SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-K

~~(Mark One)~~

~~[X]Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~

	(Mark One)
	[X]	Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 193 For the fiscal year ended June 28, 2015. Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	[ ]	For the transition period from _____ to _____.

~~For the fiscal year ended June 29, 2014.~~

~~Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~

~~[ ]~~ ~~For the transition period from _____ to _____.~~

Commission File Number 0-12919

~~PIZZA INN HOLDINGS,~~RAVE RESTAURANT GROUP, INC.

(Exact name of registrant as specified in its charter)

Missouri	45-3189287
(State or jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

3551 Plano Parkway
The Colony, Texas	75056
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (469) 384-5000

Securities registered pursuant to Section 12(b) of the Act:

Title of class		Name of each exchange on which registered
Common stock, par value $.01 each		NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Ö

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No Ö

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes Ö No ___

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes_Ö_ No__

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [-Ö]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Ö

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ___ No Ö

As of December ~~29, 2013,~~28, 2014, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common equity held by non-affiliates was approximately ~~$44.4~~$44.7 million computed by reference to the price at which the common equity was last sold on the NASDAQ Capital Market.

As of September ~~23, 2014,~~24, 2015, there were ~~9,317,672~~10,313,635 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement, to be filed pursuant to Section 14(a) of the Securities Exchange Act in connection with the registrant’s annual meeting of shareholders scheduled for November ~~18, 2014,~~17, 2015, have been incorporated by reference in Part III of this report.

~~PART I~~
~~ITEM 1.~~	~~Business~~	4
~~ITEM 1A.~~	~~Risk Factors~~	10
~~ITEM 1B.~~	~~Unresolved Staff Comments~~	10
~~ITEM 2.~~	~~Properties~~	10
~~ITEM 3.~~	~~Legal Proceedings~~	10
~~ITEM 4.~~	~~Submission Of Matters To A Vote Of Security Holders~~	10

~~PART II~~
~~ITEM 5.~~	~~Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer~~
	~~Purchases Of Equity Securities~~	11
~~ITEM 6.~~	~~Selected Financial Data~~	12
~~ITEM 7.~~	~~Management’s Discussion And Analysis Of Financial Condition And Results Of~~
	~~Operations~~	12
~~ITEM 7A.~~	~~Quantitative And Qualitative Disclosures About Market Risk.~~	21
~~ITEM 8.~~	~~Financial Statements And Supplementary Data~~	21
~~ITEM 9.~~	~~Changes In And Disagreements With Accountants On Accounting And Financial~~
	~~Disclosure~~	22
~~ITEM 9A.~~	~~Controls And Procedures~~	22
~~ITEM 9B.~~	~~Other Information~~	22

~~PART III~~
~~ITEM 10.~~	~~Directors And Executive Officers and Corporate Governance~~	22
~~ITEM 11.~~	~~Executive Compensation~~	22
~~ITEM 12.~~	~~Security Ownership Of Certain Beneficial Owners And Management And Related~~
	~~Stockholder Matters~~	22
~~ITEM 13.~~	~~Certain Relationships And Related Transactions And Director Independence~~	23
~~ITEM 14.~~	~~Principal Accountants Fees And Services~~	23

~~PART IV~~
~~ITEM 15.~~	~~Exhibits And Financial Statement Schedules~~	23

~~Signatures~~		25

Forward-Looking Statements

This Form 10-K contains certain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, which are intended to be covered by the safe harbors created thereby. Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, or which include words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate” or similar expressions. These statements include the plans and objectives of management for future operations, including plans and objectives relating to future growth of our business activities and availability of funds. Statements that address business and growth strategies, performance goals, projected financial condition and operating results, our understanding of our competition, industry and market trends, and any other statements or assumptions that are not historical facts are forward-looking statements.

The forward-looking statements included in this Form 10-K are based on current expectations that involve numerous risks and uncertainties. Assumptions relating to these forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions, regulatory framework and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the assumptions underlying these forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Form 10-K will prove to be accurate. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of such information should not be regarded as a representation that our objectives and plans will be achieved.

PART I

ITEM 1. BUSINESS.

General

~~Pizza Inn Holdings,~~Rave Restaurant Group, Inc. and its subsidiaries (collectively referred to as the “Company” or in the first person notations of “we”, “us” and “our”) operate and franchise pizza buffet, delivery/carry-out and express restaurants domestically and internationally under the trademark “Pizza Inn” and operate and franchise domestic fast casual restaurants under the trademarks “Pie Five Pizza Company” or “Pie Five”. We provide or facilitate the procurement and distribution of food, equipment and supplies to our domestic and international system of restaurants through our Norco Restaurant Services Company (“Norco”) division and through agreements with third party distributors.

As of June ~~29, 2014,~~28, 2015, we owned and operated 1526 restaurants comprised of 1324 Pie Five restaurants (“Pie Five Units”) and two Pizza Inn buffet restaurants (“Buffet Units”). As of that date, we also had ~~seven~~30 franchised Pie Five Units and ~~251~~248 franchised Pizza Inn restaurants. The ~~180~~177 domestic franchised Pizza Inn restaurants were comprised of ~~103~~99 Buffet Units, 2421 delivery/carry-out restaurants (“Delco Units”) and 5357 express restaurants (“Express Units”). The 71 international franchised Pizza Inn restaurants were comprised of 18 Buffet Units, 45 Delco Units and 8eight Express Units. Domestic restaurants were located predominantly in the southern half of the United States, with Texas, North Carolina, Arkansas and ~~Mississippi~~Tennessee accounting for approximately ~~34%, 14%~~29%, 12%, 11% and 6%8%, respectively, of the total number of domestic restaurants.

Our History

The Company has offered consumers affordable, high quality pizza since 1958, when the first Pizza Inn restaurant opened in Dallas, Texas. We awarded our first franchise in 1963 and opened our first buffet restaurant in 1969. We began franchising the Pizza Inn brand internationally in the late 1970s. In 1993, our stock began trading on the NASDAQ Stock Market, and presently trades on the NASDAQ Capital Market under the ticker symbol ~~“PZZI.~~“RAVE.” In June 2011, we opened the first Pie Five restaurant in Ft. Worth, Texas. In November 2012, we signed our first franchise development agreement for Pie Five.

Our Concepts

We operate and franchise restaurant concepts under two distinct brands: Pie Five and Pizza ~~Inn~~Inn.

Pie Five

Pie Five is a fast-casual pizza concept that creates individualized pizzas which are baked in 140 seconds in our specially designed oven. Pizzas are created at the direction of our customers who choose from a variety of freshly prepared and displayed toppings, cheeses, sauces and doughs and complete their purchase process in less than five minutes. Customers can also get freshly prepared entrée and side salads, also made to order from our recipes or at the customer's direction. They can also choose from several baked daily desserts like brownies, cookie pies, and cakes. A variety of soft beverages are available, as well as beer and wine in some locations. Pie ~~Five.~~Five restaurants offer items at prices from $5.49 to $9.99, and the average ticket price per meal, including a drink, was approximately $8.98 per person for fiscal year 2015. The average per person ticket is slightly higher in restaurants offering beer and wine.

Pie Five restaurants typically occupy leased, in-line or end-cap space of between 1,800 and 2,400 square feet in retail strip or multi-unit retail space. The restaurants typically are located in high traffic, high visibility urban or suburban sites in mid- to large-size metropolitan areas. With seating for 65 to 85 customers in most units, and patio seating where available, Pie Five restaurants primarily serve lunch and dinner to families, adults and kids of all ages. Sales are predominantly on-premise though carry out is offered as well. Future sales growth initiatives may include expanded text ordering and catering services. Due to the relatively compact footprint of the restaurants, and other operating advantages, we also believe Pie Five is well suited for non-traditional locations such as airports.

Pizza Inn

We operate Buffet Units, Delco Units and Express Units under the Pizza Inn brand. Buffet Units and Delco Units feature crusts that are hand-made from dough made fresh in the restaurant each day. Our pizzas are made with a proprietary all-in-one flour mixture, real mozzarella cheese and a proprietary mix of classic pizza spices. In international markets, the menu mix of toppings and side items is occasionally adapted to local tastes.

Buffet Units offer dine-in, carryout and catering service and, in many cases, also offer delivery service. Buffet Units offer a variety of pizza crusts with standard toppings and special combinations of toppings in addition to pasta, salad, sandwiches, appetizers, desserts and beverages, including beer and wine in some locations, in an informal, family-oriented atmosphere. We occasionally offer other items on a limited promotional basis. Buffet Units are generally located in free standing buildings or strip center locations in retail developments in close proximity to offices, shopping centers and residential areas. The current standard Buffet Units are between 2,100 and 4,500 square feet in size and seat 120 to 185 customers. The interior decor is designed to promote a casual, lively, contemporary, family-style atmosphere. Some Buffet Units feature game rooms that offer a range of electronic game entertainment for the entire family. The buffet is typically offered at prices from ~~$4.99~~$3.49 to ~~$7.99,~~$7.49, and the average ticket price, including a drink, was approximately ~~$9.38~~$9.52 per person for fiscal year ~~2014.~~2015. The average per person ticket is slightly higher in restaurants offering beer and wine.

Delco Units offer delivery and carryout service only and are typically located in shopping centers or other in-line retail developments. Delco Units typically offer a variety of crusts and some combination of side items. Delco Units occupy approximately 1,200 square feet, are primarily production facilities and, in most instances, do not offer seating. The decor of the Delco Unit is designed to be bright and highly visible and feature neon lighted displays and awnings. We have attempted to locate Delco Units strategically to facilitate timely delivery service and to provide easy access for carryout service.

Express Units serve our customers through a variety of non-traditional points of sale. Express Units are typically located in a convenience store, food court, college campus, airport terminal, travel plaza, athletic facility or other commercial facility. They have limited or no seating and solely offer quick carryout service of a limited menu of pizza and other foods and beverages. An Express Unit typically occupies approximately 200 to 400 square feet and is commonly operated by the operator or food service licensee of the commercial host facility. We have developed a high-quality pre-prepared crust that is topped and cooked on-site, allowing this concept to offer a lower initial investment and reduced labor and operating costs while maintaining product quality and consistency. Like Delco Units, Express Units are primarily production-oriented facilities and, therefore, do not require all of the equipment, labor or square footage of the Buffet Unit.

~~Pie Five~~

Pie Five is a fast-casual pizza concept that creates individualized pizzas which are baked in 140 seconds in our specially designed oven. Pizzas are created at the direction of our customers who choose from a variety of freshly prepared and displayed toppings, cheeses, sauces and doughs and complete their purchase process in less than five minutes. Customers can also get freshly prepared entrée and side salads, also made to order from our recipes or at the customer's direction. They can also choose from several baked daily desserts like brownies, cookie pies, and cakes. A variety of soft beverages are available, as well as beer and wine in some locations. Pie Five restaurants offer items at prices from $5.49 to $9.99, and the average ticket price per meal, including a drink, was approximately $8.78 per person for fiscal year 2014. The average per person ticket is slightly higher in restaurants offering beer and wine.

Pie Five restaurants typically occupy leased, in-line or end-cap space of between 1,800 and 2,400 square feet in retail strip or multi-unit retail space. The restaurants typically are located in high traffic, high visibility urban or suburban sites in mid to large size metropolitan areas. With seating for 65 to 85 customers in most units, and patio seating where available, Pie Five restaurants primarily serve lunch and dinner to families, adults and kids of all ages. Sales are predominantly on-premise though carry out is offered as well. Future sales growth initiatives may include expanded text ordering and catering services. Due to the relatively compact footprint of the restaurants, and other operating advantages, we also believe Pie Five is well suited for non-traditional locations such as airports.

Site Selection

We consider the restaurant site selection process critical to a restaurant’s long-term success and devote significant resources to the investigation and evaluation of potential sites. The site selection process includes a review of trade area demographics through the use of a third party customer and site selection tool, as well as a proprietary evaluation process. We may also rely on a franchisee’s knowledge of the trade area and market characteristics when selecting a location for a franchised restaurant. A member of our development team visits each potential domestic restaurant location.

Development and Operations

New Unit Development

We intend to expand the Pizza Inn system domestically and internationally in markets with significant long-term growth potential and where we believe we can use our competitive strengths to establish brand recognition and gain local market share. While we plan to expand our Pizza Inn branded domestic restaurant base primarily through opening new franchised restaurants with new and existing franchisees, we will continue to evaluate our mix of Company-owned and franchised restaurants. We ~~anticipate continuing to develop~~will evaluate the development of new Pizza Inn Buffet and Delco Units in international markets in fiscal ~~2015,~~2016, particularly in the Middle East.

In appropriate circumstances, we grant area developer rights for Pizza Inn restaurants in new and existing domestic markets. A Pizza Inn area developer typically pays a negotiated fee to purchase the right to operate or develop restaurants within a defined territory and, typically, agrees to a multi-restaurant development schedule. The area developer assists us in local franchise service and quality control in exchange for half of the franchise fees and royalties from all restaurants within the territory during the term of the agreement.

In fiscal ~~2015,~~2016, we intend to continue developing franchised Pie Five Units. As of August ~~22, 2014,~~25, 2015, we had ~~nine~~32 franchised units open and had executed multi-year development agreements with 21 franchisees for up to an additional ~~213~~375 Pie Five Units ~~with 16 franchisees~~ to be located in the U.S., including Alabama, Arizona, Arkansas, Colorado, Delaware, Florida, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Mississippi, Missouri, Nebraska, ~~Oklahoma,~~New Jersey, New Mexico, North Carolina, Oklahoma, Pennsylvania, Tennessee, Texas, ~~Utah, Tennessee,~~ Virginia, Wisconsin and Washington D.C. ~~and Mississippi.~~ The number of Pie Five Units subject to a development agreement is scaled relative to the estimated development potential of the specified geographic area and requires the franchisee to achieve specified unit development milestones over a period of time, typically five years, to maintain their development rights in the area. The rate at which we will be able to continue to expand the Pie Five concept through franchise development is determined in part by our success at selecting qualified franchisees, by our ability to identify satisfactory sites in appropriate markets and by our ability to continue training and monitoring our franchisees. We intend to continue to focus on franchise development opportunities with experienced, well-capitalized, multi-restaurant operators.

