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  29,  2003.
     Transition  report  pursuant  to  Section  13  or  15(d)  of the Securities
Exchange  Act  of  1934  for     the  transition  period  from  _____  to _____.

                         COMMISSION FILE NUMBER 0-12919

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

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

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

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

     At  September  10,  2003,  there were 10,058,674 shares of the registrant's
Common  Stock outstanding, and the aggregate Market value of registrant's Common
Stock  held by non-affiliates was $25,096,392, 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 2003, 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 that 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,  2003,  the  Pizza  Inn  system  consisted of 414 units,
including  two  Company  owned  and  operated units, a third that the Company is
currently  in  the  process  of  relocating,  and  411  franchised  units.  The
Company-operated  units are used for product testing and franchisee training, in
addition  to  serving customers.  The domestic franchised units are comprised of
224  buffet  units,  57  delivery/carry-out  units,  and  73 Express units.  The
international  franchised  units  are  comprised  of  16  buffet  units,  30
delivery/carry-out  units  and  14 Express units.  Pizza Inn units are currently
located  in  20  states  and  10  foreign countries.  Domestic units are located
predominantly  in  the  southern  half  of  the United States, with Texas, North
Carolina,  and  Mississippi accounting for approximately 34%, 15%, and 8% of the
total,  respectively.  Norco  Restaurant  Services  ("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.

     On August 21, 2002, C. Jeffrey Rogers, the Company's former Chief Executive
Officer,  resigned  his position with the Company.  In October 1999, the Company
loaned  Mr. Rogers approximately $1.9 million.  Subsequent to his departure, the
entire  outstanding  indebtedness was paid in full.  For additional information,
see  "Transactions with Related Parties".  In addition, pursuant to the terms of
that certain Severance Agreement and Release ("Agreement") dated August 21, 2002
between  C.  Jeffrey  Rogers  and  Pizza  Inn, Inc., the Company paid Mr. Rogers
$195,000  in  lieu of salary and made certain other payments as described in the
Agreement  which is Exhibit 10.13 of the Company's Form 10-K for the fiscal year
ended  June  30,  2002.

PIZZA  INN  RESTAURANTS

     Buffet  restaurants  ("Buffet") offer dine-in and carry-out service and, in
most cases, also offer delivery service.  These restaurants serve pizza on three
different  crusts  (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 Buffet concept
may be developed in one of two formats: full service, featuring a wait staff and
beverage  table  service, and self serve, allowing customers to serve themselves
from  the  buffet  bar  and  beverage  station.  The  current  standard  Buffet
restaurants  are between 3,000 and 5,000 square feet in size and seat 120 to 185
customers.  The  interior  decor  is  designed to promote a 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 Buffet
restaurants,  but  do  not  offer  buffet service.   The decor of these units is
designed  to  be bright and highly visible, featuring neon, lighted displays and
awnings.

          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 200 to 400 square feet and is commonly 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, and
present franchise relationships are evidenced by a variety of contractual forms.
Common to those forms are provisions that: (i) provide an initial franchise term
of  20  years  (except  as described below) and a renewal term, (ii) require the
franchisee  to  follow  the  Pizza  Inn  system  of  restaurant  operation  and
management,  (iii)  require the franchisee to pay a franchise fee and continuing
royalties,  and  (iv)  except for Express units, 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 Buffet, $7,500 for a Delco, and $3,500 for an
Express  unit, (ii) an initial franchise term of 20 years for a Buffet, 10 years
for  a  Delco  or  Express, plus a renewal term of 10 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 Buffet
restaurant,  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 Buffet and
a  Delco,  and  2%  for  an  Express  unit.

     The  Company  has  adopted  a  franchising  strategy  that  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  that  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 Texas 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 Buffet or Delco unit,
including  the  Company,  is  entitled to membership in PIAP.  Nearly all of the
Company's  existing franchise agreements for Buffet, and Delco units require the
franchisees  to  become  members  of PIAP.  Members contribute 1% of their gross
sales  to  PIAP.  PIAP is managed by a Board of Trustees comprised 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,  2003,  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 purchases of Express unit
marketing  materials  and  similar  expenditures.

     Groups  of  franchisees in some of the Pizza Inn system's market areas have
formed  local advertising cooperatives.  These cooperatives, which may be formed
voluntarily  or  may  be required by the Company under the franchise agreements,
establish  contributions  to be made by their members and direct the expenditure
of  these  contributions on local media advertising using materials developed by
PIAP  and  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 that it typically distributes to Pizza Inn units 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,  2003,  the  Company  had  approximately  191 employees,
including 65 in the Company's corporate office, 71 at its Norco division, and 18
full-time  and 37 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 that 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.

AVAILABILITY

     The  Company  files  regular  reports,  including  quarterly Forms 10-Q and
annual  Form  10-K,  with  the  Securities and Exchange Commission (SEC).  These
reports  are  available  to  the  public  to  read  and copy at the SEC's Public
Reference  Room  at  450 Fifth Street, NW, Washington, DC 20549.  Information on
the operation of the Public Reference Room can be obtained by calling the SEC at
1-800-SEC-0300.

     The Company files these reports electronically, and the reports can also be
accessed by the public via an SEC-maintained internet site (http://www.sec.gov).
                                                            ------------------
These  reports  can  also be accessed by going to the Company's internet website
(http://www.pizzainn.com).
  ----------------------










ITEM  2  -  PROPERTIES

     In  November  2001 the Company moved into a new 40,000 square foot facility
housing  its  corporate  office  and  training center, and a 100,000 square foot
warehouse  and  distribution  facility.  These  buildings  were  constructed  on
approximately  11  acres  of  land the Company purchased in The Colony, Texas in
December  2000.  Refer to the notes to the consolidated financial statements for
information  concerning  financing  terms  and  construction  costs.

     The Company currently operates two Pizza Inn restaurants, both of which are
in  Texas.  The Company-operated units range in size from approximately 2,500 to
3,600  square feet and incur annual minimum rental charges of between $12.50 and
$20.00  per  foot.  Both  of  the  currently  operated restaurants are at leased
locations,  one of which is non-renewable and will expire in 2005 and the second
of  which  is  renewable  and  will  expire  in 2007.  In June 2003, the Company
acquired land north of Dallas, Texas in Little Elm on which a Delco unit will be
constructed  and  operated.  Refer  to  the  notes to the consolidated financial
statements  for  information  concerning  purchase  and  construction  costs.

ITEM  3  -  LEGAL  PROCEEDINGS

     On  January  18,  2002,  the  Company  was  served  with a lawsuit filed by
Blakely-Witt  &  Associates,  Inc.  in  the  District  Court,  L-193rd  Judicial
District, Dallas County, Texas (Cause No. 01-11043).  The suit alleges Pizza Inn
sent  or caused to be sent unsolicited facsimile advertisements to plaintiff and
others  in  violation  of  (i)  47  U.S.C.  Section 227(b)(1)(C) and (b)(3), the
Telephone  Consumer  Protection  Act,  and (ii) Texas Business and Commerce Code
Section  35.47.  The plaintiff has requested this matter be certified as a class
action.  We plan to vigorously defend our position in this litigation. We cannot
assure  you that we will prevail in this lawsuit and our defense could be costly
and  consume the time of our management. We are unable to predict the outcome of
this  case.  An  adverse  resolution  of this matter could materially affect our
financial  position  and  results  of  operations.

     Certain  other pending legal proceedings exist against the Company that 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  2003.


<PAGE>
                                     PART II

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

     On  September  10,  2003,  there  were  2,097 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
                                     --------------  ----
                                          2003
<S>                                  <C>             <C>
    First Quarter Ended 9/29/2002 .            1.75  0.68
    Second Quarter Ended 12/29/2002            2.99  1.60
    Third Quarter Ended 3/30/2003 .            2.60  1.33
    Fourth Quarter Ended 6/29/2003.            2.24  1.51

                                               2002
    First Quarter Ended 9/23/2001 .            2.27  1.84
    Second Quarter Ended 12/23/2001            2.16  1.03
    Third Quarter Ended 3/24/2002 .            1.67  1.20
    Fourth Quarter Ended 6/30/2002.            1.55  1.09

</TABLE>


     Under  the  Company's  bank  loan  agreement, the Company is limited in its
ability  to  pay dividends or make other distributions on the common stock.  The
Company  did  not  pay any dividends on its common stock during the fiscal years
ended  June 29, 2003 and June 30, 2002.  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.

                      EQUITY COMPENSATION PLAN INFORMATION

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

<TABLE>
<CAPTION>


                       Number of Securities to    Weighted-average       Number of Securities
<S>                    <C>                      <C>                    <C>
                       be issued upon exercise  exercise price of      remaining available for
Plan. . . . . . . . .  of outstanding options,  outstanding options,   future issuance under
Category. . . . . . .  warrants, and rights     warrants, and rights   equity compensation plans
---------------------  -----------------------  ---------------------  -------------------------
Equity Compensation
plans approved by . .                  806,150  $                3.68                  1,462,467
security holders

Equity compensation
plans not approved by                        -                      -                          -
security holders
                       -----------------------  --------------------  --------------------------
Total . . . . . . . .                  806,150  $                3.68                  1,462,467
                       =======================  =====================  =========================



</TABLE>




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



 ITEM  6  -  SELECTED  FINANCIAL  DATA

     The  following  table  contains  certain  selected  financial  data for the
Company for each of the last five fiscal years through June 29, 2003, 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
Statement  of  Financial  Accounting  Standard  ("SFAS")  128.


<TABLE>
<CAPTION>


                                          Year Ended
                                          -----------
                                           June 29,    June 30,   June 24,   June 25,    June 27,
                                             2003        2002       2001       2000        1999
                                          -----------  ---------  ---------  ---------  ----------
(In thousands, except per share amounts)
<S>                                       <C>          <C>        <C>        <C>        <C>         <C>  <C>
SELECTED INCOME STATEMENT DATA:
  Total revenues . . . . . . . . . . . .  $    58,782  $  66,642  $  65,268  $  67,640  $  67,261

  Income before taxes. . . . . . . . . .        4,643      1,723      3,921      4,389      4,096
  Net income . . . . . . . . . . . . . .        3,093      1,137      2,480      2,884      2,752
  Basic earnings per common share. . . .         0.31       0.11       0.23        .25        .24
  Diluted earnings per common share. . .         0.31       0.11       0.23        .25        .23
  Dividends declared per common share. .            -          -       0.12     .24 (2)    .18 (1)

SELECTED BALANCE SHEET DATA:
  Total assets, as restated (3). . . . .       20,796     24,318     19,576     17,395     18,290
  Long-term debt and
       capital lease obligations . . . .        9,676     15,227     11,161     10,655      6,944
<FN>

(1)     On  June  18,  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.

(3)     Total  assets include a prior period adjustment of $296,000 to properly state deferred tax asset and
liability   balances.  See  Note  A  to  the  consolidated  financial  statements  for  further  discussion.


