Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 08, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | NOBLE ROMANS INC | |
Entity Central Index Key | 709,005 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 20,717,660 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,015 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $ 280,697 | $ 200,349 |
Accounts receivable - net | 1,766,038 | 1,687,954 |
Inventories | 382,163 | 381,400 |
Prepaid expenses | 659,602 | 467,721 |
Deferred tax asset - current portion | 1,675,000 | 1,675,000 |
Total current assets | 4,763,500 | 4,412,424 |
Property and equipment: | ||
Equipment | 1,391,137 | 1,383,380 |
Leasehold improvements | 88,718 | 88,718 |
Total | 1,479,855 | 1,472,098 |
Less accumulated depreciation and amortization | 1,077,843 | 1,041,951 |
Net property and equipment | 402,012 | 430,147 |
Deferred tax asset (net of current portion) | 7,555,851 | 7,899,497 |
Other assets including long-term portion of receivables-net | 5,292,586 | 5,015,931 |
Total assets | 18,013,949 | 17,757,999 |
Current liabilities: | ||
Current portion of long-term note payable to bank | 1,449,583 | 1,469,028 |
Accounts payable and accrued expenses | 824,923 | 676,386 |
Total current liabilities | 2,274,506 | 2,145,414 |
Long-term obligations: | ||
Note payable to bank - net of current portion | 1,121,944 | 1,846,736 |
Total long-term liabilities | 1,121,944 | 1,846,736 |
Stockholders' equity: | ||
Common stock - no par value (25,000,000 shares authorized, 20,095,087 issued and outstanding as of December 31, 2014 and 20,702,660 issued and outstanding as of June 30, 2015) | 24,272,316 | 23,970,654 |
Accumulated deficit | (9,654,817) | (10,204,805) |
Total stockholders' equity | 14,617,499 | 13,765,849 |
Total liabilities and stockholders' equity | $ 18,013,949 | $ 17,757,999 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Stockholders' equity: | ||
Common stock, par value | $ 0 | $ 0 |
Common stock, authorized shares | 25,000,000 | 25,000,000 |
Common stock, issued shares | 20,702,660 | 20,095,087 |
Common stock, outstanding shares | 20,702,660 | 20,095,087 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
Royalties and fees | $ 2,026,510 | $ 1,969,378 | $ 3,799,082 | $ 3,783,443 |
Administrative fees and other | 14,885 | 20,807 | 26,633 | 41,493 |
Restaurant revenue | 104,411 | 98,768 | 187,759 | 175,720 |
Total revenue | 2,145,806 | 2,088,953 | 4,013,474 | 4,000,656 |
Operating expenses: | ||||
Salaries and wages | 292,357 | 265,664 | 571,874 | 525,558 |
Trade show expense | 136,470 | 140,161 | 262,585 | 266,422 |
Travel expense | 58,407 | 61,979 | 114,553 | 109,097 |
Other operating expenses | 193,964 | 219,432 | 401,590 | 408,018 |
Restaurant expenses | 112,345 | 104,892 | 218,473 | 196,320 |
Depreciation and amortization | 26,354 | 27,821 | 52,708 | 55,642 |
General and administrative | 407,669 | 413,638 | 809,827 | 807,646 |
Total expenses | 1,227,566 | 1,233,587 | 2,431,610 | 2,368,703 |
Operating income | 918,240 | 855,366 | 1,581,864 | 1,631,953 |
Interest and other expense | 42,193 | 46,954 | 88,229 | 97,007 |
Adjust evaluation of receivables | 600,000 | 0 | 600,000 | 0 |
Income before income taxes | 276,047 | 808,412 | 893,635 | 1,534,946 |
Income tax expense | 106,154 | 305,016 | 343,647 | 592,795 |
Net income | $ 169,893 | $ 503,396 | $ 549,988 | $ 942,151 |
Earnings per share - basic: | ||||
Net income | $ 0.01 | $ 0.03 | $ 0.03 | $ 0.05 |
Weighted average number of common shares outstanding | 20,483,091 | 19,801,087 | 20,291,653 | 19,786,507 |
Diluted earnings per share: | ||||
Net income | $ 0.01 | $ 0.02 | $ 0.03 | $ 0.04 |
Weighted average number of common shares outstanding | 21,844,981 | 21,082,553 | 21,653,543 | 21,067,973 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - 6 months ended Jun. 30, 2015 - USD ($) | Common Stock | Accumulated Deficit | Total |
Beginning Balance, Amount at Dec. 31, 2014 | $ 23,970,654 | $ (10,204,805) | $ 13,765,849 |
Beginning Balance, Shares at Dec. 31, 2014 | 20,095,087 | ||
Cashless exercise of employee stock options | 326,906 | ||
Net income | $ 549,988 | 549,988 | |
Exercise of employee stock options, Amount | $ 174,186 | 174,186 | |
Exercise of employee stock options, Shares | 230,667 | ||
Amortization of value of employee stock options | $ 32,476 | 32,476 | |
Stock issued in exchange for payables, Amount | $ 95,000 | 95,000 | |
Stock issued in exchange for payables, Shares | 50,000 | ||
Ending Balance, Amount at Jun. 30, 2015 | $ 14,617,499 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
