Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Mar. 25, 2018 | May 07, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | RAVE RESTAURANT GROUP, INC. | |
Entity Central Index Key | 718,332 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 25, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-24 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 15,047,274 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 25, 2018 | Mar. 26, 2017 | Mar. 25, 2018 | Mar. 26, 2017 | |
Income Statement [Abstract] | ||||
REVENUES: | $ 2,665 | $ 6,498 | $ 12,294 | $ 20,744 |
COSTS AND EXPENSES: | ||||
Cost of sales | 299 | 3,756 | 3,441 | 12,061 |
General and administrative expenses | 1,698 | 2,902 | 5,809 | 8,427 |
Franchise expenses | 613 | 587 | 1,957 | 1,850 |
Pre-opening expenses | 0 | 29 | 114 | 83 |
Loss/(Gain) on sale of assets | 31 | 345 | (134) | 1,044 |
Impairment of long-lived assets and other lease charges | 70 | (110) | 751 | 5,116 |
Bad debt | 264 | 73 | 477 | 424 |
Interest expense | 26 | 37 | 157 | 39 |
Depreciation and amortization expense | 133 | 578 | 733 | 2,095 |
Total costs and expenses | 3,134 | 8,197 | 13,305 | 31,139 |
LOSS FROM CONTINUING OPERATIONS BEFORE TAXES | (469) | (1,699) | (1,011) | (10,395) |
Income tax expense / (benefit) | 6 | 5 | (8) | 15 |
LOSS FROM CONTINUING OPERATIONS | (475) | (1,704) | (1,003) | (10,410) |
Loss from discontinued operations | (17) | (258) | (422) | (973) |
NET LOSS | $ (492) | $ (1,962) | $ (1,425) | $ (11,383) |
LOSS PER SHARE OF COMMON STOCK - BASIC: | ||||
Loss from continuing operations | $ (0.03) | $ (0.16) | $ (0.08) | $ (0.98) |
Loss from discontinued operations | 0 | (0.02) | (0.03) | (0.09) |
Net loss | (0.03) | (0.18) | (0.11) | (1.07) |
LOSS PER SHARE OF COMMON STOCK - DILUTED: | ||||
Loss from continuing operations | (0.03) | (0.16) | (0.08) | (0.98) |
Loss from discontinued operations | 0 | (0.02) | (0.03) | (0.09) |
Net loss | $ (0.03) | $ (0.18) | $ (0.11) | $ (1.07) |
Weighted average common shares outstanding - basic | 14,940 | 10,657 | 13,456 | 10,602 |
Weighted average common and potential dilutive common shares outstanding | 14,940 | 10,657 | 13,456 | 10,602 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 25, 2018 | Jun. 25, 2017 |
CURRENT ASSETS | ||
Cash and Cash Equivalents | $ 979 | $ 451 |
Accounts receivable, less allowance for bad debts accounts of $298 and $249, respectively | 1,568 | 2,761 |
Notes receivable, less allowance for bad debts of $95 and $0, respectively | 853 | 675 |
Inventories | 13 | 79 |
Income tax receivable | 5 | 194 |
Property held for sale | 552 | 671 |
Prepaid expenses and other | 488 | 295 |
Total current assets | 4,458 | 5,126 |
LONG-TERM ASSETS | ||
Property, plant and equipment, net | 1,839 | 3,808 |
Intangible assets definite-lived, net | 218 | 239 |
Long-term notes receivable | 325 | 127 |
Deposits and other | 243 | 246 |
Total assets | 7,083 | 9,546 |
CURRENT LIABILITIES | ||
Accounts payable - trade | 713 | 4,165 |
Short-term debt | 0 | 1,000 |
Accrued expenses | 863 | 1,265 |
Deferred rent | 35 | 101 |
Deferred revenues | 68 | 212 |
Total current liabilities | 1,679 | 6,743 |
Convertible notes | 1,557 | 2,749 |
Deferred rent, net of current portion | 218 | 655 |
Deferred revenues, net of current portion | 700 | 1,425 |
Other long-term liabilities | 38 | 53 |
Total liabilities | 4,192 | 11,625 |
COMMITMENTS AND CONTINGENCIES (SEE NOTE 2) | ||
SHAREHOLDERS' EQUITY (DEFICIT) | ||
Common stock, $.01 par value; authorized 26,000,000 shares; issued 22,166,674 and 17,786,049 shares, respectively; outstanding 15,047,274 and 10,666,649 shares, respectively | 222 | 178 |
Additional paid-in capital | 33,135 | 26,784 |
Accumulated deficit | (5,830) | (4,405) |
Treasury stock at cost Shares in treasury: 7,119,400 | (24,636) | (24,636) |
Total shareholders' equity (deficit) | 2,891 | (2,079) |
Total liabilities and shareholders' equity (deficit) | $ 7,083 | $ 9,546 |
Condensed Consolidated Balance4
