----

----

| Missouri         | 47-0654575               |
|----------------------------------------------------------|--------------------------|
| (State      or jurisdiction of                 | (Employer                |
| incorporation      or organization)                      | Identification      No.) |
|                                                     |                     |
| 3551      Plano Parkway                                  |                     |
| The      Colony, Texas                              | 75056                    |
| (Address      of principal executive offices)            | (Zip      Code)          |

| Title      of class                    |   | Name      of each exchange on which registered |
|----------------------------------------|--------|------------------------------------------------|
| Common      stock, par value $.01 each |   | NASDAQ      Capital Market                     |

----

----

----

----

----

----

----

----

----

|                                 |   | Actual      Trade   |   |
|--------------------------------------|--------|---------------------|--------|
|                                 |   | Executed      Price |   |
|                                 |   | High                |   |   | Low |   |
|                                 |   |                |   |   |   |   |
| First      Quarter Ended 9/23/2007   |   | $                   | 3.17   |   |   | $ | 2.08 |   |
| Second      Quarter Ended 12/23/2007 |   |                | 2.92   |   |   |   | 2.20 |   |
| Third      Quarter Ended 3/23/2008   |   |                | 3.04   |   |   |   | 2.45 |   |
| Fourth      Quarter Ended 6/29/2008  |   |                | 2.98   |   |   |   | 2.26 |   |
|                                 |   |                |   |   |   |   |   |   |
|                                 |   |                |   |   |   |   |   |   |
| First      Quarter Ended 9/24/2006   |   | $                   | 2.90   |   |   | $ | 1.85 |   |
| Second      Quarter Ended 12/24/2006 |   |                | 2.25   |   |   |   | 1.51 |   |
| Third      Quarter Ended 3/25/2007   |   |                | 2.53   |   |   |   | 1.77 |   |
| Fourth      Quarter Ended 6/24/2007  |   |                | 3.22   |   |   |   | 2.24 |   |

----

| Pizza      Inn, Inc.                               |   |
|----------------------------------------------------|--------|
| Common      Shares Purchased through June 29, 2008 |   |
| Under      the 2007 Stock Purchase Plans           |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Period                                             |   | Total      Number of Shares Purchased |   |   | Average      Price Paid per Share |   |   | Cum.      Number of Shares Purchased as Part of Publicly Announced    Plan |   |   | Maximum      Number of Shares that May Yet Be Purchased Under the Plan |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Shares      Authorized to Purchase                 |   |   |   |   |   |   |   |   |   |   |   | 2,016,000 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 03/24/2008      - 04/27/2008                       |   |   | 327,333 |   |   | $ | 2.7489 |   |   |   | 1,000,000 |   |   |   | 1,016,000 |   |
| 04/28/2008      - 04/25/2008                       |   |   | 0 |   |   | $ | 0.0000 |   |   |   | 1,000,000 |   |   |   | 1,016,000 |   |
| 05/26/2008      - 06/29/2008                       |   |   | 74,133 |   |   | $ | 2.3400 |   |   |   | 1,074,133 |   |   |   | 941,867 |   |
|                                               |   |   | 401,466 |   |   | $ | 2.6734 |   |   | Cum.      Avg. price |   |   |   |   |   |

| Plan      Category                                                        |   | Number      of securities to be issued upon excercise of outstanding options,      warrants, and rights |    |   | Weighted-average      excercise price of outstanding options, warrants, and    rights |   |   | Number      of securities remaining available for future issuance under equity      compensation plans |   |
|---------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|---------|--------|---------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------|--------|
|                                                                      |   |                                                                                                    |    |   |                                                                                  |   |   |                                                                                                   |   |
|                                                                      |   |                                                                                                    |    |   |                                                                                  |   |   |                                                                                                   |   |
| Equity      compensation plans approved by security holders               |   |                                                                                                    | 275,000 |   |                                                                                  | $      | 2.55   |                                                                                                   |   |   | 1,225,000 |   |
|                                                                      |   |                                                                                                    |    |   |                                                                                  |   |   |                                                                                                   |   |   |   |   |
| Equity      compensation plans      not approved by security      holders |   |                                                                                                    | -       |   |                                                                                  | $      | 0.00   |                                                                                                   |   |   | - |   |
|                                                                      |   |                                                                                                    |    |   |                                                                                  |   |   |                                                                                                   |   |   |   |   |
| Total                                                                     |   |                                                                                                    | 275,000 |   |                                                                                  | $      | 2.55   |                                                                                                   |   |   | 1,225,000 |   |

----

|                                                           |   | Fiscal      Year Ended |    |
|----------------------------------------------------------------|--------|------------------------|---------|
|                                                           |   | June      29,          |    |   | June      24, |   |
|                                                           |   | 2008                   |    |   | 2007 |   |
|  Chainwide      retail sales Buffet Units (in thousands)  |   | $                      | 117,347 |   |   | $ | 114,083 |   |
|  Chainwide      retail sales Delco Units (in thousands)   |   | $                      | 11,791  |   |   | $ | 12,576 |   |
|  Chainwide      retail sales Express Units (in thousands) |   | $                      | 5,883   |   |   | $ | 7,175 |   |
|  Average      number of Buffet Units                      |   |                   | 161     |   |   |   | 171 |   |
|  Average      number of Delco Units                       |   |                   | 42      |   |   |   | 46 |   |
|  Average      number of Express Units                     |   |                   | 59      |   |   |   | 67 |   |

----

|                                                              |   | Fiscal      Year Ended |   |
|-------------------------------------------------------------------|--------|------------------------|--------|
|                                                              |   | June      29,          |   |   | June      24, |   |
|                                                              |   | 2008                   |   |   | 2007 |   |
|      Domestic      royalties             |   | $                      | 3,995  |   |   | $ | 3,963 |   |
|      International      royalties        |   |                   | 494    |   |   |   | 423 |   |
|      Domestic      franchise fees        |   |                   | 215    |   |   |   | 191 |   |
|      International      development fees |   |                   | 266    |   |   |   | 45 |   |
|      Franchise      revenue              |   | $                      | 4,970  |   |   | $ | 4,622 |   |

|                                         |   | Fiscal      Year Ended |   |
|----------------------------------------------|--------|------------------------|--------|
|                                         |   | June      29,          |   |   | June      24, |   |
|                                         |   | 2008                   |   |   | 2007 |   |
|  Payroll                                |   | $                      | 1,814  |   |   | $ | 1,800 |   |
|  Administrative      expenses and other |   |                   | 235    |   |   |   | 289 |   |
|  Travel                                 |   |                   | 318    |   |   |   | 268 |   |
|  Depreciation      and amortization     |   |                   | 192    |   |   |   | 192 |   |
|  Professional      fees                 |   |                   | 43     |   |   |   | 135 |   |
|  Utilities                              |   |                   | 37     |   |   |   | 39 |   |
|  Marketing                              |   |                   | (101   | ) |   |   | (90 | ) |
|  Total      franchise expenses          |   | $                      | 2,538  |   |   | $ | 2,633 |   |

