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

Note 1 - The accompanying unaudited interim condensed consolidated financial statements, included herein, have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated statements have been prepared in accordance with the Company’s accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 20182019, as supplemented by this Form 10-Q for the three months ended June 30, 2020 and should be read in conjunction with the audited consolidated financial statements and the notes thereto included in that report. Unless the context indicates otherwise, references to the “Company” mean Noble Roman’s, Inc. and its subsidiaries.

Significant Accounting Policies

There have been no other significant changes in the Company's accounting policies from those disclosed in its Annual Report on Form 10-K except for those policies described below in relation to the adoption of Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842).

In the opinion of the management of the Company, the information contained herein reflects all adjustments necessary for a fair presentation of the results of operations and cash flows for the interim periods presented and the financial condition as of the dates indicated, which adjustments are of a normal recurring nature. The results for the nine-month periodthree-month and six-month periods ended SeptemberJune 30, 20192020 are not necessarily indicative of the results to be expected for the full year ending December 31, 2019.2020, especially in light of recent volatility and uncertainty resulting from the coronavirus (“COVID-19) pandemic and the governmental response and the government assistance in the form of a PPP grant in the amount of $715,000 affecting the three and six months ended June 30, 2020.

Long-term receivable from franchisees represent receivables from approximately 80 different non-traditional franchisees (Noble Roman’s franchises located within a host facility). These receivables originated from a variety of circumstances, including where audits of a number of the non-traditional franchises’ reporting of sales found them to be underreporting their sales and, therefore, underpaying their royalty obligations. In other instances, some franchisees were selling non-Noble Roman’s products under the Noble Roman’s trademark. In addition, some receivables arose from the Company incurring legal fees to enforce the franchise agreements and other collection costs, totaling approximately $1.9 million which adds to the receivables in accordance with the agreements. Someagreements and some of the receivables were generated by early termination of the franchise agreements. These receivables have been classified as long-term since collections are expected to extend over more than a one-year cycle. During the three-month period ended June 30, 2020, all remaining $197,294 of the franchisee receivables which had been classified as short term was transferred to long term.

Noble Roman’s, Inc., an Indiana corporation incorporated in 1972, sells and services pizza-focused foodservice franchises and licenses under the trade name “Noble Roman’s Craft Pizza & Pub,” “Noble Roman’s Pizza,” “Noble Roman’s Take-N-Bake,” and “Tuscano’s Italian Style Subs”. It also currently operates one Company-owned non-traditional Noble Roman's Pizza and Tuscano'sTuscano’s Italian Style Subs location in a hospital and fourfive Company-owned Craft Pizza & Pub restaurants.restaurants with a sixth location under development. The Company's concepts’ feature high quality fresh pizza, pasta and salads along with other related menu items, simple operating systems, fast service times, attractive food costs and overall affordability.

To facilitate accelerated growth, in the future, the Company began adding Company-owned Craft Pizza & Pub locations to its business plan in 2017 and has now begun franchising Craft Pizza & Pub on a limited basis to qualified multi-unit operators. The Company opened two Craft Pizza & Pub locations in 2017, and added two additional locations in 2018. In 2018 and opened one thus far in 2020 with another one under development expected to open near the end of the third quarter. The Company added $4.8 million in revenue from the Company-owned Craft Pizza & Pubhas plans for additional company-owned locations which had an operating income contribution to Noble Roman's in excess of $900,000 in 2018.open later this year and next year. The first franchised Craft Pizza & Pub opened onin May 2, 2019 in Lafayette, Indiana with record-breaking sales volumes. Thisand the second franchised Craft Pizza & Pub opened in November 2019 in Evansville, Indiana. The franchisee purchased a franchise forof the first franchised location has a second location to be opened in West Lafayette, Indiana. One other franchise location is now under development in Kokomo, Indiana with an anticipated opening occurring duringplans to open late summer of 2020. In addition to growth in the Fall of 2019. SinceCraft Pizza & Pub venue, since 1997 the Company hashad concentrated its efforts and resources primarily on franchising and licensing non-traditional locations and has awarded franchise and/or license agreements in all 50 states. The Company is continuing itsThat focus on franchising and licensing non-traditional locations is continuing and currently has a significant backlog of franchises sold but not yet opened, combined with an active pipelinebase of qualified prospects for additional locations.locations, however the current pandemic has slowed that development.

