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                                  United States
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act
            of 1934 For the quarterly period ended September 30, 2012

                         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
             of organization)                         Identification No.)

     One Virginia Avenue, Suite 300
           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 [ ]

Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section
232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).
Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer [ ]                               Accelerated Filer [ ]
Non-Accelerated Filer   [ ]                       Smaller Reporting Company [X]
(do not check if smaller
  reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of November 5, 2012, there were 19,516,589 shares of Common Stock, no par
value, outstanding.


PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements The following unaudited condensed consolidated financial statements are included herein: Condensed consolidated balance sheets as of December 31, 2011 and September 30, 2012 (unaudited) Page 3 Condensed consolidated statements of operations for the three months and nine months ended September 30, 2011 and 2012 (unaudited) Page 4 Condensed consolidated statements of changes in stockholders' equity for the nine months ended September 30, 2012 (unaudited) Page 5 Condensed consolidated statements of cash flows for the nine months ended September 30, 2011 and 2012 (unaudited) Page 6 Notes to condensed consolidated financial statements (unaudited) Page 7 2
Noble Roman's, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) December 31, September 30, 2011 2012 ------------ ------------ Assets Current assets: Cash $ 233,296 $ 162,768 Accounts and notes receivable - net 884,811 1,212,115 Inventories 338,447 424,136 Assets held for resale 252,552 252,552 Prepaid expenses 278,718 507,284 Deferred tax asset - current portion 1,400,000 1,400,000 ------------ ------------ Total current assets 3,387,824 3,958,855 ------------ ------------ Property and equipment: Equipment 1,147,109 1,160,824 Leasehold improvements 12,283 12,283 ------------ ------------ 1,159,392 1,173,107 Less accumulated depreciation and amortization 851,007 892,343 ------------ ------------ Net property and equipment 308,385 280,764 Deferred tax asset (net of current portion) 9,613,399 8,920,666 Other assets 3,914,523 4,453,865 ------------ ------------ Total assets $ 17,224,131 $ 17,614,150 ============ ============ Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term note payable to bank $ 3,575,000 1,250,000 Accounts payable and accrued expenses 665,054 170,267 ------------ ------------ Total current liabilities 4,240,054 1,420,267 ------------ ------------ Long-term obligations: Note payable to bank (net of current portion) -- 3,333,333 Note payable to officer 1,255,821 -- ------------ ------------ Total long-term liabilities 1,255,821 3,333,333 ------------ ------------ Stockholders' equity: Common stock - no par value (25,000,000 shares authorized, 19,469,317 issued and outstanding as of December 31, 2011 and 19,516,589 as of September 30, 2012) 23,239,976 23,337,814 Preferred stock (5,000,000 shares authorized and 20,625 issued and outstanding as of December 31, 2011 and September 30, 2012) 800,250 800,250 Accumulated deficit (12,311,970) (11,277,514) ------------ ------------ Total stockholders' equity 11,728,256 12,860,550 ------------ ------------ Total liabilities and stockholders' equity $ 17,224,131 $ 17,614,150 ============ ============ See accompanying notes to condensed consolidated financial statements. 3
Noble Roman's, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2011 2012 2011 2012 ------------ ------------ ------------ ------------ Royalties and fees $ 1,623,943 1,728,207 $ 5,030,533 $ 5,199,187 Administrative fees and other 3,107 5,202 22,502 17,944 Restaurant revenue 138,601 111,259 395,122 358,788 ------------ ------------ ------------ ------------ Total revenue 1,765,651 1,844,668 5,448,157 5,575,919 Operating expenses: Salaries and wages 251,790 250,216 736,929 747,199 Trade show expense 77,112 128,357 260,359 372,481 Travel expense 50,919 46,234 150,393 140,607 Other operating expenses 165,286 170,488 520,516 520,697 Restaurant expenses 137,508 100,514 385,975 332,789 Depreciation and amortization 36,311 28,561 86,170 87,786 General and administrative 405,281 394,122 1,217,099 1,182,508 ------------ ------------ ------------ ------------ Total expenses 1,124,207 1,118,492 3,357,441 3,384,067 ------------ ------------ ------------ ------------ Operating income 641,444 726,176 2,090,716 2,191,852 Interest and other expense 98,965 61,211 294,823 355,831 ------------ ------------ ------------ ------------ Income before income taxes 542,479 664,965 1,795,893 1,836,021 Income tax expense 214,876 263,393 711,353 727,247 ------------ ------------ ------------ ------------ Net income from continuing operations 327,603 401,572 1,084,540 1,108,774 Loss from discontinued operations net of tax benefit of $207,280 for 2011 (316,022) -- (316,022) -- ------------ ------------ ------------ ------------ Net income 11,581 401,572 768,518 1,108,774 ------------ ------------ ------------ ------------ Cumulative preferred dividends 24,682 24,682 74,047 74,318 ------------ ------------ ------------ ------------ Net income (loss) available to common stockholders $ (13,101) $ 376,890 $ 694,471 $ 1,034,456 ============ ============ ============ ============ Earnings per share - basic: Net income from continuing operations $ .02 $ .02 $ .06 $ .06 Net loss from discontinued operations (.02) -- (.02) -- Net income -- .02 .04 .06 Net income (loss) available to common stockholders $ -- $ .02 $ .04 $ .05 ============ ============ ============ ============ Weighted average number of common shares outstanding 19,469,317 19,506,886 19,453,932 19,491,274 Diluted earnings per share: Net income from continuing operations $ .02 $ .02 $ .05 $ .06 Net loss from discontinued operations (.02) -- (.02) -- Net income -- .02 .04 .06 Net income available to common stockholders $ -- $ .02 $ .03 $ .05 Weighted average number of common shares outstanding 20,159,153 20,070,990 20,143,768 20,055,378 See accompanying notes to condensed consolidated financial statements. 4
Noble Roman's, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) Preferred Common Stock Accumulated Stock Shares Amount Deficit Total ------------ ------------ ------------ ------------ ------------ Balance at December 31, 2011 $ 800,250 19,469,317 $ 23,239,976 $(12,311,970) $ 11,728,256 Net income for nine months ended September 30, 2012 1,108,774 1,108,774 Cumulative preferred dividends (74,318) (74,318) Exercise of employee stock options 47,272 18,200 18,200 Amortization of value of stock options 79,638 79,638 ------------ ------------ ------------ ------------ ------------ Balance at September 30, 2012 $ 800,250 19,516,589 23,337,814 $(11,277,514) $ 12,860,550 ============ ============ ============ ============ ============ See accompanying notes to condensed consolidated financial statements. 5