</TABLE>

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

                   CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Management's discussion and analysis is based on the Company's consolidated
financial  statements  and  related footnotes contained within this report.  The
Company's  critical  accounting  policies  used  in  the  preparation  of  those
consolidated  financial  statements  are  discussed  below.

     The  preparation  of  financial  statements  in  conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect  the  amounts reported in the financial statements and
accompanying  notes.  Significant  estimates  made  by  management  include  the
allowance  for  doubtful  accounts,  inventory  valuation,  deferred  tax  asset
valuation  allowances,  and  legal  accruals.   Actual results could differ from
those  estimates.

     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  consists  of  income  from license fees, royalties, and
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.

     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.

     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  and  is based upon management's assessment of the market conditions
for  its  products.

     Accounts  receivable  consist primarily of receivables from food and supply
sales  and  franchise  royalties.  The  Company records a provision for doubtful
receivables  to  allow  for  any amounts which may be unrecoverable and is based
upon  an  analysis  of  the  Company's  prior  collection  experience,  customer
creditworthiness,  and  current  economic  trends.

     Notes  receivable  primarily  consist  of  notes  from  franchisees for the
purchase  of  area development and master license territories, trade receivables
and  equipment  purchases.  These notes generally have terms ranging from one to
five  years and interest rates of 6% to 12%. The Company records a provision for
doubtful  receivables to allow for any amounts which may be unrecoverable and is
based  upon  an  analysis of the Company's prior collection experience, customer
creditworthiness,  and  current  economic  trends.

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

     The  Company  assesses  its exposures to loss contingencies including legal
and  income  tax  matters  based  upon factors such as the current status of the
cases and consultations with external counsel and provides for an exposure if it
is  judged  to  be probable and estimable. If the actual loss from a contingency
differs  from  management's  estimate,  operating  results  could  be  impacted.



<PAGE>
                              RESULTS OF OPERATIONS

FISCAL  2003  COMPARED  TO  FISCAL  2002

          Diluted  earnings  per share increased 182% to $0.31 from $0.11 in the
prior  year.  Net  income  increased  172%  to $3,093,000 from $1,137,000 in the
prior  year,  on  revenues of $58,782,000 in the current year and $66,642,000 in
the  prior  year.  Pre-tax  income increased 169% to $4,643,000 from $1,723,000.
The  increase  in  net  income  was  primarily attributable to the reversal of a
pretax  charge  of approximately $1.9 million, originally recorded in June 2002,
to reserve for a note receivable owed to the Company from C. Jeffrey Rogers, the
Company's  former Chief Executive Officer.  The Company received payment in full
for  the  note  receivable  in  December  2002.  See  "Transactions with Related
Parties".

     Results  of  operations  for  fiscal  2003  include  fifty-two weeks versus
fifty-three  weeks  in  fiscal  2002.

     Food  and  supply  sales  by  the Company's Norco division include food and
paper  products, equipment, marketing material, and other distribution revenues.
Total food and supply sales decreased 11% to $51.6 million from $57.7 million in
the  prior  year  due to lower chainwide retail sales in the current year, lower
cheese  prices,  and  an  additional  week  of  operations  in  the  prior year.

     Franchise  revenue,  which includes royalties, license fees and income from
area  development  and foreign master license (collectively, "Territory") sales,
decreased  7%  or $393,000 in fiscal 2003 primarily due to lower retail sales in
the  current  year  and  an  additional  week  of  operations in the prior year.

     Restaurant  sales,  which  consist of revenue generated by Company-operated
stores,  for  the  year decreased 17% or $354,000 compared to the same period of
the  prior  year.  This  is  the  result  of  lower  comparable sales at the two
operating  Company  stores, the temporary closing of the Delco unit in September
2001,  and  an  additional  week  of  sales  in  the  prior  year.

     Other  income  primarily  consists  of  interest  income  and non-recurring
revenue  items.  Other  income  decreased  75%  or $942,000 primarily due to the
non-cash  reversal of a $700,000 reserve in the prior year, which was originally
set  up  as  the  Company  emerged  from  bankruptcy and was subsequently deemed
unnecessary.

     Cost  of  sales  decreased  12%  to $47.6 million from $54.1 million in the
prior  year.  As  a  percentage  of sales, cost of sales decreased to 89.2% from
90.5%  compared to the prior year.  Lower cost of sales is due to the additional
week  of  operations  in  the  prior year and lower cheese prices in the current
year,  as  described  above.

     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 16% or $446,000 compared
to last year primarily due to foreign tax on a master license agreement recorded
during  the  fiscal  year,  departmental  restructuring, marketing research, and
additional  staffing  levels.

     General  and  administrative  expenses  decreased 10% or $458,000 in fiscal
2003.  This is primarily the result of the full provision for all remaining rent
expense at the Company's former corporate headquarters of approximately $304,000
and  additional  legal  reserves  of  $165,000  in  the  prior  year.

     Interest  expense  decreased 5% or $43,000 in the current year due to lower
interest  rates  and  lower  debt  levels  in  the  current  year.

     Provision for income taxes increased 165% or $964,000 due to higher income,
primarily  attributable  to  the reversal of the pre-tax charge discussed above.
The  effective tax rate was 33% compared to 34% in the prior year.  The decrease
in  the  effective  tax  rate  is  primarily due to an increase in nondeductible
permanent  differences,  which was offset by a change in the valuation allowance
related  to  foreign  tax  carryforwards.

     During fiscal 2003, the Company opened for business a total of 24 new Pizza
Inn  franchise  units,  including  18  domestic  and  6  international  units.
Domestically,  36  units were closed by franchisees or terminated by the Company
typically  because  of  unsatisfactory  standards  of  operation or performance.
Additionally,  7  international  units  were  closed.




FISCAL  2002  COMPARED  TO  FISCAL  2001

          Diluted  earnings  per  share decreased 52% to $0.11 from $0.23 in the
prior year.  Net income decreased 54% to $1,137,000 from $2,480,000 in the prior
year,  on  revenues  of  $66,642,000  in the current year and $65,268,000 in the
prior  year.  Pre-tax  income  decreased 56% to $1,723,000 from $3,921,000.  The
decrease  in  net  income  was  primarily  attributable  to  a  pretax charge of
approximately  $1.9 million to reserve for a note receivable owed to the Company
from  C. Jeffrey Rogers, the Company's former Chief Executive Officer.  Based on
a  review  of certain financial information provided by Mr. Rogers, the Board of
Directors  of the Company determined the collection of the loan of approximately
$1.9  million from the Company to Mr. Rogers was doubtful.  The Company recorded
the  charge  in  the  fourth  quarter  of  fiscal  2002 to fully reserve for the
possible  nonpayment  by Mr. Rogers. The Company intended, to the extent legally
permissible,  to  enforce  this  obligation  under  the  relevant  terms  of the
Promissory Note and the Pledge Agreement. On August 21, 2002, C. Jeffrey Rogers,
the  Company's  former  Chief  Executive Officer, resigned his position with the
Company.  See  "Transactions  with  Related  Parties".

     Results  of  operations  for  fiscal  2002 include fifty-three weeks versus
fifty-two  weeks  in  fiscal  2001.

     Food  and  supply  sales  by  the Company's Norco division include food and
paper  products, equipment, marketing material, and other distribution revenues.
Total  food and supply sales increased 1% to $57.7 million from $57.0 million in
the  prior  year.  Higher  cheese prices, the additional week of operations, and
increased  sales of marketing materials were partially offset by lower chainwide
retail  sales.

     Franchise  revenue,  which includes royalties, license fees and income from
area  development  and foreign master license (collectively, "Territory") sales,
increased  3%  or  $155,000  in  fiscal  2002  primarily  due  to the sale of an
international  master  license.

     Restaurant  sales,  which  consist of revenue generated by Company-operated
stores, for the year decreased 9% or $212,000 compared to the same period of the
prior  year.  This  is  the result of the temporary closing of the Delco unit in
September  2001.

     Other  income  primarily  consists  of  interest  income  and non-recurring
revenue  items.  Other  income  increased  137% or $724,000 primarily due to the
non-cash  reversal  of  a  $700,000  reserve  which was originally set up as the
Company  emerged  from  bankruptcy,  and  is  now  deemed  unnecessary.

     Cost of sales increased less than 1% to $54.1 million from $53.8 million in
the prior year.  As a percentage of sales, cost of sales decreased to 90.5% from
90.6%  compared  to  the prior year.  Higher cost of sales due to the additional
week  of  operations,  as  described  above,  were  offset  by lower fuel costs.

     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 8% or $217,000 compared to
last  year  primarily  due  to  the  additional week of operations and increased
expenses  for  training  materials.

     General  and  administrative  expenses  increased 22% or $839,000 in fiscal
2002.  This is primarily the result of the full provision for all remaining rent
expense at the Company's former corporate headquarters of approximately $304,000
and  additional  legal  reserves  of $165,000.  Additionally, property taxes and
insurance  associated  with  the  new  facility,  along  with  the extra week of
operations  in fiscal 2002, all contributed to higher general and administrative
expenses.

     Interest  expense  decreased  less  than  1% or $4,000 in the current year.
Lower  interest  rates  and  increased  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.

     Provision  for  income taxes decreased 59% or $855,000 due to lower income.
The  effective tax rate was 34% compared to 37% in the prior year.  The decrease
in  the  effective  tax  rate  is  primarily  due to a decrease in nondeductible
permanent  differences, which were partially offset by a change in the valuation
allowance  due to the potential expiration of certain foreign tax carryforwards.

     During fiscal 2002, the Company opened for business a total of 37 new Pizza
Inn  franchise  units,  including  29  domestic  and  8  international  units.
Domestically,  46  units were closed by franchisees or terminated by the Company
typically  because  of  unsatisfactory  standards  of  operation or performance.
Additionally,  8  international  units  were  closed.


                               FINANCIAL CONDITION

     Cash  and  cash  equivalents decreased $371,000 in fiscal 2003. The Company
used  the  cash flow generated from operations plus the proceeds from an officer
loan  repayment  to  pay  down  $5.6  million  of  debt.

At  June  29, 2003 the net deferred tax asset balance was $967,000.  At June 29,
2003,  the  Company  had a valuation allowance of $153,000 which is provided for
foreign  tax  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 $153,000 related to the
potential  expiration  of  certain  foreign  tax  credit  carryforwards.
Additionally,  management  believes  that  taxable income based on the Company's
existing  franchise base should be more than sufficient to enable the Company to
realize  its  net  deferred  tax asset without reliance on material, non-routine
income.

