v3.26.3
Segment Reporting
 9 Months Ended
Sep. 30, 2026
Segment Reporting  
Segment Reporting

Note 12 – Segment Reporting - The Company accounts for segment reporting in accordance with Accounting Standards Codification (“ASC”) Topic No. 280/ASU 2023-07, Segment Reporting. Operating segments are components of an enterprise for which separate financial information is available and regularly reviewed by the chief operating decision maker ("CODM") in deciding how to allocate resources and assess performance.

 

Nine-Month Period Ended September 30, 2026

 

 

 

Franchising

 

 

Company-Owned Restaurants

 

 

Total

 

Revenue

 

$4,759,683

 

 

$6,474,085

 

 

$11,233,768

 

Administrative fees and other revenue

 

 

-

 

 

 

-

 

 

 

39,186

 

Total revenue

 

 

4,759,683

 

 

 

6,474,085

 

 

 

11,272,954

 

Segment operating expenses

 

 

(1,275,067)

 

 

(5,966,269)

 

 

(7,241,336)

Segment contribution margin

 

$3,484,616

 

 

$507,816

 

 

$4,031,618

 

 

Nine-Month Period Ended September 30, 2025

 

 

 

Franchising

 

 

Company-Owned Restaurants

 

 

Total

 

Revenue

 

$4,367,815

 

 

$6,630,583

 

 

$10,998,398

 

Administrative fees and other revenue

 

 

-

 

 

 

-

 

 

 

64,433

 

Total revenue

 

 

4,367,815

 

 

 

6,630,583

 

 

 

11,062,831

 

Segment operating expenses

 

 

(1,401,190)

 

 

(5,893,883)

 

 

(7,295,073)

Segment contribution margin

 

$2,966,625

 

 

$736,700

 

 

$3,767,758

 

Nine Months Ended September 30,

 

 

 

2026

 

 

2025

 

Total segment contribution margin

 

$4,031,618

 

 

$3,767,758

 

General and administrative expenses

 

 

(1,904,671)

 

 

(1,548,409)

Depreciation and amortization

 

 

(305,549)

 

 

(293,545)

Operating income

 

 

1,821,398

 

 

 

1,925,804

 

Interest expense

 

 

(1,020,522)

 

 

(1,156,870)

Income before income taxes, discontinued operations and decrease in value of warrants

 

$800,876

 

 

$768,934

 

 

Three Months Ended September 30, 2026

 

 

 

Franchising

 

 

Company-Owned Restaurants

 

 

Total

 

Revenue

 

$1,629,093

 

 

$2,166,285

 

 

$3,795,378

 

Administrative fees and other revenue

 

 

-

 

 

 

-

 

 

 

(706)

Total revenue

 

 

1,629,093

 

 

 

2,166,285

 

 

 

3,794,672

 

Segment operating expenses

 

 

(433,427)

 

 

(2,026,055)

 

 

(2,459,482)

Segment contribution margin

 

$1,195,666

 

 

$140,230

 

 

$1,335,190

 

 

Three Months Ended September 30, 2025

 

 

 

Franchising

 

 

Company-Owned Restaurants

 

 

Total

 

Revenue

 

$1,467,655

 

 

$2,286,707

 

 

$3,754,362

 

Administrative fees and other revenue

 

 

-

 

 

 

-

 

 

 

57,479

 

Total revenue

 

 

1,467,655

 

 

 

2,286,707

 

 

 

3,811,841

 

Segment operating expenses

 

 

(459,998)

 

 

(1,994,014)

 

 

(2,454,012)

Segment contribution margin

 

$1,007,657

 

 

$292,693

 

 

$1,357,829

 

 

Three Months Ended September 30,

 

 

 

2026

 

 

2025

 

Total segment contribution margin

 

$1,335,190

 

 

$1,357,829

 

General and administrative expenses

 

 

(674,748)

 

 

(554,897)

Depreciation and amortization

 

 

(104,408)

 

 