----

|                                                 |   | Fiscal      Year Ended |   |
|------------------------------------------------------|--------|------------------------|--------|
|                                                 |   | June      29,          |   |   | June      24, |   |
|                                                 |   | 2008                   |   |   | 2007 |   |
|  Legal      and Other Professional Fees         |   | $                      | 994    |   |   | $ | 1,829 |   |
|  Depreciation      and Amortization             |   |                   | 69     |   |   |   | 155 |   |
|  Payroll                                        |   |                   | 264    |   |   |   | 400 |   |
|  Information      Technology                    |   |                   | 141    |   |   |   | 210 |   |
|  Repairs      and Maintenance                   |   |                   | 37     |   |   |   | 75 |   |
|  Utilities                                      |   |                   | 160    |   |   |   | 189 |   |
|  Company      Store Marketing                   |   |                   | 34     |   |   |   | 48 |   |
|  Administrative      expenses and other         |   |                   | 468    |   |   |   | 383 |   |
|  Occupancy      Costs                           |   |                   | 739    |   |   |   | 567 |   |
|  Stock      Compensation                        |   |                   | 51     |   |   |   | (14 | ) |
|  Total      general and administrative expenses |   | $                      | 2,957  |   |   | $ | 3,842 |   |

----

----

|  Fiscal      year ended June 29, 2008             |   |                                                                                                     |   |                                                                                              |   |                                                                                              |   |                                                                                                    |
|--------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|
|                                                   |   |  Beginning                                                                                          |   |                                                                                              |   |                                                                                              |   |  Concept                                                                                           |   |  End      of |
|                                                   |   |  of      Period                                                                                     |   |  Opened                                                                                      |   |  Closed                                                                                      |   |  Change                                                                                            |   |  Period |
| Domestic                                               |   |                                                                                                     |   |                                                                                              |   |                                                                                              |   |                                                                                                    |   |   |
|       Buffet      Units  |   |                166            |   |                 6 |   |               14            |   |                  - |   |             158 |
|       Delco      Units   |   |                  42 |   |                 1 |   |                 2 |   |                  - |   |               41 |
|       Express      Units |   |                  68 |   |                 1 |   |               13            |   |                  - |   |               56 |
|  International      Units                         |   |                  77 |   |                 3 |   |               12            |   |                  - |   |               68 |
|  Total                                            |   |                353            |   |               11            |   |               41            |   |                  - |   |             323 |
|                                                   |   |                                                                                                     |   |                                                                                              |   |                                                                                              |   |                                                                                                    |   |   |
|                                                   |   |                                                                                                     |   |                                                                                              |   |                                                                                              |   |                                                                                                    |   |   |
|  Fiscal      year ended June 24, 2007             |   |                                                                                                     |   |                                                                                              |   |                                                                                              |   |                                                                                                    |
|                                                   |   |  Beginning                                                                                          |   |                                                                                              |   |                                                                                              |   |  Concept                                                                                           |   |  End      of |
|                                                   |   |  of      Period                                                                                     |   |  Opened                                                                                      |   |  Closed                                                                                      |   |  Change                                                                                            |   |  Period |
| Domestic                                               |   |                                                                                                     |   |                                                                                              |   |                                                                                              |   |                                                                                                    |   |   |
|       Buffet      Units  |   |                182            |   |                 3 |   |               20            |   |                 1       |   |             166 |
|       Delco      Units   |   |                  49 |   |                 1 |   |                 8 |   |                  - |   |               42 |
|       Express      Units |   |                  70 |   |                 4 |   |                 5 |   |                (1)           |   |               68 |
|  International      Units                         |   |                  74 |   |                 7 |   |                 4 |   |                  - |   |               77 |
|  Total                                            |   |                375            |   |               15            |   |               37            |   |                  - |   |             353 |

----

----

----

----

----

----

| (a)                                                                                          | 1.     | The      financial statements filed as part of this report are listed in the Index      to Financial Statements and Supplemental Data under Part II, Item 8 of      this Form 10-K.         |
|----------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                         | 2.     | The      financial statement schedule filed as part of this report are listed in      the Index to Financial Statements and Supplemental Data under Part II,      Item 8 of this Form 10-K. |
|                                                                                         | 3.     | Exhibits:                                                                                                                                                                                   |   |
|                                                                                         |   | 3.1                                                                                                                                                                                         | Amended      and Restated By-Laws (filed as Exhibit 3.1 to Form 10-K for the fiscal      year ended June 25, 2006 and incorporated herein by    reference) |
|                                                                                         |   | 3.2                                                                                                                                                                                         | Restated      Articles of Incorporation  (filed as Exhibit 3.2 to Form 10-K      for the fiscal year ended June 25, 2006 and incorporated herein by      reference) |
|                                                                                         |   | 10.1                                                                                                                                                                                        | Employment      Letter entered into between the Company and Charles R. Morrison on January      31, 2007 (filed as Exhibit 10.5 to Form 10-Q for the quarterly period      ended December 24, 2006 and incorporated herein by      reference).* |
|                                                                                         |   | 10.2                                                                                                                                                                                        | 2005      Non-Employee Directors Stock Award Plan of the Company and form of Stock      Option Award Agreement (filed as Exhibit 10.25 to Form 10-K for the fiscal      year ended June 26, 2005 and incorporated herein by      reference).* |
|                                                                                         |   | 10.3                                                                                                                                                                                        | 2005      Employee Incentive Stock Option Award Plan of the Company and form of      Stock Option Award Agreement (filed as Exhibit 10.26 to Form 10-K.for the      fiscal year ended June 26, 2005 and incorporated herein by      reference)* |
|                                                                                         |   | 10.4                                                                                                                                                                                        | Warehouse      Lease Agreement dated August 25, 2006 between the Company and The SYGMA      Network (filed as Exhibit 10.15 to Form 10-K for the fiscal year ended      June 25, 2006 and incorporated herein by reference) |
|                                                                                         |   | 10.5                                                                                                                                                                                        | Compromise      and Settlement Agreement dated September 24, 2006 between the Company and      Ronald W. Parker (filed as Exhibit 10.16 to Form 10-K for the fiscal year      ended June 25, 2006 and incorporated herein by  reference). |
|                                                                                         |   | 10.6                                                                                                                                                                                        | Compromise      Settlement Agreement and Mutual Release entered into between the Company      and PepsiCo, Inc. on December 14, 2006 (filed as Exhibit 10.3 to Form 10-Q      for the quarterly period ended December 24, 2006 and incorporated herein      by reference). |
|                                                                                         |   | 10.7                                                                                                                                                                                        | First      Amendment to Purchase and Sale Agreement entered into between the Company      and Vintage Interests, L.P. on November 21, 2006 (filed as Exhibit 10.1 to      Form 10-Q for the quarterly period ended December 24, 2006 and      incorporated herein by reference). |
|                                                                                         |   | 10.8                                                                                                                                                                                        | Second      Amendment to the Financing Agreement between the Company and The CIT Group      / Commercial Services, Inc. (“CIT”) dated June 27, 2007 (filed as Exhibit      10.22 to Form 10-K for the fiscal year ended June 24, 2007 and      incorporated herein by reference). |
|                                                                                         |   | 10.9                                                                                                                                                                                        | Purchase      and Sale Agreement entered into between the Company and Vintage Interests,      L.P. on October 20, 2006 (filed as Exhibit 10.1 to Form 10-Q for the      quarterly period ended September 24, 2006 and incorporated herein by      reference). |
|                                                                                         |   | 10.10                                                                                                                                                                                       | Third      Amendment to the Financing Agreement between the Company and The CIT Group      / Commercial Services, Inc. (“CIT”) dated May 30,    2008. |
|                                                                                         |   | 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. |
|                                                                                         |   | 31.1                                                                                                                                                                                        | Rule      13a-14(a)/15d-14(a) Certification of Principal Executive      Officer. |
|                                                                                         |   | 31.2                                                                                                                                                                                        | Rule      13a-14(a)/15d-14(a) Certification of Principal Accounting      Officer. |
|                                                                                         |   | 32.1                                                                                                                                                                                        | Section      1350 Certification of Principal Executive Officer. |
|                                                                                         |   | 32.2                                                                                                                                                                                        | Section      1350 Certification of Principal Accounting Officer. |
|                                                                                         |
| *      Denotes a management contract or any compensatory plan, contract or      arrangement. |

