10-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 28, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number: 001-36865

Rocky Mountain Chocolate Factory, Inc.

(Exact name of registrant as specified in its charter)

Delaware	47-1535633
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

265 Turner Drive, Durango, CO 81303

(Address of principal executive offices, including ZIP code)

(970) 259-0554

(Registrant’s telephone number, including area code)

Securities Registered Pursuant To Section 12(b) Of The Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.001 Par Value per Share	RMCF	Nasdaq Global Market
Preferred Stock Purchase Rights	RMCF	Nasdaq Global Market

Securities Registered Pursuant To Section 12(g) Of The Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐     No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐       No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes ☐    No ☒

The aggregate market value of the registrant’s common stock (based on the closing price as quoted on the Nasdaq Global Market on August 31, 2018, the last trading day of the registrant’s most recently completed second fiscal quarter) held by non-affiliates was $38,815,702. For purposes of this calculation, shares of common stock held by each executive officer and director and by holders of more than 5% of the registrant’s outstanding common stock have been excluded since those persons may under certain circumstances be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of May 10, 2019, there were 5,965,827 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: None

EXPLANATORY NOTE

Rocky Mountain Chocolate Factory, Inc. (the “Company,” “we,” “us” or “our”) is filing this Amendment No. 1 on Form 10-K/A (this “Amendment No. 1”) to amend our Annual Report on Form 10-K for the fiscal year ended February 28, 2019, originally filed with the Securities and Exchange Commission (“SEC”) on May 29, 2019 (the “Original Filing”), to include the information required by Items 10 through 14 of Part III of Form 10-K. This information was previously omitted from the Original Filing in reliance on General Instruction G(3) of Form 10-K, which permits such information to be incorporated by reference in the Form 10-K from our definitive proxy statement if such proxy statement is filed no later than 120 days after the end of our fiscal year. We are filing this Amendment No. 1 to include the information required by Part III of the Original Filing because we no longer intend to file our definitive proxy statement within 120 days after the end of our fiscal year.

In addition, this Amendment No. 1 is being filed to include the auditor tenure statement in the audit reports contained in Part II, Item 8, which was inadvertently omitted in the Original Filing.

In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Item 8 of Part II and Items 10 through 14 of Part III of the Original Filing have been amended and restated in their entirety, and Item 15 of Part IV of the Original Filing has also been amended and restated in its entirety to include new certifications by our principal executive officer and principal financial officer and a new consent from Plante & Moran, PLLC. This Amendment No. 1 does not amend or otherwise update any other information in the Original Filing. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Filing and with our other filings with the SEC subsequent to the Original Filing.

ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

FORM 10-K/A

TABLE OF CONTENTS 

PART II.	2
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	2
PART III	25
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	25
ITEM 11. EXECUTIVE COMPENSATION	28
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	32
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	33
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES	34
PART IV	35
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES	35

1

PART II.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

	Page
Reports of Independent Registered Public Accounting Firms	3-4
Consolidated Statements of Income	5
Consolidated Balance Sheets	6
Consolidated Statements of Changes in Stockholders’ Equity	7
Consolidated Statements of Cash Flows	8
Notes to Consolidated Financial Statements	9

2

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of Rocky Mountain Chocolate Factory, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Rocky Mountain Chocolate Factory, Inc. (the “Company”) as of February 28, 2019, the related consolidated statement of income, stockholders' equity, and cash flows for the year ended February 28, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 28, 2019 and the results of its operations and its cash flows for the year ended February 28, 2019, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the financial statements, the Company adopted Accounting Standards Codification (ASC) Topic 606, “Revenue from Contracts with Customers,” using the modified retrospective adoption method on March 1, 2018.

Basis for Opinion

The Company's management is responsible for these financial statements. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Change in Accounting Principle

As discussed in Note 1 and 17 to the financial statements, the Company adopted ASC Topic 606, Revenue from Contracts with Customers, using the modified retrospective adoption method on March 1, 2018.

We have audited the impact on the 2018 financial statements as disclosed under the modified retrospective method as a result of the adoption of ASC Topic 606, “Revenue from Contracts with Customers”, as described in Note 1 and 17 to the financial statements. In our opinion, the impacts are appropriate and have been properly disclosed. We were not engaged to audit, review, or apply any procedures to the 2018 financial statements of the Company other than with respect to the impacts disclosed and, accordingly, we do not express an opinion or any other form of assurance on the 2018 financial statements taken as a whole.

/s/ Plante & Moran, PLLC

We have served as the Company’s auditor since 2004. 

Denver, Colorado

May 29, 2019 

3

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of Rocky Mountain Chocolate Factory, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheet of Rocky Mountain Chocolate Factory, Inc. (the “Company”) as of February 28, 2018, the related statements of income, stockholders' equity, and cash flows for each of the years in the two-year period ended February 28, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 28, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the two-year period ended February 28, 2018, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The Company's management is responsible for these financial statements. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ EKS&H LLLP

Denver, Colorado

May 15, 2018   

We have served as the Company’s auditor since 2004. 

4

ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	FOR THE YEARS ENDED FEBRUARY 28,
	2019			2018			2017
Revenues
Sales	$	27,563,794		$	30,167,760		$	29,876,507
Franchise and royalty fees		6,981,653			7,906,935			8,419,870
Total Revenue		34,545,447			38,074,695			38,296,377
Costs and Expenses
Cost of sales		20,599,551			21,176,711			20,735,739
Franchise costs		1,980,781			2,097,555			2,067,530
Sales and marketing		2,210,800			2,489,483			2,658,421
General and administrative		3,432,618			3,904,560			4,005,142
Retail operating		1,934,891			2,389,296			2,404,003
Depreciation and amortization, exclusive of depreciation and amortization expense of $555,926, $523,034, and $447,651, respectively, included in cost of sales		1,153,873			796,221			841,058
Costs associated with Company-owned store closures		226,981			-			60,000
Total costs and expenses		31,539,495			32,853,826			32,771,893
Income from Operations		3,005,952			5,220,869			5,524,484
Other Income (Expense)
Interest expense		(70,787	)		(121,244	)		(170,351	)
Interest income		20,496			24,578			41,572
Other expense, net		(50,291	)		(96,666	)		(128,779	)
Income Before Income Taxes		2,955,661			5,124,203			5,395,705
Income Tax Provision		716,862			2,160,295			1,945,589
Consolidated Net Income	$	2,238,799		$	2,963,908		$	3,450,116
Basic Earnings per Common Share	$	0.38		$	0.50		$	0.59
Diluted Earnings per Common Share	$	0.37		$	0.50		$	0.58
Weighted Average Common Shares Outstanding - Basic		5,931,431			5,884,337			5,843,245
Dilutive Effect of Employee Stock Awards		51,207			96,099			150,447
Weighted Average Common Shares Outstanding - Diluted		5,982,638			5,980,436			5,993,692

The accompanying notes are an integral part of these consolidated financial statements.

5

ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	AS OF FEBRUARY 28,
	2019		2018
Assets
Current Assets
Cash and cash equivalents	$	5,384,027	$	6,072,984
Accounts receivable, less allowance for doubtful accounts of $489,502 and $479,472, respectively		3,993,262		3,897,334
Notes receivable, current portion, less current portion of the valuation allowance of $0 and $9,000, respectively		110,162		105,540
Refundable income taxes		190,201		342,863
Inventories, less reserve for slow moving inventory of $371,147 and $357,706, respectively		4,270,357		4,842,474
Other		318,126		310,173
Total current assets		14,266,135		15,571,368
Property and Equipment, Net		5,786,139		6,166,240
Other Assets
Notes receivable, less current portion and valuation allowance of $0 and $17,500, respectively		281,669		235,983
Goodwill, net		1,046,944		1,046,944
Franchise rights, net		3,678,920		4,433,927
Intangible assets, net		498,337		587,377
Deferred income taxes		607,421		835,463
Other		56,576		63,333
Total other assets		6,169,867		7,203,027
Total Assets	$	26,222,141	$	28,940,635
Liabilities and Stockholders' Equity
Current Liabilities
Current maturities of long term debt	$	1,176,488	$	1,352,893
Accounts payable		897,074		1,647,991
Accrued salaries and wages		655,853		644,005
Gift card liabilities		742,289		3,057,131
Other accrued expenses		293,094		325,034
Dividend payable		714,939		708,652
Contract liabilities		256,094		471,910
Total current liabilities		4,735,831		8,207,616
Long-Term Debt, Less Current Maturities		-		1,176,416
Contract Liabilities, Less Current Portion		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, 5,957,827 shares and 5,903,436 shares issued and outstanding, respectively		5,958		5,903
Additional paid-in capital		6,650,864		6,131,147
Retained earnings		13,733,010		13,419,553
Total stockholders' equity		20,389,832		19,556,603
Total Liabilities and Stockholders' Equity	$	26,222,141	$	28,940,635

The accompanying notes are an integral part of these consolidated financial statements.

6

ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	FOR THE YEARS ENDED FEBRUARY 28,
	2019			2018			2017
Common Stock
Balance at beginning of year	$	5,903		$	5,854		$	5,839
Repurchase and retirement of common stock		-			-			(35	)
Issuance of common stock		6			5			2
Exercise of stock options, vesting of restricted stock units and other		49			44			48
Balance at end of year		5,958			5,903			5,854
Additional Paid-In Capital
Balance at beginning of year		6,131,147			5,539,357			5,340,190
Repurchase and retirement of common stock		-			-			(351,548	)
Issuance of common stock		55,971			59,095			20,418
Exercise of stock options, vesting of restricted stock units and other		463,746			532,695			564,425
Tax (expense) benefit from employee stock transactions		-			-			(34,128	)
Balance at end of year		6,650,864			6,131,147			5,539,357
Retained Earnings
Balance at beginning of year		13,419,553			13,283,646			13,132,879
Net income attributable to RMCF stockholders		2,238,799			2,963,908			3,450,116
Cash dividends declared		(2,851,271	)		(2,828,001	)		(2,806,583	)
Correction of immaterial error1		-			-			(492,766	)
Adoption of ASC 6062		925,929			-			-
Balance at end of year		13,733,010			13,419,553			13,283,646
Total Stockholders' Equity		20,389,832			19,556,603			18,828,857
Common Shares
Balance at beginning of year		5,903,436			5,854,372			5,839,396
Repurchase and retirement of common stock		-			-			(35,108	)
Issuance of common stock		5,333			5,000			2,000
Exercise of stock options, vesting of restricted stock units and other		49,058			44,064			48,084
Balance at end of year		5,957,827			5,903,436			5,854,372

¹ As revised. Refer to Note 16 for information on immaterial correction of errors in prior period.

² Refer to Note 17 for information on the adoption of ASC 606.

The accompanying notes are an integral part of these consolidated financial statements.

7

ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	FOR THE YEARS ENDED FEBRUARY 28,
	2019			2018			2017
Cash Flows From Operating Activities
Net Income	$	2,238,799		$	2,963,908		$	3,450,116
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,709,799			1,319,255			1,288,709
Provision for obsolete inventory		325,478			166,868			138,125
Provision for loss on accounts and notes receivable		155,600			225,858			100,049
Asset impairment and store closure losses		67,822			-			-
Loss on sale or disposal of property and equipment		36,024			38,496			37,112
Expense recorded for stock compensation		519,772			591,839			584,893
Deferred income taxes		(78,934	)		23,411			262,248
Changes in operating assets and liabilities:
Accounts receivable		(390,663	)		(229,948	)		(128,404	)
Refundable income taxes		157,544			(295,000	)		(47,863	)
Inventories		41,310			(365,323	)		(2,735	)
Other current assets		(8,225	)		(54,091	)		29,442
Accounts payable		(545,588	)		96,491			(87,657	)
Accrued liabilities		(84,191	)		242,578			(293,402	)
Contract Liabilities		(129,527	)		33,270			(9,619	)
Net cash provided by operating activities		4,015,020			4,757,612			5,321,014
Cash Flows from Investing Activities
Addition to notes receivable		-			(14,293	)		(133,202	)
Proceeds received on notes receivable		102,256			230,637			318,219
Purchase of intangible assets		-			(8,508	)		(312,947	)
Proceeds from (cost of) sale or distribution of assets		13,498			(7,926	)		39,045
Purchases of property and equipment		(613,786	)		(544,956	)		(1,238,472	)
(Increase) decrease in other assets		(8,140	)		5,529			34,479
Net cash used in investing activities		(506,172	)		(339,517	)		(1,292,878	)
Cash Flows from Financing Activities
Payments on long-term debt		(1,352,821	)		(1,302,432	)		(1,253,392	)
Repurchase of common stock		-			-			(351,583	)
Tax expense of stock option exercise		-			-			(34,128	)
Dividends paid		(2,844,984	)		(2,821,874	)		(2,804,786	)
Net cash used in financing activities		(4,197,805	)		(4,124,306	)		(4,443,889	)
Net Decrease in Cash and Cash Equivalents		(688,957	)		293,789			(415,753	)
Cash and Cash Equivalents, Beginning of Period		6,072,984			5,779,195			6,194,948
Cash and Cash Equivalents, End of Period	$	5,384,027		$	6,072,984		$	5,779,195

The accompanying notes are an integral part of these consolidated financial statements.

8

ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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”), and U-Swirl International, Inc. (“U-Swirl”), and its 46%-owned subsidiary, U-Swirl, Inc. (“SWRL”) (collectively, the “Company”).

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 self-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.

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: 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; 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 its subsidiaries at February 28, 2019:

	Sold, Not Yet Open		Open		Total
Rocky Mountain Chocolate Factory
Company-owned stores		-		2		2
Franchise stores - Domestic stores and kiosks		4		183		187
International license stores		1		64		65
Cold Stone Creamery - co-branded		11		91		102
U-Swirl (Including all associated brands)
Company-owned stores		-		1		1
Company-owned stores - co-branded		-		3		3
Franchise stores - Domestic stores		-		87		87
Franchise stores - Domestic - co-branded		-		9		9
International license stores		-		2		2
Total		16		442		458

Consolidation

Management accounts for the activities of the Company and its subsidiaries, and the accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. As described above, on January 14, 2013, the Company acquired a controlling interest in SWRL. Prior to January 14, 2013, the Company’s consolidated financial statements excluded the financial information of SWRL. Beginning on January 14, 2013, the results of operations, assets and liabilities of SWRL have been included in these consolidated financial statements. 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 a loan and security agreement with SWRL to cover the purchase price and other costs associated with the acquisitions (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 U-Swirl, Inc. as of February 29, 2016. As of February 29, 2016, U-Swirl, Inc. had no assets. All intercompany balances and transactions have been eliminated in consolidation.

Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of six months or less to be cash equivalents. The Company continually monitors its positions with, and the credit quality of, the financial institutions with which it invests. As of the balance sheet date, and periodically throughout the year, the Company has maintained balances in various operating accounts in excess of federally insured limits. This amount was approximately $4.9 million at February 28, 2019.

9

ROCKY MOUNTAIN CHOCOLATE FACTORY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts and Notes Receivable

In the normal course of business, the Company extends credit to customers, primarily franchisees that satisfy pre-defined credit criteria. The Company believes that it has limited concentration of credit risk primarily because its receivables are secured by the assets of the franchisees to which the Company ordinarily extends credit, including, but not limited to, their franchise rights and inventories. An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable, assessments of collectability based on historical trends, and an evaluation of the impact of current and projected economic conditions. The process by which the Company performs its analysis is conducted on a customer by customer, or franchisee by franchisee, basis and takes into account, among other relevant factors, sales history, outstanding receivables, customer financial strength, as well as customer specific and geographic market factors relevant to projected performance. The Company monitors the collectability of its accounts receivable on an ongoing basis by assessing the credit worthiness of its customers and evaluating the impact of reasonably likely changes in economic conditions that may impact credit risks. Estimates with regard to the collectability of accounts receivable are reasonably likely to change in the future. At February 28, 2019, the Company had $391,831 of notes receivable outstanding and an allowance for doubtful accounts of $0 associated with these notes. The notes require monthly payments and bear interest rates ranging from 4.5% to 6%. The notes mature through November 2023 and approximately $375,000 of notes receivable are secured by the assets financed.

Inventories

Inventories are stated at the lower of cost or net realizable value. An inventory reserve is established to reduce the cost of obsolete, damaged and excess inventories to the lower of cost or net realizable value based on actual differences. This inventory reserve is determined through analysis of items held in inventory, and, if the recorded value is higher than the market value, the Company records an expense to reduce inventory to its actual market value. The process by which the Company performs its analysis is conducted on an item by item basis and takes into account, among other relevant factors, market value, sales history and future sales potential. Cost is determined using the first-in, first-out method.

Property and Equipment and Other Assets

Property and equipment are recorded at cost. Depreciation and amortization are computed using the straight-line method based upon the estimated useful life of the asset, which range from five to thirty-nine years. Leasehold improvements are amortized on the straight-line method over the lives of the respective leases or the service lives of the improvements, whichever is shorter.

The Company reviews its long-lived assets through analysis of estimated fair value, including identifiable intangible assets, whenever events or changes indicate the carrying amount of such assets may not be recoverable. The Company’s policy is to review the recoverability of all assets, at a minimum, on an annual basis.

Income Taxes

The Company provides for income taxes pursuant to the liability method. The liability method requires recognition of deferred income taxes based on temporary differences between financial reporting and income tax bases of assets and liabilities, using current enacted income tax rates and regulations. These differences will result in taxable income or deductions in future years when the reported amount of the asset or liability is recovered or settled, respectively. Considerable judgment is required in determining when these events may occur and whether recovery of an asset, including the utilization of a net operating loss or other carryforward prior to its expiration, is more likely than not. Due to historical U-Swirl losses, prior to FY 2016 the Company established a full valuation allowance on the Company’s deferred tax assets. During FY 2016 the Company took possession of the outstanding equity in U-Swirl. As a result of the Company’s ownership increasing to 100%, the Company began filing consolidated income tax returns in FY 2017. Because of this change, the Company has recognized the full value of deferred tax assets that had full valuation allowances prior to FY 2016. During the fourth quarter of FY 2017 the Company further evaluated the value of deferred tax assets and determined that the assets are restricted due to a limitation on the deductibility of future losses in accordance with Section 382 of the Internal Revenue Code as a result of the foreclosure transaction. The correction of this immaterial error to the Company’s balance sheet is further described in Note 16. The Company's temporary differences are listed in Note 6.

Gift Card Breakage

The Company and its franchisees sell gift cards that are redeemable for product in stores. The Company manages the gift card program, and therefore collects all funds from the activation of gift cards and reimburses franchisees for the redemption of gift cards in their stores. A liability for unredeemed gift cards is included in accounts payable and accrued liabilities in the balance sheets.

There are no expiration dates on the Company’s gift cards, and the Company does not charge any service fees. While the Company’s franchisees continue to honor all gift cards presented for payment, the Company may determine the likelihood of redemption to be remote for certain cards due to long periods of inactivity. The Company has historically accumulated gift card liabilities and has not recognized breakage associated with the gift card liability. The adoption of ASU 2014-09, “REVENUE FROM CONTRACTS WITH CUSTOMERS” (“ASC 606”) during FY 2019 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. Accrued gift card liability was $742,289 and $3,057,131 at February 28, 2019 and 2018, respectively. The Company recognized breakage of $139,188 and $0 during FY 2019 and FY 2018, respectively. See Note 17 to the financial statements for a complete description of the adjustments recorded upon the adoption of ASC 606.

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Goodwill

Goodwill arose from three transaction types. The first type was the result of the incorporation of the Company after its inception as a partnership. The goodwill recorded was the excess of the purchase price of the Company over the fair value of its assets. The Company has allocated this goodwill equally between its Franchising and Manufacturing operations. The second type was the purchase of various retail stores, either individually or as a group, for which the purchase price was in excess of the fair value of the assets acquired. Finally, goodwill arose from business acquisitions, where the fair value of the consideration given for acquisition exceeded the fair value of the identified assets net of liabilities.

The Company performs a goodwill impairment test on an annual basis or more frequently when events or circumstances indicate that the carrying value of a reporting unit more likely than not exceeds its fair value. Recoverability of goodwill is evaluated through comparison of the fair value of each of the Company’s reporting units with its carrying value. To the extent that a reporting unit’s carrying value exceeds the implied fair value of its goodwill, an impairment loss is recognized. On February 29, 2016 RMCF repossessed all stock in U-Swirl International, Inc. pledged as collateral on the SWRL Loan Agreement. This was the result of SWRL’s inability to repay the SWRL Loan Agreement and inability to cure defaults of financial covenants. As of February 29, 2016, U-Swirl had $1,930,529 of goodwill recorded as a result of past business acquisitions. In the fourth quarter of FY 2016, RMCF performed a test of impairment as a result of the change in ownership and the result of the Company’s test indicated a full impairment of the U-Swirl goodwill. The Company’s testing and impairment is described in Note 13 to the financial statements.

Franchise Rights

Franchise rights arose from the entry into agreements to acquire substantially all of the franchise rights of Yogurtini, CherryBerry, Fuzzy Peach, Let’s Yo! and Yogli Mogli. Franchise rights are amortized over a period of 20 years.

Insurance and Self-Insurance Reserves

The Company uses a combination of insurance and self-insurance plans to provide for the potential liabilities for workers’ compensation, general liability, property insurance, director and officers’ liability insurance, vehicle liability and employee health care benefits. Liabilities associated with the risks that are retained by the Company are estimated, in part, by considering historical claims experience, demographic factors, severity factors and other assumptions. While the Company believes that its assumptions are appropriate, the estimated accruals for these liabilities could be significantly affected if future occurrences and claims differ from these assumptions and historical trends.

Sales

Sales of products to franchisees and other customers are recognized at the time of delivery. Sales of products to franchisees and other customers are made at standard prices, without any bargain sales of equipment or supplies. Sales of products at retail stores are recognized at the time of sale.

Rebates

Rebates received from purveyors that supply products to the Company’s franchisees are included in franchise royalties and fees. Product rebates are recognized in the period in which they are earned. Rebates related to Company-owned locations are offset against operating costs.

Shipping Fees

Shipping fees charged to customers by the Company’s trucking department are reported as sales. Shipping costs incurred by the Company for inventory are reported as cost of sales or inventory.

Franchise and Royalty Fees

Beginning in FY 2019, upon adoption of adoption of ASC 606, the Company began recognizing franchise fees over the term of the associated franchise agreement, which is generally a period of 10 to 15 years. Prior to FY 2019, franchise fee revenue was recognized upon opening of the franchise store. In addition to the initial franchise fee, the Company also recognizes a marketing and promotion fee of one percent (1%) of franchised stores’ gross retail sales and a royalty fee based on gross retail sales. The Company recognizes no royalty on franchised stores’ retail sales of products purchased from the Company and recognizes a ten percent (10%) royalty on all other sales of product sold at franchise locations. Royalty fees for U-Swirl cafés are based on the rate defined in the acquired contracts for the franchise rights and range from 2.5% to 6% of gross retail sales.

In certain instances, the Company is required to pay a portion of franchise fee revenue, or royalty fees to parties the Company has contracted with to assist in developing and growing a brand. The agreements generally include Development Agents, or commissioned brokers who are paid a portion of the initial franchise fee, a portion of the ongoing royalty fees, or both. When such agreements exist, the Company reports franchise fee and royalty fee revenues net of the amount paid, or due, to the agent/broker.

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Use of Estimates

In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities, at the date of the consolidated financial statements, and revenues and expenses during the reporting period. Actual results could differ from those estimates.

Vulnerability Due to Certain Concentrations

Revenue from one customer of our manufacturing segment represented approximately $3.1 million or 9% of our total revenues during the year ended February 28, 2019 compared to revenue of approximately $5.1 million or 13% of our total revenues during the year ended February 28, 2018. Our future results may be adversely impacted by further decreases in the purchases of this customer or the loss of this customer entirely.

Stock-Based Compensation

At February 28, 2019, the Company had one stock-based compensation plan, the Company’s 2007 Equity Incentive Plan, for employees and non-employee directors which authorized the granting of stock awards.

The Company recognized $519,772, $591,839, and $584,893 related to equity-based compensation expense during the years ended February 28, 2019, 2018 and 2017, respectively. Compensation costs related to share-based compensation are generally recognized over the vesting period.

Beginning March 1, 2017, the Company adopted ASU No. 2019-09, which requires recognition of excess tax benefits and tax deficiencies in the income statement. Prior to March 1, 2017 tax benefits or expense resulting from the difference in the compensation cost recognized for stock options are reported as financing cash flows in the accompanying Statements of Cash Flows. The excess tax expense included in net cash provided by financing activities for the years ended February 28, 2017 was $34,128.

During FY 2019 and 2018, the Company granted no restricted stock units. There were no stock options granted to employees during FY 2019 or FY 2018. The restricted stock unit grants generally vest 17 to 20% annually over a period of five to six years. The Company recognized $463,795 of consolidated stock-based compensation expense related to grants made in prior years during FY 2019 compared with $532,739 in FY 2018 and $564,473 in FY 2017. Total unrecognized stock-based compensation expense of non-vested, non-forfeited shares granted, as of February 28, 2019 was $114,183, which is expected to be recognized over the weighted average period of 0.4 years.

The Company issued 2,000 fully vested, unrestricted shares of stock to non-employee directors during the year ended February 28, 2019 compared to no shares issued during the year ended February 28, 2018 and 2,000 issued during the year ended February 28, 2017. In connection with these non-employee director stock issuances, the Company recognized $24,480, $0 and $20,420 of stock-based compensation expense during year ended February 28, 2019, 2018 and 2017, respectively.

During the year ended February 28, 2018, the Company issued 5,000 shares of common stock under the Company’s equity incentive plan to an independent contractor providing information technology consulting services to the Company. These shares were issued as a part of the compensation for services rendered to the Company by the contractor. Associated with this unrestricted stock award, the Company recognized $59,100 in stock-based compensation expense during the year ended February 28, 2018. During the year ended February 28, 2019, the Company issued 3,333 shares of common stock under the Company’s equity incentive plan to the former Vice President of Creative Services. These shares were issued in consideration of services rendered prior to retirement and based on the number of unvested restricted stock units that were forfeited upon retirement. Associated with this unrestricted stock award, the Company recognized $31,497 in stock-based compensation expense during the year ended February 28, 2019.

Earnings Per Share

Basic earnings per share is computed as net earnings divided by the weighted average number of common shares outstanding during each year. Diluted earnings per share reflects the potential dilution that could occur from common shares issuable through stock options and restricted stock units. Following the expiration of all outstanding options, during FY 2017, no stock options were excluded from diluted shares.

Advertising and Promotional Expenses

The Company expenses advertising costs as incurred. Total advertising expense for RMCF amounted to $275,441, $355,678, and $279,698 for the fiscal years ended February 28, 2019, 2018 and 2017, respectively. Total advertising expense for U-Swirl and its brands amounted to $168,000, $222,093, and $335,771 for the fiscal years ended February 28, 2019, 2018 and 2017, respectively.

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Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, trade receivables, payables, notes payable and notes receivable. The fair value of all instruments approximates the carrying value, because of the relatively short maturity of these instruments.

Recent Accounting Pronouncements

In August 2018, the Securities and Exchange Commission (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 will present the analysis of changes in stockholders’ equity in its interim financial statements in its May 31, 2019 Quarterly Report on Form 10-Q. The Company does not anticipate that the adoption of these SEC amendments will 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. These amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company will adopt this guidance effective with the three month period ending May 31, 2019 (the first quarter of Fiscal Year 2020). The Company can elect to record a cumulative-effect adjustment as of the beginning of the year of adoption or apply a modified retrospective transition approach. The Company expects that substantially all of its operating lease commitments will be subject to the new guidance and will be recognized as operating lease liabilities and right-of-use assets upon adoption. The Company anticipates ASU 2016-02 will have a material impact on the consolidated balance sheet. The impact of ASU 2016-02 is non-cash in nature, as such, it will not affect the Company’s cash flows. The cumulative adjustment to be recorded as right-of-use assets and operating lease liabilities, upon adoption, is expected to be in the range of $3,500,000 to $3,900,000.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASC 606”). This guidance, as amended by subsequent ASUs on the topic, supersedes current guidance on revenue recognition in ASC 605 “Revenue Recognition.” 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 our franchisees and others, or in 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 did 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 changed the timing in which the Company recognizes initial fees from franchisees and licensees for new franchise locations and renewals that impact the term of the franchise agreement. The Company's policy for recognizing initial franchise and renewal fees through February 28, 2018, was to recognize initial franchise fees upon new store opening 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 to 15 years.

