What changed in this filing

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Item 1. Financial Statements

2026-02-05 compared with 2025-11-06 · 223 added, 138 removed, 501 unchanged (42% of the section changed)

4 unchanged sentences

Three Months Ended

September 28,

September 29,

Six Months Ended

COSTS AND EXPENSES

14 unchanged sentences

(In thousands, except share amounts)

September 28,

CURRENT ASSETS

46 unchanged sentences

Balance, September 29, 2024

Stock-based compensation expense

RSU vested and taxes paid on RSUs

Balance, December 29, 2024

Treasury Stock

2 unchanged sentences

Balance, September 28, 2025

Stock-based compensation expense

Balance, December 28, 2025

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(In thousands)

Three Months Ended

September 28,

September 29,

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Amortization of discount on short-term investment

Impairment of long-lived assets and other lease charges

Stock-based compensation expense

22 unchanged sentences

Cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Taxes paid on issuance of restricted stock units

Cash used in financing activities

Net decrease in cash and cash equivalents

6 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Rave Restaurant Group, Inc., through its subsidiaries (collectively, the “Company” or “we,” “us” or “our”), franchises pizza buffet (“Buffet Units”), delivery/carry-out (“Delco Units”), express restaurants (“Express Units”) and ghost kitchens (“Pizza Inn Ghost Kitchen Units”) under the trademark “Pizza Inn” and franchises fast casual pizza restaurants (“Pie Five Units”) and ghost kitchens (“Pie Five Ghost Kitchen Units”) under the trademarks “Pie Five Pizza Company” or “Pie Five”.

Rave Restaurant Group, Inc., through its subsidiaries (collectively, the “Company” or “we,” “us” or “our”), franchises pizza buffet (“Buffet Units”), delivery/carry-out (“Delco Units”) and express restaurants (“Express Units”) under the trademark “Pizza Inn” and franchises fast casual pizza restaurants (“Pie Five Units”) under the trademarks “Pie Five Pizza Company” or “Pie Five”.

The Company previously franchised ghost kitchens under the trademarks “Pizza Inn” and “Pie Five” (“Pizza Inn Ghost Kitchen Units” and “Pie Five Ghost Kitchen Units”) but the remaining two ghost kitchen locations were closed in agreements made with the franchisees during the three month period ended December 28, 2025.

The Company may franchise ghost kitchens in the future.

The Company also licenses Pizza Inn Express, or PIE, kiosks (“PIE Units”) under the trademark “Pizza Inn”.

20 unchanged sentences

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 September 28, 2025 and June 29, 2025, the Company held U.S.

As of December 28, 2025 and June 29, 2025, the Company held U.S.

Treasury bills valued at approximately $ 10.3 million and $ 7.0 million, respectively, which are included within short-term investments on the accompanying Condensed Consolidated Balance Sheets.

Interest income is reflected in the accompanying Condensed Consolidated Statements of Income and Cash Flows.

For the three months ended September 28, 2025 and September 29, 2024, interest income recognized on the treasury bills was $ 86 thousand and $ 76 thousand, respectively.

For the three months ended December 28, 2025 and December 29, 2024, interest income recognized on U.S.

Treasury bills was $ 86 thousand and $ 87 thousand, respectively.

For the six months ended December 28, 2025 and December 29, 2024, interest income recognized on the U.S.

Treasury bills was $ 171 thousand and $ 169 thousand, respectively.

Fair Value Measurements

5 unchanged sentences

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

Treasury bills at September 28, 2025 and September 29, 2024, was determined using Level 1 observable inputs.

Treasury bills at December 28, 2025 and June 29, 2025, was determined using Level 1 observable inputs.

The following table summarizes the Company’s financial assets and financial liabilities measured at fair value (in thousands):

September 28, 2025

June 29, 2025

Fair Value Measurements

10 unchanged sentences

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

For the three month period ended September 28, 2025, provision for credit losses were $ 4 thousand compared to recoveries for credit losses of $ 17 thousand for the same period in the prior fiscal year.

Changes in the allowance for credit losses consisted of the following (in thousands):

For the three month period ended December 28, 2025, provision for credit losses were $ 7 thousand compared to $ 9 thousand for the same period in the prior fiscal year.

