Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 26, 2016 | Sep. 20, 2016 | Dec. 27, 2015 | |
Document and Entity Information: | |||
Entity Registrant Name | RAVE RESTAURANT GROUP, INC. | ||
Entity Trading Symbol | rave | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 26, 2016 | ||
Amendment Flag | false | ||
Entity Central Index Key | 718,332 | ||
Current Fiscal Year End Date | --06-26 | ||
Entity Common Stock, Shares Outstanding | 10,656,551 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Entity Public Float | $ 43,700,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Jun. 26, 2016 | Jun. 28, 2015 | |
REVENUES | ||
REVENUES: | $ 60,811 | $ 48,199 |
COSTS AND EXPENSES: | ||
Cost of sales | 53,303 | 41,307 |
General and administrative expenses | 7,247 | 4,792 |
Franchise expenses | 3,636 | 3,154 |
Pre-opening expenses | 883 | 721 |
Impairment of long-lived assets and other lease charges | 1,698 | 300 |
Bad debt | 101 | 153 |
Interest expense | 4 | 113 |
Total costs and expenses | 66,872 | 50,540 |
LOSS FROM CONTINUING OPERATIONS BEFORE TAXES | (6,061) | (2,341) |
Income tax expense (benefit) | 2,713 | (670) |
LOSS FROM CONTINUING OPERATIONS | (8,774) | (1,671) |
Loss from discontinued operations, net of taxes | (112) | (168) |
Net loss | $ (8,886) | $ (1,839) |
LOSS PER SHARE OF COMMON STOCK - BASIC: | ||
Loss from continuing operations | $ (0.85) | $ (0.17) |
Loss from discontinued operations | (0.01) | (0.02) |
Net loss | (0.86) | (0.19) |
LOSS PER SHARE OF COMMON STOCK - DILUTED: | ||
Loss from continuing operations | (0.82) | (0.16) |
Loss from discontinued operations | (0.01) | (0.02) |
Net loss | $ (0.83) | $ (0.18) |
Weighted average common shares outstanding - basic | 10,317 | 9,744 |
Weighted average common shares outstanding - diluted | 10,749 | 10,306 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 26, 2016 | Jun. 28, 2015 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 1,104 | $ 5,958 |
Accounts receivable, less allowance for doubtful accounts of $198 and $193, respectively | 2,974 | 3,437 |
Notes receivable | 167 | 24 |
Inventories | 197 | 180 |
Income tax receivable | 492 | |
Deferred income tax assets | 729 | |
Prepaid expenses and other | 430 | 872 |
Total current assets | 4,872 | 11,692 |
LONG-TERM ASSETS | ||
Property, plant and equipment, net | 12,979 | 10,020 |
Long-term notes receivable | 382 | 119 |
Long-term deferred tax asset | 1,864 | |
Deposits and other | 272 | 276 |
Total assets | 18,505 | 23,971 |
CURRENT LIABILITIES | ||
Accounts payable - trade | 3,815 | 2,875 |
Accrued expenses | 1,220 | 1,267 |
Deferred rent | 160 | 155 |
Deferred revenues | 304 | 374 |
Total current liabilities | 5,499 | 4,671 |
LONG-TERM LIABILITIES | ||
Deferred rent, net of current portion | 2,133 | 893 |
Deferred revenues, net of current portion | 1,440 | 1,166 |
Deferred gain on sale of property | 9 | |
Other long-term liabilities | 30 | 22 |
Total liabilities | 9,102 | 6,761 |
COMMITMENTS AND CONTINGENCIES (See Notes F and J) | ||
SHAREHOLDERS' EQUITY | ||
Common stock, $.01 par value; authorized 26,000,000 shares; issued 17,460,951 and 17,374,735 shares, respectively; outstanding 10,341,551 and 10,255,335 shares, respectively | 175 | 174 |
Additional paid-in capital | 25,778 | 24,700 |
Retained earnings | 8,086 | 16,972 |
Treasury stock at cost 7,119,400 shares | (24,636) | (24,636) |
Total shareholders' equity | 9,403 | 17,210 |
Total liabilities and shareholders' equity | $ 18,505 | $ 23,971 |
CONDENSED BALANCE SHEETS PARENT
CONDENSED BALANCE SHEETS PARENTHETICALS - USD ($) shares in Thousands, $ in Thousands | Jun. 26, 2016 | Jun. 28, 2015 |
Parentheticals | ||
Allowance for bad debts accounts | $ 198 | $ 193 |
Common Stock, Par Value | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 26,000,000 | 26,000,000 |
Common Stock, Shares Issued | 17,460,951 | 17,374,735 |
Common Stock, Shares Outstanding | 10,341,551 | 10,255,335 |
Treasury Stock, shares | 7,119,400 | 7,119,400 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock Shares | Common Stock Amount | Additional Paid-in Capital | Retained Earnings | Treasury Stock Shares | Treasury Stock Amount | Total |
BALANCE, at Jun. 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 at Jun. 28, 2015 | 10,255 | 174 | 24,700 | 16,972 | (7,119) | (24,636) | 17,210 |
Stock compensation expense | $ 213 | $ 213 | |||||
Stock options exercised | 28 | 102 | 102 | ||||
Sale of stock | 59 | 1 | 763 | 764 | |||
Net loss | $ (8,886) | $ (8,886) | |||||
BALANCE at Jun. 26, 2016 | 10,342 | 175 | 25,778 | 8,086 | (7,119) | (24,636) | 9,403 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 26, 2016 | Jun. 28, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (8,886) | $ (1,839) |
Adjustments to reconcile net loss to cash provided by operating activities: | ||
Impairment of fixed assets and other assets | 1,698 | 300 |
Stock compensation expense | 213 | 128 |
Deferred income taxes | 2,593 | (703) |
Depreciation and amortization | 2,722 | 1,617 |
Loss on the sale of assets | 432 | 49 |
Provision for bad debt | 101 | 153 |
Changes in operating assets and liabilities: | ||
Notes and accounts receivable | (44) | (240) |
Inventories | (17) | 1,523 |
Income tax receivable | 492 | (107) |
Prepaid expenses and other | 419 | (705) |
Deferred revenue | 195 | 545 |
Accounts payable - trade | 940 | 852 |
Accrued expenses | 1,088 | 404 |
Cash provided by operating activities | 1,946 | 1,977 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from sale of assets | 444 | |
Capital expenditures | (8,110) | (6,727) |
Cash used for investing activities | (7,666) | (6,727) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayments of bank debt | (767) | |
Proceeds from sale of stock | 764 | 8,253 |
Proceeds from exercise of stock options | 102 | 426 |
Cash provided by financing activities | 866 | 7,912 |
Net increase in cash and cash equivalents | (4,854) | 3,162 |
Cash and cash equivalents, beginning of year | 5,958 | 2,796 |
Cash and cash equivalents, end of year | 1,104 | 5,958 |
CASH PAID FOR: | ||
Interest | $ 4 | 113 |
Income taxes | $ 19 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jun. 26, 2016 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Description of Business: 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 26, 2016, we owned and operated 32 restaurants comprised of 31 Pie Five restaurants ("Pie Five Units") and one Pizza Inn buffet restaurant ("Buffet Unit"). As of that date, we also had 57 franchised Pie Five Units and 221 franchised Pizza Inn restaurants. The 161 domestic franchised Pizza Inn restaurants were comprised of 95 Buffet Units, 15 delivery/carry-out restaurants ("Delco Units") and 51 express restaurants ("Express Units"). The 60 international franchised Pizza Inn restaurants were comprised of 12 Buffet Units, 40 Delco Units and eight Express Units. Domestic restaurants were located predominantly in the southern half of the United States, with Texas, North Carolina, Arkansas and Kansas accounting for approximately 33%, 12%, 10% and 6%, respectively, of the total number of domestic restaurants. Principles of Consolidation: The consolidated financial statements include the accounts of 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 26, 2016 and June 28, 2015 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 consists primarily of food, paper products and supplies stored in and used by Company restaurants and was stated at lower of first-in, first-out ("FIFO") or market. The valuation of such restaurant inventory requires us to estimate the amount of obsolete and excess inventory based on estimates of future retail sales by Company-owned restaurants. Overestimating retail sales by Company-owned restaurants could result in the write-down of inventory which would have a negative impact on the gross margin of such Company-owned restaurants. 