Noble Roman's, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 2011 2012 ----------- ----------- OPERATING ACTIVITIES Net income $ 768,518 $ 1,108,774 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 160,492 150,734 Deferred income taxes 504,073 727,248 Changes in operating assets and liabilities: Increase in: Accounts and notes receivable (235,723) (327,304) Inventories (26,329) (85,690) Prepaid expenses (87,382) (228,566) Other assets (635,886) (381,558) Increase (decrease) in: Accounts payable and accrued expenses 478,206 (86,254) ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 925,969 877,384 ----------- ----------- INVESTING ACTIVITIES Purchase of property and equipment (8,699) (13,715) Investment in assets held for sale (3,393) -- ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (12,092) (13,715) ----------- ----------- FINANCING ACTIVITIES Payment of obligations from discontinued operations (453,034) (408,533) Payment of cumulative preferred dividends (74,047) (74,318) Payment of principal outstanding under prior bank loan (725,000) (3,575,000) Payment of principal of officer loan -- (1,255,821) Net proceeds from new bank loan -- 4,812,457 Payment of principal outstanding under new bank loan -- (416,667) Payment of alternative minimum tax -- (34,515) Proceeds from the exercise of employee stock options 18,000 18,200 Principal payment received on notes receivable 31,665 -- Proceeds from officer loan 200,000 -- ----------- ----------- NET CASH USED IN FINANCING ACTIVITIES (1,002,416) (934,197) ----------- ----------- Decrease in cash (88,539) (70,528) Cash at beginning of period 337,044 233,296 ----------- ----------- Cash at end of period $ 248,505 $ 162,768 =========== =========== Supplemental schedule of non-cash investing and financing activities None. Cash paid for interest $ 257,564 $ 207,123 See accompanying notes to condensed consolidated financial statements. 6
Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1 - Basis of Presentation. The accompanying unaudited interim condensed consolidated financial statements, included herein, have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated statements have been prepared in accordance with the Company's accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2011 and should be read in conjunction with the audited consolidated financial statements and the notes thereto included in that report. Unless the context indicates otherwise, references to the "Company" mean Noble Roman's, Inc. and its subsidiaries. In the opinion of the management of the Company, the information contained herein reflects all adjustments necessary for a fair presentation of the results of operations and cash flows for the interim periods presented and the financial condition as of the dates indicated, which adjustments are of a normal recurring nature. The results for the nine-month period ended September 30, 2012 are not necessarily indicative of the results to be expected for the full year ending December 31, 2012. Note 2 - Note Payable to Bank. On May 15, 2012, the Company entered into a Credit Agreement with BMO Harris Bank, N.A. for a term loan in the amount of $5.0 million which is repayable in 48 equal monthly principal installments of $104,000 plus interest commencing on June 15, 2012 with a final payment due on May 15, 2016. Interest on the unpaid principal balance is payable at a rate per annum of LIBOR plus 4%. The proceeds from the term loan, net of certain fees and expenses associated with obtaining the term loan, were used to repay existing indebtedness to Wells Fargo Bank, N.A. and to an officer of the Company. The Company's obligations under the term loan are secured by the grant of a security interest in essentially all assets of the Company and a personal guaranty of an officer of up to $1.2 million of the term loan. The Credit Agreement contains certain restrictions such as a prohibition on the payment of dividends. Note 3 - Royalties and Fees. Royalties and fees include $131,000 and $256,000 for the three-month and nine-month periods ended September 30, 2012, and $28,000 and $156,000 for the three-month and nine-month periods ended September 30, 2011, respectively, of initial franchise fees. Royalties and fees included $32,000 and $55,000 for the three-month and nine-month periods ended September 30, 2012, and $11,000 and $30,000 for the three-month and nine-month periods ended September 30, 2011, respectively, of equipment commissions. Royalties and fees, less initial franchise fees and equipment commissions were $1.6 million and $4.9 million for the three-month and nine-month periods ended September 30, 2012 and $1.6 million and $4.8 million for the three-month and nine-month periods ended September 30, 2011, respectively. The breakdown of royalties and fees, less upfront fees, were royalties and fees from non-traditional franchises other than grocery stores were $1.0 million and $3.2 million for the three-month and nine-month periods ended September 30, 2012, and $971,000 and $3.1 million for the three-month and nine-month periods ended September 30, 2011, respectively; royalties and fees from grocery store take-n-bake were $350,000 and $1,045,000 for the three-month and nine-month periods ended September 30, 2012, and $325,000 and $873,000 for the three-month and nine-month periods ended September 30, 2011, respectively; and royalties and fees from traditional locations were $179,000 and $640,000 for the three-month and nine-month periods ended September 30, 2012, and $288,000 and $838,000 for the three-month and nine-month periods ended September 30, 2011, respectively. The Company has no material amount of past due royalties. 7
There were 1,460 franchises/licenses in operation on September 30, 2011 and 1,772 franchises/licenses in operation on September 30, 2012. During the twelve-month period ended September 30, 2012, 326 new franchised/licensed locations opened and 14 franchised/licensed locations closed. The breakdown of the 1,772 franchises/licenses at September 30, 2012 was 757 non-traditional franchises other than grocery stores, 973 grocery stores and 42 traditional franchises. In the ordinary course, grocery stores from time to time add products, remove and subsequently re-offer them. Therefore, it is unknown if any grocery store licensees have left the system. Note 4 - Earnings Per Share. The following table sets forth the calculation of basic and diluted earnings per share for the three-month and nine-month periods ended September 30, 2012: Three Months Ended September 30, 2012 ------------------------------------- Per-Share Income Shares Amount ------ ------ ------ (Numerator) (Denominator) Net income $ 401,572 19,506,886 $ .02 Less preferred stock dividends 24,682 ---------- Earnings per share - basic Income available to common stockholders 376,890 .02 Effect of dilutive securities Options 197,438 Convertible preferred stock 24,682 366,666 ---------- ---------- Diluted earnings per share Income available to common stockholders and assumed conversions $ 401,572 20,070,990 $ .02 ========== ========== Nine Months Ended September 30, 2012 ------------------------------------ Per-Share Income Shares Amount ------ ------ ------ (Numerator) (Denominator) Net income $1,108,774 19,491,274 $ .06 Less preferred stock dividends 74,318 ---------- Earnings per share - basic Income available to common stockholders 1,034,456 .05 Effect of dilutive securities Options 197,438 Convertible preferred stock 74,318 366,666 ---------- ---------- Diluted earnings per share Income available to common stockholders and assumed conversions $1,108,774 20,055,378 $ .06 ========== ========== 8
