INDIANAPOLIS, IN / ACCESSWIRE / August 14, 2017 / Noble Roman's, Inc. (OTCQB: NROM), the Indianapolis based franchisor and
licensor of Noble Roman's Pizza, today issued an important reiteration of its primary opportunities for future revenue growth.
Additionally, the company announced the first six-months operating results for its initial Noble Roman's Craft Pizza & Pub
location, as well as overall corporate financial results for the quarterly and six-month periods ended June 30, 2017.
Strategic Overview of Growth Opportunities
In a brief statement outlining the company's growth strategy, A. Scott Mobley, the company's President and Chief executive
Officer, said:
"As everyone has an opportunity to study the results of the initial six months of operation of our first flagship Noble Roman's
Craft Pizza & Pub (CPP), it will become apparent that this is potentially the company's most valuable growth opportunity.
Accordingly, CPP will take a priority position in management's long-term strategic development planning. Initially, this will take
the form of constructing three additional CPP units to be company owned and operated, for a total of four company units.
Additionally, the company is initializing an effort to franchise CPP with experienced operators in and around the state of Indiana
to exploit the marketing synergies of concentric development. One such franchised location is already approaching potential
construction stage. At the same time, the company will continue to grow its franchised non-traditional segment, concentrating on
growth in convenience stores and entertainment facilities. The non-traditional segment of the company has been a tremendously
valuable and reliable producer and, with the recent modernization in kiosk design, stands to be a critically important, on-going
growth opportunity as well. Lastly, the company will continue to exploit current opportunities in the grocery segment. The grocery
take-n-bake market, which was originally targeted during the Great Recession, presents not only a valuable current revenue source,
but as a home meal replacement alternative to dining out, it represents potential additional opportunity in any future economic
contraction."
Noble Roman's Craft Pizza & Pub
The first unit of the company's CPP concept continues to exceed management's pre-opening expectations by over 50%. For the six
months that the unit has been open (February thru July), sales were $935,492 net of discounts and promotions, with a net income
from operations of $259,558, representing an operating margin of 27.7%. According to Mr. Mobley, "Outside of Easter and spring
break weekends, the CPP sales have maintained or exceeded grand opening levels throughout the six months."
The first CPP unit opened in 4,200 square feet of the newly constructed Monon Marketplace on Main Street/Highway 32 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. The CPP 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. The CPP features many exciting enhancements over
the current competitive landscape, particularly when compared to the fast-casual segment from which it differs greatly. As the name
implies, the restaurant features two styles of hand-crafted, made-from-scratch pizzas with a selection of over 40 different
toppings, cheeses and sauces from which to choose. The pizza offerings feature Noble Roman's traditional hand-crafted thinner crust
as well as its signature deep-dish Sicilian crust. Beer and wine is also featured, with 16 different beers on tap including both
national and local craft selections.
CPP features fast and efficient service, but it is a full-featured, family-friendly pizzeria rather than a more limited,
fast-casual concept. 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 dinner time 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 &
white shorts featured in Noble Roman's earlier days.
Financial Results for the Six-Month Period ended June 30, 2017 Compared to the Comparable Period Ended in 2016
- Total
revenue was $4.7 million, compared to $3.7 million (a 27.0% increase). - Operating income was $1.4 million, compared to $1.5
million. - Net income before taxes was $1.1 million, compared to $617,000. - Net income was $774,000, or $.04 per basic share,
compared to a net income of $381,000, or $.02 per basic share. - Upfront franchisee fees and commissions were $140,000, compared to
$139,000. - Royalties and fees less upfront fees were $3.2 million, compared to $3.5 million. The decrease was a result of retiring
the stand-alone take-n-bake concept. This loss in revenue was more than offset by the additional revenue of $776,000 from the new
Craft Pizza & Pub location. - Royalties and fees from non-traditional franchises other than grocery stores were $2.15 million,
compared to $2.11 million. - Royalties and fees from grocery store take-n-bake locations were $891,000, compared to $1.0 million. -
Royalties and fees from stand-alone take-n-bake locations were $32,000, compared to $211,000, as a result of discontinuing
franchising in the stand-alone take-n-bake venue.
Financial Results for the Three-Month Period ended June 30, 2017 Compared to the Comparable Period Ended in 2016
- Total
revenue was $2.5 million, compared to $1.9 million (a 31.6% increase). - Operating income was $740,000, compared to $880,000. - Net
income before taxes was $755,000, compared to $47,000. - Net income was $581,000, or $.03 per basic share, compared to a net income
of $31,000, or $.00 per basic share. - Upfront franchise fees and commissions were $76,000, compared to $83,000. - Royalties and
fees less upfront fees were $1.6 million, compared to $1.8 million. The decrease was a result of retiring the stand-alone
take-n-bake concept. This loss in revenue was more than offset by the additional revenue of $460,000 from the new Craft Pizza & Pub
location. - Royalties and fees from non-traditional franchises other than grocery stores were $1.13 million compared to $1.11
million. - Royalties and fees from grocery store take-n-bake locations were $429,000, compared to $530,000. - Royalties and fees
from stand-alone take-n-bake locations were $15,000, compared to $88,000, as a result of discontinuing franchising in the
stand-alone take-n-bake venue.
