015 Franchising Manufacturing Retail U-Swirl Other Total Total revenues $ 1,550,441 $ 6,622,368 $ 380,658 $ 2,109,797 $ - $ 10,663,264 Intersegment revenues (1,423 ) (297,819 ) - - - (299,242 ) Revenue from external customers 1,549,018 6,324,549 380,658 2,109,797 - 10,364,022 Segment profit (loss) 756,913 1,399,604 (41,030 ) 264,416 (1,014,244 ) 1,365,659 Total assets 1,224,822 10,471,309 1,095,173 12,948,323 7,552,528 33,292,155 Capital expenditures - 146,071 - 16,198 29,913 192,182 Total depreciation & amortization $ 10,287 $ 102,516 $ 5,896 $ 203,177 $ 42,974 $ 364,850 Revenue from one customer of the Company’s Manufacturing segment represented approximately $1.4 million of the Company’s revenues from external customers during the three months ended May 31, 2016 compared to $2.0 million during the three months ended May 31, 2015. |
Note 8 - Goodwill and Intangibl
Note 8 - Goodwill and Intangible Assets | 3 Months Ended |
May 31, 2016 | |
Notes to Financial Statements | |
Goodwill and Intangible Assets Disclosure [Text Block] | NOTE 8 – GOODWILL AND INTANGIBLE ASSETS Intangible assets at May 31, 2016 and February 29, 2016 consist of the following: May 31, 2016 February 29, 2016 Amortization Period (years) Gross Carrying Value Accumulated Amortization Gross Carrying Value Accumulated Amortization Intangible assets subject to amortization Store design 10 $ 220,778 $ 210,027 $ 220,778 $ 209,653 Packaging licenses 3 - 5 120,830 120,830 120,830 120,830 Packaging design 10 430,973 430,973 430,973 430,973 Trademark/Non-competition agreements 5 - 20 715,340 61,022 459,340 51,423 Franchise Rights 20 5,931,137 855,527 5,914,181 760,818 Total $ 7,419,058 $ 1,678,379 $ 7,146,102 $ 1,573,697 Intangible assets not subject to amortization Franchising segment- Company stores goodwill $ 1,099,328 $ 267,020 $ 1,099,328 $ 267,020 Franchising goodwill 295,000 197,682 295,000 197,682 Manufacturing segment-Goodwill 295,000 197,682 295,000 197,682 Trademark 20,000 - 20,000 - Total 1,709,328 662,384 1,709,328 662,384 Total intangible assets $ 9,128,386 $ 2,340,763 $ 8,855,430 $ 2,236,081 Effective March 1, 2002, under Accounting Standards Codification Topic 350, all goodwill with indefinite lives is no longer subject to amortization. Accumulated amortization related to intangible assets not subject to amortization is a result of amortization expense related to indefinite life goodwill incurred prior to March 1, 2002. Amortization expense related to intangible assets totaled $104,683 and $93,150 during the three months ended May 31, 2016 and 2015, respectively. At May 31, 2016, annual amortization of intangible assets, based upon our existing intangible assets and current useful lives, is estimated to be the following: 2017 $ 321,408 2018 443,214 2019 449,644 2020 436,487 2021 424,778 Thereafter 3,665,148 Total $ 5,740,679 |
Note 9 - Other Accrued Liabilit
Note 9 - Other Accrued Liabilities | 3 Months Ended |
May 31, 2016 | |
Notes to Financial Statements | |
Accounts Payable and Accrued Liabilities Disclosure [Text Block] | NOTE 9 – OTHER ACCRUED LIABILITIES Other accrued expenses consisted of the following as of: May 31, 2016 February 29, 2016 Gift card liabilities $ 2,749,052 $ 2,835,943 Other accrued expenses 511,999 364,955 Total other accrued expenses $ 3,261,051 $ 3,200,898 |
Note 10 - Related Party Transac
Note 10 - Related Party Transactions | 3 Months Ended |
May 31, 2016 | |
Notes to Financial Statements | |
Related Party Transactions Disclosure [Text Block] | NOTE 10 – RELATED PARTY TRANSACTIONS Our President and Chief Executive Officer has members of his immediate family with ownership interests in retail marketing businesses. These businesses have, on occasion, provided services to the Company and may provide services in the future. For the three months ended May 31, 2016, the Company paid $10,432 and no amount was recorded to accounts payable that related to these businesses. Transactions with these businesses have been immaterial to our results of operations. |
Note 11 - Restructuring and Acq
Note 11 - Restructuring and Acquisition Related Charges | 3 Months Ended |
May 31, 2016 | |
Notes to Financial Statements | |
Restructuring and Related Activities Disclosure [Text Block] | NOTE 11 – RESTRUCTURING AND ACQUISITION RELATED CHARGES Restructuring and acquisition charges incurred were comprised of lease settlement costs of $60,000 for the three months ended May 31, 2016, relating to the closure of an Aspen Leaf Yogurt company-owned location. The Company did not record any restructuring charges in the three months ended May 31, 2015. |
Note 12 - Contingencies
Note 12 - Contingencies | 3 Months Ended |
May 31, 2016 | |
Notes to Financial Statements | |
