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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, 2004
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, 2004, there were 16,277,827 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:
Condensed consolidated balance sheets as of December 31, 2003
and June 30, 2004 Page 3
Condensed consolidated statements of operations for the three
months and six months ended June 30, 2003 and 2004 Page 4
Condensed consolidated statements of cash flows for the
six months ended June 30, 2003 and 2004 Page 5
Notes to condensed consolidated financial statements Page 6
2
Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
December 31, June
2003 30,
2004
------------ ------------
Assets
------
Current assets:
Cash $ 237,445 $ 273,933
Accounts and notes receivable (net of allowances) 711,385 963,804
Inventories 157,192 163,589
Prepaid expenses 439,901 437,492
Current portion of long-term notes receivable 147,923 153,940
Deferred tax asset - current portion 1,350,000 1,350,000
------------ ------------
Total current assets 3,043,847 3,342,758
------------ ------------
Property and equipment:
Equipment 988,980 1,122,350
Leasehold improvements 86,229 94,936
------------ ------------
1,075,209 1,217,286
Less accumulated depreciation and amortization 441,239 474,145
------------ ------------
Net property and equipment 633,970 743,141
------------ ------------
Deferred tax asset (net of current portion) 8,699,340 8,324,763
Other assets 1,907,133 1,925,585
------------ ------------
Total assets $ 14,284,289 $ 14,336,247
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable and accrued expenses $ 1,057,564 $ 465,401
Note payable to officer 65,840 65,840
------------ ------------
Total current liabilities 1,123,404 531,241
------------ ------------
Long-term obligations:
Notes payable to bank 7,800,000 7,700,000
Subordinated debentures 2,040,000 2,040,000
Participating income notes 859,060 859,060
------------ ------------
Total long-term liabilities 10,699,060 10,599,060
------------ ------------
Stockholders' equity:
Common stock (25,000,000 shares authorized, 16,277,827 out-
standing at December 31, 2003 and June 30, 2004) 17,789,452 17,789,452
Preferred stock (5,000,000 shares authorized) 4,929,274 4,929,274
Accumulated deficit (20,256,901) (19,512,780)
------------ ------------
Total stockholders' equity 2,461,825 3,205,945
------------ ------------
Total liabilities and stockholders' equity $ 14,284,289 $ 14,336,247
============ ============
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,
-------- --------
2003 2004 2003 2004
---- ---- ---- ----
Revenue:
Royalties and fees $ 1,660,278 $ 1,792,474 $ 3,190,961 $ 3,489,035
Administrative fees and other 51,157 22,131 90,492 75,072
Restaurant revenue 225,748 308,092 426,510 501,917
----------- ----------- ----------- -----------
Total revenue 1,937,183 2,122,697 3,707,963 4,066,024
Operating expenses:
Salaries and wages 263,995 288,411 526,077 563,507
Trade show expense 79,293 83,394 157,900 207,981
Travel expense 39,916 55,781 86,868 120,449
Other operating expenses 165,754 175,486 350,772 354,580
Restaurant expenses 220,534 299,275 418,698 485,470
Depreciation and amortization 16,232 16,672 32,464 32,905
General and administrative 306,221 331,291 617,934 686,632
----------- ----------- ----------- -----------
Operating income 845,238 872,386 1,517,249 1,614,501
Interest and other expense 252,777 250,437 513,405 495,803
----------- ----------- ----------- -----------
Income before income tax 592,461 621,950 1,003,844 1,118,698
Income tax 201,437 205,683 341,307 374,577
----------- ----------- ----------- -----------
Net income $ 391,024 $ 416,267 $ 662,537 $ 744,121
=========== =========== =========== ===========
Earnings per share:
Net income $ .02 $ .03 $ .04 $ .05
Weighted average number of common shares outstanding
16,166,158 16,277,827 16,166,158 16,277,827
Fully diluted earnings per share:
Net income $ .02 $ .02 $ .04 $ .04
Weighted average number of common shares outstanding 17,102,511 17,156,501 17,102,511 17,156,501
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,
--------
2003 2004
---- ----
OPERATING ACTIVITIES
Net income $ 662,537 $ 744,121
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 125,594 78,365
Deferred federal income taxes 341,307 374,577
Changes in operating assets and liabilities (increase) decrease in:
