7

                       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  24,  2001.
     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.)

                            5050  QUORUM  DRIVE
                                SUITE  500
                         DALLAS,  TEXAS     75254
         (Address  of  principal  executive  offices)     (Zip  Code)

     Registrant's telephone number, including area code:     (972) 701-9955
      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)

     At  September  10,  2001,  there were 10,107,788 shares of the registrant's
Common Stock outstanding,  and the aggregate Market value of registrant's Common
Stock  held by non-affiliates was $20,720,965, based upon the average of the bid
and  ask  prices.

     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}

              APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

     Indicate  by  check mark whether the registrant has filed all documents and
reports  required  to  be  filed  by  Section  12, 13 or 15(d) of the Securities
Exchange  Act  of 1934 subsequent to the distribution of securities under a plan
confirmed  by  a  court.   Yes    No
                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions  of  the  registrant's  definitive  Proxy  Statement,  to be filed
pursuant  to  Section 14(a) of the Securities Exchange Act of 1934 in connection
with the registrant's annual meeting of shareholders in December 2001, have been
incorporated  by  reference  in  Part  III  of  this  report.


<PAGE>

                                     PART I

ITEM  1  -  BUSINESS

GENERAL

     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 trade name "Pizza
Inn"  .

     On  September  10,  2001,  the  Pizza  Inn  system  consisted of 447 units,
including  two Company operated units, a third which the Company is currently in
the process of relocating, and 444 franchised units.  The Company-operated units
are  used  for  product  testing and franchisee training, in addition to serving
customers.  The  domestic  units  are  comprised  of  242 full service units, 44
delivery/carry-out units, 12 self serve buffet units, and 88 Express units.  The
international  units  are  comprised  of  20  full  service  units,  28
delivery/carry-out  units  and  13 Express units.  Pizza Inn units are currently
located  in  20  states  and  12  foreign countries.  Domestic units are located
predominantly  in  the  southern  half  of  the United States, with Texas, North
Carolina  and  Arkansas  accounting  for  approximately  31%,  17% and 9% of the
total,  respectively.  Norco  Distributing  Company ("Norco"), a division of the
Company,  distributes  food  products, equipment, and other supplies to units in
the  United  States  and,  to  the  extent  feasible,  in  other  countries.

PIZZA  INN  RESTAURANTS

     Full  service  restaurants  ("Full  Service")  offer  dine-in and carry-out
service  and,  in  most  cases,  also offer delivery service.  These restaurants
serve  pizza  on  three different crusts (The Original Thin Crust, New York Pan,
and Italian Crust), with standard toppings and special combinations of toppings.
They also offer pasta, salad, sandwiches, desserts and beverages, including beer
and  wine  in  some  locations.  They  are  generally  located  in free standing
buildings in close proximity to offices, shopping centers and residential areas.
The  current standard Full Service units are between 3,000 and 5,000 square feet
in  size  and  seat  130  to  185  customers.  The interior decor is designed to
promote  a  contemporary,  family  style  atmosphere.

     Restaurants  that  offer delivery and carry-out service only ("Delcos") are
growing  in  popularity  and  number.  Delcos  typically are located in shopping
centers  or  other in-line arrangements, occupy approximately 1,000 square feet,
and  offer  limited  or  no  seating.  Delcos  generally  offer the same menu as
Full-Service units, except for buffet.   The decor of these units is designed to
be  bright  and  highly  visible,  featuring neon, lighted displays and awnings.

     The  Self Serve Buffet restaurant ("Self Serve") offers items from the full
dine-in  menu,  and  features  delivery and carryout and a self-serve buffet and
beverage  station.  The  Self  Serve  can be free-standing or located in a strip
center.  Slightly  larger  than  a  Delco, it ranges in size from 2,400 to 2,600
square  feet  and  seats  between  60  to  70  customers.

     A  fourth version, Pizza Inn Express Serve units ("Express"), are typically
located  in  a  convenience  store,  college  campus,  airport terminal or other
commercial  facility.  They have limited or no seating and offer quick carry-out
service  of  a  limited menu of pizza and other foods and beverages.  An Express
unit  typically occupies approximately 300 to 400 square feet and is operated by
the  same  person  who owns the commercial facility or who is licensed at one or
more  locations  within  the  facility.

<PAGE>

FRANCHISING

     The  Pizza  Inn  concept  was  first  franchised in 1963.  Since that time,
industry  franchising  concepts  and  development strategies have changed,  thus
present franchise relationships are evidenced by a variety of contractual forms.
Common  to  those  forms  are provisions which: (i) provide an initial franchise
term  of  20 years 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) prohibit
the  development  of  one  unit  within  a  specified  distance  from  another.

     The  Company's  current  form  of  franchise agreement provides for:  (i) a
franchise  fee  of  $20,000  for  a Full Service unit, $15,000 for a Self Serve,
$7,500  for  a  Delco  and $3,500 for an Express unit, (ii) an initial franchise
term  of  20  years for a Full Service or Self Serve unit, 10 years for a Delco,
plus a renewal term of 10 years in both cases, and an initial term of five years
for an Express unit plus a renewal term of five years, (iii) contributions equal
to  1%  of  gross  sales  to  the  Pizza Inn Advertising Plan or to the Company,
discussed  below,  (iv) royalties equal to 4% of gross sales for a Full Service,
Self  Serve  or Delco and 6% of gross sales for an Express unit and (v) required
advertising  expenditures of at least 5% of gross sales for a Full Service, Self
Serve  and  a  Delco  and  2%  for  an  Express  unit.

     The  Company  has  adopted  a  franchising  strategy  which has three major
components:  continued  development  within  existing  Pizza  Inn  market areas,
development  of  new  domestic  territories,  and  continued  growth  in  the
international  arena.  As a cornerstone of this approach, the Company offers, to
certain  experienced restaurant operators, area developer rights in both new and
existing  domestic markets.  An area developer pays a negotiated fee to purchase
the  right  to operate or develop, along with the Company, Pizza Inn restaurants
within  a  defined  territory,  typically  for  a  term of 20 years plus renewal
options  for  10  years.  The  area  developer agrees to a new store development
schedule and assists the Company in local franchise service and quality control.
In  return,  half of the franchise fees and royalties earned on all units within
the  territory  are  retained  by  the  area  developer  during  the term of the
agreement.  Similarly,  the  Company  offers  master franchise rights to develop
Pizza  Inn  restaurants  in  certain  foreign  countries,  with negotiated fees,
development  schedules  and  ongoing  royalties.

     As  with  developers,  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 foreign territory, typically for a term of 20 years
plus  renewal  options  for 10 years.  The master licensee agrees to a new store
development  schedule  and the Company trains the master licensee to monitor and
assist  franchisees  in their territory with local franchise service and quality
control,  with  support  from  the  Company.  In  return,  the  master  licensee
typically  retains  half the franchise fees and approximately half the royalties
on  all  units within the territory during the term of the agreement.  While all
Pizza  Inn  restaurants  opened in an area of a developer's territory enter into
franchise  agreements  with  the Company, a master licensee may open restaurants
owned  and  operated  by  the  master  licensee, or they may open sub-franchised
restaurants  owned  and  operated  by  third  parties through agreement with the
master  licensee.

FOOD  AND  SUPPLY  DISTRIBUTION

     The Company's Norco division offers substantially all of the food and paper
products,  equipment  and  other  supplies  necessary  to  operate  a  Pizza Inn
restaurant.  Franchisees  are  required  to  purchase  from  Norco  certain food
products  which  are proprietary to the Pizza Inn system.  In addition, the vast
majority  of  franchisees  also  purchase  other  supplies  from  Norco.

     Norco  operates its central distribution facility six days per week, and it
delivers  to  all  domestic  units  on  a  weekly  basis,  utilizing  a fleet of
refrigerated  tractor-trailer  units operated by Company drivers and independent
owner-operators.  Norco  also  ships products and equipment to its international
franchisees.  The  food,  equipment, and other supplies distributed by Norco are
generally  available  from  several  qualified  sources,  and 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.  The  Company does not anticipate any difficulty in obtaining supplies
in  the  foreseeable  future.




ADVERTISING

     The  Pizza  Inn  Advertising Plan ("PIAP") is a non-profit corporation that
creates and produces 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 Full Service, Self Serve or Delco unit,
including  the  Company,  is  entitled to membership in PIAP.  Nearly all of the
Company's  existing  franchise agreements for Full Service, Self Serve and Delco
units  require the franchisees to become members of PIAP.  Members contribute 1%
of  their  gross  sales.  PIAP  is  managed by a Board of Trustees, comprised 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.  On  September  10,  2001,  the Company-operated stores and
substantially all of its franchisees were members of PIAP.  Operators of Express
units  do  not  participate  in PIAP; however, they contribute up to 1% of their
gross  sales  directly  to  the  Company  to  help  fund  Express unit marketing
materials  and  similar  expenditures.  Express  units  may  also  voluntarily
contribute  up  to  2%  of  their  gross sales to the Royalty Rebate Advertising
Program  ("RRAP").

     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  the  Company.

     The  Company  and  its franchisees conduct independent marketing efforts in
addition  to  their  participation  in  PIAP  and  local  cooperatives.

TRADEMARKS  AND  QUALITY  CONTROL

     The  Company owns various trademarks, including the name "Pizza Inn", which
are  used  in  connection with the restaurants and have been registered with the
United  States  Patent and Trademark Office.  The duration of such trademarks is
unlimited,  subject  to  continued  use.  In  addition, the Company has obtained
trademark  registrations  in  several  foreign  countries  and  has  applied for
registration in others.  The Company believes that it holds the necessary rights
for  protection  of  the  trademarks  essential  to  its  business.

     The  Company  requires  all  units  to  satisfy  certain  quality standards
governing  the  products  and  services  offered  through  use  of the Company's
trademarks.  The  Company  maintains  a  staff  of  field representatives, whose
primary  responsibilities  include  periodic  visits  to  provide  advice  in
operational and marketing activities and to evaluate and enforce compliance with
the  Company's  quality  standards.

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 units, and special field seminars.
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 video tapes and printed materials produced by the
Company.

WORKING  CAPITAL  PRACTICES

     The  Company's  Norco division maintains a sufficient inventory of food and
other consumable supplies which it distributes to Pizza Inn units typically on a
weekly  basis.  The  Company's  accounts receivable and notes receivable consist
primarily  of  receivables  from  food  and  supply  sales, equipment sales, and
accrued  franchise  royalties.

