1 unchanged sentence
Evaluation of Disclosure Controls and Procedures
−Removed: The Company’s management, with the participation of the Company’s principal executive officer and principal financial officer, evaluated the
−Removed: effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report.
−Removed: Based on that evaluation, the principal executive officer and principal financial officer concluded that the Company’s disclosure
−Removed: controls and procedures, as of the end of the period covered by this report, were effective in assuring that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934 is (i) accumulated and
−Removed: communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure, and (ii) recorded, processed, summarized and reported within the time periods
−Removed: specified in the SEC’s rules and forms.
+Added: The Company’s management, with the participation of the Company’s principal executive officer and principal financial officer, evaluated the effectiveness of the Company’s
+Added: disclosure controls and procedures as of the end of the period covered by this report.
+Added: Based on that evaluation, the principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures, as of
+Added: the end of the period covered by this report, were effective in assuring that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934 is (i) accumulated and communicated to management,
+Added: including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and
Management Report on Internal Control over Financial Reporting
−Removed: The Company’s management is responsible for establishing and maintaining adequate “internal control over financial reporting” (as defined in
−Removed: Rule 13a-15(f) under the Securities Exchange Act of 1934).
+Added: The Company’s management is responsible for establishing and maintaining adequate “internal control over financial reporting” (as defined
+Added: in Rule 13a-15(f) under the Securities Exchange Act of 1934).
Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, the Company has conducted an evaluation of the
4 unchanged sentences
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
−Removed: The information required by this Item is incorporated by reference from the Company’s definitive proxy statement to be filed with the SEC
−Removed: pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.
+Added: The information required by this Item is incorporated by reference from the Company’s definitive proxy statement to be filed with the SEC pursuant to Regulation 14A not later than
+Added: 120 days after the end of the fiscal year covered by this report.
EXECUTIVE COMPENSATION.
−Removed: The information required by this Item is incorporated by reference from the Company’s definitive proxy statement to be filed with the SEC
−Removed: pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.
+Added: The information required by this Item is incorporated by reference from the Company’s definitive proxy statement to be filed with the SEC pursuant to Regulation 14A not later than
+Added: 120 days after the end of the fiscal year covered by this report.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
−Removed: The information required by this Item is incorporated by reference from the Company’s definitive proxy statement to be filed with the SEC
−Removed: pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.
+Added: The information required by this Item is incorporated by reference from the Company’s definitive proxy statement to be filed with the SEC pursuant to Regulation 14A not later than
+Added: 120 days after the end of the fiscal year covered by this report.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.
−Removed: The information required by this Item is incorporated by reference from the Company’s definitive proxy statement to be filed with the SEC
−Removed: pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.
+Added: The information required by this Item is incorporated by reference from the Company’s definitive proxy statement to be filed with the SEC pursuant to Regulation 14A not later than
+Added: 120 days after the end of the fiscal year covered by this report.
PRINCIPAL ACCOUNTING FEES AND SERVICES.
−Removed: The information required by this Item is incorporated by reference from the Company’s definitive proxy statement to be filed with the SEC
−Removed: pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.
+Added: The information required by this Item is incorporated by reference from the Company’s definitive proxy statement to be filed with the SEC pursuant to Regulation 14A not later than
+Added: 120 days after the end of the fiscal year covered by this report.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
5 unchanged sentences
(incorporated by reference to Exhibit 3.2 to the registrant’s Current Report on Form 8-K filed January 8, 2015).
−Removed: Indenture for 4% Convertible Senior Notes due 2022 (filed as Exhibit 4.1 to Form S-3/A filed January 6, 2017 and incorporated herein by reference).
−Removed: Pledge Agreement (filed as Exhibit 4.2 to Form S-3/A filed January 6, 2017 and incorporated herein by reference).
−Removed: Supplemental Indenture Number 1 dated as of October 31, 2017, between Rave Restaurant Group, Inc.
−Removed: and Securities Transfer Corporation (filed as Exhibit 4.1 to Form 8-K filed November 9,
−Removed: 2017 and incorporated herein by reference).
Description of Registrant’s Securities.
+Added: (filed as Exhibit 4.4 to Form 10-K for the fiscal year ended June 27, 2021 and incorporated herein by reference).
2015 Long Term Incentive Plan of the Company (filed as Exhibit 10.1 to Form 8-K filed November 20, 2014 and incorporated herein by reference).*
9 unchanged sentences
Second Amendment to Lease Agreement effective June 1, 2020, between A&H Properties Partnership and Rave Restaurant Group, Inc.
−Removed: At Market Issuance Sales Agreement between the Company and B.
−Removed: Riley FBR, Inc.
−Removed: (filed as Exhibit 1.01 to Form 8-K filed December 5, 2017).*
+Added: (filed as Exhibit 10.6 to Form 10-K for
+Added: the fiscal year ended June 27, 2021 and incorporated herein by reference).
Letter agreement dated October 18, 2019, between Rave Restaurant Group, Inc.
1 unchanged sentence
Letter agreement dated November 4, 2019, between Rave Restaurant Group, Inc.
−Removed: and Mike Burns (filed as Exhibit 10.1 to Form 8-K filed November 15, 2019 and incorporated herein by
−Removed: Letter agreement dated December 16, 2019, between Rave Restaurant Group, Inc.
−Removed: and Clinton Fendley (filed as Exhibit 10.1 to Form 8-K filed January 7, 2020 and incorporated herein by
−Removed: Note, dated April 10, 2020, between Rave Restaurant Group, Inc.
−Removed: and JPMorgan Chase Bank, N.
−Removed: (filed as Exhibit 10.1 to Form 8-K filed April 16, 2020 and incorporated herein by
+Added: and Mike Burns (filed as Exhibit 10.1 to Form 8-K filed November 15, 2019 and incorporated herein by reference).*
Letter agreement dated June 16, 2021, between Rave Restaurant Group, Inc.
and Clinton Fendley (filed as Exhibit 10.1 to Form 8-K filed June 17, 2021 and incorporated herein by reference).*
−Removed: List of Subsidiaries.
+Added: List of Subsidiaries (filed as Exhibit 21.1 to Form 10-K filed September 30, 2019 and incorporated herin by reference).*
Consent of Independent Registered Public Accounting Firm.
6 unchanged sentences
FORM 10-K SUMMARY.
−Removed: Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
−Removed: signed on its behalf by the undersigned, thereunto duly authorized.
+Added: Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to
+Added: be signed on its behalf by the undersigned, thereunto duly authorized.
Rave Restaurant Group, Inc.
26 unchanged sentences
RAVE RESTAURANT GROUP, INC.
−Removed: INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
−Removed: Report of Independent Registered Public Accounting Firm
−Removed: Consolidated Statements of Operations for the fiscal years ended June 27, 2021 and June 28, 2020.
+Added: INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
+Added: SUPPLEMENTARY DATA
+Added: Report of Independent Registered Public Accounting Firm (PCAOB ID:
+Added: Consolidated Statements of Income for the fiscal years ended June 26, 2022 and June 27, 2021
Consolidated Balance Sheets at June 26, 2022 and June 27, 2021
8 unchanged sentences
Opinion on the Consolidated Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of Rave Restaurant Group, Inc.
−Removed: (the “Company”) and subsidiaries as of June 27, 2021 and June 28,
−Removed: 2020, the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).
−Removed: our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 27, 2021 and June 28, 2020, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
+Added: We have audited the accompanying consolidated balance sheets of Rave Restaurant Group, Inc.
+Added: (the “Company”)
+Added: and subsidiaries as of June 26, 2022 and June 27, 2021 , the related consolidated statements of income,
+Added: changes in shareholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).
+Added: In our opinion, the consolidated financial statements present fairly, in all
+Added: material respects, the financial position of the Company at June 26, 2022 and June 27, 2021 , and the
+Added: results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management.
−Removed: Our responsibility is to express an opinion on the Company’s
−Removed: consolidated financial statements based on our audit.
−Removed: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in
−Removed: accordance with the U.S.
+Added: responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.
+Added: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are
+Added: required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable
−Removed: assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
−Removed: The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
−Removed: As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial
+Added: We conducted our audits in accordance with the standards of the PCAOB.
+Added: Those standards require that we plan
+Added: and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
+Added: The Company is not required to have, nor were we engaged to perform, an
+Added: audit of its internal control over financial reporting.
+Added: As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the
+Added: Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
−Removed: Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud,
−Removed: and performing procedures that respond to those risks.
+Added: Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
−Removed: Our audit also included evaluating the accounting
−Removed: principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
+Added: Our audits also included evaluating the accounting principles used and significant estimates made by
+Added: management, as well as evaluating the overall presentation of the consolidated financial statements.
+Added: We believe that our audits provides a reasonable basis for our opinion.
Critical Audit Matter
−Removed: The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated
−Removed: or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
−Removed: communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical
−Removed: audit matter or on the accounts or disclosures to which it relates.
+Added: The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that
+Added: were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex
+Added: The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate
+Added: opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition — Refer to Note A to the Financial Statements
2 unchanged sentences
restaurant sales and franchise revenues.
−Removed: Franchise revenues consist of 1) franchise royalties, 2) supplier and
−Removed: distributor incentive revenues, 3) franchise license fees, 4) area development exclusivity fees and foreign master license fees, 5) advertising funds, and 6) supplier convention funds.
−Removed: Each of these sources of revenues have different contract types,
−Removed: lengths, terms, and conditions.
+Added: Franchise revenues
+Added: consist of 1) franchise royalties, 2) supplier and distributor incentive revenues, 3) franchise license fees, 4) area development exclusivity fees and foreign master license fees, 5) advertising funds, and 6) supplier convention funds.
+Added: these sources of revenues have different contract types, lengths, terms, and conditions.
As such, revenue recognition requires significant analysis and a high degree of auditor judgment.
4 unchanged sentences
Reviewed the entity’s revenue recognition policies and evaluated whether following those policies comply with the requirements of ASC 606.
−Removed: Obtained a listing of franchise revenue related contracts, agreements, and invoices during the year, sampled the detail, and tested revenues by examining and documenting supporting contracts, invoices, and
−Removed: other documentation to determine whether revenue was recognized at the proper amount.
+Added: Obtained a listing of franchise revenue related contracts, agreements, and invoices during the year, sampled the detail, and tested revenues by examining and documenting supporting
+Added: contracts, invoices, and other documentation to determine whether revenue was recognized at the proper amount.
Performed various cutoff procedures to ensure revenue was recognized in the proper period.
3 unchanged sentences
RAVE RESTAURANT GROUP, INC.
