Noble Roman's Announces Results for 2008

INDIANAPOLIS, March 19 /PRNewswire-FirstCall/ -- Noble Roman's, Inc. (OTC Bulletin Board: NROM), the Indianapolis based franchisor of Noble Roman's Pizza and Tuscano's Italian Style Subs, today announced results for the year 2008. Net income from continuing operations was $1.4 million, or $.07 per share basic and diluted, on weighted average number of common shares outstanding of 19.2 million and diluted weighted average shares of 20.1 million. This compares to net income from continuing operations for the year ended December 31, 2007 of $2.5 million, or $.14 per share basic, on weighted average number of common shares outstanding of 17.7 million, or $.13 per share diluted, on weighted average number of common shares outstanding of 19.0 million. Total revenues for the year ended December 31, 2008 were $9.1 million compared to total revenues of $11.6 million in 2007.

The company incurred a loss on discontinued operations, which was primarily the result of operating and re-franchising traditional restaurants which had been acquired from struggling franchisees and later sold to new franchisees. Given current severe economic recession and the frozen credit markets making third party financing for traditional franchisees difficult to obtain, the company believes its non-traditional franchises offer the best opportunity for most potential growth at the current time. Therefore, the company is currently focusing all of its sales efforts on selling franchises for non-traditional locations. In conjunction with this strategy, the company made the decision in late 2008 to discontinue operating any restaurants except for the two restaurants it has been using for research and development and training purposes, and charged off or dramatically lowered the carrying value of all receivables and other assets related to the traditional restaurants and accrued future estimated expenses related thereto.

After recording the loss in discontinued operations, the net loss for 2008 was $2.4 million, or $.13 per share basic on weighted average number of shares outstanding of 19.2 million, or $.12 per share diluted on 20.1 million shares outstanding. This compares to a net income for 2007 of $2.5 million, or $.14 per share basic on 17.7 million weighted average number of shares outstanding, or $.13 per share diluted on 19.0 million weighted average number of shares outstanding.

Royalty and fee income from franchising decreased from $10.4 million in 2007 to $7.6 million in 2008. Royalty and fee income, less initial fees, was approximately $6.75 million in both 2008 and 2007. The decrease in total revenue and net income from continuing operations were largely the result of selling fewer agreements in 2008 compared to 2007. The decline in the sale of agreements is largely a reflection of the current economic environment as well as the company's current focus on non-traditional venues.

To augment the company's sales opportunities within non-traditional venues, it recently developed the new Noble Roman's Bistro service system. As an addition to the current service systems offered in its Noble Roman's Pizza and Tuscano's Italian Style Subs concepts, the Bistro is designed to appeal to additional types of businesses and operational objectives with a fresh food display and serve-to-order serving system. Though sometimes presented or packaged differently, the vast majority of the menu selections are comprised of ingredients already utilized in Noble Roman's Pizza and Tuscano's Italian Style Subs, thereby leveraging the company's simple systems, distribution and purchasing power.

The Bistro incorporates all of the ingredient qualities which Noble Roman's Pizza has been known for and retains simplicity by using largely ready-to-use ingredients that require only final assembly and baking on site. It features the new SuperSlice pizza, one-fourth of a large pizza, along with hot entrees such as chicken parmesan, baked pasta, hot sub sandwiches, breadsticks and calzones plus fresh salads and snacks. The Bistro is also available with an optional breakfast expansion menu featuring a wide variety of standard breakfast favorites. Customers move along the food display counter and are served to order as they go.

With the intensified focus on non-traditional franchising, the company's requirements for overhead and operating cost will be substantially less. In addition, as a result of discontinuing operating restaurants, the company's requirements for overhead and operating cost will be substantially less. These changes will allow for a more complete focus on selling and servicing franchises to take full advantage of the unique opportunity the company believes it has for increased unit growth in non-traditional. After making these changes, the company believes that it has created the opportunity to achieve management's business plan for 2009 and the anticipated results that were announced in the company's 10-Q for the quarterly period ended September 30, 2008.