Accounts receivable (65,238) (252,419)
Inventory 8,577 (6,397)
Prepaid expenses (130,606) 2,410
Other assets (234,665) 517
Increase (decrease) in:
Accounts payable (213,626) (283,195)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 493,880 657,979
--------- ---------
INVESTING ACTIVITIES
Purchase of property and equipment (28,061) (74,228)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (28,061) (74,228)
--------- ---------
FINANCING ACTIVITIES
Payment received on long-term notes receivable -- 72,487
Payment of obligations from discontinued operations (468,251) (519,750)
Payment of principal on outstanding debt -- (100,000)
--------- ---------
NET CASH USED BY FINANCING ACTIVITIES (468,251) (547,263)
--------- ---------
INCREASE (DECREASE) IN CASH (2,432) 36,488
Cash at beginning of period 13,180 237,445
--------- ---------
Cash at end of period $ 10,748 $ 273,933
========= =========
Supplemental schedule of non-cash investing and financing activities
None.
See accompanying notes to condensed consolidated financial statements.
5
Notes to Unaudited Condensed Consolidated Financial Statements
- --------------------------------------------------------------
The interim condensed consolidated financial statements, included herein, are
unaudited, but 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. The results for the quarter ended
June 30, 2004 are not necessarily indicative of the results to be expected for
the full year ending December 31, 2004.
The Company has an outstanding note payable originally made in favor of a bank
with an unpaid principal balance of $7,700,000. By the terms of the note it
bears interest of 8.75% per annum payable monthly in arrears. Summitbridge
National Investments, LLC reported that it had purchased this note in October
2003, as well as convertible preferred stock of the Company with an aggregate
liquidation preference of $4,929,275 (convertible into 1,643,092 shares of
common stock of the Company), 3,214,748 shares of common stock and a warrant to
purchase 385,000 shares of common stock at an exercise price of $.01 per share.
The preferred stock, common stock and warrant were issued to the bank lender in
conjunction with various financing transactions. Under the Indiana Control Share
Acquisition Law, Summitbridge currently has no voting rights with respect to the
shares it acquired. The Company also has advised Summitbridge of the Company's
position that the Indiana Business Combination Law prohibits Summitbridge from
engaging in certain transactions with the Company until the fifth anniversary of
the acquisition, including receipt of payment in respect of the debt obligation
and receipt of common stock issuable upon conversion of the convertible
preferred stock. The Company also believes that the warrants have expired and no
longer are exercisable.
The Company has filed a Complaint For Declaratory Judgment, Money Damages and
Jury Trial in the Marion Superior Court Civil Division against Summitbridge
seeking (among other relief) confirmation of the Company's position under the
Indiana Business Combination Law and as to the Company's obligations under the
loan. Summitbridge filed an Answer, as well as a Counterclaim against the
Company and certain of its subsidiaries and principal shareholder to enforce
certain purported guarantees.
Summitbridge also has filed a motion for Judgment on the Pleadings as to a
portion of the Complaint filed by the Company. That motion seeks for the Court
to rule that the Indiana Business Combination Law does not prevent Summitbridge
from enforcing its purported rights under the loan and related instruments it
purchased from the bank. Summitbridge's motion has been briefed and argued and
has been taken under submission by the Court which has not yet ruled on it. The
Company intends to continue to vigorously prosecute its claims against
Summitbridge and to defend against Summitbridge's counterclaims.
Based on the Company's 2001, 2002, 2003 operating results and results thus far
in 2004, its business plan, the number of franchise units now open, the backlog
of units sold to be opened in the future and the backlog of franchise prospects
now in ongoing discussions and negotiations, 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
6
tax asset could be jeopardized. The Company will continue to evaluate the need
for a valuation allowance on a quarterly basis.
