What changed in this filing

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Item 9A. Controls and Procedures

2024-09-26 compared with 2023-09-21 · 272 added, 363 removed, 623 unchanged (50% of the section changed)

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disclosure controls and procedures as of the end of the period covered by this report.

Based on that evaluation, the principal executive officer and principal financial officer concluded that the Company’s disclosure 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 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 specified in the SEC’s rules

Management Report on Internal Control over Financial Reporting

Based on that evaluation, the principal executive officer and principal financial officer concluded that the Company’s disclosure 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 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 specified in

the SEC’s rules and forms.

Management’s Annual Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate “internal control over financial reporting” (as defined in Rule 13a-15(f) under the

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Based upon that evaluation, management has concluded that our internal control over financial reporting was effective as of June 30, 2024.

OTHER INFORMATION.

During the quarter ended June 30, 2024, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

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and Brandon Solano (filed as Exhibit 10.1 to Form 8-K filed October 21, 2019 and incorporated herein by

Letter agreement dated November 4, 2019, between Rave Restaurant Group, Inc.

and Mike Burns (filed as Exhibit 10.1 to Form 8-K filed November 15, 2019 and incorporated herein by

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).*

Letter agreement dated March 25, 2024, between Rave Restaurant Group, Inc.

and Jay Rooney (filed as Exhibit 10.1 to Form 8-K filed March 26, 2019 and incorporated herein by reference).*

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.

Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.

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(principal executive officer)

/s/ Clinton D.

Chief Financial Officer

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September 26, 2024

/s/ Clinton D.

Chief Financial Officer

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RAVE RESTAURANT GROUP, INC.

INDEX TO CONSOLIDATED

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm (Whitley Penn LLP, PCAOB ID:

Report of Independent Registered Public Accounting Firm (Armanino, LLP, PCAOB ID:

CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm ( Whitley Penn LLP ,

Consolidated Statements of Income for the fiscal years ended June 30, 2024 and June 25, 2023

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Consolidated Statements of Cash Flows for the fiscal years ended June 30, 2024 and June 25, 2023

Supplemental Disclosures of Cash Flow Information for the fiscal years ended June 25, 2023 and June 26, 2022

Notes to Consolidated Financial Statements

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Rave Restaurant Group, Inc and subsidiaries (the “Company”) as of June 25, 2023,

and the related consolidated statements of income, shareholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present

fairly, in all material respects, the financial position of the Company as of June 25, 2023, 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 (“GAAP”).

We have audited the accompanying consolidated balance sheets of Rave Restaurant Group, Inc and subsidiaries (the “Company”) as of June 30, 2024 and June 25, 2023,

and the related consolidated statements of income, shareholders’ equity, and cash flows for the fiscal years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements

present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and June 25, 2023, and the results of their operations and their cash flows for the fiscal years then ended, in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial

statements based on our audit.

Our responsibility is to express an opinion on these financial statements based on our

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 accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

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 entity’s internal control over financial

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

federal securities laws and

the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance

about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

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 entity’s internal control over financial reporting.

Accordingly, we

express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the 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 financial statements.

Our audit also included evaluating the accounting

principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and

significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be

communicated to the audit committee and that:

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the

audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical

audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or

disclosures to which it relates

The communication of the critical audit matter does not

alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it

Assessment of Realizability of Deferred Tax Assets

Critical Audit Matter Description

As disclosed in Note A and Note F to the consolidated financial statements, the Company recognizes deferred income taxes for tax attributes and

for differences between the financial statement and tax carrying amounts of assets and liabilities at enacted statutory tax rates in effect for the years in which the deferred tax liability or asset are expected to be settled or realized.

Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies.

In assessing the need for

the valuation allowance, the Company considers both positive and negative evidence 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.

As disclosed in Note A and Note E to the consolidated financial statements, the Company recognizes deferred income taxes for tax attributes and for differences

between the financial statement and tax carrying amounts of assets and liabilities at enacted statutory tax rates in effect for the years in which the deferred tax liability or asset are expected to be settled or realized.

The Company continually

reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies.

In assessing the need for the valuation

allowance, the Company considers both positive and negative evidence 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

As of June 30, 2024, the Company has deferred tax assets of approximately $4.8 million.

Auditing management’s assessment of realizability of deferred tax assets involved subjective estimation and complex auditor judgment in

Auditing management’s assessment of recoverability of deferred tax assets involved subjective estimation and complex auditor judgment in

determining whether sufficient future taxable income, including projected pre-tax income, will be generated to support the realization of the existing deferred tax assets before expiration.

How We Addressed the Matter

We evaluated the assumptions used by the Company to develop projections of future taxable income, including the pre-tax income, by income tax

jurisdiction and tested the completeness and accuracy of the underlying data used in the projections.

For example, we compared the projections of pre-tax income with the actual results of prior periods, as well as management’s consideration of

current industry and economic trends.