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


<TABLE>
<CAPTION>



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

</TABLE>

     The  Company  has  realized substantial benefit from the utilization of its
net operating loss carryforwards to reduce its federal tax liability and expects
to  realize  a  benefit  in  future  years from the utilization of its temporary
differences,  which  currently  total  $967,000.  In  accordance  with SFAS 109,
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 33%, 34%, and 37% for fiscal years
2003,  2002 and 2001, respectively.  However, the actual amount of taxes paid at
the alternative minimum tax rate of approximately 0%, 0% and 0% for fiscal years
2003,  2002,  and  2001,  respectively, is significantly less than the corporate
rate  reflected  on the Company's statement of operations.  As of June 29, 2003,
the  net  operating  loss carryforwards have been fully utilized.  Therefore, in
fiscal  2004,  the  Company  will  become  a  cash  taxpayer.  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.

                         LIQUIDITY AND CAPITAL RESOURCES

     Cash  flows  from  operating  activities  are  generally  the result of net
income,  deferred  taxes,  depreciation and amortization, and changes in working
capital.  In  fiscal  2003,  the company generated cash flows of $4,021,000 from
operating  activities as compared to $5,560,000 in fiscal 2002 and $6,420,000 in
fiscal  2001.  The decrease in cash flows generated in fiscal 2003 was primarily
the result of the reversal of the bad debt expense as described in Note J of the
Company's  consolidated  financial  statements.

Cash  flows  from  investing  activities primarily reflect the Company's capital
expenditure  strategy.  In  fiscal  2003,  the Company used cash of $470,000 for
investing  activities as compared to $8,928,000 in fiscal 2002 and $4,713,000 in
fiscal  2001.  The  cash flow during fiscal 2003 consisted primarily of bar code
software  and  related  equipment,  land  for  a future Company-owned store, and
equipment  for the corporate office and the distribution facility.  The decrease
in  fiscal  2003  was  primarily the result of the construction of the corporate
office  and  distribution  facility  that  was  completed  during  fiscal  2002.

     Cash  flows  from  financing  activities  generally  reflect changes in the
Company's  borrowings  during the period, together with dividends paid on common
stock,  treasury  stock  transactions,  and exercise of stock options.  Net cash
used  for financing activities was $3,922,000 in fiscal 2003 as compared to cash
provided  by financing activities of $3,598,000 in fiscal 2002 and cash used for
financing  activities  of $1,651,000  in fiscal 2001. The Company used cash flow
from  operations and proceeds from an officer loan repayment to decrease its net
bank  borrowings  by $5,600,000 to $11,100,000 at June 29, 2003 from $16,700,000
at June 30, 2002.  Cash provided by operations totaled $4,021,000 in fiscal 2003
and  was  used  primarily,  in  conjunction  with  proceeds from an officer loan
repayment,  to pay down debt.  Net cash provided by financing activities in 2002
was  used  for  the  construction  of  the  Company's  new  corporate office and
distribution  facility.

     The  Company  signed an agreement with it's current lender, Wells Fargo, to
refinance  its  debt  under  a  $9.5  million  revolving  credit facility.  This
agreement  contains  covenants which, among other things, require the Company to
satisfy  certain  financial ratios and restrict additional debt.  The Company is
in  compliance  with  all  of  the  above  financial  ratios and restrictions on
additional  debt  as  of  June  29,  2003,  and  management believes that future
operations  and  cash  flows will enable the Company to continue compliance with
these  covenants.

     The  Company's  future  requirements  for  cash  relate   primarily  to the
repayment  of  debt, capital expenditures, including information system upgrades
and  miscellaneous  equipment,  and  the  possible  periodic purchase of its own
common  stock.

          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, could 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  29,  2003 the Company had approximately $11.1 million of variable
rate debt obligations outstanding with a weighted average interest rate of 3.14%
for  the year ending June 29, 2003.   A hypothetical 10% change in the effective
interest rate for these borrowings, assuming debt levels at June 29, 2003, would
change  interest  expense  by  approximately  $35,000.

     The Company entered into an interest rate swap effective February 27, 2001,
as  amended,  designated  as  a  cash  flow  hedge, to manage interest rate risk
relating  to the financing of the construction of the Company's new headquarters
and  to  fulfill bank requirements.  The swap agreement has a notional principal
amount  of $8.125 million with a fixed pay rate of 5.84% which began November 1,
2001  and will end November 19, 2007.  The swap's notional amount amortizes over
a  term  of  twenty  years to parallel the terms of the term loan.  Statement of
Financial  Accounting  Standards  ("SFAS")  No.  133, "Accounting for Derivative
Instruments  and  Hedging  Activities" requires that for cash flow hedges, which
hedge  the  exposure  to  variable  cash  flow  of a forecasted transaction, the
effective  portion  of  the derivative's gain or loss be initially reported as a
component  of  other  comprehensive  income in the equity section of the balance
sheet  and  subsequently  reclassified  into  earnings  when  the  forecasted
transaction  affects earnings.  Any ineffective portion of the derivative's gain
or  loss  is  reported  in  earnings immediately.  At June 29, 2003 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.

                                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.

<PAGE>
                     CONTRACTUAL OBLIGATIONS AND COMMITMENTS
The  following  chart  summarizes  all of the Company's material obligations and
commitments  to  make  future  payments  under  contracts such as debt and lease
agreements  as  of  June  29,  2003  (in  thousands):

<TABLE>
<CAPTION>



<S>                                  <C>      <C>     <C>       <C>     <C>
                                           Less Than 1 . 1-3     4-5     After 5
                                     Total ..  Year    Years   Years      Years
-----------------------------------  -------  ------  --------  ------   -------
Bank debt . . . . . . . . . . . . .  $11,091  $1,448  $  3,313  $6,330  $    -
Operating lease obligations . . . .    3,366   1,090     1,712     564       -
Capital lease obligations (1) . . .      142     109        20      13       -
                                     -------  ------  --------  ------  -    -
Total contractual cash obligations.  $14,599  $2,647  $  5,045  $6,907  $    -
                                     =======  ======  ========  ======      ==

</TABLE>

(1)  Does  not  include  amount  representing  interest.

                        TRANSACTIONS WITH 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  11  restaurants located in Arkansas.  Purchases by this franchisee comprised
6% and 6% of the Company's total food and supply sales in fiscal 2003 and fiscal
2002,  respectively.  Royalties and license fees and area development sales from
this franchisee comprised 4% and 3% of the Company's total franchise revenues in
fiscal 2003 and fiscal 2002, respectively.  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 29, 2003 and June 30,
2002,  his  accounts and note payable to the Company were $854,780 and $685,669,
respectively.

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

In October 1999,  the Company loaned $557,056 to Ronald W. Parker in the form of
a promissory note due  in  June  2004 to acquire 200,000 shares of the Company's
common  stock through the exercise of vested stock options previously granted to
him  in  1995  by  the  Company.  The  note  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
Ronald W. Parker.  The note is reflected as a reduction to shareholders' equity.
As  of  June  29,  2003,  the  current  note  balance  is  $557,056.

In  July  2000, the Company also loaned $302,581 to Ronald W. Parker in the form
of a promissory note due in June 2004 to acquire 200,000 shares of the Company's
common  stock through the exercise of vested stock options previously granted in
1995 by the Company.  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
Ronald W. Parker.  The note is reflected as a reduction to shareholders' equity.
As  of  June  29,  2003,  the  current  note  balance  is  $131,853.


<PAGE>
                            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  Schedule:



FINANCIAL  STATEMENTS                                                  PAGE  NO.


Report  of  Independent  Auditors.                                            17

Consolidated  Statements  of  Operations  for  the  years  ended
     June  29,  2003,  June  30,  2002,  and  June  24,  2001.                18

Consolidated  Statements  of  Comprehensive  Income  for  the years ended     18
     June  29,  2003,  June  30,  2002,  and  June  24,  2001.

Consolidated  Balance  Sheets  at  June  29,  2003  and  June  30,  2002.     19

Consolidated  Statements  of  Shareholders'  Equity  for  the  years
     ended  June  29,  2003,  June  30,  2002,  and  June  24,  2001.         20

Consolidated  Statements  of  Cash  Flows  for  the  years  ended June 29, 2003,
     June  30,  2002,  and  June  24,  2001.                                  21

Notes  to  Consolidated  Financial  Statements.                               23



FINANCIAL  STATEMENT  SCHEDULE


Schedule  II   -  Consolidated  Valuation  and  Qualifying  Accounts          38

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

SIGNATURES                                                                    43



<PAGE>


                         REPORT OF INDEPENDENT AUDITORS

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

In our opinion, the consolidated financial statements listed in the accompanying
index,  after  the  restatement  described  in  Note  A,  present fairly, in all
material  respects,  the  financial  position  of  Pizza  Inn,  Inc.  and  its
subsidiaries  at  June  29,  2003  and  June  30, 2002, and the results of their
operations  and their cash flows for each of the three years in the period ended
June 29, 2003 in conformity with accounting principles generally accepted in the
United  States of America.  In addition, in our opinion, the financial statement
schedule  listed  in  the  accompanying  index  presents fairly, in all material
respects,  the  information  set forth therein when read in conjunction with the
related  consolidated  financial  statements.  These  financial  statements  and
financial statement schedule are the responsibility of the Company's management;
our  responsibility  is  to express an opinion on these financial statements and
financial  statement  schedule  based on our 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.

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



PRICEWATERHOUSECOOPERS  LLP
Dallas,  Texas
September  25,  2003


<TABLE>
<CAPTION>

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



<S>                                                                    <C>                       <C>                       <C>
                                                                                     YEAR ENDED
                                                                              ----------------------
                                                                     JUNE 29,                  JUNE 30,                  JUNE 24,
                                                                        2003                      2002                      2001
                                                     ------------------------  ------------------------  ------------------------
REVENUES:
  Food and supply sales . . . . . . . . . . . . . .  $                51,556   $                57,727   $                57,020
  Franchise revenue . . . . . . . . . . . . . . . .                    5,135                     5,528                     5,373
  Restaurant sales. . . . . . . . . . . . . . . . .                    1,780                     2,134                     2,346
  Other income. . . . . . . . . . . . . . . . . . .                      311                     1,253                       529
                                                     ------------------------  ------------------------  ------------------------
                                                                      58,782                    66,642                    65,268
                                                     ------------------------  ------------------------  ------------------------

COSTS AND EXPENSES:
  Cost of sales . . . . . . . . . . . . . . . . . .                   47,583                    54,146                    53,783
  Franchise expenses. . . . . . . . . . . . . . . .                    3,311                     2,865                     2,648
  General and administrative expenses . . . . . . .                    4,251                     4,709                     3,870
  Provision for (recovery of) bad debt (see Note J)                   (1,795)                    2,367                       210
  Interest expense (net of capitalized interest of
    $0, $178, and $102, respectively) . . . . . . .                      789                       832                       836
                                                     ------------------------  ------------------------  ------------------------
                                                                      54,139                    64,919                    61,347
                                                     ------------------------  ------------------------  ------------------------

INCOME BEFORE INCOME TAXES. . . . . . . . . . . . .                    4,643                     1,723                     3,921

  Provision for income taxes. . . . . . . . . . . .                    1,550                       586                     1,441
                                                     ------------------------  ------------------------  ------------------------

