RAVE RESTAURANT GROUP INC

Previous wording

The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes appearing elsewhere in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended June 30, 2024, together with our Quarterly Report on Form 10-Q for the period ended September 29, 2024, may contain certain forward-looking statements that are based on current management expectations. Generally, verbs in the future tense and the words “believe,” “expect,” “anticipate,” “estimate,” “intends,” “opinion,” “potential” and similar expressions identify forward-looking statements. Forward-looking statements in this report include, without limitation, statements relating to our business objectives, our customers and franchisees, our liquidity and capital resources, and the impact of our historical and potential business strategies on our business, financial condition, and operating results. Our actual results could differ materially from our expectations. Further information concerning our business, including additional factors that could cause actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q, are set forth in our Annual Report on Form 10-K for the year ended June 30, 2024, as well as our Quarterly Report on Form 10-Q for the period ended September 29, 2024. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The forward-looking statements contained herein speak only as of the date of this Quarterly Report on Form 10-Q and, except as may be required by applicable law, we do not undertake, and specifically disclaim any obligation to, publicly update or revise such statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Current wording

The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes appearing elsewhere in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended June 30, 2024, together with our Quarterly Reports on Form 10-Q for the periods ended September 29, and December 29, 2024, may contain certain forward-looking statements that are based on current management expectations. Generally, verbs in the future tense and the words “believe,” “expect,” “anticipate,” “estimate,” “intends,” “opinion,” “potential” and similar expressions identify forward-looking statements. Forward-looking statements in this report include, without limitation, statements relating to our business objectives, our customers and franchisees, our liquidity and capital resources, and the impact of our historical and potential business strategies on our business, financial condition, and operating results. Our actual results could differ materially from our expectations. Further information concerning our business, including additional factors that could cause actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q, are set forth in our Annual Report on Form 10-K for the year ended June 30, 2024, as well as our Quarterly Reports on Form 10-Q for the periods ended September 29, and December 29, 2024. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The forward-looking statements contained herein speak only as of the date of this Quarterly Report on Form 10-Q and, except as may be required by applicable law, we do not undertake, and specifically disclaim any obligation to, publicly update or revise such statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Previous wording

The domestic units were located in 15 states predominantly situated in the southern half of the United States. The international units were located in eight foreign countries.

Current wording

The domestic units were located in 15 states predominantly situated in the southern half of the United States. The international units were located in seven foreign countries.

Previous wording

Adjusted EBITDA for the fiscal quarter ended December 29, 2024 increased $0.3 million compared to the same period of the prior fiscal year. Year-to-date Adjusted EBITDA increased $0.4 million compared to the same period of the prior fiscal year. The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown (in thousands):

Current wording

Adjusted EBITDA for the fiscal quarter ended March 30, 2025 increased $0.1 million compared to the same period of the prior fiscal year. Year-to-date Adjusted EBITDA increased $0.5 million compared to the same period of the prior fiscal year. The following table sets forth a reconciliation of net income to EBITDA and Adjusted EBITDA for the periods shown (in thousands):

Previous wording

Pizza Inn total domestic retail sales decreased by $0.3 million, or 0.7%, for the six months ended December 29, 2024 when compared to the same period of the prior year. Compared to the same fiscal period of the prior year, average Buffet Units open in the period increased from 77 to 78. Comparable store retail sales decreased by $0.3 million, or 0.7%, for the six month period ended December 29, 2024 as compared to the same period of the prior fiscal year. For the six months ended December 29, 2024, the decrease in domestic retail sales were primarily the result of the decrease in comparable domestic store retail sales, offset by an increase in Buffet Units.

Current wording

Pizza Inn total domestic retail sales increased by $0.6 million, or 2.3%, for the three months ended March 30, 2025 when compared to the same period of the prior year. Compared to the same fiscal quarter of the prior year, average Buffet Units open in the period remained stable. Comparable store retail sales increased by $0.6 million, or 2.5%, for the three month period ended March 30, 2025 as compared to the same period of the prior fiscal year.

