May 8, 2025 - 10-Q: Quarterly report [Sections 13 or 15(d)]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

☑

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

For the quarterly period ended March 30, 2025 or

☐

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

For the transition period from ________ to ________.

Commission File Number: 0-12919

RAVE RESTAURANT GROUP, INC.

(Exact name of registrant as specified in its charter)


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

3551 Plano Parkway

The Colony, Texas 75056

(Address of principal executive offices)

(Zip Code)

(469) 384-5000

(Registrant’s telephone number,

including area code)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	RAVE	Nasdaq Capital Market

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

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


Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☑	Smaller reporting company ☑
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of May 6, 2025, 14,211,566 shares of the issuer’s common stock were outstanding.

RAVE RESTAURANT GROUP, INC.

Index



PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	Page

	Condensed Consolidated Statements of Income (unaudited) for the three and nine months ended March 30, 2025 and March 24, 2024	3

	Condensed Consolidated Balance Sheets at March 30, 2025 (unaudited) and June 30, 2024	4

	Condensed Consolidated Statements of Shareholders’ Equity (unaudited) for the three and nine months ended March 30, 2025 and March 24, 2024	5

	Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended March 30, 2025 and March 24, 2024	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls and Procedures	24

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 3.	Defaults Upon Senior Securities	25

Item 4.	Mine Safety Disclosures	25

Item 5.	Other Information	25

Item 6.	Exhibits	26

Signatures		27

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

RAVE RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended						Nine Months Ended
	March 30, 2025			March 24, 2024			March 30, 2025			March 24, 2024
REVENUES	$	2,966		$	2,962		$	8,885		$	8,795

COSTS AND EXPENSES
General and administrative expenses		1,302			1,272			4,032			3,932
Franchise expenses		768			812			2,592			2,828
Provision (recovery) for credit losses		(14	)		11			(22	)		46
Interest income		(84	)		(45	)		(253	)		(93	)
Depreciation and amortization expense		44			58			140			170
Total costs and expenses		2,016			2,108			6,489			6,883
INCOME BEFORE TAXES		950			854			2,396			1,912
Income tax expense		228			200			541			319
NET INCOME	$	722		$	654		$	1,855		$	1,593

INCOME PER SHARE OF COMMON STOCK
Basic	$	0.05		$	0.04		$	0.13		$	0.11
Diluted	$	0.05		$	0.04		$	0.13		$	0.11

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic		14,508			14,587			14,595			14,395
Diluted		14,532			14,737			14,618			14,546

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

RAVE RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)

	March 30, 2025			June 30, 2024
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	734		$	2,886
Short-term investments		7,987			4,945
Accounts receivable, less allowance for credit losses of $30 and $57, respectively		1,221			1,411
Notes receivable, current		45			68
Assets held for sale		24			33
Deferred contract charges, current		21			26
Prepaid expenses and other current assets		216			167
Total current assets		10,248			9,536

LONG-TERM ASSETS
Property and equipment, net		147			182
Operating lease right-of-use assets, net		565			817
Intangible assets definite-lived, net		191			252
Notes receivable, net of current portion		86			79
Deferred tax asset, net		4,297			4,756
Deferred contract charges, net of current portion		177			197
Total assets	$	15,711		$	15,819

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable - trade	$	425		$	359
Accrued expenses		600			915
Operating lease liabilities, current		367			402
Deferred revenues, current		183			343
Total current liabilities		1,575			2,019

LONG-TERM LIABILITIES
Operating lease liabilities, net of current portion		300			555
Deferred revenues, net of current portion		488			543
Total liabilities		2,363			3,117

COMMITMENTS AND CONTINGENCIES (SEE NOTE D)

SHAREHOLDERS’ EQUITY
Common stock, $0.01 par value; authorized 26,000,000 shares; issued 25,647,171 and 25,522,171 shares, respectively; outstanding 14,211,566 and 14,586,566 shares, respectively		256			255
Additional paid-in capital		37,558			37,563
Retained earnings		6,767			4,912
Treasury stock, at cost
Shares in treasury: 11,435,605 and 10,935,605 respectively		(31,233	)		(30,028	)
Total shareholders' equity		13,348			12,702

Total liabilities and shareholders' equity	$	15,711		$	15,819

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

RAVE RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands)

(Unaudited)

	Common Stock				Additional Paid-in			Retained		Treasury Stock
	Shares		Amount		Capital			Earnings		Shares			Amount			Total
Balance, June 25, 2023		25,090	$	251	$	37,729		$	2,439		(10,936	)	$	(30,028	)	$	10,391
Stock-based compensation expense		—		—		79			—		—			—			79
Net income		—		—		—			386		—			—			386
Balance, September 24, 2023		25,090	$	251	$	37,808		$	2,825		(10,936	)	$	(30,028	)	$	10,856
Stock-based compensation expense		—		—		3			—		—			—			3
RSU vested and taxes paid on RSUs		432		4		(315	)		—		—			—			(311	)
Net income		—		—		—			553		—			—			553
Balance, December 24, 2023		25,522		255		37,496			3,378		(10,936	)		(30,028	)		11,101
Stock-based compensation expense		—		—		45			—		—			—			45
Net income		—		—		—			654		—			—			654
Balance, March 24, 2024		25,522		255	$	37,541		$	4,032		(10,936	)	$	(30,028	)	$	11,800

	Common Stock				Additional Paid-in			Retained		Treasury Stock
	Shares		Amount		Capital			Earnings		Shares			Amount			Total
Balance, June 30, 2024		25,522	$	255	$	37,563		$	4,912		(10,936	)	$	(30,028	)	$	12,702
Stock-based compensation expense		—		—		73			—		—			—			73
Net income		—		—		—			526		—			—			526
Balance, September 29, 2024		25,522	$	255	$	37,636		$	5,438		(10,936	)	$	(30,028	)	$	13,301
Stock-based compensation expense		—		—		53			—		—			—			53
RSU vested and taxes paid on RSUs		125		1		(183	)		—		—			—			(182	)
Net income		—		—		—			607		—			—			607
Balance, December 29, 2024		25,647	$	256	$	37,506		$	6,045		(10,936	)	$	(30,028	)	$	13,779
Stock-based compensation expense		—		—		52			—		—			—			52
Purchase of treasury stock		—		—		—			—		(500	)		(1,205	)		(1,205	)
Net income		—		—		—			722		—			—			722
Balance, March 30, 2025		25,647	$	256	$	37,558		$	6,767		(11,436	)	$	(31,233	)	$	13,348

