INDIANAPOLIS, May 6 /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 March 31, 2010. Net income was $351,667 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 20.0 million. This compares to net income of $416,761 for the quarterly period ended March 31, 2009, 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. Total revenues for the quarterly period ended March 31, 2010 were $1.8 million compared to total revenues of $1.9 million for the comparable period in 2009.
Total revenue decreased from $1.9 million to $1.8 million for the three-month period ended March 31, 2010 compared to the corresponding period in 2009. One-time fees, franchisee fees and equipment commissions increased during this period from $84,623 in the first quarter 2009 to $123,684 in 2010. Ongoing royalties and fees decreased during this period from $1,674,991 in 2009 to $1,511,972 in 2010. Of this decrease, $102,384 resulted from fewer traditional units being in operation in 2010, $105,275 resulted from a decrease in ongoing royalties and fees from non-traditional units other than grocery stores (believed to be primarily the result of the unusually bad weather during January and February, 2010), and was partially offset by an increase in ongoing royalties and fees from the grocery store take-n-bake additions in the amount of $44,640.
The company recently developed a take-n-bake version of its pizza as an addition to its menu offerings. The take-n-bake pizza is designed as an add-on component for new and existing convenience store franchisees and as a stand-alone offering for grocery store chains. Since the company started offering take-n-bake pizza to grocery store chains in September, 2009 through March 31, 2010, the company had signed agreements for 93 grocery store locations to operate the take-n-bake pizza program, 79 of which were opened at that time. As of April 30, 2010, the company had signed agreements for 155 grocery store locations to operate the take-n-bake pizza program, 101 of which were open at that time and anticipates the remainder of the 155 locations to open during the first three weeks of May, 2010. The company expects to sign agreements for several additional locations with existing chains and is also in discussions with several new grocery store chains. The take-n-bake program has also been integrated into the operations of many existing convenience stores, generating significant add-on sales, and is now being offered to all convenience store franchisees. The company uses the same high quality pizza ingredients for its take-n-bake product as with its standard pizza, with slight modification to portioning for increased home baking performance.
The company previously announced a grab-n-go service system for a limited portion of the Tuscano's Subs 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 several existing locations, generating 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 is now promoting these enhancements for non-traditional locations.
The company has recently submitted several bids to franchise Noble Roman's Pizza on various military bases. Most of those bids are still outstanding, though the company was just recently awarded contracts for the Keesler Air Force Base in Mississippi and Tinker Air Force base in Oklahoma. The company will be franchising these operations to independent franchisees pursuant to these contracts.
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 did include certain of the company's officers and lenders to certain of the Plaintiffs. The Court has dismissed the claims against the lenders. On April 30, 2010, Plaintiffs Marikate Morris, Paul Morris and Kapza, Inc. filed a Motion to Voluntarily Dismiss Claims with the Court in which they requested that the Court dismiss with prejudice all of their claims against Defendants. This Motion will not affect the company's counter-claim against those Defendants upon the eventual ruling on the Motion.
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. To date, 11 of the 13 remaining Plaintiff groups have been deposed. Plaintiffs' counsel withdrew representation of Plaintiffs Soltero and counsel for Defendants has been unable to locate Plaintiffs Soltero, leaving one Plaintiff group, Villasenor, to be deposed. Because the Villasenors have failed to appear for two previous scheduled depositions, Defendants, on April 16, 2010, filed a motion to compel the deposition of Villasenors and require them to appear in Indianapolis for their depositions during the week of May 3, 2010 or to dismiss Villasenors claims against Defendants with prejudice if they fail again to appear for the noticed depositions. On April 29, 2010, the Judge granted Defendants' motion and ordered Villasenors to appear in Indianapolis for depositions at a time convenient to Defendants' counsel during the week of May 3, 2010 or all claims alleged in this lawsuit by the Villasenors against Defendants will be dismissed with prejudice if the Villasenors fail to appear for deposition, however, this will not affect Defendants counter-claim against these Plaintiffs. Defendants noticed Brenda Villasenor for deposition on May 6, 2010 and Henry Villasenor for deposition on May 7, 2010. Brenda Villasenor failed to appear for her noticed deposition.
Certain Defendants were scheduled for depositions by Plaintiffs' counsel during the week of August 24, 2009, however, Plaintiff's counsel canceled those depositions. They were scheduled again for deposition during the week of November 9, 2009, however, Plaintiffs' counsel canceled those depositions. Defendants had been rescheduled for depositions during the week of March 15, 2010, however, on March 12, 2010 Plaintiffs' counsel again canceled those depositions stating the reason was because of an unidentified family emergency. Because Defendants and Defendants' counsel had expended a significant amount of time and money preparing for depositions that were canceled right before the deposition dates, Defendants filed a Motion for Protective Order prohibiting the depositions of Defendants unless just cause is demonstrated for Plaintiffs' cancellation of Defendants' deposition previous scheduled to occur on March 15, 2010 through March 19, 2010. On April 28, 2010, the court notified Plaintiffs' counsel to submit under seal the specific reasons why he canceled Defendants' depositions by May 7, 2010 in order to rule on Defendants' Motion for Protective Order. If Plaintiffs' counsel does not submit those reasons by May 7, 2010, the court will rule on the existing pleadings.