Previous wording

Pizza Inn total domestic retail sales increased by $0.3 million, or 1.2%, for the three months ended December 29, 2024 when compared to the same period of the prior year. Compared to the same fiscal quarter of the prior year, average Buffet Units open in the period increased from 75 to 78. Comparable store retail sales increased by $0.2 million, or 0.8%, for the three month period ended December 29, 2024 as compared to the same period of the prior fiscal year. For the three months ended December 29, 2024, the increase in domestic retail sales were primarily the result of the increase in Buffet Units, supplemented by an increase in comparable domestic store retail sales.

Current wording

Pizza Inn total domestic retail sales increased by $0.2 million, or 0.3%, for the nine months ended March 30, 2025 when compared to the same period of the prior year. Compared to the same fiscal period of the prior year, average Buffet Units open in the period increased from 77 to 78. Comparable store retail sales increased by $0.3 million, or 0.4%, for the nine month period ended March 30, 2025 as compared to the same period of the prior fiscal year. For the nine months ended March 30, 2025, the increase in domestic retail sales were primarily the result of the increase in the average number of Buffet Units, supplemented by an increase in comparable domestic store retail sales.

Previous wording

The following chart summarizes Pizza Inn restaurant activity for the three and six months ended December 29, 2024:

Current wording

The following chart summarizes Pizza Inn restaurant activity for the three and nine months ended March 30, 2025:

Previous wording

There was a net decrease of zero and three units in the total domestic Pizza Inn unit count during the three and six months ended December 29, 2024, respectively. There were three unit transfers between franchisees in the total domestic Pizza Inn unit count during the three and six months ended December 29, 2024. For the three and six months ended December 29, 2024, the number of international Pizza Inn units increased by one and three units, respectively. There were zero transfers in the total international Pizza Inn unit count during the three and six months ended December 29, 2024. The Company believes the number of both domestic and international Pizza Inn units will increase modestly in future periods.

Current wording

There was a net decrease of four and seven units in the total domestic Pizza Inn unit count during the three and nine months ended March 30, 2025, respectively. There were two and five units transferred between franchisees in the total domestic Pizza Inn unit count during the three and nine months ended March 30, 2025, respectively. For the three and nine months ended March 30, 2025, the number of international Pizza Inn units decreased by seven and four net units, respectively. There were zero transfers in the total international Pizza Inn unit count during the three and nine months ended March 30, 2025. The Company believes the number of both domestic and international Pizza Inn units will increase modestly in future periods.

Previous wording

Pie Five total domestic retail sales decreased by $1.6 million, or 37.0%, for the three months ended December 29, 2024 when compared to the same period of the prior year. Compared to the same fiscal quarter of the prior year, average units open in the period decreased from 25 to 20. Comparable store retail sales decreased by $0.3 million, or 11.4%, for the three month period ended December 29, 2024 as compared to the same period of the prior fiscal year. For the three months ended December 29, 2024, the decrease in domestic retail sales were primarily the result of the decrease in store count, supplemented by a decrease in comparable store retail sales.

Current wording

Pie Five total domestic retail sales decreased by $1.1 million, or 28.2%, for the three months ended March 30, 2025 when compared to the same period of the prior year. Compared to the same fiscal quarter of the prior year, average units open in the period decreased from 24 to 19. Comparable store retail sales decreased by $0.2 million, or 5.6%, for the three month period ended March 30, 2025 as compared to the same period of the prior fiscal year. For the three months ended March 30, 2025, the decrease in domestic retail sales were primarily the result of the decrease in average store count, supplemented by a decrease in comparable store retail sales.

Previous wording

Pie Five total domestic retail sales decreased by $3.4 million, or 37.3%, for the six months ended December 29, 2024 when compared to the same period of the prior year. Compared to the same fiscal period of the prior year, average units open in the period decreased from 26 to 20. Comparable store retail sales decreased by $0.6 million, or 10.0%, for the six month period ended December 29, 2024 as compared to the same period of the prior fiscal year. For the six months ended December 29, 2024, the decrease in domestic retail sales were primarily the result of the decrease in store count, supplemented by a decrease in comparable store retail sales.