Contingencies Disclosure [Text Block] | NOTE 12 - CONTINGENCIES The Company is party to various legal proceedings arising in the ordinary course of business from time to time. Management believes that the resolution of these matters will not have a significant adverse effect on the Company’s financial position, results of operations or cash flows. In January 2014, SWRL entered into an Asset Purchase Agreement (the “CherryBerry Purchase Agreement”) with CherryBerry Enterprises LLC, CherryBerry Corporate LLC, CherryBerry LLC, and their respective owners (collectively, the “CherryBerry Selling Parties”), pursuant to which SWRL acquired the franchise rights of frozen yogurt stores branded as “CherryBerry” (the “CherryBerry Acquisition”). As a part of the consideration for the CherryBerry Acquisition, SWRL agreed to issue an aggregate of 4,000,000 shares of SWRL common stock (the “CB Shares”) to the CherryBerry Selling Parties, which were subject to a one-year lock-up agreement. The CB Shares were issued to the CherryBerry Selling Parties in February 2015. Pursuant to the terms of the CherryBerry Purchase Agreement, following expiration of the lock-up period, if any of the CherryBerry Selling Parties desired to sell their CB Shares, they must first offer such shares to SWRL and RMCF prior to any sale of the CB Shares on the open market. If the proceeds from the sale of any of the CB Shares is less than $0.50 per share and the CherryBerry Selling Parties comply with other terms of the CherryBerry Purchase Agreement, SWRL agreed to pay a shortfall payment equal to the difference of the sale price of the CB Shares and $0.50 per share, multiplied by the number of shares sold by the CherryBerry Selling Parties. If SWRL was required to pay the shortfall payment at February 29, 2016, the shortfall payment would approximate $1,800,000. SWRL determined the likelihood of incurring the liability to be less than probable and has not recorded a contingent liability at February 29, 2016. In July and August 2015, the CherryBerry Selling Parties submitted to SWRL several requests for payment of approximately $205,000 of shortfall payments based on the sale of a portion of the CB Shares. In August 2015, SWRL filed a lawsuit against the CherryBerry Selling Parties, a former officer and director of SWRL and unknown other parties, in the District Court for La Plata County, Colorado, alleging wrongful actions on their part to cause the price of SWRL’s common stock to decline and thereafter making an improper demand for the shortfall payment described above, and certain other actions in violation of various provisions of the CherryBerry Purchase Agreement. SWRL sought unspecified damages, attorney’s fees, other costs, and a determination that the shortfall payment arrangement is void. In September 2015, the CherryBerry Selling Parties filed an answer and counterclaim to the lawsuit in the U.S. District Court for the District of Colorado, and moved the lawsuit to federal court in the U.S. District Court for the District of Colorado (the “Colorado District Court”). In addition, the CherryBerry Entities added RMCF to the lawsuit through a third-party complaint. The complaint alleged that SWRL materially breached the CherryBerry Purchase Agreement by not paying the shortfall payment, that SWRL is the alter ego of RMCF and RMCF is liable for any obligations of SWRL, and that the SWRL Loan Agreement should be recharacterized as equity. The CherryBerry Entities sought payment in full of the shortfall payment under the CherryBerry Purchase Agreement, declaratory judgements that SWRL is the alter ego of RMCF and the SWRL Loan Agreement should be recharacterized as equity, and interest, attorney’s fees, costs and other equitable relief. On January 13, 2016, the CherryBerry Entities dismissed without prejudice their counterclaim and third-party complaint from the Colorado District Court, and thereafter on January 13, 2016, the CherryBerry Entities refiled the exact claims (the “Oklahoma Action”) in the United States District Court for the Northern District of Oklahoma (the “Oklahoma Court”). Also on January 13, 2016, RMCF filed a lawsuit against the CherryBerry Entities in the Colorado District Court seeking a declaratory judgment that it is not the alter ego of SWRL and that the SWRL Loan Agreement should not be re-characterized as equity (the “Colorado Action”). On that same date, SWRL filed a complaint against the CherryBerry Selling Parties asserting the same claims as it had asserted previously. RMCF filed a motion to dismiss for lack of jurisdiction and improper venue and in the alternative a motion to transfer venue in response to the Oklahoma Action, and the CherryBerry Selling Parties subsequently filed a motion to dismiss the Colorado Action. In April 2016, the Colorado District Court granted in part the CherryBerry Selling Parties’ motion and administratively closed the case. In addition, in April 2016, the Oklahoma Court denied RMCF’s motion (and SWRL’s similar motion). On April 8, 2016, the CherryBerry Entities moved to add RMCF as a defendant on the alter ego and re-characterization claims in the Oklahoma Action. On May 9, 2016, the Oklahoma Court granted that application and we intend to file an answer or other responses to the action. We intend to vigorously assert and defend our rights in this lawsuit. |