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 25, 2018 | Jun. 25, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for bad debts accounts, accounts receivable | $ 298 | $ 249 |
Common Stock, Par Value | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 26,000,000 | 26,000,000 |
Common Stock, Shares Issued | 22,166,674 | 17,786,049 |
Common Stock, Shares Outstanding | 15,047,274 | 10,666,649 |
Treasury Stock, shares | 7,119,400 | 7,119,400 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 25, 2018 | Mar. 26, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,425) | $ (11,383) |
Adjustments to reconcile net loss to cash used in operating activties: | ||
Depreciation and amortization | 704 | 2,080 |
Amortization of intangible assets definite-lived | 29 | 37 |
Amortization of debt issue costs | 29 | 0 |
Impairment of long-lived assets and other lease charges | 751 | 4,773 |
Stock compensation expense | 29 | 143 |
(Gain)/loss on sale/disposal of assets | (134) | 1,044 |
Provision for bad debt | 477 | 423 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,127 | 39 |
Inventories | 66 | 65 |
Accounts payable - trade | (4,240) | 512 |
Accrued expenses | (417) | (321) |
Deferred rent | (503) | (167) |
Deferred revenue | (734) | 17 |
Prepaid expenses and other | (188) | (294) |
Cash used in operating activities | (4,429) | (3,032) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from sale of assets | 1,706 | 102 |
Purchase of intangible assets definite-lived | (9) | 0 |
Capital expenditures | (884) | (258) |
Cash provided by (used in) investing activities | 813 | (156) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from sale of stock | 5,144 | 0 |
Proceeds from stock options | 0 | 806 |
Proceeds from issuance of convertible notes | 0 | 2,882 |
Issuance (payments) of short-term debt | (1,000) | 1,000 |
Cash provided by financing activities | 4,144 | 4,688 |
Net increase (decrease) in cash and cash equivalents | 528 | 1,500 |
Cash and cash equivalents, beginning of period | 451 | 873 |
Cash and cash equivalents, end of period | 979 | 2,373 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Interest paid | 170 | 25 |
Taxes paid | 48 | 29 |
Non-cash activities: | ||
Capital expenditures included in accounts payable | $ 81 | $ 0 |
1. Summary of Significant Accou
1. Summary of Significant Accounting Policies | 9 Months Ended |
Mar. 25, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All appropriate intercompany 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. Fiscal Quarters The three and nine month periods ended March 25, 2018 and March 26, 2017, each contained 13 weeks and 39 weeks, respectively. Revenue Recognition Revenue from restaurant sales is recognized when food and beverage products are sold. The Company reports revenue net of sales taxes collected from customers and remitted to governmental taxing authorities. Franchise revenues consist of income from license fees, royalties, and area development and foreign master license fees and supplier and distributor incentive revenues. License fees are recognized as income when there has been substantial performance under the agreement by the Company. Domestic license fees are generally recognized at the time the restaurant is opened. Foreign master license fees are generally recognized upon execution of the agreement as all material services relating to the sale have been substantially performed by the Company and the fee has been collected. Royalties are recognized as income when earned. Supplier and distributor incentive revenues are recognized when title to the underlying commodities transfer. Stock-Based Compensation The Company accounts for stock options using the fair value recognition provisions of the authoritative guidance on share-based payments. The Company uses the Black-Scholes formula to estimate the value of stock-based compensation for options granted to employees and directors and expects to continue to