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 September 30, 2003
Or
Transition report pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934 For the transition period from to
------- -------
Commission file number: 0-11104
NOBLE ROMAN'S, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-1281154
(State or other jurisdiction (I.R.S. Employer
of organization) Identification No.)
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 November 7, 2003, there were 16,166,158 shares of Common Stock, no par
value, outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
The following condensed consolidated financial statements are included
herein:
Notes to condensed consolidated financial statements Page 2
Condensed consolidated balance sheets as of December 31,
2002 and September 30, 2003 Page 3
Condensed consolidated statements of operations for the
three months and nine months ended September 30, 2002
and 2003 Page 4
Condensed consolidated statements of cash flows for the
nine months ended September 30, 2002 and 2003 Page 5
The interim condensed consolidated financial statements included herein reflect
all adjustments which are, in the opinion of management, necessary for a fair
statement of the results of operations for the interim periods presented and the
balance sheets for the dates indicated, which adjustments are of a normal
recurring nature.
Notes
- -----
Based on the Company's 2000, 2001 and 2002 operating results, its business plan,
the number of franchise units now open, the backlog of units sold to be opened,
the backlog of franchise prospects now in ongoing discussions and negotiations,
the Company's trends and the results of its operations thus far in 2003,
management has determined that it is more likely than not that the Company's
deferred tax credits will be fully utilized before the tax credits expire, the
majority of which expire between 2012 and 2016. Therefore, no valuation
allowance was established for its deferred tax asset. If unanticipated events
should occur in the future, the realization of all or some portion of the
Company's deferred tax asset could be jeopardized. The Company will continue to
evaluate the need for a valuation allowance on a quarterly basis.
The statements contained in Management's Discussion and Analysis concerning the
Company's future revenues, profitability, financial resources, market demand and
product development are forward-looking statements (as such term is defined in
the Private Securities Litigation Reform Act of 1995) relating to the Company
that are based on the beliefs of the management of the Company, as well as
assumptions and estimates made by and information currently available to the
Company's management. The Company's actual results in the future may differ
materially from those projected in the forward-looking statements due to risks
and uncertainties that exist including, but not limited to: competitive factors
and pricing pressures, shifts in market demand, general economic conditions and
other factors, including (but not limited to) changes in demand for the
Company's products or franchises, the impact of competitors' actions, and
changes in prices or supplies of food ingredients and labor. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions or
estimates prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated, expected or intended.
2
Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
Unaudited
December 31, September 30,
2002 2003
------------ ------------
Assets
Current assets:
Cash $ 13,180 $ 159,790
Accounts and notes receivable 1,107,551 1,233,295
Inventories 140,762 129,278
Prepaid expenses 345,818 551,724
Current portion of long-term notes receivable 58,618 145,004
Deferred tax asset - current portion 1,550,000 2,250,000
------------ ------------
Total current assets 3,215,929 4,469,091
Property and equipment:
Equipment 923,034 982,985
Leasehold improvements 86,229 86,229
------------ ------------
1,009,262 1,069,214
Less accumulated depreciation and amortization 373,301 421,997
------------ ------------
Net property and equipment 635,962 647,217
------------ ------------
Deferred tax asset 8,371,093 7,145,905
Other assets 1,377,761 1,867,244
------------ ------------
Total assets $ 13,600,744 $ 14,129,457
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 1,920,915 $ 978,873
Note payable to officer 65,840 65,840
Current portion of long-term notes payable 1,050,000 1,650,000
Deferred franchise fees 163,115 60,500
------------ ------------
Total current liabilities 3,199,870 2,755,213
------------ ------------
Long-term obligations:
Notes payable to bank - net of warrant value of $67,370
