• Filing Date: 2019-07-15
  • Form Type: 10-Q
  • Description: Quarterly report
v3.19.2
Document And Entity Information - shares
3 Months Ended
May 31, 2019
Jun. 25, 2019
Document Information [Line Items]    
Entity Registrant Name Rocky Mountain Chocolate Factory, Inc.  
Entity Central Index Key 0001616262  
Trading Symbol rmcf  
Current Fiscal Year End Date --02-29  
Entity Filer Category Non-accelerated Filer  
Entity Current Reporting Status Yes  
Entity Emerging Growth Company false  
Entity Small Business true  
Entity Common Stock, Shares Outstanding (in shares)   5,965,827
Document Type 10-Q  
Document Period End Date May 31, 2019  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q1  
Amendment Flag false  
Entity Shell Company false  
v3.19.2
Consolidated Statements of Income - USD ($)
3 Months Ended
May 31, 2019
May 31, 2018
Revenues    
Total revenues $ 8,425,999 $ 8,366,085
Costs and Expenses    
Cost of sales 4,614,744 4,665,242
Sales and marketing 556,651 588,250
General and administrative 1,144,731 914,447
Depreciation and amortization, exclusive of depreciation and amortization expense of $145,699, $136,505, respectively, included in cost of sales 231,955 301,000
Costs associated with Company-owned store closures 58,188
Total costs and expenses 7,479,996 7,582,849
Income from Operations 946,003 783,236
Other Income (Expense)    
Interest Expense (12,398) (22,639)
Interest Income 10,179 4,577
Other income (expense), net (2,219) (18,062)
Income Before Income Taxes 943,784 765,174
Income Tax Provision 232,175 188,230
Consolidated Net Income $ 711,609 $ 576,944
Basic Earnings per Common Share (in dollars per share) $ 0.12 $ 0.10
Diluted Earnings per Common Share (in dollars per share) $ 0.11 $ 0.10
Weighted Average Common Shares Outstanding - Basic (in shares) 5,962,278 5,905,414
Dilutive Effect of Employee Stock Awards (in shares) 272,286 77,594
Weighted Average Common Shares Outstanding - Diluted (in shares) 6,234,564 5,983,008
Product [Member]    
Revenues    
Total revenues $ 6,460,611 $ 6,582,049
Franchise and Royalty Fees [Member]    
Revenues    
Total revenues 1,965,388 1,784,036
Franchise [Member]    
Costs and Expenses    
Costs 483,013 493,250
Retail [Member]    
Costs and Expenses    
Costs $ 448,902 $ 562,472
v3.19.2
Consolidated Statements of Income (Parentheticals) - USD ($)
3 Months Ended
May 31, 2019
May 31, 2018
Depreciation and amortization expense, cost of sales $ 145,699 $ 136,505
v3.19.2
Consolidated Balance Sheets - USD ($)
May 31, 2019
Feb. 28, 2019
Current Assets    
Cash and cash equivalents $ 5,895,574 $ 5,384,027
Accounts receivable, less allowance for doubtful accounts of $557,916 and $489,502, respectively 3,877,170 3,993,262
Notes receivable, current portion 140,452 110,162
Refundable income taxes 4,534 190,201
Inventories, less reserve for slow moving inventory of $171,651 and $371,147, respectively 4,016,264 4,270,357
Other 440,173 318,126
Total current assets 14,374,167 14,266,135
Property and Equipment, Net 5,855,457 5,786,139
Other Assets    
Notes receivable, less current portion 357,877 281,669
Goodwill, net 1,046,944 1,046,944
Franchise rights, net 3,521,112 3,678,920
Intangible assets, net 479,601 498,337
Deferred income taxes 569,393 607,421
Lease right of use asset 3,280,508
Other 63,384 56,576
Total other assets 9,318,819 6,169,867
Total Assets 29,548,443 26,222,141
Current Liabilities    
Current maturities of long term debt 829,941 1,176,488
Accounts payable 1,126,472 897,074
Accrued salaries and wages 732,313 655,853
Gift card liabilities 715,700 742,289
Other accrued expenses 271,863 293,094
Dividend payable 715,899 714,939
Contract liabilities 238,194 256,094
Lease liability 851,249
Total current liabilities 5,481,631 4,735,831
Lease Liability, Less Current Portion 2,429,259
Contract Liabilities, Less Current Portion 1,020,997 1,096,478
Commitments and Contingencies
Stockholders' Equity    
Preferred stock, $.001 par value per share; 250,000 authorized; -0- shares issued and outstanding; Series A Junior Participating Preferred Stock, 50,000 authorized; -0- shares issued and outstanding; Undesignated series, 200,000 shares authorized; -0- shares issued and outstanding
Common stock, $.001 par value, 46,000,000 shares authorized, 5,962,327 shares and 5,957,827 shares issued and outstanding, respectively 5,962 5,958
Additional paid-in capital 6,882,114 6,650,864
Retained earnings 13,728,480 13,733,010
Total stockholders' equity 20,616,556 20,389,832
Total Liabilities and Stockholders' Equity $ 29,548,443 $ 26,222,141
v3.19.2
Consolidated Balance Sheets (Parentheticals) - USD ($)
May 31, 2019
Feb. 28, 2019
Accounts receivable, allowance for doubtful accounts $ 557,916 $ 489,502
Inventories, reserve $ 171,651 $ 371,147
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001
Preferred stock, shares authorized (in shares) 250,000 250,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized (in shares) 46,000,000 46,000,000
Common stock, shares issued (in shares) 5,962,327 5,957,827
Common stock, shares outstanding (in shares) 5,962,327 5,957,827
Series A Preferred Stock [Member]    
Preferred stock, shares authorized (in shares) 50,000 50,000
Undesignated Series [Member]    
Preferred stock, shares authorized (in shares) 200,000 200,000
v3.19.2
Consolidated Statements of Cash Flows - USD ($)
3 Months Ended
May 31, 2019
May 31, 2018
Cash Flows From Operating Activities    
Net Income $ 711,609 $ 576,944
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 377,654 437,505
Provision for obsolete inventory 23,766 24,185
Provision for loss on accounts and notes receivable 81,283 23,400
Asset impairment and store closure losses 44,000
Loss on sale or disposal of property and equipment 2,867 17,056
Expense recorded for stock compensation 231,254 155,807
Deferred income taxes 38,028 (54,493)
Changes in operating assets and liabilities:    
Accounts receivable (100,089) 672,005
Refundable income taxes 185,667
Inventories 344,058 (916,261)
Contract Liabilities (90,248) (78,883)
Other current assets (122,047) (168,990)
Accounts payable 115,667 291,989
Accrued liabilities 28,640 349,987
Net cash provided by operating activities 1,828,109 1,374,251
Cash Flows from Investing Activities    
Proceeds received on notes receivable 28,400 33,698
Proceeds from (cost of) sale or distribution of assets 500
Purchases of property and equipment (283,548) (130,572)
(Increase) decrease in other assets 312 (5,366)
Net cash used in investing activities (254,836) (101,740)
Cash Flows from Financing Activities    
Payments on long-term debt (346,547) (333,955)
Dividends paid (715,179) (708,653)
Net cash used in financing activities (1,061,726) (1,042,608)
Net Increase in Cash and Cash Equivalents 511,547 229,903
Cash and Cash Equivalents, Beginning of Period 5,384,027 6,072,984
Cash and Cash Equivalents, End of Period $ 5,895,574 $ 6,302,887
v3.19.2
Consolidated Statements of Changes in Stockholders' Equity - USD ($)
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Balance at Feb. 28, 2018   $ 5,903 $ 6,131,147 $ 13,419,553
Repurchase and retirement of common stock    
Issuance of common stock      
Exercise of stock options, vesting of restricted stock units and other   2    
Issuance of common stock      
Exercise of stock options, vesting of restricted stock units and other     155,805  
Net Income $ 576,944     576,944
Cash dividends declared       (708,653)
Balance at May. 31, 2018 20,506,630 $ 5,905 6,286,952 14,213,773
Balance (in shares) at Feb. 28, 2018   5,903,436    
Repurchase and retirement of common stock (in shares)      
Exercise of stock options, vesting of restricted stock units and other (in shares)   2,000    
Balance (in shares) at May. 31, 2018   5,905,436    
Adoption of ASC 606       925,929
Balance at Feb. 28, 2019   $ 5,958 6,650,864 13,733,010
Repurchase and retirement of common stock    
Issuance of common stock      
Exercise of stock options, vesting of restricted stock units and other   4    
Issuance of common stock      
Exercise of stock options, vesting of restricted stock units and other     231,250  
Net Income 711,609     711,609
Cash dividends declared       (716,139)
Balance at May. 31, 2019 $ 20,616,556 $ 5,962 $ 6,882,114 13,728,480
Balance (in shares) at Feb. 28, 2019 5,957,827 5,957,827    
Repurchase and retirement of common stock (in shares)      
Exercise of stock options, vesting of restricted stock units and other (in shares)   4,500    
Balance (in shares) at May. 31, 2019 5,962,327 5,962,327    
Adoption of ASC 606      
v3.19.2
Note 1 - Nature of Operations and Basis of Presentation
3 Months Ended
May 31, 2019
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 (“RMCF”), Aspen Leaf Yogurt, LLC, a Colorado limited liability company (“ALY”), and U-Swirl International, Inc., a Nevada corporation (“U-Swirl”), and its
46%
-owned subsidiary, U-Swirl, Inc. (“SWRL”), of which RMCF 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.
 
