Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 07, 2014 | Jun. 28, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'NOBLE ROMANS INC | ' | ' |
Entity Central Index Key | '0000709005 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'Yes | ' | ' |
Is Entity's Reporting Status Current? | 'No | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $11,500,000 |
Entity Common Stock, Shares Outstanding | ' | 19,801,087 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current assets: | ' | ' |
Cash | $157,787 | $144,354 |
Accounts receivable - net | 1,268,788 | 1,080,362 |
Inventories | 337,822 | 460,839 |
Assets held for resale | ' | 259,579 |
Prepaid expenses | 472,065 | 379,669 |
Deferred tax asset - current portion | 1,250,000 | 1,400,000 |
Total current assets | 3,486,462 | 3,724,803 |
Property and equipment: | ' | ' |
Equipment | 1,361,205 | 1,166,103 |
Leasehold improvements | 88,718 | 12,283 |
Total | 1,449,923 | 1,178,386 |
Less accumulated depreciation and amortization | 962,502 | 905,376 |
Net property and equipment | 487,421 | 273,010 |
Deferred tax asset (net of current portion) | 9,332,024 | 9,238,536 |
Other assets including long-term portion of notes receivable - net | 3,067,754 | 3,924,404 |
Total assets | 16,373,661 | 17,160,753 |
Current liabilities: | ' | ' |
Current portion of long-term note payable to bank | 1,216,250 | 1,250,000 |
Accounts payable and accrued expenses | 818,803 | 510,710 |
Total current liabilities | 2,035,053 | 1,760,710 |
Long-term obligations: | ' | ' |
Note payable to bank (net of current portion) | 2,635,208 | 3,020,833 |
Total long-term liabilities | 2,635,208 | 3,020,833 |
Stockholders' equity: | ' | ' |
Common stock - no par value (25,000,000 shares authorized, 19,516,589 issued and outstanding as of December 31, 2012 and 19,585,089 as of December 31, 2013) | 23,498,401 | 23,366,058 |
Preferred stock (5,000,000 shares authorized, 20,625 issued and outstanding as of December 31, 2012 and none outstanding as of December 31, 2013) | ' | 800,250 |
Accumulated deficit | -11,795,001 | -11,787,098 |
Total stockholders' equity | 11,703,400 | 12,379,210 |
Total liabilities and stockholders' equity | $16,373,661 | $17,160,753 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Stockholders' equity: | ' | ' |
Preferred stock, par value | $0 | $0 |
Preferred stock, authorized shares | 5,000,000 | 5,000,000 |
Preferred stock, issued shares | 0 | 20,625 |
Preferred stock, outstanding shares | 0 | 20,625 |
Common stock, par value | $0 | $0 |
Common stock, authorized shares | 25,000,000 | 25,000,000 |
Common stock, issued shares | 19,585,089 | 19,585,089 |
Common stock, outstanding shares | 19,585,089 | 19,585,089 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Income Statement [Abstract] | ' | ' | ' |
Royalties and fees | $7,082,548 | $6,823,811 | $6,813,946 |
Administrative fees and other | 24,138 | 19,872 | 44,448 |
Restaurant revenue | 420,753 | 456,449 | 517,679 |
Total revenue | 7,527,439 | 7,300,132 | 7,376,073 |
Operating expenses: | ' | ' | ' |
Salaries and wages | 1,056,790 | 979,447 | 970,966 |
Trade show expense | 514,570 | 498,951 | 351,907 |
Travel expense | 207,572 | 183,316 | 191,695 |
Other operating expenses | 747,914 | 685,836 | 687,519 |
Restaurant expenses | 390,507 | 427,127 | 507,838 |
Depreciation and amortization | 113,607 | 116,287 | 124,009 |
General and administrative | 1,646,993 | 1,593,646 | 1,619,778 |
Total expenses | 4,677,953 | 4,484,610 | 4,453,712 |
Operating income | 2,849,486 | 2,815,522 | 2,922,361 |
Interest and other expense | 201,381 | 413,334 | 390,858 |
Adjust valuation allowance - Heyser Case | 1,208,162 | 500,000 | ' |
Income before income taxes from continuing operations | 1,439,943 | 1,902,188 | 2,531,503 |
Income tax expense | 568,406 | 753,457 | 1,002,729 |
Net income from continuing operations | 871,537 | 1,148,731 | 1,528,774 |
Loss from discontinued operations net of tax benefit of $465,570 for 2011, $344,079 for 2012 and $511,893 for 2013 | -780,440 | -524,588 | -709,816 |
Net income | 91,097 | 624,143 | 818,958 |
Cumulative preferred dividends | 99,000 | 99,271 | 99,000 |
Net income (loss) available to common stockholders | ($7,903) | $524,872 | $719,958 |
Earnings per share - basic: | ' | ' | ' |
Net income from continuing operations | $0.05 | $0.06 | $0.08 |
Net loss from discontinued operations net of tax benefit | ($0.04) | ($0.03) | ($0.04) |
Net income | $0.01 | $0.03 | $0.04 |
Net income available to common stockholders | ' | $0.03 | $0.04 |
Weighted average number of common shares outstanding | 19,533,201 | 19,497,638 | 19,457,810 |
Diluted earnings per share: | ' | ' | ' |
Net income from continuing operations | $0.05 | $0.06 | $0.08 |
Net loss from discontinued operations net of tax benefit | ($0.04) | ($0.03) | ($0.04) |
Net income | $0.01 | $0.03 | $0.04 |
Weighted average number of common shares outstanding | 20,472,908 | 20,077,910 | 20,112,278 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Stockholders' Equity (USD $) | Preferred Stock | Common Stock | Accumulated Deficit | Total |
Beginning Balance, Amount at Dec. 31, 2010 | $800,250 | $23,116,317 | ($13,031,928) | $10,884,639 |
Beginning Balance, Shares at Dec. 31, 2010 | ' | 19,419,317 | ' | ' |
Cumulative preferred dividends | ' | ' | -99,000 | -99,000 |
Amortization of value of employee stock options | ' | 105,659 | ' | 105,659 |
Net income | ' | ' | 818,958 | 818,958 |
Exercise of employee stock options, Amount | ' | 18,000 | ' | 18,000 |
Exercise of employee stock options, Shares | ' | 50,000 | ' | ' |
Ending Balance, Amount at Dec. 31, 2011 | 800,250 | 23,239,976 | -12,311,970 | 11,728,256 |
Ending Balance, Shares at Dec. 31, 2011 | ' | 19,469,317 | ' | ' |
Cumulative preferred dividends | ' | ' | -99,271 | -99,271 |
Amortization of value of employee stock options | ' | 107,882 | ' | 107,882 |
Net income | ' | ' | 624,143 | 624,143 |
Exercise of employee stock options, Amount | ' | 18,200 | ' | 18,200 |
Exercise of employee stock options, Shares | ' | 47,272 | ' | ' |
Ending Balance, Amount at Dec. 31, 2012 | 800,250 | 23,366,058 | -11,787,098 | 12,379,210 |
Ending Balance, Shares at Dec. 31, 2012 | ' | 19,516,589 | ' | ' |
Cumulative preferred dividends | ' | ' | -99,000 | -99,000 |
Amortization of value of employee stock options | ' | 117,118 | ' | 117,118 |
Net income | ' | ' | 91,097 | 91,097 |
Redeemed preferred stock | -800,250 | ' | ' | -800,250 |
Exercise of employee stock options, Amount | ' | 39,975 | ' | 39,975 |
Exercise of employee stock options, Shares | ' | 68,500 | ' | ' |
Issurance cost of preferred stock | ' | -24,750 | ' | -24,750 |
Ending Balance, Amount at Dec. 31, 2013 | ' | $23,498,401 | ($11,795,001) | $11,703,400 |
Ending Balance, Shares at Dec. 31, 2013 | ' | 19,585,089 | ' | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
OPERATING ACTIVITIES | ' | ' | ' |
Net income | $91,097 | $624,143 | $818,958 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' | ' |
Depreciation and amortization | 174,241 | 192,012 | 298,937 |
Non-cash expense from loss on discontinued operations | 1,208,162 | ' | ' |
Deferred income taxes | 568,406 | 753,457 | 1,002,729 |
(Increase) decrease in: | ' | ' | ' |
Accounts and notes receivable | -288,425 | -195,553 | 19,711 |
Inventories | 123,018 | -122,392 | -21,534 |
Prepaid expenses | -92,397 | -100,950 | -42,940 |
Other assets | -370,133 | 147,902 | -849,910 |
Increase in: | ' | ' | ' |
Accounts payable and accrued expenses | 308,093 | 205,946 | 10,736 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 1,722,062 | 1,504,565 | 1,236,687 |
INVESTING ACTIVITIES | ' | ' | ' |
Purchase of property and equipment | -11,958 | -18,994 | -8,059 |
Assets held for resale | ' | -7,027 | -6,274 |
NET CASH USED BY INVESTING ACTIVITIES | -11,958 | -26,021 | -14,333 |
FINANCING ACTIVITIES | ' | ' | ' |
Payment of cumulative preferred dividends | -99,000 | -99,271 | -99,000 |
Payment of principal on outstanding underprior bank loan | ' | -3,575,000 | -925,000 |
Payment of principal officer loan | ' | -1,255,821 | ' |