GOVERNMENT  REGULATION

     The  Company  is  subject  to  registration and disclosure requirements and
other  restrictions under federal and state franchise laws.  The Company's Norco
division  is  subject  to various federal and state regulations, including those
regarding  transportation  of  goods,  food  labeling,  safety,  sanitation,
distribution,  and  vehicle  licensing.

     The  development  and  operation of Pizza Inn units are subject to federal,
state  and  local  regulations,  including  those  pertaining  to zoning, public
health,  and  alcoholic  beverages, where applicable.  Many restaurant employees
are  paid  at rates related to the minimum wage established by federal and state
law.  Increases in the federal minimum wage can result in higher labor costs for
the  Company  operated units, as well as its franchisees, which may be partially
offset  by  price  increases  or  operational  and  equipment  efficiencies.

EMPLOYEES

     On  September  10,  2001,  the  Company  had  approximately  211 employees,
including 61 in the Company's corporate office, 80 at its Norco division, and 19
full-time  and 51 part-time employees at the Company operated restaurants.  None
of  the  Company's  employees  are  currently  covered  by collective bargaining
agreements.  The  Company  believes  that  its employee relations are excellent.

COMPETITION

     The  restaurant  business  is  highly  competitive.  The  Company  and  its
franchisees  compete  with other national and regional pizza chains, independent
pizza  restaurants,  and  other restaurants which serve moderately priced foods.
The  Company believes that Pizza Inn units compete primarily on the basis of the
quality,  value  and  price of their food, the consistency and level of service,
and the location, attractiveness and cleanliness of their restaurant facilities.
Because  of  the  importance  of  brand awareness, the Company has increased its
development  emphasis  on  individual  market  penetration and local cooperative
advertising  by  franchisees.

     The  Company's  Norco  division  competes  with  both  national  and  local
distributors of food, equipment and other restaurant supplies.  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  which  are  required  to  be  used  by  all  Pizza  Inn  units.

     In  the  sale of franchises, the Company competes with franchisors of other
restaurant concepts and franchisors of a variety of other products and services.
The  Company  believes that the principal competitive factors affecting the sale
of  franchises  are  product  quality and value, consumer acceptance, franchisor
experience  and  support,  and  the  quality relationship maintained between the
franchisor  and  its  franchisees.

SEASONALITY

     Historically,  sales  at  Pizza  Inn  restaurants have been somewhat higher
during  the  warmer  months  and  somewhat lower during the colder months of the
year.  The  Company  believes that the increasing popularity of delivery service
and  expansion  into  the  high impulse purchase markets of Express units should
lessen  the  seasonal  impact  on  future  chainwide  sales.


<PAGE>
ITEM  2  -  PROPERTIES

     The  Company  leases  20,677 square feet in Dallas, Texas for its corporate
office  and  76,700  square feet in Grand Prairie, Texas for its Norco warehouse
and  office  facilities.  The  leases  expire  in  April  2003 and October 2001,
respectively.  The  Company  also leases 2,736 square feet in Addison, Texas for
its  training  facility  and test kitchen with a term expiring in December 2001.

     The  Company's  current  lease  for  its  distribution  facility expires in
October  2001,  at  which time the Company plans to relocate Norco operations to
its  new  distribution  facility  as  described  below.

     In  December  2000  the Company purchased approximately 11 acres of land in
The  Colony,  Texas  for the relocation of its corporate office, training center
and  distribution  facility.  Construction  is underway on a 100,000 square foot
distribution  facility  and a 40,000 square foot facility to house the Company's
corporate office and training center.  Occupancy is scheduled for November 2001.

     Each  of  the Company operated Pizza Inn restaurants (all located in Texas)
are  leased.  The  Company operated units range in size from approximately 2,500
to 3,600 square feet and incur annual minimum rent between $12.50 and $20.00 per
square foot.  Some of the leases require payment of additional rent based upon a
percentage  of gross sales and require the Company to pay for repairs, insurance
and  real  estate  taxes.  The  leases are renewable and will expire in 2005 and
2007.

ITEM  3  -  LEGAL  PROCEEDINGS

          Certain  pending legal proceedings exist against the Company which the
Company  believes  are not material or have arisen in the ordinary course of its
business.

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

     No  matters  were submitted to a vote of security holders during the fourth
quarter  of  the  Company's  fiscal  year  2001.


<PAGE>

                                     PART II

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

     On  September  10,  2001,  there  were  2,446 stockholders of record of the
Company's  Common  Stock.

     The  Company's  Common  Stock  is  listed  on  the  Small-Cap 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
                                            High         Low
                                       --------------  -------
<S>                                    <C>             <C>
      2001
      First Quarter Ended 9/24/2000 .               4  2 15/16
      Second Quarter Ended 12/24/2000           3 3/8    1 5/8
      Third Quarter Ended 3/25/2001 .           2 7/8   1 7/16
      Fourth Quarter Ended 6/24/2001.           2 1/4    1 5/8

      2000
      First Quarter Ended 9/26/1999 .               4   2 5/16
      Second Quarter Ended 12/26/1999           4 1/4    3 1/4
      Third Quarter Ended 3/26/2000 .           4 1/8    2 7/8
      Fourth Quarter Ended 6/25/2000.           3 3/4    3 1/8
</TABLE>

During  the  first  two  quarters  of  fiscal 2001 the Board of Directors of the
Company  declared  quarterly  cash  dividends  of $0.06 per share.  For the year
ended June 24, 2001 cash dividends paid were approximately $1.2 million or $0.12
per  share. 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.


<PAGE>
 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 24 2001, and should
be  read in conjunction with the financial statements and schedules in Item 8 of
this  report.  Earnings  per  share  data  for  all  periods presented have been
restated  to  reflect  the  computation of earnings per share in accordance with
SFAS  128.

<TABLE>
<CAPTION>


                                                                   Year Ended
                                            ------------------------------------------------------
                                           June 24,    June 25,    June 27,   June 28,    June 29,
                                             2001        2000        1999       1998        1997
                                          -----------  ---------  ----------  ---------  ----------
(In thousands, except per share amounts)
<S>                                       <C>          <C>        <C>         <C>        <C>         <C>  <C>
SELECTED INCOME STATEMENT DATA:
  Total revenues . . . . . . . . . . . .  $    63,827  $  66,304  $  66,294   $  68,640  $  69,123

  Income before taxes. . . . . . . . . .        3,921      4,389      4,096       7,023      6,860
  Net income . . . . . . . . . . . . . .        2,480      2,884      2,752       4,880      4,528
  Basic earnings per common share. . . .         0.23        .25        .24         .38        .35
  Diluted earnings per common share. . .         0.23        .25        .23         .36        .33
  Dividends declared per common share. .         0.12        .24 (2)    .18(1)      .24         -

SELECTED BALANCE SHEET DATA:
  Total assets . . . . . . . . . . . . .       19,872     17,691     18,586      21,773     24,310
  Long-term debt and
       capital lease obligations . . . .       11,161     10,655      6,944       5,454      7,789
<FN>

(1)     On  June  28, 1999 the Company's Board of Directors declared a quarterly dividend of $.06 per share
     on  the  Company's  common  stock,  payable  to  shareholders  of  record  on  July  9,  1999.

(2)     On  June  26, 2000 the Company's Board of Directors declared a quarterly dividend of $.06 per share
     on  the  Company's  common  stock,  payable  to  shareholders  of  record  on  July  7,  2000.
</TABLE>



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

                              RESULTS OF OPERATIONS

FISCAL  2001  COMPARED  TO  FISCAL  2000

          Diluted  earnings  per  share  decreased 8% to $0.23 from $0.25 in the
prior year.  Net income decreased 14% to $2,480,000 from $2,884,000 in the prior
year,  on revenues of $63.8 million in the current year and $66.3 million in the
prior  year.  Pre-tax  income  decreased 11% to $3,921,000 from $4,389,000.  The
Company  considers  pre-tax income to be the best measure of its performance due
to  the  significant  benefit  of  its  net operating loss carryforwards.  These
carryforwards,  which  total  $2.8  million  at June 24, 2001, reduce the income
taxes paid by the Company from the 34% statutory rate to the minimum tax rate of
approximately  2%.

     Food  and  supply sales by the Company's distribution division decreased 4%
to  $55.7  million  from  $58.0  million  in the prior year as a result of fewer
stores,  softer  retail  sales, and slightly lower cheese prices.  International
food  and supply sales decreased $554,000 from the prior year due to lower sales
and  store  closings  caused primarily by poor economic and social conditions in
international  markets.  Domestic  and  international  equipment sales decreased
12.6%,  or  $213,000  from  the  prior  year  due  to  fewer  store  openings.

     Franchise  revenue,  which includes royalties, license fees and income from
area  development  and foreign master license (collectively, "Territory") sales,
decreased  6%  or  $326,000  in  fiscal  2001.  Royalty  revenue decreased 5% or
$294,000 compared to last year, mainly resulting from a decrease in domestic and
international  chainwide  sales.

     Restaurant  sales,  which  consist  of  revenue  generated by Company-owned
stores,  for  the  year  decreased  less  than 1% or $6,000 compared to the same
period  of  the  prior  year.

     Other  income  consists  of  primarily  interest  income  and non-recurring
revenue  items.  Other  income  increased  69%  or $153,000 due to higher vendor
incentives  in  the  current  year, the sale of promotional items, and increased
interest  income.

     Cost of sales decreased 4% to $52.8 million from $55.3 million in the prior
year.  As  a  percentage  of  sales, cost of sales decreased to 90.9% from 91.5%
compared to the prior year.  Cost of sales decreased primarily due to lower food
and  supply  sales  as noted above, which was partially offset by higher vehicle
costs,  depreciation  and  amortization,  and  rent  expense.

     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 costs increased 9% or $185,000 compared to
last  year.  This  was  primarily  due  to lower marketing expenses in the prior
year.

     General  and  administrative  expenses  increased  5% or $188,000 in fiscal
2001.  This  is  a result of computer system modifications that were capitalized
in  the  prior  year,  and  lower  legal  fees  in  the  prior  year.

     Interest  expense  increased  11%  or  $86,000  in the current year.  Lower
interest rates and capitalized interest on funds used in construction of the new
corporate  office and distribution facility were partially offset by higher debt
levels  in  the  current  year.

     During fiscal 2001, the Company opened for business a total of 35 new Pizza
Inn  franchise  units,  including  27  domestic  and  8  international  units.
Domestically,  58  units, including 25 Express units, were closed by franchisees
or  terminated  by  the Company typically because of unsatisfactory standards of
operation  or  performance.  Similarly  23  international  units were closed, of
which  11  were  kiosk  units.







