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Further details:

The company had a net loss for the six-months ended June 30, 2024 of approximately $30,000 compared to a net income of approximately $1.2 million for the comparable period in 2023. The net loss of approximately $30,000 was after the company recorded an additional non-cash expense for the change in the value of the warrant of approximately $190,000, a non-cash charge of $29,000 to close out the asset ledger for dormant subsidiary and a non-cash adjustment for allowance receivables from a prior period of $32,000 excluding those one-time charges, the company would have reported a net income of approximately $225,000. The comparability of the two six-month periods of June 30, 2024 and 2023 is reduced because the net income of $1.2 million in 2023 was after recording $1.46 million of income from the ERTC refund. The ERTC refund was expenses and lost revenue, due to COVID restrictions, incurred by the company in periods prior to March 31, 2023. Excluding the ERTC refund recorded in the first quarter of 2023, the company would have reported a net loss of $267,000 for the six-month period ended June 30, 2023.

The revenue from the non-traditional franchising venue increased to $2.9 million from $2.2 million, or a 32.2% increase. By adding in the $127,500 in deferred initial franchise fees in the current period, which were actually received in cash but deferred for future income recognition, which is a different accounting treatment than was applied the previous year, and the non-cash adjustment above of $32,000, the increase would have been $857,000, or 39.6% increase in franchising revenue. The company currently has a significant pipeline of prospects for additional franchise sales and a significant number of franchised locations sold but not yet open. It is anticipated that this source of revenue will substantially increase through the rest of 2024 and beyond. Salaries and wages from the franchising venue decreased to 16.2% of revenue from 18.2% of revenue in the comparable period in 2023. This improvement came in spite of the shortage of available labor and increased labor rates as a result of that shortage. The labor was reduced as a percentage of revenue primarily related to the growing number of franchises sold and opened without adding additional staff.

The total revenue from the company-owned restaurants was $4.7 million for the six months ended June 30, 2024 compared to $4.9 million in the corresponding period in 2023. Same store sales declined during this period approximately 4.7% due in part to localized bad weather in the first quarter and sluggish spending by consumers in the second quarter. During the month of July, same store sales increased by approximately 1% and increased by approximately 9.5% during the first 11 days in August. During the first quarter of 2024 the average check was down versus the prior year while the guest count increased somewhat. By the latter stages of the second quarter 2024, the average check was up somewhat versus the prior year while the guest count was down, indicating that the price sensitive, lower spending guests had decreased their spending frequency.

During the six-month period ended June 30, 2024, the company generated net cash from operations of nearly $500,000 despite reducing its accounts payable and accrued expenses by $669,000 and used that cash to pay principal on debt of $500,000. This was accomplished in spite of paying the high interest rate on the Corbel loan which bears interest on a variable rate of SOFR, as defined in the agreement, plus 7.75% for an aggregate rate of 13.08% at December 31, 2023 in addition to non-cash PIK interest of 3% adding to the principal balance of the loan making a combined rate of well over 16%.

As previously announced, the company is pursuing plans to obtain new financing to repay the Corbel loan prior to its maturity in February 2025 and to repay the subordinated notes as well when the Corbel loan is repaid. Based on the company's credit metrics the company believes its financing efforts will be successful. The company expects the new financing will result in a significant reduction in the interest rate that it currently pays, with the structure of the loan being a full amortization over a longer term and at a lower rate of interest.

The following table sets forth the revenue, expense and margin contribution of the Company's Craft Pizza & Pub venue and the percentage relationship to its revenue:

The following table sets forth the revenue, expense and margin contribution of the Company's franchising activities and the percentage relationship to its revenue:

The following table sets forth the revenue, expense and margin contribution of the Company-owned non-traditional venue and the percentage relationship to its revenue:

Detail on Corporate Expenses:

Depreciation and amortization remained approximately constant at $96,000 and $193,000 for the three-month and six-month periods ended June 30, 2023 and 2024. The amount remained largely consistent since there have been no new company locations opened since 2021.

General and administrative expenses increased to $570,000 and $1.15 million from $526,000 and $1.05 million for the three-month and six-month periods, respectively, ended June 30, 2024 compared to the corresponding periods in 2023. The increase in the year-to-date period was largely the result of 2023 expenses being decreased by certain amounts of the ERTC refunds recorded in the first quarter 2023, as explained above.

Interest expense increased to $435,000 and $829,000 for the three-month and six-month periods ended June 30, 2024 compared to $379,000 and $762,000 for the comparable periods in 2023. The reason for the increase was the addition to principal of the non-cash PIK interest being added to the principal balance of the senior note and the increase in the variable rate, as explained above, which was only partially offset by principal reductions of nearly $1.6 million in the principal amount of the senior note since June 2023.

The company recorded a change in the fair value of warrants of $66,000 and $190,000 in the three-month and six-month periods ended June 30, 2024 compared to none in the comparable periods in 2023. This is a non-cash expense to reflect a theoretical change in the value of the outstanding warrants.

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 indicated by the forward-looking statements due to risks and uncertainties that exist in the company's operations and business environment, including, but not limited to the continuing after-effects of the COVID-19 pandemic, the ability of franchisees to timely prepare their units for scheduled openings, the company's ability to maintain adequate staff for new openings, competitive factors and pricing and cost pressures, non-renewal of franchise agreements or the openings contemplated by the development agreement not occurring, shifts in market demand, the success of franchise programs, including the Noble Roman's Craft Pizza & Pub format, general economic conditions, changes in demand for the company's products or franchises, the company's ability to service its loans, the impact of franchise regulation, the success or failure of individual franchisees and inflation, other changes in prices or supplies of food ingredients and labor and, as well as the factors discussed under "Risk Factors" contained in this company's Annual Report on Form 10-K for the year ended December 31, 2022. 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. If activist stockholder activities ensue, the company's business could be adversely impacted.

Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)

Noble Roman's, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)

FOR ADDITIONAL INFORMATION, CONTACT:

For Media Information: Scott Mobley, President & CEO (smobley@nobleromans.com)
For Investor Relations: Paul Mobley, Executive Chairman (pmobley@nobleromans.com)
Mike Cole, Investor Relations: 949-444-1341 (mike.cole@armaadvisoryservices.com)

SOURCE: Noble Romans, Inc.

View the original press release on accesswire.com