UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2025

Commission file number: 0-11104

(317) 634-3377

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 20, 2025, there were 22,215,512 shares of Common Stock, no par value, outstanding.

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

The following unaudited consolidated financial statements are included herein:

Noble Roman's, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited and Not Reviewed)

See accompanying notes to condensed consolidated financial statements (unaudited).

Noble Roman's, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited and Not Reviewed)

See accompanying notes to condensed consolidated financial statements (unaudited).

Noble Roman's, Inc. and Subsidiaries

Consolidated Statements of Changes in

Stockholders' Equity

(Unaudited and Not Reviewed)

Three Months Ended March 31, 2025:

Three Months Ended March 31, 2024:

See accompanying notes to condensed consolidated financial statements (unaudited)

Noble Roman's, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited and Not Reviewed)

See accompanying notes to condensed consolidated financial statements (unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Noble Roman’s, Inc., an Indiana corporation incorporated in 1972, sells and services franchises, operates Company-owned stand-alone restaurants and non-traditional foodservice operations under the trade names “Noble Roman’s Craft Pizza & Pub,” “Noble Roman’s Pizza,” “Noble Roman’s Take-N-Bake,” and “Tuscano’s Italian Style Subs.” References in this report to the “Company” are to Noble Roman’s, Inc. and its wholly-owned subsidiaries, unless the context requires otherwise. The Company’s only operating subsidiary is RH Roanoke, Inc., which operates a Company-owned non-traditional location.

The Company has been operating and franchising Noble Roman’s Pizza operations in a variety of stand-alone and non-traditional locations across the country since 1972. Its first Craft Pizza & Pub location opened in January 2017 as a Company-operated restaurant in a northern suburb of Indianapolis, Indiana. Since then, the Company opened a total of eight more Company-operated Craft Pizza & Pub locations in 2017, 2018, 2020 and 2021. The Company-operated locations serve as the base for what it sees as a significant potential future growth driver, including additional Company operated locations and franchising its full-service restaurant format to experienced, multi-unit restaurant operators with a track record of success. In addition to the nine Company-operated Craft Pizza & Pub locations, during 2019 and 2020 the Company opened three franchised locations. Today, in total, there are 12 Craft Pizza & Pub locations in operation.

Noble Roman’s Pizza for Non-Traditional Locations

In 1997, the Company started franchising non-traditional locations (a Noble Roman’s pizza operation within some other host business or activity with existing traffic) such as entertainment facilities, hospitals, convenience stores and other types of facilities. Today the Company is focusing primarily on convenience stores and travel plazas for rapid expansion of its non-traditional franchises. These locations offer the two pizza styles the Company started with in 1972, along with its great tasting, high quality ingredients and menu extensions.

The hallmark of Noble Roman’s Pizza for non-traditional locations is “Superior quality that our customers can taste.” Every ingredient and process has been designed with a view to produce superior results.

As discussed under “Impact of COVID Pandemic” above, revenue from the franchising venue declined in 2021 and early 2022 due to the number of government-forced closures in an attempt to prevent the spread of COVID. The franchising section was made up of a number of franchises located in all types of entertainment facilities such as bowling centers and family entertainment centers. The regulations varied in different states but for the most part closing orders were in effect for two years after which most of those franchisees did not have the financial means of reopening.

The Company refocused its development plans toward selling more non-traditional franchises as a result of the pandemic coming to an end and the owners of non-traditional locations becoming more willing to look at expansion options and to invest in their growth. The focus on selling more non-traditional franchise locations, including several locations with higher-than-average potential volumes, is proceeding. The Company has sold many units yet to be opened and still has a significant pipeline of prospects to expand the number of non-traditional franchise locations in operation. In October 2023, the Company entered into a Development Agreement with Majors Management, LLC (“Majors”) for 100 franchise locations to be developed over the succeeding three years. Currently, Majors has opened approximately half of the 100 franchised locations.