at December 31, 2002 and $12,659 at September 30, 2003 and
net of current portion 7,632,630 6,287,341
Subordinated debentures 2,040,000
Participating income notes - net of warrant valuation of $22,917
at December 31, 2002 and $0 at September 30, 2003 1,599,883 859,060
------------ ------------
Total long-term liabilities 9,232,513 9,186,401
------------ ------------
Stockholders' equity:
Common stock (25,000,000 shares authorized, 16,166,158 outstanding
at December 31, 2002 and 16,166,158 as of September 30, 2003) 17,789,452 17,789,452
Preferred stock (5,000,000 shares authorized) 4,929,274 4,929,274
Accumulated deficit (21,550,365) (20,530,883)
------------ ------------
Total stockholders' equity 1,168,361 2,187,842
------------ ------------
Total liabilities and stockholders' equity $ 13,600,744 $ 14,129,457
============ ============
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,
-------------------------- --------------------------
2002 2003 2002 2003
----------- ----------- ----------- -----------
Revenue:
Royalties and fees $ 1,481,736 $ 1,695,459 $ 4,080,473 $ 4,890,068
Administrative fees and other 49,290 50,192 223,678 137,036
Restaurant revenue 253,805 238,367 503,078 664,889
----------- ----------- ----------- -----------
Total revenue 1,784,831 1,984,018 4,807,228 5,691,993
Operating expenses:
Salaries and wages 282,170 286,034 798,430 812,111
Trade show expense 51,142 84,020 159,995 241,920
Travel expense 66,986 61,887 171,382 148,754
Other operating expenses 171,909 179,828 444,119 530,455
Restaurant expenses 255,697 234,105 482,369 652,803
Depreciation and amortization 14,532 16,232 43,136 48,696
General and administrative 321,534 326,281 913,395 944,216
----------- ----------- ----------- -----------
Operating income 620,862 795,631 1,794,402 2,313,037
Interest and other expense 334,840 254,844 957,513 768,368
----------- ----------- ----------- -----------
Income before income tax 286,021 540,787 836,889 1,544,669
Income tax 97,247 183,867 284,542 525,187
----------- ----------- ----------- -----------
Net income $ 188,774 $ 356,919 $ 552,347 $ 1,019,481
=========== =========== =========== ===========
Earnings per share:
Net income $ .01 $ .02 $ .03 $ .06
Weighted average number of common shares outstanding 16,051,158 16,166,158 16,051,158 16,166,158
Fully diluted earnings per share:
Net income $ .01 $ .02 $ .03 $ .06
Weighted average number of common shares outstanding 17,015,481 17,157,632 17,015,481 17,157,632
See accompanying notes to condensed consolidated financial statements.
4
Noble Roman's, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
2002 2003
----------- -----------
OPERATING ACTIVITIES
Net income $ 552,347 $ 1,019,481
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 200,018 178,262
Deferred federal income taxes 284,542 525,187
Changes in operating assets and liabilities (increase) decrease in:
Accounts receivable (172,723) (125,744)
Inventory (35,882) 11,484
Prepaid expenses (81,081) (205,906)
Other assets (233,527) (522,724)
Increase (decrease) in:
Accounts payable 317,336 (578,489)
Deferred franchise fee 21,150 (102,615)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 852,179 198,936
INVESTING ACTIVITIES
Purchase of property and equipment (104,627) (59,952)
----------- -----------
NET CASH (USED) IN INVESTING ACTIVITIES (104,627) (59,952)
FINANCING ACTIVITIES
Net proceeds from issuance of subordinated debentures -- 1,934,919
Payment of obligations for discontinued operations (759,602) (363,553)
Payment of principal on outstanding debt -- (1,563,740)
----------- -----------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (759,602) 7,626
----------- -----------
INCREASE (DECREASE) IN CASH (12,050) 146,610
Cash at beginning of period 25,203 13,180
----------- -----------
Cash at end of period $ 13,153 $ 159,790
=========== ===========
Supplemental schedule of non-cash investing and financing activities
None.
See accompanying notes to condensed consolidated financial statements.
5
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Noble Roman's, Inc. and Subsidiaries
Results of Operations - Three-month and nine-month periods ended September 30,
2002 and 2003
Introduction
- ------------
Over the last several years, given the potential size of the opportunities in
the non-traditional and co-branding segments of the industry, the Company made
the strategic decision to focus its business on franchising to non-traditional
and co-branding locations and away from operating full-service, traditional
restaurants. During 2000, the Company completed that transition and all of its
full-service, traditional restaurants are now franchised.