The Company adopted ASC 606 as of March 1, 2018, 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. See Note 17 to these financial statements for additional details regarding the adjustments recorded upon adoption of this standard.

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NOTE 2 - INVENTORIES

Inventories consist of the following at February 28:

	2019			2018
Ingredients and supplies	$	2,612,954		$	2,764,727
Finished candy		1,983,854			2,371,610
U-Swirl food and packaging		44,696			63,843
Reserve for slow moving inventory		(371,147	)		(357,706	)
Total inventories	$	4,270,357		$	4,842,474

NOTE 3 - PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following at February 28:

	2019			2018
Land	$	513,618		$	513,618
Building		5,031,395			4,905,103
Machinery and equipment		10,263,119			10,686,631
Furniture and fixtures		864,944			1,067,788
Leasehold improvements		1,131,659			1,568,260
Transportation equipment		422,458			434,091
Asset impairment		(30,000	)		(62,891	)
		18,197,193			19,112,600
Less accumulated depreciation		(12,411,054	)		(12,946,360	)
Property and equipment, net	$	5,786,139		$	6,166,240

NOTE 4 - LINE OF CREDIT AND LONG-TERM DEBT

Line of Credit

At February 28, 2019, the Company had a $5.0 million working capital line of credit from Wells Fargo Bank, N.A., collateralized by substantially all of the Company’s assets with the exception of the Company’s retail store assets. Draws may be made under the line at 50% of eligible accounts receivable plus 50% of eligible inventories. Interest on borrowings is at LIBOR plus 2.25% (4.7% at February 28, 2019). At February 28, 2019, $5.0 million was available for borrowings under the line of credit, subject to borrowing base limitations. Additionally, the line of credit is subject to various financial ratio and leverage covenants. At February 28, 2019, the Company was in compliance with all such covenants. The credit line is subject to renewal in September 2019 and the Company believes it is likely to be renewed on terms similar to current terms. At February 28, 2019 and 2018 there was no amount outstanding under this line of credit.

Effective January 16, 2014, the Company entered into a business loan agreement with Wells Fargo Bank, N.A. (the “Wells Fargo Loan Agreement”) for a $7.0 million long-term line of credit to be used to loan money to SWRL to fund the purchase price of business acquisitions by SWRL (the “Wells Fargo Loan”). The Company made its first draw of approximately $6.4 million on the Wells Fargo Loan on January 16, 2014 and the first draw was the amount outstanding at February 28, 2014. Interest on the Wells Fargo Loan is at a fixed rate of 3.75% and the maturity date is January 15, 2020. The Wells Fargo Loan may be prepaid without penalty at any time by the Company. The Wells Fargo Loan is collateralized by substantially all of the Company’s assets. Additionally, the Wells Fargo Loan is subject to various financial ratio and leverage covenants. As of February 28, 2019, the Company was in compliance with all such covenants. The Wells Fargo Loan Agreement also contains customary representations and warranties, covenants and acceleration provisions in the event of a default by the Company.

Long-term debt consists of the following at February 28:

	2019		2018
Note payable in monthly installments of principal and interest at 3.75% per annum through December 2019 collateralized by sustantially all business assets	$	1,176,488	$	2,529,309
Less current maturities		1,176,488		1,352,893
Long-term obligations	$	-	$	1,176,416

NOTE 5 – COMMITMENTS AND CONTINGENCIES

Operating Leases

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.

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The following is a schedule by year of future minimum rental payments required under such leases for the years ending February 28 or 29:

2020	$	318,000
2021		259,000
2022		249,000
2023		243,000
2024		249,000
Thereafter		175,000
Total	$	1,493,000

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. The Company’s current policy is not to act as primary lessee on any further franchised locations, except in rare instances. At February 28, 2019, the Company was the primary lessee at four of the Company’s 313 domestic franchised stores.

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's liability as primary lessee on sublet franchise outlets, all of which is fully offset by sublease rentals, is as follows for the years ending February 28 or 29:

2020	$	92,000
2021		75,000
2022		21,000
Total	$	188,000

The following is a schedule of lease expense for all retail operating leases for the three years ended February 28:

	2019			2018			2017
Minimum rentals	$	1,030,536		$	1,270,240		$	944,938
Less sublease rentals		(572,000	)		(603,000	)		(318,000	)
Contingent rentals		22,800			26,100			25,200
	$	481,336		$	693,340		$	652,138

In FY 2019, the Company renewed an operating lease for warehouse space in the immediate vicinity of its manufacturing operation. The following is a schedule, by year, of future minimum rental payments required under such lease for the years ending February 28 or 29:

2020	$	116,000
2021		121,000
2022		125,000
2023		129,000
2024		33,000
Total	$	524,000

The Company also leases trucking equipment under operating leases. The following is a schedule by year of future minimum rental payments required under such leases for the years ending February 28 or 29:

2020	$	323,000
2021		323,000
2022		257,000
2023		29,000
Total	$	932,000

The following is a schedule of lease expense for trucking equipment operating leases for the three years ended February 28:

2019		2018		2017
	325,229		225,992		220,791

Purchase contracts

The Company frequently enters into purchase contracts of between six to eighteen months for chocolate and certain nuts. These contracts permit the Company to purchase the specified commodity at a fixed price on an as-needed basis during the term of the contract. Because prices for these products may fluctuate, the Company may benefit if prices rise during the terms of these contracts, but it may be required to pay above-market prices if prices fall and it is unable to renegotiate the terms of the contract. As of February 28, 2019, the Company was contracted for approximately $880,000 of raw materials under such agreements.

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NOTE 6 - INCOME TAXES

Income tax expense (benefit) is comprised of the following for the years ended February 28:

	2019			2018			2017
Current
Federal	$	653,226		$	1,916,720		$	1,411,127
State		142,570			220,164			272,214
Total Current		795,796			2,136,884			1,683,341
Deferred
Federal		(67,410	)		55,658			240,233
State		(11,524	)		(32,247	)		22,015
Total Deferred		(78,934	)		23,411			262,248
Total	$	716,862		$	2,160,295		$	1,945,589

A reconciliation of the statutory federal income tax rate and the effective rate as a percentage of pretax income is as follows for the years ended February 28 or 29:

	2019			2018			2017
Statutory rate		21.0	%		31.9	%		34.0	%
State income taxes, net of federal benefit		3.4	%		2.4	%		3.6	%
Domestic production deduction		0.0	%		(0.9	)%		(1.1	)%
Work opportunity tax credits		(0.7	)%		(0.2	)%		(0.4	)%
Other		0.5	%		0.8	%		0.0	%
Impact of tax reform		0.0	%		8.2	%		0.0	%
Effective rate - provision (benefit)		24.2	%		42.2	%		36.1	%

The components of deferred income taxes at February 28 are as follows:

	2019			2018
Deferred Tax Assets
Allowance for doubtful accounts and notes	$	120,368		$	124,469
Inventories		91,265			86,938
Accrued compensation		87,930			130,049
Loss provisions and deferred income		492,468			817,945
Self-insurance accrual		34,426			38,868
Amortization		217,481			520,379
Restructuring charges		98,693			98,728
U-Swirl accumulated net loss		325,253			258,173
Valuation allowance		(98,693	)		(98,728	)
Net deferred tax assets	$	1,369,191		$	1,976,821
Deferred Tax Liabilities
Depreciation and amortization		(682,542	)		(1,066,113	)
Prepaid expenses		(79,228	)		(75,245	)
Deferred Tax Liabilities		(761,770	)		(1,141,358	)
Net deferred tax assets	$	607,421		$	835,463

The following table summarizes deferred income tax valuation allowances as of February 28:

	2019			2018
Valuation allowance at beginning of period	$	98,728		$	148,494
Tax expense (benefits) realized by valuation allowance		(35	)		-
Tax benefits released from valuation allowance		-			-
Impact of tax reform		-			(49,766	)
Valuation allowance at end of period	$	98,693		$	98,728

Income tax expense and the effective income tax rate for the year ended February 28, 2019 decreased from the year ended February 28, 2018, primarily as a result of the revaluation of deferred tax assets and liabilities to the lower enacted U.S. corporate tax rate of 21% under the Tax Cuts and Jobs Act recognized during the year ended February 28, 2018 and the lower enacted U.S. corporate tax rate of 21% under the Tax Cuts and Jobs Act effective for the year ended February 28, 2019. The revaluation of deferred tax assets and liabilities resulted in income tax expense of approximately $421,000 recognized in consideration of the lower enacted rate for the year ended February 28, 2018.

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The Company files income tax returns in the U.S. federal and various state taxing jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal and state tax examinations in its major tax jurisdictions for periods before FY 2013. The Company’s federal income tax returns have been examined for the years ended February 28, 2015 and 2014 and the examination did not result in any changes to the income tax returns filed for these years. The Company’s federal income tax returns are being examined for the years ended February 28 or 29, 2017 and 2016.

Realization of the Company's deferred tax assets is dependent upon the Company generating sufficient taxable income, in the appropriate tax jurisdictions, in future years to obtain benefit from the reversal of net deductible temporary differences. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed. Management believes that, with the exception of the deferred tax asset related to restructuring charges, it is more likely than not that RMCF will realize the benefits of its deferred tax assets as of February 28, 2019.

The Company accounts for uncertainty in income taxes by recognizing the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized in the consolidated financial statements from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The application of income tax law is inherently complex. As such, the Company is required to make judgments regarding income tax exposures. Interpretations of and guidance surrounding income tax law and regulations change over time and may result in changes to the Company's judgments which can materially affect amounts recognized in the balance sheets and statements of operations. The result of the assessment of the Company's tax positions did not have an impact on the consolidated financial statements for the years ended February 28, 2019 or 2018. The Company does not have any significant unrecognized tax benefits and does not anticipate a significant increase or decrease in unrecognized tax benefits within the next twelve months. Amounts are recognized for income tax related interest and penalties as a component of general and administrative expense in the statement of income and are immaterial for years ended February 28, 2019 and 2018.

As of February 29, 2016, the Company foreclosed on the outstanding equity of U-Swirl and U-Swirl was consolidated for income tax purposes. SWRL, along with U-Swirl has historically filed its own consolidated federal income tax return and reported its own Federal net operating loss carry forward. As of February 28, 2015, SWRL had recorded a full valuation allowance related to the realization of its deferred income tax assets. As of February 29, 2016, a portion of the U-Swirl deferred tax assets were recognized as a result of it becoming more likely than not that some of these assets would be realized in the future as a result of RMCF and U-Swirl filing a consolidated income tax return.

In accordance with Section 382 of the Internal Revenue Code, deductibility of SWRL’s and U-Swirl’s Federal net operating loss carryovers may be subject to annual limitation in the event of a change in control. The Company has performed a preliminary evaluation as to whether a change in control has taken place, and have concluded that there was a change of control with respect to the net operating losses of U-Swirl when the Company acquired its controlling ownership interest in January 2013 and again in February 2016 when the Company foreclosed on the stock of U-Swirl. The initial limitations will continue to limit deductibility of SWRL’s and U-Swirl’s net operating loss carryovers, but the annual loss limitation will be deductible to RMCF and U-Swirl International Inc. upon the filing of joint tax returns in FY 2017 and future years.

The Company estimates that the potential future tax deductions of U-Swirl’s Federal net operating losses, limited by section 382, to be approximately $1,323,000 with a resulting deferred tax asset of approximately $325,000. U-Swirl’s Federal net operating loss carryovers will expire at various dates beginning in 2026.

NOTE 7 – 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.

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. During FY 2017, the Company repurchased 35,108 shares under the repurchase plan at an average price of $10.01 per share. The Company did not repurchase any shares during the years ended February 28, 2019 or 2018. As of February 28, 2019, approximately $638,000 remains available under the repurchase plan for further stock repurchases.

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NOTE 8 - STOCK COMPENSATION PLANS

In FY 2014, stockholders approved an amendment and restatement of the 2007 Equity Incentive Plan (as amended and restated, the “2007 Plan”). The 2007 Plan allows awards of stock options, stock appreciation rights, stock awards, restricted stock and stock units, performance shares and performance units, and other stock- or cash-based awards.

The following table summarizes stock awards under the 2007 Plan as of February 28, 2019:

Original share authorization:	300,000
Prior plan shares authorized and incorporated in the 2007 Plan:	85,340
Additional shares authorized through 2007 Plan amendment:	300,000
Available for award:	685,340
Cancelled/forfeited:	199,859
Shares awarded as unrestricted shares, stock options or restricted stock units:	(557,409	)
Shares available for award:	327,790

Information with respect to stock option awards outstanding under the 2007 Plan at February 28, 2019, and changes for the three years then ended was as follows:

	Twelve Months Ended
	February 28:
	2019		2018		2017
Outstanding stock options at beginning of year:		-		-		12,936
Granted		-		-		-
Exercised		-		-		-
Cancelled/forfeited		-		-		(12,936	)
Outstanding stock options as of February 28:		-		-		-
Weighted average exercise price		n/a		n/a		n/a
Weighted average remaining contractual term (in years)		n/a		n/a		n/a

Information with respect to restricted stock unit awards outstanding under the 2007 Plan at February 28, 2019, and changes for the three years then ended was as follows:

	Twelve Months Ended
	February 28:
	2019			2018			2017
Outstanding non-vested restricted stock units at beginning of year:		77,594			123,658			181,742
Granted		-			-			-
Vested		(49,058	)		(44,064	)		(48,084	)
Cancelled/forfeited		(3,534	)		(2,000	)		(10,000	)
Outstanding non-vested restricted stock units as of February 28:		25,002			77,594			123,658
Weighted average grant date fair value	$	12.05		$	12.16		$	12.21
Weighted average remaining vesting period (in years)		0.38			1.27			2.23

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NOTE 9 - OPERATING SEGMENTS

The Company classifies its business interests into five reportable segments: Rocky Mountain Chocolate Factory, Inc. 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 these consolidated financial statements. 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:

FY 2019	Franchising			Manufacturing			Retail			U-Swirl			Other			Total
Total revenues	$	5,361,528		$	25,324,024		$	1,272,009		$	3,737,606		$	-		$	35,695,167
Intersegment revenues		(5,236	)		(1,144,484	)		-			-			-			(1,149,720	)
Revenue from external customers		5,356,292			24,179,540			1,272,009			3,737,606			-			34,545,447
Segment profit (loss)		2,288,871			4,310,722			(52,009	)		(32,391	)		(3,559,532	)		2,955,661
Total assets		1,182,355			12,267,458			1,001,419			5,264,989			6,505,920			26,222,141
Capital expenditures		3,548			526,402			9,617			16,512			57,707			613,786
Total depreciation & amortization	$	46,369		$	573,846		$	32,762		$	952,178		$	104,644		$	1,709,799

FY 2018	Franchising			Manufacturing			Retail			U-Swirl		Other			Total
Total revenues	$	6,004,897		$	27,491,089		$	1,876,021		$	4,142,085	$	-		$	39,514,092
Intersegment revenues		(4,882	)		(1,434,515	)		-			-		-			(1,439,397	)
Revenue from external customers		6,000,015			26,056,574			1,876,021			4,142,085		-			38,074,695
Segment profit (loss)		2,623,081			5,791,980			(37,102	)		542,073		(3,795,829	)		5,124,203
Total assets		1,157,158			12,729,659			1,134,876			8,125,171		5,793,771			28,940,635
Capital expenditures		15,429			429,545			33,056			11,899		55,027			544,956
Total depreciation & amortization	$	46,087		$	540,033		$	32,567		$	576,162	$	124,406		$	1,319,255

FY 2017	Franchising			Manufacturing			Retail		U-Swirl		Other			Total
Total revenues	$	5,951,055		$	26,678,514		$	1,710,734	$	5,216,076	$	-		$	39,556,379
Intersegment revenues		(5,332	)		(1,254,670	)		-		-		-			(1,260,002	)
Revenue from external customers		5,945,723			25,423,844			1,710,734		5,216,076		-			38,296,377
Segment profit (loss)		2,495,709			5,609,957			128,024		1,017,395		(3,855,380	)		5,395,705
Total assets		1,216,241			12,900,070			1,101,461		9,124,822		5,075,762			29,418,356
Capital expenditures		15,480			966,619			17,047		40,924		198,402			1,238,472
Total depreciation & amortization	$	54,053		$	463,996		$	14,755	$	622,654	$	133,251		$	1,288,709

Revenue from one customer of the Company’s Manufacturing segment represented approximately $3.1 million, or 9.1 percent, of the Company’s revenues from external customers during the year ended February 28, 2019, compared to $5.1 million, or 13.4 percent of the Company’s revenues from external customers during the year ended February 28, 2018.

NOTE 10 - SUPPLEMENTAL CASH FLOW INFORMATION

For the three years ended February 28 or 29:

Cash paid for:	2019		2018		2017
Interest, net	$	52,102	$	102,640	$	129,927
Income taxes		638,252		2,431,884		1,997,751
Non-cash Operating Activities
Accrued Inventory		52,918		258,247		531,017
Non-cash Financing Activities
Dividend payable	$	714,939	$	708,652		702,525

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NOTE 11 - EMPLOYEE BENEFIT PLAN

The Company has a 401(k) plan called the Rocky Mountain Chocolate Factory, Inc. 401(k) Plan. Eligible participants are permitted to make contributions up to statutory limits. The Company makes a matching contribution, which vests ratably over a 3-year period, and is 25% of the employee’s contribution up to a maximum of 1.5% of the employee’s compensation. During the years ended February 28, 2019, 2018 and 2017, the Company’s contribution was approximately $70,000, $68,000, and $66,000, respectively, to the plan.

NOTE 12 – SUMMARIZED QUARTERLY DATA (UNAUDITED)

Following is a summary of the quarterly results of operations for the fiscal years ended February 28, 2019 and 2018:

2019	First		Second		Third		Fourth		Total
Total revenue	$	8,366,085	$	7,800,088	$	8,949,747	$	9,429,527	$	34,545,447
Gross margin		1,916,807		1,852,435		1,882,975		1,312,026		6,964,243
Net income		576,944		750,815		525,361		385,679		2,238,799
Basic earnings per share		0.10		0.13		0.09		0.06		0.38
Diluted earnings per share	$	0.10	$	0.13	$	0.09	$	0.06	$	0.37

2018	First		Second		Third		Fourth		Total
Total revenue	$	9,346,447	$	8,266,691	$	9,961,572	$	10,499,985	$	38,074,695
Gross margin		2,191,974		2,210,910		2,311,579		2,276,586		8,991,049
Net income		813,672		928,284		751,056		470,896		2,963,908
Basic earnings per share		0.14		0.16		0.13		0.08		0.50
Diluted earnings per share	$	0.14	$	0.16	$	0.13	$	0.08	$	0.50

NOTE 13 – GOODWILL AND INTANGIBLE ASSETS

Intangible assets consist of the following at February 28:

				2019				2018
	Amortization Period (Years)			Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Intangible assets subject to amortization
Store design		10		$	220,778	$	214,152	$	220,778	$	212,653
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		715,339		223,628		715,339		136,087
Franchise rights		20			5,979,637		2,300,717		5,979,637		1,545,710
Total					7,467,557		3,290,300		7,467,557		2,446,253
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	$	3,952,684	$	9,176,885	$	3,108,637

Effective March 1, 2002, under ASC 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 $844,320, $446,050, and $427,840 during the fiscal years ended February 28 or 29, 2019, 2018 and 2017, 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.

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At February 28, 2019, annual amortization of intangible assets, based upon the Company’s existing intangible assets and current useful lives, is estimated to be the following:

2020	$	706,177
2021		594,229
2022		490,060
2023		411,607
2024		345,642
Thereafter		1,629,542
Total	$	4,177,257

NOTE 14 – COSTS ASSOCIATED WITH COMPANY-OWNED STORE CLOSURES

Costs associated with Company-owned store closures at February 28, 2019, 2018 and 2017 were comprised of the following:

	2019		2018		2017
Loss on distribution of assets	$	81,981	$	-	$	-
Lease settlement costs		145,000		-		60,000
Total	$	226,981	$	-	$	60,000

NOTE 15 – SUBSEQUENT EVENTS

On May 28, 2019, the Company announced that its Board of Directors has declared a first quarter FY2020 cash dividend of $0.12 per common share outstanding. The cash dividend will be payable June 14, 2019 to shareholders of record at the close of business June 4, 2019.

In March 2019, the Company’s Compensation Committee awarded 270,000 restricted stock units to eligible employees of the Company. The awards vest over a period of five to six years and have a grant date fair value of $2,536,100. Expense associated with these awards will be recognized over the vesting period.

NOTE 16 – IMMATERIAL REVISION OF PREVIOUSLY REPORTED INCOME TAXES AND DEFERRED TAX LIABILITIES

In the fourth quarter of FY 2017, the Company identified an immaterial error related to the overstatement of the income tax benefit and related deferred income tax asset accounts that impacted the Company’s previously issued annual consolidated financial statements. The adjustment relates to the foreclosure upon the interest in U-Swirl and the realization of U-Swirl deferred tax assets and refundable income taxes.

The Company determined that this error was not material to any of the Company’s prior annual consolidated financial statements and therefore, amendments of previously filed reports were not required. As such, a revision for the correction is reflected in the February 28, 2017 financial information of the applicable prior periods in this Form 10-K. The error resulted in corrections to beginning retained earnings, accrued liabilities and deferred tax assets of $(492,766), $192,233 and $(300,533), respectively, on the Consolidated Balance Sheet as of February 28, 2017.

NOTE 17 – ADOPTION OF ASU 2014-09, “REVENUE FROM CONTRACTS WITH CUSTOMERS” (“ASC 606”)

As described in Note 1, 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 our franchisees and others, or in our 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.

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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.

Impact to Prior Periods

The cumulative adjustment recorded upon adoption of ASC 606 consisted of net contract liabilities of approximately $1,022,720, a reduction in gift card liability of $2,250,743 and approximately $302,094 of associated adjustments to the deferred tax balances which are recorded in deferred income taxes. The Company did not record any contract assets. The following table outlines the adjustments to the consolidated financial statements made upon adoption of ASC 606 on March 1, 2018:

	Amount
Increase in deferred revenue	$	(1,022,720	)
Reduction in gift card liabilities		2,250,743
Adjustment to deferred income tax assets		(302,094	)
Cumulative increase to retained earnings	$	925,929

The Company adopted ASC 606 as of March 1, 2018, 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.

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The adoption of ASC 606 impacted the Company’s previously reported financial statements as follows:

	CONSOLIDATED BALANCE SHEET
	AS OF FEBRUARY 28, 2018
	Previously Reported		Adjustments			Restated
Assets
Current Assets
Cash and cash equivalents	$	6,072,984	$	-		$	6,072,984
Accounts receivable, net		3,897,334		-			3,897,334
Notes receivable, current portion, net		105,540		-			105,540
Refundable income taxes		342,863		-			342,863
Inventories, net		4,842,474		-			4,842,474
Other		310,173		-			310,173
Total current assets		15,571,368		-			15,571,368
Property and Equipment, Net		6,166,240		-			6,166,240
Other Assets
Notes receivable, less current portion, net		235,983		-			235,983
Goodwill, net		1,046,944		-			1,046,944
Franchise rights, net		4,433,927		-			4,433,927
Intangible assets, net		587,377		-			587,377
Deferred income taxes		835,463		(302,094	)		533,369
Other		63,333		-			63,333
Total other assets		7,203,027		(302,094	)		6,900,933
Total Assets	$	28,940,635	$	(302,094	)	$	28,638,541
Liabilities and Stockholders' Equity
Current Liabilities
Current maturities of long-term debt	$	1,352,893		-		$	1,352,893
Accounts payable		1,647,991		-			1,647,991
Accrued salaries and wages		644,005		-			644,005
Gift card liabilities		3,057,131		(2,250,743	)		806,388
Other accrued expenses		325,034		-			325,034
Dividend payable		708,652		-			708,652
Deferred revenue		471,910		(143,445	)		328,465
Total current liabilities		8,207,616		(2,394,188	)		5,813,428
Long-Term Debt, Less Current Maturities		1,176,416		-			1,176,416
Deferred Revenue, Less Current Portion		-		1,166,165			1,166,165
Commitments and Contingencies
Stockholders' Equity
Preferred stock
Common stock		5,903		-			5,903
Additional paid-in capital		6,131,147		-			6,131,147
Retained earnings		13,419,553		925,929			14,345,482
Total stockholders' equity		19,556,603		925,929			20,482,532
Total Liabilities and Stockholders' Equity	$	28,940,635	$	(302,094	)	$	28,638,541

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The following table contains a reconciliation of revenue reported for the current period and revenue had the Company reported under the prior method for revenue recognition:

	For the Years Ended February 28,
	2019			2018		2017
Franchise Fees contained within the
Statement of Income:	$	335,028		$	681,613	$	324,718
Adjustment required to conform revenue to prior period method:		(53,528	)		-		-
Comparable franchise fees:	$	281,500		$	681,613	$	324,718

On February 28, 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:

2020	$	256,093
2021		204,071
2022		190,524
2023		176,394
2024		137,477
Thereafter		388,013
Total	$	1,352,572

NOTE 18 – DISAGGREGATION OF REVENUE

The following table presents disaggregated revenue by the method of recognition and segment:

For the Year Ended February 28, 2019

Revenues recognized over time under ASC 606:

	Franchising		Manufacturing		Retail		U-Swirl		Total
Revenues recognized over time under ASC 606:
Franchise fees	$	199,362	$	-	$	-	$	135,666	$	335,028

Revenues recognized at a point in time:

	Franchising		Manufacturing		Retail		U-Swirl		Total
Factory sales		-		24,179,540		-		-		24,179,540
Retail sales		-		-		1,272,009		2,112,245		3,384,254
Royalty and marketing fees		5,156,930		-		-		1,489,695		6,646,625
Total	$	5,356,292	$	24,179,540	$	1,272,009	$	3,737,606	$	34,545,447

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PART III.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our Board of Directors currently consists of five members. Information concerning our executive officers and members of our Board of Directors as of June 1, 2019 is set forth below. There are no family relationships between any of our directors and executive officers.

Name	Title/Position	Age
Bryan J. Merryman	Chairman of the Board, Chief Executive Officer, Chief Financial Officer, Treasurer and Director	58
Franklin E. Crail	Director	77
Clyde Wm. Engle	Director	76
Scott G. Capdevielle	Director	53
Brett P. Seabert	Director	58
Gregory L. Pope	Senior Vice President – Franchise Development	53
Edward L. Dudley	Senior Vice President - Sales and Marketing	55
Donna L. Coupe	Vice President - Franchise Support and Training	53
Ryan R. McGrath	Vice President - Information Technology	45

Directors

Bryan J. Merryman. Mr. Merryman joined us in December 1997 as Chief Financial Officer and Vice President - Finance. Since April 1999, Mr. Merryman also served as our Chief Operating Officer and as a director, and since January 2000, as our Treasurer. In February 2019, Mr. Merryman was appointed as our Chief Executive Officer and was elected Chairman of the Board. From January 1997 to December 1997, Mr. Merryman was a principal in Knightsbridge Holdings, Inc., a leveraged buyout firm. Mr. Merryman also served as Chief Financial Officer of Super Shops, Inc., a retailer and manufacturer of after-market auto parts, from July 1996 to November 1997, and prior to July 1996, was employed for more than eleven years by Deloitte & Touche LLP, most recently as a Senior Manager. Mr. Merryman also currently serves as Chief Executive Officer of U-Swirl, Inc. (“U-Swirl”), a consolidated subsidiary of the company, a position he has held since October 2014, and has served as Chairman of the Board of U-Swirl since January 2013. Mr. Merryman’s extensive operational, accounting and financial expertise, along with his extensive knowledge of our business and broad industry expertise, provides significant value and insights to the Board of Directors.

Franklin E. Crail. Mr. Crail co-founded the first Rocky Mountain Chocolate Factory store in May 1981. He served as our Chief Executive Officer and President from November 1982 until his retirement in February 2019, and, from September 1981 to January 2000, he served as our Treasurer. He has served as a director since November 1982 and served as Chairman of the Board from March 1986 until February 2019. Prior to founding the Company, Mr. Crail was co-founder and President of CNI Data Processing, Inc., a software firm which developed automated billing systems for the cable television industry. Mr. Crail has also served as a director for U-Swirl since January 2013. As our co-founder and as our former Chief Executive Officer and President, and director since 1982, Mr. Crail brings his leadership, extensive experience and knowledge of the Company, the industry, our customers and the investment community to the Board of Directors.

