3. Royalties and Fees
|
6 Months Ended |
---|---|
Jun. 30, 2012
|
|
Notes to Financial Statements | |
3. Royalties and Fees |
Note 3 Royalties and fees include $50,000 and $125,000 for the three-month and six-month periods ended June 30, 2012, and $75,000 and $127,000 for the three-month and six-month periods ended June 30, 2011, respectively, of initial franchise fees. Royalties and fees included $13,000 and $23,000 for the three-month and six-month periods ended June 30, 2012, and $8,000 and $18,000 for the three-month and six-month periods ended June 30, 2011, respectively, of equipment commissions. Royalties and fees, less initial franchise fees and equipment commissions were $1.7 million and $3.3 million for the three-month and six-month periods ended June 30, 2012 and $1.6 million and $3.3 million for the three-month and six-month periods ended June 30, 2011, respectively. The breakdown of royalties and fees, less upfront fees, are royalties and fees from non-traditional franchises other than grocery stores were $1.2 million and $2.2 million for the three-month and six-month periods ended June 30, 2012, and $1.1 million and $2.2 million for the three-month and six-month periods ended June 30, 2011, respectively; royalties and fees from the grocery store take-n-bake were $371,000 and $695,000 for the three-month and six-month periods ended June 30, 2012, and $265,000 and $548,000 for the three-month and six-month periods ended June 30, 2011, respectively; and royalties and fees from traditional locations were $180,000 and $461,000 for the three-month and six-month periods ended June 30, 2012, and $272,000 and $551,000 for the three-month and six-month periods ended June 30, 2011, respectively. The Company has no material amount of past due royalties.
There were 1,331 franchises/licenses in operation on June 30, 2011 and 1,710 franchises/licenses in operation on June 30, 2012. During the twelve-month period ended June 30, 2012 there was 394 new outlets opened and 15 outlets closed. The breakdown of the 1,710 franchises at June 30, 2012 was 756 non-traditional franchises other than grocery stores, 912 grocery stores and 42 traditional franchises. In the ordinary course, grocery stores from time to time add products, remove and subsequently re-offer them. Therefore, it is unknown if any grocery store licenses have left the system. |
2. Notes Payable to Bank
|
6 Months Ended |
---|---|
Jun. 30, 2012
|
|
Notes to Financial Statements | |
2. Notes Payable to Bank |
Note 2 On May 15, 2012, the Company entered into a Credit Agreement with BMO Harris Bank, N.A. for a term loan in the amount of $5.0 million which is repayable in 48 equal monthly principal installments of $104,000 plus interest commencing on June 15, 2012 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 existing indebtedness to Wells Fargo Bank, N.A. and to an officer of the Company. The Companys obligations under the term 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 $1.2 million of the term loan and certain restrictions apply such as a prohibition on the payment of dividends, as defined in the Credit Agreement. |
Condensed Consolidated Statement of Changes in Shareholders Equity (Unaudited) (USD $)
|
Preferred Stock
|
Common Stock
|
Accumulated Deficit
|
Total
|
---|---|---|---|---|
Beginning Balance, Amount at Dec. 31, 2011 | $ 800,250 | $ 23,239,976 | $ (12,311,970) | $ 11,728,256 |
Beginning Balance, Shares at Dec. 31, 2011 | 0 | 19,469,317 | ||
Cumulative preferred dividends | (49,636) | (49,636) | ||
Exercise of employee stock options, Amount | 7,200 | 7,200 | ||
Exercise of employee stock options, Shares | 20,000 | |||
Amortization of value of employee stock options, Amount | 51,394 | 51,394 | ||
Net income | 707,201 | 707,201 | ||
Ending Balance, Amount at Jun. 30, 2012 | $ 800,250 | $ 23,298,570 | $ (11,654,405) | $ 12,444,415 |
Ending Balance, Shares at Jun. 30, 2012 | 19,489,317 |
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1. Basis of Presentation
|
6 Months Ended |
---|---|
Jun. 30, 2012
|
|
Notes to Financial Statements | |
