INDIANAPOLIS, IN / ACCESSWIRE / March 27, 2017 / Noble Roman's, Inc. (OTCQB: NROM), the Indianapolis based franchisor and
licensor of Noble Roman's Pizza, today reviewed the results to date of the company's new "Craft Pizza & Pub," announced results for
the year 2016 and the quarterly period ended December 31, 2016, and reviewed the company's strategic direction.
Craft Pizza & Pub
The first unit of its new generation, stand-alone pizzerias, known as Noble Roman's Craft Pizza & Pub, continues to exceed
management pre-opening expectations by over 50%. During its first full calendar month of operation in February, net sales were in
excess of $150,000, with an operating margin of over 33%. With current trends, March net sales are expected to exceed $160,000.
According to Scott Mobley, President & CEO of Noble Roman's, "Even though, after 8 weeks of operation, the unit may still be
considered in its honeymoon phase, sales and margins continue to run consistently higher than forecasted, and we are obviously
greatly pleased with the results."
The Noble Roman's Craft Pizza & Pub opened in 4,000 square feet of the newly constructed Monon Marketplace on Main
Street/Highway 32 across from Grand Park in Westfield, Indiana, a prosperous and growing community on the northwest side of
Indianapolis. The pizzeria concept has a hint of nostalgia with a modern flair and substantial new innovations. Noble Roman's Craft
Pizza & Pub harkens back to the company's early history when it was known simply as "Pizza Pub." Like then, for fast and efficient
service that is easy to staff and manage, ordering takes place at the counter and food runners deliver orders to the dining room
for dine-in guests. Noble Roman's Craft Pizza & Pub features many exciting enhancements over the current competitive landscape. As
the name implies, the restaurant features two styles of hand-crafted, made-from-scratch pizzas, with a selection of 40 different
toppings, cheeses, and sauces from which to choose. Beer and wine is also featured, with 16 different beers on tap, including both
national and local craft selections. Wines include 16 high quality, affordably priced options by the bottle or glass in a range of
varietals. Beer and wine service is provided at the bar and throughout the dining room.
The pizza offerings feature Noble Roman's traditional hand-crafted thinner crust, as well as its signature deep-dish Sicilian
crust. New technology and extensive R&D are bringing amazingly fast cook times, with oven speeds running only 2.5 minutes for
traditional pies and 5.75 minutes for Sicilian pies. And not just individual pizzas, as with the more menu-limited fast casual
chains, but medium and full-sized large pizzas as well - an essential component, the company believes, to offer that full-fledged
pizzeria experience where dinnertime meals are a shared experience. Traditional pizza favorites, such as pepperoni, are obvious
options on the menu, but also offered is a fun selection of original creations, such as "Pig in the Apple Tree," a pizza featuring
bacon, diced apples, candied walnuts, and gorgonzola cheese. The menu also features a selection of contemporary and fresh,
made-to-order salads, such as "Avocado Chicken Caesar," and fresh-cooked pasta like "Chicken Fettuccine Alfredo." Baked subs,
hand-sauced wings, a selection of desserts and, of course, Noble Roman's famous Breadsticks with Spicy Cheese Sauce also make the
menu.
Additional enhancements include a glass enclosed "Dough Room," where Noble Roman's Dough Masters hand make all pizza and
breadstick dough from scratch in customer view. Also in the dining room is a "Dusting & Drizzle Station," where guests can
customize their pizzas after they are baked with a variety of toppings and drizzles, such as rosemary infused olive oil, honey, and
Italian spices. Kids and adults alike enjoy Noble Roman's root beer tap, which is also part of a special menu for customers 12 and
younger. Throughout the dining room and the bar area are thirteen large and giant screen TV monitors for sports and the nostalgic
black and white shorts featured in Noble Roman's earlier days.
As Scott Mobley previously stated, "Noble Roman's Craft Pizza & Pub is the most exciting development for the company since it
pioneered the non-traditional pizza venue. This stand-alone pizzeria concept is the culmination of some of the best of our history
combined with all-new, leading edge technology and recipes to produce what we think will be a terrific growth vehicle for the
future."