Clyde Wm. Engle. Mr. Engle has served on our Board of Directors since January 2000, and previously from December 1987 to August 1995. Mr. Engle is currently the Chairman of the Board, President and Chief Executive Officer of Lincolnwood Bancorp, Inc. (formerly known as GSC Enterprises, Inc.). Lincolnwood Bancorp, Inc. owned the Bank of Lincolnwood until June 2009 when the Bank of Lincolnwood came under control of the Federal Deposit Insurance Corporation. Mr. Engle has also served as a director of U-Swirl since January 2013. Mr. Engle’s extensive executive and board experience brings governance, investment and strategic expertise to the Board of Directors.

Scott G. Capdevielle. Mr. Capdevielle has served on our Board of Directors since June 2009. Mr. Capdevielle founded, and has served as President, Chief Executive Officer and a member of the Board of Directors of, Syndicom, Inc., a software and consulting company, since 2000. Prior to founding Syndicom, Inc., from 1999 to 2000, Mr. Capdevielle was Chief Executive Officer and founder of Untv, Inc., a company pioneering user-generated web video and distribution on the Internet. From 1995 to 1999, Mr. Capdevielle founded and held the position of Chief Technical Officer and a member of the Board of Directors of Andromedia Corporation, a developer of web analytics software to Fortune 1000 companies prior to its sale to Macromedia, Inc. Mr. Capdevielle has been engaged in the software industry since 1993 and has served on several advisory boards and board of directors of technology companies from 1994 to present. Mr. Capdevielle has also served as a director of U-Swirl since January 2013. Mr. Capdevielle’s extensive executive and board experience brings operational, investment, strategic, technology and industry expertise to the Board of Directors.

Brett P. Seabert. Mr. Seabert has served on our Board of Directors since April 2017. Mr. Seabert, a Certified Public Accountant (“CPA”), has 29 years of experience in business management, operations, finance and administration. Mr. Seabert currently serves in various capacities, including as a director or executive officer of various companies, including Tanamera Construction, LLC, a high-end real estate development and construction company (since April 2007), TD Construction, LP, a construction company (since September 2009), Caughlin Club Management Partners, LLC, a health and tennis club and preschool owner and operator (since July 2008), and B&L Investments, Inc., a management and holding company (since March 2003). From 2001 to 2008, Mr. Seabert served as Chief Financial and Operating Officer of Tanamera Commercial Development, LLC. Between 1989 and 2001, Mr. Seabert served in various positions at CMS International, an owner and management company operating several casinos, most recently as Executive Vice President and Chief Financial Officer, including oversight of internal audit, risk management and human resource functions. Mr. Seabert has been primarily engaged in commercial and residential real estate development and construction for the past 17 years. From 1984 to 1989, Mr. Seabert was a practicing CPA with Deloitte & Touche LLP. Mr. Seabert’s extensive management, accounting and financial experience brings operational, investment, and strategic value and insights to the Board of Directors.

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Executive Officers

Bryan J. Merryman. Mr. Merryman’s biographical information is set forth above under the heading “Directors.”     

Gregory L. Pope. Mr. Pope has served as Senior Vice President - Development since May 2004. Since joining the Company in October 1990, he has served in various positions, including store manager, new store opener and franchise field consultant. In March 1996, he became Director of Franchise Development and Support. In June 2001, he became Vice President of Franchise Development, a position he held until he was promoted to his present position.

Edward L. Dudley. Mr. Dudley has served as Senior Vice President - Sales and Marketing since June 2001. Previously, he served as Vice President of Sales and Marketing from January 1997 to June 2001. Prior to joining the Company, Mr. Dudley spent 10 years with Baxter Healthcare Corporation, a medical devices and services company, where he served in a number of senior marketing and sales management capacities, including most recently that of Director, Distribution Services from March 1996 to January 1997.

Donna L. Coupe. Ms. Coupe has served as Vice President - Franchise Support and Training since June 2008. From 1992 to 1997, she managed franchised Rocky Mountain Chocolate Factory stores in Northern California for absentee owners. Since joining the Company in October 1997, she has served in various positions including Field Consultant, Regional Manager and Director of Franchise Support.

Ryan R. McGrath. Mr. McGrath has served as Vice President - Information Technology since August 2017. Since joining the Company in October 2009, he has served in various positions, including Systems Analyst and Director of Information Technology. Prior to joining the Company he held various operating and information technology roles, including work for Sports Express, a travel logistics company, where he focused on software, database and application development.

Involvement in Certain Other Legal Proceedings

On March 29, 1994, a class action was filed in the Circuit Court for the 21st Judicial District, Centerville, Hickman County, Tennessee against National Development Company, Inc. (“NDI”) and Sunstates Corporation (“Sunstates”) for breach of contract by a class of purchasers (the “Plaintiffs”) of real property in a recreational development developed and marketed by NDI. The Plaintiffs brought the class action to recover for the diminution in value of their properties caused by the failure of NDI to complete the primary lake in the development. On January 19, 1999, Mr. Engle, one of our directors, was added as a defendant to the class action, alleging that Mr. Engle operated the two defendant corporations as his alter ego. On January 24, 2000, the court found the defendants NDI liable for over $2.5 million to the Plaintiffs for the diminution in value of their real property based on a failure to build an adjacent lake as promised. On August 30, 2005, a judgment was entered against Mr. Engle, personally, for the amount of the original judgment plus statutory interest (the “Tennessee Judgment”).

In a related case filed on October 29, 2007 in the Circuit Court for the Second Circuit, State of Hawaii, the Plaintiffs pursued a class action against Mr. Engle and others to set aside fraudulent transfers, for declaratory and injunctive relief and for damages. In that complaint, the Plaintiffs claimed they were unable to collect on the Tennessee Judgment and alleged that Mr. Engle engaged in a scheme to aggressively and fraudulently transfer assets and earnings to his wife to hinder, delay and defraud his creditors. Following a trial, a jury verdict was entered against Mr. Engle on March 3, 2010, whereby he was found to have fraudulently transferred shares of stock valued at $10,768,450 and the jury awarded punitive damages to the Plaintiffs in the amount of $43,073,800. Several post-trial motions were filed after the jury verdict but no judgement was ever entered by the court against Mr. Engle, and no material activity has occurred in this case since March 2010.

Corporate Governance

Code of Ethics and Code of Conduct

We have adopted a Code of Ethics for Senior Financial Officers that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. In addition, in accordance with NASDAQ listing rules, we have adopted a Code of Conduct applicable to all our officers, directors and employees. The text of each of the Code of Ethics for Senior Financial Officers and the Code of Conduct (together, the “Codes”) is available under Corporate Governance on the Investor Relations page of our website at www.rmcf.com. If we waive, or implicitly waive, any material provision of either of the Codes, or substantively amend either of the Codes, we will disclose that fact on our website within four business days.

Audit Committee

The Board of Directors has a separately-designated standing Audit Committee. The Audit Committee operates under a written charter adopted by the Board of Directors. A copy of the Audit Committee Charter is available under Corporate Governance on the Investor Relations page of the Company's website at www.rmcf.com.

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The members of the Audit Committee currently consist of Brett P. Seabert, Clyde Wm. Engle and Scott G. Capdevielle. The responsibilities of our Audit Committee include:

● Assisting the full Board of Directors;

● Oversight of the Company’s accounting and financial reporting principles and policies and internal controls and procedures;

● Oversight of the Company’s financial statements and the independent audit thereof;

● Selecting, evaluating and, where deemed appropriate, replacing the independent auditors; and

● Evaluating the independence and performance of the independent auditors.

The Board of Directors has determined that Brett P. Seabert is an “audit committee financial expert” as defined in Item 407 of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and thus possesses “financial sophistication” as that term is used in applicable NASDAQ listing rules.

The Board of Directors has also determined that each of Brett P. Seabert, Clyde Wm. Engle and Scott G. Capdevielle, representing all of the members of the Audit Committee, is an “independent director” under applicable Nasdaq listing rules and SEC regulations applicable to Audit Committee members.

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ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth certain information with respect to annual compensation for the years indicated for the Company’s named executive officers.

Name and Principal Position	Fiscal Year	Salary ($)		Stock Awards ($)		All Other Compensation ($)		Total ($)
Bryan J. Merryman (1)	2019		$340,000		-0-		$4,125 (2)		$344,125
President, Chief Executive Officer, Chief Financial Officer and Director	2018		$340,000		-0-		$4,050 (2)		$344,050
Franklin E. Crail (1)	2019		$355,000		-0-		$47,539 (3)		$402,539
Former Chief Executive Officer and President	2018		$355,000		-0-		$41,262 (3)		$396,262
Edward L. Dudley	2019		$225,000		-0-		$3,167 (2)		$228,167
Senior Vice President – Sales and Marketing	2018		$225,000		-0-		$3,375 (2)		$228,375
Gregory L. Pope (4)	2019		$225,000		-0-		$1,688 (2)		$226,688
Senior Vice President – Franchise Development

(1) On February 26, 2019, Mr. Crail resigned as President and Chief Executive Officer, effective immediately. In addition, on February 26, 2019, Mr. Merryman was appointed as President and Chief Executive Officer to replace Mr. Crail.

(2) Represents 401(k) plan matching contributions during each fiscal year.

(3) Consists of life insurance premiums paid by the Company for fiscal years 2019 and 2018 of $43,414 and $37,212, respectively, and 401(k) plan matching contributions for fiscal years 2019 and 2018 of $4,125 and $4,050, respectively.

(4) Mr. Pope was not a named executive officer for fiscal year 2018.

Narrative Discussion of Summary Compensation Table

Salary, Bonus and Stock Awards. Base salary and cash bonuses for our named executive officers are reviewed on an annual basis by the Compensation Committee in conjunction with performance and upon the recommendations of our Chief Executive Officer. Our Chief Executive Officer is not present during voting or deliberation on his own compensation. Base salary adjustments and cash bonuses are awarded on a discretionary basis based on the Company’s overall performance and a subjective review of each named executive officer’s performance. For fiscal year 2019, in light of the Company’s performance and in the interest of the Company and our stockholders, our Chief Executive Officer did not recommend that the Compensation Committee award base salary adjustments or cash bonuses for the named executive officers for fiscal year 2019. The Compensation Committee did not award any salary adjustments or bonus payments in fiscal year 2019. In addition, in light of the Company’s performance, no equity grants were made to our named executive officers in fiscal years 2019 or 2018.

Benefits. Our named executive officers generally receive health and welfare benefits under the same programs and subject to the same terms and conditions as our other salaried employees. Other elements of compensation for our named executive officers are participation in Company-wide life insurance, long-term disability insurance, medical benefits and the ability to defer compensation pursuant to a 401(k) plan. Our named executive officers also receive matching contributions from the Company under our 401(k) plan at a rate of 25% up to 1.5% of base salary, which is the same benefit available to all salaried employees.

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Outstanding Equity Awards at Fiscal Year-End Table

The following table provides information regarding the number and estimated value of unvested stock awards held by each of the Company’s named executive officers at 2019 fiscal year-end. There were no outstanding stock options for any of our named executive officers at the end of fiscal year 2019.

			Stock Awards
Name	Grant Date		Number of Shares or Units of Stock That Have Not Vested (#)			Market Value of Shares or Units of Stock That Have Not Vested ($) (2)
Bryan J. Merryman	4/18/2013			10,000	(1)	$	94,800
Franklin E. Crail (3)		—		—			—
Edward L. Dudley	4/18/2013			4,167	(1)	$	39,503
Gregory L. Pope	4/18/2013			4,167	(1)	$	39,503

(1) Represents restricted stock units (“RSUs”) that vest in six equal annual installments beginning on the first anniversary of the vesting commencement date. The vesting commencement date was July 18, 2013 for RSUs granted on April 18, 2013.

(2) Based on a price of $9.48 per share, which was the closing price of our common stock as reported on the Nasdaq Global Market on February 28, 2019, the last trading day of fiscal year 2019.

(3) All of Mr. Crail’s unvested equity awards were accelerated upon his retirement on February 26, 2019.

Potential Payments on Termination or Change in Control

We have arrangements with each of our named executive officers providing for post-employment payments under certain conditions, as described below.  

Employment Agreements. We have entered into employment agreements with certain of our executives which contain, among other things, "change in control" severance provisions. Specifically, we have entered into employment agreements with Messrs. Merryman and Dudley. The agreements with each of Messrs. Merryman and Dudley provide for "at will" employment, which means we or the executive can terminate his employment at any time, with or without “cause” (as defined therein). The employment agreements generally provide that, if we terminate the executive's employment under circumstances constituting a "triggering termination," the executive will be entitled to receive, among other benefits, 2.99 times the sum of (i) the executive's annual salary and (ii) the lesser of (a) two times the bonus that would be payable to the executive for the bonus period in which the change in control occurred and (b) 25% of the executive's annual salary. The executive will also receive an additional payment of $18,000, which represents the estimated cost to the executive of obtaining accident, health, dental, disability and life insurance coverage for the 18-month period following the expiration of COBRA coverage.

A “change in control,” as used in these employment agreements, generally means a change in the control of us following (1) an event that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act, without the approval of two-thirds of the Board of Directors prior to its occurrence or within 60 days thereafter, (2) a person (an “Acquiring Person”) acquiring direct or indirect beneficial ownership of 20% or more of our then outstanding voting securities, without the approval of two-thirds of the Board of Directors prior to its occurrence or within 60 days thereafter, (3) a merger, consolidation, sale of assets or other reorganization, or a proxy contest in which our Board of Directors prior to the transaction constitutes less than a majority of our Board of Directors after the transaction or (4) the members of our Board of Directors during any consecutive two-year period who at the beginning of such period constituted the Board of Directors cease to be the majority of the Board of Directors at the conclusion of that period. In addition to the foregoing, a change in control shall be deemed to have occurred if, after the occurrence of the event described in clause (2) above that has been approved by a two-thirds vote of the Board of Directors, the Acquiring Person shall have become the beneficial owner, directly or indirectly, of securities representing an additional 5% or more of the combined voting power of our then outstanding voting securities (a “Subsequent Share Acquisition”) without the approval prior thereto or within 60 days thereafter of at least two-thirds of the members of the Board of Directors who were in office immediately prior to such Subsequent Share Acquisition and were not appointed, nominated or recommended by, and do not otherwise represent the interests of, the Acquiring Person on the Board of Directors. Each subsequent acquisition by an Acquiring Person of securities representing an additional 5% or more of the combined voting power of our then outstanding voting securities shall also constitute a Subsequent Share Acquisition (and a change in control unless approved as contemplated by the preceding sentence) if the approvals contemplated above were given with respect to the initial Share Acquisition and all prior Subsequent Share Acquisitions by such Acquiring Person. A “triggering termination” generally occurs when an executive is terminated during a specified period preceding a change in control of us, or if the executive or we terminate the executive’s employment under circumstances constituting a triggering termination during a specified period after a change in control. A triggering termination also includes a voluntary termination by the executive within five business days before an anticipated change in control with the concurrence of two concurring persons (either the Chairman of the Board of Directors or a member of our Compensation Committee) that the change in control is likely to occur during such five-business day period. In such event, the executive must agree to continue to work on an at-will basis, without compensation, until the change in control occurs. If the change in control does not occur within ten business days, the executive must refund the severance payment to us.

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2007 Equity Compensation Plan. Our 2007 Equity Incentive Plan provides that in the event of a Company transaction in which all of the named executive officer’s unvested option awards or RSUs are not converted, assumed or replaced by the successor company, such options or RSUs will immediately vest and become exercisable and payable immediately prior to the company transaction. In addition, in the event of a change in control, all of the named executive officer’s unvested option awards and RSUs will immediately vest and become exercisable and payable.

Assuming the applicable triggering event took place on February 28, 2019, the named executive officers would have been eligible for payments set forth in the following table. These payments are estimates. If a specific triggering event had actually occurred, the named executive officer would only receive the payments that applied to that specific triggering event. These payments would come from us if the triggering event occurred before a change in control and from the successor company if after a change in control. As of February 28, 2019, no outstanding stock option awards for our named executive officers were outstanding.

Name	Change in Control Severance Payment ($)(1)	Payment for Continuing Insurance Coverage ($)	RSU Acceleration (2)	Total
Bryan J. Merryman	$1,326,813	$15,500	$94,800	$1,437,113
Edward L. Dudley	$ 840,938	$15,500	$39,503	$ 895,941
Gregory L. Pope	-	-	$39,503	$39,503

(1) These amounts are based on 2.99 times 125% of each executive’s base salary in place during fiscal year 2019.

(2) Based on a price of $9.48 per share, which was the closing price of our common stock as reported on the Nasdaq Global Market on February 28, 2019, the last trading day of fiscal year 2019.

Retirement Separation Agreement with Mr. Crail. In connection with Mr. Crail’s retirement on February 26, 2019, the Company entered into a Retirement Separation and General Release Agreement with Mr. Crail (the “Separation Agreement”). Pursuant to the Separation Agreement, the Company agreed to accelerate the vesting of all of Mr. Crail’s outstanding equity awards and, for so long as Mr. Crail continues to serve on the Board of Directors, to provide (or pay premiums for) a Medicare supplemental insurance policy for Mr. Crail.

Director Compensation

Non-employee directors are generally compensated with a combination of cash retainers for serving on committees of the Board of Directors and annual equity grants. Our director compensation policy for fiscal year 2019 provided for the following compensation to our non-employee directors:     

Cash Retainer. Non-employee directors receive cash retainers for their service on the committees of the Board of Directors and on the Board of Directors. Each non-employee director is paid $3,125 quarterly. Members of our Compensation Committee are paid $750 quarterly, with the chairman of the Compensation Committee being paid $1,500 quarterly. Audit Committee members are paid $500 quarterly, with the chairman of the Audit Committee being paid $1,500 quarterly. Additionally, Audit Committee members receive $250 for each meeting held by phone and $500 for each meeting held in person. Also, an Audit Committee member attending all of the Audit Committee meetings for any fiscal year receives a $1,000 bonus for that year.

Equity Awards. Non-employee directors generally receive annual equity awards under our 2007 Equity Incentive Plan at the discretion of the Compensation Committee. For their service in fiscal year 2019, each non-employee director was granted 2,000 shares of common stock and an additional 500 shares of common stock were granted to the chairman of each of the Audit Committee and the Compensation Committee, unless the non-employee director elected to receive a cash payment in lieu of the equity award. In fiscal year 2019, all of our directors, except for Mr. Crail, elected to receive the cash payment in lieu of the equity award. Any cash payment in lieu of an equity award was paid in an amount equal to the potential grant date fair value of the equity award.

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The following table summarizes the total compensation paid to each of our non-employee directors who served during fiscal year 2019. Mr. Crail, our former President and Chief Executive Officer, and Mr. Merryman, our current President, Chief Executive Officer, Chief Financial Officer and Treasurer, do not receive any compensation for their service as directors. See “Executive Compensation” above for information regarding the compensation for Messrs. Crail and Merryman..

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)(2)	Total ($)
Lee N. Mortenson (1)	$49,470	-0-	$49,470
Brett P. Seabert	$44,480	-0-	$44,480
Scott G. Capdevielle	$44,480	-0-	$44,480
Clyde Wm. Engle	$12,750	$24,480	$37,230

___________________________

(1) Mr. Mortenson served as a director until his passing on October 5, 2018. The payments above represent payments for his service from the start of fiscal year 2019 until his passing.

(2) Represents the grant date fair value for stock awards granted during fiscal year 2019 computed in accordance with the requirements of FASB ASC Topic 718. A summary of the assumptions we applied in calculating these amounts is set forth in the Notes to Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2019.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information, as of June 1, 2019, with respect to the shares of our common stock beneficially owned (i) by each person known to us to be the beneficial owner of more than 5% of our common stock, (ii) by each director, (iii) each named executive officer set forth in the Summary Compensation Table above and (iv) by all of our directors and executive officers as a group. As of June 1, 2019, 5,965,827 shares of our common stock were outstanding.

The number of shares beneficially owned includes shares of our common stock with respect to which the persons named below have either investment or voting power. A person is also deemed to be the beneficial owner of a security if that person has the right to acquire beneficial ownership of that security within 60 days of June 1, 2019 through the exercise of options, vesting of RSUs, or through the conversion of another security. For purposes of calculating each person’s or group’s percentage ownership, shares of our common stock issuable upon the exercise of options, vesting of RSUs or through conversion of another security within 60 days of June 1, 2019 are included as outstanding and beneficially owned for that person or group, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person or group. Except as noted, each beneficial owner has sole investment and voting power with respect to our common stock.

Unless otherwise indicated, the address for each director and named executive officer listed below is c/o Rocky Mountain Chocolate Factory, Inc., 265 Turner Drive, Durango, Colorado 81303.

Name of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percent of Class
5% Stockholders:
FMR LLC	582,493	(1)	9.77	%
AB Value Management LLC	460,189	(2)	8.18	%
Renaissance Technologies LLC	487,939	(3)	7.72	%
Taylor Hoffman Wealth Management, LLC	302,366	(4)	5.07	%
Directors and Named Executive Officers:
Franklin E. Crail	491,126		8.24	%
Clyde Wm. Engle	4,000		*
Brett P. Seabert	-		*
Scott G. Capdevielle	8,228		*
Bryan J. Merryman	40,000	(5)	*
Edward L. Dudley	37,063	(6)	*
Gregory L. Pope	58,298	(7)	*
All executive officers and directors as a group (9 persons) (7)	651,059	(8)	11.98	%

* Less than 1%

(1) Based solely on the information contained in a filing on Schedule 13G/A filed with the SEC on February 13, 2019. The address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210.

(2) Based solely on the information contained in a filing on Schedule 13D/A filed with the SEC on May 22, 2019. The address of AB Value Management LLC is 200 Sheffield Street, Suite 311, Mountainside, New Jersey 07092.

(3) Based solely on the information contained in a filing on Schedule 13G/A filed with the SEC on February 13, 2019. The shares are beneficially owned by Renaissance Technologies LLC and its affiliate, Renaissance Technologies Holdings Corporation. The address of Renaissance Technologies LLC and its affiliates is 800 Third Avenue, New York, New York 10022.

(4) Based solely on the information contained in a filing on Schedule 13G/A filed with the SEC on February 14, 2019. The shares are beneficially owned by Taylor Hoffman Wealth Management, LLC, Brandon Christopher Taylor and Gabriel Christopher Hoffman. The address of Taylor Hoffman Wealth Management, LLC and its affiliates is 1802 Bayberry Court, Suite 101, Richmond, Virginia 23226.

(5) Includes 10,000 shares issuable upon the vesting of RSUs within 60 days of June 1, 2019.

(6) Includes 4,167 shares issuable upon the vesting of RSUs within 60 days of June 1, 2018.

(7) Includes 4,167 shares issuable upon the vesting of RSUs within 60 days of June 1, 2018 and 38,620 shares held within the Rocky Mountain Chocolate Factory, Inc. 401(K) Plan.

(8) Shares beneficially owned include 21,667 shares issuable to our executive officers and directors as a group upon the vesting of RSUs within 60 days of June 1, 2019.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Related Person Transactions

We had no transactions with related persons during fiscal year 2019 which are required to be disclosed pursuant to SEC rules.

Policies and Procedures for Approving Transactions with Related Persons

The independent members of the Board of Directors have the responsibility to review and approve related person transactions, either in advance or when we become aware of a related person transaction that was not reviewed and approved in advance; however, the Board of Directors has not adopted a written policy or procedures governing its approval of transactions with related persons. There were no related person transactions in fiscal year 2018 or 2019.

Director Independence

Nasdaq listing rules require that a majority of the Board of Directors must be comprised of independent directors. The Board of Directors has determined that Brett P. Seabert, Clyde Wm. Engle, and Scott G. Capdevielle is each an independent director. Mr. Merryman is not independent due to his service as a current executive officer of the Company, and Mr. Crail is not independent due to his service as a former executive officer of the Company. The Board of Directors makes a determination regarding the independence of each director annually based on relevant facts and circumstances. Applying the standards and independence criteria defined by the Nasdaq listing standards, the Board of Directors has made a determination as to each independent director that no relationships exist which, in the opinion of the Board of Directors, would interfere with the exercise of his independent judgment in carrying out the responsibilities of a director.

The Board of Directors has also determined that Brett P. Seabert, Clyde Wm. Engle and Scott G. Capdevielle, representing all of the members of the Audit Committee, are all "independent directors" under Nasdaq listing standards and SEC rules applicable to Audit Committee members.

The Board of Directors has determined that Brett P. Seabert and Scott G. Capdevielle are “independent directors” under Nasdaq listing standards and SEC rules applicable to Compensation Committee members. Mr. Crail, who is also a member of the Compensation Committee, is not deemed to be independent under the applicable Nasdaq listing standards because he served as our Chief Executive Officer until February 2019. Although Mr. Crail is not an independent director, Section 5605(d)(2)(B) of the Nasdaq listing standards nonetheless permits the appointment of a non-independent director to the Compensation Committee if the Board of Directors, under exceptional and limited circumstances, determine that the non-independent director’s membership is in the best interests of the Company and its stockholders. Based on Mr. Crail’s extensive experience with the Company and his knowledge of the operations of the Company, the Board of Directors concluded that, under the exceptional and limited circumstances due to the unexpected pass of Lee Mortensen, Mr. Crail’s appointment to, and membership on, the Compensation Committee was in the best interests of the Company and its stockholders.

The Board of Directors has determined that Brett P. Seabert and Scott G. Capdevielle, representing all of the members of the Nominating Committee were all "independent directors" under applicable Nasdaq listing standards.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Effective October 1, 2018, EKS&H LLLP (“EKS&H”), the former independent registered public accounting firm for Rocky Mountain Chocolate Factory, Inc. (the “Company”), combined with Plante & Moran PLLC (“Plante Moran”). As a result of this transaction, on October 1, 2018, EKS&H resigned as the independent registered public accounting firm for the Company. Concurrent with such resignation, the Audit Committee of the Company approved the engagement of Plante Moran as the new independent registered public accounting firm for the Company for the fiscal year ending February 28, 2019.

Independent Registered Public Accounting Firm Fees

Fees billed by EKS&H in fiscal years 2018 and 2019 were as follows:

	2019	2018
Audit fees	$114,725	$155,711
Audit-related fees(1)	$ 15,750	$ 15,750
Tax fees(2)	$ 14,325	$42,795
All other fees	—	—
Total	$144,800	$214,256

Fees billed by Plante Moran in fiscal years 2018 and 2019 were as follows:

	2019	2018
Audit fees	$19,250	—
Audit-related fees(1)	—	—
Tax fees(2)	$27,475	—
All other fees	—	—
Total	$46,725	—

(1) Audit-related fees consist of assurance and related services that are reasonably related to the performance of the audit or review of the Company's financial statements. This category includes fees related to the performance of audits and attest services not required by statute or regulations, audits of the Company’s benefit plans, and additional compliance procedures related to performance of the review or audit of the Company's financial statements, and accounting consultations about the application of generally accepted accounting principles to proposed transactions. These services support the evaluation of the effectiveness of internal controls.

(2) Tax fees consist of the aggregate fees billed for professional services rendered for tax compliance, tax advice, and tax planning services.

Audit Committee Pre-Approval Policy and Procedures

The Audit Committee is responsible for appointing, setting compensation for and overseeing the work of the independent auditor. The Audit Committee has established a policy regarding pre-approval of all audit and permissible non-audit services to be provided by the independent auditor. Such policy requires that all audit and permissible non-audit services to be provided by the independent auditor must be submitted to the Audit Committee for approval at a meeting of the Audit Committee or by unanimous written consent of the Audit Committee in lieu of a meeting. The Audit Committee has determined that the provision of the services listed above is compatible with maintaining the principal accountant's independence, and pre-approved all such services and fees in fiscal year 2018 and 2019.

