XML 30 R18.htm IDEA: XBRL DOCUMENT v3.7.0.1
Significant Accounting Policies (Policies)
3 Months Ended
May 31, 2017
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]
Basis of Presentation
 
The accompanying
consolidated financial statements have been prepared by the Company, without audit, and reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial reporting and Securities and Exchange Commission regulations. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Certain amounts previously presented for prior periods have been reclassified to conform to the current presentation. The reclassifications had
no
effect on net income, working capital or equity previously reported.
In the opinion of management, the consolidated financial statements reflect all adjustments (of a normal and recurring nature) which are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. The results of operations for the
three
months ended
May 31, 2017
are
not
necessarily indicative of the results to be expected for the entire fiscal year.
 
These
consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form
10
-K for the fiscal year ended
February 28, 2017.
Subsequent Events, Policy [Policy Text Block]
Subsequent Events
 
Management evaluated all activity of the Company through the issue date of the financial statements and concluded that
no
subsequent events have occurred that would require recognition or disclosure in the financial statements.
New Accounting Pronouncements, Policy [Policy Text Block]
Recent
Accounting Pronouncements
 
In
January 2017,
the Financial Accounting Standards Board (the “FASB”) issued new guidance for goodwill impairment which requires only a single-step quantitative test to identify and measure impairment and record an impairment charge based on the excess of a reporting unit
’s carrying amount over its fair value. The option to perform a qualitative assessment
first
for a reporting unit to determine if a quantitative impairment test is necessary does
not
change under the new guidance. This guidance is effective for the Company beginning in fiscal year
2020
with early adoption permitted. The Company adopted this guidance in fiscal year
2017.
The adoption of this guidance had
no
impact on the Company’s consolidated financial statements.
 
In
August 2016,
FASB issued ASU
2016
-
15,
Statement of Cash Flows (Topic
230
): Classification of Certain Cash Receipts and Cash Payments. ASU
No.
2016
-
15
clarifies and provides specific guidance on
eight
cash flow classification issues that are
not
currently addressed by current GAAP and thereby reduce the current diversity in practice. ASU
No.
2016
-
15
is effective for public business entities for annual periods, including interim periods within those annual periods, beginning after
December 15, 2017,
with early application permitted. This guidance is applicable to the Company's fiscal year beginning
March 1, 2018.
The Company does
not
anticipate that this guidance will have a material impact on its consolidated financial statements.
 
In
June 2016,
the FASB issued ASU
2016
-
13,
Financial Instruments - Credit Losses (Topic
326
): Measurement of Credit Losses on Financial Instruments. ASU
2016
-
13
significantly changes the impairment model for most financial assets and certain other instruments. ASU
2016
-
13
will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. ASU
2016
-
13
is effective for the Company's fiscal year beginning
March 1, 2020
and subsequent interim periods. The Company is currently evaluating the impact
the adoption of ASU
2016
-
13
will have on the Company's condensed consolidated financial statements.
 
In
March 2016,
the FASB issued ASU
No.
2016
-
09,
Compensation
— Stock Compensation, (Topic
718
): Improvements to Employee Share-Based Payment Accounting, which is intended to simplify aspects of the accounting for share-based payment transactions. The ASU simplifies the accounting of stock compensation, including income tax implications, the balance sheet classification of awards as either equity or liabilities, and the cash flow classification of employee share based payment transactions. ASU
No.
2016
-
09
is effective for public business entities for annual and interim periods beginning after
December 15, 2016,
with early application permitted. This guidance is applicable to the Company's fiscal year beginning
March 1, 2017.
Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement must be applied prospectively. Amendments related to the presentation of excess tax benefits on the statement of cash flows
may
be applied either prospectively or retrospectively based on the Company’s election. Amendments related to the statement of cash flows presentation of employee taxes paid when an employer withholds shares must be applied retrospectively. The Company is in the process of assessing the impact of the adoption of ASU
No.
2016
-
09
on its consolidated financial statements. During the fiscal years ended
February 28, 2017
and
February
29,
2016,
the Company would have realized additional expense of
$34,000
and additional income of
$20,000,
respectively, if this guidance had been applied.
 
In
February 2016,
the FASB issued ASU
2016
-
02,
Leases (Topic
842
), which requires the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases under ASC
840
“Leases.” These amendments also require qualitative disclosures along with specific quantitative disclosures. These amendments are effective for fiscal years beginning after
December 15, 2018,
including interim periods within those fiscal years. Early application is permitted. Entities are required to apply the amendments at the beginning of the earliest period presented using a modified retrospective approach. The Company expects that substantially all of its operating lease commitments will be subject to the new guidance and will be recognized as operating lease liabilities and right-of-use assets upon adoption.
 
In
January 2016,
the FASB issued ASU
2016
-
01,
Financial Instruments - Overall (Subtopic
825
-
10
), Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU
2016
-
01
will be effective for us in the
first
quarter of our fiscal year
2019,
and early adoption is
not
permitted. The Company is currently evaluating the impact that the standard will have on its consolidated financial statements.
 
In
May 2014,
the FASB issued ASU
No.
2014
-
09,
Revenue from Contracts with Customers (Topic
606
). This guidance, as amended by subsequent ASUs on the topic, supersedes current guidance on revenue recognition in Topic
605,
Revenue Recognition. This guidance will be effective for annual reporting periods beginning after
December 15, 2017,
including interim reporting periods. Early application of the guidance is permitted for annual reporting periods beginning after
December 31, 2016.
This guidance is applicable to the Company's fiscal year beginning
March 1, 2018.
The Company expects the adoption of the new guidance to change the timing of recognition of initial franchise fees, including master license and territory fees for our international business, and renewal fees. Currently, these fees are generally recognized upfront upon either opening of the respective franchise store or entry into a license agreement. The new guidance will generally require these fees to be recognized over the term of the related agreement, which we expect will result in a material impact to revenue recognized for franchise fees, license fees and renewal fees. The Company does
not
expect this new guidance to materially impact the recognition of royalty income or sales of products. The Company is continuing to evaluate the impact the adoption of this new guidance will have on these and other revenue transactions, as well as the presentation of marketing and advertising fee revenues and expenses, in addition to the impact on accounting policies and related disclosures.