Financial Results for the Year Ended December 31, 2016 Compared to Year Ended December 31, 2015
- Operating income from
continuing operations was $3.1 million, or $.15 per basic share, compared to $2.9 million, or $.14 per basic share. EBITDA was $3.2
million, compared to $3.0 million. - Net income from continuing operations before taxes was $1.3 million, or $0.06 per basic share,
for both 2016 and 2015. However, interest expense was $593,000 in 2016, compared to $186,000 in 2015 due to additional borrowing at
a higher rate. - Loss on discontinued operations in 2016 was $1.7 million, compared to $35,000 in 2015. The loss on discontinued
operations in 2016 was the result of the company discontinuing the stand-alone take-n-bake venue and charging off all assets
related thereto. The company believes losses on discontinued operations have now been recorded and further expenses related to
discontinued operations will be minimal, if any. - Net loss was $871,000, or $0.04 per basic share, compared to a net income of
$786,000, or $0.04 per basic share. The net loss for 2016 was a result of a $1.1 million adjustment to the valuation of
receivables, including the Heyser case, a one-time $1.7 million loss on discontinued operations from discontinuing the stand-alone
take-n-bake venue as described above and a $44,000 change in fair value of derivatives. - In 2016, the operating margin was 39.3%
of revenue compared to 38.0%. - Total revenue was $7.8 million compared to $7.7 million. - Upfront franchisee fees and commissions
were $299,000 compared to $228,000. The increase in upfront fees was the result of selling more non-traditional franchises. -
Royalties and fees less upfront fees were $7.1 million compared to $7.2 million. The decrease was a result of the decrease in
stand-alone take-n-bake revenue mostly offset by the increase in royalties and fees from non-traditional locations and the increase
in royalties and fees from the grocery store take-n-bake. - Royalties and fees from non-traditional franchises other than grocery
stores were $4.4 million for both years, however there was a slight increase in 2016. - Royalties and fees from grocery store
take-n-bake locations were $2.1 million compared to $1.9 million. - Royalties and fees from stand-alone take-n-bake locations were
$318,000 compared to $707,000. The reason for this decrease was the decision to discontinue the stand-alone take-n-bake venue. -
Royalties and fees from traditional locations were $238,000 compared to $265,000. This is a result of losing two of the older
franchises during the second quarter of 2015, mostly offset by same store sales increases. These fees are expected to grow
significantly in 2017 as a result of the company's new Craft Pizza & Pub locations.
Financial Results for Fourth Quarter 2016 Compared to Fourth Quarter 2015
- Operating income was $679,000 compared to
$634,000. - Net loss before taxes from continuing operations was $42,000 compared to net income of $15,000. Interest expense was
$324,000 compared to $48,000. Adjustment for valuation of receivables, including the Heysesr case, was $353,000 compared to
$380,000. The company will pay no income taxes on approximately the next $23 million in net income. - Net loss was $260,000 for
2016, compared to net income of $25,000 for 2015. The reason for the net loss in the quarter ended December 31, 2016 was a
valuation allowance of $353,000 related to receivables including the Heyser case, $35,000 loss on discontinued operations from
discontinuing the stand-alone take-n-bake venue, and $44,000 from a change in fair value of derivatives. - Total revenue was $2.1
million for the fourth quarter 2016, compared to $1.9 million for 2015. - Upfront franchisee fees and commissions were $78,000
compared to $16,000. The increase in upfront fees was the result of selling more non-traditional franchises. - Royalties and fees
less upfront fees were $1.7 million compared to $1.8 million. The reason for the decrease was the decrease in revenue from the
stand-alone take-n-bake venue as a result of that venue being discontinued which offset the modest gains in the other venues. -
Royalties and fees from non-traditional franchises other than grocery stores were $1.1 million in both the quarter ended December
31, 2016 and 2015. - Royalties and fees from grocery store take-n-bake locations were $551,000 compared to $532,000. - Royalties
and fees from stand-alone take-n-bake locations were $42,000 compared to $151,000. This decrease was the result of discontinuing
the stand-alone take-n-bake venue. - Royalties and fees from traditional locations were $58,000 compared to $64,000. As previously
discussed, this decrease was the result of two fewer franchised locations operating. This revenue source is expected to grow
significantly in 2017 as a result of the new Craft Pizza & Pub locations. - Operating margin was 32.4% compared to 33.5%. This
slight decrease was a result of a higher percentage of total revenue coming from restaurant sales as opposed to fee income.