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

RAVE RESTAURANT GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended
	March 30, 2025			March 24, 2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,855		$	1,593
Adjustments to reconcile net income to cash provided by operating activities:
Amortization of discount on short-term investment		(110	)		—
Impairment of long-lived assets and other lease charges		9			—
Stock-based compensation expense		178			127
Depreciation and amortization		70			107
Amortization of operating lease right-of-use assets		276			314
Amortization of definite-lived intangible assets		61			63
Non-cash lease expense		19			—
Provision (recovery) for credit losses		(22	)		46
Deferred income tax		459			247
Changes in operating assets and liabilities:
Accounts receivable		212			(239	)
Notes receivable		(18	)		(30	)
Deferred contract charges		25			20
Prepaid expenses and other current assets		(49	)		(227	)
Accounts payable - trade		66			150
Accrued expenses		(315	)		(217	)
Operating lease liabilities		(333	)		(356	)
Deferred revenues		(215	)		(267	)
Cash provided by operating activities		2,168			1,331

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments		(12,265	)		—
Maturities of short-term investments		9,333			—
Payments received on notes receivable		34			45
Proceeds from sale of assets		9			1
Purchase of definite-lived intangible assets		—			(8	)
Purchase of property and equipment		(44	)		(68	)
Cash used in investing activities		(2,933	)		(30	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock		(1,205	)		—
Taxes paid on issuance of restricted stock units		(182	)		(311	)
Cash used in financing activities		(1,387	)		(311	)

Net increase (decrease) in cash and cash equivalents		(2,152	)		990
Cash and cash equivalents, beginning of period		2,886			5,328
Cash and cash equivalents, end of period	$	734		$	6,318

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

CASH PAID FOR:
Income taxes	$	98		$	4

NON-CASH ACTIVITIES:
Operating lease right of use assets at purchase	$	24		$	—

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

RAVE RESTAURANT GROUP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Rave Restaurant Group, Inc., through its subsidiaries (collectively, the “Company” or “we,” “us” or “our”), franchises pizza buffet (“Buffet Units”), delivery/carry-out (“Delco Units”), express restaurants (“Express Units”) and ghost kitchens (“Pizza Inn Ghost Kitchen Units”) under the trademark “Pizza Inn” and franchises fast casual pizza restaurants (“Pie Five Units”) and ghost kitchens (“Pie Five Ghost Kitchen Units”) under the trademarks “Pie Five Pizza Company” or “Pie Five”. The Company also licenses Pizza Inn Express, or PIE, kiosks (“PIE Units”) under the trademark “Pizza Inn”. We facilitate food, equipment, and supply distribution to our domestic and international system of restaurants through agreements with third-party distributors. The accompanying condensed consolidated financial statements of Rave Restaurant Group, Inc. have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in the financial statements have been omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company’s financial position and results of operations for the interim periods reflected. Except as noted, all adjustments are of a normal recurring nature. Results of operations for the fiscal periods presented are not necessarily indicative of fiscal year-end results.

Note A - Summary of Significant Accounting Policies

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.

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.

Short-Term Investments

The Company holds short-term investments in U.S. Treasury bills, classified as trading securities. Accordingly, interest income is recorded through the Condensed Consolidated Statements of Income, when earned. Management has elected to classify all U.S. Treasury bills as short-term, regardless of their maturity dates, as these are readily available to fund current operations and can be liquidated at any time at the discretion of the Company. As of March 30, 2025 and June 30, 2024, the Company held U.S. Treasury bills valued at approximately $8.0 million and $4.9 million, respectively, which are included within short-term investments on the accompanying Condensed Consolidated Balance Sheets.

Fair Value Measurements

Assets and liabilities carried at fair value are categorized based on the level of judgment associated with the inputs used to measure their fair value. Authoritative guidance for fair value measurements establishes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into the following three levels:

Level 1:

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

Level 2:

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

Level 3:

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

The fair value of the Company’s investments in U.S. Treasury bills at March 30, 2025 and June 30, 2024, was determined using Level 1 observable inputs. Management believes the carrying amounts of other financial instruments at March 30, 2025 and June 30, 2024, including accounts receivable, accounts payable, and accrued expenses are representative of their fair values due to their short-term maturities.

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

	March 30, 2025								June 30, 2024
Fair Value Measurements	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
U.S. Treasury bills	$	7,987	$	—	$	—	$	7,987	$	4,945	$	—	$	—	$	4,945
	$	7,987	$	—	$	—	$	7,987	$	4,945	$	—	$	—	$	4,945

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

These items are classified in their entirety based on the lowest priority level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement of assets and liabilities within the levels of the fair value hierarchy.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable consist primarily of receivables generated from franchise royalties and supplier concessions. The Company records an allowance for credit losses to allow for any amounts that may be unrecoverable based upon an analysis of the Company’s prior collection experience, customer creditworthiness and current economic trends. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Finance charges may be accrued at a rate of 18% per year, or up to the maximum amount allowed by law, on past due receivables. The interest income recorded from finance charges is immaterial.

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

	Three Months Ended					Nine Months Ended
	March 30, 2025			March 24, 2024		March 30, 2025			March 24, 2024
Balance at beginning of year	$	42		$	22	$	57		$	58
Provision (recovery) for credit losses		(14	)		10		(22	)		46
Amounts recovered (written off)		2			1		(5	)		(71	)
Ending balance	$	30		$	33	$	30		$	33

Fiscal Quarters

The three and nine month periods ended March 30, 2025 and March 24, 2024 each contained 13 weeks and 39 weeks, respectively.

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.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU” or “standard”) 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures (Topic 280). The Company will adopt this standard, which requires companies to enhance disclosure of significant reportable segment expenses. The new guidance is effective for the Company's fiscal year beginning after December 15, 2023 and for interim periods beginning after December 15, 2024. Management believes that upon adoption, this standard will not have a material impact on the Company's consolidated financial statements and related disclosures as a result of adopting this standard.

In December 2023, FASB issued ASU 2023-09, Income Taxes: Improvements to Income Tax Disclosures (Topic 740), which requires companies to provide a more granular breakdown of the components that make up their effective tax rate and additional disclosures about the nature and effect of significant reconciling items. The new guidance is effective for the Company's fiscal year beginning after December 15, 2024. Management believes that adopting this standard will not have a material impact on the Company's consolidated financial statements and related disclosures as a result of adopting this standard.

Revenue Recognition

Revenue is measured based on consideration specified in contracts with customers and excludes incentives and amounts collected on behalf of third parties, primarily sales tax. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction that are collected by the Company from a customer are excluded from revenue.

The following describes principal activities, separated by major product or service, from which the Company generates its revenues:

Franchise Revenues

Franchise revenues consist of 1) franchise royalties, 2) supplier and distributor incentive revenues, 3) franchise license fees, 4) area development exclusivity fees and foreign master license fees, 5) advertising fund contributions, and 6) supplier convention funds.

Franchise royalties, which are based on a percentage of net retail sales, are recognized as sales occur.

Supplier and distributor incentive revenues are recognized when title to the underlying commodities transfer.

Franchise license fees are typically billed upon execution of the franchise agreement and amortized over the term of the franchise agreement, which typically range from five to 20 years. Fees received for renewal periods are amortized over the life of the renewal period. In the event of a closed franchise or terminated development agreement, the remaining balance of unamortized license fees will be recognized in entirety as of the date of the closure or termination.