1. Basis of Presentation |
Note 1 - 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 Annual Report on Form 10-K for the year ended December 31, 2011 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, 2012 are not necessarily indicative of the results to be expected for the full year ending December 31, 2012. |
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
|
Jun. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Stockholders' equity: | ||
Preferred stock, par value | $ 0 | $ 0 |
Preferred stock, authorized shares | 5,000,000 | 5,000,000 |
Preferred stock, issued shares | 20,625 | 20,625 |
Preferred stock, outstanding shares | 20,625 | 20,625 |
Common stock, par value | $ 0 | $ 0 |
Common stock, authorized shares | 25,000,000 | 25,000,000 |
Common stock, issued shares | 19,489,317 | 19,469,317 |
Common stock, outstanding shares | 19,489,317 | 19,469,317 |
Document and Entity Information
|
6 Months Ended | |
---|---|---|
Jun. 30, 2012
|
Aug. 09, 2012
|
|
Document And Entity Information | ||
Entity Registrant Name | NOBLE ROMANS INC | |
Entity Central Index Key | 0000709005 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2012 | |
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 | 19,516,589 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2012 |
Condensed Consolidated Statements of Operations (Unaudited) (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2012
|
Jun. 30, 2011
|
Jun. 30, 2012
|
Jun. 30, 2011
|
|
Income Statement [Abstract] | ||||
Royalties and fees | $ 1,767,414 | $ 1,731,802 | $ 3,470,980 | $ 3,406,589 |
Administrative fees and other | 5,496 | 11,018 | 12,743 | 19,395 |
Restaurant revenue | 120,680 | 137,670 | 247,529 | 256,522 |
Total revenue | 1,893,590 | 1,880,490 | 3,731,252 | 3,682,506 |
Operating expenses: | ||||
Salaries and wages | 253,524 | 247,497 | 496,983 | 485,140 |
Trade show expense | 123,127 | 93,247 | 244,124 | 183,247 |
Travel expense | 45,459 | 52,589 | 94,374 | 99,474 |
Other operating expenses | 172,008 | 176,290 | 350,209 | 355,230 |
Restaurant expenses | 113,029 | 129,903 | 232,272 | 248,467 |
Depreciation and amortization | 28,561 | 36,311 | 59,225 | 49,860 |
General and administrative | 392,670 | 403,430 | 788,387 | 811,818 |
Total expenses | 1,128,378 | 1,139,267 | 2,265,574 | 2,233,236 |
Operating income | 765,212 | 741,223 | 1,465,678 | 1,449,270 |
Interest and other expense | 198,692 | 97,207 | 294,621 | 195,859 |
Income before income taxes | 566,520 | 644,016 | 1,171,057 | 1,253,411 |
Income tax expense | 224,398 | 255,097 | 463,856 | 496,478 |
Net income | 342,122 | 388,919 | 707,201 | 756,933 |
Cumulative preferred dividends | 24,683 | 24,411 | 49,636 | 49,364 |
Net income available to common stockholders | $ 317,439 | $ 364,508 | $ 657,565 | $ 707,569 |
Earnings per share - basic: | ||||
Net income | $ 0.02 | $ 0.02 | $ 0.04 | $ 0.04 |
Net income available to common stockholders | $ 0.02 | $ 0.02 | $ 0.03 | $ 0.04 |
Weighted average number of common shares outstanding | 19,489,317 | 19,469,317 | 19,483,383 | 19,446,113 |
Diluted earnings per share: | ||||
Net income | $ 0.02 | $ 0.02 | $ 0.04 | $ 0.04 |
Net income available to common shareholders | $ 0.02 | $ 0.02 | $ 0.03 | $ 0.04 |
Weighted average number of common shares outstanding | 20,041,048 | 20,183,876 | 20,035,114 | 20,160,672 |
6. Subsequent Events
|
6 Months Ended |
---|---|
Jun. 30, 2012
|
|
Notes to Financial Statements | |
6. Subsequent Events |
Note 6: 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. |
5. Pending Litigation
|
6 Months Ended |
---|---|
Jun. 30, 2012
|
|
Notes to Financial Statements | |
5. Pending Litigation |