Payment of principal outstanding on new bank loan | -1,244,375 | -729,167 | ' |
Redemption of all preferred stock outstanding | -825,000 | ' | ' |
Payment of alternative minimum tax | ' | -34,515 | ' |
Payment received on long-term notes receivable | ' | ' | 33,417 |
Payment of loan modification cost | ' | ' | -43,703 |
Proceeds of loan from officer | ' | ' | 400,000 |
Proceeds from new bank loan net of closing costs | 821,454 | 4,812,457 | ' |
Proceeds from the exercise of stock options | 39,975 | 18,200 | 18,000 |
NET CASH USED BY FINANCING ACTIVITIES | -1,306,946 | -863,117 | -616,286 |
DISCONTINUED OPERATIONS | ' | ' | ' |
Payment of obligations from discontinued operations | -389,725 | -704,369 | -709,816 |
Increase (decrease) in cash | 13,433 | -88,942 | -103,748 |
Cash at beginning of year | 144,354 | 233,296 | 337,044 |
Cash at end of year | $157,787 | $144,354 | $233,296 |
1_Summary_of_Significant_Accou
1. Summary of Significant Accounting Policies | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||
Note 1 - Summary of Significant Accounting Policies | ' | ||||||||||||
Organization: The Company sells and services franchises and/or licenses for non-traditional foodservice operations and stand-alone retail outlets under the trade names “Noble Roman’s Pizza,” “Tuscano’s Italian Style Subs and” “Noble Roman’s Take-N-Pizza”. Unless the context otherwise indicates, reference to the “Company” are to Noble Roman’s, Inc. and its wholly-owned subsidiaries. | |||||||||||||
Principles of Consolidation: The consolidated financial statements include the accounts of Noble Roman’s, Inc. and its wholly-owned subsidiaries, Pizzaco, Inc. and N.R. Realty, Inc. Inter-company balances and transactions have been eliminated in consolidation. | |||||||||||||
Inventories: Inventories consist of food, beverage, restaurant supplies, restaurant equipment and marketing materials and are stated at the lower of cost (first-in, first-out) or market. | |||||||||||||
Property and Equipment: Equipment and leasehold improvements are stated at cost. Depreciation and amortization are computed on the straight-line method over the estimated useful lives ranging from five years to 12 years. Leasehold improvements are amortized over the shorter of estimated useful life or the term of the lease. | |||||||||||||
Cash and Cash Equivalents: Includes actual cash balance. The cash is not pledged nor are there any withdrawal restrictions. | |||||||||||||
Assets Held for Resale: The Company records the cost of franchised locations held by the Company on a temporary basis until they are sold to a franchisee at the Company’s cost adjusted for impaired value, if any, to the estimated net realizable value. The Company estimates net realizable value using comparative replacement costs for other similar franchise locations that are being built at the time the estimate is made. Since a decision was made not to sell the assets held for sale on the December 31, 2012 statement, those assets were moved into equipment and began depreciation. | |||||||||||||
Advertising Costs: The Company records advertising costs consistent with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Other Expense topic and Advertising Costs subtopic. This statement requires the Company to expense advertising production costs the first time the production material is used. | |||||||||||||
Use of Estimates: The preparation of the consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The Company records a valuation allowance in a sufficient amount to adjust the total notes and accounts receivables value, in its best judgment, to reflect the amount that the Company estimates will be collected from its total receivables. As any accounts are determined to be permanently impaired (bankruptcy, lack of contact, age of account balance, etc.), they are charged off against the valuation allowance. The Company evaluates its assets held for resale, property and equipment and related costs periodically to assess whether any impairment indications are present, including recurring operating losses and significant adverse changes in legal factors or business climate that affect the recovery of recorded value. If any impairment of an individual asset is evident, a loss would be provided to reduce the carrying value to its estimated fair value. | |||||||||||||
Intangible Assets: Debt issue costs are amortized to interest expense ratably over the term of the applicable debt. The debt issue cost being amortized is $160,537 with accumulated amortization at December 31, 2013 of $62,676. | |||||||||||||
Royalties, Administrative and Franchise Fees: Royalties are recognized as income monthly and are based on a percentage of monthly sales of franchised or licensed restaurants. Fees from the retail products in grocery stores are recognized monthly based on the distributors’ sale of those retail products to the grocery stores or grocery store distributors. Administrative fees are recognized as income monthly as earned. Initial franchise fees are recognized as income when the services for the franchised restaurant are substantially completed. | |||||||||||||
Exit or Disposal Activities Related to Discontinued Operations: The Company records exit or disposal activity for discontinued operations when management commits to an exit or disposal plan and includes those charges under results of discontinued operations, as required by the ASC “Exit or Disposal Cost Obligations” topic. | |||||||||||||
Income Taxes: The Company provides for current and deferred income tax liabilities and assets utilizing an asset and liability approach along with a valuation allowance as appropriate. The Company concluded that no valuation allowance was necessary because it is more likely than not that the Company will earn sufficient income before the expiration of its net operating loss carry-forwards to fully realize the value of the recorded deferred tax asset. As of December 31, 2013, the net operating loss carry-forward was approximately $25 million which expires between the years 2018 and 2033. Management made the determination that no valuation allowance was necessary after reviewing the Company’s business plans, relevant known facts to date, recent trends, current performance and analysis of the backlog of franchises sold but not yet open. | |||||||||||||
U.S. generally accepted accounting principles require the Company to examine its tax positions for uncertain positions. Management is not aware of any tax positions that are more likely than not to change in the next 12 months, or that would not sustain an examination by applicable taxing authorities. The Company’s policy is to recognize penalties and interest as incurred in its Consolidated Statements of Operations, none were included for the years ended December 31, 2011, 2012 and 2013. The Company’s federal and various state income tax returns for 2010 through 2013 are subject to examination by the applicable tax authorities, generally for three years after the later of the original or extended due date. | |||||||||||||
Basic and Diluted Net Income Per Share: Net income per share is based on the weighted average number of common shares outstanding during the respective year. When dilutive, stock options and warrants are included as share equivalents using the treasury stock method. | |||||||||||||
The following table sets forth the calculation of basic and diluted earnings per share for the year ended December 31, 2011: | |||||||||||||
Income | Shares | Per Share | |||||||||||
(Numerator) | (Denominator) | Amount | |||||||||||
Net income | $ | 818,958 | |||||||||||
Less preferred stock dividends | (99,000 | ) | |||||||||||
Earnings per share – basic | |||||||||||||
Income available to common | 719,958 | 19,457,810 | $ | 0.04 | |||||||||
stockholders | |||||||||||||
Effect of dilutive securities | |||||||||||||
Options | - | 287,802 | |||||||||||
Convertible preferred stock | 99,000 | 366,666 | |||||||||||
Diluted earnings per share | |||||||||||||
Income available to common stockholders | $ | 818, 958 | 20,112,278 | $ | 0.04 | ||||||||