Current wording

Pie Five total domestic retail sales decreased by $4.5 million, or 34.6%, for the nine months ended March 30, 2025 when compared to the same period of the prior year. Compared to the same fiscal period of the prior year, average units open in the period decreased from 26 to 20. Comparable store retail sales decreased by $0.8 million, or 8.6%, for the nine month period ended March 30, 2025 as compared to the same period of the prior fiscal year. For the nine months ended March 30, 2025, the decrease in domestic retail sales were primarily the result of the decrease in average store count, supplemented by a decrease in comparable store retail sales.

Previous wording

The following chart summarizes Pie Five restaurant activity for the three and six months ended December 29, 2024:

Current wording

The following chart summarizes Pie Five restaurant activity for the three and nine months ended March 30, 2025:

Previous wording

The Pie Five units remained stable during the three and six months ended December 29, 2024. There were zero transfers in the total domestic Pie Five unit count during the three and six months ended December 29, 2024. We believe that Pie Five units will decrease modestly in future periods.

Current wording

There was a net decrease of one unit in the total domestic Pie Five unit count during the three and nine months ended March 30, 2025. There was one unit transferred in the total domestic Pie Five unit count during the three and nine months ended March 30, 2025. We believe that Pie Five units will decrease modestly in future periods.

Previous wording

In addition to Corporate overhead support, the Company defines its operating segments as Pizza Inn Franchising and Pie Five Franchising. The following is additional business segment information for the three and six months ended December 29, 2024 and December 24, 2023 (in thousands):

Current wording

In addition to Corporate overhead support, the Company defines its operating segments as Pizza Inn Franchising and Pie Five Franchising. The following is additional business segment information for the three and nine months ended March 30, 2025 and March 24, 2024 (in thousands):

Previous wording

Total revenues for the three month period ended December 29, 2024 and for the same period in the prior fiscal year were $2.9 million and $2.7 million, respectively.

Current wording

Total revenues for the three month period ended March 30, 2025 and for the same period in the prior fiscal year were $3.0 million and $3.0 million, respectively.

Previous wording

Total revenues for the six month period ended December 29, 2024 and for the same period in the prior fiscal year were $5.9 million and $5.8 million, respectively.

Current wording

Total revenues for the nine month period ended March 30, 2025 and for the same period in the prior fiscal year were $8.9 million and $8.8 million, respectively.

Previous wording

Pizza Inn franchise revenues increased by $0.3 million to $2.5 million for the three month period ended December 29, 2024 as compared to the same period in the prior fiscal year. The 11.9% increase was driven by increases in supplier and distributor incentives. Pizza Inn franchise revenues increased by $0.4 million to $5.3 million for the six month period ended December 29, 2024 as compared to the same period in the prior fiscal year. The 7.9% increase was driven by increases in supplier and distributor incentives.

Current wording

Pizza Inn franchise revenues increased by $0.2 million to $2.7 million for the three month period ended March 30, 2025 as compared to the same period in the prior fiscal year. The 6.5% increase was driven by increases in supplier and distributor incentives. Pizza Inn franchise revenues increased by $0.5 million to $7.9 million for the nine month period ended March 30, 2025 as compared to the same period in the prior fiscal year. The 7.4% increase was driven by increases in supplier and distributor incentives.

Previous wording

Pie Five franchise revenues decreased by $0.1 million to $0.3 million for the three month period ended December 29, 2024 as compared to the same period in the prior fiscal year. The 30.2% decrease was driven by decreases in domestic royalties. Pie Five franchise revenues decreased by $0.3 million to $0.6 million for the six month period ended December 29, 2024 as compared to the same period in the prior fiscal year. The 29.9% decrease was driven by decreases in domestic royalties.

Current wording

Pie Five franchise revenues decreased by $0.1 million to $0.3 million for the three month period ended March 30, 2025 as compared to the same period in the prior fiscal year. The 32.6% decrease was driven by decreases in domestic royalties as a result of lower retail sales primarily driven by net decreases in domestic units. Pie Five franchise revenues decreased by $0.4 million to $0.9 million for the nine month period ended March 30, 2025 as compared to the same period in the prior fiscal year. The 30.8% decrease was driven by decreases in domestic royalties.