OPERATING ACTIVITIES | ||
Net income | $ 549,988 | $ 942,151 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 68,365 | 57,901 |
Deferred income taxes | 343,647 | 592,795 |
(Increase) decrease in: | ||
Accounts receivable | (75,764) | (720,055) |
Inventories | (763) | (867) |
Prepaid expenses | (191,881) | (94,278) |
Other assets including long-term potion of accounts receivable | (276,655) | (136,225) |
Increase (decrease) in: | ||
Accounts payable and accrued expenses | 386,563 | 196,793 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 803,500 | 838,215 |
INVESTING ACTIVITIES | ||
Purchase of property and equipment | (7,757) | (8,549) |
NET CASH USED IN INVESTING ACTIVITIES | (7,757) | (8,549) |
FINANCING ACTIVITIES | ||
Payment of principal on outstanding debt | (744,236) | (608,125) |
Proceeds from the exercise of employee stock options | 171,867 | 830 |
NET CASH USED IN FINANCING ACTIVITIES | (572,369) | (607,295) |
DISCONTINUED OPERATIONS | ||
Payment of obligations from discontinued operations | (143,026) | (101,777) |
Increase (decrease) in cash | 80,348 | 120,594 |
Cash at beginning of period | 200,349 | 157,787 |
Cash at end of period | $ 280,697 | $ 278,381 |
1. Basis of Presentation
1. Basis of Presentation | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
1. Basis of Presentation | The accompanying unaudited interim condensed consolidated financial statements, included herein, have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated statements have been prepared in accordance with the Companys accounting policies described in the Companys Annual Report on Form 10-K for the year ended December 31, 2014 and should be read in conjunction with the audited consolidated financial statements and the notes thereto included in that report. Unless the context indicates otherwise, references to the Company mean Noble Romans, Inc. and its subsidiaries. In the opinion of the management of the Company, the information contained herein reflects all adjustments necessary for a fair presentation of the results of operations and cash flows for the interim periods presented and the financial condition as of the dates indicated, which adjustments are of a normal recurring nature. The results for the six-month period ended June 30, 2015 are not necessarily indicative of the results to be expected for the full year ending December 31, 2015. |
2. Royalties and Fees
2. Royalties and Fees | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
2. Royalties and Fees | Royalties and fees include initial franchise fees of $93,000 and $131,000 for the three-month and six-month periods ended June 30, 2014, and $29,000 and $66,000 for the three-month and six-month periods ended June 30, 2015, respectively. Royalties and fees included equipment commissions of $23,000 and $35,000 for the three-month and six-month periods ended June 30, 2014, and $8,000 and $37,000 for the three-month and six-month periods ended June 30, 2015, respectively. Royalties and fees including interest per franchise agreements, less initial franchise fees and equipment commissions, were $1.9 million and $3.6 million for the respective three-month and six-month periods ended June 30, 2014, and $2.0 million and $3.7 million for the respective three-month and six-month periods ended June 30, 2015. 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 a contractual liability of the franchisee. For the most part, the Companys royalty income is paid by the Company initiating a draft on the franchisees account by electronic withdrawal. There were 2,215 franchises/licenses in operation on December 31, 2014 and 2,309 franchises/licenses in operation on June 30, 2015. During the six-month period ended June 30, 2015, there were 126 new outlets opened and 32 outlets closed. In the ordinary course, grocery stores from time to time add our licensed products, remove them and subsequently re-offer them. Therefore, it is unknown how many licensed grocery store units have left the system. |
3. Earnings per Share
3. Earnings per Share | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