In
January 2013,
through its wholly-owned subsidiaries, including 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 (
46%
equity interest as of
May 31, 2019).
Upon completion of these transactions, the Company ceased to directly operate any Company-owned ALY locations or sell and support frozen yogurt franchise locations, which were being supported by SWRL. The SWRL board of directors is composed solely of board members also serving on the Company’s board of directors (the “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 Bank, N.A. used to finance the acquisitions by 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. As a result of certain defaults under the SWRL Loan Agreement, 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 on
February
29,
2016
in full satisfaction of the amounts owed under the SWRL Loan Agreement. This resulted in U-Swirl 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
May 31, 2019,
SWRL had
no
operating assets.
 
U-Swirl operates self-serve frozen yogurt cafés under the names “U-Swirl,” “Yogurtini,” “CherryBerry,” “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: (i) sales to franchisees and other
third
parties of chocolates and other confectionery products manufactured by the Company; (ii) sales at Company-owned stores of chocolates, other confectionery products and frozen yogurt (including products manufactured by us); (iii) the collection of initial franchise fees and royalties from franchisees.
 
The following table summarizes the number of stores operating under the Rocky Mountain Chocolate Factory brand and frozen yogurt cafés at
May 31, 2019:
 
   
Sold, Not Yet
Open
   
Open
   
Total
 
Rocky Mountain Chocolate Factory
                       
Company-owned stores
   
-
     
2
     
2
 
Franchise stores - Domestic stores and kiosks
   
3
     
181
     
184
 
International license stores
   
1
     
63
     
64
 
Cold Stone Creamery - co-branded
   
9
     
93
     
102
 
U-Swirl (Including all associated brands)
   
 
     
 
     
-
 
Company-owned stores
   
-
     
1
     
1
 
Company-owned stores - co-branded
   
-
     
3
     
3
 
Franchise stores - Domestic stores
   
-
     
86
     
86
 
Franchise stores - Domestic - co-branded
   
1
     
8
     
8
 
International license stores
   
-
     
2
     
2
 
Total
   
14
     
439
     
453
 
 
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 (the “SEC”) 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. 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, 2019
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 28, 2019.
 
