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United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934 For the quarterly period ended June 30, 2003
Or
Transition report pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934 For the transition period from to
Commission file number: 0-11104
NOBLE ROMAN'S, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-1281154
(State or other jurisdiction (I.R.S. Employer Identification No.)
of organization)
One Virginia Avenue, Suite 800
Indianapolis, Indiana 46204
(Address of principal executive offices) (Zip Code)
(317) 634-3377
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
As of August 1, 2003, there were 16,166,158 shares of Common Stock, no par
value, outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
The following condensed consolidated financial statements are included
herein:
Notes to condensed consolidated financial statements Page 2
Condensed consolidated balance sheets as of December 31, 2002
and June 30, 2003 Page 3
Condensed consolidated statements of operations for the three
months and six months ended June 30, 2002 and 2003 Page 4
Condensed consolidated statements of cash flows for the
six months ended June 30, 2002 and 2003 Page 5
The interim condensed consolidated financial statements included herein reflect
all adjustments which are, in the opinion of management, necessary for a fair
statement of the results of operations for the interim periods presented and the
balance sheets for the dates indicated, which adjustments are of a normal
recurring nature.
Notes
- -----
Based on the Company's 2000, 2001 and 2002 operating results, its business plan,
the number of franchise units now open, the backlog of units sold to be opened,
the backlog of franchise prospects now in ongoing discussions and negotiations,
the Company's trends and the results of its operations thus far in 2003,
management has determined that it is more likely than not that the Company's
deferred tax credits will be fully utilized before the tax credits expire, the
majority of which expire between 2012 and 2016. Therefore, no valuation
allowance was established for its deferred tax asset. If unanticipated events
should occur in the future, the realization of all or some portion of the
Company's deferred tax asset could be jeopardized. The Company will continue to
evaluate the need for a valuation allowance on a quarterly basis.
The statements contained 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 including, but not limited to: competitive factors
and pricing pressures, 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 impact of competitors' actions, and
changes in prices or supplies of food ingredients and labor. 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.
2
Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
December 31, June
2002 30, 2003
---- --------
Assets
------
Current assets:
Cash $ 13,180 $ 10,748
Accounts and notes receivable 1,107,551 1,172,789
Inventories 140,762 132,185
Prepaid expenses 345,818 476,423
Current portion of long-term notes receivable 58,618 119,216
Deferred tax asset - current portion 1,550,000 2,250,000
------------ ------------
Total current assets 3,215,929 4,161,361
Property and equipment:
Equipment 923,034 951,095
Leasehold improvements 86,229 86,229
------------ ------------
1,009,262 1,037,324
Less accumulated depreciation and amortization 373,301 405,765
------------ ------------
Net property and equipment 635,962 631,559
------------ ------------
Deferred tax asset 8,371,093 7,329,786
Other assets 1,377,761 1,727,771
------------ ------------
Total assets $ 13,600,744 $ 13,850,477
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 1,920,915 $ 1,548,835
Note payable to officer 65,840 65,840
Current portion of long-term notes payable to various
funds affiliated with Geometry Group 1,050,000 1,513,740
Deferred franchise fees 163,115 63,000
------------ ------------
Total current liabilities 3,199,870 3,191,415
------------ ------------
Long-term obligations:
Notes payable to Provident Bank net of warrant value of $67,370
at December 31, 2002 and $30,896 at June 30, 2003 7,632,630 7,969,104
Notes payable to Geovest Capital Partners, L.P. 1,599,883 859,060
------------ ------------
Total long-term liabilities 9,232,513 8,828,164
------------ ------------
Stockholders' equity:
Common stock (25,000,000 shares authorized, 16,166,158 out-
standing at December 31, 2002 and 16,166,158 as of June 30, 2003) 17,789,452 17,789,452
Preferred stock (5,000,000 shares authorized) 4,929,274 4,929,274
Accumulated deficit (21,550,365) (20,887,828)
------------ ------------
Total stockholders' equity 1,168,361 1,830,898
------------ ------------
Total liabilities and stockholders' equity $ 13,600,744 $ 13,850,477
============ ============
See accompanying notes to condensed consolidated financial statements.