Noble Roman’s Craft Pizza & Pub

The Noble Roman’s Craft Pizza & Pub format incorporates many of the basic elements first introduced in 1972 but in a modern atmosphere with up-to-date baking technology and equipment to maximize speed, enhance quality and perpetuate the taste customers love and expect from a Noble Roman’s.

The Noble Roman’s Craft Pizza & Pub provides for a selection of over 40 different toppings, cheeses and sauces from which to choose. Beer and wine also are featured, with 16 different beers on tap including both national and local craft selections. Wines include 16 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 Company designed the system to enable fast cook times, with oven speeds running approximately three minutes for traditional pizzas and 5.75 minutes for Sicilian pizzas. Popular pizza favorites such as pepperoni are options on the menu but also offered is a selection of Craft Pizza & Pub original pizza creations. The menu also features a selection of contemporary and fresh, made-to-order salads and fresh-cooked pasta. The menu also incorporates baked sub sandwiches, hand-sauced boneless wings and a selection of desserts, as well as Noble Roman’s famous Breadsticks with Delicious Cheese Sauce, most of which have been offered in its locations since 1972. In 2022, new salad bars were rolled out over time across all Company-operated restaurants.

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. Kids and adults enjoy Noble Roman’s self-serve root beer tap, which is also part of a special menu for customers 12 and younger. Throughout the dining room and the bar area there are many giant screen television monitors for sports and the nostalgic black and white shorts featured in Noble Roman’s since 1972.

The Company designed its curbside service for carry-out customers, called “Pizza Valet Service,” to create added value and convenience. With Pizza Valet Service, customers place orders ahead, drive into the restaurant’s reserved valet parking spaces and have their pizza run to their vehicle by specially uniformed pizza valets. Customers who pay when they place their orders are able to drive up and leave with their order very quickly without stepping out of their vehicle. For those who choose to pay after they arrive, pizza valets can take credit card payments on their mobile payment devices right at the customer’s vehicle. With the fast baking times, the entire experience, from order to pick-up can take as little as 12 minutes. The Company’s continued focus on quality service and speed in the Craft Pizza and Pub locations has resulted in May 2025 being the most profitable month of operations on a combined basis since August 2022. In addition, same store sales in April were up 2.7% and in May were up 9.3% over the corresponding months a year ago.

Business Strategy

The Company is focused on revenue expansion while carefully managing corporate-level overhead expenses. The Company refocused its development plans toward selling more non-traditional franchises as a result of the pandemic coming to an end and the owners of non-traditional host facilities becoming more willing to look at expansion options and to invest in their growth. The Company has a significant pipeline of leads and prospects for future non-traditional franchise sales as well as a significant number of franchised locations sold but not yet open. The tight control on administrative costs has led to general and administrative expenses of approximately $424,000 in the first quarter of 2025 versus $577,000 in the corresponding quarter in 2024.

The initial franchise fees for a Noble Roman’s Pizza non-traditional location or a Craft Pizza & Pub location are as follows:

The franchise fees are paid upon signing the franchise agreement and recorded in deferred income which begins amortizing into income over the life of the contract from the time the location opens for business and, when paid, are non-refundable in consideration of the administration and other expenses incurred by the Company in granting the franchises.

Business Operations

Distribution

The Company’s proprietary ingredients are manufactured pursuant to the Company’s specifications or recipes by third-party manufacturers under contracts between the Company and its various manufacturers. These contracts require the manufacturers to produce ingredients meeting the Company’s specifications and to sell them to Company-approved third-party distributors at prices negotiated between the Company and the manufacturer.

The Company has third-party distributors strategically located throughout the United States. The agreements require the distributors to maintain adequate inventories of all ingredients necessary to meet the needs of the Company’s franchisees in their distribution areas for weekly deliveries to the franchisee. Each of the primary distributors purchases the ingredients from the manufacturers at prices negotiated between the Company and the manufacturers, but under payment terms agreed upon by the manufacturers and the distributor, and distributes the ingredients to the franchisee at a price determined by the distributor agreement. Payment terms to the distributor are agreed upon between each franchisee and the respective distributor.