Area development exclusivity fees and foreign master license fees are typically billed upon execution of the area development and foreign master license agreements. Area development exclusivity fees are included in deferred revenue in the accompanying Condensed Consolidated Balance Sheets and allocated on a pro rata basis to all stores opened under that specific development agreement as the stores are opened. Area development exclusivity fees that include rights to sub-franchise are amortized as revenue over the term of the contract.

Advertising fund contributions for Pizza Inn and Pie Five units represent contributions collected where we have control over the activities of the fund. Contributions are based on a percentage of net retail sales. We have determined that we are the principal in these arrangements, and advertising fund contributions and expenditures are, therefore, reported on a gross basis in the Condensed Consolidated Statements of Income. In general, we expect such advertising fund contributions and expenditures to be largely offsetting and, therefore, do not expect a significant impact on our reported income before income taxes. Our obligation related to these funds is to develop and conduct advertising activities. Pizza Inn and Pie Five marketing fund contributions are billed and collected weekly or monthly.

Supplier convention funds are deferred until the obligations of the agreement are met and the event takes place.

Rental Income

The Company had subleased some of its restaurant space to a third-party. The Company’s last remaining sublease term ended in January 2025 and the Company has no plans to enter into future sublease arrangements. The sublease agreements were non-cancelable through the end of the term and both parties had substantive rights to terminate the lease when the term is complete. Sublease agreements are not capitalized and are recorded as rental income in the period that rent is received.

Total revenues consist of the following (in thousands):

	Three Months Ended				Nine Months Ended
	March 30, 2025		March 24, 2024		March 30, 2025		March 24, 2024
Franchise royalties	$	1,156	$	1,166	$	3,420	$	3,563
Supplier and distributor incentive revenues		1,230		1,191		3,578		3,341
Franchise license fees		52		93		116		245
Area development exclusivity fees and foreign master license fees		3		4		10		11
Advertising fund contributions		514		450		1,480		1,297
Supplier convention funds		—		30		217		217
Rental income		7		23		53		108
Other		4		5		11		13
	$	2,966	$	2,962	$	8,885	$	8,795

Stock-Based Compensation

The Company accounts for stock options using the fair value recognition provisions of the authoritative guidance on stock-based payments. The Company uses the Black-Scholes formula to estimate the value of stock-based compensation for options granted to employees and directors and expects to continue to use this acceptable option valuation model in the future. The authoritative guidance also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow.

Restricted stock units (“RSUs”) represent the right to receive shares of common stock upon the satisfaction of vesting requirements, performance criteria and other terms and conditions. Compensation cost for RSUs is measured as an amount equal to the fair value of the RSUs on the date of grant and is expensed over the vesting period if achievement of the performance criteria is deemed probable, with the amount of the expense recognized based on the best estimate of the ultimate achievement level.

Note B - Leases

The Company determines if an arrangement is a lease at inception of the arrangement. To the extent that it can be determined that an arrangement represents a lease, it is classified as either an operating lease or a finance lease. The Company does not currently have any finance leases. The Company capitalizes operating leases on the Condensed Consolidated Balance Sheets through a right-of-use asset and a corresponding lease liability. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Short-term leases that have an initial term of one year or less are not capitalized. The Company does not presently have any short-term leases.

Operating lease right-of-use assets and liabilities are recognized at the commencement date of an arrangement based on the present value of lease payments over the lease term. In addition to the present value of lease payments, the operating lease right-of-use asset also includes any lease payments made to the lessor prior to lease commencement less any lease incentives and initial direct costs incurred. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

Nature of Leases

The Company leases certain office space, restaurant space, and information technology equipment under non-cancelable leases to support its operations. A more detailed description of significant lease types is included below.

Office Space Agreements

The Company rents office space from third parties for its corporate location. Office space agreements are typically structured with non-cancelable terms of one to 10 years. The Company has concluded that its office space agreements represent operating leases with a lease term that equals the primary non-cancelable contract term. Upon completion of the primary term, both parties have substantive rights to terminate the lease. As a result, enforceable rights and obligations do not exist under the rental agreement subsequent to the primary term.

Restaurant Space Agreements

The Company subleased one of its restaurant spaces to a third-party through January 2025. The Company has no plans to enter into future sublease arrangements.

Information Technology Equipment Agreements

The Company rents information technology equipment, primarily printers and copiers, from a third-party for its corporate office location. Information technology equipment agreements are typically structured with non-cancelable terms of one to five years. The Company has concluded that its information technology equipment agreements are operating leases.

Discount Rate

Leases typically do not provide an implicit interest rate. Accordingly, the Company is required to use its incremental borrowing rate in determining the present value of lease payments based on the information available at the lease commencement date. The Company’s incremental borrowing rate reflects the estimated rate of interest that it would pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. The Company uses the implicit rate in the limited circumstances in which that rate is readily determinable.

Lease Guarantees

The Company has guaranteed the financial responsibilities of certain franchised store leases. These guaranteed leases are not considered operating leases because the Company does not have the right to control the underlying asset. If the franchisee abandons the lease and fails to meet the lease’s financial obligations, the lessor may assign the lease to the Company for the remainder of the term. If the Company does not expect to assign the abandoned lease to a new franchisee within 12 months, the lease will be considered an operating lease and a right-of-use asset, and lease liability will be recognized.

Practical Expedients and Accounting Policy Elections

Certain lease agreements include lease and non-lease components. For all existing asset classes with multiple component types, the Company has utilized the practical expedient that exempts it from separating lease components from non-lease components. Accordingly, the Company accounts for the lease and non-lease components in an arrangement as a single lease component.

In addition, for all existing asset classes, the Company has made an accounting policy election not to apply the lease recognition requirements to short-term leases (that is, a lease that, at commencement, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the Company is reasonably certain to exercise). Accordingly, we recognize lease payments related to our short-term leases in our income statements on a straight-line basis over the lease term which has not changed from our prior recognition. To the extent that there are variable lease payments, we recognize those payments in our income statements in the period in which the obligation for those payments is incurred.

The components of total lease expense for the three and nine months ended March 30, 2025 and March 24, 2024, where operating lease cost is included in general and administrative expense and sublease income is included in revenues in the accompanying Condensed Consolidated Statements of Income, are as follows (in thousands):

	Three Months Ended						Nine Months Ended
	March 30, 2025			March 24, 2024			March 30, 2025			March 24, 2024
Operating lease cost	$	88		$	104		$	295		$	344
Sublease income		(7	)		(23	)		(53	)		(108	)
Total lease expense, net of sublease income	$	81		$	81		$	242		$	236

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

	March 30, 2025			June 30, 2024
Weighted average remaining lease term	1.9 Years			1.5 Years
Weighted average discount rate		4.2	%		4.0	%

Remaining operating lease liabilities with enforceable contract terms that are greater than one year mature as follows (in thousands):

	Operating Leases
Fiscal Year 2025		96
Fiscal Year 2026		388
Fiscal Year 2027		197
Fiscal Year 2028		6
Fiscal Year 2029		6
Thereafter		1
Total operating lease payments	$	694
Less: imputed interest		(27	)
Total operating lease liability	$	667

Note C - Stock Purchase Plan

On May 23, 2007, the Company’s board of directors approved a stock purchase plan (the “2007 Stock Purchase Plan”) authorizing the purchase on our behalf of up to 1,016,000 shares of our common stock in the open market or in privately negotiated transactions. On June 2, 2008, the Company’s board of directors amended the 2007 Stock Purchase Plan to increase the number of shares of common stock the Company may repurchase by 1,000,000 shares to a total of 2,016,000 shares. On April 22, 2009, the Company’s board of directors amended the 2007 Stock Purchase Plan again to increase the number of shares of common stock the Company may repurchase by 1,000,000 shares to a total of 3,016,000 shares. On June 28, 2022, the Company’s board of directors amended the 2007 Stock Purchase Plan again to increase the number of shares of common stock the Company may repurchase by 5,000,000 shares to a total of 8,016,000 shares. The 2007 Stock Purchase Plan does not have an expiration date.