FISCAL  2000  COMPARED  TO  FISCAL  1999

          Diluted  earnings  per  share  increased 9% to $0.25 from $0.23 in the
prior  year.  Net income increased 5% to $2,884,000 from $2,752,000 in the prior
year, on revenues of $66.3 million in each year.  Pre-tax income increased 7% to
$4,389,000 from $4,096,000.  The Company considers pre-tax income to be the best
measure  of  its performance due to the significant benefit of its net operating
loss  carryforwards.  These  carryforwards, which total $6.6 million at June 25,
2000, reduce the income taxes paid by the Company from the 34% statutory rate to
the  minimum  tax  rate  of  approximately  2%.

     Food  and  supply  sales  of $58 million for the year decreased slightly as
compared to the same period last year due to higher overall cheese prices in the
prior  year.  Excluding  the  change  in  cheese  prices,  food and supply sales
increased  approximately  $2,000,000  reflecting  greater  chainwide  sales.

     Franchise  revenue,  which includes royalties, license fees and income from
area  development  and foreign master license (collectively, "Territory") sales,
increased 1% or $80,000 in fiscal 2000. Royalty revenue increased $191,000 or 4%
compared  to  last year, mainly resulting from an increase in domestic chainwide
sales.  These  increases  were  offset  by  $106,000  less  of  area development
territory  sales  in  fiscal  2000.

     Restaurant  sales,  which  consist  of  revenue  generated by Company-owned
stores,  for the year increased 3% or $65,000 compared to the same period of the
prior  year.  Comparable store sales growth at Company-owned stores increased 5%
for  the  year,  which  offset  the  closing  of  one Delco unit in August 1998.

     Other  income  consists  of  primarily  interest  income  and non-recurring
revenue  items.  Other  income  decreased  22%  or  $64,000 due to higher vendor
incentives  in  the prior year, partially offset by increased interest income in
the  current  year.

     Cost of sales decreased slightly compared to the same period last year.  As
a  percentage of sales, cost of sales remained the same for both years at 91.5%.
Lower  cheese  prices  in  fiscal 2000 were offset by higher chainwide sales, as
noted  above.   These  higher  chainwide  sales required additional distribution
miles  resulting  in  higher  fuel costs, compounded even further by higher fuel
prices.

     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 costs decreased 27% or $738,000 compared
to  last  year.  This  was  primarily  due  to  lower  marketing expenses and an
increase in allocation of corporate services expenses to the distribution center
resulting  in  a  corresponding  decrease  in  franchise  expenses.

     General  and  administrative  expenses  increased  7% or $251,000 in fiscal
2000.  This is a result of higher insurance costs, higher franchise and property
taxes,  and payroll costs that were capitalized as software development costs as
required  by  current  accounting  pronouncements  in  the  prior  year.  These
increases  were  partially offset by lower legal and contract services expenses.

     Interest  expense increased 43% or $226,000 in the current year as a result
of higher debt levels, capital lease interest expense on new computer equipment,
and  higher  interest  rates.

     During fiscal 2000, the Company opened for business a total of 42 new Pizza
Inn  franchise  units,  including  26  domestic  and  16  international  units.
Domestically,  27  units were closed by franchisees or terminated by the Company
typically  because  of  unsatisfactory  standards  of  operation or performance.
Similarly,  34  Kmart  express  units  and  5  international  units were closed.

                               FINANCIAL CONDITION

     Cash  and  cash  equivalents  increased $56,000 in fiscal 2001. The Company
used  the  cash  flow generated from operations plus the proceeds from increased
net bank borrowings of $1.1 million to fund $4.7 million of capital expenditures
consisting primarily of land and construction costs for the new corporate office
and distribution center, and $1.3 million to reacquire 541,122 shares of its own
common stock at prevailing prices on the open market. The Company also used $1.2
million  to  pay  cash  dividends  on  its  common  stock  in  fiscal  2001.

     At June 24, 2001 the net deferred tax asset balance was $3.1 million.  This
balance  includes  $2.8  million  of  net operating loss carryforwards and other
temporary  differences.  At June 24, 2001, the Company has a valuation allowance
of $38,000 for credit carryforwards that may expire before they can be utilized.
The Company believes that it is more likely than not that these credits will not
be  realized.

     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 $38,000 related to the
potential expiration of certain tax credit carryforwards.  Future taxable income
at the same level as fiscal 2001 would be sufficient for full realization of the
net  operating  loss carryforwards included in the net tax asset.  Additionally,
management  believes  that  taxable  income based on recent growth trends of the
Company's franchise base should be more than sufficient to enable the Company to
realize its deferred tax asset without reliance on material, non-routine income.

     While  the  Company  expects  to  realize  substantial  benefit  from  the
utilization  of its net operating loss carryforwards (which currently total $2.8
million  and  expire  in  2005  and  2006)  to reduce its federal tax liability,
current  accounting  standards dictate that this benefit can not be reflected in
the  Company's  results  of  operations.  In  accordance  with  SFAS  109,  the
carryforwards,  when  utilized, are reflected as a reduction of the deferred tax
asset  rather  than  a  reduction  of  income  tax expense.  This has caused the
Company to reflect an amount for federal income tax expense on its statements of
operations  at an effective corporate rate of 37%, 34%, and 32% for fiscal years
2001,  2000 and 1999, respectively.  However, the actual amount of taxes paid at
the  alternative minimum tax rate of approximately 2% is significantly less than
the  corporate  rate  reflected  on  the  Company's  statement  of  operations.
Historically,  the  differences between pre-tax earnings for financial reporting
purposes  and  taxable  income  for  tax  purposes  have  consisted of temporary
differences  arising  from  the  timing  of depreciation, deductions for accrued
expenses  and deferred revenues, as well as permanent differences as a result of
the  exercise  of  stock  options  deducted  for income tax purposes but not for
financial  reporting  purposes.

     Under  the  Internal  Revenue Code, the utilization of net operating losses
and credit carryforwards could be limited if certain changes in ownership of the
Company's  common  stock  were  to  occur.

                         LIQUIDITY AND CAPITAL RESOURCES

     Cash  provided by operations totaled $6,420,000 in fiscal 2001 and was used
primarily,  in  conjunction  with  additional  borrowings,  to  fund  capital
expenditures,  to  reacquire the Company's common stock, and to pay dividends on
its  common  stock.

     The  Company increased its bank borrowings by $1.1 million to $12.2 million
at  June  24,  2001  from  $11.1  million  at  June  25,  2000.

     During  fiscal  2001 the Company purchased 541,122 shares of its own common
stock  on  the  open  market for a total price of $1.3 million.  This brings the
total  number  of  shares  in  treasury  to  4,635,481  as  of  June  24,  2001.

     Capital  expenditures of $4,713,000 during fiscal 2001 consist primarily of
land  and  construction  costs  for  the  new  corporate office and distribution
center.

     The  Company's  future  requirements  for  cash relate primarily to capital
expenditures,  including  the  completion  of  the  new  corporate  office  and
distribution  center,  the  periodic  purchase  of  its  own  common  stock, and
repayment  of  debt.  The  Company  currently  considers  its common stock to be
undervalued  and  plans to continue purchasing its own shares on the open market
during fiscal year 2002. For the period June 25, 2001 through September 10, 2001
the  Company  has  purchased  212,000  shares for a total amount of $467,762. In
addition  to  the  the  corporate  office  and  distribution center, anticipated
capital  expenditures  include  information  system  upgrades  and miscellaneous
equipment.  During  fiscal 2001, the Board of Directors of the Company paid cash
dividends  on  the Company's common stock of approximately $1.2 million or $0.12
per  share.

     The  Company entered into an agreement effective December 28, 2000 with its
current lender 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  will  convert  to  a  term  loan upon completion of the
construction phase and the then unpaid principal balance will mature on December
28,  2007.  The  term  loan  will  amortize  over  a  term of twenty years, with
principal  and interest payments due monthly. Interest is provided for at a rate
equal to prime less an interest rate margin of .50% prior to loan conversion and
 .75%  following  loan conversion, or, at the Company's option, to the Eurodollar
rate  plus  1.5%.  The  Company,  to  fulfill  bank requirements, has caused the
outstanding  principal  amount  to be subject to a fixed interest rate after the
conversion  date. As of June 24, 2001, the Company had borrowed $916,000 for the
construction  in  progress  of  its  new  headquarters.

     The  Company's  primary  sources  of  cash  are sales from the distribution
division,  royalties,  license  fees  and  Territory  sales.  Existing  area
development  and  master license agreements contain development commitments that
should  result in future chainwide growth.  Related growth in distribution sales
and  royalties  are  expected  to provide adequate working capital to supply the
needs  described  above.  The  signing  of  any  new  area development or master
license agreements, which cannot be predicted with certainty, would also provide
significant  infusions  of  cash.

                                   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.

     At  June  24,  2001 the Company had approximately $12.2 million of variable
rate  debt  obligations  outstanding  with  a  weighted average interest rate of
7.19%.   A  hypothetical  10%  change  in  the effective interest rate for these
borrowings,  assuming debt levels at June 24, 2001 would change interest expense
by  approximately  $88,000.

                                ECONOMIC FACTORS

     The  costs  of  operations, including labor, supplies, utilities, financing
and  rental  costs,  to  the  Company  and its franchisees, can be significantly
affected  by  inflation and other economic factors.  Increases in any such costs
would  result  in  higher costs to the Company and its franchisees, which may be
partially  offset  by  price increases and increased efficiencies in operations.
The  Company's  revenues  are also affected by local economic trends where units
are  concentrated.  The  Company  intends to pursue franchise development in new
markets  in  the  United  States  and  other countries, which would mitigate the
impact  of  local  economic  factors.

                            FORWARD-LOOKING STATEMENT

     This  report  contains  certain forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) relating to the
Company  that are based on the beliefs of the management of the Company, as well
as  assumptions and estimates made by and information currently available to the
Company's  management.  When  used  in  the  report,  the  words  "anticipate,"
"believe," "estimate," "expect," "intend" and other similar expressions, as they
relate  to  the  Company  or  the Company's management, identify forward-looking
statements.  Such  statements  reflect  the  current  views  of the Company with
respect  to  future  events  and are subject to certain risks, uncertainties and
assumptions  relating to the operations and results of operations of the Company
as  well  as  its  customers and suppliers, including as a result of competitive
factors  and  pricing  pressures,  shifts  in  market  demand,  general economic
conditions and other factors including but not limited to, changes in demand for
Pizza Inn products or franchises, the impact of competitors' actions, changes in
prices  or supplies of food ingredients, and restrictions on international trade
and  business.  Should  one or more of these risks or uncertainties materialize,
or  should  underlying  assumptions or estimates prove incorrect, actual results
may  vary  materially  from  those  described  herein  as anticipated, believed,
estimated,  expected  or  intended.

