Good morning, ladies and gentlemen. Thank you for standing by. Welcome to today's conference call to discuss Rocky Mountain Chocolate Factory's Financial Results for the Fiscal Second Quarter 2026. [Operator Instructions]. As a reminder, this conference call is being recorded. Joining us on the call today is the company's interim CEO, Jeff Geygan; and CFO, Carrie Cass. Please be advised, this conference call will contain statements that are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC. Do not place undue reliance on any forward-looking statements, which are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to publicly update or revise any forward-looking statements. And now, I will turn the call over to the company's Interim CEO, Jeff Geygan. Jeff, please go ahead.

Thank you, and good morning, everyone. Over the past 16 months, we've taken meaningful steps to modernize our business, strengthen operations and lay the groundwork for stable growth, progress that's now becoming evident across the enterprise. These foundational steps are largely complete, and our focus is shifting towards disciplined execution. We're moving from transformational planning to transformational performance. The results of that shift are reflected in how we operate our business, how we support our franchisees and how we present our brand to customers. The changes we're making today and in the past are intended to create value for investors over the long run. In the short run, we've made many difficult personnel and operating decisions that had to be put in place despite the immediate cost. We believe those changes were necessary and are prerequisite to allowing the company to achieve its long-run potential. There's more work to be done with sales, production and franchise development, but we believe we put the right people and processes in place to execute in ways that will allow us to return to historic levels of profitability over the coming quarters and years. Today, I'll walk you through several developments that highlight our progress, including franchise growth, brand development and operational improvements as we move into the holiday season. Our ongoing operational challenges evidenced in our Q2 report are being met through a combination of improvements initiated by our new VP of Operations, who took over midway through the quarter. Within weeks of his onboarding, he laid out new money-saving strategies, including ways to eliminate overtime compensation, reduce scrap and waste and improve in-stock items to fulfill incoming franchisee orders as a first step to increasing the ratio of Durango products sold in every store, a significant financial opportunity for the company. In…

Thank you, Jeff. Please note that unless otherwise stated, all comparisons are on a year-over-year basis. Total revenue for the quarter was $6.8 million compared to $6.4 million in the same period last year. Product sales were $5.2 million compared to $4.9 million last year, and franchise and royalty fees were $1.6 million, up from $1.5 million in the same period last year. The total product and retail gross profit was negative $33,000 compared to $0.6 million. The decrease reflects year-over-year comparability factors, the timing of inventory adjustments, and it's partially offset by continued factory efficiency gains. Total costs and expenses were $7.3 million, which were essentially flat compared to the same period last year. The net loss of $0.7 million or a negative $0.09 per share compared to the net loss of $0.7 million or a negative $0.11 per share in the second fiscal quarter of '25. Turning to the balance sheet. As of August 31, 2025, we had cash of $2 million compared to $0.7 million at February 28 of '25. During the quarter, we added $1.8 million in new borrowings to support working capital and seasonal needs. This included a $1.2 million term loan and $0.6 million incremental loan under our existing credit facility. Both loans carry the same 12% interest rate, interest-only payments and the same September 30 '27 maturity as the original $6 million facility established last year. As a result, total debt outstanding was $7.8 million as of August 31, '25. This concludes our prepared remarks. We'll now open it up to Q&A. Operator, back to you.

[Operator Instructions] And our first question will be coming from Peter Sidoti of Sidoti & Company.

Just a couple of quick questions. One, can you discuss the background of the new Chief Operating Officer?

Yes, of course. This is Luis Burgos. He has 30-plus years in manufacturing and operations. He has worked for start-ups with as few as 150 people, and manage operations with over 3,000 people. He's operated in the U.S. and internationally. And notably, he was employed by Kimberly-Clark on 2 separate occasions, but he has a fantastic experience and background, and he's fluent with the FDA rules and regulations.

Okay. Great. As you open new stores, do you have targets for number of openings you expect for '26 and '27?

Peter, not that we've disclosed yet, but our stated goal is to be net positive in store growth on an annual basis, which means whatever the stores that are closed, we exceed that with new openings.

And can you just discuss the -- thinking about between owned and franchised?