The following table furnishes information for purchases made pursuant to the 2007 Stock Purchase Plan during fiscal 2025:

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
February 3, 2025 - March 2, 2025		500,000	$	2.40		6,518,026		1,497,974
Total		500,000	$	2.40

The Company’s ability to purchase shares of our common stock is subject to various laws, regulations, and policies as well as the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company may also purchase shares of our common stock other than pursuant to the 2007 Stock Purchase Plan or other publicly announced plans or programs.

On February 24, 2025, the Company repurchased 500,000 shares at $2.40 per share in a negotiated transaction.

Note D - 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 results of operations or financial condition if decided in a manner that is unfavorable to the Company.

Note E - Stock-Based Compensation

Stock Options:

For the three and nine months ended March 30, 2025 and March 24, 2024, the Company recognized stock-based compensation expense related to stock options of zero. As of March 30, 2025, there was no unamortized stock-based compensation expense related to stock options.

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

	Nine Months Ended
	March 30, 2025		March 24, 2024
	Shares		Shares
Outstanding at beginning of year		114,286		151,750

Granted		—		—
Exercised		—		—
Forfeited/Canceled/Expired		—		(8,664	)

Outstanding at end of period		114,286		143,086

Exercisable at end of period		114,286		143,086

Restricted Stock Units:

For the three and nine months ended March 30, 2025, the Company had stock-based compensation expense related to RSUs of $52 thousand and $178 thousand, respectively. For the three and nine months ended March 24, 2024, the Company had stock-based compensation expense related to RSUs of $45 thousand and $127 thousand, respectively. As of March 30, 2025, there was $440 thousand unamortized stock-based compensation expense related to RSUs.

As of March 30, 2025 the RSUs will be amortized during the next 31 months. A summary of the status of restricted stock units as of March 30, 2025 and March 24, 2024, and changes during the nine months then ended is presented below:

	Nine Months Ended
	March 30, 2025			March 24, 2024
Unvested at beginning of year		269,063			885,688
Performance adjustment		34,351			(25,223	)
Granted		142,328			131,460
Issued		(198,414	)		(588,589	)
Forfeited		—			(101,461	)
Unvested at end of period		247,328			301,875

Note F - Earnings per Share (EPS)

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):

	Three Months Ended				Nine Months Ended
	March 30, 2025		March 24, 2024		March 30, 2025		March 24, 2024
Net income available to common shareholders	$	722	$	654	$	1,855	$	1,593

BASIC:
Weighted average common shares		14,508		14,587		14,595		14,395

Net income per common share	$	0.05	$	0.04	$	0.13	$	0.11

DILUTED:
Weighted average common shares		14,508		14,587		14,595		14,395
Dilutive stock options and restricted stock units		24		150		23		151
Weighted average common shares outstanding		14,532		14,737		14,618		14,546

Net income per common share	$	0.05	$	0.04	$	0.13	$	0.11

For the three and nine months ended March 30, 2025, exercisable options to purchase 74,286 shares of common stock at exercise prices from $3.95 to $13.11 were excluded from the computation of diluted EPS because they had an intrinsic value of zero. For the three and nine months ended March 30, 2025, 247,328 and 247,328 RSUs were excluded from the computation of diluted EPS because performance criteria is not probable at period end, respectively.

For the three and nine months ended March 24, 2024, exercisable options to purchase 103,086 shares of common stock at exercise prices from $3.95 to $13.11 were excluded from the computation of diluted EPS because they had an intrinsic value of zero. For the three and nine months ended March 24, 2024, 65,625 and 156,250 RSUs were excluded from the computation of diluted EPS because performance criteria is not probable at period end, respectively.

Note G - Income Taxes

Total income tax expense consists of the following (in thousands):

	Three Months Ended				Nine Months Ended
	March 30, 2025		March 24, 2024		March 30, 2025		March 24, 2024
Federal tax expense	$	195	$	176	$	459	$	261
State tax expense		33		24		82		58
Total income tax expense	$	228	$	200	$	541	$	319

Note H - Segment Reporting

The Company has three reportable operating segments as determined by management using the “management approach” as defined by ASC 280 Disclosures about Segments of an Enterprise and Related Information: (1) Pizza Inn Franchising, (2) Pie Five Franchising and (3) Corporate administration and other. These segments are a result of differences in the nature of the products and services sold. Corporate administration costs, which include, but are not limited to, general accounting, human resources, legal and credit and collections, are partially allocated to the three operating segments.

The Pizza Inn and Pie Five Franchising segments establish franchisees, licensees and territorial rights. Revenue for these segments are derived from franchise royalties, franchise fees, sale of area development and foreign master license rights and incentive payments from third-party suppliers and distributors. Assets for these segments include equipment, furniture and fixtures.

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 operating revenues, depreciation and amortization expense, and income before taxes for the Company’s reportable segments as of the three and nine months ended March 30, 2025 and March 24, 2024 (in thousands):

	Three Months Ended						Nine Months Ended
	March 30, 2025			March 24, 2024			March 30, 2025			March 24, 2024
Net sales and operating revenues:
Pizza Inn Franchising	$	2,661		$	2,498		$	7,921		$	7,373
Pie Five Franchising		298			441			911			1,314
Corporate administration and other		7			23			53			108
Consolidated revenues	$	2,966		$	2,962		$	8,885		$	8,795

Depreciation and amortization:
Corporate administration and other	$	44		$	58		$	140		$	170
Depreciation and amortization	$	44		$	58		$	140		$	170

Income before taxes:
Pizza Inn Franchising	$	1,990		$	1,828		$	5,637		$	5,091
Pie Five Franchising		201			299			603			768
Combined		2,191			2,127			6,240			5,859
Corporate administration and other		(1,241	)		(1,273	)		(3,844	)		(3,947	)
Income before taxes	$	950		$	854		$	2,396		$	1,912

Geographic information (revenues):
United States	$	2,908		$	2,908		$	8,693		$	8,643
Foreign countries		58			54			192			152
Consolidated revenues	$	2,966		$	2,962		$	8,885		$	8,795

Item 2.

