Effective September 28, 2023, Rocky Mountain Chocolate Factory, Inc. (the ?Company?) entered into (i) a second amendment to its credit agreement with Wells Fargo Bank, National Association (the ?Lender?) (the ?Second Amendment?), and (ii) the revolving line of credit note (the ?Revolving Note?) in connection with the Second Amendment, each effective September 28, 2023. The Second Amendment and Revolving Note extend the maturity date of the company?s revolving line of credit under the Credit Agreement, dated October 13, 2021 (the ?Credit Agreement,? and together with the Second Amendment and the Revolving Note, the ?Line of Credit?) from September 30, 2023 to September 30, 2024.

In addition, the Second Amendment lowers the maximum principal amount available under the Line of Credit from $5 million to $4 million and amends certain financial covenants in the Credit Agreement. Borrowings under the Line of Credit bear interest at a per annum rate equal to the Daily Simple SOFR (as defined in the Revolving Note) plus 2.37%, which is initially set at 7.69%. The outstanding balance under the Line of Credit may not exceed 50% of the Company?s eligible accounts receivable plus 50% of the Company?s eligible inventories.

The Line of Credit is collateralized by substantially all of the Company?s assets with the exception of the Company?s retail store assets. Upon the occurrence of certain events, including the Company?s failure to satisfy its payment obligations under the Revolving Note, failure to adhere to the financial covenants, and the breach of certain of its other covenants under the Credit Agreement, the Lender will have the right, among other remedies, to declare all principal and interest due under the Revolving Note immediately due and payable.