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, The authoritative guidance on " Accounting for the Impairment or Disposal of Long-Lived Assets," The authoritative guidance on " Accounting for Costs Associated with Exit or Disposal Activities," 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 are 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: 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 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 2016 and 2015, the Company tested its long-lived assets for impairment and recognized pre-tax, non-cash impairment charges of $1.7 million and $0.3 million, respectively, related to the carrying value of several Pie Five and Pizza Inn units. 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. 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 2024 and bear interest at rates that range from 5% to 7% (6% average rate at June 26, 2016). Management evaluates the creditworthiness of franchisees by considering credit history and sales to evaluate credit risk. Management determines interest rates based on credit risk of the underlining franchisee. The Company monitors payment history to determine whether or not a loan should be placed on a nonaccrual status or impaired. The Company charges off notes receivable based on an account-by-account analysis of the borrower's current economic conditions, monthly payments history and historical loss experience. The allowance for doubtful notes receivable is included with the allowance for doubtful accounts. Notes receivable as of June 26, 2016 consisted of $0.2 million in current assets and $0.4 million in long-term assets. The principal balance outstanding on the notes receivable and expected principal collections for the next five years and thereafter were as follows as of June 26, 2016 (in thousands): Notes Receivable 2017 167 2018 86 2019 81 2020 87 2021 and thereafter 128 $ 549 One note totaling $15 thousand was charged off for the fiscal year ended June 26, 2016. Income Taxes: Income taxes are accounted for using the asset and liability method pursuant to the authoritative guidance on Accounting for Income Taxes The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. In the second quarter of fiscal year 2016, the Company recorded a $3.5 million valuation allowance against its net deferred tax assets. The valuation allowance was increased by $0.5 million in the third quarter of fiscal year 2016 to $4.0 million and again in the fourth quarter by $0.9 million to $4.9 million. The Company assessed whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, using a "more likely than not" standard. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Future sources of taxable income were also considered in determining the amount of the recorded valuation allowance. Based on the Company's review of this evidence, management determined that a full valuation allowance against all of the Company's deferred tax assets was appropriate. 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 26, 2016 and June 28, 2015, the Company had no uncertain tax positions. Federal returns for tax years 2012 through 2015 remained open for examination as of June 26, 2016. Pre-Opening Expense: 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. 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 26, 2016, the accrued liability relating to services performed by NCMS was $100,003. 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. Shipping and handling costs billed to customers are recognized as revenue and the associated costs are included in cost of sales. 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 26, 2016 and June 28, 2015, 82.8% and 82.2%, 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's stock-based compensation 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. Restricted Stock Units: Compensation cost is measured as an amount equal to the fair value of the restricted stock units on the date of grant and is expensed over the vesting period if achievement of the performance criteria is deemed probable, with the amount of the expense recognized based on the best estimate of the ultimate achievement level. Fair Value of Financial Instruments: The carrying amounts of accounts receivable and accounts payable approximate fair value because of the short maturity of these instruments. The Company had no bank debt at June 26, 2016. Advertising and Marketing Costs: Advertising and marketing costs are expensed as incurred and totaled $1.2 million for fiscal year ended June 26, 2016 and $0.7 million for fiscal year ended June 28, 2015. 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 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 26, 2016 and the fiscal year ended June 28, 2015 both contained 52 weeks. |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
Jun. 26, 2016 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT | NOTE B – PROPERTY, PLANT AND EQUIPMENT: Property, and plant and equipment consist of the following (in thousands): Estimated Useful June 26, June 28, Lives 2016 2015 Equipment, furniture and fixtures 3 - 7 yrs $ 9,697 $ 6,927 Software 5 yrs 872 637 Vehicle 2 - 3 yrs - 19 Leasehold improvements 10 yrs or lease term, if shorter 13,290 9,134 23,859 16,717 Less: accumulated depreciation/amortization (10,880 ) (6,697 ) $ 12,979 $ 10,020 |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Jun. 26, 2016 | |
ACCRUED EXPENSES: | |
ACCRUED EXPENSES | NOTE C - ACCRUED EXPENSES: Accrued expenses consist of the following (in thousands): June 26, June 28, 2016 2015 Compensation $ 728 $ 587 Other 447 506 Professional fees 37 79 Insurance loss reserves 8 95 $ 1,220 $ 1,267 |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Jun. 26, 2016 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | NOTE D - LONG-TERM DEBT: 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 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 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 2015 and 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 the expiration of the advance period. As of September 26, 2014, the balance on the initial term loan facility was also paid in full. As a result, the F&M Loan Agreement expired by its terms. Management believes the cash on hand combined with cash from operations and proceeds from the 2014 ATM Offering will be sufficient to fund operations for the next 12 months. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Jun. 26, 2016 | |
INCOME TAXES | |
INCOME TAXES | NOTE E - INCOME TAXES: Provision for income taxes from continuing operations consists of the following (in thousands): Fiscal Year Ended June 26, June 28, 2016 2015 Current - Federal $ - $ - Current - Foreign - 24 Current - State 4 29 Deferred - Federal 2,823 (674 ) Deferred - State (114 ) (49 ) Provision for income taxes $ 2,713 $ (670 ) Included in loss from discontinued operations is $58,000 and $86,000 of tax benefit for the fiscal years ended June 26, 2016 and June 28, 2015, respectively. The effective income tax rate varied from the statutory rate for the fiscal years ended June 26, 2016 and June 28, 2015 as reflected below (in thousands): June 26, June 28, 2016 2015 Federal income taxes based on 34% of pre-tax loss $ (2,060 ) $ (796 ) State income tax, net of federal effect (45 ) (13 ) Permanent adjustments 19 44 Valuation allowance 4,891 - Foreign tax credits - 24 Other (92 ) 71 $ 2,713 $ (670 ) The tax effects of temporary differences that give rise to the net deferred tax assets consisted of the following (in thousands): June 26, June 28, 2016 2015 Current Reserve for bad debt $ 70 $ 69 Deferred fees 105 124 Other reserves and accruals 1,246 536 1,421 729 Non Current Credit carryforwards 747 180 Net operating loss carryforwards 197 1,633 Depreciable assets 2,526 51 Total gross deferred tax asset 4,891 2,593 Valuation allowance (4,891 ) - Net deferred tax asset $ - $ 2,593 At the end of tax year ended June 26, 2016, the Company had net operating loss carryforwards totaling $7.5 million that are available to reduce future taxable income and will begin to expire 2032. The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. In the second quarter of fiscal year 2016, the Company recorded a $3.5 million valuation allowance against its net deferred tax assets. The valuation allowance was increased by $0.5 million in the third quarter of fiscal year 2016 to $4.0 million and again in the fourth quarter by $0.9 million to $4.9 million. The Company assessed whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, using a "more likely than not" standard. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Future sources of taxable income were also considered in determining the amount of the recorded valuation allowance. Based on the Company's review of this evidence, management determined that a full valuation allowance against all of the Company's deferred tax assets was appropriate. |