For the six month period ended December 28, 2025, provision for credit losses were $ 11 thousand compared to recoveries for credit losses of $ 8 thousand for the same period in the prior fiscal year.

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

Three Months Ended

September 28, 2025

September 29, 2024

Six Months Ended

Balance at beginning of year

3 unchanged sentences

Fiscal Quarters

The three month periods ended September 28, 2025 and September 29, 2024 each contained 13 weeks.

The three and six month periods ended December 28, 2025 and December 29, 2024 each contained 13 weeks and 26 weeks, respectively.

Use of Management Estimates

17 unchanged sentences

Management is currently evaluating this ASU to determine its impact on our disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow- Scope Improvements , which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting.

The ASU provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.

ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2025-11.

In December 2025, the FASB issued its final ASU which makes improvements to the Accounting Standards Codification (“ASC”) in response to feedback from stakeholders.

This standard, issued as ASU 2025-12, specifically updates the Codification for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements.

This update is effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual reporting periods.

The Company is currently evaluating the impact of adopting ASU 2025-12.

Revenue Recognition

23 unchanged sentences

The Company’s last remaining sublease term ended in January 2025 and the Company has no plans to enter into future sublease arrangements.

The sublease agreements were non-cancelable through the end of the term and both parties had 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.

Total revenues consist of the following (in thousands):

Three Months Ended

September 28, 2025

September 29, 2024

Six Months Ended

Franchise royalties

6 unchanged sentences

Other franchise revenue

The following table reflects the changes in deferred franchise and development fees for the three months ended on September 28, 2025 and September 29, 2024 (in thousands):

September 28,

September 29,

The following table reflects the changes in deferred franchise and development fees for the six months ended on December 28, 2025 and December 29, 2024 (in thousands):

Beginning balance

1 unchanged sentence

Ending balance

The following table illustrates franchise and development fees expected to be recognized in the future related to performance obligations that were unsatisfied or partially satisfied as of September 28, 2025 (in thousands):

Franchise and

40 unchanged sentences

Lease Guarantees

The Company has guaranteed the financial responsibilities of certain franchised store leases.

These guaranteed leases are not considered operating leases because the Company does not have the right to control the underlying asset.

The Company has guaranteed the financial responsibilities of one franchised store lease.

The guaranteed lease is not considered an operating lease because the Company does not have the right to control the underlying asset.

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.

7 unchanged sentences

To the extent that there are variable 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 three months ended September 28, 2025 and September 29, 2024, where operating lease cost is included in general and administrative expense and sublease income is included in revenues in the accompanying Condensed Consolidated Statements of Income, are as follows (in thousands):

The components of total lease expense for the three and six months ended December 28, 2025 and December 29, 2024, where operating lease cost is included in general and administrative expense and sublease income is included in revenues in the accompanying Condensed Consolidated Statements of Income, are as follows (in thousands):

Three Months Ended

September 28, 2025

September 29, 2024

Six Months Ended

December 28, 2025

December 29, 2024

December 28, 2025

December 29, 2024

Operating lease cost

2 unchanged sentences

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

September 28, 2025 September 29, 2024

December 28, 2025 December 29, 2024

Weighted average remaining lease term

1.2 Years 2.1 Years

Weighted average discount rate

11 unchanged sentences

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 Company’s results of operations or financial condition if decided in a manner that is unfavorable to the Company.

No accrual has been recorded for any claims or actions at December 28, 2025 or June 29, 2025.

Note D - Stock-Based Compensation

Stock Options:

For the three months ended September 28, 2025 and September 29, 2024, the Company recognized stock-based compensation expense related to stock options of zero .

As of September 28, 2025, there was no unamortized stock-based compensation expense related to stock options.

For the three and six months ended December 28, 2025 and December 29, 2024, the Company recognized stock-based compensation expense related to stock options of zero .

As of December 28, 2025, there was no unamortized stock-based compensation expense related to stock options.