The company also filed a Motion for Partial Summary Judgment as to several claims in the Complaint, which the Judge granted in September, 2009. In October, 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. In January, 2010, the court denied Plaintiffs' Motion and in the same Order the court denied Plaintiffs' Motion for Certification of Appeal of Interlocutory Order and for Stay of Proceedings Pending Appeal. Further, the court denied Plaintiffs' request to amend their Complaint. In February, 2010, counsel for the Plaintiffs filed a Notice of Appeal with the Indiana Court of Appeals. Defendants' Counsel is preparing a Brief in Opposition to the appeal, both for lack of jurisdiction and also on the merits. The Brief in Opposition is due to be filed on or before May 15, 2010.
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.
Defendants have filed Motions for Summary Judgment as to some of the Plaintiffs as a result of their testimony at depositions and are in the process of preparing motions for Summary Judgment against all of the other Plaintiffs whose depositions have been taken. In his Order of February 2, 2010, the Judge set a deadline of April 30, 2010 for filing of all remaining Motions for Summary Judgment, a deadline of June 4, 2010 for Plaintiffs' Response to the Motions and a deadline of June 18, 2010 for Defendants' Reply to Responses. Because of the difficulty in scheduling Plaintiffs for deposition by Defendants, in the Court's Order of April 29, 2010, the Court extended the deadline for filing summary judgment motions to May 31, 2010, the deadline for any responses to those motions to July 5, 2010 and the deadline for any reply brief to that response to July 19, 2010.
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 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 under "Risk Factors" in the company's annual report on Form 10-K for the year-ended December 31, 2009. 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) December Assets 31, March 31, 2009 2010 --- Current assets: Cash $333,204 $303,108 Accounts and notes receivable -net 1,343,500 1,539,674 Inventories 239,006 237,553 Assets held for resale 243,527 243,527 Prepaid expenses 241,852 341,080 Deferred tax asset - current portion 1,050,500 1,050,500 --------- --------- Total current assets 3,451,589 3,715,441 --------- --------- Property and equipment: Equipment 1,133,312 1,135,707 Leasehold improvements 96,512 96,512 ------ ------ 1,229,824 1,232,219 Less accumulated depreciation and amortization 790,134 807,658 ------- ------- Net property and equipment 439,690 424,562 Deferred tax asset (net of current portion) 10,703,594 10,472,935 Other assets including long-term portion of notes receivable 2,087,644 2,255,139 --------- --------- Total assets $16,682,517 $16,868,077 =========== =========== Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term note payable $1,500,000 $1,500,000 Accounts payable and accrued expenses 434,665 651,510 ------- ------- Total current liabilities 1,934,666 2,151,511 --------- --------- Long-term obligations: Note payable to bank (net of current portion) 4,125,000 3,750,000 --------- --------- Total long-term liabilities 4,125,000 3,750,000 --------- --------- Stockholders' equity: Common stock - no par value (25,000,000 shares authorized, 19,412,499 issued and outstanding as of December 31, 2009 and March 31, 2010) 23,074,160 23,082,844 Preferred stock (5,000,000 shares authorized and 20,625 issued and outstanding as of December 31, 2009 and March 31, 2010) 800,250 800,250 Accumulated deficit (13,251,559) (12,916,528) ----------- ----------- Total stockholders' equity 10,622,851 10,966,566 ---------- ---------- Total liabilities and stockholders' equity $16,682,517 $16,868,077 =========== =========== Noble Roman's, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended March 31, --------- 2009 2010 ---- ---- Royalties and fees $1,759,614 $1,635,656 Administrative fees and other 12,563 6,250 Restaurant revenue 118,891 113,226 ------- ------- Total revenue 1,891,068 1,755,132 Operating expenses: Salaries and wages 274,149 240,388 Trade show expense 75,617 75,139 Travel expense 44,532 36,239 Sales commissions 3,627 - Other operating expenses 191,949 190,515 Restaurant expenses 118,023 111,749 Depreciation and amortization 19,338 14,574 General and administrative 353,402 394,804 ---- ------- Total expenses 1,080,637 1,063,406 --------- --------- Operating income 810,431 691,725 Interest and other expense 120,315 109,399 ------- ------- Income before income taxes 690,116 582,326 Income tax expense 273,355 230,659 ------- ------- Net income 416,761 351,667 Cumulative preferred dividends 16,636 16,636 ------ ------ Net income available to common stockholders $400,125 $335,031 ======== ======== Earnings per share - basic: Net income $.02 $.02 Net income available to common stockholders .02 .02 Weighted average number of common shares outstanding 19,412,499 19,412,499 Diluted earnings per share: Net income $.02 $.02 Weighted average number of common shares outstanding 19,854,863 20,036,415
Noble Roman's, Inc
CONTACT: Paul Mobley, Chairman & CEO, Noble Roman's, +1-317-634-3377