The franchise program for non-traditional and co-brand locations was developed
and launched in 1997. The Company has awarded franchises in 44 states plus
Washington, D.C., Guam, Puerto Rico, Italy and Canada. The program was designed
based on the Company's reputation for superior tasting pizza products. It is a
complete foodservice program, although primarily focused on pizza, and the
concept can be tailored easily for the different venues and for different
locations within a venue. The systems are designed to provide excellent taste
and quality with simplicity and cost effectiveness. Operations require minimal
training and low staffing levels, has a food cost structure that is very
attractive and carries a low investment cost, making the unit economics
attractive to the franchisee. The Company believes that franchising these type
facilities offers opportunities for substantial growth for the foreseeable
future.
The Company has been selling franchises in such non-traditional locations as
convenience stores, travel plazas, all types of entertainment facilities,
military bases, universities, airports, commercial facilities where there is
existing traffic, hotels and as a co-brand to other traditional restaurants.
Recently, the Company has expanded its venues to include retail foodservice to
hospitals. The Company believes the potential in this venue is excellent and
plans to open several such locations over the next several months.
The Company has more recently launched a variation of its concept called "Noble
Roman's Pizza Express". The purpose was to provide pizza-focused foodservice for
locations which want to add foodservice, but require something even simpler and
more space efficient than the Company's standard solution. A primary difference
is the use of either par-baked crusts, which require no live dough management,
or fully pre-topped pizzas, which arrive to the operator ready-to-bake. The
Company believes this foodservice solution offers a significant growth
opportunity and plans to further develop the concept and aggressively market it
nationwide.
Based on the Company's 2000, 2001 and 2002 operating results, its business plan,
the number of franchise units now open, the backlog of units sold to be opened,
the backlog of franchise prospects now in ongoing discussions and negotiations,
and the Company's trends and the results of its operations thus far in 2003,
management has determined that it is more likely than not that the Company's
deferred tax credits will be fully utilized before the tax credits expire.
Therefore, no valuation allowance was established for its deferred tax asset. If
unanticipated events should occur
6
in the future, the realization of all or some portion of the Company's deferred
tax asset could be jeopardized. The Company will continue to evaluate the need
for a valuation allowance on a quarterly basis.
The following table sets forth the percentage relationship to total revenue of
the listed items included in Noble Roman's condensed consolidated statements of
operations for the three-month and nine-month periods ended September 30, 2002
and for September 30, 2003, respectively.
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2002 2003 2002 2003
---- ---- ---- ----
Revenue:
Royalties and fees 83.0% 85.5% 84.8% 85.9%
Administrative fees and other 2.8 2.5 4.7 2.4
Restaurant revenue 14.2 12.0 10.5 11.7
----- ----- ----- -----
Total revenue 100.0 100.0 100.0 100.0
Operating expenses:
Salaries and wages 15.8 14.4 16.7 14.3
Trade show expenses 2.9 4.2 3.3 4.3
Travel expense 3.8 3.1 3.6 2.6
Other operating expenses 9.6 9.1 9.2 9.3
Restaurant expenses 14.3 11.8 10.0 11.5
Depreciation and amortization .8 .8 .9 .9
General and administrative 18.0 16.4 19.0 16.6
----- ----- ----- -----
Operating income 34.8 40.1 37.3 40.6
Interest and other expense 18.8 12.8 19.9 13.5
----- ----- ----- -----
Net income before income tax 16.0% 27.3% 17.4% 27.1%
Income tax 5.4 9.3 5.9 9.2
----- ----- ----- -----
Net income 10.6% 18.0% 11.5% 17.9%
2003 Compared wth 2002
- ----------------------
Total revenue from royalties and fees increased from $1.48 million to $1.70
million and from $4.08 million to $4.89 million, respectively, for the
three-month and nine-month periods ended September 30, 2003 compared to the same
periods in 2002. That is a 14.4% and 19.8% growth, respectively, for the
three-month and nine-month periods ended September 30, 2003 as compared to the
same periods in 2002. Total revenue increased from $1.78 million to $1.98
million and from $4.81 million to $5.69 million, or an increase of 11.2% and
18.4%, respectively, for the three-month and nine-month periods ended September
30, 2003 compared to the same periods in 2002. The increase in the royalties and
fees was primarily the result of the growth in the number of franchise locations
open and the higher unit sales from some of the most recent openings. The
increase in total revenue was the result of the increase in royalties and fees
partially offset by decrease in administrative fees and other and the increase
in restaurant revenue as a result of operating three
7
locations on military bases until they are sold as franchise locations. The
Company only plans to operate these locations temporarily until a qualified
franchisee can be located.
