Humpty's Restaurants International Inc. First Quarter 2008 Results

CALGARY, ALBERTA--(Marketwire - May 28, 2008) - Humpty's Restaurants International Inc. (TSX VENTURE:HMP) today released financial results for the 3-month period ending March 31, 2008.


For the 3- Months ended March 31
2008 2007
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Consolidated Revenue: $ 1,684,595 $ 2,973,991
Net Income: 94,280 101,059
Net Income/Share: 0.006 0.007
Shares Outstanding: 14,651,785 14,716,785
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We are pleased to present the First Quarter Report for Humpty's Restaurants International Inc. for the three months ending March 31st, 2008.

Year-over-year First Quarter combined revenue (Franchise Revenue and Restaurant Operations) decreased 43.3% through the period from $2,974 million (Q1/07) to $1,685 million (Q1/08). Franchise revenue recorded a decrease of 7.9% however Restaurant Operations decreased significantly by 56.9%. The decrease in Restaurant Operations was due to the fact that in the Fourth Quarter of fiscal 2007 the Corporation sold its high volume Gasoline, Convenience Store, Car Wash and Restaurant enterprise in Red Deer, Alberta. In the First Quarter this business would have contributed at least $500,000/month to the sales volume. Despite the significant decrease in sales in Restaurant Operations the contributing profit increased by 85.9%. This profit increase was largely due to increased menu prices and our Foreign Labour Recruitment Program (FLRP) that has assisted us to better control our labour costs.

Fiscal First Quarter 2008 operating results decreased slightly as the Corporation recorded net income of $94,280 vs. net income of $101,059 in fiscal 2007. This represents a 6.7% decrease from fiscal 2007. Two extraordinary expenses that caused the reduced profitability were the following: a) paid off bank loan for a location we took back from a defaulted Franchisee three years ago, amount $17,133 b) with the sale of the Red Deer, Alberta location we guaranteed the assets against defects for a period of six months, amount $12,643.

Going forward, the Corporation's strategy hasn't changed over the past two years. That strategy has been to improve what we have and explore and examine every opportunity to grow the system geographically. That is the reason we continue to renovate our existing locations. Instead of reviewing our menu pricing annually we are now doing that twice per year and making the necessary adjustments. At the same time we are diligent with our supplier negotiations in order that we are guaranteed the most competitive prices. Because labour costs have overtaken food costs we will not slow down our FLRP. The critical labour shortage still exists in Western Canada and as a result we still have some locations that are not operating full time. However, our situation has improved immensely since the same period in fiscal 2007.

As a Shareholder in our Corporation we must assure you that we are continuously examining each opportunity to increase our presence in the marketplace with additional locations. Due to the current economic conditions in Western Canada it is our opinion that leasing rates, construction costs and materials are generously overpriced at this time. However, as we go forward this will change as we are already witnessing more retail spaces becoming available. We are fully aware of what our operating costs need to be and therefore will not go into a new location unless our Franchisee can generate a profit.

We are optimistic and looking forward to opportunities for growth in the next twelve months. In the meantime it is very important that we be diligent in our efforts to assist our existing Franchisees and Corporate Managers in improving sales and profitability.

For detailed financial information, audited statements can be found at www.sedar.com.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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