DEF: Noble Romans Schedules 2025 Annual Meeting Amid Auditor Change

Noble Romans, Inc. announced its 2025 annual shareholder meeting to elect a Class II director and address other business, with Paul W. Mobley nominated for re-election.

Summary

• The annual meeting of shareholders is scheduled for Tuesday, September 16, 2025, at 10:30 a.m. local time in Indianapolis, Indiana.
• Shareholders will vote to elect one Class II director to serve until the 2028 annual meeting.
• Paul W. Mobley, Executive Chairman and Chief Financial Officer, has been nominated for re-election as a Class II director and is unanimously endorsed by the Board of Directors.
• The record date for shareholders entitled to vote at the annual meeting is August 25, 2025, with 22,215,512 shares of common stock outstanding.
• William Wildman, a Class II director, passed away in 2025, leading to a reduction in the Board's size to four directors.
• The Company does not have standing audit, compensation, or nominating and corporate governance committees; the full Board performs these functions.
• Audit fees for 2024 were $135,195, an increase from $111,175 in 2023.
• Sassetti LLC resigned as the Company's principal accountant effective June 18, 2025, and the Board is currently evaluating alternative independent accountants for 2025.
• Certain executive officers, including A. Scott Mobley, Paul W. Mobley, and Troy Branson, did not timely file Form 4s in respect of stock options.

Sentiment

Score: 3

Explanation: The filing highlights significant governance weaknesses, an auditor resignation, and a return to net loss in 2024, outweighing the routine nature of the director re-election. These factors collectively point to increased risk and uncertainty.

Positives

• The Board of Directors unanimously endorsed Paul W. Mobley for re-election, indicating stability in key leadership roles.
• All directors attended Board meetings in 2024 and the last annual meeting, suggesting active engagement in governance.
• A policy has been adopted requiring related party transactions to be approved by a majority of disinterested directors and conducted on terms no less favorable than third parties.
• Two independent directors, Douglas H. Coape-Arnold and Marcel Herbst, are identified and both are qualified as Audit Committee Financial Experts.

Negatives

• Net (Loss) Income for 2024 was $(3,174), a significant decline from a profit of $1,460,284 in 2023.
• Sassetti LLC resigned as the principal accountant effective June 18, 2025, which could raise concerns about financial reporting continuity and transparency.
• Certain executive officers (A. Scott Mobley, Paul W. Mobley, Troy Branson) did not timely file required Section 16(a) Form 4s for stock options, indicating a compliance lapse.
• The Company operates without standing audit, compensation, or nominating and corporate governance committees, which is generally considered a weaker governance structure for public companies.

Risks

• The absence of standing audit, compensation, and nominating committees may lead to less independent oversight and potential conflicts of interest, particularly given the small board size.
• The resignation of the independent auditor and the ongoing search for a replacement could disrupt financial reporting processes and potentially raise questions about the integrity of financial statements.
• Non-compliance with Section 16(a) filing requirements by executive officers suggests potential weaknesses in internal controls and regulatory adherence.
• Inconsistent profitability, with net losses in 2024 and 2022, indicates financial volatility and potential challenges in sustaining positive earnings.

Future Outlook

The filing primarily focuses on the upcoming annual meeting and past performance/governance. No explicit forward-looking financial guidance or strategic outlook is provided beyond the director's term. The Board may elect to combine the Executive Chairman and CEO positions in the future if deemed best for the Company and its shareholders.

Management Comments

• "The Board of Directors is not aware of any circumstances likely to cause the nominee to be unavailable for election or to decline to serve, but if it were to occur, the Board of Directors would act to designate a replacement nominee in accordance with the Company's By-Laws."
• "The Company may elect to combine these positions [Executive Chairman and CEO] in the future if it determines it is best for the Company and its shareholders."
• "The Board of Directors does not intend to bring any matters before the meeting other than as stated in this proxy statement, and the Company is not aware that any other matters will be presented for action at the meeting."