LEASES
LEASES | 12 Months Ended |
Jun. 26, 2016 | |
LEASES | |
LEASES | NOTE F - LEASES: Premises occupied by Company-owned restaurants are leased for initial terms of five to ten years, and each has multiple renewal terms. Certain lease agreements contain either a provision requiring additional rent if sales exceed specified amounts or an escalation clause based upon a predetermined multiple. In fiscal 2007, the Company sold its corporate office building and distribution facility located at 3551 Plano Parkway, The Colony, Texas, and entered into a ten-year lease agreement for the corporate office building. This lease expires December 19, 2016. The Company is in discussion with the landlord to extend its lease, and is also evaluating alternative options. Future minimum rental payments under non-cancelable leases, net of subleases, with initial or remaining terms of one year or more at June 26, 2016 were as follows (in thousands): Operating Leases 2017 $ 3,346 2018 3,050 2019 2,951 2020 2,899 2021 2,892 Thereafter 10,296 $ 25,434 Rental expense consisted of the following (in thousands): Fiscal Year Ended June 26, June 28, 2016 2015 Minimum rentals $ 3,090 $ 1,666 Sublease rentals (257 ) (221 ) $ 2,833 $ 1,445 |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Jun. 26, 2016 | |
EMPLOYEE BENEFITS | |
EMPLOYEE BENEFITS | 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 26, 2016 and June 28, 2015, total matching contributions to the tax advantaged savings plan by the Company on behalf of participating employees were approximately $53,000 and $39,000, respectively. |
STOCK BASED COMPENSATION PLANS
STOCK BASED COMPENSATION PLANS | 12 Months Ended |
Jun. 26, 2016 | |
STOCK BASED COMPENSATION PLANS | |
STOCK BASED COMPENSATION PLANS | NOTE H - STOCK BASED COMPENSATION PLANS: 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 were eligible to receive options to purchase shares of the Company's common stock. Options were granted at market value of the stock on the date of grant, were subject to various vesting and exercise periods as determined by the Compensation Committee of the board of directors, and could be designated as non-qualified or incentive stock options. A total of 1,000,000 shares of common stock were authorized for issuance under the 2005 Employee Plan. During the 2015 fiscal year, options to purchase 92,000 shares were granted under the 2005 Employee Plan. Also during the 2015 fiscal year, 3,000 shares of common stock were issued upon the exercise of options granted under the 2005 Employee Plan. The 2005 Employee Plan expired by its terms on June 23, 2015. During fiscal 2016, contingencies were satisfied with respect to options to purchase 18,500 shares of common stock previously conditionally granted under the 2005 Employee Plan. The shareholders also approved the 2005 Non-Employee Directors Stock Award Plan (the "2005 Directors Plan") in June 2005, to be effective as of June 23, 2005. Directors not employed by the Company were eligible to receive stock options under the 2005 Directors Plan. Options for common stock equal to twice the number of shares of common stock acquired during the previous fiscal year, up to 40,000 shares per year, were automatically granted to each non-employee director on the first day of each fiscal year. Options were granted at market value of the stock on the first day of each fiscal year, with vesting periods beginning at a minimum of six months and with exercise periods up to ten years. A total of 650,000 shares of Company common stock were authorized for issuance pursuant to the 2005 Directors Plan. During the 2015 fiscal year, 28,800 options were granted under the 2005 Directors Plan. Also during the 2015 fiscal year, 167,200 shares of common stock were issued upon the exercise of options granted under the 2005 Directors Plan. The 2005 Directors Plan expired by its terms on June 23, 2015. The 2015 Long Term Incentive Plan (the "2015 LTIP") was approved by the Company's shareholders on November 18, 2014, and became effective June 1, 2015. Officers, employees and non-employee directors of the Company are eligible to receive awards under the 2015 LTIP. A total of 1,200,000 shares of common stock are authorized for issuance under the 2015 LTIP. Awards authorized under the 2015 LTIP include incentive stock options, non-qualified stock options, restricted shares, restricted stock units and rights (either with or without accompanying options). The 2015 LTIP provides for options to be granted at market value of the stock on the date of grant and have exercise periods determined by the Compensation Committee of the board of directors. The Compensation Committee may also determine the vesting periods, performance criteria and other terms and conditions of all awards under the 2015 LTIP. The Compensation Committee has adopted resolutions under the 2015 LTIP automatically granting to each non-employee director on the first day of each fiscal year options to purchase twice the number of shares of common stock acquired during the previous fiscal year, up to a maximum of 40,000 shares. Such options are exercisable at the market value of the stock on the first day of the fiscal year, vest six months from the date of grant and expire 10 years from the date of grant. During fiscal 2016, options to purchase 24,286 shares of common stock and 100,190 restricted stock units (representing the right to receive up to 150,285 shares of common stock) were granted under the 2015 LTIP and represent the only awards outstanding thereunder. Share based compensation expense is included in general and administrative expense in the statement of operations. Stock Options: 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: Fiscal Year Ended June 26, 2016 June 28, 2015 Weighted- Weighted- Average Average Exercise Exercise Shares Price Shares Price Outstanding at beginning of year 871,798 $ 3.51 921,198 $ 2.92 Granted 42,786 $ 10.92 120,800 $ 6.57 Exercised (27,916 ) $ 3.65 (170,200 ) $ 2.50 Forfeited/Canceled/Expired (39,112 ) $ 5.67 - $ - Outstanding at end of year 847,556 $ 3.77 871,798 $ 3.51 Exercisable at end of year 558,620 $ 2.71 406,378 $ 2.63 Weighted-average fair value of options granted during the year $ 4.24 $ 3.16 Total intrinsic value of options exercised $ 102,010 $ 425,944 At June 26, 2016, the total intrinsic value of options outstanding was $8.2 million and of options exercisable was $5.8 million. The following table provides information on options outstanding and options exercisable as of June 26, 2016: Options Outstanding Options Exercisable Weighted- Average Options Remaining Weighted- Options Weighted- Range of Outstanding Contractual Average Exercisable Average Exercise Prices at June 26, 2016 Life (Years) Exercise Price at June 26, 2016 Exercise Price $ 1.55 - 1.95 81,306 3.1 $ 1.90 81,306 $ 1.90 $ 1.96 - 2.35 90,000 2.0 $ 2.32 90,000 $ 2.32 $ 2.36 - 2.75 390,000 6.2 $ 2.58 250,000 $ 2.58 $ 2.76 - 3.30 55,000 6.0 $ 3.11 55,000 $ 3.11 $ 5.51 - 5.74 8,664 7.0 $ 5.74 8,664 $ 5.74 $ 5.95 - 6.25 153,300 7.9 $ 6.06 66,150 $ 3.40 $ 6.26 - 8.16 69,286 8.3 $ 9.85 7,500 $ 8.12 847,556 5.9 $ 3.77 558,620 $ 2.71 We determine fair value following the authoritative guidance as follows: Valuation and Amortization Method. Expected Life Expected Volatility Risk-Free Interest Rate Expected Dividend Yield. Expected Forfeitures The following weighted average assumptions were used for options granted in the last two fiscal years: June 26, June 28, Fiscal Year Ended 2016 2015 Expected life (in years) 5.7 5.9 Expected volatility 36.0% 39.1% Risk-free interest rate 1.6% 1.9% Expected forfeiture rate 61.8% 47.1% At June 26, 2016, the Company had unvested options to purchase 288,936 shares with a weighted average grant date fair value of $4.47. The total remaining unrecognized compensation cost related to unvested stock options amounted to approximately $0.2 million at June 26, 2016. The weighted average remaining requisite service period of the unvested awards was 9.3 months. Stock compensation expense related to stock options of $0.2 million and $0.1 million was recognized in fiscal years 2016 and 2015, respectively. Restricted Stock Units: Restricted stock units awarded under the 2015 LTIP represent the right to receive shares of common stock upon the satisfaction of vesting requirements, performance criteria and other terms and conditions. During the third quarter of fiscal 2016, an aggregate of 100,190 restricted stock units were granted to certain employees. The restricted stock units granted to each recipient are allocated among performance criteria pertaining to various aspects of the Company's business, as well as its overall operations, measured based on its fiscal year ending June 24, 2018. Achievement of the various performance criteria entitles the recipient to receive shares of common stock in amounts ranging from 50% to 150% of the number of restricted stock units granted. Grantees of restricted stock units do not have any rights of a stockholder, and do not participate in any distributions on our common stock, until the award fully vests upon satisfaction of the vesting schedule, performance criteria and other conditions set forth in their award agreement. Therefore, unvested restricted stock units are not considered participating securities under ASC 260, " Earnings Per Share Compensation cost is measured as an amount equal to the fair value of the restricted stock units on the date of grant and is expensed over the vesting period if achievement of the performance criteria is deemed probable, with the amount of the expense recognized based on the best estimate of the ultimate achievement level. The grant date fair value of the restricted stock units granted in fiscal 2016 is $5.99 per unit. The Company incurred compensation expense of $33 thousand and recorded no income tax benefit due to a full valuation allowance. A summary of the status of restricted stock units as of June 26, 2016, and changes during the fiscal year then ended is presented below: Number of Restricted Stock Units Vested at June 28, 2015 - Granted 100,190 Vested - Forfeited 20,570 Unvested at June 26, 2016 79,620 As of June 26, 2016, there was $0.2 million of total unrecognized compensation cost related to unvested restricted stock units granted under the 2015 LTIP, of which $79 thousand is expected to be recognized in each of fiscal 2017 and fiscal 2018, and $23 thousand is expected to be recognized in fiscal 2019. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Jun. 26, 2016 | |
SHAREHOLDERS' EQUITY {1} | |
SHAREHOLDERS' EQUITY | 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 2016 and, as of June 26, 2016, 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 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 "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 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 gross proceeds of $8.0 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 26, 2016, the Company had sold an aggregate of 825,763 shares in the 2014 ATM Offering, realizing aggregate gross proceeds of $8.1 million. The Company pays to MLV a fee equal to 3% of the gross sales price in addition to reimbursing certain costs. Expenses associated with the 2013 ATM Offering and 2014 ATM Offering were $21,000 and $42,000 in fiscal 2016 and fiscal 2015, respectively, which includes fees and expense reimbursement to MLV and legal and other offering expenses incurred by the Company. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jun. 26, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE J - COMMITMENTS AND CONTINGENCIES: The Company is subject to various claims and contingencies related to employment agreements, franchise disputes, lawsuits, taxes, food product purchase contracts and other matters arising out of the normal course of business. Management believes that any such claims and actions currently pending are either covered by insurance or would not have a material adverse effect on the Company's annual results of operations or financial condition if decided in a manner that is unfavorable to us. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Jun. 26, 2016 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE K - EARNINGS PER SHARE: The Company computes and presents earnings per share ("EPS") in accordance with the authoritative guidance on 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). Fiscal Year Ended June 26, June 28, 2016 2015 Loss from continuing operations $ (8,774 ) $ (1,671 ) Discontinued operations (112 ) (168 ) Net loss available to common stockholders $ (8,886 ) $ (1,839 ) BASIC: Weighted average common shares 10,317 9,744 Loss from continuing operations per common share $ (0.85 ) $ (0.17 ) Discontinued operations per common share (0.01 ) (0.02 ) Net loss per common share $ (0.86 ) $ (0.19 ) DILUTED: Weighted average common shares 10,317 9,744 Stock options 432 562 Weighted average common shares outstanding 10,749 10,306 Loss from continuing operations per common share $ (0.82 ) $ (0.16 ) Discontinued operations per common share (0.01 ) (0.02 ) Net loss per common share $ (0.83 ) $ (0.18 ) |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Jun. 26, 2016 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | 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 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 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 26, 2016 and June 28, 2015 (in thousands): Fiscal Year Ended June 26, June 28, 2016 2015 Net sales and operating revenues: Franchising and food and supply distribution $ 40,324 $ 35,330 Company-owned restaurants (1) 20,487 12,869 Consolidated revenues $ 60,811 $ 48,199 Depreciation and amortization: Franchising and food and supply distribution $ 23 $ 24 Company-owned restaurants (1) 2,458 1,374 Combined 2,481 1,398 Corporate administration and other 241 219 Depreciation and amortization $ 2,722 $ 1,617 Loss from continuing operations before taxes Franchising and food and supply distribution (2) $ 2,694 $ 1,492 Company-owned restaurants (1) (2) (6,183 ) (1,729 ) Combined (3,489 ) (237 ) Corporate administration and other (2) (2,572 ) (2,104 ) Loss from continuing operations before taxes $ (6,061 ) $ (2,341 ) Capital Expenditures: Franchising and food and supply distribution $ - $ - Company-owned restaurants 7,497 6,443 Corporate administration 613 284 Combined capital expenditures $ 8,110 $ 6,727 Assets: Franchising and food and supply distribution $ 3,187 $ 4,314 Company-owned restaurants 12,817 11,088 Corporate administration 2,501 8,569 Combined assets $ 18,505 $ 23,971 (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: United States $ 60,260 $ 47,509 Foreign countries 551 690 Consolidated total $ 60,811 $ 48,199 |
Accounting Policies (Policies)
Accounting Policies (Policies) | 12 Months Ended |
Jun. 26, 2016 | |
Accounting Policies: | |