The following table summarizes the number of shares of the Company’s common stock subject to outstanding stock options:

Three Months Ended

September 28,

September 29,

Six Months Ended

December 28, 2025

December 29, 2024

Outstanding at beginning of year

3 unchanged sentences

Restricted Stock Units:

For the three months ended September 28, 2025 and September 29, 2024, the Company had stock-based compensation expense related to RSUs of $ 38 thousand and $ 73 thousand, respectively.

As of September 28, 2025, there was $ 276 thousand unamortized stock-based compensation expense related to RSUs.

As of September 28, 2025, the RSUs will be amortized during the next 25 months.

A summary of the status of RSUs as of September 28, 2025 and September 29, 2024, and changes during the three months then ended is presented below:

Three Months Ended

September 28,

September 29,

For the three and six months ended December 28, 2025, the Company had stock-based compensation expense related to RSUs of $ 62 thousand and $ 100 thousand, respectively.

For the three and six months ended December 29, 2024, the Company had stock-based compensation expense related to RSUs of $ 53 thousand and $ 126 thousand, respectively.

As of December 28, 2025, there was $ 591 thousand unamortized stock-based compensation expense related to RSUs.

As of December 28, 2025 the RSUs will be amortized during the next 34 months.

A summary of the status of restricted stock units as of December 28, 2025 and December 29, 2024, and changes during the six months then ended is presented below:

Six Months Ended

December 28, 2025

December 29, 2024

Unvested at beginning of year

4 unchanged sentences

Three Months Ended

September 28, 2025

September 29, 2024

Six Months Ended

Net income available to common shareholders

5 unchanged sentences

Net income per common share

For the three months ended September 28, 2025, exercisable options to purchase 50,000 shares of common stock at exercise price $ 3.95 were excluded from the computation of diluted EPS because they had an intrinsic value of zero .

For the three months ended September 28, 2025, 142,328 RSUs were excluded from the computation of diluted EPS because performance criteria is not probable at period end.

For the three months ended September 29, 2024, exercisable options to purchase 71,886 shares of common stock at exercise prices from $ 3.95 to $ 13.11 were excluded from the computation of diluted EPS because they had an intrinsic value of zero .

For the three months ended September 29, 2024, 105,000 RSUs were excluded from the computation of diluted EPS because performance criteria is not probable at period end.

For the three and six months ended December 28, 2025, exercisable options to purchase 50,000 shares of common stock at exercise price $ 3.95 were excluded from the computation of diluted EPS because they had an intrinsic value of zero .

For the three and six months ended December 28, 2025, 277,400 and 277,400 RSUs were excluded from the computation of diluted EPS because performance criteria is not probable at period end, respectively.

For the three and six months ended December 29, 2024, exercisable options to purchase 74,286 shares of common stock at exercise prices from $ 3.95 to $ 13.11 were excluded from the computation of diluted EPS because they had an intrinsic value of zero .

For the three and six months ended December 29, 2024, 142,328 and 247,328 RSUs were excluded from the computation of diluted EPS because performance criteria is not probable at period end, respectively.

Note F - Income Taxes

1 unchanged sentence

Three Months Ended

September 28, 2025

September 29, 2024

Six Months Ended

Federal tax expense

11 unchanged sentences

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

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.

Revenues 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.

Assets for these segments include equipment, furniture and fixtures.

1 unchanged sentence

All assets are located within the United States.

Summarized in the following tables are revenues, expenses, operating income, and income before taxes for the Company’s reportable segments as of the three months ended September 28, 2025 and September 29, 2024 (in thousands):

Fiscal Quarter Ended

September 28,

September 29,

September 28,

September 29,

September 28,

September 29,

September 28,

September 29,

Summarized in the following tables are revenues, expenses, operating income, and income before taxes for the Company’s reportable segments as of the three and six months ended December 28, 2025 and December 29, 2024 (in thousands):

Three Months Ended

Franchise royalties

10 unchanged sentences

Franchise expenses

Provision for credit losses

Depreciation and amortization expense

Total costs and expenses

OPERATING INCOME

Interest income

Total other income

INCOME/(LOSS) BEFORE TAXES

Income tax expense

NET INCOME/(LOSS)

Six Months Ended

Franchise royalties

Supplier and distributor incentive revenues

Franchise license fees

Area development exclusivity fees and foreign master license fees

Advertising fund contributions

Supplier convention funds

Rental income

Other franchise revenue

Total revenues

COSTS AND EXPENSES:

General and administrative expenses

Franchise expenses

Provision (recovery) for credit losses

8 unchanged sentences

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended June 29, 2025 and may contain certain forward-looking statements that are based on current management expectations.

