SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D. C.  20549

                                    FORM 10-K
(Mark  One)
[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
        ACT  OF  1934
        FOR  THE  FISCAL  YEAR  ENDED  JUNE  26,  2005.
     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

                                 PIZZA INN, INC.
             (Exact name of registrant as specified in its charter)

                        MISSOURI                       47-0654575
                 (State  or  jurisdiction  of       (I.R.S.  Employer
                   incorporation  or  organization)  Identification  No.)

                            3551  PLANO  PARKWAY
                       THE  COLONY,  TEXAS     75056
         (Address  of  principal  executive  offices)     (Zip  Code)

     Registrant's telephone number, including area code:     (469) 384-5000
      Securities registered pursuant to Section 12(b) of the Act:     NONE
           Securities registered pursuant to Section 12(g) of the Act:
                        COMMON STOCK, PAR VALUE $.01 EACH
                                (Title of class)

     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 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 [X]_ No  [ ]

     Indicate  by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  registrant's  knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form  10-K. [X]

     Indicate  by  check mark whether the registrant is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Act).  Yes [ ] No [X]

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

As of December 26, 2004, the last business day of the registrant's most recently
completed  second  fiscal  quarter, the aggregate market value of the voting and
non-voting  common  equity  held  by non-affiliates was $14,371,275, computed by
reference  to the price at which the common equity was last sold, or the average
bid  and  asked  price  of  such  common  equity,  as  of  such  date.

     As  of September 19, 2005, there were 10,108,494 shares of the registrant's
common  stock  outstanding.


                       DOCUMENTS INCORPORATED BY REFERENCE

     The  information  required  by  Part  III of this report is incorporated by
reference  from the registrant's definitive proxy statement required to be filed
pursuant  to  Regulation  14A  in  connection  with the registrant's next annual
meeting  of  shareholders,  which  is  expected  to  be  held  in December 2005.



<PAGE>

                                     PART I

ITEM  1  -  BUSINESS

GENERAL

     Pizza  Inn,  Inc.  and  its  subsidiaries  (collectively referred to as the
"Company", "Pizza Inn" or in the first person notations of "we", "us" and "our")
operate  and  franchise pizza buffet, delivery/carry-out and express restaurants
domestically  and  internationally under the trademark "Pizza Inn".  Through our
Norco  Restaurant  Services  Company  ("Norco")  division,  we  are also a food,
equipment  and  supply  distributor  to our domestic and international system of
restaurants.

     On  September  19, 2005, the Pizza Inn system consisted of 391 restaurants,
including  four  Company-owned restaurants, and 387 franchised restaurants.  The
domestic  franchised  restaurants  are  comprised  of 191 buffet restaurants, 50
delivery/carry-out  restaurants  and  71 express restaurants.  The international
franchised  restaurants  are  comprised  of  17  buffet  restaurants,  44
delivery/carry-out restaurants and 14 express restaurants.  Domestic restaurants
are located predominantly in the southern half of the United States, with Texas,
North  Carolina,  and  Arkansas  accounting  for approximately 35%, 14%, and 8%,
respectively,  of  the  total  number  of  domestic  restaurants.

OUR  HISTORY

     Pizza  Inn has offered consumers affordable, quality pizza since 1958, when
the  first  Pizza  Inn restaurant opened in Dallas, Texas.  We awarded our first
franchise  in  1963  and  opened  our first buffet restaurant in 1969.  We began
franchising the Pizza Inn brand internationally in the late 1970s.  In 1993, our
stock  began  trading  on  the  NASDAQ Stock Market, and presently trades on the
NASDAQ  SmallCap  Market  under  the  ticker  symbol  "PZZI".

OUR  CONCEPTS

     We  offer  three  concepts: buffet, delivery/carry-out and express. Each is
designed  to  enhance the smooth flow of food ordering, preparation and service,
and  we  believe  that  the  overall configuration of each results in simplified
operations,  lower  training  and labor costs, increased efficiency and improved
consistency and quality of our food products.  Our restaurants may be configured
to  adapt  to  a  variety of building shapes and sizes, offering the flexibility
necessary  for  our  concepts to be operated at any number of otherwise suitable
locations.

     Our  focused  menu  is  designed  to  present  an appealing variety of high
quality  of  pizza and side items to our customers.  Our basic buffet restaurant
menu  offers  three main crusts (Original Thin Crust, New York Pan and Italian),
with standard toppings and special combinations of toppings.  Buffet restaurants
also  offer  pasta,  salad,  sandwiches,  appetizers,  desserts  and  beverages,
including  beer  and  wine  in  some  locations, in an informal, family-oriented
atmosphere.  We  occasionally  offer other items on a limited promotional basis.
Delivery/carryout  restaurants  usually  offer  the  three  main crusts and some
combination  of side items.  We believe that our focus on three main crust types
creates  a  better brand identity among customers, improves operating efficiency
and  maintains  food  quality  and  consistency.

     Our  buffet  and  delivery/carry-out  concepts  feature  crusts  that  are
hand-made  from  dough  made  fresh in the restaurant each day.  We do not use a
centralized  commissary  for  mass  production  of  dough and our dough is never
frozen (with the exception of certain dough products used in the express concept
for  pizza,  discussed  below).  Pizza  Inn  pizzas  are made from a proprietary
all-in-one  flour  mixture,  real  mozzarella  cheese  and  a proprietary mix of
classic  pizza  spices.  Domestically,  all  ingredients  and  toppings  can  be
purchased  from Norco, which makes deliveries to each domestic restaurant in our
system  at least once a week. In international markets, the menu mix of toppings
and  side  items  is  occasionally  adapted  to  local  tastes.

     Buffet  Restaurants
     -------------------

     These  restaurants  offer  dine-in and carryout service and, in many cases,
also  offer  delivery  service.  They  are  generally  located  in free standing
buildings  or  in-line  locations  in  retail developments in close proximity to
offices,  shopping  centers  and residential areas.  The current standard buffet
restaurants  are between 3,000 and 5,000 square feet in size and seat 120 to 185
customers.  The  interior  decor  is  designed  to  promote  a  casual,  lively,
contemporary,  family-style  atmosphere.  Buffet restaurants also offer catering
service.

     The  buffet  is  typically  offered  at prices from $4.29 to $5.99, and the
average  ticket  price  per  meal, including a drink, is approximately $6.38 per
person  for fiscal year 2005.  These averages are slightly higher in restaurants
offering  beer  and  wine.

     We  are developing and implementing a new image and layout for our domestic
buffet  concept,  which  we  believe  may increase retail sales and market share
through  a  stronger  market  presence,  greater  brand  awareness  and enhanced
customer  satisfaction.  This program involves significant exterior and interior
changes  in  signage, color schemes and work flow and dining area configuration,
including  the  addition  of  a  back-fed  buffet  bar  offering  attractive and
efficient  presentation,  a  greater variety of products and increased operating
efficiency.  The design features vibrant colors, graphic accents, a contemporary
interior  and  updated  signage  and  logos.  Some restaurants will feature game
rooms,  which will offer a range of electronic game entertainment for the entire
family.  Interiors  will  feature  selected  memorabilia  capturing  some of the
milestones in our nearly 50 years of operation.  Additionally, guests will enjoy
the  convenience  of  curbside  service.  This  new  buffet  concept  is  being
introduced  in  several  new  Company-owned  restaurants,  as well as in new and
certain  existing  franchised  restaurants.

     Delivery/Carryout  Restaurants
     ------------------------------

     These  restaurants  offer  delivery  and  carryout  service  only  and  are
typically  located  in  shopping  centers  or other in-line retail developments.
These  relatively  small restaurants, occupying approximately 1,000 square feet,
are  primarily  production  facilities  and,  in  most  instances,  do not offer
seating.    Because these restaurants do not typically offer dine-in areas, they
usually  do  not  require expensive real estate leasehold or ownership costs and
are  relatively  less  expensive  to  build  and  equip.  The  decor  of  these
restaurants  is  designed  to  be  bright  and  highly visible and feature neon,
lighted  displays  and  awnings.

     We  attempt  to locate these restaurants strategically to facilitate timely
delivery  service  and  to provide easy access for carryout service.  We believe
that  there  are  continuing  opportunities  for  strategic  development for the
delivery/carry-out  concept, whether as a primary means of market development in
carefully  targeted  areas,  or  as  "in-fills"  in  buffet  markets to serve an
identifiable  customer  segment  and  capture  additional  market  share.

     Express  Restaurants
     --------------------

     These restaurants offer us the opportunity to serve our customers through a
variety  of  non-traditional  points of sale.  Express restaurants are typically
located  in  a  convenience store, food court, college campus, airport terminal,
athletic facility or other commercial facility.  They have limited or no seating
and  solely  offer  quick  carryout service of a limited menu of pizza and other
foods and beverages.  An express restaurant typically occupies approximately 200
to  400  square  feet  and  is commonly operated by the same person who owns the
commercial  host facility or who is licensed at one or more locations within the
facility.  We  have  developed  a high-quality pre-prepared crust that is topped
and  cooked  on-site,  allowing this concept to offer a lower initial investment
and  reduced  labor  and  operating  costs while maintaining product quality and
consistency.  Like  the  delivery/carry-out restaurants, express restaurants are
primarily  production-oriented  facilities and, therefore, do not require all of
the  equipment,  labor,  real  estate  or square footage of a traditional buffet
restaurant.

SITE  SELECTION

     We  consider  the  restaurant  site  selection  process  critical  to  the
restaurant's  long-term  success  and  devote  significant  resources  to  the
investigation  and  evaluation  of  potential  sites. The site selection process
includes  a review of trade area demographics and other competitive factors.  We
also  rely  on  the  franchisee's  knowledge  of  the  trade  area  and  market
characteristics  when selecting a location for a franchised restaurant. A member
of  the  Company's  development  team  will  visit  each  potential  domestic
Company-owned  restaurant  location.  We  try  to  locate  franchised  and
Company-operated  restaurants  in retail strip centers or freestanding buildings
offering  visibility,  curb  appeal  and  accessibility.


<PAGE>
DEVELOPMENT  AND  OPERATIONS

     We  intend  to  continue  our  expansion  domestically  in markets where we
believe  there exists significant long-term earnings growth potential, and where
we  believe  that  we  can  use  our  competitive  strengths  to establish brand
recognition  and  gain  local  market  share.  We believe our franchise-oriented
business model will allow us eventually to expand our franchised restaurant base
with  limited  capital  expenditures and working capital requirements.  While we
plan  to  expand  our  domestic  restaurant  base  primarily through opening new
franchised  restaurants,  we  also  will  continually  evaluate  our  mix  of
Company-operated  and  franchised  restaurants  and  may  strategically  develop
Company-operated  restaurants,  acquire  franchised restaurants and re-franchise
Company-operated  restaurants.  We  believe  that our most promising development
and  system  growth  opportunities  lie  with  experienced,  well-capitalized,
multi-restaurant  operators.

     The  specific  rate  at  which  we will be able to expand through franchise
development  is  determined  in  part  by  our  success  at  selecting qualified
franchisees, by identifying satisfactory sites in appropriate markets and by our
ability  to  continue  training  and  monitoring  our  franchisees.

     Franchise  Operations
     ---------------------

     We  have  adopted  a  franchising  strategy  that has two major components:
continued  development  within  our existing market areas and new development in
strategically targeted domestic territories.  We also intend to continue to seek
appropriate  international  development  opportunities.

     Franchise  and  development  agreements.  Our  current  forms  of franchise
agreements  provide for: (i) a franchise fee of $20,000 for a buffet restaurant,
$7,500 for a delivery/carry-out restaurant and $5,000 for an express restaurant,
(ii) an initial franchise term of 20 years for a buffet restaurant and ten years
for a delivery/carry-out or express restaurant, plus a renewal term of ten years
for each concept, (iii) required contributions equal to 1% of gross sales to the
Pizza  Inn Advertising Plan ("PIAP") or to the Company, as discussed below, (iv)
royalties  equal  to  4%  of  gross  sales  for  a  buffet or delivery/carry-out
restaurant,  and 5% or 6%, as determined by the respective franchise agreements,
of  gross  sales  for  an  express  restaurant,  and  (v)  required  advertising
expenditures  of  at  least 5% of gross sales for a buffet or delivery/carry-out
restaurant,  and  2%  for an express restaurant.  From time to time, the Company
offers,  to  certain  experienced restaurant operators, area developer rights in
new  and  existing domestic markets.  An area developer pays a negotiated fee to
purchase the right to operate or develop restaurants within a defined territory.
The area developer typically agrees to multi-restaurant development schedule and
assists  the  Company in local franchise service and quality control in exchange
for  half  of  the  franchise fees and royalties from all restaurants within the
territory  during  the  term  of  the  agreement.

     The  Pizza  Inn  concept  was  first  franchised in 1963.  Since that time,
industry  franchising  concepts and development strategies have changed, and the
Company's  present  franchise  relationships  are  evidenced  by  a  variety  of
contractual  forms.  Common  to those forms are provisions that: (i) provide for
an  initial franchise term of 20 years (except as described below) and a renewal
term,  (ii)  require the franchisee to follow the Pizza Inn system of restaurant
operation  and  management,  (iii) require the franchisee to pay a franchise fee
and  continuing royalties, and (iv) except for express restaurants, prohibit the
development  of  one  restaurant  within  a  specified  distance  from  another.

     Training.  The Company offers numerous training programs for the benefit of
franchisees  and  their restaurant crew managers.  The training programs, taught
by  experienced  Company  employees,  focus  on  food preparation, service, cost
control,  sanitation,  safety,  local  store marketing, personnel management and
other  aspects  of  restaurant  operation.  The  training programs include group
classes,  supervised  work  in  Company-operated  restaurants  and special field
seminars.  Initial  and  some supplemental training programs are offered free of
charge  to  franchisees,  who  pay  their  own  travel  and  lodging  expenses.
Restaurant  managers  train  their  staff through on-the-job training, utilizing
videotapes  and  printed  materials  produced  by  the  Company.

     Standards.  We  enforce a variety of standards over franchise operations to
protect  and  enhance  our brand.  All franchisees are required to operate their
restaurants  in  compliance with written policies, standards and specifications,
which  include  matters  such  as  menu items, ingredients, materials, supplies,
services,  furnishings,  decor  and signs.  Our efforts to maintain a consistent
level  of operations may result from time to time in closing certain restaurants
that  are not capable of achieving and maintaining a consistent level of quality
operations.  Each  franchisee  has full discretion to determine the prices to be
charged  to  customers.  We  also  provide  ongoing  support to our franchisees,
including  training,  marketing  assistance  and consultation to franchisees who
experience  financial  or  operational  difficulties.

     Company  Operations
     -------------------

     One  of  our  long-term objectives is to continue to selectively expand the
number  of Company-owned restaurants by identifying appropriate opportunities in
our  targeted  markets.  We  intend  to  concentrate  our  efforts  in  certain
identified  markets  by  opening  a  limited  number of restaurants at locations
developed  by the Company or by selectively identifying opportunities to acquire
restaurants  operated  by  franchisees  at  negotiated  prices.  We believe that
moving  forward, our domestic network of Company- owned restaurants will play an
important  strategic  role  in our predominately franchised operating structure.
In  addition  to  generating  revenues  and  earnings, we expect to use domestic
Company-owned  restaurants as test sites for new products and promotions as well
as  restaurant operational improvements and as a forum for training new managers
and  franchisees.  We  also  believe that as the number gradually increases, our
Company-owned  restaurants  may  add  to  the  economies  of scale available for
advertising,  marketing  and  other  costs.

     We  currently  operate  one  buffet  restaurant  and one delivery/carry-out
restaurant  in  the  Dallas,  Texas  market.  We  are  presently  developing two
additional buffet restaurants in Houston, Texas that were recently acquired from
franchisees  and  we  are  constructing  a  new restaurant in Dallas, Texas.  We
anticipate  that  these  restaurants  will be open late in the second quarter of
fiscal  2006.  We  are  also  considering  opportunities  to  acquire  select
franchisee-owned  restaurants  in  other  markets. We do not currently intend to
operate any delivery/carry-out restaurants or express restaurants other than the
one  we  currently  own.

     Our  ability  to  open Company-owned restaurants is affected by a number of
factors,  including,  the  terms  of  available financing, our ability to locate
suitable sites, negotiate acceptable lease or purchase terms, secure appropriate
local  governmental  permits  and  approvals  and  our  capacity  to  supervise
construction  and  to  recruit  and  train  management  personnel.

     International  Operations
     -------------------------

     From  time  to  time we also offer master franchise rights to develop Pizza
Inn  restaurants in certain foreign countries, with negotiated fees, development
schedules and ongoing royalties.  A master licensee for a foreign country pays a
negotiated  fee  to  purchase  the  right  to  develop  and  operate  Pizza  Inn
restaurants within a defined territory, typically for a term of 20 years, plus a
ten-year  renewal  option.  The  master  licensee  agrees  to a multi-restaurant
development  schedule  and the Company trains the master licensee to monitor and
assist  franchisees  in  their territory with local service and quality control,
with support from the Company.  In return, the master licensee typically retains
half  the  franchise  fees  and half the royalties on all restaurants within the
territory  during  the  term  of  the  agreement.  Master  licensees  may  open
restaurants  that  they  own  and  operate,  or  they  may  open  sub-franchised
restaurants  owned  and  operated  by  third parties through agreements with the
master  licensee,  but  subject  to  our  approval.

     We  opened  our  first  restaurant outside of the United States in the late
1970s,  and,  as  of  June  26,  2005,  there  were  74  restaurants  operating
internationally,  with  43  of those restaurants operated or sub-licensed by our
franchisees  in  the United Arab Emirates and Saudi Arabia.  Our master licensee
in Saudi Arabia has also developed several express restaurants at U. S. military
facilities.

     Our ability to continue to develop select international markets is affected
by  a  number  of  factors,  including  our  ability  to  locate  experienced,
well-capitalized  developers  who  can  commit to an aggressive multi-restaurant
development  schedule  and  achieve  maximum  initial  market penetration with a
minimum  of  direct  control  by  the  Company.

FOOD  AND  SUPPLY  DISTRIBUTION

     We  believe that Norco, our food and supply distribution system, results in
lower  operating  costs,  improved  food  quality  and  increased  customer
satisfaction.  Norco  is able to leverage the advantages of volume purchasing of
food,  equipment  and  supplies  for  the  franchisees' benefit in the form of a
concentrated,  one-truck  delivery  system,  pricing  efficiencies  and  product
consistency.  We  negotiate  directly with major suppliers to obtain competitive
prices.  Operators are able to purchase all products and ingredients from Norco,
thereby  reducing  the  logistical difficulties and added expense of maintaining
multiple inventory, purchasing and delivery records.  In order to assure product
quality  and  consistency, our franchisees are required to purchase, from Norco,
certain  food  products  that are proprietary to the Pizza Inn system, including
our flour mixture and spice blend.  In addition, almost all franchisees purchase
other  supplies  from  Norco.  Franchisees  may  also  purchase  non-proprietary
products and supplies from other suppliers who meet our requirements for quality
and  reliability.

     Norco  operates  its  central  distribution facility six days per week, and
delivers  to  all domestic restaurants weekly, utilizing a fleet of refrigerated
tractor-trailers  operated  by  Company drivers and independent owner-operators.
Norco  also  ships  products  and  equipment  to  international  franchisees.
Non-proprietary  food  and ingredients, equipment and other supplies distributed
by  Norco  are  generally  available  from  several qualified sources.  With the
exception  of  several  proprietary  food products, the Company is not dependent
upon any one supplier or limited group of suppliers.  The Company contracts with
established  food  processors  for  the  production of its proprietary products.

     We have not experienced any significant shortages of supplies or any delays
in  receiving our food or beverage inventories, restaurant supplies or products,
and do not anticipate any difficulty in obtaining inventories or supplies in the
foreseeable  future.  Prices  charged  to  us  by  our  suppliers are subject to
fluctuation,  and  we  may from time to time attempt to pass increased costs and
savings  on  to  our  franchisees.  We  do  not  engage  in  commodity  hedging.

ADVERTISING

     By  communicating  a common brand message at the regional, local market and
store  levels,  we  believe  we  can  create  and reinforce a strong, consistent
marketing  message  to  consumers  and  increase  our market share.  We offer or
facilitate  a  number  of ways for the brand image and message to be promoted at
the  local  and  regional  levels.

     PIAP is a Texas non-profit corporation that is responsible for creating and
producing  print  advertisements,  television and radio commercials and in-store
promotional  materials,  along  with related advertising services for use by its
members.  Each  operator of a buffet or delivery/carry-out restaurant, including
the  Company,  is  entitled  to membership in PIAP.  Nearly all of the Company's
existing  franchise  agreements  for  buffet  and delivery/carry-out restaurants
require  the  franchisees  to  become members of PIAP.  Members contribute 1% of
their  gross  sales  to  PIAP.  PIAP is managed by a board of trustees comprised
solely  of  franchisee representatives who are elected by the members each year.
The  Company does not have any ownership interest in PIAP.  The Company provides
certain administrative, marketing and other services to PIAP and is paid by PIAP
for  such  services.  As  of September 19, 2005, the Company-operated stores and
substantially all of our franchisees were members of PIAP.  Operators of express
restaurants  do  not  participate  in PIAP; however, they contribute up to 1% of
their  gross  sales  directly  to  the Company to help fund purchases of express
restaurant  marketing  materials  and  similar  expenditures.

     Groups  of  franchisees in some of the Pizza Inn system's market areas have
formed  local advertising cooperatives.  These cooperatives, which may be formed
voluntarily  or  may  be required by the Company under the franchise agreements,
establish  contributions  to be made by their members and direct the expenditure
of  these  contributions on local media advertising using materials developed by
PIAP  and/or  the  Company.  Franchisees  are  required  to  conduct independent
marketing  efforts  in  addition  to  their  participation  in  PIAP  and  local
cooperatives.

     We  provide  Company-operated  and franchised restaurants with catalogs for
the purchase of marketing and promotional items and pre-approved print and radio
marketing materials.  We have also developed an internet-based system, Pizza Inn
Inn-tranet,  by  which  all of our restaurants may communicate with us and place
orders  for  marketing  and  promotional  products.

TRADEMARKS  AND  QUALITY  CONTROL

     The  Company  owns various trademarks, including the name "Pizza Inn," that
are  used  in  connection with the restaurants and have been registered with the
United  States  Patent  and Trademark Office.  The duration of our trademarks is
unlimited,  subject  to  periodic  renewal  and continued use.  In addition, the
Company  has  obtained  trademark registrations in several foreign countries and
has  periodically  re-filed  and applied for registration in others.  We believe
that  we hold the necessary rights for protection of the trademarks essential to
our  business  and it is our regular policy to monitor the use of our trademarks
around  the  world.

     The  Company  requires all restaurants to satisfy certain quality standards
governing  the  products  and  services  offered  through  use  of the Company's
trademarks.

GOVERNMENT  REGULATION

     We and our franchisees are subject to various federal, state and local laws
affecting  the  operation  of  our  restaurants.  Each  Pizza  Inn restaurant is
subject  to  licensing  and  regulation by a number of governmental authorities,
which  include  health,  safety,  sanitation,  wage  and hour, building and fire
agencies  in  the  state  or  municipality  in  which the restaurant is located.
Difficulties  in  obtaining,  or  the  failure  to  obtain, required licenses or
approvals  could delay or prevent the opening of a new restaurant or require the
temporary  or  permanent  closing  of existing restaurants in a particular area.
Our  distribution  center is subject to regulation by state and local health and
fire  codes,  and  the  operation of our trucks is subject to U.S. Department of
Transportation  regulations.  We  are  also  subject  to  state  and  federal
environmental  regulations.

     We  are  subject  to  Federal  Trade  Commission  ("FTC") regulation and to
various  state  laws regulating the offer and sale of franchises.  Several state
laws  also  regulate  the  substantive  aspects  of  the  franchisor-franchisee
relationship.  The  FTC  requires  us  to  furnish  to prospective franchisees a
franchise  offering  circular  containing  prescribed  information.  Substantive
state  laws that regulate the franchisor-franchisee relationship presently exist
in  a  number of states, and bills have been introduced in Congress from time to
time  that  would  provide  for  further  federal  regulation  of  the
franchisor-franchisee  relationship in certain respects.  Some foreign countries
also  have disclosure requirements and other laws regulating franchising and the
franchisor-franchisee  relationship.  Further  government  initiatives,  such as
proposed  minimum  wage rate increases, could adversely affect Pizza Inn as well
as  the  restaurant  industry  in  general.

EMPLOYEES

     As  of September 19, 2005, we had approximately 167 employees, including 56
in  our  corporate  office,  70  at  our  Norco division and 17 full-time and 24
part-time  employees at the Company-operated restaurants.  None of the Company's
employees are currently covered by collective bargaining agreements.  We believe
that  our  employee  relations  are  excellent.

INDUSTRY  AND  COMPETITION

     The  restaurant  industry  is  intensely competitive with respect to price,
service,  location  and  food  quality,  and  there  are  many  well-established
competitors with substantially greater brand recognition and financial and other
resources  than Pizza Inn.  Competitors include a large number of international,
national  and regional restaurant chains, as well as local restaurants and pizza
operators.  Some  of  our  competitors  may be better established in the markets
where  our  restaurants are located or may be located.  Within the pizza segment
of the restaurant industry, we believe that our primary competitors are national
pizza chains and several regional chains, including chains executing a "take and
bake"  concept.  A  change  in  the pricing or other market strategies of one or
more  of our competitors could have an adverse impact on our sales and earnings.

     With respect to the sale of franchises, we compete with many franchisors of
restaurants  and  other  business  concepts.  We  believe  that  the  principal
competitive  factors  affecting  the  sale of franchises are product quality and
price,  value,  consumer  acceptance,  franchisor experience and support and the
quality  of  the  relationship  maintained  between  the  franchisor  and  its
franchisees.  In  general,  there  is  also  active  competition  for management
personnel  and  attractive  commercial  real  estate  sites  suitable  for  our
restaurants.

     Our  Norco  division  competes with both national and local distributors of
food,  equipment  and  other restaurant suppliers.  The distribution industry is
very  competitive.  The  Company believes that the principal competitive factors
in  the  distribution  industry are product quality, customer service and price.
Norco  is  the sole authorized supplier of certain proprietary products that all
Pizza  Inn  restaurants  are  required  to  use.

  AVAILABLE  INFORMATION

     The  Company  files  reports, including reports on Form 10-Q and Form 10-K,
with  the  Securities  and Exchange Commission ("SEC").  The public may read and
copy  any  materials  we file with the SEC at the SEC's Public Reference Room at
100  F  Street, N.E. Washington, DC 20549.  The public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The  SEC maintains an Internet site that contains reports, proxy and information
statements,  and  other  information  regarding issuers that file electronically
with  the  SEC.  The  address  of  that  site  is  http://www.sec.gov.
                                                   ------------------

     We  make  available  free  of  charge  on  or  through our Internet website
(http://www.pizzainn.com)  our  annual report on Form 10-K, quarterly reports on
       -----------------
Form  10-Q, current reports on Form 8-K and amendments to those reports filed or
furnished  pursuant  to  Section  13(a)  or 15(d) of the Exchange Act as soon as
reasonably  practicable  after  we  electronically  file  such material with, or
furnish  it to, the SEC.  We voluntarily will provide electronic or paper copies
of  our  filings  free  of  charge upon written request to: Corporate Secretary,
Pizza  Inn,  Inc.,  3551  Plano  Parkway,  The  Colony,  TX  75056.

