Noble Roman’s recently announced 2/10/2020 Financing Package Press Release the completion of a new financing package consisting of an $8 million senior secured term loan with a 5-year maturity and a warrant purchase agreement. $2.5 million of the proceeds are to be used for development of three new Company-owned Craft Pizza Pub locations in and around the Indianapolis area as well as general working capital and debt insurance costs.

The balance of the financing package, $5.5 million, consolidates the Company’s existing debt with the new expansion capital by repaying the balance of $4.2 million on former bank loans. The new loan also provides funds to repay $1,275,000 of the Company’s subordinated convertible debt leaving $625,000 of subordinated debt which maturity had previously been extended to January 31, 2023.

The cash interest rate on the term loan is LIBOR + 7.75% per annum which at the current time would be 9.42% plus “payment in kind”. PIK interest of 3%, which when added to the principal amount of the note, is payable monthly in arrears. The note matures on 2/7/2025 and does not require any principal payment until 2/28/2023 when monthly principal payments of $33,333 will commence and continue until maturity.

While there are warrants attached, maturing in six years, for 2,250,000, these warrants replace those attached to the previous debt, so the net result is a reduction of 1.8 million fully diluted shares. Also, the new warrants have to be exercised for cash, bringing in $1.3 million of additional funds, versus the previous warrants which could be redeemed with a cashless exercise. The new warrants are issued in three tranches, the first is for 1,200,000 shares at $0.57 per share, the second for 900,000 shares at $0.72 per share, and the third for 150,000 shares at $0.97 per share.

Noble Roman’s Balance Sheet Improvement

The most recent $8M financing puts the Company in the strongest position it has experienced in recent years. It allows them to pay off the existing debt, with over $1.5 million of working capital to restart their expansion of Company operated stores. Especially with the current economic turmoil related to the Coronavirus, the Company should be able to make better lease deals on new locations. The Company has been producing approximately $3M of EBITDA annually over the last several years, so that should comfortably allow for servicing the new debt and opening the new stores, the first of which is scheduled for late March. Noble Roman’s stock should also be valued materially higher than the current level, due to the reduced risk provided from the recent financing.

12/2/2019 Press Release – New franchise location in Evansville, IN (third largest city in Indiana) set a new sales record for the first seven days of operations – $63K. The sales beat the previous record opening by nearly 15%. The new franchisee has extensive restaurant experience as a former multi-unit McDonald’s franchisee.

2/10/2020 Brownsburg Press Release – It was also announced that a third franchise location, which is owned by the Lafayette franchisee, Patrick O’Neal, is currently under development for Kokomo, Indiana.


The new financing, in essence, provides Noble Roman’s with a new expansion phase, with adequate financing in place to cover the next several years at least. While the total interest rate on the new financing package is high, NROM management is confident that the return on investment will be substantially more than the cost of capital.

The first new Noble Roman’s Craft Pizza Pub location is already planned to open in late March, and successful restaurant openings often create new interest in the underlying stock. The location will be in Brownsburg, IN, just outside Indianapolis, and that market knows the Noble Roman’s Brand well, so it is a reasonable expectation that it will be successful. The second and third new locations, also funded through the latest financing, are expected to open later in 2020, according to the Company 2/10/2020 Financing Package Press Release

Exercise of the warrants, when that happens, will provide $1.3M in total. Along with internally generated funds, this should fund further Company store expansion beyond the three new stores of 2020. Along with the expected further expansion by existing franchisees, there is the possibility that new franchisees will sign up. With or without new franchisees, it is likely that new locations will be opened, by Company and franchisees in total, every three or four months over the foreseeable future. This pace could expand further if new franchisees are added to the mix. All of the above will likely fuel a rise in the stock of Noble Roman’s (OTCQB:NROM), and we therefore advise purchase.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

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