NET INCOME. . . . . . . . . . . . . . . . . . . . .                 3,093                    1,137                     2,480
                                                     ========================  ========================  ========================

BASIC EARNINGS PER COMMON SHARE . . . . . . . . . .                   0.31                     0.11                      0.23
                                                     ========================  ========================  ========================

DILUTED EARNINGS PER COMMON SHARE . . . . . . . . .                   0.31                     0.11                      0.23
                                                     ========================  ========================  ========================

DIVIDENDS DECLARED PER COMMON SHARE . . . . . . . .                       -                        -                     0.12
                                                     ========================  ========================  ========================

WEIGHTED AVERAGE COMMON SHARES. . . . . . . . . . .                   10,058                    10,092                    10,635
                                                     ========================  ========================  ========================

WEIGHTED AVERAGE COMMON AND
  POTENTIALLY DILUTIVE COMMON SHARES. . . . . . . .                   10,061                    10,095                    10,639
                                                     ========================  ========================  ========================


                                                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                                  (IN THOUSANDS)

                                                                                              YEAR ENDED
                                                                     ---------------------------------------------------
                                                                      JUNE 29,. . . . . . . .  JUNE 30,                  JUNE 24,
                                                                        2003                      2002                      2001
                                                     ------------------------  ------------------------  ------------------------

    Net Income. . . . . . . . . . . . . . . . . . .  $                 3,093   $                 1,137   $                 2,480
    Interest rate swap loss (net of tax benefit of
        $168, $129, and $38, respectively). . . . .                     (326)                     (251)                      (73)
                                                     -----------------------   -----------------------   ------------------------
    Comprehensive Income. . . . . . . . . . . . . .  $                 2,767   $                   886   $                 2,407
                                                     ========================  ========================  ========================
<FN>

                                   See accompanying Notes to Consolidated Financial Statements.

</TABLE>


<TABLE>
<CAPTION>

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


                                                                           JUNE 29,               JUNE 30,
ASSETS                                                                       2003                   2002
                                                                     ---------------------  ---------------------
(as restated)
CURRENT ASSETS
<S>                                                                  <C>                    <C>
  Cash and cash equivalents . . . . . . . . . . . . . . . . . . . .  $                399   $                770
  Accounts receivable, less allowance for doubtful
    accounts of $722 and $829, respectively . . . . . . . . . . . .                 3,730                  3,867
  Notes receivable, current portion, less allowance
    for doubtful accounts of $175 and $354, respectively. . . . . .                   260                    332
  Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . .                 1,511                  1,526
  Deferred tax assets, net. . . . . . . . . . . . . . . . . . . . .                   585                  1,307
  Prepaid expenses and other. . . . . . . . . . . . . . . . . . . .                   533                    905
                                                                     ---------------------  ---------------------
      Total current assets. . . . . . . . . . . . . . . . . . . . .                 7,018                  8,707
Property, plant and equipment, net. . . . . . . . . . . . . . . . .                13,126                 13,567
Property under capital leases, net. . . . . . . . . . . . . . . . .                   120                    337
Deferred tax assets, net. . . . . . . . . . . . . . . . . . . . . .                   382                  1,041
Long-term notes receivable, less
    allowance for doubtful accounts of $19 and $20, respectively. .                    41                    191
Deposits and other. . . . . . . . . . . . . . . . . . . . . . . . .                   109                    475
                                                                     ---------------------  ---------------------
                                                                     $             20,796   $             24,318
                                                                     =====================  =====================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable - trade. . . . . . . . . . . . . . . . . . . . .  $              1,217   $              1,527
  Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . .                 1,950                  2,529
  Current portion of long-term debt . . . . . . . . . . . . . . . .                 1,448                  1,656
  Current portion of capital lease obligations. . . . . . . . . . .                   109                    229
                                                                     ---------------------  ---------------------
    Total current liabilities . . . . . . . . . . . . . . . . . . .                 4,724                  5,941

LONG-TERM LIABILITIES
  Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . .                 9,643                 15,091
  Long-term capital lease obligations . . . . . . . . . . . . . . .                    33                    136
  Other long-term liabilities . . . . . . . . . . . . . . . . . . .                   989                    517
                                                                     ---------------------  ---------------------
                                                                                   15,389                 21,685
                                                                     ---------------------  ---------------------

COMMITMENTS AND CONTINGENCIES (See Note I)

SHAREHOLDERS' EQUITY
  Common Stock, $.01 par value; authorized 26,000,000
    shares; issued 14,956,319 and 14,955,819 shares, respectively;
    outstanding 10,058,674 and 10,058,174 shares, respectively. . .                   150                    150
  Additional paid-in capital. . . . . . . . . . . . . . . . . . . .                 7,825                  7,824
  Loans to officers, less allowance for doubtful
    accounts of $0 and $1,750, respectively . . . . . . . . . . . .                  (569)                  (575)
  Retained earnings . . . . . . . . . . . . . . . . . . . . . . . .                18,135                 15,042
  Accumulated other comprehensive loss. . . . . . . . . . . . . . .                  (650)                  (324)
  Treasury stock at cost
    Shares in treasury: 4,897,645 and 4,897,645, respectively . . .               (19,484)               (19,484)
                                                                     ---------------------  ---------------------
    Total shareholders' equity. . . . . . . . . . . . . . . . . . .                 5,407                  2,633
                                                                     ---------------------  ---------------------
                                                                     $             20,796   $             24,318
                                                                     =====================  =====================
<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 25, 2000,        10,645  $    150  $   7,708  $  (2,250)  $  12,867  $    -  $(18,282)  $  193
                         ------------  --------  ---------  ----------  ---------  ------  ---------  ------
as restated
<FN>

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
  and shares                        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 of $38)               -        -          -           -          -      (73)        -     (73)
Net income                          -        -          -           -        2,480      -         -    2,480
                              -------    ------   -------    --------      -------   ------  ------    -----
BALANCE, JUNE 24, 2001         10,320   $   150   $ 7,823     $(2,325)    $ 13,905  $   (73) $(18,911)   569
                              -------    ------   -------    --------      -------   ------  ------    -----
as  restated

Employee incentive shares          -         -         1            -           -       -         -        1
Acquisition  of  treasury
  stock (see Note K)             (262)       -         -            -            -      -       (573)  (573)
Allowance  for
  doubtful accounts                -         -         -        1,750            -      -         -    1,750
Interest  rate  swap  loss
  (net of tax of $129)             -         -         -            -            -   (251)        -    (251)
Net income                         -         -         -            -        1,137     -          -    1,137
                              -------    ------   -------    --------      -------   ------  ------    -----
BALANCE, JUNE 30, 2002,        10,058   $   150   $ 7,824    $   (575)     $15,042  $ (324) $(19,484)$ 2,633
                              -------    ------   -------    --------      -------   ------  ------    -----
as  restated

Employee incentive shares           1        -          1           -            -     -          -        1
Principal  repayment  of  loans
  by officers         -             -        -          -       1,756            -     -          -    1,756
Reversal  of  allowance  for
  doubtful accounts                 -        -          -      (1,750)           -     -          -  (1,750)
Interest  rate  swap  loss
  (net of tax of $168)              -        -          -           -            -    (326)       -    (326)
Net income                          -        -          -           -       3,093      -          -    3,093
                              -------    ------   -------    --------      -------   ------  ------    -----
BALANCE, JUNE 29, 2003         10,059   $   150   $ 7,825   $   (569)      $18,135   $(650) $(19,484) $5,407
                              =======    ======   =======    ========      =======    =====  =======   =====

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

<TABLE>
<CAPTION>

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


                                                                                    YEAR ENDED
                                                        ---------------------------------------------
                                                               JUNE 29,                 JUNE 30,                 JUNE 24,
                                                                 2003                     2002                     2001
                                                        -----------------------  -----------------------  -----------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                     <C>                      <C>                      <C>
  Net income . . . . . . . . . . . . . . . . . . . . .  $                3,093   $                1,137   $                2,480
    Adjustments to reconcile net income to
      cash provided by operating activities:
      Depreciation and amortization. . . . . . . . . .                   1,403                    1,337                    1,343
      Provision for (recovery of) bad debt . . . . . .                  (1,795)                   2,367                      210
      Deferred income taxes. . . . . . . . . . . . . .                   1,381                      538                    1,247
    Changes in assets and liabilities:
      Notes and accounts receivable. . . . . . . . . .                     204                      799                     (263)
      Inventories. . . . . . . . . . . . . . . . . . .                      15                      537                      847
      Accounts payable - trade . . . . . . . . . . . .                    (310)                    (825)                     102
      Accrued expenses . . . . . . . . . . . . . . . .                    (527)                     240                      102
      Deferred franchise revenue . . . . . . . . . . .                     (52)                      38                      (10)
      Prepaid expenses and other . . . . . . . . . . .                     609                     (608)                     362
                                                        -----------------------  -----------------------  -----------------------
      CASH PROVIDED BY OPERATING ACTIVITIES. . . . . .                   4,021                    5,560                    6,420
                                                        -----------------------  -----------------------  -----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:

    Capital expenditures . . . . . . . . . . . . . . .                    (476)                  (8,952)                  (4,713)
    Proceeds from sale of assets . . . . . . . . . . .                       6                       24                        -
                                                        -----------------------  -----------------------  -----------------------
      CASH USED FOR INVESTING ACTIVITIES . . . . . . .                    (470)                  (8,928)                  (4,713)
                                                        -----------------------  -----------------------  -----------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

    Repayments of long-term bank debt and
      capital lease obligations, net . . . . . . . . .                  (6,379)                  (3,738)                  (4,184)
    Borrowings of long-term debt . . . . . . . . . . .                     500                    7,909                    4,642
    Dividends paid . . . . . . . . . . . . . . . . . .                       -                        -                   (1,243)
    Proceeds from exercise of stock options. . . . . .                       -                        -                      298
    Officer loan payment . . . . . . . . . . . . . . .                   1,957                        -                      165
    Purchases of treasury stock. . . . . . . . . . . .                       -                     (573)                  (1,329)
                                                        -----------------------  -----------------------  -----------------------
      CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES                  (3,922)                   3,598                   (1,651)
                                                        -----------------------  -----------------------  -----------------------

Net increase (decrease) in cash and cash equivalents .                    (371)                     230                       56
Cash and cash equivalents, beginning of period . . . .                     770                      540                      484
                                                        -----------------------  -----------------------  -----------------------
Cash and cash equivalents, end of period . . . . . . .     $              399      $              770        $                540
                                                        -----------------------  -----------------------  -----------------------
<FN>

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


<TABLE>
<CAPTION>

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



                                                           YEAR ENDED
                                                  -----------
                                                   JUNE 29,    JUNE 30,   JUNE 24,
                                                     2003        2002       2001
                                                  -----------  ---------  ---------
<S>                                               <C>          <C>        <C>
CASH PAYMENTS FOR:
  Interest . . . . . . . . . . . . . . . . . . .  $       810  $     992  $     876
  Income taxes . . . . . . . . . . . . . . . . .            -         53         65


NONCASH FINANCING AND INVESTING
ACTIVITIES:
  Capital lease obligations incurred . . . . . .  $         -  $     156  $       -
  Stock issued to officers in exchange for loans            -          -        303

</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  29,  2003  the  Pizza Inn system consisted of 410 locations, including
three  Company-operated  units  (one  of  which  is  temporarily closed) and 407
franchised  units.  On June 29, 2003 the Company had franchises in 20 states and
10  foreign countries.  Domestic units are located predominantly in the southern
half of the United States, with Texas, North Carolina and Mississippi accounting
for approximately 34%, 15%, and 8%, respectively, of the total. Norco Restaurant
Services  ("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 amortized over the
useful  life  of the asset.  As of June 29, 2003, total interest of $280,000 has
been  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  thirty-  nine  years.  It is the Company's policy to periodically review the
net  realizable  value  of  its  long-lived assets when certain indicators exist
through  an  assessment of the estimated gross future cash flows related to such
assets.  In  the  event that assets are found to be carried at amounts 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  29,  2003.

