Note 3 – Royalties and fees included initial franchise fees and transfer fees of $218,300 (after deferral of initial fees of $164,250 and amortization of $208,300 of previously deferred fees) for the six-month period ended June 30, 2026 and $52,409 (after deferral of initial fees of $135,000 and amortization of $123,721 of previously deferred fees and receipt of $4,000 in transfer fees) for the six-month period ended June 30, 2025.  Royalties and fees included equipment commissions of $27,802 for the six-month period ended June 30, 2026 and royalties and fees included equipment commissions of $17,605 for the six-month period ended June 30, 2025.  Royalties and fees, including amortized initial franchise fees and equipment commissions, were $3,130,590 for the six-month period ended June 30, 2026 and royalties and fees, including amortized initial franchise fees and equipment commissions, were approximately $2,900,159 for the six-month period ended June 30, 2025. Most 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 June 30, 2026, deferred contract income and deferred costs were $1,655,885.

At December 31, 2025 and June 30, 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 June 30, 2026, will be collected. 

During the three-month and six-month periods ended June 30, 2026 there were no Company-operated or franchised Craft Pizza & Pub restaurants opened or closed.  There were 18 new non-traditional outlets opened and two non-traditional outlets closed during the six-month period ended June 30, 2026.