<PAGE>

                                 PIZZA INN, INC.



ITEM  8  -  FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA


Index  to  Financial  Statements  and  Schedules:



FINANCIAL  STATEMENTS                                           PAGE  NO.


Report  of  Independent  Accountants.                                         14

Consolidated  Statements  of  Operations  for  the  years  ended
     June  24,  2001,  June  25,  2000,  and  June  27,  1999.                15

Consolidated  Statements  of  Comprehensive  Income  for  the  years  ended
     June  24,  2001,  June  25,  2000,  and  June  27,  1999.                15

Consolidated  Balance  Sheets  at  June  24,  2001  and  June  25,  2000      16

Consolidated  Statements  of  Shareholders'  Equity  for  the  years
     ended  June  24,  2001,  June  25,  2000,  and  June  27,  1999.        17

Consolidated  Statements  of  Cash  Flows  for  the  years  ended June 24, 2001,
     June  25,  2000,  and  June  27,  1999.                                 18

Notes  to  Consolidated  Financial  Statements.                              20



     FINANCIAL  STATEMENT  SCHEDULES


     Schedule  II   -  Consolidated  Valuation  and  Qualifying  Accounts   33

     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.



<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS

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

In our opinion, the consolidated financial statements listed in the accompanying
index  present fairly, in all material respects, the financial position of Pizza
Inn,  Inc.  and  its  subsidiaries  at  June 24, 2001 and June 25, 2000, and the
results  of their operations and their cash flows for each of the three years in
the  period  ended  June  24,  2001,  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  the  financial  statement  schedule  are  the
responsibility  of the Company's management; our responsibility is to express an
opinion on these financial statements and the financial statement schedule based
on  our  audits.  We conducted our audits of these statements in accordance with
auditing  standards  generally  accepted  in the United States of America, which
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  audits  provide  a
reasonable  basis  for  our  opinion.



PRICEWATERHOUSECOOPERS  LLP


Dallas,  Texas
September  6,  2001










<PAGE>

<TABLE>
<CAPTION>

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



                                                        YEAR ENDED
                                                  -----------------------
                                                         JUNE 24,                 JUNE 25,                JUNE 27,
REVENUES:                                                  2001                     2000                    1999
                                                  -----------------------  ----------------------  -----------------------
<S>                                               <C>                      <C>                     <C>
  Food and supply sales. . . . . . . . . . . . .  $               55,732   $               58,030  $                58,101
  Franchise revenue. . . . . . . . . . . . . . .                   5,373                    5,699                    5,619
  Restaurant sales . . . . . . . . . . . . . . .                   2,346                    2,352                    2,287
  Other income . . . . . . . . . . . . . . . . .                     376                      223                      287
                                                  -----------------------  ----------------------  -----------------------
                                                                  63,827                   66,304                   66,294
                                                  -----------------------  ----------------------  -----------------------

COSTS AND EXPENSES:
  Cost of sales. . . . . . . . . . . . . . . . .                  52,802                   55,255                   55,265
  Franchise expenses . . . . . . . . . . . . . .                   2,188                    2,003                    2,741
  General and administrative expenses. . . . . .                   3,870                    3,682                    3,431
  Provision for bad debt . . . . . . . . . . . .                     210                      225                      237
  Interest expense . . . . . . . . . . . . . . .                     836                      750                      524
                                                  -----------------------  ----------------------  -----------------------
                                                                  59,906                   61,915                   62,198
                                                  -----------------------  ----------------------  -----------------------

INCOME BEFORE INCOME TAXES . . . . . . . . . . .                   3,921                    4,389                    4,096

  Provision for income taxes . . . . . . . . . .                   1,441                    1,505                    1,344
                                                  -----------------------  ----------------------  -----------------------

NET INCOME . . . . . . . . . . . . . . . . . . .  $                2,480   $                2,884  $                 2,752
                                                  =======================  ======================  =======================

BASIC EARNINGS PER COMMON SHARE. . . . . . . . .                   0.23                    0.25                    0.24
                                                  =======================  ======================  =======================

DILUTED EARNINGS PER COMMON SHARE. . . . . . . .                   0.23                    0.25                    0.23
                                                  =======================  ======================  =======================

DIVIDENDS DECLARED PER COMMON SHARE. . . . . . .                   0.12                    0.24                    0.18
                                                  =======================  ======================  =======================

WEIGHTED AVERAGE COMMON SHARES . . . . . . . . .                  10,635                   11,316                   11,678
                                                  =======================  ======================  =======================

WEIGHTED AVERAGE COMMON AND
  POTENTIAL DILUTIVE COMMON SHARES . . . . . . .                  10,639                   11,441                   12,154
                                                  =======================  ======================  =======================

                                          CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                                 (IN THOUSANDS)

                                                                                      YEAR ENDED
                                                                     ------------------------------------------------
                                                                JUNE 24, . . . . . . .  JUNE 25,                 JUNE 27,
                                                                    2001                     2000                     1999
                                                  -----------------------  ----------------------  -----------------------

    Net Income . . . . . . . . . . . . . . . . .  $                2,480   $                2,884  $                 2,752
    Interest rate swap loss (net of tax of $38).                     (73)                       -                        -
                                                  ----------------------    ---------------------   ----------------------
    Comprehensive Income . . . . . . . . . . . .  $                2,407   $                2,884  $                 2,752
                                                  =======================  ======================  =======================
<FN>

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



<TABLE>
<CAPTION>

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


                                                                           JUNE 24,               JUNE 25,
ASSETS                                                                       2001                   2000
                                                                     ---------------------  ---------------------
CURRENT ASSETS
<S>                                                                  <C>                    <C>
  Cash and cash equivalents . . . . . . . . . . . . . . . . . . . .  $                540   $                484
  Accounts receivable, less allowance for doubtful
    accounts of $729 and $776, respectively . . . . . . . . . . . .                 4,839                  4,681
  Notes receivable, current portion, less allowance
    for doubtful accounts of $263 and $260, respectively. . . . . .                   958                    810
  Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . .                 2,063                  2,910
  Deferred taxes, net . . . . . . . . . . . . . . . . . . . . . . .                 1,285                  1,117
  Prepaid expenses and other. . . . . . . . . . . . . . . . . . . .                   578                    566
                                                                     ---------------------  ---------------------
      Total current assets. . . . . . . . . . . . . . . . . . . . .                10,263                 10,568
Property, plant and equipment, net. . . . . . . . . . . . . . . . .                 6,594                  1,650
Property under capital leases, net. . . . . . . . . . . . . . . . .                   576                  1,165
Deferred taxes, net . . . . . . . . . . . . . . . . . . . . . . . .                 1,897                  3,312
Long-term notes receivable, less
  allowance for doubtful accounts of $9 and $66, respectively . . .                     9                    262
Deposits and other. . . . . . . . . . . . . . . . . . . . . . . . .                   533                    734
                                                                     ---------------------  ---------------------
                                                                     $             19,872   $             17,691
                                                                     =====================  =====================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable - trade. . . . . . . . . . . . . . . . . . . . .  $              3,245   $              2,251
  Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . .                 2,000                  1,797
  Current portion of long-term debt . . . . . . . . . . . . . . . .                 1,250                  1,250
  Current portion of capital lease obligations. . . . . . . . . . .                   486                    534
                                                                     ---------------------  ---------------------
    Total current liabilities . . . . . . . . . . . . . . . . . . .                 6,981                  5,832

LONG-TERM LIABILITIES
  Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . .                10,934                  9,842
  Long-term capital lease obligations . . . . . . . . . . . . . . .                   227                    813
  Other long-term liabilities . . . . . . . . . . . . . . . . . . .                   865                    715
                                                                     ---------------------  ---------------------
                                                                                   19,007                 17,202
                                                                     ---------------------  ---------------------

COMMITMENTS AND CONTINGENCIES (See Note I)

SHAREHOLDERS' EQUITY
  Common Stock, $.01 par value; authorized 26,000,000
    shares; issued 14,955,119 and 14,954,789 shares, respectively;
    outstanding 10,319,638 and 10,645,380 shares, respectively. . .                   150                    150
  Additional paid-in capital. . . . . . . . . . . . . . . . . . . .                 7,823                  7,708
  Loans to officers . . . . . . . . . . . . . . . . . . . . . . . .                (2,325)                (2,250)
  Retained earnings . . . . . . . . . . . . . . . . . . . . . . . .                14,201                 13,163
  Accumulated other comprehensive loss. . . . . . . . . . . . . . .                   (73)                     -
  Treasury stock at cost
    Shares in treasury: 4,635,481 and 4,309,409, respectively . . .               (18,911)               (18,282)
                                                                     ---------------------  ---------------------
    Total shareholders' equity. . . . . . . . . . . . . . . . . . .                   865                    489
                                                                     ---------------------  ---------------------
                                                                     $             19,872   $             17,691
                                                                     =====================  =====================
<FN>

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




<TABLE>
<CAPTION>

                                                     PIZZA INN, INC.
                                     CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                                      (IN THOUSANDS)

                                                                                              ACCUM.
                                                          ADDITIONAL                          OTHER    TREASURY
                                        COMMON STOCK        PAID-IN    LOANS TO    RETAINED   COMP.     STOCK
                                    SHARES       AMOUNT    CAPITAL    OFFICERS    EARNINGS    LOSS     AT COST    TOTAL
                                 -------------  --------  ---------  ----------  ----------  -------  ---------  --------
<S>                              <C>            <C>       <C>        <C>         <C>         <C>      <C>        <C>

BALANCE, JUNE 28, 1998. . . . .        12,528   $    149  $   7,036  $       -   $  13,715   $    -   $ (9,983)  $10,917

Stock options exercised . . . .            17          -         52          -           -        -          -        52
Tax benefits associated
    with stock options. . . . .             -          -        233          -           -        -          -       233
Dividends paid. . . . . . . . .             -          -          -          -      (2,092)       -          -    (2,092)
Acquisition of treasury
     stock (see Note K) . . . .        (1,137)         -          -          -           -        -     (5,803)   (5,803)
Net income. . . . . . . . . . .             -          -          -          -       2,752        -          -     2,752
                                 -------------  --------  ---------  ----------  ----------  -------  ---------  --------

BALANCE, JUNE 27, 1999. . . . .        11,408   $    149  $   7,321  $       -   $  14,375   $    -   $(15,786)  $ 6,059
                                 -------------  --------  ---------  ----------  ----------  -------  ---------  --------