use this acceptable option valuation model in the future. The authoritative guidance also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow. Compensation cost for restricted stock units (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. Use of Management Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires the Companys 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 and actual results could differ materially from estimates. Discontinuation of Norco Distribution Division During the fiscal quarter ended December 24, 2017, the Company discontinued its Norco distribution division and revised its arrangements with third party suppliers and distributors of food, equipment and supplies. As a result, sale of food, equipment and supplies is no longer recognized as revenue and the cost of such items is no longer included in cost of sales. The Company now recognizes incentive revenues received from third party suppliers and distributors as revenue. |
2. Commitments and Contingencie
2. Commitments and Contingencies | 9 Months Ended |
Mar. 25, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | On April 22, 2009 the Company’s board of directors amended the 2007 Stock Purchase Plan first adopted on May 23, 2007 and previously amended on June 2, 2008, to increase the number of shares of common stock the Company may repurchase shares to a total of 3,016,000 shares. The 2007 Stock Purchase Plan does not have an expiration date. There were no stock repurchases in the third quarter of fiscal 2018. As of March 25, 2018, up to an additional 848,425 shares could be repurchased under the 2007 Stock Purchase Plan. 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. |
3. Stock-Based Compensation
3. Stock-Based Compensation | 9 Months Ended |
Mar. 25, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock Options: For the three month period ended March 25, 2018 and March 26, 2017, the Company recognized stock-based compensation expense related to stock options of $10 thousand and $20 thousand, respectively. For the nine month period ended March 25, 2018 and March 26, 2017, the Company recognized stock-based compensation expense related to stock options of $29 thousand and $70 thousand, respectively. As of March 25, 2018, unamortized stock-based compensation expense related to stock options was $6 thousand. The following table summarizes the number of shares of the Companys common stock subject to outstanding stock options: Nine Months Ended March 25, 2018 March 26, 2017 Outstanding at beginning of year 478,056 847,556 Granted – 50,000 Exercised – (315,000 ) Forfeited/Canceled/Expired – (104,500 ) Outstanding at end of period 478,056 478,056 Exercisable at end of period 438,056 358,056 Restricted Stock Units: For the three month periods ended March 25, 2018 and March 26, 2017, the Company recognized $0 and $33 thousand in stock-based compensation expense related to RSUs. For the nine month period ended March 25, 2018 and March 26, 2017, the Company recognized $0 and $73 thousand in stock-based compensation expense related to RSUs. As of March 25, 2018, unamortized stock-based compensation expense related to RSUs was $0 because the Company determined that the probability of achieving the minimum performance criteria was remote. A summary of the status of restricted stock units as of March 25, 2018, and changes during the fiscal nine month period then ended is presented below: Number of Restricted Stock Units Unvested at June 25, 2017 487,950 Granted – Vested – Forfeited (34,730 ) Unvested at March 25, 2018 453,220 |
4. Earnings per Share (EPS)
4. Earnings per Share (EPS) | 9 Months Ended |
Mar. 25, 2018 | |
Earnings Per Share [Abstract] | |
