718332--10/10/2006--PIZZA_INN_INC

related topics

{financial, litigation, operation}

{competitive, industry, competition}

{cost, regulation, environmental}

{customer, product, revenue}

{stock, price, share}

{stock, price, operating}

{control, financial, internal}

{acquisition, growth, future}

{debt, indebtedness, cash}

{loss, insurance, financial}

{personnel, key, retain}

{interest, director, officer}

{regulation, change, law}

Our substantial indebtedness could materially adversely affect our business and limit our ability to plan for or respond to changes in our business. Payments we are required to make under a settlement agreement with our former president and chief executive officer could result in diminished liquidity and cash flow positions. If we do not prevail in litigation with a former beverage supplier, we could be liable for significant monetary damages. We also face risks of litigation from customers, franchisees, employees and others in the ordinary course of business, which diverts our financial and management resources. Any adverse litigation or publicity may negatively impact our financial condition and results of operations. If we are not able to implement our growth strategy successfully, which includes opening new domestic Buffet Units and reimaging existing restaurants, our ability to increase our revenues and operating profits could be materially adversely affected. An increase in the cost of cheese or other commodities, including fuel and labor, could adversely affect our profitability and operating results. Shortages or interruptions in the delivery of food products could adversely affect our operating results. If we are not able to continue purchasing our key pizza ingredients from our current suppliers or find suitable replacement suppliers our financial results could be materially adversely affected. We are subject to extensive government regulation, and any failure to comply with existing or increased regulations could adversely affect our business and operating results. Our earnings and business growth strategy depends on the success of our franchisees, and we may be harmed by actions taken by our franchisees that are outside of our control. Loss of key personnel or our inability to attract and retain new qualified personnel could hurt our business and inhibit our ability to operate and grow successfully. Our current insurance coverage may not be adequate, our insurance premiums may increase and we may not be able to obtain insurance at acceptable rates, or at all. The Company s management has concluded that the Company s disclosure controls and procedures are not effective, and that a material weakness in financial reporting existed at June 25, 2006 as a result of recent turnover in its accounting staff and reassignment of responsibilities among remaining staff, which may affect the Company s ability to accurately and timely complete and file its financial statements. If the Company is not able to accurately and timely complete its financial statements and file the reports required under Section 13 or of the Exchange Act, the Company could face SEC or NASDAQ inquiries, its stock price may decline, and/or its financial condition could be materially adversely affected. Risks Associated With Our Common Stock Even though our common stock is currently traded on the Nasdaq Capital Market, it has less liquidity than the stock of many other companies quoted on the NASDAQ Stock Market s Global Market or on a national securities exchange. The market price of our common stock may fluctuate in the future, and these fluctuations may be unrelated to our performance. Risks Associated With Our Industry If we are not able to compete effectively, our business, sales and earnings could be materially adversely affected.

Full 10-K form ▸

718332--10/10/2006--PIZZA_INN_INC_/MO/