and assumed conversions | |||||||||||||
The following table sets forth the calculation of basic and diluted earnings per share for the year ended December 31, 2012: | |||||||||||||
Income | Shares | Per Share | |||||||||||
(Numerator) | (Denominator) | Amount | |||||||||||
Net income | $ | 624,143 | |||||||||||
Less preferred stock dividends | (99,271 | ) | |||||||||||
Earnings per share – basic | |||||||||||||
Income available to common | 524,872 | 19,497,638 | $ | 0.03 | |||||||||
stockholders | |||||||||||||
Effect of dilutive securities | |||||||||||||
Options | - | 213,606 | |||||||||||
Convertible preferred stock | 99,271 | 366,666 | |||||||||||
Diluted earnings per share | |||||||||||||
Income available to common stockholders | $ | 624,143 | 200,077,910 | $ | 0.03 | ||||||||
and assumed conversions | |||||||||||||
The following table sets forth the calculation of basic and diluted earnings per share for the year ended December 31, 2013: | |||||||||||||
Income | Shares | Per Share | |||||||||||
(Numerator) | (Denominator) | Amount | |||||||||||
Net income | $ | 91,097 | |||||||||||
Less preferred stock dividends | (99,000 | ) | |||||||||||
Earnings per share – basic | |||||||||||||
Income available to common | -7,903 | 19,533,201 | $ | - | |||||||||
stockholders | |||||||||||||
Effect of dilutive securities | |||||||||||||
Options | - | 939,707 | |||||||||||
Convertible preferred stock | 99,000 | - | |||||||||||
Diluted earnings per share | |||||||||||||
Income available to common stockholders | $ | 91,097 | 20,472,908 | $ | 0.01 | ||||||||
and assumed conversions | |||||||||||||
Subsequent Events: The Company evaluated subsequent events through the date the consolidated statements were issued and filed with Form 10-K. On February 13, 2014, judgment was entered by the Hamilton Superior Court I in favor of Noble Roman’s, Inc. and against two plaintiffs/counter-defendants in a lawsuit related to 2008 discontinued operations. No other subsequent event required recognition or disclosure. |
2_Accounts_Receivable
2. Accounts Receivable | 12 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
Note 2 - Accounts Receivable | ' |
At December 31, 2012 and 2013, the carrying value of the Company’s accounts receivable has been reduced to anticipated realizable value. As a result of this reduction of carrying value, the Company anticipates that substantially all of its net receivables reflected on the Consolidated Balance Sheets as of December 31, 2012 and 2013 will be collected. The allowance to reduce the receivables to anticipated net realizable value at December 31, 2013 was $263,000. | |
In 2012, the Company dismissed its counterclaims against certain plaintiffs in the lawsuit related to the operations discontinued in 2008 and reduced the net realizable value by $500,000 related to the Company’s counterclaims against the plaintiffs in the lawsuit referenced above. In 2013, based on a judgment that was entered on February 13, 2014 in the lawsuit discussed above, the Company reduced the carrying value of the receivables subject to the counterlaims by $1.1 million. Since the right to receive passive income in the form of royalties is not a part of the discontinued operations, the adjustments to reflect these two charges was made to continuing operations. |
3_Notes_Payable
3. Notes Payable | 12 Months Ended |
Dec. 31, 2013 | |
Debt Disclosure [Abstract] | ' |
Note 3 - Notes Payable | ' |
On May 15, 2012, the Company entered into a Credit Agreement with a bank for a term loan in the amount of $5.0 million which was repayable in 48 equal monthly principal installments of approximately $104,000 plus interest with a final payment due on May 15, 2016. Interest on the unpaid principal balance is payable at a rate per annum of LIBOR plus 4%. The proceeds from the term loan, net of certain fees and expenses associated with obtaining the term loan, were used to repay then-existing bank indebtedness and borrowing from an officer of the Company. On October 31, 2013, the Company entered into a First Amendment to the Credit Agreement (“Amendment”) with BMO Harris Bank, N.A. The Amendment maintains the terms of the term loan, as described above, except for reducing the monthly principal payments from $104,000 to approximately $80,700 and extending the maturity to February 15, 2017. All other terms and conditions of the term loan remain the same including interest on the unpaid principal at a rate per annum of LIBOR plus 4%. The Amendment also provided for a new term loan II in the original amount of $825,000 requiring monthly principal payments of approximately $20,600 per month commencing on November 15, 2013 and continuing thereafter until the final payment on February 15, 2017. The term loan II provides for interest on the unpaid principal balance to be paid monthly at a rate per annum of LIBOR plus 6.08%. Proceeds from term loan II were used to redeem the Series B Preferred Stock. Interest paid on the term loan in 2013 was $157,000 and interest paid on term loan II in 2013 was $6,000. The Company’s obligations under the term loan and term II loan are secured by the grant of a security interest in essentially all assets of the Company and a personal guaranty of an officer of up to $2 million of the loans and certain restrictions apply to the Company such as a prohibition on the payment of dividends on common stock, as set forth in the Credit Agreement. |
4_Royalties_and_Fees
4. Royalties and Fees | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' |
Note 4 - Royalties and Fees | ' |
Approximately $194,000, $294,000 and $788,000 are included in the 2011, 2012 and 2013, respectively, royalties and fees in the Consolidated Statements of Operations for initial franchise fees. Also included in royalties and fees were approximately $61,000, $81,000 and $95,000 in 2011, 2012 and 2013, respectively, for equipment commissions. Most of the cost for the services required to be performed by the Company are incurred prior to the franchise fee income being recorded which is based on contractual liability for the franchisee. For the most part, the Company’s ongoing royalty income is paid electronically by the Company initiating a draft on the franchisee’s account by electronic withdrawal. As such, the Company has no material amount of past due royalties. | |
In conjunction with the development of Noble Roman’s Pizza and Tuscano’s Italian Style Subs, the Company has devised its own recipes for many of the ingredients that go into the making of its products (“Proprietary Products”). The Company contracts with various manufacturers to manufacture its Proprietary Products in accordance with the Company’s recipes and formulas and to sell those products to authorized distributors at a contract price which includes an allowance for use of the Company’s recipes. The manufacturing contracts also require the manufacturers to remit those allowances to the Company on a periodic basis, usually monthly. The Company recognizes those allowances in revenue as earned based on sales reports from the distributors. | |
There were 1,847 franchised or licensed outlets in operation on December 31, 2012 and 2,029 on December 31, 2013. During that 12-month period there were 211 new franchised or licensed outlets opened and 29 franchised or licensed outlets left the system. Grocery stores are accustomed to adding products for a period of time, removing them for a period of time and possibly reoffering them. Therefore, it is unknown how many grocery store licenses have left the system. |
5_Contingent_Liabilities_for_L
5. Contingent Liabilities for Leased Facilities | 12 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
Note 5 - Contingent Liabilities for Leased Facilities | ' |