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 25, March 26, March 25, March 26, 2018 2017 2018 2017 Loss from continuing operations $ (475 ) $ (1,704 ) $ (1,003 ) $ (10,410 ) Loss from discontinued operations (17 ) (258 ) (422 ) (973 ) Net loss available to common stockholders $ (492 ) $ (1,962 ) $ (1,425 ) $ (11,383 ) BASIC: Weighted average common shares 14,940 10,657 13,456 10,602 Loss from continuing operations per common share $ (0.03 ) $ (0.16 ) $ (0.08 ) $ (0.98 ) Loss from discontinued operations per common share (0.00 ) (0.02 ) (0.03 ) (0.09 ) Net loss per common share $ (0.03 ) $ (0.18 ) $ (0.11 ) $ (1.07 ) DILUTED: Weighted average common shares 14,940 10,657 13,456 10,602 Stock options – – – – Weighted average common shares outstanding 14,940 10,657 13,456 10,602 Loss from continuing operations per common share $ (0.03 ) $ (0.16 ) $ (0.08 ) $ (0.98 ) Loss from discontinued operations per common share (0.00 ) (0.02 ) (0.03 ) (0.09 ) Net loss per common share $ (0.03 ) $ (0.18 ) $ (0.11 ) $ (1.07 ) For the three and nine month periods ended March 25, 2018, options to purchase 478,056 shares of common stock at exercise prices ranging from $1.87 to $13.11 were excluded from the computation of diluted EPS because their inclusion would have been anti-dilutive. |
5. Closed restaurants and disco
5. Closed restaurants and discontinued operations | 9 Months Ended |
Mar. 25, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Closed restaurants and discontinued operations | In April, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which modifies the definition of discontinued operations to include only disposals of an entity that represent strategic shifts that have or will have a major effect on an entitys operation and requires entities to disclose information about disposals of individually significant components that do not meet the definition of discontinued operations. The standard was effective prospectively for annual and interim periods beginning after December 15, 2014, with early adoption permitted. The authoritative guidance on Accounting for the Impairment or Disposal of Long-Lived Assets, requires that discontinued operations that meet certain criteria be reflected in the statement of operations after results of continuing operations as a net amount. This guidance also requires that the operations of closed restaurants, including any impairment charges, be reclassified to discontinued operations for all periods presented. The authoritative guidance on Accounting for Costs Associated with Exit or Disposal Activities, requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. This authoritative guidance also establishes that fair value is the objective for initial measurement of the liability. Discontinued operations include losses attributable to the discontinued Norco distribution and supply division, leased buildings associated with Company-owned restaurants closed in prior years, and Company-owned restaurants closed in the reported period. |
6. Income Taxes
6. Income Taxes | 9 Months Ended |
Mar. 25, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | For the three months ended March 25, 2018, the Company recorded an income tax expense of $6 thousand. This amount was comprised of an income tax benefit of $130 thousand calculated at a 27.5% weighted-average rate consistent with the statutory U.S. federal rate offset by an income tax expense of $130 thousand related to a valuation allowance for deferred tax assets and state taxes of $6 thousand. For the nine months ended March 25, 2018, the Company recorded an income tax benefit of $8 thousand. This amount was comprised of an income tax benefit of $390 thousand calculated at a 27.5% weighted-average rate consistent with the statutory U.S. federal rate offset by an income tax expense of $390 thousand related to recording a valuation allowance for deferred tax assets, foreign taxes of $6 thousand, state taxes of $19 thousand and a federal tax refund of $33 thousand. 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 continues to record a full valuation allowance against its net deferred tax assets. 