3
Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2002 2003 2002 2003
---- ---- ---- ----
Revenue:
Royalties and fees $ 1,350,328 $ 1,660,278 $ 2,598,737 $ 3,190,961
Administrative fees and other 49,507 51,157 174,388 90,492
Restaurant revenue 178,713 225,748 249,273 426,510
----------- ----------- ----------- -----------
Total revenue 1,578,548 1,937,183 3,022,398 3,707,963
Operating expenses:
Salaries and wages 281,060 263,995 516,260 526,077
Trade show expense 50,839 79,293 108,854 157,900
Travel expense 51,190 39,916 104,396 86,868
Other operating expenses 147,332 165,754 272,210 350,772
Restaurant expenses 159,797 220,534 226,672 418,698
Depreciation and amortization 14,342 16,232 28,604 32,464
General and administrative 299,629 306,221 591,861 617,934
----------- ----------- ----------- -----------
Operating income 574,359 845,238 1,173,541 1,517,249
Interest and other expense 319,641 252,777 622,673 513,405
----------- ----------- ----------- -----------
Income before income tax 254,719 592,461 550,868 1,003,844
Income tax 86,604 201,437 187,295 341,307
----------- ----------- ----------- -----------
Net income $ 168,114 $ 391,024 $ 363,573 $ 662,537
=========== =========== =========== ===========
Earnings per share:
Net income $ .01 $ .02 $ .02 $ .04
Weighted average number of common shares outstanding
16,051,158 16,166,158 16,051,158 16,166,158
Fully diluted earnings per share:
Net income $ .01 $ .02 $ .02 $ .04
Weighted average number of common shares outstanding
17,015,481 17,102,511 17,015,481 17,102,511
See accompanying notes to condensed consolidated financial statements.
4
Noble Roman's, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
June 30,
2002 2003
---- ----
OPERATING ACTIVITIES
Net income $ 363,573 $ 662,537
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 133,191 125,594
Deferred federal income taxes 187,295 341,307
Changes in operating assets and liabilities (increase) decrease in:
Accounts receivable (156,107) (65,238)
Inventory (80,861) 8,577
Prepaid expenses (69,698) (130,606)
Other assets (108) (444,347)
Increase (decrease) in:
Accounts payable 263,047 (113,511)
Deferred franchise fee 1,957 (100,115)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 642,217 284,198
INVESTING ACTIVITIES
Purchase of property and equipment (80,937) (28,061)
--------- ---------
NET CASH (USED) IN INVESTING ACTIVITIES (80,937) (28,061)
FINANCING ACTIVITIES
Payment of obligations for discontinued operations (580,451) (258,569)
--------- ---------
NET CASH (USED) BY FINANCING ACTIVITIES (580,451) (258,569)
--------- ---------
INCREASE (DECREASE) IN CASH (19,171) (2,432)
Cash at beginning of period 25,203 13,180
--------- ---------
Cash at end of period $ 6,032 $ 10,748
========= =========
Supplemental schedule of non-cash investing and financing activities
None.
See accompanying notes to condensed consolidated financial statements.
5
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Noble Roman's, Inc. and Subsidiaries
Results of Operations - Three-month and six month periods ended June 30, 2002
and 2003
Introduction
- ------------
Over the last several years, given the potential size of the opportunities in
the non-traditional and co-branding segments of the industry, the Company made
the strategic decision to focus its business on franchising to non-traditional
and co-branding locations and away from operating full-service, traditional
restaurants. During 2000, the Company completed that transition and all of its
full-service, traditional restaurants are now franchised
The franchise program for non-traditional and co-brand locations was developed
and launched in 1997. Since inception in 1997, the Company has awarded over
1,150 franchises in 44 states plus Washington, D.C., Guam, Puerto Rico, Italy
and Canada. The program was designed based on the Company's reputation for
superior tasting pizza products. It is a complete foodservice program, although
primarily focused on pizza, and the concept can be tailored easily for the
different venues and for different locations within a venue. The systems are
designed to provide excellent taste and quality with simplicity and cost
effectiveness. Operations require minimal training and low staffing levels, has
a food cost structure that is very attractive and carries a low investment cost,
making the unit economics attractive to the franchisee. The Company believes
that franchising these type facilities offers opportunities for substantial
growth for the foreseeable future.
The Company has been selling franchises in such non-traditional locations as
convenience stores, travel plazas, all types of entertainment facilities,
military bases, universities, airports, commercial facilities where there is
existing traffic, hotels and as a co-brand to other traditional restaurants.
Recently, the Company has expanded its venues to include retail foodservice to
hospitals. The Company believes the potential in this venue is excellent and
plans to open several such locations over the next several months.
The Company launched two other variations of the concept in late 2002 called
"Noble Roman's Cafe-To-Go" and "Noble Roman's Pizza Express". These concepts
were developed to provide pizza-focused foodservice for locations which need to
add foodservice but require something even simpler and with less space
requirements than the Company's standard concept. These concepts feature many of
the great tasting products offered under the standard concept but where the food
arrives already fully prepared and assembled, ready to bake. The concepts
require no additional labor and only requires approximately 12 square feet of
floor space. The innovative, patent-pending "Pizza Bake Ovens" produce fresh
baked, great tasting personal pizzas in approximately 3 1/2 -5 minutes. The
Company has undertaken an aggressive marketing plan nationwide and believes
there is a very large market whereby the Company can accelerate its growth with
these additional variations.