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.
 
Recent Accounting Pronouncements
 
In
August 2018,
the SEC adopted amendments to certain disclosure requirements in Securities Act Release
No.
33
-
10532,
Disclosure Update and Simplification. These amendments eliminate, modify, or integrate into other SEC requirements certain disclosure rules. Among the amendments is the requirement to present an analysis of changes in stockholders’ equity in the interim financial statements included in Quarterly Reports on Form
10
-Q. The analysis, which can be presented as a footnote or separate statement, is required for the current and comparative quarter and year-to-date interim periods. The amendments are effective for all filings made on or after
November 5, 2018.
In light of the anticipated timing of effectiveness of the amendments and expected proximity of effectiveness to the filing date for most filers’ quarterly reports, the SEC’s Division of Corporate Finance issued a Compliance and Disclosure Interpretation related to Exchange Act Forms, (“CDI – Question
105.09”
), that provides transition guidance related to this disclosure requirement. CDI – Question
105.09
states that the SEC would
not
object if the filer’s
first
presentation of the changes in shareholders’ equity is included in its Quarterly Report on Form
10
-Q for the quarter that begins after the effective date of the amendments. As such, the Company adopted these SEC amendments on
November 30, 2018
and is
first
presenting the analysis of changes in stockholders’ equity in its interim financial statements in this Quarterly Report on this Form
10
-Q. The adoption of these SEC amendments did
not
have a material effect on the Company’s financial position, results of operations, cash flows or stockholders’ equity.
 
In
June 2016,
the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2016
-
13,
Financial Instruments - Credit Losses (Topic
326
): Measurement of Credit Losses on Financial Instruments. ASU
2016
-
13
significantly changes the impairment model for most financial assets and certain other instruments. ASU
2016
-
13
will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. ASU
2016
-
13
is effective for the Company's fiscal year beginning
March 1, 2020
and subsequent interim periods. The Company is currently evaluating the impact the adoption of ASU
2016
-
13
will have on the Company's consolidated financial statements.
  
In
February 2016,
the FASB issued ASU
2016
-
02,
Leases (Topic
842
), which requires the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases under ASC
840
“Leases.” These amendments also require qualitative disclosures along with specific quantitative disclosures.
 
The Company adopted ASU
2016
-
02
as of
March 1, 2019,
using the modified retrospective method. This method allows the new standard to be applied retrospectively through a cumulative catch-up adjustment recognized upon adoption. As a result, comparative information in the Company’s financial statements has
not
been restated and continues to be reported under the accounting standards in effect for those periods. The Company recorded a Right of Use Asset and Lease Liability on the Consolidated Balance Sheet of
$3.3
million upon adoption. The impact of the new standard did
not
affect the Company’s cash flows or results of operations. The lease liability reflects the present value of the Company’s estimated future minimum lease payments over the lease term, which includes options that are likely to be exercised, discounted using an incremental borrowing rate or implicit rate.
v3.19.2
Note 2 - Earnings Per Share
3 Months Ended
May 31, 2019
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 FY
2019
and FY
2018,
no
stock options were excluded from diluted shares as there were
no
stock options outstanding. Restricted stock units become dilutive within the period granted and remain dilutive until the units vest and are issued as common stock.
v3.19.2
Note 3 - Inventories
3 Months Ended
May 31, 2019
Notes to Financial Statements  
Inventory Disclosure [Text Block]
NOTE
3
– INVENTORIES
 
The Company held the following inventory at
May 31, 2019
and
February 28, 2019:
 
   
May 31, 2019
   
February 28, 2019
 
Ingredients and supplies
  $
2,380,863
    $
2,612,954
 
Finished candy
   
1,754,915
     
1,983,854
 
U-Swirl food and packaging
   
52,137
     
44,696
 
Reserve for slow moving inventory
   
(171,651
)    
(371,147
)
Total inventories
  $
4,016,264
    $
4,270,357
 
v3.19.2
Note 4 - Property and Equipment, Net
3 Months Ended
May 31, 2019
Notes to Financial Statements  
Property, Plant and Equipment Disclosure [Text Block]
NOTE
4
- PROPERTY AND EQUIPMENT, NET
 
Property and equipment at
May 31, 2019
and
February 28, 2019
consisted of the following:
 
   
May 31, 2019
   
February 28, 2019
 
Land
  $
513,618
    $
513,618
 
Building
   
5,031,395
     
5,031,395
 
Machinery and equipment
   
10,509,121
     
10,263,119
 
Furniture and fixtures
   
864,944
     
864,944
 
Leasehold improvements
   
1,128,659
     
1,131,659
 
Transportation equipment
   
440,050
     
422,458
 
Asset impairment
   
(30,000
)    
(30,000
)
     
18,457,787
     
18,197,193
 
                 
Less accumulated depreciation
   
(12,602,330
)    
(12,411,054
)
Property and equipment, net
  $
5,855,457
    $
5,786,139
 
v3.19.2
Note 5 - Stockholders' Equity
3 Months Ended
May 31, 2019
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 16, 2018
to stockholders of record on
March 6, 2018.
The Company paid a quarterly cash dividend of
$0.12
per share of common stock on
June 15, 2018
to stockholders of record on
June 5, 2018.
The Company paid a quarterly cash dividend of
$0.12
per share of common stock on
September 14, 2018
to stockholders of record on
September 4, 2018.
The Company paid a quarterly cash dividend of
$0.12
per share of common stock on
December 7, 2018
to stockholders of record on
November 23, 2018.
The Company declared a quarterly cash dividend of
$0.12
per share of common stock on
February 14, 2019,
which was paid on
March 15, 2019
to stockholders of record on
March 5, 2019.
The Company declared a quarterly cash dividend of
$0.12
per share of common stock on
May 28, 2019,
which was paid on
June 14, 2019
to stockholders of record on
June 4, 2019.
 
