Noble Roman's Announces Third Quarter 2009 Earnings

INDIANAPOLIS, Nov. 9 /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
quarterly period ended September 30, 2009. Net income was $459,535 or $.02
per share basic and diluted, on weighted average number of common shares
outstanding of 19.4 million and diluted weighted average shares of 19.9
million. This was a 44.2% increase in net income over the quarterly period
ended September 30, 2008 of $304,809, or $.02 per share basic and diluted, on
weighted average number of common shares outstanding of 19.2 million, and
diluted weighted average shares of 19.9 million. Total revenues for the
quarterly period ended September 30, 2009 were $1.9 million compared to total
revenues of $2.2 million for the comparable period in 2008.

For the nine-month period ended September 30, 2009, the company reported a net
income of $1,291,529, or $.07 per share basic and $.06 per share diluted, on
weighted average number of common shares outstanding of 19.4 million and
diluted weighted average shares of 19.9 million. This was a 26.4% increase in
net income over the nine-month period ended September 30, 2008 of $1,021,547,
or $.05 per share basic and diluted, on weighted average number of common
shares outstanding of 19.2 million, and diluted weighted average shares of
19.9 million. Total revenues for the nine-month period ended September 30,
2009 were $5.7 million compared to $7.0 million for the corresponding period
in 2008. The company's pre-tax income for the nine-month period was $2,138,649
compared to $1,547,798 for the corresponding period in 2008.

The increase in earnings was primarily the result of implementing the strategy
announced during the third quarter of 2008: intensifying the company's focus
on non-traditional franchising and discontinuing company operation of
restaurants except for the two locations currently used for training and
demonstration purposes. This strategy has allowed the company to narrow its
focus and decrease its overhead and operating expenses during this period of
weakened consumer activity and severe dislocations in lending markets. The
company continues to believe that during such troubled economic times as these
it has a unique opportunity for increasing unit growth and revenue within its
non-traditional venues such as hospitals, military bases, universities,
convenience stores, grocery stores, attractions, entertainment facilities,
casinos, airports, travel plazas and hotels, while at the same time operating
with reduced overhead and operating costs. Total overhead and operating costs
for the three-month period and nine-month period ended September 30, 2009 were
$1,057,696 and $3,237,159, respectively, compared to $1,599,445 and
$4,969,881, respectively, for the corresponding periods in 2008.

Royalty and fee income, less initial franchise fees, equipment commissions and
area development fees remained almost unchanged at $1,668,457 and $5,025,930,
and $1,660,558 and $5,045,426 for the three-month and nine-month periods ended
September 30, 2009 and 2008, respectively. The decrease in total revenue was
the result of selling fewer franchise agreements and having less
company-operated restaurant revenue in the three-month and nine-month periods
ended September 30, 2009 compared to the comparable periods in 2008. For
initial franchise fees, approximately $102,050 and $167,650 are included in
royalty and fee income for the three-month and nine-month periods ended
September 30, 2009, respectively, and approximately $58,000 and $296,500 are
included in the three-month and nine-month periods ended September 30, 2008,
respectively. For equipment commissions, approximately $7,723 and $84,085,
and approximately $106,610 and $313,685 are included in royalty and fee income
for the three-month and nine-month periods ended September 30, 2009 and 2008,
respectively. There were no area development fees in either the three-month or
nine-month periods in 2009 and there were no area development fees in the
three-month period ended September 30, 2008, however, there were $104,825 in
area development fees in the nine-month period ended September 30, 2008.

The company previously announced the development of a take-n-bake pizza as an
addition to its menu offerings. The take-n-bake pizza was designed as an
add-on component for new and existing convenience store franchisees, and as a
stand-alone offering for grocery store chains. The company has signed
agreements for 44 grocery store locations, allowing them to operate the
take-n-bake pizza program. The company is also in discussions with several
additional grocery store chains regarding adding the take-n-bake program to
their stores. The company expects the number of grocery store locations for
take-n-bake to increase significantly over the next several months. The
take-n-bake program has also been integrated into the operations of 16
existing convenience stores, generating significant add-on sales, and is now
being offered to all convenience store franchisees for a small training fee.
The take-n-bake program in grocery stores is being offered as a supply
agreement rather than as a franchise.

The company previously announced a grab-n-go service system for a limited
portion of the Tuscano's menu. The grab-n-go system was designed to add sales
opportunities at existing non-traditional Noble Roman's Pizza and/or Tuscano's
Subs locations. The grab-n-go system has been integrated into the operations
of seven existing locations, generating significant add-on sales. The system
is now being made available to other existing franchisees for a small training
and administrative fee.