FORWARD-LOOKING  STATEMENTS

     This  Form  10-K  contains forward-looking statements within the meaning of
the  Private  Securities  Litigation Reform Act of 1995 (the "PSLRA"), including
information  within  Management's Discussion and Analysis of Financial Condition
and  Results  of Operations.  The following cautionary statements are being made
pursuant  to the provisions of the PSLRA and with the intention of obtaining the
benefits of the "safe harbor" provisions of the PSLRA.  Although we believe that
our  expectations  are  based  upon  reasonable  assumptions, actual results may
differ  materially  from  those in the forward-looking statements as a result of
various  factors,  including,  but not limited to, the factors discussed in this
Form  10-K  under  the  heading  "Risk  Factors".

RISK  FACTORS

     Investing  in  our  common stock involves a high degree of risk. You should
carefully consider the following factors, as well as other information contained
in  this report, before deciding to invest in shares of our common stock.  These
risks  could  materially  adversely  affect our business, financial condition or
results  of  operations.  The  trading  price  of our common stock could also be
materially  adversely  affected  by  any  of  these  risks.

IF  WE  ARE  NOT  ABLE  TO COMPETE EFFECTIVELY, OUR BUSINESS, SALES AND EARNINGS
COULD  BE  MATERIALLY  ADVERSELY  AFFECTED.

     The  restaurant  industry  in  general, as well as the pizza segment of the
industry,  is intensely competitive, both internationally and domestically, with
respect  to  price, service, location and food quality.  We compete against many
regional and local businesses.  There are many well-established competitors with
substantially  greater brand awareness and financial and other resources than we
have.  Some  of  these  competitors  have  been in existence for a substantially
longer  period  than  we  have  and  may  be better established in markets where
restaurants  we  operate or that are operated by our franchisees are, or may be,
located.  Experience  has  shown that a change in the pricing or other marketing
or  promotional  strategies,  including new product and concept developments, of
one  or  more  of  our major competitors can have an adverse impact on sales and
earnings  and  our  systemwide  restaurant  operations.

     We  could  also  experience  increased  competition  from  existing  or new
companies  in the pizza segment of the restaurant industry.  If we are unable to
compete,  we  could experience downward pressure on prices, lower demand for our
products,  reduced  margins,  the  inability  to  take advantage of new business
opportunities  and  the loss of market share, all of which would have a material
adverse  effect  on  our  operating  results.

     We  also  compete  on  a  broader scale with quick service, fast casual and
other international, national, regional and local restaurants.  The overall food
service market and the quick service restaurant sector are intensely competitive
with  respect  to  food  quality,  price,  service, and convenience and concept.

     We  compete  within the food service market and the restaurant industry not
only  for customers, but also for management and hourly employees, suitable real
estate  sites  and  qualified franchisees.  Norco is also subject to competition
from  outside  suppliers.  If  other  suppliers,  who  meet  our  qualification
standards,  were  to offer lower prices or better service to our franchisees for
their  ingredients  and  supplies and, as a result, our franchisees chose not to
purchase from Norco, our financial condition, business and results of operations
would  be  adversely  affected.

     IF  WE  ARE  NOT  ABLE TO IMPLEMENT OUR GROWTH STRATEGY SUCCESSFULLY, WHICH
INCLUDES  OPENING  NEW  DOMESTIC  AND  INTERNATIONAL  RESTAURANTS  AND REIMAGING
EXISTING RESTAURANTS, OUR ABILITY TO INCREASE OUR REVENUES AND OPERATING PROFITS
COULD  BE  MATERIALLY  ADVERSELY  AFFECTED.

     A  significant component of our growth strategy is opening new domestic and
international  franchise  restaurants.  We  and  our  franchisees  face  many
challenges  in opening new restaurants, including, among other things, selection
and  availability  of  suitable  restaurant  locations  and  suitable employees,
increases  in  food, paper, labor, utilities, fuel, employee benefits, insurance
and similar costs, negotiation of suitable lease or financing terms, constraints
on  permitting  and  construction  of  restaurants,  higher  than  anticipated
construction  costs,  the hiring, training and retention of management and other
personnel  and  securing  required  domestic or foreign governmental permits and
approvals.

The  opening  of additional franchise restaurants and our reimaging program also
depends,  in part, upon the availability of prospective franchisees who meet our
criteria.  Our  reimaging  program  may  require considerable management time as
well as start-up expenses for market development before any significant revenues
and  earnings  are  generated.

Accordingly,  there  can  be  no  assurance that we will be able to meet planned
growth  targets,  open  restaurants  in  markets  now  targeted for expansion or
operate  in  existing  markets  profitably.  In addition, even if we are able to
continue  to  open  new restaurants, we may not be able to keep restaurants from
closing  at  a  faster  rate  than  we  are  able  to  open  restaurants.

     AN  INCREASE IN THE COST OF CHEESE OR OTHER COMMODITIES, INCLUDING FUEL AND
LABOR,  COULD  ADVERSELY  AFFECT  OUR  PROFITABILITY  AND  OPERATING  RESULTS.

     An  increase  in  our  operating  costs  could  adversely  affect  our
profitability.  Factors such as inflation, increased food costs, increased labor
and  employee  benefit costs and increased energy costs may adversely affect our
operating  costs.  Most  of  the  factors affecting costs are beyond our control
and,  in  many  cases, we may not be able to pass along these increased costs to
our  customers  or  franchisees even if we attempted to do so.  Most ingredients
used  in  our  pizza,  particularly  cheese,  are  subject  to significant price
fluctuations as a result of seasonality, weather, availability, demand and other
factors.  Sustained  increases  in fuel and utility costs could adversely affect
the  profitability  of  our restaurant and distribution businesses.  Labor costs
are  largely a function of the minimum wage for a majority of our restaurant and
distribution center personnel and, generally, are a function of the availability
of  labor.

     SHORTAGES OR INTERRUPTIONS IN THE SUPPLY OR DELIVERY OF FOOD PRODUCTS COULD
ADVERSELY  AFFECT  OUR  OPERATING  RESULTS.

     We,  and  our  franchisees  are  dependent  on  frequent deliveries of food
products that meet our specifications.  Shortages or interruptions in the supply
of  food  products  caused  by  unanticipated  demand, problems in production or
distribution  by Norco or otherwise, inclement weather (including hurricanes and
other  natural  disasters)  or  other  conditions  could  adversely  affect  the
availability,  quality and cost of ingredients, which would adversely affect our
operating  results.

     CHANGES  IN  CONSUMER PREFERENCES AND PERCEPTIONS COULD DECREASE THE DEMAND
FOR  OUR  PRODUCTS,  WHICH  WOULD  REDUCE  SALES  AND  HARM  OUR  BUSINESS.

     Restaurant businesses are affected by changes in consumer tastes, national,
regional  and  local  economic  conditions,  demographic  trends,  disposable
purchasing  power,  traffic  patterns  and  the  type,  number  and  location of
competing restaurants.  For example, if prevailing health or dietary preferences
cause  consumers  to  avoid  pizza and other products we offer in favor of foods
that  are perceived as more healthy, our business and operating results would be
harmed.  Moreover,  because  we  are primarily dependent on a single product, if
consumer  demand  for pizza should decrease, our business would suffer more than
if  we  had  a  more diversified menu, as many other food service businesses do.

     HEALTH  CONCERNS  OR  DISEASE-RELATED DISRUPTIONS ABOUT COMMODITIES THAT WE
USE TO MAKE PIZZA COULD MATERIALLY ADVERSELY AFFECT THE AVAILABILITY AND COST OF
SUCH  COMMODITIES.

     Health-  or  disease-related  disruptions  or  consumer  concerns about the
commodity  supply could materially adversely impact the availability and/or cost
of  such  commodities,  thereby  materially  adversely  impacting  restaurant
operations  and  our  financial  results.

WE  ARE  SUBJECT  TO  EXTENSIVE GOVERNMENT REGULATION, AND ANY FAILURE TO COMPLY
WITH  EXISTING  OR INCREASED REGULATIONS COULD ADVERSELY AFFECT OUR BUSINESS AND
OPERATING  RESULTS.

     We  are  subject  to  numerous  federal,  state, local and foreign laws and
regulations,  including  those  relating  to  the  preparation and sale of food;
building  and  zoning  requirements;  environmental  protection;  minimum  wage,
citizenship,  overtime  and  other  labor  requirements;  compliance  with  the
Americans  with  Disabilities  Act;  and  working  and  safety  conditions.

A  significant  number of hourly personnel employed by our franchisees and by us
are  paid  at  rates  related to the federal minimum wage.  Accordingly, further
increases  in  the  federal minimum wage or the enactment of additional state or
local  wage  proposals  may  increase labor costs for our systemwide operations.
Additionally, labor shortages in various markets could result in higher required
wage  rates.

     If  we  fail to comply with existing or future laws and regulations, we may
be  subject  to  governmental  or judicial fines or sanctions.  In addition, our
capital  expenditures  could  increase  due  to remediation measures that may be
required  if  we  are  found  to  be  noncompliant  with  any  of  these laws or
regulations.

     We are also subject to a Federal Trade Commission rule and to various state
and  foreign  laws  that govern the offer and sale of franchises.  Additionally,
these  laws  regulate  various  aspects of the franchise relationship, including
terminations  and  the  refusal to renew franchises.  The failure to comply with
these  laws and regulations in any jurisdiction or to obtain required government
approvals  could  result  in  a  ban or temporary suspension on future franchise
sales,  fines  or  other penalties or require us to make offers of rescission or
restitution,  any  of  which  could  adversely affect our business and operating
results.

     IF  WE  ARE  NOT ABLE TO CONTINUE PURCHASING OUR KEY PIZZA INGREDIENTS FROM
OUR  CURRENT  SUPPLIERS  OR  FIND  SUITABLE  REPLACEMENT SUPPLIERS OUR FINANCIAL
RESULTS  COULD  BE  MATERIALLY  ADVERSELY  AFFECTED.

We  are  dependent on a few suppliers for our key ingredients.  Domestically, we
rely  upon  sole  suppliers  for our cheese, flour mixture and certain other key
ingredients.  Alternative  sources for these ingredients may not be available on
a  timely  basis  to  supply  these  key ingredients or be available on terms as
favorable  to  us  as  under our current arrangements.  Our domestic restaurants
purchase  substantially  all  food  and  related  products from our distribution
division.  Accordingly,  both  our  Company-operated  and franchised restaurants
could  be  harmed  by  any  prolonged  disruption in the supply of products from
Norco.  Additionally,  domestic  franchisees  are  only required to purchase the
flour  mixture,  spice  blend  and certain other items from Norco and changes in
purchasing  practices  by  domestic  franchisees  could  adversely  affect  the
financial  results  of  our  distribution  operation.

     OUR  INTERNATIONAL  AND  DOMESTIC  OPERATIONS COULD BE MATERIALLY ADVERSELY
AFFECTED  BY  SIGNIFICANT CHANGES IN INTERNATIONAL, REGIONAL, AND LOCAL ECONOMIC
AND  POLITICAL  CONDITIONS.

     Our  international  and  domestic  operations  are subject to many factors,
including  currency  regulations  and  fluctuations,  culture  and  consumer
preferences, diverse government regulations and structures, availability and the
cost  of  land  and  construction,  ability  to  source  ingredients  and  other
commodities  in  a  cost-effective  manner  and  differing interpretation of the
obligations  established in franchise agreements with international franchisees.
Accordingly,  there  can  be  no  assurance  that our operations will achieve or
maintain  profitability  or  meet  planned  growth  rates.

     EACH  OF  THE  FOREGOING RISK FACTORS THAT COULD AFFECT RESTAURANT SALES OR
COSTS  COULD  DISPROPORTIONATELY  AFFECT THE FINANCIAL VIABILITY OF NEWLY OPENED
RESTAURANTS  AND  FRANCHISEES  IN  UNDER-PENETRATED  OR  EMERGING  MARKETS  AND,
CONSEQUENTLY,  OUR  OVERALL  RESULTS  OF  OPERATIONS.

A  decline  in  or  failure  to  improve financial performance for this group of
restaurants  or  franchisees  could lead to an inability to successfully recruit
new  franchisees  and  open  new  restaurants and lead to restaurant closings at
greater  than anticipated levels and therefore impact contributions to marketing
funds,  our  royalty  stream,  our  distribution operations and support services
efficiencies  and  other  system-wide  results  of  operations.

     WE  FACE  RISKS  OF  LITIGATION  FROM CUSTOMERS, FRANCHISEES, EMPLOYEES AND
OTHERS  IN  THE  ORDINARY  COURSE  OF  BUSINESS, WHICH DIVERTS OUR FINANCIAL AND
MANAGEMENT RESOURCES.  ANY ADVERSE LITIGATION OR PUBLICITY MAY NEGATIVELY IMPACT
OUR  FINANCIAL  CONDITION  AND  RESULTS  OF  OPERATIONS.

     Claims  of  illness or injury relating to food quality or food handling are
common  in  the  food  service industry. In addition to decreasing our sales and
profitability  and  diverting  our  management resources, adverse publicity or a
substantial judgment against us could negatively impact our financial condition,
results of operations and brand reputation, hindering our ability to attract and
retain  franchisees  and  grow  our  business.

     Further,  we may be subject to employee, franchisee and other claims in the
future  based  on,  among  other  things,  discrimination,  harassment, wrongful
termination and wage, rest break and meal break issues, including those relating
to  overtime compensation.  If one or more of these claims were to be successful
or  if  there  is  a  significant  increase  in  the number of these claims, our
business,  financial  condition  and  operating  results  could  be  harmed.

     For  example,  an  adverse  outcome  to the proceedings involving Ronald W.
Parker, the Company's former President and Chief Executive Officer, and B. Keith
Clark, the Company's former Senior Vice President Secretary and General Counsel,
could  materially  affect  the  Company's  financial  position  and  results  of
operations.  In the event the Company is unsuccessful, it could be liable to Mr.
Parker  for  approximately  $5.4  million under his employment agreement and for
approximately  $775,000  under  Mr.  Clark's  employment  agreement plus accrued
interest and legal expenses.  No accrual for any amount has been made as of June
26,  2005.  See  the  discussion  under  "Legal  Proceedings"  in  this  report.

     OUR  EARNINGS  AND  BUSINESS  GROWTH STRATEGY DEPENDS ON THE SUCCESS OF OUR
FRANCHISEES,  AND  WE MAY BE HARMED BY ACTIONS TAKEN BY OUR FRANCHISEES THAT ARE
OUTSIDE  OF  OUR  CONTROL.

     A significant portion of our earnings comes from royalties generated by our
franchised  restaurants.  Franchisees  are  independent  operators,  and  their
employees  are  not  our  employees.  We provide limited training and support to
franchisees,  but  the  quality  of  franchised  restaurant  operations  may  be
diminished  by  any  number  of  factors  beyond  our  control.  Consequently,
franchisees may not successfully operate restaurants in a manner consistent with
our standards and requirements, or may not hire and train qualified managers and
other store personnel.  If they do not, our image and reputation may suffer, and
revenues  could  decline.  While  we try to ensure that our franchisees maintain
the  quality of our brand and branded products, our franchisees may take actions
that adversely affect the value of our intellectual property or reputation.  Our
domestic  and  international  franchisees  may  not  operate  their  franchises
successfully.  If one or more of our key franchisees were to become insolvent or
otherwise  were  unable  or  unwilling to pay us our royalties, our business and
results  of  operations  would  be  adversely  affected.

     LOSS  OF KEY PERSONNEL OR OUR INABILITY TO ATTRACT AND RETAIN NEW QUALIFIED
PERSONNEL  COULD  HURT  OUR BUSINESS AND INHIBIT OUR ABILITY TO OPERATE AND GROW
SUCCESSFULLY.

     Our  success will depend to a significant extent on our leadership team and
other  key  management  personnel.  We  may  not be able to retain our executive
officers  and  key  personnel  or  attract additional qualified management.  Our
success  also  will  depend  on  our  ability  to  attract  and retain qualified
personnel  to  oversee  our  restaurants,  distribution center and international
operations.  The  loss of these employees or our inability to recruit and retain
qualified  personnel  could  have  a  material  adverse  effect on our operating
results.

     OUR  CURRENT INSURANCE COVERAGE MAY NOT BE ADEQUATE, AND INSURANCE PREMIUMS
FOR  SUCH  COVERAGE  MAY  INCREASE AND WE MAY NOT BE ABLE TO OBTAIN INSURANCE AT
ACCEPTABLE  RATES,  OR  AT  ALL.

     Our  insurance  policies may not be adequate to protect us from liabilities
that  we  incur  in  our  business.  In  addition,  in  the future our insurance
premiums  may  increase  and  we  may  not  be  able to obtain similar levels of
insurance  on reasonable terms, or at all.  Any such inadequacy of, or inability
to  obtain,  insurance  coverage  could  have  a  material adverse effect on our
business,  financial  condition  and  results  of  operations.

     OUR  ANNUAL  AND  QUARTERLY  FINANCIAL  RESULTS  ARE SUBJECT TO SIGNIFICANT
FLUCTUATIONS DEPENDING ON VARIOUS FACTORS, MANY OF WHICH ARE BEYOND OUR CONTROL,
AND IF WE FAIL TO MEET THE EXPECTATIONS OF SECURITIES ANALYSTS OR INVESTORS, OUR
SHARE  PRICE  MAY  DECLINE  SIGNIFICANTLY.

     Our  sales  and  operating  results  can vary significantly from quarter to
quarter  and year to year depending on various factors, many of which are beyond
our  control.  These  factors include variations in the timing and volume of our
sales  and our franchisees' sales; the timing of expenditures in anticipation of
future sales; sales promotions by us and our competitors; changes in competitive
and  economic  conditions  generally; and changes in the cost or availability of
our  ingredients (including cheese), fuel or labor.  As a result, our results of
operations may decline quickly and significantly in response to changes in order
patterns  or  rapid  decreases  in  demand for our products.  We anticipate that
fluctuations  in  operating  results  will  continue  in  the  future.

ITEM  2  -  PROPERTIES

     The Company owns a 40,000 square foot facility housing its corporate office
and  training  center  and  a  100,000  square  foot  warehouse and distribution
facility.  These buildings were constructed on approximately 11 acres of land in
The  Colony,  Texas  in  2001.

     The  Company  currently owns two Pizza Inn restaurants in the Dallas, Texas
area.  One  Company-owned  restaurant,  a  buffet,  is  operated  from  a leased
location  of  approximately  3,865  square  feet.  Annual  lease  payments  are
approximately  $14.00  per  square  foot.  The  lease  expires  in  2007 but has
continuous  three-year  renewal  options.  The other Company-owned restaurant, a
delivery/carry-out  restaurant,  was  constructed  on land the Company purchased
north  of  Dallas,  in  Little  Elm,  Texas,  in  June  2003.

     In  July  2005,  the  Company  acquired  the  assets of two existing buffet
restaurants  from  Houston,  Texas-area  franchisees.  We  are in the process of
remodeling  these  restaurants  and  anticipate  reopening them in October 2005.
One location has approximately 4,100 square feet and the other has approximately
2,750  square feet.  Both are leased at rates of approximately $18.00 per square
foot.  The  leases  expire  in  2015  and  each has at least one renewal option.

     In  July  2005, the Company leased approximately 4,100 square feet of space
in  a  retail  development  in  Dallas,  Texas  for  the  operation  of a buffet
restaurant  at  an  annual rate of approximately $30.00 per square foot.  We are
currently  in  the  process  of  finishing  out the space and expect to have the
restaurant  operating  in  October  2005.  The  lease  has a five-year term with
multiple  renewal  options.

     We  also  own  property in Prosper, Texas that was purchased in August 2004
with  the  intention of constructing and operating a buffet restaurant.  We have
decided  not  to  pursue  development  at  that  location and currently have the
property  under  contract  to  sell  to  a  third  party.

ITEM  3  -  LEGAL  PROCEEDINGS

     We  are  subject  to claims and legal actions in the ordinary course of our
business.  With  the  possible  exception  of  the  matters  set forth below, we
believe that all such claims and actions currently pending against us are either
adequately  covered  by insurance or would not have a material adverse effect on
the  Company's annual results of operations or financial condition if decided in
a  manner  that  is  unfavorable  to  us.

     On  June  15,  2004, B. Keith Clark provided the Company with notice of his
intent to resign as Senior Vice President - Corporate Development, Secretary and
General  Counsel  of  the Company effective as of July 7, 2004.  By letter dated
June  24,  2004,  Mr.  Clark  notified the Company that he reserved his right to
assert that the election of Ramon D. Phillips and Robert B. Page to the Board of
Directors of the Company at the February 11, 2004 annual meeting of shareholders
constituted  a  "change  of  control"  of  the  Company  under  his  executive
compensation  agreement  (the  "Clark  Agreement").  As  a result of the alleged
change  of  control under the Clark Agreement, Clark claims that he was entitled
to  terminate the Clark Agreement within twelve (12) months of February 11, 2004
for  "good  reason"  (as  defined  in  the  Clark  Agreement) and is entitled to
severance.  On  August 6, 2004, the Company instituted an arbitration proceeding
against  Mr.  Clark  with  the American Arbitration Association in Dallas, Texas
pursuant to the Clark Agreement seeking declaratory relief that Mr. Clark is not
entitled  to  severance  payments  or  any  other  further compensation from the
Company.  On  January 18, 2005, the Company amended its claims against Mr. Clark
to  include  claims  for  compensatory  damages,  consequential  damages  and
disgorgement  of  compensation  paid to Mr. Clark under the Clark Agreement. Mr.
Clark  has  filed  claims against the Company for breach of the Clark Agreement,
seeking  the  severance payment provided for in the Clark Agreement plus a bonus
payment for 2003 of approximately $12,500.  The arbitration hearing is scheduled
to  begin  on  November  8,  2005.

     The Company disagrees with Mr. Clark's claim that a "change of control" has
occurred under the Clark Agreement or that he is entitled to terminate the Clark
Agreement  for "good reason."  On May 4, 2004, the Board of Directors obtained a
written  legal  opinion  that  the  "change  of  control" provision in the Clark
Agreement  was  not  triggered  by  the  results of the February 11, 2004 annual
meeting.  Due  to  the  nature  of  the  preliminary  stages  of the arbitration
proceeding  and  the general uncertainty surrounding the outcome of this type of
legal  proceeding,  it is not possible for the Company to provide any certain or
meaningful  analysis,  projections  or  expectations  at this time regarding the
outcome  of  this  matter.  Although  the  ultimate  outcome  of the arbitration
proceeding  cannot  be  projected  with certainty, the Company believes that its
claims  against  Mr. Clark are well founded and intends to vigorously pursue all
relief  to which it may be entitled.  An adverse outcome to the proceeding could
materially affect the Company's financial position and results of operations. In
the  event  the Company is unsuccessful, it could be liable to Mr. Clark for the
severance payment of approximately $762,000, the $12,500 bonus payment and costs
and  fees.  No  accrual  for any such amounts has been made as of June 26, 2005.

     On  October  5, 2004 the Company filed a lawsuit against the law firm Akin,
Gump,  Strauss,  Hauer  &  Feld, ("Akin Gump") and J. Kenneth Menges, one of the
firm's  partners.  Akin  Gump  served as the Company's principal outside lawyers
from  1997  through  May 2004, when the Company terminated the relationship. The
petition  alleges  that  during the course of representation of the Company, the
firm  and  Mr.  Menges,  as the partner in charge of the firm's services for the
Company,  breached  certain  fiduciary responsibilities to the Company by giving
advice  and  taking  action  to further the personal interests of certain of the
Company's  executive  officers  to  the  detriment  of  the  Company  and  its
shareholders.  Specifically,  the  petition alleges that the firm and Mr. Menges
assisted  in  the  creation  and  implementation of so-called "golden parachute"
agreements, which, in the opinion of the Company's current counsel, provided for
potential  severance  payments  to  those  executives  in  amounts  greatly
disproportionate  to  the  Company's  ability  to  pay, and that, if paid, could
expose  the  Company  to  significant  financial  liability  which  could have a
material  adverse  effect on the Company's financial position. This matter is in
its  preliminary  stages,  and  the  Company is unable to provide any meaningful
analysis, projections or expectations at this time regarding the outcome of this
matter.  However, the Company believes that its claims against Akin Gump and Mr.
Menges  are well founded and intends to vigorously pursue all relief to which it
may  be  entitled.  On January 25, 2005, Akin Gump filed a motion with the court
asking  for  this  matter  to be abated pending a determination in the Clark and
Parker  arbitrations.  The  court  denied the motion but ruled that it would not
set  a  trial  date  until  after completion of the Clark and Parker arbitration
hearings.

     On  December 11, 2004, the Board of Directors of the Company terminated the
Executive Compensation Agreement dated December 16, 2002 between the Company and
its  then  Chief  Executive Officer, Ronald W. Parker ("Parker Agreement").  Mr.
Parker's  employment  was  terminated  following  ten days written notice to Mr.
Parker  of  the  Company's  intent  to  discharge  him  for cause as a result of
violations  of  the  Parker  Agreement.  Written  notice  of  termination  was
communicated  to  Mr.  Parker  on  December  13,  2004.  The nature of the cause
alleged  was  set  forth  in  the  notice  of intent to discharge and based upon
Section  2.01(c)  of the Parker Agreement, which provides for discharge for "any
intentional  act of fraud against the Company, any of its subsidiaries or any of
their  employees  or  properties,  which  is not cured, or with respect to which
Executive  is  not  diligently pursuing a cure, within ten (10) business days of
the  Company giving notice to Executive to do so."  Mr. Parker was provided with
an  opportunity  to  cure  as  provided  in  the Parker Agreement as well as the
opportunity  to  be  heard  by  the Board of Directors prior to the termination.

     On  January  12,  2005,  the  Company  instituted an arbitration proceeding
against  Mr.  Parker  with the American Arbitration Association in Dallas, Texas
pursuant  to  the Parker Agreement seeking declaratory relief that Mr. Parker is
not  entitled  to  severance payments or any other further compensation from the
Company.  In  addition,  the  Company  is  seeking  compensatory  damages,
consequential  damages and disgorgement of compensation paid to Mr. Parker under
the  Parker  Agreement. On January 31, 2005, Mr. Parker filed claims against the
Company  for  breach  of  the  Parker  Agreement,  seeking the severance payment
provided  for  in  the  Parker  Agreement for a termination of Mr. Parker by the
Company  for  reason  other than for cause (as defined in the Parker Agreement),
plus interest, attorney's fees and costs. No date for an arbitration hearing has
been  set.