In fiscal ~~2015,~~2016, we also intend to continue to develop Company-owned Pie Five Units in selected metropolitan areas throughout the United States. Our ability to open new Company-owned Pie Five Units is largely dependent on our ability to identify and secure suitable locations, to manage and fund the development of such locations and to train and staff the restaurants.

Domestic Franchise Operations

Franchise and development agreements. We discontinued offering new Delco Franchises during fiscal 2014. Our current standard forms of franchise agreements provide for the following basic terms:

Pizza Inn
Buffet Unit Delco Unit Express Unit Pie Five Unit
Development fee per unit $ - $ - $ - $ 5,000
Franchise fee per unit $ 25,000 $ 10,000 $ 5,000 $ 20,000
Initial franchise term 20 years 10 years 5 years 10 years
Renewal period 10 years 10 years 5 years 5 years
Royalty rate % of sales 4 % 4 % 5 % 6 %
National Ad fund % of sales 1 % 1 % - 2 %
Required total ad spending % of sales 5 % 5 % 3.5 % 5 %

	Pizza Inn
	Buffet Unit			Express Unit			Pie Five Unit
Development fee per unit		-			-			5,000
Franchise fee per unit		25,000			5,000			20,000
Initial franchise term	20 years			5 years			10 years
Renewal period	10 years			5 years			5 years
Royalty rate % of sales		4	%		5	%		6	%
National Ad fund % of sales		1	%		2	%		2	%
Required total ad spending % of sales		5	%		2	%		5	%

Since the Pizza Inn concept was first franchised in 1963, industry franchising concepts and development strategies have ~~changed,~~evolved, and our present franchise relationships are evidenced by a variety of contractual forms. Common to those forms are provisions that: (i) require the franchisee to follow the Pizza Inn system of restaurant operation and management, (ii) require the franchisee to pay a franchise fee and continuing royalties, and (iii) except for Express Units, prohibit the development of one restaurant within a specified distance from another.

We launched the franchise program for Pie Five in fiscal 2013. Based on the Pie Five development agreements currently in effect, we anticipate allocating significant internal resources to the growth of our Pie Five franchise and development operation in fiscal ~~2015.~~2016. Our Pie Five franchise agreement requires that the franchisees: (i) follow the Pie Five system of restaurant operation and management, (ii) pay a franchise fee and continuing royalties, (iii) contribute a specified percentage of sales to a marketing fund managed by the Company, and (iv) only open restaurants that comply with site and design standards determined by the Company.

Training. We offer numerous training programs for the benefit of franchisees and their restaurant crew managers. The training programs, taught by experienced Company employees, focus on food preparation, service, cost control, sanitation, safety, local store marketing, personnel management and other aspects of restaurant operation. The training programs include group classes, supervised work in Company-owned restaurants and special field seminars. Initial and certain supplemental training programs are offered free of charge to franchisees, who pay their own travel and lodging expenses. New franchisees also receive on-site training from Company employees to assist with their first two restaurant openings under their development agreements. Restaurant managers train their staff through on-the-job training, utilizing video and printed materials produced by us.

Standards. We require franchisee adherence to a variety of standards designed to ensure proper operations and to protect and enhance the Pie Five and Pizza Inn brands. All franchisees are required to operate their restaurants in compliance with these written policies, standards and specifications, which include matters such as menu items, ingredients, materials, supplies, services, furnishings, decor and signs. Our efforts to maintain consistent operations may result, from time to time, in the closing of certain restaurants that have not achieved and maintained a consistent standard of quality or operations. We also maintain adherence to our standards through ongoing support and education of our franchisees by our franchise business consultants, who are deployed locally in markets where our franchisees are located.

Company-Owned Restaurant Operations

As of June ~~29, 2014,~~28, 2015, we operated two Buffet Units and 1324 Pie Five Units, ~~all~~primarily in the Dallas/Fort Worth, Houston and Chicago metropolitan ~~area.~~areas. We do not currently intend to operate any Delco Units or Express Units. Our ability to open Company-owned restaurants is affected by a number of factors, including the terms of available financing and our ability to locate suitable sites, negotiate acceptable lease or purchase terms, secure appropriate local governmental permits and approvals, supervise construction and recruit and train management personnel. In addition to generating revenues and earnings, we use domestic Company-owned restaurants as test sites for new products and promotions as well as restaurant operational improvements and as a forum for training new managers and franchisees.

Developing Company-owned Pie Five Units in multiple metropolitan areas is a key component of our strategic plan. In addition to providing the Company with an attractive economic return, we believe that developing a domestic network of Company-owned Pie Five Units is an important aspect of our strategy for growing the Pie Five system. Growth in both the franchised and Company-owned Pie Five Units in operation improves the system’s overall economies of scale for advertising, marketing, information systems, distribution and procurement of food products, and other costs. In fiscal ~~2015,~~2016, we plan to allocate additional resources to developing and operating Company-owned Pie Five Units.

International Franchise Operations

We also offer master license rights to develop Pizza Inn restaurants in certain foreign countries, with negotiated fees, development schedules and ongoing royalties. A master licensee for a foreign country pays a negotiated fee to purchase the right to develop and operate Pizza Inn restaurants within a defined territory, typically for a term of 20 years, plus a ten-year renewal option. The master licensee agrees to a multi-restaurant development schedule and we train the master licensee to monitor and assist franchisees in their territory with local service and quality control, with support from us. In return, the master licensee typically retains half the franchise fees and half the royalties on all restaurants within the territory during the term of the agreement. Master licensees may open restaurants that they own and operate, or they may open sub-franchised restaurants owned and operated by third parties through agreements with the master licensee, but subject to our approval.

Our first franchised restaurant outside of the United States opened in the late 1970s. As of June ~~29, 2014,~~28, 2015, there were 71 Pizza Inn restaurants operating internationally. With the exception of two restaurants in Honduras and one in Bangladesh, all of the restaurants operated or sub-licensed by our international master licensees are in the United Arab Emirates, Saudi Arabia and adjoining countries. Our ability to continue to develop select international markets is affected by a number of factors, including our ability to locate experienced, well-capitalized developers who can commit to an aggressive multi-restaurant development schedule and achieve maximum initial market penetration with minimal supervision by us. In the future, we may also pursue international opportunities for the development of Pie Five franchisees.

Food and Supply Distribution

Our Norco division provides product sourcing, purchasing, quality assurance, research and development, franchisee order and billing services, and logistics support functions for both the Pizza Inn and Pie Five restaurant systems. We outsource our warehousing and distribution services to reputable and experienced restaurant distribution companies, including Performance Food Group, Inc., and ~~UniPro Food Service Inc.. and their~~its affiliates. The distributors make deliveries to all domestic restaurants from several distribution centers, with delivery territories and responsibilities for each determined according to geographical region. We believe this division of responsibilities for our purchasing, franchisee support and distribution systems has resulted in lower operating costs and logistical efficiencies. Norco also arranges for the distribution of certain products and equipment to some international franchisees.

Effective in the third quarter of fiscal 2015, we changed our distribution arrangements to shift the responsibility for maintaining system-wide inventory from Norco to third party distributors. As a result, as of June 28, 2015, inventory consisted primarily of food, paper products and supplies stored in and used by Company restaurants.

Norco is able to leverage the advantages of direct vendor negotiations and volume purchasing of food, equipment and supplies for the franchisees’ benefit in the form of a concentrated, one-truck delivery system, competitive pricing and product consistency. Franchisees are able to purchase all products and ingredients from Norco and have them delivered by experienced and efficient distributors. In order to assure product quality and consistency, our franchisees are required to purchase from Norco certain food products that are proprietary to the Pizza Inn and Pie Five systems, including cheese, pizza sauce, flour mixture, certain meats and spice blend. In addition, franchisees purchase other non-proprietary food products and supplies from Norco. Alternatively, franchisees may also purchase non-proprietary products and supplies from other suppliers who meet our requirements for quality and reliability.

Non-proprietary food and ingredients, equipment and other supplies sold by Norco are generally available from several qualified sources. With the exception of several proprietary food products, such as cheese and dough flour, we are not dependent upon any one supplier or a limited group of suppliers. We contract with established food processors for the production of our proprietary products according to our specifications.

We have not experienced any significant shortages of supplies or any delays in receiving our food or beverage inventories, restaurant supplies or products, and do not anticipate any difficulty in obtaining inventories or supplies in the foreseeable future. Prices charged to us by our suppliers are subject to fluctuation, and we typically pass increased costs or savings on to our franchisees through changes in product pricing. We do not engage in commodity hedging but enter into pricing arrangements for up to a year in advance for certain high volume products.

Marketing and Advertising

By communicating a common brand message at the regional, local market and restaurant levels, we believe we can create and reinforce a strong, consistent marketing message to consumers and increase our market share. We offer or facilitate a number of ways for the brand image and message to be promoted at the local and regional levels.

The Pizza Inn Advertising Plan Cooperative (“~~PIAP”~~PIAP Cooperative”) is a Texas ~~non-profit corporation~~cooperative association that is responsible for creating and producing various marketing programs and materials, which may include print and digital advertisements, direct mail materials, social media and e-mail marketing, television and radio commercials, in-store promotional materials, and related marketing and public relations services. Each operator of a domestic Buffet Unit or Delco Unit is entitled to membership in ~~PIAP.~~PIAP Cooperative. Nearly all of our existing Pizza Inn franchise agreements for Buffet Units and Delco Units require the franchisees to become members of ~~PIAP.~~PIAP Cooperative. Members contribute 1% of their sales to ~~PIAP.~~ PIAP Cooperative. PIAP Cooperative is managed by a board of trustees comprised of franchisee representatives who are elected by the members each year. We do not have any ownership interest in ~~PIAP.~~PIAP Cooperative. We provide certain administrative, marketing and other services to PIAP Cooperative and are paid by PIAP Cooperative for such services. As of June ~~29, 2014,~~28, 2015, the Company-owned Buffet Units and substantially all of our domestic franchisees were members of ~~PIAP.~~PIAP Cooperative. Operators of Express Units do not participate in ~~PIAP.~~PIAP Cooperative. However, they contribute up to 1% of their sales directly to us to help fund purchases of Express Unit marketing materials and similar expenditures. International franchisees do not participate in ~~PIAP.~~

PIAP Cooperative.

In some market areas, groups of Pizza Inn franchisees that are also participants of PIAP have formed local advertising cooperatives. These cooperatives, which may be formed voluntarily or may be required by us under the franchise agreements, establish contributions to be made by their members and direct the expenditure of these contributions on local media advertising using materials developed by PIAP and/or us.

In the past year we have allocated additional resources to the development and execution of marketing programs for the Pie Five restaurant system to benefit Pie Five franchisees and Company-owned restaurants in different metropolitan areas. Pie Five franchisees contribute a specified percentage of their sales to the Company to fund the creation and production of various marketing and advertising programs and materials, which may include print and digital advertisements, direct mail materials, customer satisfaction ~~system,~~systems, social media and e-mail marketing, television and radio commercials, in-store promotional materials, and related marketing and public relations services. We anticipate continuing to expand Pie Five marketing activities commensurate with the growth of the Pie Five system.

Pizza Inn and Pie Five franchisees are required to conduct independent marketing efforts in addition to their participation in the national marketing programs for each brand. We provide Company-owned and franchised restaurants with access to an assortment of local store marketing materials, including pre-approved print, radio, and digital media marketing materials. We also provide local store marketing materials and programs specifically to support new restaurant openings.

Trademarks and Quality Control

We own various trademarks, including the names “Pizza Inn” and “Pie Five,” that are used in connection with the restaurants and have been registered with the United States Patent and Trademark Office. The duration of our trademarks is unlimited, subject to periodic renewal and continued use. In addition, we have obtained trademark registrations for our marks in several foreign countries and have periodically re-filed and applied for registration in others. We believe that we hold the necessary rights for protection of the trademarks essential to our business.

Government Regulation

We and our franchisees are subject to various federal, state and local laws affecting the operation of our restaurants. Each restaurant is subject to licensing and regulation by a number of governmental authorities, which include health, safety, sanitation, wage and hour, alcoholic beverage, building and fire agencies in the state or municipality in which the restaurant is located. Difficulties in obtaining, or the failure to obtain, required licenses or approvals could delay or prevent the opening of a new restaurant or require the temporary or permanent closing of existing restaurants in a particular area.

We are subject to Federal Trade Commission (“FTC”) regulation and to various state laws regulating the offer and sale of franchises. The FTC requires us to furnish to prospective franchisees a franchise disclosure document containing prescribed information. Substantive state laws that regulate the franchisor-franchisee relationship presently exist in a number of states, and bills have been introduced in Congress from time to time that would provide for further federal regulation of the franchisor-franchisee relationship in certain respects. Some foreign countries also have disclosure requirements and other laws regulating franchising and the franchisor-franchisee relationship.

Employees

As of August ~~22, 2014,~~25, 2015, we had ~~304~~557 employees, including 4153 in our corporate office and 2957 full-time and ~~234~~447 part-time employees at the Company-owned restaurants. None of our employees are currently covered by collective bargaining agreements.

Industry and Competition

The restaurant industry is intensely competitive with respect to price, service, location and food quality, and there are many well-established competitors with substantially greater brand recognition and financial and other resources than the Company. Competitors include a large number of international, national and regional restaurant and pizza chains, as well as local restaurants and pizza operators. Some of our competitors may be better established in the markets where our restaurants are or may be located. Within the pizza segment of the restaurant industry, we believe that our primary competitors are national pizza chains and several regional chains, including chains executing a “take and bake” concept. We also compete against the frozen pizza products available at grocery stores and large superstore retailers. In recent years several competitors have developed fast-casual pizza concepts that compete with Pie Five in certain metropolitan areas. A change in the pricing or other market strategies of one or more of our competitors could have an adverse impact on our sales and earnings.

With respect to the sale of franchises, we compete with many franchisors of restaurants and other business concepts. We believe that the principal competitive factors affecting the sale of franchises are product quality, price, value, consumer acceptance, franchisor experience and support, and the quality of the relationship maintained between the franchisor and its franchisees. In general, there is also active competition for management personnel and attractive commercial real estate sites suitable for our restaurants.

Our Norco division competes with both national and local distributors of food and other restaurant suppliers. The distribution industry is very competitive. We believe that the principal competitive factors in the distribution industry are product quality, customer service and price. Norco or its designees are the sole authorized suppliers of certain proprietary products that all Pizza Inn or Pie Five restaurants are required to use.

ITEM 1A. RISK FACTORS.

Not required for a smaller reporting company.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not applicable.

ITEM 2. PROPERTIES.

The Company leases its 38,130 square foot corporate office facility pursuant to a sale-leaseback transaction with average annual lease payments of approximately $11.00 per square foot. This lease began on December 19, 2006 and has a ten year term. In August 2011, we secured a three year term sublease at $14.50 per square foot for 18,360 square feet of the building beginning December 1, 2011.

As of June ~~29, 2014,~~28, 2015, the Company also operated two Pizza Inn Buffet Units and 1324 Pie Five Units from leased locations. The operating leases cover premises from 1,765 to 4,634 square feet and have initial terms of from five to ten years at base rental rates of ~~$15.00~~$18.00 to ~~$40.00~~$42.00 per square foot and contain provisions permitting renewal for one or more specified terms.

The Company has two leases for Buffet Units in Texas that were closed in fiscal 2008 and 2014. These leased properties are 4,000 and 4,347 square feet, have annual rental rates of approximately $13.00 and $30.00 per square foot and expire in 2015 and 2020, respectively. The Company is currently pursuing alternatives for subleasing or terminating these leases.

ITEM 3. LEGAL PROCEEDINGS.

The Company is subject to claims and legal actions in the ordinary course of its business. The Company believes that all such claims and actions currently pending against it are either adequately covered by insurance or would not have a material adverse effect on the Company’s annual results of operations, cash flows or financial condition if decided in a manner that is unfavorable to the Company.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

As of August ~~22, 2014,~~25, 2015, there were approximately ~~1,874~~1,933 stockholders of record of the Company's common stock.

The Company had no sales of unregistered securities during fiscal ~~2014~~2015 or ~~2013.~~2014.

The Company's common stock is listed on the Capital Market of the NASDAQ Stock Market, LLC (“NASDAQ”) under the symbol ~~“PZZI”~~“RAVE”. The following table shows the highest and lowest price per share of the common stock during each quarterly period within the two most recent fiscal years, as reported by NASDAQ. Such prices reflect inter-dealer quotations, without adjustment for any retail markup, markdown or commission.

					High		Low
Fiscal 2015:
Fourth Quarter Ended 6/28/2015					$	15.93	$	10.72
Third Quarter Ended 3/29/2015						16.20		6.96
Second Quarter Ended 12/28/2014						8.23		6.12
First Quarter Ended 9/28/2014						8.63		5.96
	High		Low
Fiscal 2014:
Fourth Quarter Ended 6/29/2014	$	6.74	$	5.41	$	6.74	$	5.41
Third Quarter Ended 3/30/2014		8.29		5.38		8.29		5.38
Second Quarter Ended 12/29/2013		9.09		7.15		9.09		7.15
First Quarter Ended 9/29/2013		8.21		5.51		8.21		5.51

Fiscal 2013:
Fourth Quarter Ended 6/30/2013	$	9.18	$	3.80
Third Quarter Ended 3/24/2013		3.90		3.03
Second Quarter Ended 12/23/2012		3.48		2.47
First Quarter Ended 9/23/2012		3.94		2.20

2007 Stock Purchase Plan

On May 23, 2007, the Company’s board of directors approved a stock purchase plan (the “2007 Stock Purchase Plan”) authorizing the purchase on our behalf of up to 1,016,000 shares of our common stock in the open market or in privately negotiated transactions. On June 2, 2008, the Company’s board of directors amended the 2007 Stock Purchase Plan to increase the number of shares of common stock the Company may repurchase by 1,000,000 shares to a total of 2,016,000 shares. On April 22, 2009 the Company’s board of directors amended the 2007 Stock Purchase Plan again to increase the number of shares of common stock the Company may repurchase by 1,000,000 shares to a total of 3,016,000 shares. The 2007 Stock Purchase Plan does not have an expiration date. There were no stock purchases in the fiscal year ended June ~~29, 2014.~~28, 2015.

Equity Compensation Plan Information

ITEM 6. SELECTED FINANCIAL DATA

Not required for a smaller reporting company.

ITEM 7. 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 Annual Report on Form 10-K and may contain certain forward-looking statements. See “Forward-Looking Statements.”

The Company operates and franchises pizza buffet, delivery/carry-out and express restaurants domestically and internationally under the trademark “Pizza Inn” and operates domestic fast casual pizza restaurants under the trademarks “Pie Five Pizza Company” or “Pie Five”. We provide or facilitate food, equipment and supply distribution to our domestic and international system of restaurants through our Norco Restaurant Services Company division and through agreements with third party distributors. At June ~~29, 2014, Company~~28, 2015, Company-owned and franchised restaurants consisted of the following:

(in thousands, except unit data)
	Pizza Inn				Pie Five				All Concepts
	Ending		Retail		Ending		Retail		Ending		Retail
	Units		Sales		Units		Sales		Units		Sales

Company-Owned		2	$	1,471		24	$	11,398		26	$	12,869
Domestic Franchised		177		91,480		30		13,940		207		105,420
Total Domestic Units		179	$	92,951		54	$	25,338		233	$	118,289


International Franchised		71				-				71

2014. The ~~reduction~~increase in net ~~income~~loss from prior year iswas primarily due to ~~lower food and supply sales~~increased pre-opening expenses and higher general and administrative and franchise costs related to additional personnel and other resources to support the growth of Pie Five franchising and opening of Company-owned restaurants. ~~Partially offsetting these factors was~~

Adjusted EBITDA for the fiscal year ended June 28, 2015, improved $0.9 million to a ~~reduction in~~positive $0.6 million compared to a negative $0.3 million for the ~~impairment costs and increased earnings from Company-owned Pie Five restaurants.~~comparable period of the prior fiscal year. The following table sets forth a reconciliation of net income to Adjusted EBITDA for the periods shown (in thousands):

	Fiscal Year Ended
	June 28,			June 29,
	2015			2014
Net Loss	$	(1,839	)	$	(1,567	)
Interest Expense		113			142
Income Taxes		(670	)		(760	)
Income Taxes--Discontinued Operations		(86	)		(58	)
Depreciation and amortization		1,617			1,454
EBITDA	$	(865	)	$	(789	)
Stock compensation expense		128			68
Pre-opening costs		721			161
Asset disposals, closure costs and restaurant impairment		586			275
Adjusted EBITDA	$	570		$	(285	)

Results of operations for fiscal 2015 and 2014 ~~and 2013~~both included 52 ~~and 53 weeks respectively.~~weeks.

Management believes that key performance indicators in evaluating financial results include domestic and international franchisee retail sales and the number and type of operating restaurants. The following tables summarize these key performance indicators for franchise locations. All amounts are in thousands except the average number of units.

Fiscal Year Ended
Pizza Inn Franchise Stores - Total Stores June 29, June 30,
2014 2013
Domestic retail sales of Buffet Units $ 81,960 $ 88,519
Domestic retail sales of Delco Units 5,247 6,474
Domestic retail sales of Express Units 3,130 3,157
Total domestic retail sales
$ 90,337 $ 98,150

Average number of domestic Buffet Units 105 118
Average number of domestic Delco Units 25 29
Average number of domestic Express Units 48 44

Fiscal Year Ended
June 29, June 30,
2014 2013
International retail sales of Buffet Units $ 7,036 $ 7,379
International retail sales of Delco Units 10,104 10,576
International retail sales of Express Units 2,224 1,405
Total International retail sales
$ 19,364 $ 19,360

Average number of International Buffet Units 21 20
Average number of International Delco Units 45 49
Average number of International Express Units 7 8

Total domestic chain-wide franchisee retail sales decreased $7.8 million, or 8.0%, while international chain-wide retail remained consistent compared to the prior year. The reduction in domestic franchise retail sales was primarily due to an additional week in the prior fiscal year, a 1.1% reduction in average weekly comparable store sales and the closure of domestic Buffet Units.

Management also believes that a comparison of period-to-period retail sales by restaurants open throughout both periods is an important performance measure in evaluating financial results. The calculation of “comparable store sales” includes the sales results for restaurants which have been open for at least 18 months as of the end of the reporting period. The sales results for any restaurant that was closed temporarily for remodeling or relocation within the same trade area are included in the calculation only for the days that the restaurant was open in both periods being compared.

Pie Five Brand Summary

The following tables summarize ~~franchise comparable store retail sales~~certain key indicators for the ~~periods presented (with fiscal 2013 adjusted to 52 weeks comparable to fiscal 2014):~~Pie Five franchised and Company-owned restaurants that management believes are useful in evaluating performance.

~~Domestic comparable store franchisee~~Pie Five system-wide retail sales ~~(adjusted to 52 weeks for both fiscal years) decreased $0.9~~increased $14.4 million, or ~~1.1%~~131.2%, for the fiscal year ended June 28, 2015 when compared to the prior year. ~~International comparable~~System-wide average weekly sales improved by $2,439, or 19.6%, from $12,468 in fiscal year 2014 to $14,907 for fiscal year 2015. Compared to the fiscal year 2014, average units open in the period increased from 17 to 32. Comparable store retail sales ~~(adjusted to 52 weeks for both~~increased by 11.2% during fiscal ~~years) decreased $0.5 million, or 3.3%, when~~2015 compared to ~~the prior year.~~fiscal 2014.

The following ~~table~~chart summarizes ~~the results and key performance indicators~~Pie Five restaurant activity for the fiscal year ended June 28, 2015:

	Fiscal Year Ended June 28, 2015
	Beginning						Ending
	Units		Opened		Closed		Units

Domestic - Franchised		7		25		2		30
Domestic - Company-owned		13		11		-		24
Total domestic Units		20		36		2		54

We believe that the net addition of 34 Pie Five Units during fiscal 2015 reflects the continuation of an accelerated pace of growth in the opening of Pie Five Units as franchised stores begin to open pursuant to previously executed franchise development agreements and ~~Pizza Inn Company-owned restaurants. We believe this information is useful~~the Company continues to ~~management~~develop its own stores in the Dallas-Fort Worth, Houston, Chicago and ~~investors~~other metropolitan areas. The two closed franchised locations were related to ~~measure~~ the ~~performance~~conversion of the Company-owned restaurants. These indicators provide performance trend information as well as the cash flow of the restaurants before depreciation and amortization, pre-opening costs, allocated corporate administration and extraordinary expenses. This information is important in evaluating the effectiveness of our business strategies and for planning and budgeting purposes. Restaurant operating cash flow is a non-GAAP financial measure that should not be viewed as an alternative or substitute for our reported results in accordance with U.S. generally accepted accounting principles (“GAAP”). The fourth quarters and fiscal year periods ended June 29, 2014 and June 30, 2013, contained 13 and 14 weeks, respectively, and 52 and 53 weeks, respectively.market region from a franchise market to a Company market.

Pie Five - Company-Owned Restaurants
(in thousands, except store weeks and average data)	Three Months Ended												Fiscal Year Ended
	Sept 28,			Dec 28,			March 29,			June 28,			June 28,
	2014			2014			2015			2015			2015
Store weeks		169			182			212			264			827
Average weekly sales		14,199			13,336			13,432			13,826			13,693
Average number of units		13			14			16			20			16

Restaurant sales (excluding partial weeks)		2,400			2,427			2,848			3,650			11,324
Restaurant sales		2,405			2,438			2,855			3,700			11,398

Restaurant operating cash flow		413			346			439			571			1,769
Allocated marketing and advertising expenses		(120	)		(122	)		(143	)		(185	)		(570	)
Depreciation/amortization expense		(274	)		(267	)		(319	)		(384	)		(1,244	)
Pre-opening costs		(35	)		(137	)		(195	)		(354	)		(721	)
Operations management and extraordinary expenses		(41	)		(100	)		(51	)		(229	)		(421	)
Deferred rent adjustment (net) and impairment		-			-			-			-			-
Loss from continuing operations before taxes		(57	)		(280	)		(269	)		(581	)		(1,187	)

	Three Months Ended												Fiscal Year Ended
	Sept 29,			Dec 29,			March 30,			June 29,			June 29,
		2013			2013			2014			2014			2014
Store weeks		139			156			169			169			633
Average weekly sales		11,896			11,802			13,186			14,030			12,787
Average number of units		11			12			13			13			12

Restaurant sales (excluding partial weeks)		1,654			1,841			2,228			2,371			8,094
Restaurant sales		1,659			1,843			2,228			2,371			8,101

Restaurant operating cash flow		164			161			316			370			1,011
Allocated marketing and advertising expenses		(83	)		(92	)		(111	)		(119	)		(405	)
Depreciation/amortization expense		(256	)		(237	)		(280	)		(274	)		(1,047	)
Pre-opening costs		(86	)		(70	)		(4	)		(1	)		(161	)
Operations management and extraordinary expenses		(41	)		(59	)		(59	)		(50	)		(209	)
Deferred rent adjustment (net) and impairment		-			3			-			(253	)		(250	)
Loss from continuing operations before taxes		(302	)		(294	)		(138	)		(327	)		(1,061	)

Pie Five - Company-Owned Restaurants

(in thousands, except store weeks and average data) Three Months Ended Fiscal Year Ended
Sept 29, Dec 29, March 30, June 29, June 29,
2013 2013 2014 2014 2014
Store weeks 140 156 169 169 634
Average weekly sales 11,850 11,821 13,189 14,018 12,778
Average number of units 11 12 13 13 12