The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes appearing elsewhere in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended June 29, 2025, together with our Quarterly Report on Form 10-Q for the period ended September 28, 2025, may contain certain forward-looking statements that are based on current management expectations.

Generally, verbs in the future tense and the words “believe,” “expect,” “anticipate,” “estimate,” “intends,” “opinion,” “potential” and similar expressions identify forward-looking statements.

1 unchanged sentence

Our actual results could differ materially from our expectations.

Further information concerning our business, including additional factors that could cause actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q, are set forth in our Annual Report on Form 10-K for the year ended June 29, 2025.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

2 unchanged sentences

The Company also licenses Pizza Inn Express, or PIE, kiosks (“PIE Units”) under the trademark “Pizza Inn”.

The Company also licenses Pizza Inn Express, or PIE, kiosks (“PIE Units”).

We facilitate food, equipment and supply distribution to our domestic and international system of restaurants through agreements with third-party distributors.

At September 28, 2025, franchised and licensed units consisted of the following:

Three Months Ended September 28, 2025

At December 28, 2025, franchised and licensed units consisted of the following:

Three Months Ended December 28, 2025

(in thousands, except unit data)

1 unchanged sentence

International Franchised

Six Months Ended December 28, 2025

(in thousands, except unit data)

Domestic Franchised/Licensed

International Franchised

The domestic units were located in 16 states predominantly situated in the southern half of the United States.

The international units were located in six foreign countries.

The international units were located in five foreign countries.

Non-GAAP Financial Measures and Other Terms

17 unchanged sentences

EBITDA and Adjusted EBITDA

Adjusted EBITDA for the fiscal quarter ended September 28, 2025 increased $0.1 million compared to the same period of the prior fiscal year.

Adjusted EBITDA for the fiscal quarter ended December 28, 2025 increased $0.1 million compared to the same period of the prior fiscal year.

Year-to-date Adjusted EBITDA increased $0.2 million compared to the same period of the prior fiscal year.

The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown (in thousands):

3 unchanged sentences

Three Months Ended

September 28, 2025

September 29, 2024

Six Months Ended

Interest income

6 unchanged sentences

Three Months Ended

September 28, 2025

September 29, 2024

Six Months Ended

Pizza Inn Retail Sales - Total Domestic Units

(in thousands, except unit data)

Buffet Units - Franchised

10 unchanged sentences

Total Domestic Units

Pizza Inn total domestic retail sales increased by $2.6 million, or 10.2%, for the three months ended September 28, 2025 when compared to the same period of the prior fiscal year.

Pizza Inn total domestic retail sales increased by $1.1 million, or 4.1%, for the three months ended December 28, 2025 when compared to the same period of the prior year.

Compared to the same fiscal quarter of the prior year, average Buffet Units open in the period increased from 78 to 80.

Comparable store retail sales increased by $2.0 million, or 8.1%, for the three month period ended September 28, 2025 as compared to the same period of the prior fiscal year.

For the three months ended September 28, 2025, the increase in domestic retail sales were primarily the result of the increase in the average number of Buffet Units, supplemented by an increase in comparable domestic store retail sales.

The following chart summarizes Pizza Inn restaurant activity for the three months ended September 28, 2025:

Three Months Ended September 28, 2025

Comparable store retail sales increased by $0.6 million, or 2.5%, for the three month period ended December 28, 2025 as compared to the same period of the prior fiscal year.

For the three months ended December 28, 2025, the increase in domestic retail sales were primarily the result of the increase in the average number of Buffet units, supplemented by an increase in comparable domestic store retail sales.

Pizza Inn total domestic retail sales increased by $3.6 million, or 7.1%, for the six months ended December 28, 2025 when compared to the same period of the prior year.

Compared to the same fiscal period of the prior year, average Buffet Units open in the period increased from 78 to 79.