     Due to the preliminary stages of the arbitration proceeding and the general
uncertainty  surrounding the outcome of this type of legal proceeding, it is not
possible  for  the  Company  to  provide  any  certain  or  meaningful analysis,
projections  or  expectations at this time regarding the outcome of this matter.
Although  the ultimate outcome of the arbitration proceeding cannot be projected
with  certainty  at  this time, the Company believes that its claims against Mr.
Parker  are well founded and intends to vigorously pursue all relief to which it
may  be  entitled.  An adverse outcome to the proceeding could materially affect
the  Company's  financial  position and results of operations.  In the event the
Company is unsuccessful, it could be liable to Mr. Parker for approximately $5.4
million under the Parker Agreement plus accrued interest and legal expenses.  No
accrual  for  any  amount  has  been  made  as  of  June  26,  2005.

ITEM  4  -  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

     The  following  matters were submitted to a vote of security holders during
the  fourth  quarter  of  the  Company's  fiscal year 2005 at the Company's 2004
Annual  Meeting  of  Shareholders  on  June  23,  2005.

Item  1.  Election  of  Class  I  Directors.

<TABLE>
<CAPTION>



Elected Directors        For     Against  Abstain
--------------------  ---------  -------  -------
<S>                   <C>        <C>      <C>
 Bobby L. Clairday .  8,577,823  102,628   35,426
 John D. Harkey, Jr.  8,164,874   17,877  533,126
 Timothy P. Taft . .  8,179,874    2,877  533,126
 Mark E. Schwarz . .  8,130,825   51,926  533,126

Continuing Directors
--------------------
 Robert B. Page
 Ramon D. Phillips
 Steven J. Pully


Item  2.  Approval  of adoption of a stock award plan for non-employee directors
as  a successor plan to the 1993 Outside Directors Stock Award Plan that expired
in  2003.

                        For. .  Against   Abstain
                      ---------  -------  -------
                      5,313,541  779,115    5,371


Item 3. Approval of adoption of an incentive stock award plan for employees as a
successor  plan  to  the  1993  Employee  Stock Award Plan that expired in 2003.

                        For. .  Against   Abstain
                      ---------  -------  -------
                      5,849,542  245,990    2,495


Item  4.   Approval  of  an  amendment  to  the  Company's  Restated Articles of
Incorporation  to  declassify  the  board  of  directors.

                        For. .  Against   Abstain
                      ---------  -------  -------
                      8,664,039   42,924    8,913

</TABLE>

PART  II

ITEM  5  - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     As  of  September  19, 2005, there were approximately 2,045 stockholders of
record  of  the  Company's  common  stock.

     The Company's common stock is listed on the SmallCap Market of the National
Association  of  Securities  Dealers Automated Quotation ("NASDAQ") system under
the symbol "PZZI". The following table shows the highest and lowest actual trade
executed price per share of the common stock during each quarterly period within
the  two  most  recent  fiscal years, as reported by the National Association of
Securities  Dealers.  Such  prices  reflect  inter-dealer  quotations,  without
adjustment  for  any  retail  markup,  markdown  or  commission.

<TABLE>
<CAPTION>


                                      Actual Trade
                                     Executed Price
<S>                                  <C>              <C>
                                     High             Low
                                     ---------------  -----
    2005
    First Quarter Ended 9/26/2004 .  $          3.25  $2.39
    Second Quarter Ended 12/26/2004             3.26   2.63
    Third Quarter Ended 3/27/2005 .             2.95   2.25
    Fourth Quarter Ended 6/26/2005.             3.00   2.30

    2004
    First Quarter Ended 9/28/2003 .  $          3.95  $1.80
    Second Quarter Ended 12/28/2003             3.06   2.50
    Third Quarter Ended 3/28/2004 .             3.07   2.70
    Fourth Quarter Ended 6/27/2004.             3.09   2.58

</TABLE>



     Under  the  Company's bank loan agreement, the Company is currently limited
in  its ability to pay dividends or make other distributions on its common stock
and  the  Company  believes  that  the  loan  agreement  is  likely to limit the
Company's  ability  to  take  such  actions  in  the  future.

     The Company did not pay any dividends on its common stock during the fiscal
years  ended  June  26,  2005  and June 27, 2004.  Any determination to pay cash
dividends  in  the  future  will  be at the discretion of the Company's Board of
Directors  and  will  be  dependent  upon  the  Company's results of operations,
financial  condition,  capital  requirements, contractual restrictions and other
factors  deemed relevant.  Currently, there is no intention to pay any dividends
on  its  common  stock.


<PAGE>

                      EQUITY COMPENSATION PLAN INFORMATION

A  summary of equity compensation under all of the Company's equity compensation
plans  follows:

<TABLE>
<CAPTION>


                       Number of Securities to    Weighted-average       Number of Securities
<S>                    <C>                      <C>                    <C>
                       be issued upon exercise  exercise price of      remaining available for
Plan. . . . . . . . .  of outstanding options,  outstanding options,   future issuance under
Category. . . . . . .  warrants, and rights     warrants, and rights   equity compensation plans
---------------------  -----------------------  ---------------------  -------------------------
Equity Compensation
plans approved by
security holders. . .                  310,958  $                3.10                  1,457,142

Equity compensation
plans not approved by
security holders. . .                  500,000  $                2.50                          -
                       -----------------------  ---------------------  -------------------------
Total . . . . . . . .                  810,958  $                2.73                  1,457,142
                       =======================  =====================  =========================

</TABLE>
Additional  information  regarding equity compensation can be found in the notes
to  the  consolidated  financial  statements.

 ITEM  6  -  SELECTED  FINANCIAL  DATA

     The  following  table  contains  certain  selected  financial  data for the
Company for each of the last five fiscal years through June 26, 2005, and should
be  read in conjunction with the financial statements and schedules in Item 8 of
this  report.

<TABLE>
<CAPTION>


                                                                     Year Ended
                                                                      -----------
                                           June 26,    June 27,   June 29,   June 30,    June 24,
                                             2005        2004       2003       2002        2001
                                          -----------  ---------  ---------  ---------  ----------
                                                    (In thousands, except per share amounts)
<S>                                       <C>          <C>        <C>        <C>        <C>         <C>
SELECTED INCOME STATEMENT DATA:
  Total revenues . . . . . . . . . . . .  $    55,269  $  59,988  $  58,471  $  65,388  $  64,739

  Income before taxes. . . . . . . . . .          359      3,648      4,643      1,723      3,921
  Net income . . . . . . . . . . . . . .          204      2,243      3,093      1,137      2,480
  Basic earnings per common share. . . .         0.02       0.22       0.31       0.11       0.23
  Diluted earnings per common share. . .         0.02       0.22       0.31       0.11       0.23
  Dividends declared per common share. .            -          -          -          -       0.12

SELECTED BALANCE SHEET DATA:
  Total assets . . . . . . . . . . . . .       20,255     20,906     20,796     24,318 (1)  19,576
  Long-term debt and
       capital lease obligations . . . .        7,310      7,960      9,676     15,227      11,161
<FN>

(1)  Total  assets  in  2002  include  a  prior period adjustment of $296,000 to
properly  reflect  deferred  tax asset and liability balances. See Note A to the
consolidated  financial  statements  for  further  discussion.
</TABLE>

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

                              RESULTS OF OPERATIONS

     The  following  discussion  should  be  read  in  conjunction  with  the
consolidated  financial  statements,  accompanying  notes and selected financial
data  appearing  elsewhere  in  this  Annual Report on Form 10-K and 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 the strategies
underlying  our  business  objectives,  our  customers  and our franchisees, our
liquidity  and  capital  resources,  the  impact of our historical and potential
business  strategies on our business, financial condition, and operating results
and the expected effects of potentially adverse litigation outcomes.  Our actual
results  could  differ  materially  from  our expectations.  Further information
concerning  our  business,  including  additional risk factors and uncertainties
that  could  cause  actual results to differ materially from the forward-looking
statements  contained  in  this  Annual Report on Form 10-K, are set forth above
under  Item  1  and  below  under  the  heading "Risk Factors."  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 Annual Report on
Form 10-K and, except as may be required by applicable law and regulation, 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.

FISCAL  2005  COMPARED  TO  FISCAL  2004

OVERVIEW

     We  are  a  franchisor  and  food  and  supply  distributor  to a system of
restaurants  operating under the trademark "Pizza Inn".  At June 26, 2005, there
were  398 Pizza Inn restaurants, consisting of two Company-owned restaurants and
396  franchised  restaurants.  At  June  26,  2005,  domestic  restaurants  were
operated  as:  (i)  199 buffet restaurants that offer dine-in, carry-out and, in
many cases, delivery services; (ii) 52 restaurants that offer delivery/carry-out
services  only;  and  (iii)  73  express  restaurants that are typically located
within  a  convenience store, college campus building, airport terminal or other
commercial  facility and offer quick carry-out service from a limited menu.  The
324 domestic restaurants were located in 18 states predominately situated in the
southern  half  of  the  United  States.   Additionally, we had 74 international
restaurants  located  in  nine  foreign  countries.

     Diluted  earnings  per share decreased 91% to $0.02 from $0.22 in the prior
year.  Net  income  decreased 91% to $204,000 from $2,243,000 in the prior year,
on  revenues  of  $55,269,000  in  the current year and $59,988,000 in the prior
year.  Pre-tax  income decreased 90% to $359,000 from $3,648,000.   The decrease
in  net  income  is  the  result of lower food and supply sales created by lower
restaurant  sales  combined  with  product  cost  inflation not passed on to the
franchisees  and  planned  reductions in prices on products sold to franchisees.
The  retention  in cost inflation and the reduction in some pricing was designed
to  improve  the  store level economics and strengthen the system.  In addition,
legal  fees  increased  $1,454,000,  which  included  the prior-year reversal of
$567,000  in  legal reserves relating to the settlement of a previously resolved
legal  matter  and  for  on  going  litigation  and  related  matters.

Results  of  operations  for  fiscal 2005 and 2004 both include fifty-two weeks.

REVENUES

     Our  revenues  are primarily derived from sales of food, paper products and
equipment  and  supplies by Norco to franchisees, franchise royalties, franchise
fees  and  area  development  rights.  Management  believes that key performance
indicators  in  evaluating financial results include chainwide retail sales, the
number  and  type  of  operating  restaurants  and the percentage of product and
supplies  such  restaurants  purchase  from  Norco.  Our  financial  results are
dependent in large part upon the pricing and cost of these products and supplies
to  franchisees,  and  the  level  of chainwide retail sales, which is driven by
changes  in  same  store  sales  and  restaurant  count.

FOOD  AND  SUPPLY  SALES

     Food  and supply sales by Norco include food and paper products, equipment,
marketing  materials  and  other  distribution  revenues.  Food and supply sales
decreased  7%,  or  $3,911,000,  to $49,161,000 from $53,072,000 compared to the
comparable  period  last  year.  The  decrease  is  partially due to lower sales
prices,  reduced  to  improve  the  store  level  economics,  on  certain  key
ingredients,  including  dough  products  and  tomato  tidbits, which negatively
impacted  revenues  by  approximately  $997,000.  Cheese  product  sales  were
approximately $799,000 lower than the comparable period in the prior year due to
the  lower  retail  sales  and  were  partially  offset by higher overall cheese
prices.   Also  contributing  to  the  revenue  decrease  for the year was lower
equipment  sales  of  approximately  $758,000  due  to  fewer  store  openings.
Additionally,  a  decline  of  2.6% in overall chainwide retail sales negatively
impacted  non-cheese,  dough  and  tidbit sales by approximately $737,000.   The
sale  of restaurant-level marketing materials to franchisees decreased $624,000.

FRANCHISE  REVENUE

     Franchise  revenue,  which includes income from royalties, license fees and
area  development  and  foreign  master  license sales, decreased 4% or $238,000
compared  to  the  comparable  period  last  year  primarily  due  to  higher
international  royalties  for  the  comparable  period in the previous year as a
result  of  the  collection  of  international  royalties  previously  deemed
uncollectible.  Additionally, domestic franchise fees were lower compared to the
comparable  period  last  year  due to fewer store openings. The following chart
summarizes  the  major  components  of  franchise  revenue  (in  thousands):


<TABLE>
<CAPTION>


                                                               Twelve Months Ended
                                                                ------------------
                                                              June 26,        June 27,
<S>                                                    <C>                   <C>
                                                                       2005       2004
                                                       --------------------  ---------
     Domestic royalties . . . . . . . . . . . . . . .  $              4,624  $   4,557
     International royalties. . . . . . . . . . . . .                   365        380
     Collection of international royalties previously
       deemed uncollectible . . . . . . . . . . . . .                     -        173
     Domestic franchise fees. . . . . . . . . . . . .                   173        278
     International development fees . . . . . . . . .                     -         12
                                                       --------------------  ---------
     Franchise revenue. . . . . . . . . . . . . . . .  $              5,162  $   5,400
                                                       ====================  =========
</TABLE>

RESTAURANT  SALES

     Restaurant  sales,  which  consist  of  revenue  generated by Company-owned
stores, decreased 38% or $570,000 compared to the comparable period of the prior
year.   The  decrease  is the result of the sale of one buffet restaurant, which
was replaced by a smaller, lower sales volume delivery/carry-out restaurant, and
lower  comparable  sales  at  the  other  Company-owned  buffet restaurant.  The
following chart details the revenues at the respective Company-owned restaurants
(in  thousands):

<TABLE>
<CAPTION>


                                                                   Twelve Months Ended
                                                                  --------------------
                                                                     June 26,    June 27,
<S>                                                       <C>                   <C>
                                                                          2005       2004
                                                          --------------------  ---------
     Buffet restaurant . . . . . . . . . . . . . . . . .  $                574  $     647
     Buffet restaurant - sold February 2004. . . . . . .                     -        616
     Delivery/carry-out restaurant - opened January 2004                   372        253
                                                          --------------------  ---------
     Restaurant sales. . . . . . . . . . . . . . . . . .  $                946  $   1,516
                                                          ====================  =========
</TABLE>

COSTS  AND  EXPENSES

COST  OF  SALES

     Cost  of sales decreased 5% or $2,409,000 compared to the comparable period
in  the prior year.  This decrease is the result of lower chainwide retail sales
and lower payroll costs as a result of earlier staff reductions.  Cost of sales,
as  a percentage of food and supply sales and restaurant sales, increased to 93%
from  90%  for  the  comparable  period  last year.  This percentage increase is
primarily  due to higher product costs of approximately 3.3% offset partially by
payroll savings of $1,001,000 resulting from earlier staff reductions.  Although
the  Company  does  not  currently  intend to raise prices to compensate for the
increases  in  product costs referenced, in part, because we do not believe that
we  would  be  able  to  successfully  do  so  as  a  result  of the competitive
environment  in  which we operate, it may become necessary to increase prices in
the  future.  The  Company  experiences  fluctuations  in commodity prices (most
notably,  block  cheese prices), increases in transportation costs (particularly
in  the  price  of diesel fuel), fluctuations in interest rates and net gains or
losses  in  the number of restaurants open in any particular period, among other
things,  all of which have impacted operating margins over the past year to some
extent.  Future  fluctuations  in these factors are difficult for the Company to
meaningfully  predict  with  any  certainty.

FRANCHISE  EXPENSES

     Franchise  expenses  include  selling,  general and administrative expenses
(primarily  wages  and  travel  expenses)  directly  related  to  the  sale  and
continuing  service of franchises and Territories.  These expenses decreased 12%
or  $384,000  compared  to  the  comparable  period last year.  This decrease is
primarily  the  result  of  lower  payroll  and  related expenses resulting from
earlier  staff  reductions  and  are partially offset by higher product research
expenses.

GENERAL  AND  ADMINISTRATIVE  EXPENSES

     General and administrative expenses increased 31% or $1,127,000 compared to
the  comparable  period  last  year.  The following chart summarizes the primary
variances  in  general  and  administrative  expenses  (in  thousands):

<TABLE>
<CAPTION>



                                                  Twelve Months Ended
                                                 --------------------
                                            June 26,         June 27,
<S>                                   <C>                   <C>
                                                      2005       2004
                                      --------------------  ----------
     Legal fees. . . . . . . . . . .  $              1,257  $    (197)
     Payroll . . . . . . . . . . . .                   758      1,122
     Consulting fees . . . . . . . .                   126         33
     Other . . . . . . . . . . . . .                   113          -
     Proxy solicitation. . . . . . .                    69        238
                                      --------------------  ----------
     Primary variances in general
         and administrative expenses  $              2,323  $   1,196
                                      ====================  ==========
</TABLE>

     Legal  fees  in  the  prior year included the reversal of $567,000 in legal
reserves  relating  to  the settlement of a previously resolved legal matter. In
addition, the current year includes legal expenses related to ongoing litigation
and related matters described previously. The Company anticipates a higher level
of  legal  expenses  from  the  ongoing litigation and related matters described
previously,  until  all  such matters are resolved. The higher legal fees in the
current  year  were partially offset by proxy solicitation expenses in the prior
year  of  $190,000  and  lower  payroll  and related expenses from earlier staff
reductions.


INTEREST  EXPENSE

     Interest  expense  decreased  4%  or  $23,000 for the period ended June 26,
2005,  compared  to  the  comparable  period of the prior year due to lower debt
balances  offset  by  higher  interest  rates.

PROVISION  FOR  INCOME  TAX

     Provision  for  income  taxes  decreased  89% or $1,250,000 compared to the
comparable  period  in  the  prior year due to lower income in the current year.
The effective tax rate was 43% compared to 39% in the previous year.  The change
in  the  effective  tax  rate  is  primarily  due  to  the  effect  of permanent
differences  on  lower  net  income in the current year as compared to the prior
year.


<PAGE>
RESTAURANT  OPENINGS  AND  CLOSINGS

     During  fiscal  2005  a  total  of  29  new Pizza Inn franchise restaurants
opened, including 22 domestic and 7 international.  Domestically, 36 restaurants
were  closed  by  franchisees or terminated by the Company, typically because of
unsatisfactory  standards  of  operation  or  performance.  No  international
restaurants were closed.  We do not believe that these closings had any material
impact  on collectibility of any outstanding receivables and royalties due to us
because  (i)  these amounts have been previously reserved for by us with respect
to  units  that  were closed during fiscal 2005 and (ii) these closed units were
lower  volume  units  whose  financial  impact  on  our  business as a whole was
immaterial.  For  those  units that are anticipated to close or exhibiting signs
of financial distress, credit terms are typically restricted, weekly food orders
are  required to be paid for on delivery and/or with certified funds and royalty
and  advertising  fees are collected as add-ons to the delivered price of weekly
food  orders.  The  following  chart  summarizes  store activity for the periods
ended  June  26,  2005  compared  to  the  comparable  period in the prior year:


<TABLE>
<CAPTION>



Twelve months ending June 26, 2005

                                     Beginning                   Concept  End of
<S>                                  <C>        <C>      <C>     <C>      <C>
                                     of Period  Opened   Closed  Change   Period
                                     ---------  -------  ------  -------  ------
 Buffet . . . . . . . . . . . . . .        212        8      18      (3)     199
 Delivery/carry-out . . . . . . . .         53        6       8       1       52
 Express. . . . . . . . . . . . . .         73        8      10       2       73
 International. . . . . . . . . . .         67        7       -       -       74
                                     ---------  -------  ------  -------  ------
 Total. . . . . . . . . . . . . . .        405       29      36       -      398
                                     =========  =======  ======  =======  ======


 Twelve months ending June 27, 2004

                                     Beginning                   Concept  End of
                                     of Period  Opened   Closed  Change   Period
                                     ---------  -------  ------  -------  ------
 Buffet . . . . . . . . . . . . . .        220       12      20       -      212
 Delivery/carry-out . . . . . . . .         56        4       8       1       53
 Express. . . . . . . . . . . . . .         75       10      11      (1)      73
 International. . . . . . . . . . .         59        8       -       -       67
                                     ---------  -------  ------  -------  ------
 Total. . . . . . . . . . . . . . .        410       34      39       -      405
                                     =========  =======  ======  =======  ======

</TABLE>

FISCAL  2004  COMPARED  TO  FISCAL  2003

OVERVIEW

     Diluted  earnings  per share decreased 29% to $0.22 from $0.31 in the prior
year.  Net income decreased 27% to $2,243,000 from $3,093,000 in the prior year,
on  revenues  of  $59,988,000  in  the current year and $58,471,000 in the prior
year.  Pre-tax income decreased 21% to $3,648,000 from $4,643,000.  The decrease
in  net  income was primarily attributable to the reversal of a pretax charge in
the  prior  year of approximately $1.9 million, which was originally recorded in
June  2002, to reserve for a note receivable owed to the Company from C. Jeffrey
Rogers,  the  Company's  former  Chief Executive Officer.   The Company received
payment  in  full  for  the note receivable in December 2002.  See "Transactions
with  Related  Parties."

     Results  of  operations  for  fiscal  2004  and 2003 both include fifty-two
weeks.

REVENUES

FOOD  AND  SUPPLY  SALES

     Food  and supply sales by Norco include food and paper products, equipment,
marketing  materials  and  other  distribution  revenues.  Total food and supply
sales  increased  3%  to  $53,072,000  from  $51,556,000  in  the prior year due
primarily  to  higher  cheese  prices.

FRANCHISE  REVENUE

     Franchise  revenue,  which includes royalties, license fees and income from
area  development  and foreign master license (collectively, "Territory") sales,
increased  5%  or  $265,000 in fiscal 2004 primarily due to higher international
royalties,  including the collection of previously unrecorded past due royalties
which  were  offset  by  lower  international  development  fees.

RESTAURANT  SALES

Restaurant sales, which consist of revenue generated by Company-operated stores,
decreased  15%  or  $264,000 compared to the same period of the prior year.  The
Company  opened  a  new  delivery/carry-out  restaurant on January 9, 2004.  The
Company  also  sold  an  existing buffet restaurant effective March 1, 2004. The
year-to-date  decrease  is  primarily  the  result  of  lower  comparable sales.

COSTS  AND  EXPENSES

COST  OF  SALES

     Cost  of  sales  increased  4% to $49,194,000 from $47,420,000 in the prior
year.  The  increase  in  cost of sales is primarily the result of higher cheese
prices.  Block  cheese  prices averaged $1.61 per pound in fiscal 2004 vs. $1.13
per pound in fiscal 2003.   This increase in cheese cost was partially offset by
lower depreciation and amortization expenses and lower transportation costs.  As
a  percentage  of sales, cost of sales increased to 90.1% from 88.9% compared to
the  prior  year.

FRANCHISE  EXPENSES

     Franchise  expenses  include  selling,  general and administrative expenses
(primarily  wages  and travel expenses) directly related to the sale and service
of  franchises  and  Territories.  These  expenses  decreased  2.5%  or  $81,000
compared  to  last  year primarily due to a departmental restructuring offset by
added  amortization  costs from the reacquisition of area development rights for
certain  counties  in  Kentucky  and  Tennessee.

GENERAL  AND  ADMINISTRATIVE  EXPENSES

     General  and  administrative expenses decreased 13.7% or $571,000 in fiscal
2004.  This  is  primarily  the  result of lower legal fees due to settlement of
litigation for less than the previously accrued amount and lower amortization of
a  leasehold  property  and  computer  system implementation. These savings were
partially  offset  by  higher  proxy  solicitation  expenses.

INTEREST  EXPENSE

     Interest expense decreased 22% or $176,000 in the current year due to lower
average  interest  rates  and  debt  levels  in  the  current  year.

PROVISION  FOR  INCOME  TAX

     Provision  for  income  taxes decreased 9% or $145,000 due to a decrease in
income  as  mentioned above.   The effective tax rate was 39% compared to 33% in
the  prior  year.  The  increase in the effective tax rate is primarily due to a
provision  made  for  state income tax and an increase in permanent differences.


<PAGE>
RESTAURANT  OPENINGS  AND  CLOSINGS

     During  fiscal  2004  a  total  of  34  new Pizza Inn franchise restaurants
opened, including 26 domestic and 8 international restaurants.  Domestically, 39
restaurants  were  closed  by franchisees or terminated by the Company typically
because  of  unsatisfactory  standards  of  operation  or  performance.  No
international  restaurants  were  closed.

<TABLE>
<CAPTION>



Twelve months ending June 27, 2004

                                     Beginning                   Concept  End of
<S>                                  <C>        <C>      <C>     <C>      <C>
                                     of Period  Opened   Closed  Change   Period
                                     ---------  -------  ------  -------  ------
 Buffet . . . . . . . . . . . . . .        220       12      20       -      212
 Delco. . . . . . . . . . . . . . .         56        4       8       1       53
 Express. . . . . . . . . . . . . .         75       10      11      (1)      73
 International. . . . . . . . . . .         59        8       -       -       67
                                     ---------  -------  ------  -------  ------
 Total. . . . . . . . . . . . . . .        410       34      39       -      405
                                     =========  =======  ======  =======  ======


 Twelve months ending June 29, 2003

                                     Beginning                   Concept  End of
                                     of Period  Opened   Closed  Change   Period
                                     ---------  -------  ------  -------  ------
 Buffet . . . . . . . . . . . . . .        233        5      17      (1)     220
 Delco. . . . . . . . . . . . . . .         54        7       8       3       56
 Express. . . . . . . . . . . . . .         82        6      11      (2)      75
 International. . . . . . . . . . .         60        6       7       -       59
                                     ---------  -------  ------  -------  ------
 Total. . . . . . . . . . . . . . .        429       24      43       -      410
                                     =========  =======  ======  =======  ======

</TABLE>

                         LIQUIDITY AND CAPITAL RESOURCES

     Cash flows from operating activities are generally the result of net income
adjusted  for  deferred  taxes,  depreciation  and  amortization  and changes in
working  capital. In fiscal 2005, the Company generated cash flows of $1,088,000
from  operating  activities  as  compared  to  $3,512,000  in  fiscal  2004  and
$4,021,000  in  fiscal 2003.  Cash provided by operations was primarily used for
capital  expenditures  and  to  pay  down  debt.  Reduction  in  cash flows from
operating activities for the fiscal year ending June 26, 2005 as compared to the
prior  year  resulted  primarily  from a decrease in net income of $2,039,000 to
$204,000  at June 26, 2005, from $2,243,000 at June 27, 2004, with the remaining
reduction  from  normal  changes  in  working  capital.

Cash  flows  from  investing  activities primarily reflect the Company's capital
expenditure  strategy.  In  fiscal  2005,  the Company used cash of $753,000 for
investing  activities  as  compared to $1,299,000 in fiscal 2004 and $470,000 in
fiscal  2003.  Cash  flow  used  for  investing  activities  during  fiscal 2005
consisted  primarily  of  the capital expenditures relating to land purchased in
Prosper, Texas and the enlargement of the Norco parking lot.  In the prior year,
the  Company  used  $682,000  to  re-acquire  an  area development territory and
$655,000  in  the  prior  year primarily used to fund the new delivery/carry-out
restaurant  in  Little  Elm,  Texas.