Future declarations of dividends will depend on, among other things, the Company's results of operations, financial condition, capital requirements, 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. The Company did
not
repurchase any shares during the
three
months ended
May 31, 2019
or
2018.
As of
May 31, 2019,
approximately
$638,000
remains available under the repurchase plan for further stock repurchases.
 
Stock-Based Compensation
 
Under the Company’s
2007
Equity Incentive Plan (as amended and restated) (the
“2007
Plan”), the Company
may
authorize and grant stock awards to employees, non-employee directors and certain other eligible participants, including stock options, restricted stock and restricted stock units.
 
The Company recognized
$231,254
of stock-based compensation expense during the
three
months ended
May 31, 2019
compared with
$155,807
during the
three
months ended
May 31, 2018.
Compensation costs related to stock-based compensation are generally amortized over the vesting period of the stock awards.
 
The following table summarizes non-vested restricted stock unit transactions for common stock during the
three
months ended
May 31, 2019
and
2018:
 
   
Three Months Ended
 
   
May 31,
 
   
2019
   
2018
 
Outstanding non-vested restricted stock units as of February 28:
   
25,002
     
77,594
 
Granted
   
270,000
     
-
 
Vested
   
-
     
-
 
Cancelled/forfeited
   
-
     
-
 
Outstanding non-vested restricted stock units as of May 31:
   
295,002
     
77,594
 
                 
Weighted average grant date fair value
  $
9.62
    $
12.16
 
Weighted average remaining vesting period (in years)
   
4.94
     
1.02
 
 
The Company issued
4,500
fully vested, unrestricted shares of stock to non-employee directors during the
three
months ended
May 31, 2019
compared to
2,000
shares issued during the
three
months ended
May 31, 2018.
In connection with these non-employee director stock issuances, the Company recognized
$42,525
and
$24,480
of stock-based compensation expense during the
three
months ended
May 31, 2019
and
2018,
respectively.
 
During the
three
months ended
May 31, 2019,
the Company recognized
$188,729
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, 2019,
was
$2,461,553,
which is expected to be recognized over the weighted average period of
4.94
years.
 
During the
three
months ended
May 31, 2019,
the Company granted
270,000
shares of restricted stock units with a grant date fair value of
$2,536,100
or
$9.39
per share, compared with
no
restricted stock units awarded in the
three
months ended
May 31, 2018.
The restricted stock unit grants vest between
17%
and
20%
annually over a period of
five
to
six
years.
 
The Company has
no
outstanding stock options as of
May 31, 2019.
v3.19.2
Note 6 - Supplemental Cash Flow Information
3 Months Ended
May 31, 2019
Notes to Financial Statements  
Cash Flow, Supplemental Disclosures [Text Block]
NOTE
6
– SUPPLEMENTAL CASH FLOW INFORMATION
 
   
Three Months Ended
 
   
May 31,
 
 
 
2019
   
2018
 
Cash paid for:                
Interest, net
  $
2,851
    $
17,774
 
Income taxes
   
8,481
     
7,277
 
Non-cash Operating Activities
               
Accrued Inventory
   
166,649
     
256,856
 
Non-cash Financing Activities
               
Dividend payable
  $
715,899
    $
708,652
 
v3.19.2
Note 7 - Operating Segments
3 Months Ended
May 31, 2019
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 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 consolidated financial statements included in the Company’s Annual Report on Form
10
-K for the year ended
February 28, 2019.
The Company evaluates performance and allocates resources based on operating contribution, which excludes unallocated
corporate general and administrative costs and income tax expense or benefit. The Company’s reportable segments are strategic businesses that utilize common merchandising, distribution, and marketing functions, as well as common information systems and corporate administration. All inter-segment sales prices are market based. Each segment is managed separately because of the differences in required infrastructure and the differences in products and services:
 
Three Months Ended May 31, 2019
 
Franchising
   
Manufacturing
   
Retail
   
U-Swirl
   
Other
   
Total
 
Total revenues
  $
1,429,041
    $
5,866,472
    $
232,419
    $
1,159,805
    $
-
    $
8,687,737
 
Intersegment revenues
   
(1,286
)    
(260,452
)    
-
     
-
     
-
     
(261,738
)
Revenue from external customers
   
1,427,755
     
5,606,020
     
232,419
     
1,159,805
     
-
     
8,425,999
 
Segment profit (loss)
   
617,910
     
1,168,687
     
(15,012
)    
279,163
     
(1,106,964
)    
943,784
 
Total assets
   
1,275,471
     
11,660,148
     
992,148
     
6,330,540
     
9,290,136
     
29,548,443
 
Capital expenditures
   
10,540
     
223,552
     
9,518
     
-
     
39,938
     
283,548
 
Total depreciation & amortization
  $
10,830
    $
150,132
    $
2,611
    $
190,769
    $
23,312
    $
377,654
 
 
Three Months Ended May 31, 2018
 
Franchising
   
Manufacturing
   
Retail
   
U-Swirl
   
Other
   
Total
 
Total revenues
  $
1,313,206
    $
5,870,514
    $
361,435
    $
1,133,254
    $
-
    $
8,678,409
 
Intersegment revenues
   
(1,035
)    
(311,289
)    
-
     
-
     
-
     
(312,324
)
Revenue from external customers
   
1,312,171
     
5,559,225
     
361,435
     
1,133,254
     
-
     
8,366,085
 
Segment profit (loss)
   
489,271
     
1,169,335
     
(78,494
)    
135,155
     
(950,093
)    
765,174
 
Total assets
   
1,058,006
     
12,533,723
     
1,054,367
     
7,594,185
     
5,897,814
     
28,138,095
 
Capital expenditures
   
3,529
     
111,765
     
2,071
     
3,338
     
9,869
     
130,572
 
Total depreciation & amortization
  $
11,924
    $
141,028
    $
12,675
    $
244,051
    $
27,827
    $
437,505
 
