May 2, 2005
Via US Mail and Facsimile
Mr. Paul W. Mobley
Chief Financial Officer
One Virginia Avenue, Suite 800
Indianapolis, Indiana 46204
Re: Noble Romans, Inc.
Form 10-K for the year ended December 31, 2004
Commission file #: 000-11104
Dear Mr. Mobley:
We have reviewed your April 15, 2005 response letter and have the
following comments. Where expanded or revised disclosure is
requested, you may comply with these comments in future filings.
If
you disagree, we will consider your explanation as to why our
comments
are inapplicable or a revision is unnecessary. We also ask you to
provide us with supplemental information so we may better
understand
your disclosure. Please be as detailed as necessary in your
explanation. We look forward to working with you in these
respects
and welcome any questions you may have about any aspects of our
review.
* * * * * * * * * * * * * * * * * * * * * * *
Form 10-K for the year ended December 31, 2004
General
1. We note that your response letter dated April 15, 2005 includes
an
acknowledgement that you are responsible for the adequacy and
accuracy
of the disclosure it your filings. However, we also requested
that
you provide a statement acknowledging that:
* Staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* The company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal
securities laws of the United States.
Please include this acknowledgement in your next letter.
MD&A Critical Accounting Estimates
2. We note from your response to comment 3 that you consider the
accounting for property and equipment and related impairments as a
critical accounting estimate and will include disclosure of such
in
future filings. We also believe that you should consider deferred
tax
assets and accounts receivable as critical accounting estimates.
Please supplementally tell us why you do not believe these are
critical accounting estimates, or alternatively provide us with a
draft of the disclosure that you will include in future filings
with
respect to these estimates. See SEC Release No. 33-8040 (FR-60)
and
FRR Topic 501.14.
Financial Statements
Statements of Operations
3. We note from your response to comment 7 that you have included
interest income in the total revenue line item in 2004. Please
tell
us if there was any interest income in 2002 and 2003 and to the
extent
the amount was material to operating income in those years or in
any
future year, the amount should be considered non-operating income
and
presented below the operating income line on the statement of
operations in future filings. See Rule 5-03(b)(7) of Regulation
S-X.
Statements of Stockholders` Equity
4. We note from your response to comment 11, that the 115,000
shares
issued for the termination of a lease, bore a restrictive legend
and
it was determined that any value attributable to the shares was
minimal. Please supplementally explain to us the nature of the
restrictions and the periods to which those restrictions apply.
Additionally, please tell us your basis for determining that the
value
was minimal and immaterial.
Notes to the Financial Statements
Note 1. Summary of Significant Accounting Principles
5. We note from your response to comment 1 that product allowances
are
amounts received from manufacturers that sell your proprietary
products. To the extent the amount of these product allowances is
material to revenue, please include a discussion of these
allowances
and your accounting for their revenue in your notes to the
financial
statements in future filings.
6. We note from your response to comment 4 that you have a
valuation
allowance and an established policy for writing off uncollectible
accounts. Please confirm that in future filings, you will include
the
amount of the allowance and your policies for establishing the
allowance, determining past due or delinquency status, and writing
off
uncollectible accounts, in your notes to your financial
statements.
Note 2. Notes Payable
7. We note from your response to comment 13 that because the
holders
had a right to receive repayment of the note at their option in
either
cash or stock, there was no treatment of the conversion feature in
your financial statements at the time of issuance. However, we
are
still unclear as to how the original conversion prices of the
notes of
$1.375 per share, or the amended conversion prices for certain of
the
notes of $1.00 per share were determined. Please tell us in
further
detail how the conversion prices associated with these notes were
determined. As part of your response, tell us the trading prices
of
the Company`s common shares at the time these conversion prices
were
determined. Please note that paragraph 3 of EITF 98-5 states that
the
issue applies to convertible securities with beneficial conversion
features that must be settled in stock and to those that give the
issuer a choice of settling the obligation in either stock or
cash.
Please supplementally tell us how evaluated EITF 98-5 in your
accounting for the participating income notes. We may have
further
comment upon receipt of your response.
Note 5. Common Stock, page 23
8. We note from your response to comment 15 that as of December
31,
2004 you had outstanding warrants. Please confirm to us that in
future filings you will present the detail included in your
response
in your notes to the financial statements.
Note 6. Loss from Discontinued Operations
9. We note from your response to comment 16 that the amounts
charged
to loss from discontinued operations have primarily been the
result of
legal expenses, settlements relating to terminates leases and
disputed
claims, and the write down of assets. In future filings, please
disclose the nature and amount of such adjustments.
10. We note from your response to comment 17 that you recognized
the
deferred tax asset as it was determined in 2003 and 2004 that it
was
more likely than not that the deferred tax asset would be
utilized.
We also note that you have allocated this tax benefit to
discontinued
operations because the deferred tax asset was created as a result
of
the loss from the discontinued segment. Please supplementally
tell us
how you applied paragraph 37 of SFAS 109 in your accounting for
the
tax asset and why you did not allocate the entire tax benefit to
continuing operations.
* * * * * * * * * * * * * * * * * * * * * * *
As appropriate, please respond to these comments within 10
business
days or tell us when you will provide us with a response. Please
furnish a cover letter that keys your responses to our comments
and
provides any requested supplemental information.
We urge all persons who are responsible for the accuracy and
adequacy
of the disclosure in the filings reviewed by the staff to be
certain
that they have provided all information investors require for an
informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have
made.
In connection with responding to our comments, please provide, in
writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal
securities laws of the United States.
In addition, please be advised that the Division of Enforcement
has
access to all information you provide to the staff of the Division
of
Corporation Finance in our review of your filing or in response to
our
comments on your filing.
You may contact Claire Lamoureux at 202-551-3301 or me at 202-551-
3813
if you have questions.
Sincerely,
Linda Cvrkel
Branch Chief
??
??
??
??
Noble Roman's Inc.
May 2, 2005
Page 1