RH Roanoke, Inc. operates a Company-owned non-traditional location in a hospital and Noble Roman’s, Inc. owns and operates fourfive Craft Pizza & Pub locations.locations with another one under development and with plans to add more. The Company intends to use its Craft Pizza & Pub locations as a base to support the franchising and continued future growth of that concept. The Company's growth plans contemplate refinancing its existing debt and accessing additional debt capital to fund development of five additional Company-owned Craft Pizza & Pub locations for a larger base to support continued franchising and, possibly, further growth.

References in this report to the “Company” and to "Noble Roman's" are to Noble Roman’s, Inc. and its two wholly-owned subsidiaries, Pizzaco, Inc. and RH Roanoke, Inc., unless the context indicates otherwise.

Noble Roman's Craft Pizza & Pub is intended to provide a fun, pleasant atmosphere serving pizza and other related menu items, all made to order using high-qualityfresh ingredients in the view of the customers. In January 2017, the Noble Roman’s Craft Pizza & Pub opened its first Company-owned restaurant in Westfield, Indiana, a prosperous and growing community on the northwest side of Indianapolis. Since that time threefour additional Craft Pizza & Pubs have been opened as Company-owned restaurants and one franchised location opened.restaurants. Noble Roman’s Craft Pizza & Pub is designed to harken back to the Company’s early history when it was known simply as “Pizza Pub.” Like then, and like the new full-service pizza concepts today, ordering takes place at the counter and food runners deliver orders to the dining room for dine-in guests. The Company believes that Noble Roman’s Craft Pizza & Pub features many enhancements over the current competitive landscape. The restaurant features two styles of hand-crafted, made-from-scratch pizzas with a selection of over 40 different toppings, cheeses and sauces from which to choose. Beer and wine also are also featured, with 16 different beers on tap including both national and local craft selections. Wines include 16 high quality, 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 pizza offerings feature Noble Roman’s traditional hand-crafted thinner crust as well as its signature deep-dish Sicilian crust. After extensive research and development, the system has been designed to enable fast cook times, with oven speeds running approximately 2.5 minutes for traditional pies and 5.75 minutes for Sicilian pies. Traditional pizza favorites such as pepperoni are options on the menu, but also offered is a selection of Craft Pizza & Pub original creations like "Swims with the Fishes" and "Pizza Margherita". The menu also features a selection of contemporary and fresh, made-to-order salads and fresh-cooked pasta. In addition, the menu includes baked subs, hand-sauced wings and a selection of desserts, as well as Noble Roman’s famous Breadsticks with Spicy Cheese Sauce.

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. Also in the dining room is a “Dust & Drizzle Station” where guests can customize their pizzas after they are baked with a variety of condiments and drizzles, such as rosemary-infused olive oil, honey and Italian spices. 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 a large number of giant screen television monitors for sports and the nostalgic black and white shorts featured in Noble Roman’s earlier days.

Noble Roman's franchised and licensed non-traditional locations are designed to bring high-quality, pizza-focused foodservice into underlying establishments that have a captive audience or high customer counts associated with their business. Examples of these venues include convenience stores, hospitals, entertainment facilities, military bases, bowling centers and other similar facilities. Noble Roman's, for non-traditional locations, range in scope from relatively small operations focused on quick meals and impulse food purchases to elaborate, full-scale restaurant operations depending on the facility and the goals of the individual franchisee or licensee.

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.

Tuscano’s Italian Style Subs is a separate non-traditional location concept that focuses on sub sandwich menu items but only in locations that also have a Noble Roman’s franchise. The ongoing royalty for a Tuscano’s franchise is identical to that charged for a Noble Roman’s Pizza franchise.

The Company’s proprietary ingredients are manufactured pursuant to the Company’s recipes and specifications 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 sells franchises for both non-traditional and traditional locations.

Noble Roman’s Take-n-Bake Pizza licenses for grocery stores are governed by a supply agreement. The supply agreement generally requires the licensee to: (1) purchase proprietary ingredients only from a Noble Roman’s-approved distributor; (2) assemble the products using only Noble Roman’s approved ingredients and recipes; and (3) display products in a manner approved by Noble Roman’s using Noble Roman’s point-of-sale marketing materials. Pursuant to the distributor agreements, the primary distributors place an additional mark-up, as determined by the Company, above their normal selling price on the key ingredients as a fee for the Company in lieu of royalty. The distributors agree to segregate this additional mark-up upon invoicing the licensee or grocery store distributor, to hold the fees in trust for the Company and to remit them to the Company within ten days after the end of each month.