Restaurant sales 1,659 1,844 2,229 2,369 8,101

Restaurant operating cash flow 81 69 205 251 606
Depreciation/amortization expense (256 ) (237 ) (280 ) (274 ) (1,047 )
Pre-opening costs (86 ) (70 ) (4 ) (1 ) (161 )
Allocated corporate administration and other expenses (41 ) (59 ) (59 ) (50 ) (209 )
Deferred rent adjustment net of store closure/relocation costs - 3 - - 3
Loss from continuing operations before taxes (302 ) (294 ) (138 ) (74 ) (808 )

Three Months Ended Fiscal Year Ended
Sept 23, Dec 23, March 24, June 30, June 30,
2012 2012 2013 2013 2013
Store weeks 82 101 113 129 425
Average weekly sales 11,732 11,406 11,283 11,194 11,372
Average number of units 6 8 9 10 8

Restaurant sales 962 1,152 1,275 1,444 4,833

Restaurant operating cash flow 62 95 121 161 439
Depreciation/amortization expense (122 ) (157 ) (176 ) (189 ) (644 )
Pre-opening costs (79 ) (85 ) (82 ) (40 ) (286 )
Allocated corporate administration and other expenses (26 ) (51 ) (47 ) (23 ) (147 )
Loss from continuing operations before taxes (165 ) (198 ) (184 ) (91 ) (638 )

Pizza Inn - Company-Owned Restaurants

(in thousands, except store weeks and average data) Three Months Ended Fiscal Year Ended
Sept 29, Dec 29, March 30, June 29, June 29,
2013 2013 2014 2014 2014
Store weeks 52 42 39 32 165
Average weekly sales 14,456 12,839 14,767 15,340 14,289
Average number of units 4 3 3 2 3

Restaurant sales 752 539 576 491 2,358

Restaurant operating cash flow (23 ) (31 ) (3 ) (16 ) (73 )
Depreciation/amortization expense (50 ) (50 ) (49 ) (48 ) (197 )
Allocated corporate administration and other expenses (30 ) (29 ) (36 ) (39 ) (134 )
Loss from continuing operations before taxes (103 ) (110 ) (88 ) (103 ) (404 )

Three Months Ended Fiscal Year Ended
Sept 23, Dec 23, March 24, June 30, June 30,
2012 2012 2013 2013 2013
Store weeks 52 52 52 56 212
Average weekly sales 13,250 12,308 12,000 12,714 12,571
Average number of units 4 4 4 4 4

Restaurant sales 689 640 624 712 2,665

Restaurant operating cash flow 6 14 (6 ) (2 ) 12
Depreciation/amortization expense (77 ) (78 ) (78 ) (173 ) (406 )
Allocated corporate administration and other expenses (31 ) (38 ) (41 ) (31 ) (141 )
Loss from continuing operations before taxes (102 ) (102 ) (125 ) (206 ) (535 )

~~For~~Pizza Inn Brand Summary

The following tables summarize certain key indicators for the ~~Pie Five~~Pizza Inn franchised and Company-owned domestic restaurants that management believes are useful in evaluating performance.

Total domestic Pizza Inn retail sales increased $0.7 million, or 0.8% compared to the prior year. The increase in ~~average weekly~~domestic retail sales ~~and restaurant operating cash flow is~~was primarily due to ana $3.5 million, or 4.1% increase in comparable store ~~count and higher weekly~~ sales ~~primarily in~~compared to the ~~new units.~~

The following chart summarizes Pizza Inn restaurant activity for the fiscal year ended June 28, 2015:

	Fiscal Year Ended June 28, 2015
	Beginning						Ending
	Units		Opened		Closed		Units
Domestic Units
Buffet - Franchised		103		2		6		99
Delco/Express - Franchised		77		6		5		78
Buffet - Company-owned		2		-		-		2
Total domestic Units		182		8		11		179

International Units (all types)		71		-		-		71

Total Units		253		8		11		250

We believe that the net decrease of three domestic Pizza Inn units during fiscal 2015 reflects an overall improving trend in ~~total sales~~net domestic store closures. The number of international Pizza Inn units continues to remain steady.

Non-GAAP Financial Measures and ~~restaurant~~Other Terms

The Company’s financial statements are prepared in accordance with United States generally accepted accounting principles (“GAAP”). However, the Company also presents and discusses certain non-GAAP financial measures that it believes are useful to investors as measures of operating ~~cash flow compared to~~performance. Management may also use such non-GAAP financial measures in evaluating the ~~prior year was due to a reduction~~effectiveness of business strategies and for planning and budgeting purposes. However, these non-GAAP financial measures should not be viewed as an alternative or substitute for the results reflected in ~~comparable store sales~~the Company’s GAAP financial statements.

~~Revenues~~

·	“EBITDA” represents earnings before interest, taxes, depreciation and amortization.

·	“Adjusted EBITDA” represents earnings before interest, taxes, depreciation and amortization, stock compensation expense, pre-opening expense, gain/loss on sale of assets, costs related to closed restaurants and impairment charges.

·	“Retail sales” represents the restaurant sales reported by our franchisees and Company-owned restaurants, which may be segmented by brand or domestic/international locations.

·	“System-wide retail sales” represents combined retail sales for franchisee and Company-owned restaurants for a specified brand.

“Comparable store retail sales” includes the retail sales for restaurants that have been open for at least 18 months as of the end of the reporting period. The sales results for a restaurant that was closed temporarily for remodeling or relocation within the same trade area are included in the calculation only for the days that the restaurant was open in both periods being compared.

·	“Store weeks” represent the total number of full weeks that specified restaurants were open during the period.

·	“Average units open” reflects the number of restaurants open during a reporting period weighted by the percentage of the weeks in a reporting period that each restaurant was open.

·	“Average weekly sales” for a specified period is calculated as total retail sales (excluding partial weeks) divided by store weeks in the period.

“Restaurant operating cash flow” represents the pre-tax income earned by Company-owned restaurants before (1) allocated marketing and advertising expenses, (2) depreciation and amortization, (3) pre-opening expenses, (4) operations management and extraordinary expenses and (5) deferred rent adjustment (net) and impairment.

·	“Pre-opening expenses” consist primarily of certain costs incurred prior to the opening of a restaurant, including: (1) marketing and promotional expenses, (2) accrued rent, and (3) manager salaries, employee payroll and related training costs.

Food and Supply Sales

Food and supply sales by Norco include food and paper products and other distribution revenues. For fiscal ~~2014,~~2015, food and supply sales ~~decreased 4.3%~~increased 6.9% to ~~$28.8~~$30.8 million compared to ~~$30.1~~$28.8 million for the prior fiscal year due to ~~a decrease~~an increase in sales to ~~franchisees as~~franchisees. This increase was driven by a ~~result of a $7.8~~$12.2 million, or ~~8.0%~~13.1%, ~~decrease~~increase in domestic franchisee retail sales attributable to ~~one less week than the prior year, a reduction~~an increase in the average number of stores open and ~~a slight decrease~~an increase in comparable store sales in the current year when compared to prior year.

Franchise revenue, which includes income from domestic and international royalties and license fees, ~~decreased~~increased to ~~$3.4~~$4.5 million for fiscal ~~2014~~2015 compared to ~~$3.6~~$3.4 million for the prior fiscal year as the result of ~~lower~~higher domestic and international royalties resulting from ~~lower~~higher franchisee retail sales and ~~one less week than the prior year, which were partially offset by~~ an increase in franchise and development ~~fees.~~fees due to increased Pie Five store openings.

Restaurant sales, which consist of revenue generated by Company-owned restaurants, increased ~~33.0%~~29.1%, or ~~$2.5~~$2.9 million, to ~~$10.0~~$12.9 million for fiscal ~~2014~~2015 compared to ~~$7.5~~$10.0 million for the prior fiscal year. ~~These increases were~~This increase was due to ~~three~~11 new Company-owned Pie Five Units in fiscal ~~2014 and five new Company-owned Pie Five Units during fiscal 2013. These increases were~~2015, partially offset by the closing of ~~two~~one Company-owned Pizza Inn buffet ~~restaurants in fiscal 2014 and an additional week~~restaurant in the ~~prior year.~~

Costs and ~~Expenses~~Expenses:

Cost of sales primarily includes food and supply costs, distribution fees, labor and general and administrative expenses directly related to restaurant sales. These costs increased ~~4.5%~~13.7%, or ~~$1.5~~$5.0 million, to ~~$36.3~~$41.3 million for fiscal ~~2014~~2015 compared to ~~$34.8~~$36.3 million for the prior fiscal year. The ~~increases~~increase in ~~costs were~~cost of sales was primarily due to the increased number of Company-owned Pie Five ~~Units partially offset by lower distribution costs due to lower food and supply sales and one less week~~restaurants compared to the prior year.

Franchise expenses include selling, general and administrative expenses directly related to the sale and continuing service of domestic and international franchises. These expenses increased to ~~$2.9~~$3.2 million from ~~$2.4~~$2.9 million in the prior fiscal year primarily due to higher payroll, travel and marketing costs during fiscal ~~2014~~2015 as a result of the addition of personnel to develop and grow the Pie Five franchise system.

General and Administrative Expenses

General and administrative expenses increased ~~$0.3~~$0.4 million to ~~$4.4~~$4.8 million for fiscal ~~2014~~2015 compared to ~~$4.1~~$4.4 million for the prior fiscal year primarily due to ~~the~~ operating expenses associated with ~~the~~ new Company-owned Pie Five restaurants and future growth plans.

The Company's pre-opening costs are expensed as incurred and generally include payroll and other direct costs associated with training new managers and employees prior to opening a new restaurant, rent and other unit operating expenses incurred prior to opening, and promotional costs associated with the ~~opening.~~opening of Company-owned restaurants. Pre-opening expenses ~~decreased slightly~~increased to ~~$0.2~~$0.7 million from ~~$0.3~~$0.2 million in the prior ~~year.~~year primarily due to the accelerating rate of Pie Five store openings.

Provision for Bad Debt

Bad debt provision related to accounts receivable from franchisees ~~increased~~decreased to ~~$0.3~~$0.2 million in fiscal ~~2014~~2015 compared to ~~$0.2~~$0.3 million in the prior year. The Company believes that this provision and related allowance for doubtful accounts adequately reserves for outstanding receivables due from franchisees whose restaurants closed and for outstanding receivables due from continuing franchisees. For restaurants that are anticipated to close or are exhibiting signs of financial distress, credit terms are typically restricted, weekly food orders are required to be paid prior to delivery and royalty and advertising fees are collected as add-ons to the delivered price of weekly food orders.

Interest expense decreased ~~$0.1 million~~nominally for the fiscal year ended June ~~29, 2014,~~28, 2015, compared to the prior year due to lower average borrowings on the Company’s credit facilities in the current ~~year.~~

Provision for Income Tax

Discontinued Operations

~~Restaurant Openings and Closings~~

Fiscal year ended June 29, 2014

Beginning End of
of Period Opened Closed Period
Pizza Inn Domestic
      Buffet Units 114 2 11 105
      Delco Units 27 1 4 24
      Express Units 43 15 5 53
Pizza Inn International Units 66 6 1 71

Pie Five Units 11 9 - 20

Total 261 33 21 273

Fiscal year ended June 30, 2013

Beginning End of
of Period Opened Closed Period
Pizza Inn Domestic
      Buffet Units 135 - 21 114
      Delco Units 29 2 4 27
      Express Units 47 3 7 43
Pizza Inn International Units 66 6 6 66

Pie Five Units 6 5 - 11

Total 283 16 38 261

We believe that the net decrease of two domestic Pizza Inn units during fiscal 2014 reflects an overall improving trend in net domestic store closures that was interrupted by the expiration of an abnormally high number of domestic franchise agreements in fiscal 2013. We believe that the opening of a total of 27 new domestic stores during fiscal 2014 reflects the beginning of an accelerated pace of growth in store openings, particularly for the Pie Five concept and the Pizza Inn Express concept.

~~Non-GAAP Financial Measures~~

~~The following table sets forth a reconciliation of net income to Adjusted EBITDA for the periods shown:~~

Fiscal Year Ended
June 29, June 30,
2014 2013
Net Loss $ (1,567 ) $ (1,261 )
Interest Expense 142 244
Income Taxes--Continuing Operations (760 ) (504 )
Income Taxes--Discontinued Operations (58 ) (94 )
Stock compensation expense 68 150
Impairment of long-lived assets and other lease charges 253 766
Depreciation and amortization 1,454 1,304
Adjusted EBITDA $ (468 ) $ 605

Sources and Uses of Funds

Our primary sources of liquidity are cash ~~flow~~flows from operating activities and proceeds from the sale of common stock.

Cash flows from operating activities are generally the result of net income adjusted for depreciation and amortization and changes in working capital. Cash provided by operations was $2.0 million in fiscal 2015 compared to cash used by operations ~~was~~of $0.1 million in fiscal ~~2014 compared to $0.7 provided~~year 2014.

The Company used cash for investing activities of approximately $6.7 million in fiscal ~~year 2013.~~

Cash flows from financing activities generally reflect changes in the Company's net borrowings, stock options exercised and proceeds from the sale of stock during the period. During fiscal 2015, the Company had a net decrease of $0.8 million in bank debt. During fiscal 2014, the Company had a net decrease of $1.8 million in bank debt. During fiscal ~~2013, the Company had a net increase of $0.8 million in bank debt. During fiscal 2014,~~2015, the Company had proceeds from the sale of stock of ~~$5.6~~$8.3 million compared to ~~$0.9~~$5.6 million in the prior fiscal year. During fiscal ~~2014,~~2015, the Company had proceeds from the exercise of stock options of ~~$0.1~~$0.4 million compared to ~~zero~~$0.1 million in the prior fiscal year.