Yes, sure. Historically, the company has had relatively few owned stores. Philosophically, we think if we're going to be a good franchisor, we need to be able to talk the talk, run the businesses and have proof positive that we know what we're doing as an operator, not just as a franchisor. We had, until recently, 2 stores, one in Durango, which we've owned for many, many years; and the second in Corpus Christi, which was acquired roughly 3 years ago, which has gone through a very nice turnaround. Camarillo, Texas -- or Camarillo, California, which I cited in our numbers here, was able to be purchased at a very attractive rate, put us in a strategic market where we have boots on the ground, which we think is relevant. My expectation is in the not-too-distant future, we'll have a handful of additional stores that strategically put us into markets where we can develop and potentially turn around and sell a cluster of stores to a prospective franchisee, while we're developing those stores in those markets. And with each store, we'll have an opportunity to test new products, new practices.

Okay. And just one last question. You seem to be burning a little cash at this point. Can you just talk to me, how long you think that will continue? And will there be a need for equity financing?

Yes. Well, of course, our fiscal Q1 and Q2 are historically our slow periods; our 3 and 4 are historically our better periods. We're performing to budget this year. And we -- the discussion about any type of capital raise would be one that would have to be considered with the Board of Directors.

I'm sorry, could you just repeat it so I understand it.

Yes, sure. Any type of capital raise would be at the discretion of the Board of Directors.

Right. But you're burning cash at this point in time. Do you expect to continue to burn cash for the next 12 months?

We do not.

You do not. All right. Great.

And I'm showing no further questions in the queue. I would now like to pass the call to Sean Mansouri for e-mail questions.

Thank you, Latonya. To address a few questions that have come in via e-mail over the past week, Jeff, Carrie, first here, can you expand on what's driving the increase in franchise demand beyond the visual aspects of the brand? In other words, what tangible changes in the business are making RMCF a more investable system for operators today?

Yes. Thanks, Sean. It's a good question. For starters, I think one aspect of our offering that differentiates us from a lot of our competitive offerings is our relatively low labor model in a world where labor costs, among other things are rising, that's attractive. Number two, with the new store design, we've been able to move more closely to a defined number in terms of what it would cost to build. And once we have that defined number, we've been able to reduce those costs. So I think our ability to articulate the ROI to a prospective franchisee in terms of cost to build and expected cash flow, those numbers are very attractive. And again, we've worked with existing franchisees to try to get our store growth kick started. And frankly, it was -- in most cases, it was just simply a matter of asking our franchisees if they had an interest, to which most of them said, "Yes, I was waiting for someone at the corporate to ask." So that was an easy answer. We've also hired a new VP of Franchise Development, as I mentioned during my prepared remarks, who started in August, who has 20-plus years of franchise development and has a proven track record of building small systems into larger systems. So we feel very optimistic about not just the design, the economics, but we're putting the mechanics in place to do this on a repeated basis. And as I've said on several occasions, we're looking for financially sophisticated, well-capitalized entrepreneurial franchisees to join our system, and we've had conversations with a number of those type of investors recently.

That's great. Moving on to the next one. Can you walk through what's changed in your factory operations that's most meaningfully impacting cost per unit or fulfillment reliability?

Sure. Carrie, do you want to take that?

Sure. As Jeff mentioned, we just recently hired a new VP of Operations. He has made a number of changes in the factory, most of which have happened after the end of the quarter. So we're still testing best practices downstairs. We've made a lot of progress in a lot of areas in the business. That's one we're still working on.

And with cocoa prices easing from historic highs, how are you thinking about the potential margin benefit and timing, including your hedging strategy and supplier costs?

Yes, it's a great question. Good observation, too. As we speak, the price of metric ton of cocoa is $5,806. 16 months ago, for perspective, if we could lock into cocoa pricing at $8,000 per metric ton, I felt pretty lucky. $8,000 for many months was as low as it traded and then had bumped up a couple of times to $10,000 or $11,000. But recently, for a variety of reasons that are mostly geopolitical and some weather-related, the price dipped below $8,000 into the $7,000 and $6,000 range. We took full advantage of that, locking in some amount of production. But bear in mind, it's not an all or none, and we're not in the spot market. So every time we lock at today's lower price, we still have the long tail backwards that our prices that we locked previously. But the highest price we've locked since I've been here is $8,000. So we expect that we'll pick up some margin and lower raw material costs. And this cocoa, of course, becomes chocolate for us. Chocolate represents 40% of our raw material costs. So this will be meaningful for us, and we expect to see improved margins over time as a result.

Excellent. That concludes the e-mail portion of the Q&A session. Latonya, over to you to close the call.

Certainly. And this concludes today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.