Note 5 - The Company is a Defendant in a lawsuit styled Kari Heyser, Fred Eric Heyser and Meck Enterprises, LLC, et al v. Noble Romans, Inc. et al, filed in Superior Court in Hamilton County, Indiana in June 2008. The Court issued an Order dated December 23, 2010 granting summary judgment in favor of the Company against all of the Plaintiffs. As a result, the Plaintiffs allegations of fraud against the Company and certain of its officers were determined to be without merit. Plaintiffs filed numerous motions and an appeal to the Indiana Court of Appeals, in an attempt to reverse the December 23, 2010 summary judgment. All of the motions were denied and the Indiana Court of Appeals dismissed the appeal with prejudice. Plaintiffs last attempt to vacate the summary judgment award was their attempt to vacate the Order on the grounds of misconduct of third parties. On December 1, 2011, the Judge denied their motion and specifically found that there was absolutely no evidence of misconduct and the Court admonished Plaintiffs and Plaintiffs counsel for making such unfounded allegations. The fraud charges against the Company and certain of its officers are dismissed entirely and Plaintiffs have no appeal rights remaining. The Company then filed a motion for sanctions against the Plaintiffs and their attorney for the frivolous filings. On February 28, 2012, the Court granted the Companys request for sanctions and ordered the Plaintiffs and their attorney to pay the Company $8,326 by April 23, 2012. The Plaintiffs filed a motion to reconsider and the hearing was held on May 23, 2012. The Judge denied their motion and ordered Plaintiffs and Plaintiffs counsel to pay those sanctions within 14 days, which made the payment due on June 7, 2012. Sanctions were not paid and the Company filed a motion for contempt of court or to show cause. The Judge gave the Plaintiffs until July 5, 2012 to respond to that motion. The Plaintiffs filed a response but the Plaintiffs counsel did not respond. The Company does not believe that the Plaintiffs response was responsive to the contempt charge and, therefore, the Company filed a reply asking the Court to rule on the contempt charge against Plaintiffs counsel and to point out that the Plaintiffs response was not responsive to the Companys contempt motion and moved the Court to impose additional sanctions. The Companys counterclaims against the Plaintiffs for breach of contract remain pending as to amount of damages, however the Company has been granted summary judgment as to liability.
The Complaint was originally against the Company and certain officers and institutional lenders. The Plaintiffs are former franchisees of the Companys traditional location venue. The Plaintiffs alleged that the Defendants fraudulently induced them to purchase franchises for traditional locations through misrepresentations and omissions of material facts regarding the franchises. In addition to the above claims, one group of franchisee-Plaintiffs in the same case had asserted a separate claim under the Indiana Franchise Act as to which the Courts Order denied the Companys motion for summary judgment as the Court determined that there is a genuine issue of material facts but did not render any opinion on the merits of the claim. The Company denies any liability on the Indiana Franchise Act claim and will continue to vigorously defend against this claim.
The Company filed counterclaims for damages for breach of contract against all of the Plaintiffs in the approximate amount of $3.6 million plus attorneys fees, interest and other costs of collection, or a total of over $5 million. On September 21, 2011, the Company filed motions for partial summary judgment as to liability against the Plaintiffs on the Companys counterclaims. As a result, the Company was granted partial summary judgment as to liability against the Plaintiffs/Counterclaim-Defendants on the Companys counterclaims against the Plaintiffs. In this partial summary judgment, the Court determined that the Plaintiffs were liable to the Company for direct damages and consequential damages, including future royalties, for breach of their franchise agreements. In addition, the Court determined that, as a matter of law, Noble Romans was entitled to recover attorneys fees associated with obtaining preliminary injunctions, fees resulting from the prosecution of Noble Romans counterclaims and fees for defending against fraud claims against the Company and certain of its officers. The amount of the award is to be determined at trial. The Company moved the Court to order mandatory mediation as to the Indiana Franchise Act claim and the Companys counterclaim for damages. The Court ordered mediation, which is set for September 14, 2012 with all Plaintiffs required to appear. |