Balance Sheet Summary
Current assets totaled $4.6 million and current liabilities totaled $2.1 million as of December 31, 2016, compared to total
current assets of $4.3 million and current liabilities of $1.4 million as of December 31, 2015. Total debt was $5.5 million as of
December 31, 2016, compared to $2.7 million as of December 31, 2015. Total stockholders' equity as of December 31, 2016 was $14
million, compared to $14.9 million as of December 31, 2015.
Strategic Review
The company continues to focus its growth strategy in two general areas: (1) non-traditional locations in host businesses, such
as convenience stores, entertainment facilities, and grocery deli departments, and (2) franchised stand-alone restaurant locations.
In discussing the company's strategic priorities, Scott Mobley stated, "In 2016, as CEO, my evaluation of the company's strategic
opportunities for growth indicated that the stand-alone venue will have the most significant and dependable long-term revenue and
growth potential. Although more mature and staid, with our efforts to update and modernize our product and trade dress, I believe
the non-traditional venue also offers significant additional potential for long term growth, as well. Our objective is to continue
to capture available opportunities in the grocery take-n-bake venue while developing and expanding the non-traditional venue
generally. At the same time, we are working hard to begin capitalizing on the strong, longer-term opportunities in the stand-alone
venue represented by Craft Pizza & Pub."
As discussed previously, during 2015 and 2016 the company developed and tested new products, services, and systems in its
stand-alone venue, resulting in the opening of the first Noble Roman's Craft Pizza & Pub at the end of January 2017. The company
believes these efforts will further capitalize on the brand's name recognition, history, and product strengths. Along with this,
the company also believes it is extremely important in 2017 and 2018 to develop two to three additional Craft Pizza & Pub units to
be company owned and operated to serve as a show case for prospective franchisees and to serve as a catalyst for growth in the
venue. Concurrent with the development of two or more additional corporately operated locations, the company anticipates initiating
franchise development of additional units, as well.
Starting in October 2016 and finishing in 2017, the company completed a private placement of convertible notes with attached
warrants for $2.4 million. The private placement was accomplished by selling 48 units with each unit consisting of: 1) a
convertible subordinated note for $50,000 due in three years with interest payable quarterly in arrears at 10% per annum but
convertible at any time during that three years to common stock at $.50 per share; and 2) a warrant to purchase 50,000 shares of
common stock at any time during the three year term of the note at $1.00 per share. Paul Mobley, a Director and Officer, purchased
three of the units and Marcel Herbst, a Director, purchased four of the units. The other 41 units were purchased by unrelated
parties. To make better use of and to increase available cash flow, to maintain a healthy degree of leverage, and to undertake the
development of two or three more company owned and operated Craft Pizza & Pub units as described above, the company has undertaken
initial efforts to restructure and refinance all of its current debt, except its convertible debt, at a more favorable rate and
with a long term repayment period. Proceeds of the proposed refinancing would be used to pay the remaining balance of the term loan
to BMO Harris Bank, to repay the remaining balance of the Super G Funding loan, to repay the officer loans, to open two or three
Craft Pizza & Pub locations, with the balance intended for general corporate purposes.
The statements contained in this press release 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, the success of new franchise programs, including the new Noble
Roman's Craft Pizza & Pub format, the company's ability to successfully operate an increased number of company-owned restaurants,
general economic conditions, changes in purchases of or demand for the company's products, licenses or franchises, the success or
failure of individual franchisees and licensees, changes in prices or supplies of food ingredients and labor, and dependence on
continued involvement of current management. Should one or more of these risks or uncertainties materialize, or should underlying
assumptions or estimates prove incorrect, actual results may differ materially from those described herein as anticipated,
believed, estimated, expected or intended. The company undertakes no obligations to update the information in this press release
for subsequent events.