The following table sets forth the calculation of basic and diluted earnings per share for the three-month and nine-month periods ended September 30, 2011: Three Months Ended September 30, 2011 ------------------------------------- Per-Share Income Shares Amount ------ ------ ------ (Numerator) (Denominator) Net income $ 11,581 19,469,317 $ .00 Less preferred stock dividends (24,682) ---------- Earnings per share - basic Loss available to common stockholders (13,101) .00 Effect of dilutive securities Options 323,170 Convertible preferred stock 24,682 366,666 ---------- ---------- Diluted earnings per share Income available to common stockholders and assumed conversions $ 11,581 20,159,153 $ .00 ========== ========== Nine Months Ended September 30, 2011 ------------------------------------ Per-Share Income Shares Amount ------ ------ ------ (Numerator) (Denominator) Net income $ 768,518 19,453,932 $ .04 Less preferred stock dividends (74,047) ---------- Earnings per share - basic Income available to common stockholders 694,471 .04 Effect of dilutive securities Options 323,170 Convertible preferred stock 74,047 366,666 ---------- ---------- Diluted earnings per share Income available to common stockholders and assumed conversions $ 768,518 20,143,768 $ .04 ========== ========== Note 5 - Pending Litigation. 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 Court issued an Order dated December 23, 2010 granting summary judgment in favor of the Company against all of the Plaintiffs. As a result, the Plaintiffs' allegations of fraud against the Company and certain of its officers were determined to be without merit. Plaintiffs filed numerous motions and an appeal to the Indiana Court of Appeals, in an attempt to reverse the December 23, 2010 summary judgment. All of the motions were denied and the Indiana Court of Appeals dismissed the appeal with prejudice. Plaintiffs' last attempt to vacate the summary judgment award was their attempt to vacate the Order on the grounds of misconduct of third parties. On December 1, 2011, the Judge denied their motion and specifically found "that there was absolutely no evidence of misconduct" and the Court admonished Plaintiffs and Plaintiffs' counsel for making such unfounded allegations. The fraud charges against the Company and certain of its officers are dismissed entirely and Plaintiffs have exhausted their rights of appeal. The Company then filed a motion for sanctions against the Plaintiffs and their attorney for the frivolous filings and that motion was granted by the Court. The sanctions were not paid and the Company filed a motion for contempt of court or to show cause and the Court has not yet ruled on that motion. The Company's counterclaims against the Plaintiffs for breach of 9
contract remain pending as to amount of damages, however the Company has been granted summary judgment as to liability. The Complaint was originally against the Company and certain officers and institutional lenders. The Plaintiffs are former franchisees of the Company's traditional location venue. The Plaintiffs alleged that the Defendants fraudulently induced them to purchase franchises for traditional locations through misrepresentations and omissions of material facts regarding the franchises. In addition to the above claims, one group of franchisee-Plaintiffs in the same case had asserted a separate claim under the Indiana Franchise Act as to which the Court's Order denied the Company's motion for summary judgment as the Court determined that there is a genuine issue of material facts but did not render any opinion on the merits of the claim. The Company denies any liability on the Indiana Franchise Act claim and will continue to vigorously defend against this claim. The Company filed counterclaims for damages for breach of contract against all of the Plaintiffs in the approximate amount of $3.6 million plus attorneys' fees, interest and other costs of collection, or a total of over $5 million. On September 21, 2011, the Company filed motions for partial summary judgment as to liability against the Plaintiffs on the Company's counterclaims. As a result, the Company was granted partial summary judgment as to liability against the Plaintiffs/Counterclaim-Defendants on the Company's counterclaims against the Plaintiffs. In this partial summary judgment, the Court determined that the Plaintiffs were liable to the Company for direct damages and consequential damages, including future royalties, for breach of their franchise agreements. In addition, the Court determined that, as a matter of law, Noble Roman's was entitled to recover attorneys' fees associated with obtaining preliminary injunctions, fees resulting from the prosecution of Noble Roman's counterclaims and fees for defending against fraud claims against the Company and certain of its officers. The amount of the award is to be determined at trial. The trial began on October 30, 2012 on the one franchisee-Plaintiff's claim under the Indiana Franchise Act and the Company's counterclaims for damages against all of the Plaintiffs remaining in the case. As of the date of this report, the trial is still proceeding. The Judge has indicated, upon completion of the trial, he will rule on the amount of attorney's fees owed to the Company by the Plaintiffs. Note 6 - Subsequent Events. The Company evaluated subsequent events through the date the financial statements were issued and filed with the SEC. There were no subsequent events that required recognition or disclosure beyond what is disclosed in this report. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations General Information ------------------- Noble Roman's, Inc., an Indiana corporation incorporated in 1972 with two wholly-owned subsidiaries, Pizzaco, Inc. and N.R. Realty, Inc., sells and services franchises and licenses for non-traditional foodservice operations under the trade names "Noble Roman's Pizza", "Noble Roman's Take-N-Bake", "Tuscano's Italian Style Subs" and "Tuscano's Grab-N-Go Subs". The concepts' hallmarks include high quality pizza and sub sandwiches, along with other related menu items, simple operating systems, fast service times, labor-minimizing operations, attractive food costs and overall affordability. Since 1997, the Company has focused its efforts and resources primarily on franchising and licensing for non-traditional locations and now has awarded franchise and/or license agreements in 49 states plus Washington, D.C., Puerto 10
Rico, the Bahamas, Italy and Canada. Although from 2005 to 2007 the Company sold some franchises for its concepts in traditional restaurant locations, the Company is currently focusing its sales efforts primarily on (1) selling franchises for non-traditional locations primarily in convenience stores and entertainment facilities, (2) license agreements for grocery stores to sell the Noble Roman's Take-N-Bake Pizza and (3) the recently developed stand-alone take-n-bake pizza prototype. The Company has entered into agreements with three separate existing franchisees to open a total of seven stand-alone take-n-bake units in the upcoming months, the first of which opened in Greenwood, Indiana, a suburb of Indianapolis, on October 29, 2012. Pizzaco, Inc. is the owner and operator of the two Company locations used for testing and demonstration purposes. The Company has no plans to operate any other locations. Products & Systems ------------------ The Company's non-traditional franchises provide high-quality products, simple operating systems, labor minimizing operations and attractive food costs. Noble Roman's Pizza The hallmark of Noble Roman's Pizza is "Superior quality that our customers can taste." Every ingredient and process has been designed with a view to produce superior results. o Crust made with only specially milled flour with above average protein and yeast. o Fresh packed, uncondensed sauce made with secret spices, parmesan cheese and vine-ripened tomatoes. o 100% real cheese blended from mozzarella and Muenster, with no soy additives or extenders. o 100% real meat toppings, again with no additives or extenders - a distinction compared to many pizza concepts. o Vegetable and mushroom toppings that are sliced and delivered fresh, never canned. o An extended