3. Earnings per Share | The following table sets forth the calculation of basic and diluted earnings per share for the three-month and six-month periods ended June 30, 2014: Three Months Ended June 30, 2014 Income (Numerator) Shares (Denominator) Per-Share Amount Net income $ 503,396 19,801,087 $ .03 Effect of dilutive securities Options - 1,281,466 Diluted earnings per share Net income $ 503,396 21,082,553 $ .02 Six Months Ended June 30, 2014 Income (Numerator) Shares (Denominator) Per-Share Amount Net income $ 942,151 19,786,507 $ .05 Effect of dilutive securities Options - 1,281,466 Diluted earnings per share Net income $ 942,151 21,067,973 $ .04 7 The following table sets forth the calculation of basic and diluted earnings per share for the three-month and six-month periods ended June 30, 2015: Three Months Ended June 30, 2015 Income (Numerator) Shares (Denominator) Per-Share Amount Net income $ 169,893 20,483,091 $ .01 Effect of dilutive securities Options - 1,361,890 Diluted earnings per share Net income $ 169,893 21,844,981 $ .01 Six Months Ended June 30, 2015 Income (Numerator) Shares (Denominator) Per-Share Amount Net income $ 549,988 20,291,653 $ .03 Effect of dilutive securities Options - 1,361,890 Diluted earnings per share Net income $ 549,988 21,653,543 $ .03 |
4. Subsequent Events
4. Subsequent Events | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
4. Subsequent Events | On July 1, 2015, the Company borrowed $600,000 which was evidenced by a promissory note which matures on July 1, 2017. Interest on the note is payable at the rate of 8% per annum quarterly in arrears and this loan is subordinate to the promissory notes to the bank. In connection with the loan, the Company issued, to the holder of the promissory note, a warrant entitling the holder to purchase up to 300,000 shares of the Company's common stock at a price per share of $2.00. The warrant expires July 1, 2020. Proceeds were used to increase working capital in anticipation of expected growth including due to the Company hiring a new sales person, a Vice President of Supermarket Development, and entering into an arrangement with a franchise broker. The Company evaluated subsequent events through the date the financial statements were issued and filed with the SEC. There were no subsequent events that required recognition or disclosure beyond what is disclosed in this report. |
3. Earnings per Share (Tables)
3. Earnings per Share (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share Tables | |
Earnings Per Share | Three Months Ended June 30, 2014 Income (Numerator) Shares (Denominator) Per-Share Amount Net income $ 503,396 19,801,087 $ .03 Effect of dilutive securities Options - 1,281,466 Diluted earnings per share Net income $ 503,396 21,082,553 $ .02 Six Months Ended June 30, 2014 Income (Numerator) Shares (Denominator) Per-Share Amount Net income $ 942,151 19,786,507 $ .05 Effect of dilutive securities Options - 1,281,466 Diluted earnings per share Net income $ 942,151 21,067,973 $ .04 Three Months Ended June 30, 2015 Income (Numerator) Shares (Denominator) Per-Share Amount Net income $ 169,893 20,483,091 $ .01 Effect of dilutive securities Options - 1,361,890 Diluted earnings per share Net income $ 169,893 21,844,981 $ .01 Six Months Ended June 30, 2015 Income (Numerator) Shares (Denominator) Per-Share Amount Net income $ 549,988 20,291,653 $ .03 Effect of dilutive securities Options - 1,361,890 Diluted earnings per share Net income $ 549,988 21,653,543 $ .03 |
2. Royalties and Fees (Details
2. Royalties and Fees (Details Narrative) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015USD ($)Integer | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)Integer | Jun. 30, 2014USD ($) | Dec. 31, 2014Integer | |
Royalties and Fees | $ 2,000,000 | $ 1,900,000 | $ 3,700,000 | $ 3,600,000 | |
Number of Franchisee | Integer | 2,309 | 2,309 | 2,215 | ||
Outlets opened | Integer | 126 | ||||
Outlets closed | Integer | 32 | ||||
Initial Franchisee Fees | |||||
Royalties and Fees | $ 29,000 | 93,000 | $ 66,000 | 131,000 | |
Equipment Commission | |||||
Royalties and Fees | $ 8,000 | $ 23,000 | $ 37,000 | $ 35,000 |
3. Earnings Per Share (Details)
3. Earnings Per Share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income (Numerator) | ||||
Net income | $ 169,893 | $ 503,396 | $ 549,988 | $ 942,151 |
Shares (Denominator) | ||||
Shares, basic | 20,483,091 | 19,801,087 | 20,291,653 | 19,786,507 |
Effect of dilutive securities | 0 | 0 | 0 | 0 |
Dilutive earnings per share: Income available to common stockholders and assumed conversions | 21,844,981 | 21,082,553 | 21,653,543 | 21,067,973 |
Per-Share (Amount) | ||||
Earnings per share | $ 0.01 | $ 0.03 | $ 0.03 | $ 0.05 |
Diluted earnings per share Income available to common stockholders and assumed conversions | $ 0.01 | $ 0.02 | $ 0.03 | $ 0.04 |
Options | ||||
Shares (Denominator) | ||||
Effect of dilutive securities | 1,361,890 | 1,281,466 | 1,361,890 | 1,281,466 |