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PART IV.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)      The following documents are filed as part of this report:

1.     Financial Statements

Reports of Independent Registered Public Accounting Firms	3-4
Consolidated Statements of Income	5
Consolidated Balance Sheets	6
Consolidated Statements of Changes in Stockholders’ Equity	7
Consolidated Statements of Cash Flows	8
Notes to Consolidated Financial Statements	9

      2.     Financial Statement Schedule          

SCHEDULE II - Valuation and Qualifying Accounts

3. Exhibits

Exhibit Number	Description	Incorporated by Reference to
3.1	Amended and Restated Certificate of Incorporation of Rocky Mountain Chocolate Factory, Inc., a Delaware corporation	Exhibit 3.1 to the Current Report on Form 8-K filed on March 2, 2015
3.2	Certificate of Designations of Series A Junior Participating Preferred Stock, Par Value $0.001 Per Share, of Rocky Mountain Chocolate Factory, Inc., a Delaware corporation	Exhibit 3.2 to the Current Report on Form 8-K filed on March 2, 2015
3.3	Amended and Restated Bylaws of Rocky Mountain Chocolate Factory, Inc., a Delaware corporation	Exhibit 3.3 to the Current Report on Form 8-K filed on March 2, 2015
4.1	Description of Capital Stock	***
10.1**	Form of Employment Agreement (Officers)	Exhibit 10.1 to the Annual Report on Form 10-K for the fiscal year ended February 28, 2007 (File No. 000-14749)
10.2	Form of Franchise Agreement for Rocky Mountain Chocolate Factory	Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended May 31, 2010 (File No. 000-14749)
10.3**	2007 Equity Incentive Plan (As Amended and Restated)	Exhibit 10.1 to the Current Report on Form 8-K filed on August 9, 2013 (File No. 000-14749)
10.4**	Form of Indemnification Agreement (Directors)	Exhibit 10.7 to the Annual Report on Form 10-K for the fiscal year ended February 28, 2007 (File No. 000-14749)
10.5**	Form of Indemnification Agreement (Officers)	Exhibit 10.8 to the Annual Report on Form 10-K for the fiscal year ended February 28, 2007 (File No. 000-14749)
10.6*	Master License Agreement, dated August 17, 2009, between Kahala Franchise Corp. and Rocky Mountain Chocolate Factory, Inc., a Colorado corporation	Exhibit 10.3 to the Quarterly Report on Form 10-Q of the Registrant for the quarter ended August 31, 2009 (File No. 000-14749)
10.7	Revolving Line of Credit Note, dated September 13, 2017, between Rocky Mountain Chocolate Factory, Inc. and Wells Fargo Bank, National Association	Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended August 31, 2017
10.8	Business Loan Agreement, dated August 2, 2013, between Wells Fargo Bank and Rocky Mountain Chocolate Factory, Inc., a Colorado corporation	Exhibit 10.2 to the Quarterly Report on Form 10-Q for the quarter ended August 31, 2013 (File No. 000-14749)

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Exhibit Number	Description	Incorporated by Reference to
10.9	Business Loan Agreement, dated December 27, 2013, between Wells Fargo Bank and Rocky Mountain Chocolate Factory, Inc., a Colorado corporation	Exhibit 99.3 to the Current Report on Form 8-K filed on January 22, 2014 (File No. 000-14749)
10.10*	Master License Agreement, dated April 27, 2012, between RMCF Asia, Ltd. and Rocky Mountain Chocolate Factory, Inc., a Colorado corporation	Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended May 31, 2012 (File No. 000-14749)
10.11	Voting Agreement, dated January 14, 2013, among U-Swirl, Inc., Henry Cartwright, Ulderico Conte, Terry Cartwright, Rocky Mountain Chocolate Factory, Inc., a Colorado corporation, and Aspen Leaf Yogurt, LLC	Exhibit 99.4 to the Current Report on Form 8-K filed January 14, 2013 (File No. 000-14749)
10.12	Investor Rights Agreement, dated January 14, 2013, between U-Swirl, Inc. and Rocky Mountain Chocolate Factory, Inc., a Colorado corporation	Exhibit 99.5 to the Current Report on Form 8-K filed January 14, 2013 (File No. 000-14749)
10.13	Investor Rights Agreement, dated January 14, 2013 between U-Swirl, Inc. and Aspen Leaf Yogurt, LLC	Exhibit 99.6 to the Current Report on Form 8-K filed January 14, 2013 (File No. 000-14749)
10.14**	Second Restated Employment Agreement, dated February 26, 2019, between Rocky Mountain Chocolate Factory, Inc., a Delaware corporation, and Bryan J. Merryman.	***
10.15**	Retirement Separation and General Release Agreement, dated February 26, 2019, between Rocky Mountain Chocolate Factory, Inc., a Delaware corporation, and Franklin E. Crail.	***
21.1	Subsidiaries of the Registrant	***
23.1	Consent of Independent Registered Public Accounting Firm	Filed herewith
23.2	Consent of Independent Registered Public Accounting Firm	***
31.1	Certification Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002	***
31.2	Certification Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32.1	Certification Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002	***
32.2	Certification Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith
101.INS	XBRL Instance Document	Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith

36

Exhibit Number		Description	Incorporated by Reference to
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith
101.LAB		XBRL Taxonomy Extension Label Linkbase Document	Filed herewith
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith
*	Contains material that has been omitted pursuant to a request for confidential treatment and such material has been filed separately with the SEC.
**	Management contract or compensatory plan.
***	Previously filed with the Company’s Annual Report on Form 10-K filed with the SEC on May 29, 2019.

37

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
Date: June 28, 2019	/S/ Bryan J. Merryman
	BRYAN J. MERRYMAN
	Chief Executive Officer, Chief Financial Officer,
	Treasurer and Director

38

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File Nos. 333-206534, 333-145986, and 333-191729) of Rocky Mountain Chocolate Factory, Inc. (the "Company") of our report dated May 29, 2019 relating to the consolidated financial statements for the fiscal year ended February 28, 2019, which appears in this Annual Report on Form 10-K/A.

/s/ Plante & Moran, PLLC

Denver, Colorado

June 28, 2019

EX-31.2

Exhibit 31.2

Certification Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002

I, Bryan J. Merryman, certify that:

1.     I have reviewed this Amendment No. 1 on Form 10-K/A of Rocky Mountain Chocolate Factory, Inc.;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

      a)             Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

       b)            Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

       c)             Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

       d)            Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

       a)             All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

       b)            Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 28, 2019	/s/ Bryan J. Merryman
	Bryan J. Merryman, Chief Executive Officer, Chief Financial Officer, Treasurer and Director (Principal Executive and Financial Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with Amendment No. 1 to the Annual Report of Rocky Mountain Chocolate Factory, Inc. (the "Company") on Form 10-K/A for the fiscal year ended February 28, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned certifies pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1)     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: June 28, 2019	/s/ Bryan J. Merryman
	Bryan J. Merryman, Chief Executive Officer, Chief Financial Officer, Treasurer and Director
	(Principal Executive and Financial Officer)

XML

Document And Entity Information - USD ($)	12 Months Ended
	Feb. 28, 2019	May 10, 2019	Aug. 31, 2018
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	--02-28
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding (in shares)		5,965,827
Entity Public Float			$ 38,815,702
Entity Shell Company	false
Document Type	10-K/A
Document Period End Date	Feb. 28, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	true
Amendment Description	Rocky Mountain Chocolate Factory, Inc. (the “Company,” “we,” “us” or “our”) is filing this Amendment No. 1 on Form 10-K/A (this “Amendment No. 1”) to amend our Annual Report on Form 10-K for the fiscal year ended February 28, 2019, originally filed with the Securities and Exchange Commission (“SEC”) on May 29, 2019 (the “Original Filing”), to include the information required by Items 10 through 14 of Part III of Form 10-K. This information was previously omitted from the Original Filing in reliance on General Instruction G(3) of Form 10-K, which permits such information to be incorporated by reference in the Form 10-K from our definitive proxy statement if such proxy statement is filed no later than 120 days after the end of our fiscal year. We are filing this Amendment to include the information required by Part III of the Original Filing because we no longer intend to file our definitive proxy statement within 120 days after the end of our fiscal year. In addition, this Amendment No. 1 is being filed to include the auditor tenure statement in Plante & Moran, PLLC's audit report contained in Part II, Item 8, which was inadvertently omitted in the Original Filing. In accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Item 8 of Part II and Items 10 through 14 of Part III of the Original Filing have been amended and restated in their entirety, and Item 15 of Part IV of the Original Filing has also been amended and restated in its entirety to include new certifications by our principal executive officer and principal financial officer and a new consent from Plante & Moran, PLLC. This Amendment No. 1 does not amend or otherwise update any other information in the Original Filing. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Filing and with our other filings with the SEC subsequent to the Original Filing.

XML

Consolidated Statements of Income - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Revenues
Total revenues	$ 34,545,447	$ 38,074,695	$ 38,296,377
Costs and Expenses
Cost of sales	20,599,551	21,176,711	20,735,739
Sales and marketing	2,210,800	2,489,483	2,658,421
General and administrative	3,432,618	3,904,560	4,005,142
Depreciation and amortization, exclusive of depreciation and amortization expense of $555,926, $523,034, and $447,651, respectively, included in cost of sales	1,153,873	796,221	841,058
Costs associated with Company-owned store closures	226,981		60,000
Total costs and expenses	31,539,495	32,853,826	32,771,893
Income from Operations	3,005,952	5,220,869	5,524,484
Other Income (Expense)
Interest expense	(70,787)	(121,244)	(170,351)
Interest income	20,496	24,578	41,572
Other expense, net	(50,291)	(96,666)	(128,779)
Income Before Income Taxes	2,955,661	5,124,203	5,395,705
Income Tax Provision	716,862	2,160,295	1,945,589
Consolidated Net Income	$ 2,238,799	$ 2,963,908	$ 3,450,116
Basic Earnings per Common Share (in dollars per share)	$ 0.38	$ 0.50	$ 0.59
Diluted Earnings per Common Share (in dollars per share)	$ 0.37	$ 0.50	$ 0.58
Outstanding - Basic (in shares)	5,931,431	5,884,337	5,843,245
Stock Awards (in shares)	51,207	96,099	150,447
Outstanding - Diluted (in shares)	5,982,638	5,980,436	5,993,692
Product [Member]
Revenues
Total revenues	$ 27,563,794	$ 30,167,760	$ 29,876,507
Franchise and Royalty Fees [Member]
Revenues
Total revenues	6,981,653	7,906,935	8,419,870
Franchise [Member]
Costs and Expenses
Costs	1,980,781	2,097,555	2,067,530
Retail [Member]
Costs and Expenses
Costs	$ 1,934,891	$ 2,389,296	$ 2,404,003

XML

Consolidated Statements of Income (Parentheticals) - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Depreciation and amortization expense	$ 555,926	$ 523,034	$ 447,651

XML

Consolidated Balance Sheets - USD ($)	Feb. 28, 2019	Feb. 28, 2018
Current Assets
Cash and cash equivalents	$ 5,384,027	$ 6,072,984
Accounts receivable, less allowance for doubtful accounts of $489,502 and $479,472, respectively	3,993,262	3,897,334
Notes receivable, current portion, less current portion of the valuation allowance of $0 and $9,000, respectively	110,162	105,540
Refundable income taxes	190,201	342,863
Inventories, less reserve for slow moving inventory of $371,147 and $357,706, respectively	4,270,357	4,842,474
Other	318,126	310,173
Total current assets	14,266,135	15,571,368
Property and Equipment, Net	5,786,139	6,166,240
Other Assets
Notes receivable, less current portion and valuation allowance of $0 and $17,500, respectively	281,669	235,983
Goodwill, net	1,046,944	1,046,944
Franchise rights, net	3,678,920	4,433,927
Intangible assets, net	498,337	587,377
Deferred income taxes	607,421	835,463
Other	56,576	63,333
Total other assets	6,169,867	7,203,027
Total Assets	26,222,141	28,940,635
Current Liabilities
Current maturities of long-term debt	1,176,488	1,352,893
Accounts payable	897,074	1,647,991
Accrued salaries and wages	655,853	644,005
Gift card liabilities	742,289	3,057,131
Other accrued expenses	293,094	325,034
Dividend payable	714,939	708,652
Contract liabilities	256,094	471,910
Total current liabilities	4,735,831	8,207,616
Long-Term Debt, Less Current Maturities		1,176,416
Contract Liabilities, Less Current Portion	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, authorized 50,000 shares Undesignated series, authorized 200,000 shares
Common stock, $.001 par value, 46,000,000 shares authorized, 5,957,827 shares and 5,903,436 shares issued and outstanding, respectively	5,958	5,903
Additional paid-in capital	6,650,864	6,131,147
Retained earnings	13,733,010	13,419,553
Total stockholders' equity	20,389,832	19,556,603
Total Liabilities and Stockholders' Equity	$ 26,222,141	$ 28,940,635

XML

Consolidated Balance Sheets (Parentheticals) - USD ($)	Feb. 28, 2019	Feb. 28, 2018
Accounts receivable, allowance for doubtful accounts	$ 489,502	$ 479,472
Notes receivable, current portion of valuation allowance	0	9,000
Inventories, reserve	371,147	357,706
Notes receivable, valuation allowance	$ 0	$ 17,500
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)	5,957,827	5,903,436
Common stock, shares outstanding (in shares)	5,957,827	5,903,436
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
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0

XML

Consolidated Statements of Changes in Stockholders' Equity - USD ($)		Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Noncontrolling Interest [Member]
Balance at beginning of year at Feb. 29, 2016			$ 5,839	$ 5,340,190	$ 13,132,879	$ 5,839,396
Common Stock
Repurchase and retirement of common stock			(35)	(351,548)
Issuance of common stock			2
Exercise of stock options, vesting of restricted stock units and other			48
Balance at beginning of year at Feb. 29, 2016			5,839	5,340,190	13,132,879	5,839,396
Additional Paid-In Capital
Repurchase and retirement of common stock			(35)	(351,548)
Issuance of common stock				20,418
Exercise of stock options, vesting of restricted stock units and other				564,425
Tax (expense) benefit from employee stock transactions				(34,128)
Balance at beginning of year at Feb. 29, 2016			5,839	5,340,190	13,132,879	5,839,396
Retained Earnings
Net income (loss)					3,450,116
Cash dividends declared					(2,806,583)
Correction of immaterial error	[1]				(492,766)
Balance at end of year at Feb. 28, 2017		$ 18,828,857	5,854	5,539,357	13,283,646	5,854,372
Balance at beginning of year at Feb. 29, 2016			$ 5,839	5,340,190	13,132,879	5,839,396
Common Shares
Repurchase and retirement of common stock (in shares)			(35,108)
Issuance of common stock (in shares)			2,000
Exercise of stock options, vesting of restricted stock units and other (in shares)			48,084
Balance at end of year at Feb. 28, 2017		18,828,857	$ 5,854	5,539,357	13,283,646	5,854,372
Retained Earnings
Adoption of ASC 606	[2]
Repurchase and retirement of common stock
Issuance of common stock			5
Exercise of stock options, vesting of restricted stock units and other			44
Balance at beginning of year at Feb. 28, 2017		18,828,857	5,854	5,539,357	13,283,646	5,854,372
Additional Paid-In Capital
Repurchase and retirement of common stock
Issuance of common stock				59,095
Exercise of stock options, vesting of restricted stock units and other				532,695
Tax (expense) benefit from employee stock transactions
Balance at beginning of year at Feb. 28, 2017		18,828,857	5,854	5,539,357	13,283,646	5,854,372
Retained Earnings
Net income (loss)		2,963,908			2,963,908
Cash dividends declared					(2,828,001)
Correction of immaterial error	[1]
Balance at end of year at Feb. 28, 2018		19,556,603	5,903	6,131,147	13,419,553	5,903,436
Balance at beginning of year at Feb. 28, 2017		18,828,857	$ 5,854	5,539,357	13,283,646	5,854,372
Common Shares
Repurchase and retirement of common stock (in shares)
Issuance of common stock (in shares)			5,000
Exercise of stock options, vesting of restricted stock units and other (in shares)			44,064
Balance at end of year at Feb. 28, 2018		19,556,603	$ 5,903	6,131,147	13,419,553	5,903,436
Retained Earnings
Adoption of ASC 606	[2]
Repurchase and retirement of common stock
Issuance of common stock			6
Exercise of stock options, vesting of restricted stock units and other			49
Balance at beginning of year at Feb. 28, 2018		19,556,603	5,903	6,131,147	13,419,553	5,903,436
Additional Paid-In Capital
Repurchase and retirement of common stock
Issuance of common stock				55,971
Exercise of stock options, vesting of restricted stock units and other				463,746
Tax (expense) benefit from employee stock transactions
Balance at beginning of year at Feb. 28, 2018		19,556,603	5,903	6,131,147	13,419,553	5,903,436
Retained Earnings
Net income (loss)		2,238,799			2,238,799
Cash dividends declared					(2,851,271)
Correction of immaterial error	[1]
Balance at end of year at Feb. 28, 2019		20,389,832	5,958	6,650,864	13,733,010	5,957,827
Balance at beginning of year at Feb. 28, 2018		19,556,603	$ 5,903	6,131,147	13,419,553	5,903,436
Common Shares
Repurchase and retirement of common stock (in shares)
Issuance of common stock (in shares)			5,333
Exercise of stock options, vesting of restricted stock units and other (in shares)			49,058
Balance at end of year at Feb. 28, 2019		20,389,832	$ 5,958	$ 6,650,864	$ 13,733,010	$ 5,957,827
Retained Earnings
Adoption of ASC 606	[2]	$ 925,929

[1] As revised. Refer to Note 16 for information on immaterial correction of errors in prior period.

[2] Refer to Note 17 for information on the adoption of ASC 606.

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Cash Flows From Operating Activities
Net Income	$ 2,238,799	$ 2,963,908	$ 3,450,116
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,709,799	1,319,255	1,288,709
Provision for obsolete inventory	325,478	166,868	138,125
Provision for loss on accounts and notes receivable	155,600	225,858	100,049
Asset impairment and store closure losses	67,822
Loss on sale or disposal of property and equipment	36,024	38,496	37,112
Expense recorded for stock compensation	519,772	591,839	584,893
Deferred income taxes	(78,934)	23,411	262,248
Changes in operating assets and liabilities:
Accounts receivable	(390,663)	(229,948)	(128,404)
Refundable income taxes	157,544	(295,000)	(47,863)
Inventories	41,310	(365,323)	(2,735)
Other current assets	(8,225)	(54,091)	29,442
Accounts payable	(545,588)	96,491	(87,657)
Accrued liabilities	(84,191)	242,578	(293,402)
Contract Liabilities	(129,527)	33,270	(9,619)
Net cash provided by operating activities	4,015,020	4,757,612	5,321,014
Cash Flows from Investing Activities
Addition to notes receivable		(14,293)	(133,202)
Proceeds received on notes receivable	102,256	230,637	318,219
Purchase of intangible assets		(8,508)	(312,947)
Proceeds from (cost of) sale or distribution of assets	13,498	(7,926)	39,045
Purchases of property and equipment	(613,786)	(544,956)	(1,238,472)
(Increase) decrease in other assets	(8,140)	5,529	34,479
Net cash used in investing activities	(506,172)	(339,517)	(1,292,878)
Cash Flows from Financing Activities
Payments on long-term debt	(1,352,821)	(1,302,432)	(1,253,392)
Repurchase of common stock			(351,583)
Tax expense of stock option exercise			(34,128)
Dividends paid	(2,844,984)	(2,821,874)	(2,804,786)
Net cash used in financing activities	(4,197,805)	(4,124,306)	(4,443,889)
Net Decrease in Cash and Cash Equivalents	(688,957)	293,789	(415,753)
Cash and Cash Equivalents, Beginning of Period	6,072,984	5,779,195	6,194,948
Cash and Cash Equivalents, End of Period	$ 5,384,027	$ 6,072,984	$ 5,779,195

XML

Note 1 - Nature of Operations and Summary of Significant Accounting Policies

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Business Description and Accounting Policies [Text Block]

NOTE

1

- NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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”), and U-Swirl International, Inc. (“U-Swirl”), and its

46%

-owned subsidiary, U-Swirl, Inc. (“SWRL”) (collectively, the “Company”).

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 self-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.

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: 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; 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 its subsidiaries at

February 28, 2019:

	Sold, Not Yet Open		Open		Total
Rocky Mountain Chocolate Factory
Company-owned stores		-		2		2
Franchise stores - Domestic stores and kiosks		4		183		187
International license stores		1		64		65
Cold Stone Creamery - co-branded		11		91		102
U-Swirl (Including all associated brands)
Company-owned stores		-		1		1
Company-owned stores - co-branded		-		3		3
Franchise stores - Domestic stores		-		87		87
Franchise stores - Domestic - co-branded		-		9		9
International license stores		-		2		2
Total		16		442		458

Consolidation

Management accounts for the activities of the Company and its subsidiaries, and the accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. As described above, on

January 14, 2013,

the Company acquired a controlling interest in SWRL. Prior to

January 14, 2013,

the Company’s consolidated financial statements excluded the financial information of SWRL. Beginning on

January 14, 2013,

the results of operations, assets and liabilities of SWRL have been included in these consolidated financial statements. 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 a loan and security agreement with SWRL to cover the purchase price and other costs associated with the acquisitions (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 U-Swirl, Inc. as of

February

29,

2016.

As of

February

29,

2016,

U-Swirl, Inc. had

no

assets. All intercompany balances and transactions have been eliminated in consolidation.

Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of

six

months or less to be cash equivalents. The Company continually monitors its positions with, and the credit quality of, the financial institutions with which it invests. As of the balance sheet date, and periodically throughout the year, the Company has maintained balances in various operating accounts in excess of federally insured limits. This amount was approximately

$4.9

million at

February 28, 2019.

Accounts

and Notes

Receivable

In the normal course of business, the Company extends credit to customers, primarily franchisees that satisfy pre-defined credit criteria. The Company believes that it has limited concentration of credit risk primarily because its receivables are secured by the assets of the franchisees to which the Company ordinarily extends credit, including, but

not

limited to, their franchise rights and inventories. An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable, assessments of collectability based on historical trends, and an evaluation of the impact of current and projected economic conditions. The process by which the Company performs its analysis is conducted on a customer by customer, or franchisee by franchisee, basis and takes into account, among other relevant factors, sales history, outstanding receivables, customer financial strength, as well as customer specific and geographic market factors relevant to projected performance. The Company monitors the collectability of its accounts receivable on an ongoing basis by assessing the credit worthiness of its customers and evaluating the impact of reasonably likely changes in economic conditions that

may

impact credit risks. Estimates with regard to the collectability of accounts receivable are reasonably likely to change in the future. At

February 28, 2019,

the Company had

$391,831

of notes receivable outstanding and an allowance for doubtful accounts of

$0

associated with these notes. The notes require monthly payments and bear interest rates ranging from

4.5%

to

6%.

The notes mature through

November 2023

and approximately

$375,000

of notes receivable are secured by the assets financed.

Inventories

Inventories are stated at the lower of cost or net realizable value. An inventory reserve is established to reduce the cost of obsolete, damaged and excess inventories to the lower of cost or net realizable value based on actual differences. This inventory reserve is determined through analysis of items held in inventory, and, if the recorded value is higher than the market value, the Company records an expense to reduce inventory to its actual market value. The process by which the Company performs its analysis is conducted on an item by item basis and takes into account, among other relevant factors, market value, sales history and future sales potential. Cost is determined using the

first

-in,

first

-out method.

Property and Equipment and Other Assets

Property and equipment are recorded at cost. Depreciation and amortization are computed using the straight-line method based upon the estimated useful life of the asset, which range from

five

to

thirty-nine

years. Leasehold improvements are amortized on the straight-line method over the lives of the respective leases or the service lives of the improvements, whichever is shorter.

The Company reviews its long-lived assets through analysis of estimated fair value, including identifiable intangible assets, whenever events or changes indicate the carrying amount of such assets

may

not

be recoverable. The Company’s policy is to review the recoverability of all assets, at a minimum, on an annual basis.

Income Taxes

The Company provides for income taxes pursuant to the liability method. The liability method requires recognition of deferred income taxes based on temporary differences between financial reporting and income tax bases of assets and liabilities, using current enacted income tax rates and regulations. These differences will result in taxable income or deductions in future years when the reported amount of the asset or liability is recovered or settled, respectively. Considerable judgment is required in determining when these events

may

occur and whether recovery of an asset, including the utilization of a net operating loss or other carryforward prior to its expiration, is more likely than

not.

Due to historical U-Swirl losses, prior to FY

2016

the Company established a full valuation allowance on the Company’s deferred tax assets. During FY

2016

the Company took possession of the outstanding equity in U-Swirl. As a result of the Company’s ownership increasing to

100%,

the Company began filing consolidated income tax returns in FY

2017.

Because of this change, the Company has recognized the full value of deferred tax assets that had full valuation allowances prior to FY

2016.

During the

fourth

quarter of FY

2017

the Company further evaluated the value of deferred tax assets and determined that the assets are restricted due to a limitation on the deductibility of future losses in accordance with Section

382

of the Internal Revenue Code as a result of the foreclosure transaction. The correction of this immaterial error to the Company’s balance sheet is further described in Note

16.

The Company's temporary differences are listed in Note

6.

Gift

C

ard

B

reakage

The Company and its franchisees sell gift cards that are redeemable for product in stores. The Company manages the gift card program, and therefore collects all funds from the activation of gift cards and reimburses franchisees for the redemption of gift cards in their stores. A liability for unredeemed gift cards is included in accounts payable and accrued liabilities in the balance sheets.

There are

no

expiration dates on the Company’s gift cards, and the Company does

not

charge any service fees. While the Company’s franchisees continue to honor all gift cards presented for payment, the Company

may

determine the likelihood of redemption to be remote for certain cards due to long periods of inactivity. The Company has historically accumulated gift card liabilities and has

not

recognized breakage associated with the gift card liability. The adoption of ASU

2014

-

09,

“REVENUE FROM CONTRACTS WITH CUSTOMERS” (“ASC

606”

) during FY

2019

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. Accrued gift card liability was

$742,289

and

$3,057,131

at

February 28, 2019

and

2018,

respectively. The Company recognized breakage of

$139,188

and

$0

during FY

2019

and FY

2018,

respectively. See Note

17

to the financial statements for a complete description of the adjustments recorded upon the adoption of ASC

606.

Goodwill

Goodwill arose from

three

transaction types. The

first

type was the result of the incorporation of the Company after its inception as a partnership. The goodwill recorded was the excess of the purchase price of the Company over the fair value of its assets. The Company has allocated this goodwill equally between its Franchising and Manufacturing operations. The

second

type was the purchase of various retail stores, either individually or as a group, for which the purchase price was in excess of the fair value of the assets acquired. Finally, goodwill arose from business acquisitions, where the fair value of the consideration given for acquisition exceeded the fair value of the identified assets net of liabilities.

The Company performs a goodwill impairment test on an annual basis or more frequently when events or circumstances indicate that the carrying value of a reporting unit more likely than

not

exceeds its fair value. Recoverability of goodwill is evaluated through comparison of the fair value of each of the Company’s reporting units with its carrying value. To the extent that a reporting unit’s carrying value exceeds the implied fair value of its goodwill, an impairment loss is recognized. On

February

29,

2016

RMCF repossessed all stock in U-Swirl International, Inc. pledged as collateral on the SWRL Loan Agreement. This was the result of SWRL’s inability to repay the SWRL Loan Agreement and inability to cure defaults of financial covenants. As of

February

29,

2016,

U-Swirl had

$1,930,529

of goodwill recorded as a result of past business acquisitions. In the

fourth

quarter of FY

2016,

RMCF performed a test of impairment as a result of the change in ownership and the result of the Company’s test indicated a full impairment of the U-Swirl goodwill. The Company’s testing and impairment is described in Note

13

to the financial statements.

Franchise Rights

Franchise rights arose from the entry into agreements to acquire substantially all of the franchise rights of Yogurtini, CherryBerry, Fuzzy Peach, Let’s Yo! and Yogli Mogli. Franchise rights are amortized over a period of

20

years.

Insurance and Self-Insurance Reserves

The Company uses a combination of insurance and self-insurance plans to provide for the potential liabilities for workers’ compensation, general liability, property insurance, director and officers’ liability insurance, vehicle liability and employee health care benefits. Liabilities associated with the risks that are retained by the Company are estimated, in part, by considering historical claims experience, demographic factors, severity factors and other assumptions. While the Company believes that its assumptions are appropriate, the estimated accruals for these liabilities could be significantly affected if future occurrences and claims differ from these assumptions and historical trends.

Sales

Sales of products to franchisees and other customers are recognized at the time of delivery. Sales of products to franchisees and other customers are made at standard prices, without any bargain sales of equipment or supplies. Sales of products at retail stores are recognized at the time of sale.

Rebates

Rebates received from purveyors that supply products to the Company’s franchisees are included in franchise royalties and fees. Product rebates are recognized in the period in which they are earned. Rebates related to Company-owned locations are offset against operating costs.

Shipping Fees

Shipping fees charged to customers by the Company’s trucking department are reported as sales. Shipping costs incurred by the Company for inventory are reported as cost of sales or inventory.