Comparable store retail sales increased by $2.7 million, or 5.3%, for the six month period ended December 28, 2025 as compared to the same period of the prior fiscal year.

For the six months ended December 28, 2025, the increase in domestic retail sales were primarily the result of the increase in the average number of Buffet Units, supplemented by an increase in comparable domestic store retail sales.

The following chart summarizes Pizza Inn restaurant activity for the three and six months ended December 28, 2025:

Three Months Ended December 28, 2025

Buffet Units - Franchised

4 unchanged sentences

International Units (all types)

The total domestic Pizza Inn units remained stable during the three months ended September 28, 2025.

There were two units transferred between franchisees in the total domestic Pizza Inn unit count during the three months ended September 28, 2025.

For the three months ended September 28, 2025, the number of international Pizza Inn units decreased by two units.

There were zero transfers in the total international Pizza Inn unit count during the three months ended September 28, 2025.

Six Months Ended December 28, 2025

Buffet Units - Franchised

Delco/Express Units - Franchised

PIE Units - Licensed

Pizza Inn Ghost Kitchen Units - Franchised

Total Domestic Units

International Units (all types)

There was a net increase of one unit in the total domestic Pizza Inn unit count during the three and six months ended December 28, 2025, respectively.

There were zero and two units transferred between franchisees in the total domestic Pizza Inn unit count during the three and six months ended December 28, 2025, respectively.

For the three and six months ended December 28, 2025, the number of international Pizza Inn units decreased by one and three net units, respectively.

There were zero transfers in the total international Pizza Inn unit count during the three and six months ended December 28, 2025.

The Company believes the number of both domestic and international Pizza Inn units will increase modestly in future periods.

2 unchanged sentences

Three Months Ended

September 28,

September 29,

Six Months Ended

Pie Five Retail Sales - Total Units

(in thousands, except unit data)

Pie Five Units - Franchised

6 unchanged sentences

Total Domestic Units

Pie Five total domestic retail sales decreased by $0.6 million, or 18.7%, for the three months ended September 28, 2025 when compared to the same period of the prior fiscal year.

Pie Five total domestic retail sales decreased by $0.4 million, or 16.3%, for the three months ended December 28, 2025 when compared to the same period of the prior year.

Compared to the same fiscal quarter of the prior year, average units open in the period decreased from 18 to 16.

Comparable store retail sales decreased by $0.2 million, or 9.1%, for the three month period ended September 28, 2025 as compared to the same period of the prior fiscal year.

For the three months ended September 28, 2025, the decrease in domestic retail sales were primarily the result of the decrease in average store count, supplemented by a decrease in comparable store retail sales.

The following chart summarizes Pie Five restaurant activity for the three months ended September 28, 2025:

Three Months Ended September 28, 2025

Comparable store retail sales decreased by $34 thousand, or 1.5%, for the three month period ended December 28, 2025 as compared to the same period of the prior fiscal year.

For the three months ended December 28, 2025, the decrease in domestic retail sales were primarily the result of the decrease in average store count, supplemented by a decrease in comparable store retail sales.

Pie Five total domestic retail sales decreased by $1.0 million, or 17.6%, for the six months ended December 28, 2025 when compared to the same period of the prior year.

Compared to the same fiscal period of the prior year, average units open in the period decreased from 18 to 16.

Comparable store retail sales decreased by $0.3 million, or 5.7%, for the six month period ended December 28, 2025 as compared to the same period of the prior fiscal year.

For the six months ended December 28, 2025, the decrease in domestic retail sales were primarily the result of the decrease in average store count, supplemented by a decrease in comparable store retail sales.

The following chart summarizes Pie Five restaurant activity for the three and six months ended December 28, 2025:

Three Months Ended December 28, 2025

Pie Five Units - Franchised

1 unchanged sentence

Total Domestic Units

The total domestic Pie Five units remained stable during the three months ended September 28, 2025.

Six Months Ended December 28, 2025

Pie Five Units - Franchised

Pie Five Ghost Kitchen Units - Franchised

Total Domestic Units

There was a net decrease of one unit in the total domestic Pie Five unit count during the three and six months ended December 28, 2025.