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, 2003
and 2004
Introduction
- ------------
The Company's strategic direction is to grow its business by franchising
primarily in non-traditional locations.
The Company recently improved its cold sub sandwich menu items, and expanded the
offerings into a separate concept named Tuscano's Italian Style Subs. Tuscano's
was designed to be comfortably familiar from a customer's perspective, but with
many distinctive features that include an Italian-themed menu. The franchise fee
and ongoing royalty for a Tuscano's is identical to that charged for a Noble
Roman's Pizza franchise. To date, franchisees have opened seven Tuscano's
locations. Additionally, the Company has awarded nine Tuscano's franchise
agreements to be opened soon. Additionally, the Company plans on adding
Tuscano's to its corporate test unit during May 2004. For the most part, the
Company expects to award Tuscano's franchises for the same facilities as Noble
Roman's Pizza franchises, although Tuscano's franchises are also available for
locations that do not have a Noble Roman's Pizza franchise.
The Company continues its focus of awarding franchise agreements for both Noble
Roman's Pizza and Tuscano's Italian Style Subs in non-traditional venues such as
hospitals, military bases, universities, convenience stores, attractions,
entertainment facilities, casinos, airports, travel plazas, office complexes and
hotels. Noble Roman's has sold franchises in 44 states from coast-to-coast
within the United States. In addition, it has sold franchise agreements for
military bases in Puerto Rico, Guam and Italy, and for entertainment facilities
and convenience stores in Canada.
Both franchising concepts were designed to capitalize on the rapid growth of
non-traditional locations for quick service restaurants and to be simple to
operate, requiring a modest investment, with minimal staffing requirements while
serving great tasting menu items. The concepts were designed to be convenient
and quick for its customers. Based on the Company's experience, we believe that
franchising for non-traditional locations offers many opportunities for growth
for the foreseeable future.
Based on the Company's 2001, 2002 and 2003 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 2004,
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.
However, there can be no assurance that the
7
franchising growth will continue in the future. 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 in the future.
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, 2003 and
June 30, 2004, respectively.
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2003 2004 2003 2004
---- ---- ---- ----
Revenue:
Royalties and fees 85.7% 84.5% 86.1% 85.9%
Administrative fees and other 2.6 1.0 2.4 1.8
Restaurant revenue 11.7 14.5 11.5 12.3
----- ----- ----- -----
Total revenue 100.0 100.0 100.0 100.0
Operating expenses:
Salaries and wages 13.6 13.6 14.2 13.9
Trade show expenses 4.1 3.9 4.3 5.1
Travel expense 2.1 2.6 2.3 3.0
Other operating expenses 8.6 8.3 9.5 8.7
Restaurant expenses 11.4 14.1 11.3 11.9
Depreciation and amortization .8 .8 .9 .8
General and administrative 15.8 15.6 16.7 16.9
----- ----- ----- -----
Operating income 43.6 41.1 40.9 39.7
Interest and other expense 13.0 11.8 13.8 12.2
----- ----- ----- -----
Net income before income tax 30.6 29.3 27.1 27.5
Income tax 10.4 9.7 9.2 9.2
----- ----- ----- -----
Net income 20.2% 19.6% 17.9% 18.3%
===== ===== ===== =====
Results of Operations
- ---------------------
Total revenue from royalties and fees increased from $1.66 million to $1.79
million and from $3.19 million to $3.49 million, respectively, for the
three-month and six-month periods ended June 30, 2004 compared to the
corresponding periods in 2003. That represented 8.0% and 9.3% growth,
respectively, for the three-month and six-month periods ended June 30, 2004
compared to the corresponding periods in 2003. Total revenue increased from
$1.94 million to $2.12 million and from $3.71 million to $4.07 million, or an
increase of 9.6% and 9.7%, respectively, for the three-month and six-month
periods ended June 30, 2004 compared to the corresponding periods in 2003. 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 sales from some of the
most recent openings. The increases in total revenue were the result of the
increase in royalties and fees partially offset by
8
decrease in administrative fees and other and an increase in restaurant revenue
as a result of operating on some military bases until they are sold as franchise
locations. The Company has no intention of operating these locations except
temporarily until a qualified franchisee can be located.