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 Companys review of this evidence at March 25, 2018, management determined that a full valuation allowance against all of the Companys deferred tax assets was appropriate. In December 2017, President Donald Trump signed the Tax Cuts and Jobs Act. The new law reduces the income tax rate for corporations from 35% to 21% effective January 1, 2018. The Company has not completed the accounting for the tax effects of enactment of the Act, but has estimated the effects on the deferred tax balances. The Company measured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, the Company is still analyzing certain aspects of the Act and refining calculations, which could potentially affect the remeasurement of these balances or give rise to new deferred tax amounts. The estimated increase in deferred taxes recorded due to the remeasurement was $3.3 million and the valuation allowance was adjusted by the same amount. There were approximately $6.0 million of deferred tax assets at March 25, 2018. |
7. Related Party Transactions
7. Related Party Transactions | 9 Months Ended |
Mar. 25, 2018 | |
Related Party Transactions [Abstract] | |
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 would provide 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 continued quarterly thereafter until terminated by either party. Pursuant to the Agreement, NCMS was paid an initial fee of $150,000 and earned 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 were waived if the Company was 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. The Agreement was terminated at the end of fiscal 2017. |
8. Segment Reporting
8. Segment Reporting | 9 Months Ended |
Mar. 25, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting | During the fiscal quarter ended December 24, 2017, the Company discontinued its Norco distribution division and revised its arrangements with third party suppliers and distributors of food, equipment and supplies. As a result, sale of food, equipment and supplies is no longer recognized as revenue and the cost of such items is no longer included in cost of sales. The Company now recognizes incentive revenues received from third party suppliers and distributors as revenue. In order to show the impact of this change and better reflect the current operational structure, effective with the second quarter of fiscal 2018, the Company redefined its operating segments as Pizza Inn Franchising, Pie Five Franchising and Company-Owned Restaurants. Summarized in the following tables are net sales and operating revenues, operating income and geographic information (revenues) for these reportable segments for the three and nine month periods ended March 25, 2018 and March 26, 2017 (in thousands). Operating income reported below excludes income tax provision and discontinued operations. Three Months Ended Nine Months Ended March 25, March 26, March 25, March 26, 2018 2017 2018 2017 Net sales and operating revenues: Pizza Inn Franchising $ 1,601 $ 1,764 $ 5,093 $ 5,420 Pie Five Franchising 774 857 3,169 2,680 Company-Owned Restaurants (Note 1) 290 3,877 4,032 12,644 Consolidated revenues $ 2,665 $ 6,498 $ 12,294 $ 20,744 Depreciation and amortization: Pizza Inn Franchising $ – $ – $ – $ – Pie Five Franchising – – – – Company-Owned Restaurants (Note 1) 45 436 418 1,740 Combined 45 436 418 1,740 Corporate administration and other 88 142 315 355 Depreciation and amortization $ 133 $ 578 $ 733 $ 2,095 Gain/(Loss) from continuing operations before taxes: Pizza Inn Franchising $ 1,288 $ 1,443 $ 4,165 $ 4,473 Pie Five Franchising 474 591 2,140 1,777 Company-Owned Restaurants (Note 1) (167 ) (1,013 ) (1,509 ) (8,787 ) Combined 1,595 1,021 4,796 (2,537 ) Corporate administration and other (2,064 ) (2,720 ) (5,807 ) (7,858 ) Loss from continuing operations before taxes $ (469 ) $ (1,699 ) $ (1,011 ) $ (10,395 ) Geographic information (revenues): United States $ 2,593 $ 6,455 $ 11,929 $ 20,558 Foreign countries 72 43 365 186 Consolidated total $ 2,665 $ 6,498 $ 12,294 $ 20,744 Note 1: Company stores that were closed are included in discontinued operations in the accompanying Condensed Consolidated Statement of Operations. |