Description of Business | Description of Business: 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 26, 2016, we owned and operated 32 restaurants comprised of 31 Pie Five restaurants ("Pie Five Units") and one Pizza Inn buffet restaurant ("Buffet Unit"). As of that date, we also had 57 franchised Pie Five Units and 221 franchised Pizza Inn restaurants. The 161 domestic franchised Pizza Inn restaurants were comprised of 95 Buffet Units, 15 delivery/carry-out restaurants ("Delco Units") and 51 express restaurants ("Express Units"). The 60 international franchised Pizza Inn restaurants were comprised of 12 Buffet Units, 40 Delco Units and eight Express Units. Domestic restaurants were located predominantly in the southern half of the United States, with Texas, North Carolina, Arkansas and Kansas accounting for approximately 33%, 12%, 10% and 6%, respectively, of the total number of domestic restaurants. |
Principles of Consolidation | Principles of Consolidation: The consolidated financial statements include the accounts of Rave Restaurant Group, Inc. and its subsidiaries, all of which are wholly owned. All appropriate inter-company balances and transactions have been eliminated. |
Reclassification | Reclassifications: Certain reclassifications have been made to prior period amounts to conform to the current period presentation. |
Cash and Cash Equivalents | 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, Policy | 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 26, 2016 and June 28, 2015 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, Policy | Inventories: Inventory consists primarily of food, paper products and supplies stored in and used by Company restaurants and was stated at lower of first-in, first-out ("FIFO") or market. The valuation of such restaurant inventory requires us to estimate the amount of obsolete and excess inventory based on estimates of future retail sales by Company-owned restaurants. Overestimating retail sales by Company-owned restaurants could result in the write-down of inventory which would have a negative impact on the gross margin of such Company-owned restaurants. |
Closed Restaurants and Discontinued Operations, Policy | 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, The authoritative guidance on " Accounting for the Impairment or Disposal of Long-Lived Assets," The authoritative guidance on " Accounting for Costs Associated with Exit or Disposal Activities," 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, Policy | 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 are 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, Policy | Impairment of Long-Lived Asset and other Lease Charges: 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 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 2016 and 2015, the Company tested its long-lived assets for impairment and recognized pre-tax, non-cash impairment charges of $1.7 million and $0.3 million, respectively, related to the carrying value of several Pie Five and Pizza Inn units. |
Accounts Receivable , Policy | 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. |
Notes Receivable | 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 2024 and bear interest at rates that range from 5% to 7% (6% average rate at June 26, 2016). Management evaluates the creditworthiness of franchisees by considering credit history and sales to evaluate credit risk. Management determines interest rates based on credit risk of the underlining franchisee. The Company monitors payment history to determine whether or not a loan should be placed on a nonaccrual status or impaired. The Company charges off notes receivable based on an account-by-account analysis of the borrower's current economic conditions, monthly payments history and historical loss experience. The allowance for doubtful notes receivable is included with the allowance for doubtful accounts. Notes receivable as of June 26, 2016 consisted of $0.2 million in current assets and $0.4 million in long-term assets. The principal balance outstanding on the notes receivable and expected principal collections for the next five years and thereafter were as follows as of June 26, 2016 (in thousands): Notes Receivable 2017 167 2018 86 2019 81 2020 87 2021 and thereafter 128 $ 549 One note totaling $15 thousand was charged off for the fiscal year ended June 26, 2016. |
Income Taxes, Policy | Income Taxes: Income taxes are accounted for using the asset and liability method pursuant to the authoritative guidance on Accounting for Income Taxes The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. In the second quarter of fiscal year 2016, the Company recorded a $3.5 million valuation allowance against its net deferred tax assets. The valuation allowance was increased by $0.5 million in the third quarter of fiscal year 2016 to $4.0 million and again in the fourth quarter by $0.9 million to $4.9 million. The Company assessed whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, using a "more likely than not" standard. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Future sources of taxable income were also considered in determining the amount of the recorded valuation allowance. Based on the Company's review of this evidence, management determined that a full valuation allowance against all of the Company's deferred tax assets was appropriate. 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 26, 2016 and June 28, 2015, the Company had no uncertain tax positions. Federal returns for tax years 2012 through 2015 remained open for examination as of June 26, 2016. |
Pre-Opening Expense | Pre-Opening Expense: 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. |
Related Party Transactions | 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 26, 2016, the accrued liability relating to services performed by NCMS was $100,003. |
Revenue Recognition | 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. Shipping and handling costs billed to customers are recognized as revenue and the associated costs are included in cost of sales. 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 26, 2016 and June 28, 2015, 82.8% and 82.2%, 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 | Stock Options: We account for stock options using the fair value recognition provisions of the authoritative guidance on Share-Based Payments The Company's stock-based compensation 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. |
Restricted Stock Units | Restricted Stock Units: Compensation cost is measured as an amount equal to the fair value of the restricted stock units on the date of grant and is expensed over the vesting period if achievement of the performance criteria is deemed probable, with the amount of the expense recognized based on the best estimate of the ultimate achievement level. |
Fair Value of Financial Instruments, Policy | 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 no bank debt at June 26, 2016. |
Advertising and Marketing Costs, Policy | Advertising and Marketing Costs: Advertising and marketing costs are expensed as incurred and totaled $1.2 million for fiscal year ended June 26, 2016 and $0.7 million for fiscal year ended June 28, 2015. Advertising and marketing costs are included in cost of sales and general and administrative expenses in the consolidated statements of operations. |
Contingencies, Policy | 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 |
Use of Management Estimates | 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 | Fiscal Year: The Company's fiscal year ends on the last Sunday in June. The fiscal year ended June 26, 2016 and the fiscal year ended June 28, 2015 both contained 52 weeks. |
Schedule of notes receivable (T
Schedule of notes receivable (Tables) | 12 Months Ended |
Jun. 26, 2016 | |
Schedule of notes receivable (Tables): | |