product line that includes breadsticks and cheesy stix with dip, pasta, baked sandwiches, salads, wings and a line of breakfast products. o A fully-prepared pizza crust that captures the made-from-scratch pizzeria flavor which gets delivered to the franchise location shelf-stable so that dough handling is no longer an impediment to a consistent product. Noble Roman's Take-N-Bake The Company 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 stores and as a stand-alone offering for grocery stores. The take-n-bake program in grocery stores is being offered as a license agreement rather than a franchise agreement. In convenience stores, take-n-bake is an available menu offering under the existing franchise agreement. The Company has recently developed a stand-alone take-n-bake pizza prototype and has entered into agreements with three separate existing franchisees to open a total of seven such units in the upcoming months. The first stand-alone Take-N-Bake Pizza location opened in Greenwood, Indiana, a suburb of Indianapolis, on October 29, 2012. The Company uses the same high quality pizza ingredients for its take-n-bake pizza as with its standard pizza, with slight modifications to portioning for increased home baking performance. The Company's stand-alone pizza program features the chains popular traditional Hand-Tossed Style pizza, Deep-Dish Sicilian pizza, SuperThin pizza and Noble Roman's famous breadsticks with spicy cheese sauce, all in a convenient cook-at-home format. Additional menu items include such items as fresh salads, cookie dough, cinnamon rounds, bake-able pasta and more. 11
Tuscano's Italian Style Subs Tuscano's Italian Style Subs is a separate restaurant concept that focuses on sub sandwich menu items. Tuscano's was designed to be comfortably familiar from a customer's perspective but with many distinctive features which include an Italian-themed menu. The franchise fee and ongoing royalty for a Tuscano's franchise is identical to that charged for a Noble Roman's Pizza franchise. For the most part, the Company awards Tuscano's franchises for some of 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. Tuscano's Grab-N-Go Subs Noble Roman's has developed a grab-n-go service system for a select 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. Franchisees that opened prior to the development of the grab-n-go service system may add it as an option. The grab-n-go system has already been integrated into the operations of several existing locations and is now available to all franchisees. New, non-traditional franchisees have the opportunity to open with both take-n-bake pizza and grab-n-go subs when they acquire a Noble Roman's franchise or license. Business Strategy ----------------- The Company's business strategy includes the following four elements: 1. Focus on revenue expansion through three primary growth vehicles: Sales of Non-Traditional Franchises and Licenses. The Company believes that in today's macroeconomic circumstances, it has an opportunity for increasing unit growth and revenue within its non-traditional venues, particularly with convenience stores, travel plazas and entertainment facilities. The Company's franchises in non-traditional locations are foodservice providers within a host business, and usually require a substantially less investment compared to a stand-alone traditional location. Non-traditional franchises and licenses are most often sold into pre-existing facilities as a service and/or revenue enhancer for the underlying business. Although the Company's current focus is on non-traditional franchise or license expansion, the Company will still seek to capitalize on other franchising opportunities as they present themselves. As a result of the Company's major focus being on non-traditional franchising and licensing, its requirements for overhead and operating costs are significantly less than if it were focusing on traditional franchising. In addition, the Company does not operate restaurants except for two restaurants it uses for product testing, demonstration and training purposes. This allows for a more complete focus on selling and servicing franchises and licenses to pursue increased unit growth. Licensing and Franchising the Company's Take-N-Bake Program. In September 2009, the Company introduced a take-n-bake pizza as an addition to its menu offering. The take-n-bake pizza is designed as a stand-alone offering for grocery stores and an add-on component for new and existing convenience store franchisees or licensees and/or stand-alone franchise locations. Since the Company started offering take-n-bake pizza to grocery store chains in September 2009, through November 6, 2012, the Company has signed agreements for approximately 1,350 grocery store locations to operate the take-n-bake pizza program and has opened 12
the take-n-bake pizza program in approximately 1,010 of those locations. The Company is currently in discussions with numerous grocery store operators for additional take-n-bake locations. Beginning in August 2011, the Company introduced six new "Signature Specialty Take-N-Bake Pizza" combinations to its current standard offerings. These pizzas feature unique, fun combinations of ingredients with proven customer appeal in other Company venues, and include Hawaiian pizza, Four Cheese pizza, BBQ Pork pizza, BBQ Chicken pizza, Hoppin' Jalapeno pizza and Parmesan Tomato pizza. The Company's strategy with these new combinations is to secure more shelf space in existing locations, to add appeal of the program in order to attract new locations, and to generally increase sales of the Company's products. To further accelerate the growth of take-n-bake pizza in grocery stores, the Company has focused on signing agreements with various grocery store distributors to market the take-n-bake pizza program to the distributors' current customer bases. As of November 6, 2012, the Company had signed 14 grocery distributors to the program, and continues to pursue others as well. Franchising the Company's Take-N-Bake Program for Stand-Alone Locations. The Company has recently developed a stand-alone take-n-bake pizza prototype and has entered into agreements with three separate existing franchisees to open a total of seven such units in the upcoming months. The first stand-alone Take-N-Bake Pizza location opened in Greenwood, Indiana, a suburb of Indianapolis, on October 29, 2012. The Company's stand-alone take-n-bake program features the chain's popular traditional Hand-Tossed Style pizza, Deep-Dish Sicilian pizza, SuperThin pizza and Noble Roman's famous breadsticks with spicy cheese sauce, all in a convenient cook-at-home format. Additional menu items include such items as fresh salads, cookie dough, cinnamon rounds, bake-able pasta and more. The Company is currently in discussions with other prospects for its stand-alone program and plans to commence advertising for additional franchisees in the near future. 2. Leverage the results of extensive research and development advances. The Company has invested significant time and effort to create what it considers to be competitive advantages in its products and systems for non-traditional and take-n-bake locations. The Company will continue to make these investments the focal point in its marketing process. The Company believes that the quality of its products, their cost-effectiveness, relatively simple production and service systems, and its diverse, modularized menu offerings all contribute to the Company's strategic attributes and growth potential. Every ingredient and process was designed with a view to producing superior results. The menu items were developed to be delivered in a ready-to-use form requiring only on-site assembly and baking except for take-n-bake pizza, which is sold to bake at home, and the carton-to-shelf retail items which require no assembly. The Company believes this process results in products that are great tasting, quality consistent, easy to assemble, and relatively low in food cost, and which require very low amounts of labor, thus allowing for a significant competitive advantage due to the speed at which its products can be prepared, baked and served to customers. For example, in convenience stores and travel plazas, at competitive retail prices, margins on Noble Roman's products, after cost of product and royalty, can range to approximately 65% to 70%. The Company believes it maintains a competitive advantage in product cost by using carefully selected independent third-party manufacturers and independent third-party distributors. This allows the Company to contract for proprietary products and services with highly efficient suppliers that have the potential of keeping costs low compared to typical competing systems whereby the franchisor owns and operates production and distribution systems much less efficiently. 13