Salaries and wages represented 13.6% of revenue for the three-month periods
ended June 30, 2003 and June 30, 2004. Salaries and wages decreased from 14.2%
of revenue for the six-month period ended June 30, 2003 to 13.9% of revenue for
the corresponding period in 2004. The primary reason for the decrease in the
six-month period compared to last year was the growth in revenue with only a
very minor increase in salaries by utilizing the same staff to support
additional growth.
Trade show expense decreased from 4.1% of revenue for the three-month period
ended June 30, 2003 to 3.9% of revenue for the corresponding period in 2004.
Trade show expense increased for the six-month period ended June 30, 2004 to
5.1% of revenue from 4.3% of revenue for the corresponding period in 2003. The
increase in the six-month period was primarily the result of increased
participation in national trade shows to create additional growth for the
future.
Travel expenses increased from 2.1% and 2.3% of revenue for the three-month and
six-month periods ended June 30, 2003 to 2.6% and 3.0%, respectively, of revenue
for the corresponding periods in 2004. This increase was primarily the result of
the increase in the number of franchise locations, especially locations further
away from the home office.
Other operating expenses decreased from 8.6% and 9.5% of revenue for the
three-month and six-month periods ended June 30, 2003 to 8.3% and 8.7%,
respectively, of revenue for the corresponding periods in 2004. These decreases
were primarily the result of the growth in revenue from additional locations
with only minor increase in total operating expenses.
Restaurant expenses increased from 11.4% and 11.3% of revenue for the
three-month and six-month periods ended June 30, 2003 to 14.1% and 11.9%,
respectively, of revenue for the corresponding periods in 2004. These increases
were the result of operations on certain military bases until they are sold as
franchise locations. The Company only plans to operate these locations
temporarily until a franchisee can be located.
General and administrative expense decreased from 15.8% of revenue for the
three-month period ended June 30, 2003 to 15.6% of revenue for the corresponding
period in 2004. General and administrative expense increased for the six-month
period ended June 30, 2004 to 16.9% of revenue from 16.7% of revenue for the
corresponding period in 2003. The slight decrease in the three-month period
ended June 30, 2004 was a result of revenue growth offsetting the growth in
general and administrative expenses that were increased at the beginning of 2004
in anticipation of the additional growth. The slight increase in the six-month
period was a result of the growth in revenue not yet offsetting the growth in
general and administrative expenses that were increased in the beginning of 2004
to support planned growth.
Operating income decreased from 43.6% and 40.9% of revenue for the three-month
and six-month periods ended June 30, 2003 to 41.1% and 39.7%, respectively, of
revenue for the corresponding periods in 2004. The decrease in operating income
as a percentage of revenue was a result of increasing capacity for future
growth. It is anticipated that the operating income as a percent of revenue will
improve later in the year as revenue continues to grow from the growth in the
number of units.
9
Interest expense decreased from 13.0% and 13.8% of revenue for the three-month
and six-month periods ended June 30, 2003 to 11.8% and 12.2%, respectively, of
revenue for the corresponding periods in 2004. This decrease was the result of
the revenue increases from additional growth while the interest cost remained
approximately the same .
Net income increased from approximately $391 thousand to $416 thousand and from
$663 thousand to $744 thousand, respectively, for the three-month and six-month
periods ended June 30, 2004 compared to the corresponding periods in 2003. These
amounts reflected 6.5% and 12.3% growth, respectively, for the three-month and
six-month periods ended June 30, 2004 as compared to the corresponding periods
in 2003. The primary reason for this increase was the continued growth in the
number of franchised units. This was partially offset by increased operating
costs in preparation for planned growth in the future. Management believes that
the operating structure in place will not change significantly from continued
growth in the near future and, therefore, as additional new units open the net
income should continue to grow.