There were zero transfers in the total domestic Pie Five unit count during the three and six months ended December 28, 2025.

We believe that Pie Five units will decrease modestly in future periods.

1 unchanged sentence

In addition to Corporate overhead support, the Company defines its operating segments as Pizza Inn Franchising and Pie Five Franchising.

The following is additional business segment information for the three months ended September 28, 2025 and September 29, 2024 (in thousands):

Fiscal Quarter Ended

September 28,

September 29,

September 28,

September 29,

September 28,

September 29,

September 28,

September 29,

The following is additional business segment information for the three and six months ended December 28, 2025 and December 29, 2024 (in thousands):

Three Months Ended December 28, 2025 and December 29, 2024

Three Months Ended

Franchise and license revenues

4 unchanged sentences

Franchise expenses

Provision for credit losses

Depreciation and amortization expense

Total costs and expenses

OPERATING INCOME:

Interest income

Total other income

INCOME/(LOSS) BEFORE TAXES

Six Months Ended December 28, 2025 and December 29, 2024

Six Months Ended

Franchise and license revenues

Rental income

Other franchise revenue

Total revenues

COSTS AND EXPENSES:

General and administrative expenses

Franchise expenses

Provision (recovery) for credit losses

7 unchanged sentences

The volume of supplier and distributor incentive revenues is dependent on the level of total retail sales, which are impacted by changes in comparable store sales and restaurant count, as well as the products sold to franchisees through third-party food distributors.

Total revenues for the three month period ended September 28, 2025 and for the same period in the prior fiscal year were $3.2 million and $3.1 million, respectively.

Total revenues for the three month period ended December 28, 2025 and for the same period in the prior fiscal year were $3.0 million and $2.9 million, respectively.

Total revenues for the six month period ended December 28, 2025 and for the same period in the prior fiscal year were $6.3 million and $5.9 million, respectively.

Pizza Inn Franchise and License

Pizza Inn franchise revenues increased by $0.3 million to $3.0 million for the three month period ended September 28, 2025 as compared to the same period in the prior fiscal year.

The 9.4% increase was driven by increases in supplier and distributor incentives and domestic royalties mainly due to an increase in system-wide sales.

Pizza Inn franchise revenues increased by $0.3 million to $2.8 million for the three month period ended December 28, 2025 as compared to the same period in the prior fiscal year.

The 10.5% increase was driven by increases in supplier and distributor incentives and domestic royalties mainly due to an increase in system-wide retail sales.

Pizza Inn franchise revenues increased by $0.5 million to $5.8 million for the six month period ended December 28, 2025 as compared to the same period in the prior fiscal year.

The 9.9% increase was driven by increases in supplier and distributor incentives and domestic royalties mainly due to an increase in system-wide retail sales.

Pie Five Franchise and License

Pie Five franchise revenues decreased by $0.1 million to $0.2 million for the three month period ended September 28, 2025 as compared to the same period in the prior fiscal year.

The 22.2% decrease was driven by decreases in domestic royalties and supplier and distributor incentives from lower system-wide sales mainly due to unit closures.

Pie Five franchise revenues decreased by $0.1 million to $0.2 million for the three month period ended December 28, 2025 as compared to the same period in the prior fiscal year.

The 21.7% decrease was driven by decreases in domestic royalties and supplier and distributor incentives from lower system-wide retail sales mainly due to unit closures.

Pie Five franchise revenues decreased by $0.1 million to $0.5 million for the six month period ended December 28, 2025 as compared to the same period in the prior fiscal year.

The 21.9% decrease was driven by decreases in domestic royalties and supplier and distributor incentives from lower system-wide retail sales mainly due to unit closures.

Costs and Expenses:

General and Administrative Expenses

Total general and administrative expenses remained relatively stable at $1.4 million for the three month period ended September 28, 2025 as compared to the same period of the prior fiscal year.

The 3.0% decrease was driven by decreases in legal fees, offset by increases in salaries.

Total general and administrative expenses increased by $0.2 million for the three month period ended December 28, 2025 as compared to the same period of the prior fiscal year.

The 15.6% increase was driven by increases in salaries, supplemented by increases in legal fees, which reflect fewer legal settlements recognized in the current year compared to the prior year.