3. Expand the Company's overall capacity to generate new franchises and licenses. The Company's Chairman and CEO has assumed the lead position at all of the Company's trade shows across the country, which is the primary means for demonstrating its product and system advantages to thousands of prospective non-traditional and grocery operators. This focus by the Company's CEO has underscored the Company's current, overriding orientation towards new revenue generation. 4. Aggressively communicate the Company's competitive advantages to its target market of potential franchisees and licensees. The Company utilizes four basic methods of reaching potential franchisees and licensees and to communicate its product and system advantages. These methods include: 1) calling from both acquired and in-house prospect lists; 2) frequent direct mail campaigns to targeted prospects; 3) web-based lead capturing; and 4) live demonstrations at trade and food shows. In particular, the Company has found that conducting live demonstrations of its systems and products at selected trade and food shows across the country allows it to demonstrate advantages that can otherwise be difficult for a potential prospect to visualize. There is no substitute for actually tasting the difference in a product's quality to demonstrate the advantages of the Company's products. The Company carefully selects the national and regional trade and food shows where it either has an existing relationship or considerable previous experience to expect that they offer opportunities for fruitful lead generation. Business Operations ------------------- Distribution ------------ Primarily all of the Company's products are manufactured pursuant to the Company's recipes and formulas by third-party manufacturers under contracts between the Company and its various manufacturers. These contracts require the manufacturers to produce products with various specifications and sell them to Company-approved distributors at a price negotiated between the Company and the manufacturer. At present, the Company has distribution agreements with 12 primary distributors strategically located throughout the United States. The distribution agreements require the primary distributors to maintain adequate inventories of all products necessary to meet the needs of the Company's franchisees and licensees for weekly deliveries to the franchisee/licensee locations plus the grocery store distributors in their respective territories. Each of the primary distributors purchases the products from the manufacturer, under payment terms agreed upon by the manufacturer and the distributor, and distribute the ingredients to the franchisee/licensee at a price fixed by the distribution agreement, which is landed cost plus a contracted mark-up for distribution. Payment terms to the distributor are agreed upon between each franchisee/licensee and the respective distributor. In addition, the Company has agreements with 14 grocery store distributors located in various parts of the country which agree to buy their products from one of the primary distributors to distribute take-n-bake products to their grocery store customers. 14
Franchising ----------- The Company sells franchises into various non-traditional and traditional venues. The initial franchise fees are as follows: ----------------------------------------------------------------------------------------- Non-Traditional, Traditional Franchise except Hospitals Hospitals Stand-Alone ----------------------------------------------------------------------------------------- Noble Roman's Pizza $ 6,000 $10,000 $15,000 ----------------------------------------------------------------------------------------- Tuscano's Subs $ 6,000 $10,000 $15,000 ----------------------------------------------------------------------------------------- Noble Roman's & Tuscano's $10,000 $18,000 $18,000 ----------------------------------------------------------------------------------------- Noble Roman's Stand-Alone Take-N-Bake $15,000 ----------------------------------------------------------------------------------------- The franchise fees are paid upon signing the franchise agreement and, when paid, are deemed fully earned and non-refundable in consideration of the administration and other expenses incurred by the Company in granting the franchises and for the lost and/or deferred opportunities to grant such franchises to any other party. Licensing --------- Noble Roman's Take-n-Bake Pizza licenses for grocery stores are governed by a supply agreement. The supply agreement generally requires the licensee to: purchase proprietary ingredients from a Noble Roman's-approved distributor; assemble the products using only Noble Roman's approved ingredients and recipes; and display products in a manner approved by Noble Roman's using Noble Roman's point-of-sale marketing materials. Pursuant to the distribution agreements, the distributors place an additional mark-up, as determined by the Company, above their normal selling price, on the key ingredients for a fee to the Company in lieu of royalty. The distributors agree to segregate this additional mark-up upon invoicing the licensee, hold the amount in trust for the Company and remit such fees to the Company within ten days after the end of each month. Financial Summary ----------------- The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates. The Company periodically evaluates the carrying values of its assets, including property, equipment and related costs, accounts receivable and deferred tax assets, to assess whether any impairment indications are present due to (among other factors) recurring operating losses, significant adverse legal developments, competition, changes in demand for the Company's products or changes in the business climate that affect the recovery of recorded value. If any impairment of an individual asset is evident, a charge will be provided to reduce the carrying value to its estimated fair value. 15