 
Revenue from
one
customer of the Company’s Manufacturing segment represented approximately
$1.4
million, or
16.3
percent of the Company’s revenues from external customers during the
three
months ended
May 31, 2019
compared to
$1.3
million, or
15.2
percent of the Company’s revenues from external customers during the
three
months ended
May 31, 2018.
 
v3.19.2
Note 8 - Goodwill and Intangible Assets
3 Months Ended
May 31, 2019
Notes to Financial Statements  
Goodwill and Intangible Assets Disclosure [Text Block]
NOTE
8
– GOODWILL AND INTANGIBLE ASSETS
 
Intangible assets at
May 31, 2019
and
February 28, 2019
consist of the following:
 
             
May 31, 2019
   
February 28, 2019
 
   
Amortization
Period (in years)
   
Gross Carrying
Value
   
Accumulated
Amortization
   
Gross Carrying
Value
   
Accumulated
Amortization
 
Intangible assets subject to amortization
                                         
Store design
 
 
10
 
    $
220,778
    $
214,527
    $
220,778
    $
214,152
 
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
     
715,339
     
241,989
     
715,339
     
223,628
 
Franchise rights
 
 
20
 
     
5,979,637
     
2,458,525
     
5,979,637
     
2,300,717
 
Total
 
 
 
 
     
7,467,557
     
3,466,844
     
7,467,557
     
3,290,300
 
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 goodwill
 
 
 
 
     
1,709,328
     
662,384
     
1,709,328
     
662,384
 
                                           
Total Intangible Assets
 
 
 
 
    $
9,176,885
    $
4,129,228
    $
9,176,885
    $
3,952,684
 
 
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
$176,544
and
$211,287
during the
three
months ended
May 31, 2019
and
2018,
respectively.
 
During the year ended
February 28, 2019,
the Company reviewed its estimates of the future economic life of certain intangible assets. As a result of this review, the Company accelerated the rate of amortization of certain intangible assets to better reflect their expected future value. Consistent with the treatment of a change in estimate, the new rate of amortization of intangible assets will be applied to future periods.
 
At
May 31, 2019,
annual amortization of intangible assets, based upon the Company’s existing intangible assets and current useful lives, is estimated to be the following:
 
FYE 20
  $
529,632
 
FYE 21
   
594,229
 
FYE 22
   
490,060
 
FYE 23
   
411,607
 
FYE 24
   
345,642
 
Thereafter
   
1,629,543
 
Total
  $
4,000,713
 
v3.19.2
Note 9 - Costs Associated With Company-owned Store Closures
3 Months Ended
May 31, 2019
Notes to Financial Statements  
Restructuring, Impairment, and Other Activities Disclosure [Text Block]
NOTE
9
– COSTS ASSOCIATED WITH COMPANY-OWNED STORE CLOSURES
 
Costs associated with Company-owned store closures were comprised of asset disposal and impairment costs of
$58,188
for the
three
months ended
May 31, 2018,
relating to the closure and planned closing of certain underperforming Company-owned locations.
 
There were
no
comparable costs incurred during the
three
months ended
May 31, 2019.
v3.19.2
Note 10 - Note Payable
3 Months Ended
May 31, 2019
Notes to Financial Statements  
Long-term Debt [Text Block]
NOTE
10
– NOTE PAYABLE
 
The Company’s long-term debt is comprised of a promissory note, the proceeds of which were loaned to SWRL and used to finance SWRL’s business acquisitions. As of
May 31, 2019,
approximately
$830,000
was outstanding under this promissory note. This promissory note matures in
January 2020.
 
Additionally, the promissory note is subject to various financial ratio and leverage covenants. As of
May 31, 2019,
the Company was in compliance with all such covenants.
 
As of
May 31, 2019
and
February 28, 2019,
notes payable consisted of the following:
 
   
May 31, 2019
   
February 28, 2019
 
Promissory note
  $
829,941
    $
1,176,488
 
Less: current maturities
   
(829,941
)    
(1,176,488
)
Long-term obligations
  $
-
    $
-
 
v3.19.2
Note 11 - Leasing Arrangements
3 Months Ended
May 31, 2019
Notes to Financial Statements  
Lessee, Operating Leases [Text Block]
NOTE
11
– LEASING ARRANGEMENTS
 
The Company conducts its retail operations in facilities leased under non-cancelable operating leases of up to
ten
years. Certain leases contain renewal options for between
five
and
ten
additional years at increased monthly rentals. Some of the leases provide for contingent rentals based on sales in excess of predetermined base levels. 
 
The Company acts as primary lessee of some franchised store premises, which the Company then subleases to franchisees, but the majority of existing locations are leased by the franchisee directly.
 
In some instances, the Company has leased space for its Company-owned locations that are now occupied by franchisees. When the Company-owned location was sold or transferred, the store was subleased to the franchisee who is responsible for the monthly rent and other obligations under the lease.
 
The Company also leases trucking equipment and warehouse space in support of its manufacturing operations.  Expense associated with trucking and warehouse leases is included in cost of sales on the consolidated statements of income.
 
ASU
2016
-
02
allows, as a practical expedient, the retention of the classification of existing leases as operating or financing. All of the Company’s leases are classified as operating leases and that classification has been retained upon adoption. The Company does
not
believe the utilization of this practical expedient has a material impact on lease classifications.
 
The Company accounts for payments related to lease liabilities on a straight-line basis over the lease term. As of
May 31, 2019
and
2018
lease expense recognized in the Consolidated Statements of Income was
$238,666
and
$265,426,
respectively.
 