We evaluated the assumptions used by the Company to develop projections of future taxable income, including the pre-tax income, by income tax jurisdiction and tested

the completeness and accuracy of the underlying data used in the projections.

For example, we compared the projections of pre-tax income with the actual results of prior periods, as well as management’s consideration of current industry and

economic trends.

We also compared the projections of future pre-tax income with other forecasted financial information prepared by the Company.

With the assistance of our income tax specialists, we evaluated the methodology and models used in management’s forecasting of the reversal of

deferred income tax assets and liabilities in order to determine such methodologies were consistent with GAAP, including management’s consideration of definite-lived deferred income tax balances and indefinite-lived deferred income tax balances.

We have served as the Company’s auditor since 2023.

With the assistance of our income tax specialists, we evaluated the methodology and models used in management’s forecasting of the reversal of deferred income tax

assets and liabilities in order to determine such methodologies were consistent with GAAP, including management’s consideration of definite-lived deferred income tax balances and indefinite-lived deferred income tax balances.

We have served as the Company’s

auditor since 2023.

/s/ Whitley Penn LLP

September 26, 2024

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

RAVE RESTAURANT GROUP, INC.

The Colony, Texas

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Rave Restaurant Group, Inc.

(the “Company”) and subsidiaries as of June 26, 2022 and June 27, 2021, the related consolidated statements of income, changes in shareholders’ equity, and cash flows for the years then ended, and the related notes

(collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 26, 2022 and June 27, 2021, and the 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 America.

Basis for Opinion

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

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 accordance with the U.S.

federal securities laws and the applicable rules and regulations of the

Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not

required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

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 Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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.

Our audits also included

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit

matter communicated below is a matter arising from the current period audit of the consolidated financial statements that 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 judgments.

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 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

Critical Audit Matter Description

The Company has two

primary sources of revenues:

restaurant sales and franchise revenues.

Franchise revenues 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.

Each of 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.

How the Critical Audit Matter Was Addressed in the Audit

Our principal audit procedures related to the Company’s revenue recognition included the following:

We obtained the detail of all revenue transactions and performed the following procedures:

Identified the Company’s various revenue streams and any differences in the processes, methods, and policies applicable to each revenue

Reviewed the entity’s revenue recognition policies and evaluated whether following those policies comply with the requirements of ASC

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 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.

Dallas, Texas

We served as the Company’s auditor from 2020 through 2022 .

September 23, 2022

RAVE RESTAURANT GROUP, INC.

CONSOLIDATED STATEMENTS OF

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COSTS AND EXPENSES

Cost of sales

General and administrative expenses

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Impairment of long-lived assets and other lease charges

Bad debt expense

Interest expense

Provision for credit losses

Interest (income) expense

Depreciation and amortization expense

Total costs and expenses

OTHER INCOME:

Employee retention credit

Total other income

INCOME BEFORE TAXES

Income tax (expense) benefit

Income tax expense

INCOME PER SHARE OF COMMON STOCK - BASIC

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Weighted average common shares outstanding - basic

Weighted average common and potential dilutive common shares outstanding

Weighted average common shares outstanding - diluted

See accompanying Notes to Consolidated Financial Statements.

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Cash and cash equivalents

Accounts receivable, less allowance for bad debts of $ 58

Short term investments

Accounts receivable, less allowance for credit losses of $ 57

and $ 58 , respectively

Notes receivable, current

Property held for sale

Assets held for sale

Deferred contract charges, current

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Property and equipment, net

Operating lease right of use asset, net

Operating lease right of use assets, net

Intangible assets definite-lived, net

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Accrued expenses

Other current liabilities

Operating lease liability, current

Short term loan

Operating lease liabilities, current

Deferred revenues, current

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LONG-TERM LIABILITIES

Operating lease liability, net of current portion

Operating lease liabilities, net of current portion

Deferred revenues, net of current portion

Total liabilities

COMMITMENTS AND CONTINGENCIES (SEE NOTE K)

COMMITMENTS AND CONTINGENCIES (SEE NOTE I)

SHAREHOLDERS’ EQUITY

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Stock compensation expense

Purchase of treasury stock

Issuance of vested restricted stock units, net of shares withheld for taxes

Balance, June 30, 2024

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Adjustments to reconcile net income to cash provided by operating activities:

Amortization of discount on short term investment

Impairment of long-lived assets and other lease charges

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Amortization of intangible assets definite-lived

Amortization of debt issue costs

Allowance for bad debts

Non cash lease expense

Provision for credit losses

Deferred income tax

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Deferred contract charges

Prepaid expenses and other

Prepaid expenses and other current assets

Accounts payable - trade

Accrued expenses

Other current liabilities

Operating lease liability

Operating lease liabilities

Deferred revenues

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CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of short term investments

Maturities of short term investments

Payments received on notes receivable

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Purchase of property and equipment

Cash (used in)/provided by investing activities

Cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Purchase of treasury stock

Payment of convertible notes

Taxes paid on issuance of restricted stock units

Payments on short term loan

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Net decrease in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

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RAVE RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

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Rave Restaurant Group, Inc., and its subsidiaries (collectively referred to as the

“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

under the trademarks “Pie Five Pizza Company” or “Pie Five”.