     Cash  flows  from  financing  activities  generally  reflect changes in the
Company's net repayments of borrowings during the period, together with treasury
stock  purchases  and  exercise  of  stock options.  Net cash used for financing
activities  was  $779,000  in fiscal 2005 as compared to cash used for financing
activities  of  $1,995,000 in fiscal 2004 and cash used for financing activities
of  $3,922,000  in  fiscal  2003.  The Company used cash flow from operations to
decrease  its  net  bank borrowings and capital lease obligations by $649,000 to
$7,727,000  at  June  26,  2005  from  $8,376,000  at  June  27,  2004.

     Management believes that future operations will generate sufficient taxable
income,  along  with the reversal of temporary differences, to fully realize the
deferred  tax  asset, net of a valuation allowance of $116,000 primarily related
to  the  potential  expiration  of  certain  foreign  tax  credit carryforwards.
Additionally,  management  believes  that  taxable income based on the Company's
existing  franchise base should be more than sufficient to enable the Company to
realize  its  net  deferred  tax  asset without reliance on material non-routine
income.  The  Company's  prior  net operating loss carryforwards and alternative
minimum  tax  carryforwards  have  now been fully utilized and the Company began
making  estimated  quarterly  tax  payments  in  January  2004.

     The  Company  entered  into an agreement on August 29, 2005, effective June
26,  2005 (the "Revolving Credit Agreement"), with Wells Fargo to provide a $6.0
million  revolving  credit  line  that  will expire October 1, 2007, replacing a
$3.0  million  line  that  was  due  to expire December 23, 2005.  The amendment
provides,  among  other terms, for modifications to certain financial covenants,
which  would  have  resulted  in an Event of Default had the Company not entered
into  the  new  Revolving  Credit Agreement.  Interest is provided for at a rate
equal to a range of Prime less an interest rate margin of 0.75% to Prime plus an
interest  rate  margin  of  1.75% or, at the Company's option, at the LIBOR rate
plus  an  interest  rate  margin of 1.25% to 3.75%.  The interest rate margin is
based  on  the  Company's  performance  under certain financial ratio tests.  An
annual  commitment  fee is payable on any unused portion of the revolving credit
line  at  a  rate  from  0.35% to 0.50% based on the Company's performance under
certain  financial  ratio  tests.  As  of  June  26, 2005 and June 27, 2004, the
variable  interest  rates  were  6.50%  and  2.35%,  using a Prime and the LIBOR
interest  rate  basis,  respectively.  Amounts  outstanding  under the revolving
credit  line  as  of  June  26,  2005  and  June 27, 2004 were $966,000 and $1.2
million,  respectively.  Property,  plant  and equipment, inventory and accounts
receivable  have  been  pledged  for  the  above  referenced  loan  agreement.

     The  Company  entered  into  an  agreement  effective December 28, 2000, as
amended  (the  "Term  Loan Agreement"), with Wells Fargo to provide up to $8.125
million  of  financing  for  the construction of the Company's new headquarters,
training center and distribution facility.  The construction loan converted to a
term loan effective January 31, 2002 with the unpaid principal balance to mature
on  December 28, 2007. The term loan amortizes over a term of twenty years, with
principal  payments  of  $34,000  due monthly. Interest on the term loan is also
payable  monthly.  Interest  is provided for at a rate equal to a range of Prime
less  an  interest rate margin of 0.75% to Prime plus an interest rate margin of
1.75%  or,  at  the  Company's  option,  at the LIBOR rate plus an interest rate
margin  of  1.25%  to 3.75%.  The interest rate margin is based on the Company's
performance  under  certain  financial ratio tests.  The Company, to fulfill the
requirements  of  Wells  Fargo,  fixed  the  interest  rate  on the term loan by
utilizing  an interest rate swap agreement.  The $8.125 million term loan had an
outstanding  balance  of  $6.7 million at June 26, 2005 and $7.1 million at June
27, 2004.  Property, plant and equipment, inventory and accounts receivable have
been  pledged  for  the  above  referenced  loan  agreement.

     The Company is in arbitration proceedings with Messrs. Parker and Clark and
has filed a lawsuit against the law firm Akin, Gump, Strauss, Hauer and Feld, as
previously  described.  Although  the  ultimate  outcome  of the arbitration and
legal  proceedings  cannot be projected with certainty at this time, the Company
believes that its claims against Messrs. Parker and Clark and Akin Gump are well
founded and intends to vigorously pursue all relief to which it may be entitled.
An  adverse  outcome  to  the  proceedings could materially affect the Company's
financial  position,  results  of  operations  and  liquidity.  In the event the
Company  is  unsuccessful,  it  could  be liable to Mr. Parker and Mr. Clark for
approximately  $6.2  million  under the Parker Agreement and the Clark Agreement
plus  accrued  interest  and legal expenses.  The Company maintains that it does
not  owe  Messrs. Parker and Clark severance payments or any other compensation,
but  it  believes it has the ability to make any payments required by an adverse
determination.  No  accrual  for  any  amount has been made as of June 26, 2005.
The  Company  anticipates  a  higher  level  of  legal expenses from the ongoing
litigation  and related matters described previously, until all such matters are
resolved.

     In  July  2005  the  Company  acquired the assets of two existing Pizza Inn
buffet  restaurants  from Houston, Texas-area franchises and is currently in the
process  of  remodeling  those  restaurants  with the objective of reopening and
operating  them  as  Company-owned  restaurants.  We  anticipate  opening  these
restaurants  in October 2005.   One location has approximately 4,100 square feet
and  the other has approximately 2,750 square feet.  Both are leased at rates of
approximately $18.00 per square foot.  The leases expire in 2015 and each has at
least  one  renewal  option.  The  cost  of  acquiring  and  remodeling  these
restaurants  is  expected  to  range  between  $965,000  and  $1,050,000.

     In July 2005 the Company leased approximately 4,100 square feet of space in
a  retail  development  in  Dallas,  Texas at a rate of approximately $30.00 per
square  foot  for  the  operation  of a buffet concept.  We are currently in the
process  of  finishing out the space and expect to have the restaurant operating
in  October 2005.  The lease has a five-year term with multiple renewal options.
The  cost  of  finishing out the space is expected to range between $450,000 and
$500,000.

     We  also  own  property in Prosper, Texas that was purchased in August 2004
with  the  intention of constructing and operating a buffet restaurant.  We have
decided  not  to  pursue  development  at  that  location and currently have the
property  under  contract  to  sell  to  a  third  party.


<PAGE>
                     CONTRACTUAL OBLIGATIONS AND COMMITMENTS

          The  following  chart  summarizes  all  of  the  Company's  material
obligations and commitments to make future payments under contracts such as debt
and  lease  agreements  as  of  June  26,  2005  (in  thousands):

<TABLE>
<CAPTION>



                                                Fiscal Year Fiscal Years Fiscal Years   After Fiscal
<S>                                  <C>           <C>            <C>            <C>            <C>
                                        Total       2006    2007- 2008   2009 - 2010       Year 2010
                                     ---------    -------  ------------ ------------    ------------
Bank debt (1) . . . . . . . . . . .  $   7,703  $      406  $    7,297  $        -     $           -
Operating lease obligations . . . .      2,223         947         862         282               132
Employment Agreements . . . . . . .        761         386         375           -                 -
Capital lease obligations (1) . . .         24          11          13           -                 -
                                     ---------    -------  ------------ ------------    ------------
Total contractual cash obligations.  $  10,711  $    1,750  $    8,547  $      282     $         132
                                     ==========  =========  ==========  ==========      ============
<FN>

1)  Does  not  include  amount  representing  interest.
</TABLE>

                        TRANSACTIONS WITH RELATED PARTIES

     Two  directors  of  the  Company  are  franchisees.

     One  of  the  director  franchisees  currently  operates  a  total  of  10
restaurants  located  in  Arkansas.  Purchases by this franchisee comprised 6.3%
and  6.0% of the Company's total food and supply sales in fiscal 2005 and fiscal
2004,  respectively.  Royalties and license fees and area development sales from
this  franchisee  comprised  3.4%  and  3.2%  of  the  Company's total franchise
revenues  in fiscal 2005 and fiscal 2004, respectively.  As of June 26, 2005 and
June  27,  2004,  his accounts and note payable to the Company were $898,000 and
$923,000,  respectively.  As  franchised units, his restaurants pay royalties to
the  Company  and  purchase  a  majority  of their food and supplies from Norco.

     The  other  director  franchisee  currently  operates  one  restaurant  in
Oklahoma.  Purchases by this franchisee comprised 0.4% and 0.5% of the Company's
total  food  and  supply  sales  in  fiscal  2005 and fiscal 2004, respectively.
Royalties  from  this  franchisee comprised 0.5% and 0.5% of the Company's total
franchise revenues in fiscal 2005 and fiscal 2004, respectively.  As of June 26,
2005  and  June  27,  2004,  his accounts payable to the Company was $39,000 and
$42,000,  respectively.  As  a franchised unit, his restaurant pays royalties to
the Company and purchases a majority of its food and supplies from the Company's
distribution  division.

     The  Company  believes  that the above transactions were at the same prices
and  on  the  same  payment  terms  available  to  non-related parties, with one
exception.  This  exception relates to the enforcement of the personal guarantee
by  a  director of the $314,000 debt of a franchise of which he is the President
and  sole  shareholder.  The  debt  relates  to food and equipment purchases and
royalty  payments  for  the  franchise  during  a  period  when the director had
transferred  his interest in the franchise, and prior to his later reacquisition
of the franchise. The director has affirmed his guarantee and confirmed that the
debt  will  be  paid  in  full.

     In  October  1999,  the  Company  loaned $1,949,698 to then Chief Executive
Officer  C.  Jeffery Rogers in the form of a promissory note due in June 2004 to
acquire  700,000  shares  of  the Company's common stock through the exercise of
vested stock options previously granted to him in 1995 by the Company.  The note
bore  interest  at  the  same  floating  interest  rate  the Company pays on its
revolving  credit  line with Wells Fargo and was collateralized by a second lien
in  certain real property and existing Company stock owned by C. Jeffrey Rogers.
The first lien on both the real property and Company stock pledged by Mr. Rogers
was  held by Wells Fargo, Mr. Rogers' primary lender.  The Board determined that
doubt  existed regarding the collectibility of the note as of June 30, 2002, and
recorded a pre-tax charge of approximately $1.9 million to fully reserve for the
expected non-payment of the debt by Mr. Rogers.  In December 2002, the Company's
loan  to  Mr.  Rogers was paid in full.  The reserve for the note receivable was
reversed  in  the  quarter  ended  December  29,  2002.

     In  October  1999,  the  Company  loaned  $557,056  to then Chief Operating
Officer  Ronald  W.  Parker in the form of a promissory note due in June 2004 to
acquire  200,000  shares  of  the Company's common stock through the exercise of
vested stock options previously granted to him in 1995 by the Company.  The note
bore  interest  at  the  same  floating  interest  rate  the Company pays on its
revolving  credit  line  with Wells Fargo and was collateralized by certain real
property  and  existing  Company  stock owned by Ronald W. Parker.  The note was
reflected  as  a  reduction  to shareholders' equity.   As of June 27, 2004, the
note  balance  was  paid  in  full.

     In  July  2000, the Company also loaned $302,581 to Ronald W. Parker in the
form  of  a promissory note due in June 2004, in conjunction with a cash payment
of  $260,000  from Mr. Parker, to acquire 200,000 shares of the Company's common
stock through the exercise of vested stock options previously granted in 1995 by
the  Company.  The  note  bore  interest  at the same floating interest rate the
Company  pays  on  its  revolving  credit  line  with  Wells  Fargo  and  was
collateralized  by  certain  real  property  and existing Company stock owned by
Ronald  W.  Parker.  The  note  was  reflected  as  a reduction to shareholders'
equity.  As  of  June  27,  2004,  the  note  balance  was  paid  in  full.

                   CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The  preparation  of  financial  statements  in  conformity  with generally
accepted  accounting  principles  requires  our management to make estimates and
assumptions  that  affect our reported amounts of assets, liabilities, revenues,
expenses  and  related  disclosure  of  contingent  liabilities.  We  base  our
estimates on historical experience and various other assumptions that we believe
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 our results of operations
and  financial  conditions  in  future  periods.

     Accounts  receivable  consist  primarily of receivables generated from food
and  supply sales to franchisees and franchise royalties.  The Company records a
provision  for  doubtful  receivables  to  allow  for  any  amounts which may be
unrecoverable  and  is  based upon an analysis of the Company's prior collection
experience,  general  customer  creditworthiness and the franchisee's ability to
pay,  based upon the franchisee's sales, operating results and other general and
local economic trends and conditions that may affect the franchisee's ability to
pay.  Actual  realization of amounts receivable could differ materially from our
estimates.

     Notes  receivable  primarily  consist  of  notes from franchisees for trade
receivables, franchise fees and equipment purchases.  These notes generally have
terms  ranging  from  one  to  five  years  and interest rates of 6% to 12%. The
Company  records  a  provision for doubtful receivables to allow for any amounts
which  may be unrecoverable and is based upon an analysis of the Company's prior
collection  experience,  general  customer  creditworthiness  and a franchisee's
ability  to  pay, based upon the franchisee's sales, operating results and other
general  and  local  economic  trends  and  conditions  that  may  affect  the
franchisee's  ability  to  pay.  Actual  realization of amounts receivable could
differ  materially  from  our  estimates.

     Inventory,  which  consists primarily of food, paper products, supplies and
equipment  located at the Company's distribution center, are stated at the lower
of  FIFO  (first-in,  first-out)  cost  or  market.  The  valuation of inventory
requires  us  to  estimate  the  amount  of  obsolete and excess inventory.  The
determination  of  obsolete  and  excess  inventory  requires us to estimate the
future  demand  for  our  products  within specific time horizons, generally six
months  or  less.  If  the  Company's  demand  forecast for specific products is
greater  than  actual  demand  and  the  Company  fails  to  reduce  purchasing
accordingly,  the  Company could be required to write down additional inventory,
which  would  have  a  negative  impact  on  our  gross  margin.

     Re-acquired  development  franchise rights are recorded at lower of cost or
fair value based upon estimated cash flows from existing franchises operating in
the  region.  When circumstances warrant, the Company assesses the fair value of
these assets based on estimated, undiscounted future cash flows, to determine if
impairment  in  the  value  has  occurred and an adjustment is necessary.  If an
adjustment  is  required, a discounted cash flow analysis would be performed and
an  impairment  loss  would  be  recorded.

     The  Company  has  recorded  a valuation allowance to reflect the estimated
amount  of deferred tax assets that may not be realized based upon the Company's
analysis  of  existing  tax  credits  by  jurisdiction  and  expectations of the
Company's  ability to utilize these tax attributes through a review of estimated
future  taxable  income  and  establishment  of tax strategies.  These estimates
could be materially impacted by changes in future taxable income and the results
of  tax  strategies.

     The  Company  assesses  its exposures to loss contingencies including legal
and  income  tax  matters  based  upon factors such as the current status of the
cases  and  consultations  with external counsel and provides for an 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  impacted.

NEW  PRONOUNCEMENTS

     In  November 2004, the Financial Accounting Standards Board ("FASB") issued
Statement  of  Financial  Accounting  Standards  No.  151,  "Inventory Costs, an
amendment  of  ARB  No.  43,  Chapter  4"  ("SFAS  151"). SFAS 151 clarifies the
accounting  for  abnormal  amounts  of  idle facility expense, freight, handling
costs  and  wasted  material. Additionally, SFAS 151 requires that allocation of
fixed  production  overhead  to inventory be based on the normal capacity of the
production  facilities.  The  provisions of SFAS 151 are applicable to inventory
costs  incurred  during fiscal years beginning after June 15, 2005. The adoption
of  this  statement  is  not expected to have a material effect on the Company's
consolidated  financial  position,  results  of  operations  or  cash  flows.

     In  December  2004, the FASB issued the revised SFAS No. 123 ("SFAS 123R"),
which addresses the accounting for share-based payment transactions in which the
Company  obtains employee services in exchange for (a) equity instruments of the
Company  or  (b)  liabilities  that are based on the fair value of the Company's
equity  instruments  or  that  may  be  settled  by  the issuance of such equity
instruments.  This  statement  eliminates  the  ability  to account for employee
share-based payment transactions using APB No. 25 and requires instead that such
transactions be accounted for using the grant-date fair value based method. SFAS
123R is effective for public companies that are not small business issuers as of
the  first  interim  period  or fiscal year beginning after June 15, 2005.  SFAS
123R  will  require  the  Company to record compensation charges for share-based
transactions  in the Statement of Operations.  The adoption of this statement is
not  expected  to have a material effect on the Company's consolidated financial
position,  results  of  operations  or  cash  flows.

     On  December  2004, FASB issued Statement of Financial Accounting Standards
No.  153,  "Exchanges of Nonmonetary Assets, an amendment to APB Opinion No. 29"
("SFAS  153").  The  Statement  eliminates the exception to measure exchanges at
fair  value  for  exchanges  of similar productive assets and replaces it with a
general  exception  for  exchange  transactions  that  do  not  have  commercial
substance.  SFAS  153  is  effective for nonmonetary exchanges in fiscal periods
beginning after June 15, 2005. The adoption of this statement is not expected to
have a material effect on the Company's consolidated financial position, results
of  operations  or  cash  flows.

     In  March  2005,  the  FASB  issued  FASB  Interpretation  ("FIN")  No.
47,"Accounting  for  Conditional  Asset  Retirement  Obligations."  FIN  No.  47
clarifies  the  meaning  of  the term CONDITIONAL ASSET RETIREMENT OBLIGATION as
used  in  SFAS  143, "Accounting for Asset Retirement Obligations" and clarifies
when an entity would have sufficient information to reasonably estimate the fair
value  of  an  asset  retirement obligation. This interpretation is effective no
later  than the end of fiscal years ending after December 15, 2005 (December 31,
2005  for  calendar-year  companies).  Retrospective  application  of  interim
financial information is permitted but is not required.  The adoption of FIN No.
47  is  not  expected  to  have  a material effect on the Company's consolidated
financial  position,  results  of  operations  or  cash  flows.

     On  May  5, 2005, the FASB issued Statement No. 154, Accounting Changes and
Error  Corrections  ("SFAS  154"),  a replacement of APB Opinion No. 20 and FASB
Statement  No.  3.  The Statement applies to all voluntary changes in accounting
principles,  and  changes the requirements for accounting for and reporting of a
change  in  accounting principle. SFAS 154 requires retrospective application to
prior  periods'  financial  statements  of  a  voluntary  change  in  accounting
principle  unless it is impracticable. SFAS 154 requires that a change in method
of  depreciation, amortization, or depletion for long-lived, nonfinancial assets
be accounted for as a change in accounting estimate that is effected by a change
in  accounting  principle.  Opinion 20 previously required that such a change be
reported  as  a change in accounting principle. The requirements of SFAS 154 are
effective  for  accounting changes made in fiscal years beginning after December
15,  2005.  The  adoption  of  this statement is not expected to have a material
effect  on  the Company's consolidated financial position, results of operations
or  cash  flows.

RISK  FACTORS

Investing  in  our  common  stock  involves  a  high  degree of risk. You should
carefully consider the following factors, as well as other information contained
in  this report, before deciding to invest in shares of our common stock.  These
risks  could  materially  adversely  affect our business, financial condition or
results  of  operations.  The  trading  price  of our common stock could also be
materially  adversely  affected  by  any  of  these  risks.

     IF WE ARE NOT ABLE TO COMPETE EFFECTIVELY, OUR BUSINESS, SALES AND EARNINGS
COULD  BE  MATERIALLY  ADVERSELY  AFFECTED.

     The  restaurant  industry  in  general, as well as the pizza segment of the
industry,  is intensely competitive, both internationally and domestically, with
respect  to  price, service, location and food quality.  We compete against many
regional and local businesses.  There are many well-established competitors with
substantially  greater brand awareness and financial and other resources than we
have.  Some  of  these  competitors  have  been in existence for a substantially
longer  period  than  we  have  and  may  be better established in markets where
restaurants  we  operate or that are operated by our franchisees are, or may be,
located.  Experience  has  shown that a change in the pricing or other marketing
or  promotional  strategies,  including new product and concept developments, of
one  or  more  of  our major competitors can have an adverse impact on sales and
earnings  and  our  systemwide  restaurant  operations.

     We  could  also  experience  increased  competition  from  existing  or new
companies  in the pizza segment of the restaurant industry.  If we are unable to
compete,  we  could experience downward pressure on prices, lower demand for our
products,  reduced  margins,  the  inability  to  take advantage of new business
opportunities  and  the loss of market share, all of which would have a material
adverse  effect  on  our  operating  results.

     We  also  compete  on  a  broader  scale  with  quick  service  and  other
international,  national,  regional  and  local  restaurants.  The  overall food
service market and the quick service restaurant sector are intensely competitive
with  respect  to  food  quality,  price,  service, and convenience and concept.

     We  compete  within the food service market and the restaurant industry not
only  for customers, but also for management and hourly employees, suitable real
estate  sites  and  qualified franchisees.  Norco is also subject to competition
from  outside  suppliers.  If  other  suppliers,  who  meet  our  qualification
standards,  were  to offer lower prices or better service to our franchisees for
their  ingredients  and  supplies and, as a result, our franchisees chose not to
purchase from Norco, our financial condition, business and results of operations
would  be  adversely  affected.

     IF  WE  ARE  NOT  ABLE TO IMPLEMENT OUR GROWTH STRATEGY SUCCESSFULLY, WHICH
INCLUDES  OPENING  NEW  DOMESTIC  AND  INTERNATIONAL  RESTAURANTS  AND REIMAGING
EXISTING RESTAURANTS, OUR ABILITY TO INCREASE OUR REVENUES AND OPERATING PROFITS
COULD  BE  MATERIALLY  ADVERSELY  AFFECTED.

     A  significant component of our growth strategy is opening new domestic and
international  franchise stores.  We and our franchisees face many challenges in
opening new stores, including, among other things, selection and availability of
suitable  restaurant  locations  and  suitable  franchisees,  increases in food,
paper,  labor,  utilities, fuel, employee benefits, insurance and similar costs,
negotiation  of suitable lease or financing terms, constraints on permitting and
construction  of  restaurants,  higher  than anticipated construction costs, the
hiring,  training  and  retention of management and other personnel and securing
required  domestic  or  foreign  governmental  permits  and  approvals.

The  opening  of additional franchise restaurants and our reimaging program also
depends,  in part, upon the availability of prospective franchisees who meet our
criteria.  Our  reimaging  program  may  require considerable management time as
well as start-up expenses for market development before any significant revenues
and  earnings  are  generated.

Accordingly,  there  can  be  no  assurance that we will be able to meet planned
growth  targets,  open  restaurants  in  markets  now  targeted for expansion or
operate  in  existing  markets  profitably.  In addition, even if we are able to
continue  to  open  new restaurants, we may not be able to keep restaurants from
closing  at  a  faster  rate  than  we  are  able  to  open  restaurants.

     AN  INCREASE IN THE COST OF CHEESE OR OTHER COMMODITIES, INCLUDING FUEL AND
LABOR,  COULD  ADVERSELY  AFFECT  OUR  PROFITABILITY  AND  OPERATING  RESULTS.

     An  increase  in  our  operating  costs  could  adversely  affect  our
profitability.  Factors such as inflation, increased food costs, increased labor
and  employee  benefit costs and increased energy costs may adversely affect our
operating  costs.  Most  of  the  factors affecting costs are beyond our control
and,  in  many  cases, we may not be able to pass along these increased costs to
our  customers  or  franchisees even if we attempted to do so.  Most ingredients
used  in  our  pizza,  particularly  cheese,  are  subject  to significant price
fluctuations as a result of seasonality, weather, availability, demand and other
factors.  Sustained  increases  in fuel and utility costs could adversely affect
the  profitability  of  our restaurant and distribution businesses.  Labor costs
are  largely a function of the minimum wage for a majority of our restaurant and
distribution center personnel and, generally, are a function of the availability
of  labor.

     SHORTAGES OR INTERRUPTIONS IN THE SUPPLY OR DELIVERY OF FOOD PRODUCTS COULD
ADVERSELY  AFFECT  OUR  OPERATING  RESULTS.

     We  and  our  franchisees  are  dependent  on  frequent  deliveries of food
products that meet our specifications.  Shortages or interruptions in the supply
of  food  products  caused  by  unanticipated  demand, problems in production or
distribution  by Norco or otherwise, inclement weather (including hurricanes and
other  natural  disasters)  or  other  conditions  could  adversely  affect  the
availability,  quality and cost of ingredients, which would adversely affect our
operating  results.

     CHANGES  IN  CONSUMER PREFERENCES AND PERCEPTIONS COULD DECREASE THE DEMAND
FOR  OUR  PRODUCTS,  WHICH  WOULD  REDUCE  SALES  AND  HARM  OUR  BUSINESS.

     Restaurant businesses are affected by changes in consumer tastes, national,
regional  and  local  economic  conditions,  demographic  trends,  disposable
purchasing  power,  traffic  patterns  and  the  type,  number  and  location of
competing restaurants.  For example, if prevailing health or dietary preferences
cause  consumers  to  avoid  pizza and other products we offer in favor of foods
that  are perceived as more healthy, our business and operating results would be
harmed.  Moreover,  because  we  are primarily dependent on a single product, if
consumer  demand  for pizza should decrease, our business would suffer more than
if  we  had  a  more diversified menu, as many other food service businesses do.

     HEALTH  CONCERNS  OR  DISEASE-RELATED DISRUPTIONS ABOUT COMMODITIES THAT WE
USE TO MAKE PIZZA COULD MATERIALLY ADVERSELY AFFECT THE AVAILABILITY AND COST OF
SUCH  COMMODITIES.

     Health-  or  disease-related  disruptions  or  consumer  concerns about the
commodity  supply could materially adversely impact the availability and/or cost
of  such  commodities,  thereby  materially  adversely  impacting  restaurant
operations  and  our  financial  results.

WE  ARE  SUBJECT  TO  EXTENSIVE GOVERNMENT REGULATION, AND ANY FAILURE TO COMPLY
WITH  EXISTING  OR INCREASED REGULATIONS COULD ADVERSELY AFFECT OUR BUSINESS AND
OPERATING  RESULTS.

     We  are  subject  to  numerous  federal,  state, local and foreign laws and
regulations,  including  those  relating  to  the  preparation and sale of food;
building  and  zoning  requirements;  environmental  protection;  minimum  wage,
citizenship,  overtime  and  other  labor  requirements;  compliance  with  the
Americans  with  Disabilities  Act;  and  working  and  safety  conditions.

A  significant  number of hourly personnel employed by our franchisees and by us
are  paid  at  rates  related to the federal minimum wage.  Accordingly, further
increases  in  the  federal minimum wage or the enactment of additional state or
local  wage  proposals  may  increase labor costs for our systemwide operations.
Additionally, labor shortages in various markets could result in higher required
wage  rates.