Note 13 - Note Payable
Note 13 - Note Payable | 3 Months Ended |
May 31, 2016 | |
Notes to Financial Statements | |
Long-term Debt [Text Block] | NOTE 13 – NOTE PAYABLE The Company’s long-term debt is comprised of a promissory note, the proceeds of which were loaned to U-Swirl and used to finance U-Swirl’s business acquisitions (unpaid balance as of May 31, 2016, $4.8 million). As of May 31, 2016 and February 29, 2016, notes payable consisted of the following: May 31, 2016 February 29, 2016 Promissory note $ 4,775,479 $ 5,085,133 Less: current maturities (1,265,648 ) (1,254,007 ) Long-term obligations $ 3,509,831 $ 3,831,126 The following table summarizes annual maturities of our notes payable as of May 31, 2016: Amount 2017 $ 943,782 2018 1,302,503 2019 1,352,897 2020 1,176,297 Total minimum payments 4,775,479 Less: current maturities (1,265,648 ) Long-term obligations $ 3,509,831 |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 3 Months Ended |
May 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation The accompanying consolidated financial statements have been prepared by the Company, without audit, and reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial reporting and Securities and Exchange Commission regulations. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Certain amounts previously presented for prior periods have been reclassified to conform to the current presentation. The reclassifications had no effect on net income, working capital or equity previously reported. In the opinion of management, the consolidated financial statements reflect all adjustments (of a normal and recurring nature) which are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for the three months ended May 31, 2016 are not necessarily indicative of the results to be expected for the entire fiscal year. These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended February 29, 2016. |
Subsequent Events, Policy [Policy Text Block] | Subsequent Events Management evaluated all activity of the Company through the issue date of the financial statements and concluded that no subsequent events have occurred that would require recognition or disclosure in the financial statements. |
New Accounting Pronouncements, Policy [Policy Text Block] | New Accounting Pronouncements In July 2015, FASB issued ASU 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory, which changes the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. ASU 2015-11 defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The adoption of this guidance during the first quarter of fiscal year 2017 and prior fiscal year reclassifications did not have a material impact on the Company's consolidated financial statements. In April 2015, FASB issued ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs would not be affected by the amendment. The adoption of this guidance during the first quarter of fiscal year 2017 and prior fiscal year reclassifications did not have a material impact on the Company's consolidated financial statements. In November 2015, FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, entities will be required to classify all deferred tax assets and liabilities as noncurrent. This ASU will be effective for the Company beginning in its first quarter of fiscal year 2018 and early adoption is permitted. We have adopted ASU 2015-17 as of February 29, 2016 and have reported deferred tax assets and liabilities as noncurrent on the balance sheet. The prospective adoption of this guidance in the fiscal fourth quarter of 2016 did not materially affect the Company’s financial position, results of operations or cash flows. Prior periods were not retrospectively adjusted. |
Note 1 - Nature of Operations21
Note 1 - Nature of Operations and Basis of Presentation (Tables) | 3 Months Ended |
May 31, 2016 | |
Notes Tables | |