−Removed: CONSOLIDATED STATEMENTS OF OPERATIONS
+Added: CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
12 unchanged sentences
Gain on forgiveness of PPP loan
+Added: Employee retention credit
Total other income
−Removed: INCOME (LOSS) BEFORE TAXES
−Removed: Income tax (benefit) expense
−Removed: NET INCOME (LOSS)
−Removed: INCOME (LOSS) PER SHARE OF COMMON STOCK - BASIC:
−Removed: INCOME (LOSS) PER SHARE OF COMMON STOCK - DILUTED:
+Added: INCOME BEFORE TAXES
+Added: Income tax benefit
+Added: INCOME PER SHARE OF COMMON STOCK - BASIC:
+Added: INCOME PER SHARE OF COMMON STOCK - DILUTED:
Weighted average common shares outstanding - basic
6 unchanged sentences
Cash and cash equivalents
−Removed: Restricted cash
−Removed: Accounts receivable, less allowance for bad debts of $47 and $269, respectively
+Added: Accounts receivable, less allowance for bad debts of $ 27
+Added: and $ 47 , respectively
Notes receivable, current
Deferred contract charges, current
−Removed: Prepaid expenses and other
+Added: Prepaid expenses and other current assets
Total current assets
4 unchanged sentences
Notes receivable, net of current portion
+Added: Deferred tax asset, net
Deferred contract charges, net of current portion
−Removed: Deposits and other
LIABILITIES AND SHAREHOLDERS’ EQUITY
1 unchanged sentence
Accounts payable - trade
−Removed: Accounts payable - lease termination impairments
Accrued expenses
1 unchanged sentence
Operating lease liability, current
−Removed: Short term loan, current
+Added: Short term loan
Convertible notes short term, net of unamortized debt issuance costs and discounts
2 unchanged sentences
LONG-TERM LIABILITIES
−Removed: Convertible notes, net of current portion
Operating lease liability, net of current portion
Deferred revenues, net of current portion
−Removed: Other long-term liabilities
Total liabilities
3 unchanged sentences
authorized 26,000,000 shares;
−Removed: issued 25,090,058 and 22,550,376 shares, respectively;
−Removed: outstanding 18,004,904 and 15,465,222 shares,
+Added: issued 25,090,058
+Added: and 25,090,058 shares, respectively;
+Added: outstanding 17,511,430 and 18,004,904 shares, respectively
Additional paid-in capital
−Removed: Accumulated deficit
+Added: Retained earnings/(accumulated deficit)
Treasury stock at cost
10 unchanged sentences
Stock compensation expense
−Removed: Conversion of senior notes, net
Issuance of common stock
−Removed: Equity issue costs - ATM Offering
+Added: Equity issuance costs - ATM offering
Balance, June 27, 2021
2 unchanged sentences
Stock compensation expense
−Removed: Issuance of common stock
−Removed: Equity issue costs - ATM Offering
+Added: Purchase of treasury stock
Balance, June 26, 2022
5 unchanged sentences
CASH FLOWS FROM OPERATING ACTIVITIES:
−Removed: Net income (loss)
−Removed: Adjustments to reconcile net income (loss) to cash used in operating activities:
+Added: Adjustments to reconcile net income to cash provided by/ operating activities:
Impairment of long-lived assets and other lease charges
5 unchanged sentences
Gain on the sale of assets
−Removed: Provision for bad debt
+Added: Allowance for bad debts
Bad debt on notes receivable
Gain on forgiveness of PPP loan
−Removed: Deferred income tax
+Added: Deferred tax asset, net
Changes in operating assets and liabilities:
2 unchanged sentences
Deferred contract charges
−Removed: Prepaid expenses and other
+Added: Prepaid expenses and other current assets
Deposits and other
4 unchanged sentences
Operating lease liability
−Removed: Deferred revenue
+Added: Deferred revenues
Other long-term liabilities
−Removed: Cash provided by/(used in) operating activities
+Added: Cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
1 unchanged sentence
Proceeds from sale of assets
−Removed: Purchase of intangible assets definite-lived
−Removed: Purchase of property, plant and equipment
+Added: Purchases of intangible assets definite-lived
+Added: Purchases of property, plant and equipment
Cash provided by/(used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
−Removed: Proceeds from sale of stock
+Added: Purchase of treasury stock
+Added: Proceeds from issuance of common stock
Equity issuance costs - ATM offering
−Removed: Proceeds from PPP loan
−Removed: Short term loan, current
−Removed: Cash provided by financing activities
−Removed: Net increase/(decrease) in cash, cash equivalents and restricted cash
−Removed: Cash, cash equivalents and restricted cash, beginning of period
−Removed: Cash, cash equivalents and restricted cash, end of period
−Removed: Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets
−Removed: Cash and cash equivalents
−Removed: Restricted cash
−Removed: Total cash, cash equivalents and restricted cash
+Added: Payment of convertible notes
+Added: Payment of short term loan
+Added: Cash (used in)/provided by financing activities
+Added: Net (decrease)/increase in cash and cash equivalents
+Added: Cash and cash equivalents, beginning of period
+Added: Cash and cash equivalents, end of period
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
−Removed: Non-cash activities:
−Removed: Conversion of notes to common shares
−Removed: Operating lease right of use assets at adoption
−Removed: Operating lease liability at adoption
−Removed: Gain on forgiveness of PPP loan
See accompanying Notes to Consolidated Financial Statements.
3 unchanged sentences
Description of Business:
−Removed: Rave Restaurant Group, Inc.
−Removed: and its subsidiaries (collectively referred to as the “Company”, or in the first person notations of “we”, “us”
−Removed: and “our”) franchise pizza buffet, delivery/carry-out and express restaurants domestically and internationally under the trademark “Pizza Inn” and franchise domestic fast casual restaurants under the trademarks “Pie Five Pizza Company” or “Pie
+Added: Rave Restaurant Group, Inc., and its subsidiaries (collectively referred to as the
+Added: “Company”, or in the first person notations of “we”, “us” and “our”) franchise pizza buffet, delivery/carry-out and express restaurants domestically and internationally under the trademark “Pizza Inn” and franchise domestic fast casual restaurants
+Added: under the trademarks “Pie Five Pizza Company” or “Pie Five”.
The Company also licenses pizza kiosks under the “Pizza Inn” trademark.
−Removed: We facilitate the procurement and distribution of food, equipment and supplies to our domestic and international system of restaurants through agreements with third party
−Removed: distributors.
−Removed: As of June 27, 2021, we had 33 franchised Pie Five Units, 156 franchised Pizza Inn restaurants, and 11 licensed Pizza Inn Express, or PIE,
−Removed: kiosks (“PIE Units”).
−Removed: The 124 domestic franchised Pizza Inn restaurants were comprised of 70 pizza buffet restaurants (“Buffet Units”), 10 delivery/carry-out restaurants (“Delco Units”), and 44 express restaurants (“Express Units”).
−Removed: As of June 27,
−Removed: 2021, there were 32 international franchised Pizza Inn restaurants.
−Removed: Domestic Pizza Inn restaurants and kiosks were located predominantly in the southern half of the United States, with Texas, Arkansas, North Carolina and Mississippi accounting for
−Removed: approximately 25%, 21%, 16% and 8%, respectively, of the total number of domestic units.
+Added: We facilitate the procurement and distribution of food, equipment and supplies to our domestic and international
+Added: system of restaurants through agreements with third party distributors.
+Added: As of June 26, 2022, we had 150 franchised Pizza Inn restaurants, 31 franchised Pie Five
+Added: Units, and 9 licensed Pizza Inn Express, or PIE, kiosks (“PIE Units”).
+Added: The 119 domestic franchised Pizza Inn restaurants were comprised of 72
+Added: pizza buffet restaurants (“Buffet Units”), 10 delivery/carry-out restaurants (“Delco Units”), and 37 express restaurants (“Express Units”).
+Added: As of June 26, 2022, there were 31 international franchised Pizza Inn restaurants.
+Added: Domestic Pizza Inn restaurants and kiosks were located predominantly in the southern half of the United States, with Texas,
+Added: Arkansas, North Carolina and Mississippi accounting for approximately 23 %, 22 %, 13 % and 9 %, respectively, of the total number of domestic units.
Principles of Consolidation:
−Removed: The consolidated financial statements include the accounts of Rave Restaurant Group, Inc.
−Removed: and its subsidiaries, all of which are wholly
+Added: The consolidated financial statements include the accounts of Rave Restaurant
+Added: and its subsidiaries, all of which are wholly owned.
All appropriate inter-company balances and transactions have been eliminated.
Cash and Cash Equivalents:
−Removed: The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
−Removed: Restricted cash of $0.2 million as of June 28, 2020 consisted of an interest-bearing money market account restricted pursuant to a letter of credit for an insurance claim dating back to the mid-1980’s.
−Removed: The $0.2 million in restricted cash was released
−Removed: during the third quarter of fiscal 2021.
+Added: The Company considers all highly liquid investments purchased with an original maturity
+Added: of three months or less to be cash equivalents.
Concentration of Credit Risk:
−Removed: Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash
−Removed: Balances in accounts are insured up to Federal Deposit Insurance Corporation (“FDIC”) limits of $250 thousand per institution.
−Removed: At June 27, 2021 and June 28, 2020, the Company had cash balances in excess of FDIC insurance coverage of
−Removed: approximately $8.0 million and $2.7 million, respectively.
+Added: Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and
+Added: cash equivalents.
+Added: Balances in accounts are insured up to Federal Deposit Insurance Corporation (“FDIC”) limits of $ 250 thousand per
+Added: At June 26, 2022 and June 27, 2021, the Company had cash balances in excess of FDIC insurance coverage of approximately $ 7.5
+Added: million and $ 8.1 million, respectively.
We do not believe we are exposed to any significant credit risk on cash and cash equivalents.
−Removed: Notes receivable, which potentially subject the Company to concentrations of credit risk, consist primarily of promissory
−Removed: notes from franchise agreements and structured Company-financed sales of assets.
+Added: Notes receivable, which potentially subject the Company to concentrations of credit risk, consist primarily of promissory notes
+Added: from franchise agreements and structured Company-financed sales of assets.
At June 26, 2022 and June 27, 2021, and at various times during the fiscal years then ended, the Company had concentrations of credit risk with five franchisees on notes receivables with both short and long term maturities.
−Removed: As of June 27, 2021, the Company had six short term notes receivable with four franchisees and the Company had one note
−Removed: receivable with one franchisee totaling $1.0 million.
+Added: As of June 26, 2022, the Company had one short term notes receivable with one
+Added: franchisee and four long term notes receivable with three franchisees.
The financed asset sales were executed with a weighted average interest rate of 0 .0%%.
−Removed: Principal payments are due monthly and mature from November 1, 2021 to December 1, 2023.
−Removed: Inventory consists primarily of food, paper products and supplies stored in and used by Company restaurants and is stated at lower of
−Removed: first-in, first-out (“FIFO”) or market.
+Added: Principal payments are due monthly and mature from March 3, 2023 to January 1, 2025.
Closed Restaurants and Discontinued Operations:
2 unchanged sentences
Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which modifies the
−Removed: definition of discontinued operations to include only disposals of an entity that represent strategic shifts that have or will have a major effect on an entity’s operation and requires entities to disclose information about disposals of individually
−Removed: significant components that do not meet the definition of discontinued operations.