Schedule of notes receivable | The principal balance outstanding on the notes receivable and expected principal collections for the next five years and thereafter were as follows as of June 26, 2016 (in thousands): Notes Receivable 2017 167 2018 86 2019 81 2020 87 2021 and thereafter 128 |
Schedule of Property, and plant
Schedule of Property, and plant and equipment (Tables) | 12 Months Ended |
Jun. 26, 2016 | |
Schedule of Property, and plant and equipment (Tables): | |
Schedule of Property, and plant and equipment (Tables) | Property, and plant and equipment consist of the following (in thousands): Estimated Useful June 26, June 28, Lives 2016 2015 Equipment, furniture and fixtures 3 - 7 yrs $ 9,697 $ 6,927 Software 5 yrs 872 637 Vehicle 2 - 3 yrs - 19 Leasehold improvements 10 yrs or lease term, if shorter 13,290 9,134 23,859 16,717 Less: accumulated depreciation/amortization (10,880 ) (6,697 ) $ 12,979 $ 10,020 |
Schedule of Accrued expenses (T
Schedule of Accrued expenses (Tables) | 12 Months Ended |
Jun. 26, 2016 | |
Schedule of Accrued expenses (Tables): | |
Schedule of Accrued expenses | Accrued expenses consist of the following (in thousands): <BTB> June 26, June 28, <S> 2016 2015 Compensation $ 728 $ 587 Other 447 506 Professional fees 37 79 Insurance loss reserves 8 95 $ 1,220 $ 1,267 |
Schedule of income taxes (Table
Schedule of income taxes (Tables) | 12 Months Ended |
Jun. 26, 2016 | |
Schedule of income taxes (Tables): | |
Schedule of Provision for income taxes (Tables) | Provision for income taxes from continuing operations consists of the following (in thousands): Fiscal Year Ended June 26, June 28, 2016 2015 Current - Federal $ - $ - Current - Foreign - 24 Current - State 4 29 Deferred - Federal 2,823 (674 ) Deferred - State (114 ) (49 ) Provision for income taxes $ 2,713 $ (670 ) |
Schedule of Effective Income Tax Rate Reconciliation | The effective income tax rate varied from the statutory rate for the fiscal years ended June 26, 2016 and June 28, 2015 as reflected below (in thousands): June 26, June 28, 2016 2015 Federal income taxes based on 34% of pre-tax loss $ (2,060 ) $ (796 ) State income tax, net of federal effect (45 ) (13 ) Permanent adjustments 19 44 Valuation allowance 4,891 - Foreign tax credits - 24 Other (92 ) 71 $ 2,713 $ (670 ) |
Schedule of Deferred Tax Assets | The tax effects of temporary differences that give rise to the net deferred tax assets consisted of the following (in thousands): June 26, June 28, 2016 2015 Current Reserve for bad debt $ 70 $ 69 Deferred fees 105 124 Other reserves and accruals 1,246 536 1,421 729 Non Current Credit carryforwards 747 180 Net operating loss carryforwards 197 1,633 Depreciable assets 2,526 51 Total gross deferred tax asset 4,891 2,593 Valuation allowance (4,891 ) - Net deferred tax asset $ - $ 2,593 |
Schedule of Leases (Tables)
Schedule of Leases (Tables) | 12 Months Ended |
Jun. 26, 2016 | |
Schedule of Leases (Tables): | |
Schedule of Future Minimum Lease rental payments | Future minimum rental payments under non-cancelable leases, net of subleases, with initial or remaining terms of one year or more at June 26, 2016 were as follows (in thousands): Operating Leases 2017 $ 3,346 2018 3,050 2019 2,951 2020 2,899 2021 2,892 Thereafter 10,296 $ 25,434 |
Schedule of Rental expense | Rental expense consisted of the following (in thousands): Fiscal Year Ended June 26, June 28, 2016 2015 Minimum rentals $ 3,090 $ 1,666 Sublease rentals (257 ) (221 ) $ 2,833 $ 1,445 |
Schedule of Summary of Outstand
Schedule of Summary of Outstanding Stock Options (Tables) | 12 Months Ended |
Jun. 26, 2016 | |
Schedule of Summary of Outstanding Stock Options | |
Schedule of Summary of Outstanding Stock Options | 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: Fiscal Year Ended June 26, 2016 June 28, 2015 Weighted- Weighted- Average Average Exercise Exercise Shares Price Shares Price Outstanding at beginning of year 871,798 $ 3.51 921,198 $ 2.92 Granted 42,786 $ 10.92 120,800 $ 6.57 Exercised (27,916 ) $ 3.65 (170,200 ) $ 2.50 Forfeited/Canceled/Expired (39,112 ) $ 5.67 - $ - Outstanding at end of year 847,556 $ 3.77 871,798 $ 3.51 Exercisable at end of year 558,620 $ 2.71 406,378 $ 2.63 Weighted-average fair value of options granted during the year $ 4.24 $ 3.16 Total intrinsic value of options exercised $ 102,010 $ 425,944 |
Schedule of restricted stock units (Tables) | A summary of the status of restricted stock units as of June 26, 2016, and changes during the fiscal year then ended is presented below: Number of Restricted Stock Units Vested at June 28, 2015 - Granted 100,190 Vested - Forfeited 20,570 Unvested at June 26, 2016 79,620 |
Schedule of Stock Options weighted average Valuation Assumptions | The following weighted average assumptions were used for options granted in the last two fiscal years: June 26, June 28, Fiscal Year Ended 2016 2015 Expected life (in years) 5.7 5.9 Expected volatility 36.0% 39.1% Risk-free interest rate 1.6% 1.9% Expected forfeiture rate 61.8% 47.1% |
Schedule of reconciliation of t
Schedule of reconciliation of the numerator and denominator of the basic EPS calculation to the numerator and denominator of the diluted EPS calculation (Tables) | 12 Months Ended |
Jun. 26, 2016 | |
Schedule of reconciliation of the numerator and denominator of the basic EPS calculation to the numerator and denominator of the diluted EPS calculation | |
Schedule of Earnings Per Share, Basic and Diluted | 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). Fiscal Year Ended June 26, June 28, 2016 2015 Loss from continuing operations $ (8,774 ) $ (1,671 ) Discontinued operations (112 ) (168 ) Net loss available to common stockholders $ (8,886 ) $ (1,839 ) BASIC: Weighted average common shares 10,317 9,744 Loss from continuing operations per common share $ (0.85 ) $ (0.17 ) Discontinued operations per common share (0.01 ) (0.02 ) Net loss per common share $ (0.86 ) $ (0.19 ) DILUTED: Weighted average common shares 10,317 9,744 Stock options 432 562 Weighted average common shares outstanding 10,749 10,306 Loss from continuing operations per common share $ (0.82 ) $ (0.16 ) Discontinued operations per common share (0.01 ) (0.02 ) Net loss per common share $ (0.83 ) $ (0.18 ) |
Notes Receivables (Details)
Notes Receivables (Details) | Jun. 26, 2016USD ($) |
Accounts Receivalble details | |
Finance charges may be accrued at a rate per year | 18.00% |
Notes Receivables details | |
Notes receivable bear interest rate minimum | 5.00% |
Notes receivable bear interest rate maximum | 7.00% |
Current notes receivables | $ 200,000 |
Total notes receivables | $ 600,000 |
Expected Principal Collections
Expected Principal Collections For The Next Five Years And Thereafter (Details) $ in Thousands | Jun. 26, 2016USD ($) |
Expected principal collections for the next five years and thereafter | |
Notes Recevables 2017 | $ 167 |
Notes Recevables 2018 | 86 |
Notes Recevables 2019 | 81 |
Notes Recevables 2020 | 87 |
Notes Recevables 2021 and there after | 128 |
Total Notes Receivables | 549 |
One note totaling | $ 15 |
Significant Accounting Policies
Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Jun. 26, 2016 | Jun. 28, 2015 | |
Impairment of Long-Lived Asset | ||
Long-lived assets for impairment and recognized pre-tax, non-cash impairment charges | $ 1,700,000 | $ 300,000 |
Royalties in percentge | 82.00% | 82.20% |
Advertising and Marketing Costs | ||
Advertising and marketing costs are expensed and totaled | $ 1,200,000 | $ 700,000 |
Company's fiscal year | 52 | 52 |
Related Party (Details)
Related Party (Details) | Feb. 20, 2014USD ($) |
Related Party Details | |
NCMS was paid an initial fee | $ 150,000 |
Earns quarterly fees | 50,000 |
Additional fee per quarter | 50,000 |
Aggregate additional fees | 100,000 |
Accrued liability relating to services performed by NCMS | $ 100,003 |
Property, and plant and equipme
Property, and plant and equipment consist of the following (Details) - USD ($) $ in Thousands | Jun. 26, 2016 | Jun. 28, 2015 |