Franchise and Royalty Fees

Beginning in FY

2019,

upon adoption of adoption of ASC

606,

the Company began recognizing franchise fees over the term of the associated franchise agreement, which is generally a period of

10

to

15

years. Prior to FY

2019,

franchise fee revenue was recognized upon opening of the franchise store. In addition to the initial franchise fee, the Company also recognizes a marketing and promotion fee of

one

percent (

1%

) of franchised stores’ gross retail sales and a royalty fee based on gross retail sales. The Company recognizes

no

royalty on franchised stores’ retail sales of products purchased from the Company and recognizes a

ten

percent (

10%

) royalty on all other sales of product sold at franchise locations. Royalty fees for U-Swirl cafés are based on the rate defined in the acquired contracts for the franchise rights and range from

2.5%

to

6%

of gross retail sales.

In certain instances, the Company is required to pay a portion of franchise fee revenue, or royalty fees to parties the Company has contracted with to assist in developing and growing a brand. The agreements generally include Development Agents, or commissioned brokers who are paid a portion of the initial franchise fee, a portion of the ongoing royalty fees, or both. When such agreements exist, the Company reports franchise fee and royalty fee revenues net of the amount paid, or due, to the agent/broker.

Use of Estimates

In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities, at the date of the consolidated financial statements, and revenues and expenses during the reporting period. Actual results could differ from those estimates.

Vulnerability Due to Certain Concentrations

Revenue from

one

customer of our manufacturing segment represented approximately

$3.1

million or

9%

of our total revenues during the year ended

February 28, 2019

compared to revenue of approximately

$5.1

million or

13%

of our total revenues during the year ended

February 28, 2018.

Our future results

may

be adversely impacted by further decreases in the purchases of this customer or the loss of this customer entirely.

Stock-Based Compensation

At

February 28, 2019,

the Company had

one

stock-based compensation plan, the Company’s

2007

Equity Incentive Plan, for employees and non-employee directors which authorized the granting of stock awards.

The Company recognized

$519,772,

$591,839,

and

$584,893

related to equity-based compensation expense during the years ended

February 28, 2019,

2018

and

2017,

respectively. Compensation costs related to share-based compensation are generally recognized over the vesting period.

Beginning

March 1, 2017,

the Company adopted ASU

No.

2019

-

09,

which requires recognition of excess tax benefits and tax deficiencies in the income statement. Prior to

March 1, 2017

tax benefits or expense resulting from the difference in the compensation cost recognized for stock options are reported as financing cash flows in the accompanying Statements of Cash Flows. The excess tax expense included in net cash provided by financing activities for the years ended

February 28, 2017

was

$34,128.

During FY

2019

and

2018,

the Company granted

no

restricted stock units. There were

no

stock options granted to employees during FY

2019

or FY

2018.

The restricted stock unit grants generally vest

17

to

20%

annually over a period of

five

to

six

years. The Company recognized

$463,795

of consolidated stock-based compensation expense related to grants made in prior years during FY

2019

compared with

$532,739

in FY

2018

and

$564,473

in FY

2017.

Total unrecognized stock-based compensation expense of non-vested, non-forfeited shares granted, as of

February 28, 2019

was

$114,183,

which is expected to be recognized over the weighted average period of

0.4

years.

The Company issued

2,000

fully vested, unrestricted shares of stock to non-employee directors during the year ended

February 28, 2019

compared to

no

shares issued during the year ended

February 28, 2018

and

2,000

issued during the year ended

February 28, 2017.

In connection with these non-employee director stock issuances, the Company recognized

$24,480,

$0

and

$20,420

of stock-based compensation expense during year ended

February 28, 2019,

2018

and

2017,

respectively.

During the year ended

February 28, 2018,

the Company issued

5,000

shares of common stock under the Company’s equity incentive plan to an independent contractor providing information technology consulting services to the Company. These shares were issued as a part of the compensation for services rendered to the Company by the contractor. Associated with this unrestricted stock award, the Company recognized

$59,100

in stock-based compensation expense during the year ended

February 28, 2018.

During the year ended

February 28, 2019,

the Company issued

3,333

shares of common stock under the Company’s equity incentive plan to the former Vice President of Creative Services. These shares were issued in consideration of services rendered prior to retirement and based on the number of unvested restricted stock units that were forfeited upon retirement. Associated with this unrestricted stock award, the Company recognized

$31,497

in stock-based compensation expense during the year ended

February 28, 2019.

Earnings

P

er Share

Basic earnings per share is computed as net earnings divided by the weighted average number of common shares outstanding during each year. Diluted earnings per share reflects the potential dilution that could occur from common shares issuable through stock options and restricted stock units. Following the expiration of all outstanding options, during FY

2017,

no

stock options were excluded from diluted shares.

Advertising and Promotional Expenses

The Company expenses advertising costs as incurred. Total advertising expense for RMCF amounted to

$275,441,

$355,678,

and

$279,698

for the fiscal years ended

February 28, 2019,

2018

and

2017,

respectively. Total advertising expense for U-Swirl and its brands amounted to

$168,000,

$222,093,

and

$335,771

for the fiscal years ended

February 28, 2019,

2018

and

2017,

respectively.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, trade receivables, payables, notes payable and notes receivable. The fair value of all instruments approximates the carrying value, because of the relatively short maturity of these instruments.

Recent Accounting Pronouncements

In

August 2018,

the Securities and Exchange Commission (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 will present the analysis of changes in stockholders’ equity in its interim financial statements in its

May 31, 2019

Quarterly Report on Form

10

-Q. The Company does

not

anticipate that the adoption of these SEC amendments will 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. These amendments are effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. The Company will adopt this guidance effective with the

three

month period ending

May 31, 2019 (

the

first

quarter of Fiscal Year

2020

). The Company can elect to record a cumulative-effect adjustment as of the beginning of the year of adoption or apply a modified retrospective transition approach. The Company expects that substantially all of its operating lease commitments will be subject to the new guidance and will be recognized as operating lease liabilities and right-of-use assets upon adoption. The Company anticipates ASU

2016

-

02

will have a material impact on the consolidated balance sheet. The impact of ASU

2016

-

02

is non-cash in nature, as such, it will

not

affect the Company’s cash flows. The cumulative adjustment to be recorded as right-of-use assets and operating lease liabilities, upon adoption, is expected to be in the range of

$3,500,000

to

$3,900,000.

In

May 2014,

the FASB issued ASU

No.

2014

-

09,

Revenue from Contracts with Customers (“ASC

606”

). This guidance, as amended by subsequent ASUs on the topic, supersedes current guidance on revenue recognition in ASC

605

“Revenue Recognition.” 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 our franchisees and others, or in 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 did

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 changed the timing in which the Company recognizes initial fees from franchisees and licensees for new franchise locations and renewals that impact the term of the franchise agreement. The Company's policy for recognizing initial franchise and renewal fees through

February 28, 2018,

was to recognize initial franchise fees upon new store opening 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

to

15

years.

The Company adopted ASC

606

as of

March 1, 2018,

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. See Note

17

to these financial statements for additional details regarding the adjustments recorded upon adoption of this standard.

XML

Note 2 - Inventories

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE

2

- INVENTORIES

Inventories consist of the following at

February 28:

	2019			2018
Ingredients and supplies	$	2,612,954		$	2,764,727
Finished candy		1,983,854			2,371,610
U-Swirl food and packaging		44,696			63,843
Reserve for slow moving inventory		(371,147	)		(357,706	)
Total inventories	$	4,270,357		$	4,842,474

XML

Note 3 - Property and Equipment, Net

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE

3

- PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following at

February 28:

	2019			2018
Land	$	513,618		$	513,618
Building		5,031,395			4,905,103
Machinery and equipment		10,263,119			10,686,631
Furniture and fixtures		864,944			1,067,788
Leasehold improvements		1,131,659			1,568,260
Transportation equipment		422,458			434,091
Asset impairment		(30,000	)		(62,891	)
		18,197,193			19,112,600
Less accumulated depreciation		(12,411,054	)		(12,946,360	)
Property and equipment, net	$	5,786,139		$	6,166,240

XML

Note 4 - Line of Credit and Long-term Debt

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Long-term Debt [Text Block]

NOTE

4

- LINE OF CREDIT AND LONG-TERM DEBT

Line of Credit

At

February 28, 2019,

the Company had a

$5.0

million working capital line of credit from Wells Fargo Bank, N.A., collateralized by substantially all of the Company’s assets with the exception of the Company’s retail store assets. Draws

may

be made under the line at

50%

of eligible accounts receivable plus

50%

of eligible inventories. Interest on borrowings is at LIBOR plus

2.25%

(

4.7%

at

February 28, 2019).

At

February 28, 2019,

$5.0

million was available for borrowings under the line of credit, subject to borrowing base limitations. Additionally, the line of credit is subject to various financial ratio and leverage covenants. At

February 28, 2019,

the Company was in compliance with all such covenants. The credit line is subject to renewal in

September 2019

and the Company believes it is likely to be renewed on terms similar to current terms. At

February 28, 2019

and

2018

there was

no

amount outstanding under this line of credit.

Effective

January 16, 2014,

the Company entered into a business loan agreement with Wells Fargo Bank, N.A. (the “Wells Fargo Loan Agreement”) for a

$7.0

million long-term line of credit to be used to loan money to SWRL to fund the purchase price of business acquisitions by SWRL (the “Wells Fargo Loan”). The Company made its

first

draw of approximately

$6.4

million on the Wells Fargo Loan on

January 16, 2014

and the

first

draw was the amount outstanding at

February 28, 2014.

Interest on the Wells Fargo Loan is at a fixed rate of

3.75%

and the maturity date is

January 15, 2020.

The Wells Fargo Loan

may

be prepaid without penalty at any time by the Company. The Wells Fargo Loan is collateralized by substantially all of the Company’s assets. Additionally, the Wells Fargo Loan is subject to various financial ratio and leverage covenants. As of

February 28, 2019,

the Company was in compliance with all such covenants. The Wells Fargo Loan Agreement also contains customary representations and warranties, covenants and acceleration provisions in the event of a default by the Company.

Long-term debt consists of the following at

February 28:

	2019		2018
Note payable in monthly installments of principal and interest at 3.75% per annum through December 2019 collateralized by sustantially all business assets	$	1,176,488	$	2,529,309
Less current maturities		1,176,488		1,352,893
Long-term obligations	$	-	$	1,176,416

XML

Note 5 - Commitments and Contingencies

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Contingencies Disclosure [Text Block]

NOTE

5

– COMMITMENTS AND CONTINGENCIES

Operating Leases

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 following is a schedule by year of future minimum rental payments required under such leases for the years ending

February 28

or

29:

2020	$	318,000
2021		259,000
2022		249,000
2023		243,000
2024		249,000
Thereafter		175,000
Total	$	1,493,000

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. The Company’s current policy is

not

to act as primary lessee on any further franchised locations, except in rare instances. At

February 28, 2019,

the Company was the primary lessee at

four

of the Company’s

313

domestic franchised stores.

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's liability as primary lessee on sublet franchise outlets, all of which is fully offset by sublease rentals, is as follows for the years ending

February 28

or

29:

2020	$	92,000
2021		75,000
2022		21,000
Total	$	188,000

The following is a schedule of lease expense for all retail operating leases for the

three

years ended

February 28:

	2019			2018			2017
Minimum rentals	$	1,030,536		$	1,270,240		$	944,938
Less sublease rentals		(572,000	)		(603,000	)		(318,000	)
Contingent rentals		22,800			26,100			25,200
	$	481,336		$	693,340		$	652,138

In FY

2019,

the Company renewed an operating lease for warehouse space in the immediate vicinity of its manufacturing operation. The following is a schedule, by year, of future minimum rental payments required under such lease for the years ending

February 28

or

29:

2020	$	116,000
2021		121,000
2022		125,000
2023		129,000
2024		33,000
Total	$	524,000

The Company also leases trucking equipment under operating leases. The following is a schedule by year of future minimum rental payments required under such leases for the years ending

February 28

or

29:

2020	$	323,000
2021		323,000
2022		257,000
2023		29,000
Total	$	932,000

The following is a schedule of lease expense for trucking equipment operating leases for the

three

years ended

February 28:

2019	2018		2017
325,229		225,992		220,791

Purchase contracts

The Company frequently enters into purchase contracts of between

six

to

eighteen

months for chocolate and certain nuts. These contracts permit the Company to purchase the specified commodity at a fixed price on an as-needed basis during the term of the contract. Because prices for these products

may

fluctuate, the Company

may

benefit if prices rise during the terms of these contracts, but it

may

be required to pay above-market prices if prices fall and it is unable to renegotiate the terms of the contract. As of

February 28, 2019,

the Company was contracted for approximately

$880,000

of raw materials under such agreements.

XML

Note 6 - Income Taxes

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

6

- INCOME TAXES

Income tax expense (benefit) is comprised of the following for the years ended

February 28:

	2019			2018			2017
Current
Federal	$	653,226		$	1,916,720		$	1,411,127
State		142,570			220,164			272,214
Total Current		795,796			2,136,884			1,683,341
Deferred
Federal		(67,410	)		55,658			240,233
State		(11,524	)		(32,247	)		22,015
Total Deferred		(78,934	)		23,411			262,248
Total	$	716,862		$	2,160,295		$	1,945,589

A reconciliation of the statutory federal income tax rate and the effective rate as a percentage of pretax income is as follows for the years ended

February 28

or

29:

	2019			2018			2017
Statutory rate		21.0	%		31.9	%		34.0	%
State income taxes, net of federal benefit		3.4	%		2.4	%		3.6	%
Domestic production deduction		0.0	%		(0.9	)%		(1.1	)%
Work opportunity tax credits		(0.7	)%		(0.2	)%		(0.4	)%
Other		0.5	%		0.8	%		0.0	%
Impact of tax reform		0.0	%		8.2	%		0.0	%
Effective rate - provision (benefit)		24.2	%		42.2	%		36.1	%

The components of deferred income taxes at

February 28

are as follows:

	2019			2018
Deferred Tax Assets
Allowance for doubtful accounts and notes	$	120,368		$	124,469
Inventories		91,265			86,938
Accrued compensation		87,930			130,049
Loss provisions and deferred income		492,468			817,945
Self-insurance accrual		34,426			38,868
Amortization		217,481			520,379
Restructuring charges		98,693			98,728
U-Swirl accumulated net loss		325,253			258,173
Valuation allowance		(98,693	)		(98,728	)
Net deferred tax assets	$	1,369,191		$	1,976,821
Deferred Tax Liabilities
Depreciation and amortization		(682,542	)		(1,066,113	)
Prepaid expenses		(79,228	)		(75,245	)
Deferred Tax Liabilities		(761,770	)		(1,141,358	)
Net deferred tax assets	$	607,421		$	835,463

The following table summarizes deferred income tax valuation allowances as of

February 28:

	2019			2018
Valuation allowance at beginning of period	$	98,728		$	148,494
Tax expense (benefits) realized by valuation allowance		(35	)		-
Tax benefits released from valuation allowance		-			-
Impact of tax reform		-			(49,766	)
Valuation allowance at end of period	$	98,693		$	98,728

Income tax expense and the effective income tax rate for the year ended

February 28, 2019

decreased from the year ended

February 28, 2018,

primarily as a result of the revaluation of deferred tax assets and liabilities to the lower enacted U.S. corporate tax rate of

21%

under the Tax Cuts and Jobs Act recognized during the year ended

February 28, 2018

and the lower enacted U.S. corporate tax rate of

21%

under the Tax Cuts and Jobs Act effective for the year ended

February 28, 2019.

The revaluation of deferred tax assets and liabilities resulted in income tax expense of approximately

$421,000

recognized in consideration of the lower enacted rate for the year ended

February 28, 2018.

The Company files income tax returns in the U.S. federal and various state taxing jurisdictions. With few exceptions, the Company is

no

longer subject to U.S. federal and state tax examinations in its major tax jurisdictions for periods before FY

2013.

The Company’s federal income tax returns have been examined for the years ended

February 28, 2015

and

2014

and the examination did

not

result in any changes to the income tax returns filed for these years. The Company’s federal income tax returns are being examined for the years ended

February 28

or

29,

2017

and

2016.

Realization of the Company's deferred tax assets is dependent upon the Company generating sufficient taxable income, in the appropriate tax jurisdictions, in future years to obtain benefit from the reversal of net deductible temporary differences. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed. Management believes that, with the exception of the deferred tax asset related to restructuring charges, it is more likely than

not

that RMCF will realize the benefits of its deferred tax assets as of

February 28, 2019.

The Company accounts for uncertainty in income taxes by recognizing the tax benefit from an uncertain tax position only if it is more likely than

not

that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized in the consolidated financial statements from such a position based on the largest benefit that has a greater than

50%

likelihood of being realized upon ultimate resolution. The application of income tax law is inherently complex. As such, the Company is required to make judgments regarding income tax exposures. Interpretations of and guidance surrounding income tax law and regulations change over time and

may

result in changes to the Company's judgments which can materially affect amounts recognized in the balance sheets and statements of operations. The result of the assessment of the Company's tax positions did

not

have an impact on the consolidated financial statements for the years ended

February 28, 2019

or

2018.

The Company does

not

have any significant unrecognized tax benefits and does

not

anticipate a significant increase or decrease in unrecognized tax benefits within the next

twelve

months. Amounts are recognized for income tax related interest and penalties as a component of general and administrative expense in the statement of income and are immaterial for years ended

February 28, 2019

and

2018.

As of

February

29,

2016,

the Company foreclosed on the outstanding equity of U-Swirl and U-Swirl was consolidated for income tax purposes. SWRL, along with U-Swirl has historically filed its own consolidated federal income tax return and reported its own Federal net operating loss carry forward. As of

February 28, 2015,

SWRL had recorded a full valuation allowance related to the realization of its deferred income tax assets. As of

February

29,

2016,

a portion of the U-Swirl deferred tax assets were recognized as a result of it becoming more likely than

not

that some of these assets would be realized in the future as a result of RMCF and U-Swirl filing a consolidated income tax return.

In accordance with Section

382

of the Internal Revenue Code, deductibility of SWRL’s and U-Swirl’s Federal net operating loss carryovers

may

be subject to annual limitation in the event of a change in control. The Company has performed a preliminary evaluation as to whether a change in control has taken place, and have concluded that there was a change of control with respect to the net operating losses of U-Swirl when the Company acquired its controlling ownership interest in

January 2013

and again in

February 2016

when the Company foreclosed on the stock of U-Swirl. The initial limitations will continue to limit deductibility of SWRL’s and U-Swirl’s net operating loss carryovers, but the annual loss limitation will be deductible to RMCF and U-Swirl International Inc. upon the filing of joint tax returns in FY

2017

and future years.

The Company estimates that the potential future tax deductions of U-Swirl’s Federal net operating losses, limited by section

382,

to be approximately

$1,323,000

with a resulting deferred tax asset of approximately

$325,000.

U-Swirl’s Federal net operating loss carryovers will expire at various dates beginning in

2026.

XML

Note 7 - Stockholders' Equity

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

NOTE

7

– 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.

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. During FY

2017,

the Company repurchased

35,108

shares under the repurchase plan at an average price of

$10.01

per share. The Company did

not

repurchase any shares during the years ended

February 28, 2019

or

2018.

As of

February 28, 2019,

approximately

$638,000

remains available under the repurchase plan for further stock repurchases.

XML

Note 8 - Stock Compensation Plans

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

NOTE

8

- STOCK COMPENSATION PLANS

In FY

2014,

stockholders approved an amendment and restatement of the

2007

Equity Incentive Plan (as amended and restated, the

“2007

Plan”). The

2007

Plan allows awards of stock options, stock appreciation rights, stock awards, restricted stock and stock units, performance shares and performance units, and other stock- or cash-based awards.

The following table summarizes stock awards under the

2007

Plan as of

February 28, 2019:

Original share authorization:	300,000
Prior plan shares authorized and incorporated in the 2007 Plan:	85,340
Additional shares authorized through 2007 Plan amendment:	300,000
Available for award:	685,340
Cancelled/forfeited:	199,859
Shares awarded as unrestricted shares, stock options or restricted stock units:	(557,409	)
Shares available for award:	327,790

Information with respect to stock option awards outstanding under the

2007

Plan at

February 28, 2019,

and changes for the

three

years then ended was as follows:

	Twelve Months Ended
	February 28:
	2019		2018		2017
Outstanding stock options at beginning of year:		-		-		12,936
Granted		-		-		-
Exercised		-		-		-
Cancelled/forfeited		-		-		(12,936	)
Outstanding stock options as of February 28:		-		-		-
Weighted average exercise price		n/a		n/a		n/a
Weighted average remaining contractual term (in years)		n/a		n/a		n/a

Information with respect to restricted stock unit awards outstanding under the

2007

Plan at

February 28, 2019,

and changes for the

three

years then ended was as follows:

	Twelve Months Ended
	February 28:
	2019			2018			2017
Outstanding non-vested restricted stock units at beginning of year:		77,594			123,658			181,742
Granted		-			-			-
Vested		(49,058	)		(44,064	)		(48,084	)
Cancelled/forfeited		(3,534	)		(2,000	)		(10,000	)
Outstanding non-vested restricted stock units as of February 28:		25,002			77,594			123,658
Weighted average grant date fair value	$	12.05		$	12.16		$	12.21
Weighted average remaining vesting period (in years)		0.38			1.27			2.23

XML

Note 9 - Operating Segments

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE

9

- OPERATING SEGMENTS

The Company classifies its business interests into

five

reportable segments: Rocky Mountain Chocolate Factory, Inc. 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 these consolidated financial statements. 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:

FY 2019	Franchising			Manufacturing			Retail			U-Swirl			Other			Total
Total revenues	$	5,361,528		$	25,324,024		$	1,272,009		$	3,737,606		$	-		$	35,695,167
Intersegment revenues		(5,236	)		(1,144,484	)		-			-			-			(1,149,720	)
Revenue from external customers		5,356,292			24,179,540			1,272,009			3,737,606			-			34,545,447
Segment profit (loss)		2,288,871			4,310,722			(52,009	)		(32,391	)		(3,559,532	)		2,955,661
Total assets		1,182,355			12,267,458			1,001,419			5,264,989			6,505,920			26,222,141
Capital expenditures		3,548			526,402			9,617			16,512			57,707			613,786
Total depreciation & amortization	$	46,369		$	573,846		$	32,762		$	952,178		$	104,644		$	1,709,799

FY 2018	Franchising			Manufacturing			Retail			U-Swirl		Other			Total
Total revenues	$	6,004,897		$	27,491,089		$	1,876,021		$	4,142,085	$	-		$	39,514,092
Intersegment revenues		(4,882	)		(1,434,515	)		-			-		-			(1,439,397	)
Revenue from external customers		6,000,015			26,056,574			1,876,021			4,142,085		-			38,074,695
Segment profit (loss)		2,623,081			5,791,980			(37,102	)		542,073		(3,795,829	)		5,124,203
Total assets		1,157,158			12,729,659			1,134,876			8,125,171		5,793,771			28,940,635
Capital expenditures		15,429			429,545			33,056			11,899		55,027			544,956
Total depreciation & amortization	$	46,087		$	540,033		$	32,567		$	576,162	$	124,406		$	1,319,255

FY 2017	Franchising			Manufacturing			Retail		U-Swirl		Other			Total
Total revenues	$	5,951,055		$	26,678,514		$	1,710,734	$	5,216,076	$	-		$	39,556,379
Intersegment revenues		(5,332	)		(1,254,670	)		-		-		-			(1,260,002	)
Revenue from external customers		5,945,723			25,423,844			1,710,734		5,216,076		-			38,296,377
Segment profit (loss)		2,495,709			5,609,957			128,024		1,017,395		(3,855,380	)		5,395,705
Total assets		1,216,241			12,900,070			1,101,461		9,124,822		5,075,762			29,418,356
Capital expenditures		15,480			966,619			17,047		40,924		198,402			1,238,472
Total depreciation & amortization	$	54,053		$	463,996		$	14,755	$	622,654	$	133,251		$	1,288,709

Revenue from

one

customer of the Company’s Manufacturing segment represented approximately

$3.1

million, or

9.1

percent, of the Company’s revenues from external customers during the year ended

February 28, 2019,

compared to

$5.1

million, or

13.4

percent of the Company’s revenues from external customers during the year ended

February 28, 2018.

XML

Note 10 - Supplemental Cash Flow Information

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Cash Flow, Supplemental Disclosures [Text Block]

NOTE

10

- SUPPLEMENTAL CASH FLOW INFORMATION

For the

three

years ended

February 28

or

29:

Cash paid for:	2019		2018		2017
Interest, net	$	52,102	$	102,640	$	129,927
Income taxes		638,252		2,431,884		1,997,751
Non-cash Operating Activities
Accrued Inventory		52,918		258,247		531,017
Non-cash Financing Activities
Dividend payable	$	714,939	$	708,652		702,525

XML

Note 11 - Employee Benefit Plan

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

NOTE

11

- EMPLOYEE BENEFIT PLAN

The Company has a

401

(k) plan called the Rocky Mountain Chocolate Factory, Inc.

401

(k) Plan. Eligible participants are permitted to make contributions up to statutory limits. The Company makes a matching contribution, which vests ratably over a

3

-year period, and is

25%

of the employee’s contribution up to a maximum of

1.5%

of the employee’s compensation. During the years ended

February 28, 2019,

2018

and

2017,

the Company’s contribution was approximately

$70,000,

$68,000,

and

$66,000,

respectively, to the plan.

XML

Note 12 - Summarized Quarterly Data (Unaudited)

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Quarterly Financial Information [Text Block]

NOTE

12

– SUMMARIZED QUARTERLY DATA (UNAUDITED)

Following is a summary of the quarterly results of operations for the fiscal years ended

February 28, 2019

and

2018:

			Fiscal Quarter
2019	First		Second		Third		Fourth		Total
Total revenue	$	8,366,085	$	7,800,088	$	8,949,747	$	9,429,527	$	34,545,447
Gross margin		1,916,807		1,852,435		1,882,975		1,312,026		6,964,243
Net income		576,944		750,815		525,361		385,679		2,238,799
Basic earnings per share		0.10		0.13		0.09		0.06		0.38
Diluted earnings per share	$	0.10	$	0.13	$	0.09	$	0.06	$	0.37

			Fiscal Quarter
2018	First		Second		Third		Fourth		Total
Total revenue	$	9,346,447	$	8,266,691	$	9,961,572	$	10,499,985	$	38,074,695
Gross margin		2,191,974		2,210,910		2,311,579		2,276,586		8,991,049
Net income		813,672		928,284		751,056		470,896		2,963,908
Basic earnings per share		0.14		0.16		0.13		0.08		0.50
Diluted earnings per share	$	0.14	$	0.16	$	0.13	$	0.08	$	0.50

XML

Note 13 - Goodwill and Intangible Assets

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE

13

– GOODWILL AND INTANGIBLE ASSETS

Intangible assets consist of the following at

February 28:

				2019				2018
	Amortization Period (in years)			Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Intangible assets subject to amortization
Store design		10		$	220,778	$	214,152	$	220,778	$	212,653
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		715,339		223,628		715,339		136,087
Franchise rights		20			5,979,637		2,300,717		5,979,637		1,545,710
Total					7,467,557		3,290,300		7,467,557		2,446,253
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	$	3,952,684	$	9,176,885	$	3,108,637

Effective

March 1, 2002,

under ASC 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

$844,320,

$446,050,

and

$427,840

during the fiscal years ended

February 28

or

29,

2019,

2018

and

2017,

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

February 28, 2019,

annual amortization of intangible assets, based upon the Company’s existing intangible assets and current useful lives, is estimated to be the following:

2020	$	706,177
2021		594,229
2022		490,060
2023		411,607
2024		345,642
Thereafter		1,629,542
Total	$	4,177,257

XML

Note 14 - Costs Associated With Company-owned Store Closures

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Restructuring, Impairment, and Other Activities Disclosure [Text Block]

NOTE

14

– COSTS ASSOCIATED WITH COMPANY-OWNED STORE CLOSURES

Costs associated with Company-owned store closures at

February 28, 2019,

2018

and

2017

were comprised of the following:

	2019		2018		2017
Loss on distribution of assets	$	81,981	$	-	$	-
Lease settlement costs		145,000		-		60,000
Total	$	226,981	$	-	$	60,000

XML

Note 15 - Subsequent Events

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE

15

– SUBSEQUENT EVENTS

On

May 28, 2019,

the Company announced that its Board of Directors has declared a

first

quarter

FY2020

cash dividend of

$0.12

per common share outstanding. The cash dividend will be payable

June 14, 2019

to shareholders of record at the close of business

June 4, 2019.