The company is now offering new, non-traditional franchisees the opportunity
to open with both take-n-bake pizza and grab-n-go subs when they acquire a
dual-brand franchise. Additionally, through changes in the menu, operating
systems and equipment structure, the company is now able to offer dual Noble
Roman's Pizza and Tuscano's Subs franchises at a significantly reduced
investment cost. The company has recently begun promoting these enhancements
for non-traditional locations, and recently demonstrated the dual-brand at the
Foodservice At Retail Expo in Chicago in August and at the National
Association of Convenience Stores in Las Vegas in October.

The company is a Defendant in a lawsuit styled Kari Heyser, Fred Eric Heyser
and Meck Enterprises, LLC, et al v. Noble Roman's, Inc. et al, filed in
Superior Court in Hamilton County, Indiana in June 2008. The Plaintiffs are
former franchisees of the company's traditional location venue. In addition
to the company, the Defendants include certain of the company's officers and
lenders to certain of the Plaintiffs. The Plaintiffs allege that the
Defendants induced them to purchase traditional franchises through fraudulent
representations and omissions of material facts regarding the franchises, and
seek compensatory and punitive damages. Discovery is in progress, but has not
yet been completed. Defendants filed the First Request for Production of
Documents in February 2009 and certain Plaintiffs produced some documents
requested by the company. However, many of the Plaintiffs produced no
documents and the company, in July 2009, filed a Motion to Compel the
production against the Plaintiffs. In September 2009 the Judge entered a
Stipulated Order on the Motion to Compel stating that all Plaintiffs in this
litigation were ordered to: (i) fully and completely and without objection or
evasion, file written responses to the company's Request by September 30, 2009
demonstrating what documents and things exists which are responsive to the
Request and (ii) fully and completely without objection or evasion, produce
all documents and things that are responsive to the Request by October
15,2009. The Company believes that the written responses submitted by the
Plaintiffs do not comply with the Order. Further, many of the Plaintiffs have
not submitted any documents and most of the others have not fully complied
with the Order to Compel. The company is in the process of filing an
additional Motion to Require Full Compliance with the Order to Compel and To
Show Cause why they should not be held in contempt and for sanctions against
the Plaintiffs.

The company filed a Counter-Claim for Damages against all of the Plaintiffs
and moved to obtain Preliminary and Permanent Injunctions against a majority
of the Plaintiffs to remedy the Plaintiffs' continuing breaches of the
applicable franchise agreements. The company's Motion for Preliminary
Injunction was granted in October 2008. The company has asserted that none of
the preliminarily enjoined Plaintiffs fully complied with the Court's Order
and that several of them only minimally complied. Accordingly, the company
filed a Motion to Require Full Compliance and To Show Cause why they should
not be held in contempt and for attorney's fees as sanctions.

The company filed a Motion to Revoke the Temporary Admission Pro Hac Vice of
David M. Duree, Plaintiff's former counsel, for filing fraudulent affidavits
with the Court. The Court granted this motion in March 2009. In the same
ruling the Court: i) continued the Motion to Show Cause to allow parties time
to conduct discovery, including depositions on the preliminarily enjoined
Plaintiffs, on that issue; ii) granted preliminary injunctions against
Plaintiffs Gomes and Villasenor; iii) dismissed claims against CIT Small
Business Lending Corporation and PNC Bank with prejudice; and iv) struck the
fraudulent affidavits. New counsel for Plaintiffs entered his appearance in
the case on behalf of the Plaintiffs in May 2009.

The company filed a Motion for Partial Summary Judgment as to several claims
in the Complaint. On September 22, 2009 the Judge granted Defendant's Motion
For Partial Summary Judgment. On October 8, 2009 Plaintiffs filed a Motion To
Correct Error, Reconsider And Vacate Order; Request For Clarification;
Alternatively, Motion For Certification Of Appeal Of Interlocutory Order And
For Stay Of Proceeding Pending Appeal. That Motion has been fully briefed by
both parties and a hearing has been set for January 5, 2010.

Some of the Plaintiffs' depositions were taken during August and September.
The Company has been attempting, and continues to attempt, to schedule the
remaining Plaintiffs for depositions. On September 29, 2009, Defendants filed
a Motion to Reopen Plaintiff Dunn's deposition and require him to come to
Indianapolis and resume his deposition at the Plaintiff's expense claiming
that Plaintiffs' counsel wrongly interrupted a proper line of questioning and
prematurely ended the deposition. A hearing on that motion has been set for
January 5, 2010. On October 16,2009, Defendants filed a motion to require
Plaintiff Heyser to travel to Indianapolis for her deposition as a result of
her deposition, which had been previously agreed to, being canceled at her
request and agreeing, through counsel, to come to Indianapolis at a later date
for the deposition. Many days later Plaintiffs' counsel denied that agreement
even though it had been confirmed in written communication. A hearing on that
motion has been set for January 5, 2010. Certain Defendants were scheduled
for depositions by Plaintiffs' counsel on November 9, 10, 11 and 12, 2009,
however, Plaintiffs' counsel recently canceled those depositions.

