Financial Analysis

NOTE I - 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 Companys annual results of operations or financial condition if decided in a manner that is unfavorable to the Company. …

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Total revenues consist of the following (in thousands): Fiscal Year Ended June 29, 2025 June 30, 2024 June 25, 2023 Franchise royalties $ 4,620 $ 4,844 $ 4,978 Supplier and distributor incentive revenues 4,940 4,833 4,418 Franchise license fees 153 281 152 Area development exclusivity fees and foreign master license fees 13 15 18 Advertising fund contributions 2,031 1,814 1,943 Supplier convention funds 217 217 172 Rental income 53 131 186 Other 12 15 22 $ 12,039 $ 12,150 $ 11,889

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NOTE H - STOCK-BASED COMPENSATION PLANS: The 2015 Long Term Incentive Plan (the 2015 LTIP) was approved by the Companys shareholders on November 18, 2014 and became effective June 1, 2015. Officers, employees and non-employee directors of the Company were eligible to receive awards under the 2015 LTIP. A total of 3,000,000 shares of common stock were authorized for issuance under the 2015 LTIP. Awards authorized under the 2015 LTIP included incentive stock options, non-qualified stock options, restricted shares, restricted stock units and rights (either with or without accompanying options). The 2015 LTIP provided for options to be granted at market value of the stock on the date of grant and have exercise periods determined by the Compensation Committee of the board of directors. The Compensation Committee also determined the vesting periods, performance criteria and other terms and conditions of all awards under the 2015 LTIP. The Compensation Committee had adopted resolutions under the 2015 LTIP automatically granting to each non-employee director on the first day of each fiscal year options to purchase twice the number of shares of common stock acquired during the previous fiscal year, up to a maximum of 40,000 shares. Such options were exercisable at the market value of the stock on the first day of the fiscal year, vested six months from the date of grant and expired 10 years from the date of grant. The 2015 LTIP expired by its terms on June 1, 2025. Stock-based compens …

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NOTE E - INCOME TAXES: Provision for income taxes from continuing operations consists of the following (in thousands): Fiscal Year Ended June 29, 2025 June 30, 2024 June 25, 2023 Current - Federal $ $ $ Current - State 156 33 107 Deferred - Federal 793 530 394 Deferred - State (31 ) 56 36 Provision for income taxes $ 918 $ 619 $ 537 The effective income tax rate varied from the statutory rate for the fiscal years ended June 29, 2025, June 30, 2024, and June 25, 2023 as reflected below (in thousands): Fiscal Year Ended June 29, 2025 June 30, 2024 June 25, 2023 Federal income taxes based on a statutory rate of 21% $ 760 $ 649 $ 452 State income taxes (net of federal benefit) 99 82 119 Permanent Adjustments (31 ) (128 ) 7 Return to Provision 16 (49 ) Other 90 8 Provision for income taxes $ 918 $ 619 $ 537 The tax effects of temporary differences that give rise to the net deferred tax assets consisted of the following (in thousands): June 29, 2025 June 30, 2024 Allowance for credit losses $ 7 $ 13 Deferred fees 55 58 Other reserves and accruals 420 475 Operating lease liabilities 135 222 Credit carryforwards 56 156 Net operating loss carryforwards 3,503 4,057 Total deferred tax assets $ 4,176 $ 4,981 Right-of-use assets (115 ) (190 ) Other deferred tax liabilities (66 ) (35 ) Total deferred tax liabilities $ (181 ) $ (225 ) Net deferred tax asset $ 3,995 $ 4,756 The Company utilized net operating losses to offset federal taxes. At the end of tax year June 29, 2025, the Company ha …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

NOTE F - LEASES: The Company leases its 19,576 square foot corporate office facility with average annual lease payments of approximately $18.00 per square foot. This lease began on January 2, 2017 and has a ten-year term. The Company amended its lease agreement in June 2020 and has elected to defer one-half of the monthly base rent for the period from June 2020 through May 2021. As of June 29, 2025 and June 30, 2024, the unpaid balance of deferred base rent was approximately $24 thousand and $56 thousand, respectively which is included in accounts payable on the accompanying Consolidated Balance Sheets. The components of total lease expense for the fiscal years ended June 29, 2025, June 30, 2024, and June 25, 2023, where operating lease cost is included in general and administrative expense and sublease income is included in revenues in the accompanying Consolidated Statements of Income, are as follows (in thousands): Fiscal Year Ended June 29, 2025 June 30, 2024 June 25, 2023 Operating lease cost $ 377 $ 447 $ 494 Sublease income (53 ) (131 ) (186 ) Total lease expense, net of sublease income $ 324 $ 316 $ 308 Supplemental cash flow information related to operating leases is included in the table below (in thousands): Fiscal Year Ended June 29, 2025 June 30, 2024 June 25, 2023 Cash paid for amounts included in the measurement of lease liabilities $ 429 $ 511 $ 558 Weighted average remaining lease term and weighted average discount rate for operating leases are as follows: Fi …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Recently Adopted Accounting Guidance: 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 new guidance is effective for the Company's fiscal year beginning after December 15, 2023 and for interim periods beginning after December 15, 2024. The Company adopted this standard on July 1, 2024, which required companies to enhance disclosure of significant reportable segment expenses. Recently Issued Accounting Standards: December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about a companys effective tax rate reconciliation and requires disclosure of income taxes paid by jurisdiction. The amendments are effective for fiscal years beginning after December 15, 2024, which require us to adopt the provisions in our fiscal 2026 Form 10-K. The amendments should be applied prospectively; however, retrospective application is permitted. Management does not expect this ASU to have a material impact on our disclosures. In November 2024, the FASB issued ASU 2024-03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires, for each relevant expense caption on the income statement, detailed disclosure a …