The Company leased its former restaurant facilities under non-cancelable lease agreements which generally had initial terms ranging from five to 20 years with extended renewal terms. These leases have been terminated or assigned to franchisees who operate them pursuant to a Noble Roman’s, Inc. Franchise Agreement. The assignment passes all liability for future lease payments to the assignees, however, the Company remains contingently liable on two of the leases to the landlords in the event of default by the assignees. The leases generally required the Company or its assignees to pay all real estate taxes, insurance and maintenance costs. At December 31, 2013, contingent obligations under non-cancelable operating leases for 2014, 2015 and 2016, were approximately $91,563, $71,343 and $24,675, respectively. | |
The Company has future obligations of $381,642 under current operating leases as follows: due in less than one year $238,795 and due in one to three years $142,848. |
6_Income_Taxes
6. Income Taxes | 12 Months Ended |
Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | ' |
Note 6 - Income Taxes | ' |
The Company had a deferred tax asset, as a result of prior operating losses, of $10.64 million at December 31, 2012 and $10.58 million at December 31, 2013, which expires between the years 2018 and 2033. In 2011, 2012 and 2013, the Company used deferred benefits to offset its tax expense of $1.00 million, $753,000 and $568,000, respectively, and tax benefits from loss on discontinued operations of $466,000 in 2011, $344,000 in 2012 and $512,000 in 2013. As a result of the tax credits, the Company did not pay any income taxes in 2011, 2012 and 2013. There are no material differences between reported income tax expense or benefit and the income tax expense or benefit that would result from applying the Federal and state statutory tax rates. |
7_Common_Stock
7. Common Stock | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Equity [Abstract] | ' | ||||
Note 7 - Common Stock | ' | ||||
On December 31, 2012, the Company had issued and outstanding Series B Preferred Stock with an aggregate liquidation value of $825,000 and none on December 31, 2013. Prior to the redemption of the Series B Preferred, at the option of the holder, it could have been converted to common stock at a conversion price of $2.25 per share, however the Company redeemed the Series B Preferred stock prior to it being converted. The preferred stock provided for cumulative dividends at the rate of 12% per annum on the liquidation value. The Company redeemed the Series B Preferred Stock at the liquidation value on October 31, 2013. | |||||
On September 6, 2013, an employee exercised an option for 2,500 shares of common stock at a price of $.83 per share. On September 11, 2013, an employee exercised an option for 30,000 shares of common stock at a price of $.36 per share. On September 24, 2013, an employee exercised an option for 10,000 shares of common stock at a price of $.36 per share. On September 27, 2013, an employee exercised an option for 1,000 shares of common stock at a price of $.95 per share. On October 7, 2013, an employee exercised an option for 10,000 shares of common stock at a price of $.83 per share. On December 2, 2013, an employee exercised an option for 15,000 shares of common stock at a price of $.95 per share. | |||||
The Company has an incentive stock option plan for key employees, officers and directors. The options are generally exercisable three years after the date of grant and expire ten years after the date of grant. The option prices are the fair market value of the stock at the date of grant. At December 31, 2013, the Company had the following employee stock options outstanding: | |||||
# Common Shares | Exercise Price | ||||
Represented | |||||
33,500 | $ | 0.83 | |||
57,500 | 2.3 | ||||
335,000 | 0.36 | ||||
415,000 | 0.95 | ||||
1,800,000 | 1.05 | ||||
15,500,035,100,040,000 | .90.58.68 | ||||
270,500 | 1.3 | ||||
As of December 31, 2013, options for 2,041,000 shares were exercisable. | |||||
The Company adopted the modified prospective method to account for stock option grants, which does not require restatement of prior periods. Under the modified prospective method, the Company is required to record compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards that remain outstanding at the date of adoption, net of an estimate of expected forfeitures. Compensation expense is based on the estimated fair values of stock options determined on the date of grant and is recognized over the related vesting period, net of an estimate of expected forfeitures. | |||||
The Company estimates the fair value of its option awards on the date of grant using the Black-Scholes option pricing model. The risk-free interest rate is based on external data while all other assumptions are determined based on the Company’s historical experience with stock options. The following assumptions were used for grants in 2011, 2012 and 2013: | |||||
Expected volatility | 20% to 30% | ||||
Expected dividend yield | None | ||||
Expected term (in years) | 5 | ||||
Risk-free interest rate | 3.56% to 1.62% | ||||
The following table sets forth the number of options outstanding as of December 31, 2010, 2011, 2012 and 2013 and the number of options granted, exercised or forfeited during the years ended December 31, 2011, December 31, 2012 and December 31, 2013: | |||||
Balance of employee stock options outstanding as of 12/31/10 | 1,100,500 | ||||
Stock options granted during the year ended 12/31/11 | 2,000,000 | ||||
Stock options exercised during the year ended 12/31/11 | -50,000 | ||||
Stock options forfeited during the year ended 12/31/11 | -50,000 | ||||
Balance of employee stock options outstanding as of 12/31/11 | 3,000,500 | ||||
Stock options granted during the year ended 12/31/12 | 401,000 | ||||
Stock options exercised during the year ended 12/31/12 | -60,000 | ||||
Stock options forfeited during the year ended 12/31/12 | -75,000 | ||||
Balance of employee stock options outstanding as of 12/31/12 | 3,266,500 | ||||
Stock options granted during the year ended 12/31/13 | 273,000 | ||||
Stock options exercised during the year ended 12/31/13 | 68,500 | ||||
Stock options forfeited during the year ended 12/31/13 | 13,500 | ||||
Balance of employee stock options outstanding as of 12/31/13 | 3,457,500 | ||||
The following table sets forth the number of non-vested options outstanding as of December 31, 2010, 2011, 2012 and 2013, and the number of stock options granted, vested and forfeited during the years ended December 31, 2011, 2012 and 2013. | |||||
Balance of employee non-vested stock options outstanding as of 12/31/10 | 936,000 | ||||
Stock options granted during the year ended 12/31/11 | 2,000,000 | ||||
Stock options vested during the year ended 12/31/11 | (445,000 | ) | |||
Stock options forfeited during the year ended 12/31/11 | (30,000 | ) | |||
Balance of employee non-vested stock options outstanding as of 12/31/11 | 2,461,000 | ||||
Stock options granted during the year ended 12/31/12 | 401,000 | ||||
Stock options vested during the year ended 12/31/12 | (600,000 | ) | |||
Stock options forfeited during the year ended 12/31/12 | (75,000 | ) | |||
Balance of employee non-vested stock options outstanding as of 12/31/12 | 2,187,000 | ||||
Stock options granted during the year ended 12/31/13 | 273,000 | ||||
Stock options vested during the year ended 12/31/13 | (1,031,000 | ) | |||
Stock options forfeited during the year ended 12/31/13 | (12,500 | ) | |||
Balance of employee non-vested stock options outstanding as of 12/31/13 | 1,416,500 | ||||
During 2013, employee stock options were granted for 273,000 shares, options for 68,500 shares were exercised and options for 13,500 shares were forfeited. At December 31, 2013, the weighted average grant date fair value of non-vested options was $.95 per share and the weighted average grant date fair value of vested options was $.95 per share. The weighted average grant date fair value of employee stock options granted during 2011 was $1.04, during 2012 was $.58 and during 2013 was $1.30. Total compensation cost recognized for share-based payment arrangements was $105,659 with a tax benefit of $41,841 in 2011, $107,882 with a tax benefit of $42,732 in 2012 and $117,118 with a tax benefit of $46,390 in 2013. As of December 31, 2013, total compensation cost related to non-vested options was $71,214, which will be recognized as compensation cost over the next six to 30 months. No cash was used to settle equity instruments under share-based payment arrangements. | |||||