On November 6, 2009, Defendants filed a motion for Summary Judgment as to
Plaintiff Brintle as a result of the testimony at his deposition. The
Defendants are in the process of filing motions for Summary Judgment against
all of the other Plaintiffs whose deposition have been taken.

Although there can be no assurance regarding the outcome of litigation, the
company believes that it has strong and meritorious legal and factual defenses
to these claims, viable counter claims against the Plaintiffs and will
vigorously defend its interests in this case.

The statements contained above in Management's Discussion and Analysis
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 under
"Risk Factors" in the company's Annual Report on Form 10-K for the year ended
December 31, 2008. 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.

Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)

Assets December 31, September 30,
2008 2009
---- ----
Current assets:
Cash $450,968 $363,331
Accounts and notes
receivable - net 1,046,545 1,352,485
Inventories 223,024 212,397
Assets held for resale 242,690 243,527
Prepaid expenses 222,095 238,814
Current portion of long-term notes
receivable 5,810 24,167
Deferred tax asset - current portion 1,050,500 1,050,500
--------- ---------
Total current assets 3,241,632 3,485,221
--------- ---------

Property and equipment:
Equipment 1,206,979 1,230,623
Leasehold improvements 96,512 96,512
------ ------
1,303,491 1,327,135
Less accumulate depreciation and
amortization 821,422 886,778
------- -------
Net property and equipment 482,069 440,357
Deferred tax asset (net of current portion) 11,802,637 10,955,518
Other assets including long-term portion of
notes receivable - net 1,752,102 2,225,075
--------- ---------
Total assets $17,278,440 $17,106,171
=========== ===========

Liabilities and Stockholders' Equity

Current liabilities:
Current portion of long-term note payable $1,500,000 $1,500,000
Accounts payable and accrued expenses 1,191,116 859,456
--------- -------
Total current liabilities 2,691,116 2,359,456
--------- ---------

Long-term obligations:
Note payable to bank (net of current
portion) 5,625,000 4,500,000
--------- ---------
Total long-term liabilities 5,625,000 4,500,000
--------- ---------

Stockholders' equity:
Common stock - no par value (25,000,000
shares authorized, 19,412,499 issued and
outstanding as of December 31, 2008
and September 30, 2009) 23,023,250 23,065,476
Preferred stock (5,000,000 shares
authorized and 20,625 issued and
outstanding as of December 31, 2008 and
September 30, 2009) 800,250 800,250
Accumulated deficit (14,861,176) (13,619,011)
------------ ------------
Total stockholders' equity 8,962,324 10,246,715
--------- ----------
Total liabilities and
stockholders' equity $17,278,440 $17,106,171
=========== ===========

Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2009 2008 2009
---- ---- ---- ----
Royalties and fees $1,825,168 $1,778,230 $5,760,253 $5,277,665
Administrative fees and
other 10,880 7,818 44,752 45,373
Restaurant revenue 375,907 148,275 1,179,427 405,908
------- ------- --------- -------
Total revenue 2,211,955 1,934,323 6,984,432 5,728,946

Operating expenses:
Salaries and wages 344,763 252,048 1,074,862 795,778
Trade show expense 121,814 77,032 366,598 229,259
Travel expense 109,940 29,927 332,572 108,060
Sales commissions 12,022 - 56,135 3,627
Other operating
expenses 225,253 172,268 697,784 560,531
Restaurant expenses 363,638 131,706 1,127,858 382,531
Depreciation and
amortization 21,060 19,557 70,265 59,456
General and
administrative 400,955 375,158 1,243,807 1,097,917
------- ------- --------- ---------
Total expenses 1,599,445 1,057,696 4,969,881 3,237,159
--------- --------- --------- ---------
Operating income 612,510 876,627 2,014,551 2,491,787

Interest and other
expense 150,678 115,682 466,753 353,138
------- ------- ------- -------
Income before
income taxes 461,832 760,945 1,547,798 2,138,649

Income tax expense 157,023 301,410 526,251 847,120
------- ------- ------- -------
Net income 304,809 459,535 1,021,547 1,291,529

Cumulative preferred
dividends 16,455 16,455 49,545 49,364
------ ------ ------ ------

Net income available
to common
stockholders $288,354 $443,080 $972,002 $1,242,165
======== ======== ======== ==========

Earnings per share -
basic:
Net income $.02 $.02 $.05 $.07
Net income available to
common stockholders $.02 $.02 $.05 $.06
Weighted average number
of common shares
outstanding 19,212,499 19,412,499 19,203,647 19,412,499

Diluted earnings per
share:
Net income $.02 $.02 $.05 $.06
Weighted average number
of common shares
outstanding 19,937,218 19,922,242 19,928,366 19,922,242

SOURCE Noble Roman's, Inc

Paul Mobley, Chairman & CEO of Noble Roman's, Inc., +1-317-634-3377