+Added: definition of discontinued operations to include only disposals of an entity that represent strategic shifts that have or will have a major effect on an entity’s operation and requires entities to disclose information about disposals of
+Added: individually significant components that do not meet the definition of discontinued operations.
The standard was effective prospectively for annual and interim periods beginning after December 15, 2014, with early adoption permitted.
−Removed: The authoritative guidance on “ Accounting for the Impairment or Disposal of Long-Lived Assets,”
−Removed: requires that discontinued operations that meet certain criteria be reflected in the statement of operations after results of continuing operations as a net amount.
−Removed: This guidance also requires that the operations of closed restaurants, including any
−Removed: impairment charges, be reclassified to discontinued operations for all periods presented.
−Removed: The authoritative guidance on “ Accounting for Costs Associated with Exit or Disposal Activities,”
−Removed: requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred.
−Removed: This authoritative guidance also establishes that fair value is the objective for initial measurement of the liability.
−Removed: Property, Plant and Equipment:
−Removed: Property, plant and equipment are stated at cost less accumulated depreciation and amortization.
−Removed: Repairs and maintenance are charged to
−Removed: operations as incurred while major renewals and betterments are capitalized.
−Removed: Upon the sale or disposition of a fixed asset, the asset and the related accumulated depreciation or amortization are removed from the accounts and the gain or loss is
−Removed: included in operations.
−Removed: The Company capitalizes interest on borrowings during the active construction period of major capital projects.
−Removed: Capitalized interest is added to the cost of the underlying asset and amortized over the estimated useful life
−Removed: of the asset.
−Removed: Depreciation and amortization are computed on the straight-line method over the estimated useful lives of the assets or, in the case of
−Removed: leasehold improvements, over the term of the lease including any reasonably assured renewal periods, if shorter.
+Added: The authoritative guidance on “ Accounting for the Impairment or Disposal of Long-Lived
+Added: Assets,” requires that discontinued operations that meet certain criteria be reflected in the income statements after results of continuing operations as a net amount.
+Added: This guidance also requires that the operations of closed restaurants,
+Added: including any impairment charges, be reclassified to discontinued operations for all periods presented.
+Added: The authoritative guidance on “ Accounting for Costs Associated with Exit or Disposal
+Added: Activities,” requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred.
+Added: This authoritative guidance also establishes that fair value is the objective for initial
+Added: measurement of the liability.
+Added: Plant and Equipment :
+Added: Property, plant and equipment are stated at
+Added: cost less accumulated depreciation and amortization.
+Added: Repairs and maintenance are charged to operations as incurred while major renewals and betterments are capitalized.
+Added: Upon the sale or disposition of any property, plant or equipment, the asset
+Added: and the related accumulated depreciation or amortization are removed from the accounts and the gain or loss is included in operations.
+Added: The Company capitalizes interest on borrowings during the active construction period of major capital
+Added: Capitalized interest is added to the cost of the underlying asset and amortized over the estimated useful life of the asset.
+Added: Depreciation and amortization are computed on
+Added: the straight-line method over the estimated useful lives of the assets or, in the case of leasehold improvements, over the term of the lease including any reasonably assured renewal periods, if shorter.
The useful lives of the assets range from three to ten years .
Impairment of Long-Lived Asset and other Lease Charges:
−Removed: The Company reviews long-lived assets for impairment when events or circumstances indicate that the carrying value of such assets may not be
−Removed: fully recoverable.
+Added: The Company reviews long-lived assets for impairment when events or circumstances indicate that the carrying value of such
+Added: assets may not be fully recoverable.
Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use and eventual disposition of the assets compared to their carrying value.
−Removed: If impairment is recognized, the carrying
−Removed: value of an impaired asset is reduced to its fair value, based on discounted estimated future cash flows.
−Removed: During fiscal year 2021, the Company tested its long-lived assets for impairment and recognized $21 thousand in pre-tax, non-cash impairment
−Removed: The Company had lease charges related to closed units of $0.7 million partially offset by $0.2 million in sublease income.
+Added: If impairment is
+Added: recognized, the carrying value of an impaired asset is reduced to its fair value, based on discounted estimated future cash flows.
+Added: The Company recognized, pre-tax, non-cash impairment charges of $ 6 thousand and $ 21 thousand during fiscal years, 2022 and 2021, respectively.
+Added: The Company had $ 0.2 million in sublease income during fiscal year 2022.
+Added: The Company had lease charges related to closed units of $ 0.7 million partially offset by $ 0.2 million in sublease rental income during
+Added: fiscal year 2021.
Accounts Receivable:
−Removed: Accounts receivable consist primarily of receivables generated from franchise royalties.
−Removed: The Company records a provision for doubtful
−Removed: receivables to allow for any amounts that may be unrecoverable based upon an analysis of the Company’s prior collection experience, customer creditworthiness and current economic trends.
−Removed: After all attempts to collect a receivable have failed, the
−Removed: receivable is written off against the allowance.
−Removed: Finance charges may be accrued at a rate of 18% per year, or up to the maximum amount allowed by law, on past due receivables.
+Added: Accounts receivable consist primarily of receivables generated from franchise royalties and supplier concessions.
+Added: records an allowance for bad debts to allow for any amounts that may be unrecoverable based upon an analysis of the Company’s prior collection experience, customer creditworthiness and current economic trends.
+Added: After all attempts to collect a
+Added: receivable have failed, the receivable is written off against the allowance.
+Added: Finance charges may be accrued at a rate of 18 % per year,
+Added: or up to the maximum amount allowed by law, on past due receivables.
The interest income recorded from finance charges is immaterial.
Notes Receivable:
−Removed: Notes receivable primarily consist of promissory notes arising from franchisee agreements and structured Company-financed sales of assets.
+Added: Notes receivable primarily consist of promissory notes arising from franchisee agreements and structured Company-financed sales
The majority of amounts and terms are evidenced by formal promissory notes and personal guarantees.
1 unchanged sentence
Fixed principal payments are due monthly.
−Removed: Notes receivable mature at various dates through 2023
−Removed: and bear interest at a weighted average rate of 0.0% at June 27, 2021.
+Added: Notes receivable mature at various dates
+Added: through 2025 and bore interest at a weighted average rate of 0 .0%% at June 26, 2022.
Management evaluates the creditworthiness of franchisees by considering credit history and sales to evaluate credit risk.
−Removed: determines interest rates based on credit risk of the underlining franchisee.
+Added: Management determines interest rates based on credit risk of the underlining franchisee.
The Company monitors payment history to determine whether or not a loan should be placed on a nonaccrual status or impaired.
−Removed: The Company charges off notes receivable
−Removed: based on an account-by-account analysis of the borrower’s current economic conditions, monthly payments history and historical loss experience.
+Added: The Company charges off notes
+Added: receivable based on an account-by-account analysis of the borrower’s current economic conditions, monthly payments history and historical loss experience.
The allowance for doubtful notes receivable is netted within notes receivable.
−Removed: The expected principal collections on notes receivable for the next three years were as follows as of June 27, 2021 (in thousands):
+Added: The expected principal collections on notes receivable for the next three years were as follows as of June 26, 2022 (in
Notes Receivable
1 unchanged sentence
Income taxes are accounted for using the asset and liability method pursuant to the authoritative guidance on Accounting for Income Taxes .
−Removed: Deferred taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement and
−Removed: carrying amounts and the tax bases of existing assets and liabilities.
+Added: Deferred taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the
+Added: financial statement and carrying amounts and the tax bases of existing assets and liabilities.
The effect on deferred taxes for a change in tax rates is recognized in income in the period that includes the enactment date.
−Removed: The Company recognizes future tax benefits to the
−Removed: extent that realization of such benefits is more likely than not.
−Removed: The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable
−Removed: income, reversal of existing taxable temporary differences, and tax planning strategies.
−Removed: In assessing the need for the valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of deferred
+Added: The Company recognizes
+Added: future tax benefits to the extent that realization of such benefits is more likely than not.
+Added: The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future
+Added: taxable income, reversal of existing taxable temporary differences, and tax planning strategies.
+Added: In assessing the need for the valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization
+Added: of deferred tax assets.
Future sources of taxable income are also considered in determining the amount of the recorded valuation allowance.
−Removed: The Company has continued to maintain a full valuation allowance for the year ended June 27, 2021.
−Removed: At the end of tax year ended June 27, 2021, the Company had net operating loss carryforwards totaling $23.6 million that are available to
−Removed: reduce future taxable income and will begin to expire in 2032.
−Removed: Under the Tax Cuts and Jobs Act, approximately $1.78 million of the loss carryforwards are limited to 80% and do not expire.
−Removed: As of June 27, 2021, tax years remained open to examination from June 24, 2012, by the federal and state tax authorities, for three or four years from the
−Removed: tax year in which net operating losses or tax credits are utilized.
−Removed: The Company was not subject to any open income tax examinations by any tax authority as of June 27, 2021.
+Added: Based on this analysis, the Company has reversed the full amount of the previous valuation allowance as of
+Added: June 26, 2022 (see Note F).
+Added: For the year ended June 26, 2022, the Company recorded an income tax benefit of $ 5.7 million including federal deferred tax benefit of $ 5.5
+Added: million and current/deferred state tax benefit of $ 0.2 million.
+Added: As of June 26, 2022, the Company had net operating loss carryforwards
+Added: totaling $ 23.1 million that are available to reduce future taxable income and will begin to expire in 2032 , of which $ 1.8 million are limited
+Added: to 80 % and do not expire.
+Added: Tax returns for fiscal 2013 and after will remain open to examination by federal and state tax authorities for
+Added: three to four years
+Added: following the tax year in which net operating losses or tax credits are utilized.
+Added: The Company was not subject to income tax examinations by any tax authority as of June 26, 2022.
There are no material uncertain tax positions.
−Removed: Management’s position is that all relevant requirements are met and necessary returns have been filed, and
−Removed: therefore the tax positions taken on the tax returns would be sustained upon examination.
−Removed: Under ASC 740, we recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be
−Removed: sustained on examination by the taxing authorities, based on the technical merits of the position.
−Removed: The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50%
−Removed: likelihood of being realized upon ultimate resolution.
+Added: Management’s position is that all relevant requirements are met and necessary returns have been filed,
+Added: and therefore the tax positions taken on the tax returns would be sustained upon examination.
+Added: Under ASC 740, we recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position
+Added: will be sustained on examination by the taxing authorities, based on the technical merits of the position.
+Added: The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater
+Added: than 50% likelihood of being realized upon ultimate resolution.
From time to time, the Company may be assessed interest and penalties by taxing authorities.
−Removed: In those cases, the charges are recorded as income tax expense, as incurred, in the Consolidated
−Removed: Statements of Operations.