Liquidity and Capital Resources
- -------------------------------
The Company's strategic direction is to grow its business by franchising
primarily in non-traditional locations. This strategy does not require
significant growth in capital.
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 Company has an outstanding note payable originally made in favor of a bank
with an unpaid principal balance of $7,700,000. By the terms of the note it
bears interest of 8.75% per annum payable monthly in arrears. Summitbridge
National Investments, LLC reported that it had purchased this note in October
2003, as well as convertible preferred stock of the Company with an aggregate
liquidation preference of $4,929,275 (convertible into 1,643,092 shares of
common stock of the Company), 3,214,748 shares of common stock and a warrant to
purchase 385,000 shares of common stock at an exercise price of $.01 per share.
The preferred stock, common stock and warrant were issued to the bank lender in
conjunction with various financing transactions. Under the Indiana Control Share
Acquisition Law, Summitbridge currently has no voting rights with respect to the
shares it acquired. The Company also has advised Summitbridge of the Company's
position that the Indiana Business Combination Law prohibits Summitbridge from
engaging in certain transactions with the Company until the fifth anniversary of
the acquisition, including receipt of payment in respect of the debt obligation
and receipt of common stock issuable upon conversion of the convertible
preferred stock. The Company also believes that the warrants have expired and no
longer are exercisable.
The Company has filed a Complaint For Declaratory Judgment, Money Damages and
Jury Trial in the Marion Superior Court Civil Division against Summitbridge
seeking (among other relief) confirmation of the Company's position under the
Indiana Business Combination Law and as to the Company's obligations under the
loan. Summitbridge filed an Answer, as well as a Counterclaim against the
Company and certain of its subsidiaries and principal shareholder to enforce
certain purported guarantees.
10
Summitbridge also has filed a motion for Judgment on the Pleadings as to a
portion of the Complaint filed by the Company. That motion seeks for the Court
to rule that the Indiana Business Combination Law does not prevent Summitbridge
from enforcing its purported rights under the loan and related instruments it
purchased from the bank. Summitbridge's motion has been briefed and argued and
has been taken under submission by the Court which has not yet ruled on it. The
Company intends to continue to vigorously prosecute its claims against
Summitbridge and to defend against Summitbrige's counterclaims.
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 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, changes in prices or supplies of food ingredients and labor and
disputes regarding the Company's obligations under certain financing agreements.
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.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
The Company presently does not use any derivative financial instruments to hedge
its exposure to adverse fluctuations in interest rates, foreign exchange rates,
fluctuations in commodity prices or other market risks, nor does the Company
invest in speculative financial instruments. Borrowings with the bank bear
interest at 8.75%.
Due to the nature of the Company's borrowings, it has concluded that there is no
material market risk exposure and, therefore, no quantitative tabular
disclosures are required.
ITEM 4. Controls and Procedures
Based on his evaluation as of the end of the period covered by this report, Paul
W. Mobley, the Company's Chief Executive Officer and Chief Financial Officer,
has concluded that the Company's disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended) are effective. There have been no changes in internal controls over
financial reporting during the period covered by this report that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.
11
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. As described above in
Part I under "ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources",
the Company is involved in litigation involving a dispute regarding its
obligations under certain financing agreements. Although there can be
no assurance, the Company believes that the outcome of current legal
proceedings, individually or in the aggregate, will not have a material
adverse effect upon the Company beyond the amount reserved in its
financial statements.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: See Exhibit Index appearing on page 13.
12
Index to Exhibits
Exhibit
- -------
31.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13
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, 2004 By /s/ Paul W. Mobley
------------------
Paul W. Mobley, Chairman of the Board and
Chief Financial Officer
14