“Company”, or in the first person notations of “we”, “us” and “our”) franchise pizza buffet, delivery/carry-out, express restaurants and ghost kitchens domestically and internationally under the trademark “Pizza Inn” and franchise domestic fast

casual restaurants under the trademarks “Pie Five Pizza Company” or “Pie Five”.

The Company also licenses pizza kiosks under the “Pizza Inn” trademark.

We facilitate the procurement and distribution of food, equipment and supplies to our domestic and international

system of restaurants through agreements with third party distributors.

We facilitate the procurement and distribution of food, equipment and supplies to our domestic

and international system of restaurants through agreements with third party distributors.

As of June 30, 2024, we had 126 franchised Pizza Inn restaurants, 20 franchised Pie Five

Units, and 5 licensed Pizza Inn Express, or PIE, kiosks (“PIE Units”).

Units, and three licensed Pizza Inn Express, or PIE, kiosks (“PIE Units”).

The 102 domestic franchised Pizza Inn restaurants were comprised of 78

pizza buffet restaurants (“Buffet Units”), 7 delivery/carry-out restaurants (“Delco Units”), and 34 express restaurants (“Express Units”).

pizza buffet restaurants (“Buffet Units”), six delivery/carry-out restaurants (“Delco Units”), 17 express restaurants (“Express Units”), and one ghost kitchen

(“Pizza Inn Ghost Kitchen Units”).

As of June 30, 2024, there were 24 international franchised Pizza Inn restaurants.

Domestic Pizza Inn restaurants and kiosks were located predominantly in the southern half of the United States, with

Arkansas, Texas, North Carolina and Mississippi accounting for approximately 23 %, 20 %, 15 % and 9 %, respectively, of the total number of domestic units.

Domestic Pizza

Inn restaurants and kiosks were located predominantly in the southern half of the United States, with Texas, North Carolina, Arkansas and Mississippi accounting for approximately 23 %, 16 %, 14 % and 10 %, respectively, of the total number of domestic

Principles of Consolidation:

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of three months or less to be cash equivalents.

Short Term Investments:

The Company holds short term investments in treasury bills, classified as trading securities.

Accordingly, interest income is recorded through the

Consolidated Statements of Income, when earned.

Management has elected to classify all treasury bills as short-term, regardless of their maturity dates, as these are readily available to fund current operations and can be liquidated at any time

at the discretion of the Company.

As of June 30, 2024 and June 25, 2023, the Company held treasury bills valued at $ 4.9 million and zero , respectively, which are included within short term investments on the accompanying Consolidated Balance Sheets.

Interest income is reflected in

the accompanying Consolidated Statements of Income and Cash Flows.

For the years ended June 30, 2024 and June 25, 2023, interest income recognized on the treasury bills was $ 151 thousand and zero , respectively.

Fair Value Measurements:

Assets and liabilities carried at fair value are categorized based on the level of judgment associated with the inputs used to measure their fair

Authoritative guidance for fair value measurements establishes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into the following three levels:

Inputs are unadjusted quoted market prices in active markets for identical assets or liabilities at the measurement date.

Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date for the duration

of the instrument’s anticipated life.

Inputs are unobservable and therefore reflect management’s best estimate of the assumptions that market participants would use in pricing the asset or liability.

The fair value of the Company’s investments in U.S.

Treasury bills at June 30, 2024 and June 25, 2023, was determined using level 1 observable

Management believes the carrying amounts of other financial instruments at June 30, 2024 and June 25, 2023, including cash, accounts receivable, accounts payable, and accrued expenses are representative of their fair values due to their

short term maturities.

The following table summarizes the Company’s financial assets and financial liabilities measured at fair value at June 30, 2024:

Fair Value Measurements

Treasury bills

The Company did no t have any

financial assets or liabilities at June 25, 2023 that were measured at fair value.

The Company has no financial assets or liabilities classified within Level 3 of the valuation hierarchy.

These items are classified in their entirety based on the lowest priority level of input that is significant to the fair value measurement.

assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement of assets and liabilities within the levels of the fair value hierarchy.

Concentration of Credit Risk:

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Balances in accounts are insured up to Federal Deposit Insurance Corporation (“FDIC”) limits of $ 250 thousand per

At June 25, 2023 and June 26, 2022, the Company had cash balances in excess of FDIC insurance coverage of approximately $ 5.1

At June 30, 2024 and June 25, 2023, the Company had cash and cash equivalent balances in excess of FDIC insurance coverage of approximately $ 2.4

million and $ 5.1 million, respectively.

We do not believe we are exposed to any significant credit risk on cash and cash equivalents.

The Company invests in U.S.