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

The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes appearing elsewhere in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended June 30, 2024, together with our Quarterly Reports on Form 10-Q for the periods ended September 29, and December 29, 2024, may contain certain forward-looking statements that are based on current management expectations. Generally, verbs in the future tense and the words “believe,” “expect,” “anticipate,” “estimate,” “intends,” “opinion,” “potential” and similar expressions identify forward-looking statements. Forward-looking statements in this report include, without limitation, statements relating to our business objectives, our customers and franchisees, our liquidity and capital resources, and the impact of our historical and potential business strategies on our business, financial condition, and operating results. Our actual results could differ materially from our expectations. Further information concerning our business, including additional factors that could cause actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q, are set forth in our Annual Report on Form 10-K for the year ended June 30, 2024, as well as our Quarterly Reports on Form 10-Q for the periods ended September 29, and December 29, 2024. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The forward-looking statements contained herein speak only as of the date of this Quarterly Report on Form 10-Q and, except as may be required by applicable law, we do not undertake, and specifically disclaim any obligation to, publicly update or revise such statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Results of Operations

Overview

Three Months Ended March 30, 2025

(in thousands, except unit data)


	Pizza Inn				Pie Five				All Concepts
	Ending Units		Retail Sales		Ending Units		Retail Sales		Ending Units		Retail Sales
Domestic Franchised/Licensed		98	$	26,515		19	$	2,716		117	$	29,231

International Franchised		20	$	1,480		—	$	—		20	$	1,480

Nine Months Ended March 30, 2025

(in thousands, except unit data)


	Pizza Inn				Pie Five				All Concepts
	Ending Units		Retail Sales		Ending Units		Retail Sales		Ending Units		Retail Sales
Domestic Franchised/Licensed		98	$	77,740		19	$	8,405		117	$	86,145

International Franchised		20	$	5,147		—	$	—		20	$	5,147

The domestic units were located in 15 states predominantly situated in the southern half of the United States. The international units were located in seven foreign countries.

Non-GAAP Financial Measures and Other Terms

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

We consider EBITDA and Adjusted EBITDA to be important supplemental measures of operating performance that are commonly used by securities analysts, investors and other parties interested in our industry. We believe that EBITDA is helpful to investors in evaluating our results of operations without the impact of expenses affected by financing methods, accounting methods and the tax environment. We believe that Adjusted EBITDA provides additional useful information to investors by excluding non-operational or non-recurring expenses to provide a measure of operating performance that is more comparable from period to period. Management also uses these non-GAAP financial measures for evaluating operating performance, assessing the effectiveness of business strategies, projecting future capital needs, budgeting and other planning purposes.

The following key performance indicators presented herein, some of which represent non-GAAP financial measures, have these meanings and are calculated as follows:

●

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

●

“Adjusted EBITDA” represents earnings before interest, taxes, depreciation and amortization, stock-based compensation expense, severance, gain/loss on sale of assets, costs related to impairment and other lease charges, franchisee default and closed store revenue/expense, and closed and non-operating store costs.

●

“Retail sales” represents the restaurant sales reported by our franchisees, which may be segmented by brand or domestic/international locations.

●

“Comparable store retail sales” includes the retail sales for restaurants that have been open for at least 18 months as of the end of the reporting period. The sales results for a restaurant that was closed for more than seven days for remodeling or relocation within the same trade area are not included in the calculation.

●

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

●

“Franchisee default and closed store revenue/expense” represents the net of accelerated revenues and costs attributable to defaulted area development agreements and closed franchised stores.

●

“Closed and non-operating store costs” represent gain or loss on asset disposal, store closure expenses, lease termination expenses and expenses related to abandoned store sites.

EBITDA and Adjusted EBITDA

Adjusted EBITDA for the fiscal quarter ended March 30, 2025 increased $0.1 million compared to the same period of the prior fiscal year. Year-to-date Adjusted EBITDA increased $0.5 million compared to the same period of the prior fiscal year. The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown (in thousands):

RAVE RESTAURANT GROUP, INC.

ADJUSTED EBITDA

(In thousands)


	Three Months Ended						Nine Months Ended
	March 30, 2025			March 24, 2024			March 30, 2025			March 24, 2024
Net income	$	722		$	654		$	1,855		$	1,593
Interest income		(84	)		(45	)		(253	)		(93	)
Income taxes		228			200			541			319
Depreciation and amortization		44			58			140			170
EBITDA	$	910		$	867		$	2,283		$	1,989
Stock-based compensation expense		52			45			178			127
Severance		7			—			12			—
Franchisee default and closed store revenue		(16)			(70	)		7			(152	)
Adjusted EBITDA	$	953		$	842		$	2,480		$	1,964

Pizza Inn Brand Summary

The following tables summarize certain key indicators for the Pizza Inn franchised and licensed domestic units that management believes are useful in evaluating performance:


	Three Months Ended					Nine Months Ended
	March 30, 2025		March 24, 2024			March 30, 2025		March 24, 2024
Pizza Inn Retail Sales - Total Domestic Units	(in thousands, except unit data)					(in thousands, except unit data)

Buffet Units - Franchised	$	25,763		$	25,019	$	75,292	$	74,588
Delco/Express Units - Franchised		746			893		2,425		2,860
PIE Units - Licensed		4			16		18		53
Pizza Inn Ghost Kitchen Units - Franchised		2			2		5		2
Total Domestic Retail Sales	$	26,515		$	25,930	$	77,740	$	77,503

Pizza Inn Comparable Store Retail Sales - Total Domestic	$	25,844		$	25,218	$	74,600	$	74,307

Pizza Inn Average Units Open in Period

Buffet Units - Franchised		77			77		78		77
Delco/Express Units - Franchised		20			27		23		32
PIE Units - Licensed		1			4		1		4
Pizza Inn Ghost Kitchen Units - Franchised		1			1		1		1
Total Domestic Units		99			109		103		114

Pizza Inn total domestic retail sales increased by $0.6 million, or 2.3%, for the three months ended March 30, 2025 when compared to the same period of the prior year. Compared to the same fiscal quarter of the prior year, average Buffet Units open in the period remained stable. Comparable store retail sales increased by $0.6 million, or 2.5%, for the three month period ended March 30, 2025 as compared to the same period of the prior fiscal year.

Pizza Inn total domestic retail sales increased by $0.2 million, or 0.3%, for the nine months ended March 30, 2025 when compared to the same period of the prior year. Compared to the same fiscal period of the prior year, average Buffet Units open in the period increased from 77 to 78. Comparable store retail sales increased by $0.3 million, or 0.4%, for the nine month period ended March 30, 2025 as compared to the same period of the prior fiscal year. For the nine months ended March 30, 2025, the increase in domestic retail sales were primarily the result of the increase in the average number of Buffet Units, supplemented by an increase in comparable domestic store retail sales.