4. Earnings per Share (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2012
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share (Six Month Ended 2011) |
|
4. Earnings Per Share (Details) (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2012
|
Jun. 30, 2011
|
Jun. 30, 2012
|
Jun. 30, 2011
|
|
Net Income
|
||||
Income (Numerator) | $ 342,122 | $ 388,919 | $ 707,201 | $ 756,933 |
Shares (Denominator) | 19,489,317 | 19,469,317 | 19,483,383 | 19,446,113 |
Per-Share (Amount) | $ 0.02 | $ 0.02 | $ 0.04 | $ 0.04 |
Less Preferred Stock Dividend
|
||||
Income (Numerator) | 24,683 | (24,411) | 49,636 | 49,364 |
Shares (Denominator) | 0 | 0 | 0 | 0 |
Per-Share (Amount) | $ 0 | $ 0 | $ 0 | $ 0 |
Earnings Per Share Basic-Income Available To Common Stockholders
|
||||
Income (Numerator) | 317,439 | 364,508 | 657,565 | 707,569 |
Shares (Denominator) | 0 | 0 | 0 | 0 |
Per-Share (Amount) | $ 0.02 | $ 0.02 | $ 0.03 | $ 0.04 |
Effects Of Dilutive Securities-Options
|
||||
Income (Numerator) | 0 | 0 | 0 | 0 |
Shares (Denominator) | 185,065 | 347,893 | 185,065 | 347,893 |
Per-Share (Amount) | $ 0 | $ 0 | $ 0 | $ 0 |
Effects Of Dilutive Securities-Convertible Preferred Stock
|
||||
Income (Numerator) | 24,683 | 24,411 | 49,636 | 49,364 |
Shares (Denominator) | 366,666 | 366,666 | 366,666 | 366,666 |
Per-Share (Amount) | $ 0 | $ 0 | $ 0 | $ 0 |
Diluted Earnings Per Share-Income Available To Common Stockholders And Assumed Conversions
|
||||
Income (Numerator) | $ 342,122 | $ 388,919 | $ 707,201 | $ 756,933 |
Shares (Denominator) | 20,041,048 | 20,183,876 | 20,035,114 | 20,160,672 |
Per-Share (Amount) | $ 0.02 | $ 0.02 | $ 0.03 | $ 0.04 |
4. Earnings per Share
|
6 Months Ended |
---|---|
Jun. 30, 2012
|
|
Notes to Financial Statements | |
4. Earnings per Share |
Note 4 - 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, 2012:
Three Months Ended June 30, 2012
Income Shares Per-Share (Numerator) (Denominator) Amount Net income $342,122 19,489,317 $ .02 Less preferred stock dividends 24,683
Earnings per share - basic Income available to common stockholders 317,439 .02
Effect of dilutive securities Options 185,065 Convertible preferred stock 24,683 366,666
Diluted earnings per share Income available to common stockholders and assumed conversions $ 342,122 20,041,048 $ .02
Six Months Ended June 30, 2012
Income Shares Per-Share (Numerator) (Denominator) Amount Net income $ 707,201 19,483,383 $ .04 Less preferred stock dividends 49,636
Earnings per share - basic Income available to common stockholders 657,565 .03
Effect of dilutive securities Options 185,065 Convertible preferred stock 49,636 366,666
Diluted earnings per share Income available to common stockholders and assumed conversions $ 707,201 20,035,114 $ .03
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, 2011:
Three Months Ended June 30, 2011
Income Shares Per-Share (Numerator) (Denominator) Amount Net income $ 388,919 19,469,317 $ .02 Less preferred stock dividends (24,411)
Earnings per share - basic Income available to common stockholders 364,508 .02
Effect of dilutive securities Options 347,893 Convertible preferred stock 24,411 366,666
Diluted earnings per share Income available to common stockholders and assumed conversions $ 388,919 20,183,876 $ .02
Six Months Ended June 30, 2011
Income Shares Per-Share (Numerator) (Denominator) Amount Net income $ 756,933 19,446,113 $ .04 Less preferred stock dividends (49,364)
Earnings per share - basic Income available to common stockholders 707,569 .04
Effect of dilutive securities Options 347,893 Convertible preferred stock 49,364 366,666
Diluted earnings per share Income available to common stockholders and assumed conversions $ 756,933 20,160,672 $ .04 |
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