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Subsequent Events
6 Months Ended
Jun. 30, 2022
Subsequent Events  
Note 5 - Subsequent Events

Note 5- The Company evaluated subsequent events through the date the financial statements were issued and filed with SEC.  There were no subsequent events that required recognition or disclosure beyond what is disclosed in this report.

 

Impact of COVID-19 Pandemic

 

In the first quarter of 2020, a novel strain of coronavirus (COVID-19) emerged and spread throughout the United States. The World Health Organization recognized COVID-19 as a pandemic in March 2020. In response to the pandemic, the U.S. federal government and various state and local governments, among other things, imposed travel and business restrictions, including stay-at-home orders and other guidelines that required restaurants and bars to close or restrict inside dining. The pandemic resulted in significant, economic volatility, uncertainty and disruption, reduced commercial activity and weakened economic conditions in the regions in which the Company and its franchisees operate.

 

The pandemic and the governmental response had a significant adverse impact on the Company, due to, among other things, governmental restrictions, reduced customer traffic, staffing challenges and supply difficulties especially as a result of the emergence of the Omicron and other variants of COVID-19 in early 2022.  Many states and municipalities in the United, including Indiana where all of the Company-owned Craft Pizza & Pub restaurants are located, have from time to time temporarily restricted travel and suspended the operation of dine-in restaurants and other businesses in light of COVID-19 which negatively affected the Company’s operations.  As the duration and scope of the pandemic is uncertain these orders are subject to further modification which could adversely affect the Company.  Further, the Company can provide no assurance the phase out of restrictions will have a positive effect on the Company’s business.

 

Host facilities for the Company’s non-traditional franchises were also affected by labor shortages which adversely impacted those developments and in turn slowed the sale of franchises. The uncertainty and disruption in the U.S. economy caused by the pandemic are likely to continue to adversely impact the volume and resources of potential franchisees for both the Company's Craft Pizza & Pub and non-traditional venues.

 

On February 5, 2021, the Company received an additional loan of $940,734 under the PPP.  In accordance with the applicable accounting policy adopted, the Company accounted for the loan as a government grant and presented it in the Condensed Consolidated Statement of Operations as a reduction of certain qualifying expenses incurred during the three-month period ended March 31, 2021.  The expenses included payroll costs and benefits, interest on mortgage obligations, rent under lease agreements and utilities and other qualifying expenses pursuant to the CARES ACT.  Because the $940,734 loan was applied against relevant expenses in the first quarter 2021, the results of operations for the six-month periods in 2021 and 2022 are of limited comparability.