Financial Summary

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results may differ from those estimates. The Company periodically evaluates the carrying value of its assets, including property, equipment and related costs, accounts receivable and deferred tax assets, to assess whether any impairment indications are present. If any impairment of an individual asset is evident, a charge will be provided to reduce the carrying value to its estimated fair value.

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:

Note: The significant increase in revenue was primarily the result of the hospital remodeling the food area and opening up another wing of the hospital late in 2024.

Results of Operations

Company-Owned Craft Pizza & Pub

The revenue from this venue was $2,019,418 for the three months ended March 31, 2025 compared to $1,995,524 for the corresponding period in 2024. The same stores sales increase of approximately 1.2% was heavily weighted in March. In January and February the Company’s market area experienced frequent periods of inclement weather. In March, sensing another downturn in consumer spending, the Company began more heavily promoting a significant value message in its marketing efforts.

Cost of sales decreased to 18.8% for the three months ended March 31, 2025 from 20.9% for the corresponding period last year. This decrease was because the Company maintained good controls over portioning and promoted large pizzas with lower costs, partially offset by the continuing high cost of cheese.

Salaries and wages remained relatively unchanged at 29.7% for the three months ended March 31, 2025 from 29.8% for the comparable period in 2024, was the result of more efficient use of labor due to increased average tenure and experience of the Company’s workforce which mostly offset the significant salary increases caused by competition from experienced management within a tight workforce pool.

Gross margin contribution decreased to 6.4% for the three months ended March 31, 2025 from 8.2% for the comparable period last year, which was primarily the result of inflationary pressures on most all expenses as well as significant discounting created by the Company’s value promotions in the face of weak consumer spending.

Franchising

Although the ERC refund for extra expenses and lost revenue was recorded in the first quarter of 2023, the actual reimbursements occurred mostly in 2024 and a portion of that reimbursement has yet to be received but has been acknowledged by the Internal Revenue Service.

The revenue from this venue increased from $1,425,290 to $1,445,908 in the three months ended March 31, 2025 compared to the corresponding period in 2024. There was a one-time charge in 2024 of approximately $77,000 due to a change in the method of recording income from product usage as reported by monthly distributor reports to acknowledge revenue when the manufacturers acknowledge it, which causes an income recognition problem because the Company does not have any type of report telling them when the manufacturers recognize the liability. When the Company was using the distributor reports it gave the Company control over what the manufacturers were acknowledging. This change lowered revenue from this venue in December 2024, which will be recognized in future periods. There was another charge of approximately $75,000 to revenue from this revenue due to the charge off of a receivable from a soft drink supplier under a binding agreement entered into in 2023 for an allowance to the Company of $125,000 to be paid in equal payments over five years for changing the soft drink brands offered in Company-owned Craft Pizza & Pub locations. That lowered revenue reported in December 2024 by $75,000, however the Company will recognize $25,000 of related revenue in each of the years 2025, 2026 and 2027.

The Company enjoyed significant growth in the number of non-traditional franchises opened during 2024, which is continuing at an accelerated pace so far in 2025. The Company opened 68 new non-traditional locations in 2024 and is expecting to open 60 to 70 new non-location locations in 2025. The Company still has a pipeline of interested prospects for additional franchise sales and a significant number of franchised locations sold but not yet opened.

Salaries and wages decreased to 14.6% from 16.4% as a percent of revenue for the comparable period in 2025 versus 2024. This decrease came primarily from the growing number of franchises open without the necessity of adding additional staff. The Company’s franchising business model allows it to substantially grow the number of open units without any material increase in overhead.

Company-Owned Non-Traditional Location

Gross revenue from this venue increased to $294,573 from $238,147 in the three-month period ended March 31, 2025 compared to the corresponding period in 2024. This growth came despite the operations being moved out of the primary location in the facility into temporary space with limited hours and limited menu while the primary space was being totally remodeled. In addition to remodeling the primary space, the hospital completed the construction and an addition to the hospital which significantly increased the hospital’s capacity and number of rooms for occupancy. In 2025, as the Company is back in its traditional space after the remodel and the hospital has opened its new additional wing and fully in operation, the Company is now experiencing approximately 25% growth in its sales over the same period a year ago and expects to continue that throughout the year. The Company does not intend to operate any more Company-owned non-traditional locations except the one location that it is currently operating.

