Noble Roman’s Continues Growth; Enhances Stand-Alone and Grocery Take-N-Bake Concepts

INDIANAPOLIS, March 25, 2014 /PRNewswire/ — Noble Roman’s, Inc. (OTC/BB: NROM),
the Indianapolis based franchisor and licensor of Noble Roman’s Pizza and
Tuscano’s Italian Style Subs, today announced results for the annual and
quarterly periods ended December 31, 2013.

Financial and Operational Highlights for 2013 Compared to 2012

For purposes of comparing current operating results, the 2012 amounts below were
adjusted, where appropriate, for the $400,000 reduction in reserve for
collectability of receivables from the Heyser plaintiffs, and the $500,000
adjustment to reduce the valuation of the Heyser case which resulted in a net
decrease in the net income from continuing operations before taxes, all relating
to units no longer operating. In 2013, there was a $1.21 million adjustment to
the valuation of the Heyser plaintiff receivables which resulted in a decrease
to net income from continuing operations before taxes relating to units no
longer operating. Details regarding the adjustments for the reserve are provided
in the company’s Form 10-K filed with the Securities and Exchange Commission.

— Net income before taxes from continuing operations was $2.65 million, or
$0.14 per share, compared to $2.0 million, or $0.10 per share. The
company will pay no income taxes on approximately the next $25 million
in net income.
— Net income from continuing operations was $1.6 million, or $0.08 per
share, compared to $1.21 million, or $0.06 per share.
— Operating margin was 38.0% of revenue compared to 35.0%.
— Total revenue was $7.5 million, up 9.1% compared to $6.9 million.
— Upfront franchisee fees and commissions were $883,000 compared to
$374,000.
— Royalties and fees less upfront fees were $6.2 million compared to $6.0
million.
— Royalties and fees from non-traditional franchises other than grocery
stores were $4.3 million compared to $4.4 million
— Royalties and fees from grocery store take-n-bake locations were
unchanged at $1.3 million.
— Royalties and fees from traditional locations were $313,000 compared to
$307,000.
— Royalties and fees from stand-alone take-n-bake locations were $310,000
compare to $10,000.
Fourth Quarter 2013 Financial and Operational Highlights Compared to Fourth
Quarter 2012

For purposes of comparing current operating results for the fourth quarter 2013
to the fourth quarter 2012, the 2012 amounts below were adjusted, where
appropriate, for the $500,000 reduction in the receivables from the Heyser
plaintiffs and the 2013 amounts were adjusted, where appropriate, for the $1.1
million reduction in the receivables from the Heyser plaintiffs. Details
regarding the adjustment for the reduction of receivables from the Heyser
plaintiffs are provided in the company’s Form 10-K filed with the Securities and
Exchange Commission.

— Net income before taxes from continuing operations was $496,000, or
$0.03 per share, compared to $566,000, or $0.03 per share. The company
will pay no income taxes on approximately the next $25 million in net
income.
— Net income from continuing operations was $300,000, or $0.02 per share,
compared to $342,000, or $0.02 per share.
— Operating margin was 32% of revenue compared to 36%.
— Total revenue was approximately the same for both the fourth quarter
2013 and 2012 at $1.72 million.
— Upfront franchisee fees and commissions were $147,000 compared to
$63,000.
— Royalties and fees less upfront fees were $1.5 million compared to $1.6
million.
— Royalties and fees from non-traditional franchises other than grocery
stores were $1 million compared to $1.2 million.
— Royalties and fees from grocery store take-n-bake locations were
$257,000 compared to $313,000.
— Royalties and fees from traditional locations were $74,000 compared to
$67,000.
— Royalties and fees from stand-alone take-n-bake locations were $146,000
compared to $10,000.
In both the fourth quarter and the year 2013, the company recorded a loss on
discontinued operations of $780,000 compared to $525,000 in the fourth quarter
and year 2012. The loss on discontinued operations for 2013 consisted of
$178,000 in legal and settlement costs relating to a restaurant that was closed
in conjunction with the business activity discontinued in 1999 and later damaged
by a tornado, $147,000 for legal and other costs related to the Heyser case,
plus $257,000 in receivables and $199,000 in obsolete support materials, all
relating to the operations discontinued in 2008. These are further discussed in
the company’s Form 10-K filed with the Securities and Exchange Commission.
Management believes that the company is at or very near the end of any further
losses related to the discontinued operations, as all assets related to those
operations have now been charged off. Less than 50% of this loss was actual cash
payments which was down considerably from prior years. The remainder was from
the charge off of now obsolete assets related to the operations discontinued in
2008.

The company finally received a ruling on its long-standing counterclaims against
former plaintiffs in the Heyser case. On February 13, 2014, judgment was entered
by the Hamilton Superior Court in favor of Noble Roman’s and against two
plaintiffs/counter-defendants in the 2008 lawsuit in the amount of $1.35 million
plus court costs and interest at 8% per annum. The attorney for the
plaintiffs/counter-defendants have indicated they intend to appeal the judgment.
On March 6, 2014, the company filed a motion to require
plaintiffs/counter-defendants to post an appeals bond of $1.5 million each.

