Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
||
|
|
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
|
Smaller reporting company
|
Emerging growth company
|
PART I. FINANCIAL INFORMATION
|
|||
Item 1.
|
Financial Statements
|
Page
|
|
3
|
|||
4
|
|||
5
|
|||
6
|
|||
7
|
|||
Item 2.
|
14
|
||
Item 3.
|
22
|
||
Item 4.
|
23
|
||
PART II. OTHER INFORMATION
|
|||
Item 1.
|
24
|
||
Item 1A.
|
24
|
||
Item 2.
|
24
|
||
Item 3.
|
24
|
||
Item 4.
|
24
|
||
Item 5.
|
24
|
||
Item 6.
|
25
|
||
26
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
March 26,
2023
|
March 27,
2022
|
March 26,
2023
|
March 27,
2022
|
|||||||||||||
REVENUES:
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
COSTS AND EXPENSES:
|
||||||||||||||||
Cost of sales
|
||||||||||||||||
General and administrative expenses
|
|
|
|
|
||||||||||||
Franchise expenses
|
|
|
|
|
||||||||||||
Impairment of long-lived assets and other lease charges
|
|
|
|
|
||||||||||||
Bad debt expense
|
|
|
|
|
||||||||||||
Interest expense
|
|
|
|
|
||||||||||||
Depreciation and amortization expense
|
|
|
|
|
||||||||||||
Total costs and expenses
|
|
|
|
|
||||||||||||
INCOME BEFORE TAXES
|
|
|
|
|
||||||||||||
Income tax expense
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
NET INCOME
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
INCOME PER SHARE OF COMMON STOCK - BASIC:
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
INCOME PER SHARE OF COMMON STOCK - DILUTED:
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Weighted average common shares outstanding - basic
|
|
|
|
|
||||||||||||
Weighted average common and potential dilutive common shares outstanding
|
|
|
|
|
March 26,
2023
|
June 26,
2022
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Accounts receivable, less allowance for bad debts of $
|
|
|
||||||
Notes receivable, current
|
|
|
||||||
Property held for sale
|
||||||||
Deferred contract charges, current
|
|
|
||||||
Prepaid expenses and other current assets
|
|
|
||||||
Total current assets
|
|
|
||||||
LONG-TERM ASSETS
|
||||||||
Property, plant and equipment, net
|
|
|
||||||
Operating lease right of use asset, net
|
|
|
||||||
Intangible assets definite-lived, net
|
|
|
||||||
Notes receivable, net of current portion
|
|
|
||||||
Deferred tax asset, net
|
||||||||
Deferred contract charges, net of current portion
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES
|
||||||||
Accounts payable - trade
|
$
|
|
$
|
|
||||
Accrued expenses
|
||||||||
Other current liabilities
|
||||||||
Operating lease liability, current
|
|
|
||||||
Short term loan
|
|
|
||||||
Deferred revenues, current
|
|
|
||||||
Total current liabilities
|
|
|
||||||
LONG-TERM LIABILITIES
|
||||||||
Operating lease liability, net of current portion
|
|
|
||||||
Deferred revenues, net of current portion
|
|
|
||||||
Total liabilities
|
|
|
||||||
COMMITMENTS AND CONTINGENCIES (SEE NOTE D)
|
||||||||
SHAREHOLDERS’ EQUITY
|
||||||||
Common stock, $
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Retained earnings
|
|
|
||||||
Treasury stock at cost
|
||||||||
Shares in treasury:
|
(
|
)
|
(
|
)
|
||||
Total shareholders’ equity
|
|
|
||||||
Total liabilities and shareholders’ equity
|
$
|
|
$
|
|
Common Stock
|
Treasury Stock
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Shares
|
Amount
|
Total
|
||||||||||||||||||||||
Balance, June 27, 2021
|
|
$
|
|
$
|
|
$
|
(
|
)
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|||||||||||||
Stock-based compensation expense
|
—
|
—
|
||||||||||||||||||||||||||
Net income
|
—
|
|
|
|
—
|
|
|
|||||||||||||||||||||
Balance, September 26, 2021
|
|
$
|
|
$
|
|
$
|
(
|
)
|
(
|
)
|
$
|
(
|
)
|
$
|
|
|||||||||||||
Stock-based compensation expense
|
— |
—
|
||||||||||||||||||||||||||
Net income
|
—
|
|
|
|
—
|
|
|
|||||||||||||||||||||
Balance, December 26, 2021
|
|
|
|
|
|
|
(
|
)
|
(
|
)
|
|
(
|
)
|
|
|
|||||||||||||
Stock-based compensation expense