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

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

The revenue from this venue declinedgrew from $1.3$1.33 million to $1.2$1.41 million and grew from $3.66$2.47 million to $3.69$2.50 million for the respective three-month and nine-monthsix-month periods ended SeptemberJune 30, 20192020 compared to the comparable periods in 2018. The primary reason for the decrease in the three-month period2019. Revenue was same store sales declined relative to theincreased by opening weeks in the latest two store openings. Thean additional Craft Pizza & Pub restaurant on March 25, 2020 but that increase in the nine-month period was the result of one additional restaurant which opened in June 2018, however that was partially offset by the unusually extreme winter weather conditionsGovernor of the State of Indiana issuing an order on March 16, 2020 in Indiana duringresponse to the monthsCOVID-19 pandemic closing all dining rooms for inside dining for an indefinite period of Januarytime but allowed carry-out and February 2019.delivery. Most but not all, of the inside dining revenue that was lost from the closure of the dining rooms was made up through our Pizza Valet service and outside delivery service.

Cost of sales improved to 21.4%19.8% and 21.1%20.6% from 21.7%20.9% and 22.0%20.8%, respectively, for the three-month and nine-monthsix-month periods ended SeptemberJune 30, 20192020 compared to the comparable periods in 2018.2019. This improvement was the result of efficiency gained as the restaurants matured and as the staff gained experience.

Salaries and wages decreased to 29.6%2.6% and 29.9%14.2% from 30.6%28.6% and 30.8%30.2% for the respective three-month and nine-monthsix-month periods ended SeptemberJune 30, 20192020 compared to the comparable periods in 2018. This2019. The primary reason for the decrease was the PPP grant was first used for reimbursing the Company for payroll costs for retaining employees. In addition, this improvement was the result of improved efficiency as the restaurants matured and as the staff gained experience. This gainexperience and was partially offsetthe result of all of the dining rooms being closed by order of the Governor on March 16, 2020. During the period of closure the restaurants continued to use Pizza Valet service for carry-out which decreased the labor requirements to a greater extent in percentage terms than the first three months of 2019sales were reduced by the unusually extreme winter weather conditions in Indiana during the monthslack of January and February 2019.dining room service.

Facility cost including rent, common area maintenanceGross margin contribution increased from 15.7% to 42.8% and utilities increasedfrom 13.8% to 17.7% and 16.9% from 14.6% and 12.9% of revenue28.9% for the respective three-month and nine-monthsix-month periods, ended September 30, 2019respectfully, compared to the comparable periods last year. This significant increase is largely the result of the PPP grant offsetting salaries and wages and, to a lesser extent, reduction in 2018. The primary reasonother costs. Overall expenses for this venue decreased from 84.3% to 57.2% and from 86.2% to 71.1% for the significant increases was the increase in common area maintenance. In 2018, all four locations were operating in new strip centers based on the landlord's estimate of the common area maintenance costs. When the estimates were reconciled with the actual costs, the Company had to pay common area maintenance in 2019 based on the actual cost in 2018. In two cases, the actual common area maintenance costs were double the landlords' estimates. In addition, the non-cash expense related to the adoption of ASU 2016-02 increased reported rent costs by $35,636 for the nine-month period ended September 30, 2019.

Salaries and wages, trade show expense, insurance and other operating costs decreased from $1.34 million33.6% to 24.6% and $3.73 millionfrom 32.4% to 29.7% for the three-month and nine-monthsix-month periods, ended September 30, 2019respectively, compared to the comparable periods in 2018.2019. These increases were partially offset by a decrease in royalties and fees from grocery store take-n-bake, which decreased to $263,000 and $835,000 from $311,000 and $1.10 million for the three-month and nine-month periods ended September 30, 2019 comparedreductions significantly relate to the comparable periods in 2018. The increase in franchise fees and decrease in license fees from grocery stores reflectedgrant through the change in emphasis on franchising over licensing to grocery stores to sell take-n-bake pizza because ofPPP partially reimbursing the stronger economic conditionsCompany for its payroll costs during that exist today.