On May 20, 2013, the Company entered into an At-the-Market Issuance Sales Agreement with MLV & Co. LLC (“MLV”) pursuant to which the Company could offer and sell shares of its common stock having an aggregate offering price of up to $3,000,000 from time to time through MLV, acting as agent (the ~~“ATM~~“2013 ATM Offering”). The 2013 ATM Offering was undertaken pursuant to Rule 415 and a shelf Registration Statement on Form S-3 which was declared effective by the SEC on May 13, 2013. On November 20, 2013, the Company and MLV amended the At-the-Market Issuance Sales Agreement and the SEC declared effective a new shelf ~~registration statement~~Registration Statement on Form S-3 to increase the 2013 ATM Offering by $5,000,000. The Company ultimately sold an aggregate of 1,257,609 shares in the 2013 ATM Offering, realizing aggregate net proceeds of $7.8 million.

On October 1, 2014, the Company entered into a new At Market Issuance Sales Agreement with MLV pursuant to which the Company could initially offer and sell shares of its common stock having an aggregate offering price of up to $5,000,000 from time to time through MLV, acting as agent (the “2014 ATM Offering”). On February 13, 2015, the aggregate offering amount of the 2014 ATM Offering was increased to $10,000,000. The 2014 ATM Offering is being undertaken pursuant to Rule 415 and a shelf Registration Statement on Form S-3 which was declared effective by the SEC on August 8, 2014. Through June ~~29, 2014,~~28, 2015, the Company had sold an aggregate of ~~1,060,949~~767,463 shares in the 2014 ATM Offering, realizing aggregate net proceeds of ~~$5.6~~$7.1 million.

On August 28, 2012, the Company entered into a Loan and Security Agreement (the “F&M Loan Agreement”) with The F&M Bank & Trust Company (“F&M”) providing for a $2.0 million revolving credit facility (with a $500 thousand letter of credit subfacility), a $2.0 million fully funded term loan facility and a $6.0 million advancing term loan facility. An origination fee of 0.5% of the total credit facilities was paid at closing. At closing, F&M funded a $2.0 million term loan payable in 48 equal monthly installments of principal plus accrued interest at a fixed rate of 4.574% per annum. Amounts repaid under this fully funded term loan ~~may~~could not be reborrowed. Initial proceeds from the F&M Loan Agreement were used to repay amounts borrowed under a previous credit facility that subsequently was canceled.

On June 13, 2013 the Company entered into a First Amendment to the F&M Loan Agreement that revised certain financial covenants to address proceeds from the Company’s at-the-market ~~offering~~offerings of common stock. On September 10, 2013 the Company entered into a Second Amendment to the F&M Loan Agreement that specified the application of prepayments to the loan amortization schedule and revised certain definitions.

The Company could borrow, repay and reborrow under the revolving credit facility through August 28, 2014, at which time all amounts outstanding under the revolving credit facility would mature. The Company did not draw borrowings on the revolving credit facility during fiscal ~~2014~~2015 and ~~has~~ allowed it to expire. An unused commitment fee of 0.50% per annum was payable quarterly on the average unused portion of the revolving credit facility.

Through August 28, 2014, F&M had agreed to make up to $6.0 million in additional term loans to the Company. However, no amounts were outstanding on the advancing term loan facility at ~~fiscal year end or~~ the expiration of the advance period.

We expect to fund continuing operations and planned capital expenditures ~~and new restaurant openings~~ for the next fiscal year primarily from cash on hand and operating cash flow, ~~and net proceeds~~with additional potential funding from the 2014 ATM ~~Offering.~~Offering and debt borrowings. Based on budgeted and year-to-date cash flow information, we believe that we have sufficient liquidity to satisfy our cash requirements for the ~~2015~~2016 fiscal year.

The Company reviews long-lived assets for impairment when events or circumstances indicate that the carrying value of such assets may not be fully recoverable. Impairment is evaluated based on the sum of undiscounted estimated future cash flows expected to result from use of ~~the assets~~an asset compared to its carrying value. If impairment is recognized, the carrying value of the impaired asset is reduced to its fair value based on discounted estimated future cash flows. During fiscal year 2015, the Company tested its long-lived assets for impairment and recognized pre-tax, non-cash impairment charges of $0.3 million related to the carrying value of one Company-owned Buffet Unit in Texas. During fiscal year 2014, the Company tested its long-lived assets for impairment and recognized pre-tax, non-cash impairment charges of $0.3 million related to the carrying value of two Company-owned Pie Five restaurants. During fiscal year 2013, the Company tested its long-lived assets for impairment and recognized pre-tax, non-cash impairment charges of $0.8 million related to the carrying value of two Company-owned Buffet Units in ~~Texas and one Company-owned Pie Five Unit in Texas that relocated in fiscal 2014.~~Texas.

The Company periodically evaluates the realizability of its deferred tax assets based upon the Company’s analysis of existing tax credits by jurisdiction and expectations of the Company’s ability to utilize these tax assets through a review of estimated future taxable income and establishment of tax strategies. These estimates could be materially impacted by changes in future taxable income, the results of tax strategies or changes in tax law.

The Company recognizes food and supply revenue when products are delivered and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. Franchise revenue consists of income from license fees, royalties, and area development and foreign master license sales. License fees are recognized as income when there has been substantial performance of the agreement by both the franchisee and the Company, generally at the time the restaurant is opened. Royalties are recognized as income when earned.

The Company accounts for uncertain tax positions in accordance with ASC 740-10, which prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that it has taken or expects to take on a tax return. ASC 740-10 requires that a company recognize in its financial statements the impact of tax positions that meet a “more likely than not” threshold, based on the technical merits of the position. 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 June ~~29, 2014~~28, 2015 and June ~~30, 2013,~~29, 2014, the Company had no uncertain tax positions.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required for a smaller reporting company.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See information set forth on Index to Consolidated Financial Statements and Supplementary Data appearing on page F-1 of this report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s principal executive officer and principal financial officer, evaluated the effectiveness of the Company’s 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 and forms.

Management 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 Securities Exchange Act of 1934). Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, the Company has conducted an evaluation of the effectiveness of its internal control over financial reporting. The Company’s management based it’s evaluation on criteria set forth in the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon that evaluation, management has concluded that our internal control over financial reporting was effective as of June ~~29, 2014.~~28, 2015. During the most recent fiscal quarter, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

There is no information required to be disclosed under this Item.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required by this Item is incorporated by reference from the Company’s definitive proxy statement to be filed with the SEC pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.

ITEM 11. EXECUTIVE COMPENSATION.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)	1.	The financial statements filed as part of this report are listed in the Index to Consolidated Financial Statements and Supplementary Data appearing on page F-1 of this report on Form 10-K.

	2.	Any financial statement schedule filed as part of this report ~~are~~is listed in the Index to Consolidated Financial Statements and Supplementary Data appearing on page F-1 of this report on Form 10-K.

	3.	Exhibits:

		3.1	Amended and Restated Articles of Incorporation of ~~Pizza Inn Holdings,~~Rave Restaurant Group, Inc. (filed as Exhibit 3.1 to Form 8-K filed ~~September 23, 2011~~January 8, 2015 and incorporated herein by reference).

		3.2	Amended and Restated Bylaws of ~~Pizza Inn Holdings,~~Rave Restaurant Group, Inc. (filed as Exhibit 3.2 to Form 8-K filed ~~September 23, 2011~~January 8, 2015 and incorporated herein by reference).

		10.1	2005 Non-Employee Directors Stock Award Plan of the Company and form of Stock Option Award Agreement (filed as Exhibit 10.25 to Form 10-K for the fiscal year ended June 26, 2005 and incorporated herein by reference).*

		10.2	2005 Employee Incentive Stock Option Award Plan of the Company and form of Stock Option Award Agreement (filed as Exhibit 10.26 to Form 10-K for the fiscal year ended June 26, 2005 and incorporated herein by reference).*

		10.3	2015 Long Term Incentive Plan of the Company (filed as Exhibit 10.1 to Form 8-K filed November 20, 2014 and incorporated herein by reference).*

		~~10.3~~10.4	Form of Stock Option Grant Agreement under the Company’s 2015 Long Term Incentive Plan (filed as Exhibit 10.2 to Form 8-K filed November 20, 2014 and incorporated herein by reference).*
		10.5	Employment letter dated November 8, 2012, between ~~Pizza Inn Holdings, Inc.~~the Company and Randall Gier (filed as Exhibit 10.1 to Form 8-K filed November 15, 2012, and incorporated herein by reference).*

		~~10.4~~10.6	Employment letter dated April 7, 2014, between ~~Pizza Inn Holdings, Inc.~~the Company and Tim Mullany (filed as Exhibit 10.1 to Form 8-K filed April 30, 2014, and incorporated herein by reference).*

		~~10.5~~ 10.7	~~Loan~~At Market Issuance Sales Agreement between the Company and ~~Security Agreement among Pizza Inn, Inc., Pie Five Pizza Company, Inc. and The F&M Bank and Trust Company~~MLV & Co. LLC dated ~~August 28, 2012~~October 1, 2014 (filed as Exhibit ~~10.1~~1.1 to Form 8-K filed ~~August 30, 2012~~October 1, 2014, and incorporated herein by reference).

		~~10.6~~	First Amendment to Loan and Security Agreement among Pizza Inn, Inc., Pie Five Pizza Company, Inc. and The F&M Bank & Trust Company dated June 13, 2013 (filed as Exhibit 10.1 to Form 8-K filed June 14, 2013, and incorporated herein by reference.

		~~10.7~~	Second Amendment to Loan and Security Agreement among Pizza Inn, Inc., Pie Five Pizza Company, Inc. and The F&M Bank & Trust Company dated September 10, 2013 (filed as Exhibit 10.1 to Form 8-K filed September 13, 2013, and incorporated herein by reference).

		10.8	At-the-Market Issuance Sales Agreement between Pizza Inn Holdings, Inc. and MLV & Co. LLC dated May 20, 2013 (filed as Exhibit 1.1 to Form 8-K filed May 20, 2013, and incorporated herein by reference).

		~~10.9~~	Amendment No. 1 to At-the-Market Issuance Sales Agreement between Pizza Inn Holdings, Inc. and MLV & Co. LLC dated November 20, 2013 (filed as Exhibit 1.1 to Form 8-K filed November 20, 2013, and incorporated herein by reference).

		~~10.10~~	Advisory Services Agreement between ~~Pizza Inn Holdings, Inc.~~the Company and NCM Services, Inc. dated February 20, 2014 (filed as Exhibit 10.1 to Form 8-K filed February 24, 2014, and incorporated herein by reference).*

		21.1	List of Subsidiaries.

		23.1	Consent of Independent Registered Public Accounting Firm.

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

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

		32.1	Section 1350 Certification of Principal Executive Officer.

		32.2	Section 1350 Certification of Principal Financial Officer.
		101
		~~101~~	Interactive data files pursuant to Rule 405 of Regulation S-T.

* Management contract or compensatory plan or arrangement.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	~~Pizza Inn Holdings,~~Rave Restaurant Group, Inc.
Date: September ~~23, 2014~~24, 2015	By: /s/ Randall E. Gier
		Randall E. Gier
		President and Chief Executive Officer


	By: /s/ Timothy E. Mullany
		Timothy E. Mullany
		Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name and Position		Date
/s/ Randall E. Gier		September ~~23, 2014~~24, 2015
Randall E. Gier
President and Chief Executive Officer (Principal Executive Officer)

/s/Timothy E. Mullany		September ~~23, 2014~~24, 2015
Tim Mullany
Chief Financial Officer
(Principal Financial and Accounting Officer)

/s/Mark E. Schwarz		September ~~23, 2014~~24, 2015
Mark E. Schwarz
Director and Chairman of the Board

/s/Ramon D. Phillips		September ~~23, 2014~~24, 2015
Ramon D. Phillips
Director and Vice Chairman of the Board

/s/ Steven M. Johnson		September ~~23, 2014~~24, 2015
Steven M. Johnson
Director

/s/ ~~James K. Zielke~~		~~September 23, 2014~~
~~James K. Zielke~~
~~Director~~

~~/s/~~Robert B. Page		September ~~23, 2014~~24, 2015
Robert B. Page
Director

/s/ William C. Hammett, Jr.		September ~~23, 2014~~24, 2015
William Hammett
Director

/s/ Clinton J. Coleman		September ~~23, 2014~~24, 2015
Clinton J. Coleman
Director

Description		Page No.

Report of Independent Registered Public Accounting Firm – Montgomery Coscia Greilich LLP		F-2

Consolidated Statements of Operations for the years ended June ~~29, 2014~~28, 2015 and June ~~30, 2013.~~29, 2014.		F-3

Consolidated Balance Sheets at June ~~29, 2014~~28, 2015 and June ~~30, 2013.~~29, 2014.		F-4

Consolidated Statements of Shareholders' Equity for the years ended June ~~29, 2014~~28, 2015 and June ~~30, 2013.~~29, 2014.		F-5

Consolidated Statements of Cash Flows for the years ended June ~~29, 2014~~28, 2015 and June ~~30, 2013.~~29, 2014.		F-6

Supplemental Disclosures of Cash Flow Information for the years ended June ~~29, 2014~~28, 2015 and June ~~30, 2013.~~29, 2014.		F-6

Notes to Consolidated Financial Statements.		F-7

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders

~~Pizza Inn Holdings,~~Rave Restaurant Group, Inc.

We have audited the accompanying consolidated balance sheets of ~~Pizza Inn Holdings,~~Rave Restaurant Group, Inc. as of June ~~29, 2014~~28, 2015 and June ~~30, 2013~~29, 2014 and the related consolidated statements of operations, shareholders’ equity, and cash flows for the fiscal years then ended. 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 audits.