+Added: In those cases, the charges are recorded as income tax expense, as incurred, in the
+Added: Consolidated Statements of Income.
Revenue Recognition:
−Removed: Revenue is measured based on consideration specified in contracts with customers and excludes incentives and amounts collected on behalf of
−Removed: third parties, primarily sales tax.
+Added: Revenue is measured based on consideration specified in contracts with customers and excludes incentives and amounts collected
+Added: on behalf of third parties, primarily sales tax.
The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.
−Removed: Taxes assessed by a governmental authority that are both imposed on and
−Removed: concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.
−Removed: The following describes principal activities, separated by major product or service, from which the Company generates its revenues:
−Removed: Restaurant Sales
−Removed: Revenue from restaurant sales is recognized when food and beverage products are sold in Company-owned restaurants.
−Removed: The Company reports
−Removed: revenue net of sales taxes collected from customers and remitted to governmental taxing authorities.
+Added: Taxes assessed by a governmental authority that are both
+Added: imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.
+Added: The following describes principal activities, separated by major product or service, from which the Company generates its
Franchise Revenues
−Removed: Franchise revenues consist of 1) franchise royalties, 2) supplier and distributor incentive revenues, 3) franchise license fees, 4) area
−Removed: development exclusivity fees and foreign master license fees, 5) advertising funds, and 6) supplier convention funds.
+Added: Franchise revenues consist of 1) franchise royalties, 2) supplier and distributor incentive revenues, 3) franchise license
+Added: fees, 4) area development exclusivity fees and foreign master license fees, 5) advertising funds, and 6) supplier convention funds.
Franchise royalties, which are based on a percentage of franchise restaurant sales, are recognized as sales occur.
Supplier and distributor incentive revenues are recognized when title to the underlying commodities transfer.
−Removed: Franchise license fees are typically billed upon execution of the franchise agreement and amortized over the term of the franchise agreement
−Removed: which can range from five to 20 years.
+Added: Franchise license fees are typically billed upon execution of the franchise agreement and amortized over the term of the
+Added: franchise agreement which can range from five to 20 years .
Fees received for renewal periods are amortized over the life of the renewal period.
−Removed: Area development exclusivity fees and foreign master license fees are typically billed upon execution of the area development and foreign
−Removed: master license agreements.
−Removed: Area development exclusivity fees are included in deferred revenue in the Accompanying Consolidated Balance Sheets and allocated on a pro rata basis to all stores opened under that specific development agreement.
−Removed: development exclusivity fees that include rights to sub-franchise are amortized as revenue over the term of the contract.
−Removed: Advertising fund contributions for Pie Five units represent contributions collected where we have control over the activities of the fund.
+Added: Area development exclusivity fees and foreign master license fees are typically billed upon execution of the area development
+Added: and foreign master license agreements.
+Added: Area development exclusivity fees are included in deferred revenue in the accompanying Consolidated Balance Sheets and allocated on a pro rata basis to all stores opened under that specific development
+Added: Area development exclusivity fees that include rights to sub-franchise are amortized as revenue over the term of the contract.
+Added: Advertising fund contributions for Pie Five and Pizza Inn units represent contributions collected where we have control over
+Added: the activities of the fund.
Contributions are based on a percentage of net retail sales.
−Removed: We have determined that we are the principal in these arrangements, and advertising fund contributions and expenditures are, therefore, reported on a gross basis in the Consolidated
−Removed: Statements of Income.
+Added: We have determined that we are the principal in these arrangements, and advertising fund contributions and expenditures are, therefore, reported on a gross
+Added: basis in the Consolidated Statements of Income.
In general, we expect such advertising fund contributions and expenditures to be largely offsetting and, therefore, do not expect a significant impact on our reported income before income taxes.
−Removed: Our obligation related to these
−Removed: funds is to develop and conduct advertising activities.
+Added: obligation related to these funds is to develop and conduct advertising activities.
Pie Five marketing fund contributions are billed and collected weekly.
3 unchanged sentences
Fiscal Year Ended
−Removed: Restaurant sales
Franchise royalties
6 unchanged sentences
Stock-Based Compensation:
−Removed: The Company accounts for stock options using the fair value recognition provisions of the authoritative guidance on share-based payments.
+Added: The Company accounts for stock options using the fair value recognition provisions of the authoritative guidance on share-based
The Company uses the Black-Scholes formula to estimate the value of stock-based compensation for options granted to employees and directors and expects to continue to use this acceptable option valuation model in the future.
−Removed: The authoritative
−Removed: guidance also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow.
+Added: authoritative guidance also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow.
Restricted stock units (“RSUs”) represent the right to receive shares of common stock upon the satisfaction of vesting requirements,
3 unchanged sentences
Fair Value of Financial Instruments:
−Removed: The carrying amounts of accounts receivable and accounts payable approximate fair value because of the short maturity of these instruments.
+Added: The carrying amounts of accounts receivable and accounts payable approximate fair value because of the short maturity of these
Contingencies:
1 unchanged sentence
accordance with the authoritative guidance on Accounting for Contingencies .
−Removed: If the best estimate of cost can only be identified within a range and no specific amount within that range can be determined more
−Removed: likely than any other amount within the range, and the loss is considered probable, the minimum of the range is accrued.
+Added: If the best estimate of cost can only be identified within a range and no specific amount within that range can be determined
+Added: more likely than any other amount within the range, and the loss is considered probable, the minimum of the range is accrued.
Legal and related professional services costs to defend litigation are expensed as incurred.
Use of Management Estimates:
−Removed: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
−Removed: the Company’s management to make estimates and assumptions that affect its reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent liabilities.
−Removed: The Company bases its estimates on historical experience and
−Removed: other various assumptions that it believes are reasonable under the circumstances.
+Added: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
+Added: America requires the Company’s management to make estimates and assumptions that affect its reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent liabilities.
+Added: The Company bases its estimates on historical
+Added: experience and other various assumptions that it believes are reasonable under the circumstances.
Estimates and assumptions are reviewed periodically.
1 unchanged sentence
The Company’s fiscal year ends on the last Sunday in June.
−Removed: The fiscal year ended June 27, 2021 contained 52 weeks and the fiscal year ended
−Removed: June 28, 2020 contained 52 weeks.
+Added: The fiscal years ended June 26, 2022 and June 27, 2021 each contained 52
NOTE B - PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS:
4 unchanged sentences
accumulated depreciation/amortization
−Removed: Depreciation and amortization expense was approximately $131 thousand and $145 thousand for the fiscal years ended June 27, 2021 and June
−Removed: 28, 2020, respectively.
+Added: Depreciation and amortization expense for property, plant and equipment was approximately
+Added: $ 140 thousand and $ 131
+Added: thousand for the fiscal years ended June 26, 2022 and June 27, 2021, respectively.
Intangible assets consist of the following (in thousands):
Trademarks and tradenames
−Removed: Amortization expense for intangible assets was approximately $36 thousand and $41 thousand for the fiscal years ended June 27, 2021 and June
−Removed: 28, 2020, respectively.
+Added: Amortization expense for intangible assets was approximately $ 47 thousand and $ 36 thousand for the
+Added: fiscal years ended June 26, 2022 and June 27, 2021, respectively.
NOTE C - ACCRUED EXPENSES:
1 unchanged sentence
Professional fees
−Removed: Insurance loss reserves
NOTE D - CONVERTIBLE NOTES:
On March 3, 2017, the Company completed a registered shareholder rights offering of its 4 % Convertible Senior Notes Due 2022 (“Notes”).
−Removed: Shareholders exercised subscription rights to purchase all 30,000 of the Notes at the par value of $100 per Note, resulting in gross offering proceeds to the Company of $3.0 million.
−Removed: The Notes bear interest at the rate of 4% per annum on the principal or par value of $100 per note, payable annually in arrears on February
−Removed: 15 of each year, commencing February 15, 2018.
−Removed: Interest is payable in cash or, at the Company’s discretion, in shares of Company common stock.
−Removed: The Notes mature on February 15, 2022, at which time all principal and unpaid interest will be payable in
−Removed: cash or, at the Company’s discretion, in shares of Company common stock.
−Removed: The Notes are secured by a pledge of all outstanding equity securities of our two primary direct operating subsidiaries.
−Removed: Noteholders may convert their Notes to common stock as of the 15 th day of any calendar month, unless the Company sooner elects to
−Removed: redeem the Notes.
−Removed: The conversion price is $2.00 per share of common stock.
−Removed: Accrued interest will be paid through the effective date of the conversion in cash or, at the Company’s sole discretion, in shares of Company common stock.
−Removed: During fiscal 2021, none of the Notes were converted to common shares.
−Removed: As of June 27, 2021, $1.6 million of the Notes were outstanding,
−Removed: offset by $28 thousand of unamortized debt issue costs and unamortized debt discounts.
−Removed: NOTE E - PPP LOAN:
−Removed: On April 13, 2020, the Company received the proceeds from a loan in the amount of $0.7 million (the “PPP Loan”) from JPMorgan Chase Bank,
−Removed: (the “Lender”) pursuant to the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S.
+Added: Shareholders exercised subscription rights to purchase all 30,000 of the Notes at the par value of $ 100 per Note, resulting
+Added: in gross offering proceeds to the Company of $ 3.0 million.
+Added: The Notes bore interest at the rate of 4 % per annum on the principal or par value of $ 100 per note,
+Added: payable annually in arrears on February 15 of each year, commencing February 15, 2018.
+Added: Interest was payable in cash or, at the Company’s discretion, in shares of Company common stock.
+Added: The Notes were secured by a pledge of all outstanding equity
+Added: securities of our two primary direct operating subsidiaries.
+Added: During the fiscal year ended June 26, 2022, no Notes were converted to common shares.
+Added: The Notes matured on February 15, 2022 , at which time all principal and unpaid interest was paid in cash.
+Added: Therefore, as of June 26, 2022, there were no Notes outstanding.
+Added: NOTE E - PPP LOAN FORGIVENESS AND EMPLOYEE RETENTION CREDIT:
+Added: On April 13, 2020, the Company received the proceeds from a loan in the amount of $ 0.7 million (the “PPP Loan”) from JPMorgan Chase Bank, N.A.
+Added: (the “Lender”) pursuant to the Paycheck Protection Program (the “PPP”) of the Coronavirus
+Added: Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S.
Small Business Administration (“SBA”).
−Removed: The PPP Loan was unsecured by the
−Removed: Company and was guaranteed by the SBA.
−Removed: We applied for and received a forgiveness decision in the fourth quarter of fiscal 2021, such that all of the PPP Loan was forgiven at that time.
−Removed: (See, “Consolidated Statement of Operations.”)
+Added: The PPP Loan was unsecured by the Company and was guaranteed by the SBA.
+Added: We applied for and received a forgiveness decision in
+Added: the fourth quarter of fiscal 2021, such that all of the PPP Loan was forgiven at that time.
+Added: December 27, 2020, the Consolidated Appropriations Act of 2021 (the “CAA”) was signed into law.