(97,465)

Operating income

 

 

556,034

 

 

 

705,467

 

Interest expense

 

 

(167,071)

 

 

(405,534)

Income before income taxes, discontinued operations and decrease in value of warrants

 

$388,963

 

 

$299,933

 

The Company generates revenue from the following primary sources:

 

Restaurant Revenue

Restaurant revenue consists primarily of food and beverage sales from Company-owned Craft Pizza & Pub locations and a Company-operated non-traditional location, which was discontinued as of August 11, 2026. The revenue from the discontinued restaurant operations was moved to discontinued operations. Revenue is recognized at the point in time when food and beverage products are provided to customers. Payment is generally received at the time of sale through cash, credit card, or other electronic payment methods.

 

Franchise Royalties

The Company enters into franchise agreements with the owners of the pizza program that they install in their convenience stores that documents the terms of their agreement, which provide for ongoing royalty fees based on a percentage of the pizza program sales. Royalty revenue is recognized as the underlying franchise sales occur because the nature of the Company's performance obligation is to provide ongoing access to the Company's intellectual property and franchise system. Royalty revenue is generally billed and collected weekly through automated clearing house (ACH) withdrawals.

 

Initial Franchise Fees

Initial franchise fees and transfer fees are received upon execution of franchise agreements or transfer agreements. Because the initial franchise fee does not represent a separate performance obligation, the fee had formerly been deferred and recognized over the term of the related franchise agreement, which is generally ten years, as the Company satisfies its ongoing performance obligations to the franchisee. Since the Company lowered its upfront fee for non-traditional franchises to $2,750 the Company spends more money on the acquiring of the franchise than the fee provides. The Company now recognizes both the fee income and the cost at the time the fee is received. Any differences between the cost and the fee is immaterial.

 

Equipment Commissions

The Company assists franchisees in arranging equipment purchases from third-party vendors and earns commissions on certain equipment sales. Revenue is recognized when the underlying equipment transaction is completed and the Company's performance obligation has been satisfied.

 

Manufacturer and Distributor Allowances

The Company receives consideration from approved manufacturers and distributors related to the use of the Company's proprietary recipes, formulas, specifications, and approved product programs. Revenue from these arrangements is recognized as the underlying product sales occur based on sales reports received from distributors.

 

Administrative Fees and Other Revenue

Administrative fees and other revenue primarily consist of various franchise-related charges and other miscellaneous revenue streams and are recognized when the related services are performed or when the Company's performance obligations have been satisfied.

Disaggregation of Revenue

 

The following table disaggregates revenue by major revenue source for the nine-month periods ended September 30:

 

Revenue Source

 

2026

 

 

2025

 

Company-owned Craft Pizza & Pub restaurant revenue

 

$6,474,085

 

 

$6,630,583

 

Franchising revenue (including royalties, franchise fee amortization, manufacturer allowances, equipment commissions and other franchise-related revenue)

 

 

4,759,683

 

 

 

4,367,815

 

Administrative fees and other revenue

 

 

39,186

 

 

 

64,433

 

Total Revenue

 

$11,272,954

 

 

$11,062,831

 

 

The Company's CODM is its Chief Executive Officer.

 

The Company has identified two reportable operating segments:

 

·

Franchising – Consists primarily of franchise royalties, franchise fee revenue, manufacturer and distributor allowances, equipment commissions, and related support activities.

·

Company-Owned Restaurants – Consists of the operations of Company-owned Craft Pizza & Pub locations and a Company-operated non-traditional restaurant location which was discontinued on August 11, 2026 and all income and expenses were taken out of current operations and moved to discontinued operations.

 

The CODM evaluates segment performance primarily based on segment revenue, segment operating expenses, and segment contribution margin. General corporate expenses, depreciation and amortization, interest expense, income taxes, and certain other corporate-level items are not allocated to operating segments for purposes of evaluating segment performance.

 

For income and expense performance please refer to the margin statements on page 19 of this report.