Stock options exercised . . . .            47          1         83          -          (1)       -         61       144
Loans to officers for exercise
     of stock options . . . . .           900          -          -     (2,250)     (1,296)       -      3,546         -
Tax benefits associated
    with stock options. . . . .             -                   303         -          -           -        -        303
Employee incentive options. . .             -          -          1          -           -        -          -         1
Dividends paid. . . . . . . . .             -          -          -          -      (2,799)       -          -    (2,799)
Acquisition of treasury
     stock (see Note K) . . . .        (1,710)         -          -          -           -        -     (6,103)   (6,103)
Net income. . . . . . . . . . .             -          -          -          -       2,884        -          -     2,884
                                 -------------  --------  ---------  ----------  ----------  -------  ---------  --------

BALANCE, JUNE 25, 2000. . . . .        10,645   $    150  $   7,708  $  (2,250)  $  13,163   $    -   $(18,282)  $   489
                                 -------------  --------  ---------  ----------  ----------  -------  ---------  --------

Stock options exercised . . . .           215          -         37          -        (199)       -        700       538
Loans to officers for
     exercise of stock options.             -          -          -       (240)          -        -          -      (240)
Principal repayment of loans
    by officers . . . . . . . .                                            165                                       165
Tax benefits associated
    with stock options. . . . .             -          -         77          -           -        -          -        77
Employee incentive options. . .             1          -          1          -           -        -          -         1
Dividends paid. . . . . . . . .             -          -          -          -      (1,243)       -          -    (1,243)
Acquisition of treasury
     stock (see Note K) . . . .          (541)         -          -          -           -        -     (1,329)   (1,329)
Interest rate swap loss . . . .             -
     (net of tax $38) . . . . .             -          -          -          -           -      (73)         -       (73)
Net income. . . . . . . . . . .             -          -          -          -       2,480        -          -     2,480
                                 -------------  --------  ---------  ----------  ----------  -------  ---------  --------

BALANCE, JUNE 24, 2001. . . . .        10,320   $    150  $   7,823  $  (2,325)  $  14,201   $  (73)  $(18,911)  $   865
                                 =============  ========  =========  ==========  ==========  =======  =========  ========
<FN>

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


<TABLE>
<CAPTION>

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


                                                                  YEAR ENDED
                                                            ----------------------
                                                                   JUNE 24,               JUNE 25,                JUNE 27,
                                                                     2001                   2000                    1999
                                                            ----------------------  ---------------------  ----------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                         <C>                     <C>                    <C>
  Net income . . . . . . . . . . . . . . . . . . . . . . .  $               2,480   $              2,884   $               2,752
    Adjustments to reconcile net income to
      cash provided by operating activities:
      Depreciation and amortization. . . . . . . . . . . .                  1,343                  1,210                     871
      Provision for bad debt . . . . . . . . . . . . . . .                    210                    225                     237
      Income from transfer of Pizza Inn stock (see Note K)                      -                      -                     (15)
      Deferred income taxes. . . . . . . . . . . . . . . .                  1,247                  1,127                   1,149
    Changes in assets and liabilities:
      Notes and accounts receivable. . . . . . . . . . . .                   (263)                  (196)                  1,179
      Inventories. . . . . . . . . . . . . . . . . . . . .                    847                   (517)                   (440)
      Accounts payable - trade . . . . . . . . . . . . . .                    102                   (390)                    627
      Accrued expenses . . . . . . . . . . . . . . . . . .                    102                    111                    (717)
      Deferred franchise revenue . . . . . . . . . . . . .                    (10)                  (109)                      5
      Prepaid expenses and other . . . . . . . . . . . . .                    362                    233                     193
                                                            ----------------------  ---------------------  ----------------------
      CASH PROVIDED BY OPERATING ACTIVITIES. . . . . . . .                  6,420                  4,578                   5,841
                                                            ----------------------  ---------------------  ----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:

    Capital expenditures . . . . . . . . . . . . . . . . .                 (4,713)                  (754)                   (640)
                                                            ----------------------  ---------------------  ----------------------
      CASH USED FOR INVESTING ACTIVITIES . . . . . . . . .                 (4,713)                  (754)                   (640)
                                                            ----------------------  ---------------------  ----------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

    Repayments of long-term bank debt and
      capital lease obligations. . . . . . . . . . . . . .                 (4,184)                (5,391)                   (199)
    Borrowings of long-term debt . . . . . . . . . . . . .                  4,642                 10,300                   1,000
    Dividends paid . . . . . . . . . . . . . . . . . . . .                 (1,243)                (2,799)                 (2,092)
    Proceeds from exercise of stock options. . . . . . . .                    298                    144                      52
    Officer loan payment . . . . . . . . . . . . . . . . .                    165                      -                       -
    Purchases of treasury stock. . . . . . . . . . . . . .                 (1,329)                (6,103)                 (5,788)
                                                            ----------------------  ---------------------  ----------------------
      CASH USED FOR FINANCING ACTIVITIES . . . . . . . . .                 (1,651)                (3,849)                 (7,027)
                                                            ----------------------  ---------------------  ----------------------

Net increase (decrease) in cash and cash equivalents . . .                     56                    (25)                 (1,826)
Cash and cash equivalents, beginning of period . . . . . .                    484                    509                   2,335
                                                            ----------------------  ---------------------  ----------------------
Cash and cash equivalents, end of period . . . . . . . . .                   540   $                484                    509
                                                            ----------------------  ---------------------  ----------------------
<FN>

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





<TABLE>
<CAPTION>

                    SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
                                     (IN THOUSANDS)



                                                  YEAR ENDED
                                                  -----------
                                                   JUNE 24,    JUNE 25,   JUNE 27,
                                                     2001        2000       1999
                                                  -----------  ---------  ---------
<S>                                               <C>          <C>        <C>
CASH PAYMENTS FOR:
  Interest . . . . . . . . . . . . . . . . . . .  $       876  $     582  $     551
  Income taxes . . . . . . . . . . . . . . . . .           65         75         20


NONCASH FINANCING AND INVESTING
ACTIVITIES:
  Capital lease obligations incurred . . . . . .  $         -  $     158  $     992
  Stock issued to officers in exchange for loans          303      2,507          -

</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  trade  name  "Pizza  Inn"  .

On  June  24,  2001  the  Pizza Inn system consisted of 446 locations, including
three  Company  operated  units  and 443 franchised units.  On June 24, 2001 the
Company  was  franchised  in 20 states and 12 foreign countries.  Domestic units
are located predominantly in the southern half of the United States, with Texas,
North  Carolina  and  Arkansas  accounting  for  approximately 30%, 17%, and 9%,
respectively, of the total.  Norco Distributing Company ("Norco"), a division of
the  Company,  distributes food products, equipment, and other supplies to units
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  intercompany  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,  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 will be amortized over
the  useful  life  of  the asset.  For the year ended June 24, 2001, interest of
$102,000  was  capitalized  in connection with the construction of the Company's
new  headquarters,  training  center,  and  distribution  facility.

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, if shorter.  The useful lives of the assets range from three
to  eight  years.  It  is  the  Company's  policy to periodically review the net
realizable  value  of  its  long-lived  assets  when indicators exist through an
assessment  of  the  estimated future cash flows related to such assets.  In the
event  that  assets  are  found  to be carried at amounts which 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  24,  2001.




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.

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 8% to 12%.  The Company records a provision for
doubtful  receivables  to  allow  for  any  amounts  which may be unrecoverable.

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.  In  addition, the Company recognizes future tax
benefits  to  the  extent that realization of such benefits are more likely than
not.

DISTRIBUTION  DIVISION  OPERATIONS:

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.  Norco sales are reflected under the caption "food
and  supply  sales."  Shipping  and  handling  costs  billed  to  customers  are
recognized  as  revenue.

FRANCHISE  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 unit is opened.  Royalties are recognized as income when earned.
For the years ended June 24, 2001, June 25, 2000 and June 27, 1999, 96%, 96% and
93%,  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.  When  the  Company  has  no  continuing  substantive
obligations  of  performance  to the area developer or master licensee regarding
the  fee,  the  Company  recognizes  the fee to the extent of cash received.  If
continuing obligations exist, fees are recognized ratably during the performance
of  those  obligations.  Territory fees recognized as income for the years ended
June  24,  2001,  June  25,  2000  and  June  27, 1999 were $0, $0 and $106,000,
respectively.

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 management to make estimates and assumptions that
affect  the reported amounts of assets and liabilities, and related revenues and
expenses  and  disclosure  of  gain  and  loss  contingencies at the date of the
financial  statements.  Actual  results  could  differ  from  those  estimates.

FISCAL  YEAR:

The  Company's  fiscal year ends on the last Sunday in June.  Fiscal years ended
June  24,  2001,  June  25,  2000  and  June  27,  1999  all contained 52 weeks.

NEW  PRONOUNCEMENTS:

The  Company  has adopted Statement of Financial Accounting Standards (SFAS) No.
133,  "Accounting  for  Derivative  Instruments  and  Hedging  Activities".  The
Company  entered into an interest rate swap, designated as a cash flow hedge, to
manage  interest  rate  risk related to the financing of the construction of the
Company's  new  headquarters  and  to  fulfill  bank requirements.  SFAS No. 133
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 24, 2001 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 has adopted Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue
Recognition  in  Financial  Statements",  which, among other guidance, clarifies
certain  conditions  to be met in order to recognize revenue.  SAB 101 was to be
adopted  no  later  than  the  fourth  quarter  of  fiscal years beginning after
December 15, 1999. The adoption of SAB 101 has resulted in no material effect on
the  Company's  revenues  recorded.


NOTE  B  -  PROPERTY,  PLANT  AND  EQUIPMENT:

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

<TABLE>
<CAPTION>


                                          JUNE 24,                 JUNE 25,
<S>                                <C>                      <C>
                                                     2001                    2000
                                   -----------------------  ----------------------
Property, plant and equipment:
Equipment, furniture and fixtures  $                4,932   $               4,522
Land. . . . . . . . . . . . . . .                   1,984                       -
Construction in progress. . . . .                   3,279                       -
Leasehold improvements. . . . . .                   1,595                   1,482
                                   -----------------------  ----------------------
                                                   11,790                   6,004
Less:  accumulated depreciation .                  (5,196)                 (4,354)
                                   -----------------------  ----------------------
                                                  6,594                   1,650
                                   =======================  ======================
Property under capital leases:
Real Estate . . . . . . . . . . .  $                  118   $                 118
Equipment . . . . . . . . . . . .                   2,120                   2,421
                                   -----------------------  ----------------------
                                                    2,238                   2,539
Less:  accumulated amortization .                  (1,662)                 (1,374)
                                   -----------------------  ----------------------
                                                     576                  1,165
                                   =======================  ======================

</TABLE>




Depreciation  and  amortization expense was $1,343,000, $1,210,000, and $871,000
for  the  years  ended  June  24,  2001,  June  25,  2000,  and  June  27, 1999,
respectively.