The following table sets forth the percentage relationship to total revenue of the listed items included in Noble Roman's consolidated statements of operations for the three-month and nine-month periods ended September 30, 2011 and 2012, respectively. Three Months Ended Nine Months Ended September 30, September 30, ------------ ------------ 2011 2012 2011 2012 ----- ----- ----- ----- Royalties and fees 92.1 % 93.7 % 92.3 % 93.3 % Administrative fees and other 0.2 0.3 0.4 0.3 Restaurant revenue 7.7 6.0 7.3 6.4 ----- ----- --- --- Total revenue 100.0 % 100.0 % 100.0 % 100.0 % ----- ----- ----- ----- Operating expenses: Salaries and wages 14.3 13.6 13.5 13.4 Trade show expense 4.4 7.0 4.8 6.7 Travel expense 2.9 2.5 2.8 2.5 Other operating expense 9.4 9.2 9.6 9.3 Restaurant expenses 7.8 5.4 7.1 6.0 Depreciation and amortization 2.0 1.5 1.6 1.6 General and administrative 22.9 21.4 22.2 21.2 ----- ----- ---- ---- Total expenses 63.7 60.6 61.6 60.7 ----- ----- ---- ---- Operating income 36.3 39.4 38.4 39.3 Interest and other expense 5.6 3.3 5.4 6.4 ----- ----- --- --- Income before income taxes 30.7 36.1 33.0 32.9 Income tax expense 12.1 14.3 13.1 13.0 ----- ----- ---- ---- Net income 18.6 % 21.8 % 19.9 % 19.9 % ===== ===== ==== ==== Results of Operations --------------------- Total revenue increased from $1.77 million to $1.84 million and from $5.45 million to $5.58 million for the respective three-month and nine-month periods ended September 30, 2012 compared to the corresponding periods in 2011. Franchisee fees and equipment commissions ("upfront fees") increased from $39,500 to $163,000 and increased from $185,000 to $311,000 during the respective three-month and nine-month periods ended September 30, 2012 compared to the corresponding periods in 2011. Royalties and fees, less upfront fees, remained approximately the same at $1.56 million for the three-month periods ended September 30, 2012 and 2011, and increased from $4.85 million to $4.89 million for the nine-month period ended September 30, 2012 compared to the corresponding periods in 2011. The breakdown of royalties and fees less upfront fees: royalties and fees from non-traditional franchises other than grocery stores were $1.04 million and $3.20 million for the three-month and nine-month periods ended September 30, 2012, and $971,000 and $3.13 million for the three-month and nine-month periods ended September 30, 2011, respectively; royalties and fees from the grocery store take-n-bake were $350,000 and $1.05 million for the three-month and nine-month periods ended September 30, 2012 and $325,000 and $873,000 for the three-month and nine-month periods ended September 30, 2011, respectively; and royalties and fees from traditional locations were $179,000 and $640,000 for the three-month and nine-month periods ended September 30, 2012, and $288,000 and $838,000 for the three-month and nine-month periods ended September 30, 2011, respectively. Included in royalties and fees from traditional locations were $100,000 and $400,000 for the three-month and nine-month periods ended September 30, 2012, and $200,000 and $600,000 for the three-month and nine-month periods ended September 30, 2011, respectively, for royalties and fees recognized as collectible from traditional locations which are no longer operating. 16
Restaurant revenue decreased from $139,000 to $111,000 and from $395,000 to $359,000 for the respective three-month and nine-month periods ended September 30, 2012 compared to the corresponding periods in 2011. The decreases were a result of same store sales decreases. The Company only operates two locations primarily for testing and demonstration purposes. Salaries and wages decreased, as a percentage of total revenue, from 14.3% to 13.6% and from 13.5% to 13.4% for the respective three-month and nine-month periods ended September 30, 2012 compared to the corresponding periods in 2011. The decreases were primarily the result of revenue increases. The amount of salaries and wages decreased slightly from $252,000 to $250,000 for the three-month period ended September 30, 2012 compared to the corresponding period in 2011, and increased from $737,000 to $747,000 for the nine-month period ended September 30, 2012 compared to the corresponding period in 2011. Trade show expenses increased from 4.4% to 7.0% of total revenue and from 4.8% to 6.7% of total revenue for the three-month and nine-month periods ended September 30, 2012, respectively, compared to the corresponding periods in 2011. These increases were the result of scheduling more trade shows for marketing to grocery stores. Travel expenses decreased from 2.9% to 2.5% of total revenue and from 2.8% to 2.5% of total revenue for the three-month and nine-month periods ended September 30, 2012, respectively, compared to the corresponding periods in 2011. The amount of travel expense decreased from $51,000 to $46,000 and from $150,000 to $141,000 for the respective three-month and nine-month periods ended September 30, 2012 compared to the corresponding periods in 2011. The decreases were partially the result of increased revenue and partially the result of efficiency in scheduling openings in groups by region of the country. Other operating expenses decreased, as a percentage of total revenue, from 9.4% to 9.2% and from 9.6% to 9.3% for the three-month and nine-month periods ended September 30, 2012, respectively, compared to the corresponding periods in 2011. The amount of operating expenses increased from $165,000 to $170,000 for the three-month period ended September 30, 2012 compared to the corresponding period in 2011, and remained constant at $521,000 for the nine-month periods ended September 30, 2012 and 2011. This reflected management's effort to tightly control operating expenses while increasing revenue. Restaurant expenses decreased as a percentage of total revenue from 7.8% to 5.4% and from 7.1% to 6.0% for the three-month and nine-month periods ended September 30, 2012, respectively, compared to the corresponding periods in 2011. The decrease was primarily a result of the restaurant revenue decrease and as a result of the increase in total revenue. The Company only operates two restaurants which it uses for demonstration, training and testing purposes. General and administrative expenses decreased as a percentage of total revenue from 22.9% to 21.4% and from 22.2% to 21.2% for the three-month and nine-month periods ended September 30, 2012, respectively, compared to the corresponding periods in 2011. The amount of general and administrative expenses decreased from $405,000 to $394,000 and from $1.22 million to $1.18 million for the three-month and nine-month periods ended September 30, 2012, respectively, compared to the corresponding periods in 2011. The decrease in general and administrative expense was primarily the result of tightly controlling costs. 17
Total expenses decreased as a percentage of total revenue from 63.7% to 60.6% and from 61.6% to 60.7% for the three-month and nine-month periods period ended September 30, 2012, respectively, compared to the corresponding periods in 2011. The amount of total actual expenses was $1.12 million and $1.12 million, and $3.36 million and $3.38 million, respectively, for the three-month and nine-month periods ended September 30, 2012, respectively, compared to the corresponding periods in 2011. The decrease in total expenses as a percentage of total revenue was primarily the result of increases in total revenue. Trade show expenses in both the three-month and nine-month periods in 2012 compared to the corresponding periods in 2011 increased, but were offset by decreases in other expense categories. Operating income increased as a percentage of total revenue from 36.3% to 39.4% and from 38.4% to 39.3% for the three-month and nine-month periods ended September 30, 2012, respectively, compared to the corresponding periods in 2011. Actual operating income increased from $641,000 to $726,000 and from $2.09 million to $2.19 million for the three-month and nine-month periods ended September 30, 2012, respectively, compared to the corresponding periods in 2011. Interest expense decreased as a percentage of total revenue from 5.6% to 3.3% for the three-month period ended September 30, 2012 compared to the corresponding