+Added: The CAA expanded eligibility for an employee retention credit for companies impacted by the COVID-19 pandemic with fewer than five hundred employees
+Added: and at least a twenty percent decline in gross receipts compared to the same quarter in 2019, to encourage retention of employees.
+Added: This payroll tax credit was a refundable tax credit against certain federal employment taxes.
+Added: For the fiscal year
+Added: ended June 26, 2022, the Company recorded $ 0.7 million of other income for the employee retention credit.
+Added: The Company has also
+Added: benefitted from the CAA guidance to treat expenses associated with the PPP loan forgiveness as tax deductible.
NOTE F - INCOME TAXES:
−Removed: Provision for income taxes from continuing operations consists of the following (in thousands):
+Added: Benefit from income taxes from continuing operations consists of the following (in
Fiscal Year Ended
3 unchanged sentences
Deferred - State
−Removed: Provision for income taxes
−Removed: The effective income tax rate varied from the statutory rate for the fiscal years ended June 27, 2021 and June 28, 2020 as reflected below
−Removed: (in thousands):
+Added: Benefit from income taxes
+Added: The effective income tax rate varied from the statutory rate for the fiscal years ended June 26, 2022 and June 27, 2021 as
+Added: reflected below (in thousands):
Federal income taxes based on a statutory rate of 21 %
−Removed: State income tax, net of federal effect
+Added: State income taxes (net of federal benefit)
Permanent adjustments
1 unchanged sentence
Change in valuation allowance
−Removed: The tax effects of temporary differences that give rise to the net deferred tax assets consisted of the following (in thousands):
−Removed: Reserve for bad debt
+Added: Income tax benefit
+Added: The tax effects of temporary differences that give rise to the net deferred tax assets consisted of the
+Added: following (in thousands):
+Added: Allowance for bad debt
Deferred fees
1 unchanged sentence
Operating lease liabilities
+Added: Depreciable assets
Credit carryforwards
Net operating loss carryforwards
−Removed: Depreciable assets
Total gross deferred tax asset
Valuation allowance
−Removed: Total deferred tax asset
+Added: Total deferred tax assets
Right-of-use asset
2 unchanged sentences
Net deferred tax asset
−Removed: For the year ended June 27, 2021 , the Company recorded an income tax benefit of $29 thousand including federal deferred tax expense of zero and current state tax benefit of
−Removed: $29 thousand.
−Removed: At the end of tax year ended June 27, 2021, the Company had net operating loss carryforwards totaling $23.6 million that are available to reduce future taxable income and will begin to expire in 2032.
−Removed: Under the Tax Cuts and Jobs Act,
−Removed: approximately $1.78 million of the loss carryforwards are limited to 80% and do not expire.
−Removed: As of June 27, 2021, tax years remained open to examination from June 24, 2012, by the federal and state tax authorities, for three or four years from the tax
−Removed: year in which net operating losses or tax credits are utilized.
−Removed: The Company was not subject to any open income tax examinations by any tax authority as of June 27, 2021.
−Removed: The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable
−Removed: income, reversal of existing taxable temporary differences, and tax planning strategies.
−Removed: In assessing the need for the valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of deferred
+Added: For the year ended June 26, 2022, the Company recorded an
+Added: income tax benefit of $ 5.7 million including federal deferred tax benefit of $ 5.5 million and current/deferred state tax benefit of $ 0.2 million.
+Added: June 26, 2022, the Company had net operating loss carryforwards totaling $ 23.1 million that are available to reduce future taxable
+Added: income and will begin to expire in 2032 , of which $ 1.8 million are limited to 80 % and do not expire.
+Added: Tax returns for
+Added: fiscal 2013 and after will remain open to examination by federal and state tax authorities for three to four years following the tax year in which net operating losses or tax credits are utilized.
+Added: The Company was not subject to income tax examinations
+Added: by any tax authority as of June 26, 2022.
+Added: The Company continually reviews the realizability of its deferred tax assets, including
+Added: an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies.
+Added: In assessing the need for the valuation allowance, the Company considers both positive and negative evidence
+Added: related to the likelihood of realization of deferred tax assets.
Future sources of taxable income are also considered in determining the amount of the recorded valuation allowance.
−Removed: The Company has continued to maintain a full valuation allowance for the year ended June 27, 2021.
+Added: Based on this analysis, t he Company reversed the full amount of the established valuation allowance as of
+Added: June 26, 2022.
+Added: The reversal of the valuation allowance resulting in tax benefit of $ 5.7 million in fiscal 2022.
There are no material uncertain tax positions.
−Removed: Management’s position is that all relevant requirements are met and necessary returns have
−Removed: been filed, and therefore the tax positions taken on the tax returns would be sustained upon examination.
−Removed: On March 27, 2020, President Trump signed into law the CARES Act.
−Removed: The legislation enacts various measures to assist companies affected by
−Removed: the COVID-19 pandemic.
−Removed: Key income tax-related provisions of the bill include temporary modifications to net operating loss utilization and carryback limitations, allowance of refundable alternative minimum tax credits, reduced limitation of
−Removed: charitable contributions, reduced limitations of business interest expense, and technical corrections to depreciation of qualified improvement property.
−Removed: On December 27, 2020, President Trump signed into law the Consolidated Appropriations Act, an omnibus spending bill that includes an array
−Removed: of COVID-related tax relief for individuals and businesses.
−Removed: The tax-related measures contained in the Act revise and expand provisions enacted earlier in the year by the Families First Coronavirus Response Act and the CARES Act.
−Removed: extends a number of expiring tax provisions.
−Removed: Additionally, the Act provides for a 100% deduction for certain business meals incurred in calendar years 2021 and 2022, which are currently deductible at 50% for years ending December 31, 2020.
−Removed: Company determined that income tax effects related to the passage of the Consolidated Appropriations Act were not material to the financial statements for the year ended June 27, 2021.
+Added: Management’s position is that all relevant
+Added: requirements are met and necessary returns have been filed, and therefore the tax positions taken on the tax returns would be sustained upon examination.
NOTE G - LEASES:
−Removed: The Company leases its 19,576 square foot corporate office facility with average annual lease payments of approximately $18.00 per square
+Added: The Company leases its 19,576 square foot corporate office facility with average annual lease payments of approximately $ 18.00 per square foot.
This lease began on January 2, 2017 and has a ten-year term.
−Removed: The Company amended its lease agreement in June 2020 and deferred one-half of the monthly base rent for the period from June 2020 through May 2021.
+Added: amended its lease agreement in June 2020 and deferred one-half of the monthly base rent for the period from June 2020 through May 2021.
The Company determines if an arrangement is a lease at inception of the arrangement.
−Removed: To the extent that it can be determined that an arrangement represents a lease, it is classified
−Removed: as either an operating lease or a finance lease.
+Added: To the extent that it can
+Added: be determined that an arrangement represents a lease, it is classified as either an operating lease or a finance lease.
The Company does not currently have any finance leases.
−Removed: The Company capitalizes operating leases on the Consolidated Balance Sheets through a right of use asset and a corresponding lease liability.
−Removed: Right of use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
−Removed: Short-term leases that have an initial term of one
−Removed: year or less are not capitalized but are disclosed below.
−Removed: Short-term lease costs exclude expenses related to leases with a lease term of one month or less.
−Removed: Operating lease right of use assets and liabilities are recognized at the commencement date of an arrangement based on the present value of lease payments over the lease term.
−Removed: addition to the present value of lease payments, the operating lease right of use asset also includes any lease payments made to the lessor prior to lease commencement less any lease incentives and initial direct costs incurred.
−Removed: Lease expense for
−Removed: operating lease payments is recognized on a straight-line basis over the lease term.
+Added: The Company capitalizes operating leases on the Consolidated Balance
+Added: Sheets through a right of use asset and a corresponding lease liability.
+Added: Right of use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments
+Added: arising from the lease.
+Added: Short-term leases that have an initial term of one year or less are not capitalized.
+Added: The Company does not presently have any short-term leases.
+Added: Operating lease right of use assets and liabilities are recognized at the commencement date of an arrangement
+Added: based on the present value of lease payments over the lease term.
+Added: In addition to the present value of lease payments, the operating lease right of use asset also includes any lease payments made to the lessor prior to lease commencement less any
+Added: lease incentives and initial direct costs incurred.
+Added: Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.
Nature of Leases
−Removed: The Company leases certain office space, restaurant space, and information technology equipment under non-cancelable leases to support its operations.
−Removed: A more detailed description of
−Removed: significant lease types is included below.
+Added: The Company leases certain office space, restaurant space, and information technology equipment under
+Added: non-cancelable leases to support its operations.
+Added: A more detailed description of significant lease types is included below.
Office Agreements
The Company rents office space from third parties for its corporate location.
−Removed: Office agreements are typically structured with non-cancelable terms of one to 10 years.
−Removed: The Company has
−Removed: concluded that its office agreements represent operating leases with a lease term that equals the primary non-cancelable contract term.
−Removed: Upon completion of the primary term, both parties have substantive rights to terminate the lease.
−Removed: enforceable rights and obligations do not exist under the rental agreements subsequent to the primary term.
+Added: Office agreements are typically
+Added: structured with non-cancelable terms of one to 10 years .
+Added: The Company has concluded that its office agreements represent operating leases with a lease term that equals the primary non-cancelable contract term.
+Added: Upon completion of the primary term, both parties
+Added: have substantive rights to terminate the lease.
+Added: As a result, enforceable rights and obligations do not exist under the rental agreements subsequent to the primary term.
Restaurant Space Agreements
The Company rents restaurant space from third parties for its Company-owned restaurants.
−Removed: Restaurant space agreements are typically structured with non-cancelable terms of one to 10
+Added: Restaurant space
+Added: agreements are typically structured with non-cancelable terms of one to 10 years .
The Company has concluded that its restaurant agreements represent operating leases with a lease term that equals the primary non-cancelable contract term.
−Removed: Upon completion of the primary term, both parties have substantive rights to terminate
+Added: completion of the primary term, both parties have substantive rights to terminate the lease.
As a result, enforceable rights and obligations do not exist under the rental agreements subsequent to the primary term.
1 unchanged sentence
The Company’s two subleases have terms that end in 2023 and 2025.
−Removed: The sublease agreements are noncancelable
−Removed: through the end of the term and both parties have substantive rights to terminate the lease when the term is complete.
+Added: The sublease agreements are noncancelable through the end of the term and both parties have
+Added: substantive rights to terminate the lease when the term is complete.
Sublease agreements are not capitalized and are recorded as rental income in the period that rent is received.
1 unchanged sentence
Information Technology Equipment
−Removed: The Company rents information technology equipment, primarily printers and copiers, from a third party for its corporate office location.
−Removed: Information technology equipment agreements
−Removed: are typically structured with non-cancelable terms of one to five years.