In

March 2019,

the Company’s Compensation Committee awarded

270,000

restricted stock units to eligible employees of the Company. The awards vest over a period of

five

to

six

years and have a grant date fair value of

$2,536,100.

Expense associated with these awards will be recognized over the vesting period.

XML

Note 16 - Immaterial Revision of Previously Reported Income Taxes and Deferred Tax Liabilities

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Accounting Changes and Error Corrections [Text Block]

NOTE

16

– IMMATERIAL REVISION OF PREVIOUSLY REPORTED INCOME TAXES AND DEFERRED TAX LIABILITIES

In the

fourth

quarter of FY

2017,

the Company identified an immaterial error related to the overstatement of the income tax benefit and related deferred income tax asset accounts that impacted the Company’s previously issued annual consolidated financial statements. The adjustment relates to the foreclosure upon the interest in U-Swirl and the realization of U-Swirl deferred tax assets and refundable income taxes.

The Company determined that this error was

not

material to any of the Company’s prior annual consolidated financial statements and therefore, amendments of previously filed reports were

not

required. As such, a revision for the correction is reflected in the

February 28, 2017

financial information of the applicable prior periods in this Form

10

-K. The error resulted in corrections to beginning retained earnings, accrued liabilities and deferred tax assets of $(

492,766

),

$192,233

and $(

300,533

), respectively, on the Consolidated Balance Sheet as of

February 28, 2017.

XML

Note 17 - Adoption of ASU 2014-09, "Revenue from Contracts with Customers" ("ASC 606")

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

NOTE

17

– ADOPTION OF ASU

2014

-

09,

“REVENUE FROM CONTRACTS WITH CUSTOMERS” (“ASC

606”

)

As described in Note

1,

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 our franchisees and others, or in our 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.

Impact to Prior Periods

The cumulative adjustment recorded upon adoption of ASC

606

consisted of net contract liabilities of approximately

$1,022,720,

a reduction in gift card liability of

$2,250,743

and approximately

$302,094

of associated adjustments to the deferred tax balances which are recorded in deferred income taxes. The Company did

not

record any contract assets. The following table outlines the adjustments to the consolidated financial statements made upon adoption of ASC

606

on

March 1, 2018:

	Amount
Increase in deferred revenue	$	(1,022,720	)
Reduction in gift card liabilities		2,250,743
Adjustment to deferred income tax assets		(302,094	)
Cumulative increase to retained earnings	$	925,929

The Company adopted ASC

606

as of

March 1, 2018,

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 adoption of ASC

606

impacted the Company’s previously reported financial statements as follows:

	CONSOLIDATED BALANCE SHEET
	AS OF FEBRUARY 28, 2018
	Previously Reported		Adjustments			Restated
Assets
Current Assets
Cash and cash equivalents	$	6,072,984	$	-		$	6,072,984
Accounts receivable, net		3,897,334		-			3,897,334
Notes receivable, current portion, net		105,540		-			105,540
Refundable income taxes		342,863		-			342,863
Inventories, net		4,842,474		-			4,842,474
Other		310,173		-			310,173
Total current assets		15,571,368		-			15,571,368
Property and Equipment, Net		6,166,240		-			6,166,240
Other Assets
Notes receivable, less current portion, net		235,983		-			235,983
Goodwill, net		1,046,944		-			1,046,944
Franchise rights, net		4,433,927		-			4,433,927
Intangible assets, net		587,377		-			587,377
Deferred income taxes		835,463		(302,094	)		533,369
Other		63,333		-			63,333
Total other assets		7,203,027		(302,094	)		6,900,933
Total Assets	$	28,940,635	$	(302,094	)	$	28,638,541
Liabilities and Stockholders' Equity
Current Liabilities
Current maturities of long-term debt	$	1,352,893		-		$	1,352,893
Accounts payable		1,647,991		-			1,647,991
Accrued salaries and wages		644,005		-			644,005
Gift card liabilities		3,057,131		(2,250,743	)		806,388
Other accrued expenses		325,034		-			325,034
Dividend payable		708,652		-			708,652
Deferred revenue		471,910		(143,445	)		328,465
Total current liabilities		8,207,616		(2,394,188	)		5,813,428
Long-Term Debt, Less Current Maturities		1,176,416		-			1,176,416
Deferred Revenue, Less Current Portion		-		1,166,165			1,166,165
Commitments and Contingencies
Stockholders' Equity
Preferred stock
Common stock		5,903		-			5,903
Additional paid-in capital		6,131,147		-			6,131,147
Retained earnings		13,419,553		925,929			14,345,482
Total stockholders' equity		19,556,603		925,929			20,482,532
Total Liabilities and Stockholders' Equity	$	28,940,635	$	(302,094	)	$	28,638,541

The following table contains a reconciliation of revenue reported for the current period and revenue had the Company reported under the prior method for revenue recognition:

	For the Years Ended February 28,
	2019			2018		2017
Franchise Fees contained within the Statement of Income:	$	335,028		$	681,613	$	324,718
Adjustment required to conform revenue to prior period method:		(53,528	)		-		-
Comparable franchise fees:	$	281,500		$	681,613	$	324,718

On

February 28, 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:

2020	$	256,093
2021		204,071
2022		190,524
2023		176,394
2024		137,477
Thereafter		388,013
Total	$	1,352,572

XML

Note 18 - Disaggregation of Revenue

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

Disaggregation of Revenue [Text Block]

NOTE

18

– DISAGGREGATION OF REVENUE

The following table presents disaggregated revenue by the method of recognition and segment:

For the Year Ended February 28, 2019
Revenues recognized over time under ASC 606:
	Franchising		Manufacturing		Retail		U-Swirl		Total
Revenues recognized over time under ASC 606:
Franchise fees	$	199,362	$	-	$	-	$	135,666	$	335,028

Revenues recognized at a point in time:
	Franchising		Manufacturing		Retail		U-Swirl		Total
Factory sales		-		24,179,540		-		-		24,179,540
Retail sales		-		-		1,272,009		2,112,245		3,384,254
Royalty and marketing fees		5,156,930		-		-		1,489,695		6,646,625
Total	$	5,356,292	$	24,179,540	$	1,272,009	$	3,737,606	$	34,545,447

XML

Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Feb. 28, 2019

Notes to Financial Statements

SEC Schedule, 12-09, Schedule of Valuation and Qualifying Accounts Disclosure [Text Block]

SCHEDULE II - Valuation and Qualifying Accounts

	Balance at Beginning of Period	Additions Charged to Costs & Exp.	Deductions	Balance at End of Period
Year Ended February 28, 2019
Valuation Allowance for Accounts and Notes Receivable	505,972	143,214	159,684	489,502
Year Ended February 29, 2018
Valuation Allowance for Accounts and Notes Receivable	536,093	166,868	196,989	505,972
Year Ended February 28, 2017
Valuation Allowance for Accounts and Notes Receivable	670,471	138,125	272,503	536,093

XML

Significant Accounting Policies (Policies)

12 Months Ended

Feb. 28, 2019

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

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”), and U-Swirl International, Inc. (“U-Swirl”), and its

46%

-owned subsidiary, U-Swirl, Inc. (“SWRL”) (collectively, the “Company”).

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 self-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.

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: 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; 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 its subsidiaries at

February 28, 2019:

	Sold, Not Yet Open		Open		Total
Rocky Mountain Chocolate Factory
Company-owned stores		-		2		2
Franchise stores - Domestic stores and kiosks		4		183		187
International license stores		1		64		65
Cold Stone Creamery - co-branded		11		91		102
U-Swirl (Including all associated brands)
Company-owned stores		-		1		1
Company-owned stores - co-branded		-		3		3
Franchise stores - Domestic stores		-		87		87
Franchise stores - Domestic - co-branded		-		9		9
International license stores		-		2		2
Total		16		442		458

Consolidation, Policy [Policy Text Block]

Consolidation

Management accounts for the activities of the Company and its subsidiaries, and the accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. As described above, on

January 14, 2013,

the Company acquired a controlling interest in SWRL. Prior to

January 14, 2013,

the Company’s consolidated financial statements excluded the financial information of SWRL. Beginning on

January 14, 2013,

the results of operations, assets and liabilities of SWRL have been included in these consolidated financial statements. 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 a loan and security agreement with SWRL to cover the purchase price and other costs associated with the acquisitions (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 U-Swirl, Inc. as of

February

29,

2016.

As of

February

29,

2016,

U-Swirl, Inc. had

no

assets. All intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of

six

months or less to be cash equivalents. The Company continually monitors its positions with, and the credit quality of, the financial institutions with which it invests. As of the balance sheet date, and periodically throughout the year, the Company has maintained balances in various operating accounts in excess of federally insured limits. This amount was approximately

$4.9

million at

February 28, 2019.

Receivable [Policy Text Block]

Accounts

and Notes

Receivable

In the normal course of business, the Company extends credit to customers, primarily franchisees that satisfy pre-defined credit criteria. The Company believes that it has limited concentration of credit risk primarily because its receivables are secured by the assets of the franchisees to which the Company ordinarily extends credit, including, but

not

limited to, their franchise rights and inventories. An allowance for doubtful accounts is determined through analysis of the aging of accounts receivable, assessments of collectability based on historical trends, and an evaluation of the impact of current and projected economic conditions. The process by which the Company performs its analysis is conducted on a customer by customer, or franchisee by franchisee, basis and takes into account, among other relevant factors, sales history, outstanding receivables, customer financial strength, as well as customer specific and geographic market factors relevant to projected performance. The Company monitors the collectability of its accounts receivable on an ongoing basis by assessing the credit worthiness of its customers and evaluating the impact of reasonably likely changes in economic conditions that

may

impact credit risks. Estimates with regard to the collectability of accounts receivable are reasonably likely to change in the future. At

February 28, 2019,

the Company had

$391,831

of notes receivable outstanding and an allowance for doubtful accounts of

$0

associated with these notes. The notes require monthly payments and bear interest rates ranging from

4.5%

to

6%.

The notes mature through

November 2023

and approximately

$375,000

of notes receivable are secured by the assets financed.

Inventory, Policy [Policy Text Block]

Inventories

Inventories are stated at the lower of cost or net realizable value. An inventory reserve is established to reduce the cost of obsolete, damaged and excess inventories to the lower of cost or net realizable value based on actual differences. This inventory reserve is determined through analysis of items held in inventory, and, if the recorded value is higher than the market value, the Company records an expense to reduce inventory to its actual market value. The process by which the Company performs its analysis is conducted on an item by item basis and takes into account, among other relevant factors, market value, sales history and future sales potential. Cost is determined using the

first

-in,

first

-out method.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment and Other Assets

Property and equipment are recorded at cost. Depreciation and amortization are computed using the straight-line method based upon the estimated useful life of the asset, which range from

five

to

thirty-nine

years. Leasehold improvements are amortized on the straight-line method over the lives of the respective leases or the service lives of the improvements, whichever is shorter.

The Company reviews its long-lived assets through analysis of estimated fair value, including identifiable intangible assets, whenever events or changes indicate the carrying amount of such assets

may

not

be recoverable. The Company’s policy is to review the recoverability of all assets, at a minimum, on an annual basis.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company provides for income taxes pursuant to the liability method. The liability method requires recognition of deferred income taxes based on temporary differences between financial reporting and income tax bases of assets and liabilities, using current enacted income tax rates and regulations. These differences will result in taxable income or deductions in future years when the reported amount of the asset or liability is recovered or settled, respectively. Considerable judgment is required in determining when these events

may

occur and whether recovery of an asset, including the utilization of a net operating loss or other carryforward prior to its expiration, is more likely than

not.

Due to historical U-Swirl losses, prior to FY

2016

the Company established a full valuation allowance on the Company’s deferred tax assets. During FY

2016

the Company took possession of the outstanding equity in U-Swirl. As a result of the Company’s ownership increasing to

100%,

the Company began filing consolidated income tax returns in FY

2017.

Because of this change, the Company has recognized the full value of deferred tax assets that had full valuation allowances prior to FY

2016.

During the

fourth

quarter of FY

2017

the Company further evaluated the value of deferred tax assets and determined that the assets are restricted due to a limitation on the deductibility of future losses in accordance with Section

382

of the Internal Revenue Code as a result of the foreclosure transaction. The correction of this immaterial error to the Company’s balance sheet is further described in Note

16.

The Company's temporary differences are listed in Note

6.

Gift Card Breakage, Policy [Policy Text Block]

Gift

C

ard

B

reakage

The Company and its franchisees sell gift cards that are redeemable for product in stores. The Company manages the gift card program, and therefore collects all funds from the activation of gift cards and reimburses franchisees for the redemption of gift cards in their stores. A liability for unredeemed gift cards is included in accounts payable and accrued liabilities in the balance sheets.

There are

no

expiration dates on the Company’s gift cards, and the Company does

not

charge any service fees. While the Company’s franchisees continue to honor all gift cards presented for payment, the Company

may

determine the likelihood of redemption to be remote for certain cards due to long periods of inactivity. The Company has historically accumulated gift card liabilities and has

not

recognized breakage associated with the gift card liability. The adoption of ASU

2014

-

09,

“REVENUE FROM CONTRACTS WITH CUSTOMERS” (“ASC

606”

) during FY

2019

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. Accrued gift card liability was

$742,289

and

$3,057,131

at

February 28, 2019

and

2018,

respectively. The Company recognized breakage of

$139,188

and

$0

during FY

2019

and FY

2018,

respectively. See Note

17

to the financial statements for a complete description of the adjustments recorded upon the adoption of ASC

606.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

Goodwill arose from

three

transaction types. The

first

type was the result of the incorporation of the Company after its inception as a partnership. The goodwill recorded was the excess of the purchase price of the Company over the fair value of its assets. The Company has allocated this goodwill equally between its Franchising and Manufacturing operations. The

second

type was the purchase of various retail stores, either individually or as a group, for which the purchase price was in excess of the fair value of the assets acquired. Finally, goodwill arose from business acquisitions, where the fair value of the consideration given for acquisition exceeded the fair value of the identified assets net of liabilities.

The Company performs a goodwill impairment test on an annual basis or more frequently when events or circumstances indicate that the carrying value of a reporting unit more likely than

not

exceeds its fair value. Recoverability of goodwill is evaluated through comparison of the fair value of each of the Company’s reporting units with its carrying value. To the extent that a reporting unit’s carrying value exceeds the implied fair value of its goodwill, an impairment loss is recognized. On

February

29,

2016

RMCF repossessed all stock in U-Swirl International, Inc. pledged as collateral on the SWRL Loan Agreement. This was the result of SWRL’s inability to repay the SWRL Loan Agreement and inability to cure defaults of financial covenants. As of

February

29,

2016,

U-Swirl had

$1,930,529

of goodwill recorded as a result of past business acquisitions. In the

fourth

quarter of FY

2016,

RMCF performed a test of impairment as a result of the change in ownership and the result of the Company’s test indicated a full impairment of the U-Swirl goodwill. The Company’s testing and impairment is described in Note

13

to the financial statements.

Goodwill and Intangible Assets, Policy [Policy Text Block]

Franchise Rights

Franchise rights arose from the entry into agreements to acquire substantially all of the franchise rights of Yogurtini, CherryBerry, Fuzzy Peach, Let’s Yo! and Yogli Mogli. Franchise rights are amortized over a period of

20

years.

Insurance and Self-Insurance Reserves [Policy Text Block]

Insurance and Self-Insurance Reserves

The Company uses a combination of insurance and self-insurance plans to provide for the potential liabilities for workers’ compensation, general liability, property insurance, director and officers’ liability insurance, vehicle liability and employee health care benefits. Liabilities associated with the risks that are retained by the Company are estimated, in part, by considering historical claims experience, demographic factors, severity factors and other assumptions. While the Company believes that its assumptions are appropriate, the estimated accruals for these liabilities could be significantly affected if future occurrences and claims differ from these assumptions and historical trends.

Revenue [Policy Text Block]

Sales

Sales of products to franchisees and other customers are recognized at the time of delivery. Sales of products to franchisees and other customers are made at standard prices, without any bargain sales of equipment or supplies. Sales of products at retail stores are recognized at the time of sale.

Rebates

Rebates received from purveyors that supply products to the Company’s franchisees are included in franchise royalties and fees. Product rebates are recognized in the period in which they are earned. Rebates related to Company-owned locations are offset against operating costs.

Shipping Fees

Shipping fees charged to customers by the Company’s trucking department are reported as sales. Shipping costs incurred by the Company for inventory are reported as cost of sales or inventory.

Franchise and Royalty Fees

Beginning in FY

2019,

upon adoption of adoption of ASC

606,

the Company began recognizing franchise fees over the term of the associated franchise agreement, which is generally a period of

10

to

15

years. Prior to FY

2019,

franchise fee revenue was recognized upon opening of the franchise store. In addition to the initial franchise fee, the Company also recognizes a marketing and promotion fee of

one

percent (

1%

) of franchised stores’ gross retail sales and a royalty fee based on gross retail sales. The Company recognizes

no

royalty on franchised stores’ retail sales of products purchased from the Company and recognizes a

ten

percent (

10%

) royalty on all other sales of product sold at franchise locations. Royalty fees for U-Swirl cafés are based on the rate defined in the acquired contracts for the franchise rights and range from

2.5%

to

6%

of gross retail sales.

In certain instances, the Company is required to pay a portion of franchise fee revenue, or royalty fees to parties the Company has contracted with to assist in developing and growing a brand. The agreements generally include Development Agents, or commissioned brokers who are paid a portion of the initial franchise fee, a portion of the ongoing royalty fees, or both. When such agreements exist, the Company reports franchise fee and royalty fee revenues net of the amount paid, or due, to the agent/broker.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities, at the date of the consolidated financial statements, and revenues and expenses during the reporting period. Actual results could differ from those estimates.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Vulnerability Due to Certain Concentrations

Revenue from

one

customer of our manufacturing segment represented approximately

$3.1

million or

9%

of our total revenues during the year ended

February 28, 2019

compared to revenue of approximately

$5.1

million or

13%

of our total revenues during the year ended

February 28, 2018.

Our future results

may

be adversely impacted by further decreases in the purchases of this customer or the loss of this customer entirely.

Share-based Payment Arrangement [Policy Text Block]

Stock-Based Compensation

At

February 28, 2019,

the Company had

one

stock-based compensation plan, the Company’s

2007

Equity Incentive Plan, for employees and non-employee directors which authorized the granting of stock awards.

The Company recognized

$519,772,

$591,839,

and

$584,893

related to equity-based compensation expense during the years ended

February 28, 2019,

2018

and

2017,

respectively. Compensation costs related to share-based compensation are generally recognized over the vesting period.

Beginning

March 1, 2017,

the Company adopted ASU

No.

2019

-

09,

which requires recognition of excess tax benefits and tax deficiencies in the income statement. Prior to

March 1, 2017

tax benefits or expense resulting from the difference in the compensation cost recognized for stock options are reported as financing cash flows in the accompanying Statements of Cash Flows. The excess tax expense included in net cash provided by financing activities for the years ended

February 28, 2017

was

$34,128.

During FY

2019

and

2018,

the Company granted

no

restricted stock units. There were

no

stock options granted to employees during FY

2019

or FY

2018.

The restricted stock unit grants generally vest

17

to

20%

annually over a period of

five

to

six

years. The Company recognized

$463,795

of consolidated stock-based compensation expense related to grants made in prior years during FY

2019

compared with

$532,739

in FY

2018

and

$564,473

in FY

2017.

Total unrecognized stock-based compensation expense of non-vested, non-forfeited shares granted, as of

February 28, 2019

was

$114,183,

which is expected to be recognized over the weighted average period of

0.4

years.

The Company issued

2,000

fully vested, unrestricted shares of stock to non-employee directors during the year ended

February 28, 2019

compared to

no

shares issued during the year ended

February 28, 2018

and

2,000

issued during the year ended

February 28, 2017.

In connection with these non-employee director stock issuances, the Company recognized

$24,480,

$0

and

$20,420

of stock-based compensation expense during year ended

February 28, 2019,

2018

and

2017,

respectively.

During the year ended

February 28, 2018,

the Company issued

5,000

shares of common stock under the Company’s equity incentive plan to an independent contractor providing information technology consulting services to the Company. These shares were issued as a part of the compensation for services rendered to the Company by the contractor. Associated with this unrestricted stock award, the Company recognized

$59,100

in stock-based compensation expense during the year ended

February 28, 2018.

During the year ended

February 28, 2019,

the Company issued

3,333

shares of common stock under the Company’s equity incentive plan to the former Vice President of Creative Services. These shares were issued in consideration of services rendered prior to retirement and based on the number of unvested restricted stock units that were forfeited upon retirement. Associated with this unrestricted stock award, the Company recognized

$31,497

in stock-based compensation expense during the year ended

February 28, 2019.

Earnings Per Share, Policy [Policy Text Block]

Earnings

P

er Share

Basic earnings per share is computed as net earnings divided by the weighted average number of common shares outstanding during each year. Diluted earnings per share reflects the potential dilution that could occur from common shares issuable through stock options and restricted stock units. Following the expiration of all outstanding options, during FY

2017,

no

stock options were excluded from diluted shares.

Advertising Cost [Policy Text Block]

Advertising and Promotional Expenses

The Company expenses advertising costs as incurred. Total advertising expense for RMCF amounted to

$275,441,

$355,678,

and

$279,698

for the fiscal years ended

February 28, 2019,

2018

and

2017,

respectively. Total advertising expense for U-Swirl and its brands amounted to

$168,000,

$222,093,

and

$335,771

for the fiscal years ended

February 28, 2019,

2018

and

2017,

respectively.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, trade receivables, payables, notes payable and notes receivable. The fair value of all instruments approximates the carrying value, because of the relatively short maturity of these instruments.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In

August 2018,

the Securities and Exchange Commission (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 will present the analysis of changes in stockholders’ equity in its interim financial statements in its

May 31, 2019

Quarterly Report on Form

10

-Q. The Company does

not

anticipate that the adoption of these SEC amendments will 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. These amendments are effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. The Company will adopt this guidance effective with the

three

month period ending

May 31, 2019 (

the

first

quarter of Fiscal Year

2020

). The Company can elect to record a cumulative-effect adjustment as of the beginning of the year of adoption or apply a modified retrospective transition approach. The Company expects that substantially all of its operating lease commitments will be subject to the new guidance and will be recognized as operating lease liabilities and right-of-use assets upon adoption. The Company anticipates ASU

2016

-

02

will have a material impact on the consolidated balance sheet. The impact of ASU

2016

-

02

is non-cash in nature, as such, it will

not

affect the Company’s cash flows. The cumulative adjustment to be recorded as right-of-use assets and operating lease liabilities, upon adoption, is expected to be in the range of

$3,500,000

to

$3,900,000.

In

May 2014,

the FASB issued ASU

No.

2014

-

09,

Revenue from Contracts with Customers (“ASC

606”

). This guidance, as amended by subsequent ASUs on the topic, supersedes current guidance on revenue recognition in ASC

605

“Revenue Recognition.” 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 our franchisees and others, or in 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 did

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 changed the timing in which the Company recognizes initial fees from franchisees and licensees for new franchise locations and renewals that impact the term of the franchise agreement. The Company's policy for recognizing initial franchise and renewal fees through

February 28, 2018,

was to recognize initial franchise fees upon new store opening 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

to

15

years.

The Company adopted ASC

606

as of

March 1, 2018,

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. See Note

17

to these financial statements for additional details regarding the adjustments recorded upon adoption of this standard.

XML

Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Feb. 28, 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		4		183		187
International license stores		1		64		65
Cold Stone Creamery - co-branded		11		91		102
U-Swirl (Including all associated brands)
Company-owned stores		-		1		1
Company-owned stores - co-branded		-		3		3
Franchise stores - Domestic stores		-		87		87
Franchise stores - Domestic - co-branded		-		9		9
International license stores		-		2		2
Total		16		442		458

XML

Note 2 - Inventories (Tables)

12 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	2019			2018
Ingredients and supplies	$	2,612,954		$	2,764,727
Finished candy		1,983,854			2,371,610
U-Swirl food and packaging		44,696			63,843
Reserve for slow moving inventory		(371,147	)		(357,706	)
Total inventories	$	4,270,357		$	4,842,474

XML

Note 3 - Property and Equipment, Net (Tables)

12 Months Ended

Feb. 28, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

	2019			2018
Land	$	513,618		$	513,618
Building		5,031,395			4,905,103
Machinery and equipment		10,263,119			10,686,631
Furniture and fixtures		864,944			1,067,788
Leasehold improvements		1,131,659			1,568,260
Transportation equipment		422,458			434,091
Asset impairment		(30,000	)		(62,891	)
		18,197,193			19,112,600
Less accumulated depreciation		(12,411,054	)		(12,946,360	)
Property and equipment, net	$	5,786,139		$	6,166,240

XML

Note 4 - Line of Credit and Long-term Debt (Tables)

12 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

	2019		2018
Note payable in monthly installments of principal and interest at 3.75% per annum through December 2019 collateralized by sustantially all business assets	$	1,176,488	$	2,529,309
Less current maturities		1,176,488		1,352,893
Long-term obligations	$	-	$	1,176,416

XML

Note 5 - Commitments and Contingencies (Tables)

12 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

2020	$	318,000
2021		259,000
2022		249,000
2023		243,000
2024		249,000
Thereafter		175,000
Total	$	1,493,000

2020	$	116,000
2021		121,000
2022		125,000
2023		129,000
2024		33,000
Total	$	524,000

2020	$	323,000
2021		323,000
2022		257,000
2023		29,000
Total	$	932,000

Schedule of Future Sublease Rental Payments [Table Text Block]

<div style="display: inline; font-family: times new roman; font-size: 10pt"><table border="0" cellpadding="0" cellspacing="0" style="margin-right: 20%; font-size: 10pt; font-family: "Times New Roman", Times, serif; text-indent: 0px; margin-left: 18pt; min-; min-width: 700px;"> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt; width: 81%;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2020</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 16%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">92,000</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2021</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 16%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">75,000</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">2022</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 16%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">21,000</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <div style=" font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Total</div> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td style="width: 16%; text-align: right; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">188,000</div></td> <td nowrap="nowrap" style="width: 1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; margin-left: 0pt;"> </td> </tr> </table></div>

Schedule of Rent Expense [Table Text Block]

	2019			2018			2017
Minimum rentals	$	1,030,536		$	1,270,240		$	944,938
Less sublease rentals		(572,000	)		(603,000	)		(318,000	)
Contingent rentals		22,800			26,100			25,200
	$	481,336		$	693,340		$	652,138

2019	2018		2017
325,229		225,992		220,791

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Note 6 - Income Taxes (Tables)

12 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	2019			2018			2017
Current
Federal	$	653,226		$	1,916,720		$	1,411,127
State		142,570			220,164			272,214
Total Current		795,796			2,136,884			1,683,341
Deferred
Federal		(67,410	)		55,658			240,233
State		(11,524	)		(32,247	)		22,015
Total Deferred		(78,934	)		23,411			262,248
Total	$	716,862		$	2,160,295		$	1,945,589

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	2019			2018			2017
Statutory rate		21.0	%		31.9	%		34.0	%
State income taxes, net of federal benefit		3.4	%		2.4	%		3.6	%
Domestic production deduction		0.0	%		(0.9	)%		(1.1	)%
Work opportunity tax credits		(0.7	)%		(0.2	)%		(0.4	)%
Other		0.5	%		0.8	%		0.0	%
Impact of tax reform		0.0	%		8.2	%		0.0	%
Effective rate - provision (benefit)		24.2	%		42.2	%		36.1	%

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	2019			2018
Deferred Tax Assets
Allowance for doubtful accounts and notes	$	120,368		$	124,469
Inventories		91,265			86,938
Accrued compensation		87,930			130,049
Loss provisions and deferred income		492,468			817,945
Self-insurance accrual		34,426			38,868
Amortization		217,481			520,379
Restructuring charges		98,693			98,728
U-Swirl accumulated net loss		325,253			258,173
Valuation allowance		(98,693	)		(98,728	)
Net deferred tax assets	$	1,369,191		$	1,976,821
Deferred Tax Liabilities
Depreciation and amortization		(682,542	)		(1,066,113	)
Prepaid expenses		(79,228	)		(75,245	)
Deferred Tax Liabilities		(761,770	)		(1,141,358	)
Net deferred tax assets	$	607,421		$	835,463

Summary of Valuation Allowance [Table Text Block]

	2019			2018
Valuation allowance at beginning of period	$	98,728		$	148,494
Tax expense (benefits) realized by valuation allowance		(35	)		-
Tax benefits released from valuation allowance		-			-
Impact of tax reform		-			(49,766	)
Valuation allowance at end of period	$	98,693		$	98,728

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Note 8 - Stock Compensation Plans (Tables)

12 Months Ended

Feb. 28, 2019

Notes Tables

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block]

Original share authorization:	300,000
Prior plan shares authorized and incorporated in the 2007 Plan:	85,340
Additional shares authorized through 2007 Plan amendment:	300,000
Available for award:	685,340
Cancelled/forfeited:	199,859
Shares awarded as unrestricted shares, stock options or restricted stock units:	(557,409	)
Shares available for award:	327,790

Share-based Payment Arrangement, Option, Activity [Table Text Block]

	Twelve Months Ended
	February 28:
	2019		2018		2017
Outstanding stock options at beginning of year:		-		-		12,936
Granted		-		-		-
Exercised		-		-		-
Cancelled/forfeited		-		-		(12,936	)
Outstanding stock options as of February 28:		-		-		-
Weighted average exercise price		n/a		n/a		n/a
Weighted average remaining contractual term (in years)		n/a		n/a		n/a

Share-based Payment Arrangement, Restricted Stock Unit, Activity [Table Text Block]

	Twelve Months Ended
	February 28:
	2019			2018			2017
Outstanding non-vested restricted stock units at beginning of year:		77,594			123,658			181,742
Granted		-			-			-
Vested		(49,058	)		(44,064	)		(48,084	)
Cancelled/forfeited		(3,534	)		(2,000	)		(10,000	)
Outstanding non-vested restricted stock units as of February 28:		25,002			77,594			123,658
Weighted average grant date fair value	$	12.05		$	12.16		$	12.21
Weighted average remaining vesting period (in years)		0.38			1.27			2.23

XML

Note 9 - Operating Segments (Tables)

12 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

FY 2019	Franchising			Manufacturing			Retail			U-Swirl			Other			Total
Total revenues	$	5,361,528		$	25,324,024		$	1,272,009		$	3,737,606		$	-		$	35,695,167
Intersegment revenues		(5,236	)		(1,144,484	)		-			-			-			(1,149,720	)
Revenue from external customers		5,356,292			24,179,540			1,272,009			3,737,606			-			34,545,447
Segment profit (loss)		2,288,871			4,310,722			(52,009	)		(32,391	)		(3,559,532	)		2,955,661
Total assets		1,182,355			12,267,458			1,001,419			5,264,989			6,505,920			26,222,141
Capital expenditures		3,548			526,402			9,617			16,512			57,707			613,786
Total depreciation & amortization	$	46,369		$	573,846		$	32,762		$	952,178		$	104,644		$	1,709,799

FY 2018	Franchising			Manufacturing			Retail			U-Swirl		Other			Total
Total revenues	$	6,004,897		$	27,491,089		$	1,876,021		$	4,142,085	$	-		$	39,514,092
Intersegment revenues		(4,882	)		(1,434,515	)		-			-		-			(1,439,397	)
Revenue from external customers		6,000,015			26,056,574			1,876,021			4,142,085		-			38,074,695
Segment profit (loss)		2,623,081			5,791,980			(37,102	)		542,073		(3,795,829	)		5,124,203
Total assets		1,157,158			12,729,659			1,134,876			8,125,171		5,793,771			28,940,635
Capital expenditures		15,429			429,545			33,056			11,899		55,027			544,956
Total depreciation & amortization	$	46,087		$	540,033		$	32,567		$	576,162	$	124,406		$	1,319,255

FY 2017	Franchising			Manufacturing			Retail		U-Swirl		Other			Total
Total revenues	$	5,951,055		$	26,678,514		$	1,710,734	$	5,216,076	$	-		$	39,556,379
Intersegment revenues		(5,332	)		(1,254,670	)		-		-		-			(1,260,002	)
Revenue from external customers		5,945,723			25,423,844			1,710,734		5,216,076		-			38,296,377
Segment profit (loss)		2,495,709			5,609,957			128,024		1,017,395		(3,855,380	)		5,395,705
Total assets		1,216,241			12,900,070			1,101,461		9,124,822		5,075,762			29,418,356
Capital expenditures		15,480			966,619			17,047		40,924		198,402			1,238,472
Total depreciation & amortization	$	54,053		$	463,996		$	14,755	$	622,654	$	133,251		$	1,288,709

XML

Note 10 - Supplemental Cash Flow Information (Tables)

12 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]

Cash paid for:	2019		2018		2017
Interest, net	$	52,102	$	102,640	$	129,927
Income taxes		638,252		2,431,884		1,997,751
Non-cash Operating Activities
Accrued Inventory		52,918		258,247		531,017
Non-cash Financing Activities
Dividend payable	$	714,939	$	708,652		702,525

XML

Note 12 - Summarized Quarterly Data (Unaudited) (Tables)

12 Months Ended

Feb. 28, 2019

Notes Tables

Quarterly Financial Information [Table Text Block]

			Fiscal Quarter
2019	First		Second		Third		Fourth		Total
Total revenue	$	8,366,085	$	7,800,088	$	8,949,747	$	9,429,527	$	34,545,447
Gross margin		1,916,807		1,852,435		1,882,975		1,312,026		6,964,243
Net income		576,944		750,815		525,361		385,679		2,238,799
Basic earnings per share		0.10		0.13		0.09		0.06		0.38
Diluted earnings per share	$	0.10	$	0.13	$	0.09	$	0.06	$	0.37

			Fiscal Quarter
2018	First		Second		Third		Fourth		Total
Total revenue	$	9,346,447	$	8,266,691	$	9,961,572	$	10,499,985	$	38,074,695
Gross margin		2,191,974		2,210,910		2,311,579		2,276,586		8,991,049
Net income		813,672		928,284		751,056		470,896		2,963,908
Basic earnings per share		0.14		0.16		0.13		0.08		0.50
Diluted earnings per share	$	0.14	$	0.16	$	0.13	$	0.08	$	0.50

XML

Note 13 - Goodwill and Intangible Assets (Tables)

12 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of Intangible Assets and Goodwill [Table Text Block]

				2019				2018
	Amortization Period (in years)			Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Intangible assets subject to amortization
Store design		10		$	220,778	$	214,152	$	220,778	$	212,653
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		715,339		223,628		715,339		136,087
Franchise rights		20			5,979,637		2,300,717		5,979,637		1,545,710
Total					7,467,557		3,290,300		7,467,557		2,446,253
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	$	3,952,684	$	9,176,885	$	3,108,637

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

2020	$	706,177
2021		594,229
2022		490,060
2023		411,607
2024		345,642
Thereafter		1,629,542
Total	$	4,177,257

XML

Note 14 - Costs Associated With Company-owned Store Closures (Tables)

12 Months Ended

Feb. 28, 2019

Notes Tables

Restructuring and Related Costs [Table Text Block]

	2019		2018		2017
Loss on distribution of assets	$	81,981	$	-	$	-
Lease settlement costs		145,000		-		60,000
Total	$	226,981	$	-	$	60,000

XML

Note 17 - Adoption of ASU 2014-09, "Revenue from Contracts with Customers" ("ASC 606") (Tables)

12 Months Ended

Feb. 28, 2019

Notes Tables

Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block]

	Amount
Increase in deferred revenue	$	(1,022,720	)
Reduction in gift card liabilities		2,250,743
Adjustment to deferred income tax assets		(302,094	)
Cumulative increase to retained earnings	$	925,929

	CONSOLIDATED BALANCE SHEET
	AS OF FEBRUARY 28, 2018
	Previously Reported		Adjustments			Restated
Assets
Current Assets
Cash and cash equivalents	$	6,072,984	$	-		$	6,072,984
Accounts receivable, net		3,897,334		-			3,897,334
Notes receivable, current portion, net		105,540		-			105,540
Refundable income taxes		342,863		-			342,863
Inventories, net		4,842,474		-			4,842,474
Other		310,173		-			310,173
Total current assets		15,571,368		-			15,571,368
Property and Equipment, Net		6,166,240		-			6,166,240
Other Assets
Notes receivable, less current portion, net		235,983		-			235,983
Goodwill, net		1,046,944		-			1,046,944
Franchise rights, net		4,433,927		-			4,433,927
Intangible assets, net		587,377		-			587,377
Deferred income taxes		835,463		(302,094	)		533,369
Other		63,333		-			63,333
Total other assets		7,203,027		(302,094	)		6,900,933
Total Assets	$	28,940,635	$	(302,094	)	$	28,638,541
Liabilities and Stockholders' Equity
Current Liabilities
Current maturities of long-term debt	$	1,352,893		-		$	1,352,893
Accounts payable		1,647,991		-			1,647,991
Accrued salaries and wages		644,005		-			644,005
Gift card liabilities		3,057,131		(2,250,743	)		806,388
Other accrued expenses		325,034		-			325,034
Dividend payable		708,652		-			708,652
Deferred revenue		471,910		(143,445	)		328,465
Total current liabilities		8,207,616		(2,394,188	)		5,813,428
Long-Term Debt, Less Current Maturities		1,176,416		-			1,176,416
Deferred Revenue, Less Current Portion		-		1,166,165			1,166,165
Commitments and Contingencies
Stockholders' Equity
Preferred stock
Common stock		5,903		-			5,903
Additional paid-in capital		6,131,147		-			6,131,147
Retained earnings		13,419,553		925,929			14,345,482
Total stockholders' equity		19,556,603		925,929			20,482,532
Total Liabilities and Stockholders' Equity	$	28,940,635	$	(302,094	)	$	28,638,541

Reconciliation of Revenue Reported for Periods Prior to the Adoption of ASC 606 [Table Text Block]

	For the Years Ended February 28,
	2019			2018		2017
Franchise Fees contained within the Statement of Income:	$	335,028		$	681,613	$	324,718
Adjustment required to conform revenue to prior period method:		(53,528	)		-		-
Comparable franchise fees:	$	281,500		$	681,613	$	324,718

Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block]

2020	$	256,093
2021		204,071
2022		190,524
2023		176,394
2024		137,477
Thereafter		388,013
Total	$	1,352,572

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Note 18 - Disaggregation of Revenue (Tables)

12 Months Ended

Feb. 28, 2019

Notes Tables

Disaggregation of Revenue [Table Text Block]

For the Year Ended February 28, 2019
Revenues recognized over time under ASC 606:
	Franchising		Manufacturing		Retail		U-Swirl		Total
Revenues recognized over time under ASC 606:
Franchise fees	$	199,362	$	-	$	-	$	135,666	$	335,028

Revenues recognized at a point in time:
	Franchising		Manufacturing		Retail		U-Swirl		Total
Factory sales		-		24,179,540		-		-		24,179,540
Retail sales		-		-		1,272,009		2,112,245		3,384,254
Royalty and marketing fees		5,156,930		-		-		1,489,695		6,646,625
Total	$	5,356,292	$	24,179,540	$	1,272,009	$	3,737,606	$	34,545,447

XML

Schedule II - Valuation and Qualifying Accounts (Tables)	12 Months Ended
	Feb. 28, 2019
Notes Tables
Valuation and Qualifying Accounts Disclosure [Table Text Block]	<div style="display: inline; font-family: times new roman; font-size: 10pt"><table cellpadding="0pt" cellspacing="0pt" style="margin: 0pt; text-indent: 0px; font-family: "Times New Roman", Times, serif; font-size: 10pt; min-; min-width: 700px;"> <tr style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <td style="vertical-align: top; border-width: 1px; border-style: solid; border-color: rgb(0, 0, 0); width: 32%; font-family: "Times New Roman", Times, serif; font-size: 10pt;"> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 15.5%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0); border-top: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">Balance at</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">Beginning of Period</div> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 18.1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0); border-top: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">Additions Charged to</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">Costs & Exp.</div> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 17.2%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0); border-top: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"> </div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"> </div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">Deductions</div> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 17.2%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0); border-top: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"> </div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">Balance at End of</div> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">Period</div> </td> </tr> <tr style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <td style="vertical-align: top; border-bottom: thin solid rgb(0, 0, 0); width: 32%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0px 0px 0px 5px; border-right: 1px solid rgb(0, 0, 0); border-left: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Year Ended February 28, 2019</div> </td> <td style="vertical-align: top; border-bottom: 1px solid rgb(0, 0, 0); width: 15.5%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: top; border-bottom: 1px solid rgb(0, 0, 0); width: 18.1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: top; border-bottom: 1px solid rgb(0, 0, 0); width: 17.2%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: top; border-bottom: 1px solid rgb(0, 0, 0); width: 17.2%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> </tr> <tr style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <td style="vertical-align: top; border-bottom: thin solid rgb(0, 0, 0); width: 32%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0px 0px 0px 5px; border-right: 1px solid rgb(0, 0, 0); border-left: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Valuation Allowance for Accounts and Notes Receivable</div> </td> <td style="vertical-align: bottom; border-bottom: thin solid rgb(0, 0, 0); width: 15%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0px 5px 0px 0px; border-right: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">505,972</div> </td> <td style="vertical-align: bottom; border-bottom: thin solid rgb(0, 0, 0); width: 18%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: thin solid rgb(0, 0, 0); padding: 0px 5px 0px 0px;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">143,214</div> </td> <td style="vertical-align: bottom; border-bottom: thin solid rgb(0, 0, 0); width: 17%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: thin solid rgb(0, 0, 0); padding: 0px 5px 0px 0px;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">159,684</div> </td> <td style="vertical-align: bottom; border-bottom: thin solid rgb(0, 0, 0); width: 17%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: thin solid rgb(0, 0, 0); padding: 0px 5px 0px 0px;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">489,502</div> </td> </tr> <tr style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <td style="vertical-align: top; border-bottom: 1px solid rgb(0, 0, 0); width: 32%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0); border-left: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 15.5%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 18.1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 17.2%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 17.2%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> </tr> <tr style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <td style="vertical-align: top; border-bottom: thin solid rgb(0, 0, 0); width: 32%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0px 0px 0px 5px; border-right: 1px solid rgb(0, 0, 0); border-left: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Year Ended February 29, 2018</div> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 15.5%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 18.1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 17.2%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 17.2%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> </tr> <tr style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <td style="vertical-align: top; border-bottom: thin solid rgb(0, 0, 0); width: 32%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0px 0px 0px 5px; border-right: 1px solid rgb(0, 0, 0); border-left: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Valuation Allowance for Accounts and Notes Receivable</div> </td> <td style="vertical-align: bottom; border-bottom: thin solid rgb(0, 0, 0); width: 15%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0px 5px 0px 0px; border-right: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">536,093</div> </td> <td style="vertical-align: bottom; border-bottom: thin solid rgb(0, 0, 0); width: 18%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: thin solid rgb(0, 0, 0); padding: 0px 5px 0px 0px;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">166,868</div> </td> <td style="vertical-align: bottom; border-bottom: thin solid rgb(0, 0, 0); width: 17%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: thin solid rgb(0, 0, 0); padding: 0px 5px 0px 0px;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">196,989</div> </td> <td style="vertical-align: bottom; border-bottom: thin solid rgb(0, 0, 0); width: 17%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: thin solid rgb(0, 0, 0); padding: 0px 5px 0px 0px;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">505,972</div> </td> </tr> <tr style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <td style="vertical-align: top; border-bottom: 1px solid rgb(0, 0, 0); width: 32%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0); border-left: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 15.5%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 18.1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 17.2%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 17.2%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> </tr> <tr style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <td style="vertical-align: top; border-bottom: thin solid rgb(0, 0, 0); width: 32%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0px 0px 0px 5px; border-right: 1px solid rgb(0, 0, 0); border-left: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Year Ended February 28, 2017</div> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 15.5%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 18.1%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 17.2%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> <td style="vertical-align: bottom; border-bottom: 1px solid rgb(0, 0, 0); width: 17.2%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: 1px solid rgb(0, 0, 0);"> </td> </tr> <tr style="font-family: "Times New Roman", Times, serif; font-size: 10pt;"> <td style="vertical-align: top; border-bottom: thin solid rgb(0, 0, 0); width: 32%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0px 0px 0px 5px; border-right: 1px solid rgb(0, 0, 0); border-left: 1px solid rgb(0, 0, 0);"> <div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Valuation Allowance for Accounts and Notes Receivable</div> </td> <td style="vertical-align: bottom; border-bottom: thin solid rgb(0, 0, 0); width: 15%; font-family: "Times New Roman", Times, serif; font-size: 10pt; padding: 0px 5px 0px 0px; border-right: 1px solid rgb(0, 0, 0);"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">670,471</div> </td> <td style="vertical-align: bottom; border-bottom: thin solid rgb(0, 0, 0); width: 18%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: thin solid rgb(0, 0, 0); padding: 0px 5px 0px 0px;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">138,125</div> </td> <td style="vertical-align: bottom; border-bottom: thin solid rgb(0, 0, 0); width: 17%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: thin solid rgb(0, 0, 0); padding: 0px 5px 0px 0px;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">272,503</div> </td> <td style="vertical-align: bottom; border-bottom: thin solid rgb(0, 0, 0); width: 17%; font-family: "Times New Roman", Times, serif; font-size: 10pt; border-right: thin solid rgb(0, 0, 0); padding: 0px 5px 0px 0px;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> </div><div style=" font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">536,093</div> </td> </tr> </table></div>

XML

Note 1 - Nature of Operations and Summary of Significant Accounting Policies 1 (Details Textual) - USD ($)	1 Months Ended	3 Months Ended								12 Months Ended
	Mar. 31, 2019	Feb. 28, 2019	Nov. 30, 2018	Aug. 31, 2018	May 31, 2018	Feb. 28, 2018	Nov. 30, 2017	Aug. 31, 2017	May 31, 2017	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017	Feb. 29, 2016	Mar. 01, 2019	Mar. 01, 2018
Assets, Total		$ 26,222,141				$ 28,940,635				$ 26,222,141	$ 28,940,635	$ 29,418,356			$ 28,638,541
Cash, Uninsured Amount		4,900,000								4,900,000
Financing Receivable, before Allowance for Credit Loss, Total		391,831								391,831
Financing Receivable, Allowance for Credit Loss, Ending Balance		0								0
Gift Card, Liability, Current		742,289				3,057,131				742,289	3,057,131				$ 806,388
Contract with Customer, Liability, Revenue Recognized										$ 139,188	0
Royalty on Retail Sales of Products Purchased from the Company										0.00%
Revenues, Total		9,429,527	$ 8,949,747	$ 7,800,088	$ 8,366,085	$ 10,499,985	$ 9,961,572	$ 8,266,691	$ 9,346,447	$ 34,545,447	38,074,695
Share-based Payment Arrangement, Expense										$ 519,772	$ 591,839	584,893
Excess Tax Benefit from Share-based Compensation, Financing Activities												$ 34,128
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross										0	0
Share-based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount												0
Independent Contractor [Member]
Share-based Payment Arrangement, Expense										$ 59,100
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture										5,000
Vice President of Creative Services [Member]
Share-based Payment Arrangement, Expense										$ 31,497
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture										3,333
Restricted Stock Units (RSUs) [Member]
Share-based Payment Arrangement, Expense										$ 463,795	$ 532,739	$ 564,473
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period										0	0
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total		114,183								$ 114,183
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition										146 days
Restricted Stock Units (RSUs) [Member] | Subsequent Event [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	270,000
Unrestricted Shares of Stock [Member]
Share-based Payment Arrangement, Expense										$ 24,480	$ 0	$ 20,420
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture										2,000	0	2,000
Revenue Benchmark [Member] | Customer Concentration Risk [Member]
Number of Major Customers										1
Revenues, Total										$ 3,100,000	$ 5,100,000
Concentration Risk, Percentage										9.00%	13.00%
Marketing and Promotion Fee [Member]
Franchise Fee Rate										1.00%
Products Sold [Member]
Franchise Fee Rate										10.00%
Franchise Rights [Member]
Finite-Lived Intangible Asset, Useful Life										20 years
U-Swirl International, Inc. [Member]
Goodwill, Impairment Loss													$ 1,930,529
Secured by Assets Financed [Member]
Financing Receivable, before Allowance for Credit Loss, Total		$ 375,000								$ 375,000
Minimum [Member]
Financing Receivable Interest Rate		4.50%								4.50%
Property, Plant and Equipment, Useful Life										5 years
Percent of Retail Sales		2.50%								2.50%
Minimum [Member] | Accounting Standards Update 2016-02 [Member] | Subsequent Event [Member]
Operating Lease, Right-of-Use Asset														$ 3,500,000
Minimum [Member] | Restricted Stock Units (RSUs) [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
Minimum [Member] | Restricted Stock Units (RSUs) [Member] | Subsequent Event [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Minimum [Member] | Franchise Rights [Member]
Finite-Lived Intangible Asset, Useful Life										10 years
Maximum [Member]
Financing Receivable Interest Rate		6.00%								6.00%
Property, Plant and Equipment, Useful Life										39 years
Percent of Retail Sales		6.00%								6.00%
Maximum [Member] | Accounting Standards Update 2016-02 [Member] | Subsequent Event [Member]
Operating Lease, Right-of-Use Asset														$ 3,900,000
Maximum [Member] | Restricted Stock Units (RSUs) [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
Maximum [Member] | Restricted Stock Units (RSUs) [Member] | Subsequent Event [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	6 years
Maximum [Member] | Franchise Rights [Member]
Finite-Lived Intangible Asset, Useful Life										15 years
USwirl Inc [Member]
Assets, Total													$ 0
Advertising Expense										$ 168,000	$ 222,093	$ 335,771
Rocky Mountain Chocolate Factory [Member]
Advertising Expense										$ 275,441	$ 355,678	$ 279,698
USwirl Inc [Member]
Noncontrolling Interest, Ownership Percentage by Parent		46.00%								46.00%

XML

Note 1 - Nature of Operations and Summary of Significant Accounting Policies 2 (Details Textual)	Feb. 28, 2019	Mar. 01, 2018
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period
Minimum [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period		10 years
Maximum [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period		15 years

XML

Note 1 - Nature of Operations and Summary of Significant Accounting Policies - Number of Stores (Details)	Feb. 28, 2019
Number of stores	458
Sold Not Yet Open [Member]
Number of stores	16
Open [Member]
Number of stores	442
Company Owned Stores [Member] | Rocky Mountain Chocolate Factory [Member]
Number of stores	2
Company Owned Stores [Member] | USwirl Inc [Member]
Number of stores	1
Company Owned Stores [Member] | Sold Not Yet Open [Member] | Rocky Mountain Chocolate Factory [Member]
Number of stores	0
Company Owned Stores [Member] | Sold Not Yet Open [Member] | USwirl Inc [Member]
Number of stores	0
Company Owned Stores [Member] | Open [Member] | Rocky Mountain Chocolate Factory [Member]
Number of stores	2
Company Owned Stores [Member] | Open [Member] | USwirl Inc [Member]
Number of stores	1
Franchise Stores - Domestic Stores and Kiosks [Member] | Rocky Mountain Chocolate Factory [Member]
Number of stores	187
Franchise Stores - Domestic Stores and Kiosks [Member] | Sold Not Yet Open [Member] | Rocky Mountain Chocolate Factory [Member]
Number of stores	4
Franchise Stores - Domestic Stores and Kiosks [Member] | Open [Member] | Rocky Mountain Chocolate Factory [Member]
Number of stores	183
International License Stores [Member] | Rocky Mountain Chocolate Factory [Member]
Number of stores	65
International License Stores [Member] | USwirl Inc [Member]
Number of stores	2
International License Stores [Member] | Sold Not Yet Open [Member] | Rocky Mountain Chocolate Factory [Member]
Number of stores	1
International License Stores [Member] | Sold Not Yet Open [Member] | USwirl Inc [Member]
Number of stores	0
International License Stores [Member] | Open [Member] | Rocky Mountain Chocolate Factory [Member]
Number of stores	64
International License Stores [Member] | Open [Member] | USwirl Inc [Member]
Number of stores	2
Cold Stone Creamery - Co-Branded [Member] | Rocky Mountain Chocolate Factory [Member]
Number of stores	102
Cold Stone Creamery - Co-Branded [Member] | Sold Not Yet Open [Member] | Rocky Mountain Chocolate Factory [Member]
Number of stores	11
Cold Stone Creamery - Co-Branded [Member] | Open [Member] | Rocky Mountain Chocolate Factory [Member]
Number of stores	91
Company Owned Stores Co-branded [Member] | USwirl Inc [Member]
Number of stores	3
Company Owned Stores Co-branded [Member] | Sold Not Yet Open [Member] | USwirl Inc [Member]
Number of stores	0
Company Owned Stores Co-branded [Member] | Open [Member] | USwirl Inc [Member]
Number of stores	3
Franchise Stores - Domestic Stores [Member] | USwirl Inc [Member]
Number of stores	87
Franchise Stores - Domestic Stores [Member] | Sold Not Yet Open [Member] | USwirl Inc [Member]
Number of stores
Franchise Stores - Domestic Stores [Member] | Open [Member] | USwirl Inc [Member]
Number of stores	87
Franchise Stores - Domestic Stores - Co-Branded [Member] | USwirl Inc [Member]
Number of stores	9
Franchise Stores - Domestic Stores - Co-Branded [Member] | Sold Not Yet Open [Member] | USwirl Inc [Member]
Number of stores
Franchise Stores - Domestic Stores - Co-Branded [Member] | Open [Member] | USwirl Inc [Member]
Number of stores	9

XML

Note 2 - Inventories - Inventories (Details) - USD ($)	Feb. 28, 2019	Mar. 01, 2018	Feb. 28, 2018
Ingredients and supplies	$ 2,612,954		$ 2,764,727
Finished candy	1,983,854		2,371,610
U-Swirl food and packaging	44,696		63,843
Reserve for slow moving inventory	(371,147)		(357,706)
Total inventories	$ 4,270,357	$ 4,842,474	$ 4,842,474

XML

Note 3 - Property and Equipment, Net - Property and Equipment (Details) - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Mar. 01, 2018
Property, plant and equipment, gross	$ 18,197,193	$ 19,112,600
Asset impairment	(30,000)	(62,891)
Less accumulated depreciation	(12,411,054)	(12,946,360)
Property and equipment, net	5,786,139	6,166,240	$ 6,166,240
Land [Member]
Property, plant and equipment, gross	513,618	513,618
Building [Member]
Property, plant and equipment, gross	5,031,395	4,905,103
Machinery and Equipment [Member]
Property, plant and equipment, gross	10,263,119	10,686,631
Furniture and Fixtures [Member]
Property, plant and equipment, gross	864,944	1,067,788
Leasehold Improvements [Member]
Property, plant and equipment, gross	1,131,659	1,568,260
Transportation Equipment [Member]
Property, plant and equipment, gross	$ 422,458	$ 434,091

XML

Note 4 - Line of Credit and Long-term Debt (Details Textual) - USD ($) $ in Thousands		12 Months Ended
	Jan. 16, 2014	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2014
Line of Credit Facility, Maximum Borrowing Capacity		$ 5,000
Debt Instrument, Interest Rate, Stated Percentage		3.75%	3.75%
Wells Fargo Bank [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 7,000
Debt Instrument, Interest Rate, Stated Percentage				3.75%
Proceeds from Lines of Credit, Total	$ 6,400
Line of Credit [Member] | Wells Fargo Bank [Member]
Debt Instrument, Interest Rate, Stated Percentage		4.70%
Line of Credit Facility, Remaining Borrowing Capacity		$ 5,000
Long-term Line of Credit, Total		$ 0	$ 0
Line of Credit [Member] | Wells Fargo Bank [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate		2.25%
Eligible Accounts Receivable [Member]
Maximum Draws Allowed		50.00%
Eligible Inventories [Member]
Maximum Draws Allowed		50.00%

XML

Note 4 - Line of Credit and Long-term Debt - Long-term Note Payable (Details) - USD ($)	Feb. 28, 2019	Mar. 01, 2018	Feb. 28, 2018
Note payable in monthly installments of principal and interest at 3.75% per annum through December 2019 collateralized by sustantially all business assets	$ 1,176,488		$ 2,529,309
Less current maturities	1,176,488	$ 1,352,893	1,352,893
Long-term obligations		$ 1,176,416	$ 1,176,416

XML

Note 4 - Line of Credit and Long-term Debt - Long-term Note Payable (Details) (Parentheticals)	Feb. 28, 2019	Feb. 28, 2018
Debt Instrument, Interest Rate, Stated Percentage	3.75%	3.75%