NOTE  C  -  ACCRUED  EXPENSES:

Accrued  expenses  consist  of  the  following  (in  thousands):

<TABLE>
<CAPTION>


                                         JUNE 24,               JUNE 25,
<S>                                <C>                    <C>
                                                    2001                   2000
                                   ---------------------  ---------------------
Compensation. . . . . . . . . . .  $                 889  $               1,018
Legal and other professional fees                    197                    100
Deferred franchise revenue. . . .                    111                     71
Other . . . . . . . . . . . . . .                    803                    608
                                   ---------------------  ---------------------

                                                  2,000                 1,797
                                   =====================  =====================


</TABLE>



NOTE  D  -  LONG-TERM  DEBT:

In  August 1997, the Company signed an agreement (the "Loan Agreement") with its
current  lender, Wells Fargo, to refinance its debt under a new revolving credit
facility.  The revolving credit note is collateralized by essentially all of the
Company's  assets.  The  Loan  Agreement  contains  covenants which, among other
things,  require  the  Company  to satisfy certain financial ratios and restrict
additional  debt.

In  March  2000,  the  Company  amended the agreement with its current lender to
extend the term of its existing $9.5 million revolving credit line through March
2002, to modify certain financial covenants, and to enter into a $5,000,000 term
note (described below). Amounts outstanding under the revolving credit line were
$7.7  million  and  $6.3 million at fiscal year end 2001 and 2000, respectively.

Interest  on the revolving credit line is payable monthly.  Interest is provided
for at a rate equal to prime plus an interest rate margin from -1.0% to 0.0% or,
at  the  Company's  option,  at  the  Eurodollar  rate plus 1.25% to 2.25%.  The
interest  rate  margin  is  based  on  the  Company's  performance under certain
financial  ratio tests.  As of June 24, 2001, the Company was in compliance with
all of its debt covenants.  A 0.375% to 0.5% annual commitment fee is payable on
any  unused  portion of the revolving credit line. For the years ending June 24,
2001  and  June  25,  2000,  the Company's interest rates were 5.25% and 7.625%,
respectively  (using  a  Eurodollar  rate  basis).

The  $5,000,000 term note had an outstanding balance of $3.5 million at June 24,
2001  and  requires  monthly  principal  payments  of  $104,000 with the balance
maturing  on March 31, 2004.  Interest on the term loan is also payable monthly.
Interest  is  provided for at a rate equal to prime less an interest rate margin
of  0.75%,  or,  at the Company's option, at the Eurodollar rate plus 1.5%.   At
June  24,  2001,  the Company's interest rate was 5.5 % (using a Eurodollar Rate
Basis).

The  Company  entered  into  an  agreement  effective December 28, 2000 with its
current lender 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  will  convert  to  a  term  loan upon completion of the
construction phase and the then unpaid principal balance will mature on December
28,  2007.  The  term  loan  will  amortize  over  a  term of twenty years, with
principal  and interest payments due monthly. Interest is provided for at a rate
equal  to  prime  less an interest rate margin of 0.50% prior to loan conversion
and  0.75%  following  loan  conversion,  or,  at  the  Company's option, to the
Eurodollar  rate  plus  1.5%.  The  Company,  to  fulfill bank requirements, has
caused  the  outstanding principal amount to be subject to a fixed interest rate
after  the  conversion  date.  As  of  June  24,  2001, the Company had borrowed
$916,000  for  the  construction  in  progress  of  its  new  headquarters.

In  accordance with the agreement at February 27, 2001, the Company entered into
an  interest  rate swap on that date, 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 5.80%
beginning  November  1, 2001 and ending November 1, 2007.  At June 24, 2001, the
Company  recorded  its interest rate swap with a fair value of $111,000 in other
liabilities,  with  the  offset  recorded  in  the  other  comprehensive  income
component  of  stockholder's  equity  and in deferred income taxes.  At June 24,
2001, 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.

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 24, 2001 and June 25,
2000  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.













NOTE  E  -  INCOME  TAXES:

Income  tax  expense  consists  of  the  following  (in  thousands):

<TABLE>
<CAPTION>


                                          JUNE 24,               JUNE 25,               JUNE 27,
<S>                         <C>                    <C>                    <C>
                                             2001                   2000                   1999
                            ---------------------  ---------------------  ---------------------

Federal:
  Current. . . . . . . . .  $                 156  $                 378  $                 195
  Deferred . . . . . . . .                  1,285                  1,127                  1,149
                            ---------------------  ---------------------  ---------------------
Provision for income taxes                 1,441                 1,505                 1,344
                            =====================  =====================  =====================

</TABLE>





The  effective  federal  income  tax rate varied from the statutory rate for the
years  ended  June 24, 2001, June 25, 2000 and June 27, 1999 as reflected below.


<TABLE>
<CAPTION>


                                         JUNE 24,                JUNE 25,                JUNE 27,
                                           2001                    2000                    1999
                                   ---------------------  ----------------------  ----------------------
<S>                                <C>                    <C>                     <C>
          (in thousands)

Federal income taxes based on 34%
  of book income. . . . . . . . .  $               1,333  $               1,492   $               1,393
Permanent adjustments . . . . . .                     70                    (46)                   (290)
Change in valuation allowance . .                     16                   (182)                   (535)
Expired credits . . . . . . . . .                     22                    241                     776
                                    --------------------   --------------------    ---------------------
                                                   1,441                 1,505                  1,344
                                   =====================  ======================  ======================

</TABLE>

The tax effects of temporary differences which give rise to the net deferred tax
assets  (liabilities)  consisted  of  the  following  (in  thousands):

<TABLE>
<CAPTION>


                                 JUNE 24,                JUNE 25,
                                   2001                    2000
                          ----------------------  ----------------------
<S>                       <C>                     <C>
Reserve for bad debt . .  $                 381   $                 415
Depreciable assets . . .                    678                     631
Deferred fees. . . . . .                     79                      55
Other reserves . . . . .                     46                      94
NOL carryforwards. . . .                    954                   2,246
Interest rate swap loss.                     38                       -
Credit carryforwards . .                  1,044                   1,010
                          ----------------------  ----------------------

Gross deferred tax asset  $               3,220   $               4,451

Valuation allowance. . .                    (38)                    (22)
                          ----------------------  ----------------------

Net deferred tax asset .                 3,182                  4,429
                          ======================  ======================

</TABLE>

As  of  June  24,  2001,  the  Company  had  $2.8  million of net operating loss
carryforwards  that  expire  in 2005 and 2006.  The Company also had $241,000 of
foreign  tax credit carryforwards expiring between 2004 and 2006 and $803,000 of
minimum  tax  credits  that  can be carried forward indefinitely.  The valuation
allowance  was  established  upon  adoption of SFAS 109, since it is more likely
than  not that a portion of the credit carryforwards will expire before they can
be utilized.  In fiscal 2001, $22,000 of general business credits expired before
they  could  be  utilized.  The  Company  decreased  the  deferred  tax asset by
$110,000  for  foreign  tax  credits  that  are  not  expected  to  be utilized.

Under  the  Internal  Revenue  Code,  the  utilization of net operating loss and
credit  carryforwards  could  be  limited if certain changes in ownership of the
Company's  Common  Stock were to occur.  The Company's Articles of Incorporation
contain  certain  restrictions  which are intended to reduce the likelihood that
such  changes  in  ownership  would  occur.

NOTE  F  -  LEASES:

The  real  property  occupied  by the Company operated restaurants is leased for
initial  terms  ranging  from  five  to  twenty-five  years with renewal options
ranging  from  three  to  fifteen  years.  Some  of the lease agreements contain
either  provisions  requiring additional rent if sales exceed specified amounts,
or  escalation  clauses  based  on  changes  in  the  Consumer  Price  Index.

The  Company leases 20,677 square feet in Dallas, Texas for its corporate office
and  76,700  square  feet  in  Grand  Prairie, Texas for its Norco warehouse and
office  facilities.  The  leases  expire in 2003 and October 2001, respectively.
The  Company  also  leases  2,736 square feet in Addison, Texas for its training
facility  with a term expiring in December 2001.  Upon expiration of the current
leases  for  the  warehouse  and training facility the Company plans to relocate
these  facilities  to  its  new headquarters and distribution facility currently
under  construction  in  The  Colony,  Texas.

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

Future  minimum  rental  payments  under  non-cancelable  leases with initial or
remaining  terms  of  one  year  or  more  at  June  24, 2001 are as follows (in
thousands):

<TABLE>
<CAPTION>


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

2002. . . . . . . . . . . . . . . . . . .  $    529       1,260
2003. . . . . . . . . . . . . . . . . . .       107         846
2004. . . . . . . . . . . . . . . . . . .       108         432
2005. . . . . . . . . . . . . . . . . . .        11         253
2006. . . . . . . . . . . . . . . . . . .        12         163
Thereafter. . . . . . . . . . . . . . . .        13         239
                                              ------    ---------
                                                780. . $  3,193
                                                        ==========
Less amount representing interest . . . .       (67)
                                           ---------
Present value of total obligations under
    capital leases. . . . . . . . . . . .       713
Less current portion. . . . . . . . . . .      (486)
                                           ---------
Long-term capital lease obligations . . .  $    227
                                           =========


</TABLE>



Rental  expense  consisted  of  the  following  (in  thousands):

<TABLE>
<CAPTION>


                     YEAR ENDED    YEAR ENDED    YEAR ENDED
                      JUNE 24,      JUNE 25,      JUNE 27,
                        2001          2000          1999
                    ------------  ------------  ------------
<S>                 <C>           <C>           <C>
Minimum rentals. .  $     1,566   $     1,438   $     1,339
Contingent rentals           19            15            13
Sublease rentals .         (102)          (96)          (99)
                    ------------  ------------  ------------
                    $     1,483   $     1,357   $     1,253
                    ============  ============  ============

</TABLE>


NOTE  G  -  EMPLOYEE  BENEFITS:

The  Company  has  a  tax  advantaged savings plan which 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.  The plan
provides  that  participating  employees may elect to have between 1% and 15% of
their  compensation  deferred  and contributed to the plan. From January 1, 1998
through January 1, 1999, the Company contributed on behalf of each participating
employee  an  amount  equal  to 100% of up to 6% of the employee's contribution.
From January 1, 1999 through July 31, 2000, the Company contributed on behalf of
each  participating  employee an amount equal to 100% of the first 3% and 50% of
the  next  3%  of  the  employee's  contribution.  From  August  1, 2000 through
December  31,  2000,  the  Company  contributed  on behalf of each participating
employee  an  amount  equal  to  50% of up to 6% of the employee's contribution.
Effective  January  1,  2001,  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  24,  2001, June 25, 2000, and June 27, 1999, total
matching  contributions  to  the  tax  advantaged savings plan by the Company on
behalf  of  participating  employees  were  $77,000,  $185,591,  and  $205,922,
respectively.