8_Statements_of_Financial_Acco
8. Statements of Financial Accounting Standards | 12 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
Note 8 - Statements of Financial Accounting Standards | ' |
The Company does not believe that the recently issued Statements of Financial Accounting Standards will have any material impact on the Company’s Consolidated Statements of Operations or its Consolidated Balance Sheets. |
9_Loss_from_Discontinued_Opera
9. Loss from Discontinued Operations | 12 Months Ended |
Dec. 31, 2013 | |
Discontinued Operations and Disposal Groups [Abstract] | ' |
Note 9 - Loss from Discontinued Operations | ' |
The Company made the decision in 1999 to discontinue operations of its full-service restaurants and made the decision in late 2008 to discontinue the business of operating traditional quick service restaurants, which had been acquired from struggling franchisees and later sold to new franchisees. As a result, the Company charged off or dramatically lowered the carrying value of all receivables related to the traditional restaurants and accrued future estimated expenses related to the estimated cost to prosecute a lawsuit related to those discontinued operations. The ongoing right to receive passive income in the form of royalties is not a part of the discontinued segment. | |
A full-service restaurant that was closed in conjunction with the business activity discontinued in 1999 was sublet to an unrelated party. In late 2008, the Company lost that sub-tenant and the building was severely damaged by a tornado. As a result, the Company incurred additional cost related to the 1999 discontiniued operations as well as the ones that were discontinued in 2008. | |
The Company reported net loss from discontinued operations in 2011 of $710,000. This was comprised of $111,000 for the leased property discussed above. The Company disclosed the contingent lease liability portion of this cost in the footnotes to the consolidated financial statements under “Contingent Liabilities for Leased Facilities.” The net loss also included $230,000 for legal and other expenses related to a California foodservice distributor arising out of the operations discontinued in 2008 and $370,000 for estimated legal and other costs of a lawsuit related to those discontinued operations. | |
The Company reported a net loss from discontinued operations of $525,000 in 2012. This consisted of $110,000 in legal and other costs relating to the restaurant that was closed in conjunction with the business activity discontinued in 1999 discussed above. The primary reason for this additional loss was the insurance company’s denial of all except a small portion of the Company’s claim for damages from the tornado. In addition, the Company accrued an additional loss of $415,000 for legal and other costs of a lawsuit related to the operations discontinued in 2008. | |
The Company reported a net loss on discontinued operations of $780,000 in 2013. This consisted of $178,000 in legal and settlement costs through the end of the lease relating to the restaurant that was closed in conjunction with the business activity discontinued in 1999 discussed above. In addition, the Company incurred $147,000 for legal and other costs of its lawsuit related to the operations discontinued in 2008, and wrote off $257,000 in receivables of which $123,000 were from various distributors and $199,000 in obsolete support materials and other costs, all related to the operations discontinued in 2008. | |
10_Contingencies
10. Contingencies | 12 Months Ended |
Dec. 31, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Note 10 - Contingencies | ' |
The Company, from time to time, is or may become involved in various litigation relating to claims arising out of its normal business operations. | |
Currently, the Company has no material litigation pending against it. |
11_Certain_Relationships_and_R
11. Certain Relationships and Related Transactions | 12 Months Ended |
Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ' |
Note 11 - Certain Relationships and Related Transactions | ' |
The following is a summary of transactions to which the Company and certain officers and directors of the Company are a party or have a financial interest. The Board of Directors of the Company has adopted a policy that all transactions between the Company and its officers, directors, principal shareholders and other affiliates must be approved by a majority of the Company's disinterested directors, and be conducted on terms no less favorable to the Company than could be obtained from unaffiliated third parties. | |
Jeffrey R. Gaither, a Director, is Managing Partner of Bose McKinney & Evans, LLP, a law firm that performs legal services for the Company. The Company paid Bose McKinney for services rendered in the approximate amount of $428,000, $382,000 and $200,000 in 2011, 2012 and 2013, respectively. |
12_Unaudited_Quarterly_Financi
12. Unaudited Quarterly Financial Information | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | ' | ||||||||||||||||
Note 12 - Unaudited Quarterly Financial Information | ' | ||||||||||||||||
Quarter Ended | |||||||||||||||||
2013 | December 31 | September 30 | June 30 | 31-Mar | |||||||||||||
(in thousands, except per share data) | |||||||||||||||||
Total revenue | $ | 1,717 | $ | 1,933 | $ | 1,987 | $ | 1,891 | |||||||||
Operating income | 547 | 752 | 805 | 746 | |||||||||||||
Net income (loss) before income taxes from | (712 | ) | 705 | 754 | 693 | ||||||||||||
continuing operations | |||||||||||||||||
Net income (loss) from continuing operations | (430 | ) | 427 | 456 | 418 | ||||||||||||
Loss from discontinued operations | (780 | ) | - | - | - | ||||||||||||
Net income (loss) | (1,210 | ) | 427 | 456 | 418 | ||||||||||||
Net income (loss) from continuing operations | |||||||||||||||||
per common share | |||||||||||||||||
Basic | (.02 | ) | 0.02 | 0.02 | 0.02 | ||||||||||||
Diluted | (.02 | ) | 0.02 | 0.02 | 0.02 | ||||||||||||
Net income (loss) per common share | |||||||||||||||||
Basic | (.06 | ) | 0.02 | 0.02 | 0.02 | ||||||||||||
Diluted | (.06 | ) | 0.02 | 0.02 | 0.02 | ||||||||||||
Quarter Ended | |||||||||||||||||
2012 | December 31 | September 30 | 30-Jun | 31-Mar | |||||||||||||
(in thousands, except per share data) | |||||||||||||||||
Total revenue | $ | 1,724 | $ | 1,845 | $ | 1,894 | $ | 1,838 | |||||||||
Operating income | 624 | 726 | 765 | 700 | |||||||||||||
Net income before income taxes from | 66 | 665 | 567 | 605 | |||||||||||||
continuing operations | |||||||||||||||||
Net income from continuing operations | 40 | 402 | 342 | 365 | |||||||||||||
Loss from discontinued operations | 525 | - | - | - | |||||||||||||
Net income (loss) | (485 | ) | 402 | 342 | 365 | ||||||||||||
Net income from continuing operations | |||||||||||||||||
per common share | |||||||||||||||||
Basic | - | 0.02 | 0.02 | 0.02 | |||||||||||||
Diluted | - | 0.02 | 0.02 | 0.02 | |||||||||||||
Net income (loss) per common share | |||||||||||||||||
Basic | (.02 | ) | 0.02 | 0.02 | 0.02 | ||||||||||||
Diluted | (.02 | ) | 0.02 | 0.02 | 0.02 | ||||||||||||
1_Summary_of_Significant_Accou1
1. Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Summary Of Significant Accounting Policies Policies | ' | ||||||||||||
Organization | ' | ||||||||||||
Organization: The Company sells and services franchises and/or licenses for non-traditional foodservice operations and stand-alone retail outlets under the trade names “Noble Roman’s Pizza,” “Tuscano’s Italian Style Subs and” “Noble Roman’s Take-N-Pizza”. Unless the context otherwise indicates, reference to the “Company” are to Noble Roman’s, Inc. and its wholly-owned subsidiaries. | |||||||||||||
Principles of Consolidation | ' | ||||||||||||