Property, and plant and equipment consist of the following | ||
Equipment, furniture and fixtures with estimated life of 3 to 7 years | $ 9,697 | $ 6,927 |
Software with estimated life of 5 years | 872 | 637 |
Vehicle with estimated life of 2 to 3 years | 19 | |
Leasehold improvements with estimated life of 10 yrs or lease term, if shorter | 13,290 | 9,134 |
Gross Total of Property, and plant and equipment | 23,859 | 16,717 |
Less: accumulated depreciation/amortization | (10,880) | (6,697) |
Net Total of Property, and plant and equipment | $ 12,979 | $ 10,020 |
Depreciation And Amortization E
Depreciation And Amortization Expense (Details) - USD ($) | 12 Months Ended | |
Jun. 26, 2016 | Jun. 28, 2015 | |
Depreciation and amortization expense Details | ||
Depreciation and amortization expense | $ 2,700,000 | $ 1,600,000 |
Accrued Expenses Consist Of The
Accrued Expenses Consist Of The Following (Details) - USD ($) $ in Thousands | Jun. 26, 2016 | Jun. 28, 2015 |
Accrued expenses consist of the following | ||
Compensation accrued | $ 728 | $ 587 |
Other | 447 | 506 |
Professional fees accrued | 37 | 79 |
Insurance loss reserves | 8 | 95 |
Total accrued expense | $ 1,220 | $ 1,267 |
Loan and Security Agreement wit
Loan and Security Agreement with F & M Bank & Trust Company (Details) - USD ($) | Aug. 28, 2014 | Aug. 28, 2012 |
Loan and Security Agreement with F & M Bank & Trust Company: | ||
Revolving credit facility provided | $ 2,000,000 | |
Fully Funded Term loan facility | 2,000,000 | |
Advancing term loan facility | $ 6,000,000 | |
Origination fee of total credit facilities | 0.50% | |
F & M funded term loan payable | $ 2,000,000 | |
Term loan payable in equal monthly installments | 48 | |
Accrued interest at a fixed rate | 4.57% | |
Unused commitment fee per annum is payable quarterly | 0.50% | |
F&M had agreed to make up in additional term loans | $ 6,000,000 |
Provision For Income Taxes From
Provision For Income Taxes From Continuing Operations Consists Of The Following (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 26, 2016 | Jun. 28, 2015 | |
Provision for income taxes from continuing operations consists of the following | ||
Current - Federal | $ 0 | |
Current - Foreign | $ 24 | |
Current - State | 4 | 29 |
Deferred - Federal | 2,823 | (674) |
Deferred - State | (114) | (49) |
Provision for income taxes | 2,713 | (670) |
Tax benefit Included in loss from discontinued operations | $ 58,000 | $ 86,000 |
Effective Income Tax Rate Varie
Effective Income Tax Rate Varied From The Statutory Rate (Details) - USD ($) $ in Thousands | Jun. 26, 2016 | Jun. 28, 2015 |
Effective income tax rate varied from the statutory rate | ||
Federal income taxes based on 34% of pre-tax income | $ (2,060) | $ (796) |
State income tax, net of federal effect | (45) | (13) |
Permanent adjustments | 19 | 44 |
Valuation allowance | 4,891 | |
Foreign tax credits | 24 | |
Other adjustments | (92) | 71 |
Total tax net | $ 2,713 | $ (670) |
Tax Effects Of Temporary Differ
Tax Effects Of Temporary Differences That Give Rise To The Net Deferred tax Assets Consisted Of The Following (Details) - USD ($) $ in Thousands | Jun. 26, 2016 | Jun. 28, 2015 |
Current | ||
Reserve for bad debt | $ 70 | $ 69 |
Deferred fees | 105 | 124 |
Other reserves and accruals | 1,246 | 536 |
Total gross current deferred tax asset | 1,421 | 729 |
Non Current | ||
Credit carryforwards, | 747 | 180 |
Net operating loss carryforwards, | 197 | 1,633 |
Depreciable assets | 2,526 | 51 |
Total gross deferred tax asset | 4,891 | 2,593 |
Valuation allowance | $ (4,891) | |
Net deferred tax asset | $ 2,593 |
Income Tax (Details)
Income Tax (Details) | Jun. 26, 2016USD ($) |
Income Tax | |
Company had federal and state net operating loss carryforwards | $ 7,500,000 |
Valuation allowance against its net deferred tax assets | $ 3,500,000 |
Future minimum rental payments
Future minimum rental payments under non-cancelable leases (Operating Leases) (Details) $ in Thousands | Jun. 26, 2016USD ($) |
Future minimum rental payments under non-cancelable leases | |
Future minimum rental payments under non-cancelable leases in 2017 | $ 3,346 |
Future minimum rental payments under non-cancelable leases in 2018 | 3,050 |
Future minimum rental payments under non-cancelable leases in 2019 | 2,951 |
Future minimum rental payments under non-cancelable leases in 2020 | 2,899 |
Future minimum rental payments under non-cancelable leases in 2021 | 2,892 |
Future minimum rental payments under non-cancelable leases Thereafter | 10,296 |
Future minimum rental payments under non-cancelable leases | $ 25,434 |
Rental Expense Consisted Of The
Rental Expense Consisted Of The Following (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 26, 2016 | Jun. 28, 2015 | |
Rental expense consisted of the following | ||
Minimum rentals | $ 3,090 | $ 1,666 |
Sublease rentals | (257) | (221) |
Total rental expense | $ 2,833 | $ 1,445 |
Employee Benefits (Details)
Employee Benefits (Details) - USD ($) | 12 Months Ended | |
Jun. 26, 2016 | Jun. 28, 2015 | |
EMPLOYEE BENEFITS Details | ||
Contributions to the tax advantaged savings plan | $ 53,000 | $ 39,000 |
Company contributes on behalf of each participating employee an amount equal to the percentage contributed by employees | 50.00% | |
Maximum percentage of contribution by the employer as compensation | 4.00% | |
Compensation deferred minimum | 1.00% | |
Compensation deferred maximum | 15.00% |
Stock Options (Details)
Stock Options (Details) | Jun. 26, 2016shares |
Stock Options Details | |
Total shares of common stock are authorized for issuance under the 2005 Employee Plan | 1,000,000 |
Options to purchase Shares granted under the Employee plan. | 92,000 |
Shares of common stock were issued upon the exercise of options granted under Employee Plan | 3,000 |
Shares of common stock acquired per year | 40,000 |
Total shares of common stock are authorized for issuance under the 2005 Directors Plan | 650,000 |
Options to purchase Shares granted under the Directors plan. | 28,800 |
Shares of common stock were issued upon the exercise of options granted under Directors plan | 167,200 |
Total shares of common stock are authorized for issuance under the 2015 LTIP | 1,200,000 |
Company had unvested options to purchase shares | 24,286 |
Weighted average grant date fair value per share | 100,190 |
Total remaining unrecognized compensation cost related to unvested awards | 150,285 |
Common Stock To Outstanding Sto
Common Stock To Outstanding Stock Options of 2015-2016 (Details) {Stockholder Equity} | 12 Months Ended |
Jun. 26, 2016$ / sharesshares | |
Shares | |
Outstanding at beginning of year | 871,798 |
Granted | 42,786 |
Exercised | (27,916) |
Forfeited/Canceled/Expired | (39,112) |
Outstanding at end of year | 847,556 |
Exercisable at end of year | 558,620 |
Weighted-Average Exercise Price | |
Outstanding at beginning of year | 3.51 |
Granted | 10.92 |
Exercised | 3.65 |
Forfeited/Canceled/Expired | 5.67 |
Weighted-average fair value of options granted during the year | $ / shares | $ 4.24 |
Total intrinsic value of options exercised | 102,010 |
Outstanding at end of year | 3.77 |
Exercisable at end of year | 2.71 |
Common Stock To Outstanding S44
Common Stock To Outstanding Stock Options of 2014-2015 (Details) {Stockholder Equity} | 12 Months Ended |
Jun. 26, 2016$ / sharesshares | |
Shares | |
Outstanding at beginning of year | 921,198 |
Granted | 120,800 |
Exercised | (170,200) |
Outstanding at end of year | 871,798 |
Exercisable at end of year | 406,378 |
Weighted-Average Exercise Price | |
Outstanding at beginning of year | 2.92 |
Granted | 6.57 |
Exercised | 2.5 |
Forfeited/Canceled/Expired | 0 |
Weighted-average fair value of options granted during the year | $ / shares | $ 3.16 |
Total intrinsic value of options exercised | 425,944 |
Outstanding at end of year | 3.51 |
Exercisable at end of year | 2.63 |
Total intrinsic value of option
Total intrinsic value of options (Details) | Jun. 26, 2016shares |