The amount of the Right of Use Asset and Lease Liability recorded upon the adoption of ASU
2016
-
02
was
$3.3
million. The lease liability reflects the present value of the Company’s estimated future minimum lease payments over the life of its leases. This includes known escalations and renewal option periods reasonably assured of being exercised. Typically, renewal options are considered reasonably assured of being exercised if the sales performance of the location remains strong. Therefore, the Right of Use Asset and Lease Liability include an assumption on renewal options that have
not
yet been exercised by the Company, and are
not
currently a future obligation. The Company has separated non-lease components from lease components in the recognition of the Asset and Liability except in instances where such costs were
not
practical to separate. To the extent that occupancy costs, such as site maintenance, are included in the Asset and Liability, the impact is immaterial. For franchised locations, the related occupancy costs including property taxes, insurance and site maintenance are generally required to be paid by the franchisees as part of the franchise arrangement. In addition, the Company is the lessee under non-store related leases such as storage facilities and trucking equipment. For leases where the implicit rate is
not
readily determinable, the Company uses an incremental borrowing rate to calculate the lease liability that represents an estimate of the interest rate the Company would incur to borrow on a collateralized basis over the term of a lease. The weighted average discount rate used for operating leases was
3.4%
as of
May 31, 2019.
The total estimated future minimum lease payments is
$3.6
million.
 
As of
May 31, 2019,
maturities of lease liabilities for our operating leases were as follows:
 
FYE 20
  $
663,738
 
FYE 21
   
819,005
 
FYE 22
   
694,755
 
FYE 23
   
437,445
 
FYE 24
   
315,962
 
Thereafter
   
717,040
 
Total
  $
3,647,945
 
         
Less: imputed interest
   
(367,437
)
Present value of lease liabilities:
  $
3,280,508
 
         
Weighted average lease term (in years)
   
6.8
 
v3.19.2
Note 12 - Revenue from Contracts with Customers
3 Months Ended
May 31, 2019
Notes to Financial Statements  
Revenue from Contract with Customer [Text Block]
NOTE
12
– REVENUE FROM CONTRACTS WITH CUSTOMERS.
 
Effective
March 1, 2018,
the Company adopted ASC
606.
ASC
606
provides that revenues are to be recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration expected to be received for those goods or services. This new standard does
not
impact the Company's recognition of revenue from sales of confectionary items to its franchisees and others, or in its Company-owned stores as those sales are recognized at the time of the underlying sale and are presented net of sales taxes and discounts. The standard also does
not
change the recognition of royalties and marketing fees from franchised or licensed locations, which are based on a percent of sales and recognized at the time the sales occur. The standard does change the timing in which the Company recognizes initial fees from franchisees and licensees for new franchise locations and renewals that affect the term of the franchise agreement.
 
Initial Franchise Fees, License Fees, Transfer Fees
and
Renewal Fees
 
The Company's policy for recognizing initial franchise and renewal fees through
February 28, 2018,
was to recognize initial franchise fees upon new store openings and renewals that impact the term of the franchise agreement upon renewal. In accordance with the new guidance, the initial franchise services are
not
distinct from the continuing rights or services offered during the term of the franchise agreement, and will be treated as a single performance obligation. Beginning
March 1, 2018,
initial franchise fees are being recognized as the Company satisfies the performance obligation over the term of the franchise agreement, which is generally
10
-
15
years.
 
Gift Cards
 
The Company’s franchisees sell gift cards which do
not
have either expiration dates, or non-usage fees. The proceeds from the sale of gift cards by the franchisees are accumulated by the Company and paid out to the franchisees upon customer redemption. The Company has historically accumulated gift card liabilities and has
not
recognized breakage associated with the gift card liability. The adoption of ASC
606
requires the use of the “proportionate” method for recognizing breakage, which the Company has
not
historically utilized. Upon adoption of ASC
606
the Company began recognizing breakage from gift cards when the gift card is redeemed by the customer or the Company determines the likelihood of the gift card being redeemed by the customer is remote (“gift card breakage”). The determination of the gift card breakage rate is based upon Company-specific historical redemption patterns.
 
On
May 31, 2019,
annual revenue expected to be recognized in the future, related to performance obligations that are
not
yet fully satisfied, are estimated to be the following:
 
FYE 20
  $
186,880
 
FYE 21
   
199,216
 
FYE 22
   
186,117
 
FYE 23
   
171,982
 
FYE 24
   
133,064
 
Thereafter
   
381,932
 
Total
  $
1,259,191
 
 
v3.19.2
Note 13 - Disaggregation of Revenue
3 Months Ended
May 31, 2019
Notes to Financial Statements  
Disaggregation of Revenue [Text Block]
NOTE
13
– DISAGGREGATION OF REVENUE
 
The following table presents disaggregated revenue by method of recognition and segment:
 
Three Months Ended May 31, 2019                                        
                                         
Revenues recognized over time under ASC 606:                                        
   
Franchising
   
Manufacturing
   
Retail
   
U-Swirl
   
Total
 
                                         
Franchise fees
  $
80,019
    $
-
    $
-
    $
26,261
    $
106,280
 
 
Revenues recognized at a point in time:                                        
   
Franchising
   
Manufacturing
   
Retail
   
U-Swirl
   
Total
 
Factory sales
   
-
     
5,606,020
     
-
     
-
     
5,606,020
 
Retail sales
   
-
     
-
     
232,419
     
622,172
     
854,591
 
Royalty and marketing fees
   
1,347,736
     
-
     
-
     
511,372
     
1,859,108
 
Total
  $
1,427,755
    $
5,606,020
    $
232,419
    $
1,159,805
    $
8,425,999
 
 
Three Months Ended May 31, 2018                                        
                                         
Revenues recognized over time under ASC 606:                                        
                                         
   
Franchising
   
Manufacturing
   
Retail
   
U-Swirl
   
Total
 
Revenues recognized over time under ASC 606:                                        
Franchise fees
  $
74,516
    $
-
    $
-
    $
18,619
    $
93,135
 
 
Revenues recognized at a point in time:                                        
   