Gross margin increased to 70.1%66.4% to 75.4% and 68.5% from 59.4% and 58.4%67.6% to 70.3% for the three-month and nine-monthsix-month periods, ended September 30, 2019respectively, compared to the comparable periods in 2018. These2019. As indicated in the previous paragraph, these increased margins werereflect the directpartial reimbursement of the Company’s payroll costs through the PPP and partially as a result of the Company's in-depth review of its operations to find ways to minimize costs but, at the same time, increase revenue. These higher margins are expected to continue in the future.and still accomplish its mission.

Gross revenue from this venue decreased from $160,000 to $169,000$111,000 and $500,000 from $283,000 and $863,000$331,000 to $266,000 for the respective three-month and nine-monthsix-month periods ended SeptemberJune 30, 20192020 compared to the comparable periods in 2018.2019. The primary reason for this decreasethese decreases was the Company operating three non-traditionalrestriction placed on hospital locations inas a result of the three-monthCOVID-19 pandemic whereby hospitals were restricted from having outside visitors and nine-month periods ended September 30, 2018 comparedstaff inside the hospital was restricted from going from one area of the hospital to one location in the three-month and nine-month periods ended September 30, 2019.another. The two locations vacated in December 2018 were locations that the Company was only operating to the end of their contract terms. Thereafter, Company does not intend to operate any more Company-owned non-traditional locations except the one location that it is currently operating.

Comparing the variousTotal expenses is not meaningful since they reflected different types of non-traditional venues. The total expenses were $158,000decreased from $153,000 and $464,000$77,000 and $307,000 to $229,000 for the three-month and nine-monthsix-month periods ended SeptemberJune 30, 2019 compared to $279,000 and $852,000 for the comparable periods in 2018. The primary reason for this decrease was two fewer locations operated by the Company in the three-month and nine-month periods ended September 30, 20192020 compared to the comparable periods in 2018.2019. The primary reason for these decreases was restrictions on hospitals resulting from the COVID-19 pandemic.

Net income before income tax increased to $615,000$696,000 from $580,000 and $1.82decreased to $359,000 from $1.21 million from a loss of $755,000 and a net income of $334,000 for the respective three-month and nine-monthsix-month periods ended SeptemberJune 30, 20192020 compared to the corresponding periods in 2018. Net income before taxes is significant as2019. The three-month results were aided by the grant through the PPP partially reimbursing the Company will not pay anyfor its payroll costs partially offset by the lowering of income taxes on approximatelyfrom non-traditional locations because of temporary closing some of those locations because of COVID-19. The six-month period decrease was substantially because of the next $15 millionnon-cash write-off of taxable income. The loss in 2018 was largelyunamortized loan costs of the result of an adjustment for valuation of receivables of $1.30 million in bothCompany’s previous debts and the three-month and nine-month periods.non-cash expense from the PIK interest cost.

NetDue to the factors discussed above, net income increased to $468,000$696,000 from $441,000 and $1.40 milliondecreased to $441,000 from a loss of $562,000 and net income of $252,000$917,000 for the respective three-month and nine-monthsix-month periods ended SeptemberJune 30, 20192020 compared to the corresponding periods in 2018. The loss2019. Income tax expense is not significant in 2018 was largely the resultsecond quarter as the benefit from the reimbursement of an adjustment for valuation of receivables before income tax effect of $1.30 millioncertain expenses in both the three-month and nine-month periods.PPP is non-taxable as designated in the CARES Act.

The Company’s strategy is to grow its business by concentrating on franchising/licensing non-traditional locations, franchising its updated stand-alone concept, Craft Pizza & Pub and operating a limited number of Company-owned Craft Pizza & Pub restaurants. The Company currently owns and operates fouradded new Company-operated Craft Pizza & Pub locations in January and November of which two were opened in 2017, January and two were opened in 2018. The Company has plans to open five more Company-owned Craft Pizza & Pub locations over the next 15 months.

During 2018, the Company invested resources (approximately $300,000) to commence franchising of the Craft Pizza & Pub concept. The Company's first franchisedfranchise. As of December 31, 2019, the Company had two Craft Pizza & Pub locations under franchise agreements which were open and an additional franchise location opened on May 2, 2019, a second location isunder development and expected to open within the next two weeks and another franchise agreement has been signed and is expected to open within the next three months.in late summer of 2020.

The Company is operating one non-traditional location in a hospital and has no plans for operating any additional non-traditional locations.