Previous wording

Total general and administrative expenses remained relatively stable at $1.3 million for the three month period ended December 29, 2024 as compared to the same period of the prior fiscal year. The 2.0% decrease was driven by decreases in legal fees, offset by increases in salaries. Total general and administrative expenses increased by $0.1 million to $2.7 million for the six month period ended December 29, 2024 as compared to the same period of the prior fiscal year. The 2.6% increase was driven by increases in salaries.

Current wording

Total general and administrative expenses remained relatively stable at $1.3 million for the three month period ended March 30, 2025 as compared to the same period of the prior fiscal year. The 2.4% increase was driven by increases in salaries, offset by decreases in legal fees. Total general and administrative expenses increased by $0.1 million to $4.0 million for the nine month period ended March 30, 2025 as compared to the same period of the prior fiscal year. The 2.5% increase was driven by increases in salaries, offset by decreases in legal fees.

Previous wording

Franchise expenses include general and administrative expenses directly related to the sale and continuing service of domestic and international franchises. Total franchise expenses remained relatively stable at $0.8 million for the three month period ended December 29, 2024 as compared to the same period of the prior fiscal year. The 1.8% decrease was driven by decreases in salaries, offset by increases in advertising fees. Total franchise expenses decreased by $0.2 million to $1.8 million for the six month period ended December 29, 2024 as compared to the same period of the prior fiscal year. The 9.5% decrease was driven by decreases in salaries and advertising fees.

Current wording

Franchise expenses include general and administrative expenses directly related to the sale and continuing service of domestic and international franchises. Total franchise expenses remained relatively stable at $0.8 million for the three month period ended March 30, 2025 as compared to the same period of the prior fiscal year. The 5.4% decrease was driven by decreases in salaries directly related to franchise operations, offset by increases in advertising fees. Total franchise expenses decreased by $0.2 million to $2.6 million for the nine month period ended March 30, 2025 as compared to the same period of the prior fiscal year. The 8.3% decrease was driven by decreases in salaries directly related to franchise operations and advertising fees.

Previous wording

The Company monitors franchisee receivable balances and adjusts credit terms when necessary to minimize the Company’s exposure to high-risk accounts receivable. For the three month period ended December 29, 2024, provision for credit losses was $9 thousand compared to $10 thousand for the same period in the prior fiscal year. During the three month period ended December 29, 2024, the Company recorded a loss in provision for credit losses due to the write off of receivables. For the six month period ended December 29, 2024, recoveries for credit losses were $8 thousand compared to provision for credit losses of $35 thousand for the same period in the prior fiscal year. During the six month period ended December 29, 2024, the Company recorded a loss in provision for credit losses due to the write off of receivables, offset by a gain in provision for credit losses due to the recoveries of receivables that had been previously reserved.

Current wording

The Company monitors franchisee receivable balances and adjusts credit terms when necessary to minimize the Company’s exposure to high-risk accounts receivable. For the three month period ended March 30, 2025, recoveries for credit losses were $14 thousand compared to provision for credit losses of $11 thousand for the same period in the prior fiscal year. During the three month period ended March 30, 2025, the Company recorded a loss in provision for credit losses due to the write off of receivables, offset by a gain in provision for credit losses due to the recoveries of receivables that had been previously reserved. For the nine month period ended March 30, 2025, recoveries for credit losses were $22 thousand compared to provision for credit losses of $46 thousand for the same period in the prior fiscal year. During the nine month period ended March 30, 2025, the Company recorded a loss in provision for credit losses due to the write off of receivables, offset by a gain in provision for credit losses due to the recoveries of receivables that had been previously reserved.

Previous wording

Interest income increased by $41 thousand to $87 thousand for the three month period ended December 29, 2024 as compared to the same period in the prior fiscal year. The increase was primarily driven by interest received on U.S. Treasury bills. Interest income increased by $121 thousand to $169 thousand for the six month period ended December 29, 2024 as compared to the same period in the prior fiscal year. The increase was primarily driven by interest received on U.S. Treasury bills.