|
— |
— |
||||||||||||||||||||||||||
Net income
|
— |
— |
||||||||||||||||||||||||||
Balance, March 27, 2022
|
|
$ |
$ |
( |
) | |
( |
) | $ |
( |
) | $ |
Common Stock
|
Treasury Stock
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Shares
|
Amount
|
Total
|
||||||||||||||||||||||
Balance, June 26, 2022
|
|
$
|
|
$
|
|
$
|
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||||||||||||
Stock-based compensation expense |
—
|
|
|
|
—
|
|
|
|||||||||||||||||||||
Purchase of treasury stock |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Net income
|
—
|
|
|
|
—
|
|
|
|||||||||||||||||||||
Balance, September 25, 2022
|
|
$
|
|
$
|
|
$
|
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||||||||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|||||||||||||||||||||||
Purchase of treasury stock | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Net income
|
—
|
|
|
|
—
|
|
|
|||||||||||||||||||||
Balance, December 25, 2022
|
|
$
|
|
$
|
|
$
|
|
(
|
)
|
$
|
(
|
)
|
$
|
|
||||||||||||||
Stock-based compensation expense
|
— |
— |
||||||||||||||||||||||||||
Net income
|
— |
— |
||||||||||||||||||||||||||
Balance, March 26, 2023
|
$ |
$ |
$ |
|
( |
) | $ |
( |
) | $ |
Nine Months Ended
|
||||||||
March 26,
2023
|
March 27,
2022
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to cash provided by operating activities:
|
||||||||
Impairment of long-lived assets and other lease charges
|
|
|
||||||
Stock-based compensation expense
|
|
|
||||||
Depreciation and amortization
|
|
|
||||||
Amortization of operating right of use assets
|
|
|
||||||
Amortization of intangible assets definite-lived
|
||||||||
Amortization of debt issue costs
|
|
|
||||||
Allowance for bad debts
|
|
|
||||||
Deferred income tax
|
||||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
|
(
|
)
|
|||||
Notes receivable
|
|
|
||||||
Deferred contract charges
|
|
(
|
)
|
|||||
Prepaid expenses and other
|
(
|
)
|
|
|||||
Accounts payable - trade
|
(
|
)
|
(
|
)
|
||||
Accrued expenses
|
(
|
)
|
(
|
)
|
||||
Operating lease liability
|
(
|
)
|
(
|
)
|
||||
Deferred revenues
|
( |
) | ( |
) | ||||
Cash provided by operating activities
|
|
|||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Payments received on notes receivable
|
|
|
||||||
Proceeds from sale of assets
|
||||||||
Purchase of intangible assets definite-lived
|
( |
) | ( |
) | ||||
Purchase of property, plant and equipment
|
(
|
)
|
(
|
)
|
||||
Cash (used in)/provided by investing activities
|
(
|
)
|
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Purchase of treasury stock
|
( |
) | ||||||
Payment of convertible notes
|
( |
) | ||||||
Payments on short term loan
|
(
|
)
|
(
|
)
|
||||
Cash used in financing activities
|
(
|
)
|
(
|
)
|
||||
Net decrease in cash and cash equivalents
|
(
|
)
|
(
|
)
|
||||
Cash and cash equivalents, beginning of period
|
|
|
||||||
Cash and cash equivalents, end of period
|
$
|
|
$
|
|
||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
CASH PAID FOR:
|
||||||||
Income taxes
|
$
|
|
$
|
|
Three Months Ended
|
||||||||
March 26, 2023
|
March 27, 2022
|
|||||||
Franchise royalties
|
$
|
|
$
|
|
||||
Supplier and distributor incentive revenues
|
|
|
||||||
Franchise license fees
|
|
|
||||||
Area development exclusivity fees and foreign master license fees
|
|
|
||||||
Advertising funds contributions
|
||||||||
Rental income
|
|
|
||||||
Other
|
||||||||
$
|
|
$
|
|
Nine Months Ended
|
||||||||
March 26, 2023
|
March 27, 2022
|
|||||||
Franchise royalties
|
$
|
|
$
|
|
||||
Supplier and distributor incentive revenues
|
|
|
||||||
Franchise license fees
|
|
|
||||||
Area development exclusivity fees and foreign master license fees
|
|
|
||||||
Advertising funds contributions
|
||||||||
Supplier convention funds
|
|
|
||||||
Rental income
|
|
|
||||||
Other
|
||||||||
$
|
|
$
|
|
Nine Months Ended
|
||||
March 26, 2023
|
||||
Operating lease cost
|
$
|
|
||