----

|                          | Pizza      Inn, Inc.                  |
|-------------------------------|---------------------------------------|
| Date:      September 25, 2008 | By:      /s/ Charles R.      Morrison |
|                          |                                  | Charles      R. Morrison |
|                          |                                  | President      and Chief Executive Officer |
|                          |                                  | (Principal      Executive Officer) |
|                          |                                  |   |
|                          | By:      /s/ Nancy      Ellefson      |
|                          |                                  | Vice      President of Finance and |
|                          |                                  | Principal      Accounting Officer |
|                          |                                  | (Principal      Financial Officer) |
|                          |                                  |   |

| Name      and Position                       |   | Date                    |   |
|----------------------------------------------|--------|-------------------------|--------|
|                                         |   |                    |   |
| /s/Mark E.      Schwarz                      |   | September 25,      2008 |   |
| Mark      E. Schwarz                         |   |                    |   |
| Director      and Chairman of the Board      |   |                    |   |
|                                         |   |                    |   |
| /s/Ramon D.      Phillips                    |   | September 25,      2008 |   |
| Ramon      D. Phillips                       |   |                    |   |
| Director      and Vice Chairman of the Board |   |                    |   |
|                                         |   |                    |   |
| /s/ Steven M.      Johnson                   |   | September 25,      2008 |   |
| Steven      M. Johnson                       |   |                    |   |
| Director                                     |   |                    |   |
|                                         |   |                    |   |
| /s/ James K.      Zielke                     |   | September 25,      2008 |   |
| James      K. Zielke                         |   |                    |   |
| Director                                     |   |                    |   |
|                                         |   |                    |   |
| /s/Robert B.      Page                       |   | September 25,      2008 |   |
| Robert      B. Page                          |   |                    |   |
| Director                                     |   |                    |   |
|                                         |   |                    |   |
| /s/ William      Hammett                     |   | September 25,      2008 |   |
| William      Hammett                         |   |                    |   |
| Director                                     |   |                    |   |
|                                         |   |                    |   |
| /s/ Clinton J.      Coleman                  |   | September 25,      2008 |   |
| Clinton      J. Coleman                      |   |                    |   |
| Director                                     |   |                    |   |

----

| Description                                                                                                      |   | Page No. |   |
|------------------------------------------------------------------------------------------------------------------|--------|----------|--------|
|                                                                                                             |   |     |   |
| Report      of Independent Registered Public Accounting Firm.                                                    |   | F-2      |   |
|                                                                                                             |   |     |   |
| Consolidated      Statements of Operations for the years ended June 29, 2008 and June 24,      2007.             |   | F-3      |   |
|                                                                                                             |   |     |   |
| Consolidated      Statements of Comprehensive Income for the years ended June 29, 2008 and      June 24, 2007.   |   | F-4      |   |
|                                                                                                             |   |     |   |
| Consolidated      Balance Sheets at June 29, 2008 and June 24, 2007.                                             |   | F-5      |   |
|                                                                                                             |   |     |   |
| Consolidated      Statements of Shareholders' Equity for the years June 29, 2008 and June      24, 2007.         |   | F-6      |   |
|                                                                                                             |   |     |   |
| Consolidated      Statements of Cash Flows for the years ended June 29, 2008 and June 24,      2007.             |   | F-7      |   |
|                                                                                                             |   |     |   |
| Supplemental      Disclosures of Cash Flow Information for the years ended June 29, 2008 and      June 24, 2007. |   | F-8      |   |
|                                                                                                             |   |     |   |
| Notes      to Consolidated Financial Statements.                                                                 |   | F-9      |   |
|                                                                                                             |   |     |   |
| Schedule      II - Consolidated Valuation and Qualifying Accounts                                                |   | F-24     |   |