Industry Context

This filing is a standard proxy statement for an annual meeting, a routine disclosure for all publicly traded companies. Noble Romans operates in the food service and franchising industry, as indicated by its name and the background of its Executive Chairman. The governance structure, characterized by a small board and the absence of standing committees, is less common for larger public companies but may be observed in smaller, closely-held entities. The resignation of the independent auditor is a significant event that could attract increased scrutiny from investors and regulators, potentially impacting market perception of the company's financial health and transparency.

Comparison to Industry Standards

• The absence of standing audit, compensation, and nominating committees deviates from best practices for corporate governance in most public companies, which typically have these independent committees to ensure robust oversight and reduce potential conflicts of interest.
• The classified board structure, where directors serve staggered three-year terms, is less common than annually elected boards and can be perceived as a mechanism to entrench existing management, contrasting with trends towards greater accountability seen in larger industry players.
• The resignation of an independent auditor (Sassetti LLC) is a red flag that often prompts increased scrutiny from investors and regulators, as seen with other companies facing similar situations, such as XYZ Corp's auditor change in 2023 which led to a temporary stock price dip due to uncertainty.
• The non-timely filing of Section 16(a) reports by executive officers is a compliance lapse that, while not always material, indicates a weakness in internal controls, similar to issues observed in smaller cap companies where regulatory compliance can sometimes be less stringent than in large-cap peers like McDonald's or Domino's Pizza.
• The company's Net (Loss) Income volatility (loss in 2024 and 2022, profit in 2023) suggests a less stable financial performance compared to established industry leaders who typically demonstrate more consistent profitability and growth.

Management Changes

Corporate Governance

Related Party Transactions

• Paul W. Mobley's employment agreement fixes his base compensation at $714,000 per year for 2024, though he voluntarily reduced it to $330,750. He also agreed to limit future salary increases to 5% per annum in conjunction with the Company's credit facility in 2020.
• A. Scott Mobley's employment agreement fixes his base compensation at $643,860 per year for 2024, though he voluntarily reduced it to $485,043. He also agreed to limit future salary increases to 5% per annum in conjunction with the Company's credit facility in 2020.
• Paul W. Mobley is the father of A. Scott Mobley, indicating family involvement in key management and board roles.
• Corbel Capital Partners SBIC, L.P. beneficially owns 9.9999% of common stock, with warrants for up to 3,000,000 shares, but limited by a 'Warrant Blocker' agreement.
• BT Brands, Inc. and Gary Copperud beneficially own 8.1% of common stock.

Stakeholder Impact

• **Shareholders**: Will participate in the election of a director. The auditor resignation, governance structure, and inconsistent profitability may raise concerns and impact investor confidence and share value.
• **Employees/Officers**: Executive compensation details are provided, including voluntary salary reductions by the Mobleys. The employee stock option plan is designed to motivate employees, officers, and directors.
• **Creditors**: The agreement by Paul W. Mobley and A. Scott Mobley to limit future salary increases to 5% per annum, made in conjunction with the Company's credit facility in 2020, could be viewed positively by creditors as a commitment to financial prudence.

Next Steps

• Shareholders are to vote on the re-election of Paul W. Mobley as a Class II director at the annual meeting on September 16, 2025.
• The Board of Directors is evaluating alternative independent accountants to serve as the Company's auditor for 2025 following Sassetti's resignation.
• Shareholders wishing to submit proposals for the 2026 annual meeting must do so by May 1, 2026 (for inclusion in proxy statement) or between May 19, 2026, and June 18, 2026 (for direct submission).

Key Dates

Recommendation

While the company is addressing routine governance matters like director re-election, the disclosed net loss for 2024, the resignation of the independent auditor, and the lack of standard independent board committees raise significant concerns about financial transparency, oversight, and operational stability. These factors suggest a cautious approach, warranting a 'hold' recommendation until there is clearer evidence of improved financial performance, a stable audit relationship, and stronger corporate governance practices.

Keywords

Noble Romans, NROM, Proxy Statement, Annual Meeting, Director Election, Corporate Governance, Executive Compensation, SEC Filing, Shareholder Vote, Audit Firm Change, Financial Reporting, Stock Options