/s/ Montgomery Coscia Greilich LLP

September ~~23, 2014~~24, 2015

PIZZA INN HOLDINGS, INC.
RAVE RESTAURANT GROUP, INC								RAVE RESTAURANT GROUP, INC
CONSOLIDATED STATEMENTS OF OPERATIONS	CONSOLIDATED STATEMENTS OF OPERATIONS							CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)	(In thousands, except per share amounts)							(In thousands, except per share amounts)


		Year Ended							Fiscal Year Ended
		June 29,			June 30,				June 28,			June 29,
		2014			2013				2015			2014

REVENUES:		$	42,224		$	41,181			$	48,199		$	42,224

COSTS AND EXPENSES:
Cost of sales			36,325			34,767				41,307			36,325
Franchise expenses			2,931			2,390				3,154			2,931
General and administrative expenses			4,373			4,106				4,792			4,373
Pre-opening expenses			161			286				721			161
Impairment of long-lived assets and other lease charges			253			766				300			253
Bad debt			253			205				153			253
Interest expense			142			244				113			142
			44,438			42,764				50,540			44,438

LOSS FROM CONTINUING
OPERATIONS BEFORE TAXES			(2,214	)		(1,583	)			(2,341	)		(2,214	)

Income tax benefit			(760	)		(504	)			(670	)		(760	)

LOSS FROM
CONTINUING OPERATIONS			(1,454	)		(1,079	)			(1,671	)		(1,454	)

Loss from discontinued operations, net of taxes			(113	)		(182	)			(168	)		(113	)

NET LOSS		$	(1,567	)	$	(1,261	)		$	(1,839	)	$	(1,567	)

LOSS PER SHARE OF COMMON
STOCK - BASIC:
Loss from continuing operations		$	(0.17	)	$	(0.13	)		$	(0.17	)	$	(0.17	)
Loss from discontinued operations		$	(0.01	)	$	(0.03	)		$	(0.02	)	$	(0.01	)
Net loss		$	(0.18	)	$	(0.16	)		$	(0.19	)	$	(0.18	)

LOSS PER SHARE OF COMMON
STOCK - DILUTED:
Loss from continuing operations		$	(0.16	)	$	(0.13	)		$	(0.16	)	$	(0.16	)
Loss from discontinued operations		$	(0.01	)	$	(0.02	)		$	(0.02	)	$	(0.01	)
Net loss		$	(0.17	)	$	(0.15	)		$	(0.18	)	$	(0.17	)

Weighted average common
shares outstanding - basic			8,635			8,031				9,744			8,635

Weighted average common
shares outstanding - diluted			9,173			8,310				10,306			9,173

See accompanying Report of Independent Registered Public

Accounting Firm and Notes to Consolidated Financial Statements.

RAVE RESTAURANT GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

	June 28,			June 29,
ASSETS	2015			2014

CURRENT ASSETS
Cash and cash equivalents	$	5,958		$	2,796
Accounts receivable, less allowance for doubtful
accounts of $193 and $276, respectively		3,437			3,276
Notes receivable		24			81
Inventories		180			1,703
Income tax receivable		492			386
Deferred income tax assets		729			951
Prepaid expenses and other		872			173
Total current assets		11,692			9,366

LONG-TERM ASSETS
Property, plant and equipment, net		10,020			5,133
Long-term notes receivable		119			134
Long-term deferred tax asset		1,864			939
Deposits and other		276			396
Total assets	$	23,971		$	15,968
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade	$	2,875		$	2,023
Accrued expenses		1,267			926
Deferred rent		155			163
Deferred revenues		374			177
Bank debt		-			500
Total current liabilities		4,671			3,789

LONG-TERM LIABILITIES
Bank debt, net of current portion		-			267
Deferred rent, net of current portion		893			822
Deferred revenues, net of current portion		1,166			791
Deferred gain on sale of property		9			34
Other long-term liabilities		22			23
Total liabilities		6,761			5,726

COMMITMENTS AND CONTINGENCIES (See Notes F and J)

SHAREHOLDERS' EQUITY
Common stock, $.01 par value; authorized 26,000,000
shares; issued 17,374,735 and 16,240,412 shares, respectively;
outstanding 10,255,335 and 9,121,012 shares, respectively		174			162
Additional paid-in capital		24,700			15,905
Retained earnings		16,972			18,811
Treasury stock at cost
7,119,400 shares		(24,636	)		(24,636	)
Total shareholders' equity		17,210			10,242
Total liabilities and shareholders' equity	$	23,971		$	15,968

See accompanying Report of Independent Registered Public

Accounting Firm and Notes to Consolidated Financial Statements.

PIZZA INN HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

June 29, June 30,
ASSETS 2014 2013

CURRENT ASSETS
Cash and cash equivalents $ 2,796 $ 919
Accounts receivable, less allowance for doubtful
accounts of $276 and $228, respectively 3,276 3,139
Notes receivable 81 292
Inventories 1,703 1,615
Income tax receivable 386 343
Deferred income tax assets 951 882
Prepaid expenses and other 173 307
Total current assets 9,366 7,497

LONG-TERM ASSETS
Property, plant and equipment, net 5,133 4,711
Long-term notes receivable 134 40
Long-term deferred tax asset 939 168
Deposits and other 396 119
Total assets $ 15,968 $ 12,535
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 2,023 $ 1,572
Accrued expenses 926 792
Deferred rent 163 249
Deferred revenues 177 169
Bank debt 500 669
Total current liabilities 3,789 3,451

LONG-TERM LIABILITIES
Bank debt, net of current portion 267 1,856
Deferred rent, net of current portion 822 708
Deferred revenues, net of current portion 791 370
Deferred gain on sale of property 34 59
Other long-term liabilities 23 22
Total liabilities 5,726 6,466

COMMITMENTS AND CONTINGENCIES (See Notes F and J)

SHAREHOLDERS' EQUITY
Common stock, $.01 par value; authorized 26,000,000
shares; issued 16,240,412 and 15,312,680 shares, respectively;
outstanding 9,121,012 and 8,193,280 shares, respectively 162 153
Additional paid-in capital 15,905 10,174
Retained earnings 18,811 20,378
Treasury stock at cost
7,119,400 shares (24,636 ) (24,636 )
Total shareholders' equity 10,242 6,069
Total Liabilities & Shareholders' Equity $ 15,968 $ 12,535

RAVE RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)


					Additional
	Common Stock				Paid-in		Retained			Treasury Stock
	Shares		Amount		Capital		Earnings			Shares			Amount			Total



BALANCE, JUNE 30, 2013		8,193	$	153	$	10,174	$	20,378			(7,119	)	$	(24,636	)	$	6,069

Stock compensation expense		-		-		68		-			-			-			68
Stock options exercised		39		-		82		-			-			-			82
Sale of Stock		889		9		5,581		-			-			-			5,590
Net loss		-		-		-		(1,567	)		-			-			(1,567	)

BALANCE, JUNE 29, 2014		9,121	$	162	$	15,905	$	18,811			(7,119	)	$	(24,636	)	$	10,242

Stock compensation expense		-		-		128		-			-			-			128
Stock options exercised		170		2		424		-			-			-			426
Sale of stock		964		10		8,243		-			-			-			8,253
Net loss		-		-		-		(1,839	)		-			-			(1,839	)

BALANCE, JUNE 28, 2015		10,255	$	174	$	24,700	$	16,972			(7,119	)	$	(24,636	)	$	17,210

See accompanying Report of Independent Registered Public

Accounting Firm and Notes to Consolidated Financial Statements.

F ~~- 4~~5

PIZZA INN HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)

Additional
Common Stock Paid-in Retained Treasury Stock
Shares Amount Capital Earnings Shares Amount Total

BALANCE, JUNE 24, 2012 8,021 $ 151 $ 9,154 $ 21,639 (7,119 ) $ (24,636 ) $ 6,308

Stock compensation expense - - 150 - - - 150
Stock options exercised - - - - - - -
Sale of Stock 172 2 870 872
Net loss - - - (1,261 ) - - (1,261 )

BALANCE, JUNE 30, 2013 8,193 $ 153 $ 10,174 $ 20,378 (7,119 ) $ (24,636 ) $ 6,069

Stock compensation expense - - 68 - - - 68
Stock options exercised 39 - 82 - - - 82
Sale of Stock 889 9 5,581 5,590
Net loss - - - (1,567 ) - - (1,567 )

BALANCE, JUNE 29, 2014 9,121 $ 162 $ 15,905 $ 18,811 (7,119 ) $ (24,636 ) $ 10,242

RAVE RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	Fiscal Year Ended
	June 28,			June 29,
	2015			2014

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss	$	(1,839	)	$	(1,567	)
Adjustments to reconcile net loss to cash
provided by (used in) operating activities:
Impairment of fixed assets and other assets		300			253
Depreciation and amortization		1,617			1,454
(Gain) loss on the sale of assets		49			(97	)
Provision for bad debt		153			48
Stock compensation expense		128			68
Deferred income taxes		(703	)		(840	)
Changes in operating assets and liabilities:
Notes and accounts receivable		(240	)		(70	)
Income tax receivable		(107	)		(41	)
Inventories		1,523			(88	)
Prepaid expenses and other		(705	)		(213	)
Deferred revenue		545			404
Accounts payable - trade		852			451
Accrued expenses		404			163
Cash provided by (used for) operating activities		1,977			(75	)

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sale of assets		-			106
Capital expenditures		(6,727	)		(2,068	)
Cash used for investing activities		(6,727	)		(1,962	)

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings of bank debt		-			-
Repayments of bank debt		(767	)		(1,758	)
Proceeds from sale of stock		8,253			5,590
Proceeds from exercise of stock options		426			82

Cash provided by financing activities		7,912			3,914

Net increase in cash and cash equivalents		3,162			1,877
Cash and cash equivalents, beginning of year		2,796			919
Cash and cash equivalents, end of year	$	5,958		$	2,796

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

CASH PAID FOR:

Interest	$	113		$	142
Income taxes	$	19		$	17

See accompanying Report of Independent Registered Public

Accounting Firm and Notes to Consolidated Financial Statements.

~~F - 5~~

PIZZA INN HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Year Ended
June 29, June 30,
2014 2013

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ (1,567 ) $ (1,261 )
Adjustments to reconcile net loss to cash
(used in) provided by operating activities:
Impairment of fixed assets and other assets 253 766
Depreciation and amortization 1,454 1,304
(Gain) loss on the sale of assets (97 ) 129
Provision for bad debt 48 25
Stock compensation expense 68 150
Deferred income taxes (840 ) (671 )
Changes in operating assets and liabilities:
Notes and accounts receivable (70 ) (283 )
Income tax receivable (41 ) 88
Inventories (88 ) 237
Prepaid expenses and other (213 ) 247
Deferred revenue 404 -
Accounts payable - trade 451 10
Accrued expenses 163 (7 )
Cash (used) provided by operating activities (75 ) 734

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sale of assets 106 184
Capital expenditures (2,068 ) (2,244 )
Cash used for investing activities (1,962 ) (2,060 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings of bank debt - 3,460
Repayments of bank debt (1,758 ) (2,677 )
Proceeds from sale of stock 5,590 872
Proceeds from exercise of stock options 82 -

Cash provided by financing activities 3,914 1,655

Net increase in cash and cash equivalents 1,877 329
Cash and cash equivalents, beginning of year 919 590
Cash and cash equivalents, end of year $ 2,796 $ 919

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

CASH PAID FOR:

Interest $ 142 $ 296
Income taxes (refunded) paid $ 17 $ (67 )

~~See accompanying Report of Independent Registered Public~~

~~Accounting Firm and Notes to Consolidated Financial Statements.~~

F - 6

~~PIZZA INN HOLDINGS,~~RAVE RESTAURANT GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Description of Business:

~~Pizza Inn Holdings,~~Rave Restaurant Group, Inc. and its subsidiaries (collectively referred to as the “Company”, or in the first person notations of “we”, “us” and “our”) operate and franchise pizza buffet, delivery/carry-out and express restaurants domestically and internationally under the trademark “Pizza Inn” and operate and franchise domestic fast casual restaurants under the trademarks “Pie Five Pizza Company” or “Pie Five”. We provide or facilitate the procurement and distribution of food, equipment and supplies to our domestic and international system of restaurants through our Norco Restaurant Services Company (“Norco”) division and through agreements with third party distributors.

Principles of Consolidation:

The consolidated financial statements include the accounts of ~~Pizza Inn Holdings,~~Rave Restaurant Group, Inc. and its subsidiaries, all of which are wholly owned. All appropriate inter-company balances and transactions have been eliminated.

Reclassifications:

Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

Cash and Cash Equivalents:

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Concentration of Credit Risk:

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. At June 28, 2015 and June 29, 2014 and at various times during the fiscal years then ended, cash and cash equivalents were in excess of Federal Depository Insurance Corporation insured limits. We do not believe we are exposed to any significant credit risk on cash and cash equivalents.

Inventories:

Inventory ~~which~~ consists primarily of food, paper products and supplies ~~primarily warehoused~~stored in and used by ~~the Company’s third-party distributor, is~~Company restaurants and was stated at lower of ~~cost~~first-in, first-out (“FIFO”) or ~~market, with cost determined according to the weighted average cost method.~~market. The valuation of such restaurant inventory requires us to estimate the amount of obsolete and excess ~~inventory. The determination~~inventory based on estimates of ~~obsolete and excess inventory requires us to estimate~~future retail sales by Company-owned restaurants. Overestimating retail sales by Company-owned restaurants could result in the future demand for the Company’s products within specific time horizons, generally six months or less. If the Company’s demand forecast for specific products is greater than actual demand and the Company fails to reduce purchasing accordingly, the Company could be required to write downwrite-down of inventory which would have a negative impact on the ~~Company’s~~ gross ~~margin.~~margin of such Company-owned restaurants.

F 7

Closed Restaurants and Discontinued Operations:

In April, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which modifies the definition of discontinued operations to include only disposals of an entity that represent strategic shifts that have or will have a major effect on an entity’s operation and requires entities to disclose information about disposals of individually significant components that do not meet the definition of discontinued operations. The standard is effective prospectively for annual and interim periods beginning after December 15, 2014, with early adoption permitted. This pronouncement did not have a material impact on our condensed consolidated financial statements

The authoritative guidance on “Accounting for the Impairment or Disposal of Long-Lived Assets,” requires that discontinued operations that meet certain criteria be reflected in the statement of operations after results of continuing operations as a net amount. This guidance also requires that the operations of closed restaurants, including any impairment charges, be reclassified to discontinued operations for all periods presented.