The Company’s current ratio was 1.8-to-15.2-to-1 as of SeptemberJune 30, 20192020 compared to 2.4-to-11.5-to-1 as of December 31, 2018.2019. The current ratio was improved significantly with the new financing in February 2020 and operations through June 30, 2020.

In January 2017, the Company completed the offering of $2.4 million principal amount of convertible, subordinated and unsecured promissory notes (the “Notes”) convertible to common stock at $.50$0.50 per share and due three years after issue datewarrants (the "Notes"“Warrants”) 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 (the "Warrants").adjustment. 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 $500,000 have been$50,000 was converted to 1,000,000into 100,000 shares of the Company’s common stock, and in August 2019 another Note in the holdersprincipal 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 have extended thetheir maturity of their Notesdate to January 31, 2023. The remaining Notes, in the amount of $1.125 million, matured in November 2019. The Company's loan agreement with the Bank (as defined below) prohibits the Company from repaying anyIn February 2020, $1,275,000 of the Notes until the senior debt iswere repaid in conjunction with a new financing leaving a principal balance of $625,000 of subordinated convertible notes outstanding due January 31, 2023. These Notes bear interest at 10% per annum paid in full. However the extended Notes can be convertedquarterly and are convertible to common stock at any time prior to their maturity in accordance withat the termsoption of the Notes. The Company currently has plansholder at $0.50 per share. Warrants to refinance its banks loan with an expanded credit facilitypurchase 1,775,000 shares of common stock at $1.00 per share expired late in the amount of $10 million. It is expected that borrowings under the new facility will be used to repay existing bank debt, to repay un-extended Notes and to fund the development of five additional Company-owned Craft Pizza & Pub locations. If this is completed as planned, the repayment of convertible debt will reduce future potential dilution by $4,175,000 shares underlying the debt.2019.

In September 2017, the Company entered into a loan agreement (the “Loan“Bank Agreement”) with First Financial Bank (the “Bank”). The LoanBank Agreement providesprovided for a senior credit facility (the “Credit Facility”) from the Bank consisting of: (1) a term loan in the amount of $4.5 million (the “Term Loan”); and (2) a development line of credit of up to $1.6 million (the “Development Line of Credit”) for the opening of three Craft Pizza & Pub restaurants. Borrowings under the Credit Facility bearbore interest at a variable annual rate equalup to the London Interbank Offer Rate (“LIBOR”) plus 4.25%7.25%. All outstanding amounts owed under the LoanBank Agreement were due to mature in September 2022.2022, however these amounts were all paid in full from the $8.0 million new financing in February 2020.

On April 25, 2020, the Company received a loan of 2019.$715,000 under the PPP. It is probable this will be forgiven, therefore the Company has accounted for it as a grant. The funds, according to the provision in the CARES Act, were used for payroll costs including payroll benefits and other minor costs allowed by the act.

As a result of the financial arrangements described above including the planned new financing and 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. 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/licensing venues, operating Craft Pizza & Pub locations, to open additional Company-owned Craft Pizza & Pub restaurants and pursuing an aggressive franchising program for Craft Pizza & Pub restaurants.

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. In February 2016, the FASB issued ASU 2016-02, its leasing standard for both lessees and lessors. Under its core principle, a lessee recognizes operating lease assets and liabilities on the balance sheet for all arrangements with terms longer than 12 months. This new standard took effect on January 1, 2019 for public business entities and are reflected in the financial statements included herein.

The statements contained above in Management’s Discussion and Analysis 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:to the Company's successful completioneffects of its proposed credit facility, resolution of a disagreement with the Bank over the interpretation of certain financial covenants and/or the Company's ability to service or refinance its debt,COVID-19 pandemic, competitive factors and pricing pressures, non-renewal of franchise agreements, shifts in market demand, the success of new franchise programs, including the new Noble Roman’s Craft Pizza & Pub format, the Company’s ability to successfully operate and manage costs of an increased number of Company-owned restaurants, 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 changes in prices or supplies of food ingredients and labor as well as the factors discussed under “Risk Factors”Factors " contained in our Annual Reportthe annual report on Form 10-K for the year ended December 31, 2018.10-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.

Based on their evaluation as of the end of the period covered by this report, A. Scott Mobley, the Company’s President and Chief Executive Officer, and Paul W. Mobley, the Company’s Executive Chairman and Chief Financial Officer, have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are effective. There have been no changes in internal controls over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company is not involved in any material litigation against it.