Total intrinsic value of options | |
Total intrinsic value of options outstanding | 8,200,000 |
Total intrinsic value of options exercisable | 5,800,000 |
Options outstanding and options
Options outstanding and options exercisable (Details){Stockholder Equity} | 12 Months Ended |
Jun. 26, 2016shares | |
Options Outstanding at June 26, 2016 | |
Range of Exercise Prices 1.55 - 1.95 | 81,306 |
Range of Exercise Prices 1.96 - 2.35 | 90,000 |
Range of Exercise Prices 2.36 - 2.75 | 390,000 |
Range of Exercise Prices 2.76 - 3.30 | 55,000 |
Range of Exercise Prices 5.51 - 5.74 | 8,664 |
Range of Exercise Prices 5.95 - 6.25 | 153,300 |
Range of Exercise Prices 6.26 - 8.16 | 69,286 |
Total Options outstanding and options exercisable | 847,556 |
Options Outstanding Weighted-Average Remaining Contractual Life (Years) | |
Range of Exercise Prices 1.55 - 1.95 | 3.1 |
Range of Exercise Prices 1.96 - 2.35 | 2 |
Range of Exercise Prices 2.36 - 2.75 | 6.2 |
Range of Exercise Prices 2.76 - 3.30 | 6 |
Range of Exercise Prices 5.51 - 5.74 | 7 |
Range of Exercise Prices 5.95 - 6.25 | 7.9 |
Range of Exercise Prices 6.26 - 8.16 | 8.3 |
Total Options outstanding and options exercisable | 5.9 |
Options Outstanding Weighted-Average Exercise Price | |
Range of Exercise Prices 1.55 - 1.95 | 1.9 |
Range of Exercise Prices 1.96 - 2.35 | 2.32 |
Range of Exercise Prices 2.36 - 2.75 | 2.58 |
Range of Exercise Prices 2.76 - 3.30 | 3.11 |
Range of Exercise Prices 5.51 - 5.74 | 5.74 |
Range of Exercise Prices 5.95 - 6.25 | 6.06 |
Range of Exercise Prices 6.26 - 8.16 | 9.85 |
Total Options outstanding and options exercisable | 3.77 |
Options Exercisable at June 26, 2016 | |
Range of Exercise Prices 1.55 - 1.95 | 81,306 |
Range of Exercise Prices 1.96 - 2.35 | 90,000 |
Range of Exercise Prices 2.36 - 2.75 | 250,000 |
Range of Exercise Prices 2.76 - 3.30 | 55,000 |
Range of Exercise Prices 5.51 - 5.74 | 8,664 |
Range of Exercise Prices 5.95 - 6.25 | 66,150 |
Range of Exercise Prices 6.26 - 8.16 | 7,500 |
Total Options outstanding and options exercisable | 558,620 |
Options Exercisable Weighted-Average Exercise Price | |
Range of Exercise Prices 1.55 - 1.95 | 1.90 |
Range of Exercise Prices 1.96 - 2.35 | 2.32 |
Range of Exercise Prices 2.36 - 2.75 | 2.58 |
Range of Exercise Prices 2.76 - 3.30 | 3.11 |
Range of Exercise Prices 5.51 - 5.74 | 5.74 |
Range of Exercise Prices 5.95 - 6.25 | 3.40 |
Range of Exercise Prices 6.26 - 8.16 | 8.12 |
Total Options outstanding and options exercisable | 2.71 |
Weighted Average Assumptions (D
Weighted Average Assumptions (Details) | Jun. 26, 2016 | Jun. 28, 2015 |
Weighted average assumptions | ||
Expected life (in years) | 5.7 | 5.9 |
Expected volatility | 36.00% | 39.10% |
Risk-free interest rate | 1.60% | 1.90% |
Expected forfeiture rate | 61.80% | 47.10% |
Stock compensation expense (Det
Stock compensation expense (Details) | 12 Months Ended | |
Jun. 26, 2016USD ($) | Jun. 28, 2015USD ($) | |
Stock compensation expense Details | ||
Stock compensation expense related to stock options | $ 200,000 | $ 100,000 |
Fair value of the restricted stock units granted | 5.99 |
Number of Restricted Stock Unit
Number of Restricted Stock Units (Details) | Jun. 26, 2016shares |
Number of Restricted Stock Units Details | |
Vested at June 28, 2015 | 0 |
Granted | 100,190 |
Vested | 0 |
Forfeited | 20,570 |
Unvested at June 26, 2016 | 79,620 |
Stock Options Narrative (Detail
Stock Options Narrative (Details) | Jun. 26, 2016USD ($)$ / sharesshares |
Stock Options Narrative Details | |
Unvested options to purchase | shares | 288,936 |
Weighted average grant date fair value | $ / shares | $ 4.47 |
Total remaining unrecognized compensation | shares | 200,000 |
Remaining requisite service period of the unvested awards in months | 93 |
Restricted Stock Units | |
Restricted stock units were granted to certain employees | shares | 100,190 |
Unrecognized compensation cost related to unvested restricted stock | $ 200,000 |
Recognized compensation each of fiscal 2017 and fiscal 2018 | 79,000 |
Recognized compensation each of fiscal 2019 | 23,000 |
Company incurred compensation expense | $ 23 |
Stock repurchase plan (Details)
Stock repurchase plan (Details) - shares | Jun. 26, 2016 | Apr. 22, 2009 |
Stock repurchase plan | ||
Aggregate number of shares of common stock the Company may repurchase under the plan | 3,016,000 | |
Shares available to repurchase under the plan. | 848,425 |
Sales Agreement with MLV & Co.
Sales Agreement with MLV & Co. LLC (Details) - USD ($) | Jun. 26, 2016 | Feb. 13, 2015 | Oct. 01, 2014 | Nov. 20, 2013 | May 20, 2013 |
Sales Agreement with MLV & Co. LLC | |||||
Company may offer and sell shares of its common stock having an aggregate offering price | $ 5,000,000 | $ 3,000,000 | |||
The Company pays to MLV a fee equal to the gross sales price | 3.00% | ||||
Increase the 2014 ATM Offering by | $ 10,000,000 | $ 5,000,000 | |||
Company had sold an aggregate of shares of common stock in the ATM offering | $ 825,763 | $ 1,257,609 | |||
Realizing net proceeds in the ATM offering | $ 8,100,000 | $ 8,000,000 |
ATM offering Expenses (Details)
ATM offering Expenses (Details) - USD ($) | 12 Months Ended | |
Jun. 26, 2016 | Jun. 28, 2015 | |
ATM offering Expenses Details | ||
Expenses associated with the ATM offering were | $ 21,000 | $ 42,000 |
Earnings per Share (EPS) Consis
Earnings per Share (EPS) Consists of the Following (Details) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Jun. 26, 2016 | Jun. 28, 2015 | |
Earnings per Share (EPS) Consists of the Following | ||
Loss from continuing operations | $ (8,774) | $ (1,671) |
Discontinued operations | (112) | (168) |
Net loss available to common stockholders | $ (8,886) | $ (1,839) |
BASIC: | ||
Weighted average common shares | 10,317 | 9,744 |
Loss from continuing operations per common share | $ (0.85) | $ (0.17) |
Discontinued operations per common share | (0.01) | (0.02) |
Net loss per common share | $ (0.86) | $ (0.19) |
DILUTED: | ||
Weighted average common shares | 10,317 | 9,744 |
Stock options | 432 | 562 |
Weighted average common shares outstanding | 10,749 | 10,306 |
Loss from continuing operations per common share | $ (0.82) | $ (0.16) |
Discontinued operations per common share | (0.01) | (0.02) |
Net loss per common share | $ (0.83) | $ (0.18) |
Segment Reporting Operating Inc
Segment Reporting Operating Income And Geographic Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 26, 2016 | Jun. 28, 2015 | |
Net sales and operating revenues: | ||
Franchising and food and supply distribution | $ 40,324 | $ 35,330 |
Company-owned restaurants | 20,487 | 12,869 |
Consolidated revenues | 60,811 | 48,199 |
Depreciation and amortization: | ||
Franchising and food and supply distribution | 23 | 24 |
Company-owned restaurants | 2,458 | 1,374 |
Combined | 2,481 | 1,398 |
Corporate administration and other | 241 | 219 |
Depreciation and amortization | 2,722 | 1,617 |
Loss from continuing operations before taxes | ||
Franchising and food and supply distribution | 2,694 | 1,492 |
Company-owned restaurants | (6,183) | (1,729) |
Combined | (3,489) | (237) |
Corporate administration and other | (2,572) | (2,104) |
Loss from continuing operations before taxes | (6,061) | (2,341) |
Capital Expenditures: | ||
Franchising and food and supply distribution | 0 | |
Company-owned restaurants | 7,497 | 6,443 |
Corporate administration | 613 | 284 |
Combined capital expenditures | 8,110 | 6,727 |
Assets: | ||
Franchising and food and supply distribution | 3,187 | 4,314 |
Company-owned restaurants | 12,817 | 11,088 |
Corporate administration | 2,501 | 8,569 |
Combined assets | $ 18,505 | $ 23,971 |
Foreign and domestic revenues (
Foreign and domestic revenues (Details) - USD ($) | Jun. 26, 2016 | Jun. 28, 2015 |
Foreign and domestic revenues Details | ||
United States | $ 60,260 | $ 47,509 |
Foreign countries | 551 | 690 |
Consolidated total | $ 60,811 | $ 48,199 |