The following chart summarizes Pizza Inn restaurant activity for the three and nine months ended March 30, 2025:


	Three Months Ended March 30, 2025
	Beginning Units		Opened		Transfer	Closed		Ending Units

Buffet Units - Franchised		77		—	2		—		77
Delco/Express Units - Franchised		23		—	—		4		19
PIE Units - Licensed		1		—	—		—		1
Pizza Inn Ghost Kitchen Units - Franchised		1		—	—		—		1
Total Domestic Units		102		—	2		4		98

International Units (all types)		27		1	—		8		20

Total Units		129		1	2		12		118


	Nine Months Ended March 30, 2025
	Beginning Units		Opened		Transfer	Closed		Ending Units

Buffet Units - Franchised		78		1	5		2		77
Delco/Express Units - Franchised		23		—	—		4		19
PIE Units - Licensed		3		—	—		2		1
Pizza Inn Ghost Kitchen Units - Franchised		1		—	—		—		1
Total Domestic Units		105		1	5		8		98

International Units (all types)		24		6	—		10		20

Total Units		129		7	5		18		118

There was a net decrease of four and seven units in the total domestic Pizza Inn unit count during the three and nine months ended March 30, 2025, respectively. There were two and five units transferred between franchisees in the total domestic Pizza Inn unit count during the three and nine months ended March 30, 2025, respectively. For the three and nine months ended March 30, 2025, the number of international Pizza Inn units decreased by seven and four net units, respectively. There were zero transfers in the total international Pizza Inn unit count during the three and nine months ended March 30, 2025. The Company believes the number of both domestic and international Pizza Inn units will increase modestly in future periods.

Pie Five Brand Summary

The following tables summarize certain key indicators for the Pie Five franchised restaurants that management believes are useful in evaluating performance:


	Three Months Ended				Nine Months Ended
	March 30, 2025		March 24, 2024		March 30, 2025		March 24, 2024
Pie Five Retail Sales - Total Units	(in thousands, except unit data)				(in thousands, except unit data)

Pie Five Units - Franchised	$	2,663	$	3,778	$	8,175	$	12,850
Pie Five Ghost Kitchen Units - Franchised		53		5		230		5
Total Domestic Retail Sales	$	2,716	$	3,783	$	8,405	$	12,855

Pie Five Comparable Store Retail Sales - Total	$	2,665	$	2,822	$	8,173	$	8,941

Pie Five Average Units Open in Period

Pie Five Units - Franchised		18		23		18		25
Pie Five Ghost Kitchen Units - Franchised		1		1		2		1
Total Domestic Units		19		24		20		26

Pie Five total domestic retail sales decreased by $1.1 million, or 28.2%, for the three months ended March 30, 2025 when compared to the same period of the prior year. Compared to the same fiscal quarter of the prior year, average units open in the period decreased from 24 to 19. Comparable store retail sales decreased by $0.2 million, or 5.6%, for the three month period ended March 30, 2025 as compared to the same period of the prior fiscal year. For the three months ended March 30, 2025, the decrease in domestic retail sales were primarily the result of the decrease in average store count, supplemented by a decrease in comparable store retail sales.

Pie Five total domestic retail sales decreased by $4.5 million, or 34.6%, for the nine months ended March 30, 2025 when compared to the same period of the prior year. Compared to the same fiscal period of the prior year, average units open in the period decreased from 26 to 20. Comparable store retail sales decreased by $0.8 million, or 8.6%, for the nine month period ended March 30, 2025 as compared to the same period of the prior fiscal year. For the nine months ended March 30, 2025, the decrease in domestic retail sales were primarily the result of the decrease in average store count, supplemented by a decrease in comparable store retail sales.

The following chart summarizes Pie Five restaurant activity for the three and nine months ended March 30, 2025:


	Three Months Ended March 30, 2025
	Beginning Units		Opened		Transfer		Closed		Ending Units

Pie Five Units - Franchised		18		—		—		—		18
Pie Five Ghost Kitchen Units - Franchised		2		—		1		1		1
Total Domestic Units		20		—		1		1		19


	Nine Months Ended March 30, 2025
	Beginning Units		Opened		Transfer		Closed		Ending Units

Pie Five Units - Franchised		18		—		—		—		18
Pie Five Ghost Kitchen Units - Franchised		2		—		1		1		1
Total Domestic Units		20		—		1		1		19

There was a net decrease of one unit in the total domestic Pie Five unit count during the three and nine months ended March 30, 2025. There was one unit transferred in the total domestic Pie Five unit count during the three and nine months ended March 30, 2025. We believe that Pie Five units will decrease modestly in future periods.

Financial Results

In addition to Corporate overhead support, the Company defines its operating segments as Pizza Inn Franchising and Pie Five Franchising. The following is additional business segment information for the three and nine months ended March 30, 2025 and March 24, 2024 (in thousands):

Three Months Ended March 30, 2025 and March 24, 2024


	Pizza Inn Franchising				Pie Five Franchising				Corporate						Total
	Fiscal Quarter Ended				Fiscal Quarter Ended				Fiscal Quarter Ended						Fiscal Quarter Ended
	March 30, 2025		March 24, 2024		March 30, 2025		March 24, 2024		March 30, 2025			March 24, 2024			March 30, 2025			March 24, 2024
REVENUES:
Franchise and license revenues	$	2,661	$	2,498	$	294	$	436	$	—		$	—		$	2,955		$	2,934
Rental income		—		—		—		—		7			23			7			23
Other income		—		—		4		5		—			—			4			5
Total revenues		2,661		2,498		298		441		7			23			2,966			2,962

COSTS AND EXPENSES:
General and administrative expenses		—		—		—		—		1,302			1,272			1,302			1,272
Franchise expenses		671		670		97		142		—			—			768			812
Provision (recovery) for credit losses		—		—		—		—		(14	)		11			(14	)		11
Interest income		—		—		—		—		(84	)		(45	)		(84	)		(45	)
Depreciation and amortization expense		—		—		—		—		44			58			44			58
Total costs and expenses		671		670		97		142		1,248			1,296			2,016			2,108

INCOME/(LOSS) BEFORE TAXES	$	1,990	$	1,828	$	201	$	299	$	(1,241	)	$	(1,273	)	$	950		$	854

Nine Months Ended March 30, 2025 and March 24, 2024


	Pizza Inn Franchising				Pie Five Franchising				Corporate						Total
	Fiscal Year-to-Date				Fiscal Year-to-Date				Fiscal Year-to-Date						Fiscal Year-to-Date
	March 30, 2025		March 24, 2024		March 30, 2025		March 24, 2024		March 30, 2025			March 24, 2024			March 30, 2025			March 24, 2024
REVENUES:
Franchise and license revenues	$	7,921	$	7,373	$	900	$	1,301	$	—		$	—		$	8,821		$	8,674
Rental income		—		—		—		—		53			108			53			108
Other income		—		—		11		13		—			—			11			13
Total revenues		7,921		7,373		911		1,314		53			108			8,885			8,795

COSTS AND EXPENSES:
General and administrative expenses		—		—		—		—		4,032			3,932			4,032			3,932
Franchise expenses		2,284		2,282		308		546		—			—			2,592			2,828
Provision (recovery) for credit losses		—		—		—		—		(22	)		46			(22	)		46
Interest income		—		—		—		—		(253	)		(93	)		(253	)		(93	)
Depreciation and amortization expense		—		—		—		—		140			170			140			170
Total costs and expenses		2,284		2,282		308		546		3,897			4,055			6,489			6,883

INCOME/(LOSS) BEFORE TAXES	$	5,637	$	5,091	$	603	$	768	$	(3,844	)	$	(3,947	)	$	2,396		$	1,912

Revenues:

Revenues are derived from franchise royalties, supplier and distributor incentive revenues, franchise license fees, area development exclusivity fees and foreign master license fees, advertising fund contributions, supplier convention funds, rental income, and other income. The volume of supplier and distributor incentive revenues is dependent on the level of total retail sales, which are impacted by changes in comparable store sales and restaurant count, as well as the products sold to franchisees through third-party food distributors.