NOTE  H  -  STOCK  OPTIONS:

On  September  1, 1992, the Company adopted the 1992 Stock Award Plan (the "1992
Plan").  All  officers,  employees and elected outside directors are eligible to
participate.  The  Company's  1992  Plan is a combined nonqualified stock option
and  stock  appreciation  rights  arrangement.  A total of two million shares of
Pizza  Inn, Inc. Common Stock were originally authorized to be awarded under the
1992 Plan.  A total of 973,073 options were actually granted under the 1992 Plan
through  December  1993.  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 are eligible to receive
stock  options  under the 1993 Plan.  Options are granted at market value of the
stock  on the date of grant, are subject to various vesting periods ranging from
six  months  to  three years with exercise periods up to eight years, and may be
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  to the 1993 plan
increasing  by  500,000  shares, in each year, the aggregate number of shares of
common  stock  issuable  under  the  plan.  In  December,  2000,  the  Company's
Shareholders  approved  amendments to the 1993 plan increasing by 100,000 shares
the  aggregate  number  of  shares  of  common  stock  issuable  under the plan.

The 1993 Outside Directors Stock Award Plan (the "1993 Directors Plan") was also
adopted  by the Company effective as of October 13, 1993.  Elected Directors who
are  not employed by the Company are 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 are granted, up
to  20,000  shares  per  year, to each outside director.  Options are granted at
market value of the stock on the first day of the fiscal year, which is also the
date  of  grant, and 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  are  authorized  to  be  issued  pursuant  to  the  1993  Directors Plan.

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












SUMMARY  OF  STOCK  OPTION  TRANSACTIONS

<TABLE>
<CAPTION>


                                   June 24, 2001   June 25, 2000    June 27, 1999
                                  ---------------  --------------  ---------------
                                     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       2,123,306   $         3.91       3,247,972   $ 3.50  2,675,366   $ 3.27

Granted. . . . . . . . . . . . .         464,160   $         2.83          94,000   $ 3.57    655,290   $ 4.79
Exercised. . . . . . . . . . . .        (215,000)  $         2.50        (947,913)  $ 2.53    (17,084)  $ 2.97
Canceled . . . . . . . . . . . .        (162,433)  $         3.82        (270,753)  $ 4.38    (65,600)  $ 4.68
                                  ---------------  --------------  ---------------  ------  ----------  ------

Outstanding at end of year . . .       2,210,033   $         3.82       2,123,306   $ 3.91  3,247,972   $ 3.50
                                  ===============  ==============  ===============  ======  ==========  ======

Exercisable at end of year . . .       1,696,873   $         4.07       1,872,616   $ 3.88  2,745,448   $ 3.42

Weighted-average fair value of
options granted during the year.                  $         0.93                   $ 0.75               $ 1.30


</TABLE>



FIXED  PRICE  STOCK  OPTIONS

The  following  table  provides  information  on options outstanding and options
exercisable  at  June  24,  2001:

<TABLE>
<CAPTION>



                                           Options Outstanding                          Options Exercisable
                                           -------------------                           --------------------
                       Weighted-
                        Average
                        Shares              Remaining           Weighted-          Shares          Weighted-
Range of              Outstanding          Contractual           Average        Exercisable         Average
Exercise Prices    at June 24, 2001        Life (Years)      Exercise Price   at June 24, 2001  Exercise Price
----------------  -------------------  --------------------  ---------------  ----------------  ---------------
<S>               <C>                  <C>                   <C>              <C>               <C>
1.75 - 3.25 . .              274,100                  5.37  $          2.21            61,100  $          2.93
3.33 - 4.25 . .            1,452,943                  2.40  $          3.74         1,184,283  $          3.78
4.38 - 5.50 . .              482,990                  2.93  $          4.97           451,490  $          4.97
                  -------------------                                         ----------------
1.75 - 5.50 . .            2,210,033                  2.88  $          3.82         1,696,873  $          4.07
                  ===================                                         ================
</TABLE>






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
1999,  2000  and  2001  was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted average assumptions:  risk-free
interest rates ranging from 4.2% to 6.6%, expected volatility of 39.4% to 50.8%,
expected  dividend  yield  of  0%  to  8.9%  and expected lives of 2 to 6 years.

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 24, 2001   June 25, 2000   June 27, 1999
                            --------------  --------------  --------------
                             As Reported      Pro Forma      As Reported    Pro Forma   As Reported   Pro Forma
                            --------------  --------------  --------------  ----------  ------------  ----------
<S>                         <C>             <C>             <C>             <C>         <C>           <C>
Net income . . . . . . . .  $        2,480  $        2,288  $        2,884  $    2,872  $      2,752  $    2,291
Basic earnings per share .  $         0.23  $         0.22  $         0.25  $     0.25  $       0.24  $     0.20
Diluted earnings per share  $         0.23  $         0.22  $         0.25  $     0.25  $       0.23  $     0.19


</TABLE>




The effects of applying SFAS 123 in this 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.

NOTE  I  -  COMMITMENTS  AND  CONTINGENCIES:

The Company is subject to 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.  Management believes that any
liabilities  arising  from  these claims and contingencies are either covered by
insurance  or  would  not have a material adverse effect on the Company's annual
results  of  operations  or  financial  condition.

On  April  30, 1998, Mid-South Pizza Development, Inc., an area developer of the
Company  ("Mid-South")  entered  into  a  promissory  note  whereby, among other
things,  Mid-South  borrowed  $1,330,000 from a third party lender (the "Loan").
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.  As part of the terms and conditions of the Loan, the Company was
required  to guaranty the obligations of Mid-South under the Loan.  In the event
such  guaranty  ever  required payment, the Company has personal guarantees from
certain  Mid-South  principals  and  a  security  interest  in  certain personal
property.

 NOTE  J  -  RELATED  PARTIES:

One  of  the  individuals  nominated  by the Company and elected to serve on its
Board  of Directors is a franchisee.  This franchisee currently operates a total
of  13  restaurants located in Arkansas.  Purchases by this franchisee comprised
6%  of  the Company's total food and supply sales in fiscal 2001.  Royalties and
license fees and area development sales from this franchisee comprised 3% of the
Company's  total  franchise  revenues  in fiscal 2001.  As franchised units, his
restaurants  pay  royalties to the Company and purchase a majority of their food
and supplies from the Company's distribution division.  As of June 24, 2001, his
accounts  and  note  payable  to  the  Company  were  $875,294.

The  Company  believes the above transactions were at the same prices and on the
same  terms  available  to  non-related  third  parties.

In  October  1999,  the  Company  loaned  $2,506,754  to certain officers of the
Company  in  the  form  of  promissory notes due in June 2004 to acquire 900,000
shares  of  the  Company's  common  stock  through  the exercise of vested stock
options  previously  granted  to  them  in  1995 by the Company.  The notes bear
interest  at  the  same floating interest rate the Company pays on its revolving
credit line with Wells Fargo and are collateralized by certain real property and
existing  Company  stock  owned  by  the officers.  The notes are reflected as a
reduction  to  stockholders'  equity.

In  July  2000,  the Company loaned $302,581 to an officer of the Company 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  in  1995 by the Company.  In October 2000, a $164,647 principal payment
was  made  on  the  note.  The note bears interest at the same floating interest
rate  the  Company  pays  on  its  revolving credit line with Wells Fargo and is
collateralized  by certain real property and existing Company stock owned by the
officer.  The  note  is  reflected  as  a  reduction  to  stockholders'  equity.

NOTE  K  -  TREASURY  STOCK:

For  the  period  of  September  1995  through  June 2001, the Company purchased
4,982,061 shares of its own Common Stock from time to time on the open market at
a  total  cost  of $20.8 million.  In April 1999, the Company received a gift of
4,945  shares  from  a  vendor which was recorded at current market value in the
amount  of  $15,000.  The purchases of common shares described above were funded
from  working  capital,  and  reduced  the  Company's  outstanding  shares  by
approximately  31%.

In  June  1995,  the  Company  adopted  the  par  value method of accounting for
treasury  share  purchases  with  the intent to retire the shares purchased.  In
December  1999, the Company changed its method of accounting for treasury shares
purchased to the cost method because it is now the Company's intent to reissue a
portion  of  the  shares  held  in treasury.  Accordingly, retained earnings and
additional  paid  in capital as of June 27, 1999 and June 28, 1998 were adjusted
by  $5,361,115  and  $431,166,  and  $2,975,817  and  $211,940,  respectively.

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 24, 2001
BASIC EPS
Income Available to Common Shareholders . . .  $      2,480         10,635  $     0.23
Effect of Dilutive Securities - Stock Options                           4
                                                              ------------
DILUTED EPS
Income Available to Common Shareholders
& Assumed Conversions . . . . . . . . . . . .  $      2,480         10,639  $     0.23
                                               ============  =============  ==========

YEAR ENDED JUNE 25, 2000
BASIC EPS
Income Available to Common Shareholders . . .  $      2,884         11,316  $     0.25
Effect of Dilutive Securities - Stock Options                         125
                                                                ------------
DILUTED EPS
Income Available to Common Shareholders
& Assumed Conversions . . . . . . . . . . . .  $      2,884         11,441  $     0.25
                                               ============  =============  ==========

YEAR ENDED JUNE 27, 1999
BASIC EPS
Income Available to Common Shareholders . . .  $      2,752         11,678  $     0.24
Effect of Dilutive Securities - Stock Options                          476
                                                                ------------
DILUTED EPS
Income Available to Common Shareholders
& Assumed Conversions . . . . . . . . . . . .  $      2,752         12,154  $     0.23
                                               ============  =============  ==========

</TABLE>





Options  to purchase 2,195,033 shares of common stock at exercise prices ranging
from  $2.00  to  $5.50  per share were outstanding at June 24, 2001 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 1,194,773 and 2,002,106 shares of common stock during fiscal years 2000
and 1999, respectively, were excluded from the computation of EPS in those years
because  their  inclusion  would  result  in  an  anti-dilutive  effect  on EPS.