----

----

| PIZZA      INN, INC.                                                 |   |
|----------------------------------------------------------------------|--------|
| CONSOLIDATED      STATEMENTS OF OPERATIONS                           |   |
| (In      thousands, except per share amounts)                        |   |
|                                                                 |   |   |   |   |   |   |
|                                                                 |   | Year      Ended |   |
|                                                                 |   | June      29, |   |   | June      24, |   |
| REVENUES:                                                            |   | 2008 |   |   | 2007 |   |
|                                                                 |   |   |   |   |   |   |
| Food      and supply sales                                           |   | $ | 43,807 |   |   | $ | 41,029 |   |
| Franchise      revenue                                               |   |   | 4,970 |   |   |   | 4,622 |   |
| Restaurant      sales                                                |   |   | 741 |   |   |   | 774 |   |
|                                                                 |   |   | 49,518 |   |   |   | 46,425 |   |
| COSTS      AND EXPENSES:                                             |   |   |   |   |   |   |   |   |
| Cost      of sales                                                   |   |   | 40,819 |   |   |   | 39,170 |   |
| Franchise      expenses                                              |   |   | 2,538 |   |   |   | 2,633 |   |
| General      and administrative expenses                             |   |   | 2,957 |   |   |   | 3,842 |   |
| Severance                                                            |   |   | 391 |   |   |   | - |   |
| Provision      for bad debts                                         |   |   | 146 |   |   |   | 96 |   |
| Loss      (gain) on sale of assets                                   |   |   | 9 |   |   |   | (570 | ) |
| Other      income                                                    |   |   | - |   |   |   | (159 | ) |
| Impairment      of long-lived assets                                 |   |   | - |   |   |   | 48 |   |
| (Recovery      of) provision for litigation costs                    |   |   | (284 | ) |   |   | 302 |   |
| Interest      expense                                                |   |   | - |   |   |   | 476 |   |
|                                                                 |   |   | 46,576 |   |   |   | 45,838 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| INCOME      FROM CONTINUING                                          |   |   |   |   |   |   |   |   |
| OPERATIONS      BEFORE TAXES                                         |   |   | 2,942 |   |   |   | 587 |   |
| Income      taxes                                                    |   |   | (99 | ) |   |   | - |   |
| INCOME      FROM                                                     |   |   |   |   |   |   |   |   |
| CONTINUING      OPERATIONS                                           |   |   | 3,041 |   |   |   | 587 |   |
| Loss      from discontinued                                          |   |   |   |   |   |   |   |   |
| operations,      net of income tax benefit                           |   |   | (216 | ) |   |   | (381 | ) |
| NET      INCOME                                                      |   | $ | 2,825 |   |   | $ | 206 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| EARNINGS      (LOSS) PER SHARE OF COMMON                             |   |   |   |   |   |   |   |   |
| STOCK      - BASIC:                                                  |   |   |   |   |   |   |   |   |
| Income      from continuing operations                               |   | $ | 0.31 |   |   | $ | 0.06 |   |
| Loss      from discontinued operations                               |   | $ | (0.02 | ) |   | $ | (0.04 | ) |
| Net      income                                                      |   | $ | 0.29 |   |   | $ | 0.02 |   |
| EARNINGS      (LOSS) PER SHARE OF COMMON                             |   |   |   |   |   |   |   |   |
| STOCK      - DILUTED:                                                |   |   |   |   |   |   |   |   |
| Income      from continuing operations                               |   | $ | 0.31 |   |   | $ | 0.06 |   |
| Loss      from discontinued operations                               |   | $ | (0.02 | ) |   | $ | (0.04 | ) |
| Net      income                                                      |   | $ | 0.29 |   |   | $ | 0.02 |   |
| Weighted      average common                                         |   |   |   |   |   |   |   |   |
| shares      outstanding - basic                                      |   |   | 9,761 |   |   |   | 10,145 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Weighted      average common                                         |   |   |   |   |   |   |   |   |
| shares      outstanding - diluted                                    |   |   | 9,789 |   |   |   | 10,146 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| See      accompanying Report of Independent Registered Public        |   |
| Accounting      Firm and Notes to Consolidated Financial Statements. |   |

----

| PIZZA      INN, INC.                                                                           |   |
|------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED      STATEMENTS OF COMPREHENSIVE INCOME                                           |   |
| (In      thousands)                                                                            |   |
|                                                                                           |   |   |   |   |   |   |
|                                                                                           |   |   |   |   |   |   |
|                                                                                           |   | Year      Ended |   |   |   |   |
|                                                                                           |   | June      29, |   |   | June      24, |   |
|                                                                                           |   | 2008 |   |   | 2007 |   |
|                                                                                           |   |   |   |   |   |   |
| Net      income                                                                                |   | $ | 2,825 |   |   | $ | 206 |   |
|                                                                                           |   |   |   |   |   |   |   |   |
| Interest      rate swap gain - (net of  tax expense of      $0 and $0, respectively) |   |   | - |   |   |   | 14 |   |
| Comprehensive      income                                                                      |   | $ | 2,825 |   |   | $ | 220 |   |
|                                                                                           |   |   |   |   |   |   |   |   |
|                                                                                           |   |   |   |   |   |   |   |   |
| See      accompanying Report of Independent Registered Public                                  |   |   |   |   |   |   |   |   |
| Accounting      Firm and Notes to Consolidated Financial Statements.                           |   |   |   |   |   |   |   |   |

----

| PIZZA      INN, INC.                                                 |   |
|----------------------------------------------------------------------|--------|
| CONSOLIDATED      BALANCE SHEETS                                     |   |
| (In      thousands, except share amounts)                            |   |
|                                                                 |   |   |   |   |   |   |
|                                                                 |   | June      29, |   |   | June      24, |   |
| ASSETS                                                               |   | 2008 |   |   | 2007 |   |
|                                                                 |   |   |   |   |   |   |
| CURRENT      ASSETS                                                  |   |   |   |   |   |   |
| Cash      and cash equivalents                                       |   | $ | 1,157 |   |   | $ | 1,879 |   |
| Accounts      receivable, less allowance for doubtful                |   |   |   |   |   |   |   |   |
| accounts      of $128 and $451, respectively                         |   |   | 2,773 |   |   |   | 2,716 |   |
| Notes      receivable, current portion                               |   |   | 6 |   |   |   | 8 |   |
| Income      tax receivable                                           |   |   | 272 |   |   |   | - |   |
| Inventories                                                          |   |   | 1,396 |   |   |   | 1,518 |   |
| Property      held for sale                                          |   |   | 301 |   |   |   | 336 |   |
| Deferred      income tax assets                                      |   |   | 555 |   |   |   | 458 |   |
| Prepaid      expenses and other                                      |   |   | 235 |   |   |   | 165 |   |
| Total      current assets                                            |   |   | 6,695 |   |   |   | 7,080 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| LONG-TERM      ASSETS                                                |   |   |   |   |   |   |   |   |
| Property,      plant and equipment, net                              |   |   | 635 |   |   |   | 778 |   |
| Notes      receivable                                                |   |   | 7 |   |   |   | 12 |   |
| Deferred      income tax assets                                      |   |   | 237 |   |   |   | - |   |
| Re-acquired      development territory, net                          |   |   | 46 |   |   |   | 239 |   |
| Deposits      and other                                              |   |   | 215 |   |   |   | 85 |   |
|                                                                 |   | $ | 7,835 |   |   | $ | 8,194 |   |
| LIABILITIES      AND SHAREHOLDERS' EQUITY                            |   |   |   |   |   |   |   |   |
| CURRENT      LIABILITIES                                             |   |   |   |   |   |   |   |   |
| Accounts      payable - trade                                        |   | $ | 2,380 |   |   | $ | 2,082 |   |
| Accrued      expenses                                                |   |   | 1,316 |   |   |   | 1,805 |   |
| Total      current liabilities                                       |   |   | 3,696 |   |   |   | 3,887 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| LONG-TERM      LIABILITIES                                           |   |   |   |   |   |   |   |   |
| Deferred      gain on sale of property                               |   |   | 184 |   |   |   | 209 |   |
| Deferred      revenues, net of current portion                       |   |   | 283 |   |   |   | 314 |   |
| Other      long-term liabilities                                     |   |   | 18 |   |   |   | 7 |   |
| Total      liabilities                                               |   |   | 4,181 |   |   |   | 4,417 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| COMMITMENTS      AND CONTINGENCIES (See Notes D, F and I)            |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |
| SHAREHOLDERS'      EQUITY                                            |   |   |   |   |   |   |   |   |
| Common      stock, $.01 par value; authorized 26,000,000             |   |   |   |   |   |   |   |   |
| shares;      issued 15,130,319 and 15,120,319 shares, respectively;  |   |   |   |   |   |   |   |   |
| outstanding      9,104,361 and 10,168,494 shares, respectively       |   |   | 151 |   |   |   | 151 |   |
| Additional      paid-in capital                                      |   |   | 8,543 |   |   |   | 8,471 |   |
| Retained      earnings                                               |   |   | 17,624 |   |   |   | 14,799 |   |
| Treasury      stock at cost                                          |   |   |   |   |   |   |   |   |
| Shares      in treasury: 6,025,958 and 4,951,825, respectively       |   |   | (22,664 | ) |   |   | (19,644 | ) |
| Total      shareholders' equity                                      |   |   | 3,654 |   |   |   | 3,777 |   |
|                                                                 |   | $ | 7,835 |   |   | $ | 8,194 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| See      accompanying Report of Independent Registered Public        |   |
| Accounting      Firm and Notes to Consolidated Financial Statements. |   |