Salaries and wages decreased from 15.8% and 16.7% of revenue for the three-month
and nine-month periods ended September 30, 2002 to 14.4% and 14.3%,
respectively, of revenue for the same periods in 2003. This decrease was the
result of the revenue increase from the continued growth in the number of
locations while utilizing approximately the same operational staff.
Trade show expense increased from 2.9% and 3.3% of revenue for the three-month
and nine-month periods ended September 30, 2002 to 4.2% and 4.3%, respectively,
of revenue for the same periods in 2003. This increase was a result of
participating in more national trade shows to attract franchisees from
additional venues to further diversify the Company's target market.
Travel expenses decreased from 3.8% and 3.6% of revenue for the three-month and
nine-month periods ended September 30, 2002 to 3.1% and 2.6%, respectively, of
revenue for the same periods in 2003. This decrease is a result of the growth in
revenue from continued growth in locations while utilizing approximately the
same employees and by locating operational staff in various parts of the country
to minimize travel costs.
Other operating expenses decreased from 9.6 % of revenue for the three-month
period ended September 30, 2002 to 9.1% of revenue for the same period in 2003.
Operating expenses increased for the nine-month period ended September 30, 2003
to 9.3% of revenue from 9.2% of revenue for the same period in 2002. This
increase in other operating expenses for the nine-month period is primarily the
result of an increase in group insurance costs, additional sales commissions
from the sale of new units and the increase in payroll taxes as a result of the
increase in commissions. The increases were mostly offset by the increase in
revenue. The decrease in the most recent three-month period was the result of
the growth in revenue more than offsetting the growth in expenses.
Restaurant expenses decreased from 14.3 % of revenue for the three-month period
ended September 30, 2002 to 11.8% of revenue for the same period in 2003.
Restaurant expenses increased for the nine-month period ended September 30, 2003
to 11.5% of revenue from 10.0% of revenue for the same period in 2002. This
increase in restaurant expenses for the nine-month period is the result of
operating three locations on military bases until they are sold as franchise
locations. These three military bases were first fully operated by Noble
Roman's, Inc. during the third quarter of 2002. The decrease in the most recent
three-month period was the primarily the result of better controls put into
place by the Company combined with the increases in revenue.
General and administrative expense decreased from 18.0% and 19.9% of revenue for
the three-month and nine-month periods ended September 30, 2002 to 16.4% and
16.6%, respectively, of revenue for the same periods in 2003. This decrease is
the result of the increased revenue utilizing approximately the same
administrative structure. The dollar amount of general and administrative
expenses only grew by 3.4% for the nine-month period ended September 30, 2003
compared to the same period in 2003 while revenue grew 18.4% during the same
time period.
Operating income increased from 34.8% and 37.3% of revenue for the three-month
and nine-month periods ended September 30, 2002 to 40.1% and 40.6%,
respectively, of revenue for the same periods in 2003. This increase was the
result of total revenue growing by 11.2% and 18.4%, respectively, for the
three-month and nine-month periods ended September 30, 2003 compared to
8
the same periods in 2002, while total operating expenses grew by 2.1% and 12.2%,
respectively, for the same time periods.