     If  we  fail to comply with existing or future laws and regulations, we may
be  subject  to  governmental  or judicial fines or sanctions.  In addition, our
capital  expenditures  could  increase  due  to remediation measures that may be
required  if  we  are  found  to  be  noncompliant  with  any  of  these laws or
regulations.

     We are also subject to a Federal Trade Commission rule and to various state
and  foreign  laws  that govern the offer and sale of franchises.  Additionally,
these  laws  regulate  various  aspects of the franchise relationship, including
terminations  and  the  refusal to renew franchises.  The failure to comply with
these  laws and regulations in any jurisdiction or to obtain required government
approvals  could  result  in  a  ban or temporary suspension on future franchise
sales,  fines  or  other penalties or require us to make offers of rescission or
restitution,  any  of  which  could  adversely affect our business and operating
results.

     IF  WE  ARE NOT ABLE TO CONTINUE TO PURCHASE OUR KEY PIZZA INGREDIENTS FROM
OUR  CURRENT  SUPPLIERS  OR  FIND  SUITABLE  REPLACEMENT SUPPLIERS OUR FINANCIAL
RESULTS  COULD  BE  MATERIALLY  ADVERSELY  AFFECTED.

We  are  dependent on a few suppliers for our key ingredients.  Domestically, we
rely  upon  sole  suppliers  for our cheese, flour mixture and certain other key
ingredients.  Alternative  sources for these ingredients may not be available on
a  timely  basis  to  supply  these  key ingredients or be available on terms as
favorable  to  us  as  under our current arrangements.  Our domestic restaurants
purchase  substantially  all  food  and  related  products from our distribution
division.  Accordingly,  both  our  Company-operated  and franchised restaurants
could  be  harmed  by  any  prolonged  disruption in the supply of products from
Norco.  Additionally,  domestic  franchisees  are  only required to purchase the
flour  mixture,  spice  blend  and certain other items from Norco and changes in
purchasing  practices  by  domestic  franchisees  could  adversely  affect  the
financial  results  of  our  distribution  operation.

     OUR  INTERNATIONAL  AND  DOMESTIC  OPERATIONS COULD BE MATERIALLY ADVERSELY
AFFECTED  BY  SIGNIFICANT CHANGES IN INTERNATIONAL, REGIONAL, AND LOCAL ECONOMIC
AND  POLITICAL  CONDITIONS.

     Our  international  and  domestic  operations  are subject to many factors,
including  currency  regulations  and  fluctuations,  culture  and  consumer
preferences, diverse government regulations and structures, availability and the
cost  of  land  and  construction,  ability  to  source  ingredients  and  other
commodities  in  a  cost-effective  manner  and  differing interpretation of the
obligations  established in franchise agreements with international franchisees.
Accordingly,  there  can  be  no  assurance  that our operations will achieve or
maintain  profitability  or  meet  planned  growth  rates.

     EACH  OF  THE  FOREGOING RISK FACTORS THAT COULD AFFECT RESTAURANT SALES OR
COSTS  COULD  DISPROPORTIONATELY  AFFECT THE FINANCIAL VIABILITY OF NEWLY OPENED
RESTAURANTS  AND  FRANCHISEES  IN  UNDER-PENETRATED  OR  EMERGING  MARKETS  AND,
CONSEQUENTLY,  OUR  OVERALL  RESULTS  OF  OPERATIONS.

A  decline  in  or  failure  to  improve financial performance for this group of
restaurants  or  franchisees  could lead to an inability to successfully recruit
new  franchisees  and  open  new  restaurants and lead to restaurant closings at
greater  than anticipated levels and therefore impact contributions to marketing
funds,  our  royalty  stream,  our  distribution operations and support services
efficiencies  and  other  system-wide  results  of  operations.

     WE  FACE  RISKS  OF  LITIGATION  FROM CUSTOMERS, FRANCHISEES, EMPLOYEES AND
OTHERS  IN  THE  ORDINARY  COURSE  OF  BUSINESS, WHICH DIVERTS OUR FINANCIAL AND
MANAGEMENT RESOURCES.  ANY ADVERSE LITIGATION OR PUBLICITY MAY NEGATIVELY IMPACT
OUR  FINANCIAL  CONDITION  AND  RESULTS  OF  OPERATIONS.

     Claims  of  illness or injury relating to food quality or food handling are
common  in  the  food  service industry. In addition to decreasing our sales and
profitability  and  diverting  our  management resources, adverse publicity or a
substantial judgment against us could negatively impact our financial condition,
results of operations and brand reputation, hindering our ability to attract and
retain  franchisees  and  grow  our  business.

     Further,  we may be subject to employee, franchisee and other claims in the
future  based  on,  among  other  things,  discrimination,  harassment, wrongful
termination and wage, rest break and meal break issues, including those relating
to  overtime compensation.  If one or more of these claims were to be successful
or  if  there  is  a  significant  increase  in  the number of these claims, our
business,  financial  condition  and  operating  results  could  be  harmed.

     For  example,  an  adverse  outcome  to the proceedings involving Ronald W.
Parker,  the  Company's  former Chief Executive Officer, and B. Keith Clark, the
Company's  former  Senior  Vice  President and General Counsel, could materially
affect the Company's financial position and results of operations.  In the event
the  Company is unsuccessful, it could be liable to Mr. Parker for approximately
$5.4 million under his employment agreement and for approximately $775,000 under
Mr.  Clark's  employment agreement plus accrued interest and legal expenses.  No
accrual  for  any  amount has been made as of June 26, 2005.  See the discussion
under  "Legal  Proceedings"  in  this  report.

     OUR  EARNINGS  AND  BUSINESS  GROWTH STRATEGY DEPENDS ON THE SUCCESS OF OUR
FRANCHISEES,  AND  WE MAY BE HARMED BY ACTIONS TAKEN BY OUR FRANCHISEES THAT ARE
OUTSIDE  OF  OUR  CONTROL.

     A significant portion of our earnings comes from royalties generated by our
franchised  restaurants.  Franchisees  are  independent  operators,  and  their
employees  are  not  our  employees.  We provide limited training and support to
franchisees,  but  the  quality  of  franchised  restaurant  operations  may  be
diminished  by  any  number  of  factors  beyond  our  control.  Consequently,
franchisees may not successfully operate restaurants in a manner consistent with
our standards and requirements, or may not hire and train qualified managers and
other store personnel.  If they do not, our image and reputation may suffer, and
revenues  could  decline.  While  we try to ensure that our franchisees maintain
the  quality of our brand and branded products, our franchisees may take actions
that adversely affect the value of our intellectual property or reputation.  Our
domestic  and  international  franchisees  may  not  operate  their  franchises
successfully.  If one or more of our key franchisees were to become insolvent or
otherwise  were  unable  or  unwilling to pay us our royalties, our business and
results  of  operations  would  be  adversely  affected.

     LOSS  OF KEY PERSONNEL OR OUR INABILITY TO ATTRACT AND RETAIN NEW QUALIFIED
PERSONNEL  COULD  HURT  OUR BUSINESS AND INHIBIT OUR ABILITY TO OPERATE AND GROW
SUCCESSFULLY.

     Our  success will depend to a significant extent on our leadership team and
other  key  management  personnel.  We  may  not be able to retain our executive
officers  and  key  personnel  or  attract additional qualified management.  Our
success  also  will  depend  on  our  ability  to  attract  and retain qualified
personnel  to  operate  our  restaurants, distribution centers and international
operations.  The  loss of these employees or our inability to recruit and retain
qualified  personnel  could  have  a  material  adverse  effect on our operating
results.

<PAGE>

     OUR  CURRENT INSURANCE COVERAGE MAY NOT BE ADEQUATE, AND INSURANCE PREMIUMS
FOR  SUCH  COVERAGE  MAY  INCREASE AND WE MAY NOT BE ABLE TO OBTAIN INSURANCE AT
ACCEPTABLE  RATES,  OR  AT  ALL.

     Our  insurance  policies may not be adequate to protect us from liabilities
that  we  incur  in  our  business.  In  addition,  in  the future our insurance
premiums  may  increase  and  we  may  not  be  able to obtain similar levels of
insurance  on reasonable terms, or at all.  Any such inadequacy of, or inability
to  obtain,  insurance  coverage  could  have  a  material adverse effect on our
business,  financial  condition  and  results  of  operations.

     OUR  ANNUAL  AND  QUARTERLY  FINANCIAL  RESULTS  ARE SUBJECT TO SIGNIFICANT
FLUCTUATIONS DEPENDING ON VARIOUS FACTORS, MANY OF WHICH ARE BEYOND OUR CONTROL,
AND IF WE FAIL TO MEET THE EXPECTATIONS OF SECURITIES ANALYSTS OR INVESTORS, OUR
SHARE  PRICE  MAY  DECLINE  SIGNIFICANTLY.

     Our  sales  and  operating  results  can vary significantly from quarter to
quarter  and year to year depending on various factors, many of which are beyond
our  control.  These  factors include variations in the timing and volume of our
sales  and our franchisees' sales; the timing of expenditures in anticipation of
future sales; sales promotions by us and our competitors; changes in competitive
and  economic  conditions  generally; and changes in the cost or availability of
our  ingredients (including cheese), fuel or labor.  As a result, our results of
operations may decline quickly and significantly in response to changes in order
patterns  or  rapid  decreases  in  demand for our products.  We anticipate that
fluctuations  in  operating  results  will  continue  in  the  future.


ITEM  7A  -  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

     The  Company  has  market  risk  exposure  arising from changes in interest
rates.  The  Company's  earnings  are affected by changes in short-term interest
rates as a result of borrowings under its credit facilities, which bear interest
based  on  floating  rates.

     As of June 26, 2005, the Company had approximately $7.7 million of variable
rate debt obligations outstanding with a weighted average interest rate of 4.69%
for  the year ending June 26, 2005.   A hypothetical 10% change in the effective
interest rate for these borrowings, assuming debt levels at June 26, 2005, would
change  interest  expense  by  approximately  $31,000.

     The Company entered into an interest rate swap effective February 27, 2001,
as  amended,  designated  as  a  cash  flow  hedge, to manage interest rate risk
relating  to the financing of the construction of the Company's new headquarters
and  to  fulfill bank requirements.  The swap agreement has a notional principal
amount of $8.125 million with a fixed pay rate of 5.84%, which began November 1,
2001  and will end November 19, 2007.  The swap's notional amount amortizes over
a  term  of  twenty  years to parallel the terms of the term loan.  Statement of
Financial  Accounting  Standards No. 133, "Accounting for Derivative Instruments
and  Hedging  Activities"  requires  that  for cash flow hedges, which hedge the
exposure  to  variable  cash  flow  of  a  forecasted transaction, the effective
portion of the derivative's gain or loss be initially reported as a component of
other  comprehensive  income  in  the  equity  section  of the balance sheet and
subsequently  reclassified into earnings when the forecasted transaction affects
earnings.  Any  ineffective portion of the derivative's gain or loss is reported
in  earnings  immediately.  As  of  June  26,  2005,  there  was  no  hedge
ineffectiveness. The Company's expectation is that the hedging relationship will
be  highly  effective  at  achieving  offsetting  changes  in  cash  flows.

     The  Company  is  exposed to market risks from changes in commodity prices.
During  the  normal course of business, the Company purchases cheese and certain
other  food  products that are affected by changes in commodity prices and, as a
result,  the  Company  is  subject  to  volatility in our food sales and cost of
sales.  Management  actively  monitors  this  exposure, however, we do not enter
into financial instruments to hedge commodity prices.  The block price per pound
of  cheese  averaged $1.56 in fiscal 2005.  The estimated change in sales from a
hypothetical $0.20 change in the average cheese block price per pound would have
been  approximately  $1.3  million  in  fiscal  2005.




<PAGE>

                                 PIZZA INN, INC.


ITEM  8  -  FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA


Index  to  Financial  Statements  and  Schedule:



FINANCIAL  STATEMENTS                                                PAGE  NO.


Report  of  Independent  Registered  Public  Accounting  Firm.              32

Report  of  Independent  Registered  Public  Accounting  Firm.              33

Consolidated  Statements  of  Operations  for  the  years  ended
     June  26,  2005,  June  27,  2004,  and  June  29,  2003.              34

Consolidated  Statements  of  Comprehensive Income for the years ended
     June  26,  2005,  June  27,  2004,  and  June  29,  2003.              34

Consolidated  Balance  Sheets  at  June  26,  2005  and  June  27,  2004.   35

Consolidated  Statements  of  Shareholders'  Equity  for  the  years
     ended  June  26,  2005,  June  27,  2004,  and  June  29,  2003.       36

Consolidated Statements of Cash Flows for the years  ended June 26, 2005,
     June  27,  2004,  and  June  29,  2003.                                37

Notes  to  Consolidated  Financial  Statements.                             39



FINANCIAL  STATEMENT  SCHEDULE


Schedule  II   -  Consolidated  Valuation  and  Qualifying  Accounts        57

     All  other schedules are omitted because they are not applicable, not
     required or because the required  information  is  included  in  the
     consolidated financial  statements  or  notes  thereto.

SIGNATURES                                                                  62



<PAGE>


                   REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM




Board  of  Directors  and  Stockholders
Pizza  Inn,  Inc.

We  have audited the accompanying consolidated balance sheets of Pizza Inn, Inc.
as of June 26, 2005 and June 27, 2004 and the related consolidated statements of
operations  and  comprehensive  income, stockholders' equity, and cash flows for
the  years  then  ended.  We  have  also  audited  the  schedule  listed  in the
accompanying  index  for the years ended June 26, 2005 and June 27, 2004.  These
financial  statements  and  schedule  are  the  responsibility  of the Company's
management.  Our  responsibility  is  to  express  an opinion on these financial
statements  and  schedule  based  on  our  audits.

We  conducted  our audits in accordance with the standards of the Public Company
Accounting  Oversight  Board  (United  States).  Those standards require that we
plan  and  perform  the  audits to obtain reasonable assurance about whether the
financial  statements  and schedule are free of material misstatement.  An audit
includes  consideration  of internal control over financial reporting as a basis
for  designing  audit  procedures that are appropriate in the circumstances, but
not  for  the  purpose  of  expressing  an  opinion  on the effectiveness of the
Company's  internal  controls over financial reporting.  Accordingly, we express
no  such  opinion.  An  audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements and schedule,
assessing  the  accounting  principles  used  and  significant estimates made by
management,  as  well  as  evaluating  the overall presentation of the financial
statements  and schedule.  We believe that our audit provides a reasonable basis
for  our  opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all material respects, the financial position of Pizza Inn, Inc. at
June  26, 2005 and June 27, 2004, and the results of its operations and its cash
flows  for  the  year  then  ended,  in  conformity  with  accounting principles
generally  accepted  in  the  United  States  of  America.

Also,  in  our  opinion, the schedule for the years ended June 26, 2005 and June
27,  2004  presents  fairly, in all material respects, the information set forth
therein.


/s/ BDO Seidman, LLP
Dallas,  TX
August  16,  2005










<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To  the  Board  of  Directors
and  Shareholders  of  Pizza  Inn,  Inc.

In our opinion, the consolidated financial statements listed in the accompanying
index,  after  the  restatement  described  in  Note  A,  present fairly, in all
material  respects,  the results of operations and cash flows of Pizza Inn, Inc.
and  its  subsidiaries  for  the  year  ended  June  29, 2003 in conformity with
accounting  principles  generally  accepted in the United States of America.  In
addition,  in  our  opinion,  the  financial  statement  schedule  listed in the
accompanying  index  presents  fairly, in all material respects, the information
set  forth  therein  when  read  in  conjunction  with  the related consolidated
financial  statements.  These  financial  statements  and  financial  statement
schedule  are the responsibility of the Company's management; our responsibility
is  to  express an opinion on these financial statements and financial statement
schedule  based  on  our  audit.  We  conducted our audit of these statements in
accordance  with  the standards of the Public Company Accounting Oversight Board
(United  States).  Those standards require that we plan and perform the audit to
obtain  reasonable  assurance about whether the financial statements are free of
material  misstatement.  An  audit includes examining, on a test basis, evidence
supporting  the  amounts  and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating  the  overall  financial statement presentation.  We believe that our
audit  provides  a  reasonable  basis  for  our  opinion.

As described in Note A to the consolidated financial statements, the Company has
restated  its  financial  statements  as  of  June  30, 2002 to adjust beginning
retained  earnings  and  deferred  tax  assets.




/s/ PRICEWATERHOUSECOOPERS  LLP
Dallas,  Texas
September  25,  2003


<TABLE>
<CAPTION>

                                                       PIZZA INN, INC.
                                            CONSOLIDATED STATEMENTS OF OPERATIONS
                                           (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



                                                                                    YEAR ENDED
                                                           ----------------------------------------------------------------
                                                                      JUNE 26,               JUNE 27,               JUNE 29,
<S>                                                                      <C>                   <C>                     <C>
                                                                           2005                   2004                  2003
                                                           --------------------  ----------------------  --------------------
REVENUES:
  Food and supply sales . . . . . . . . . . . . . . . . .  $             49,161  $              53,072   $            51,556
  Franchise revenue . . . . . . . . . . . . . . . . . . .                 5,162                  5,400                 5,135
  Restaurant sales. . . . . . . . . . . . . . . . . . . .                   946                  1,516                 1,780
                                                           --------------------  ----------------------  --------------------
                                                                         55,269                 59,988                58,471
                                                           --------------------  ----------------------  --------------------

COSTS AND EXPENSES:
  Cost of sales . . . . . . . . . . . . . . . . . . . . .                46,785                 49,194                47,420
  Franchise expenses. . . . . . . . . . . . . . . . . . .                 2,791                  3,175                 3,256
  General and administrative expenses . . . . . . . . . .                 4,714                  3,587                 4,158
  Provision for (recovery of) bad debt (see Note J) . . .                    30                   (229)               (1,795)
  Interest expense. . . . . . . . . . . . . . . . . . . .                   590                    613                   789
                                                           --------------------  ----------------------  --------------------
                                                                         54,910                 56,340                53,828
                                                           --------------------  ----------------------  --------------------

INCOME BEFORE INCOME TAXES. . . . . . . . . . . . . . . .                   359                  3,648                 4,643

  Provision for income taxes. . . . . . . . . . . . . . .                   155                  1,405                 1,550
                                                           --------------------  ----------------------  --------------------

NET INCOME. . . . . . . . . . . . . . . . . . . . . . . .  $                204  $               2,243   $             3,093
                                                           ====================  ======================  ====================

BASIC EARNINGS PER COMMON SHARE . . . . . . . . . . . . .  $               0.02                  0.22   $              0.31
                                                           ====================  ======================  ====================

DILUTED EARNINGS PER COMMON SHARE . . . . . . . . . . . .  $               0.02                  0.22   $              0.31
                                                           ====================  ======================  ====================

WEIGHTED AVERAGE COMMON SHARES. . . . . . . . . . . . . .                10,105                 10,076                10,058
                                                           ====================  ======================  ====================

WEIGHTED AVERAGE COMMON AND
  POTENTIALLY DILUTIVE COMMON SHARES. . . . . . . . . . .                10,142                 10,117                10,061
                                                           ====================  ======================  ====================

                                       CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                       (IN THOUSANDS)

                                                                                    YEAR ENDED
                                                           ----------------------------------------------------------------
                                                                        JUNE 26,               JUNE 27,               JUNE 29,
                                                                           2005                   2004                  2003
                                                           --------------------  ----------------------  --------------------

    Net Income. . . . . . . . . . . . . . . . . . . . . .  $                204  $               2,243   $             3,093
    Interest rate swap gain (loss) (net of tax (expense)
      benefit of  ($59),  ($179), and $168, respectively)                   115                    348                  (326)
                                                           --------------------  ----------------------  --------------------
    Comprehensive Income. . . . . . . . . . . . . . . . .  $                319  $               2,591   $             2,767
                                                           ====================  ======================  ====================
<FN>

                                 See accompanying Notes to Consolidated Financial Statements.
</TABLE>


<TABLE>
<CAPTION>




                                                 PIZZA INN, INC.
                                          CONSOLIDATED BALANCE SHEETS
                                     (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<S>                                                                  <C>                    <C>
                                                                                 JUNE 26,               JUNE 27,
ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  2005                   2004
                                                                     ---------------------  ---------------------

CURRENT ASSETS
  Cash and cash equivalents . . . . . . . . . . . . . . . . . . . .  $                173   $                617
  Accounts receivable, less allowance for doubtful
      accounts of $360 and $310, respectively . . . . . . . . . . .                 3,419                  3,113
  Accounts receivable - related parties . . . . . . . . . . . . . .                   622                    577
  Notes receivable, current portion, less allowance
      for doubtful accounts of $11 and $59, respectively. . . . . .                     -                     50
  Notes receivable - related parties. . . . . . . . . . . . . . . .                     -                     54
  Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . .                 1,918                  1,713
  Property held for resale. . . . . . . . . . . . . . . . . . . . .                   301                      -
  Deferred tax assets, net. . . . . . . . . . . . . . . . . . . . .                   193                    183
  Prepaid expenses and other. . . . . . . . . . . . . . . . . . . .                   355                    415
                                                                     ---------------------  ---------------------
      Total current assets. . . . . . . . . . . . . . . . . . . . .                 6,981                  6,722

LONG-TERM ASSETS
  Property, plant and equipment, net. . . . . . . . . . . . . . . .                12,148                 12,756
  Property under capital leases, net. . . . . . . . . . . . . . . .                    12                     18
  Deferred tax assets, net. . . . . . . . . . . . . . . . . . . . .                     -                    105
  Long-term notes receivable, less allowance
      for doubtful accounts of $0 and $3, respectively. . . . . . .                     -                      -
  Long-term receivable  - related party . . . . . . . . . . . . . .                   314                    335
  Re-acquired development territory, net. . . . . . . . . . . . . .                   623                    866
  Deposits and other. . . . . . . . . . . . . . . . . . . . . . . .                   177                    104
                                                                     ---------------------  ---------------------
                                                                     $             20,255   $             20,906
                                                                     =====================  =====================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable - trade. . . . . . . . . . . . . . . . . . . . .  $              1,962   $              1,246
  Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . .                 1,374                  2,109
  Current portion of long-term debt . . . . . . . . . . . . . . . .                   406                    406
  Current portion of capital lease obligations. . . . . . . . . . .                    11                     10
                                                                     ---------------------  ---------------------
      Total current liabilities . . . . . . . . . . . . . . . . . .                 3,753                  3,771

LONG-TERM LIABILITIES
  Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . .                 7,297                  7,937
  Long-term capital lease obligations . . . . . . . . . . . . . . .                    13                     23
  Deferred tax liability, net . . . . . . . . . . . . . . . . . . .                     3                      -
  Other long-term liabilities . . . . . . . . . . . . . . . . . . .                   283                    458
                                                                     ---------------------  ---------------------
                                                                                   11,349                 12,189
                                                                     ---------------------  ---------------------

COMMITMENTS AND CONTINGENCIES (See Notes D and I)

SHAREHOLDERS' EQUITY
  Common Stock, $.01 par value; authorized 26,000,000
    shares; issued 15,046,319 and 15,031,319 shares, respectively;
    outstanding 10,094,494 and 10,133,674 shares, respectively. . .                   150                    150
  Additional paid-in capital. . . . . . . . . . . . . . . . . . . .                 8,005                  7,975
  Retained earnings . . . . . . . . . . . . . . . . . . . . . . . .                20,582                 20,378
  Accumulated other comprehensive loss. . . . . . . . . . . . . . .                  (187)                  (302)
  Treasury stock at cost
    Shares in treasury: 4,951,825 and 4,897,645, respectively . . .               (19,644)               (19,484)
                                                                     ---------------------  ---------------------
      Total shareholders' equity. . . . . . . . . . . . . . . . . .                 8,906                  8,717
                                                                     ---------------------  ---------------------
                                                                     $             20,255   $             20,906
                                                                     =====================  =====================
<FN>

                           See accompanying Notes to Consolidated Financial Statements.
</TABLE>

<TABLE>
<CAPTION>



                                                 PIZZA INN, INC.
                               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                 (IN THOUSANDS)
                                                                                       ACCUM.
                                                                                        OTHER
                                                                                         COMP.    TREASURY
                                     COMMON STOCK      PAID-IN    LOANS TO    RETAINED  (LOSS)     STOCK
                                    -------------
<S>                                  <C>      <C>        <C>        <C>         <C>         <C>      <C>     <C>
                                   SHARES    AMOUNT     CAPITAL    OFFICERS    EARNINGS  GAIN     AT COST  Total
                                   -------- -------    -------    ---------  ---------- --------- ------  ------


BALANCE, JUNE 30, 2002,. . . .       10,058 $  150  $   7,824  $    (575)  $  15,042  $ (324)  $(19,484) $ 2,633
                                   -------- -------    -------    ---------  ---------- --------- ------  ------
as restated

Employee incentive shares..             1        -          1          -            -       -          -       1
Principal repayment of loans
    by officers. . . . . . .            -        -          -      1,756            -       -          -   1,756
Reversal of allowance for
    doubtful accounts. . . .            -        -          -     (1,750)           -       -          - (1,750)
Interest rate swap loss
     (net of tax benefit of $168)       -        -          -          -            -    (326)         -   (326)
Net income . . . . . . . . . . .         -       -          -          -       3,093       -          -    3,093
                                   -------- -------    -------    ---------  ---------- --------- ------  ------

BALANCE, JUNE 29, 2003 . . . .       10,059  $ 150  $   7,825  $    (569)  $  18,135  $ (650)  $(19,484)$5,407
                                   -------- -------    -------    ---------  ---------- --------- ------  ------

Employee incentive shares. .          75           -        150          -            -       -          -   150
Principal repayment of loans
     by officers . . . . . .           -           -          -        569            -       -          -   569
Interest rate swap gain
     (net of tax expense of $179)      -           -          -          -            -     348          -   348
Net income . . . . . . . . . . .       -           -          -          -       2,243       -          -  2,243
                                   -------- -------    -------    ---------  ---------- --------- ------  ------
BALANCE, JUNE 27, 2004 . . .        10,134  $  150  $   7,975  $       -   $  20,378  $ (302)  $(19,484) $8,717
                                   -------- -------    -------    ---------  ---------- --------- ------  ------

Employee incentive shares . .        15           -         30          -           -       -          -      30
Stock repurchase
     (54,180 shares) . .  . . .     (54)          -          -          -           -       -       (160)  (160)
Interest rate swap gain
     (net of tax expense of $59)      -           -          -          -           -     115          -     115
Net income . . . . . . . . . . .      -           -          -          -         204       -          -     204
                                   -------- -------    -------    ---------  ---------- --------- ------  -- ---
BALANCE, JUNE 26, 2005 .. . . .  10,095   $     150  $   8,005  $       -   $  20,582  $ (187)  $(19,644) $8,906
                               ========    ========   ========  ==========  ==========  ======= =========  =====



<FN>

                                   See accompanying Notes to Consolidated Financial Statements.
</TABLE>

<TABLE>
<CAPTION>

                                                        PIZZA INN, INC.
                                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                         (IN THOUSANDS)


                                                                                    YEAR ENDED
                                                                            -----------------------
                                                                   JUNE 26,                 JUNE 27,                 JUNE 29,
<S>                                                   <C>                      <C>                      <C>
                                                                        2005                     2004                     2003
                                                      -----------------------  -----------------------  -----------------------

CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income . . . . . . . . . . . . . . . . . . . .  $                  204   $                2,243   $                3,093
    Adjustments to reconcile net income to
      cash provided by operating activities:
      Depreciation and amortization. . . . . . . . .                   1,143                    1,133                    1,403
      Non cash settlement of accounts receivable . .                       -                     (281)                       -
      Provision for (recovery of) bad debt, net. . .                      30                     (229)                  (1,795)
      Deferred income taxes. . . . . . . . . . . . .                      39                      500                    1,381
    Changes in assets and liabilities:
      Notes and accounts receivable. . . . . . . . .                    (256)                    (270)                     204
      Inventories. . . . . . . . . . . . . . . . . .                    (205)                    (202)                      15
      Accounts payable - trade . . . . . . . . . . .                     716                       29                     (310)
      Accrued expenses . . . . . . . . . . . . . . .                    (711)                     163                     (527)
      Deferred franchise revenue . . . . . . . . . .                     (24)                      (4)                     (52)
      Prepaid expenses and other . . . . . . . . . .                     152                      430                      609
                                                      -----------------------  -----------------------  -----------------------
      CASH PROVIDED BY OPERATING ACTIVITIES. . . . .                   1,088                    3,512                    4,021
                                                      -----------------------  -----------------------  -----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:

    Proceeds from sale of assets . . . . . . . . . .                       -                       38                        6
    Capital expenditures . . . . . . . . . . . . . .                    (753)                    (655)                    (476)
    Re-acquisition of area development territory . .                       -                     (682)                       -
                                                      -----------------------  -----------------------  -----------------------
      CASH USED IN INVESTING ACTIVITIES. . . . . . .                    (753)                  (1,299)                    (470)
                                                      -----------------------  -----------------------  -----------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

    Repayments of long-term bank debt and
      capital lease obligations. . . . . . . . . . .                    (415)                  (1,534)                  (1,337)
    Borrowings of long-term debt . . . . . . . . . .                       -                        -                      500
    Line of credit, net. . . . . . . . . . . . . . .                    (234)                  (1,300)                  (5,042)
    Proceeds from exercise of stock options. . . . .                      30                      150                        -
    Officer loan payment . . . . . . . . . . . . . .                       -                      689                    1,957
    Purchases of treasury stock. . . . . . . . . . .                    (160)                       -                        -
                                                      -----------------------  -----------------------  -----------------------
      CASH USED IN FINANCING ACTIVITIES. . . . . . .                    (779)                  (1,995)                  (3,922)
                                                      -----------------------  -----------------------  -----------------------

Net increase (decrease) in cash and cash equivalents                    (444)                     218                     (371)
Cash and cash equivalents, beginning of period . . .                     617                      399                      770
                                                      -----------------------  -----------------------  -----------------------
Cash and cash equivalents, end of period . . . . . .                    173                       617                      399
                                                      =======================  ======================= =========================
<FN>

                                  See accompanying Notes to Consolidated Financial Statements.
</TABLE>

<TABLE>
<CAPTION>

                                   PIZZA INN, INC.
                  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
                                    (IN THOUSANDS)



                                           YEAR ENDED
                                            -----------
                                  JUNE 26,    JUNE 27,   JUNE 29,
                                    2005        2004       2003
                                 -----------  ---------  ---------
<S>                              <C>          <C>        <C>
CASH PAYMENTS FOR:
  Interest. . . . . . . . . . .  $       589  $     624  $     810
  Income taxes. . . . . . . . .          633        635          -


<FN>

          See accompanying Notes to Consolidated Financial Statements.

