Noble Roman's Announces Second Quarter 2009 Earnings

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 June 30, 2009. Net income was $415,234 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 5.0% increase in net income over the quarterly period ended June 30, 2008 of $395,307, 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 20.3 million. Total revenues for the quarterly period ended June 30, 2009 were $1.9 million compared to total revenues of $2.4 million for the comparable period in 2008.

For the six-month period ended June 30, 2009, the company reported a net income of $831,995, or $.04 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 16.1% increase in net income over the six-month period ended June 30, 2008 of $716,737, or $.04 per share basic and diluted, on weighted average number of common shares outstanding of 19.2 million, and diluted weighted average shares of 20.3 million. Total revenues for the six-month period ended June 30, 2009 were $3.8 million compared to $4.8 million for the corresponding period in 2008. The company's pre-tax income for the six-month period was $1,615,160 compared to $1,402,041 for the corresponding period in 2008. For the six-month period ended June 30, 2009, the company has exceeded its pre-tax income plan, as announced in the Form 10-Q for the quarterly period ended September 30, 2008, by approximately $56,000.

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 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, attractions, entertainment facilities, casinos, airports, travel plazas, office complexes 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 six-month period ended June 30, 2009 were $1,098,827 and $2,179,464, respectively, compared to $1,661,081 and $3,370,436, 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 $1,682,483 and $3,357,473, and $1,682,510 and $3,384,688 for the three-month and six-month periods ended June 30, 2009 and 2008, respectively. The decrease in total revenue was the result of selling fewer franchise agreements in the three-month and six-month periods ended June 30, 2009 compared to the comparable periods in 2008. For initial franchise fees, approximately $37,000 and $65,600 are included in royalty and fee income for the three-month and six-month periods ended June 30, 2009, respectively, and approximately $103,000 and $238,500 are included in the three-month and six-month periods ended June 30, 2008, respectively. For equipment commissions, approximately $20,338 and $76,361, and approximately $96,597 and $207,072 are included in royalty and fee income for the three-month and six-month periods ended June 30, 2009 and 2008, respectively. There were no area development fees in either the three-month or six-month periods in 2009 and there were area development fees of $104,825 in both the three-month and six-month periods ended June 30, 2008.

To augment the company's sales opportunities within non-traditional venues, in October 2008 the company introduced the new Noble Roman's Bistro service system. The Bistro incorporates all of the ingredient qualities for which Noble Roman's Pizza is known, and retains simplicity by using largely ready-to-use ingredients that require only final assembly and baking on site. It features the SuperSlice pizza, one-fourth of a large pizza, along with hot entrees such as chicken parmesan, baked pastas, 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.

The company has recently developed a take-n-bake pizza module as an addition to its menu offering. The take-n-bake pizza is primarily designed as an add-on component for new and existing convenience store franchisees, and as a stand-alone offering for grocery store chains. At the time of this report, the company has already signed agreements with 24 grocery stores, allowing them to operate the take-n-bake pizza program. Twenty-two of these stores have begun selling take-n-bake pizzas under the program, and the other two are expected to begin operations within the next two weeks. The take-n-bake program has also been integrated into the operations of three existing convenience stores, generating significant add-on sales, and is now being offered to all convenience store franchisees for a small training fee. The company has also begun approaching additional grocery stores and convenience stores regarding the take-n-bake program.

The company has also recently developed a grab-n-go service system for a limited portion of the Tuscano's menu. The grab-n-go system is 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 already been integrated into the operations of two existing locations, generating significant add-on sales. The system will be 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 plans to demonstrate the enhanced dual-brand configuration at the Foodservice At Retail Expo in Chicago August 18th and 19th.

Updating the previously announced lawsuit styled Kari Heyser, et al (Plaintiffs), vs. Noble Roman's, Inc., et al (Defendants), discovery is in progress. Defendants filed the First Request for Production of Documents on February 9, 2009 and certain Plaintiffs produced some of the requested documents. However, many of the Plaintiffs produced no documents and the company, on July 27, 2009, filed a Motion to Compel the production against those Plaintiffs. Depositions have been scheduled for the Plaintiffs during August, September and October. Depositions of the Defendants have been scheduled during August and October. 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 moved to obtain Preliminary and Permanent Injunctions against a majority of the Plaintiffs to remedy the Plaintiff's 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 subsequently 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 on March 31, 2009. In the same ruling the Court: continued the Motion to Show Cause to allow parties time to conduct discovery, including depositions on the preliminarily enjoined Plaintiffs, on that issue; granted preliminary injunctions against Plaintiffs Gomes and Villasenor; dismissed claims against CIT Small Business Lending Corporation and PNC Bank with prejudice; and struck the fraudulent affidavits.

The company has filed a Motion for Partial Summary Judgment as to several issues in the Complaint. New counsel for Plaintiffs entered his appearance in the case on behalf of the Plaintiffs on July 7, 2009 and moved to dismiss the Company's Motion for Partial Summary Judgment. The Court has set a hearing on the Motion for Partial Summary Judgment for September 2, 2009.

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