Based on the Company's 2000, 2001 and 2002 operating results, its business plan,
the number of franchise units now open, the backlog of units sold to be opened,
the backlog of franchise prospects
6
now in ongoing discussions and negotiations, and the Company's trends and the
results of its operations thus far in 2003, management has determined that it is
more likely than not that the Company's deferred tax credits will be fully
utilized before the tax credits expire. Therefore, no valuation allowance was
established for its deferred tax asset. If unanticipated events should occur in
the future, the realization of all or some portion of the Company's deferred tax
asset could be jeopardized. The Company will continue to evaluate the need for a
valuation allowance on a quarterly basis.
The following table sets forth the percentage relationship to total revenue of
the listed items included in Noble Roman's condensed consolidated statements of
operations for the three-month and six-month periods ended June 30, 2002 and for
June 30, 2003, respectively.
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2002 2003 2002 2003
---- ---- ---- ----
Revenue:
Royalties and fees 85.5% 85.7% 86.0% 86.1%
Administrative fees and other 3.1 2.6 5.8 2.4
Restaurant revenue 11.3 11.7 8.2 11.5
----- ----- ----- -----
Total revenue 100.0 100.0 100.0 100.0
Operating expenses:
Salaries and wages 17.8 13.6 17.1 14.2
Trade show expenses 3.2 4.1 3.6 4.3
Travel expense 3.2 2.1 3.5 2.3
Other operating expenses 9.3 8.6 9.0 9.5
Restaurant expenses 10.1 11.4 7.5 11.3
Depreciation and amortization .9 .8 .9 .9
General and administrative 19.0 15.8 19.6 16.7
----- ----- ----- -----
Operating income 36.4 43.6 38.8 40.9
Interest and other expense 20.2 13.0 20.6 13.8
----- ----- ----- -----
Net income before income tax 16.1% 30.6% 18.2% 27.1%
Income tax 5.5 10.4 6.2 9.2
----- ----- ----- -----
Net income 10.6% 20.2% 12.0% 17.9%
===== ===== ===== =====
2003 Compared wth 2002
- ----------------------
Total revenue from royalties and fees increased from $1.4 million to $1.7
million and from $2.6 million to $3.2 million, respectively, for the three-month
and six-month periods ended June 30, 2003 compared to the same periods in 2002.
That is a 23.0% and 22.8% growth, respectively, for the three-month and
six-month periods ended June 30, 2003 as compared to the same periods in 2002.
Total revenue increased from $1.6 million to $1.9 million and from $3.0 million
to $3.7 million, or an increase of 22.7% and 22.7%, respectively, for the
three-month and six-month periods ended June 30, 2003 compared to the same
periods in 2002. The increase in the royalties and fees was primarily the result
of the growth in the number of franchise locations open and the higher unit
7
sales from some of the most recent openings. The increase in total revenue was
the result of the increase in royalties and fees partially offset by decrease in
administrative fees and other and the increase in restaurant revenue as a result
of operating three locations on military bases until they are sold as franchise
locations. The Company only plans to operate these locations temporarily until a
qualified franchisee can be located.
Salaries and wages decreased from 17.8% and 17.1% of revenue for the three-month
and six-month periods ended June 30, 2002 to 13.6% and 14.2%, respectively, of
revenue for the same periods in 2003. This decrease was the result of the
revenue increase from the continued growth in the number of locations while
utilizing approximately the same operational staff.
Trade show expense increased from 3.2% and 3.6% of revenue for the three-month
and six-month periods ended June 30, 2002 to 4.1% and 4.3%, respectively, of
revenue for the same periods in 2003. This increase was a result of
participating in more national trade shows to attract franchisees from
additional venues to further diversify the Company's target market.
Travel expenses decreased from 3.2% and 3.5% of revenue for the three-month and
six-month periods ended June 30, 2002 to 2.1% and 2.3%, respectively, of revenue
for the same periods in 2003. This decrease is a result of the growth in revenue
from continued growth in locations while utilizing approximately the same
employees and by locating operational staff in various parts of the country to
minimize travel costs.
Other operating expenses decreased from 9.3 % of revenue for the three-month
period ended June 30, 2002 to 8.6% of revenue for the same period in 2003.
Operating expenses increased for the six-month period ended June 30, 2003 to
9.5% of revenue from 9.0% of revenue for the same period in 2002. This increase
in other operating expenses for the six-month period is primarily the result of
an increase in group insurance costs, additional sales commissions from the sale
of new units and the increase in payroll taxes as a result of the increase in
commissions. The increases were mostly offset by the increase in revenue. The
decrease in the most recent three-month period was the result of the growth in
revenue more than offsetting the growth in expenses.