Updating the previously announced lawsuit styled Kari Heyser, et al, vs. Noble Roman's, Inc., et al, no substantive discovery has been completed. The company believes it has strong and meritorious legal and factual defenses to these claims and will vigorously defend its interest in the case. The company filed a Counter-Claim for Damages against all of the Plaintiffs and Preliminary Injunction and Permanent Injunction against a majority of the Plaintiffs. In addition, the company filed a Motion For Preliminary Injunction against a majority of the Plaintiffs, all of which are former franchisees and the Preliminary Injunction was granted on October 7, 2008. The Plaintiffs were ordered to comply within seven days for the majority of actions required by the injunction and within 14 days for the remainder. None of the Plaintiffs fully complied with the Court's Order and the company believes several of them only minimally complied. Defendants filed a motion to require full compliance, to show cause why they should not be held in contempt and for attorney's fees as sanctions. The Plaintiffs responded to that motion by filing affidavits by each of the Plaintiffs. After reviewing those affidavits, Defendants filed a Motion to Strike Plaintiff's Fraudulent Affidavits claiming that they neither contained a valid declaration or affirmation nor appeared before a valid notary who administered the oath, although Plaintiffs attorney signed the affidavits as if they had appeared before him, which Defendants claim is a criminal offense. Plaintiffs filed Response to Noble Roman's Motion to Strike Plaintiffs Affidavits by attempting to withdraw the original affidavits and substituting certified affirmations. Defendants have filed a Reply In Support of Motion to Strike Fraudulent Affidavits claiming that Plaintiffs tacitly admitted that the original affidavits were fraudulent by not denying any of the claims in the Motion To Strike but, instead, attempted to file new affidavits. Defendants have subsequently filed a Motion to Revoke David M. Duree's Temporary Admission Pro Hac Vice for committing a criminal offense and filing fraudulent affidavits with the court. The Judge has set a hearing for March 25, 2009 on the company's Motion to Strike Plaintiff's Fraudulent Affidavits and the company's Motion to Revoke David M. Duree's Temporary Admission Pro Hac Vice. The Plaintiffs have filed a motion for sanctions against certain Defendants and their counsel.

The statements contained in this press release concerning the company's future revenues, profitability, financial resources, market demand and product development are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) relating to the company that are based on the beliefs of the management of the company, as well as assumptions and estimates made by and information currently available to the company's management. The company's actual results in the future may differ materially from those projected in the forward-looking statements due to risks and uncertainties that exist in the company's operations and business environment, including, but not limited to, competitive factors and pricing pressures, the current litigation with certain former traditional franchisees, shifts in market demand, general economic conditions and other factors including, but not limited to, changes in demand for the company's products or franchises, the success or failure of individual franchisees, the impact of competitors' actions and changes in prices or supplies of food ingredients and labor as well as the factors discussed above under "Risk Factors." Should one or more of these risks or uncertainties materialize, or should underlying assumptions or estimates prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. The company undertakes no obligations to update the information in this press release for subsequent events.

                        Consolidated Balance Sheets
                    Noble Roman's, Inc. and Subsidiaries

                                                   December 31,
                                                   -----------
                                                2007          2008
                                                ----          ----
                         Assets
    Current assets:
       Cash                                   $832,207      $450,968
       Accounts and notes
        receivable - net                     1,770,994     1,046,545
       Inventories                             310,362       223,024
       Assets held for resale                  643,915       242,690
       Prepaid expenses                        175,022       222,095
       Current portion of long-term
        notes receivable                       133,736         5,810
       Deferred tax asset - current
        portion                              1,971,875     1,050,500
                                             ---------     ---------
           Total current assets              5,838,111     3,241,632
                                             ---------     ---------

    Property and equipment:
       Equipment                             1,289,795     1,206,979
       Leasehold improvements                  107,729        96,512
                                               -------        ------
                                             1,397,524     1,303,491
       Less accumulated
        depreciation and
        amortization                           755,987       821,422
                                               -------       -------
           Net property and equipment          641,537       482,069
    Deferred tax asset (net of
     current portion)                        9,106,008    11,802,637
    Other assets including
     long-term portion of notes
     receivable - net                        1,883,644     1,752,102
                                             ---------     ---------
            Total assets                   $17,469,300   $17,278,440
                                           ===========   ===========