Treasury bills, which are considered short term investments.

Treasury bills are not

insured by the FDIC, they are backed by the full faith and credit of the United States government.

As a result, the Company believes the credit risk associated with these investments is minimal.

Notes receivable, which potentially subject the Company to concentrations of credit risk, consist primarily of promissory notes

from franchise agreements and structured Company-financed sales of assets.

At June 25, 2023 and June 26, 2022, and at various times during the fiscal years then ended, the Company had concentrations of credit risk with three franchisees on notes receivables with both short and long term maturities.

As of June 25, 2023, the Company had zero short term notes receivable and three

long term notes receivable with three franchisees.

At June 30, 2024 and June 25, 2023, and at various times during the fiscal years then ended, the Company had concentrations of credit risk with four franchisees on notes receivables with both short and long term maturities.

As of June 30, 2024, the Company had one short term notes receivable and three

long term notes receivable with four franchisees.

The financed asset sales were executed with a weighted average interest rate of 4.8 %.

Principal payments are due monthly and mature from September 1, 2024 to January 1, 2027.

Principal payments are due monthly and mature from January 1, 2025 to January 1, 2027.

and Equipment :

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If impairment is

recognized, the carrying value of an impaired asset is reduced to its fair value, based on discounted estimated future cash flows.

The Company recognized, pre-tax, non-cash impairment charges of $ 5 thousand and $ 6 thousand during fiscal 2023 and 2022, respectively.

The Company had $ 0.2 million in sublease income during fiscal 2023 and 2022.

Accounts Receivable:

indicated, the carrying value of an impaired asset is reduced to its fair value, based on discounted estimated future cash flows.

The Company recognized, pre-tax, non-cash impairment charges of zero and $ 5 thousand during fiscal 2024 and 2023, respectively.

The Company had $ 0.1 million and $ 0.2 million in sublease income during fiscal 2024 and 2023, respectively.

Accounts Receivable and Allowance for Credit Losses:

Accounts receivable consist primarily of receivables generated from franchise royalties and supplier concessions.

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.

After all attempts to collect a

receivable have failed, the receivable is written off against the allowance.

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.

Company records an allowance for credit losses 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.

After all attempts to

collect a receivable have failed, the receivable is written off against the allowance.

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.

The interest income recorded from finance charges is immaterial.

Bad Debt Expense:

The Company monitors franchisee receivable balances and adjusts credit terms when necessary to minimize the Company’s exposure to

high risk accounts receivable.

Bad debt expense increased by $ 27 thousand to $ 73 thousand in fiscal 2023 compared to $ 46 thousand in fiscal

2022 primarily related to collectability concerns on international accounts receivable.

The Company monitors franchisee

receivable balances and adjusts credit terms when necessary to minimize the Company’s exposure to high risk accounts receivable.

Provision for credit losses decreased by $ 4 thousand to $ 69 thousand in fiscal 2024 compared to $ 73 thousand in fiscal 2023 primarily related to collectability concerns on international accounts receivable.

Changes in the allowance for

credit losses from continuing operations consisted of the following (in thousands):

Beginning balance

Provision for credit losses

Amounts written off

Ending balance

Notes Receivable:

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through 2027 and bore interest at a weighted average rate of 4.8 % at June 30, 2024.

Management evaluates the creditworthiness of franchisees by considering credit history and sales to evaluate credit risk.

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.

The Company charges off notes

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.

Notes receivable are reported at original issue amount less principal repaid, reduced by an allowance for credit losses.

allowance for expected credit losses is determined based on a specific assessment of all notes that are delinquent or determined to be doubtful to be collected.

Notes are considered delinquent if the repayment terms are not met.

All amounts deemed

to be uncollectible are charged against the allowance for credit losses in the period that determination is made.

The allowance for credit losses for notes receivable incorporates an estimate of lifetime expected credit losses and is

recorded on each note upon asset origination.

The starting point for the estimate of the allowance for credit losses is historical loss information, which includes losses from modifications of receivables to borrowers experiencing financial

An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification.

As of June 30, 2024 and June 25, 2023, there were no modifications to notes receivable.

In evaluating the notes receivable, the Company determines that the notes are pooled based on historical collections and write-offs for purposes of determining its allowance for credit losses related

to notes receivable.

These notes have an amortized cost of approximately $ 147 thousand and $ 133 thousand at June 30, 2024 and June 25, 2023, respectively.

Historical loss information for notes receivable at the Company shows a 0 % loss rate over the contractual term .

As of June 30, 2024 and June 25, 2023, the Company has no t recorded any allowance for credit losses related to the notes receivable balances.

Additionally, as of June 30, 2024 and June 25, 2023, the Company did no t have any notes receivable with past due or non-accrual status.

The total amount of write-offs of notes receivable were zero for the fiscal years ended June 30, 2024 and June 25, 2023.

