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Further details:

The company had a net income for the nine-months ended September 30, 2024 of approximately $164,000 compared to a net income of approximately $1.3 million for the comparable period in 2023. The $164,000 net income was after a $1,800 decrease during the nine months for the market value of the outstanding warrant, 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 $223,000. The comparability of the two nine-month periods of September 30, 2024 and 2023 is reduced because the net income of $1.3 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 approximately $160,000 for the nine-month period ended September 30, 2023.

The revenue from the non-traditional franchising venue increased to $4.3 million from $3.7 million, or a 22.5% increase. By adding in the $180,000 in deferred initial franchise fees received in the current nine-month period (which were actually received in cash but deferred for future income recognition, which is a different accounting treatment than applied the previous year) and the non-cash adjustments, detailed above, of $61,000, the increase in franchising revenue would have been $930,000, or 25.3%. 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. The company has opened approximately 53 new franchise locations and has plans to open approximately 20 additional franchise locations this year. The company anticipates that this source of revenue will increase significantly through the rest of 2024 and beyond. Salaries and wages from the franchising venue decreased to 15.9% of revenue from 17.7% of revenue in the comparable period in 2023. 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 $7.1 million for the nine months ended September 30, 2024 compared to $7.4 million in the corresponding period in 2023. Same store sales for the CPP restaurants declined during the 9-month period by approximately 3.4% in part due to localized bad weather in the first quarter and sluggish consumer spending throughout. Same store CPP sales in the 3^rd quarter increased nearly 1%, and have continued that trend after the quarter-end with the margin also increasing over last year. The company's single company-owned non-traditional operation is located in a hospital which is adding a new wing. During portions of the 3^rd quarter, the hospital upgraded infra-structure in the foodservice area as part of the construction process, and the company's operation during that time was heavily restricted to reduced hours and a remote location for grab-n-go service only. The operation has since resumed normal operations and enjoying increased sales to nearly $24,000 per week.

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 and conversations currently taking place, the company believes its financing efforts will be successful. The company expects the new financing will result in some reduction in the effective interest rate that it currently pays and will not include equity-dilutive components like those in the current Corbel financing.

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 venue 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 $289,000 for the three-month and nine-month periods ended September 30, 2023 and 2024. The amount remained largely consistent since there have been no new company locations opened.

General and administrative expenses were $566,000 and $1.7 million for the three-month and nine-month periods ended September 30, 2024 and $519,000 and $1.6 million for the corresponding periods in 2023. The increase in 2024 over 2023 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 from $359,000 to $415,000 for the three-month period and from $1.1 million to $1.2 million for the nine-month period ended September 30, 2024 compared to 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 $2.6 million in the principal amount of the senior note during 2023 and 2024.

The company has recorded the fair market value of the outstanding warrants of $539,000 which resulted in a reduction of valuation during the third quarter of $192,000 and a reduction for the nine-month period ended September 30, 2024 of $1,800.

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 and finalize refinancing for its loans, the impact of franchise regulation, the success or failure of individual franchisees, other changes in prices or supplies of food ingredients and labor and inflation, 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.

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)

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

(Unaudited)

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

SOURCE: Noble Romans, Inc.

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