                          Liabilities and Stockholders' Equity
    Current liabilities:
       Current portion of long-term
        note payable                        $1,500,000    $1,500,000
       Accounts payable                        254,813       290,895
       Accrued expenses                        277,451       900,221
                                               -------       -------
            Total current liabilities        2,032,264     2,691,116
                                             ---------     ---------

    Long-term obligations:
        Note payable to bank (net of
         current portion)                    4,125,000     5,625,000
                                             ---------     ---------
            Total long-term liabilities      4,125,000     5,625,000
                                             ---------     ---------

    Stockholders' equity:
       Common stock - no par value
        (25,000,000 shares authorized,
         19,187,499 issued and
         outstanding as of December 31,
         2007 and 19,412,499 issued and
         outstanding as of December 31,
         2008)                              22,905,617    23,023,250
       Preferred stock (5,000,000
        shares authorized, 20,625
        issued and outstanding as
        of December 31, 2007 and
        December 31, 2008)                     800,250       800,250
       Accumulated deficit                 (12,393,830)  (14,861,176)
                                          ------------  ------------
             Total stockholders' equity     11,312,036     8,962,324
                                            ----------     ---------
                Total liabilities and
                 stockholders' equity      $17,469,300   $17,278,440
                                          ============  ============

                     Consolidated Statements of Operations
                     Noble Roman's, Inc. and Subsidiaries

                                              Year Ended December 31,

                                          2006        2007         2008
                                          ----        ----         ----
    Royalties and fees                $8,084,175   $10,411,326   $7,561,440
    Administrative fees and
     other                                63,072        67,467       48,084
    Restaurant revenue                 1,339,555     1,088,022    1,432,435
                                       ---------     ---------    ---------
             Total revenue             9,486,802    11,566,815    9,041,959

    Operating expenses:
      Salaries and wages               1,278,319     1,642,529    1,366,861
      Trade show expense                 447,303       554,574      488,012
      Travel expense                     380,763       527,455      386,018
      Sales commissions                   72,343       621,928       62,960
      Other operating expenses           742,104     1,024,399      880,464
      Restaurant expenses              1,283,702     1,011,146    1,369,139
    Depreciation and
     amortization                         84,353        96,682       91,736
    General and administrative         1,550,030     1,680,284    1,624,022
                                       ---------     ---------    ---------
             Operating income          3,647,887     4,407,818    2,772,747

    Interest and other expense           776,028       650,802      616,333
                                         -------       -------      -------
         Income before income taxes
          from continuing operations   2,871,859     3,757,016    2,156,414

    Income tax expense                   976,432     1,268,489      733,180
                                         -------     ---------      -------
         Net income from continuing
          operations                   1,895,427     2,488,527    1,423,234

    Loss from discontinued
     operations net of tax
     benefit of  $2,508,433 for
     2008                                      -             -    3,824,397
                                       ---------     ---------    ---------
              Net income (loss)        1,895,427     2,488,527   (2,401,163)
    Cumulative preferred dividends       163,200       127,116       66,181
                                         -------       -------       ------
              Net income (loss)
                available to common
                stockholders          $1,732,227    $2,361,411  $(2,467,344)
                                      ==========    ==========  ===========

    Earnings per share - basic:
      Net income from continuing
       operations                           $.12          $.14         $.07
      Net income (loss)                     $.12          $.14        $(.13)
      Net income (loss) available
       to common stockholders               $.11          $.13        $(.13)
    Weighted average number of
     common shares outstanding        16,405,995    17,675,834   19,213,522

    Diluted earnings per share:
      Net income from continuing
       operations                           $.10          $.13         $.07
      Net income (loss)                     $.10          $.13        $(.12)
    Weighted average number of
     common shares outstanding        19,702,988    18,973,291   20,147,150

SOURCE Noble Roman's, Inc.