----

| PIZZA      INN, INC.                                                 |   |
|----------------------------------------------------------------------|--------|
| CONSOLIDATED      STATEMENTS OF SHAREHOLDERS' EQUITY                 |   |
| (In      thousands)                                                  |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   | Accum. |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   | Other |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   | Additional |   |   |   |   |   | Comp. |   |   |   |   |   | Treasury |   |   |   |   |
|                                                                 |   | Common      Stock |   |   | Paid-in |   |   | Retained |   |   | Income |   |   | Treasury |   |   | Stock |   |   |   |   |
|                                                                 |   | Shares |   |   | Amount |   |   | Capital |   |   | Earnings |   |   | (Loss) |   |   | Shares |   |   | at      Cost |   |   | Total |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercise      of stock options                                       |   |   | 44 |   |   |   | 1 |   |   |   | 80 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 81 |   |
| BALANCE,      JUNE 25, 2006                                          |   |   | 10,139 |   |   | $ | 151 |   |   | $ | 8,426 |   |   | $ | 14,593 |   |   | $ | (14 | ) |   |   | (4,952 | ) |   | $ | (19,644 | ) |   | $ | 3,512 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercise      of stock options                                       |   |   | 30 |   |   |   | - |   |   |   | 59 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 59 |   |
| Interest      rate swap gain (net of                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      income      tax expense of $0)         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 14 |   |   |   | - |   |   |   | - |   |   |   | 14 |   |
| Stock      compensation                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     expense      (reversal)                      |   |   | - |   |   |   | - |   |   |   | (14 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (14 | ) |
| Net      income                                                      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 206 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 206 |   |
| BALANCE,      JUNE 24, 2007                                          |   |   | 10,169 |   |   |   | 151 |   |   |   | 8,471 |   |   |   | 14,799 |   |   |   | - |   |   |   | (4,952 | ) |   |   | (19,644 | ) |   |   | 3,777 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercise      of stock options                                       |   |   | 10 |   |   |   | - |   |   |   | 20 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 20 |   |
| Treasury      stock purchases                                        |   |   | (1,074 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,074 | ) |   |   | (3,020 | ) |   |   | (3,020 | ) |
| Tax      benefit - stock options                                     |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1 |   |
| Stock      compensation expense                                      |   |   | - |   |   |   | - |   |   |   | 51 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 51 |   |
| Net      income                                                      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,825 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,825 |   |
| BALANCE,      JUNE 29, 2008                                          |   |   | 9,105 |   |   | $ | 151 |   |   | $ | 8,543 |   |   | $ | 17,624 |   |   | $ | - |   |   |   | (6,026 | ) |   | $ | (22,664 | ) |   | $ | 3,654 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See      accompanying Report of Independent Registered Public        |   |
| Accounting      Firm and Notes to Consolidated Financial Statements. |   |

----

| PIZZA      INN, INC.                                                 |   |
|----------------------------------------------------------------------|--------|
| CONSOLIDATED      STATEMENTS OF CASH FLOWS                           |   |
| (In      thousands)                                                  |   |
|                                                                 |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |
|                                                                 |   | Year      Ended |   |
|                                                                 |   | June      29, |   |   | June      24, |   |
|                                                                 |   | 2008 |   |   | 2007 |   |
|                                                                 |   |   |   |   |   |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                           |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |
| Net      income                                                      |   | $ | 2,825 |   |   | $ | 206 |   |
| Adjustments      to reconcile net income to cash                     |   |   |   |   |   |   |   |   |
|    provided      by (used for) operating activities:  |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                                   |   |   | 342 |   |   |   | 692 |   |
| Impairment      of long-lived assets and goodwill                    |   |   | - |   |   |   | 48 |   |
| Deferred      rent expense (benefit)                                 |   |   | 54 |   |   |   | (9 | ) |
| Provision      for bad debt                                          |   |   | 146 |   |   |   | 96 |   |
| Stock      compensation expense (benefit)                            |   |   | 51 |   |   |   | (14 | ) |
| Litigation      expense (benefit)                                    |   |   | - |   |   |   | 302 |   |
| Loss      (gain) on sale of assets                                   |   |   | 9 |   |   |   | (570 | ) |
| Deferred      income taxes                                           |   |   | (334 | ) |   |   | 687 |   |
| Changes      in operating assets and liabilities:                    |   |   |   |   |   |   |   |   |
| Deferred      revenue                                                |   |   | (53 | ) |   |   | 196 |   |
| Notes      and accounts receivable                                   |   |   | (196 | ) |   |   | 320 |   |
| Income      tax receivable                                           |   |   | (272 | ) |   |   | - |   |
| Inventories                                                          |   |   | 122 |   |   |   | 254 |   |
| Accounts      payable - trade                                        |   |   | 298 |   |   |   | (135 | ) |
| Accrued      expenses                                                |   |   | (490 | ) |   |   | (3,520 | ) |
| Prepaid      expenses and other                                      |   |   | (83 | ) |   |   | 76 |   |
| Cash      provided by (used for)                                     |   |   |   |   |   |   |   |   |
|    operating      activities                          |   |   | 2,419 |   |   |   | (1,371 | ) |
|                                                                 |   |   |   |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                           |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Proceeds      from sale of assets                                    |   |   | 108 |   |   |   | 11,325 |   |
| Capital      expenditures                                            |   |   | (249 | ) |   |   | (249 | ) |
| Cash      (used for) provided by                                     |   |   |   |   |   |   |   |   |
|    investing      activities                          |   |   | (141 | ) |   |   | 11,076 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                           |   |   |   |   |   |   |   |   |
| Deferred      financing costs                                        |   |   | - |   |   |   | (25 | ) |
| Repayments      of long-term bank debt                               |   |   | - |   |   |   | (8,044 | ) |
| Purchases      of treasury stock                                     |   |   | (3,020 | ) |   |   | - |   |
| Proceeds      from exercise of stock options                         |   |   | 20 |   |   |   | 59 |   |
|                                                                 |   |   |   |   |   |   |   |   |
| Cash      used for financing activities                              |   |   | (3,000 | ) |   |   | (8,010 | ) |
|                                                                 |   |   |   |   |   |   |   |   |
| Net      (decrease) increase in cash and cash equivalents            |   |   | (722 | ) |   |   | 1,695 |   |
| Cash      and cash equivalents, beginning of year                    |   |   | 1,879 |   |   |   | 184 |   |
| Cash      and cash equivalents, end of year                          |   | $ | 1,157 |   |   | $ | 1,879 |   |
|                                                                 |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |
| See      accompanying Report of Independent Registered Public        |   |
| Accounting      Firm and Notes to Consolidated Financial Statements. |   |