1. Summary of Significant Acc14
1. Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Mar. 25, 2018 | |
Accounting Policies [Abstract] | |
Principles Of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All appropriate intercompany balances and transactions have been eliminated. |
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. |
Fiscal Quarters | Fiscal Quarters The three and nine month periods ended March 25, 2018 and March 26, 2017, each contained 13 weeks and 39 weeks, respectively. |
Revenue Recognition | Revenue Recognition Revenue from restaurant sales is recognized when food and beverage products are sold. The Company reports revenue net of sales taxes collected from customers and remitted to governmental taxing authorities. Franchise revenues consist of income from license fees, royalties, and area development and foreign master license fees and supplier and distributor incentive revenues. License fees are recognized as income when there has been substantial performance under the agreement by the Company. Domestic license fees are generally recognized at the time the restaurant is opened. Foreign master license fees are generally recognized upon execution of the agreement as all material services relating to the sale have been substantially performed by the Company and the fee has been collected. Royalties are recognized as income when earned. Supplier and distributor incentive revenues are recognized when title to the underlying commodities transfer. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock options using the fair value recognition provisions of the authoritative guidance on share-based payments. The Company uses the Black-Scholes formula to estimate the value of stock-based compensation for options granted to employees and directors and expects to continue to use this acceptable option valuation model in the future. The authoritative guidance also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow. Compensation cost for restricted stock units (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. |
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 (GAAP) requires the Companys 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 and actual results could differ materially from estimates. |
Discontinuation of Norco Distribution Division | Discontinuation of Norco Distribution Division During the fiscal quarter ended December 24, 2017, the Company discontinued its Norco distribution division and revised its arrangements with third party suppliers and distributors of food, equipment and supplies. As a result, sale of food, equipment and supplies is no longer recognized as revenue and the cost of such items is no longer included in cost of sales. The Company now recognizes incentive revenues received from third party suppliers and distributors as revenue. |
3. Stock-Based Compensation (Ta
3. Stock-Based Compensation (Tables) | 9 Months Ended |
Mar. 25, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Summary of Outstanding Stock Options | Nine Months Ended March 25, 2018 March 26, 2017 Outstanding at beginning of year 478,056 847,556 Granted – 50,000 Exercised – (315,000 ) Forfeited/Canceled/Expired – (104,500 ) Outstanding at end of period 478,056 478,056 Exercisable at end of period 438,056 358,056 |
Schedule of Summary of Restricted Stock Units | Number of Restricted Stock Units Unvested at June 25, 2017 487,950 Granted – Vested – Forfeited (34,730 ) Unvested at March 25, 2018 453,220 |
4. Earnings per Share (EPS) (Ta
4. Earnings per Share (EPS) (Tables) | 9 Months Ended |
Mar. 25, 2018 | |
Earnings Per Share [Abstract] | |