Principles of Consolidation: The consolidated financial statements include the accounts of Noble Roman’s, Inc. and its wholly-owned subsidiaries, Pizzaco, Inc. and N.R. Realty, Inc. Inter-company balances and transactions have been eliminated in consolidation. | |||||||||||||
Inventories | ' | ||||||||||||
Inventories: Inventories consist of food, beverage, restaurant supplies, restaurant equipment and marketing materials and are stated at the lower of cost (first-in, first-out) or market. | |||||||||||||
Property and Equipment | ' | ||||||||||||
Property and Equipment: Equipment and leasehold improvements are stated at cost. Depreciation and amortization are computed on the straight-line method over the estimated useful lives ranging from five years to 12 years. Leasehold improvements are amortized over the shorter of estimated useful life or the term of the lease. | |||||||||||||
Cash and Cash Equivalents | ' | ||||||||||||
Cash and Cash Equivalents: Includes actual cash balance. The cash is not pledged nor are there any withdrawal restrictions. | |||||||||||||
Assets Held for Resale | ' | ||||||||||||
Assets Held for Resale: The Company records the cost of franchised locations held by the Company on a temporary basis until they are sold to a franchisee at the Company’s cost adjusted for impaired value, if any, to the estimated net realizable value. The Company estimates net realizable value using comparative replacement costs for other similar franchise locations that are being built at the time the estimate is made. Since a decision was made not to sell the assets held for sale on the December 31, 2012 statement, those assets were moved into equipment and began depreciation. | |||||||||||||
Advertising Costs | ' | ||||||||||||
Advertising Costs: The Company records advertising costs consistent with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Other Expense topic and Advertising Costs subtopic. This statement requires the Company to expense advertising production costs the first time the production material is used. | |||||||||||||
Use of Estimates | ' | ||||||||||||
Use of Estimates: The preparation of the consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The Company records a valuation allowance in a sufficient amount to adjust the total notes and accounts receivables value, in its best judgment, to reflect the amount that the Company estimates will be collected from its total receivables. As any accounts are determined to be permanently impaired (bankruptcy, lack of contact, age of account balance, etc.), they are charged off against the valuation allowance. The Company evaluates its assets held for resale, property and equipment and related costs periodically to assess whether any impairment indications are present, including recurring operating losses and significant adverse changes in legal factors or business climate that affect the recovery of recorded value. If any impairment of an individual asset is evident, a loss would be provided to reduce the carrying value to its estimated fair value. | |||||||||||||
Intangible Assets | ' | ||||||||||||
Intangible Assets: Debt issue costs are amortized to interest expense ratably over the term of the applicable debt. The debt issue cost being amortized is $160,537 with accumulated amortization at December 31, 2013 of $62,676. | |||||||||||||
Royalties, Administrative and Franchise Fees | ' | ||||||||||||
Royalties, Administrative and Franchise Fees: Royalties are recognized as income monthly and are based on a percentage of monthly sales of franchised or licensed restaurants. Fees from the retail products in grocery stores are recognized monthly based on the distributors’ sale of those retail products to the grocery stores or grocery store distributors. Administrative fees are recognized as income monthly as earned. Initial franchise fees are recognized as income when the services for the franchised restaurant are substantially completed. | |||||||||||||
Exit or Disposal Activities Related to Discontinued Operations | ' | ||||||||||||
Exit or Disposal Activities Related to Discontinued Operations: The Company records exit or disposal activity for discontinued operations when management commits to an exit or disposal plan and includes those charges under results of discontinued operations, as required by the ASC “Exit or Disposal Cost Obligations” topic. | |||||||||||||
Income Taxes | ' | ||||||||||||
Income Taxes: The Company provides for current and deferred income tax liabilities and assets utilizing an asset and liability approach along with a valuation allowance as appropriate. The Company concluded that no valuation allowance was necessary because it is more likely than not that the Company will earn sufficient income before the expiration of its net operating loss carry-forwards to fully realize the value of the recorded deferred tax asset. As of December 31, 2013, the net operating loss carry-forward was approximately $25 million which expires between the years 2018 and 2033. Management made the determination that no valuation allowance was necessary after reviewing the Company’s business plans, relevant known facts to date, recent trends, current performance and analysis of the backlog of franchises sold but not yet open. | |||||||||||||
U.S. generally accepted accounting principles require the Company to examine its tax positions for uncertain positions. Management is not aware of any tax positions that are more likely than not to change in the next 12 months, or that would not sustain an examination by applicable taxing authorities. The Company’s policy is to recognize penalties and interest as incurred in its Consolidated Statements of Operations, none were included for the years ended December 31, 2011, 2012 and 2013. The Company’s federal and various state income tax returns for 2010 through 2013 are subject to examination by the applicable tax authorities, generally for three years after the later of the original or extended due date. | |||||||||||||
Basic and Diluted Net Income Per Share | ' | ||||||||||||
Basic and Diluted Net Income Per Share: Net income per share is based on the weighted average number of common shares outstanding during the respective year. When dilutive, stock options and warrants are included as share equivalents using the treasury stock method. | |||||||||||||
The following table sets forth the calculation of basic and diluted earnings per share for the year ended December 31, 2011: | |||||||||||||
Income | Shares | Per Share | |||||||||||
(Numerator) | (Denominator) | Amount | |||||||||||
Net income | $ | 818,958 | |||||||||||
Less preferred stock dividends | (99,000 | ) | |||||||||||
Earnings per share – basic | |||||||||||||
Income available to common | 719,958 | 19,457,810 | $ | 0.04 | |||||||||
stockholders | |||||||||||||
Effect of dilutive securities | |||||||||||||
Options | - | 287,802 | |||||||||||
Convertible preferred stock | 99,000 | 366,666 | |||||||||||
Diluted earnings per share | |||||||||||||
Income available to common stockholders | $ | 818, 958 | 20,112,278 | $ | 0.04 | ||||||||
and assumed conversions | |||||||||||||
The following table sets forth the calculation of basic and diluted earnings per share for the year ended December 31, 2012: | |||||||||||||
Income | Shares | Per Share | |||||||||||
(Numerator) | (Denominator) | Amount | |||||||||||
Net income | $ | 624,143 | |||||||||||
Less preferred stock dividends | (99,271 | ) | |||||||||||
Earnings per share – basic | |||||||||||||
Income available to common | 524,872 | 19,497,638 | $ | 0.03 | |||||||||
stockholders | |||||||||||||
Effect of dilutive securities | |||||||||||||
Options | - | 213,606 | |||||||||||
Convertible preferred stock | 99,271 | 366,666 | |||||||||||
Diluted earnings per share | |||||||||||||
Income available to common stockholders | $ | 624,143 | 200,077,910 | $ | 0.03 | ||||||||
and assumed conversions | |||||||||||||
The following table sets forth the calculation of basic and diluted earnings per share for the year ended December 31, 2013: | |||||||||||||
Income | Shares | Per Share | |||||||||||
(Numerator) | (Denominator) | Amount | |||||||||||