----

| PIZZA      INN, INC.                                                 |   |
|----------------------------------------------------------------------|--------|
| SUPPLEMENTAL      DISCLOSURES OF CASH FLOW INFORMATION               |   |
| (In      thousands)                                                  |   |
|                                                                 |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |
|                                                                 |   | Year      Ended |   |
|                                                                 |   | June      29, |   |   | June      24, |   |
|                                                                 |   | 2008 |   |   | 2007 |   |
|                                                                 |   |   |   |   |   |   |
| CASH      PAID (RECEIVED) FOR:                                       |   |   |   |   |   |   |
| Interest      payments                                               |   | $ | - |   |   | $ | 498 |   |
| Income      tax payments (refunds)                                   |   |   | 499 |   |   |   | (680 | ) |
|                                                                 |   |   |   |   |   |   |   |   |
| NONCASH      FINANCING AND INVESTING ACTIVITIES:                     |   |   |   |   |   |   |   |   |
| Gain      on interest rate swap                                      |   | $ | - |   |   | $ | 14 |   |
|                                                                 |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |
| See      accompanying Report of Independent Registered Public        |   |
| Accounting      Firm and Notes to Consolidated Financial Statements. |   |

----

----

----

|                                                          |   | June      29, |   |   | June      24, |    |
|---------------------------------------------------------------|--------|---------------|--------|--------|---------------|---------|
|                                                          |   | 2008          |   |   | 2007          |    |
|  Gross      Carrying Amount                              |   | $             | 912    |   |          | $       | 912 |   |
|  Accumulated      Amortization                           |   |          | (866   | )      |          |    | (673 | ) |
|  Net                                                     |   | $             | 46     |   |          |  $ | 239 |   |
|                                                          |   |          |   |   |          |    |   |   |
|                                                          |   |          |   |   |          |    |   |   |
|                                                          |   |          |   |   |          |    |   |   |
| Aggregate Amortization      Expense:                          |   |          |   |   |          |    |   |   |
|  For      the year ended June 29, 2008 and June 24, 2007 |   | $             | 193    |   |          |    | 193 |   |
|                                                          |   |          |   |   |          |    |   |   |
| Estimated Future      Amortization Expense:                   |   |          |   |   |          |    |   |   |
|  For      the year ending 2009                           |   | $             | 46     |   |          |    |   |   |

----

----

----

|                                                        | Estimated      Useful          |   | June      29, |   |   | June      24, |   |
|-------------------------------------------------------------|--------------------------------|--------|---------------|--------|--------|---------------|--------|
|                                                        | Lives                          |   | 2008          |   |   | 2007          |   |
| Equipment,      furniture and fixtures                      | 3 -      7 yrs                 |   | $             | 1,352  |   |          | $      | 1,757 |   |
| Software                                                    | 5      yrs                     |   |          | 133    |   |          |   | - |   |
| Leasehold      improvements                                 |  7      yrs or lease term |   |          |   |   |          |   |   |   |
|                                                        | if      shorter                |   |          | 1,237  |   |          |   | 1,237 |   |
|                                                        |                           |   |          | 2,722  |   |          |   | 2,994 |   |
| Less:  accumulated      depreciation/amortization |                           |   |          | (2,087 | )      |          |   | (2,216 | ) |
|                                                        |                           |   | $             | 635    |   |          | $      | 778 |   |

|                           |   | June      29, |   |   | June      24, |   |
|--------------------------------|--------|---------------|--------|--------|---------------|--------|
|                           |   | 2008          |   |   | 2007          |   |
| Compensation                   |   | $             | 482    |   |          | $      | 667 |   |
| Accrued      rent              |   |          | 205    |   |          |   | 149 |   |
| Other                          |   |          | 158    |   |          |   | 256 |   |
| Professional      fees         |   |          | 158    |   |          |   | 226 |   |
| Insurance      loss reserves   |   |          | 142    |   |          |   | 161 |   |
| Deferred      revenue, current |   |          | 134    |   |          |   | 231 |   |
| Taxes                          |   |          | 37     |   |          |   | 115 |   |
|                           |   | $             | 1,316  |   |          | $      | 1,805 |   |

----

|                                      |   | Year      Ended |   |
|-------------------------------------------|--------|-----------------|--------|
|                                      |   | June      29,   |   |   | June      24, |   |
|                                      |   | 2008            |   |   | 2007 |   |
| Current      - Federal                    |   | $               | 227    |   |   | $ | (687 | ) |
| Deferred      - Federal                   |   |            | (326   | ) |   |   | 696 |   |
| Deferred      - State                     |   |            | -      |   |   |   | (9 | ) |
| Provision      (benefit) for income taxes |   | $               | (99    | ) |   | $ | - |   |

|                                                     |   | June      29, |      |   | June      24, |    |
|----------------------------------------------------------|--------|---------------|-----------|--------|---------------|---------|
|                                                     |   | 2008          |      |   | 2007          |    |
|                                                     |   |          |      |   |          |    |
| Federal      income taxes based on 34% of pre-tax income |   |  $  | 927  |   |          |  $ | 70  |   |
| State      income tax, net of federal effect             |   |          | (20       | )      |          |    | 125 |   |
| Permanent      adjustments                               |   |          | 29        |   |          |    | 5 |   |
| Change      in valuation allowance                       |   |          | (1,148    | )      |          |    | (416 | ) |
| Foreign      tax credits                                 |   |          | -         |   |          |    | 208 |   |
| Other                                                    |   |          | 113       |   |          |    | 8 |   |
|                                                     |   | $             | (99       | )      |          | $       | - |   |

----

|                                   |   | June      29, |   |   | June      24, |   |
|----------------------------------------|--------|---------------|--------|--------|---------------|--------|
|                                   |   | 2008          |   |   | 2007          |   |
|                                   |   |          |   |   |          |   |
| Reserve      for bad debt              |   | $             | 45     |   |          | $      | 160 |   |
| Depreciable      assets                |   |          | 237    |   |          |   | 465 |   |
| Deferred      fees                     |   |          | 38     |   |          |   | 74 |   |
| Other      reserves and accruals       |   |          | 374    |   |          |   | 473 |   |
| Credit      carryforwards              |   |          | 98     |   |          |   | 98 |   |
| Net      operating loss carry forwards |   |          | -      |   |          |   | 336 |   |
| Gross      deferred tax asset          |   |          | 792    |   |          |   | 1,606 |   |
|                                   |   |          |   |   |          |   |   |   |
| Valuation      allowance               |   |          | -      |   |          |   | (1,148 | ) |
| Net      deferred tax asset            |   | $             | 792    |   |          | $      | 458 |   |

|   |       | Operating |   |
|--------|------------|-----------|--------|
|   |       | Leases    |   |
|   |       |      |   |
|   | 2009       |      | $      | 699 |   |
|   | 2010       |      |   | 709 |   |
|   | 2011       |      |   | 721 |   |
|   | 2012       |      |   | 752 |   |
|   | 2013       |      |   | 782 |   |
|   | Thereafter |      |   | 2,760 |   |
|   |       | $         | 6,423  |   |