</TABLE>

                                 PIZZA INN, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  A  -  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES:

DESCRIPTION  OF  BUSINESS:

     Pizza  Inn,  Inc.  (the  "Company"), a Missouri corporation incorporated in
1983,  is  the  successor  to  a  Texas  company  of  the  same  name, which was
incorporated  in  1961.  The  Company  is  the  franchisor  and  food and supply
distributor  to  a  system  of  restaurants operating under the trademark "Pizza
Inn."

     On June 26, 2005 the Pizza Inn system consisted of 398 locations, including
two  Company-operated  restaurants  and 396 franchised restaurants.  On June 26,
2005  the  Company  had  franchises  in  18  states  and nine foreign countries.
Domestic  restaurants  are  located  predominantly  in  the southern half of the
United  States,  with  Texas,  North  Carolina  and  Arkansas  accounting  for
approximately  35%,  15%,  and  8%, respectively, of the total. Norco Restaurant
Services  ("Norco"),  a  division  of  the  Company,  distributes food products,
equipment  and  other  supplies  to restaurants in the United States and, to the
extent  feasible,  in  other  countries.

PRINCIPLES  OF  CONSOLIDATION:

     The  consolidated  financial statements include the accounts of the Company
and  its  wholly-owned subsidiaries.  All appropriate inter-company balances and
transactions  have  been  eliminated.  Certain  prior  year  amounts  have  been
reclassified  to  conform  with  current  year  presentation.

CASH  AND  CASH  EQUIVALENTS:

     The  Company  considers  all  highly  liquid  investments purchased with an
original  maturity  of  three  months  or  less  to  be  cash  equivalents.

INVENTORIES:

     Inventories,  which consist primarily of food, paper products, supplies and
equipment  located at the Company's distribution center, are stated at the lower
of  FIFO  (first-in,  first-out) cost or market.  Provision is made for obsolete
inventories.

PROPERTY  HELD  FOR  RESALE:

     Assets  that  are to be disposed of by sale are recognized in the financial
statements at the lower of carrying amount or fair value, less cost to sell, and
are  not  depreciated  after  being classified as held for sale. In order for an
asset to be classified as held for sale, the asset must be actively marketed, be
available  for  immediate  sale  and  meet  certain  other  specified  criteria.

PROPERTY,  PLANT  AND  EQUIPMENT:

     Property, plant and equipment, including property under capital leases, are
stated  at  cost  less  accumulated  depreciation and amortization.  Repairs and
maintenance  are  charged  to  operations  as  incurred;  major  renewals  and
betterments are capitalized.  Internal and external costs incurred to develop or
purchase  internal-use  computer  software  during  the  application development
stage,  including  upgrades and enhancements, are capitalized.  Upon the sale or
disposition  of  a  fixed  asset,  the  asset  and  the  related  accumulation
depreciation  or amortization are removed from the accounts and the gain or loss
is  included  in  operations.  The  Company  capitalizes  interest on borrowings
during  the  active  construction period of major capital projects.  Capitalized
interest  is  added  to  the cost of the underlying asset and amortized over the
useful  life  of  the  asset.

     Depreciation  and amortization is computed on the straight-line method over
the  useful  lives of the assets or, in the case of leasehold improvements, over
the  term  of  the  lease  including  any reasonably assured renewal periods, if
shorter.  The  useful lives of the assets range from three to thirty-nine years.
It  is  the  Company's policy to periodically review the net realizable value of
its long-lived assets when certain indicators exist through an assessment of the
estimated  gross  future  cash  flows related to such assets.  In the event that
assets  are found to be carried at amounts that are in excess of estimated gross
future  cash  flows  then  the assets will be adjusted for impairment to a level
commensurate with a discounted cash flow analysis of the underlying assets.  The
Company  believes  no  impairment  of long-lived assets exists at June 26, 2005.

ACCOUNTS  RECEIVABLE:

     Accounts  receivable  consist primarily of receivables from food and supply
sales  and  franchise  royalties.  The  Company records a provision for doubtful
receivables  to  allow  for any amounts, which may be unrecoverable and is based
upon  an  analysis of the Company's prior collection experience, customer credit
worthiness  and  current  economic  trends.  After  all  attempts  to  collect a
receivable  have  failed,  the  receivable is written off against the allowance.

NOTES  RECEIVABLE:

     Notes  receivable  primarily  consist  of  notes  from  franchisees for the
purchase  of area development and master license territories and the refinancing
of  existing  trade  receivables.  These notes generally have terms ranging from
one  to  five  years,  with  interest rates of 6% to 12%.  The Company records a
provision  for  doubtful  receivables  to  allow  for  any amounts, which may be
unrecoverable  and  is  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.

RE-ACQUIRED  DEVELOPMENT  TERRITORY:

     Re-acquired  development  franchise rights are recorded at lower of cost or
fair value based upon estimated cash flows from existing franchises operating in
the  region.  When circumstances warrant, the Company assesses the fair value of
these assets based on estimated, undiscounted future cash flows, to determine if
impairment  in  the  value  has  occurred and an adjustment is necessary.  If an
adjustment  is  required, a discounted cash flow analysis would be performed and
an  impairment  loss  would  be  recorded.

     The  Company has one re-acquired territory at June 26, 2005.  The territory
was  re-acquired  in  December  2003, and is being amortized against incremental
cash  flows  received,  which  is estimated to be approximately five years.  The
following  chart summarizes the amortization expense for fiscal year ending June
26,  2005  and  June  27,  2004 and the estimated amortization to be expensed in
fiscal  year  2006  through  2009.


<TABLE>
<CAPTION>



                                                               Re-Acquired Territory
                                                    Fiscal Year End         Net Book
<S>                           <C>                    <C>                       <C>
                              Amortization           Accumulated Amortization  Value
                              ---------------------  ------------------------  -----
 December 2003 . . . . . . .                                                 $   962
 For the Fiscal Year Ending
 2004 (Actual) . . . . . . .                $    96        $   96                866
 2005 (Actual) . . . . . . .                    192           288                674
 2006 (Estimate) . . . . . .                    192           480                482
 2007 (Estimate) . . . . . .                    192           672                290
 2008 (Estimate) . . . . . .                    192           864                 98
 2009 (Estimate) . . . . . .                     98           962            $     -

</TABLE>


INCOME  TAXES:

     Income  taxes  are  accounted  for  using  the  asset  and liability method
pursuant to Statement of Financial Accounting Standards No. 109, "Accounting for
Income  Taxes"  ("SFAS  109").  Deferred  taxes  are  recognized  for  the  tax
consequences  of "temporary differences" by applying enacted statutory tax rates
applicable  to  future  years to differences between the financial statement and
carrying  amounts  and  the  tax  bases of existing assets and liabilities.  The
effect  on  deferred  taxes for a change in tax rates is recognized in income in
the  period that includes the enactment date.  The Company recognizes future tax
benefits  to  the  extent  that realization of such benefits is more likely than
not.

     The  Company  has  recorded  a valuation allowance to reflect the estimated
amount  of deferred tax assets that may not be realized based upon the Company's
analysis  of  existing  tax  credits  by  jurisdiction  and  expectations of the
Company's  ability to utilize these tax attributes through a review of estimated
future  taxable  income  and  establishment  of tax strategies.  These estimates
could  be  impacted  by  changes in future taxable income and the results of tax
strategies.

During  the  fourth  quarter of fiscal 2003, the Company determined that a prior
period  adjustment  was  required  to  properly state its deferred tax asset and
liability  balances.  The  Company  identified  approximately  $296,000  in
adjustments  to  these balances, primarily relating to temporary differences for
fixed  assets  and  the allowance for doubtful accounts, which related to fiscal
years  ended  1997 and earlier.  These adjustments are summarized as follows (in
thousands):

<TABLE>
<CAPTION>



<S>                                       <C>            <C>           <C>
                                          AS PRESENTED   ADJUSTMENT    RESTATED
                                          -------------  ------------  ---------
 JUNE 30, 2002:
 Deferred taxes, net - current asset . .  $       1,297  $        10   $   1,307
 Deferred taxes, net - non-current asset          1,347         (306)      1,041
 Total assets. . . . . . . . . . . . . .         24,614         (296)     24,318
 Total shareholders' equity. . . . . . .          2,929         (296)      2,633
 JUNE 25, 2000:
 Beginning retained earnings . . . . . .         13,163         (296)     12,867


</TABLE>


REVENUE  RECOGNITION:

     The  Company's  Norco  division  sells  food,  supplies  and  equipment  to
franchisees  on trade accounts under terms common in the industry.  Revenue from
such  sales is recognized upon shipment.  Title and risk of loss for products we
sell  transfer  upon  delivery.  Revenue  has  been historically recognized upon
shipment,  which approximates the results of recognition upon delivery to within
an  insignificant degree.  This occurs because the product shipment and delivery
cycle  (the length of time between loading an order on our trucks and receipt by
franchisee)  is  relatively  short  and  consistent  between  reporting periods.
Equipment  that  is sold requires installation prior to acceptance.  Recognition
of  revenue  occurs  upon  installation  of  such  equipment.  Norco  sales  are
reflected  under  the  caption  "food  and supply sales."  Shipping and handling
costs  billed  to  customers  are  recognized  as  revenue.

     Franchise revenue consists of income from license fees, royalties, and area
development  and  foreign  master  license  (collectively,  "Territory")  sales.
License  fees  are  recognized  as  income  when  there  has  been  substantial
performance  of  the agreement by both the franchisee and the Company, generally
at  the  time the restaurant is opened.  Royalties are recognized as income when
earned. For the years ended June 26, 2005, June 27, 2004 and June 29, 2003, 97%,
95%  and  92%,  respectively,  of  franchise  revenue was comprised of recurring
royalties.

     Territory  sales  are  the  fees  paid  by  selected experienced restaurant
operators  to  the  Company  for  the  right to develop Pizza Inn restaurants in
specific geographical territories.  The Company recognizes the fee to the extent
its  obligations  are fulfilled and of cash received.  Territory fees recognized
as  income  for  the  years ended June 26, 2005, June 27, 2004 and June 29, 2003
were  $0,  $12,500  and  $180,000,  respectively.

STOCK  OPTIONS:

     As allowed by SFAS 123, "Accounting for Stock-Based Compensation" (SFAS No.
123),  the  Company elected to follow APB No. 25, and related Interpretations in
accounting  for  employee  stock  options  because  the  alternative  fair value
accounting  provided  for  under  SFAS  No.  123,  "Accounting  for  Stock Based
Compensation,"  requires  use of option valuation models that were not developed
for  use  in  valuing  employee  stock  options.  Under  APB No. 25, because the
exercise price of our employee stock options equals or exceeds the fair value of
the  underlying  stock  on  the  date  of  grant,  no  compensation  expense  is
recognized.

     Pro  forma  information  regarding  net  income  and  earnings per share is
required  to be determined as if the Company had accounted for its stock options
granted  subsequent  to  June  25, 1995 under the fair value method of SFAS 123,
"Accounting for Stock-Based Compensation."  The fair value of options granted in
fiscal 2005, 2004 and 2003 was estimated at the grant date using a Black-Scholes
option  pricing  model.  The following weighted average assumptions were used in
fiscal  2005:  risk-free  interest  rates  ranging from 4.09% to 4.50%, expected
volatility  of 40.5% to 40.9%, expected dividends yield of 0% and expected lives
of  six  to  nine years.  Assumptions used in fiscal years 2004 and 2003 were as
follows:  risk-free  interest  rates  ranging  from  1.9%  to  2.8%,  expected
volatility  of  42.2% to 42.5%, expected dividend yield of 0% and expected lives
of  two  years.

<PAGE>
For  purposes  of  pro  forma disclosures, the estimated fair value of the stock
options  is  amortized over the option vesting periods.  The Company's pro forma
information  follows  (in thousands, except for earnings per share information):

<TABLE>
<CAPTION>


                                   June 26, 2005                 June 27, 2004             June 29, 2003
                                   --------------               --------------             --------------
                             As Reported      Pro Forma      As Reported    Pro Forma   As Reported   Pro Forma
                            --------------  --------------  --------------  ----------  ------------  ----------
<S>                         <C>             <C>             <C>             <C>         <C>           <C>
Net income . . . . . . . .  $          204  $           80  $        2,243  $    2,241  $      3,093  $    3,075
Basic earnings per share .  $         0.02  $         0.01  $         0.22  $     0.22  $       0.31  $     0.31
Diluted earnings per share  $         0.02  $         0.01  $         0.22  $     0.22  $       0.31  $     0.31


</TABLE>


The  effects of applying SFAS 123 in the pro forma disclosure are not indicative
of  future  amounts  as the pro forma amounts above do not include the impact of
additional  awards  anticipated  in  future  years.

In  December 2004, the FASB issued the revised SFAS No. 123 ("SFAS 123R"), which
addresses  the  accounting  for  share-based  payment  transactions in which the
Company  obtains employee services in exchange for (a) equity instruments of the
Company  or  (b)  liabilities  that are based on the fair value of the Company's
equity  instruments  or  that  may  be  settled  by  the issuance of such equity
instruments.  This  statement  eliminates  the  ability  to account for employee
share-based payment transactions using APB No. 25 and requires instead that such
transactions be accounted for using the grant-date fair value based method. SFAS
123R is effective for public companies that are not small business issuers as of
the  first  interim  period  or  fiscal year beginning after June 15, 2005.  The
Company  anticipates  that  the  adoption  of SFAS 123R will not have an adverse
material  impact  on the Company's financial position and results of operations.
SFAS  123R  will  require  the  Company  to  record  compensation  charges  for
share-based  transactions  in  the  Statement of Operations.     The adoption of
this  statement  is  not  expected  to  have  a material effect on the Company's
consolidated  financial  position,  results  of  operations  or  cash  flows.

DISCLOSURE  ABOUT  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS:

     The  carrying  amounts  of  short-term  investments,  accounts  and  notes
receivable,  and  debt  approximate fair value.  The fair value of the Company's
interest  rate  swap  is  based  on  pricing  models using current market rates.

USE  OF  MANAGEMENT  ESTIMATES:

     The  preparation  of  financial  statements  in  conformity  with generally
accepted  accounting  principles  requires  our management to make estimates and
assumptions  that  affect our reported amounts of assets, liabilities, revenues,
expenses  and  related  disclosure  of  contingent  liabilities.  We  base  our
estimates on historical experience and other various assumptions that we believe
are  reasonable under the circumstances.  Estimates and assumptions are reviewed
periodically.  Actual  results  could  differ  materially  from  estimates.

FISCAL  YEAR:

     The  Company's  fiscal  year ends on the last Sunday in June.  Fiscal years
ending June 26, 2005 and June 27, 2004 and June 29, 2003 all contained 52 weeks.

NEW  PRONOUNCEMENTS:


     In  November 2004, the Financial Accounting Standards Board ("FASB") issued
Statement  of  Financial  Accounting  Standards  No.  151,  "Inventory Costs, an
amendment  of  ARB  No.  43,  Chapter  4"  ("SFAS  151"). SFAS 151 clarifies the
accounting  for  abnormal  amounts  of  idle facility expense, freight, handling
costs  and  wasted  material. Additionally, SFAS 151 requires that allocation of
fixed  production  overhead  to inventory be based on the normal capacity of the
production  facilities.  The  provisions of SFAS 151 are applicable to inventory
costs  incurred  during fiscal years beginning after June 15, 2005. The adoption
of  this  statement  is  not expected to have a material effect on the Company's
consolidated  financial  position,  results  of  operations  or  cash  flows.

     In  December  2004, FASB issued Statement of Financial Accounting Standards
No.  153,  "Exchanges of Nonmonetary Assets, an amendment to APB Opinion No. 29"
("SFAS  153").  The  Statement  eliminates the exception to measure exchanges at
fair  value  for  exchanges  of similar productive assets and replaces it with a
general  exception  for  exchange  transactions  that  do  not  have  commercial
substance.  SFAS  153  is  effective for nonmonetary exchanges in fiscal periods
beginning after June 15, 2005. The adoption of this statement is not expected to
have a material effect on the Company's consolidated financial position, results
of  operations  or  cash  flows.

In  March  2005, the FASB issued FASB Interpretation ("FIN") No. 47, "Accounting
for Conditional Asset  Retirement Obligations." FIN No. 47 clarifies the meaning
of the term CONDITIONAL ASSET RETIREMENT         OBLIGATION as used in SFAS 143,
"Accounting for Asset Retirement Obligations" and clarifies when an entity would
have  sufficient  information  to reasonably estimate the fair value of an asset
retirement obligation. This interpretation is effective no later than the end of
fiscal years ending after December 15, 2005 (December 31, 2005 for calendar-year
companies).  Retrospective  application  of  interim  financial  information  is
permitted  but  is not required.  The adoption of this statement is not expected
to  have  a  material  effect  on the Company's consolidated financial position,
results  of  operations  or  cash  flows.

     On  May  5, 2005, the FASB issued Statement No. 154, Accounting Changes and
Error  Corrections  ("SFAS  154"),  a replacement of APB Opinion No. 20 and FASB
Statement  No.  3.  The Statement applies to all voluntary changes in accounting
principles,  and  changes the requirements for accounting for and reporting of a
change  in  accounting principle. SFAS 154 requires retrospective application to
prior  periods'  financial  statements  of  a  voluntary  change  in  accounting
principle  unless it is impracticable. SFAS 154 requires that a change in method
of  depreciation, amortization, or depletion for long-lived, nonfinancial assets
be accounted for as a change in accounting estimate that is effected by a change
in  accounting  principle.  Opinion 20 previously required that such a change be
reported  as  a change in accounting principle. The requirements of SFAS 154 are
effective  for  accounting changes made in fiscal years beginning after December
15,  2005.  The  adoption  of  this statement is not expected to have a material
effect  on  the Company's consolidated financial position, results of operations
or  cash  flows.





<PAGE>
NOTE  B  -  PROPERTY,  PLANT  AND  EQUIPMENT:

     Property,  plant and equipment and property under capital leases consist of
the  following  (in  thousands):

<TABLE>
<CAPTION>


                                          USEFUL                 JUNE 26,                 JUNE 27,
<S>                                <C>                   <C>                       <C>
                                          LIVES  .                 2005                      2004
---------------------------------  --------------------  ------------------------
Property, plant and equipment:
Equipment, furniture and fixtures            3 - 7 yrs   $                 5,681   $                 5,504
Building. . . . . . . . . . . . .           5 - 39 yrs                    11,023                    10,875
Land. . . . . . . . . . . . . . .                    -                     2,071                     2,087
Construction in progress. . . . .                    -                        18                        10
Leasehold improvements. . . . . .  7 yrs or lease term
                                         if shorter. .                       579                       670
                                                             --------------------  -----------------------
                                                                          19,372                    19,146
Less:  accumulated depreciation .                                        (7,224)                   (6,390)
                                                             --------------------  -----------------------
                                                         $                12,148   $                12,756
                                                         ========================  =======================
Property under capital leases:
Real estate . . . . . . . . . . .               20 yrs   $                   118   $                   118
Equipment . . . . . . . . . . . .            3 - 7 yrs                         -                         3
                                                         ------------------------  -----------------------
                                                                             118                       121
Less:  accumulated amortization .                                           (106)                    (103)
                                                         -----------------------  ------------------------
                                                                              12                        18
                                                         ========================  =======================

</TABLE>

Depreciation expense was $936,000, $1,024,000 and $1,218,000 for the years ended
June  26,  2005,  June  27,  2004  and  June  29,  2003,  respectively.

The  Company  owns land in Prosper, Texas that was purchased in August 2004 with
the  intention  of  constructing  and  operating  a  buffet restaurant.  We have
decided  not  to  pursue  development  at  this  location and currently have the
property  under  contract  to  sell  to  a  third  party.

NOTE  C  -  ACCRUED  EXPENSES:

     Accrued  expenses  consist  of  the  following  (in  thousands):


<TABLE>
<CAPTION>


                                                         JUNE 26,               JUNE 27,
<S>                                                          <C>                    <C>
                                                             2005                   2004
                                            ---------------------  ---------------------
Compensation . . . . . . . . . . . . . . .  $                 586  $                 653
Taxes. . . . . . . . . . . . . . . . . . .                    221                    713
Legal reserves and other professional fees                    216                    154
Other. . . . . . . . . . . . . . . . . . .                    351                    589
                                            ---------------------  ---------------------

                                                           1,374                 2,109
                                            =====================  =====================

</TABLE>


NOTE  D  -  LONG-TERM  DEBT:

     The  Company  entered  into an agreement on August 29, 2005, effective June
26,  2005 (the "Revolving Credit Agreement"), with Wells Fargo to provide a $6.0
million  revolving  credit  line  that  will expire October 1, 2007, replacing a
$3.0  million  line  that  was  due  to expire December 23, 2005.  The amendment
provides,  among  other terms, for modifications to certain financial covenants,
which  would  have  resulted  in an Event of Default had the Company not entered
into  the  new  Revolving  Credit Agreement.  Interest is provided for at a rate
equal to a range of Prime less an interest rate margin of 0.75% to Prime plus an
interest  rate  margin  of  1.75% or, at the Company's option, at the LIBOR rate
plus  an  interest  rate  margin of 1.25% to 3.75%.  The interest rate margin is
based  on  the  Company's  performance  under certain financial ratio tests.  An
annual  commitment  fee is payable on any unused portion of the revolving credit
line  at  a  rate  from  0.35% to 0.50% based on the Company's performance under
certain  financial  ratio  tests.  As  of  June  26, 2005 and June 27, 2004, the
variable  interest  rates  were  6.50%  and  2.35%,  using a Prime and the LIBOR
interest  rate  basis,  respectively.  Amounts  outstanding  under the revolving
credit  line  as  of  June  26,  2005  and  June 27, 2004 were $966,000 and $1.2
million,  respectively.  Property,  plant  and equipment, inventory and accounts
receivable  have  been  pledged  for  the  above  referenced  loan  agreement.

          The  Company entered into an agreement effective December 28, 2000, as
amended  (the  "Term  Loan Agreement"), with Wells Fargo to provide up to $8.125
million  of  financing  for  the construction of the Company's new headquarters,
training center and distribution facility.  The construction loan converted to a
term loan effective January 31, 2002 with the unpaid principal balance to mature
on  December 28, 2007. The term loan amortizes over a term of twenty years, with
principal  payments  of  $34,000  due monthly. Interest on the term loan is also
payable  monthly.  Interest  is provided for at a rate equal to a range of Prime
less  an  interest rate margin of 0.75% to Prime plus an interest rate margin of
1.75%  or,  at  the  Company's  option,  at the LIBOR rate plus an interest rate
margin  of  1.25%  to 3.75%.  The interest rate margin is based on the Company's
performance  under  certain  financial ratio tests.  The Company, to fulfill the
requirements  of  Wells  Fargo,  fixed  the  interest  rate  on the term loan by
utilizing  an  interest  rate  swap  agreement  as  discussed below.  The $8.125
million  term  loan  had an outstanding balance of $6.7 million at June 26, 2005
and $7.1 million at June 27, 2004.  Property, plant and equipment, inventory and
accounts  receivable  have been pledged for the above referenced loan agreement.