Net income | $ | 91,097 | |||||||||||
Less preferred stock dividends | (99,000 | ) | |||||||||||
Earnings per share – basic | |||||||||||||
Income available to common | -7,903 | 19,533,201 | $ | - | |||||||||
stockholders | |||||||||||||
Effect of dilutive securities | |||||||||||||
Options | - | 939,707 | |||||||||||
Convertible preferred stock | 99,000 | - | |||||||||||
Diluted earnings per share | |||||||||||||
Income available to common stockholders | $ | 91,097 | 20,472,908 | $ | 0.01 | ||||||||
and assumed conversions | |||||||||||||
Subsequent Events | ' | ||||||||||||
Subsequent Events: The Company evaluated subsequent events through the date the consolidated statements were issued and filed with Form 10-K. On February 13, 2014, judgment was entered by the Hamilton Superior Court I in favor of Noble Roman’s, Inc. and against two plaintiffs/counter-defendants in a lawsuit related to 2008 discontinued operations. No other subsequent event required recognition or disclosure. |
1_Summary_of_Significant_Accou2
1. Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Summary Of Significant Accounting Policies Tables | ' | ||||||||||||
Basic and diluted earnings per share | ' | ||||||||||||
Income | Shares | Per Share | |||||||||||
(Numerator) | (Denominator) | Amount | |||||||||||
Net income | $ | 818,958 | |||||||||||
Less preferred stock dividends | (99,000 | ) | |||||||||||
Earnings per share – basic | |||||||||||||
Income available to common | 719,958 | 19,457,810 | $ | 0.04 | |||||||||
stockholders | |||||||||||||
Effect of dilutive securities | |||||||||||||
Options | - | 287,802 | |||||||||||
Convertible preferred stock | 99,000 | 366,666 | |||||||||||
Diluted earnings per share | |||||||||||||
Income available to common stockholders | $ | 818, 958 | 20,112,278 | $ | 0.04 | ||||||||
and assumed conversions | |||||||||||||
The following table sets forth the calculation of basic and diluted earnings per share for the year ended December 31, 2012: | |||||||||||||
Income | Shares | Per Share | |||||||||||
(Numerator) | (Denominator) | Amount | |||||||||||
Net income | $ | 624,143 | |||||||||||
Less preferred stock dividends | (99,271 | ) | |||||||||||
Earnings per share – basic | |||||||||||||
Income available to common | 524,872 | 19,497,638 | $ | 0.03 | |||||||||
stockholders | |||||||||||||
Effect of dilutive securities | |||||||||||||
Options | - | 213,606 | |||||||||||
Convertible preferred stock | 99,271 | 366,666 | |||||||||||
Diluted earnings per share | |||||||||||||
Income available to common stockholders | $ | 624,143 | 200,077,910 | $ | 0.03 | ||||||||
and assumed conversions | |||||||||||||
The following table sets forth the calculation of basic and diluted earnings per share for the year ended December 31, 2013: | |||||||||||||
Income | Shares | Per Share | |||||||||||
(Numerator) | (Denominator) | Amount | |||||||||||
Net income | $ | 91,097 | |||||||||||
Less preferred stock dividends | (99,000 | ) | |||||||||||
Earnings per share – basic | |||||||||||||
Income available to common | -7,903 | 19,533,201 | $ | - | |||||||||
stockholders | |||||||||||||
Effect of dilutive securities | |||||||||||||
Options | - | 939,707 | |||||||||||
Convertible preferred stock | 99,000 | - | |||||||||||
Diluted earnings per share | |||||||||||||
Income available to common stockholders | $ | 91,097 | 20,472,908 | $ | 0.01 | ||||||||
and assumed conversions | |||||||||||||
7_Common_Stock_Tables
7. Common Stock (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Common Stock Tables | ' | ||||
Employee stock options outstanding | ' | ||||
# Common Shares | Exercise Price | ||||
Represented | |||||
33,500 | $ | 0.83 | |||
57,500 | 2.3 | ||||
335,000 | 0.36 | ||||
415,000 | 0.95 | ||||
1,800,000 | 1.05 | ||||
40,000 | 0.68 | ||||
351,000 | 0.58 | ||||
40,000 | .68 | ||||
270,500 | 1.3 | ||||
Assumptions for grants | ' | ||||
Expected volatility | 20% to 30% | ||||
Expected dividend yield | None | ||||
Expected term (in years) | 5 | ||||
Risk-free interest rate | 3.56% to 1.62% | ||||
Options outstanding | ' | ||||
Balance of employee stock options outstanding as of 12/31/10 | 1,100,500 | ||||
Stock options granted during the year ended 12/31/11 | 2,000,000 | ||||
Stock options exercised during the year ended 12/31/11 | -50,000 | ||||
Stock options forfeited during the year ended 12/31/11 | -50,000 | ||||
Balance of employee stock options outstanding as of 12/31/11 | 3,000,500 | ||||
Stock options granted during the year ended 12/31/12 | 401,000 | ||||
Stock options exercised during the year ended 12/31/12 | -60,000 | ||||
Stock options forfeited during the year ended 12/31/12 | -75,000 | ||||
Balance of employee stock options outstanding as of 12/31/12 | 3,266,500 | ||||
Stock options granted during the year ended 12/31/13 | 273,000 | ||||
Stock options exercised during the year ended 12/31/13 | 68,500 | ||||
Stock options forfeited during the year ended 12/31/13 | 13,500 | ||||
Balance of employee stock options outstanding as of 12/31/13 | 3,457,500 | ||||
Number of non-vested options outstanding | ' | ||||
Balance of employee non-vested stock options outstanding as of 12/31/10 | 936,000 | ||||
Stock options granted during the year ended 12/31/11 | 2,000,000 | ||||
Stock options vested during the year ended 12/31/11 | (445,000 | ) | |||
Stock options forfeited during the year ended 12/31/11 | (30,000 | ) | |||
Balance of employee non-vested stock options outstanding as of 12/31/11 | 2,461,000 | ||||
Stock options granted during the year ended 12/31/12 | 401,000 | ||||
Stock options vested during the year ended 12/31/12 | (600,000 | ) | |||
Stock options forfeited during the year ended 12/31/12 | (75,000 | ) | |||
Balance of employee non-vested stock options outstanding as of 12/31/12 | 2,187,000 | ||||
Stock options granted during the year ended 12/31/13 | 273,000 | ||||
Stock options vested during the year ended 12/31/13 | (1,031,000 | ) | |||
Stock options forfeited during the year ended 12/31/13 | (12,500 | ) | |||
Balance of employee non-vested stock options outstanding as of 12/31/13 | 1,416,500 |
13_Unaudited_Quarterly_Financi
13. Unaudited Quarterly Financial Information (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Unaudited Quarterly Financial Information Tables | ' | ||||||||||||||||
Unaudited Quarterly Financial Information | ' | ||||||||||||||||
Quarter Ended | |||||||||||||||||
2013 | December 31 | September 30 | June 30 | 31-Mar | |||||||||||||
(in thousands, except per share data) | |||||||||||||||||
Total revenue | $ | 1,717 | $ | 1,933 | $ | 1,987 | $ | 1,891 | |||||||||
Operating income | 547 | 752 | 805 | 746 | |||||||||||||
Net income (loss) before income taxes from | (712 | ) | 705 | 754 | 693 | ||||||||||||
continuing operations | |||||||||||||||||
Net income (loss) from continuing operations | (430 | ) | 427 | 456 | 418 | ||||||||||||
Loss from discontinued operations | (780 | ) | - | - | - | ||||||||||||
Net income (loss) | (1,210 | ) | 427 | 456 | 418 | ||||||||||||
Net income (loss) from continuing operations | |||||||||||||||||
per common share | |||||||||||||||||
Basic | (.02 | ) | 0.02 | 0.02 | 0.02 | ||||||||||||
Diluted | (.02 | ) | 0.02 | 0.02 | 0.02 | ||||||||||||
Net income (loss) per common share | |||||||||||||||||
Basic | (.06 | ) | 0.02 | 0.02 | 0.02 | ||||||||||||
Diluted | (.06 | ) | 0.02 | 0.02 | 0.02 | ||||||||||||
Quarter Ended | |||||||||||||||||
2012 | December 31 | September 30 | 30-Jun | 31-Mar | |||||||||||||
(in thousands, except per share data) | |||||||||||||||||
Total revenue | $ | 1,724 | $ | 1,845 | $ | 1,894 | $ | 1,838 | |||||||||
Operating income | 624 | 726 | 765 | 700 | |||||||||||||
Net income before income taxes from | 66 | 665 | 567 | 605 | |||||||||||||
continuing operations | |||||||||||||||||
Net income from continuing operations | 40 | 402 | 342 | 365 | |||||||||||||
Loss from discontinued operations | 525 | - | - | - | |||||||||||||
Net income (loss) | (485 | ) | 402 | 342 | 365 | ||||||||||||
Net income from continuing operations | |||||||||||||||||
per common share | |||||||||||||||||