Number of Stores [Table Text Block] | Sold, Not Yet Open Open Total Rocky Mountain Chocolate Factory Company-owned stores - 3 3 Franchise stores – Domestic stores and kiosks 3 193 196 International License Stores - 86 86 Cold Stone Creamery – co-branded 5 77 82 U-Swirl Stores (Including all associated brands) Company-owned stores - 5 5 Company-owned stores – co-branded - 3 3 Franchise stores – Domestic stores * 179 179 Franchise stores – Domestic – co-branded * 18 18 International License Stores - 8 8 Total 8 572 580 |
Note 3 - Inventories (Tables)
Note 3 - Inventories (Tables) | 3 Months Ended |
May 31, 2016 | |
Notes Tables | |
Schedule of Inventory, Current [Table Text Block] | May 31, 2016 February 29, 2016 Ingredients and supplies $ 2,923,230 $ 2,868,157 Finished candy 2,223,478 2,138,952 U-Swirl food and packaging 87,074 94,345 Reserve for slow moving inventory (293,656 ) (261,346 ) Total inventories $ 4,940,126 $ 4,840,108 |
Note 4 - Property and Equipme23
Note 4 - Property and Equipment, Net (Tables) | 3 Months Ended |
May 31, 2016 | |
Notes Tables | |
Property, Plant and Equipment [Table Text Block] | May 31, 2016 February 29, 2016 Land $ 513,618 $ 513,618 Building 4,792,001 4,784,272 Machinery and equipment 10,537,132 9,987,906 Furniture and fixtures 1,206,792 1,169,475 Leasehold improvements 1,867,757 1,862,603 Transportation equipment 438,601 438,601 Asset impairment (568,803 ) (568,803 ) 18,787,098 18,187,672 Less accumulated depreciation (12,397,495 ) (12,177,369 ) Property and equipment, net $ 6,389,603 $ 6,010,303 |
Note 5 - Stockholders' Equity (
Note 5 - Stockholders' Equity (Tables) | 3 Months Ended |
May 31, 2016 | |
Notes Tables | |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Three Months Ended May 31, 2016 2015 Outstanding stock options as of February 28 or 29: 12,936 12,936 Granted - - Exercised - - Cancelled/forfeited (12,936 ) - Outstanding stock options as of May 31: - 12,936 Weighted average exercise price n/a $ 14.70 Weighted average remaining contractual term (in years) n/a 0.80 |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block] | Three Months Ended May 31, 2016 2015 Outstanding non-vested restricted stock units as of February 28 or 29: 181,742 237,641 Granted - - Vested - (7,820 ) Cancelled/forfeited - - Outstanding non-vested restricted stock units as of May 31: 181,742 229,821 Weighted average grant date fair value $ 12.22 $ 12.22 Weighted average remaining vesting period (in years) 2.97 3.96 |
Note 6 - Supplemental Cash Fl25
Note 6 - Supplemental Cash Flow Information (Tables) | 3 Months Ended |
May 31, 2016 | |
Notes Tables | |
Schedule of Cash Flow, Supplemental Disclosures [Table Text Block] | Three Months Ended May 31, 2016 2015 Cash paid (received) for: Interest, net $ 35,045 $ 46,797 Income taxes 217,123 39,745 Non-Cash Operating Activities Accrued Inventory 240,031 205,335 Non-Cash Financing Activities Dividend payable $ 699,009 $ 713,838 Sale of assets and inventory to buyers for notes receivable: Long-lived assets $ 30,989 - |
Note 7 - Operating Segments (Ta
Note 7 - Operating Segments (Tables) | 3 Months Ended |
May 31, 2016 | |
Notes Tables | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | Three Months Ended May 31, 2016 Franchising Manufacturing Retail U-Swirl Other Total Total revenues $ 1,548,035 $ 6,052,743 $ 305,576 $ 1,762,835 $ - $ 9,669,189 Intersegment revenues (1,361 ) (291,629 ) - - - (292,990 ) Revenue from external customers 1,546,674 5,761,114 305,576 1,762,835 - 9,376,199 Segment profit (loss) 670,628 1,233,006 (14,666 ) 467,779 (1,210,159 ) 1,146,588 Total assets 1,355,195 11,504,386 1,008,708 10,673,169 5,637,138 30,178,596 Capital expenditures 9,126 477,121 22 24,344 123,813 634,426 Total depreciation & amortization $ 13,656 $ 106,278 $ 3,348 $ 165,965 $ 35,977 $ 325,224 Three Months Ended May 31, 2015 Franchising Manufacturing Retail U-Swirl Other Total Total revenues $ 1,550,441 $ 6,622,368 $ 380,658 $ 2,109,797 $ - $ 10,663,264 Intersegment revenues (1,423 ) (297,819 ) - - - (299,242 ) Revenue from external customers 1,549,018 6,324,549 380,658 2,109,797 - 10,364,022 Segment profit (loss) 756,913 1,399,604 (41,030 ) 264,416 (1,014,244 ) 1,365,659 Total assets 1,224,822 10,471,309 1,095,173 12,948,323 7,552,528 33,292,155 Capital expenditures - 146,071 - 16,198 29,913 192,182 Total depreciation & amortization $ 10,287 $ 102,516 $ 5,896 $ 203,177 $ 42,974 $ 364,850 |
Note 8 - Goodwill and Intangi27
Note 8 - Goodwill and Intangible Assets (Tables) | 3 Months Ended |
May 31, 2016 | |
Notes Tables | |