Total revenues for the three month period ended March 30, 2025 and for the same period in the prior fiscal year were $3.0 million and $3.0 million, respectively.

Total revenues for the nine month period ended March 30, 2025 and for the same period in the prior fiscal year were $8.9 million and $8.8 million, respectively.

Pizza Inn Franchise and License

Pizza Inn franchise revenues increased by $0.2 million to $2.7 million for the three month period ended March 30, 2025 as compared to the same period in the prior fiscal year. The 6.5% increase was driven by increases in supplier and distributor incentives. Pizza Inn franchise revenues increased by $0.5 million to $7.9 million for the nine month period ended March 30, 2025 as compared to the same period in the prior fiscal year. The 7.4% increase was driven by increases in supplier and distributor incentives.

Pie Five Franchise and License

Pie Five franchise revenues decreased by $0.1 million to $0.3 million for the three month period ended March 30, 2025 as compared to the same period in the prior fiscal year. The 32.6% decrease was driven by decreases in domestic royalties as a result of lower retail sales primarily driven by net decreases in domestic units. Pie Five franchise revenues decreased by $0.4 million to $0.9 million for the nine month period ended March 30, 2025 as compared to the same period in the prior fiscal year. The 30.8% decrease was driven by decreases in domestic royalties.

Costs and Expenses:

General and Administrative Expenses

Total general and administrative expenses remained relatively stable at $1.3 million for the three month period ended March 30, 2025 as compared to the same period of the prior fiscal year. The 2.4% increase was driven by increases in salaries, offset by decreases in legal fees. Total general and administrative expenses increased by $0.1 million to $4.0 million for the nine month period ended March 30, 2025 as compared to the same period of the prior fiscal year. The 2.5% increase was driven by increases in salaries, offset by decreases in legal fees.

Franchise Expenses

Franchise expenses include general and administrative expenses directly related to the sale and continuing service of domestic and international franchises. Total franchise expenses remained relatively stable at $0.8 million for the three month period ended March 30, 2025 as compared to the same period of the prior fiscal year. The 5.4% decrease was driven by decreases in salaries directly related to franchise operations, offset by increases in advertising fees. Total franchise expenses decreased by $0.2 million to $2.6 million for the nine month period ended March 30, 2025 as compared to the same period of the prior fiscal year. The 8.3% decrease was driven by decreases in salaries directly related to franchise operations and advertising fees.

Provision (Recovery) for Credit Losses

The Company monitors franchisee receivable balances and adjusts credit terms when necessary to minimize the Company’s exposure to high-risk accounts receivable. For the three month period ended March 30, 2025, recoveries for credit losses were $14 thousand compared to provision for credit losses of $11 thousand for the same period in the prior fiscal year. During the three month period ended March 30, 2025, the Company recorded a loss in provision for credit losses due to the write off of receivables, offset by a gain in provision for credit losses due to the recoveries of receivables that had been previously reserved. For the nine month period ended March 30, 2025, recoveries for credit losses were $22 thousand compared to provision for credit losses of $46 thousand for the same period in the prior fiscal year. During the nine month period ended March 30, 2025, the Company recorded a loss in provision for credit losses due to the write off of receivables, offset by a gain in provision for credit losses due to the recoveries of receivables that had been previously reserved.

Interest Income

Interest income increased by $39 thousand to $84 thousand for the three month period ended March 30, 2025 as compared to the same period in the prior fiscal year. The increase was primarily driven by interest received on U.S. Treasury bills. Interest income increased by $160 thousand to $253 thousand for the nine month period ended March 30, 2025 as compared to the same period in the prior fiscal year. The increase was primarily driven by interest received on U.S. Treasury bills.

Depreciation and Amortization Expense

Depreciation and amortization expense decreased by $14 thousand to $44 thousand for the three month period ended March 30, 2025 as compared to the same period in the prior year. The decrease was primarily the result of lower depreciation of equipment. Depreciation and amortization expense decreased by $30 thousand to $140 thousand for the nine month period ended March 30, 2025 as compared to the same period in the prior year. The decrease was primarily the result of lower depreciation of equipment.

Provision for Income Taxes

Total income tax expense consists of the following (in thousands):


	Three Months Ended				Nine Months Ended
	March 30, 2025		March 24, 2024		March 30, 2025		March 24, 2024
Federal tax expense	$	195	$	176	$	459	$	261
State tax expense		33		24		82		58
Total income tax expense	$	228	$	200	$	541	$	319

For the three and nine months ended March 30, 2025, the Company recorded an income tax expense of $228 thousand and $541 thousand, respectively. For the three and nine months ended March 24, 2024, the Company recorded an income tax expense of $200 thousand and $319 thousand, respectively. The increase for the three months ended as of March 30, 2025 was driven by increases in federal taxes, primarily due to higher taxable income. The increase for the nine months ended as of March 30, 2025 was primarily driven by increases in federal taxes, primarily due to higher taxable income and fewer discrete tax items related to restricted stock units vesting than in the prior year.

Earnings per Share

Basic net income per share increased $0.01 per share to $0.05 per share for the three months ended March 30, 2025, compared to the comparable period in the prior fiscal year. The Company had net income of $0.7 million for the three months ended March 30, 2025 compared to net income of $0.7 million in the comparable period in the prior fiscal year, on revenues of $3.0 million for the three months ended March 30, 2025 compared to $3.0 million in the comparable period in the prior fiscal year.

Basic net income per share increased $0.02 per share to $0.13 per share for the nine months ended March 30, 2025, compared to the comparable period in the prior fiscal year. The Company had net income of $1.9 million for the nine months ended March 30, 2025 compared to net income of $1.6 million in the comparable period in the prior fiscal year, on revenues of $8.9 million for the nine months ended March 30, 2025 compared to $8.8 million in the comparable period in the prior fiscal year.

Liquidity and Capital Resources

During the nine month period ended March 30, 2025, the Company's primary source of liquidity was proceeds from operating activities.