Consolidated Balance Sheets Noble Roman's, Inc. and Subsidiaries December 31, Assets 2015 2016 Current
assets: Cash $ 194,021 $ 477,928 Accounts receivable - net 2,007,751 1,828,534 Inventories 492,222 754,418 Prepaid expenses 634,016
568,386 Deferred tax asset - current portion 925,000 925,000 Total current assets 4,253,010 4,554,266 Property and equipment:
Equipment 1,376,190 1,963,957 Leasehold improvements 88,718 88,718 Construction and equipment in progress - 351,533 1,464,908
2,404,208 Less accumulated depreciation and amortization 1,092,785 1,194,888 Net property and equipment 372,123 1,209,320 Deferred
tax asset (net of current portion) 8,158,523 8,696,870 Goodwill - 278,466 Other assets including long-term portion of accounts
receivable - net 5,681,272 5,159,937 Total assets $ 18,464,928 $ 19,898,859 Liabilities and Stockholders' Equity Current
liabilities: Current portion of long-term notes payable to bank $ 601,081 $ 655,725 Current portion of loan payable to Super G -
1,130,765 Accounts payable and accrued expenses 847,418 339,125 Total current liabilities 1,448,499 2,125,615 Long-term
obligations: Notes payable to bank (net of current portion) 1,366,454 710,729 Loan payable to Super G (net of current portion) -
718,175 Notes payable to officers 175,000 310,000 Note payable to Kingsway America 600,000 600,000 Convertible notes payable -
769,835 Derivative warrant liability - 210,404 Derivative conversion liability - 435,671 Total long-term liabilities 2,141,454
3,754,814 Stockholders' equity: Common stock - no par value (25,000,000 shares authorized, 20,775,921 issued and outstanding as of
December 31, 2015 and 20,783,032 issued and outstanding as of December 31, 2016) 24,294,002 24,308,297 Accumulated deficit
(9,419,027 ) (10,289,867 ) Total stockholders' equity 14,874,975 14,018,430 Total liabilities and stockholders' equity $ 18,464,928
$ 19,898,859 Consolidated Statements of Operations Noble Roman's, Inc. and Subsidiaries Year Ended December 31, 2014 2015 2016
Royalties and fees $ 7,479,334 $ 7,464,963 $ 7,350,692 Administrative fees and other 72,541 56,520 42,402 Restaurant revenue
363,340 207,803 443,391 Total revenue 7,915,215 7,729,286 7,836,485 Operating expenses: Salaries and wages 1,063,076 1,141,562
996,303 Trade show expense 541,385 543,354 520,691 Travel expense 235,127 255,125 230,091 Broker commissions - - 32,241 Other
operating expenses 876,162 834,320 769,791 Restaurant expenses 402,281 248,139 443,389 Depreciation and amortization 111,750
105,843 124,773 General and administrative 1,646,502 1,659,966 1,641,853 Total expenses 4,876,283 4,788,309 4,759,132 Operating
income 3,038,932 2,940,977 3,077,353 Interest 190,382 186,414 615,685 Loss on restaurant discontinued - 191,390 36,776 Change in
fair value of derivatives - - 44,464 Adjust valuation of receivables - including Heyser case - 1,230,000 1,103,521 Income before
income taxes from continuing operations 2,848,550 1,333,173 1,276,907 Income tax expense 1,104,809 512,671 487,880 Net income from
continuing operations 1,743,741 820,502 789,027 Loss from discontinued operations net of tax benefit of $97,284 for 2014, $21,697
for 2015 and $1,026,277 for 2016 (153,545 ) (34,724 ) (1,659,867 ) Net income (loss) $ 1,590,196 $ 785,778 $ (870,840 ) Earnings
per share - basic: Net income from continuing operations $ .09 $ .04 $ .04 Net loss from discontinued operations net of tax benefit
$ (.01 ) $ (.00 ) $ (.08 ) Net income (loss) $ .08 $ .04 $ (.04 ) Weighted average number of common shares outstanding 19,870,904
20,517,846 20,781,886 Diluted earnings (loss) per share: Net income from continuing operations $ .08 $ .04 $ .04 Net loss from
discontinued operations net of tax benefit $ (.01 ) $ (.00 ) $ ( .08 ) Net income (loss) $ .07 $ .04 $ ( .04 ) Weighted average
number of common shares outstanding 21,204,439 21,439,242 21,208,173
NOBLE ROMAN'S, INC. 1 Virginia Avenue, Suite 300 Indianapolis, IN 46204
FOR ADDITIONAL INFORMATION, CONTACT:
For Media Information: Scott Mobley, President & CEO 317/634-3377 For Investor Relations: Paul Mobley, Executive Chairman
317/634-3377
SOURCE: Noble Roman's, Inc.