period in 2011, and increased from 5.4% to 6.4% for the nine-month period ended September 30, 2012 compared to the corresponding period in 2011. The decrease in the three-month period was primarily the result of the re-financing of the Company's debt that was completed in the second quarter at a lower effective rate. The increase for the nine-month period was primarily the result of the Company expensing $93,000 in the unamortized loan closing costs from the origination of the former bank loan at the time the loan was repaid and recording expense of $30,000 to terminate the former interest rate swap agreement related to the loan which was repaid. Net income from continuing operations increased from $328,000 to $402,000 and from $1.08 million to $1.11 million for the respective three-month and nine-month periods ended September 30, 2012, compared to the corresponding periods in 2011. The Company recorded a loss from discontinued operations net of tax benefit of $316,000 in both the three-month and nine-month periods ended September 30, 2011 and none for the corresponding periods in 2012. Liquidity and Capital Resources ------------------------------- The Company's current strategy is to grow its business by concentrating on franchising/licensing new non-traditional locations, licensing grocery stores to sell take-n-bake pizza and other retail products, and franchising stand-alone take-n-bake locations. This strategy is intended to not require any significant increase in expenses. The Company previously announced that by developing the take-n-bake concept, which it has been distributing through grocery stores, it created a stand-alone take-n-bake concept for revenue growth opportunity. The Company has signed agreements for seven such locations, the first of which opened on October 29, 2012, while the other six remain under development and are expected to open soon. The strategy is to franchise the stand-alone take-n-bake products, which the Company believes can be done within its existing overhead structure. Additionally, the Company does not operate any restaurants except for two locations for testing and demonstration purposes. This strategy requires limited overhead and operating expense and does not require significant capital investment. 18
The Company's current ratio was 2.8-to-1 on September 30, 2012 compared to 0.8-to-1 on December 31, 2011. This significant improvement was achieved by refinancing all of its debt into one 48-month term loan and the continued net income from operating activities. On May 15, 2012, the Company entered into a Credit Agreement with a bank for a term loan in the amount of $5.0 million which is repayable in 48 equal monthly principal installments of $104,000 plus interest commencing on June 15, 2012 with a final payment due on May 15, 2016. Interest on the unpaid principal balance is payable at a rate per annum of LIBOR plus 4%. The proceeds from the term loan, net of certain fees and expenses associated with obtaining the term loan, were used to repay existing bank indebtedness and borrowing from an officer of the Company. As a result of the financial arrangements described above and the Company's cash flow projections, the Company believes it will have sufficient cash flow to meet its obligations and to carry out its current business plan for the foreseeable future. The Company's cash flow projections are based on the Company's strategy of focusing on growth in non-traditional venues, growth in the number of grocery store locations licensed to sell the take-n-bake pizza, and the anticipated growth from franchising the new stand-alone take-n-bake locations. The Company does not anticipate that any of the recently issued Statement of Financial Accounting Standards will have a material impact on its Statement of Operations or its Balance Sheet. Forward Looking Statements -------------------------- 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, non-renewal of franchise agreements, shifts in market demand, general economic conditions, changes in demand for the Company's products or franchises, the success or failure of individual franchisees and changes in prices or supplies of food ingredients and labor, the success of its recently developed stand-alone take-n-bake concept, and the factors discussed under "Risk Factors" as contained in the Company's annual report on Form 10-K. 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's exposure to interest rate risk relates primarily to its variable-rate debt. As of September 30, 2012, the Company had outstanding variable interest-bearing debt in the aggregate principal amount of $4.6 million. The Company's current borrowings are at a variable rate tied to the London Interbank Offered Rate ("LIBOR") plus 4% per annum adjusted on a monthly basis. Based on its current debt structure, for each 1% increase in LIBOR the Company would incur increased interest expense of approximately $39,600 over the succeeding twelve-month period. 19
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 and internal controls over financial reporting (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. PART II - OTHER INFORMATION ITEM 1. Legal Proceedings. 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 Court issued an Order dated December 23, 2010 granting summary judgment in favor of the Company against all of the Plaintiffs. As a result, the Plaintiffs' allegations of fraud against the Company and certain of its officers were determined to be without merit. Plaintiffs filed numerous motions and an appeal to the Indiana Court of Appeals, in an attempt to reverse the December 23, 2010 summary judgment. All of the motions were denied and the Indiana Court of Appeals dismissed the appeal with prejudice. Plaintiffs' last attempt to vacate the summary judgment award was their attempt to vacate the Order on the grounds of misconduct of third parties. On December 1, 2011, the Judge denied their motion and specifically found "that there was absolutely no evidence of misconduct" and the Court admonished Plaintiffs and Plaintiffs' counsel for making such unfounded allegations. The fraud charges against the Company and certain of its officers are dismissed entirely and Plaintiffs have exhausted their rights of appeal. The Company then filed a motion for sanctions against the Plaintiffs and their attorney for the frivolous filings and that motion was granted by the Court. The sanctions were not paid and the Company filed a motion for contempt of court or to show cause and the Court has not yet ruled on that motion. The Company's counterclaims against the Plaintiffs for breach of contract remain pending as to amount of damages, however the Company has been granted summary judgment as to liability. The Complaint was originally against the Company and certain officers and institutional lenders. The Plaintiffs are former franchisees of the Company's traditional location venue. The Plaintiffs alleged that the Defendants fraudulently induced them to purchase franchises for traditional locations through misrepresentations and omissions of material facts regarding the franchises. In addition to the above claims, one group of franchisee-Plaintiffs in the same case had asserted a separate claim under the Indiana Franchise Act as to which the Court's Order denied the Company's motion for summary judgment as the Court determined that there is a genuine issue of material facts, but did not express any opinion on the merits of the claim. The Company denies any liability on the Indiana Franchise Act claim and will continue to vigorously defend against this claim. The Company filed counterclaims for damages for breach of contract against all of the Plaintiffs in the approximate amount of $3.6 million plus attorneys' fees, interest and other costs of collection, or a total of over $5 million. On September 21, 2011, the Company filed motions for partial summary judgment as to liability against the Plaintiffs on the Company's counterclaims. As a result, the Company was granted partial summary judgment as to liability against the Plaintiffs/Counterclaim-Defendants on the Company's counterclaims against the 20
