In-Depth Analysis of Insider Buying and Investment Value for Rocky Mountain Chocolate (RMCF)

Based on public information, the recent buying activities of Jeffrey Richart Geygan, interim CEO of Rocky Mountain Chocolate, are as follows [1]:

Transaction Date	Number of Shares Purchased	Transaction Amount	Position Change
January 16, 2026	11,300 shares	Approx. $22,352	Position increased by 0.6%, holding 1,792,478 shares
November 4, 2025	Multiple Purchases	-	Cumulative increase in holdings

• CEO’s Personal Purchases
  : 7 purchase transactions, totaling 125,715 shares with an aggregate amount of approximately $208,873,
  zero sales
  [1]
• Major Shareholder Increases
  : Global Value Investment Corp (holding over 10% of shares) made 8 purchases over the past 6 months, totaling 133,115 shares with an aggregate amount of approximately $251,435 [1]
• Overall Insider Transactions
  : 15 insider transactions over the past 6 months,
  all purchases
  , no sales

Insider stock purchases are generally regarded as an important signal of management’s confidence in the company’s future in investment analysis, but a comprehensive judgment needs to be made by combining the following factors:

1. Interest Alignment
   : Insiders use personal funds to buy the company’s stock, indicating that their interests are highly aligned with those of shareholders
2. Information Advantage
   : Management has access to internal information about the company’s operations, and their purchase behavior implies confidence in the company’s fundamentals
3. Continuous Purchases
   : Continuous, phased purchases over the past 6 months, rather than a one-time large purchase, indicate that this is based on a judgment of the company’s long-term prospects rather than short-term speculation
4. Major Shareholder Endorsement
   : As a shareholder holding over 10% of shares, Global Value Investment Corp’s 8 purchases demonstrate recognition from a professional institutional investor

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Metric	Value	Evaluation
Market Capitalization	$15.19M	Micro-cap stock with limited liquidity
Current Stock Price	$1.96	-
P/E	-3.79x	In a loss-making state
ROE	-62.48%	Significantly negative
Net Profit Margin	-13.62%	Loss-making
Current Ratio	1.66	Adequate short-term solvency
P/S	0.51	Low price-to-sales ratio

Fiscal Quarter	EPS	Revenue (in millions)	Evaluation
Q3 FY2026 (Nov 2025)	-$0.02	$7.54	Significant improvement
Q2 FY2026 (Aug 2025)	-$0.09	$6.82	-
Q1 FY2026 (May 2025)	-$0.04	$6.37	-
Q4 FY2025 (Feb 2025)	-$0.37	$8.90	Largest loss

: Q3 FY2026 EPS improved significantly from -$0.09 in Q2 to -$0.02, indicating that the company’s performance may be bottoming out [0].

:

• FY2025 operating cash flow:
  -$6.6 million
  [2]
• FY2025 net loss:
  $6.1 million
  [2]
• Debt covenant default exists: The ratio of total liabilities to tangible net assets is 2.21:1, exceeding the 2:1 upper limit specified in the agreement [2]
• Auditors have marked
  substantial doubt about going concern ability
  [2]
• Cash balance as of February 2025 is only
  $0.72 million
  , a significant decrease from $2.08 million in the previous year [2]

The company’s business consists of three major segments:

1. Product Sales (76-77%)
   : Sells homemade chocolate products to franchisees and specialty markets
2. Royalty Fees (19-21%)
   : Derived from 141 franchise stores and 117 authorized stores
3. Company-Owned Stores (5%)
   : 2 company-owned stores

The

(wholesale, e-commerce, corporate procurement, customization) accounts for 16% of factory sales and is showing growth momentum [2].

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Indicator	Status	Interpretation
Trend Judgment	Uptrend (to be confirmed)	Strict conditions met, price breakout
MACD	Bearish Crossover	Medium-term momentum is bearish
KDJ	K:42.5, D:54.3	Neutral to weak
RSI	Normal Range	No overbought or oversold conditions
Beta	0.71	Low correlation with the broader market
Support Level	$2.02	-
Resistance Level	$2.25	Key short-term resistance level
Next Target	$2.39	-

Based on the candlestick chart analysis, the stock price has shown the following characteristics over the past 3 months:

• Range Performance
  : Rose from $1.74 to $1.96, with an increase of
  +12.64%
  [0]
• Fluctuation Range
  : $1.36 - $2.25, with an amplitude of
  51.77%
  [0]
• Moving Average Pattern
  : The 20-day moving average ($1.95) crossed above the 50-day moving average ($1.75), forming a
  bullish crossover
  pattern
• Trading Volume
  : Average daily trading volume of approximately 48,479 shares, with low liquidity

: The candlestick chart shows that after bottoming out at $1.36 at the end of October 2025, RMCF’s stock price has continued to rebound. It once touched the high of $2.25 in mid-December before pulling back, and is currently consolidating around $1.96. The 20-day moving average is at $1.95, forming short-term support for the stock price [0].