Schedule of Intangible Assets and Goodwill [Table Text Block] | May 31, 2016 February 29, 2016 Amortization Period (years) Gross Carrying Value Accumulated Amortization Gross Carrying Value Accumulated Amortization Intangible assets subject to amortization Store design 10 $ 220,778 $ 210,027 $ 220,778 $ 209,653 Packaging licenses 3 - 5 120,830 120,830 120,830 120,830 Packaging design 10 430,973 430,973 430,973 430,973 Trademark/Non-competition agreements 5 - 20 715,340 61,022 459,340 51,423 Franchise Rights 20 5,931,137 855,527 5,914,181 760,818 Total $ 7,419,058 $ 1,678,379 $ 7,146,102 $ 1,573,697 Intangible assets not subject to amortization Franchising segment- Company stores goodwill $ 1,099,328 $ 267,020 $ 1,099,328 $ 267,020 Franchising goodwill 295,000 197,682 295,000 197,682 Manufacturing segment-Goodwill 295,000 197,682 295,000 197,682 Trademark 20,000 - 20,000 - Total 1,709,328 662,384 1,709,328 662,384 Total intangible assets $ 9,128,386 $ 2,340,763 $ 8,855,430 $ 2,236,081 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | 2017 $ 321,408 2018 443,214 2019 449,644 2020 436,487 2021 424,778 Thereafter 3,665,148 Total $ 5,740,679 |
Note 9 - Other Accrued Liabil28
Note 9 - Other Accrued Liabilities (Tables) | 3 Months Ended |
May 31, 2016 | |
Notes Tables | |
Schedule of Accrued Liabilities [Table Text Block] | May 31, 2016 February 29, 2016 Gift card liabilities $ 2,749,052 $ 2,835,943 Other accrued expenses 511,999 364,955 Total other accrued expenses $ 3,261,051 $ 3,200,898 |
Note 13 - Note Payable (Tables)
Note 13 - Note Payable (Tables) | 3 Months Ended |
May 31, 2016 | |
Notes Tables | |
Schedule of Long-term Debt Instruments [Table Text Block] | May 31, 2016 February 29, 2016 Promissory note $ 4,775,479 $ 5,085,133 Less: current maturities (1,265,648 ) (1,254,007 ) Long-term obligations $ 3,509,831 $ 3,831,126 |
Schedule of Maturities of Long-term Debt [Table Text Block] | Amount 2017 $ 943,782 2018 1,302,503 2019 1,352,897 2020 1,176,297 Total minimum payments 4,775,479 Less: current maturities (1,265,648 ) Long-term obligations $ 3,509,831 |
Note 1 - Nature of Operations30
Note 1 - Nature of Operations and Basis of Presentation (Details Textual) - $ / shares | 12 Months Ended | |||
Feb. 29, 2016 | May 31, 2016 | Feb. 28, 2016 | Jan. 31, 2013 | |
USwirl Inc [Member] | ||||
Noncontrolling Interest, Ownership Percentage by Parent | 39.00% | |||
Equity Method Investment, Ownership Percentage | 60.00% | |||
Debt Instrument Default Interest Rate | 15.00% | |||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.03 |
Note 1 - Nature of Operations31
Note 1 - Nature of Operations and Basis of Presentation - Number of Stores (Details) | May 31, 2016 |
Company Owned Stores [Member] | Parent [Member] | Sold Not Yet Open [Member] | |
Number of stores | 0 |
Company Owned Stores [Member] | Parent [Member] | Open [Member] | |
Number of stores | 3 |
Company Owned Stores [Member] | Parent [Member] | |
Number of stores | 3 |
Company Owned Stores [Member] | USwirl Inc [Member] | Sold Not Yet Open [Member] | |
Number of stores | |
Company Owned Stores [Member] | USwirl Inc [Member] | Open [Member] | |
Number of stores | 5 |
Company Owned Stores [Member] | USwirl Inc [Member] | |
Number of stores | 5 |
Franchise Stores - Domestic Stores and Kiosks [Member] | Parent [Member] | Sold Not Yet Open [Member] | |
Number of stores | 3 |
Franchise Stores - Domestic Stores and Kiosks [Member] | Parent [Member] | Open [Member] | |
Number of stores | 193 |
Franchise Stores - Domestic Stores and Kiosks [Member] | Parent [Member] | |
Number of stores | 196 |
International License Stores [Member] | Parent [Member] | Sold Not Yet Open [Member] | |
Number of stores | |
International License Stores [Member] | Parent [Member] | Open [Member] | |
Number of stores | 86 |
International License Stores [Member] | Parent [Member] | |
Number of stores | 86 |
International License Stores [Member] | USwirl Inc [Member] | Sold Not Yet Open [Member] | |
Number of stores | |
International License Stores [Member] | USwirl Inc [Member] | Open [Member] | |
Number of stores | 8 |
International License Stores [Member] | USwirl Inc [Member] | |
Number of stores | 8 |
Cold Stone Creamery - Co-Branded [Member] | Parent [Member] | Sold Not Yet Open [Member] | |
Number of stores | 5 |
Cold Stone Creamery - Co-Branded [Member] | Parent [Member] | Open [Member] | |
Number of stores | 77 |
Cold Stone Creamery - Co-Branded [Member] | Parent [Member] | |
Number of stores | 82 |
Company Owned Stores Co-branded [Member] | USwirl Inc [Member] | Sold Not Yet Open [Member] | |
Number of stores | |
Company Owned Stores Co-branded [Member] | USwirl Inc [Member] | Open [Member] | |
Number of stores | 3 |
Company Owned Stores Co-branded [Member] | USwirl Inc [Member] | |
Number of stores | 3 |
Franchise Stores - Domestic Stores [Member] | USwirl Inc [Member] | Open [Member] | |
Number of stores | 179 |
Franchise Stores - Domestic Stores [Member] | USwirl Inc [Member] | |
Number of stores | 179 |
Franchise Stores Co-branded [Member] | USwirl Inc [Member] | Open [Member] | |
Number of stores | 18 |