Schedule Of Earnings Per Share Basic And Diluted | Three Months Ended Nine Months Ended March 25, March 26, March 25, March 26, 2018 2017 2018 2017 Loss from continuing operations $ (475 ) $ (1,704 ) $ (1,003 ) $ (10,410 ) Loss from discontinued operations (17 ) (258 ) (422 ) (973 ) Net loss available to common stockholders $ (492 ) $ (1,962 ) $ (1,425 ) $ (11,383 ) BASIC: Weighted average common shares 14,940 10,657 13,456 10,602 Loss from continuing operations per common share $ (0.03 ) $ (0.16 ) $ (0.08 ) $ (0.98 ) Loss from discontinued operations per common share (0.00 ) (0.02 ) (0.03 ) (0.09 ) Net loss per common share $ (0.03 ) $ (0.18 ) $ (0.11 ) $ (1.07 ) DILUTED: Weighted average common shares 14,940 10,657 13,456 10,602 Stock options – – – – Weighted average common shares outstanding 14,940 10,657 13,456 10,602 Loss from continuing operations per common share $ (0.03 ) $ (0.16 ) $ (0.08 ) $ (0.98 ) Loss from discontinued operations per common share (0.00 ) (0.02 ) (0.03 ) (0.09 ) Net loss per common share $ (0.03 ) $ (0.18 ) $ (0.11 ) $ (1.07 ) |
8. Segment Reporting (Tables)
8. Segment Reporting (Tables) | 9 Months Ended |
Mar. 25, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting Detail | Three Months Ended Nine Months Ended March 25, March 26, March 25, March 26, 2018 2017 2018 2017 Net sales and operating revenues: Pizza Inn Franchising $ 1,601 $ 1,764 $ 5,093 $ 5,420 Pie Five Franchising 774 857 3,169 2,680 Company-Owned Restaurants (Note 1) 290 3,877 4,032 12,644 Consolidated revenues $ 2,665 $ 6,498 $ 12,294 $ 20,744 Depreciation and amortization: Pizza Inn Franchising $ – $ – $ – $ – Pie Five Franchising – – – – Company-Owned Restaurants (Note 1) 45 436 418 1,740 Combined 45 436 418 1,740 Corporate administration and other 88 142 315 355 Depreciation and amortization $ 133 $ 578 $ 733 $ 2,095 Gain/(Loss) from continuing operations before taxes: Pizza Inn Franchising $ 1,288 $ 1,443 $ 4,165 $ 4,473 Pie Five Franchising 474 591 2,140 1,777 Company-Owned Restaurants (Note 1) (167 ) (1,013 ) (1,509 ) (8,787 ) Combined 1,595 1,021 4,796 (2,537 ) Corporate administration and other (2,064 ) (2,720 ) (5,807 ) (7,858 ) Loss from continuing operations before taxes $ (469 ) $ (1,699 ) $ (1,011 ) $ (10,395 ) Geographic information (revenues): United States $ 2,593 $ 6,455 $ 11,929 $ 20,558 Foreign countries 72 43 365 186 Consolidated total $ 2,665 $ 6,498 $ 12,294 $ 20,744 |
2. Commitments and Contingenc18
2. Commitments and Contingencies (Details Narrative) - USD ($) | Mar. 25, 2018 | Jun. 02, 2008 |
Commitments and Contingencies Disclosure [Abstract] | ||
Common stock shares may be repurchased | 3,016,000 | |
Additional shares that can be repurchased under the 2007 Stock Purchase Plan | $ 848,425 |
3. Stock-Based Compensation - S
3. Stock-Based Compensation - Schedule of Summary of Outstanding Stock Options (Details) - Options [Member] - shares | 9 Months Ended | |
Mar. 25, 2018 | Mar. 26, 2017 | |
Outstanding at beginning of year | 478,056 | 847,556 |
Granted | 0 | 50,000 |
Exercised | 0 | (315,000) |
Forfeited/Canceled/Expired | (104,500) | |
Outstanding at end of period | 478,056 | 478,056 |
Exercisable at end of period | 438,056 | 358,056 |
3. Stock-Based Compensation -20
3. Stock-Based Compensation - Schedule of Summary of Restricted Stock Units (Details) - Restricted Stock Units (RSUs) [Member] | 9 Months Ended |
Mar. 25, 2018shares | |
Unvested at June 25, 2017 | 487,950 |
Granted | 0 |
Vested | 0 |
Forfeited | (34,730) |
Unvested at March 25, 2018 | 453,220 |
3. Stock-Based Compensation (De
3. Stock-Based Compensation (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 25, 2018 | Mar. 26, 2017 | Mar. 25, 2018 | Mar. 26, 2017 | |
Stock-based compensation recognized | $ 10 | $ 53 | $ 29 | $ 143 |
Options [Member] | ||||
Stock-based compensation recognized | 10 | 20 | 29 | 70 |
Unamortizied stock-based compensation expense | 6 | 6 | ||
Restricted Stock Units (RSUs) [Member] | ||||
Stock-based compensation recognized | 0 | $ 33 | 0 | $ 73 |
Unamortizied stock-based compensation expense | $ 0 | $ 0 |
4. Earnings per Share (EPS) - S