Total general and administrative expenses increased by $0.1 million to $2.9 million for the six month period ended December 28, 2025 as compared to the same period of the prior fiscal year.

The 2.3% increase was driven by increases in salaries.

Franchise Expenses

Franchise expenses include general and administrative expenses directly related to the sale and continuing service of domestic and international franchises.

Total franchise expenses remained relatively stable at $1.0 million for the three month period ended September 28, 2025 as compared to the same period of the prior fiscal year.

The 4.2% increase was driven by increases in advertising fees.

Total franchise expenses decreased by $0.1 million to $0.7 million for the three month period ended December 28, 2025 as compared to the same period of the prior fiscal year.

The 11.7% decrease was driven by decreases in salaries directly related to franchise operations.

Total franchise expenses decreased by $0.1 million to $1.8 million for the six month period ended December 28, 2025 as compared to the same period of the prior fiscal year.

The 3.0% decrease was driven by decreases in salaries directly related to franchise operations, offset by increases in advertising fees.

Provision (Recovery) for Credit Losses

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

For the three month period ended September 28, 2025, provision for credit losses were $4 thousand compared to recoveries for credit losses of $17 thousand for the same period in the prior fiscal year.

Interest Income

Interest income increased by $9 thousand to $91 thousand for the three month period ended September 28, 2025 as compared to the same period in the prior fiscal year.

The increase was primarily driven by interest received on U.S.

Treasury bills, which had a larger average balance during the period compared to the prior fiscal year.

For the three month period ended December 28, 2025, provision for credit losses were $7 thousand compared to $9 thousand for the same period in the prior fiscal year.

For the six month period ended December 28, 2025, provision for credit losses were $11 thousand compared to recoveries for credit losses of $8 thousand for the same period in the prior fiscal year.

Depreciation and Amortization Expense

Depreciation and amortization expense decreased by $1 thousand to $42 thousand for the three month period ended September 28, 2025 as compared to the same period in the prior fiscal year.

Depreciation and amortization expense decreased by $11 thousand to $42 thousand for the three month period ended December 28, 2025 as compared to the same period in the prior fiscal year.

The decrease was primarily the result of lower depreciation of equipment.

Depreciation and amortization expense decreased by $12 thousand to $84 thousand for the six month period ended December 28, 2025 as compared to the same period in the prior fiscal year.

The decrease was primarily the result of lower depreciation of equipment due to less capital expenditure spend.

Interest Income

Interest income increased by $4 thousand to $91 thousand for the three month period ended December 28, 2025 as compared to the same period in the prior fiscal year and increased by $13 thousand to $182 thousand for the six month period ended December 28, 2025 as compared to the same period in the prior fiscal year.

The increase was primarily driven by interest received on U.S.

Treasury bills.

Provision for Income Taxes

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Three Months Ended

September 28, 2025

September 29, 2024

Six Months Ended

Federal tax expense

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Total income tax expense

For the three months ended September 28, 2025 and September 29, 2024, the Company recorded an income tax expense of $206 thousand and $169 thousand, respectively.

The increase was driven by increases in federal taxes, primarily due to higher taxable income and fewer discrete tax items related to restricted stock units vesting in the prior fiscal year.

For the three and six months ended December 28, 2025, the Company recorded an income tax expense of $205 thousand and $411 thousand, respectively.

For the three and six months ended December 29, 2024, the Company recorded an income tax expense of $144 thousand and $313 thousand, respectively.

The increase for the three months ended as of December 28, 2025 was driven by increases in federal taxes, primarily due to higher taxable income and fewer discrete tax items related to restricted stock units vesting than in the prior year.

The increase for the six months ended as of December 28, 2025 was primarily driven by increases in federal taxes, primarily due to higher taxable income and fewer discrete tax items related to restricted stock units vesting than in the prior year.

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.

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Earnings per Share

Basic net income per share increased $0.01 per share to $0.05 per share for the three months ended September 28, 2025, compared to the comparable period in the prior fiscal year.

The Company had net income of $0.6 million for the three months ended September 28, 2025 compared to net income of $0.5 million in the comparable period in the prior fiscal year, on revenues of $3.2 million for the three months ended September 28, 2025 compared to $3.1 million in the comparable period in the prior fiscal year.