Current wording

Interest income increased by $39 thousand to $84 thousand for the three month period ended March 30, 2025 as compared to the same period in the prior fiscal year. The increase was primarily driven by interest received on U.S. Treasury bills. Interest income increased by $160 thousand to $253 thousand for the nine month period ended March 30, 2025 as compared to the same period in the prior fiscal year. The increase was primarily driven by interest received on U.S. Treasury bills.

Previous wording

Amortization and depreciation expense decreased by $4 thousand to $53 thousand for the three month period ended December 29, 2024 as compared to the same period in the prior year. The decrease was primarily the result of lower depreciation of equipment. Amortization and depreciation expense decreased by $16 thousand to $96 thousand for the six month period ended December 29, 2024 as compared to the same period in the prior year. The decrease was primarily the result of lower depreciation of equipment.

Current wording

Depreciation and amortization expense decreased by $14 thousand to $44 thousand for the three month period ended March 30, 2025 as compared to the same period in the prior year. The decrease was primarily the result of lower depreciation of equipment. Depreciation and amortization expense decreased by $30 thousand to $140 thousand for the nine month period ended March 30, 2025 as compared to the same period in the prior year. The decrease was primarily the result of lower depreciation of equipment.

Previous wording

For the three and six months ended December 29, 2024, the Company recorded an income tax expense of $144 thousand and $313 thousand, respectively. For the three and six months ended December 24, 2023, the Company recorded an income tax benefit of $13 thousand and a tax expense of $119 thousand, respectively. The increase for the three months ended as of December 29, 2024 was driven by a decrease in the number of RSUs vested compared to the comparable period of the prior fiscal year, which resulted in a lower tax benefit from stock-based compensation. The increase for the six months ended as of December 29, 2024 was primarily driven by a decrease in the number of RSUs vested compared to the comparable period of the prior fiscal year, which resulted in a lower tax benefit from stock-based compensation.

Current wording

For the three and nine months ended March 30, 2025, the Company recorded an income tax expense of $228 thousand and $541 thousand, respectively. For the three and nine months ended March 24, 2024, the Company recorded an income tax expense of $200 thousand and $319 thousand, respectively. The increase for the three months ended as of March 30, 2025 was driven by increases in federal taxes, primarily due to higher taxable income. The increase for the nine months ended as of March 30, 2025 was primarily driven by increases in federal taxes, primarily due to higher taxable income and fewer discrete tax items related to restricted stock units vesting than in the prior year.

Previous wording

Basic net income per share increased $0.01 per share to $0.08 per share for the six months ended December 29, 2024, compared to the comparable period in the prior fiscal year. The Company had net income of $1.1 million for the six months ended December 29, 2024 compared to net income of $0.9 million in the comparable period in the prior fiscal year, on revenues of $5.9 million for the six months ended December 29, 2024 compared to $5.8 million in the comparable period in the prior fiscal year.

Current wording

Basic net income per share increased $0.01 per share to $0.05 per share for the three months ended March 30, 2025, compared to the comparable period in the prior fiscal year. The Company had net income of $0.7 million for the three months ended March 30, 2025 compared to net income of $0.7 million in the comparable period in the prior fiscal year, on revenues of $3.0 million for the three months ended March 30, 2025 compared to $3.0 million in the comparable period in the prior fiscal year.

Previous wording

Basic net income per share remained relatively stable at $0.04 per share for the three months ended December 29, 2024, compared to the comparable period in the prior fiscal year. The Company had net income of $0.6 million for the three months ended December 29, 2024 compared to net income of $0.6 million in the comparable period in the prior fiscal year, on revenues of $2.9 million for the three months ended December 29, 2024 compared to $2.8 million in the comparable period in the prior fiscal year.

Current wording

Basic net income per share increased $0.02 per share to $0.13 per share for the nine months ended March 30, 2025, compared to the comparable period in the prior fiscal year. The Company had net income of $1.9 million for the nine months ended March 30, 2025 compared to net income of $1.6 million in the comparable period in the prior fiscal year, on revenues of $8.9 million for the nine months ended March 30, 2025 compared to $8.8 million in the comparable period in the prior fiscal year.