Interest expense decreased from 18.8% and 19.9% of revenue for the three-month
and nine-month periods ended September 30, 2002 to 12.8% and 13.5%,
respectively, of revenue for the same periods in 2003. This decrease was the
result of the revenue increases and the rate of interest on the participating
income notes decreasing from 7.5% of defined revenue to 2.5% of defined revenue.
Net income increased from approximately $189 thousand to $357 thousand and from
$552 thousand to $1.02 million, respectively, for the three-month and nine-month
periods ended September 30, 2003 compared to the same periods in 2002. That is a
89.1% and 84.6% growth, respectively, for the three-month and nine-month periods
ended September 30, 2003 as compared to the same periods in 2002. The primary
reason for this increase was the continued growth while maintaining
approximately the same operating and administrative structure. Management does
not believe that the operating and administrative structure will change
significantly from the continued growth in the foreseeable future except for
periodically adding an additional franchise consultant or other support staff.
Liquidity and Capital Resources
- -------------------------------
Over the last several years, given the potential size of the opportunities in
the non-traditional and co-branding market segments, the Company made the
strategic decision to refocus its business on franchising to non-traditional and
co-branding locations and away from operating full-service, traditional
restaurant locations. During 2000, the Company completed that transition and all
of its full-service, traditional restaurants are now franchised. The Company
continues to provide franchise services to the full-service franchises in much
the same fashion as it does with its non-traditional and co-branded franchises.
As a result of the Company's business strategy, it's cash flow generated from
operations and it's current and anticipated future rate of growth, the Company
believes it will have sufficient cash flow to meet its obligations and to carry
out its current business plan.
The statements contained in Management's Discussion and Analysis concerning the
Company's future revenues, profitability, financial resources, market demand and
product development are forward-looking statements (as such term is defined in
the Private Securities Litigation Reform Act of 1995) relating to the Company
that are based on the beliefs of the management of the Company, as well as
assumptions and estimates made by and information currently available to the
Company's management. The Company's actual results in the future may differ
materially from those projected in the forward-looking statements due to risks
and uncertainties that exist including, but not limited to: competitive factors
and pricing pressures, shifts in market demand, general economic conditions and
other factors, including (but not limited to) changes in demand for the
Company's products or franchises, the impact of competitors' actions, and
changes in prices or supplies of food ingredients and labor. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions or
estimates prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated, expected or intended.
9
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
The Company is involved in various litigation relating to claims
arising out of its normal business operations and relating to
restaurant facilities closed in 1997 and 2000. The Company believes
that none of its current proceedings, individually or in the
aggregate, will have a material adverse effect upon the Company beyond
the amount reserved in its financial statements.
ITEM 2. Changes in Securities.
None.
ITEM 3. Defaults Upon Senior Securities.
None.
ITEM 4. Submission of Matters to a Vote of Security Holders.
None.
ITEM 5. Other Information.
None.
ITEM 6. Exhibits and Reports on Form 8-K.
Exhibit 99.1 Certification of C.E.O.
Exhibit 99.2 Certification of C.F.O.
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOBLE ROMAN'S, INC.
Date: November 13, 2003 /s/ Paul Mobley
----------------- -------------------------------------
Paul W. Mobley, Chairman of the Board
11
I, Paul W. Mobley, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of Noble Roman's,
Inc.;
(2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
(4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 45 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
(5) The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
(6) The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date November 13, 2003 /s/ Paul W. Mobley
--------------------------------
Paul W. Mobley
Chief Executive Officer
Subscribed and sworn to before me this 13th day of November, 2003.
/s/ Linda L. Minett
--------------------------------
Linda L. Minett, Notary Public
My commission expires: 11/27/08
12
I, Paul W. Mobley, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of Noble Roman's,
Inc.;
(2) Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
(4) The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 45 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
(5) The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
(6) The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date November 13, 2003 /s/ Paul W. Mobley
--------------------------------
Paul W. Mobley
Chief Financial Officer
Subscribed and sworn to before me this 13th day of November, 2003.
/s/ Linda L. Minett
--------------------------------
Linda L. Minett, Notary Public
My commission expires: 11/27/08
13