Benzinga | Sep 28, 2021 08:08AM EDT

Rocky Mountain Chocolate Factory Sends Letter To Shareholders, Highlights Co.'s ' decisive, strategic actions to increase growth and profitability, drive innovation and increase stockholder value'

September 28, 2021

Dear fellow Rocky Mountain Chocolate Factory stockholders,

Thank you for your ongoing support. I appreciate your investment in Rocky Mountain Chocolate Factory ("RMCF").

As co-founder of RMCF, building this Company has been my life's work. I have truly loved every day I have spent in our stores, working with our team at our Durango facility and committing myself to serving our customers with the very best, handmade chocolates and memorable experiences. As I prepare to step down from RMCF's Board, I felt it was important to share with you how excited I am for RMCF's future. We have an incredible leadership team that has led our Company through a challenging pandemic. We produce what I strongly believe are the world's best chocolate and confection products. And we have nominated a talented group of directors to help lead and guide our Company's transformative next chapter.

This is an important moment for our Company. RMCF's Board and leadership team are taking decisive and disciplined action to execute our transformation strategy and accelerate the Company's growth. We have put forward director nominees who possess the mission-critical skills specifically suited to guide RMCF's strategy to build on our position as an omnichannel retailer, franchiser and manufacturer of premium, handcrafted chocolates and confections. We continue to be focused on delighting our millions of consumers around the world as we best serve all of our stakeholders. We remain confident that the plan and strategic actions we are implementing will benefit our franchisees and our team members, and drive increasing value for all RMCF stockholders.

I write to ask you to vote today, on the WHITE proxy card, for all of RMCF's director nominees for election at the 2021 Annual Meeting of Stockholders (the "Annual Meeting"), to be held on October 6, 2021.

RMCF IS TAKING DECISIVE AND FORWARD-LOOKING ACTIONS TO INCREASE VALUE FOR ALL STOCKHOLDERS

Our Board and leadership team continue to execute a transformational and innovative strategic plan at RMCF, focused on driving growth, increasing revenue and profitability, maximizing value for stockholders and continuing to deliver premium products and memorable experiences our customers love.

We have completed the first phase of a brand refresh that, once complete, we expect will be transformational for RMCF. RMCF's store-level performance continues to be strong, and we are excited for customers to experience our refreshed brand vision as retail stores reopen and we return to normal operations. Future phases of our brand refreshment plan will include new displays to drive sales at our retail stores and innovative packaging enhancements. Once complete, our redesigned packaging will be a critical aspect of our strategic focus on gift boxes and gift assortments. We believe our gift box and packaging strategy initiatives will help RMCF reach new customer segments, deepen brand loyalty to RMCF and drive additional sales to our retail stores.

RMCF is expanding its e-commerce and digital capabilities, and new and recently added Board members have the product innovation, technology and digital platforms expertise to support this initiative. We are innovating and integrating our online and brick-and-mortar sales efforts as we accelerate our omnichannel transformation, and we are developing new distribution channels to expand RMCF's customer reach, including through direct-to-consumer and other third-party retail or e-commerce partners. We believe that expanding our distribution will increase utilization and profitability at our manufacturing facility, which is the largest facility in the U.S. dedicated to the production of handcrafted chocolates and confections. As we add production and execute our plan, with the support of RMCF's strong director nominees, we believe we can achieve our goals of adding new franchised units and driving growth through our digital, e-commerce and omnichannel transformation. Achieving these elements of our plan would have a measurable benefit to RMCF's revenue and profitability and will drive further growth.

As a result of our recent settlement with Immaculate Confection we have received a significant new order as a start to rebuilding their purchases, which has historically generated close to $1 million in annual sales. This positive development is creating real value for our Company and our stockholders. We expect new business with Immaculate Confection will contribute to increased utilization at our Durango facility, improving our profitability and helping us expand our international franchise network. We are confident that our current working relationship with Immaculate Confection will allow us to further develop the Canadian market. Management has also been conducting meaningful discussions with Immaculate Confection to explore ways we can further integrate or possibly consolidate our North American operations, expand on their success in developing exceptional packaging lines, and deepen our relationship and grow our business together. This is an exciting example of RMCF's strategy in action.

RMCF'S DIRECTOR NOMINEES BRING STRONG SKILLS, SIGNIFICANT DIVERSITY AND FORWARD-LOOKING EXPERTISE TO GUIDE OUR GROWTH STRATEGY

RMCF has nominated a slate of director nominees that bring the mission-critical skills, experience and backgrounds necessary to drive the Company's transformation strategy and enhance value for all stakeholders. We have thoughtfully refreshed the Company's Board and, upon election at the Annual Meeting, five of six directors will be independent. Our nominees have public company leadership and Board experience and 50% of our Board will be diverse by race, ethnicity or gender.

VOTE TODAY for this majority-independent, diverse and skilled Board for RMCF:

Rahul Mewawalla, independent Chairperson.

Mr. Mewawalla has deep expertise across digital platforms, product innovation and technology to support the Company's transformational growth strategy.

* Digital Platforms

* Product Innovation and E-Commerce

* Transformation and Growth Expertise

Bryan Merryman, Chief Executive Officer and director.

Mr. Merryman provides significant value and insights to the Board with his extensive knowledge of the Company and broad confectionery industry expertise.

* Confectionery Leadership

* Franchising

* Consumer Insights

Brett Seabert, independent director.

Mr. Seabert is a certified public accountant with significant executive leadership, financial services and accounting experience.

* Accounting

* Institutional Board Knowledge

* Investment Oversight

Jeffrey Geygan, independent director.

Mr. Geygan is one of the Company's largest stockholders and has decades of investment management and operational turnaround experience.

* Public Company Experience

* Investment Management

* Turnaround Strategy

Elisabeth Charles, independent director nominee.

Ms. Charles has deep marketing, branding, omnichannel and consumer industry experience.

* Public Company Experience

* Omnichannel / Digital Marketing

* Brand Refreshment

Gabriel Arreaga, independent director nominee.

Mr. Arreaga has robust operations, procurement and supply chain experiences across the retail and consumer goods sectors.

* Corporate Strategy

* Supply Chain & Manufacturing

* Retail / CPG Operations

RMCF CONTINUES TO BE FINANCIALLY AND OPERATIONALLY ROBUST

RMCF continues to perform well financially and operationally. Our balance sheet is strong, as it has been for many years, and we continue to experience improving free cash flow as we come out of the pandemic. The Company has returned nearly $63 million to stockholders over the past two decades, through a combination of cash dividends and open market stock purchases, representing approximately $10.37 per share, based on current shares outstanding. We have a strong balance sheet and no debt, creating a strong financial foundation as we continue to implement our transformation plan. The last 18-months have been unprecedented, but because of the disciplined decisions our leadership team and Board have made, RMCF remains very well managed and poised for growth.

VOTE THE WHITE PROXY CARD TODAY FOR ALL OF THE BOARD'S NOMINEES

RMCF'S NOMINEES WILL SERVE THE INTERESTS OF ALL STOCKHOLDERS AS WE DRIVE GROWTH AND INCREASE STOCKHOLDER VALUE

As we celebrate RMCF's 40th year anniversary this year, I believe the best years for the Company are ahead as we drive transformative innovation, growth and focus on delighting our consumers around the world.

I am incredibly excited about the next chapter of growth and innovation for RMCF. The strong slate of directors nominated by the Company brings the diverse, mission-critical skills necessary to execute our strategic plan and maximize value for all stockholders. Thank you very much for your investment in Rocky Mountain Chocolate Factory and your ongoing support.

Sincerely,

Franklin Crail RMCF Co-Founder