Previous wording

During the six month period ended December 29, 2024, the Company's primary source of liquidity was proceeds from operating activities.

Current wording

During the nine month period ended March 30, 2025, the Company's primary source of liquidity was proceeds from operating activities.

Previous wording

Cash flows from operating activities generally reflect net income adjusted for certain non-cash items including depreciation and amortization, changes in deferred taxes, stock-based compensation, and changes in working capital. Cash provided by operating activities was $1.2 million for the six month period ended December 29, 2024 compared to cash provided by operating activities of $0.3 million for the six month period ended December 24, 2023. The primary driver of increased operating cash flow during the six month period ended December 29, 2024 was increased collections of accounts receivable related to the payment of franchise receivables.

Current wording

Cash flows from operating activities generally reflect net income adjusted for certain non-cash items including depreciation and amortization, changes in deferred taxes, stock-based compensation, and changes in working capital. Cash provided by operating activities was $2.2 million for the nine month period ended March 30, 2025 compared to cash provided by operating activities of $1.3 million for the nine month period ended March 24, 2024. The primary driver of increased operating cash flow during the nine month period ended March 30, 2025 was increased collections of accounts receivable related to the payment of franchise receivables.

Previous wording

Cash flows from investing activities reflect purchases and maturities of short-term investments as well as net proceeds from the sale of assets and capital expenditures for the purchase of Company assets. Cash used in investing activities during the six month period ended December 29, 2024 was $1.0 million compared to cash used in investing activities of $16 thousand for the six months ended December 24, 2023. Net cash used by investing activities during the six month period ended December 29, 2024 was primarily attributable to increased purchases of U.S. Treasury bills.

Current wording

Cash flows from investing activities reflect purchases and maturities of short-term investments as well as net proceeds from the sale of assets and capital expenditures for the purchase of Company assets. Cash used in investing activities during the nine month period ended March 30, 2025 was $2.9 million compared to cash used in investing activities of $30 thousand for the nine months ended March 24, 2024. Net cash used in investing activities during the nine month period ended March 30, 2025 was primarily attributable to increased purchases of U.S. Treasury bills.

Previous wording

Cash flows used in financing activities generally reflect changes in the Company's stock and debt activity during the period. Net cash used in financing activities was $0.2 million for the six month period ended December 29, 2024 compared to net cash used in financing activities of $0.3 million for the six month period ended December 24, 2023. Net cash used by financing activities for the six months ended December 29, 2024 was primarily attributable to taxes paid on vested RSUs. Net cash used by financing activities for the six months ended December 24, 2023 was primarily attributable to taxes paid on vested RSUs.

Current wording

Cash flows used in financing activities generally reflect changes in the Company's stock and debt activity during the period. Net cash used in financing activities was $1.4 million for the nine month period ended March 30, 2025 compared to net cash used in financing activities of $0.3 million for the nine month period ended March 24, 2024. Net cash used by financing activities for the nine months ended March 30, 2025 was primarily attributable to repurchases of the Company's stock. On February 24, 2025, the Company repurchased 500,000 shares at $2.40 per share in a negotiated transaction. Net cash used by financing activities for the nine months ended March 24, 2024 was primarily attributable to taxes paid on vested RSUs.

Previous wording

Management believes the cash on hand combined with net cash provided by operations will be sufficient to fund operations for the next 12 months and beyond.

Current wording

Management believes the cash and short-term investments on hand combined with net cash provided by operations will be sufficient to fund operations for the next 12 months and beyond.

Previous wording

The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. The Company assesses whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, using a “more likely than not” standard. In assessing the need for the valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such assessment, more weight is given to evidence that can be objectively verified, including recent operating performance.

Current wording

The Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. The Company assesses whether a valuation allowance should be established against its deferred tax assets based on consideration of all available evidence, using a “more likely than not” standard. In assessing the need for a valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such assessment, more weight is given to evidence that can be objectively verified, including recent operating performance.