NOTE  M  -  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 three 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 includes income from royalties, license fees and
area  development  and  foreign  master  license  sales.  The  Franchise segment
includes  the  three  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 include primarily the deferred tax
asset,  cash  and  short  term  investments,  as  well as furniture and fixtures
located  at  the  corporate  office.

Summarized  in  the  following  tables  are  net  sales  and operating revenues,
depreciation  and  amortization  expense,  interest  expense,  interest  income,
operating  profit, capital expenditures, and assets for the Company's reportable
segments  for  the  years ended June 24, 2001, June 25, 2000, and June 27, 1999:

<TABLE>
<CAPTION>


                                       JUNE 24,    JUNE 25,    JUNE 27,
                                         2001        2000        1999
                                      ----------  ----------  ----------
<S>                                   <C>         <C>         <C>
         (In thousands)
 NET SALES AND OPERATING REVENUES:
 Food and Equipment Distribution . .  $  55,732   $  58,030   $  58,101
 Franchise and Other . . . . . . . .      7,719       8,051       7,906
 Intersegment revenues . . . . . . .        861         828         847
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .     64,312      66,909      66,854
 Other revenues. . . . . . . . . . .        376         223         287
 Less intersegment revenues. . . . .       (861)       (828)       (847)
                                      ----------  ----------  ----------
   Consolidated revenues . . . . . .  $  63,827   $  66,304   $  66,294
                                      ==========  ==========  ==========

 DEPRECIATION AND AMORTIZATION:
 Food and Equipment Distribution . .  $     992   $     874   $     579
 Franchise and Other . . . . . . . .        227         120         129
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .      1,219         994         708
 Corporate administration and other.        124         216         163
                                      ----------  ----------  ----------
   Depreciation and amortization . .  $   1,343   $   1,210   $     871
                                      ==========  ==========  ==========

 INTEREST EXPENSE:
 Food and Equipment Distribution . .  $     533   $     495   $     344
 Franchise and Other . . . . . . . .          6           6           8
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .        539         501         352
 Corporate administration and other.        297         249         172
                                      ----------  ----------  ----------
   Interest Expense. . . . . . . . .  $     836   $     750   $     524
                                      ==========  ==========  ==========

 INTEREST INCOME:
 Food and Equipment Distribution . .  $      25   $      66   $      72
 Franchise and Other . . . . . . . .          -           -           -
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .         25          66          72
 Corporate administration and other.        208         126          11
                                      ----------  ----------  ----------
   Interest Income . . . . . . . . .  $     233   $     192   $      83
                                      ==========  ==========  ==========

 OPERATING PROFIT:
 Food and Equipment Distribution (1)  $   3,190   $   2,709   $   3,071
 Franchise and Other (1) . . . . . .      2,685       3,790       2,813
 Intersegment profit . . . . . . . .        256         225         216
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .      6,131       6,724       6,100
 Other revenue . . . . . . . . . . .        376         223         287
 Less intersegment profit. . . . . .       (256)       (225)       (216)
 Corporate administration and other.     (2,330)     (2,333)     (2,075)
                                      ----------  ----------  ----------
   Income before taxes . . . . . . .  $   3,921   $   4,389   $   4,096
                                      ==========  ==========  ==========
<FN>

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




<TABLE>
<CAPTION>


                                       JUNE 24,   JUNE 25,   JUNE 27,
<S>                                    <C>        <C>        <C>
                                            2001       2000       1999
                                       ---------  ---------  ---------
         (In thousands)
 CAPITAL EXPENDITURES:
 Food and Equipment Distribution. . .  $   4,438  $     413  $     391
 Franchise and Other. . . . . . . . .        227        138         66
                                       ---------  ---------  ---------
   Combined . . . . . . . . . . . . .      4,665        551        457
 Corporate administration and other .         48        203        183
                                       ---------  ---------  ---------
   Consolidated capital expenditures.  $   4,713  $     754  $     640
                                       =========  =========  =========

 ASSETS:
 Food and Equipment Distribution. . .  $  13,575  $  10,279  $  10,402
 Franchise and Other. . . . . . . . .      1,193      1,361        999
                                       ---------  ---------  ---------
 Combined . . . . . . . . . . . . . .     14,768     11,640     11,401
 Corporate administration and other .      5,104      6,051      7,185
                                       ---------  ---------  ---------
 Consolidated assets. . . . . . . . .  $  19,872  $  17,691  $  18,586
                                       =========  =========  =========

 GEOGRAPHIC INFORMATION (REVENUES):
 United States. . . . . . . . . . . .  $  63,225  $  65,047  $  64,990
 Foreign countries. . . . . . . . . .        602      1,257      1,304
                                       ---------  ---------  ---------
   Consolidated total . . . . . . . .  $  63,827  $  66,304  $  66,294
                                       =========  =========  =========

</TABLE>




NOTE  N  -  QUARTERLY  RESULTS  OF  OPERATIONS  (UNAUDITED):
The  following  summarizes the unaudited quarterly results of operations for the
fiscal  years  ended  June  24, 2001 and June 25, 2000 (in thousands, except per
share  amounts):

<TABLE>
<CAPTION>


                                                                  Quarter Ended
                                                                   --------------
<S>                                       <C>             <C>            <C>         <C>
                                          September 24,   December 24,   March 25,   June 24,
                                                    2000           2000        2001       2001
                                          --------------  -------------  ----------  ---------
FISCAL YEAR 2001
Revenues . . . . . . . . . . . . . . . .  $       16,816  $      15,520  $   15,366  $  16,125

Gross Profit . . . . . . . . . . . . . .           1,287          1,050       1,112      1,308

Net Income . . . . . . . . . . . . . . .             646            529         604        701

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

Diluted earnings per share on net income            0.06           0.05        0.06       0.06

  Quarter Ended
----------------------------------------
                                             September 26,.December 26,    March 26,  June 25,
                                                    1999           1999        2000       2000
                                          --------------  -------------  ----------  ---------
FISCAL YEAR 2000
Revenues . . . . . . . . . . . . . . . .  $       17,394  $      16,331  $   15,967  $  16,612

Gross Profit . . . . . . . . . . . . . .           1,276          1,308       1,207      1,348

Net Income . . . . . . . . . . . . . . .             747            745         673        719

Basic earnings per share on net income .            0.07           0.06        0.06       0.07

Diluted earnings per share on net income            0.07           0.06        0.06       0.07

</TABLE>





<TABLE>
<CAPTION>


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

                                                                        ADDITIONS
                                                                      ------------
                                                  BALANCE AT   CHARGED TO   CHARGED TO                       BALANCE
                                                  BEGINNING     COST AND       OTHER                          AT END
                                                  OF PERIOD      EXPENSE     ACCOUNTS    DEDUCTIONS (1)   OF  PERIOD
                                                 ------------  -----------  -----------  ---------------  -----------
<S>                                              <C>           <C>          <C>          <C>              <C>
YEAR ENDED JUNE 24, 2001
Allowance for doubtful. . . . . . . . . . . . .  $      1,102  $       210  $         -  $         (311)  $     1,001
accounts and notes receivable

YEAR ENDED JUNE 25, 2000
Allowance for doubtful. . . . . . . . . . . . .  $      1,032  $       225  $         -  $         (155)  $     1,102
accounts and notes receivable

YEAR ENDED JUNE 27, 1999
Allowance for doubtful. . . . . . . . . . . . .  $      1,007  $       237  $         -  $         (212)  $     1,032
accounts and notes receivable
<FN>

(1)  Write-off  of  receivables,  net  of  recoveries.
</TABLE>







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

     There  are  no  events  to  report  under  this  item.


 PART  III


ITEM  10  -  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

     The  information  required  by  this  Item  is  included  in  the Company's
definitive  Proxy Statement to be filed pursuant to Regulation 14A in connection
with  the  Company's  annual meeting of shareholders to be held in December 2001
(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

     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.


<PAGE>
                                     PART IV

ITEM  14  -  EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES  AND  REPORTS  ON  8-K


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

     2.     The  financial  statement schedules filed as part of this report are
listed  in  the  Index
     to  Financial  Statements and Schedules under 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.

          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     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).

10.2     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).

10.3     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).

10.4     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).

10.5     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).

10.6     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.)

10.7     Form  of  Executive  Employment Contract. (filed as Exhibit 10.4 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     Amended  Employment Agreement between the Company and C. Jeffrey Rogers
dated April 20, 2001 (filed as Exhibit 10.1 to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended March 25, 2001 and incorporated herein by
reference).*


10.10     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).*

10.11     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).*

10.12     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).*

          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).

23.0     Consent  of  Independent  Accountants.








*     Denotes  a  management  contract or compensatory plan or arrangement filed
pursuant  to  Item  14  (c)  of  this  report.

(b)     No  reports  were  filed  on  Form  8-K during the fourth quarter of the
Company's  fiscal  year  2001.


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  19,  2001     By:      /s/  Shawn  Preator
          Shawn  Preator
          Vice  President  of  Finance
          Treasurer
          (Principal  Accounting  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/Steve  A.  Ungerman     September  19,  2001
----------------------     --------------------
Steve  A.  Ungerman
Director  and  Chairman  of  the  Board

/s/C.  Jeffrey  Rogers     September  19,  2001
----------------------     --------------------
C.  Jeffrey  Rogers
Director,  Vice  Chairman  and
Chief  Executive  Officer
(Principal  Executive  Officer)

/s/Butler  E.  Powell     September  19,  2001
---------------------     --------------------
Butler  E.  Powell
Director

/s/Ramon  D.  Phillips     September  19,  2001
----------------------     --------------------
Ramon  D.  Phillips
Director

/s/F.  Jay  Taylor     September  19,  2001
------------------     --------------------
F.  Jay  Taylor
Director

/s/Bobby  L.  Clairday     September  19,  2001
----------------------     --------------------
Bobby  L.  Clairday
Director

/s/Ronald  W.  Parker     September  19,  2001
---------------------     --------------------
Ronald  W.  Parker
Director,  President  and
Chief  Operating  Officer
(Principal  Financial  Officer)





<PAGE>
                       CONSENT OF INDEPENDENT ACCOUNTANTS
                       ----------------------------------


We  hereby  consent  to  the  incorporation  by  reference  in  the Registration
Statements  on  Forms  S-8  (No.  33-56590,  No.  33-71700,  as  amended  by
Post-Effective  Amendments No. One and Two, and No. 33-77617) of PIZZA INN, INC.
of  our  report dated SEPTEMBER 6, 2001 relating to the financial statements and
financial  statement  schedule,  which  appears  in  this  Form  10-K.


PricewaterhouseCoopers  LLP

Dallas,  Texas
September  19,  2001



<PAGE>