Starting in December 2013 and continuing into March, the company’s revenues have
declined, which management believes to be a result of the very severe winter
weather in most of the country.

Paul Mobley, Noble Roman’s Chairman and CEO commented, “Interest remains high in
our take-n-bake concept, though the severe weather has had a short-term impact
on our results. We are committed to continually improving consumer response to
our offerings. For the grocery store take-n-bake locations, we have introduced
new packaging and will now be displaying our pizzas in bakable, treated aluminum
pans with a clear plastic top. Consumers use the pan to bake the pizzas in, and
the anodized treatment on the bottom is designed to increase home baking
performance, drawing in more heat to make the pizza crispy on the bottom but
soft in the middle. The clear plastic top allows the entire pizza to be visible
and appealing. In addition, we have added a gluten-free crust to appeal to a
growing segment of the population. We also added three 14-inch mega-topped
pizzas which are called the ‘Mile High Extra Meat Pizza,’ the ‘Extra Cheese Four
Cheese Pizza,’ and the ‘Double Topped Pepperoni Pizza.’ The 14-inch mega-topped
pizzas in the new packaging are very appealing in the display case and are
offered at a recommended value price of $9.99. All of the new products and the
new packaging were displayed recently at the National Grocers Association Show
and drew lots of attention, including creating interest with some distributors
much larger than any of our current distributors.”

Mr. Mobley added “To further enhance our stand-alone take-n-bake stores, next
week we are initiating a 3-unit test of our new, in-store baking service, ‘You
Bake or We Bake!’. In addition to broadening consumer appeal in general, it is
anticipated that this service will expand our take-n-bake daypart earlier into
the day, as we can now offer hot pizzas and other menu items for lunch in these
three test stores.” The new baking service requires no substantial change in
unit layouts, square footage requirement or labor requirements, and can easily
be incorporated into existing operations as well as new ones.

The company has entered into agreements for 55 stand-alone take-n-bake locations
and is currently in discussions with many other prospects. The first stand-alone
take-n-bake pizza location opened in October 2012 and, to date, a total of 22
have been opened with 33 under development. The company’s stand-alone
take-n-bake program features the chain’s popular traditional Hand-Tossed Style
pizza, Deep-Dish Sicilian pizza, SuperThin pizza, all with a choice of three
different types of sauce, all in a convenient cook-at-home format. Additional
menu items include Noble Roman’s famous breadsticks with spicy cheese sauce,
fresh salads, cookie dough, cinnamon rounds, bake-able pasta and more.

“Our marketing initiatives to attract potential take-n-bake franchisees continue
to be successful in generating a significant number of leads,” said Mr. Mobley.
“Our initial goal was to sign 30 locations in 2013, which we exceeded. Late in
the year 2013, we expanded our advertising efforts by increasing the use of
web-based franchise referral systems, which we began using in late January 2013,
from three portals to five portals. In addition, we initiated web-based
advertising utilizing Google’s pay-per-click and remarketing systems.
Take-n-bake continues to be one of the fastest growing segments of the pizza
industry, and Noble Roman’s is leveraging this growth opportunity with our
economical concept, our reputation for fine quality products, and our proven
ability to support our franchisee base.”

Since the beginning of 2013, the company has signed 56 additional new
franchise/license agreements for non-traditional locations and is in discussion
with numerous other convenience store chains and entertainment facilities for
additional non-traditional locations. The primary source of growth in this
segment comes from existing franchisees and by exhibiting in various industry
trade shows, including the National Association of Convenience Stores, Western
Petroleum Marketers Association, International Association of Amusement Parks
and Attractions, and selected state convenience store associations.

Balance Sheet Summary

Cash totaled approximately $158,000 as of December 31, 2013 compared to $144,000
as of December 31, 2012. Total bank debt was $3.85 million as of December 31,
2013 compared to $4.3 million as of December 31, 2012. Total stockholders’
equity as of December 31, 2013 was approximately $11.7 million compared to $12.4
million as of December 31, 2012. The company’s bank debt was $4.3 million as of
December 31, 2012 and made principal payments on that debt during 2013 of $1.24
million and borrowed $825,000 to repurchase all of the outstanding shares of its
Series B Preferred stock which increased the bank debt and reduced the equity.
The holders of the Preferred shares had been receiving a 12% dividend. Each
Preferred share was convertible into the company’s common stock at a conversion
price of $2.25 per share. The repurchase of the Preferred shares therefore
eliminated the otherwise future dilution of 366,666 shares to the common
shareholders.

Teleconference

Management will conduct a live teleconference to discuss its financial results
at 4:30 p.m. ET on Wednesday, March 12, 2014. Anyone interested in participating
should call 1-877-941-1427 if calling from the United States, or 1-480-629-9664
if dialing internationally. A replay will be available until March 19, 2014,
which can be accessed by dialing 1-877-870-5176 within the United States and
1-858-384-5517 if dialing internationally. Please use passcode 4673307 to access
the replay. In addition, the call will be webcast and will be available on the
Company’s website at www.nobleromans.com or by visiting
http://public.viavid.com/index.php?id=108215.