4. Earnings per Share (EPS) - Schedule Of Earnings Per Share Basic And Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 25, 2018 | Mar. 26, 2017 | Mar. 25, 2018 | Mar. 26, 2017 | |
Earnings Per Share [Abstract] | ||||
Loss from continuing operations | $ (475) | $ (1,704) | $ (1,003) | $ (10,410) |
Loss from discontinued operations | (17) | (258) | (422) | (973) |
Net loss available to common stockholders | $ (492) | $ (1,962) | $ (1,425) | $ (11,383) |
BASIC: | ||||
Weighted average common shares | 14,940 | 10,657 | 13,456 | 10,602 |
Loss from continuing operations per common share | $ (0.03) | $ (0.16) | $ (0.08) | $ (0.98) |
Loss from discontinued operations per common share | 0 | (0.02) | (0.03) | (0.09) |
Net loss per common share | $ (0.03) | $ (0.18) | $ (0.11) | $ (1.07) |
DILUTED: | ||||
Weighted average common shares | 14,940 | 10,657 | 13,456 | 10,602 |
Stock options | 0 | 0 | 0 | 0 |
Weighted average common shares outstanding | 14,940 | 10,657 | 13,456 | 10,602 |
Loss from continuing operations per common share | $ (0.03) | $ (0.16) | $ (0.08) | $ (0.98) |
Loss from discontinued operations per common share | 0 | (0.02) | (0.03) | (0.09) |
Net loss per common share | $ (0.03) | $ (0.18) | $ (0.11) | $ (1.07) |
4. Earnings per Share (EPS) (De
4. Earnings per Share (EPS) (Details Narrative) - shares | 3 Months Ended | 9 Months Ended |
Mar. 25, 2018 | Mar. 25, 2018 | |
Earnings Per Share [Abstract] | ||
Options To Purchase Shares Of Common Stock Excluded From Computation Of Diluted Shares | 478,056 | 478,056 |
6. Income Taxes (Details Narrat
6. Income Taxes (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 25, 2018 | Mar. 26, 2017 | Mar. 25, 2018 | Mar. 26, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Income Tax Expense (Benefit) | $ 6 | $ 5 | $ (8) | $ 15 |
Income Tax Benefit | $ 130 | $ 390 | ||
Federal statutory rate | 27.50% | 27.50% | ||
Deferred tax valuation allowance | $ 130 | $ 390 | ||
State tax expense | 6 | 19 | ||
Foreign tax expense | 6 | |||
Federal tax refund | (33) | |||
Income tax remeasurement | 3,300 | |||
Deferred taxes | $ 6,000 | $ 6,000 |
8. Segment Reporting (Details -
8. Segment Reporting (Details - Segment reporting) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 25, 2018 | Mar. 26, 2017 | Mar. 25, 2018 | Mar. 26, 2017 | |
Net sales and operating revenues | $ 2,665 | $ 6,498 | $ 12,294 | $ 20,744 |
Depreciation and amortization | 133 | 578 | 733 | 2,095 |
Gain/(Loss) from continuing operations before taxes | (469) | (1,699) | (1,011) | (10,395) |
Pizza Inn Franchising | ||||
Net sales and operating revenues | 1,601 | 1,764 | 5,093 | 5,420 |
Depreciation and amortization | 0 | 0 | 0 | 0 |
Gain/(Loss) from continuing operations before taxes | 1,288 | 1,443 | 4,165 | 4,473 |
Pie Five Franchising | ||||
Net sales and operating revenues | 774 | 857 | 3,169 | 2,680 |
Depreciation and amortization | 0 | 0 | 0 | 0 |
Gain/(Loss) from continuing operations before taxes | 474 | 591 | 2,140 | 1,777 |
Company-owned restaurants (1) | ||||
Net sales and operating revenues | 290 | 3,877 | 4,032 | 12,644 |
Depreciation and amortization | 45 | 436 | 418 | 355 |
Gain/(Loss) from continuing operations before taxes | (167) | (1,013) | (1,509) | (7,858) |
Combined | ||||
Depreciation and amortization | 45 | 436 | 418 | 1,740 |
Gain/(Loss) from continuing operations before taxes | 1,595 | 1,021 | 4,796 | (2,537) |
Corporate administration and other | ||||
Depreciation and amortization | 88 | 142 | 315 | 355 |
Gain/(Loss) from continuing operations before taxes | $ (2,064) | $ (2,720) | $ (5,807) | $ (7,858) |
8. Segment Reporting (Details26
8. Segment Reporting (Details - Geographic information revenues) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 25, 2018 | Mar. 26, 2017 | Mar. 25, 2018 | Mar. 26, 2017 | |
Revenues | $ 2,665 | $ 6,498 | $ 12,294 | $ 20,744 |
UNITED STATES | ||||
Revenues | 2,593 | 6,455 | 11,929 | 20,558 |
Foreign countries | ||||
Revenues | $ 72 | $ 43 | $ 365 | $ 186 |