~~F - 7~~

The authoritative guidance on “Accounting for Costs Associated with Exit or Disposal Activities,” requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. This authoritative guidance also establishes that fair value is the objective for initial measurement of the liability.

Discontinued operations include losses from two Pizza Inn locations in Texas. One is a leased building associated with a Company-owned restaurant closed during fiscal 2008. The other is results of operations for a Company-owned restaurant that was closed in the fourth quarter of fiscal 2014 due to declining sales.

Property, Plant and Equipment:

Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Repairs and maintenance are charged to operations as incurred while major renewals and betterments are capitalized. Upon the sale or disposition of a fixed asset, the asset and the related accumulated depreciation or amortization isare removed from the accounts and the gain or loss is included in operations. The Company capitalizes interest on borrowings during the active construction period of major capital projects. Capitalized interest is added to the cost of the underlying asset and amortized over the estimated useful life of the asset.

Depreciation and amortization are computed on the straight-line method over the estimated useful lives of the assets or, in the case of leasehold improvements, over the term of the lease including any reasonably assured renewal periods, if shorter. The useful lives of the assets range from three to ten years.

Impairment of Long-Lived Asset and other Lease Charges:

Accounts Receivable:

Accounts receivable consist primarily of receivables from food and supply sales and franchise royalties. The Company records a provision for doubtful receivables to allow for any amounts that may be unrecoverable based upon an analysis of the Company's prior collection experience, customer creditworthiness and current economic trends. 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.

F 8

Notes Receivable:

Notes receivable primarily consist of accounts receivable from franchisees converted into notes. The majority of amounts and terms are contained under formal promissory and personal guarantee agreements. All notes allow for early payment without penalty. Fixed principle and interest payments are due weekly or monthly. Interest income is recognized monthly. Notes receivable mature at various dates through ~~2016~~2024 and bear interest at rates that range from 5% to 7% ~~to 15% (8%~~(6% average rate at June ~~29, 2014)~~28, 2015).

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.

~~F - 8~~

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 included with the allowance for doubtful accounts.

Notes receivable as of June ~~29, 2014~~28, 2015 totaled ~~$215,000,~~$143,000, of which ~~$81,000 is~~$24,000 was included in current assets ~~notes receivable~~ and ~~$134,000 is~~$119,000 was included in long-term ~~notes receivable~~assets in the accompanying balance sheet.

The principal balance outstanding on the notes ~~and advances~~ receivable and expected principal collections for the next five years and thereafter were as follows as of June ~~29, 2014~~28, 2015 (in thousands):

	Notes		Notes
	Receivable		Receivable
2015		81
2016		10		21
2017		8		9
2018		12		12
2019 and thereafter		104
2019				15
2020 and thereafter				86
	$	215	$	143

~~There~~Two notes totaling $48,813 were ~~no charge offs~~charged off for the fiscal year ended June ~~29, 2014.~~28, 2015.

Income Taxes:

Income taxes are accounted for using the asset and liability method pursuant to the authoritative guidance on 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 financial statement and carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred taxes for a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes future tax benefits to the extent that realization of such benefits is more likely than not.

Management evaluates the deferred tax asset at the end of each fiscal quarter to determine if an allowance against the deferred tax asset is required, and at the end of fiscal years ~~2014~~2015 and ~~2013~~2014 determined that it was more likely than not that the deferred tax asset would be fully realized based on the expectation of future taxable income and the future reversal of temporary differences. Therefore, no allowance was recorded. This determination and future estimates could be impacted by changes in future taxable income, the results of tax strategies or changes in tax laws.

The Company follows authoritative guidance that prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that it has taken or expects to take on a tax return. This authoritative guidance requires that a company recognize in its financial statements the impact of tax positions that meet a “more likely than not” threshold, based on the technical merits of the position. 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 June ~~29, 2014~~28, 2015 and June ~~30, 2013,~~29, 2014, the Company had no uncertain tax positions. Federal returns for tax years ~~2010~~2011 through ~~2013~~2014 remained open for examination as of June ~~29, 2014.~~28, 2015.

F 9

Pre-Opening Expense:

Related Party Transactions:

On February 20, 2014, the Company entered into an Advisory Services Agreement (the “Agreement”) with NCM Services, Inc. (“NCMS”) pursuant to which NCMS provides certain advisory and consulting services to the Company. NCMS is indirectly owned and controlled by Mark E. Schwarz, the Chairman of the Company. The term of the Agreement commenced December 30, 2013, and continues quarterly thereafter until terminated by either party. Pursuant to the Agreement, NCMS was paid an initial fee of $150,000 and earns quarterly fees of $50,000 and an additional fee of up to $50,000 per quarter (not to exceed an aggregate of $100,000 in additional fees). The quarterly and additional fees are waived if the Company is not in compliance with all financial covenants under its primary credit facility or to the extent that payment of those fees would result in non-compliance with such financial covenants. As of June 28, 2015, the accrued liability relating to services performed by NCMS was $133,336.

Revenue Recognition:

The Company recognizes food and supply revenue when products are delivered and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. The Company's Norco division sells food and supplies to franchisees on trade accounts under terms common in the industry. ~~Norco sales are reflected under the caption "Food and supply sales."~~ Shipping and handling costs billed to customers are recognized as revenue and the associated costs are included in cost of sales.

~~F - 9~~

Franchise revenue consists of income from license fees, royalties, and area development and foreign master license sales. License fees are recognized as income when there has been substantial performance of the agreement by both the franchisee and the Company, generally at the time the restaurant is opened. Royalties are recognized as income when earned. For the fiscal years ended June 28, 2015 and June 29, 2014, 82% and ~~June 30, 2013,~~ 91% ~~and 93%~~, respectively, of franchise revenue was comprised of recurring royalties.

We recognize restaurant sales when food and beverage products are sold. The Company reports revenue net of sales and use taxes collected from customers and remitted to governmental taxing authorities.

Stock Options:

We account for stock options using the fair value recognition provisions of the authoritative guidance on Share-Based Payments. 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. The authoritative guidance also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow.

~~At June 29, 2014, the Company had one~~The Company’s stock-based ~~employee~~ compensation ~~plan, and one stock-based non-employee director compensation plan.~~plans are described more fully in Note H. Stock options under these plans are granted at exercise prices equal to the fair market value of the Company’s stock at the dates of grant. Generally those options vest ratably over various vesting periods. ~~The Company’s stock-based compensation plans are described more fully in Note H.~~

Fair Value of Financial Instruments:

The carrying amounts of accounts receivable and accounts payable approximate fair value because of the short maturity of these instruments. The Company had ~~approximately $0.8 million in~~no bank debt at June ~~29, 2014. The fair value of bank debt approximated its carrying value at~~28, 2015.

F 10

Advertising and Marketing Costs:

Advertising and marketing costs are expensed as incurred and totaled $0.7 million for both fiscal years ended June 28, 2015, and June 29, 2014. Advertising and marketing costs are included in cost of sales and general and administrative expenses in the consolidated statements of operations.

Contingencies:

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. Legal and related professional services costs to defend litigation are expensed as incurred.

Use of Management Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make estimates and assumptions that affect its reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent liabilities. The Company bases its estimates on historical experience and other various assumptions that it believes are reasonable under the circumstances. Estimates and assumptions are reviewed periodically. Actual results could differ materially from estimates.

Fiscal Year:

The Company's fiscal year ends on the last Sunday in June. The fiscal year ended June ~~29, 2014~~28, 2015 and the fiscal year ended June ~~30, 2013~~29, 2014 both contained 52 ~~and 53 weeks, respectively.~~weeks.

~~F - 10~~

NOTE B – PROPERTY, PLANT AND EQUIPMENT:

Property, and plant and equipment consist of the following (in thousands):

	Estimated Useful	June 29,			June 30,			Estimated Useful	June 28,			June 29,
	Lives	2014			2013			Lives	2015			2014

Equipment, furniture and fixtures	3 - 7 yrs	$	4,864		$	4,668		3 - 7 yrs	$	6,927		$	4,864
Software	5 yrs		424			367		5 yrs		637			424
Vehicle	2 - 3 yrs		19			19		2 - 3 yrs		19			19
Leasehold improvements	10 yrs or lease term, if shorter		4,820			4,611		10 yrs or lease term, if shorter		9,134			4,820
			10,127			9,665				16,717			10,127
Less: accumulated depreciation/amortization	Less: accumulated depreciation/amortization		(4,994	)		(4,954	)	Less: accumulated depreciation/amortization		(6,697	)		(4,994	)
		$	5,133		$	4,711			$	10,020		$	5,133

NOTE C - ACCRUED EXPENSES:

NOTE D - LONG-TERM DEBT:

Bank
Debt

2015 $ 500
2016 267
2017 -
2018 -
2019 -
$ 767

NOTE E - INCOME TAXES:

The effective income tax rate varied from the statutory rate for the fiscal years ended June ~~29, 2014~~28, 2015 and June ~~30, 2013~~29, 2014 as reflected below (in thousands):

Operating
Leases

2015 $ 1,669
2016 1,609
2017 1,228
2018 849
2019 799
Thereafter 2,144
$ 8,298

Rental expense consisted of the following (in thousands):

	Fiscal Year Ended
	June 28,			June 29,
	2015			2014

Minimum rentals	$	1,666		$	1,448
Sublease rentals		(221	)		(182	)
	$	1,445		$	1,266

Year Ended
June 29, June 30,
2014 2013

Minimum rentals $ 1,448 $ 1,322
Sublease rentals (182 ) (182 )
$ 1,266 $ 1,140

NOTE G - EMPLOYEE BENEFITS:

The Company has a tax advantaged savings plan that is designed to meet the requirements of Section 401(k) of the Internal Revenue Code (the “Code”). The current plan is a modified continuation of a similar savings plan established by the Company in 1985. Employees who have completed six months of service and are at least 21 years of age are eligible to participate in the plan. The plan provides that participating employees may elect to have between 1% and 15% of their compensation deferred and contributed to the plan subject to certain IRS limitations. Effective June 27, 2005, the Company contributes on behalf of each participating employee an amount equal to 50% of the employee’s contributions up to 4% of compensation. Separate accounts are maintained with respect to contributions made on behalf of each participating employee. Employer 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.

For the fiscal years ended June ~~29, 2014~~28, 2015 and June ~~30, 2013,~~29, 2014, total matching contributions to the tax advantaged savings plan by the Company on behalf of participating employees were approximately ~~$12,400~~$39,000 and ~~$33,500,~~$12,000, respectively.

NOTE H - STOCK OPTIONS:

In June 2005, the 2005 Employee Incentive Stock Option Award Plan (the “2005 Employee Plan”) was approved by the Company’s shareholders with a plan effective date of June 23, 2005. Under the 2005 Employee Plan, officers and employees of the Company ~~are~~were eligible to receive options to purchase shares of the Company’s common stock. Options ~~are~~were granted at market value of the stock on the date of grant, ~~are~~were subject to various vesting and exercise periods as determined by the Compensation Committee of the ~~Board~~board of ~~Directors,~~directors, and ~~may~~could be designated as non-qualified or incentive stock options. A total of 1,000,000 shares of common stock ~~are~~were authorized for issuance under the 2005 Employee Plan. During the ~~2014~~2015 fiscal year, options to purchase ~~139,228~~92,000 shares were granted under the 2005 Employee Plan. Also during the ~~2014~~2015 fiscal year, ~~39,144~~3,000 shares of common stock were issued upon the exercise of ~~options. As of June 29, 2014, there were 471,828 shares available to be issued~~options granted under the ~~plan.~~2005 Employee Plan. The 2005 Employee Plan expired by its terms on June 23, 2015.

A summary of stock option transactions under all of the Company’s stock option plans and information about fixed-price stock options is as follows:

	Year Ended										Fiscal Year Ended
	June 29, 2014					June 30, 2013					June 28, 2015					June 29, 2014
				Weighted-					Weighted-					Weighted-					Weighted-
				Average					Average					Average					Average
				Exercise					Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price		Shares			Price

Outstanding at beginning
of year		851,306		$	2.54		486,506		$	2.80		921,198		$	2.92		851,306		$	2.54

Granted		147,892		$	4.92		464,800		$	2.70		120,800		$	6.57		147,892		$	4.92
Exercised		(39,144	)	$	2.12		-					(170,200	)	$	2.50		(39,144	)	$	2.12
Forfeited/Canceled/Expired		(38,856	)	$	3.15		(100,000	)	$	4.72		-		$	-		(38,856	)	$	3.15

Outstanding at end of year		921,198		$	2.92		851,306		$	2.54		871,798		$	3.51		921,198		$	2.92

Exercisable at end of year		473,659		$	2.43		459,439		$	2.42		406,378		$	2.63		473,659		$	2.43

Weighted-average fair value of
options granted during the year				$	3.64				$	1.29				$	3.16				$	3.64

Total intrinsic value of
options exercised				$	82,845				$	-				$	425,944				$	82,845

We determine fair value following the authoritative guidance as follows:

Valuation and Amortization Method. We estimate the fair value of share-based awards granted using the Black-Scholes option valuation model. We amortize the fair value of all awards on a straight-line basis over the requisite service periods, which are generally the vesting periods.

Expected Life. The expected life of awards granted represents the period of time that they are expected to be outstanding. Unless a life is specifically stated, we determine the expected life using the “simplified method” in accordance with Staff Accounting Bulletin No. 110 since we do not have sufficient historical share option exercise experience.

Expected Volatility. Using the Black-Scholes option valuation model, we estimate the volatility of our common stock at the date of grant based on the historical volatility of our common stock.

Risk-Free Interest Rate. We base the risk-free interest rate used in the Black-Scholes option valuation model on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award.

Expected Dividend Yield. We have not paid any cash dividends on our common stock in the last ten years and we do not anticipate paying any cash dividends in the foreseeable future. Consequently, we use an expected dividend yield of zero in the Black-Scholes option valuation model.