----

|                  |   | Year      Ended |   |
|-----------------------|--------|-----------------|--------|
|                  |   | June      29,   |   |   | June      24, |   |
|                  |   | 2008            |   |   | 2007 |   |
|                  |   |            |   |   |   |   |
| Minimum      rentals  |   | $               | 715    |   |   | $ | 764 |   |
| Sublease      rentals |   |            | (12    | ) |   |   | (187 | ) |
|                  |   | $               | 703    |   |   | $ | 577 |   |

----

|                                 |   | Year      Ended    |     |
|--------------------------------------|--------|--------------------|----------|
|                                 |   | June      29, 2008 |     |   |   |   | June      24, 2007 |   |
|                                 |   |               |     |   | Weighted- |   |   |   |   |   |   |   | Weighted- |   |
|                                 |   |               |     |   | Average |   |   |   |   |   |   |   | Average |   |
|                                 |   |               |     |   | Exercise |   |   |   |   |   |   |   | Exercise |   |
|                                 |   | Shares             |     |   | Price |   |   |   |   | Shares |   |   | Price |   |
|                                 |   |               |     |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding      at beginning        |   |               |     |   |   |   |   |   |   |   |   |   |   |   |
| of      year                         |   |               | 588,358  |   |   | $ | 2.54 |   |   |   |   |   | 700,858 |   |   | $ | 2.68 |   |
|                                 |   |               |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Granted                              |   |               | 270,000  |   |   | $ | 2.50 |   |   |   |   |   | - |   |   | $ | - |   |
| Exercised                            |   |               | (10,000  | ) |   | $ | 2.85 |   |   |   |   |   | (30,000 | ) |   | $ | 2.00 |   |
| Forfeited/Canceled/Expired           |   |               | (573,358 | ) |   | $ | 2.53 |   |   |   |   |   | (82,500 | ) |   | $ | 3.73 |   |
|                                 |   |               |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding      at end of year      |   |               | 275,000  |   |   | $ | 2.55 |   |   |   |   |   | 588,358 |   |   | $ | 2.54 |   |
|                                 |   |               |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercisable      at end of year      |   |               | 30,000   |   |   | $ | 2.73 |   |   |   |   |   | 388,358 |   |   | $ | 2.56 |   |
|                                 |   |               |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average      fair value of  |   |               |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| options      granted during the year |   |               |     |   |   | $ | 2.50 |   |   |   |   |   |   |   |   | $ | - |   |
|                                 |   |               |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      intrinsic value of        |   |               |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| options      exercised               |   |               |     |   |   | $ | 8,472 |   |   |   |   |   |   |   |   | $ | 13,200 |   |

|                 |             |   | Options      Outstanding |   |    |              |   |   | Options      Exercisable |   |
|----------------------|------------------|--------|--------------------------|--------|---------|-------------------|--------|--------|--------------------------|--------|
|                 |             |   |                     |   |    | Weighted-         |   |   |                     |   |   |   |   |   |   |   |
|                 |             |   |                     |   |    | Average           |   |   |                     |   |   |   |   |   |   |   |
|                 |             |   | Shares                   |   |    | Remaining         |   |   | Weighted-                |   |   | Shares |   |   | Weighted- |   |
| Range      of        |             |   | Outstanding              |   |    | Contractual       |   |   | Average                  |   |   | Exercisable |   |   | Average |   |
| Exercise      Prices |             |   | at      June 29, 2008    |   |    | Life      (Years) |   |   | Exercise      Price      |   |   | at      June 29, 2008 |   |   | Exercise      Price |   |
|                 |             |   |                     |   |    |              |   |   |                     |   |   |   |   |   |   |   |
| $                    | 2.00      - 2.35 |   |                     |   | 160,000 |              |   |   | 9.00                     |   |   | $ | 2.23 |   |   |   | 5,000 |   |   | $ | 2.15 |   |
| $                    | 2.70      - 3.05 |   |                     |   | 75,000  |              |   |   | 7.10                     |   |   | $ | 2.89 |   |   |   | 25,000 |   |   | $ | 2.85 |   |
| $                    | 3.05-      3.40  |   |                     |   | 40,000  |              |   |   | 9.40                     |   |   | $ | 3.17 |   |   |   | - |   |   | $ | 0.00 |   |
|                 |             |   |                     |   | 275,000 |              |   |   | 8.50                     |   |   | $ | 2.55 |   |   |   | 30,000 |   |   | $ | 2.73 |   |

----

|                                |   | June      29, |   |   | June      24, |   |
|-------------------------------------|--------|---------------|--------|--------|---------------|--------|
|  Fiscal      Years Ended       |   | 2008          |   |   | 2007          |   |
|                                |   |          |   |   |          |   |
|  Expected      life (in years) |   |          | 6.0    |   |          |   | 7.4 |   |
|  Expected      volatility      |   |          | 43.2   | %      |          |   | 40.0 | % |
|  Risk-free      interest rate  |   |          | 4.4    | %      |          |   | 5.0 | % |
|  Expected      forfeiture rate |   |          | 9.9    | %      |          |   | 38.5 | % |

----

----

|                                             |   | Year      Ended |   |
|--------------------------------------------------|--------|-----------------|--------|
|                                             |   | June      29,   |   |   | June      24, |   |
|                                             |   | 2008            |   |   | 2007 |   |
| Income      from continuing operations           |   | $               | 3,041  |   |   | $ | 587 |   |
| Discontinued      operations                     |   |            | (216   | ) |   |   | (381 | ) |
| Net      income available to common stockholders |   | $               | 2,825  |   |   | $ | 206 |   |
|                                             |   |            |   |   |   |   |   |   |
| BASIC:                                           |   |            |   |   |   |   |   |   |
| Weighted      average common shares              |   |            | 9,761  |   |   |   | 10,145 |   |
|                                             |   |            |   |   |   |   |   |   |
| Income      from continuing operations per share |   | $               | 0.31   |   |   | $ | 0.06 |   |
| Discontinued      operations per common share    |   |            | (0.02  | ) |   |   | (0.04 | ) |
| Net      income per common share                 |   | $               | 0.29   |   |   | $ | 0.02 |   |
|                                             |   |            |   |   |   |   |   |   |
| DILUTED:                                         |   |            |   |   |   |   |   |   |
| Weighted      average common shares              |   |            | 9,761  |   |   |   | 10,145 |   |
| Stock      options                               |   |            | 28     |   |   |   | 1 |   |
| Average      common shares outstanding           |   |            | 9,789  |   |   |   | 10,146 |   |
|                                             |   |            |   |   |   |   |   |   |
|                                             |   |            |   |   |   |   |   |   |
| Income      from continuing operations per share |   | $               | 0.31   |   |   | $ | 0.06 |   |
| Discontinued      operations per common share    |   |            | (0.02  | ) |   |   | (0.04 | ) |
| Net      income per common share                 |   | $               | 0.29   |   |   | $ | 0.02 |   |