The expected principal collections on notes receivable for the next two years are as follows as of June 30, 2024 (in

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Income Taxes:

Income taxes are accounted for using the asset and liability method pursuant to the authoritative guidance on Accounting for Income Taxes .

Income taxes are accounted for using the asset and liability method pursuant to the authoritative guidance on ASC 740 Accounting for Income Taxes .

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

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taxable income, reversal of existing taxable temporary differences, and tax planning strategies.

In assessing the need for the valuation allowance, the Company considers both positive and negative evidence 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.

Based on this analysis, the Company reversed the full amount of the established valuation allowance as of

June 26, 2022 (see Note F).

For the year ended June 25, 2023, the Company recorded an income tax expense of $ 0.5 million.

The federal and state tax expense was $ 0.4 million

and $ 0.1 million, respectively.

The Company utilized net operating losses to offset federal taxes.

As of June 25, 2023, the Company had

federal net operating loss carryforwards totaling $ 21 million that are available to reduce future taxable income and will begin to expire

Under the Tax Cuts and Jobs Act, approximately $ 1.4 million of the loss carryforwards are limited to 80 % and do not expire.

Tax years that remain

subject to examination by the IRS are the years ended June 28, 2020 through June 26, 2022 .

Tax years that remain subject to examination by state authorities are the years ended June 30, 2019 through June 26, 2022 .

There are no uncertain tax positions.

Management’s position is that all relevant requirements are met and necessary returns have been filed, and

therefore the tax positions taken on the tax returns would be sustained upon examination.

In assessing the need for a valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of

deferred tax assets.

Future sources of taxable income are also considered in determining the amount of any required valuation allowance.

There are no material uncertain tax positions.

Management’s position is that all relevant requirements are met and necessary returns have been

filed, and therefore the tax positions taken on the tax returns would be sustained upon examination.

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

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Fees received for renewal periods are amortized over the life of the renewal period.

In the event of a closed franchise or defaulted development agreement, the remaining balance of

unamortized license fees will be recognized in entirety as of the date of the closure or default.

Area development exclusivity fees and foreign master license fees are typically billed upon execution of the area development

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Stock-Based Compensation:

The Company accounts for stock options using the fair value recognition provisions of the authoritative guidance on share-based

The Company accounts for stock options using the fair value recognition provisions of the authoritative guidance on stock-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.

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,

performance criteria and other terms and conditions.

Compensation cost for RSUs is measured as an amount equal to the fair value of the RSUs 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.

RSUs represent the right to receive shares of common stock upon the satisfaction of vesting requirements, performance criteria and

other terms and conditions.

Compensation cost for RSUs is measured as an amount equal to the fair value of the RSUs 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.

Fair Value of Financial Instruments:

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Provisions for legal settlements are accrued when payment is considered probable and the amount of loss is reasonably estimable in

accordance with the authoritative guidance on Accounting for Contingencies .

If the best estimate of cost can only be identified within a range and no specific amount within that range can be determined

more likely than any other amount within the range, and the loss is considered probable, the minimum of the range is accrued.

accordance with the authoritative guidance on ASC 450 Accounting for Contingencies .

If the best estimate of cost can only be identified within a range and no specific amount within that range can be

determined 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.

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The Company’s fiscal year ends on the last Sunday in June.

The fiscal years ended June 25, 2023 and June 26, 2022 each contained 52

The fiscal year ended June 30, 2024 contained 53 weeks and the fiscal

year ended June 25, 2023 contained 52 weeks.

Recently Adopted Accounting Guidance:

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU” or “standard”)

2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments.

Subsequently, the FASB issued several clarifying standard updates to clarify and improve the ASU.

These ASUs significantly change how

entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

The most significant change in this standard is a shift from the incurred loss model to the expected

loss model that will be based on an estimate of current expected credit loss (“CECL”).

Under the standard, disclosures are required to provide users of the financial statements with useful information in analyzing an entity’s exposure to credit

risk and the measurement of credit losses.

Financial assets held by the Company that are subject to the guidance in Topic 326 were trade accounts receivable and notes receivable.

The Company adopted the standard effective June 26, 2023.

The impact of the adoption was not considered material to the

financial statements and primarily resulted in new and enhanced disclosures only.

NOTE B - PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS:

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Professional fees

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”).

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.

The Notes bore interest at the rate of 4 % per annum on the principal or par value of $ 100 per note,

payable annually in arrears on February 15 of each year, commencing February 15, 2018.

Interest was payable in cash or, at the Company’s discretion, in shares of Company common stock.

The Notes were secured by a pledge of all outstanding equity

securities of our two primary direct operating subsidiaries.

During the fiscal year ended June 26, 2022, no Notes were converted to common shares.

The Notes matured on February 15, 2022 , at which time all principal and unpaid interest was paid in cash.

Therefore, as of June 25, 2023 and June 26, 2022, there were no Notes outstanding.

NOTE E - EMPLOYEE RETENTION CREDIT:

NOTE D - EMPLOYEE RETENTION CREDIT:

December 27, 2020, the Consolidated Appropriations Act of 2021 (the “CAA”) was signed into law.