Restaurant expenses increased from 10.1% and 7.5% of revenue for the three-month
and six-month periods ended June 31, 2002 to 11.4% and 11.3%, respectively, of
revenue for the same periods in 2003. This increase was the result of operating
three locations on military bases until they are sold as franchise locations.
General and administrative expense decreased from 19.0% and 19.6% of revenue for
the three-month and six-month periods ended June 30, 2002 to 15.8% and 16.7%,
respectively, of revenue for the same periods in 2003. This decrease is the
result of the increased revenue utilizing approximately the same administrative
structure. The dollar amount of general and administrative expenses only grew by
4.4% for the six-month period ended June 30, 2003 compared to the same period in
2003 while revenue grew 22.7% during the same time period.
Operating income increased from 36.4% and 38.8% of revenue for the three-month
and six-month periods ended June 30, 2002 to 43.6% and 40.9%, respectively, of
revenue for the same periods in 2003. This increase was the result of total
revenue growing by 22.7% and 22.7%, respectively, for the three-month and
six-month periods ended June 30, 2003 compared to the same periods in 2002,
while total operating expenses grew by 8.7% and 18.5%, respectively, for the
same time periods.
8
Interest expense decreased from 20.2% and 20.6% of revenue for the three-month
and six-month periods ended June 30, 2002 to 13.0% and 13.8%, respectively, of
revenue for the same periods in 2003. This decrease was the result of the
revenue increases and the rate of interest on the participating income notes
decreasing from 7.5% of defined revenue to 2.5% of defined revenue.
Net income increased from approximately $168 thousand to $391 thousand and from
$364 thousand to $663 thousand, respectively, for the three-month and six-month
periods ended June 31, 2003 compared to the same periods in 2002. That is a
132.6% and 82.2% growth, respectively, for the three-month and six-month periods
ended June 30, 2003 as compared to the same periods in 2002. The primary reason
for this increase was the continued growth while maintaining approximately the
same operating and administrative structure. Management does not believe that
the operating and administrative structure will change significantly from the
continued growth in the foreseeable future except for periodically adding an
additional franchise consultant or other support staff.
Liquidity and Capital Resources
- -------------------------------
Over the last several years, given the potential size of the opportunities in
the non-traditional and co-branding market segments, the Company made the
strategic decision to refocus its business on franchising to non-traditional and
co-branding locations and away from operating full-service, traditional
restaurant locations. During 2000, the Company completed that transition and all
of its full-service, traditional restaurants are now franchised. The Company
continues to provide franchise services to the full-service franchises in much
the same fashion as it does with its non-traditional and co-branded franchises.
As a result of the Company's strategy, cash flow generated from operations, the
Company's current rate of growth by franchising plus the anticipated growth, the
Company believes it will have sufficient cash flow to meet its obligations and
to carry out its current business plan.
The statements contained 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 including, but not limited to: competitive factors
and pricing pressures, 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 impact of competitors' actions, and
changes in prices or supplies of food ingredients and labor. 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.
9
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
The Company is involved in various litigation relating to claims
arising out of its normal business operations and relating to
restaurant facilities closed in 1997 and 2000. The Company believes
that none of its current proceedings, individually or in the aggregate,
will have a material adverse effect upon the Company beyond the amount
reserved in its financial statements.
ITEM 2. Changes in Securities.
None.
ITEM 3. Defaults Upon Senior Securities.
None.
ITEM 4. Submission of Matters to a Vote of Security Holders.
None.
ITEM 5. Other Information.
None.
ITEM 6. Exhibits and Reports on Form 8-K.
Exhibit 99.1 Certification of C.E.O.
Exhibit 99.2 Certification of C.F.O.
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOBLE ROMAN'S, INC.
Date: August 11, 2003 /s/ Paul Mobley
--------------- -------------------------------------
Paul W. Mobley, Chairman of the Board
11
I, Paul W. Mobley, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of Noble Roman's, Inc.;
(2) Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
(4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 45 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
(5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
(6) The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
August 11, 2003 /s/ Paul W. Mobley
--------------------------------
Paul W. Mobley
Chief Executive Officer
Subscribed and sworn to before me this 11th day of August, 2003.
/s/ Linda L. Minett
--------------------------------
Linda L. Minett, Notary Public
My commission expires: 11/27/08
12
I, Paul W. Mobley, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of Noble Roman's, Inc.;
(2) Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
(4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 45 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
(5) The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
(6) The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
August 11, 2003 /s/ Paul W. Mobley
--------------------------------
Paul W. Mobley
Chief Financial Officer
Subscribed and sworn to before me this 11th day of August, 2003.
/s/ Linda L. Minett
--------------------------------
Linda L. Minett, Notary Public
My commission expires: 11/27/08
13