Rocky Mountain Chocolate Factory Weighs a Sale After Outside Interest, as Losses Widen

Rocky Mountain Chocolate Factory said on Monday, October 19, 2026 that a strategic committee of its board, working with advisers, is exploring options that could include a sale of the company, a merger, another business combination or a going-private transaction, and that it has received expressions of interest from third parties. The disclosure came in its fiscal second-quarter results release, and the headline reached the MoveSurge news feed at 16:05:02 ET. The stock traded at $0.933 just before it, $0.9732 one minute later and $1.01 after ten minutes, a rise of 8.25%.

The company did not name the interested parties, give a timeline or say what price it might accept, and it warned that the review may not lead to any transaction. Interim chief executive Allen Harper leads the company, with chief operating officer David Denker running day-to-day operations.

The quarter behind the review

Revenue slipped because the Durango factory sold less product and royalty and marketing fees from franchisees fell, while sales at company-owned stores grew. Gross margin improved on price increases and more efficient production, but higher costs left the net loss larger than a year earlier. The first quarter of fiscal 2027 had already produced a loss of $1.2 million, against $0.3 million a year before, so the company has now lost $2.5 million in six months (our calculation).

A factory deal tied to the interim CEO

On October 6, 2026, the company agreed to sell its Durango, Colorado headquarters and factory for $6.6 million to American Heritage Legacies LLC, a company controlled by the family of Allen Harper, and to lease it back for ten years at $624,000 a year, rising 2% a year. The money repays a $6.6 million note that carried 12% interest. Directors without a conflict and the audit committee approved the deal after an outside appraisal, and Harper did not vote. In 2024, American Heritage Railways led a private placement of about $2.2 million in the company, and its chief executive, Al Harper, joined the board.

The lease also reaches into any sale of the company. According to a summary of the agreement, if the company changes hands the landlord can require it to repurchase the property for the higher of $6.93 million or its appraised value at that time, which is 5% above the sale price (our calculation). The company also took a $2 million term loan from Alpine Bank on October 16, due in 2028.

Debt warnings before the review

The annual report for the year to February 28, 2026 carried a going-concern warning from the company and its auditor, after a $4.6 million net loss. The company had also breached a leverage limit in two secured credit agreements, with total liabilities at 3.8 times tangible net worth against a 2.0 maximum, and relied on waivers that ran through August 31, 2026.

How the stock traded

The jump after the headline came on thin after-hours trading, with only a few thousand shares changing hands in the first minutes. By 17:10 ET, just before the company's term-loan headline, the stock traded at $0.94, close to where it started, so most of the 8.25% gain had gone within an hour.