+Added: The Company rents information technology equipment, primarily printers and copiers, from a third party for its
+Added: corporate office location.
+Added: Information technology equipment agreements are typically structured with non-cancelable terms of one to five years .
The Company has concluded that its information technology equipment commitments are operating leases.
1 unchanged sentence
Leases typically do not provide an implicit interest rate.
−Removed: Accordingly, the Company is required to use its incremental borrowing rate in determining the present value of lease
−Removed: payments based on the information available at the lease commencement date.
−Removed: The Company’s incremental borrowing rate reflects the estimated rate of interest that it would pay to borrow on a collateralized basis over a similar term for an amount equal
−Removed: to the lease payments in a similar economic environment.
+Added: Accordingly, the Company is required to use its
+Added: incremental borrowing rate in determining the present value of lease payments based on the information available at the lease commencement date.
+Added: The Company’s incremental borrowing rate reflects the estimated rate of interest that it would pay to
+Added: borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment.
The Company uses the implicit rate in the limited circumstances in which that rate is readily determinable.
1 unchanged sentence
The Company has guaranteed the financial responsibilities of certain franchised store leases.
−Removed: These guaranteed leases are not considered operating leases because the Company does not
−Removed: have the right to control the underlying asset.
−Removed: If the franchisee abandons the lease and fails to meet the lease’s financial obligations, the lessor may assign the lease to the Company for the remainder of the term.
−Removed: If the Company does not expect to
−Removed: assign the abandoned lease to a new franchisee within 12 months, the lease will be considered an operating lease and a right-of-use asset and liability will be recognized.
+Added: These guaranteed
+Added: leases are not considered operating leases because the Company does not have the right to control the underlying asset.
+Added: If the franchisee abandons the lease and fails to meet the lease’s financial obligations, the lessor may assign the lease to the
+Added: Company for the remainder of the term.
+Added: If the Company does not expect to assign the abandoned lease to a new franchisee within 12 months, the lease will be considered an operating lease and a right-of-use asset and lease liability will be
Practical Expedients and Accounting Policy Elections
Certain lease agreements include lease and non-lease components.
−Removed: For all existing asset classes with multiple component types, the Company has utilized the practical expedient that
−Removed: exempts it from separating lease components from non-lease components.
−Removed: Accordingly, the Company accounts for the lease and non-lease components in an arrangement as a single lease component.
−Removed: In addition, for all existing asset classes, the Company has made an accounting policy election not to apply the lease recognition requirements to short-term leases (that is, a lease
−Removed: that, at commencement, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the Company is reasonably certain to exercise).
−Removed: Accordingly, we recognize lease payments related to our short-term
−Removed: leases in our statement of operations on a straight-line basis over the lease term which has not changed from our prior recognition.
−Removed: To the extent that there are variable lease payments, we recognize those payments in our statement of operations in
−Removed: the period in which the obligation for those payments is incurred.
−Removed: The components of total lease expense for the fiscal year ended June 27, 2021, the majority of which is included in general and administrative expense in the accompanying
−Removed: consolidated statement of operations, are as follows (in thousands):
+Added: For all existing asset classes with multiple
+Added: component types, the Company has utilized the practical expedient that exempts it from separating lease components from non-lease components.
+Added: Accordingly, the Company accounts for the lease and non-lease components in an arrangement as a single
+Added: lease component.
+Added: In addition, for all existing asset classes, the Company has made an accounting policy election not to apply
+Added: the lease recognition requirements to short-term leases (that is, a lease that, at commencement, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the Company is reasonably certain to
+Added: Accordingly, we recognize lease payments related to our short-term leases in our income statements on a straight-line basis over the lease term which has not changed from our prior recognition.
+Added: To the extent that there are variable lease
+Added: payments, we recognize those payments in our income statements in the period in which the obligation for those payments is incurred.
+Added: The components of total lease expense for the fiscal year ended June 26, 2022, the majority of which is
+Added: included in general and administrative expense in the accompanying Consolidated Statements of Income, are as follows (in thousands):
Fiscal Year Ended
23 unchanged sentences
Total operating lease liability
−Removed: Premises occupied by Company-owned restaurants were leased for initial terms of five to ten years, and each has multiple renewal terms.
−Removed: Certain lease agreements
−Removed: contain either a provision requiring additional rent if sales exceed specified amounts or an escalation clause based upon a predetermined multiple.
−Removed: Future minimum rental payments under active non-cancelable leases with initial or remaining terms of one year or more at June 27, 2021 were as follows (in
+Added: Premises previously occupied by Company-owned restaurants were leased for initial terms
+Added: of five to ten years ,
+Added: and each has multiple renewal terms.
+Added: Certain lease agreements contain either a provision requiring additional rent if sales exceed specified amounts or an escalation clause based upon a predetermined multiple.
+Added: Future minimum rental payments under active non-cancelable leases with initial or remaining terms of one year or more at June
+Added: 26, 2022 were as follows (in thousands):
Operating Leases
−Removed: Future minimum sublease rental income under active non-cancelable leases with initial or remaining terms of one year or more at June 27, 2021 were as follows (in thousands):
+Added: Future minimum sublease rental income under active non-cancelable leases with initial or
+Added: remaining terms of one year or more at June 26, 2022 were as follows (in thousands):
Sublease Rental Income
4 unchanged sentences
NOTE H - EMPLOYEE BENEFITS:
−Removed: The Company has a tax advantaged savings plan that is designed to meet the requirements of Section 401(k) of the Internal Revenue Code (the
−Removed: The current plan is a modified continuation of a similar savings plan established by the Company in 1985.
+Added: The Company has a tax advantaged savings plan that is designed to meet the requirements
+Added: of Section 401(k) of the Internal Revenue Code (the “Code”).
Employees who have completed three months of service and are at least 21 years of age are eligible to participate in the plan.
−Removed: plan provides that participating employees may elect to have between 1% and 15% of their compensation deferred and contributed to the plan subject to certain IRS limitations.
−Removed: Effective June 27, 2005, the Company has a discretionary matching
−Removed: contribution.
+Added: The plan provides that participating employees may elect to have between 1 % and 15 % of their compensation
+Added: deferred and contributed to the plan subject to certain IRS limitations.
+Added: The Company has a discretionary matching contribution.
Separate accounts are maintained with respect to contributions made on behalf of each participating employee.
−Removed: Employer matching contributions and earnings thereon are invested in the same investments as each participant’s employee
−Removed: The plan is subject to the provisions of the Employee Retirement Income Security Act, as amended, and is a profit-sharing plan as defined in Section 401(k) of the Code.
−Removed: For the fiscal year ended June 27, 2021, total matching contributions to the tax advantaged savings plan by the Company on behalf of
−Removed: participating employees were approximately $24 thousand.
−Removed: For the fiscal year ended June 28, 2020, no matching contributions were made to the tax advantaged savings plan by the Company.
+Added: matching contributions and earnings thereon are invested in the same investments as each participant’s employee deferral.
+Added: The plan is subject to the provisions of the Employee Retirement Income Security Act, as amended, and is a profit-sharing
+Added: plan as defined in Section 401(k) of the Code.
+Added: For the fiscal year ended June 26, 2022, and June 27, 2021, total matching contributions
+Added: to the tax advantaged savings plan by the Company on behalf of participating employees were approximately $ 33 thousand and $ 24 thousand, respectively.
NOTE I - STOCK BASED COMPENSATION PLANS:
−Removed: In June 2005, the 2005 Employee Incentive Stock Option Award Plan (the “2005 Employee Plan”) was approved by the Company’s shareholders with
−Removed: a plan effective date of June 23, 2005.
+Added: In June 2005, the 2005 Employee Incentive Stock Option Award Plan (the “2005 Employee
+Added: Plan”) was approved by the Company’s shareholders with a plan effective date of June 23, 2005.
Under the 2005 Employee Plan, officers and employees of the Company were eligible to receive options to purchase shares of the Company’s common stock.
−Removed: Options were granted at market value of the stock on the
−Removed: date of grant, were subject to various vesting and exercise periods as determined by the Compensation Committee of the board of directors and could be designated as non-qualified or incentive stock options.
−Removed: A total of 1,000,000 shares of common
−Removed: stock were authorized for issuance under the 2005 Employee Plan.
−Removed: The 2005 Employee Plan expired by its terms on June 23, 2015.
−Removed: The shareholders also approved the 2005 Non-Employee Directors Stock Award Plan (the “2005 Directors Plan”) in June 2005, to be effective as
−Removed: of June 23, 2005.
+Added: Options were granted at market value of the stock on the date of grant, were subject to various vesting and exercise periods as determined by the Compensation Committee of the board of directors and could be designated as non-qualified or incentive
+Added: stock options.
+Added: A total of 1,000,000 shares of common stock were authorized for issuance under the 2005 Employee Plan.
+Added: Employee Plan expired by its terms on June 23, 2015.
+Added: The shareholders also approved the 2005 Non-Employee Directors Stock Award Plan (the
+Added: “2005 Directors Plan”) in June 2005, to be effective as of June 23, 2005.
Directors not employed by the Company were eligible to receive stock options under the 2005 Directors Plan.
−Removed: Options for common stock equal to twice the number of shares of common stock acquired during the previous fiscal year, up
−Removed: to 40,000 shares per year, were automatically granted to each non-employee director on the first day of each fiscal year.
−Removed: Options were granted at market value of the stock on the first day of each fiscal year, with vesting periods beginning at a
−Removed: minimum of six months and with exercise periods up to ten years.
+Added: Options for common stock equal to twice the number of shares of
+Added: common stock acquired during the previous fiscal year, up to 40,000 shares per year, were automatically granted to each non-employee
+Added: director on the first day of each fiscal year.
+Added: Options were granted at market value of the stock on the first day of each fiscal year, with vesting periods beginning at a minimum of six months and with exercise periods up to ten years .
A total of 650,000 shares of Company common stock were authorized for issuance pursuant to the 2005 Directors Plan.
−Removed: The 2005 Directors Plan expired by its terms on June 23, 2015.
−Removed: The 2015 Long Term Incentive Plan (the “2015 LTIP”) was approved by the Company’s shareholders on November 18, 2014 and became effective
−Removed: June 1, 2015.
+Added: The 2005 Directors Plan expired by its terms
+Added: on June 23, 2015.
+Added: The 2015 Long Term Incentive Plan (the “2015 LTIP”) was approved by the Company’s
+Added: shareholders on November 18, 2014 and became effective June 1, 2015.
Officers, employees and non-employee directors of the Company are eligible to receive awards under the 2015 LTIP.
A total of 3,000,000 shares of common stock are authorized for issuance under the 2015 LTIP.
−Removed: Awards authorized under
−Removed: the 2015 LTIP include incentive stock options, non-qualified stock options, restricted shares, restricted stock units and rights (either with or without accompanying options).
−Removed: The 2015 LTIP provides for options to be granted at market value of the
−Removed: stock on the date of grant and have exercise periods determined by the Compensation Committee of the board of directors.