Plaintiffs. In this partial summary judgment, the Court determined that the Plaintiffs were liable to the Company for direct damages and consequential damages, including future royalties, for breach of their franchise agreements. In addition, the Court determined that, as a matter of law, Noble Roman's was entitled to recover attorneys' fees associated with obtaining preliminary injunctions, fees resulting from the prosecution of Noble Roman's counterclaims and fees for defending against fraud claims against the Company and certain of its officers. The amount of the award is to be determined at trial. The trial began on October 30, 2012 on the one franchisee-Plaintiff's claim under the Indiana Franchise Act and the Company's counterclaims for damages against all of the Plaintiffs remaining in the case. As of the date of this report, the trial is still proceeding. The Judge has indicated, upon completion of the trial, he will rule on the amount of attorney's fees owed to the Company by the Plaintiffs. ITEM 6. Exhibits. (a) Exhibits: See Exhibit Index appearing on page 23. 21
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: November 8, 2012 By: /s/ Paul W. Mobley --------------------------------- Paul W. Mobley, Chairman, Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer (Authorized Officer and Principal Financial Officer) 22
Index to Exhibits Exhibit Number Description ------ ----------- 3.1 Amended Articles of Incorporation of the Registrant, filed as an exhibit to the Registrant's Amendment No. 1 to the Post Effective Amendment No. 2 to Registration Statement on Form S-1 filed July 1, 1985 (SEC File No.2-84150), is incorporated herein by reference. 3.2 Amended and Restated By-Laws of the Registrant, as currently in effect, filed as an exhibit to the Registrant's Form 8-K filed December 23, 2009, is incorporated herein by reference. 3.3 Articles of Amendment of the Articles of Incorporation of the Registrant effective February 18, 1992 filed as an exhibit to the Registrant's Registration Statement on Form SB-2 (SEC File No. 33-66850), ordered effective on October 26, 1993, is incorporated herein by reference. 3.4 Articles of Amendment of the Articles of Incorporation of the Registrant effective May 11, 2000, filed as Annex A and Annex B to the Registrant's Proxy Statement on Schedule 14A filed March 28, 2000, is incorporated herein by reference. 3.5 Articles of Amendment of the Articles of Incorporation of the Registrant effective April 16, 2001 filed as Exhibit 3.4 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2005, is incorporated herein by reference. 3.6 Articles of Amendment of the Articles of Incorporation of the Registrant effective August 23, 2005, filed as Exhibit 3.1 to the Registrant's current report on Form 8-K filed August 29, 2005, is incorporated herein by reference. 4.1 Specimen Common Stock Certificates filed as an exhibit to the Registrant's Registration Statement on Form S-18 filed October 22, 1982 and ordered effective on December 14, 1982 (SEC File No. 2-79963C), is incorporated herein by reference. 4.2 Form of Warrant Agreement filed as Exhibit 4.1 to the Registrant's current report on Form 8-K filed August 29, 2005, is incorporated herein by reference. 10.1 Employment Agreement with Paul W. Mobley dated January 2, 1999 filed as Exhibit 10.1 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2005, is incorporated herein by reference. 10.2 Employment Agreement with A. Scott Mobley dated January 2, 1999 filed as Exhibit 10.2 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2005, is incorporated herein by reference. 23
10.3 1984 Stock Option Plan filed with the Registrant's Form S-8 filed November 29, 1994 (SEC File No. 33-86804), is incorporated herein by reference. 10.4 Noble Roman's, Inc. Form of Stock Option Agreement filed with the Registrant's Form S-8 filed November 29, 1994 (SEC File No. 33-86804), is incorporated herein by reference. 10.5 Settlement Agreement with SummitBridge dated August 1, 2005, filed as Exhibit 99.2 to the Registrant's current report on Form 8-K filed August 5, 2005, is incorporated herein by reference. 10.6 Loan Agreement with Wells Fargo Bank, N.A. dated August 25, 2005 filed as Exhibit 10.1 to the Registrant's current report on Form 8-K filed August 29, 2005, is incorporated herein by reference. 10.7 First Amendment to Loan Agreement with Wells Fargo Bank, N.A. dated February 4, 2008, filed as Exhibit 10.1 to the Registrant's current report on Form 8-K filed February 8, 2008, is incorporated herein by reference. 10.8 Registration Rights Agreement dated August 1, 2005 between the Company and SummitBridge National Investments filed as an Exhibit to the Registrant's Form S-1 filed on April 19, 2006, is incorporated herein by reference. 10.9 Second Amendment to Loan Agreement with Wells Fargo Bank, N.A. dated November 10, 2010 filed as Exhibit 10.7 to the Registrant's current report on Form 10-Q filed on November 10, 2010, is incorporated herein by reference. 10.10 Third Amendment to Loan Agreement with Wells Fargo Bank, N.A. dated March 10, 2011, filed as Exhibit 10.10 to the Registrant's current report on Form 10-K filed on March 13, 2012, is incorporated herein by reference. 10.11 Promissory Note payable to Paul Mobley dated November 1, 2010 filed as Exhibit 10.8 to the Registrant's current report on Form 10-Q filed November 10, 2010, is incorporated herein by reference. 10.12 Fourth Amendment to Loan Agreement with Wells Fargo Bank, N.A. dated July 19, 2011, filed as Exhibit 10.12 to the Registrant's current report on Form 10-K filed on March 13, 2012, is incorporated herein by reference. 10.13 Fifth Amendment to Loan Agreement with Wells Fargo Bank, N.A. dated October 28, 2011, filed as Exhibit 10.13 to the Registrant's current report on Form 10-K filed on March 13, 2012, is incorporated herein by reference. 10.14 Sixth Amendment to Loan Agreement with Wells Fargo Bank, N.A. dated December 1, 2011, filed as Exhibit 10.14 to the Registrant's current report on Form 10-K filed on March 13, 2012, is incorporated herein by reference. 24
10.15 Seventh Amendment to Loan Agreement with Wells Fargo Bank, N.A. dated January 30, 2012, filed as Exhibit 10.15 to the Registrant's current report on Form 10-K filed on March 13, 2012, is incorporated herein by reference. 10.16 Amended Promissory Note to Paul Mobley dated December 21, 2011, filed as Exhibit 10.16 to the Registrant's current report on Form 10-K filed on March 13, 2012, is incorporated herein by reference. 10.17 Credit Agreement with BMO Harris Bank, N.A. dated May 15, 2012 filed as Exhibit 10.17 to the Registrant's current report on Form 10-Q filed on August 13, 2012, is incorporated herein by reference. 10.18 Promissory Note to BMO Harris Bank, N.A. dated May 15, 2012 filed as Exhibit 10.18 to the Registrant's current report on Form 10-Q filed on August 13, 2012, is incorporated herein by reference. 21.1 Subsidiaries of the Registrant filed in the Registrant's Registration Statement on Form SB-2 (SEC File No. 33-66850) ordered effective on October 26, 1993, is incorporated herein by reference. 31.1 C.E.O. and C.F.O. Certification under Rule 13a-14(a)/15d-14(a) 32.1 C.E.O. and C.F.O. Certification under Section 1350 101 Interactive Financial Data 2