          The  Company entered into an interest rate swap effective February 27,
2001,  as amended, designated as a cash flow hedge, to manage interest rate risk
relating  to the financing of the construction of the Company's headquarters and
to  fulfill  bank  requirements.  The  swap  agreement  has a notional principal
amount  of $8.125 million with a fixed pay rate of 5.84% which began November 1,
2001  and will end November 19, 2007.  The swap's notional amount amortizes over
a  term  of  twenty years to parallel the terms of the term loan.  SFAS No. 133,
"Accounting  for  Derivative  Instruments and Hedging Activities," requires that
for  cash  flow  hedges  which  hedge  the  exposure  to variable cash flow of a
forecasted  transaction,  the effective portion of the derivative's gain or loss
be initially reported as a component of other comprehensive income in the equity
section  of  the  balance sheet and subsequently reclassified into earnings when
the  forecasted  transaction  affects  earnings.  Any ineffective portion of the
derivative's gain or loss is reported in earnings immediately.  At June 26, 2005
there  was  no  hedge  ineffectiveness.

     PIBCO,  Ltd.,  a  wholly-owned  insurance subsidiary of the Company, in the
normal course of operations, arranged for the issuance of a letter of credit for
$230,000  to  reinsurers  to secure loss reserves. At June 26, 2005 and June 27,
2004  this  letter  of  credit was secured under the Company's revolving line of
credit.  Loss  reserves  for approximately the same amount have been recorded by
PIBCO,  Ltd. and are reflected as current liabilities in the Company's financial
statements.

     The  following  chart  summarizes  all of the Company's debt obligations to
make  future  payments under debt agreements as of June 26, 2005 (in thousands):

<TABLE>
<CAPTION>





<S>                    <C>
Fiscal Year
---------------------
2006. . . . . . . . .  $                 406
2007. . . . . . . . .                    406
2008. . . . . . . . .                  6,891
                       ---------------------
Total debt obligation                  7,703
                       =====================

</TABLE>

NOTE  E  -  INCOME  TAXES:

     Provision  for  income  taxes  consist  of  the  following  (in thousands):
<TABLE>
<CAPTION>


                                       JUNE 26,               JUNE 27,               JUNE 29,
<S>                         <C>                     <C>                    <C>
                                              2005                   2004                   2003
                            ----------------------  ---------------------  ---------------------
Federal. . . . . . . . . .  $                  134  $                 637  $                   -
State. . . . . . . . . . .                       7                    246                      -
Deferred . . . . . . . . .                      14                    522                  1,550
                            ----------------------  ---------------------  ---------------------
Provision for income taxes                     155                  1,405                  1,550
                            ======================  =====================  =====================

</TABLE>
     The  effective income tax rate varied from the statutory rate for the years
ended  June  26,  2005,  June  27, 2004 and June 29, 2003 as reflected below (in
thousands):

<TABLE>
<CAPTION>


                                           JUNE 26,                 JUNE 27,                JUNE 29,
                                             2005                     2004                    2003
<S>                                             <C>                       <C>                    <C>
                                   ------------------------  ----------------------  ----------------------
Federal income taxes based on 34%
of book income                            $  111                  $  1,157                $  1,579
State income tax                               7                       246                       -
Permanent adjustments                         26                        18                      21
Change in valuation allowance                (21)                      (16)                    (72)
Expired credits                               32                       -                        22
                                   ---------------           --------------  ---------------------
                                          $ 155                   $  1,405                $  1,550
                                   ===============           ==============  ======================

</TABLE>
     The tax effects of temporary differences that give rise to the net deferred
tax  assets  (liabilities)  consisted  of  the  following  (in  thousands):

<TABLE>
<CAPTION>


                                    JUNE 26,                 JUNE 27,
                                      2005                     2004
                             -----------------------  -----------------------

<S>                          <C>                      <C>
Reserve for bad debt. . . .  $                  131   $                  126
Depreciable assets. . . . .                    (244)                    (128)
Deferred fees . . . . . . .                      24                       31
Other reserves and accruals                     123                       33
Interest rate swap loss . .                      96                      155
Credit carryforwards. . . .                     176                      208
                             -----------------------  -----------------------

Gross deferred tax asset. .  $                  306   $                  425

Valuation allowance . . . .                    (116)                    (137)
                             -----------------------  -----------------------

Net deferred tax asset. . .                    190                     288
                             =======================  =======================

</TABLE>

     As  of  June  26,  2005,  the  Company  had  $176,000 of foreign tax credit
carryforwards  expiring  between  2006  and  2007.  The  valuation allowance was
established  under  SFAS 109, since it is more likely than not that a portion of
the  foreign  tax  credit carryforwards will expire before they can be utilized.

NOTE  F  -  LEASES:

     The real property and premises occupied by a Company-operated restaurant is
leased  for  an  initial  term  of ten years with renewal options of three years
each.  The  lease agreement contains either provisions requiring additional rent
if  sales  exceed  specified  amounts  or  an  escalation  clause  based  upon a
predetermined  multiple.

     The  Company's distribution division currently leases a significant portion
of  its  transportation equipment under operating leases with terms from five to
seven  years.  Some  of the leases include fair market value purchase options at
the  end  of  the  term.



<PAGE>
Future  minimum  rental  payments  under  non-cancelable  leases with initial or
remaining  terms  of  one  year  or  more  at  June  26, 2005 are as follows (in
thousands):

<TABLE>
<CAPTION>


                                                   CAPITAL           OPERATING
<S>                                        <C>                       <C>
                                                   LEASES              LEASES
                                           ------------------------  ---------

2006. . . . . . . . . . . . . . . . . . .  $        12             $      947
2007. . . . . . . . . . . . . . . . . . .           12                    611
2008. . . . . . . . . . . . . . . . . . .            2                    251
2009. . . . . . . . . . . . . . . . . . .            -                    149
2010. . . . . . . . . . . . . . . . . . .            -                    133
Thereafter. . . . . . . . . . . . . . . .            -                    132
                                           ---------------            -------
                                           $        26            $     2,223
                                                                    ==========
Less amount representing interest . . . .           (2)
                                           -------------
Present value of total obligations under
    capital leases. . . . . . . . . . . .           24
Less current portion. . . . . . . . . . .          (11)
                                           -------------
Long-term capital lease obligations . . .  $        13
                                           =============

</TABLE>

Rental  expense  consisted  of  the  following  (in  thousands):

<TABLE>
<CAPTION>


                          YEAR ENDED               YEAR ENDED              YEAR ENDED
                           JUNE 26,                 JUNE 27,                JUNE 29,
                             2005                     2004                    2003
                    -----------------------  ----------------------  ----------------------
<S>                 <C>                      <C>                     <C>
Minimum rentals. .  $                1,040   $               1,135   $               1,143
Contingent rentals                       -                       1                      14
Sublease rentals .                     (75)                    (94)                    (97)
                    -----------------------  ----------------------  ----------------------
                    $                  965   $               1,042   $               1,060
                    =======================  ======================  ======================

</TABLE>

NOTE  G  -  EMPLOYEE  BENEFITS:

     The  Company has a tax advantaged savings plan that is designed to meet the
requirements  of  Section 401(k) of the Internal Revenue Code (the "Code").  The
current plan is a modified continuation of a similar savings plan established by
the Company in 1985.  Employees who have completed six months of service and are
at  least  21  years  of  age are eligible to participate in the plan. Effective
January 1, 2002, as amended by the Economic Growth and Tax Relief Reconciliation
Act  (EGTRRA),  the plan provides that participating employees may elect to have
between  1%  -  15%  of  their compensation deferred and contributed to the plan
subject  to certain IRS limitations.  Effective January 1, 2001 through June 30,
2004, the Company contributed on behalf of each participating employee an amount
equal  to 50% of up to 4% of the employee's contribution. Effective July 1, 2004
through  June  26, 2005, the Company elected to temporarily suspend its matching
contribution  to  the plan.  Effective June 27, 2005, the Company contributes on
behalf  of each participating employee an amount equal to 50% of up to 4% of the
employee's  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 common stock of the Company.
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 of the
Code.  The  Company  is  the  administrator  of  the  plan.

     For  the  years ended June 26, 2005, June 27, 2004 and June 29, 2003, total
matching  contributions  to  the  tax  advantaged savings plan by the Company on
behalf  of  participating  employees were $0, $94,200 and $82,576, respectively.

NOTE  H  -  STOCK  OPTIONS:

     In  January  1994, the 1993 Stock Award Plan ("the 1993 Plan") was approved
by  the  Company's  shareholders with a plan effective date of October 13, 1993.
Officers  and  employees  of  the Company were eligible to receive stock options
under  the  1993 Plan.  Options were granted at market value of the stock on the
date  of  grant,  and  were  subject to various vesting periods ranging from six
months  to  three  years with exercise periods up to eight years, and could have
been  designated  as  incentive  options  (permitting  the  participant to defer
resulting  federal  income taxes).  Originally, a total of two million shares of
common  stock  were  authorized  to  be issued under the 1993 Plan.  In December
1996,  1997  and  1998,  the  Company's  shareholders  approved  amendments that
increased  the  1993 Plan by 500,000 shares in each year.  In December 2000, the
Company's  shareholders  approved  amendments  that  increased  the 1993 Plan by
100,000  shares.  The  1993  Plan  expired  on  October  13, 2003 and no further
options  may  be  granted  pursuant  to  it.

     The 1993 Outside Directors Stock Award Plan (the "1993 Directors Plan") was
also  adopted by the Company effective as of October 13, 1993 as approved by the
shareholders.  Elected  directors  not  employed by the Company were eligible to
receive  stock  options under the 1993 Directors Plan.  Options for common stock
equal to twice the number of shares of common stock acquired during the previous
fiscal  year  were  granted,  up  to  20,000  shares  per  year, to each outside
director.  Options were granted at market value of the stock on the first day of
each  fiscal  year,  which  was also the date of grant, and with various vesting
periods  ranging  from one to four years with exercise periods up to nine years.
A  total  of 200,000 shares of Company common stock were authorized to be issued
pursuant to the 1993 Directors Plan.  The 1993 Directors Plan expired on October
13,  2003  and  no  further  options  may  be  granted  pursuant  to  it.

     On  March  31,  2005  the Company and Tim Taft, the Company's President and
Chief  Executive  Officer,  entered  into  a  non-qualified  stock  option award
agreement as part of Mr. Taft's employment agreement.  Pursuant to the agreement
Mr.  Taft was awarded options to purchase 500,000 shares of the Company's common
stock at an exercise price of $2.50 per share, which was the market value of the
stock  on that day.  Options for 50,000 shares vested immediately upon execution
of  the  agreement  and  the  remaining options vest incrementally over the next
three  years.

     In  June  2005,  the  2005  Employee Incentive Stock Option Award Plan (the
"2005  Employee  Plan")  was  approved by the Company's shareholders with a plan
effective  date  of  June  23, 2005.  Under the 2005 Employee Plan, officers and
employees  of  the Company are eligible to receive options to purchase shares of
the Company's common stock.  Options are granted at market value of the stock on
the  date  of  grant,  are  subject  to  various vesting and exercise periods as
determined  by  the Compensation Committee of the Board of Directors, and may be
designated  as  incentive options (permitting the participant to defer resulting
federal  income  taxes).  A  total  of  one  million  shares of common stock are
authorized  to  be  issued  under  the  2005  Employee  Plan.

     The  shareholders also approved the 2005 Non-Employee Directors Stock Award
Plan  (the  "2005  Directors Plan") in June 2005, to be effective as of June 23,
2005.  Directors  not  employed  by  the  Company  are eligible to receive stock
options  under the 2005 Directors Plan.  Options for common stock equal to twice
the  number  of  shares of common stock acquired during the previous fiscal year
can  be  granted,  up  to 40,000 shares per year, to each non-employee director.
Options are granted at market value of the stock on the first day of each fiscal
year,  which  is  also  the  date  of  grant,  and  with various vesting periods
beginning  at a minimum of six months and with exercise periods up to ten years.
A  total  of  500,000 shares of Company common stock are authorized to be issued
pursuant  to  the  2005  Directors  Plan.



<PAGE>


SUMMARY  OF  STOCK  OPTION  TRANSACTIONS

     A  summary  of  stock  option transactions under all of the Company's stock
option  plans  and  information  about  fixed-price  stock  options  follows:

<TABLE>
<CAPTION>


                                          June 26, 2005                  June 27, 2004        June 29, 2003
                                         ---------------                 --------------      ---------------
                                                    Weighted-                     Weighted-           Weighted-
                                                      Average                      Average             Average
                                                      Exercise                     Exercise           Exercise
                                      Shares           Price           Shares       Price     Shares    Price
                                  ---------------  --------------  ---------------  ------  ----------  ------
<S>                               <C>              <C>             <C>              <C>     <C>         <C>
Outstanding at beginning of year         485,700   $         3.40         806,150   $ 3.68  1,591,233   $ 3.76

Granted. . . . . . . . . . . . .         542,858   $         2.53           5,000   $ 2.15     10,000   $ 1.28
Exercised. . . . . . . . . . . .         (15,000)  $         2.00         (75,000)  $ 2.00          -   $ 0.00
Canceled/Expired . . . . . . . .        (202,600)  $         3.86        (250,450)  $ 4.69   (795,083)  $ 3.81
                                  ---------------  --------------  ---------------  ------  ----------  ------

Outstanding at end of year . . .         810,958   $         2.73         485,700   $ 3.40    806,150   $ 3.68
                                  ===============  ==============  ===============  ======  ==========  ======

Exercisable at end of year . . .         318,100   $         3.00         480,700   $ 3.42    792,150   $ 3.72

Weighted-average fair value of
options granted during the year.                   $         1.37                   $ 0.53              $ 0.33


</TABLE>

FIXED  PRICE  STOCK  OPTIONS

     The following table provides information on options outstanding and options
exercisable  at  June  26,  2005:

<TABLE>
<CAPTION>



                                     Options Outstanding                          Options Exercisable
                           -------------------------------------                   --------------------
                                            Weighted-
                                             Average
                        Shares              Remaining           Weighted-          Shares          Weighted-
Range of              Outstanding          Contractual           Average        Exercisable         Average
Exercise Prices    at June 26, 2005        Life (Years)      Exercise Price   at June 26, 2005  Exercise Price
----------------  -------------------  --------------------  ---------------  ----------------  ---------------
<S>               <C>                  <C>                   <C>              <C>               <C>
1.28 - 3.25 . .              668,958                  8.00  $          2.46           176,100  $          2.25
3.30 - 4.25 . .               99,000                  1.31  $          3.59            99,000  $          3.59
4.38 - 5.50 . .               43,000                  1.05  $          5.00            43,000  $          5.00
                  -------------------                                         ----------------
1.28 - 5.50 . .              810,958                  6.82  $          2.73           318,100  $          3.04
                  ===================                                         ================
</TABLE>

NOTE  I  -  COMMITMENTS  AND  CONTINGENCIES:

     On  June  15,  2004, B. Keith Clark provided the Company with notice of his
intent to resign as Senior Vice President - Corporate Development, Secretary and
General  Counsel  of  the Company effective as of July 7, 2004.  By letter dated
June  24,  2004,  Mr.  Clark  notified the Company that he reserved his right to
assert that the election of Ramon D. Phillips and Robert B. Page to the Board of
Directors of the Company at the February 11, 2004 annual meeting of shareholders
constituted  a  "change  of  control"  of  the  Company  under  his  executive
compensation  agreement  (the  "Clark  Agreement").  As  a result of the alleged
change  of  control under the Clark Agreement, Clark claims that he was entitled
to  terminate the Clark Agreement within twelve (12) months of February 11, 2004
for  "good  reason"  (as  defined  in  the  Clark  Agreement) and is entitled to
severance.  On  August 6, 2004, the Company instituted an arbitration proceeding
against  Mr.  Clark  with  the American Arbitration Association in Dallas, Texas
pursuant to the Clark Agreement seeking declaratory relief that Mr. Clark is not
entitled  to  severance  payments  or  any  other  further compensation from the
Company.  On  January 18, 2005, the Company amended its claims against Mr. Clark
to  include  claims  for  compensatory  damages,  consequential  damages  and
disgorgement  of  compensation  paid to Mr. Clark under the Clark Agreement. Mr.
Clark  has  filed  claims against the Company for breach of the Clark Agreement,
seeking  the  severance payment provided for in the Clark Agreement plus a bonus
payment for 2003 of approximately $12,500.  The arbitration hearing is scheduled
to  begin  on  November  8,  2005.

     The Company disagrees with Mr. Clark's claim that a "change of control" has
occurred under the Clark Agreement or that he is entitled to terminate the Clark
Agreement  for "good reason."  On May 4, 2004, the Board of Directors obtained a
written  legal  opinion  that  the  "change  of  control" provision in the Clark
Agreement  was  not  triggered  by  the  results of the February 11, 2004 annual
meeting.  Due  to  the  nature  of  the  preliminary  stages  of the arbitration
proceeding  and  the general uncertainty surrounding the outcome of this type of
legal  proceeding,  it is not possible for the Company to provide any certain or
meaningful  analysis,  projections  or  expectations  at this time regarding the
outcome  of  this  matter.  Although  the  ultimate  outcome  of the arbitration
proceeding  cannot  be  projected  with certainty, the Company believes that its
claims  against  Mr. Clark are well founded and intends to vigorously pursue all
relief  to which it may be entitled.  An adverse outcome to the proceeding could
materially affect the Company's financial position and results of operations. In
the  event  the Company is unsuccessful, it could be liable to Mr. Clark for the
severance payment of approximately $762,000, the $12,500 bonus payment and costs
and  fees.  No  accrual  for any such amounts has been made as of June 26, 2005.

     On  October  5, 2004 the Company filed a lawsuit against the law firm Akin,
Gump,  Strauss,  Hauer  &  Feld, ("Akin Gump") and J. Kenneth Menges, one of the
firm's  partners.  Akin  Gump  served as the Company's principal outside lawyers
from  1997  through  May 2004, when the Company terminated the relationship. The
petition  alleges  that  during the course of representation of the Company, the
firm  and  Mr.  Menges,  as the partner in charge of the firm's services for the
Company,  breached  certain  fiduciary responsibilities to the Company by giving
advice  and  taking  action  to further the personal interests of certain of the
Company's  executive  officers  to  the  detriment  of  the  Company  and  its
shareholders.  Specifically,  the  petition alleges that the firm and Mr. Menges
assisted  in  the  creation  and  implementation of so-called "golden parachute"
agreements, which, in the opinion of the Company's current counsel, provided for
potential  severance  payments  to  those  executives  in  amounts  greatly
disproportionate  to  the  Company's  ability  to  pay, and that, if paid, could
expose  the  Company  to  significant  financial  liability  which  could have a
material  adverse  effect on the Company's financial position. This matter is in
its  preliminary  stages,  and  the  Company is unable to provide any meaningful
analysis, projections or expectations at this time regarding the outcome of this
matter.  However, the Company believes that its claims against Akin Gump and Mr.
Menges  are well founded and intends to vigorously pursue all relief to which it
may  be  entitled.  On January 25, 2005, Akin Gump filed a motion with the court
asking  for  this  matter  to be abated pending a determination in the Clark and
Parker  arbitrations.  The  court  denied the motion but ruled that it would not
set  a  trial  date  until  after completion of the Clark and Parker arbitration
hearings.

     On  December 11, 2004, the Board of Directors of the Company terminated the
Executive Compensation Agreement dated December 16, 2002 between the Company and
its  then  Chief  Executive Officer, Ronald W. Parker ("Parker Agreement").  Mr.
Parker's  employment  was  terminated  following  ten days written notice to Mr.
Parker  of  the  Company's  intent  to  discharge  him  for cause as a result of
violations  of  the  Parker  Agreement.  Written  notice  of  termination  was
communicated  to  Mr.  Parker  on  December  13,  2004.  The nature of the cause
alleged  was  set  forth  in  the  notice  of intent to discharge and based upon
Section  2.01(c)  of the Parker Agreement, which provides for discharge for "any
intentional  act of fraud against the Company, any of its subsidiaries or any of
their  employees  or  properties,  which  is not cured, or with respect to which
Executive  is  not  diligently pursuing a cure, within ten (10) business days of
the  Company giving notice to Executive to do so."  Mr. Parker was provided with
an  opportunity  to  cure  as  provided  in  the Parker Agreement as well as the
opportunity  to  be  heard  by  the Board of Directors prior to the termination.

          On  January 12, 2005, the Company instituted an arbitration proceeding
against  Mr.  Parker  with the American Arbitration Association in Dallas, Texas
pursuant  to  the Parker Agreement seeking declaratory relief that Mr. Parker is
not  entitled  to  severance payments or any other further compensation from the
Company.  In  addition,  the  Company  is  seeking  compensatory  damages,
consequential  damages and disgorgement of compensation paid to Mr. Parker under
the  Parker  Agreement. On January 31, 2005, Mr. Parker filed claims against the
Company  for  breach  of  the  Parker  Agreement,  seeking the severance payment
provided  for  in  the  Parker  Agreement for a termination of Mr. Parker by the
Company  for  reason  other than for cause (as defined in the Parker Agreement),
plus interest, attorney's fees and costs. No date for an arbitration hearing has
been  set.

     Due to the preliminary stages of the arbitration proceeding and the general
uncertainty  surrounding the outcome of this type of legal proceeding, it is not
possible  for  the  Company  to  provide  any  certain  or  meaningful analysis,
projections  or  expectations at this time regarding the outcome of this matter.
Although  the ultimate outcome of the arbitration proceeding cannot be projected
with  certainty  at  this time, the Company believes that its claims against Mr.
Parker  are well founded and intends to vigorously pursue all relief to which it
may  be  entitled.  An adverse outcome to the proceeding could materially affect
the  Company's  financial  position and results of operations.  In the event the
Company is unsuccessful, it could be liable to Mr. Parker for approximately $5.4
million under the Parker Agreement plus accrued interest and legal expenses.  No
accrual  for  any  amount  has  been  made  as  of  June  26,  2005.

     The  Company  is  also  subject  to  other various claims and contingencies
related  to  employment  agreements,  lawsuits,  taxes,  food  product  purchase
contracts  and other matters arising out of the normal course of business.  With
the  possible exception of the matters set forth above, management believes that
any  such  claims and actions currently pending against us are either covered by
insurance  or  would  not have a material adverse effect on the Company's annual
results  of  operations  or  financial  condition if decided in a manner that is
unfavorable  to  us.

     On  April 30, 1998, Mid-South Pizza Development, Inc. ("Mid-South") entered
into  a  promissory  note  whereby,  among  other  things,  Mid-South  borrowed
$1,330,000 from a third party lender (the "Loan") with the Company acting as the
guarantor.  The  proceeds  of  the  Loan,  less  transaction costs, were used by
Mid-South  to  purchase  area  developer  rights  from  the  Company for certain
counties  in  Kentucky  and Tennessee.  Effective December 28, 2003, the Company
reacquired  all  such  area development rights from Mid-South.  The Company paid
approximately  $963,000  for  these rights of which $682,000 was a cash payment,
and  a  non-cash settlement of accounts receivable of approximately $281,000.  A
long-term  asset  was  recorded  for  the same amount.  Restaurants operating or
developed  in  the reacquired territory will now pay all royalties and franchise
fees  directly  to Pizza Inn, Inc.  The asset will be amortized over the life of
the  asset,  which  is  estimated  to  be  approximately  five  years.

NOTE  J  -  RELATED  PARTIES:

     Two  directors  of  the  Company  are  franchisees.

     One  of  the  director  franchisees  currently  operates  a  total  of  10
restaurants  located  in  Arkansas.  Purchases by this franchisee comprised 6.3%
and  6.0% of the Company's total food and supply sales in fiscal 2005 and fiscal
2004,  respectively.  Royalties and license fees and area development sales from
this  franchisee  comprised  3.4%  and  3.2%  of  the  Company's total franchise
revenues  in fiscal 2005 and fiscal 2004, respectively.  As of June 26, 2005 and
June  27,  2004,  his accounts and note payable to the Company were $898,000 and
$923,000,  respectively.  As  franchised units, his restaurants pay royalties to
the  Company  and  purchase  a  majority  of their food and supplies from Norco.

     The  other  director  franchisee  currently  operates  one  restaurant  in
Oklahoma.  Purchases by this franchisee comprised 0.4% and 0.5% of the Company's
total  food  and  supply  sales  in  fiscal  2005 and fiscal 2004, respectively.
Royalties  from  this  franchisee comprised 0.5% and 0.5% of the Company's total
franchise revenues in fiscal 2005 and fiscal 2004, respectively.  As of June 26,
2005  and  June  27,  2004,  his accounts payable to the Company was $39,000 and
$42,000,  respectively.  As  a franchised unit, his restaurant pays royalties to
the Company and purchases a majority of its food and supplies from the Company's
distribution  division.

     The  Company  believes  that the above transactions were at the same prices
and  on  the  same  payment  terms  available  to  non-related parties, with one
exception.  This  exception relates to the enforcement of the personal guarantee
by  a  director of the $314,000 debt of a franchise of which he is the President
and  sole  shareholder.  The  debt  relates  to food and equipment purchases and
royalty  payments  for  the  franchise  during  a  period  when the director had
transferred  his interest in the franchise, and prior to his later reacquisition
of the franchise. The director has affirmed his guarantee and confirmed that the
debt  will  be  paid  in  full.

     In  October  1999,  the  Company  loaned $1,949,698 to then Chief Executive
Officer  C.  Jeffrey Rogers in the form of a promissory note due in June 2004 to
acquire  700,000  shares  of  the Company's common stock through the exercise of
vested stock options previously granted to him in 1995 by the Company.  The note
bore  interest  at  the  same  floating  interest  rate  the Company pays on its
revolving  credit  line with Wells Fargo and was collateralized by a second lien
in  certain real property and existing Company stock owned by C. Jeffrey Rogers.
The first lien on both the real property and Company stock pledged by Mr. Rogers
was  held by Wells Fargo, Mr. Rogers' primary lender.  The Board determined that
doubt  existed regarding the collectibility of the note as of June 30, 2002, and
recorded a pre-tax charge of approximately $1.9 million to fully reserve for the
expected non-payment of the debt by Mr. Rogers.  In December 2002, the Company's
loan  to  Mr.  Rogers was paid in full.  The reserve for the note receivable was
reversed  in  the  quarter  ending  December  29,  2002.

     In  October  1999, the Company also loaned $557,056 to then Chief Operating
Officer  Ronald  W.  Parker in the form of a promissory note due in June 2004 to
acquire  200,000  shares  of  the Company's common stock through the exercise of
vested stock options previously granted to him in 1995 by the Company.  The note
bore  interest  at  the  same  floating  interest  rate  the Company pays on its
revolving  credit  line  with Wells Fargo and was collateralized by certain real
property  and  existing  Company  stock owned by Ronald W. Parker.  The note was
reflected  as  a  reduction  to shareholders' equity.   As of June 27, 2004, the
note  balance  is  paid  in  full.