XML

Note 5 - Commitments and Contingencies (Details Textual)	12 Months Ended
	Feb. 28, 2019 USD ($)
Number of Stores	458
Contractual Obligation, Total	$ 880,000
Franchised Units [Member]
Number of Stores	313
Franchised Units [Member] | Primary Lessee [Member]
Number of Stores	4
Maximum [Member]
Purchase Contracts, Term	1 year 180 days
Maximum [Member] | Retail Operations Facilities [Member]
Lessee, Operating Lease, Term of Contract	10 years
Lessee, Operating Lease, Renewal Term	10 years
Minimum [Member]
Purchase Contracts, Term	180 days
Minimum [Member] | Retail Operations Facilities [Member]
Lessee, Operating Lease, Renewal Term	5 years

XML

Note 5 - Commitments and Contingencies - Future Minimum Rental Payments Under Operating Leases (Details)	Feb. 28, 2019 USD ($)
Retail Operations Facilities [Member]
2020	$ 318,000
2021	259,000
2022	249,000
2023	243,000
2024	249,000
Thereafter	175,000
Total	1,493,000
Warehouse Space [Member]
2020	116,000
2021	121,000
2022	125,000
2023	129,000
2024	33,000
Total	524,000
Trucking Equipment [Member]
2020	323,000
2021	323,000
2022	257,000
2023	29,000
Total	$ 932,000

XML

Note 5 - Commitments and Contingencies - Sublease Rental Income (Details)	Feb. 28, 2019 USD ($)
2020	$ 92,000
2021	75,000
2022	21,000
Total	$ 188,000

XML

Note 5 - Commitments and Contingencies - Net Lease Expense for Operating Leases (Details) - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Minimum rentals	$ 1,030,536	$ 1,270,240	$ 944,938
Less sublease rentals	(572,000)	(603,000)	(318,000)
Contingent rentals	22,800	26,100	25,200
Retail operating lease expense	481,336	693,340	652,138
Lease and rental expense	$ 325,229	$ 225,992	$ 220,791

XML

Note 6 - Income Taxes (Details Textual) - USD ($)	2 Months Ended	12 Months Ended
	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%	21.00%	31.90%	34.00%
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability			$ 421,000
Deferred Tax Assets, Operating Loss Carryforwards, Domestic	$ 258,173	$ 325,253	$ 258,173
U-Swirl Segment [Member]
Operating Loss Carryforwards, Total		1,323,000
Deferred Tax Assets, Operating Loss Carryforwards, Domestic		$ 325,000

XML

Note 6 - Income Taxes - Income Tax Expense (Details) - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Federal	$ 653,226	$ 1,916,720	$ 1,411,127
State	142,570	220,164	272,214
Total Current	795,796	2,136,884	1,683,341
Federal	(67,410)	55,658	240,233
State	(11,524)	(32,247)	22,015
Total Deferred	(78,934)	23,411	262,248
Total	$ 716,862	$ 2,160,295	$ 1,945,589

XML

Note 6 - Income Taxes - Reconciliation of the Statutory Federal Income Tax Rate and the Effective Rate (Details)	2 Months Ended	12 Months Ended
	Feb. 28, 2018	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Statutory rate	21.00%	21.00%	31.90%	34.00%
State income taxes, net of federal benefit		3.40%	2.40%	3.60%
Domestic production deduction		0.00%	(0.90%)	(1.10%)
Work opportunity tax credits		(0.70%)	(0.20%)	(0.40%)
Other		0.50%	0.80%	0.00%
Impact of tax reform		0.00%	8.20%	0.00%
Effective rate - provision (benefit)		24.20%	42.20%	36.10%

XML

Note 6 - Income Taxes - Components of Deferred Income Taxes (Details) - USD ($)	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Allowance for doubtful accounts and notes	$ 120,368	$ 124,469
Inventories	91,265	86,938
Accrued compensation	87,930	130,049
Loss provisions and deferred income	492,468	817,945
Self-insurance accrual	34,426	38,868
Amortization	217,481	520,379
Restructuring charges	98,693	98,728
U-Swirl accumulated net loss	325,253	258,173
Valuation allowance	(98,693)	(98,728)	$ (148,494)
Net deferred tax assets	1,369,191	1,976,821
Depreciation and amortization	(682,542)	(1,066,113)
Prepaid expenses	(79,228)	(75,245)
Deferred Tax Liabilities	(761,770)	(1,141,358)
Net deferred tax assets	$ 607,421	$ 835,463

XML

Note 6 - Income Taxes - Summary of Deferred Income Tax Valuation Allowances (Details) - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Valuation allowance at beginning of period	$ 98,728	$ 148,494
Tax expense (benefits) realized by valuation allowance	(35)
Tax benefits released from valuation allowance
Impact of tax reform		(49,766)
Valuation allowance at end of period	$ 98,693	$ 98,728

XML

Note 7 - Stockholders' Equity (Details Textual) - USD ($)						12 Months Ended
	Mar. 15, 2019	Dec. 07, 2018	Sep. 14, 2018	Jun. 15, 2018	Mar. 16, 2018	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017	May 21, 2015	Jan. 13, 2015	Jul. 15, 2014
Common Stock, Dividends, Per Share, Cash Paid		$ 0.12	$ 0.12	$ 0.12	$ 0.12
Stock Repurchase Program, Authorized Amount										$ 2,058,000	$ 3,000,000
Stock Repurchase Program, Additional Authorized Amount									$ 2,090,000
Treasury Stock, Shares, Acquired						0	0	35,108
Treasury Stock Acquired, Average Cost Per Share								$ 10.01
Stock Repurchase Program, Remaining Authorized Repurchase Amount						$ 638,000
Subsequent Event [Member]
Common Stock, Dividends, Per Share, Cash Paid	$ 0.12

XML

Note 8 - Stock Compensation Plans - Summarizes Stock Awards (Details) - 2007 Equity Incentive Plan [Member	12 Months Ended
	Feb. 28, 2019 shares
Original share authorization: (in shares)	300,000
Prior plan shares authorized and incorporated in the 2007 Plan: (in shares)	85,340
Additional shares authorized through 2007 Plan amendment: (in shares)	300,000
Available for award: (in shares)	685,340
Cancelled/forfeited: (in shares)	199,859
Shares awarded as unrestricted shares, stock options or restricted stock units: (in shares)	(557,409)
Shares available for award: (in shares)	327,790

XML

Note 8 - Stock Compensation Plans - Stock Option Awards Outstanding Under the Plans (Details) - $ / shares	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Outstanding stock options at beginning of year: (in shares)			12,936
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	0	0
Exercised (in shares)
Cancelled/forfeited (in shares)			(12,936)
Outstanding stock options as of February 28: (in shares)
Weighted average exercise price (in dollars per share)
Weighted average remaining contractual term (Year)

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Note 8 - Stock Compensation Plans - Restricted Stock Unit Awards Outstanding Under the Plans (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Outstanding non-vested restricted stock units at beginning of year: (in shares)	77,594	123,658	181,742
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	0	0
Vested (in shares)	(49,058)	(44,064)	(48,084)
Cancelled/forfeited (in shares)	(3,534)	(2,000)	(10,000)
Outstanding non-vested restricted stock units as of February 28: (in shares)	25,002	77,594	123,658
Weighted average grant date fair value (in dollars per share)	$ 12.05	$ 12.16	$ 12.21
Weighted average remaining vesting period (Year)	138 days	1 year 98 days	2 years 83 days

XML

Note 9 - Operating Segments (Details Textual)	3 Months Ended								12 Months Ended
	Feb. 28, 2019 USD ($)	Nov. 30, 2018 USD ($)	Aug. 31, 2018 USD ($)	May 31, 2018 USD ($)	Feb. 28, 2018 USD ($)	Nov. 30, 2017 USD ($)	Aug. 31, 2017 USD ($)	May 31, 2017 USD ($)	Feb. 28, 2019 USD ($)	Feb. 28, 2018 USD ($)
Number of Reportable Segments									5
Revenues, Total	$ 9,429,527	$ 8,949,747	$ 7,800,088	$ 8,366,085	$ 10,499,985	$ 9,961,572	$ 8,266,691	$ 9,346,447	$ 34,545,447	$ 38,074,695
Revenue Benchmark [Member] | Customer Concentration Risk [Member]
Number of Major Customers									1
Revenues, Total									$ 3,100,000	$ 5,100,000
Concentration Risk, Percentage									9.00%	13.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Manufacturing [Member]
Number of Major Customers									1	1
Revenues, Total									$ 3,100,000	$ 5,100,000
Concentration Risk, Percentage									9.10%	13.40%

XML

Note 9 - Operating Segments - Segment Information (Details) - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017	Mar. 01, 2018
Revenues	$ 34,545,447	$ 38,074,695	$ 38,296,377
Segment profit (loss)	2,955,661	5,124,203	5,395,705
Assets, Total	26,222,141	28,940,635	29,418,356	$ 28,638,541
Capital expenditures	613,786	544,956	1,238,472
Total depreciation and amortization	1,709,799	1,319,255	1,288,709
Franchising [Member]
Revenues	5,356,292	6,000,015	5,945,723
Segment profit (loss)	2,288,871	2,623,081	2,495,709
Assets, Total	1,182,355	1,157,158	1,216,241
Capital expenditures	3,548	15,429	15,480
Total depreciation and amortization	46,369	46,087	54,053
Manufacturing [Member]
Revenues	24,179,540	26,056,574	25,423,844
Segment profit (loss)	4,310,722	5,791,980	5,609,957
Assets, Total	12,267,458	12,729,659	12,900,070
Capital expenditures	526,402	429,545	966,619
Total depreciation and amortization	573,846	540,033	463,996
Retail Segment [Member]
Revenues	1,272,009	1,876,021	1,710,734
Segment profit (loss)	(52,009)	(37,102)	128,024
Assets, Total	1,001,419	1,134,876	1,101,461
Capital expenditures	9,617	33,056	17,047
Total depreciation and amortization	32,762	32,567	14,755
U-Swirl Segment [Member]
Revenues	3,737,606	4,142,085	5,216,076
Segment profit (loss)	(32,391)	542,073	1,017,395
Assets, Total	5,264,989	8,125,171	9,124,822
Capital expenditures	16,512	11,899	40,924
Total depreciation and amortization	952,178	576,162	622,654
Other Segments [Member]
Revenues		0	0
Segment profit (loss)	(3,559,532)	(3,795,829)	(3,855,380)
Assets, Total	6,505,920	5,793,771	5,075,762
Capital expenditures	57,707	55,027	198,402
Total depreciation and amortization	104,644	124,406	133,251
Operating Segments [Member]
Revenues	35,695,167	39,514,092	39,556,379
Operating Segments [Member] | Franchising [Member]
Revenues	5,361,528	6,004,897	5,951,055
Operating Segments [Member] | Manufacturing [Member]
Revenues	25,324,024	27,491,089	26,678,514
Operating Segments [Member] | Retail Segment [Member]
Revenues	1,272,009	1,876,021	1,710,734
Operating Segments [Member] | U-Swirl Segment [Member]
Revenues	3,737,606	4,142,085	5,216,076
Operating Segments [Member] | Other Segments [Member]
Revenues		0	0
Intersegment Eliminations [Member]
Revenues	(1,149,720)	(1,439,397)	(1,260,002)
Intersegment Eliminations [Member] | Franchising [Member]
Revenues	(5,236)	(4,882)	(5,332)
Intersegment Eliminations [Member] | Manufacturing [Member]
Revenues	(1,144,484)	(1,434,515)	(1,254,670)
Intersegment Eliminations [Member] | Retail Segment [Member]
Revenues	0	0	0
Intersegment Eliminations [Member] | U-Swirl Segment [Member]
Revenues	0	0	0
Intersegment Eliminations [Member] | Other Segments [Member]
Revenues	$ 0	$ 0	$ 0

XML

Note 10 - Supplemental Cash Flow Information - Supplemental Cash Flow Information (Details) - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Interest, net	$ 52,102	$ 102,640	$ 129,927
Income taxes	638,252	2,431,884	1,997,751
Accrued Inventory	52,918	258,247	531,017
Dividend payable	$ 714,939	$ 708,652	$ 702,525

XML

Note 11 - Employee Benefit Plan (Details Textual) - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Defined Contribution Plan Employers Matching Contribution Vesting Period	3 years
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay	25.00%
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Percent	1.50%
Defined Contribution Plan, Employer Discretionary Contribution Amount	$ 70,000	$ 68,000	$ 66,000

XML

Note 12 - Summarized Quarterly Data (Unaudited) - Quarterly Results of Operations (Details) - USD ($)	3 Months Ended								12 Months Ended
	Feb. 28, 2019	Nov. 30, 2018	Aug. 31, 2018	May 31, 2018	Feb. 28, 2018	Nov. 30, 2017	Aug. 31, 2017	May 31, 2017	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Revenues, Total	$ 9,429,527	$ 8,949,747	$ 7,800,088	$ 8,366,085	$ 10,499,985	$ 9,961,572	$ 8,266,691	$ 9,346,447	$ 34,545,447	$ 38,074,695
Gross margin	1,312,026	1,882,975	1,852,435	1,916,807	2,276,586	2,311,579	2,210,910	2,191,974	6,964,243	8,991,049
Net income	$ 385,679	$ 525,361	$ 750,815	$ 576,944	$ 470,896	$ 751,056	$ 928,284	$ 813,672	$ 2,238,799	$ 2,963,908
Basic earnings per share (in dollars per share)	$ 0.06	$ 0.09	$ 0.13	$ 0.10	$ 0.08	$ 0.13	$ 0.16	$ 0.14	$ 0.38	$ 0.50	$ 0.59
Diluted earnings per share (in dollars per share)	$ 0.06	$ 0.09	$ 0.13	$ 0.10	$ 0.08	$ 0.13	$ 0.16	$ 0.14	$ 0.37	$ 0.50	$ 0.58

XML

Note 13 - Goodwill and Intangible Assets (Details Textual) - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Amortization of Intangible Assets, Total	$ 844,320	$ 446,050	$ 427,840

XML

Note 13 - Goodwill and Intangible Assets - Indefinite-lived Intangible Assets (Details) - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Intangible assets subject to amortization, gross carrying value	$ 7,467,557	$ 7,467,557
Intangible assets subject to amortization, accumulated amortization	3,290,300	2,446,253
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	9,176,885	9,176,885
Intangible assets not subject to amortization, accumulated goodwill impairment	3,952,684	3,108,637
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
Store Design [Member]
Amortization Period (Year)	10 years
Intangible assets subject to amortization, gross carrying value	$ 220,778	220,778
Intangible assets subject to amortization, accumulated amortization	214,152	212,653
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 Licenses [Member] | Minimum [Member]
Amortization Period (Year)	3 years
Packaging Licenses [Member] | Maximum [Member]
Amortization Period (Year)	5 years
Packaging Design [Member]
Amortization Period (Year)	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]
Intangible assets subject to amortization, gross carrying value	715,339	715,339
Intangible assets subject to amortization, accumulated amortization	$ 223,628	136,087
Trademarks and Non Competition Agreement [Member] | Minimum [Member]
Amortization Period (Year)	5 years
Trademarks and Non Competition Agreement [Member] | Maximum [Member]
Amortization Period (Year)	20 years
Franchise Rights [Member]
Amortization Period (Year)	20 years
Intangible assets subject to amortization, gross carrying value	$ 5,979,637	5,979,637
Intangible assets subject to amortization, accumulated amortization	$ 2,300,717	$ 1,545,710
Franchise Rights [Member] | Minimum [Member]
Amortization Period (Year)	10 years
Franchise Rights [Member] | Maximum [Member]
Amortization Period (Year)	15 years

XML

Note 13 - Goodwill and Intangible Assets - Estimated Future Amortization Expense (Details)	Feb. 28, 2019 USD ($)
2020	$ 706,177
2021	594,229
2022	490,060
2023	411,607
2024	345,642
Thereafter	1,629,542
Total	$ 4,177,257

XML

Note 14 - Costs Associated With Company-owned Store Closures - Costs Associated With Closures (Details) - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Costs associated with Company-owned store closures	$ 226,981		$ 60,000
Loss on Distribution of Assets [Member]
Costs associated with Company-owned store closures	81,981
Lease Settlement Costs [Member]
Costs associated with Company-owned store closures	$ 145,000		$ 60,000

XML

Note 15 - Subsequent Events (Details Textual) - USD ($)		1 Months Ended	12 Months Ended
	May 10, 2018	Mar. 31, 2019	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Common Stock, Dividends, Per Share, Declared	$ 0.12
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			0	0
Restricted Stock Units (RSUs) [Member] | Minimum [Member]
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 Period			6 years
Restricted Stock Units (RSUs) [Member] | Subsequent Event [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		270,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Grant Date Fair Value, Amount		$ 2,536,100
Restricted Stock Units (RSUs) [Member] | Subsequent Event [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		5 years
Restricted Stock Units (RSUs) [Member] | Subsequent Event [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		6 years

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Note 16 - Immaterial Revision of Previously Reported Income Taxes and Deferred Tax Liabilities (Details Textual)	12 Months Ended
	Feb. 28, 2017 USD ($)
Correction to Retained Earnings [Member]
Quantifying Misstatement in Current Year Financial Statements, Amount	$ (492,766)
Correction to Accrued Liabilities [Member]
Quantifying Misstatement in Current Year Financial Statements, Amount	192,233
Correction to Deferred Tax Assets [Member]
Quantifying Misstatement in Current Year Financial Statements, Amount	$ (300,533)

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Note 17 - Adoption of ASU 2014-09, "Revenue from Contracts with Customers" ("ASC 606") 1 (Details Textual) - USD ($)	Feb. 28, 2019	Mar. 01, 2018	Feb. 28, 2018
Gift Card, Liability, Current	$ 742,289	$ 806,388	$ 3,057,131
Deferred Tax Assets, Net, Noncurrent	$ 607,421	533,369	$ 835,463
Contract with Customer, Asset, after Allowance for Credit Loss, Total		0
Accounting Standards Update 2014-09 [Member]
Contract with Customer, Liability, Net		1,022,720
Gift Card, Liability, Current		(2,250,743)
Deferred Tax Assets, Net, Noncurrent		$ 302,094

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Note 17 - Adoption of ASU 2014-09, "Revenue from Contracts with Customers" ("ASC 606") 2 (Details Textual)	Feb. 28, 2019	Mar. 01, 2018
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period
Minimum [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period		10 years
Maximum [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period		15 years

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Note 17 - Adoption of ASU 2014-09, "Revenue from Contracts with Customers" ("ASC 606") - Adjustments to the Consolidated Financial Statements Upon Adoption of ASC 606 (Details) - USD ($)	Mar. 01, 2018	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017	Feb. 29, 2016
Reduction in gift card liabilities	$ (806,388)	$ (742,289)	$ (3,057,131)
Adjustment to deferred income tax assets	(533,369)	(607,421)	(835,463)
Current Assets
Cash and cash equivalents	6,072,984	5,384,027	6,072,984	$ 5,779,195	$ 6,194,948
Accounts receivable, net	3,897,334	3,993,262	3,897,334
Notes receivable, current portion, net	105,540	110,162	105,540
Refundable income taxes	342,863	190,201	342,863
Inventories, net	4,842,474	4,270,357	4,842,474
Other	310,173	318,126	310,173
Total current assets	15,571,368	14,266,135	15,571,368
Property and Equipment, Net	6,166,240	5,786,139	6,166,240
Other Assets
Notes receivable, less current portion, net	235,983	281,669	235,983
Goodwill, net	1,046,944	1,046,944	1,046,944
Franchise rights, net	4,433,927	3,678,920	4,433,927
Intangible assets, net	587,377	498,337	587,377
Deferred income taxes	533,369	607,421	835,463
Other	63,333	56,576	63,333
Total other assets	6,900,933
Total Assets	28,638,541	26,222,141	28,940,635	$ 29,418,356
Current Liabilities
Current maturities of long-term debt	1,352,893	1,176,488	1,352,893
Accounts payable	1,647,991	897,074	1,647,991
Accrued salaries and wages	644,005	655,853	644,005
Gift card liabilities	806,388	742,289	3,057,131
Other accrued expenses	325,034	293,094	325,034
Dividend payable	708,652	714,939	708,652
Deferred revenue	328,465	256,094	471,910
Total current liabilities	5,813,428	4,735,831	8,207,616
Long-Term Debt, Less Current Maturities	1,176,416		1,176,416
Deferred Revenue, Less Current Portion	1,166,165	1,096,478
Commitments and Contingencies
Stockholders' Equity
Common stock	5,903	5,958	5,903
Additional paid-in capital	6,131,147	6,650,864	6,131,147
Retained earnings	14,345,482	13,733,010	13,419,553
Total stockholders' equity	20,482,532	20,389,832	19,556,603
Total Liabilities and Stockholders' Equity	28,638,541	$ 26,222,141	28,940,635
Previously Reported [Member]
Reduction in gift card liabilities			(3,057,131)
Adjustment to deferred income tax assets			(835,463)
Current Assets
Cash and cash equivalents			6,072,984
Accounts receivable, net			3,897,334
Notes receivable, current portion, net			105,540
Refundable income taxes			342,863
Inventories, net			4,842,474
Other			310,173
Total current assets			15,571,368
Property and Equipment, Net			6,166,240
Other Assets
Notes receivable, less current portion, net			235,983
Goodwill, net			1,046,944
Franchise rights, net			4,433,927
Intangible assets, net			587,377
Deferred income taxes			835,463
Other			63,333
Total other assets			7,203,027
Total Assets			28,940,635
Current Liabilities
Current maturities of long-term debt			1,352,893
Accounts payable			1,647,991
Accrued salaries and wages			644,005
Gift card liabilities			3,057,131
Other accrued expenses			325,034
Dividend payable			708,652
Deferred revenue			471,910
Total current liabilities			8,207,616
Long-Term Debt, Less Current Maturities			1,176,416
Deferred Revenue, Less Current Portion
Commitments and Contingencies
Stockholders' Equity
Common stock			5,903
Additional paid-in capital			6,131,147
Retained earnings			13,419,553
Total stockholders' equity			19,556,603
Total Liabilities and Stockholders' Equity			$ 28,940,635
Accounting Standards Update 2014-09 [Member]
Increase in deferred revenue	(1,022,720)
Reduction in gift card liabilities	2,250,743
Adjustment to deferred income tax assets	(302,094)
Cumulative increase to retained earnings	925,929
Other Assets
Deferred income taxes	302,094
Current Liabilities
Gift card liabilities	(2,250,743)
Accounting Standards Update 2014-09 [Member] | Restatement Adjustment [Member]
Reduction in gift card liabilities	2,250,743
Adjustment to deferred income tax assets	302,094
Current Assets
Cash and cash equivalents
Accounts receivable, net
Notes receivable, current portion, net
Refundable income taxes
Inventories, net
Other
Total current assets
Property and Equipment, Net
Other Assets
Notes receivable, less current portion, net
Goodwill, net
Franchise rights, net
Intangible assets, net
Deferred income taxes	(302,094)
Other
Total other assets	(302,094)
Total Assets	(302,094)
Current Liabilities
Current maturities of long-term debt
Accounts payable
Accrued salaries and wages
Gift card liabilities	(2,250,743)
Other accrued expenses
Dividend payable
Deferred revenue	(143,445)
Total current liabilities	(2,394,188)
Long-Term Debt, Less Current Maturities
Deferred Revenue, Less Current Portion	1,166,165
Commitments and Contingencies
Stockholders' Equity
Common stock
Additional paid-in capital
Retained earnings	925,929
Total stockholders' equity	925,929
Total Liabilities and Stockholders' Equity	$ (302,094)

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Note 17 - Adoption of ASU 2014-09, "Revenue from Contracts with Customers" ("ASC 606") - Reconciliation of Revenue Reported for Period Prior to Adoption of ASC 606 (Details) - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Revenue	$ 34,545,447	$ 38,074,695	$ 38,296,377
Franchise Fees [Member]
Revenue	281,500	681,613	324,718
Calculated under Revenue Guidance in Effect before Topic 606 [Member] | Franchise Fees [Member]
Revenue	335,028	681,613	324,718
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | Franchise Fees [Member] | Accounting Standards Update 2014-09 [Member]
Revenue	$ (53,528)

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Note 17 - Adoption of ASU 2014-09, "Revenue from Contracts with Customers" ("ASC 606") - Remaining Performance Obligation (Details)	Feb. 28, 2019 USD ($)
Revenue, Remaining Performance Obligation, Amount	$ 1,352,572

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Note 17 - Adoption of ASU 2014-09, "Revenue from Contracts with Customers" ("ASC 606") - Remaining Performance Obligation 2 (Details)	Feb. 28, 2019 USD ($)
Revenue, Remaining Performance Obligation, Amount	$ 1,352,572
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-03-01
Revenue, Remaining Performance Obligation, Amount	$ 256,093
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-03-01
Revenue, Remaining Performance Obligation, Amount	$ 204,071
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-03-01
Revenue, Remaining Performance Obligation, Amount	$ 190,524
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-03-01
Revenue, Remaining Performance Obligation, Amount	$ 176,394
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-03-01
Revenue, Remaining Performance Obligation, Amount	$ 137,477
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-03-01
Revenue, Remaining Performance Obligation, Amount	$ 388,013
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Year)

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Note 18 - Disaggregation of Revenue - Disaggregation of Revenue (Details) - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Revenues	$ 34,545,447	$ 38,074,695	$ 38,296,377
Franchising [Member]
Revenues	5,356,292	6,000,015	5,945,723
Manufacturing [Member]
Revenues	24,179,540	26,056,574	25,423,844
Retail Segment [Member]
Revenues	1,272,009	1,876,021	1,710,734
USwirl Inc [Member]
Revenues	3,737,606
Factory Sales [Member] | Transferred at Point in Time [Member]
Revenues	24,179,540
Factory Sales [Member] | Transferred at Point in Time [Member] | Franchising [Member]
Revenues
Factory Sales [Member] | Transferred at Point in Time [Member] | Manufacturing [Member]
Revenues	24,179,540
Factory Sales [Member] | Transferred at Point in Time [Member] | Retail Segment [Member]
Revenues
Factory Sales [Member] | Transferred at Point in Time [Member] | USwirl Inc [Member]
Revenues
Retail [Member] | Transferred at Point in Time [Member]
Revenues	3,384,254
Retail [Member] | Transferred at Point in Time [Member] | Franchising [Member]
Revenues
Retail [Member] | Transferred at Point in Time [Member] | Manufacturing [Member]
Revenues
Retail [Member] | Transferred at Point in Time [Member] | Retail Segment [Member]
Revenues	1,272,009
Retail [Member] | Transferred at Point in Time [Member] | USwirl Inc [Member]
Revenues	2,112,245
Royalty and Marketing Fees [Member] | Transferred at Point in Time [Member]
Revenues	6,646,625
Royalty and Marketing Fees [Member] | Transferred at Point in Time [Member] | Franchising [Member]
Revenues	5,156,930
Royalty and Marketing Fees [Member] | Transferred at Point in Time [Member] | Manufacturing [Member]
Revenues
Royalty and Marketing Fees [Member] | Transferred at Point in Time [Member] | Retail Segment [Member]
Revenues
Royalty and Marketing Fees [Member] | Transferred at Point in Time [Member] | USwirl Inc [Member]
Revenues	1,489,695
Franchise Fees [Member]
Revenues	281,500	$ 681,613	$ 324,718
Franchise Fees [Member] | Transferred over Time [Member]
Revenues	335,028
Franchise Fees [Member] | Transferred over Time [Member] | Franchising [Member]
Revenues	199,362
Franchise Fees [Member] | Transferred over Time [Member] | Manufacturing [Member]
Revenues
Franchise Fees [Member] | Transferred over Time [Member] | Retail Segment [Member]
Revenues
Franchise Fees [Member] | Transferred over Time [Member] | USwirl Inc [Member]
Revenues	$ 135,666

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Schedule II - Valuation and Qualifying Accounts - Valuation and Qualifying Accounts (Details) - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Valuation Allowance for Accounts and Notes Receivable Beginning Balance	$ 505,972	$ 536,093	$ 670,471
Valuation Allowance and Reserves Charged to Cost and Expense	143,214	166,868	138,125
Valuation Allowances and Reserves Deductions	159,684	196,989	272,503
Valuation Allowance for Accounts and Notes Receivable Ending Balance	$ 489,502	$ 505,972	$ 536,093