Basic | - | 0.02 | 0.02 | 0.02 | |||||||||||||
Diluted | - | 0.02 | 0.02 | 0.02 | |||||||||||||
Net income (loss) per common share | |||||||||||||||||
Basic | (.02 | ) | 0.02 | 0.02 | 0.02 | ||||||||||||
Diluted | (.02 | ) | 0.02 | 0.02 | 0.02 | ||||||||||||
1_Summary_of_Significant_Accou3
1. Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Income (Numerator) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | ($1,210) | $427 | $456 | $418 | ($485) | $402 | $342 | $365 | $91,097 | $624,143 | $818,958 |
Less preferred stock dividends | ' | ' | ' | ' | ' | ' | ' | ' | -99,000 | -99,271 | -99,000 |
Income available to common stockholders | ' | ' | ' | ' | ' | ' | ' | ' | -7,903 | 524,872 | 719,958 |
Income available to common stockholders and assumed conversions | ' | ' | ' | ' | ' | ' | ' | ' | 91,097 | 624,143 | 818,958 |
Shares (Denominator) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income available to common stockholders | ' | ' | ' | ' | ' | ' | ' | ' | 19,533,201 | 19,497,638 | 19,457,810 |
Income available to common stockholders and assumed conversions | ' | ' | ' | ' | ' | ' | ' | ' | 20,472,908 | 20,077,910 | 20,112,278 |
Earnings per share basic | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income available to common stockholders | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.03 | $0.04 |
Diluted earnings per share | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income available to common stockholders and assumed conversions | ' | ' | ' | ' | ' | ' | ' | ' | $0.01 | $0.03 | $0.04 |
Options [Member] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income (Numerator) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Effect of dilutive securities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares (Denominator) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Effect of dilutive securities | ' | ' | ' | ' | ' | ' | ' | ' | 939,707 | 213,606 | 287,802 |
Convertible Preferred Stock [Member] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income (Numerator) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Effect of dilutive securities | ' | ' | ' | ' | ' | ' | ' | ' | $99,000 | $99,271 | $99,000 |
Shares (Denominator) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Effect of dilutive securities | ' | ' | ' | ' | ' | ' | ' | ' | ' | 366,666 | 366,666 |
1_Summary_of_Significant_Accou4
1. Summary of Significant Accounting Policies (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' |
Estimated useful lives | 'Five years to 12 years |
Debt issue cost | $160,537 |
Accumulated amortization | 62,676 |
Net operating loss carry-forward | $25,000,000 |
4_Royalties_and_Fees_Details_N
4. Royalties and Fees (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Number of Franchisee | 2,029 | 1,847 | ' |
Outlets opened | 211 | ' | ' |
Outlets closed | 29 | ' | ' |
InitialFranchiseeFees [Member] | ' | ' | ' |
Royalties and Fees | $788,000 | $294,000 | $194,000 |
EquipmentCommission [Member] | ' | ' | ' |
Royalties and Fees | $95,000 | $81,000 | $61,000 |
5_Contingent_Liabilities_for_L1
5. Contingent Liabilities for Leased Facilities (Details Narrative) (USD $) | Dec. 31, 2013 |
Notes to Financial Statements | ' |
2014 | $91,563 |
2015 | 71,343 |
2016 | 24,675 |
Future obligations operating leases | 381,642 |
Due in less than one year | 238,795 |
Due in one to three years | $142,848 |
6_Income_Taxes_Details_Narrati
6. Income Taxes (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Income Tax Disclosure [Abstract] | ' | ' | ' |
Deferred tax asset | $10,580,000 | $10,640,000 | ' |
Operating losses expiration year | '2033 | '2018 | ' |
Deferred benefits | 568,000 | 753,000 | 1,000,000 |
Tax benefits from loss on discontinued operations | $512,000 | $344,000 | $466,000 |
7_Common_Stock_Details
7. Common Stock (Details) (USD $) | Dec. 31, 2013 |
Employee Stock Option 1 [Member] | ' |
Common Shares Represented | 33,500 |
Exercise Price | $0.83 |
Employee Stock Option 2 [Member] | ' |
Common Shares Represented | 57,500 |
Exercise Price | $2.30 |
Employee Stock Option 3 [Member] | ' |
Common Shares Represented | 335,000 |
Exercise Price | $0.36 |
Employee Stock Option 4 [Member] | ' |
Common Shares Represented | 415,000 |
Exercise Price | $0.95 |
Employee Stock Option 5 [Member] | ' |
Common Shares Represented | 1,800,000 |
Exercise Price | $1.05 |
Employee Stock Option 6 [Member] | ' |
Common Shares Represented | 155,000 |
Exercise Price | $0.90 |
Employee Stock Option 8 [Member] | ' |
Common Shares Represented | 351,000 |
Exercise Price | $0.58 |
Employee Stock Option 7 [Member] | ' |
Common Shares Represented | 40,000 |
Exercise Price | $0.68 |
Employee Stock Option 9 [Member] | ' |
Common Shares Represented | 270,500 |
Exercise Price | $1.30 |
7_Common_Stock_Details_1
7. Common Stock (Details 1) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Equity [Abstract] | ' | ' | ' |
Expected volatility, Minimum | 20.00% | 20.00% | 20.00% |
Expected volatility, Maximum | 30.00% | 30.00% | 30.00% |
Expected dividend yield | $0 | $0 | $0 |
Expected term (in years) | '5 years | '5 years | '5 years |
Risk-free interest rate, Minimum | 3.56% | 3.56% | 3.56% |
Risk-free interest rate, Maximum | 1.62% | 1.62% | 1.62% |
7_Common_Stock_Details_2
7. Common Stock (Details 2) (Employee Stock Option [Member]) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Employee Stock Option [Member] | ' | ' | ' |
Balance of employee stock options outstanding | 3,266,500 | 3,000,500 | 1,100,500 |
Stock options granted | 273,000 | 401,000 | 2,000,000 |
Stock options exercised | 68,500 | -60,000 | -50,000 |
Stock options forfeited | 13,500 | -75,000 | -50,000 |
Balance of employee stock options outstanding | 3,457,000 | 3,266,500 | 3,000,500 |
7_Common_Stock_Details_3
7. Common Stock (Details 3) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Equity [Abstract] | ' | ' | ' |
Balance of employee non-vested stock options outstanding | 2,187,000 | 2,461,000 | 936,000 |
Stock options granted | 273,000 | 401,000 | 2,000,000 |
Stock options vested | -1,031,000 | -600,000 | -445,000 |
Stock options forfeited | -12,500 | -75,000 | -30,000 |
Balance of employee non-vested stock options outstanding | 1,416,500 | 2,187,000 | 2,461,000 |
9_Loss_from_Discontinued_Opera1
9. Loss from Discontinued Operations (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Discontinued Operations and Disposal Groups [Abstract] | ' | ' | ' |
Loss on discontinued operations | $780,000 | $525,000 | $710,000 |
Additional loss | $780,000 | $525,000 | $710,000 |
13_Unaudited_Quarterly_Financi1
13. Unaudited Quarterly Financial Information (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Quarterly Financial Information Disclosure [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total revenue | $1,717 | $1,933 | $1,987 | $1,891 | $1,724 | $1,845 | $1,894 | $1,838 | $7,527,439 | $7,300,132 | $7,376,073 |
Operating income | 547 | 752 | 805 | 746 | 624 | 726 | 765 | 700 | 2,849,486 | 2,815,522 | 2,922,361 |
Net income before income taxes from continuing operations | -712 | 705 | 754 | 693 | 66 | 665 | 567 | 605 | 1,439,943 | 1,902,188 | 2,531,503 |
Net income from continuing operations | -430 | 427 | 456 | 418 | 40 | 402 | 342 | 365 | 871,537 | 1,148,731 | 1,528,774 |
Loss from discontinued operations | -780 | ' | ' | ' | 525 | ' | ' | ' | -780,440 | -524,588 | -709,816 |
Net income (loss) | ($1,210) | $427 | $456 | $418 | ($485) | $402 | $342 | $365 | $91,097 | $624,143 | $818,958 |
Net income from continuing operations per common share | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basic | ($0.02) | $0.02 | $0.02 | $0.02 | ' | $0.02 | $0.02 | $0.02 | $0.05 | $0.06 | $0.08 |
Diluted | ($0.02) | $0.02 | $0.02 | $0.02 | ' | $0.02 | $0.02 | $0.02 | $0.05 | $0.06 | $0.08 |
Net income (loss) per common share | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basic | ($0.06) | $0.02 | $0.02 | $0.02 | ($0.02) | $0.02 | $0.02 | $0.02 | $0.01 | $0.03 | $0.04 |
Diluted | ($0.06) | $0.02 | $0.02 | $0.02 | ($0.02) | $0.02 | $0.02 | $0.02 | ' | ' | ' |