Franchising
   
Manufacturing
   
Retail
   
U-Swirl
   
Total
 
Factory sales
   
-
     
5,559,225
     
-
     
-
     
5,559,225
 
Retail sales
   
-
     
-
     
361,435
     
661,389
     
1,022,824
 
Royalty and marketing fees
   
1,237,655
     
-
     
-
     
453,246
     
1,690,901
 
Total
  $
1,312,171
    $
5,559,225
    $
361,435
    $
1,133,254
    $
8,366,085
 
 
v3.19.2
Significant Accounting Policies (Policies)
3 Months Ended
May 31, 2019
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 (the “SEC”) 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. 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, 2019
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 28, 2019.
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]
Recent Accounting Pronouncements
 
In
August 2018,
the SEC adopted amendments to certain disclosure requirements in Securities Act Release
No.
33
-
10532,
Disclosure Update and Simplification. These amendments eliminate, modify, or integrate into other SEC requirements certain disclosure rules. Among the amendments is the requirement to present an analysis of changes in stockholders’ equity in the interim financial statements included in Quarterly Reports on Form
10
-Q. The analysis, which can be presented as a footnote or separate statement, is required for the current and comparative quarter and year-to-date interim periods. The amendments are effective for all filings made on or after
November 5, 2018.
In light of the anticipated timing of effectiveness of the amendments and expected proximity of effectiveness to the filing date for most filers’ quarterly reports, the SEC’s Division of Corporate Finance issued a Compliance and Disclosure Interpretation related to Exchange Act Forms, (“CDI – Question
105.09”
), that provides transition guidance related to this disclosure requirement. CDI – Question
105.09
states that the SEC would
not
object if the filer’s
first
presentation of the changes in shareholders’ equity is included in its Quarterly Report on Form
10
-Q for the quarter that begins after the effective date of the amendments. As such, the Company adopted these SEC amendments on
November 30, 2018
and is
first
presenting the analysis of changes in stockholders’ equity in its interim financial statements in this Quarterly Report on this Form
10
-Q. The adoption of these SEC amendments did
not
have a material effect on the Company’s financial position, results of operations, cash flows or stockholders’ equity.
 
In
June 2016,
the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2016
-
13,
Financial Instruments - Credit Losses (Topic
326
): Measurement of Credit Losses on Financial Instruments. ASU
2016
-
13
significantly changes the impairment model for most financial assets and certain other instruments. ASU
2016
-
13
will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. ASU
2016
-
13
is effective for the Company's fiscal year beginning
March 1, 2020
and subsequent interim periods. The Company is currently evaluating the impact the adoption of ASU
2016
-
13
will have on the Company's consolidated financial statements.
  
In
February 2016,
the FASB issued ASU
2016
-
02,
Leases (Topic
842
), which requires the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases under ASC
840
“Leases.” These amendments also require qualitative disclosures along with specific quantitative disclosures.
 
The Company adopted ASU
2016
-
02
as of
March 1, 2019,
using the modified retrospective method. This method allows the new standard to be applied retrospectively through a cumulative catch-up adjustment recognized upon adoption. As a result, comparative information in the Company’s financial statements has
not
been restated and continues to be reported under the accounting standards in effect for those periods. The Company recorded a Right of Use Asset and Lease Liability on the Consolidated Balance Sheet of
$3.3
million upon adoption. The impact of the new standard did
not
affect the Company’s cash flows or results of operations. The lease liability reflects the present value of the Company’s estimated future minimum lease payments over the lease term, which includes options that are likely to be exercised, discounted using an incremental borrowing rate or implicit rate.
v3.19.2
Note 1 - Nature of Operations and Basis of Presentation (Tables)
3 Months Ended
May 31, 2019
Notes Tables  
Number of Stores [Table Text Block]
   
Sold, Not Yet
Open
   
Open
   
Total
 
Rocky Mountain Chocolate Factory
                       
Company-owned stores
   
-
     
2
     
2
 
Franchise stores - Domestic stores and kiosks
   
3
     
181
     
184
 
International license stores
   
1
     
63
     
64
 
Cold Stone Creamery - co-branded
   
9
     
93
     
102
 
U-Swirl (Including all associated brands)
   
 
     
 
     
-
 
Company-owned stores
   
-
     
1
     
1
 
Company-owned stores - co-branded
   
-
     
3
     
3
 
Franchise stores - Domestic stores
   
-
     
86
     
86
 
Franchise stores - Domestic - co-branded
   
1
     
8
     
8
 
International license stores
   
-
     
2
     
2
 
Total
   
14
     
439
     
453
 
v3.19.2
Note 3 - Inventories (Tables)
3 Months Ended
May 31, 2019
Notes Tables  
Schedule of Inventory, Current [Table Text Block]
   
May 31, 2019
   
February 28, 2019
 
Ingredients and supplies
  $
2,380,863
    $
2,612,954
 
Finished candy
   
1,754,915
     
1,983,854
 
U-Swirl food and packaging
   
52,137
     
44,696
 
Reserve for slow moving inventory
   
(171,651
)    
(371,147
)
Total inventories
  $
4,016,264
    $
4,270,357
 
v3.19.2
Note 4 - Property and Equipment, Net (Tables)
3 Months Ended
May 31, 2019
Notes Tables  
Property, Plant and Equipment [Table Text Block]
   
May 31, 2019
   
February 28, 2019
 
Land
  $
513,618
    $
513,618
 
Building
   
5,031,395
     
5,031,395
 
Machinery and equipment
   
10,509,121
     
10,263,119
 
Furniture and fixtures
   
864,944
     
864,944
 
Leasehold improvements
   
1,128,659
     
1,131,659
 
Transportation equipment
   
440,050
     
422,458
 
Asset impairment
   
(30,000
)    
(30,000
)
     
18,457,787
     
18,197,193
 
                 
Less accumulated depreciation
   
(12,602,330
)    
(12,411,054
)
Property and equipment, net
  $
5,855,457
    $
5,786,139
 
v3.19.2
Note 5 - Stockholders' Equity (Tables)
3 Months Ended
May 31, 2019
Notes Tables  
Share-based Payment Arrangement, Restricted Stock Unit, Activity [Table Text Block]
   