---

1. Quarterly Performance Improvement
   : Q3 FY2026 EPS improved significantly from -$0.09 to -$0.02, with revenue growing consecutively [0]
2. Healthy Current Ratio
   : A current ratio of 1.66 indicates adequate short-term solvency
3. Growth in Specialty Market Business
   : Expansion of channels such as e-commerce and wholesale brings new growth drivers
4. Continuous Insider Buying
   : Management and major shareholders have invested real capital, showing confidence in the company’s transformation

1. Sustained Losses
   : Net loss of $6.1 million in FY2025, with consecutive annual losses
2. Tight Cash Flow
   : Operating cash flow of -$6.6 million, with cash reserves of only $0.72 million
3. Debt Risks
   : Debt covenant default exists, with doubt about going concern ability
4. Limited Market Space
   : Market capitalization of only $15.2 million, with poor liquidity as a micro-cap stock
5. Industry Competition
   : The candy retail market is highly competitive, facing challenges from large brands and health trends

Dimension	Assessment	Weight
Insider Buying	Strong Buy Signal	Positive
Earnings Trend	Improving but still loss-making	Neutral to Bearish
Cash Flow	Severely Tight	Negative
Debt Risks	Default Risk Exists	Negative
Technical Aspects	Uptrend to be Confirmed	Neutral to Bullish
Valuation	Low P/S Ratio but High Risk	Neutral

: Insider buying reflect management’s confidence in the company’s transformation, and they may expect fundamental improvement in the future. However, considering the financial pressure, sustained losses, and debt risks faced by the company, it is still prudent to be cautious about claiming the company is “undervalued”. Insider buying is more likely to reflect a judgment that the company’s , rather than that the stock price is significantly undervalued in the short term.

---

• High Risk Tolerance Investors
  : Investors who can bear substantial principal losses
• Micro-Cap Stock Enthusiasts
  : Investors who are familiar with the investment logic of micro-cap stocks
• Long-Term Investors
  : Investors willing to wait for the company’s transformation to succeed (at least 1-2 years)

1. Principal Loss Risk
   : Extremely High - The company’s financial condition is unstable
2. Liquidity Risk
   : Extremely High - Average daily trading volume of only approximately 50,000 shares, large transactions may significantly affect the stock price
3. Delisting Risk
   : If the stock price remains depressed or financial conditions deteriorate, delisting may occur
4. Execution Risk
   : Uncertainty exists regarding the success of management’s strategic transformation

Strategy	Description
Wait-and-See as Main Approach	It is recommended to closely monitor the Q4 FY2026 financial report and debt compliance progress
Phased Position Building	If deciding to invest, enter positions in phases to avoid one-time large purchases
Stop-Loss Setting	It is recommended to set a stop-loss level of 10-15%
Position Control	The proportion of micro-cap stocks should not exceed 5-10% of the portfolio

1. Whether quarterly EPS can continue to improve and turn positive
2. When operating cash flow turns positive
3. Debt covenant compliance status
4. Changes in the number of franchise stores
5. Growth of the specialty market business

---

The continuous buying by the interim CEO and major shareholders of Rocky Mountain Chocolate does send a positive signal, and combined with the quarterly performance improvement trend, it may indicate that the company’s most difficult period is passing. However, investors should not make investment decisions solely based on insider buying.

:

• Insider buying
  is
  a reflection of management’s confidence, but
  does not constitute
  a buy recommendation
• The company’s fundamentals
  are improving but have not yet emerged from difficulties
• The current stock price
  may
  have partially reflected improvement expectations, but uncertainty remains high
• Investing in such high-risk micro-cap stocks requires extremely high risk tolerance and strict position management

: For most investors, it is recommended to maintain a wait-and-see stance or participate with only an extremely small position, while closely monitoring the company’s subsequent financial reports and debt negotiation progress. For aggressive investors with high risk tolerance, phased position building below $1.80 can be considered, but strict stop-losses must be set and worst-case scenarios must be prepared for.

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[0] Jinling AI Financial Database - Company Overview, Financial Analysis, Price Data and Technical Indicators for Rocky Mountain Chocolate (Data as of January 23, 2026)

[1] Quiver Quant - “Insider Purchase: Interim CEO of $RMCF Buys 11,300 Shares” (https://www.quiverquant.com/news/Insider+Purchase%3A+Interim+CEO+of+%24RMCF+Buys+11%2C300+Shares)

[2] U.S. Securities and Exchange Commission SEC Filing - Rocky Mountain Chocolate Factory, Inc. 10-K Annual Report (https://www.sec.gov/Archives/edgar/data/1616262/000095017025088556/rmcf-20250228.htm)