Rocky Mountain Chocolate Factory, Inc. (NASDAQ: RMCF) (the
"Company"), which franchises/operates gourmet chocolate and
self-serve frozen yogurt stores and manufactures an extensive line
of premium chocolates and other confectionery products, today
announced that it has (1) acquired selected assets of Yogurtini
International, LLC; and (2) contributed its Aspen Leaf Yogurt,
newly acquired Yogurtini assets, and $78,000 in cash to U-Swirl,
Inc. (OTCQB: SWRL) in exchange for a 60% controlling equity
interest in U-Swirl, Inc.
HIGHLIGHTS
- Company acquires assets of Yogurtini International, LLC.
- Company sells Aspen Leaf Yogurt and Yogurtini for 60% equity
stake in publicly-traded U-Swirl, Inc.
- Transactions expected to transform U-Swirl into profitable
company well-positioned to pursue organic growth and
acquisitions.
- Transactions expected to be accretive to Rocky Mountain
Chocolate Factory earnings in FY2014 and future years.
U-Swirl, Inc. ("U-Swirl"), headquartered in Henderson, Nevada,
currently operates and/or franchises 30 self-serve frozen yogurt
stores under the name U-Swirl Frozen Yogurt. The stores are located
in Nevada (10 units), Idaho (3), Arizona (4), California (1),
Florida (1), Utah (3), Texas (2), Montana (2), New Mexico (3) and
Pennsylvania (1). The company's common stock trades on the OTCQB
under the symbol "SWRL."
Privately-owned Yogurtini International, LLC ("Yogurtini"),
headquartered in Tempe, Arizona, currently franchises 30 self-serve
frozen yogurt stores under the name Yogurtini® Self-Serve. One store is privately owned by the
founding sisters, Natasha and Chelsey Nelson. The stores are
located in Arizona (7), Missouri (8), Kansas (2), Colorado (4),
Florida (3), South Carolina (1), Nebraska (1), Georgia (1), New
York (1) and Virginia (2).
Aspen Leaf Yogurt, Inc., a subsidiary of Rocky Mountain
Chocolate Factory, Inc., currently franchises and/or operates 16
self-serve frozen yogurt stores under the name Aspen Leaf Yogurt.
The stores are located in Colorado (6), Idaho (2), Arizona (1), New
Mexico (1), Iowa (2), Texas (1), Illinois (1), Missouri (1) and
Tennessee (1).
Under the terms of agreements among the respective parties:
- Rocky Mountain Chocolate Factory, Inc. acquired all contractual
and intellectual property assets of Yogurtini for an undisclosed
amount of cash plus a potential earnout contingent upon financial
performance over a two-year period. Specific terms of the
transaction were not disclosed.
- Rocky Mountain Chocolate Factory, Inc. contributed to U-Swirl:
substantially all contractual and intellectual property of Aspen
Leaf Yogurt and Yogurtini; property, plant and equipment relating
to six company-owned Aspen Leaf Yogurt stores; and $78,000 in cash.
In exchange, Rocky Mountain Chocolate Factory, Inc. received from
U-Swirl: 60% of U-Swirl's outstanding common stock, $500,000 in
recourse notes, $400,000 in non-recourse notes, and a stock
purchase warrant that allows Rocky Mountain Chocolate Factory, Inc.
to maintain its pro rata ownership in U-Swirl if existing options
and/or warrants are exercised.
"We believe the combination of three self-serve frozen yogurt
chains under the U-Swirl umbrella will result in a profitable
company that is well-positioned to achieve significant growth
through a disciplined organic expansion and acquisition strategy,"
stated Franklin Crail, Founder and Chief Executive Officer of Rocky
Mountain Chocolate Factory, Inc. "By partnering with
publicly-traded U-Swirl, our shareholders still have the
opportunity to realize the potential for value appreciation in the
self-serve frozen yogurt industry. Meanwhile, Rocky Mountain
Chocolate Factory's management team will be able to focus all of
its attention on the Company's highly profitable chocolate
manufacturing operations and retail store franchising
business."
In anticipation of the closing of these transactions, Rocky
Mountain Chocolate Factory, Inc. recorded a non-recurring, non-cash
impairment charge related to its Aspen Leaf Yogurt assets in the
quarter ended November 30, 2012.
While Rocky Mountain Chocolate Factory, Inc. now owns a majority
of U-Swirl's common stock and will be represented on the U-Swirl
board of directors, U-Swirl will continue to be operated by its
current management team.
"Based upon currently available information, we expect these
business combinations to have an accretive impact upon our earnings
in Fiscal 2014, which begins March 1, 2013, and in future years,"
added Bryan Merryman, Chief Operating Officer of Rocky Mountain
Chocolate Factory, Inc. "While the one-time, non-cash impairment
charge will negatively impact our GAAP earnings in Fiscal 2013, we
believe our chocolate business segment will generate improved
revenue and operating earnings when compared with the previous
fiscal year."
"With approximately 75 retail stores in its network following
the completion of these transactions, U-Swirl will represent a much
stronger competitive force in the self-serve frozen yogurt
industry," observed Ulderico Conte, Co-Founder and Chief Executive
Officer of U-Swirl, Inc. "The immediate elimination of duplicative
costs, combined with the potential for increased savings and
rebates from suppliers due to volume purchasing discounts, should
significantly benefit our profit margins in 2013. From a strategic
perspective, we believe U-Swirl will be in an excellent position to
grow its franchise base both organically and through opportunistic
acquisitions in coming years."
Rocky Mountain Chocolate Factory, Inc. was advised by investment
banking firm Paragon Capital Partners, LLC and legal counsel
Perkins Coie LLP.
About Rocky Mountain Chocolate Factory,
Inc.
Rocky Mountain Chocolate Factory, Inc., headquartered in
Durango, Colorado, is an international franchiser of gourmet
chocolate, confection and self-serve frozen yogurt stores and a
manufacturer of an extensive line of premium chocolates and other
confectionery products. As of December 31, 2012 the Company and its
franchisees operated 376 stores in 42 states, Canada, Japan and the
United Arab Emirates. The Company's common stock is listed on The
Nasdaq Global Market under the symbol "RMCF."
Forward-Looking Statements
Certain statements in this press release are "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements involve risks and uncertainties, and the Company
undertakes no obligation to update any forward-looking information.
Risks and uncertainties that could cause cash flows to decrease or
actual results to differ materially include, without limitation,
seasonality, consumer interest in the Company's products, general
economic conditions, consumer and retail trends, costs and
availability of raw materials, competition, the success of the
Company's co-branding agreement with Cold Stone Creamery Brands,
the success of international expansion efforts, including but not
limited to new store openings, the success of the Aspen Leaf Yogurt
concept and other risks. Readers are referred to the Company's
periodic reports filed with the SEC, specifically the most recent
reports which identify important risk factors that could cause
actual results to differ from those contained in the
forward-looking statements. The information contained in this press
release is a statement of the Company's present intentions, beliefs
or expectations and is based upon, among other things, the existing
business environment, industry conditions, market conditions and
prices, the economy in general and the Company's assumptions. The
Company may change its intentions, beliefs or expectations at any
time and without notice, based upon any changes in such factors, in
its assumptions or otherwise. The cautionary statements contained
or referred to in this press release should be considered in
connection with any subsequent written or oral forward-looking
statements that the Company or persons acting on its behalf may
issue.
For Further Information, Contact Bryan J. Merryman COO/CFO
(970) 259-0554
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