ACCOUNTS  RECEIVABLE:

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

NOTES  RECEIVABLE:

Notes receivable primarily consist of notes from franchisees for the purchase of
area  development and master license territories and the refinancing of existing
trade  receivables.  These  notes  generally have terms ranging from one to five
years,  with  interest  rates of 6% to 12%.  The Company records a provision for
doubtful  receivables to allow for any amounts which may be unrecoverable and is
based  upon  an  analysis of the Company's prior collection experience, customer
creditworthiness,  and  current  economic  trends.

INCOME  TAXES:

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

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

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

<TABLE>
<CAPTION>





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

</TABLE>


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 29, 2003, June 30, 2002 and June 24, 2001, 92%, 93% and
96%,  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  29,  2003, June 30, 2002 and June 24, 2001 were $180,000, $131,000 and $0,
respectively.

STOCK  OPTIONS:

In  December  of 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation  -  Transition  and  Disclosure." SFAS No. 148 amends SFAS No. 123,
"Accounting  for  Stock-Based  Compensation"  to  provide alternative methods of
transition  for  a voluntary change to the fair value based method of accounting
for  stock-based employee compensation and amends the disclosure requirements of
SFAS  No.  123 to require prominent disclosure about the effects on reported net
income  of  an  entity's accounting policy decisions with respect to stock-based
employee  compensation.  SFAS  No.  148  also amends Accounting Principles Board
("APB")  Opinion  No. 28 "Interim Financial Report," to require disclosure about
those  effects  in interim financial information.  SFAS No. 148 is effective for
the  Company's  interim  periods  after  December  29,  2002.

SFAS  No.  123  encourages  but  does  not  require a fair value based method of
accounting  for  employee  stock options or similar equity instruments. SFAS No.
123  allows  an  entity to elect to continue to measure compensation costs under
APB  No.  25, "Accounting for Stock Issued to Employees," but requires pro forma
disclosure  of  net earnings as if the fair value based method of accounting had
been  applied.

The  Company  elected  to  follow  APB  No.  25,  and related Interpretations in
accounting  for  employee  stock  options  because  the  alternative  fair value
accounting  provided  for  under  SFAS  No.  123,  "Accounting  for  Stock Based
Compensation,"  requires  use of option valuation models that were not developed
for  use  in  valuing  employee  stock  options.  Under  APB No. 25, because the
exercise price of our employee stock options equals or exceeds the fair value of
the  underlying  stock  on  the  date  of  grant,  no  compensation  expense  is
recognized.  Pro  forma  information regarding net income and earnings per share
is  required  to  be  determined  as  if the Company had accounted for its stock
options  granted subsequent to June 25, 1995 under the fair value method of SFAS
No.  123  (see  Note  H  -  Stock  Options).

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
2001,  2002  and  2003  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 2.8% to 6.3%, expected volatility of 39.4% to 42.2%,
expected  dividend  yield  of  0%  and  expected  lives  of  2  to  3  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 29, 2003                 June 30, 2002               June 24, 2001
                            ------------------------------  --------------------------  ------------------------
                              As Reported      Pro Forma      As Reported    Pro Forma   As Reported   Pro Forma
                            --------------  --------------  --------------  ----------  ------------  ----------
<S>                         <C>             <C>             <C>             <C>         <C>           <C>
Net income . . . . . . . .  $        3,093  $        3,075  $        1,137  $    1,079  $      2,480  $    2,288
Basic earnings per share .  $         0.31  $         0.31  $         0.11  $     0.11  $       0.23  $     0.22
Diluted earnings per share  $         0.31  $         0.31  $         0.11  $     0.11  $       0.23  $     0.22


</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.

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.


<PAGE>
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 ending
June 29, 2003 and June 24, 2001 contained 52 weeks.  Fiscal year ending June 30,
2002  contained  53  weeks.

NEW  PRONOUNCEMENTS:

In  April  2002,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  of  Financial  Accounting  Standards ("SFAS") No. 145, "Rescission of
SFAS  Nos.  4,  44 and 64, Amendment of SFAS No. 13, and Technical Corrections."
Among  other provisions, SFAS No. 145 rescinds both SFAS No. 4, "Reporting Gains
and  Losses  from Extinguishment of Debt," and the amendment of SFAS No. 4, SFAS
No.  64,  "Extinguishments  of  Debt Made to Satisfy Sinking-Fund Requirements."
SFAS  No.  145 also amends SFAS No. 13, "Accounting for Leases," to eliminate an
inconsistency  between  the  accounting  for sale-leaseback transactions and the
accounting for certain lease modifications that have economic effects similar to
sale-leaseback  transactions.  SFAS  No.  145  also  amends  other  existing
authoritative  pronouncements  to  make  various  technical corrections, clarify
meanings,  or  describe  their  applicability  under  changed  conditions.  The
provisions  of  SFAS  No.  145  are applicable for fiscal years beginning after,
transactions entered into after and financial statements issued on or subsequent
to  May 15, 2002. The adoption of SFAS No. 145 did not have a significant impact
on  the  Company's  consolidated  financial  statements.

In  April  2003,  the  FASB  issued SFAS No. 149, "Amendment of Statement 133 on
Derivative  Instruments  and Hedging Activities."  SFAS 149 amends and clarifies
accounting  for derivative instruments, including certain derivative instruments
embedded  in other contracts, and for hedging activities under SFAS 133. The new
guidance  amends  SFAS  133  for  decisions made: (a) as part of the Derivatives
Implementation  Group  process that effectively required amendments to SFAS 133,
(b)  in  connection with other FASB projects dealing with financial instruments,
and (c) regarding implementation issues raised in relation to the application of
the  definition  of  a  derivative,  particularly  regarding  the  meaning of an
"underlying"  and  the  characteristics  of a derivative that contains financing
components.  The amendments set forth in SFAS 149 improve financial reporting by
requiring  that  contracts  with  comparable  characteristics  be  accounted for
similarly.  SFAS  149  is  generally  effective  for  contracts  entered into or
modified  after  June  30,  2003  (with  a  few  exceptions)  and  for  hedging
relationships  designated  after  June  30,  2003. The guidance is to be applied
prospectively, and is not expected to have a significant impact on the Company's
consolidated  financial  statements.

In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness of Others." FIN 45 clarifies the requirements for a
guarantor's  accounting  for  and  disclosures  of certain guarantees issued and
outstanding. It also specifies that a guarantor is required to recognize, at the
inception  of  the  guarantee,  a liability for the fair value of the obligation
undertaken  in  issuing the guarantee, although it does not prescribe a specific
approach  for  subsequently  measuring the guarantor's recognized liability over
the term of the guarantee. FIN 45 also specifies certain disclosures required to
be  made  in  interim and annual financial statements related to guarantees. The
recognition  and  measurement  provisions of FIN 45 are effective for guarantees
issued or modified after December 31, 2002. The accounting for guarantees issued
prior  to  this  date is not affected. Disclosure requirements are effective for
financial  statements  of  interim  or  annual periods ending after December 15,
2002.  The Company has adopted the disclosure requirements of FIN 45 (see Note I
-  Commitments  and  Contingencies)  and will begin applying the recognition and
measurement  provisions  for  all  material  guarantees entered into or modified
after  December  31, 2002. The impact of FIN 45 on future consolidated financial
statements  will  depend  upon  whether  the Company enters into or modifies any
material  guarantees.

In  January  2003,  the  FASB  issued  Interpretation  No.  46  ("FIN  46"),
"Consolidation of Variable Interest Entities," which addresses the consolidation
of  business  enterprises  (variable  interest  entities),  to  which  the usual
condition of consolidation, a controlling financial interest, does not apply. As
defined  in  FIN  46,  variable  interests  are  contractual, ownership or other
interests in an entity that change with changes in the entity's net asset value.
Variable  interests  in  an entity may arise from financial instruments, service
contracts,  guarantees,  leases or other arrangements with the variable interest
entity.  An entity that will absorb a majority of the variable interest entity's
expected  losses  or  expected  residual  returns,  as  defined  in  FIN  46, is
considered  the primary beneficiary of the variable interest entity. The primary
beneficiary  must include the variable interest entity's assets, liabilities and
results  of  operations  in  its  consolidated  financial  statements. FIN 46 is
immediately  effective  for all variable interest entities created after January
31,  2003.  For  variable  interest  entities  created  prior  to this date, the
provisions  of  FIN  46  must  be  applied  no  later  than the beginning of the
Company's  first  quarter  of  fiscal  2004.

The  Company  currently  has  contracts,  guarantees and other arrangements with
other entities to develop and operate Pizza Inn stores. The Company is currently
evaluating  the  classification  of  its  franchisees  and, as a result, has not
completed  its  assessment  of whether or not the adoption of FIN 46 will have a
material  impact  on  its  consolidated  financial  statements.

On May 31, 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments  with Characteristics of both Liabilities and Equity."  SFAS No. 150
improves  the  accounting for certain financial instruments that, under previous
guidance,  issuers  could  account  for  as  equity  and  requires  that  those
instruments be classified as liabilities (or assets in certain circumstances) in
statements  of financial position.  SFAS No. 150 affects the issuer's accounting
for three types of freestanding financial instruments: 1) Mandatorily redeemable
shares  are  required to be redeemed at a specified or determinable date or upon
an event certain to occur;  2) Put options and forward purchase contracts, which
involves  financial  instruments embodying an obligation that the issuer must or
could  choose  to  settle  by  issuing  a variable number of its shares or other
equity  instruments based solely on something other than the issuer's own equity
shares; and 3) Certain obligations that can be settled with shares, the monetary
value  of which is (i) fixed, tied solely or predominantly to a variable such as
a  market index, or (ii) varies inversely with the value of the issuers' shares.
SFAS  No.  150  also requires disclosures about alternative ways of settling the
instruments  and  the  capital  structure  of  entities-all  of whose shares are
mandatorily  redeemable.  SFAS  No. 150 is generally effective for all financial
instruments  entered  into  or  modified  after  May  31, 2003, and otherwise is
effective  at the beginning of the first interim period beginning after June 15,
2003.  The  guidance is to be applied prospectively, and is not expected to have
any  impact  on  the  Company's  consolidated  financial  statements.


