Note 3 – Royalties and fees included initial franchise fees of $72,483 (after deferral of $56,000 initial fees and amortization of $66,483 of previously deferred fees) for the three-month period ended March 31, 2026 and $63,779 (after deferral of initial fees of $37,500 and amortization of $45,142 of previously deferred fees) for the three-month period ended March 31, 2025. Royalties and fees included equipment commissions of $5,859 for the three-month period ended March 31, 2026 and $12,801 for the three-month period ended March 31, 2025. Royalties and fees, including amortized initial franchise fees and equipment commissions, were $1,510,493 for the three-month period ended March 31, 2026 and $1,445,908 for the three-month period ended March 31, 2025. Essentially all of the cost for the services required to be performed by the Company are incurred prior to the franchise fee income being recorded, which is based on a contractual liability of the franchisee.

At March 31, 2026, the deferred contract income and deferred contract cost was $1,689,451. Both balances are recognized in income and expense over the term of the underlying franchise agreement.

At December 31, 2025 and March 31, 2026, the carrying values of the Company’s franchise receivables have been reduced to anticipated realizable value. After considering this reduction of carrying value, the Company anticipates that substantially all of its accounts receivable reflected on the consolidated balance sheet as of March 31, 2026, will be collected although the Company does have a reserve of approximately $231,000 against those receivables.

During the three-month period ended March 31, 2026, there were no Company-operated or franchised Craft Pizza & Pub restaurants opened or closed. During the same three-month period nine new non-traditional outlets opened and one non-traditional outlet closed.