Franchise Stores Co-branded [Member] | USwirl Inc [Member] | |
Number of stores | 18 |
Sold Not Yet Open [Member] | |
Number of stores | 8 |
Open [Member] | |
Number of stores | 572 |
Number of stores | 580 |
Note 2 - Earnings Per Share (De
Note 2 - Earnings Per Share (Details Textual) - shares | 3 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 12,936 |
Note 3 - Inventories - Inventor
Note 3 - Inventories - Inventories (Details) - USD ($) | May 31, 2016 | Feb. 29, 2016 |
Ingredients and supplies | $ 2,923,230 | $ 2,868,157 |
Finished candy | 2,223,478 | 2,138,952 |
U-Swirl food and packaging | 87,074 | 94,345 |
Reserve for slow moving inventory | (293,656) | (261,346) |
Total inventories | $ 4,940,126 | $ 4,840,108 |
Note 4 - Property and Equipme34
Note 4 - Property and Equipment, Net - Property and Equipment (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
May 31, 2016 | Feb. 29, 2016 | |
Land [Member] | ||
Property, plant and equipment, gross | $ 513,618 | $ 513,618 |
Building [Member] | ||
Property, plant and equipment, gross | 4,792,001 | 4,784,272 |
Machinery and Equipment [Member] | ||
Property, plant and equipment, gross | 10,537,132 | 9,987,906 |
Furniture and Fixtures [Member] | ||
Property, plant and equipment, gross | 1,206,792 | 1,169,475 |
Leasehold Improvements [Member] | ||
Property, plant and equipment, gross | 1,867,757 | 1,862,603 |
Transportation Equipment [Member] | ||
Property, plant and equipment, gross | 438,601 | 438,601 |
Property, plant and equipment, gross | 18,787,098 | 18,187,672 |
Asset impairment | (568,803) | (568,803) |
Less accumulated depreciation | (12,397,495) | (12,177,369) |
Property and equipment, net | $ 6,389,603 | $ 6,010,303 |
Note 5 - Stockholders' Equity35
Note 5 - Stockholders' Equity (Details Textual) - USD ($) | Jun. 17, 2016 | Mar. 11, 2016 | May 31, 2016 | May 31, 2015 | May 21, 2015 | Jan. 13, 2015 | Jul. 15, 2014 |
USwirl Inc [Member] | |||||||
Allocated Share-based Compensation Expense | $ 0 | $ 99,500 | |||||
Unrestricted Shares of Stock [Member] | |||||||
Allocated Share-based Compensation Expense | $ 20,420 | $ 61,040 | |||||
Stock Issued During Period, Shares, Share-based Compensation, Gross | 2,000 | 4,000 | |||||
Restricted Stock Units (RSUs) [Member] | Minimum [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 17.00% | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 5 years | ||||||
Restricted Stock Units (RSUs) [Member] | Maximum [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 20.00% | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 6 years | ||||||
Restricted Stock Units (RSUs) [Member] | |||||||
Allocated Share-based Compensation Expense | $ 147,354 | ||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 1,717,111 | ||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 354 days | ||||||
Allocated Share-based Compensation Expense | $ 167,774 | $ 321,033 | |||||
Common Stock, Dividends, Per Share, Cash Paid | $ 0.12 | $ 0.12 | |||||
Stock Repurchase Program, Authorized Amount | $ 2,058,000 | $ 3,000,000 | |||||
Stock Repurchase Program, Additional Authorized Amount | $ 2,090,000 | ||||||
Stock Repurchased and Retired During Period, Shares | 14,422 | ||||||
Treasury Stock Acquired, Average Cost Per Share | $ 10.07 | ||||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 844,000 |
Note 5 - Stockholders' Equity -
Note 5 - Stockholders' Equity - Stock Option Transaction for Common Stock (Details) - $ / shares | 3 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Outstanding stock options (in shares) | 12,936 | 12,936 |
Granted (in shares) | ||
Exercised (in shares) | ||
Cancelled/forfeited (in shares) | (12,936) | |
Outstanding stock options (in shares) | 12,936 | |
Weighted average exercise price (in dollars per share) | $ 14.70 | |
Weighted average remaining contractual term (in years) | 292 days |
Note 5 - Stockholders' Equity37
Note 5 - Stockholders' Equity - Non-vested Restricted Stock Unit Transactions for Common Stock (Details) - $ / shares | 3 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Outstanding non-vested restricted stock units (in shares) | 181,742 | 237,641 |
Granted (in shares) | ||
Vested (in shares) | (7,820) | |
Cancelled/forfeited (in shares) | ||
Outstanding non-vested restricted stock units (in shares) | 181,742 | 229,821 |
Weighted average grant date fair value (in dollars per share) | $ 12.22 | $ 12.22 |
Weighted average remaining vesting period (in years) | 2 years 354 days | 3 years 350 days |
Note 6 - Supplemental Cash Fl38
Note 6 - Supplemental Cash Flow Information - Supplemental Cash Flow Information (Details) - USD ($) | 3 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Sale of Long Lived Assets [Member] | ||
Long-lived assets | $ 30,989 | |