Other Expenses

Depreciation and amortization remained approximately constant at $96,000 for the three-month periods ended March 31, 2025 and 2024. The primary reason for this consistency is the fact that no additional new Company-owned locations have opened since late 2021. In December 2024 the Company recognized a one-time charge of approximately $113,000 for depreciation of some used equipment from a prior closed location for which it failed to charge depreciation for the remaining useful life. That was a one-time charge and will not impact or reoccur on any future report.

General and administrative expenses decreased to $424,405 from $577,286 for the three-month period ended March 31, 2025 compared to the corresponding period in 2024. The primary reason for the decrease was the continued focus on maintaining low administrative cost while increasing revenue through expansion of the non-traditional franchise locations. Furthermore, this strategy does not require significant additional capital to support growth as well.

Interest expense decreased to $329,754 from $394,180 for the three-month period ended March 31, 2025 compared to the corresponding period in 2024. The primary reason for the decrease was the continued repayment of principal in the amount of $83,333 per month for all months up through April, however was offset by the addition of non-cash PIK interest which increased the principal amount. In May the monthly principal payments increased to $91,667 in connection with the extension of maturity of the Senior Note. In addition, starting in May 2025, the interest rate on this loan changed to SOFR plus 9% and the PIK interest was discontinued, which had formerly been 3%.

Net income was $130,633 after an accrual for income tax, which will not be paid in cash for a significant period of time, or $.01 per share, for the three-month period ended March 31, 2025. The income prior to the non-cash tax accrual was $171,885 compared to a net loss of $86,477 before tax effect for the comparable period in 2024.

Liquidity and Capital Resources

The Company’s current ratio was .9-to-1 as of March 31, 2025 compared to .9-to-1 as of December 31, 2024. As a result of the amendment, including the extension of the maturity of the Senior Note to June 30, 2026, both the Senior Note and the subordinated convertible notes were carried as long-term liabilities as of December 31, 2024, except for the required principal payments due in the next 12 months.

In January 2017, the Company completed the offering of $2.4 million principal amount of the Notes convertible at $0.50 per share and Warrants to purchase up to 2.4 million shares of the Company’s Common Stock at an exercise price of $1.00 per share, subject to adjustment which brings the exercise price to $.10 per share as a result of the Senior Note extension. In 2018, $400,000 principal amount of Notes was converted into 800,000 shares of the Company’s Common Stock, in January 2019 another Note in the principal amount of $50,000 was converted into 100,000 shares of the Company’s Common Stock, and in August 2019 another Note in the principal amount of $50,000 was converted into 100,000 shares of the Company’s Common Stock, leaving principal amounts of Notes of $1.9 million outstanding as of December 31, 2019. Holders of Notes in the principal amount of $775,000 extended their maturity date to January 31, 2023. In February 2020, $1,275,000 principal amount of the Notes were repaid in conjunction with a new financing leaving a principal balance of $625,000 of subordinated convertible notes outstanding due January 31, 2023. In April 2023, the holder of $50,000 principal amount of the subordinated convertible notes were repaid by the Company leaving $575,000 outstanding. These Notes bear interest at 10% per annum, including the Notes which have not been extended, paid quarterly and are convertible to Common Stock any time prior to maturity at the option of the holder at the current exercise price of $0.50 per share.

In February 2020, the Company entered into the Agreement with Corbel, pursuant to which the Company issued to Corbel the Senior Note in the initial principal amount of $8.0 million. The Company used the net proceeds of the Senior Note as follows: (i) $4.2 million to repay the Company’s then-existing bank debt which were in the original amount of $6.1 million; (ii) $1,275,000 to repay the portion of the Company’s existing subordinated convertible debt the maturity date of which most had not previously been extended; (iii) debt issuance costs; and (iv) for working capital and other general corporate purposes, including development of new Company-owned Craft Pizza & Pub locations.

