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## DIVERSIFIED ROYALTY CORP . 

Notes toConsolidatedFinancial Statements (Unaudited) (Expressed in Canadian dollars) 

Year ended December 31, 2014 

## 4. Royalty pool (continued): 

The first contribution of new restaurants to the Royalty Pool will occur on April 1, 2015. 

The royalty payment from Franworks to the FW LP is 6% of system sales for such period reported by Franworks in the Royalty Pool plus a make -whole payment, if required by a restaurant closure, based on 6% of lost system sales. System sales for any period and for any Franworks restaurant located in Canada andthe United States, as defined in the License and Royalty Agreement, means the gross sales by such Franworks restaurants for such period. 

There was one make-whole payment during the current period in the amount of $6,281 (on lost system sales of $104,676) related to the closure of the Chicago Huron Elephant and Castle restaurant, which closed on December 20, 2014. 

Royalty income for the year ended December 31, 2014 and 2013was calculated as follows: 

<img src='content_image/151810.jpg'>

The Franworks Acquisition occurred on September 26, 2014, thereforesystem salesonly reflect the period between September 26, 2014 and December 31, 2014. 

## 5. Amounts receivable: 

<img src='content_image/151811.jpg'>

## 6. Deferred income taxes: 

<img src='content_image/151812.jpg'>