−Removed: The Compensation Committee may also determine the vesting periods, performance criteria and other terms and conditions of all
−Removed: awards under the 2015 LTIP.
−Removed: The Compensation Committee has adopted resolutions under the 2015 LTIP automatically granting to each non-employee director on the first day of each fiscal year options to purchase twice the number of shares of common
−Removed: stock acquired during the previous fiscal year, up to a maximum of 40,000 shares.
−Removed: Such options are exercisable at the market value of the stock on the first day of the fiscal year, vest six months from the date of grant and expire 10 years from the
−Removed: date of grant.
−Removed: Share based compensation expense is included in general and administrative expense in the accompanying consolidated statement of operations.
+Added: Awards authorized under the 2015 LTIP include incentive stock options, non-qualified stock
+Added: options, restricted shares, restricted stock units and rights (either with or without accompanying options).
+Added: The 2015 LTIP provides for options to be granted at market value of the stock on the date of grant and have exercise periods determined by
+Added: the Compensation Committee of the board of directors.
+Added: The Compensation Committee may also determine the vesting periods, performance criteria and other terms and conditions of all awards under the 2015 LTIP.
+Added: The Compensation Committee has adopted
+Added: resolutions under the 2015 LTIP automatically granting to each non-employee director on the first day of each fiscal year options to purchase twice the number of shares of common stock acquired during the previous fiscal year, up to a maximum of 40,000 shares.
+Added: Such options are exercisable at the market value of the stock on the first day of the fiscal year, vest six months from the date of grant and expire 10 years
+Added: from the date of grant.
+Added: Stock based compensation expense is included in general and administrative expense in the
+Added: accompanying Consolidated Statements of Income.
Stock Options:
−Removed: A summary of stock option transactions under all of the Company’s stock option plans and information about fixed-price stock options is as
−Removed: Fiscal Year Ended
+Added: A summary of stock option transactions under all of the Company’s stock option plans and
+Added: information about fixed-price stock options is as follows:
+Added: Fiscal Year Ended June 26, 2022
+Added: Fiscal Year Ended June 27, 2021
+Added: Exercise Price
+Added: Exercise Price
Outstanding at beginning of year
2 unchanged sentences
Exercisable at end of period
−Removed: Fiscal Year Ended
−Removed: Outstanding at beginning of year
−Removed: Forfeited/Canceled/Expired
−Removed: Outstanding at end of period
−Removed: Exercisable at end of year
The intrinsic value of options outstanding at June 26, 2022 was zero .
10 unchanged sentences
Valuation and Amortization Method.
−Removed: We estimate the fair
−Removed: value of share-based awards granted using the Black-Scholes option valuation model.
+Added: We estimate the fair value of
+Added: share-based awards granted using the Black-Scholes option valuation model.
We amortize the fair value of all awards on a straight-line basis over the requisite service periods, which are generally the vesting periods.
Expected Life .
−Removed: The expected life of awards granted represents the period of time that they are
−Removed: expected to be outstanding.
+Added: The expected life of awards granted represents the period of time that they are expected to
+Added: be outstanding.
Unless a life is specifically stated, we determine the expected life using the “simplified method” in accordance with Staff Accounting Bulletin No.
1 unchanged sentence
Expected Volatility .
−Removed: Using the Black-Scholes option
−Removed: valuation model, we estimate the volatility of our common stock at the date of grant based on the historical volatility of our common stock.
+Added: Using the Black-Scholes option valuation
+Added: model, we estimate the volatility of our common stock at the date of grant based on the historical volatility of our common stock.
Risk-Free Interest Rate .
−Removed: We base the risk-free interest
−Removed: rate used in the Black-Scholes option valuation model on the implied yield currently available on U.S.
+Added: We base the risk-free interest rate used
+Added: in the Black-Scholes option valuation model on the implied yield currently available on U.S.
Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award.
Expected Dividend Yield.
−Removed: We have not paid any cash
−Removed: dividends on our common stock in the last ten years and we do not anticipate paying any cash dividends in the foreseeable future.
+Added: We have not paid any cash dividends on our
+Added: common stock in the last ten years and we do not anticipate paying any cash dividends in the foreseeable future.
Consequently, we use an expected dividend yield of zero in the Black-Scholes option valuation model.
4 unchanged sentences
At June 26, 2022, all stock options that the Company had granted were vested.
−Removed: No stock compensation expense related to stock options was
−Removed: recognized in either fiscal years 2021 or 2020.
+Added: No stock compensation expense related to stock options was recognized in either fiscal years 2022 or 2021.
Restricted Stock Units:
−Removed: Restricted stock units awarded under the 2015 LTIP represent the right to receive shares of common stock upon the satisfaction of vesting
−Removed: requirements, performance criteria and other terms and conditions.
−Removed: During fiscal 2020, there were no grants of performance-based restricted stock units.
−Removed: During fiscal 2021, an aggregate of 545,600 performance-based restricted stock units were granted
−Removed: to certain employees.
−Removed: The restricted stock units granted to each recipient are allocated among performance criteria pertaining to various aspects of the Company’s
−Removed: business, as well as its overall operations, measured based on the second fiscal year following the date of grant.
−Removed: Achievement of the various performance criteria entitles the recipient to receive shares of common stock in amounts ranging from 50%
−Removed: to 150% of the number of restricted stock units granted.
−Removed: Grantees of restricted stock units do not have any rights of a stockholder, and do not participate in any distributions on our common stock, until the award fully vests upon satisfaction of
−Removed: the vesting schedule, performance criteria and other conditions set forth in their award agreement.
−Removed: Therefore, unvested restricted stock units are not considered participating securities under ASC 260, “ Earnings Per
−Removed: Share ,” and are not included in the calculation of basic or diluted earnings per share.
−Removed: Compensation cost is measured as an amount equal to the fair value of the restricted stock units on the date of grant and is expensed over
−Removed: the vesting period if achievement of the performance criteria is deemed probable, with the amount of the expense recognized based on the best estimate of the ultimate achievement level.
−Removed: A summary of the status of restricted stock units as of June 27, 2021 and June 28, 2020, and changes during the fiscal years then ended is
−Removed: presented below:
+Added: Restricted stock units awarded under the 2015 LTIP represent the right to receive shares
+Added: of common stock upon the satisfaction of vesting requirements, performance criteria and other terms and conditions.
+Added: During fiscal 2022 and 2021, 362,500
+Added: and 545,600 performance-based restricted stock units, respectively, were granted to certain employees.
+Added: The restricted stock units granted to each recipient are allocated among performance
+Added: criteria pertaining to various aspects of the Company’s business, as well as its overall operations, measured based on the second fiscal year following the date of grant.
+Added: Achievement of the various performance criteria entitles the recipient to
+Added: receive shares of common stock in amounts ranging from 50 % to 150 % of the number of restricted stock units granted.
+Added: Grantees of restricted stock units do not have any rights of a stockholder, and do not participate in any distributions on our common
+Added: stock, until the award fully vests upon satisfaction of the vesting schedule, performance criteria and other conditions set forth in their award agreement.
+Added: Therefore, unvested restricted stock units are not considered participating securities
+Added: under ASC 260, “ Earnings Per Share ,” and are not included in the calculation of basic or diluted earnings per share.
+Added: Compensation cost is measured as an amount equal to the fair value of the restricted
+Added: stock units on the date of grant and is expensed over the vesting period if achievement of the performance criteria is deemed probable, with the amount of the expense recognized based on the best estimate of the ultimate achievement level.
+Added: A summary of the status of restricted stock units as of June 26, 2022 and June 27, 2021,
+Added: and changes during the fiscal years then ended is presented below:
Unvested at beginning of year
4 unchanged sentences
NOTE J - SHAREHOLDERS’ EQUITY:
−Removed: On April 22, 2009, the board of directors of the Company amended the stock repurchase plan first authorized on May 23, 2007, and previously
−Removed: amended on June 2, 2008, by increasing the aggregate number of shares of common stock the Company may repurchase under the plan to a total of 3,016,000 shares.
−Removed: No shares were repurchased during fiscal 2021 and, as of June 27, 2021, there were
−Removed: 848,425 shares available to be repurchased under the plan.
−Removed: On December 5, 2017, the Company entered into an At Market Issuance Sales Agreement with B.
+Added: On April 22, 2009, the board of directors of the Company amended the stock repurchase
+Added: plan first authorized on May 23, 2007, and previously amended on June 2, 2008, by increasing the aggregate number of shares of common stock the Company may repurchase under the plan to a total of 3,016,000 shares.
+Added: During fiscal 2022, 493,474 shares were
+Added: repurchased and, as of June 26, 2022, there were 354,951 shares available to be repurchased under the plan.
+Added: On June 28, 2022, the Company’s board of directors again amended the stock repurchase plan to increase the number of shares of common stock
+Added: the Company may repurchase by 5,000,000 shares to a total of 8,016,000 shares.
+Added: Subsequently to fiscal year 2022, the Company has repurchased an additional 1,110,891 outstanding shares of its common stock.
+Added: On December 5, 2017, the Company entered into an At Market Issuance Sales Agreement with
Riley FBR, Inc.
−Removed: Riley FBR”) pursuant to
−Removed: which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $5,000,000 from time to time through B.
+Added: Riley FBR”) pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 5,000,000 from time to time through B.
Riley FBR acting as agent (the “2017 ATM Offering”).
−Removed: The 2017 ATM Offering is being undertaken
−Removed: pursuant to Rule 415 and a shelf Registration Statement on Form S-3 which was declared effective by the SEC on November 6, 2017.
−Removed: Through June 27, 2021, the Company had sold an aggregate of 3,064,342 shares in the 2017 ATM Offering, realizing
−Removed: aggregate gross proceeds of $4.4 million.
+Added: The 2017 ATM Offering was undertaken pursuant to Rule 415 and a shelf Registration Statement on Form S-3 which was
+Added: declared effective by the SEC on November 6, 2017.
+Added: Through June 27, 2021, the Company had sold an aggregate of 3,064,342 shares in the
+Added: 2017 ATM Offering, realizing aggregate gross proceeds of $ 4.4 million.
The 2017 ATM Offering expired on November 6, 2020.
−Removed: The Company pays to B.
+Added: The Company paid to B.
Riley FBR a fee equal to 3 % of the gross sales price in addition to reimbursing certain costs.
−Removed: The Company had $131
−Removed: thousand in expenses associated with the 2017 ATM Offering in fiscal 2021.
+Added: The Company had $ 131 thousand in expenses associated with the 2017 ATM Offering in fiscal 2021.
NOTE K - COMMITMENTS AND CONTINGENCIES:
−Removed: The Company is subject to various claims and contingencies related to employment agreements, franchise disputes, lawsuits, taxes, food
−Removed: product purchase contracts and other matters arising out of the normal course of business.