----

|                                                                                                                                                    |   | Year      Ended |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------|--------|
|                                                                                                                                                    |   | June      29,   |   |   | June      24, |   |
|                                                                                                                                                    |   | 2008            |   |   | 2007 |   |
|  Net      sales and operating revenues:                                                                                                            |   |            |   |   |   |   |
|  Food      and equipment distribution                                                                                                              |   | $               | 43,807 |   |   | $ | 41,029 |   |
|  Franchise      and other (2)                                                                                                                      |   |            | 5,711  |   |   |   | 5,396 |   |
|  Inter-segment      revenues                                                                                                                       |   |            | 311    |   |   |   | 541 |   |
|  Combined                                                                                                                                          |   |            | 49,829 |   |   |   | 46,966 |   |
|  Less      inter-segment revenues                                                                                                                  |   |            | (311   | ) |   |   | (541 | ) |
|  Consolidated      revenues                                                                                                                        |   | $               | 49,518 |   |   | $ | 46,425 |   |
|                                                                                                                                                    |   |            |   |   |   |   |   |   |
|  Depreciation      and amortization:                                                                                                               |   |            |   |   |   |   |   |   |
|  Food      and equipment distribution                                                                                                              |   | $               | 1      |   |   | $ | 166 |   |
|  Franchise      and other (2)                                                                                                                      |   |            | 272    |   |   |   | 371 |   |
|  Combined                                                                                                                                          |   |            | 273    |   |   |   | 537 |   |
|  Corporate      administration and other                                                                                                           |   |            | 69     |   |   |   | 155 |   |
|  Depreciation      and amortization                                                                                                                |   | $               | 342    |   |   | $ | 692 |   |
|                                                                                                                                                    |   |            |   |   |   |   |   |   |
|  Interest      expense:                                                                                                                            |   |            |   |   |   |   |   |   |
|  Food      and equipment distribution                                                                                                              |   | $               | -      |   |   | $ | 267 |   |
|  Franchise      and other (2)                                                                                                                      |   |            | -      |   |   |   | - |   |
|  Combined                                                                                                                                          |   |            | -      |   |   |   | 267 |   |
|  Corporate      administration and other                                                                                                           |   |            | -      |   |   |   | 209 |   |
|  Interest      expense                                                                                                                             |   | $               | -      |   |   | $ | 476 |   |
|                                                                                                                                                    |   |            |   |   |   |   |   |   |
|  Pre-Tax      Income (loss):                                                                                                                       |   |            |   |   |   |   |   |   |
|  Food      and equipment distribution (1)                                                                                                          |   | $               | 2,419  |   |   | $ | (49 | ) |
|  Franchise      and other (1), (2)                                                                                                                 |   |            | 2,102  |   |   |   | 1,595 |   |
|  Inter-segment      profit                                                                                                                         |   |            | 72     |   |   |   | 128 |   |
|  Combined                                                                                                                                          |   |            | 4,593  |   |   |   | 1,674 |   |
|  Less      inter-segment profit                                                                                                                    |   |            | (72    | ) |   |   | (128 | ) |
|  Corporate      administration and other                                                                                                           |   |            | (1,795 | ) |   |   | (1,340 | ) |
|  Income      (loss) before taxes                                                                                                                   |   | $               | 2,726  |   |   | $ | 206 |   |
|                                                                                                                                                    |   |            |   |   |   |   |   |   |
|  Income      tax provision (benefit):                                                                                                              |   |            |   |   |   |   |   |   |
|  Food      and equipment distribution                                                                                                              |   | $               | -      |   |   | $ | - |   |
|  Franchise      and other                                                                                                                          |   |            | -      |   |   |   | - |   |
|  Combined                                                                                                                                          |   |            | -      |   |   |   | - |   |
|  Corporate      administration and other                                                                                                           |   |            | (99    | ) |   |   | - |   |
|  Income      tax (benefit) provision                                                                                                               |   | $               | (99    | ) |   | $ | - |   |
|                                                                                                                                                    |   |            |   |   |   |   |   |   |
|  (1)Does      not include full allocation of corporate administration                                                                              |   |            |
|                                                                                                                                                    |   |            |   |   |   |   |   |   |
|  (2)Company      stores that were closed are included in discontinued operations in the      accompanying      consolidated statement ofoperations |

----

|                                          |   | Year      Ended |   |
|-----------------------------------------------|--------|-----------------|--------|
|                                          |   | June      29,   |   |   | June      24, |   |
|                                          |   | 2008            |   |   | 2007 |   |
|  Capital      Expenditures:              |   |            |   |   |   |   |
|  Food      and equipment distribution    |   | $               | -      |   |   | $ | 225 |   |
|  Franchise      and other                |   |            | 10     |   |   |   | 23 |   |
|  Combined                                |   |            | 10     |   |   |   | 248 |   |
|  Corporate      administration and other |   |            | 239    |   |   |   | 1 |   |
|  Consolidated      capital expenditures  |   | $               | 249    |   |   | $ | 249 |   |
|                                          |   |            |   |   |   |   |   |   |
|  Assets:                                 |   |            |   |   |   |   |   |   |
|  Food      and equipment distribution    |   | $               | 3,311  |   |   | $ | 4,181 |   |
|  Franchise      and other                |   |            | 629    |   |   |   | 1,460 |   |
|  Combined                                |   |            | 3,940  |   |   |   | 5,641 |   |
|  Corporate      administration and other |   |            | 3,895  |   |   |   | 2,553 |   |
|  Consolidated      assets                |   | $               | 7,835  |   |   | $ | 8,194 |   |
|                                          |   |            |   |   |   |   |   |   |
|  Geographic      Information (Revenues): |   |            |   |   |   |   |   |   |
|  United      States                      |   | $               | 47,709 |   |   | $ | 45,023 |   |
|  Foreign      countries                  |   |            | 1,809  |   |   |   | 1,402 |   |
|  Consolidated      total                 |   | $               | 49,518 |   |   | $ | 46,425 |   |

----

| PIZZA      INN, INC.                                |   |
|-----------------------------------------------------|--------|
| CONSOLIDATED      VALUATION AND QUALIFYING ACCOUNTS |   |
| (In      thousands)                                 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   |   |   |   | Additions |   |   |   |   |   |   |   |   |   |   |
|                                                |   | Balance      at |   |   | Charged      to |   |   | Recovered |   |   |   |   |   | Balance |   |
|                                                |   | beginning |   |   | cost      and |   |   | cost      and |   |   | Other |   |   | at      end |   |
|                                                |   | of      period |   |   | expense |   |   | expense |   |   | Deductions |   |   | of period |   |
| Allowance      for doubtful                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| accounts      and notes receivable                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Year      Ended June 29, 2008                       |   | $ | 451 |   |   | $ | 133 |   |   | $ | - |   |   | $ | (456 | ) |   | $ | 128 |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Year      Ended June 24, 2007                       |   | $ | 324 |   |   | $ | 120 |   |   | $ | (24 | ) |   | $ | 31 |   |   | $ | 451 |   |

----