Cash flows from operating activities generally reflect net income adjusted for certain non-cash items including depreciation and amortization, changes in deferred taxes, stock-based compensation, and changes in working capital. Cash provided by operating activities was $2.2 million for the nine month period ended March 30, 2025 compared to cash provided by operating activities of $1.3 million for the nine month period ended March 24, 2024. The primary driver of increased operating cash flow during the nine month period ended March 30, 2025 was increased collections of accounts receivable related to the payment of franchise receivables.

Cash flows from investing activities reflect purchases and maturities of short-term investments as well as net proceeds from the sale of assets and capital expenditures for the purchase of Company assets. Cash used in investing activities during the nine month period ended March 30, 2025 was $2.9 million compared to cash used in investing activities of $30 thousand for the nine months ended March 24, 2024. Net cash used in investing activities during the nine month period ended March 30, 2025 was primarily attributable to increased purchases of U.S. Treasury bills.

Cash flows used in financing activities generally reflect changes in the Company's stock and debt activity during the period. Net cash used in financing activities was $1.4 million for the nine month period ended March 30, 2025 compared to net cash used in financing activities of $0.3 million for the nine month period ended March 24, 2024. Net cash used by financing activities for the nine months ended March 30, 2025 was primarily attributable to repurchases of the Company's stock. On February 24, 2025, the Company repurchased 500,000 shares at $2.40 per share in a negotiated transaction. Net cash used by financing activities for the nine months ended March 24, 2024 was primarily attributable to taxes paid on vested RSUs.

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

Employee Retention Credit

On December 27, 2020, the Consolidated Appropriations Act of 2021 (the “CAA”) was signed into law. The CAA expanded eligibility for an employee retention credit for companies impacted by the COVID-19 pandemic with fewer than five hundred employees and at least a twenty percent decline in gross receipts compared to the same quarter in 2019, to encourage retention of employees. This payroll tax credit was a refundable tax credit against certain federal employment taxes. For the fiscal year ended June 26, 2022, the Company recorded $0.7 million of other income for the employee retention credit. As of March 30, 2025, $0.6 million has been received and $0.1 million is still outstanding and included within accounts receivable on the accompanying Condensed Consolidated Balance Sheets.

Critical Accounting Policies and Estimates

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

The Company believes the following critical accounting policies require estimates about the effect of matters that are inherently uncertain, are susceptible to change, and therefore require subjective judgments. Changes in the estimates and judgments could significantly impact the Company’s results of operations and financial condition in future periods.

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 and eventual disposition of the assets compared to their carrying value. If impairment is indicated, the carrying value of an impaired asset is reduced to its fair value, based on discounted estimated future cash flows.

Franchise revenue consists of income from license fees, royalties, area development and foreign master license agreements, advertising fund revenues, supplier incentive and convention contribution revenues. Franchise fees, area development and foreign master license agreement fees are amortized into revenue on a straight-line basis over the term of the related contract agreement. In event of a closed franchise or defaulted development agreement, the remaining balance of unamortized license fees will be recognized in entirety as of the date of the closure or default. Royalties and advertising fund revenues, which are based on a percentage of franchise retail sales, are recognized as income as retail sales occur. Supplier incentive revenues are recognized as earned, typically as the underlying commodities are shipped.

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. The Company assesses 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 considers both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such assessment, more weight is given to evidence that can be objectively verified, including recent operating performance.

The Company accounts for uncertain tax positions in accordance with ASC 740-10, which prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that it has taken or expects to take on a tax return. ASC 740-10 requires that a company recognize in its financial statements the impact of tax positions that meet a “more likely than not” threshold, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of March 30, 2025 and June 30, 2024, the Company had no uncertain tax positions.

The Company assesses its exposures to loss contingencies from legal matters based upon factors such as the current status of the cases and consultations with external counsel and provides for the exposure by accruing an amount if it is judged to be probable and can be reasonably estimated. If the actual loss from a contingency differs from management’s estimate, operating results could be adversely impacted.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for a smaller reporting company.

Item 4. Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure that information it is required to disclose in the reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. The Company’s disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

The Company’s management, including the Company’s principal executive officer and principal financial officer, or persons performing similar functions, have evaluated the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the Company’s principal executive officer and principal financial officer, or persons performing similar functions, have concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report. During the most recent fiscal quarter, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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 the Company.

Item 1A. Risk Factors

Not required for a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the three and nine months ended March 30, 2025, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits

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

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

Exhibits:

3.1	Amended and Restated Articles of Incorporation of Rave Restaurant Group, Inc. (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed January 8, 2015).

3.2	Amended and Restated Bylaws of Rave Restaurant Group, Inc. (incorporated by reference to Exhibit 3.2 to the registrant’s Current Report on Form 8-K filed January 8, 2015).

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

10.2	Form of Stock Option Grant Agreement under the Company’s 2015 Long Term Incentive Plan (filed as Exhibit 10.2 to Form 8-K filed November 20, 2014 and incorporated herein by reference).*

10.3	Form of Restricted Stock Unit Award Agreement under the Company’s 2015 Long-Term Incentive Plan (filed as Exhibit 10.3 to Form 10-K/A filed on September 30, 2019 and incorporated herein by reference).*

10.4	Lease Agreement dated November 1, 2016, between A&H Properties Partnership and Rave Restaurant Group, Inc. (filed as Exhibit 10.4 to Form 10-K for the year ended June 30, 2019 and incorporated herein by reference).*

10.5	First Amendment to Lease and Expansion dated July 1, 2017, between A&H Properties Partnership and Rave Restaurant Group, Inc. (filed as Exhibit 10.5 to Form 10-K for the year ended June 30, 2019 and incorporated herein by reference).*

10.6	Second Amendment to Lease Agreement effective June 1, 2020, between A&H Properties Partnership and Rave Restaurant Group, Inc. (filed as Exhibit 10.6 to Form 10-K for the fiscal year ended June 27, 2021 and incorporated herein by reference).

10.7	Letter agreement dated October 18, 2019, between Rave Restaurant Group, Inc. and Brandon Solano (filed as Exhibit 10.1 to Form 8-K filed October 21, 2019 and incorporated herein by reference).*

10.8	Letter agreement dated March 25, 2024, between Rave Restaurant Group, Inc. and Jay Rooney (filed as Exhibit 10.1 to Form 8-K filed March 26, 2024 and incorporated herein by reference).*

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

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

32.1	Section 1350 Certification of Principal Executive Officer.

32.2	Section 1350 Certification of Principal Financial Officer.

101	Interactive data files pursuant to Rule 405 of Regulation S-T.

104	Cover Page Interactive Data File (formatted as Inline XBRL).

*Management contract or compensatory plan or agreement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	RAVE RESTAURANT GROUP, INC.
	(Registrant)

	By:	/s/ Brandon L. Solano
		Brandon L. Solano
		Chief Executive Officer
		(principal executive officer)

	By:	/s/ Jay D. Rooney
		Jay D. Rooney
		Chief Financial Officer
		(principal financial officer)

Dated: May 8, 2025

Form: 10-Q

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