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As of June 30, 2024, $ 0.6 million has been received and $ 0.1

million is still outstanding.

NOTE F - INCOME TAXES:

million is still

outstanding and included within accounts receivable on the accompanying Consolidated Balance Sheets .

NOTE E - INCOME TAXES:

Provision for income taxes from continuing operations consists of the following (in

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Return to provision

Change in valuation allowance

Provision for income taxes

The tax effects of temporary differences that give rise to the net deferred tax assets consisted of the

following (in thousands):

The tax effects of temporary differences that give rise to the net deferred tax assets

consisted of the following (in thousands):

Allowance for bad debt

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Net operating loss carryforwards

Total gross deferred tax asset

Valuation allowance

Total deferred tax assets

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Net deferred tax asset

For the year ended June 25, 2023, the Company recorded an

income tax expense of $ 0.5 million.

The federal and state tax expense was $ 0.4 million and $ 0.1 million, respectively.

The Company utilized net

operating losses to offset federal taxes.

As of June 25, 2023, the Company had federal net operating loss carryforwards totaling $ 21

million that are available to reduce future taxable income and will begin to expire in 2035 .

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 million and current/deferred state tax benefit of $ 0.2 million.

As of June 26, 2022, the Company had net operating loss carryforwards 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 to 80 % and do

Under the Tax Cuts and Jobs Act, approximately $ 1.4 million of the loss carryforwards are limited to 80 % and do not expire.

The Company utilized net operating losses to offset

federal taxes.

At the end of tax year June 30, 2024, the Company had federal net operating loss carryforwards totaling $ 18.9 million

that are available to reduce future taxable income and will begin to expire in 2035 .

the Tax Cuts and Jobs Act, approximately $ 1.3 million of the loss carryforwards are limited to 80 % and do not expire.

Tax years that remain subject to examination by the IRS are the years ended June 28, 2021 through June 25, 2023 .

that remain subject to examination by state authorities are the years ended June 30, 2019 through June 26, 2022 .

Tax years that remain subject to examination by state authorities are the years ended June 30, 2020 through June 25, 2023 .

The Company continually reviews the realizability of its deferred tax assets, including

an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies.

In assessing the need for the valuation allowance, the Company considers both positive and negative evidence

In assessing the need for a valuation allowance, the Company considers both positive and negative evidence

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.

Based on this analysis, the Company reversed the full amount of the

established valuation allowance as of June 26, 2022 .

There are no uncertain tax positions.

Future sources of taxable income are also considered in determining the amount of any required valuation allowance.

As of June 30, 2024 and June 25, 2023, the Company determined that

no valuation allowance was necessary.

There are no material uncertain tax positions.

Management’s position is that all relevant

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:

The Company leases its 19,576 square foot corporate office facility with average annual lease payments of approximately $ 18.00 per square foot.

NOTE F - LEASES:

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.

amended its lease agreement in June 2020 and has elected to defer one-half of the monthly base rent for the period from June 2020

through May 2021.

The Company amended its lease agreement in June 2020 and

has elected to defer 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.

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The Company has concluded that its office agreements represent operating leases with a lease term that equals the primary non-cancelable contract term.

Upon completion of the primary term, both parties

have substantive rights to terminate the lease.

Upon 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.

Restaurant Space Agreements

The Company rents restaurant space from third parties for its Company-owned restaurants.

Restaurant space

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.

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.

The Company also subleases some of its restaurant space to third parties.

The Company’s two subleases have terms that end in 2023 and 2025.

The sublease agreements are noncancelable through the end of the term and both parties have

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.

As of June 25, 2023 and June 26, 2022, the Company had no Company-owned restaurants.

The Company subleases some of its restaurant space to a third party.

The Company’s sublease has terms that end

The sublease agreement is noncancelable through the end of the term and both parties have 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.

Information Technology Equipment

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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

Future minimum rental

payments for guaranteed leases with initial or remaining terms of one year or more at June 25, 2023 were as follows (in thousands):

Future minimum rental payments for guaranteed leases with initial or remaining terms of one year or more at

June 30, 2024 were as follows (in thousands):

Guaranteed Leases

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lease payments, we recognize those payments in our income statements in the period in which the obligation for those payments is incurred.