Three Months Ended
 
   
May 31,
 
   
2019
   
2018
 
Outstanding non-vested restricted stock units as of February 28:
   
25,002
     
77,594
 
Granted
   
270,000
     
-
 
Vested
   
-
     
-
 
Cancelled/forfeited
   
-
     
-
 
Outstanding non-vested restricted stock units as of May 31:
   
295,002
     
77,594
 
                 
Weighted average grant date fair value
  $
9.62
    $
12.16
 
Weighted average remaining vesting period (in years)
   
4.94
     
1.02
 
v3.19.2
Note 6 - Supplemental Cash Flow Information (Tables)
3 Months Ended
May 31, 2019
Notes Tables  
Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]
   
Three Months Ended
 
   
May 31,
 
 
 
2019
   
2018
 
Cash paid for:                
Interest, net
  $
2,851
    $
17,774
 
Income taxes
   
8,481
     
7,277
 
Non-cash Operating Activities
               
Accrued Inventory
   
166,649
     
256,856
 
Non-cash Financing Activities
               
Dividend payable
  $
715,899
    $
708,652
 
v3.19.2
Note 7 - Operating Segments (Tables)
3 Months Ended
May 31, 2019
Notes Tables  
Schedule of Segment Reporting Information, by Segment [Table Text Block]
Three Months Ended May 31, 2019
 
Franchising
   
Manufacturing
   
Retail
   
U-Swirl
   
Other
   
Total
 
Total revenues
  $
1,429,041
    $
5,866,472
    $
232,419
    $
1,159,805
    $
-
    $
8,687,737
 
Intersegment revenues
   
(1,286
)    
(260,452
)    
-
     
-
     
-
     
(261,738
)
Revenue from external customers
   
1,427,755
     
5,606,020
     
232,419
     
1,159,805
     
-
     
8,425,999
 
Segment profit (loss)
   
617,910
     
1,168,687
     
(15,012
)    
279,163
     
(1,106,964
)    
943,784
 
Total assets
   
1,275,471
     
11,660,148
     
992,148
     
6,330,540
     
9,290,136
     
29,548,443
 
Capital expenditures
   
10,540
     
223,552
     
9,518
     
-
     
39,938
     
283,548
 
Total depreciation & amortization
  $
10,830
    $
150,132
    $
2,611
    $
190,769
    $
23,312
    $
377,654
 
Three Months Ended May 31, 2018
 
Franchising
   
Manufacturing
   
Retail
   
U-Swirl
   
Other
   
Total
 
Total revenues
  $
1,313,206
    $
5,870,514
    $
361,435
    $
1,133,254
    $
-
    $
8,678,409
 
Intersegment revenues
   
(1,035
)    
(311,289
)    
-
     
-
     
-
     
(312,324
)
Revenue from external customers
   
1,312,171
     
5,559,225
     
361,435
     
1,133,254
     
-
     
8,366,085
 
Segment profit (loss)
   
489,271
     
1,169,335
     
(78,494
)    
135,155
     
(950,093
)    
765,174
 
Total assets
   
1,058,006
     
12,533,723
     
1,054,367
     
7,594,185
     
5,897,814
     
28,138,095
 
Capital expenditures
   
3,529
     
111,765
     
2,071
     
3,338
     
9,869
     
130,572
 
Total depreciation & amortization
  $
11,924
    $
141,028
    $
12,675
    $
244,051
    $
27,827
    $
437,505
 
v3.19.2
Note 8 - Goodwill and Intangible Assets (Tables)
3 Months Ended
May 31, 2019
Notes Tables  
Schedule of Intangible Assets and Goodwill [Table Text Block]
             
May 31, 2019
   
February 28, 2019
 
   
Amortization
Period (in years)
   
Gross Carrying
Value
   
Accumulated
Amortization
   
Gross Carrying
Value
   
Accumulated
Amortization
 
Intangible assets subject to amortization
                                         
Store design
 
 
10
 
    $
220,778
    $
214,527
    $
220,778
    $
214,152
 
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
     
715,339
     
241,989
     
715,339
     
223,628
 
Franchise rights
 
 
20
 
     
5,979,637
     
2,458,525
     
5,979,637
     
2,300,717
 
Total
 
 
 
 
     
7,467,557
     
3,466,844
     
7,467,557
     
3,290,300
 
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 goodwill
 
 
 
 
     
1,709,328
     
662,384
     
1,709,328
     
662,384
 
                                           
Total Intangible Assets
 
 
 
 
    $
9,176,885
    $
4,129,228
    $
9,176,885
    $
3,952,684
 
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]
FYE 20
  $
529,632
 
FYE 21
   
594,229
 
FYE 22
   
490,060
 
FYE 23
   
411,607
 
FYE 24
   
345,642
 
Thereafter
   
1,629,543
 
Total
  $
4,000,713
 
v3.19.2
Note 10 - Note Payable (Tables)
3 Months Ended
May 31, 2019
Notes Tables  
Schedule of Long-term Debt Instruments [Table Text Block]
   
May 31, 2019
   
February 28, 2019
 
Promissory note
  $
829,941
    $
1,176,488
 
Less: current maturities
   
(829,941
)    
(1,176,488
)
Long-term obligations
  $
-
    $
-
 
v3.19.2
Note 11 - Leasing Arrangements (Tables)
3 Months Ended
May 31, 2019
Notes Tables  
Lessee, Operating Lease, Liability, Maturity [Table Text Block]
FYE 20
  $
663,738
 
FYE 21
   
819,005
 
FYE 22
   
694,755
 
FYE 23
   
437,445
 
FYE 24
   
315,962
 
Thereafter
   
717,040
 
Total
  $
3,647,945