Basic net income per share remained relatively stable at $0.04 per share for the three months ended December 28, 2025, compared to the comparable period in the prior fiscal year.

The Company had net income of $0.6 million for the three months ended December 28, 2025 compared to net income of $0.6 million in the comparable period in the prior fiscal year, on revenues of $3.0 million for the three months ended December 28, 2025 compared to $2.9 million in the comparable period in the prior fiscal year.

Basic net income per share increased $0.01 per share to $0.09 per share for the six months ended December 28, 2025, compared to the comparable period in the prior fiscal year.

The Company had net income of $1.3 million for the six months ended December 28, 2025 compared to net income of $1.1 million in the comparable period in the prior fiscal year, on revenues of $6.3 million for the six months ended December 28, 2025 compared to $5.9 million in the comparable period in the prior fiscal year.

Liquidity and Capital Resources

During the three month period ended September 28, 2025, the Company's primary source of liquidity was proceeds from operating activities.

Cash flows from operating activities generally reflect net income adjusted for certain non-cash items including depreciation and amortization, changes in deferred taxes, stock-based compensation, short-term investment discount amortization, and changes in working capital.

Cash provided by operating activities was $0.6 million for the three month period ended September 28, 2025 compared to cash provided by operating activities of $0.5 million for the three month period ended September 29, 2024.

The primary driver of increased operating cash flow during the three month period ended September 28, 2025 was increased net income, which resulted primarily from increased revenue.

During the six month period ended December 28, 2025, the Company's primary source of liquidity was proceeds from operating activities.

Cash provided by operating activities was $0.9 million for the six month period ended December 28, 2025 compared to cash provided by operating activities of $1.2 million for the six month period ended December 29, 2024.

The primary driver of decreased operating cash flow during the six month period ended December 28, 2025 was increased prepaid expenses related to marketing and insurance.

Cash flows from investing activities reflect purchases and maturities of short-term investments as well as net proceeds from the sale of assets and capital expenditures for the purchase of Company assets.

Cash used in investing activities during the three month period ended September 28, 2025 was $2.1 million compared to cash used in investing activities of $2.0 million for the three months ended September 29, 2024.

The increase in net cash used in investing activities during the three month period ended September 28, 2025 was primarily attributable to increased activity related to the purchase and redemption of short-term investments.

Cash used in investing activities during the six month period ended December 28, 2025 was $3.1 million compared to cash used in investing activities of $1.1 million for the six month period ended December 29, 2024.

Net cash used in investing activities during the six month period ended December 28, 2025 was primarily attributable to decreased maturities of U.S.

Treasury bills.

Cash flows used in financing activities generally reflect changes in the Company's stock and debt activity during the period.

Net cash used in financing activities was zero for the three month periods ended September 28, 2025 and September 29, 2024.

Management believes the cash on hand combined with net cash provided by operations will be sufficient to fund operations for the next 12 months and beyond.

Net cash used in financing activities was zero for the six month period ended December 28, 2025 compared to net cash used in financing activities of $0.2 million for the six month period ended December 29, 2024.

Net cash used by financing activities for the six month period ended December 29, 2024 was primarily attributable to taxes paid on vested RSUs.

Management believes the cash and short-term investments on hand combined with net cash provided by operations will be sufficient to fund operations for the next 12 months and beyond.

Critical Accounting Policies and Estimates

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Franchise fees, area development and foreign master license agreement fees are amortized into revenue on a straight-line basis over the term of the related contract agreement.

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.

In 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.

Royalties and advertising fund revenues, which are based on a percentage of franchise retail sales, are recognized as income as retail sales occur.

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The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

As of September 28, 2025 and June 29, 2025, the Company had no uncertain tax positions.

As of December 28, 2025 and June 29, 2025, the Company had no uncertain tax positions.

The Company assesses its exposures to loss contingencies from legal matters based upon factors such as the current status of the cases and consultations with external counsel and provides for the exposure by accruing an amount if it is judged to be probable and can be reasonably estimated.

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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-Q

Item 1. Financial Statements