The components of total lease expense for the fiscal years ended June 25, 2023 and June 26, 2022, the majority of which is included in general and

administrative expense in the accompanying Consolidated Statements of Income, are as follows (in thousands):

Fiscal Year Ended

The components of total lease expense for the fiscal years ended June 30, 2024 and June 25, 2023, where operating lease cost is included in general

and administrative expense and sublease income is included in revenues in the accompanying Consolidated Statements of Income, are as follows (in thousands):

June 30, 2024

Fiscal Year Ended

June 25, 2023

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Supplemental cash flow information related to operating leases is included in the table below (in thousands):

Fiscal Year Ended

June 30, 2024

Fiscal Year Ended

June 25, 2023

Cash paid for amounts included in the measurement of lease liabilities

Supplemental balance sheet information related to operating leases is included in the table below (in thousands):

Fiscal Year Ended

June 25, 2023

Fiscal Year Ended

June 26, 2022

Operating lease right of use asset, net

Operating lease liabilities, current

Operating lease liabilities, net of current portion

Weighted average remaining lease term and weighted average discount rate for operating leases are as follows:

Fiscal Year Ended

June 30, 2024

Fiscal Year Ended

June 25, 2023

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Certain lease agreements contain either a provision requiring additional rent if sales exceed specified amounts or an escalation clause based upon a predetermined multiple.

Future minimum sublease rental income under active non-cancelable leases with initial or

remaining terms of one year or more at June 25, 2023 were as follows (in thousands):

Sublease Rental Income

Rental expense consisted of the following (in thousands):

Fiscal Year Ended

Minimum rentals

Sublease rentals

NOTE H - EMPLOYEE BENEFITS:

Future minimum sublease rental income

under active non-cancelable leases with initial or remaining terms of one year or more at June 30, 2024 were as follows (in thousands):

Sublease Rental

NOTE G - EMPLOYEE BENEFITS:

The Company has a tax advantaged savings plan that is designed to meet the requirements

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matching contributions and earnings thereon are invested in the same investments as each participant’s employee deferral.

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.

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.

For the fiscal years ended June 30, 2024 and June 25, 2023, total matching contributions

to the tax advantaged savings plan by the Company on behalf of participating employees were approximately $ 21 thousand and $ 24 thousand, respectively.

NOTE I - STOCK BASED COMPENSATION PLANS:

NOTE H - STOCK-BASED COMPENSATION PLANS:

In June 2005, the 2005 Employee Incentive Stock Option Award Plan (the “2005 Employee

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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.

The 2005 Directors Plan expired by its terms

on June 23, 2015.

of 650,000 shares of Company common stock were authorized for issuance pursuant to the 2005 Directors Plan.

The 2005 Directors Plan

expired by its terms on June 23, 2015.

The 2015 Long Term Incentive Plan (the “2015 LTIP”) was approved by the Company’s

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Forfeited/Canceled/Expired

Outstanding at end of period

Exercisable at end of period

Outstanding at end of year

Exercisable at end of year

The intrinsic value of options outstanding at June 30, 2024 was $ 37 thousand.

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Exercise Price

The following assumptions were used to estimate the fair value

of stock options for the years ended:

Fair value of awards

Risk-free interest rate

Dividend yield

Volatility factor

Expected life

We determine fair value following the authoritative guidance as follows:

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We record stock-based compensation only for those awards that are expected to vest.

The following weighted average assumptions were used for options granted during fiscal 2023:

Fiscal Year Ended

Expected life (in years)

Expected volatility

Risk-free interest rate

Expected forfeiture rate

At June 25, 2023, 111,750 of the stock options that the Company had granted were vested.

thousand stock compensation expense related to stock options was recognized in fiscal 2023.

No stock compensation expense related to

stock options was recognized in fiscal 2022.

There were 40,000 of the stock options that were unvested at June 25, 2023.

No stock compensation expense related to stock options was recognized

in fiscal 2024.

$ 15 thousand of stock compensation expense related to stock options was recognized in fiscal 2023.

There were no stock options that were unvested at June 30, 2024.

of the stock options vested on June 27, 2023 and, therefore, there was zero unamortized stock compensation expense at June 30, 2024.

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of common stock upon the satisfaction of vesting requirements, performance criteria and other terms and conditions.

During fiscal 2023 and 2022, zero

and 362,500 performance-based restricted stock units, respectively, were granted to certain employees.

For the years ended June 25, 2023

and June 26, 2022, the Company had stock compensation expense of $ 329 thousand and $ 169 thousand, respectively, related to RSUs.

During fiscal 2024 and 2023, 131,460

and zero performance-based RSUs, respectively, were granted to certain employees.

For the years ended June 30, 2024 and June 25, 2023,

the Company had stock compensation expense of $ 149 thousand and $ 329 thousand, respectively, related to RSUs.

As of June 30, 2024, there was $ 145

thousand and $ 36 thousand unamortized stock compensation expense related to RSUs, which should be recognized during fiscal years 2024 and

2025, respectively.

thousand, $ 91 thousand and $ 27

thousand unamortized stock compensation expense related to RSUs, which should be recognized during fiscal years 2025, 2026 and 2027, respectively.

The restricted stock units granted to each recipient are allocated among performance

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receive shares of common stock in amounts ranging from 50 % to 150 % of the number of restricted stock units granted.

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 the vesting schedule, performance criteria and other conditions set forth in their award agreement.

Contingent unvested restricted stock units are considered participating securities under ASC

260, “ Earnings Per Share ,” and are included in the calculation of diluted earnings per share.