     In  July  2000, the Company loaned $302,581 to Ronald W. Parker in the form
of  a  promissory  note  due in June 2004, in conjunction with a cash payment of
$260,000  from  Mr.  Parker,  to  acquire 200,000 shares of the Company's common
stock through the exercise of vested stock options previously granted in 1995 by
the  Company.  The  note  bore  interest  at the same floating interest rate the
Company  pays  on  its  revolving  credit  line  with  Wells  Fargo  and  was
collateralized  by  certain  real  property  and existing Company stock owned by
Ronald  W.  Parker.  The  note  was  reflected  as  a reduction to shareholders'
equity.  As  of  June  27,  2004,  the  note  balance  is  paid  in  full.

NOTE  K  -  TREASURY  STOCK:

     For  the  period of September 1995 through June 2005, the Company purchased
5,298,341 shares of its own Common stock from time to time on the open market at
a  total  cost  of  $21.6 million.  In fiscal 2005, the Company purchased 54,180
shares  of  its own Common stock on the open market at a total cost of $160,000.
The  purchases  of  common  shares  described  above  were primarily funded from
working  capital,  and reduced the Company's outstanding shares by approximately
34%.


<PAGE>
NOTE  L  -  EARNINGS  PER  SHARE:

          The  Company  computes  and  presents  earnings  per  share ("EPS") in
accordance  with  SFAS 128, "Earnings Per Share."  Basic EPS excludes the effect
of  potentially  dilutive  securities  while  diluted EPS reflects the potential
dilution that would occur if securities or other contracts to issue common stock
were  exercised, converted or resulted in the issuance of common stock that then
shared  in  the  earnings  of  the  entity.

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).

<TABLE>
<CAPTION>


                                                  INCOME        SHARES      PER SHARE
<S>                                            <C>           <C>            <C>
                                                (NUMERATOR)  (DENOMINATOR)  AMOUNT
                                               ------------  -------------  ----------

YEAR ENDED JUNE 26, 2005
BASIC EPS
Income Available to Common Shareholders . . .  $        204         10,105  $     0.02
Effect of Dilutive Securities - Stock Options                          37
                                                                ------------
DILUTED EPS
Income Available to Common Shareholders
& Potentially Dilutive Securities . . . . . .  $        204         10,142  $     0.02
                                               ============  =============  ==========

YEAR ENDED JUNE 27, 2004
BASIC EPS
Income Available to Common Shareholders . . .  $      2,243         10,076  $     0.22
Effect of Dilutive Securities - Stock Options                           41
                                                                 ------------
DILUTED EPS
Income Available to Common Shareholders
& Potentially Dilutive Securities . . . . . .  $      2,243         10,117  $     0.22
                                               ============  =============  ==========

YEAR ENDED JUNE 29, 2003
BASIC EPS
Income Available to Common Shareholders . . .  $      3,093         10,058  $     0.31
Effect of Dilutive Securities - Stock Options                            3
                                                                ------------
DILUTED EPS
Income Available to Common Shareholders
& Potentially Dilutive Securities . . . . . .  $      3,093         10,061  $     0.31
                                               ============  =============  ==========

</TABLE>

          Options  to purchase 206,958 shares of common stock at exercise prices
ranging from $2.85 to $5.00 per share were outstanding at June 26, 2005 but were
not  included  in  the  computation of diluted EPS because the option's exercise
price was greater than the average market price of the common shares. Options to
purchase 391,650 and 796,150 shares of common stock during fiscal years 2004 and
2003,  respectively, were not included in the computation of diluted EPS because
the  option's  exercise  price  was greater than the average market price of the
common  share.

NOTE  M  -  SUBSEQUENT  EVENTS:

     In  July  2005  the  Company  acquired the assets of two existing Pizza Inn
buffet  restaurants  from Houston, Texas-area franchises and is currently in the
process  of  remodeling  those  restaurants  with the objective of reopening and
operating  them  as  Company-owned  restaurants.  We  anticipate  opening  these
restaurants  in  October  2005.     One  location has approximately 4,100 square
feet  and  the  other  has  approximately 2,750 square feet.  Both are leased at
rates  of  approximately  $18.00 per square foot.  The leases expire in 2015 and
each  has  at  least  one  renewal  option.

     In July 2005 the Company leased approximately 4,100 square feet of space in
a  retail  development  in  Dallas,  Texas at a rate of approximately $30.00 per
square  foot  for  the  operation  of a buffet concept.  We are currently in the
process  of  finishing out the space and expect to have the restaurant operating
in  October 2005.  The lease has a five-year term with multiple renewal options.

          We  also  own  property in Prosper, Texas that was purchased in August
2004  with  the intention of constructing and operating a buffet restaurant.  We
have  decided  not to pursue development at that location and currently have the
property  under  contract  to  sell  to  a  third  party.

NOTE  N  -  SEGMENT  REPORTING:

     The  Company  has  two  reportable  operating  segments  as  determined  by
management  using  the  "management"  approach  as  defined  in  SFAS  No.  131,
"Disclosures about Segments of an Enterprise and Related Information."  (1) Food
and  Equipment  Distribution, and (2) Franchise 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 two operating segments.  Other revenue consists of nonrecurring
items.

     The  Food  and  Equipment  Distribution  segment  sells  and  distributes
proprietary  and  non-proprietary  items to franchisees and to two company-owned
and  operated  stores.  Inter-segment  revenues  consist  of  sales  to  the
company-owned  stores.  Assets  for  this  segment  include  tractor/trailers,
equipment,  furniture  and  fixtures.

     The Franchise and Other segment include income from royalties, license fees
and  area development and foreign master license sales.  The Franchise and Other
segment  include  the  company-owned  stores,  which  are  used as prototype and
training  facilities.  Assets  for this segment include equipment, furniture and
fixtures  for  the  company  stores.

     Corporate  administration  and  other assets primarily include the deferred
tax  asset,  cash  and short-term investments, as well as furniture and fixtures
located  at  the  corporate  office.  All  assets  are located within the United
States.


<PAGE>
Summarized  in  the  following  tables  are  net  sales  and operating revenues,
depreciation  and  amortization  expense,  interest  expense,  interest  income,
operating  profit,  income  tax expense, capital expenditures and assets for the
Company's  reportable segments for the years ended June 26, 2005, June 27, 2004,
and  June  29,  2003  (in  thousands):

<TABLE>
<CAPTION>


                                       JUNE 26,    JUNE 27,    JUNE 29,
<S>                                   <C>         <C>         <C>
                                           2005        2004        2003
                                      ----------  ----------  ----------
 NET SALES AND OPERATING REVENUES:
 Food and equipment distribution . .  $  49,161   $  53,072   $  51,556
 Franchise and other . . . . . . . .      6,108       6,916       6,915
 Inter-segment revenues. . . . . . .        228         640         664
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .     55,497      60,628      59,135
 Less inter-segment revenues . . . .       (228)       (640)       (664)
                                      ----------  ----------  ----------
   Consolidated revenues . . . . . .  $  55,269   $  59,988   $  58,471
                                      ==========  ==========  ==========

 DEPRECIATION AND AMORTIZATION:
 Food and equipment distribution . .  $     516   $     575   $     806
 Franchise and other . . . . . . . .        281         181         101
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .        797         756         907
 Corporate administration and other.        346         377         496
                                      ----------  ----------  ----------
   Depreciation and amortization . .  $   1,143   $   1,133   $   1,403
                                      ==========  ==========  ==========

 INTEREST EXPENSE:
 Food and equipment distribution . .  $     329   $     365   $     464
 Franchise and other . . . . . . . .          3           4           5
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .        332         369         469
 Corporate administration and other.        258         244         320
                                      ----------  ----------  ----------
   Interest expense. . . . . . . . .  $     590   $     613   $     789
                                      ==========  ==========  ==========

 OPERATING PROFIT:
 Food and equipment distribution (1)  $     614   $   3,066   $   3,389
 Franchise and other (1) . . . . . .      2,240       2,319       1,937
 Inter-segment profit. . . . . . . .         91         170         197
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .      2,945       5,555       5,523
 Less inter-segment profit . . . . .        (91)       (170)       (197)
 Corporate administration and other.     (2,495)     (1,737)       (683)
                                      ----------  ----------  ----------
   Income before taxes . . . . . . .  $     359   $   3,648   $   4,643
                                      ==========  ==========  ==========

 INCOME TAX EXPENSE:
 Food and equipment distribution . .  $     265   $   1,181   $   1,131
 Franchise and other . . . . . . . .        967         893         647
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .      1,232       2,074       1,778
 Corporate administration and other.     (1,077)       (669)       (228)
                                      ----------  ----------  ----------
   Income tax expense. . . . . . . .  $     155   $   1,405   $   1,550
                                      ==========  ==========  ==========
<FN>

 (1)  Does  not  include  full  allocation  of corporate administration
</TABLE>

<TABLE>
<CAPTION>


                                      JUNE 26,   JUNE 27,   JUNE 29,
<S>                                   <C>        <C>        <C>
                                           2005       2004       2003
                                      ---------  ---------  ---------
 CAPITAL EXPENDITURES:
 Food and equipment distribution . .  $     353  $     161  $      62
 Franchise and other . . . . . . . .        327      1,159         76
                                      ---------  ---------  ---------
   Combined. . . . . . . . . . . . .        680      1,320        138
 Corporate administration and other.         73         17        338
                                      ---------  ---------  ---------
   Consolidated capital expenditures  $     753  $   1,337  $     476
                                      =========  =========  =========

 ASSETS:
 Food and equipment distribution . .  $   8,653  $  12,186  $  10,963
 Franchise and other . . . . . . . .      1,941      1,280      1,049
                                      ---------  ---------  ---------
 Combined. . . . . . . . . . . . . .     10,594     13,466     12,012
 Corporate administration and other.      9,661      7,440      8,784
                                      ---------  ---------  ---------
 Consolidated assets . . . . . . . .  $  20,255  $  20,906  $  20,796
                                      =========  =========  =========

 GEOGRAPHIC INFORMATION (REVENUES):
 United States . . . . . . . . . . .  $  54,059  $  58,569  $  57,402
 Foreign countries . . . . . . . . .      1,210      1,419      1,069
                                      ---------  ---------  ---------
   Consolidated total. . . . . . . .  $  55,269  $  59,988  $  58,471
                                      =========  =========  =========

</TABLE>

NOTE  O  -  QUARTERLY  RESULTS  OF  OPERATIONS  (UNAUDITED):

The  following  summarizes the unaudited quarterly results of operations for the
fiscal  years  ended  June  26, 2005 and June 27, 2004 (in thousands, except per
share  amounts):

<TABLE>
<CAPTION>


                                                          QUARTER ENDED
                                                   --------------------------
<S>                                        <C>             <C>            <C>          <C>
                                             SEPTEMBER 26,   DECEMBER 26,   MARCH 27,    JUNE 26,
                                                     2004           2004        2005        2005
                                           --------------  -------------  -----------  ----------
FISCAL YEAR 2005
Revenues. . . . . . . . . . . . . . . . .  $       14,421  $      13,768  $   13,401   $  13,679

Gross profit. . . . . . . . . . . . . . .             884            823         841         774

Net Income (loss) . . . . . . . . . . . .             285             51         (20)       (112)

Basic earnings per share on net income. .            0.03           0.01           -       (0.01)

Diluted earnings per share on net income.            0.03           0.01           -       (0.01)

                                                           QUARTER ENDED
                                                  -----------------------------------------
                                            SEPTEMBER 28,  .  DECEMBER 28,    MARCH 28,  JUNE 27,
                                                     2003           2003        2004        2004
                                           --------------  -------------  -----------  ----------
FISCAL YEAR 2004
Revenues. . . . . . . . . . . . . . . . .  $       15,355  $      14,672  $   14,548   $  15,413

Gross profit. . . . . . . . . . . . . . .           1,315          1,419       1,425       1,235

Net income. . . . . . . . . . . . . . . .             504            558         617         564

Basic earnings per share on net income. .            0.05           0.06        0.06        0.06

Diluted earnings per share on net income.            0.05           0.06        0.06        0.06

</TABLE>

<TABLE>
<CAPTION>


                                                                                                    SCHEDULE II
                                                     PIZZA INN, INC.
                                        CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
                                                      (In thousands)

                                                                      ADDITIONS
                                                                     ------------
                                                  BALANCE AT   CHARGED TO    RECOVERED                   BALANCE
                                                  BEGINNING     COST AND     COST AND                     AT END
<S>                                              <C>           <C>          <C>          <C>           <C>
                                                 OF PERIOD     EXPENSE      EXPENSE      DEDUCTIONS    OF  PERIOD
                                                 ------------  -----------  -----------  ------------  -----------
ALLOWANCE FOR DOUBTFUL
ACCOUNTS AND NOTES RECEIVABLE

Year Ended June 26, 2005. . . . . . . . . . . .  $        372  $        30  $        -   $       (31)  $       371


Year Ended June 27, 2004. . . . . . . . . . . .  $        916  $        35  $     (264)  $      (315)  $       372


Year Ended June 29, 2003. . . . . . . . . . . .  $      2,953  $       155  $   (1,950)  $      (242)  $       916




VALUATION ALLOWANCE FOR
DEFERRED TAX ASSET

Year Ended June 26, 2005. . . . . . . . . . . .  $        137  $         -  $        -   $         -   $       137


Year Ended June 27, 2004. . . . . . . . . . . .  $        153  $         -  $        -   $       (16)  $       137


Year Ended June 29, 2003. . . . . . . . . . . .  $        225  $         -  $        -   $       (72)  $       153

</TABLE>


ITEM  9  -  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL  DISCLOSURE

     There  are  no  events  to  report  under  this  item.

ITEM  9A  -  CONTROLS  AND  PROCEDURES

     The  Company's  management,  including  the  Company's  principal executive
officer  and principal financial officer, has evaluated the Company's disclosure
controls  and  procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities  Exchange  Act  of  1934) as of the end of the period covered by this
report  on  Form  10-K.  Based  upon  that  evaluation,  the Company's principal
executive  officer  and  principal  financial  officer  have  concluded that the
disclosure  controls  and  procedures were effective as of the end of the period
covered  by  this  report  on  Form  10-K.

          There were no changes in the Company's internal control over financial
reporting  that  occurred  during  the  Company's  last  fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company's
internal  control  over  financial  reporting.


<PAGE>
ITEM  9B  -  OTHER  INFORMATION
There  is  no  information  required  to  be  disclosed  under  this  item.

PART  III

          The  information  required  by  this Item is incorporated by reference
from the Company's definitive Proxy Statement to be filed pursuant to Regulation
14A  in connection with the Company's next annual meeting of shareholders, which
is  expected  to  be  held  in  December  2005.

ITEM  10  -  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

     The  information  required  by this Item is included in the Proxy Statement
and  is  incorporated  herein  by  reference.


ITEM  11  -  EXECUTIVE  COMPENSATION

     The  information  required  by this Item is included in the Proxy Statement
and  is  incorporated  herein  by  reference.

ITEM  12  -  SECURITY  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED  STOCKHOLDER  MATTERS

     The  information  required  by this Item is included in the Proxy Statement
and  is  incorporated  herein  by  reference.

ITEM  13  -  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS
     The  information  required  by this Item is included in the Proxy Statement
and  is  incorporated  herein  by  reference.

ITEM  14-  PRINCIPAL  ACCOUNTANTS  FEES  AND  SERVICES

     The  information  required  by this Item is included in the Proxy Statement
and  is  incorporated  herein  by  reference.

PART  IV

ITEM  15  -  EXHIBITS  AND  FINANCIAL  STATEMENT  SCHEDULES

(a)  1.  The financial statements filed as part of this report are listed in the
Index  to  Financial  Statements  and Supplemental Data under Part II, Item 8 of
this  Form  10-K.

     2. The financial statement schedule filed as part of this report are listed
in  the Index to Financial Statements and Supplemental Dataunder Part II, Item 8
of  this  Form  10-K.


     3.     Exhibits:

3.1     Restated  Articles  of  Incorporation  as filed on September 5, 1990 and
amended on February 16,1993 (filed as Exhibit 3.1 to the Company's Annual Report
on  Form 10-K for the fiscal year ended June 27, 1993 and incorporated herein by
reference).

3.2     Amended  and  Restated  By-Laws  as adopted by the Board of Directors on
July 11, 2000  (filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K
for  the  fiscal year ended June 24, 2001 and incorporated herein by reference).

3.3     Amended  and  Restated  By-Laws  as adopted by the Board of Directors on
October  8,  2002  (filed  as  Item  9  on  Form  8-K  on  October  9,  2002 and
incorporated  herein  by  reference).

3.4     Amended  and  Restated  By-Laws  as adopted by the Board of Directors on
December  18,  2002  (filed  as  Item  5  on  Form 8-K  on December 23, 2002 and
incorporated  herein  by  reference).

3.5     Amended  and  Restated  By-Laws  as adopted by the Board of Directors on
February     11,  2004  (filed  as  Item  5  on  8-K  on  February  11, 2004 and
incorporated  herein  by     reference).

          3.6     Restated  Articles  of  Incorporation as filed on September 5,
1990  and  amended  on  June  23,  2005.

          4.1     Provisions  regarding  Common  stock  in  Article  IV  of  the
Restated  Articles  of  Incorporation,  as  amended (filed as Exhibit 3.1 to the
Company's Annual Report on Form 10-K for the fiscal year ended June 27, 1999 and
incorporated  herein  by  reference).

4.2     Provisions  regarding  Redeemable  Preferred  Stock  in Article V of the
Restated  Articles  of  Incorporation,  as amended (filed as Exhibit 3.1 to this
Report  and  incorporated  herein  by  reference).

          10.1     Third  amendment to Third Amended and Restated Loan Agreement
and  Second Amendment to Real Estate Note dated August 29, 2005 but effective as
of  June 26, 2005, between the Company and Wells Fargo Bank, N.A. (filed as item
1.01  on  Form,  8-K  on  August 30, 2005 and incorporated herein by reference).

10.2     Second  amended  and  Restated  Loan  Agreement between the Company and
Wells  Fargo  Bank  (Texas), N.A. dated March 31, 2000 (filed as Exhibit 10.1 to
the  Company's  Quarterly Report on Form 10-Q for the fiscal quarter ended March
26,  2000  and  incorporated  herein  by  reference).

10.3     First  Amendment  to  the  Second Amendment and Restated Loan Agreement
between  the  Company and Wells Fargo Bank (Texas), N.A. dated December 28, 2000
(filed  as  Exhibit  10.1 to the Company's Quarterly Report on Form 10-Q for the
fiscal  quarter  ended  December 24, 2000 and incorporated herein by reference).

10.4     Second  Amendment  to  the  Second  Amended and Restated Loan Agreement
between  the  Company and Wells Fargo Bank (Texas), N.A. dated January 31, 2002,
but  effective  December  23,  2001  (filed  as  Exhibit  10.1  to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended December 23, 2001 and
incorporated  herein  by  reference).

10.5     Third  Amendment  to  the  Second  Amended  and Restated Loan Agreement
between the Company and Wells Fargo Bank (Texas), N.A. dated September 26, 2002,
but  effective  June  30,  2002.  (filed as Exhibit 10.4 to the Company's Annual
Report  on  Form  10-K  for the fiscal year ended June 30, 2002 and incorporated
herein  by  reference).

10.6     Third Amended and Restated Loan Agreement between the Company and Wells
Fargo  Bank  (Texas),  N.A.  dated  January 22, 2003, but effective December 29,
2002.  (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
the  fiscal  quarter  ended  December  29,  2002  and  incorporated  herein  by
reference).

10.7     Construction  Loan  Agreement  between the Company and Wells Fargo Bank
(Texas)  N.A.  dated  December  28, 2000 (filed as Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended December 24, 2000 and
incorporated  herein  by  reference).

10.8     Promissory  Note  between the Company and Wells Fargo Bank (Texas) N.A.
dated December 28, 2000 (filed as Exhibit 10.3 to the Company's Quarterly Report
on  Form  10-Q  for  the fiscal quarter ended December 24, 2000 and incorporated
herein  by  reference).

10.9     Promissory  Note between the Company and Wells Fargo Bank (Texas), N.A.
dated  January 31, 2002 (filed as Exhibit 10.2 to the Company's Quarterly Report
on  Form  10-Q  for  the fiscal quarter ended December 23, 2001 and incorporated
herein  by  reference).

10.10     Stock  Purchase  Agreement  between  the  Company and Kleinwort Benson
Limited  dated April 28, 1995 (filed as Exhibit 10.14 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 26, 1995 and incorporated
herein  by  reference).

10.11     Redemption  Agreement between the Company and Kleinwort Benson Limited
dated  June  24,  1994  (filed as Exhibit 10.4 to the Company's Annual Report on
Form  10-K  for  the  fiscal year ended June 26, 1994 and incorporated herein by
reference.)

10.12     Form  of  Executive  Employment Contract (filed as Exhibit 10.3 to the
Company's  Quarterly  Report  on Form 10-Q for the fiscal quarter ended December
29,  2002  and  incorporated  herein  by  reference).*

10.13     Employment  Agreement  between  the Company and Ronald W. Parker dated
December  16,  2002  (filed as Exhibit 10.2 to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended December 29, 2002 and incorporated herein
by  reference).*

10.14     Severance  agreement  between  the Company and C. Jeffrey Rogers dated
August 21, 2002.  (filed as Exhibit 10.12 to the Company's Annual Report on Form
10-K  for  the  fiscal  year  ended  June  30,  2002  and incorporated herein by
reference).  *

10.15     1993  Stock  Award  Plan  of the Company (filed as Exhibit 10.9 to the
Company's Annual Report on Form 10-K for the fiscal year ended June 26, 1994 and
incorporated  herein  by  reference).*

10.16     1993  Outside  Directors  Stock  Award  Plan  of the Company (filed as
Exhibit  10.10  to  the Company's Annual Report on Form 10-K for the fiscal year
ended  June  26,  1994  and  incorporated  herein  by  reference).*

10.17     1992  Stock  Award  Plan  of the Company (filed as Exhibit 10.6 to the
Company's Annual Report on Form 10-K for the fiscal year ended June 27, 1993 and
incorporated  herein  by  reference).*


10.18     Letter  Agreement  dated  February 9, 2005 the Company and Wells Fargo
Bank,  N.A.  (filed  as Exhibit 10.1 on Form 10-Q for the quarterly period ended
December  26,  2004  and  incorporated  herein  by  reference).

     10.19     Second Amendment to Third Amended and Restated Loan Agreement and
Amendment  to  Real  Estate  Note  dated  February  11, 2005 but effective as of
December 26, 2004, between the Company and Wells Fargo Bank, N.A. (filed as Item
10.2 on Form 10-Q for the quarterly period ended March 27, 2005 and incorporated
herein  by  reference).

10.20     Eighth  Amended  and  Restated  Revolving  Credit Note Agreement dated
February 11, 2005 but effective as of December 26, 2004, between the Company and
Wells Fargo Bank, N.A. (filed as Item 10.3 on Form 10-Q for the quarterly period
ended  March  27,  2005  and  incorporated  herein  by  reference).

10.21     Employment  Agreement  dated  March  31,  2005 between the Company and
Timothy  P. Taft (filed as Item 10.4 on Form 10-Q for the quarterly period ended
March  27,  2005  and  incorporated  herein  by  reference).  *

     10.22     Non-Qualified Stock Option Agreement dated March 31, 2005 between
the  Company  and  Timothy  P.  Taft  (filed  as  Item 10.5 on Form 10-Q for the
quarterly  period  ended  March 27, 2005 and incorporated herein by reference).*

10.23     Executive  Compensation  Agreement  dated  April  22,2005  between the
Company  and  Ward T. Olgreen (filed as Item 10.6 on Form 10-Q for the quarterly
period  ended  March  27,  2005  and  incorporated  herein  by  reference).*

     10.24     Executive Compensation Agreement dated April 22, 2005 between the
Company  and Shawn M. Preator (filed as Item 10.7 on Form 10-Q for the quarterly
period  ended  March  27,  2005  and  incorporated  herein  by  reference).*

10.25      2005  Non-Employee  Directors  Stock  Award  Plan  of  the  Company.*

10.26          2005  Employee Incentive Stock Option Award Plan of the Company.*


          21.0     List of Subsidiaries of the Company (filed as Exhibit 21.0 to
the Company's Annual Report on Form 10-K for the fiscal year ended June 26, 1994
and  incorporated  herein  by  reference).

23.1     Consent  of  Independent  Registered  Public  Accounting  Firm.

23.2     Consent  of  Independent  Registered  Public  Accounting  Firm.

31.1     Certification of Chief Executive Officer as Adopted Pursuant to Section
302  of  the  Sarbanes-Oxley  Act  of  2002.

31.2     Certification  of  Principal  Financial  Officer as Adopted Pursuant to
Section  302  of  the  Sarbanes-Oxley  Act  of  2002.

32.1     Certification of Chief Executive Officer as Adopted Pursuant to Section
906  of  the  Sarbanes-Oxley  Act  of  2002.

32.2     Certification  of  Principal  Financial  Officer as Adopted Pursuant to
Section  906  of  the  Sarbanes-Oxley  Act  of  2002.

*     Denotes  a  management  contract or compensatory plan or arrangement filed
pursuant  to  Item  15  (a)  of  this  report.











<PAGE>
SIGNATURES

Pursuant  to  the requirements of Section 13 or 15(d) of the Securities Exchange
Act  of 1934, the Company has duly caused this report to be signed on its behalf
by  the  undersigned,  thereunto  duly  authorized.

Date:   September  23,  2005     By:      /s/  Shawn  M.  Preator
                                               Shawn  M.  Preator
                                               Chief  Financial  Officer
                                               Treasurer
                                              (Principal  Accounting  Officer)
                                              (Principal  Financial  Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has  been signed by the following persons on behalf of the Registrant and in the
capacities  and  on  the  dates  indicated.

Name  and  Position          Date
-------------------          ----

/s/Mark  E.  Schwarz              September  23,  2005
--------------------
Mark  E.  Schwarz
Director  and  Chairman  of  the  Board

/s/Ramon  D.  Phillips            September  23,  2005
----------------------
Ramon  D.  Phillips
Director  and  Vice  Chairman  of  the  Board

/s/  Bobby  L.  Clairday          September  23,  2005
------------------------
Bobby  L.  Clairday
Director

/s/  John  D.  Harkey,  Jr.       September  23,  2005
---------------------------
John  D.  Harkey,  Jr.
Director

/s/Robert  B.  Page               September  23,  2005
-------------------
Robert  B.  Page
Director

/s/  Steven  J.  Pully            September  23,  2005
----------------------
Steven  J.  Pully
Director

/s/  Tim  P.  Taft                September  23,  2005
------------------
Tim  P.  Taft
President  and  Chief  Executive  Officer
(Principal  Executive  Officer)
Director