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

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


<TABLE>
<CAPTION>


                                     USEFUL                   JUNE 29,                 JUNE 30,
<S>                                    <C>                        <C>                      <C>
                                      LIVES . . ..               2003                     2002
                                  -----------               --------------             --------
Property, plant and equipment:
Equipment, furniture and fixtures   3 - 7 yrs   $                5,559   $                5,192
Building. . . . . . . . . . . . .  5 - 39 yrs                   10,562                   10,557
Land. . . . . . . . . . . . . . .           -                    2,072                    1,945
Construction in progress. . . . .           -                       37                        -
Leasehold improvements. . . . . .       7 yrs                      668                    1,646
                                                -----------------------  ----------------------
                                                                18,898                   19,340
Less:  accumulated depreciation .                              (5,772)                  (5,773)
                                                          -----------  -----------------------
                                                $               13,126   $               13,567
                                                =======================  ======================
Property under capital leases:
Real Estate . . . . . . . . . . .      20 yrs   $                  118   $                  118
Equipment . . . . . . . . . . . .   3 - 7 yrs                      480                    1,635
                                                -----------------------  ----------------------
                                                                   598                    1,753
Less:  accumulated amortization .                                 (478)                 (1,416)
                                                             -----------            -----------
                                                                  120                     337
                                                =======================  ======================

</TABLE>


Depreciation and amortization expense was $1,403,000, $1,337,000, and $1,343,000
for  the  years  ended  June  29,  2003,  June  30,  2002,  and  June  24, 2001,
respectively.  In  fiscal  year  2003, fully depreciated assets of approximately
$1.2  million  were  removed from the books.  These amounts related primarily to
leasehold  improvements  at  the  Company's previous locations for the corporate
office,  distribution  center,  and  a  Company  store  that  was  closed.

NOTE  C  -  ACCRUED  EXPENSES:

Accrued  expenses  consist  of  the  following  (in  thousands):

<TABLE>
<CAPTION>


                                                         JUNE 29,               JUNE 30,
<S>                                                          <C>                    <C>
                                                             2003                   2002
                                            ---------------------  ---------------------
Compensation . . . . . . . . . . . . . . .  $                 539  $                 968
Taxes. . . . . . . . . . . . . . . . . . .                    437                    405
Legal reserves and other professional fees                    393                    346
Accrued rent . . . . . . . . . . . . . . .                      7                    304
Other. . . . . . . . . . . . . . . . . . .                    574                    506
                                            ---------------------  ---------------------

                                                           1,950                 2,529
                                            =====================  =====================
</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 $9.5 million
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.

The  Company entered into a new agreement effective December 29, 2002 with Wells
Fargo  to provide a $7.0 million revolving credit line that will expire December
31,  2004,  replacing  a  $9.5  million line that was due to expire December 31,
2003.  The  $7.0 million revolving credit line will reduce quarterly by $500,000
beginning  March  31, 2003 through December 31, 2004.  Interest on the revolving
credit  line  is  payable  monthly.  Interest is provided for at a rate equal to
prime  less  an  interest  rate  margin  from  1.0% to 0.5% or, at the Company's
option,  at  the  LIBOR  rate  plus 1.25% to 1.75%.  The interest rate margin is
based on the Company's performance under certain financial ratio tests. A 0.375%
to  0.5% annual commitment fee is payable on any unused portion of the revolving
credit  line. As of June 29, 2003 and June 30, 2002, the variable interest rates
were  2.82%  and  3.59%,  respectively,  using  a  LIBOR  rate  basis.  Amounts
outstanding  under  the  revolving  credit line as of June 29, 2003 and June 30,
2002  were  $2.5  million  and  $6.5  million,  respectively.

The  Company entered into a term note effective March 31, 2000 with Wells Fargo.
The  $5,000,000  term  note  had  outstanding  balances of $1.0 million and $2.3
million  at  June 29, 2003 and June 30, 2002, respectively, 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  LIBOR  rate plus 1.5%.  For the years ending June 29, 2003 and
June  30, 2002, the Company's interest rates were 2.81% and 3.38%, respectively.
Management believes that future operations will generate sufficient cash flow to
meet  this  obligation  at  the  maturity  date.

The  Company  entered into an agreement effective December 28, 2000, as amended,
with  Wells  Fargo  to  provide  up  to  $8.125  million  of  financing  for the
construction of the Company's new headquarters, training center and distribution
facility.  The  construction loan converted to a term loan effective January 31,
2002  with  the  unpaid  principal balance to mature on December 28, 2007.  This
term  loan will amortize over a term of twenty years, with principal payments of
$34,000  due  monthly.  Interest  on  this  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, to the LIBOR rate plus 1.5%. As of June
29,  2003  and  June 30, 2002, the variable interest rates were 2.59% and 3.34%,
respectively.  The  Company,  to  fulfill  bank  requirements,  has  caused  the
outstanding principal amount to be subject to a fixed interest rate by utilizing
an  interest  rate  swap  agreement as discussed below.  The $8.125 million term
loan  had  an  outstanding  balance  of  $7.5  million at June 29, 2003 and $8.0
million  at  June  30,  2002.

     The Company entered into an interest rate swap effective February 27, 2001,
as  amended,  designated  as  a  cash  flow  hedge, to manage interest rate risk
relating  to the financing of the construction of the Company's new headquarters
and  to  fulfill bank requirements.  The swap agreement has a notional principal
amount  of $8.125 million with a fixed pay rate of 5.84% which began November 1,
2001  and will end November 19, 2007.  The swap's notional amount amortizes over
a  term  of  twenty  years to parallel the terms of the term loan. SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" requires that for
cash flow hedges, which hedge the exposure to variable cash flow of a forecasted
transaction, the effective portion of the derivative's gain or loss be initially
reported  as  a component of other comprehensive income in the equity section of
the  balance  sheet  and  subsequently  reclassified  into  earnings  when  the
forecasted  transaction  affects  earnings.  Any  ineffective  portion  of  the
derivative's gain or loss is reported in earnings immediately.  At June 29, 2003
there  was  no  hedge  ineffectiveness.  The  Company's  expectation is that the
hedging  relationship  will  continue  to  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 29, 2003 and June 30,
2002  this  letter  of  credit was secured under the Company's revolving line of
credit.  Loss  reserves  for approximately the same amount have been recorded by
PIBCO,  Ltd. and are reflected as current liabilities in the Company's financial
statements.

The  following  chart  summarizes  all of the Company's debt obligations to make
future  payments  under  debt  agreements  as  of  June 29, 2003 (in thousands):

<TABLE>
<CAPTION>


                                   JUNE 29,
                                      2003
                                   ---------

<S>                    <C>
2004. . . . . . . . .  $              1,448
2005. . . . . . . . .                 2,907
2006. . . . . . . . .                   406
2007. . . . . . . . .                   406
2008. . . . . . . . .                 5,924
                       --------------------
Total debt obligation  $             11,091
                       ====================
</TABLE>

NOTE  E  -  INCOME  TAXES:

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

<TABLE>
<CAPTION>


                                         JUNE 29,                JUNE 30,                JUNE 24,
<S>                         <C>                    <C>                      <C>
                                             2003                    2002                    2001
                            ---------------------  -----------------------  ---------------------
Federal:
  Current. . . . . . . . .  $                   -  $                  (81)  $                 156
  Deferred . . . . . . . .                  1,550                     667                   1,285
                            ---------------------  -----------------------  ---------------------
Provision for income taxes  $               1,550  $                  586   $               1,441
                            =====================  =======================  =====================

</TABLE>
The  effective  federal  income  tax rate varied from the statutory rate for the
years  ended  June  29,  2003,  and June 30, 2002 and June 24, 2001 as reflected
below  (in  thousands):

<TABLE>
<CAPTION>

<S>                                         <C>                     <C>                      <C>
                                          JUNE 29,                 JUNE 30,                JUNE 24,
                                            2003                     2002                    2001
                                   -----------------------  -----------------------  ---------------------
Federal income taxes based on 34%
of book income                                     $1,579                    $586                   $1,333
Permanent adjustments                                 21                     (187)                      70
Change in valuation allowance                        (72)                     187                       16
Expired credits                                       22                         -                      22
                                   -----------------------  -----------------------  ---------------------
                                   $                1,550   $                 586   $                1,441
                                   =======================  =======================  =====================
</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 29,                 JUNE 30,
                                                   2003                     2002
                                  -----------------------  ----------------------
                                                                    (AS RESTATED)
<S>                               <C>                      <C>
Reserve for bad debt . . . . . .  $                  312   $                 341
Reserve for bad debt - officers.                       -                     663
Depreciable assets . . . . . . .                     (38)                    428
Deferred fees. . . . . . . . . .                      59                      70
Other reserves . . . . . . . . .                     (80)                      2
Interest rate swap loss. . . . .                     335                     167
Credit carryforwards . . . . . .                     532                     902
                                  -----------------------  ----------------------

Gross deferred tax asset . . . .  $                1,120   $               2,573

Valuation allowance. . . . . . .                    (153)                   (225)
                                  -----------------------  ----------------------

Net deferred tax asset . . . . .  $                 967     $            2,348
                                  =======================  ======================
</TABLE>

As  of  June  29,  2003,  the  Company  had  $232,000  of  foreign  tax  credit
carryforwards expiring between 2004 and 2008 and $300,000 of minimum tax credits
that  can  be  carried  forward  indefinitely.  The  valuation  allowance  was
established  under  SFAS 109, since it is more likely than not that a portion of
the  foreign  tax  credit carryforwards will expire before they can be utilized.