Interest, net | 35,045 | 46,797 |
Income taxes | 217,123 | 39,745 |
Accrued Inventory | 240,031 | 205,335 |
Dividend payable | $ 699,009 | $ 713,838 |
Note 7 - Operating Segments (De
Note 7 - Operating Segments (Details Textual) | 3 Months Ended | |
May 31, 2016USD ($) | May 31, 2015USD ($) | |
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Manufacturing [Member] | ||
Number of Major Customers | 1 | |
Revenues | $ 1,400,000 | $ 2,000,000 |
Manufacturing [Member] | ||
Revenues | $ 5,761,114 | 6,324,549 |
Number of Reportable Segments | 5 | |
Revenues | $ 9,376,199 | $ 10,364,022 |
Note 7 - Operating Segments - S
Note 7 - Operating Segments - Segment Information (Details) - USD ($) | 3 Months Ended | ||
May 31, 2016 | May 31, 2015 | Feb. 29, 2016 | |
Revenue Before Intersegment Eliminations [Member] | Franchising [Member] | |||
Revenues | $ 1,548,035 | $ 1,550,441 | |
Revenue Before Intersegment Eliminations [Member] | Manufacturing [Member] | |||
Revenues | 6,052,743 | 6,622,368 | |
Revenue Before Intersegment Eliminations [Member] | Retail [Member] | |||
Revenues | 305,576 | 380,658 | |
Revenue Before Intersegment Eliminations [Member] | U-Swirl Segment [Member] | |||
Revenues | 1,762,835 | 2,109,797 | |
Revenue Before Intersegment Eliminations [Member] | Other Segments [Member] | |||
Revenues | 0 | 0 | |
Revenue Before Intersegment Eliminations [Member] | |||
Revenues | 9,669,189 | 10,663,264 | |
Intersegment Eliminations [Member] | Franchising [Member] | |||
Revenues | (1,361) | (1,423) | |
Intersegment Eliminations [Member] | Manufacturing [Member] | |||
Revenues | (291,629) | (297,819) | |
Intersegment Eliminations [Member] | Retail [Member] | |||
Revenues | 0 | 0 | |
Intersegment Eliminations [Member] | U-Swirl Segment [Member] | |||
Revenues | 0 | 0 | |
Intersegment Eliminations [Member] | Other Segments [Member] | |||
Revenues | 0 | 0 | |
Intersegment Eliminations [Member] | |||
Revenues | (292,990) | (299,242) | |
Franchising [Member] | |||
Revenues | 1,546,674 | 1,549,018 | |
Segment profit (loss) | 670,628 | 756,913 | |
Total assets | 1,355,195 | 1,224,822 | |
Capital expenditures | 9,126 | ||
Total depreciation and amortization | 13,656 | 10,287 | |
Manufacturing [Member] | |||
Revenues | 5,761,114 | 6,324,549 | |
Segment profit (loss) | 1,233,006 | 1,399,604 | |
Total assets | 11,504,386 | 10,471,309 | |
Capital expenditures | 477,121 | 146,071 | |
Total depreciation and amortization | 106,278 | 102,516 | |
Retail [Member] | |||
Revenues | 305,576 | 380,658 | |
Segment profit (loss) | (14,666) | (41,030) | |
Total assets | 1,008,708 | 1,095,173 | |
Capital expenditures | 22 | ||
Total depreciation and amortization | 3,348 | 5,896 | |
U-Swirl Segment [Member] | |||
Revenues | 1,762,835 | 2,109,797 | |
Segment profit (loss) | 467,779 | 264,416 | |
Total assets | 10,673,169 | 12,948,323 | |
Capital expenditures | 24,344 | 16,198 | |
Total depreciation and amortization | 165,965 | 203,177 | |
Other Segments [Member] | |||
Revenues | 0 | 0 | |
Segment profit (loss) | (1,210,159) | (1,014,244) | |
Total assets | 5,637,138 | 7,552,528 | |
Capital expenditures | 123,813 | 29,913 | |
Total depreciation and amortization | 35,977 | 42,974 | |
Revenues | 9,376,199 | 10,364,022 | |
Segment profit (loss) | 1,146,588 | 1,365,659 | |
Total assets | 30,178,596 | 33,292,155 | $ 30,315,725 |
Capital expenditures | 634,426 | 192,182 | |
Total depreciation and amortization | $ 325,224 | $ 364,850 |
Note 8 - Goodwill and Intangi41
Note 8 - Goodwill and Intangible Assets (Details Textual) - USD ($) | 3 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Amortization of Intangible Assets | $ 104,683 | $ 93,150 |
Note 8 - Goodwill and Intangi42
Note 8 - Goodwill and Intangible Assets - Indefinite-Lived Intangible Assets (Details) - USD ($) | 3 Months Ended | |
May 31, 2016 | Feb. 29, 2016 | |
Store Design [Member] | ||
Amortization Period | 10 years | |
Intangible assets subject to amortization, gross carrying value | $ 220,778 | $ 220,778 |
Intangible assets subject to amortization, accumulated amortization | $ 210,027 | 209,653 |
Packaging Licenses [Member] | Minimum [Member] | ||
Amortization Period | 3 years | |
Packaging Licenses [Member] | Maximum [Member] | ||
Amortization Period | 5 years | |
Packaging Licenses [Member] | ||
Intangible assets subject to amortization, gross carrying value | $ 120,830 | 120,830 |
Intangible assets subject to amortization, accumulated amortization | $ 120,830 | 120,830 |
Packaging Design [Member] | ||
Amortization Period | 10 years | |
Intangible assets subject to amortization, gross carrying value | $ 430,973 | 430,973 |
Intangible assets subject to amortization, accumulated amortization | $ 430,973 | 430,973 |