Expected Forfeitures. We use historical data to estimate pre-vesting option forfeitures. We record stock-based compensation only for those awards that are expected to vest.

The following weighted average assumptions were used for options granted ~~or had options been granted:~~in the last two fiscal years:

At June ~~29, 2014,~~28, 2015, the Company had unvested options to purchase ~~447,539~~465,420 shares with a weighted average grant date fair value of ~~$2.00.~~$2.66. The total remaining unrecognized compensation cost related to unvested awards amounted to approximately ~~$0.3~~$0.4 million at June ~~29, 2014.~~28, 2015. The weighted average remaining requisite service period of the unvested awards was ~~21.1~~15.1 months. Stock compensation expense of $0.1 million ~~and $0.2 million~~ was recognized in each of fiscal years ~~2014~~2015 and ~~2013, respectively.~~2014.

NOTE I - 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. No shares were repurchased during fiscal ~~2014~~2015 and, as of June ~~29, 2014,~~28, 2015, there were 848,425 shares available to repurchase under the plan.

On May 20, 2013, the Company entered into an At-the-Market Issuance Sales Agreement with MLV & Co. LLC (“MLV”) pursuant to which the Company ~~may~~could offer and sell shares of its common stock having an aggregate offering price of up to $3,000,000 from time to time through MLV, acting as agent (the ~~“ATM~~“2013 ATM Offering”). The 2013 ATM Offering ~~is being~~was undertaken pursuant to Rule 415 and a ~~universal~~ shelf Registration Statement on Form S-3 which was declared effective by the SEC on May 13, 2013. On November 20, 2013, the Company and MLV amended the At-the-Market Issuance Sales Agreement and the SEC declared effective a new shelf Registration Statement on Form S-3 to increase the 2013 ATM Offering by $5,000,000. The Company ultimately sold an aggregate of 1,257,609 shares in the 2013 ATM Offering, realizing aggregate net proceeds of $7.8 million.

NOTE J - COMMITMENTS AND CONTINGENCIES:

NOTE K - EARNINGS PER SHARE:

The following table shows the reconciliation of the numerator and denominator of the basic EPS calculation to the numerator and denominator of the diluted EPS calculation (in thousands, except per share amounts).

Year Ended
June 29, June 30,
2014 2013
Loss from continuing operations $ (1,454 ) $ (1,079 )
Discontinued operations (113 ) (182 )
Net loss available to common stockholders $ (1,567 ) $ (1,261 )

BASIC:
Weighted average common shares 8,635 8,031

Loss from continuing operations per common share $ (0.17 ) $ (0.13 )
Discontinued operations per common share (0.01 ) (0.03 )
Net loss per common share $ (0.18 ) $ (0.16 )

DILUTED:
Weighted average common shares 8,635 8,031
Stock options 538 279
Weighted average common shares outstanding 9,173 8,310

Loss from continuing operations per common share $ (0.16 ) $ (0.13 )
Discontinued operations per common share (0.01 ) (0.02 )
Net loss per common share $ (0.17 ) $ (0.15 )

	Fiscal Year Ended
	June 28,			June 29,
	2015			2014
Loss from continuing operations	$	(1,671	)	$	(1,454	)
Discontinued operations		(168	)		(113	)
Net loss available to common stockholders	$	(1,839	)	$	(1,567	)

BASIC:
Weighted average common shares		9,744			8,635

Loss from continuing operations per common share	$	(0.17	)	$	(0.17	)
Discontinued operations per common share		(0.02	)		(0.01	)
Net loss per common share	$	(0.19	)	$	(0.18	)

DILUTED:
Weighted average common shares		9,744			8,635
Stock options		562			538
Weighted average common shares outstanding		10,306			9,173


Loss from continuing operations per common share	$	(0.16	)	$	(0.16	)
Discontinued operations per common share		(0.02	)		(0.01	)
Net loss per common share	$	(0.18	)	$	(0.17	)

NOTE L– SEGMENT REPORTING:

The Company has two reportable operating segments as determined by management using the “management approach” as defined by the authoritative guidance on Disclosures about Segments of an Enterprise and Related Information: (1) Franchising and Food and Supply Distribution, and (2) Company-owned Restaurants. 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 two operating segments. Other revenue consists of nonrecurring items.

The Franchising and Food and Supply Distribution segment establishes franchisees and franchise territorial rights and sells and distributes proprietary and non-proprietary food and other items to franchisees. Revenue for this segment is derived from the sale of distributed products and franchise royalties, franchise fees and sale of area development and foreign master license rights. Assets for this segment include equipment, furniture and fixtures.

The Company-owned Restaurant 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.

Corporate administration and other assets primarily include the deferred tax asset, cash and short-term investments, as well as furniture and fixtures located at the corporate office and trademarks and other intangible assets. All assets are located within the United States.

Summarized in the following tables are net sales and operating revenues, depreciation and amortization expense, income from continuing operations before taxes, capital expenditures and assets for the Company's reportable segments as of and for the fiscal years ended June 28, 2015 and June 29, 2014 ~~and June 30, 2013~~ (in thousands):

	Year Ended						Fiscal Year Ended
	June 29,			June 30,			June 28,			June 29,
	2014			2013			2015			2014
Net sales and operating revenues:
Franchising and food and supply distribution	$	32,253		$	33,683		$	35,330		$	32,253
Company-owned restaurants (1)		9,971			7,498			12,869			9,971
Consolidated revenues	$	42,224		$	41,181		$	48,199		$	42,224

Depreciation and amortization:
Franchising and food and supply distribution	$	19		$	-		$	24		$	19
Company-owned restaurants (1)		1,244			1,050			1,374			1,244
Combined		1,263			1,050			1,398			1,263
Corporate administration and other		191			254			219			191
Depreciation and amortization	$	1,454		$	1,304		$	1,617		$	1,454

Loss from continuing operations before taxes
Franchising and food and supply distribution (2)	$	762		$	2,136		$	1,492		$	762
Company-owned restaurants (1) (2)		(1,212	)		(1,173	)		(1,429	)		(1,212	)
Combined		(450	)		963			63			(450	)
Impairment of long-lived assets and other lease charges		(253	)		(766	)		(300	)		(253	)
Corporate administration and other (2)		(1,511	)		(1,780	)		(2,104	)		(1,511	)
Loss from continuing operations before taxes	$	(2,214	)	$	(1,583	)	$	(2,341	)	$	(2,214	)

Capital Expenditures:
Franchising and food and supply distribution	$	-		$	-		$	-		$	-
Company-owned restaurants		1,918			2,110			6,443			1,918
Corporate administration		150			134			284			150
Combined capital expenditures	$	2,068		$	2,244		$	6,727		$	2,068

Assets:
Franchising and food and supply distribution	$	5,231		$	4,909		$	4,314		$	5,231
Company-owned restaurants		4,631			4,696			11,088			4,631
Corporate administration		6,106			2,930			8,569			6,106
Combined assets	$	15,968		$	12,535		$	23,971		$	15,968

(1)		Company stores that were closed are included in discontinued operations in the accompanying Condensed

Consolidated Statement of Operations.

(2)	Portions of corporate administration and other have been allocated to segments.

The following table provides information on our foreign and domestic revenues:


Geographic information (revenues):
United States	$	47,509	$	41,342
Foreign countries		690		882
Consolidated total	$	48,199	$	42,224

	Number of securities to		Weighted-average		Number of securities		Number of securities to		Weighted-average		Number of securities
	be issued upon exercise		exercise price of		remaining available for		be issued upon exercise		exercise price of		remaining available for
Plan	of outstanding options,		outstanding options,		future issuance under		of outstanding options,		outstanding options,		future issuance under
Category	warrants, and rights		warrants, and rights		equity compensation plans		warrants, and rights		warrants, and rights		equity compensation plans
Equity compensation
plans approved by
security holders		921,198	$	2.92		679,658		871,798	$	3.51		1,200,000

Equity compensation
plans not approved by
security holders		-	$	-		-		-	$	-		-

Total		921,198	$	2.92		679,658		871,798	$	3.51		1,200,000

	Fiscal Year Ended
Pizza Inn Franchise Stores - Comparable Stores	June 29,		June 30,
	2014		2013
Domestic retail sales of comparable store Buffet Units	$	77,903	$	78,253
Domestic retail sales of comparable store Delco Units		3,877		4,250
Domestic retail sales of comparable store Express Units		2,285		2,490
Total domestic comparable store retail sales	$	84,065	$	84,993

International retail sales of comparable store Buffet Units	$	3,764	$	4,178
International retail sales of comparable store Delco Units		9,319		9,883
International retail sales of comparable store Express Units		1,680		1,212
Total International comparable store retail sales	$	14,763	$	15,273

	Options Outstanding			Options Exercisable
		Weighted-
		Average
	Options	Remaining	Weighted-	Options	Weighted-
Range of	Outstanding	Contractual	Average	Exercisable	Average
Exercise Prices	at June 29, 2014	Life (Years)	Exercise Price	at June 29, 2014	Exercise Price

$1.55 - 1.95	136,506	5.2	$1.90	136,506	$1.90
$1.96 - 2.35	130,000	4.0	$2.32	130,000	$2.32
$2.36 - 2.75	412,000	8.2	$2.57	88,000	$2.65
$2.76 - 3.30	115,000	6.4	$3.13	115,000	$3.13
$3.31 - 3.81	41,528	8.5	$3.81	4,153	$0.00
$5.51 - 5.74	8,664	0.7	$5.74	-	$0.00
$5.95 - 6.05	62,500	9.8	$6.02	-	$0.00
$8.16	15,000	9.4	$8.16	-	$0.00
	921,198	7.0	$2.92	476,659	$2.43

		Options Outstanding						Options Exercisable
				Weighted-
				Average
		Options		Remaining		Weighted-		Options		Weighted-
Range of		Outstanding		Contractual		Average		Exercisable		Average
Exercise Prices		at June 28, 2015		Life (Years)		Exercise Price		at June 28, 2015		Exercise Price

$	1.55 - 1.95		81,306		4.1	$	1.90		81,306	$	1.90
$	1.96 - 2.35		90,000		3.0	$	2.32		90,000	$	2.32
$	2.36 - 2.75		397,000		7.2	$	2.57		145,000	$	2.60
$	2.76 - 3.30		55,000		7.0	$	3.11		55,000	$	3.11
$	3.31 - 3.81		41,528		7.5	$	3.81		12,458	$	1.52
$	5.51 - 5.74		8,664		8.0	$	5.74		8,664	$	5.74
$	5.95 - 6.25		153,300		8.9	$	6.06		12,450	$	6.02
$	6.26 - 8.16		45,000		8.9	$	8.09		1,500	$	8.16
			871,798		6.9	$	3.51		406,378	$	2.63

	Pizza Inn
	Buffet Unit			Delco Unit			Express Unit			Pie Five Unit
Development fee per unit	$	-		$	-		$	-		$	5,000
Franchise fee per unit	$	25,000		$	10,000		$	5,000		$	20,000
Initial franchise term	20 years			10 years			5 years			10 years
Renewal period	10 years			10 years			5 years			5 years
Royalty rate % of sales		4	%		4	%		5	%		6	%
National Ad fund % of sales		1	%		1	%		-			2	%
Required total ad spending % of sales		5	%		5	%		3.5	%		5	%

	Pizza Inn
	Buffet Units		Delco Units		Express Units		Pie Five Units		Total Units
Company Owned		2		-		-		13		15

Domestic Franchise		103		24		53		7		187
International Franchise		18		45		8		-		71
Total Franchise		121		69		61		7		258

Total Units		123		69		61		20		273

	Fiscal Year Ended
Pizza Inn Franchise Stores - Total Stores	June 29,		June 30,
	2014		2013
Domestic retail sales of Buffet Units	$	81,960	$	88,519
Domestic retail sales of Delco Units		5,247		6,474
Domestic retail sales of Express Units		3,130		3,157
Total domestic retail sales	$	90,337	$	98,150

Average number of domestic Buffet Units		105		118
Average number of domestic Delco Units		25		29
Average number of domestic Express Units		48		44

	Fiscal Year Ended
	June 29,		June 30,
		2014		2013
International retail sales of Buffet Units	$	7,036	$	7,379
International retail sales of Delco Units		10,104		10,576
International retail sales of Express Units		2,224		1,405
Total International retail sales	$	19,364	$	19,360

Average number of International Buffet Units		21		20
Average number of International Delco Units		45		49
Average number of International Express Units		7		8

	Fiscal Year Ended
Pizza Inn Retail Sales - Total Domestic Stores	June 28,		June 29,
Domestic Units	2015		2014
Buffet - Franchised	$	83,539	$	81,960
Delco/Express - Franchised		7,941		8,377
Buffet - Company-owned		1,471		1,870
Total domestic retail sales	$	92,951	$	92,207

Pizza Inn Comparable Store Retail Sales - Total Domestic	$	87,547	$	84,065

Pizza Inn Average Units Open in Period
Domestic Units
Buffet - Franchised		100		105
Delco/Express - Franchised		75		73
Buffet - Company-owned		2		2
Total domestic units		177		180

Fiscal year ended June 29, 2014

	Beginning						End of
	of Period		Opened		Closed		Period
Pizza Inn Domestic
Buffet Units		114		2		11		105
Delco Units		27		1		4		24
Express Units		43		15		5		53
Pizza Inn International Units		66		6		1		71

Pie Five Units		11		9		-		20

Total		261		33		21		273


Fiscal year ended June 30, 2013

	Beginning						End of
	of Period		Opened		Closed		Period
Pizza Inn Domestic
Buffet Units		135		-		21		114
Delco Units		29		2		4		27
Express Units		47		3		7		43
Pizza Inn International Units		66		6		6		66

Pie Five Units		6		5		-		11

Total		283		16		38		261

	Operating
	Leases

2015	$	1,669
2016		1,609
2017		1,228
2018		849
2019		799
Thereafter		2,144
	$	8,298