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, 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 the success or failure of its recently developed stand-alone
take-n-bake operation. 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.

FOR ADDITIONAL INFORMATION, CONTACT:
For Media Information: Scott Mobley, President 317/634-3377
For Investor Relations: Paul Mobley, Chairman & CEO 317/634-3377
or Brett Maas, Hayden IR, 646/536-7331 or brett@haydenir.com

Consolidated Balance Sheets

Noble Roman’s, Inc. and Subsidiaries

December 31,
————

Assets 2012 2013
—- —-

Current assets:

Cash $144,354 $157,787

Accounts receivable – net 1,080,362 1,268,788

Inventories 460,839 337,822

Assets held for resale 259,579 –

Prepaid expenses 379,669 472,065

Deferred tax asset -current
portion 1,400,000 1,250,000
——— ———

Total current assets 3,724,803 3,486,462
——— ———

Property and equipment:

Equipment 1,166,103 1,361,205

Leasehold improvements 12,283 88,718
—— ——

1,178,386 1,449,923

Less accumulated depreciation
and amortization 905,376 962,502
——- ——-

Net property and equipment 273,010 487,421

Deferred tax asset (net of
current portion) 9,238,536 9,332,024

Other assets including long-
term portion of accounts
receivable – net 3,924,404 3,067,754
——— ———

Total assets $17,160,753 $16,373,661
=========== ===========

Liabilities and Stockholders’ Equity

Current liabilities:

Current portion of long-term
notes payable to bank $1,250,000 $1,216,250

Accounts payable and accrued
expenses 510,710 818,803
——- ——-

Total current liabilities 1,760,710 2,035,053
——— ———

Long-term obligations:

Notes payable to bank (net of
current portion) 3,020,833 2,635,208
——— ———

Total long-term liabilities 3,020,833 2,635,208
——— ———

Stockholders’ equity:

Common stock – no par value (25,000,000 shares authorized,
19,516,589

issued and outstanding as of December 31, 2012 and
19,585,089 as of

December 31, 2013) 23,366,058 23,498,401

Preferred stock (5,000,000 shares authorized, 20,625
issued and

outstanding as of December 31,
2012 and none outstanding as of 800,250 –

December 31, 2013)

Accumulated deficit (11,787,098) (11,795,001)
———- ———-

Total stockholders’ equity 12,379,210 11,703,400
———- ———-

Total liabilities and
stockholders’ equity $17,160,753 $16,373,661
=========== ===========

See accompanying notes to
consolidated financial
statements.

Consolidated Statements of Operations

Noble Roman’s, Inc. and Subsidiaries

Year Ended December 31,
———————–

2011 2012 2013
—- —- —-

Royalties
and
fees $6,813,946 $6,823,811 $7,082,548

Administrative
fees
and
other 44,448 19,872 24,138

Restaurant
revenue 517,679 456,449 420,753
——- ——- ——-

Total
revenue 7,376,073 7,300,132 7,527,439

Operating expenses:

Salaries
and
wages 970,966 979,447 1,056,790

Trade
show
expense 351,907 498,951 514,570

Travel
expense 191,695 183,316 207,572

Other
operating
expenses 687,519 685,836 747,914

Restaurant
expenses 507,838 427,127 390,507

Depreciation
and
amortization 124,009 116,287 113,607

General
and
administrative 1,619,778 1,593,646 1,646,993
——— ——— ———

Total
expenses 4,453,712 4,484,610 4,677,953
——— ——— ———

Operating
income 2,922,361 2,815,522 2,849,486

Interest
and
other
expense 390,858 413,334 201,381

Adjust
valuation
of
receivables

Heyser
case – 500,000 1,208,162
— ——- ———

Income
before
income
taxes
from 2,531,503 1,902,188 1,439,943

continuing
operations

Income
tax
expense 1,002,729 753,457 568,406
——— ——- ——-

Net
income
from
continuing
operations 1,528,774 1,148,731 871,537

Loss from discontinued
operations net of tax
benefit

of $465,570 for 2011,
$344,079 for 2012 and

$511,893 for 2013 (709,816) (524,588) (780,440)
——– ——– ——–

Net
income 818,958 624,143 91,097

Cumulative
preferred
dividends 99,000 99,271 99,000
—— —— ——

Net income (Loss)
available to common

stockholders $719,958 $524,872 $(7,903)
======== ======== =======

Earnings per share – basic:

Net
income
from
continuing
operations $.08 $.06 $.05

Net loss from discontinued
operations net of tax

benefit $(.04) $(.03) $(.04)

Net
income $.04 $.03 $.01

Net income available to
common

stockholders $.04 $.03 $ –

Weighted average number of
common shares

outstanding 19,457,810 19,497,638 19,533,201

Diluted earnings per share:

Net
income
from
continuing
operations $.08 $.06 $.05

Net
loss
from
discontinued
operations
net
of
tax
benefit $(.04) $(.03) $(.04)

Net
income $.04 $.03 $.01

Weighted average number of
common shares

outstanding 20,112,278 20,077,910 20,0472,908

See accompanying notes to
consolidated financial
statements.

SOURCE Noble Roman’s, Inc.

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