The Senior Note, as amended, bears cash interest of SOFR, as defined in the Agreement, plus 9.0% with no PIK interest, which was previously added to the principal amount of the Senior Note. Interest is payable in arrears on the last calendar day of each month. The original maturity date of the Senior Note was February 7, 2025, however the maturity has now been extended by mutual agreement to June 30, 2026. The Senior Note requires principal payments of $91,667 per month starting in May 2025.

In view of the extension of the Senior Note as well as the Company’s cash flow projections, the Company believes it will have sufficient cash flow to meet its obligations and to carry out its current business plan for the foreseeable future. The Company’s cash flow projections for the next two years are primarily based on the Company’s strategy of growing the non-traditional franchising venue, operating its existing Craft Pizza & Pub locations and pursuing a franchising program for Craft Pizza & Pub restaurants as market conditions allow.

The Company does not anticipate that any of the recently issued pronouncements relating to the Statement of Financial Accounting Standards will have a material impact on its Consolidated Statement of Operations or its Consolidated Balance Sheet.

Forward-Looking Statements

The statements contained above in Management’s Discussion and Analysis concerning the Company’s future revenues, profitability, financial resources, financing efforts, 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 competitive factors and pricing and cost pressures, the Company’s ability to service its loan and refinance the Senior Note before its maturity in 2026, the emergence or spread of human or animal pandemics (such as COVID-19 or the Avian Bird Flu), non-renewal of franchise agreements or the openings contemplated by the Development Agreement not occurring, shifts in market demand, the success of franchise programs, general economic conditions, changes in demand for the Company’s products or franchises, 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 the Annual Report on Form 10-K. 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, or if certain parties (acting individually or as a group) seek to continue or initiate interference in the Company’s business relationships, the Company business could be adversely impacted.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

The Company’s exposure to interest rate risk relates primarily to its variable-rate debt and the rate that will be required for the new financing. As of March 31, 2025, the Company had outstanding variable interest-bearing debt in the aggregate principal amount of approximately $6.5 million. The Company’s current borrowings are at a variable rate tied to SOFR plus 9.0% per annum adjusted on a monthly basis. Based on its current debt structure, for each 1% increase in SOFR the Company would incur increased interest expense of approximately $65,000 over the succeeding 12-month period.

ITEM 4. Controls and Procedures

In connection with the preparation of this quarterly report, management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this quarterly report. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures are designed only to provide reasonable assurance, and no matter how well designed and operated, there can be no assurance that disclosure controls and procedures will operate effectively in all circumstances. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that as of March 31, 2025, the Company’s disclosure controls and procedures were effective based on the criteria in Internal Control – Integrated Framework issued by the COSO, version 2013, as discussed below.

Management’s Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s internal control over financial reporting. The Company’s management used the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) to perform this evaluation and previously identified in connection with the preparation of the December 31, 2024 financial reports, as described in the 2024 Form 10-K. Management is implementing remediation efforts to address these alleged weaknesses. Management is committed to remediating them as quickly and efficiently as possible, validating those efforts will require time, operating over a sustained period and validation during the next audit.

The alleged weakness in controls consisted of inadequate receipts for certain expenses and identified that the Company’s financial close process allegedly did not include adequate controls to ensure timely and accurate reconciliation of certain account balances in the reconciliation process. In addition, the Company found that it lacked sufficient written documentation of internal control policies and procedures over some financial reporting processes. The absence of documented internal controls may impair the Company’s ability to ensure that controls are performed as intended increasing the risk of undetected errors or misstatements.

Except for ongoing remediation activities described above, there have been no changes in internal controls over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings.

The Company is not involved in material litigation against it.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

ITEM 5. Other Information.

Not applicable.

ITEM 6. Exhibits.

Index to Exhibits

*Management contract or compensation plan.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.