−Removed: Management believes that any such claims and actions currently pending are either covered by insurance or would not have a material adverse effect on the
−Removed: Company’s annual results of operations or financial condition if decided in a manner that is unfavorable to the Company.
−Removed: On March 11, 2020, the World Health Organization declared the outbreak of novel coronavirus (COVID-19) as a pandemic, and the disease has
−Removed: spread rapidly throughout the United States and the world.
−Removed: Federal, state and local responses to the COVID-19 pandemic, as well as our internal efforts to protect customers, franchisees and employees, have severely disrupted our business
−Removed: Most of the domestic Pizza Inn buffet restaurants and Pie Five restaurants are in areas that were for varying periods subject to “shelter-in-place” and social distancing restrictions prohibiting in-store sales and, therefore, were
−Removed: limited to carry-out and/or delivery orders.
+Added: The Company is subject to various claims and contingencies related to employment
+Added: agreements, franchise disputes, lawsuits, taxes, food product purchase contracts and other matters arising out of the normal course of business.
+Added: Management believes that any such claims and actions currently pending are either covered by insurance
+Added: or would not have a material adverse effect on the Company’s annual results of operations or financial condition if decided in a manner that is unfavorable to the Company.
+Added: On March 11, 2020, the World Health Organization declared the outbreak of novel
+Added: coronavirus (COVID-19) as a pandemic, and the disease spread rapidly throughout the United States and the world.
+Added: Federal, state and local responses to the COVID-19 pandemic, as well as our internal efforts to protect customers, franchisees and
+Added: employees, severely disrupted our business operations.
+Added: Most of the domestic Pizza Inn buffet restaurants and Pie Five restaurants are in areas that were for varying periods subject to “shelter-in-place” and social distancing restrictions
+Added: prohibiting in-store sales and, therefore, were limited to carry-out and/or delivery orders.
In some areas, these restrictions limited non-essential movement outside the home, which discouraged or even precluded carry-out orders.
−Removed: In most cases, in-store dining has now resumed subject to
−Removed: seating capacity limitations, social distancing protocols, and enhanced cleaning and disinfecting practices.
−Removed: Further, the COVID-19 pandemic has precipitated significant job losses and a national economic downturn that typically impacts the demand
−Removed: for restaurant food service.
−Removed: Although most of our domestic restaurants have continued to operate under these conditions, we have experienced temporary closures from time to time during the pandemic.
−Removed: The COVID-19 pandemic has resulted in dramatically reduced aggregate in-store retail sales at Buffet Units and Pie Five Units, modestly
−Removed: offset by increased aggregate carry-out and delivery sales.
+Added: COVID-19 pandemic precipitated significant job losses and a national economic downturn that impacted the demand for restaurant food service.
+Added: Although most of our domestic restaurants continued to operate under these conditions, we have
+Added: experienced temporary closures from time to time during the pandemic.
+Added: In most cases, in-store dining has now resumed subject to seating capacity limitations, social distancing protocols, and enhanced cleaning and disinfecting practices.
+Added: The COVID-19 pandemic has resulted in dramatically reduced aggregate in-store retail
+Added: sales at Buffet Units and Pie Five Units, modestly offset by increased aggregate carry-out and delivery sales.
The decreased aggregate retail sales have correspondingly decreased supplier rebates and franchise royalties payable to the Company.
−Removed: During the fourth quarter of fiscal 2020, we
−Removed: participated in a government-sponsored loan program.
−Removed: (See, “Note E--PPP Loan.”) We also temporarily furloughed certain employees and reduced base salary by 20% for all remaining employees for the fourth quarter of fiscal 2020, as well as reducing
−Removed: other expenses.
−Removed: While the Company will remain focused on controlling expenses, future results of operations are likely to be materially adversely impacted by the pandemic and its aftermath.
−Removed: We expect that Buffet Units and Pie Five Units will continue to be subject to capacity restrictions for some time as social distancing
−Removed: protocols remain in place.
−Removed: Additionally, an outbreak or perceived outbreak of COVID-19 connected to restaurant dining could cause negative publicity directed at any of our brands and cause customers to avoid our restaurants.
−Removed: We cannot predict how
−Removed: long the pandemic will last or whether it will reoccur, what additional restrictions may be enacted, to what extent off-premises dining will continue, or if individuals will be comfortable returning to our Buffet Units and Pie Five Units following
−Removed: social distancing protocols.
+Added: An outbreak or perceived outbreak of COVID-19 connected to restaurant dining could cause
+Added: negative publicity directed at any of our brands and cause customers to avoid our restaurants.
+Added: We cannot predict how long the pandemic will last or whether it will reoccur, what additional restrictions may be enacted, to what extent off-premises
+Added: dining will continue, or if individuals will be comfortable returning to our Buffet Units and Pie Five Units.
Any of these changes could materially adversely affect the Company’s future financial performance.
−Removed: However, the ultimate impact of COVID-19 on our future results of operations and liquidity cannot presently be predicted.
+Added: However, the ultimate impact of
+Added: COVID-19 on our future results of operations and liquidity cannot presently be predicted.
NOTE L - EARNINGS PER SHARE:
−Removed: The Company computes and presents earnings per share (“EPS”) in accordance with the authoritative guidance on Earnings Per Share .
−Removed: Basic EPS excludes the effect of potentially dilutive securities while diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised,
−Removed: converted or resulted in the issuance of common stock that then shared in the earnings of the Company.
−Removed: The following table shows the reconciliation of the numerator and denominator of the basic EPS calculation to the numerator and denominator
−Removed: of the diluted EPS calculation (in thousands, except per share amounts).
+Added: The Company computes and presents earnings per share (“EPS”) in accordance with ASC 260 Earnings Per Share .
+Added: Basic EPS excludes the effect of potentially dilutive securities while diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common stock
+Added: were exercised, converted or resulted in the issuance of common stock that then shared in the earnings of the Company.
+Added: The following table shows the reconciliation of the numerator and denominator of the
+Added: basic EPS calculation to the numerator and denominator of the diluted EPS calculation (in thousands, except per share amounts).
Fiscal Year Ended
−Removed: Income/(loss) from continuing operations
+Added: Net income available to common shareholders
Interest saved on convertible notes at 4 %
−Removed: Adjusted net income/(loss)
+Added: Adjusted net income
Weighted average common shares
2 unchanged sentences
Convertible notes
−Removed: Dilutive stock options
Weighted average common shares outstanding
−Removed: Income/(loss) from continuing operations per common share
−Removed: We had 166,750 and 206,750 shares of common stock potentially issuable upon exercise of employee stock options for years ended June 27, 2021
−Removed: and June 28, 2020, respectively.
−Removed: The 166,750 and 206,750 shares of common stock were excluded from the weighted average number of shares outstanding on a diluted basis because they had an intrinsic value of zero and were anti-dilutive, respectively.
+Added: Income from continuing operations per common share
+Added: We had 111,750 and 166,750 shares of common stock potentially issuable upon exercise of employee stock
+Added: options for years ended June 26, 2022 and June 27, 2021, respectively, which were excluded from the weighted average number of shares outstanding on a diluted basis because they had an intrinsic value of zero and were anti-dilutive.
These options expire at varying times from fiscal 2024 through fiscal 2026.
NOTE M - SEGMENT REPORTING:
−Removed: The Company has three reportable operating segments as determined by management using the “management approach” as defined by the
−Removed: authoritative guidance on Disclosures about Segments of an Enterprise and Related Information :
+Added: The Company has three reportable operating segments as determined by management using the “management approach” as defined by ASC 280 Disclosures about Segments of an
+Added: Enterprise and Related Information :
(1) Pizza Inn Franchising, (2) Pie Five Franchising and (3) Company-Owned Restaurants.
−Removed: These segments are a
−Removed: result of differences in the nature of the products and services sold.
−Removed: Corporate administration costs, which include, but are not limited to, general accounting, human resources, legal and credit and collections, are partially allocated to the three
−Removed: operating segments.
+Added: These segments are a result of differences in the nature of the products and services sold.
+Added: administration costs, which include, but are not limited to, general accounting, human resources, legal and credit and collections, are partially allocated to the three operating segments.
Other revenue consists of nonrecurring items.
−Removed: The Pizza Inn and Pie Five Franchising segments establish franchisees, licensees and territorial rights.
−Removed: Revenue for this segment is derived
−Removed: from franchise royalties, franchise fees, sale of area development and foreign master license rights and incentive payments from third party suppliers and distributors.
−Removed: Assets for these segments include equipment, furniture and fixtures.
−Removed: The Company-Owned Restaurants segment includes sales and operating results for all Company-owned restaurants.
−Removed: Assets for this segment
−Removed: include equipment, furniture and fixtures for the Company-owned restaurants.
−Removed: Corporate administration and other assets primarily include cash and short-term investments, as well as furniture and fixtures located at
−Removed: the corporate office and trademarks and other intangible assets.
+Added: The Pizza Inn and Pie Five Franchising segments establish franchisees, licensees and
+Added: territorial rights.
+Added: Revenue for these segments are derived from franchise royalties, franchise fees, sale of area development and foreign master license rights and incentive payments from third party suppliers and distributors.
+Added: Assets for these
+Added: segments include equipment, furniture and fixtures.
+Added: The Company-Owned Restaurants segment includes sales and operating results for all
+Added: Company-owned restaurants.
+Added: Assets for this segment include equipment, furniture and fixtures for the Company-Owned restaurants.
+Added: As of June 26, 2022, the Company did not operate any Company-Owned restaurants.
+Added: Corporate administration and other assets primarily include cash and short-term
+Added: investments, as well as furniture and fixtures located at the corporate office and trademarks and other intangible assets.
All assets are located within the United States.
−Removed: Summarized in the following tables are net sales and operating revenues, depreciation and amortization expense, income from continuing
−Removed: operations before taxes, capital expenditures and assets for the Company’s reportable segments as of and for the fiscal years ended June 27, 2021 and June 28, 2020 (in thousands):
+Added: Summarized in the following tables are net sales and operating revenues, depreciation and
+Added: amortization expense, income from continuing operations before taxes, capital expenditures and assets for the Company’s reportable segments as of and for the fiscal years ended June 26, 2022 and June 27, 2021 (in thousands):
Fiscal Year Ended
23 unchanged sentences
NOTE N - SUBSEQUENT EVENTS:
−Removed: In preparation of its financial statements, the Company considered subsequent events through September 21, 2021 which was the date the Company’s financial statements were available
−Removed: to be issued.
+Added: In preparation of its financial statements, the Company considered subsequent events through September 23,
+Added: 2022 which was the date the Company’s financial statements were available to be issued.
+Added: On June 28, 2022, the Company’s board of directors amended its stock repurchase plan to increase the number
+Added: of shares of common stock the Company may repurchase by 5,000,000 shares to a total of 8,016,000 shares.
+Added: Subsequently, the Company has repurchased an additional 1,110,891
+Added: outstanding shares of its common stock at an aggregate price of $ 1.4 million.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.