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NOTE G - EMPLOYEE BENEFITS: The Company has a tax advantaged savings plan that is designed to meet the requirements of Section 401(k) of the Internal Revenue Code (the Code). Employees who have completed three months of service and are at least 21 years of age are eligible to participate in the plan. The plan provides that participating employees may elect to have between 1% and 100% of their compensation deferred and contributed to the plan subject to certain IRS limitations. The Company has a discretionary matching contribution. Separate accounts are maintained with respect to contributions made on behalf of each participating employee. Employer matching contributions and earnings thereon are invested in the same investments as each participants employee deferral. The plan is subject to the provisions of the Employee Retirement Income Security Act, as amended, and is a profit-sharing plan as defined in Section 401(k) of the Code. For the fiscal years ended June 29, 2025, June 30, 2024, and June 25, 2023, total matching contributions to the tax advantaged savings plan by the Company on behalf of participating employees were approximately $27 thousand, $21 thousand, and $24 thousand, respectively. …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

NOTE K - 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 Company's chief operating decision maker (CODM) is the chief executive officer, who assesses segment performance primarily based on operating revenues and income before taxes to inform decisions regarding resource allocation. In addition, the CODM uses segment income to evaluate investment opportunities and strategic priorities across the Company's brands. 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 …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Note C - 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 Companys results of operations or financial condition if decided in a manner that is unfavorable to the Company. No accrual has been recorded for any claims or actions at December 28, 2025 or June 29, 2025. …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Total revenues consist of the following (in thousands): Three Months Ended Six Months Ended December 28, December 29, December 28, December 29, 2025 2024 2025 2024 Franchise royalties $ 1,141 $ 1,144 $ 2,311 $ 2,265 Supplier and distributor incentive revenues 1,361 1,156 2,636 2,348 Franchise license fees 20 36 43 64 Area development exclusivity fees and foreign master license fees 3 3 6 6 Advertising fund contributions 517 502 1,050 966 Supplier convention funds - - 209 217 Rental income - 23 - 46 Other franchise revenue - 5 - 7 $ 3,042 $ 2,869 $ 6,255 $ 5,919

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Note D - Stock-Based Compensation Stock Options: For the three and six months ended December 28, 2025 and December 29, 2024, the Company recognized stock-based compensation expense related to stock options of zero. As of December 28, 2025, there was no unamortized stock-based compensation expense related to stock options. The following table summarizes the number of shares of the Companys common stock subject to outstanding stock options: Six Months Ended December 28, 2025 December 29, 2024 Shares Shares Outstanding at beginning of year 114,286 114,286 Granted - - Exercised - - Forfeited/Canceled/Expired (24,286 ) - Outstanding at end of period 90,000 114,286 Exercisable at end of period 90,000 114,286 Restricted Stock Units: For the three and six months ended December 28, 2025, the Company had stock-based compensation expense related to RSUs of $62 thousand and $100 thousand, respectively. For the three and six months ended December 29, 2024, the Company had stock-based compensation expense related to RSUs of $53 thousand and $126 thousand, respectively. As of December 28, 2025, there was $591 thousand unamortized stock-based compensation expense related to RSUs. As of December 28, 2025 the RSUs will be amortized during the next 34 months. A summary of the status of restricted stock units as of December 28, 2025 and December 29, 2024, and changes during the six months then ended is presented below: Six Months Ended December 28, 2025 December 29, 2024 Unvested at beginning of …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Note F - Income Taxes Total income tax expense consists of the following (in thousands): Three Months Ended Six Months Ended December 28, December 29, December 28, December 29, 2025 2024 2025 2024 Federal tax expense $ 178 $ 121 $ 347 $ 264 State tax expense 27 23 64 49 Total income tax expense $ 205 $ 144 $ 411 $ 313 The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. In 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.

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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 Companys right to use an underlying asset for the lease term and lease liabilities represent the Companys 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 descript …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Recently Adopted Accounting Guidance In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU or standard) 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. The Company adopted this standard on June 30, 2025, and the adoption of this standard did not have a material impact on the Company's consolidated financial statements and related disclosures. Recent Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires, for each relevant expense caption on the income statement, detailed disclosure amounts for purchases of inventory, employee compensation, depreciation, and intangible asset amortization. In addition, this ASU requires companies to include amounts already required by GAAP in the same disclosure, provide a qualitative description of remaining amounts not separately disaggregated, and disclose the amount of total selling expenses along with the companies definition of selling expenses. The amendment is effective for fiscal years b …

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Note G - 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 Company's chief operating decision maker (CODM) is the chief executive officer, who assesses segment performance primarily based on operating revenues and income before taxes to inform decisions regarding resource allocation. In addition, the CODM uses segment income to evaluate investment opportunities and strategic priorities across the Company's brands. The Pizza Inn and Pie Five Franchising segments establish franchisees, licensees and territorial rights. Revenues 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 t …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

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 December 28, 2025 and June 29, 2025, the Company held U.S. Treasury bills valued at approximately $10.3 million and $7.0 million, respectively, which are included within short-term investments on the accompanying Condensed Consolidated Balance Sheets. For the three months ended December 28, 2025 and December 29, 2024, interest income recognized on U.S. Treasury bills was $86 thousand and $87 thousand, respectively. For the six months ended December 28, 2025 and December 29, 2024, interest income recognized on the U.S. Treasury bills was $171 thousand and $ …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing