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  27,  2004.
     Transition  report  pursuant  to  Section  13  or  15(d)  of the Securities
Exchange  Act  of  1934  for     the  transition  period  from  _____  to _____.

                         COMMISSION FILE NUMBER 0-12919

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

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

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

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

     Indicate  by  check  mark  whether the registrant (1) has filed all reports
required  to  be  filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during the preceding 12 months (or such shorter period that the registrant
was  required  to  file  such  reports), and (2) has been subject to such filing
requirements  for  the  past  90  days.  Yes [X]  No  ___

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

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


     At  December 26, 2003, the last business day of the Company's most recently
completed  second  fiscal  quarter,  there  were  10,073,674  shares  of  the
registrant's  Common  Stock  outstanding,  and  the  aggregate  Market  value of
registrant's  Common  Stock  held by non-affiliates was $ 16,335,292, based upon
the  closing  price  as  of  that  date.

     On  September  20,  2004,  there were 10,133,674 shares of the registrant's
Common  Stock  outstanding.


                       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 2004, 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  20,  2004,  the  Pizza  Inn  system  consisted of 407 units,
including  two  Company owned and operated units, and 405 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
211  buffet  units,  53  delivery/carry-out  units,  and  73 Express units.  The
international  franchised  units  are  comprised  of  16  buffet  units,  37
delivery/carry-out  units  and  15 Express units.  Pizza Inn units are currently
located  in  18  states  and  11  foreign countries.  Domestic units are located
predominantly  in  the  southern  half  of  the United States, with Texas, North
Carolina,  and  Arkansas  accounting  for  approximately 34%, 14%, 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.



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 structures, 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  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 the
Company's  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 $5,000 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) required
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.  A  master  licensee  may  open  restaurants owned and
operated  by the master licensee through agreement with the Company, 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  20,  2004,  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  periodic  renewal  and continued use.  In addition, the
Company  has  obtained  trademark registrations in several foreign countries and
has  periodically  re-filed and applied for registration in others.  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 videotapes 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  20,  2004,  the  Company  had  approximately  151 employees,
including 55 in the Company's corporate office, 63 at its Norco division, and 12
full-time  and 21 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 continually increases
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

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

     The Company currently operates two Pizza Inn restaurants, both of which are
in  Texas.  One  Company  operated  unit,  a  Buffet,  is operated from a leased
location.  Annual  lease payments are approximately $14.00 per square foot.  The
lease  expires  in  2007  but has a renewal option.  The second Company-operated
unit, a Delco, was constructed on land the Company purchased north of Dallas, in
Little Elm, Texas, in June 2003.  In August 2004 the Company purchased land just
north  of  Dallas  on  which  it  intends  to  construct  and  operate  a Buffet
restaurant.

ITEM  3  -  LEGAL  PROCEEDINGS

     On  January  18,  2002,  the  Company  was  served  with a lawsuit filed by
Blakely-Witt  &  Associates, Inc. alleging that the Company sent or caused to be
sent  unsolicited facsimile advertisements.  The Company has vigorously defended
its  position in this litigation.  In July 2004 the court preliminarily approved
a  settlement  agreement  among  all parties and certified the matter as a class
action for settlement purposes only.  Under the settlement agreement the Company
would  pay  an  amount  that  will not materially affect the Company's financial
performance.  At  a  hearing  on  September 13, 2004 the court entered its final
order  and  judgment  approving  the  settlement  agreement  and  certifying the
settlement class. Pursuant to the settlement agreement the Company has agreed to
pay  $90,000  in full and final settlement of all actual and potential claims of
the  members  and potential members of the certified settlement class. The final
order  dismissed  with  prejudice  all  pending and potential claims against the
Company.

          On  July  7,  2004,  B.  Keith  Clark  resigned  as  Senior  Vice
President-Corporate  Development,  Secretary and General Counsel of the Company.
Mr. Clark has notified the Company that he has reserved his right to assert that
the  election  of Ramon D. Phillips and Robert B. Page to the board of directors
of the Company at the February 2004 annual meeting of shareholders constituted a
"change  of  control" under his employment agreement and/or that he was entitled
to  terminate  his  contract  for  "good  reason".  Pursuant to the terms of the
employment  agreement,  the  Company  has initiated an arbitration proceeding to
resolve  this  dispute.  The arbitration proceeding is in the preliminary stages
and the Company is unable to predict the outcome of the proceeding at this time.
In  the  event the Company is unsuccessful in this proceeding, the Company could
be  liable to Mr. Clark for up to $762,000. The employment agreements of each of
Ronald  W.  Parker,  Ward  T.  Olgreen  and  Shawn  M.  Preator  contain similar
provisions  and  the  potential  amounts payable to each of them are as follows:
$5.4 million to Mr. Parker, $630,000 to Mr. Olgreen and $597,000 to Mr. Preator.
The  aggregate  of  these  payments  for which the Company would be obligated is
approximately $7.4 million.  The Company disagrees with Mr. Clark's claim that a
"change  of  control"  has occurred under his employment agreement or that he is
entitled  to  terminate  his  contract  for "good reason".  The Board obtained a
written  legal  opinion that the "change of control" provision was not triggered
by  the  results  of  its  February  2004  annual meeting.  The Company plans to
vigorously  defend our position in the matter; however, we cannot assure that we
will prevail in this matter and our defense could be costly and consume the time
of  our management.  We are unable to predict the outcome of this matter, and no
accrual  has been made as of June 27, 2004.  An adverse resolution of the 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  2004.


<PAGE>
                                     PART II

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

     On  September  20,  2004,  there  were  2,086 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
<S>                                         <C>     <C>
                                            High     Low
                                     --------------  ----
2004
    First Quarter Ended 9/28/2003 .      $   3.95  $ 1.80
    Second Quarter Ended 12/28/2003          3.06    2.50
    Third Quarter Ended 3/28/2004 .          3.07    2.70
    Fourth Quarter Ended 6/27/2004.          3.09    2.58

2003
    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

</TABLE>
     Under  the  Company's  bank  loan  agreement, the Company is limited in its
ability  to  pay dividends or make other distributions on its common stock.  The
Company  did  not  pay any dividends on its common stock during the fiscal years
ended  June 27, 2004 and June 29, 2003.  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>




<S>                    <C>                      <C>                    <C>
                       Number of Securities to  Weighted-average       Number of Securities
                       be issued upon exercise  exercise price of      remaining available for
Plan. . . . . . . . .  of outstanding options,  outstanding options,   future issuance under
Category. . . . . . .  warrants, and rights     warrants, and rights   equity compensation plans
---------------------  -----------------------  ---------------------  -------------------------
Equity Compensation
plans approved by
security holders. . .                  480,700  $                3.42                  1,707,917

Equity compensation
plans not approved by                        -                      -                          -
security holders
                       -----------------------  --------------------  --------------------------
Total . . . . . . . .                  480,700  $                3.42                  1,707,917
                       =======================  =====================  =========================


</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 27, 2004, and should
be  read in conjunction with the financial statements and schedules in Item 8 of
this  report.

<TABLE>
<CAPTION>


                                                                    Year Ended
                                                                     ----------
                                           June 27,    June 29,   June 30,    June 24,   June 25,
                                             2004        2003       2002        2001       2000
                                          -----------  ---------  ---------  ----------  ---------
                                                    (In thousands, except per share amounts)
<S>                                       <C>          <C>        <C>        <C>         <C>
SELECTED INCOME STATEMENT DATA:
  Total revenues . . . . . . . . . . . .  $    60,212  $  58,782  $  66,642  $  65,268   $  67,640

  Income before taxes. . . . . . . . . .        3,648      4,643      1,723      3,921       4,389
  Net income . . . . . . . . . . . . . .        2,243      3,093      1,137      2,480       2,884
  Basic earnings per common share. . . .         0.22       0.31       0.11       0.23         .25
  Diluted earnings per common share. . .         0.22       0.31       0.11       0.23         .25
  Dividends declared per common share. .            -          -          -       0.12         .24 (1)

SELECTED BALANCE SHEET DATA:
  Total assets . . . . . . . . . . . . .       20,906     20,796     24,318 (2) 19,576 (2)  17,395 (2)
  Long-term debt and
       capital lease obligations . . . .        7,960      9,676     15,227     11,161      10,655
<FN>

(1) 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.

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


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

                   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 accounting
principles  generally  accepted  in  the  United  States  of  America  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, intangible asset valuation, 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.  The Company recognizes the fee to the extent
its  obligations  are  fulfilled  and  of  cash  received.

     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.  After all attempts to collect a
receivable  have  failed,  the  receivable is written off against the allowance.

     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.  After all attempts to collect a
receivable  have  failed,  the  receivable is written off against the allowance.

     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  2004  COMPARED  TO  FISCAL  2003

          Diluted  earnings  per  share decreased 29% to $0.22 from $0.31 in the
prior year.  Net income decreased 27% to $2,243,000 from $3,093,000 in the prior
year,  on  revenues  of  $60,212,000  in the current year and $58,782,000 in the
prior  year.  Pre-tax  income  decreased 21% to $3,648,000 from $4,643,000.  The
decrease  in  net  income was primarily attributable to the reversal of a pretax
charge  in  the  prior  year of approximately $1.9 million, which was originally
recorded in June 2002, to reserve for a note receivable owed to the Company from
C.  Jeffrey  Rogers, the Company's former Chief Executive Officer.   The Company
received  payment  in  full  for  the  note  receivable  in  December 2002.  See
"Transactions  with  Related  Parties".

          Results  of  operations for fiscal 2004 include fifty-two weeks versus
fifty-two  weeks  in  fiscal  2003.

     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 3% to $53,072,000 from $51,556,000 in  the
prior  year  due  primarily  to  higher  cheese  prices.

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

     Restaurant  sales,  which  consist of revenue generated by Company-operated
stores, decreased 15% or $263,000 compared to the same period of the prior year.
The  Company  opened a new Delco unit on January 9, 2004.  The Company also sold
an  existing  Buffet  unit effective March 1, 2004. The year-to-date decrease is
primarily  the  result  of  lower  comparable  sales

     Other  income  primarily  consists  of  interest  income  and non-recurring
revenue  items.  Other  income  decreased  28% or $88,000 primarily due to lower
commissions  and  lower  interest  income.

     Cost of sales increased 4% to $49.4 million from $47.6 million in the prior
year.  The  increase  in  cost  of  sales is the result of higher cheese prices.
Block  cheese  prices averaged $1.61 per pound in fiscal 2004 vs $1.13 per pound
in  fiscal  2003.   This  increase  in cheese cost was partially offset by lower
depreciation  and  amortization  expenses  and lower transportation costs.  As a
percentage of sales, cost of sales increased to 90.4% from 89.2% compared to the
prior  year.

     Franchise  expenses  include  selling,  general and administrative expenses
(primarily  wages  and travel expenses) directly related to the sale and service
of franchises and Territories.  These expenses decreased 4% or $119,000 compared
to  last  year  primarily  due  to  a departmental restructuring offset by added
amortization costs from the reacquisition of area development rights for certain
counties  in  Kentucky  and  Tennessee.

     General  and  administrative  expenses  decreased 15% or $626,000 in fiscal
2004.  This  is  primarily  the  result of lower legal fees due to settlement of
litigation for less than the previously accrued amount and lower amortization of
a  leasehold  property  and  computer  system implementation. These savings were
partially  offset  by  higher  proxy  solicitation  expenses.

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

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

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




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  a  total  of 24 new Pizza Inn franchise units opened,
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.

<PAGE>
                               FINANCIAL CONDITION

     Cash  and  cash  equivalents increased $218,000 in fiscal 2004. The Company
used  the  cash flow generated from operations plus the proceeds from an officer
loan  repayment  to  pay  down  $2,800,000  of  debt, $682,000 to reacquire area
development  rights,  and  $655,000 to fund capital expenditures relating to the
new  Delco  unit  in  Little  Elm,  TX.

At  June  27, 2004 the net deferred tax asset balance was $288,000.  At June 27,
2004,  the  Company  had a valuation allowance of $137,000 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 $137,000 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 through
fiscal  year  2003.  In  fiscal  2004,  the Company became a cash taxpayer.  The
Company expects to realize a benefit in future years from the utilization of its
temporary  differences, which currently total $288,000.  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  income  tax  expense on its statements of
operations  at an effective corporate rate of 39%, 33%, and 34% for fiscal years
2004,  2003 and 2002, respectively.  However, the actual amount of taxes paid at
the  alternative  minimum tax rate of approximately 2.6% and 0% for fiscal years
2003  and  2002,  respectively,  is  significantly  less than the corporate rate
reflected  on  the  Company's statement of operations.  In fiscal year 2004, the
Company  paid  $635,000  in  cash  taxes.

                         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  2004,  the Company generated cash flows of $3,512,000 from
operating  activities as compared to $4,021,000 in fiscal 2003 and $5,560,000 in
fiscal  2002.  Cash provided by operations totaled $3,512,000 in fiscal 2004 and
was used primarily, in conjunction with proceeds from an officer loan repayment,
to  pay  down  debt  and  capital  expenditures  as  described  below.

Cash  flows  from  investing  activities primarily reflect the Company's capital
expenditure  strategy.  In  fiscal 2004, the Company used cash of $1,299,000 for
investing  activities  as  compared to $470,000 in fiscal 2003 and $8,928,000 in
fiscal  2002.  Cash  flow  used  for  investing  activities  during  fiscal 2004
consisted  primarily  of  the  reacquisition  of the area development rights and
capital  expenditures  relating  to  the  new  Delco  unit in Little Elm, Texas.

     Cash  flows  from  financing  activities  generally  reflect changes in the
Company's  borrowings  during  the  period,  together  with  treasury  stock
transactions,  and  exercise  of  stock  options.  Net  cash  used for financing
activities  was  $1,995,000  in  fiscal  2004  as  compared  to cash provided by
financing  activities  of  $3,922,000  in  fiscal  2003  and  cash  provided for
financing  activities  of  $3,598,000 in fiscal 2002. The Company used cash flow
from  operations and proceeds from an officer loan repayment to decrease its net
bank borrowings by $2,748,000 to $8,343,000 at June 27, 2004 from $11,091,000 at
June  29,  2003.    Net  cash  used  in financing activities in 2004 was for the
re-acquisition  of area development rights and for construction of the Company's
new  company  owned  Delco  unit  in  Little  Elm,  Texas.

     The  Company  entered  into  an agreement effective March 28, 2004 with its
current  lender to provide a $4.0 million revolving credit line that will expire
October  1,  2005, replacing a $7.0 million line that was due to expire 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 27, 2004 and June 29,
2003,  the  variable  interest rates were 2.35% and 2.81%, respectively, using a
LIBOR  rate  basis.  Amounts  outstanding  under the revolving credit line as of
June  27,  2004  and  June  29,  2003  were  $1.2  million  and  $2.5  million,
respectively.

     On July 7, 2004, B. Keith Clark resigned as Senior Vice President-Corporate
Development,  Secretary  and  General  Counsel  of  the  Company.  Mr. Clark has
notified  the Company that he has reserved his right to assert that the election
of Ramon D. Phillips and Robert B. Page to the board of directors of the Company
at  the  February  2004  annual meeting of shareholders constituted a "change of
control" under his employment agreement and/or that he was entitled to terminate
his  contract  for  "good  reason".  Pursuant  to  the  terms  of the employment
agreement,  the  Company has initiated an arbitration proceeding to resolve this
dispute.  The  arbitration  proceeding  is  in  the  preliminary  stages and the
Company  is unable to predict the outcome of the proceeding at this time. In the
event  the  Company  is  unsuccessful  in  this proceeding, the Company could be
liable  to  Mr.  Clark  for up to $762,000. The employment agreements of each of
Ronald  W.  Parker,  Ward  T.  Olgreen  and  Shawn  M.  Preator  contain similar
provisions  and  the  potential  amounts payable to each of them are as follows:
$5.4 million to Mr. Parker, $630,000 to Mr. Olgreen and $597,000 to Mr. Preator.
The  aggregate  of  these  payments  for which the Company would be obligated is
approximately $7.4 million.  The Company disagrees with Mr. Clark's claim that a
"change  of  control"  has occurred under his employment agreement or that he is
entitled  to  terminate  his  contract  for "good reason".  The Board obtained a
written  legal  opinion that the "change of control" provision was not triggered
by  the  results  of  its  February  2004  annual meeting.  The Company plans to
vigorously  defend our position in the matter; however, we cannot assure that we
will prevail in this matter and our defense could be costly and consume the time
of  our management.  We are unable to predict the outcome of this matter, and no
accrual  has been made as of June 27, 2004.  An adverse resolution of the matter
could  materially  affect  our  financial  position  and  results of operations.

     The  Company's  future  known requirements for cash relate primarily to the
repayment  of  debt, capital expenditures, including information system upgrades
and  a new company owned Buffet unit to be located  north of Dallas and periodic
purchases  of  the  Company's  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.

                                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  27,  2004  (in  thousands):


<TABLE>
<CAPTION>




                                                    Fiscal Year  Fiscal Years  Fiscal Years After Fiscal
<S>                                  <C>           <C>            <C>            <C>             <C>
                                            Total       2005      2006 - 2007    2008 - 2009   Year 2009
-----------------------------------  ------------  -------------  -------------  -------------  --------
Bank debt . . . . . . . . . . . . .  $      8,343  $         406  $       2,012  $       5,925  $      -
Operating lease obligations . . . .         2,850          1,071          1,396            309        74
Capital lease obligations (1) . . .            33             10             22              1         -
                                     ------------  -------------  -------------  -------------   -------
Total contractual cash obligations.  $     11,226  $       1,487  $       3,430  $       6,235       $74
                                     ============  =============  =============  =============  ========

</TABLE>


(1)  Does  not  include  amount  representing  interest.
                        TRANSACTIONS WITH RELATED PARTIES

Two  of  the  individuals  nominated  by the Company and elected to serve on its
Board of Directors are franchisees.  One of the franchisees currently operates a
total of 11 restaurants located in Arkansas, the other currently operates one in
Oklahoma.  Purchases by these franchisees comprised 6.5% and 6% of the Company's
total  food  and  supply  sales  in  fiscal  2004 and fiscal 2003, respectively.
Royalties  and  license  fees  and area development sales from these franchisees
comprised 3.9% and 4.2% of the Company's total franchise revenues in fiscal 2004
and  fiscal  2003,  respectively.  As  of June 27, 2004 and June 29, 2003, their
accounts  and  note  payable  to  the  Company  were  $965,838  and  $876,326,
respectively.  As  franchised  units,  their  restaurants  pay  royalties to the
Company  and  purchase  a majority of their food and supplies from the Company's
distribution  division.

The  Company believes that the above transactions were at the same prices and on
the  same  payment  terms  available to non-related parties, with one exception.
This  exception  relates  to  the  enforcement  of  the  personal guarantee by a
director  of  the $323,000 debt of a franchisee of which he is the President and
sole  shareholder.  The debt relates to food and equipment purchases and royalty
payments  for  the  franchisee during a period when the director had transferred
his  interest  in  the  franchisee,  and prior to his later reacquisition of the
franchisee.  The director has affirmed his guarantee and confirmed that the debt
will  be  paid  in  full.

In  October 1999, the Company loaned $1,949,698 to C. Jeffrey Rogers in the form
of a promissory note due in June 2004 to acquire 700,000 shares of the Company's
common  stock through the exercise of vested stock options previously granted to
him  in  1995  by  the  Company.  The  note  bore  interest at the same floating
interest rate the Company pays on its revolving credit line with Wells Fargo and
was  collateralized  by  a  second  lien  in  certain real property and existing
Company  stock  owned  by  C.  Jeffrey  Rogers.  The first lien on both the real
property  and  Company  stock pledged by Mr. Rogers was held by Wells Fargo, Mr.
Rogers'  primary  lender.  The Board determined that doubt existed regarding the
collectibility of the note as of June 30, 2002, and recorded a pre-tax charge of
approximately  $1.9 million to fully reserve for the expected non-payment of the
debt by Mr. Rogers.  In December 2002, the Company's loan to Mr. Rogers was paid
in  full.  The reserve for the note receivable was reversed in the quarter 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  bore  interest at the same floating
interest rate the Company pays on its revolving credit line with Wells Fargo and
was  collateralized by certain real property and existing Company stock owned by
Ronald  W.  Parker.  The  note  was  reflected  as  a reduction to shareholders'
equity.   As  of  June  27,  2004,  the  note  balance  was  paid  in  full.

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


<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>
ITEM  7A  -  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  27,  2004  the Company had approximately $8.3 million of variable
rate debt obligations outstanding with a weighted average interest rate of 2.61%
for  the year ending June 27, 2004.   A hypothetical 10% change in the effective
interest rate for these borrowings, assuming debt levels at June 27, 2004, would
change  interest  expense  by  approximately  $22,000.

     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 27, 2004 there was no
hedge  ineffectiveness.  The  Company's  expectation  is  that  the  hedging
relationship  will  be  highly effective at achieving offsetting changes in cash
flows.

     The  Company  is  exposed to market risks from changes in commodity prices.
During  the  normal course of business, the Company purchases cheese and certain
other  food  products that are affected by changes in commodity prices and, as a
result,  the  Company  is  subject  to  volatility in our food sales and cost of
sales.  Management  actively  monitors  this  exposure, however, we do not enter
into financial instruments to hedge commodity prices.  The block price per pound
of  cheese  averaged $1.61 in fiscal 2004.  The estimated change in sales from a
hypothetical $0.20 change in the average cheese block price per pound would have
been  approximately  $1.4  million  in  fiscal  2004.

          In  April  2003, the FASB issued SFAS No. 149, "Amendment of Statement
133  on  Derivative Instruments and Hedging Activities." SFAS No. 149 amends and
clarifies  financial  accounting  and  reporting  for  derivative  instruments,
including  certain  derivative  instruments  embedded  in  other  contracts
(collectively  referred to as derivatives) and for hedging activities under SFAS
No.  133,  "Accounting  for Derivative Instruments and Hedging Activities." This
statement  is  effective  for  contracts entered into or modified after June 30,
2003, and for hedging relationships designated after June 30, 2003. The adoption
of  this  Statement did not have a material impact on our financial position and
results  of  operations.

     In  May 2003, the FASB issued SFAS No. 150, which establishes standards for
how  an  issuer  classifies  and  measures  certain  financial  instruments with
characteristics  of  both liabilities and equity. Specifically, it requires that
financial  instruments  within  the  scope  of  the  statement  be classified as
liabilities  because  they  embody  an  obligation of the issuer. Under previous
guidance,  many  of  these  instruments  could  be  classified  as  equity or be
reflected  as  mezzanine  equity  between  liabilities and equity on the balance
sheet.  The Company's initial adoption of this statement on June 1, 2003 did not
have  a material impact on its results of operations, financial position or cash
flows.

                                 PIZZA INN, INC.



ITEM  8  -  FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA


Index  to  Financial  Statements  and  Schedule:



FINANCIAL  STATEMENTS                                                 PAGE  NO.


Report  of  Independent  Registered  Public  Accounting  Firm.               18

Report  of  Independent  Registered  Public  Accounting  Firm.               19

Consolidated  Statements  of  Operations  for  the  years  ended
     June  27,  2004,  June  29,  2003,  and  June  30,  2002.               20

Consolidated  Statements  of  Comprehensive  Income  for  the years ended
        June  27,  2004,  June  29,  2003,  and  June  30,  2002.            20


Consolidated  Balance  Sheets  at  June  27,  2004  and  June  29,  2003.    21

Consolidated  Statements  of  Shareholders'  Equity  for  the  years
     ended  June  27,  2004,  June  29,  2003,  and  June  30,  2002.        22

Consolidated  Statements  of  Cash  Flows  for  the  years  ended June 27,
     2004, June  29,  2003,  and  June  30,  2002.                           23

Notes  to  Consolidated  Financial  Statements.                              25



FINANCIAL  STATEMENT  SCHEDULE


Schedule  II   -  Consolidated  Valuation  and  Qualifying  Accounts         39

    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                                                                   44



<PAGE>


                   REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM




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

We  conducted  our  audit in accordance with the standards of the Public Company
Accounting  Oversight  Board  (United  States).  Those standards require that we
plan  and  perform  the  audit  to obtain reasonable assurance about whether the
financial  statements and schedules are free of material misstatement.  An audit
includes  examining,  on  a  test  basis,  evidence  supporting  the amounts and
disclosures  in  the financial statements and schedules.  An audit also includes
assessing  the  accounting  principles  used  and  significant estimates made by
management,  as  well  as  evaluating  the overall presentation of the financial
statements and schedules.  We believe that our audit provides a reasonable basis
for  our  opinion.

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

/s/BDO  Seidman,  LLP
BDO SEIDMAN, LLP
Dallas,  TX
August  23,  2004










<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




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

In our opinion, the consolidated financial statements listed in the accompanying
index,  after  the  restatement  described  in  Note  A,  present fairly, in all
material  respects,  the  financial  position  of  Pizza  Inn,  Inc.  and  its
subsidiaries  at  June  29,  2003, and the results of their operations and their
cash  flows  for  each  of  the  two  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  the  standards  of  the  Public Company
Accounting  Oversight  Board  (United  States).  Those standards require that we
plan  and  perform  the  audit  to obtain reasonable assurance about whether the
financial  statements  are  free  of  material  misstatement.  An audit includes
examining,  on  a test basis, evidence supporting the amounts and disclosures in
the  financial  statements,  assessing  the  accounting  principles  used  and
significant  estimates  made by management, and evaluating the overall financial
statement  presentation.  We  believe that our 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.



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


<TABLE>
<CAPTION>

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



                                                                               YEAR ENDED
                                                          ---------------------------------------------
                                                             JUNE 27,        JUNE 29,        JUNE 30,
<S>                                                       <C>             <C>             <C>
                                                                   2004            2003            2002
                                                          --------------  --------------  --------------
REVENUES:
  Food and supply sales. . . . . . . . . . . . . . . . .  $      53,072   $      51,556   $      57,727
  Franchise revenue. . . . . . . . . . . . . . . . . . .          5,400           5,135           5,528
  Restaurant sales . . . . . . . . . . . . . . . . . . .          1,517           1,780           2,134
  Other income . . . . . . . . . . . . . . . . . . . . .            223             311           1,253
                                                          --------------  --------------  --------------
                                                                 60,212          58,782          66,642
                                                          --------------  --------------  --------------

COSTS AND EXPENSES:
  Cost of sales. . . . . . . . . . . . . . . . . . . . .         49,363          47,583          54,146
  Franchise expenses . . . . . . . . . . . . . . . . . .          3,192           3,311           2,865
  General and administrative expenses. . . . . . . . . .          3,625           4,251           4,709
  Provision for (recovery of) bad debt (see Note J). . .           (229)         (1,795)          2,367
  Interest expense (net of capitalized interest of
    $0, $0, and $178, respectively). . . . . . . . . . .            613             789             832
                                                          --------------  --------------  --------------
                                                                 56,564          54,139          64,919
                                                          --------------  --------------  --------------

INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . .          3,648           4,643           1,723

  Provision for income taxes . . . . . . . . . . . . . .          1,405           1,550             586
                                                          --------------  --------------  --------------

NET INCOME . . . . . . . . . . . . . . . . . . . . . . .  $       2,243   $       3,093   $       1,137
                                                          ==============  ==============  ==============

BASIC EARNINGS PER COMMON SHARE. . . . . . . . . . . . .  $        0.22   $        0.31   $        0.11
                                                          ==============  ==============  ==============

DILUTED EARNINGS PER COMMON SHARE. . . . . . . . . . . .  $        0.22   $        0.31   $        0.11
                                                          ==============  ==============  ==============

WEIGHTED AVERAGE COMMON SHARES . . . . . . . . . . . . .         10,076          10,058          10,092
                                                          ==============  ==============  ==============

WEIGHTED AVERAGE COMMON AND
  POTENTIALLY DILUTIVE COMMON SHARES . . . . . . . . . .         10,117          10,061          10,095
                                                          ==============  ==============  ==============

                                   CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                      (IN THOUSANDS)

                                                                        YEAR ENDED
                                                          ---------------------------------------------
                                                                JUNE 27, . . .  JUNE 29,        JUNE 30,
                                                                   2004            2003            2002
                                                          --------------  --------------  --------------

    Net Income . . . . . . . . . . . . . . . . . . . . .  $       2,243   $       3,093   $       1,137
    Interest rate swap gain (loss) (net of tax (expense)
      benefit of  ($179),  $168, and $129, respectively)            348            (326)           (251)
                                                          --------------  --------------  --------------
    Comprehensive Income . . . . . . . . . . . . . . . .  $       2,591   $       2,767   $         886
                                                          ==============  ==============  ==============
<FN>

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

<TABLE>
<CAPTION>

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


                                                                           JUNE 27,               JUNE 29,
ASSETS                                                                       2004                   2003
                                                                     ---------------------  ---------------------

CURRENT ASSETS
<S>                                                                  <C>                    <C>
  Cash and cash equivalents . . . . . . . . . . . . . . . . . . . .  $                617   $                399
  Accounts receivable, less allowance for doubtful
    accounts of $310 and $722, respectively . . . . . . . . . . . .                 3,113                  2,908
  Accounts receivable - related parties . . . . . . . . . . . . . .                   912                    822
  Notes receivable, current portion, less allowance
    for doubtful accounts of $59 and $175, respectively . . . . . .                    50                    206
  Notes receivable - related parties. . . . . . . . . . . . . . . .                    54                     54
  Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . .                 1,713                  1,511
  Deferred tax assets, net. . . . . . . . . . . . . . . . . . . . .                   183                    585
  Prepaid expenses and other. . . . . . . . . . . . . . . . . . . .                   415                    533
                                                                     ---------------------  ---------------------
      Total current assets. . . . . . . . . . . . . . . . . . . . .                 7,057                  7,018
Property, plant and equipment, net. . . . . . . . . . . . . . . . .                12,756                 13,126
Property under capital leases, net. . . . . . . . . . . . . . . . .                    18                    120
Deferred tax assets, net. . . . . . . . . . . . . . . . . . . . . .                   105                    382
Long-term notes receivable, less
    allowance for doubtful accounts of $3 and $19, respectively . .                     -                     41
Re-acquired development territory . . . . . . . . . . . . . . . . .                   866                      -
Deposits and other. . . . . . . . . . . . . . . . . . . . . . . . .                   104                    109
                                                                     ---------------------  ---------------------
                                                                     $             20,906   $             20,796
                                                                     =====================  =====================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable - trade. . . . . . . . . . . . . . . . . . . . .  $              1,246   $              1,217
  Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . .                 2,109                  1,950
  Current portion of long-term debt . . . . . . . . . . . . . . . .                   406                  1,448
  Current portion of capital lease obligations. . . . . . . . . . .                    10                    109
                                                                     ---------------------  ---------------------
    Total current liabilities . . . . . . . . . . . . . . . . . . .                 3,771                  4,724

LONG-TERM LIABILITIES
  Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . .                 7,937                  9,643
  Long-term capital lease obligations . . . . . . . . . . . . . . .                    23                     33
  Other long-term liabilities . . . . . . . . . . . . . . . . . . .                   458                    989
                                                                     ---------------------  ---------------------
                                                                                   12,189                 15,389
                                                                     ---------------------  ---------------------

COMMITMENTS AND CONTINGENCIES (See Notes D and I)

SHAREHOLDERS' EQUITY
  Common Stock, $.01 par value; authorized 26,000,000
    shares; issued 15,031,319 and 14,956,319 shares, respectively;
    outstanding 10,133,674 and 10,058,674 shares, respectively. . .                   150                    150
  Additional paid-in capital. . . . . . . . . . . . . . . . . . . .                 7,975                  7,825
  Loans to officers . . . . . . . . . . . . . . . . . . . . . . . .                     -                   (569)
  Retained earnings . . . . . . . . . . . . . . . . . . . . . . . .                20,378                 18,135
  Accumulated other comprehensive loss. . . . . . . . . . . . . . .                  (302)                  (650)
  Treasury stock at cost
    Shares in treasury: 4,897,645 and 4,897,645, respectively . . .               (19,484)               (19,484)
                                                                     ---------------------  ---------------------
    Total shareholders' equity. . . . . . . . . . . . . . . . . . .                 8,717                  5,407
                                                                     ---------------------  ---------------------
                                                                     $             20,906   $             20,796
                                                                     =====================  =====================
<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 24, 2001,           10,320 $ 150  $ 7,823   $(2,325)  $ 13,905 $ (73)    $(18,911)       $  569
                                  ------- -----  ------  ---------  --------  ---------  -------       ------
as restated
<FN>

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

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


<TABLE>
<CAPTION>

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


                                                                                      YEAR ENDED
                                                                                 -----------------------
                                                              JUNE 27,                 JUNE 29,                 JUNE 30,
                                                                2004                     2003                     2002
                                                       -----------------------  -----------------------  -----------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                    <C>                      <C>                      <C>
  Net income. . . . . . . . . . . . . . . . . . . . .  $                2,243   $                3,093   $                1,137
    Adjustments to reconcile net income to
      cash provided by operating activities:
      Depreciation and amortization . . . . . . . . .                   1,133                    1,403                    1,337
      Non cash settlement of accounts receivable. . .                    (281)                       -                        -
      Provision for (recovery of) bad debt, net . . .                    (229)                  (1,795)                   2,367
      Deferred income taxes . . . . . . . . . . . . .                     500                    1,381                      538
    Changes in assets and liabilities:
      Notes and accounts receivable . . . . . . . . .                    (270)                     204                      799
      Inventories . . . . . . . . . . . . . . . . . .                    (202)                      15                      537
      Accounts payable - trade. . . . . . . . . . . .                      29                     (310)                    (825)
      Accrued expenses. . . . . . . . . . . . . . . .                     163                     (527)                     240
      Deferred franchise revenue. . . . . . . . . . .                      (4)                     (52)                      38
      Prepaid expenses and other. . . . . . . . . . .                     430                      609                     (608)
                                                       -----------------------  -----------------------  -----------------------
      CASH PROVIDED BY OPERATING ACTIVITIES . . . . .                   3,512                    4,021                    5,560
                                                       -----------------------  -----------------------  -----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:

    Proceeds from sale of assets. . . . . . . . . . .                      38                        6                       24
    Capital expenditures. . . . . . . . . . . . . . .                    (655)                    (476)                  (8,952)
    Re-acquisition of area development territory. . .                    (682)                       -                        -
                                                       -----------------------  -----------------------  -----------------------
      CASH USED IN INVESTING ACTIVITIES . . . . . . .                  (1,299)                    (470)                  (8,928)
                                                       -----------------------  -----------------------  -----------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

    Repayments of long-term bank debt and
      capital lease obligations . . . . . . . . . . .                  (1,534)                  (1,337)                  (3,738)
    Borrowings of long-term debt. . . . . . . . . . .                       -                      500                    5,432
    Line of credit, net . . . . . . . . . . . . . . .                  (1,300)                  (5,042)                   2,477
    Proceeds from exercise of stock options . . . . .                     150                        -                        -
    Officer loan payment. . . . . . . . . . . . . . .                     689                    1,957                        -
    Purchases of treasury stock . . . . . . . . . . .                       -                        -                     (573)
                                                       -----------------------  -----------------------  -----------------------
      CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                  (1,995)                  (3,922)                   3,598
                                                       -----------------------  -----------------------  -----------------------

Net increase (decrease) in cash and cash equivalents.                     218                     (371)                     230
Cash and cash equivalents, beginning of period. . . .                     399                      770                      540
                                                       -----------------------  -----------------------  -----------------------
Cash and cash equivalents, end of period. . . . . . . $                   617    $                 399    $                 770
                                                       -----------------------  -----------------------  -----------------------
<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 27,    JUNE 29,   JUNE 30,
                                                                 2004        2003       2002
                                                              -----------  ---------  ---------
<S>                                                           <C>          <C>        <C>
CASH PAYMENTS FOR:
  Interest . . . . . . . . . . . . . . . . . . . . . . . . .  $       624  $     810  $     992
  Income taxes . . . . . . . . . . . . . . . . . . . . . . .          635          -         53


NONCASH FINANCING AND INVESTING
ACTIVITIES:
  Capital lease obligations incurred . . . . . . . . . . . .  $         -  $       -  $     156



                     See accompanying Notes to Consolidated Financial Statements.

</TABLE>


                                 PIZZA INN, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  A  -  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES:

DESCRIPTION  OF  BUSINESS:

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

On  June 27, 2004 the Pizza Inn system consisted of 405 locations, including two
Company-operated  units  and 403 franchised units.  On June 27, 2004 the Company
had  franchises  in  18  states  and  10  foreign countries.  Domestic units are
located  predominantly  in  the  southern half of the United States, with Texas,
North  Carolina  and  Arkansas  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  inter-company  balances  and
transactions  have  been  eliminated.  Certain  prior  year  amounts  have  been
reclassified  to  conform  with  current  year  presentation.

CASH  AND  CASH  EQUIVALENTS:

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

INVENTORIES:

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

PROPERTY,  PLANT  AND  EQUIPMENT:

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

Depreciation  and  amortization is computed on the straight-line method over the
useful  lives  of the assets or, in the case of leasehold improvements, over the
term  of the lease, 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  27,  2004.

ACCOUNTS  RECEIVABLE:

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

NOTES  RECEIVABLE:

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

INCOME  TAXES:

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

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

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


<TABLE>
<CAPTION>



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

</TABLE>


REVENUE  RECOGNITION:

The  Company's  Norco division sells food, supplies and equipment to franchisees
on  trade  accounts under terms common in the industry.  Revenue from such sales
is  recognized upon shipment.  Norco sales are reflected under the caption "food
and  supply  sales."  Shipping  and  handling  costs  billed  to  customers  are
recognized  as  revenue.

Franchise  revenue  consists  of  income  from license fees, royalties, and area
development  and  foreign  master  license  (collectively,  "Territory")  sales.
License  fees  are  recognized  as  income  when  there  has  been  substantial
performance  of  the agreement by both the franchisee and the Company, generally
at the time the unit is opened.  Royalties are recognized as income when earned.
For the years ended June 27, 2004, June 29, 2003 and June 30, 2002, 95%, 92% and
93%,  respectively,  of  franchise revenue was comprised of recurring royalties.

Territory  sales  are the fees paid by selected experienced restaurant operators
to  the  Company  for  the  right  to  develop Pizza Inn restaurants in specific
geographical  territories.  The  Company  recognizes  the  fee to the extent its
obligations  are  fulfilled  and of cash received.  Territory fees recognized as
income  for  the years ended June 27, 2004, June 29, 2003 and June 30, 2002 were
$12,500,  $180,000  and  $131,000,  respectively.

STOCK  OPTIONS:

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

Pro forma information regarding net income and earnings per share is required to
be  determined  as  if  the  Company had accounted for its stock options granted
subsequent to June 25, 1995 under the fair value method of SFAS 123, "Accounting
for  Stock-Based  Compensation".  The  fair  value  of options granted in fiscal
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 1.4% to 6.3%, expected volatility of 39.4% to 42.5%,
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 27, 2004                    June 29, 2003           June 30, 2002
                                    --------------                 --------------             --------------
                             As Reported      Pro Forma      As Reported    Pro Forma   As Reported   Pro Forma
                            --------------  --------------  --------------  ----------  ------------  ----------
<S>                         <C>             <C>             <C>             <C>         <C>           <C>
Net income . . . . . . . .  $        2,243  $        2,241  $        3,093  $    3,075  $      1,137  $    1,079
Basic earnings per share .  $         0.22  $         0.22  $         0.31  $     0.31  $       0.11  $     0.11
Diluted earnings per share  $         0.22  $         0.22  $         0.31  $     0.31  $       0.11  $     0.11


</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.

USE  OF  MANAGEMENT  ESTIMATES:

The preparation of financial statements in conformity with accounting principles
generally  accepted  in the United States of America 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 27, 2004 and June 29, 2003 contained 52 weeks.  Fiscal year ending June 30,
2002  contained  53  weeks.

NEW  PRONOUNCEMENTS:

In  April  2003,  the  FASB  issued SFAS No. 149, "Amendment of Statement 133 on
Derivative  Instruments  and  Hedging  Activities."  SFAS  No.  149  amends  and
clarifies  financial  accounting  and  reporting  for  derivative  instruments,
including  certain  derivative  instruments  embedded  in  other  contracts
(collectively  referred to as derivatives) and for hedging activities under SFAS
No.  133,  "Accounting  for Derivative Instruments and Hedging Activities." This
statement  is  effective  for  contracts entered into or modified after June 30,
2003, and for hedging relationships designated after June 30, 2003. The adoption
of  this  Statement did not have a material impact on our financial position and
results  of  operations.

In  May  2003, the FASB issued SFAS No. 150, which establishes standards for how
an  issuer  classifies  and  measures  certain  financial  instruments  with
characteristics  of  both liabilities and equity. Specifically, it requires that
financial  instruments  within  the  scope  of  the  statement  be classified as
liabilities  because  they  embody  an  obligation of the issuer. Under previous
guidance,  many  of  these  instruments  could  be  classified  as  equity or be
reflected  as  mezzanine  equity  between  liabilities and equity on the balance
sheet.  The Company's initial adoption of this statement on June 1, 2003 did not
have  a material impact on its results of operations, financial position or cash
flows.

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 27,                 JUNE 29,
<S>                                <C>          <C>                       <C>
                                      LIVES . . . .       2004                      2003
                                    -------            -----------            -----------
Property, plant and equipment:
Equipment, furniture and fixtures   3 - 7 yrs   $                 5,504   $                5,559
Building. . . . . . . . . . . . .  5 - 39 yrs                    10,875                   10,562
Land. . . . . . . . . . . . . . .           -                     2,087                    2,072
Construction in progress. . . . .           -                        10                       37
Leasehold improvements. . . . . .       7 yrs                       670                      668
                                                ------------------------  ----------------------
                                                                 19,146                   18,898
Less:  accumulated depreciation .                                (6,390)                 (5,772)
                                                            -----------          ---------------
                                                $                12,756   $               13,126
                                                ========================  ======================
Property under capital leases:
Real Estate . . . . . . . . . . .      20 yrs   $                   118   $                  118
Equipment . . . . . . . . . . . .   3 - 7 yrs                         3                      480
                                                ------------------------  ----------------------
                                                                    121                      598
Less:  accumulated amortization .                                  (103)                   (478)
                                                             -----------          --------------
                                                                    18                     120
                                                ========================  ======================

</TABLE>


Depreciation and amortization expense was $1,133,000, $1,403,000, and $1,337,000
for  the  years  ended  June  27,  2004,  June  29,  2003,  and  June  30, 2002,
respectively.

NOTE  C  -  ACCRUED  EXPENSES:

Accrued  expenses  consist  of  the  following  (in  thousands):


<TABLE>
<CAPTION>


                                                        JUNE 27,               JUNE 29,
<S>                                         <C>                    <C>
                                                             2004                   2003
                                            ---------------------  ---------------------
Compensation . . . . . . . . . . . . . . .  $                 653  $                 539
Taxes. . . . . . . . . . . . . . . . . . .                    713                    437
Legal reserves and other professional fees                    154                    393
Accrued rent . . . . . . . . . . . . . . .                      -                      7
Other. . . . . . . . . . . . . . . . . . .                    589                    574
                                            ---------------------  ---------------------

                                                           2,109                 1,950
                                            =====================  =====================
</TABLE>
NOTE  D  -  LONG-TERM  DEBT:

The Company entered into an agreement effective March 28, 2004 with  Wells Fargo
to  provide  a  $4.0  million  revolving credit line that will expire October 1,
2005,  replacing  a  $7.0 million line that was due to expire 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  27, 2004 and June 29, 2003, the
variable  interest  rates were 2.35% and 2.81%, respectively, using a LIBOR rate
basis.  Amounts  outstanding under the revolving credit line as of June 27, 2004
and  June  29,  2003  were  $1.2  million  and  $2.5  million,  respectively.

The  Company entered into a term note effective March 31, 2000 with Wells Fargo.
The  $5,000,000  term  note matured on March 31, 2004 and was paid in full.  The
term note had an outstanding balance of $1.0 million at June 29, 2003.  Interest
on  the term loan was also payable monthly.  Interest was 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%.

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
27,  2004  and  June 29, 2003, the variable interest rates were 2.78% and 2.59%,
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  $7.1  million at June 27, 2004 and $7.5
million  at  June  29,  2003.

     The Company entered into an interest rate swap effective February 27, 2001,
as  amended,  designated  as  a  cash  flow  hedge, to manage interest rate risk
relating  to the financing of the construction of the Company's headquarters and
to  fulfill  bank  requirements.  The  swap  agreement  has a notional principal
amount  of $8.125 million with a fixed pay rate of 5.84% which began November 1,
2001  and will end November 19, 2007.  The swap's notional amount amortizes over
a  term  of  twenty  years to parallel the terms of the term loan. SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" requires that for
cash flow hedges, which hedge the exposure to variable cash flow of a forecasted
transaction, the effective portion of the derivative's gain or loss be initially
reported  as  a component of other comprehensive income in the equity section of
the  balance  sheet  and  subsequently  reclassified  into  earnings  when  the
forecasted  transaction  affects  earnings.  Any  ineffective  portion  of  the
derivative's gain or loss is reported in earnings immediately.  At June 27, 2004
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 27, 2004 and June 29,
2003  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.


<PAGE>
The  following  chart  summarizes  all of the Company's debt obligations to make
future  payments  under  debt  agreements  as  of  June 27, 2004 (in thousands):


<TABLE>
<CAPTION>


                                    JUNE 27,
                                       2004
                                  -------------

<S>                    <C>
2005. . . . . . . . .  $                 406
2006. . . . . . . . .                  1,606
2007. . . . . . . . .                    406
2008. . . . . . . . .                  5,925
2009. . . . . . . . .                      -
                                     -------
Total debt obligation  $               8,343
                       =====================
</TABLE>

NOTE  E  -  INCOME  TAXES:

Provision  for  income  taxes  consists  of  the  following  (in  thousands):

<TABLE>
<CAPTION>


                                  JUNE 27,               JUNE 29,                JUNE 30,
<S>                         <C>                    <C>                    <C>
                                             2004                   2003                    2002
                            ---------------------  ---------------------  -----------------------
  Federal. . . . . . . . .  $                 637  $                   -  $                  (81)
  State. . . . . . . . . .                    246                      -                       -
  Deferred . . . . . . . .                    522                  1,550                     667
                            ---------------------  ---------------------  -----------------------
Provision for income taxes  $               1,405  $               1,550  $                  586
                            =====================  =====================  =======================

</TABLE>

The effective income tax rate varied from the statutory rate for the years ended
June  27,  2004,  June  29,  2003  and  June  30,  2002  as  reflected below (in
thousands):


<TABLE>
<CAPTION>


                                          JUNE 27,                 JUNE 29,                JUNE 30,
<S>                                <C>                      <C>                     <C>
                                                     2004                    2003                     2002
                                   -----------------------  ----------------------  -----------------------
Federal income taxes based on 34%
  of book income. . . . . . . . .  $                1,157   $               1,579   $                  586
State income tax. . . . . . . . .                     246                       -                        -
Permanent adjustments . . . . . .                      18                      21                     (187)
Change in valuation allowance . .                     (16)                    (72)                     187
Expired credits . . . . . . . . .                                              22                        -
                                    ---------------------  ----------------------  ------------------------
                                   $                1,405   $               1,550   $                   586
                                   =======================  ======================  =======================
</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 27,                 JUNE 29,
                                   2004                     2003
                          -----------------------  -----------------------

<S>                       <C>                      <C>
Reserve for bad debt . .  $                  126   $                  312
Depreciable assets . . .                    (128)                     (38)
Deferred fees. . . . . .                      57                       59
Other reserves . . . . .                       7                      (80)
Interest rate swap loss.                     155                      335
Credit carryforwards . .                     208                      532
                          -----------------------  -----------------------

Gross deferred tax asset  $                  425   $                1,120

Valuation allowance. . .                    (137)                    (153)
                          -----------------------  -----------------------

Net deferred tax asset .  $                  288   $                  967
                          =======================  =======================

</TABLE>


As  of  June  27,  2004,  the  Company  had  $208,000  of  foreign  tax  credit
carryforwards  expiring  between  2004  and  2008.  The  valuation allowance was
established  under  SFAS 109, since it is more likely than not that a portion of
the  foreign  tax  credit carryforwards will expire before they can be utilized.

NOTE  F  -  LEASES:

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

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

Future  minimum  rental  payments  under  non-cancelable  leases with initial or
remaining  terms  of  one  year  or  more  at  June  27, 2004 are as follows (in
thousands):

<TABLE>
<CAPTION>


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

2005. . . . . . . . . . . . . . . . . . .  $                    12   $    1,071
2006. . . . . . . . . . . . . . . . . . .                       12          851
2007. . . . . . . . . . . . . . . . . . .                       12          545
2008. . . . . . . . . . . . . . . . . . .                        1          234
2009. . . . . . . . . . . . . . . . . . .                        -           75
Thereafter. . . . . . . . . . . . . . . .                        -           74
                                                         -------------- -------
                                                                37 . $    2,850
                                                                      =========
Less amount representing interest . . . .                       (4)
                                           ------------------------
Present value of total obligations under
    capital leases. . . . . . . . . . . .                       33
Less current portion. . . . . . . . . . .                      (10)
                                           ------------------------
Long-term capital lease obligations . . .  $                    23
                                           ========================


</TABLE>

Rental  expense  consisted  of  the  following  (in  thousands):

<TABLE>
<CAPTION>


                     YEAR ENDED    YEAR ENDED    YEAR ENDED
                      JUNE 27,      JUNE 29,      JUNE 30,
                        2004          2003          2002
                    ------------  ------------  ------------
<S>                 <C>           <C>           <C>
Minimum rentals. .  $     1,135   $     1,143   $     1,773
Contingent rentals            1            14            21
Sublease rentals .          (94)          (97)          (99)
                    ------------  ------------  ------------
                    $     1,042   $     1,060   $     1,695
                    ============  ============  ============

</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.  Effective January 1, 2001 through June 30,
2004, 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 were invested in
Common  Stock  of  the  Company.  Effective July 1, 2004, the Company elected to
temporarily  suspend its matching contribution portion to the plan.  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  27,  2004,  June 29, 2003 and June 30, 2002, total
matching  contributions  to  the  tax  advantaged savings plan by the Company on
behalf  of  participating  employees  were  $94,200,  $82,576  and  $88,770,
respectively.

NOTE  H  -  STOCK  OPTIONS:

In January 1994, the 1993 Stock Award Plan ("the 1993 Plan") was approved by the
Company's shareholders with a plan effective date of October 13, 1993.  Officers
and  employees  of  the  Company 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 that increased the 1993 Plan by
500,000  shares  in  each  year.  In  December  2000, the Company's shareholders
approved  amendments  that  increased the 1993 Plan by 100,000 shares.  The 1993
Plan  expired on October 13, 2003 and no further options may be granted pursuant
to  it.

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


<PAGE>
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 27, 2004             June 29, 2003           June 30, 2002
                                         ---------------            --------------         ---------------
                                                      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         806,150   $         3.68       1,591,233   $ 3.76  2,210,033   $ 3.82

Granted. . . . . . . . . . . . .           5,000   $         2.15          10,000   $ 1.28      4,000   $ 2.12
Exercised. . . . . . . . . . . .         (75,000)  $         2.00               -   $ 0.00          -   $ 0.00
Canceled/Expired . . . . . . . .        (250,450)  $         4.69        (795,083)  $ 3.81   (622,800)  $ 3.96
                                  ---------------  --------------  ---------------  ------  ----------  ------

Outstanding at end of year . . .         485,700   $         3.40         806,150   $ 3.68  1,591,233   $ 3.76
                                  ===============  ==============  ===============  ======  ==========  ======

Exercisable at end of year . . .         480,700   $         3.42         792,150   $ 3.72  1,358,233   $ 4.02

Weighted-average fair value of
options granted during the year.                   $         0.53                   $ 0.33              $ 0.68


</TABLE>

FIXED  PRICE  STOCK  OPTIONS

The  following  table  provides  information  on options outstanding and options
exercisable  at  June  27,  2004:

<TABLE>
<CAPTION>



                                       Options Outstanding                         Options Exercisable
                                       -------------------                        --------------------
                                            Weighted-
                                             Average
                        Shares              Remaining           Weighted-          Shares          Weighted-
Range of              Outstanding          Contractual           Average        Exercisable         Average
Exercise Prices    at June 27, 2004        Life (Years)      Exercise Price   at June 29, 2003  Exercise Price
----------------  -------------------  --------------------  ---------------  ----------------  ---------------
<S>               <C>                  <C>                   <C>              <C>               <C>
1.28 - 3.25 . .              154,700                  2.83  $          2.22           149,700  $          2.22
3.30 - 4.25 . .              240,500                  1.69  $          3.59           240,500  $          3.59
4.38 - 5.50 . .               90,500                  1.56  $          4.94            90,500  $          4.94
                  -------------------                                         ----------------
1.28 - 5.50 . .              485,700                  2.03  $          3.40           480,700  $          3.42
                  ===================                                         ================
</TABLE>

NOTE  I  -  COMMITMENTS  AND  CONTINGENCIES:

On January 18, 2002, the Company was served with a lawsuit filed by Blakely-Witt
&  Associates,  Inc.  alleging  that  the  Company  sent  or  caused  to be sent
unsolicited  facsimile  advertisements.  The Company has vigorously defended its
position  in  this  litigation.  In July 2004 the court preliminarily approved a
settlement  agreement  among  all  parties  and  certified the matter as a class
action for settlement purposes only.  Under the settlement agreement the Company
would  pay  an  amount  that  will not materially affect the Company's financial
performance.  At  a  hearing  on  September 13, 2004 the court entered its final
order  and  judgment  approving  the  settlement  agreement  and  certifying the
settlement class. Pursuant to the settlement agreement the Company has agreed to
pay  $90,000  in full and final settlement of all actual and potential claims of
the  members  and potential members of the certified settlement class. The final
order  dismissed  with  prejudice  all  pending and potential claims against the
Company.



<PAGE>

On  July  7,  2004,  B.  Keith Clark resigned as Senior Vice President-Corporate
Development,  Secretary  and  General  Counsel  of  the  Company.  Mr. Clark has
notified  the Company that he has reserved his right to assert that the election
of Ramon D. Phillips and Robert B. Page to the board of directors of the Company
at  the  February  2004  annual meeting of shareholders constituted a "change of
control" under his employment agreement and/or that he was entitled to terminate
his  contract  for  "good  reason".  Pursuant  to  the  terms  of the employment
agreement,  the  Company has initiated an arbitration proceeding to resolve this
dispute.  The  arbitration  proceeding  is  in  the  preliminary  stages and the
Company  is unable to predict the outcome of the proceeding at this time. In the
event  the  Company  is  unsuccessful  in  this proceeding, the Company could be
liable  to  Mr.  Clark  for up to $762,000. The employment agreements of each of
Ronald  W.  Parker,  Ward  T.  Olgreen  and  Shawn  M.  Preator  contain similar
provisions  and  the  potential  amounts payable to each of them are as follows:
$5.4 million to Mr. Parker, $630,000 to Mr. Olgreen and $597,000 to Mr. Preator.
The  aggregate  of  these  payments  for which the Company would be obligated is
approximately $7.4 million.  The Company disagrees with Mr. Clark's claim that a
"change  of  control"  has occurred under his employment agreement or that he is
entitled  to  terminate  his  contract  for "good reason".  The Board obtained a
written  legal  opinion that the "change of control" provision was not triggered
by  the  results  of  its  February  2004  annual meeting.  The Company plans to
vigorously  defend our position in the matter; however, we cannot assure that we
will prevail in this matter and our defense could be costly and consume the time
of  our management.  We are unable to predict the outcome of this matter, and no
accrual  has been made as of June 27, 2004.  An adverse resolution of the 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. ("Mid-South") entered into
a  promissory  note  whereby,  among other things, Mid-South borrowed $1,330,000
from a third party lender (the "Loan") with the Company acting as the guarantor.
The  proceeds  of  the  Loan,  less transaction costs, were used by Mid-South to
purchase area developer rights from the Company for certain counties in Kentucky
and  Tennessee.  Effective  December  28,  2003, the Company reacquired all such
area development rights from Mid-South.  The Company paid approximately $963,000
for these rights of which $682,000 was a cash payment, and a non-cash settlement
of  accounts  receivable  of  approximately  $281,000.  A  long-term  asset  was
recorded  for  the  same  amount.  Restaurants  operating  or  developed  in the
reacquired  territory  will now pay all royalties and franchise fees directly to
Pizza  Inn,  Inc.  The asset will be amortized over the life of the asset, which
is  estimated  to  be  approximately  five  years.

 NOTE  J  -  RELATED  PARTIES:

Two  of  the  individuals  nominated  by the Company and elected to serve on its
Board of Directors are franchisees.  One of the franchisees currently operates a
total of 11 restaurants located in Arkansas, the other currently operates one in
Oklahoma.  Purchases  by  these  franchisees  comprised  6.5%  and  6.0%  of the
Company's  total  food  and  supply  sales  in  fiscal  2004  and  fiscal  2003,
respectively.  Royalties  and license fees and area development sales from these
franchisees comprised 3.9% and 4.2% of the Company's total franchise revenues in
fiscal  2004  and  fiscal  2003, respectively.  As of June 27, 2004 and June 29,
2003, their accounts and note payable to the Company were $965,838 and $876,326,
respectively.

The  Company believes that the above transactions were at the same prices and on
the  same  payment  terms  available to non-related parties, with one exception.
This  exception  relates  to  the  enforcement  of  the  personal guarantee by a
director  of  the $323,000 debt of a franchisee of which he is the President and
sole  shareholder.  The debt relates to food and equipment purchases and royalty
payments  for  the  franchisee during a period when the director had transferred
his  interest  in  the  franchisee,  and prior to his later reacquisition of the
franchisee.  The director has affirmed his guarantee and confirmed that the debt
will  be  paid  in  full.

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

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

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

NOTE  K  -  TREASURY  STOCK:

For  the  period  of  September  1995  through  June 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 2004.  The purchases of common shares described above
were  funded  from working capital, and reduced the Company's outstanding shares
by  approximately  34%.

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

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

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
                                               ============  =============  ==========

</TABLE>

Options  to  purchase  366,700 shares of common stock at exercise prices ranging
from  $3.00  to  $5.50  per share were outstanding at June 27, 2004 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  796,150  and 1,591,233 shares of common stock during fiscal years 2003
and 2002, 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 and Other
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.


<PAGE>
Summarized  in  the  following  tables  are  net  sales  and operating revenues,
depreciation  and  amortization  expense,  interest  expense,  interest  income,
operating  profit,  income tax expense, capital expenditures, and assets for the
Company's  reportable segments for the years ended June 27, 2004, June 29, 2003,
and  June  30,  2002  (in  thousands):

<TABLE>
<CAPTION>


                                       JUNE 27,    JUNE 29,    JUNE 30,
<S>                                   <C>         <C>         <C>
                                           2004        2003        2002
                                      ----------  ----------  ----------
 NET SALES AND OPERATING REVENUES:
 Food and Equipment Distribution . .  $  53,072   $  51,556   $  57,727
 Franchise and Other . . . . . . . .      6,917       6,915       7,662
 Intersegment revenues . . . . . . .        640         664         806
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .     60,629      59,135      66,195
 Other revenues. . . . . . . . . . .        223         311       1,253
 Less intersegment revenues. . . . .       (640)       (664)       (806)
                                      ----------  ----------  ----------
   Consolidated revenues . . . . . .  $  60,212   $  58,782   $  66,642
                                      ==========  ==========  ==========

 DEPRECIATION AND AMORTIZATION:
 Food and Equipment Distribution . .  $     575   $     806   $     854
 Franchise and Other . . . . . . . .        181         101         120
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .        756         907         974
 Corporate administration and other.        377         496         363
                                      ----------  ----------  ----------
   Depreciation and amortization . .  $   1,133   $   1,403   $   1,337
                                      ==========  ==========  ==========

 INTEREST EXPENSE:
 Food and Equipment Distribution . .  $     365   $     464   $     520
 Franchise and Other . . . . . . . .          4           5           5
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .        369         469         525
 Corporate administration and other.        244         320         307
                                      ----------  ----------  ----------
   Interest Expense. . . . . . . . .  $     613   $     789   $     832
                                      ==========  ==========  ==========

 INTEREST INCOME:
 Food and Equipment Distribution . .  $      11   $      24   $      34
 Franchise and Other . . . . . . . .          -           -           -
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .         11          24          34
 Corporate administration and other.         18          55          99
                                      ----------  ----------  ----------
   Interest Income . . . . . . . . .  $      29   $      79   $     133
                                      ==========  ==========  ==========

 OPERATING PROFIT:
 Food and Equipment Distribution (1)  $   2,897   $   2,686   $   2,772
 Franchise and Other (1) . . . . . .      2,298       2,419       3,306
 Intersegment profit . . . . . . . .        170         197         235
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .      5,365       5,302       6,313
 Other revenue . . . . . . . . . . .        223         311       1,253
 Less intersegment profit. . . . . .       (170)       (197)       (235)
 Corporate administration and other.     (1,770)       (773)     (5,608)
                                      ----------  ----------  ----------
   Income before taxes . . . . . . .  $   3,648   $   4,643   $   1,723
                                      ==========  ==========  ==========

 INCOME TAX EXPENSE:
 Food and Equipment Distribution . .  $   1,231   $     896   $     943
 Franchise and Other . . . . . . . .        781         808       1,124
                                      ----------  ----------  ----------
   Combined. . . . . . . . . . . . .      2,012       1,704       2,067
 Corporate administration and other.       (607)       (154)     (1,481)
                                      ----------  ----------  ----------
   Income tax expense. . . . . . . .  $   1,405   $   1,550   $     586
                                      ==========  ==========  ==========
<FN>

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

<TABLE>
<CAPTION>


                                           JUNE 27,   JUNE 29,   JUNE 30,
<S>                                        <C>        <C>        <C>
                                                2004       2003       2002
                                           ---------  ---------  ---------
 CAPITAL EXPENDITURES:
 Food and Equipment Distribution. . . . .  $     161  $      62  $   8,499
 Franchise and Other. . . . . . . . . . .      1,159         76         82
                                           ---------  ---------  ---------
   Combined . . . . . . . . . . . . . . .      1,320        138      8,581
 Corporate administration and other . . .         17        338        371
                                            --------  ---------- ---------
   Consolidated capital expenditures. . .  $   1,337  $     476  $   8,952
                                           =========  =========  =========

 ASSETS:
 Food and Equipment Distribution. . . . .  $  12,186  $  10,963  $  12,908
 Franchise and Other. . . . . . . . . . .      1,280      1,049      1,079
                                           ---------  ---------  ---------
 Combined . . . . . . . . . . . . . . . .     13,466     12,012     13,987
 Corporate administration and other . . .      7,440      8,784     10,331
                                            --------  ---------- ---------
 Consolidated assets. . . . . . . . . . .  $  20,906  $  20,796  $  24,318
                                           =========  =========  =========

 GEOGRAPHIC INFORMATION (REVENUES):
 United States. . . . . . . . . . . . . .  $  58,793  $  57,714  $  66,124
 Foreign countries. . . . . . . . . . . .      1,419      1,068        518
                                            --------  ---------- ---------
   Consolidated total . . . . . . . . . .  $  60,212  $  58,782  $  66,642
                                           =========  =========  =========

 GEOGRAPHIC INFORMATION (PRE-TAX INCOME):
 United States. . . . . . . . . . . . . .  $   2,901  $   4,030  $   1,282
 Foreign countries. . . . . . . . . . . .        747        613        441
                                            --------  ---------- ---------
   Consolidated total . . . . . . . . . .  $   3,648  $   4,643  $   1,723
                                           =========  =========  =========

</TABLE>
NOTE  N  -  QUARTERLY  RESULTS  OF  OPERATIONS  (UNAUDITED):

The  following  summarizes the unaudited quarterly results of operations for the
fiscal  years  ended  June  27, 2004 and June 29, 2003 (in thousands, except per
share  amounts):

<TABLE>
<CAPTION>


                                                             QUARTER ENDED
                                                             --------------
<S>                                       <C>             <C>            <C>         <C>
                                          SEPTEMBER 28,   DECEMBER 28,   MARCH 28,   JUNE 27,
                                                    2003           2003        2004       2004
                                          --------------  -------------  ----------  ---------
FISCAL YEAR 2004
Revenues . . . . . . . . . . . . . . . .  $       15,376  $      14,769  $   14,643  $  15,424

Gross Profit . . . . . . . . . . . . . .           1,307          1,334       1,349      1,236

Net Income . . . . . . . . . . . . . . .             504            558         617        564

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

Diluted earnings per share on net income            0.05           0.06        0.06       0.06

                                                               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

</TABLE>

<TABLE>
<CAPTION>


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

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

Year Ended June 27, 2004. . . . . . . . . . . .  $        916  $        35  $         -  $      (579)          (1)  $  372


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
<FN>

(1)  Write-off  of  receivables,  net  of  recoveries.  For  additional information related to the recovery in fiscal year
2002,  refer  to  Note  J  in  the  Company's  consolidated  financial  statements.




VALUATION ALLOWANCE FOR
DEFERRED TAX ASSET

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


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


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

</TABLE>


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

     There  are  no  events  to  report  under  this  item.

ITEM  9A  -  CONTROLS  AND  PROCEDURES

Under  the  supervision  and with the participation of the Company's management,
including  the Company's Chief Executive Officer and Chief Financial Officer, we
have  evaluated  the  effectiveness  of  our  disclosure controls and procedures
pursuant  to  Exchange Act Rule 13a-15(b) as of the end of the period covered by
this  report.  Based  on  that evaluation, the Chief Executive Officer and Chief
Financial  Officer  have concluded that these disclosure controls and procedures
are  effective.  There  were  no  changes in our internal control over financial
reporting  during the year ended June 27, 2004 that have materially affected, or
are  reasonably  likely to materially affect our internal control over financial
reporting.

ITEM  9B  -  FORM  8-K  FILED  UNDER  ITEM  5  -  OTHER  EVENTS

On  June  16,  2004  the  Company  filed  a  report  on  Form 8-K, reporting the
resignation  of  the Company's Senior Vice President - Corporate Development and
General  Counsel.

On June 14, 2004 the Company filed a report on Form 8-K, reporting the repayment
of  the  remaining  balance  on a note by the Company's Chief Executive Officer.

On  June  8,  2004 the Company filed a report on Form 8-K, reporting a letter to
Pizza  Inn  Shareholders  from  the  Company's  President  and  Chief  Executive
Officer,  Ronald  W.  Parker.

On  May  24,  2004  the  Company  filed  a  report  on  Form  8-K, reporting the
announcement  of  reduction  in  staff  and  expenses of more than $1 million to
benefit  the  Company's  franchisees.

On  April  23,  2004  the  Company filed a report on Form 8-K, reporting a press
release  with  respect  to  earnings for the third quarter ended March 28, 2004.


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 2004
(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-  PRINCIPAL  ACCOUNTANTS  FEES  AND  SERVICES

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


<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).

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

          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).

23.1     Consent  of  Independent  Registered  Public  Accounting  Firm.

23.2     Consent  of  Independent  Registered  Public  Accounting  Firm.

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

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

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

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

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











<PAGE>
SIGNATURES

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

Date:   September  24,  2004     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  24,  2004
------------------------
Bobby  L.  Clairday
Director

/s/Robert B. Page                  September  24,  2004
---------------
Robert  B.  Page
Director

/s/  Ronald  W.  Parker          September  24,  2004
-----------------------
Ronald W. Parker
President  and  Chief  Executive  Officer
(Principal  Executive  Officer)
Director

/s/Ramon  D.  Phillips           September  24,  2004
----------------------
Ramon  D.  Phillips
Director  and  Vice  Chairman  of  the  Board

/s/  Butler  E.  Powell          September  24,  2004
-----------------------
Butler  E.  Powell
Director

/s/  Steven  J.  Pully          September  24,  2004
----------------------
Steven  J.  Pully
Director

/s/Mark  E.  Schwarz            September  24,  2004
--------------------
Mark  E.  Schwarz
Director  and  Chairman  of  the  Board