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 the vesting schedule, performance criteria and other conditions set forth in their award agreement.

Contingent unvested restricted stock units are considered participating

securities under ASC 260, “ Earnings Per Share ,” and are included in the calculation of diluted earnings per share at the beginning of the most recent quarterly period when the performance targets and vesting

are probable to be met.

Compensation cost is measured as an amount equal to the fair value of the restricted

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Unvested at beginning of year

Performance adjustment

Granted during the year

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Unvested at end of year

NOTE J - SHAREHOLDERS’ EQUITY:

On April 22, 2009, the board of directors of the Company amended the stock repurchase

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.

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

the Company may repurchase by 5,000,000 shares to a total of 8,016,000 shares.

During fiscal 2023, 3,356,977 shares were repurchased and,

as of June 25, 2023, there were 1,997,974 shares available to be repurchased under the plan.

Subsequent to fiscal 2023, the Company

has not repurchased any additional outstanding shares of

its common stock.

NOTE K - COMMITMENTS AND CONTINGENCIES:

On January 6,

2020, the Company’s former Chief Executive Officer, Scott Crane, filed suit in the U.S.

District Court for the Eastern District of Texas alleging various claims in connection with the Company’s termination of his employment in July 2019.

general, the suit asserted that the Company terminated Crane for the purpose of depriving him of certain equity compensation that otherwise would have been due to him on October 15, 2019.

The Company asserted that Crane failed to meet the

contractual qualifications for the equity, as well as other defenses.

The matter proceeded to trial which resulted in a verdict in favor of Crane, and the trial court entered judgment in Crane’s favor.

The Company appealed the judgment to the

Fifth Circuit Court of Appeals, which on May 31, 2023 issued an opinion reversing the trial court and rendering judgment in favor of the Company on all claims brought by Crane, and returning the matter to the trial court for consideration of

costs and attorney fees to be awarded to the Company as the prevailing party in the litigation.

The Company is subject to other various claims and contingencies related to employment

NOTE I - COMMITMENTS AND CONTINGENCIES:

The Company is subject to various claims and contingencies related to employment

agreements, franchise disputes, lawsuits, taxes, food product purchase contracts and other matters arising out of the normal course of business.

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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.

NOTE L - EARNINGS PER SHARE:

NOTE J - EARNINGS PER SHARE:

The Company computes and presents earnings per share (“EPS”) in accordance with ASC 260 Earnings Per Share .

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, converted or resulted in the issuance of common stock that then shared in the earnings of the Company.

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, converted or resulted in the issuance of common stock that then shared in the earnings of the Company.

The following table shows the reconciliation of the numerator and denominator of the

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Net income available to common shareholders

Interest saved on convertible notes at 4 %

Adjusted net income

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Weighted average common shares

Dilutive restricted stock units

Dilutive stock options

Dilutive stock options and restricted stock units

Weighted average common shares outstanding

Income from continuing operations per common share

Net income per common share

We had 94,769 and 151,750 shares of common stock potentially issuable upon exercise

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weighted average number of shares outstanding on a diluted basis because the performance criteria had not been met and vesting was not probable .

NOTE M - SEGMENT REPORTING:

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 Enterprise and Related Information :

(1) Pizza Inn Franchising, (2) Pie Five Franchising and (3) Company-Owned Restaurants.

NOTE K - SEGMENT REPORTING:

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

Enterprise and Related Information :

(1) Pizza Inn Franchising, (2) Pie Five Franchising and (3) Corporate administration and other.

These segments are a result of differences in the nature of the products and services sold.

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 operating segments.

Other revenue consists of nonrecurring items.

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.

The Pizza Inn and Pie Five Franchising segments establish franchisees, licensees and

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segments include equipment, furniture and fixtures.

The Company-Owned Restaurants segment includes sales and operating results for all

Company-owned restaurants.

Assets for this segment include equipment, furniture and fixtures for the Company-Owned restaurants.

As of June 25, 2023 and June 26, 2022, the Company did not operate any Company-Owned restaurants.

Corporate administration and other assets primarily include cash and short term

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Pie Five Franchising

Company-Owned Restaurants

Corporate administration and other

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Depreciation and amortization:

Pizza Inn Franchising

Pie Five Franchising

Company-Owned Restaurants

Corporate administration and other

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Pie Five Franchising

Company-Owned Restaurants

Corporate administration and other

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Foreign countries

Consolidated total

NOTE N - SUBSEQUENT EVENTS:

In preparation of its financial statements, the Company considered subsequent events through September 21,

2023 which was the date the Company’s financial statements were available to be issued.

The Company terminated its master licensee of Pizza Inn in Saudi Arabia in September 2023.

This termination resulted in the closure

of 12 international units.

These locations represented approximately $ 0.1 million in revenue during fiscal 2023 .

Consolidated revenues

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.

What changed 10-K

Item 9A. Controls and Procedures