NOTE  F  -  LEASES:

The  real  property  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's  distribution  division currently leases a significant portion of
its  transportation equipment under operating and capital leases with terms from
five  to  seven  years.  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  29, 2003 are as follows (in
thousands):

<TABLE>
<CAPTION>


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

2004. . . . . . . . . . . . . . . . . . .  $                   114   $    1,090
2005. . . . . . . . . . . . . . . . . . .                       12          944
2006. . . . . . . . . . . . . . . . . . .                       12          768
2007. . . . . . . . . . . . . . . . . . .                       12          463
2008. . . . . . . . . . . . . . . . . . .                        1          101
Thereafter. . . . . . . . . . . . . . . .                        -            -
                                           ------------------------    --------
                                             $                 151.       3,366
                                                                       ========
Less amount representing interest . . . .                       (9)
                                           ------------------------
Present value of total obligations under
    capital leases. . . . . . . . . . . .                      142
Less current portion. . . . . . . . . . .                     (109)
                                           ------------------------
Long-term capital lease obligations . . .   $                   33
                                           ========================


</TABLE>

Rental  expense  consisted  of  the  following  (in  thousands):

<TABLE>
<CAPTION>


                     YEAR ENDED    YEAR ENDED    YEAR ENDED
                      JUNE 29,      JUNE 30,      JUNE 24,
                        2003          2002          2001
                    ------------  ------------  ------------
<S>                 <C>           <C>           <C>
Minimum rentals. .  $     1,143   $     1,773   $     1,566
Contingent rentals           14            21            19
Sublease rentals .          (97)          (99)         (102)
                    ------------  ------------  ------------
                    $     1,060   $     1,695   $     1,483
                    ============  ============  ============

</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. Effective
January 1, 2002, as amended by the Economic Growth and Tax Relief Reconciliation
Act  (EGTRRA),  the plan provides that participating employees may elect to have
between  1%  -  15%  of  their compensation deferred and contributed to the plan
subject to certain IRS limitations.  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  29, 2003, June 30, 2002, and, June 24, 2001, total
matching  contributions  to  the  tax  advantaged savings plan by the Company on
behalf  of  participating  employees  were  $82,576,  $88,770,  and  $77,000,
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 as approved by the
shareholders.  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 29, 2003             June 30, 2002             June 24, 2001
                                            ---------------          --------------           ---------------
                                                       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       1,591,233   $         3.76       2,210,033   $ 3.82  2,123,306   $ 3.91

Granted. . . . . . . . . . . . .          10,000   $         1.28           4,000   $ 2.12    464,160   $ 2.83
Exercised. . . . . . . . . . . .               -   $         0.00               -   $ 0.00   (215,000)  $ 2.50
Canceled/Expired . . . . . . . .        (795,083)  $         3.81        (622,800)  $ 3.96   (162,433)  $ 3.82
                                  ---------------  --------------  ---------------  ------  ----------  ------

Outstanding at end of year . . .         806,150   $         3.68       1,591,233   $ 3.76  2,210,033   $ 3.82
                                  ===============  ==============  ===============  ======  ==========  ======

Exercisable at end of year . . .         792,150   $         3.72       1,358,233   $ 4.02  1,696,873   $ 4.07

Weighted-average fair value of
options granted during the year.                    $        0.33                   $ 0.68              $ 0.93


</TABLE>

FIXED  PRICE  STOCK  OPTIONS

The  following  table  provides  information  on options outstanding and options
exercisable  at  June  29,  2003:

<TABLE>
<CAPTION>



                                     Options Outstanding                                Options Exercisable
                                     -------------------                              --------------------
                                               Weighted-
                                                 Average
                        Shares                  Remaining           Weighted-        Shares          Weighted-
Range of              Outstanding             Contractual           Average        Exercisable         Average
Exercise Prices    at June 29, 2003           Life (Years)     Exercise Price at June 29, 2003  Exercise Price
----------------  -------------------  --------------------  ---------------  ---------------  ---------------
<S>               <C>                  <C>                   <C>              <C>               <C>
1.28 - 3.25 . .              228,500                  3.82  $          2.16           214,500  $          2.21
3.30 - 4.25 . .              281,660                  2.84  $          3.58           281,660  $          3.58
4.38 - 5.50 . .              295,990                  1.15  $          4.95           295,990  $          4.95
                  -------------------                                         ----------------
1.28 - 5.50 . .              806,150                  2.50  $          3.68           792,150  $          3.72
                  ===================                                         ================
</TABLE>

NOTE  I  -  COMMITMENTS  AND  CONTINGENCIES:

On January 18, 2002, the Company was served with a lawsuit filed by Blakely-Witt
&  Associates,  Inc.  alleging  Pizza  Inn sent or caused to be sent unsolicited
facsimile  advertisements.  The plaintiff has requested this matter be certified
as a class action. We plan to vigorously defend our position in this litigation.
We  cannot assure you that we will prevail in this lawsuit and our defense could
be  costly  and consume the time of our management. We are unable to predict the
outcome  of  this  case.  An  adverse resolution of this matter could materially
affect  our  financial  position  and  results  of  operations.

The Company is also subject to other various claims and contingencies related to
employment  agreements,  lawsuits,  taxes,  food  product purchase contracts and
other matters arising out of the normal course of business.  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  of  June 29, 2003 the outstanding principal balance of this
loan  was  approximately  $674,000.  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.  In  the event the personal guarantees and security
interest  pledged  do not sufficiently fulfill the obligation, the Company would
assume the obligation.  As of this date, the obligation could be fully offset by
the  assumption  of  the  area development rights which are currently pledged to
Mid-South's  third  party  lender.

 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  11  restaurants located in Arkansas.  Purchases by this franchisee comprised
6% and 6% of the Company's total food and supply sales in fiscal 2003 and fiscal
2002,  respectively.  Royalties and license fees and area development sales from
this franchisee comprised 4% and 3% of the Company's total franchise revenues in
fiscal 2003 and fiscal 2002, respectively.  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 29, 2003 and June 30,
2002,  his  accounts and note payable to the Company were $854,780 and $685,669,
respectively.

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

In  October  1999,  the  Company also loaned $557,056 to Ronald W. Parker in the
form  of a promissory note  due  in  June  2004 to acquire 200,000 shares of the
Company's  common  stock through the exercise of vested stock options previously
granted  to  him  in  1995  by the Company.  The note 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  Ronald  W.  Parker.  The  note  is  reflected  as  a  reduction  to
shareholders'  equity.   As  of  June  29,  2003,  the  current  note balance is
$557,056.

In  July  2000, the Company loaned $302,581 to Ronald W. Parker in the form of a
promissory  note  due  in  June  2004 to acquire 200,000 shares of the Company's
common  stock through the exercise of vested stock options previously granted in
1995 by the Company.  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
Ronald W. Parker.  The note is reflected as a reduction to shareholders' equity.
As  of  June  29,  2003,  the  current  note  balance  is  $131,853.

NOTE  K  -  TREASURY  STOCK:

For  the  period  of  September  1995  through  June 2002, the Company purchased
5,244,161 shares of its own Common Stock from time to time on the open market at
a total cost of $21.4 million.    The Company did not purchase any shares of its
own Common Stock in fiscal 2003.  The purchases of common shares described above
were  funded  from working capital, and reduced the Company's outstanding shares
by  approximately  34%.


<PAGE>

NOTE  L  -  EARNINGS  PER  SHARE:

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

The following table shows the reconciliation of the numerator and denominator of
the  basic  EPS  calculation to the numerator and denominator of the diluted EPS
calculation  (in  thousands,  except  per  share  amounts).

<TABLE>
<CAPTION>


                                                  INCOME        SHARES      PER SHARE
<S>                                            <C>           <C>            <C>
                                                (NUMERATOR)  (DENOMINATOR)  AMOUNT
                                               ------------  -------------  ----------
YEAR ENDED JUNE 29, 2003
BASIC EPS
Income Available to Common Shareholders . . .  $      3,093         10,058  $     0.31
Effect of Dilutive Securities - Stock Options                            3
                                                                ------------
DILUTED EPS
Income Available to Common Shareholders
& Potentially Dilutive Securities . . . . . .  $      3,093         10,061  $     0.31
                                               ============  =============  ==========

YEAR ENDED JUNE 30, 2002
BASIC EPS
Income Available to Common Shareholders . . .  $      1,137         10,092  $     0.11
Effect of Dilutive Securities - Stock Options                           3
                                                                ------------
DILUTED EPS
Income Available to Common Shareholders
& Potentially Dilutive Securities . . . . . .  $      1,137         10,095  $     0.11
                                               ============  =============  ==========

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
& Potentially Dilutive Securities . . . . . .  $      2,480         10,639  $     0.23
                                               ============  =============  ==========

</TABLE>

Options  to  purchase  796,150 shares of common stock at exercise prices ranging
from  $2.00  to  $5.50  per share were outstanding at June 29, 2003 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 1,591,233 and 2,195,033 shares of common stock during fiscal years 2002
and 2001, 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 two company-owned and operated
stores.  Inter-segment  revenues  consist  of sales to the company-owned stores.
Assets  for  this  segment  include  tractor/trailers,  equipment, furniture and
fixtures.

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

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

Summarized  in  the  following  tables  are  net  sales  and operating revenues,
depreciation  and  amortization  expense,  interest  expense,  interest  income,
operating  profit,  income tax expense, capital expenditures, and assets for the
Company's  reportable segments for the years ended June 29, 2003, June 30, 2002,
and  June  24,  2001  (in  thousands):

<TABLE>
<CAPTION>


                                       JUNE 29,    JUNE 30,  JUNE 24,
<S>                                   <C>            <C>          <C>
                                           2003      2002     2001
                                      ----------  ---------- --------
 NET SALES AND OPERATING REVENUES:
 Food and Equipment Distribution . .  $  51,556   $ 57,727  $  57,020
 Franchise and Other . . . . . . . .      6,915      7,662      7,719
 Intersegment revenues . . . . . . .        664        806        861
                                      ----------  --------- ----------
   Combined. . . . . . . . . . . . .     59,135     66,195     65,600
 Other revenues. . . . . . . . . . .        311      1,253        529
 Less intersegment revenues. . . . .       (664)      (806)      (861)
                                      ----------  --------- ----------
   Consolidated revenues . . . . . .  $  58,782   $ 66,642  $  65,268
                                      ==========   ======== ==========

 DEPRECIATION AND AMORTIZATION:
 Food and Equipment Distribution . .  $     806   $    854  $     992
 Franchise and Other . . . . . . . .        101        120        227
                                      ----------    -------- ---------
   Combined. . . . . . . . . . . . .        907        974      1,219
 Corporate administration and other.        496        363        124
                                      ----------  --------- ----------
   Depreciation and amortization . .  $   1,403   $  1,337  $   1,343
                                      ==========   ======== ==========
 INTEREST EXPENSE:
 Food and Equipment Distribution . .  $     464   $    520  $     533
 Franchise and Other . . . . . . . .          5          5          6
                                      ----------   --------  ---------
   Combined. . . . . . . . . . . . .        469        525        539
 Corporate administration and other.        320        307        297
                                      ----------   --------  ---------
   Interest Expense. . . . . . . . .  $     789   $    832  $     836
                                      ==========   =======  ==========

 INTEREST INCOME:
 Food and Equipment Distribution . .  $      24   $     34  $      25
 Franchise and Other . . . . . . . .          -          -          -
                                      ----------   --------  ---------
   Combined. . . . . . . . . . . . .         24         34         25
 Corporate administration and other.         55         99        208
                                      ----------   --------  ---------
   Interest Income . . . . . . . . .  $      79   $    133  $     233
                                      ==========   ========  =========