Trademarks and Non Competition Agreement [Member] | Minimum [Member] | ||
Amortization Period | 5 years | |
Trademarks and Non Competition Agreement [Member] | Maximum [Member] | ||
Amortization Period | 20 years | |
Trademarks and Non Competition Agreement [Member] | ||
Intangible assets subject to amortization, gross carrying value | $ 715,340 | 459,340 |
Intangible assets subject to amortization, accumulated amortization | $ 61,022 | 51,423 |
Franchise Rights [Member] | ||
Amortization Period | 20 years | |
Intangible assets subject to amortization, gross carrying value | $ 5,931,137 | 5,914,181 |
Intangible assets subject to amortization, accumulated amortization | 855,527 | 760,818 |
Company Stores Goodwill [Member] | ||
Intangible assets not subject to amortization, gross carrying value | 1,099,328 | 1,099,328 |
Intangible assets not subject to amortization, accumulated goodwill impairment | 267,020 | 267,020 |
Franchising Goodwill [Member] | ||
Intangible assets not subject to amortization, gross carrying value | 295,000 | 295,000 |
Intangible assets not subject to amortization, accumulated goodwill impairment | 197,682 | 197,682 |
Manufacturing Segment Goodwill [Member] | ||
Intangible assets not subject to amortization, gross carrying value | 295,000 | 295,000 |
Intangible assets not subject to amortization, accumulated goodwill impairment | 197,682 | 197,682 |
Trademarks [Member] | ||
Intangible assets not subject to amortization, gross carrying value | 20,000 | 20,000 |
Intangible assets not subject to amortization, accumulated goodwill impairment | ||
Intangible assets subject to amortization, gross carrying value | 7,419,058 | 7,146,102 |
Intangible assets subject to amortization, accumulated amortization | 1,678,379 | 1,573,697 |
Intangible assets not subject to amortization, gross carrying value | 1,709,328 | 1,709,328 |
Intangible assets not subject to amortization, accumulated goodwill impairment | 662,384 | 662,384 |
Total intangible assets | 9,128,386 | 8,855,430 |
Total intangible assets | $ 2,340,763 | $ 2,236,081 |
Note 8 - Goodwill and Intangi43
Note 8 - Goodwill and Intangible Assets - Estimated Future Amortization Expense (Details) | May 31, 2016USD ($) |
2,017 | $ 321,408 |
2,018 | 443,214 |
2,019 | 449,644 |
2,020 | 436,487 |
2,021 | 424,778 |
Thereafter | 3,665,148 |
Total | $ 5,740,679 |
Note 9 - Other Accrued Liabil44
Note 9 - Other Accrued Liabilities - Other Accrued Expenses (Details) - USD ($) | May 31, 2016 | Feb. 29, 2016 |
Gift card liabilities | $ 2,749,052 | $ 2,835,943 |
Other accrued expenses | 511,999 | 364,955 |
Total other accrued expenses | $ 3,261,051 | $ 3,200,898 |
Note 10 - Related Party Trans45
Note 10 - Related Party Transactions (Details Textual) | 3 Months Ended |
May 31, 2016USD ($) | |
Accounts Payable and Accrued Liabilities [Member] | Immediate Family Member of Management or Principal Owner [Member] | |
Related Party Transaction, Expenses from Transactions with Related Party | $ 0 |
Related Party Transaction, Expenses from Transactions with Related Party | $ 10,432 |
Note 11 - Restructuring and A46
Note 11 - Restructuring and Acquisition Related Charges (Details Textual) - USD ($) | 3 Months Ended | |
May 31, 2016 | May 31, 2015 | |
Lease Settlement Costs [Member] | ||
Restructuring Charges | $ 60,000 | |
Restructuring Charges | $ 0 |
Note 12 - Contingencies (Detail
Note 12 - Contingencies (Details Textual) - USD ($) | 1 Months Ended | 2 Months Ended | |
Feb. 28, 2015 | Aug. 31, 2015 | Feb. 29, 2016 | |
CherryBerry [Member] | USwirl Inc [Member] | |||
Business Combination, Contingent Consideration, Liability | $ 0 | ||
Stock Issued During Period, Shares, Acquisitions | 4,000,000 | ||
Lock-up Agreement | 1 year | ||
Business Combination, Contingent Consideration, Sale of Stock, Price Per Share | $ 0.50 | ||
Requested Shortfall Payment | $ 205,000 | ||
Business Combination Shortfall Payment | $ 1,800,000 |
Note 13 - Note Payable (Details
Note 13 - Note Payable (Details Textual) $ in Millions | May 31, 2016USD ($) |
Notes Payable | $ 4.8 |
Note 13 - Note Payable - Long-t
Note 13 - Note Payable - Long-term Note Payable (Details) - USD ($) | May 31, 2016 | Feb. 29, 2016 |
Promissory note | $ 4,775,479 | $ 5,085,133 |
Less: current maturities | (1,265,648) | (1,254,007) |
Long-term obligations | $ 3,509,831 | $ 3,831,126 |
Note 13 - Note Payable - Annual
Note 13 - Note Payable - Annual Maturities of Notes Payable (Details) - USD ($) | May 31, 2016 | Feb. 29, 2016 |
2,017 | $ 943,782 | |
2,018 | 1,302,503 | |
2,019 | 1,352,897 | |
2,020 | 1,176,297 | |
Total minimum payments | 4,775,479 | $ 5,085,133 |
Less: current maturities | (1,265,648) | (1,254,007) |
Long-term obligations | $ 3,509,831 | $ 3,831,126 |