Rental income
|
(
|
)
|
||
Total lease expense, net of sublease income
|
$
|
|
Nine Months Ended
|
||||
March 26, 2023
|
||||
Cash paid for amounts included in the measurement of lease liabilities
|
$
|
|
March 26, 2023
|
||||
Weighted average remaining lease term | |
|||
Weighted average discount rate
|
|
%
|
Operating Leases
|
||||
2023 |
$ | |||
2024
|
||||
2025
|
||||
2026
|
||||
Thereafter
|
||||
Total operating lease payments
|
$ | |||
Less: imputed interest
|
( |
) |
||
Total operating lease liability
|
$ |
Period
|
Total Number
of Shares
Purchased
|
Average Price
Paid Per Share
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plan
|
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plan
|
||||||||||||
June 27, 2022 - July 31, 2022
|
|
$
|
|
|
|
|||||||||||
August 1, 2022 - August 28, 2022
|
|
|
|
|
||||||||||||
August 29, 2022 - September 25, 2022
|
|
|
||||||||||||||
September 26, 2022 - October 30, 2022 | ||||||||||||||||
October 31, 2022 - November 27, 2022 | ||||||||||||||||
November 28, 2022 - December 25, 2022 | ||||||||||||||||
December 26, 2022 - January 29, 2023 |
||||||||||||||||
January 30, 2023 - February 26, 2023 |
||||||||||||||||
February 27, 2023 - March 26, 2023 |
||||||||||||||||
Total
|
|
$
|
|
Nine Months Ended
|
||||||||
March 26, 2023
|
March 27, 2022
|
|||||||
Shares
|
Shares
|
|||||||
Outstanding at beginning of year
|
|
|
||||||
Granted
|
|
|
||||||
Exercised
|
|
|
||||||
Forfeited/Canceled/Expired
|
|
|
||||||
Outstanding at end of period
|
|
|
||||||
Exercisable at end of period
|
|
|
Unvested at June 26,
2022
|
|
|||
Granted
|
|
|||
Issued
|
|
|||
Forfeited
|
|
|||
Unvested at March 26,
2023
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
March 26, 2023
|
March 27, 2022
|
March 26, 2023
|
March 27, 2022
|
|||||||||||||
Net income available to common stockholders
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
BASIC:
|
||||||||||||||||
Weighted average common shares
|
|
|
|
|
||||||||||||
Net income per common share
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
DILUTED:
|
||||||||||||||||
Weighted average common shares
|
|
|
|
|
||||||||||||
Convertible notes
|
|
|
|
|
||||||||||||
Dilutive stock options
|
|
|
|
|
||||||||||||
Weighted average common shares outstanding
|
|
|
|
|
||||||||||||
Net income per common share
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
March 26, 2023
|
March 27, 2022
|
March 26, 2023
|
March 27, 2022
|
|||||||||||||
Net sales and operating revenues:
|
||||||||||||||||
Pizza Inn Franchising
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Pie Five Franchising
|
|
|
|
|
||||||||||||
Company-Owned Restaurants
|
||||||||||||||||
Corporate administration and other
|
|
|
|
|
||||||||||||
Consolidated revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Depreciation and amortization:
|
||||||||||||||||
Corporate administration and other
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Depreciation and amortization
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Income before taxes:
|
||||||||||||||||
Pizza Inn Franchising | $ | $ | $ | $ | ||||||||||||
Pie Five Franchising
|
|
|
|
|
||||||||||||
Company-Owned Restaurants
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Combined
|
|
|
|
|
||||||||||||
Corporate administration and other
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Income before taxes
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Geographic information (revenues):
|
||||||||||||||||
United States
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Foreign countries
|
|
|
|
|
||||||||||||
Consolidated revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
Pizza Inn
|
Pie Five
|
All Concepts
|
||||||||||||||||||||||
|
Ending
Units
|
Retail
Sales
|
Ending
Units
|
Retail
Sales
|
Ending
Units
|
Retail
Sales
|
||||||||||||||||||
Domestic Franchised/Licensed
|
122
|
$
|
25,689
|
30
|
$
|
4,998
|
152
|
$
|
30,687
|
|||||||||||||||
|