Balance Sheet Summary
Current assets totaled $3.9 million and current liabilities totaled $2.9 million as of June 30, 2017, compared to total current
assets of $4.6 million and current liabilities of $2.1 million as of December 31, 2016. The primary reason for this decrease in the
company's current ratio was from reclassifying the current portion of the deferred tax assets to long-term assets in accordance
with the Financial Accounting Standards Board's recently issued Accounting Standards Update as a part of its Simplification
Initiative. In addition, since the company's term loan with the bank matures on March 31, 2018, it was reclassified to current
liabilities. Total stockholders' equity as of June 30, 2017 was $14.8 million compared to $14.0 million as of December 31,
2016.
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 completion of its proposed refinancing, 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.
Noble Roman's, Inc. and Subsidiaries Condensed Consolidated Balance
Sheets (Unaudited) Assets December 31, 2016 June 30, 2017 Current assets: Cash $ 477,928 $ 223,192 Accounts receivable - net
1,828,534 2,191,043 Inventories 754,418 744,233 Prepaid expenses 568,386 765,108 Deferred tax asset - current portion 925,000 -
Total current assets 4,554,266 3,923,576 Property and equipment: Equipment 1,963,957 2,238,470 Leasehold improvements 88,718
271,697 Construction and equipment in progress 351,533 - 2,404,208 2,510,167 Less accumulated depreciation and amortization
1,194,888 1,280,116 Net property and equipment 1,209,320 1,230,051 Deferred tax asset (net of current portion) 8,696,870 9,329,392
Goodwill 278,466 278,466 Other assets including long-term portion of receivables - net 5,159,937 5,740,129 Total assets $
19,898,859 $ 20,501,614 Liabilities and Stockholders' Equity Current liabilities: Current portion of term loan payable to bank $
655,725 $ 1,038,591 Current portion of loan payable to Super G 1,130,765 1,483,270 Accounts payable and accrued expenses 339,125
354,010 Total current liabilities 2,125,615 2,875,871 Long-term obligations: Term loan payable to bank (net of current portion)
710,729 - Loan payable to Super G (net of current portion) 718,175 - Notes payable to officers 310,000 910,000 Notes payable to
Kingsway America 600,000 - Convertible notes payable 769,835 956,427 Derivative warrant liability 210,404 344,178 Derivative
conversion liability 435,671 613,224 Total long-term liabilities 3,754,814 2,823,829 Stockholders' equity: Common stock - no par
value (40,000,000 shares authorized, 20,783,032 issued and outstanding as of December 31, 2016 and June 30, 2017) 24,308,297
24,318,165 Accumulated deficit (10,289,867 ) (9,516,251 ) Total stockholders' equity 14,018,430 14,801,914 Total liabilities and
stockholders' equity $ 19,898,859 $ 20,501,614 Noble Roman's, Inc. and Subsidiaries Condensed Consolidated Statements of Operations
(Unaudited) Three-Months Ended June 30, Six-Months Ended June 30, 2016 2017 2016 2017 Revenue: Royalties and fees $ 1,874,235 $
1,715,674 $ 3,590,546 $ 3,328,594 Administrative fees and other 10,635 11,871 21,709 23,941 Restaurant revenue - Craft Pizza & Pub
- 459,907 - 766,217 Restaurant revenue - non-traditional 55,554 279,034 107,047 560,352 Total revenue 1,940,424 2,466,486 3,719,302
4,679,104 Operating expenses: Salaries and wages 232,601 242,187 483,909 481,894 Trade show expense 130,441 123,456 258,877 245,112
Travel expense 34,407 48,134 95,674 108,428 Broker commissions 21,821 - 21,821 - Other operating expenses 179,971 229,044 375,284
427,734 Restaurant expenses - Craft Pizza & Pub - 341,971 - 555,117 Restaurant expenses - non-traditional 44,173 275,023 89,905
548,396 Depreciation and amortization 31,675 59,870 61,087 111,763 General and administrative 384,666 407,615 790,475 812,087 Total
expenses 1,059,755 1,727,300 2,177,032 3,290,531 Operating income 880,669 739,186 1,542,270 1,388,573 Interest 82,735 298,759
137,941 619,753 Loss on restaurant discontinued - - 36,776 - Adjust valuation of receivables 750,659 - 750,659 - Change in fair
value of derivatives - (314,900 ) - (297,273 ) Income before income taxes 47,275 755,327 616,894 1,066,093 Income tax expense
15,877 174,255 235,699 292,477 Net income $ 31,398 $ 581,072 $ 381,195 $ 773,616 Earnings per share - basic: Net income $ .00 $ .03
$ .02 $ .04 Weighted average number of common shares outstanding 20,483,091 20,783,032 20,780,727 20,783,032 Diluted earnings per
share: Net income $ .00 $ .02 $ .02 $ .03 Weighted average number of common shares outstanding 20,974,419 25,774,314 20,972,114
25,569,895
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.