 OPERATING PROFIT:
 Food and Equipment Distribution (1)  $   2,686   $   2,772 $    3,190
 Franchise and Other (1) . . . . . .      2,419       3,306      2,685
 Intersegment profit . . . . . . . .        197         235        256
                                      ----------   --------    -------
   Combined. . . . . . . . . . . . .      5,302       6,313      6,131
 Other revenue . . . . . . . . . . .        311       1,253        376
 Less intersegment profit. . . . . .       (197)       (235)     (256)
 Corporate administration and other.       (773)     (5,608)   (2,330)
                                      ----------   ----------  -------
   Income before taxes . . . . . . .  $   4,643   $   1,723  $   3,921
                                      ==========   ========= =========

 INCOME TAX EXPENSE:
 Food and Equipment Distribution . .  $     896   $     943  $   1,172
 Franchise and Other . . . . . . . .        808       1,124        987
                                      ----------   --------  ---------
   Combined. . . . . . . . . . . . .      1,704       2,067      2,159
 Corporate administration and other.       (154)     (1,481)     (718)
                                      ----------   ---------- --------
   Income tax expense. . . . . . . .  $   1,550   $     586  $   1,441
                                      ==========   ========= =========
         (1)  Does not include full allocation of corporate administration
</TABLE>

<TABLE>
<CAPTION>


                                      JUNE 29,   JUNE 30,   JUNE 24,
<S>                                   <C>        <C>        <C>
                                           2003       2002       2001
                                      ---------  ---------  ---------
 CAPITAL EXPENDITURES:
 Food and Equipment Distribution . .  $      62  $   8,499  $   4,438
 Franchise and Other . . . . . . . .         76         82        227
                                      ---------  ---------  ---------
   Combined. . . . . . . . . . . . .        138      8,581      4,665
 Corporate administration and other.        338        371         48
                                     ----------  --------- ----------
   Consolidated capital expenditures  $     476  $   8,952  $   4,713
                                      =========  =========  =========

 ASSETS:
 Food and Equipment Distribution . .  $  10,963  $  12,908  $  13,575
 Franchise and Other . . . . . . . .      1,049      1,079      1,193
                                      ---------  ---------  ---------
 Combined. . . . . . . . . . . . . .     12,012     13,987     14,768
 Corporate administration and other.      8,784     10,331      4,808
                                     ----------  --------- ----------
 Consolidated assets . . . . . . . .  $  20,796  $  24,318  $  19,576
                                      =========  =========  =========

 GEOGRAPHIC INFORMATION (REVENUES):
 United States . . . . . . . . . . .  $  57,714  $  66,124  $  64,666
 Foreign countries . . . . . . . . .      1,068        518        602
                                     ----------  --------- ----------
   Consolidated total. . . . . . . .  $  58,782  $  66,642  $  65,268
                                      =========  =========  =========

</TABLE>

NOTE  N  -  QUARTERLY  RESULTS  OF  OPERATIONS  (UNAUDITED):
The  following  summarizes the unaudited quarterly results of operations for the
fiscal  years  ended  June  29, 2003 and June 30, 2002 (in thousands, except per
share  amounts):

<TABLE>
<CAPTION>


                                                                   Quarter Ended
                                                                   --------------
<S>                                               <C>             <C>            <C>         <C>
                                                  September 29,   December 29,   March 30,   June 29,
                                                            2002           2002        2003       2003
                                                  --------------  -------------  ----------  ----------
FISCAL YEAR 2003
Revenues . . . . . . . . . . . . . . . . . . . .  $       15,361  $      15,164  $   14,198  $  14,059

Gross Profit . . . . . . . . . . . . . . . . . .           1,592          1,561       1,195      1,405

Net Income . . . . . . . . . . . . . . . . . . .             303          1,892         376        522

Basic earnings per share on net income . . . . .            0.03           0.19        0.04       0.05

Diluted earnings per share on net income . . . .            0.03           0.19        0.04       0.05

                                                                   Quarter Ended
                                                                 -----------------
<S>                                               <C>             <C>            <C>         <C>
                                                   September 23,..  December 23,    March 24,  June 30,
                                                            2001           2001        2002       2002
                                                  --------------  -------------  ----------  ----------
FISCAL YEAR 2002
Revenues . . . . . . . . . . . . . . . . . . . .  $       17,308  $      15,987  $   15,286  $  18,061

Gross Profit . . . . . . . . . . . . . . . . . .           1,126          1,380       1,173      2,036

Net Income (Loss). . . . . . . . . . . . . . . .             590            567         478       (498)

Basic earnings (loss) per share on net income. .            0.06           0.06        0.05      (0.05)

Diluted earnings (loss) per share on net income.            0.06           0.06        0.05      (0.05)

</TABLE>


<TABLE>
<CAPTION>


                                                 SCHEDULE II
                                              PIZZA INN, INC.
                                 CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
<S>                                              <C>           <C>          <C>          <C>           <C>          <C>
                                                                  ADDITIONS
                                                                 ------------
                                                 BALANCE AT    CHARGED TO   CHARGED TO                             BALANCE
                                                 BEGINNING     COST AND     OTHER                                   AT END
                                                 OF PERIOD     EXPENSE      ACCOUNTS     DEDUCTIONS             OF  PERIOD
                                                 ------------  -----------  -----------  ------------          -----------
ALLOWANCE FOR DOUBTFUL
ACCOUNTS AND NOTES RECEIVABLE

Year Ended June 29, 2003. . . . . . . . . . . .  $      2,953  $       155  $         -  $    (2,192)          (1)  $  916


Year Ended June 30, 2002. . . . . . . . . . . .  $      1,001  $     2,367  $         -  $      (415)          (1)  $2,953


Year Ended June 24, 2001. . . . . . . . . . . .  $      1,102  $       210  $         -  $      (311)          (1)  $1,001
<FN>

(1)  Write-off  of  receivables,  net  of  recoveries.  For  additional information related to the recovery in fiscal year
2003,  refer  to  Note  J  in  the  Company's  consolidated  financial  statements.
</TABLE>

<TABLE>
<CAPTION>



<S>                       <C>   <C>   <C>  <C>    <C>
VALUATION ALLOWANCE FOR
DEFERRED TAX ASSET

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


Year Ended June 30, 2002                         $         38  $       187  $          -  $        -                $  225


Year Ended June 24, 2001                         $         22  $        16  $          -  $         -               $   38

</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 2003
(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.

ITEM  14-  CONTROLS  AND  PROCEDURES

EVALUATION  OF  DISCLOSURE  CONTROLS  AND  PROCEDURES

     The  term "disclosure controls and procedures" is defined in Rule 13a-14(c)
of the Securities Exchange Act of 1934, or the Exchange Act. This term refers to
the  controls  and  procedures  of  a  company  that are designed to ensure that
information  required  to be disclosed by a company in the reports that it files
under  the  Exchange  Act is recorded, processed, summarized and reported within
required  time  periods.  Our  Chief  Executive  Officer and our Chief Financial
Officer  have  evaluated  the  effectiveness  of  our  disclosure  controls  and
procedures  as  of the end of the period covered by this Annual Report, and they
have  concluded  that as of that date, except as disclosed below, our disclosure
controls  and  procedures  were  effective at ensuring that required information
will be disclosed on a timely basis in our reports filed under the Exchange Act.

CHANGES  IN  INTERNAL  CONTROLS

     As  further  discussed  in  Note A to the financial statements, the Company
completed  a project to review its deferred tax asset and liability balances and
determined  a  prior period adjustment, which related to fiscal years ended 1997
and earlier, was necessary.  The Company has established controls to prepare and
reconcile  the tax balance sheet to the deferred tax assets and liabilities on a
quarterly  basis.  There  were  no  other  significant  changes  to our internal
controls  or  in  other  factors  that  could  significantly affect our internal
controls  subsequent  to  the  date  of  their evaluation by our Chief Executive
Officer  and  our  Chief  Financial  Officer.

<PAGE>
PART  IV

ITEM  15  -  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.  (filed  as  Exhibit 3.2 to the Company's Annual Report on Form
10-K  for  the  fiscal  year  ended  June  24,  2001  and incorporated herein by
reference).

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

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

          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     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).

10.2     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).

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

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

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

10.6     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).

10.7     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).

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

10.9     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).

10.10     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.)

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

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

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

10.14     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).*

10.15     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).*

10.16     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.

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

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

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

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

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




(b)     Form  8-K  filed  under  Item  5  -  Other  Events

On  September  4, 2003 the Company filed a report on Form 8-K, reporting a press
release  with  respect  to  earnings for the fourth quarter ended June 29, 2003.

On  April  18,  2003  the  Company filed a report on Form 8-K, reporting a press
release  with  respect  to  earnings for the third quarter ended March 30, 2003.

On  January  22,  2003 the Company filed a report on Form 8-K, reporting a press
release with respect to earnings for the second quarter ended December 29, 2002.

On  December  23,  2002  the  Company  filed  a report on Form 8-K, amending the
Company's  Amended  and  Restated  By-Laws  limiting  the  business  that can be
conducted  at  any  meeting of the shareholders, and detailing proper procedures
for  nominations  to  the  Board  of  Directors.

On  December  20,  2002  the  Company  filed a report on Form 8-K announcing the
resignation  of  two  Directors  and  the  appointment of two new Directors, and
publishing  the  agreement  between  the  Company  and  Newcastle Partners, L.P.

On  December 9, 2002 the Company filed a report on Form 8-K, announcing that the
Company  had  received  full payment on a note receivable owed to the Company by
the  Company's  former  Chief  Executive  Officer.

On  October  9,  2002  the  Company  filed  a  report  on Form 8-K, amending the
Company's  Amended  and  Restated  By-Laws eliminating cumulative voting for the
election  of  directors.

On  August  22,  2002,  the  Company  filed a report on Form 8-K that C. Jeffrey
Rogers,  the  Company's  Chief Executive Officer, had resigned his position with
the  Company.




<PAGE>
SIGNATURES

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

Date:   September  25,  2003     By:      /s/  Shawn  M.  Preator
          Shawn  M.  Preator
          Chief  Financial  Officer
          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/  Bobby  L.  Clairday          September  25,  2003
------------------------
Bobby  L.  Clairday
Director

/s/  Ronald  W.  Parker          September  25,  2003
-----------------------
President  and  Chief  Executive  Officer
(Principal  Executive  Officer)
Director

/s/  Butler  E.  Powell          September  25,  2003
-----------------------
Butler  E.  Powell
Director

/s/  Steven  J.  Pully           September  25,  2003
----------------------
Steven  J.  Pully
Director

/s/Mark  E.  Schwarz             September  25,  2003
--------------------
Mark  E.  Schwarz
Director

/s/F.  Jay  Taylor               September  25,  2003
------------------
F.  Jay  Taylor
Director

/s/Steve  A.  Ungerman           September  25,  2003
----------------------
Steve  A.  Ungerman
Director  and  Chairman  of  the  Board






<PAGE>