UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended: June 30, 1999
_____________
Commission file number: 0-18590
_______
GOOD TIMES RESTAURANTS INC.
___________________________
(Exact name of small business issuer as specified in its charter)
NEVADA
______
(State or other jurisdiction of incorporation or organization)
84-1133368
__________
(I.R.S. Employer Identification No.)
601 CORPORATE CIRCLE, GOLDEN, CO 80401
_________________________________________
(Address of principal executive offices)
(303) 384-1400
______________
(Issuer's telephone number)
_______________________________________________________
(Former name, former address and former fiscal year, since last report.)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
X Yes No
____ ____
APPLICABLE ONLY TO CORPORATE ISSUERS
Total number of shares of common stock outstanding at August 12, 1999.
2,221,507 SHARES OF COMMON STOCK, .001 PAR VALUE
___________________________________________________
Transitional Small Business Disclosure Format (check one): Yes ( ) No (X)
Form 10-QSB
Quarter Ended June 30, 1999
INDEX
PAGE
PART I - FINANCIAL INFORMATION
1. Financial Statements
Consolidated Balance Sheets - 3
June 30, 1999 and September 30, 1998
Consolidated Statements of Operations - 5
For the three months ended June 30,
1999 and 1998 and for the nine months ended
June 30, 1999 and 1998
Consolidated Statements of Cash Flows - 6
For the three months ended June 30,
1999 and 1998 and for the nine months
ended June 30, 1999 and 1998
Notes to Financial Statements 7
2. Management's Discussion and Analysis 8
PART II - OTHER INFORMATION
1 through 6. 12
SIGNATURES 14
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<C> <C> <C>
June 30, September 30,
1999 1998
____ ____
CURRENT ASSETS:
Cash and cash equivalent $1,755,000 $ 768,000
Receivables 593,000 281,000
Inventories 50,000 52,000
Prepaid expenses and other 42,000 8,000
Notes receivable 422,000 42,000
_________ _________
Total current assets 2,862,000 1,151,000
PROPERTY AND EQUIPMENT, at cost:
Land and building 2,422,000 2,511,000
Leasehold improvements 2,324,000 2,298,000
Fixtures and equipment 2,929,000 2,735,000
_________ _________
7,675,000 7,544,000
Less accumulated depreciation
and amortization (3,007,000) (2,625,000)
_________ _________
4,668,000 4,919,000
OTHER ASSETS:
Notes receivable 398,000 483,000
Deposits & other 34,000 25,000
_________ _________
432,000 508,000
TOTAL ASSETS $7,962,000 $6,578,000
========= =========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<C> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt
and capital leases $ 53,000 $ 96,000
Accounts payable 420,000 441,000
Accrued liabilities - Las Vegas 14,000 16,000
Accrued liabilities - RTC 129,000 148,000
Accrued liabilities - other 561,000 564,000
_________ _________
Total current liabilities 1,177,000 1,265,000
LONG-TERM LIABILITIES:
Debt and capitalized leases 603,000 463,000
Las Vegas accrued liabilities 112,000 124,000
RTC accrued liabilities 196,000 291,000
Deferred liabilities 307,000 288,000
_________ _________
Total long-term liabilities 1,218,000 1,166,000
MINORITY INTERESTS IN PARTNERSHIPS 1,347,000 1,465,000
</TABLE>
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;
5,000,000 shares authorized, None issued and outstanding
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Cont.)
<TABLE>
<C> <C> <C>
June 30, September 30,
1999 1998
____ ____
Common stock, $.001 par value;
50,000,000 shares authorized,
2,221,507 shares issued and
outstanding as of June 30,
1999 and 1,747,919 shares
issued and outstanding as
of September 30, 1998 2,000 2,000
Capital contributed in excess
of par value 13,204,000 11,851,000
Accumulated deficit (8,986,000) (9,171,000)
__________ __________
Total stockholders' equity 4,220,000 2,682,000
__________ __________
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 7,962,000 $ 6,578,000
========== ==========
</TABLE>
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
Three Months Ended Nine Months Ended
June 30, June 30,
<C> <C> <C> <C> <C>
1999 1998 1999 1998
____ ____ ____ ____
NET REVENUES:
Restaurant sales, net $3,331,000 $3,358,000 $9,954,000 $9,398,000
Franchise net revenues 82,000 63,000 210,000 143,000
_________ _________ _________ _________
Total revenues 3,413,000 3,421,000 10,164,000 9,541,000
RESTAURANT OPERATING EXPENSES:
Food & paper costs 1,148,000 1,198,000 3,574,000 3,349,000
Labor, occupancy & other 1,285,000 1,381,000 3,912,000 4,076,000
Accretion of deferred rent 7,000 13,000 21,000 33,000
Depreciation & amortization 152,000 162,000 461,000 496,000
_________ _________ _________ _________
Total restaurant
operating costs 2,592,000 2,754,000 7,968,000 7,954,000
INCOME FROM RESTAURANT
OPERATIONS 821,000 667,000 2,196,000 1,587,000
OTHER OPERATING EXPENSES:
Selling, general &
administrative expenses 560,000 528,000 1,691,000 1,638,000
Loss (income) from
operating RTC stores 20,000 13,000 37,000 25,000
Loss (gain) on sales of
restaurants & equipment (66,000) 0 (70,000) 0
________ ________ _________ _________
Total other operating
expenses 514,000 541,000 1,658,000 1,663,000
INCOME (LOSS) FROM OPERATIONS 307,000 126,000 538,000 (76,000)
OTHER INCOME & (EXPENSES)
Minority income (expense)
,net (128,000) (87,000) (310,000) (168,000)
Interest, net 12,000 (15,000) 10,000 (45,000)
Loss from RTC &
Las Vegas lease liabilities 0 0 0 (55,000)
Other, net (57,000) (3,000) ( 52,000) 50,000
________ ________ ________ ________
Total other income &
expenses (173,000) (105,000) (352,000) (218,000)
NET INCOME (LOSS) $ 134,000 $ 21,000 $186,000 ($294,000)
======== ======== ======== ========
PREFERRED STOCK DIVIDENDS
IN ARREARS 0 0 0 40,000
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCKHOLDERS $ 134,000 $ 21,000 $186,000 ($334,000)
======== ======== ======== ========
NET INCOME (LOSS) PER COMMON
SHARE $.07 $.02 $.10 ($.26)
WEIGHTED AVERAGE COMMON SHARES AND
EQUIVALENTS USED IN PER SHARE CALCULATION
BASIC 1,945,346 1,321,064 1,820,213 1,307,888
DILUTED 1,963,500 1,321,064 1,844,282 1,307,888
</TABLE>
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
Three Months Ended Nine Months Ended
June 30, June 30,
<C> <C> <C> <C> <C>
1999 1998 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $134,000 $ 21,000 $186,000 ($294,000)
Depreciation and
amortization 174,000 175,000 502,000 534,000
Changes in operating
assets & liabilities--
(Increase) decrease in:
Prepaids & receivables (361,000) (27,000) (345,000) 236,000
Inventories (1,000) 6,000 2,000 2,000
Other assets (296,000) (6,000) (303,000) 28,000
Opening expenses 0 0 (1,000) 0
(Decrease) increase in:
Accounts payable (19,000) 0 (21,000) (35,000)
Accrued interest 0 0 0 0
Accrued property taxes (78,000) (93,000) (15,000) (54,000)
Accrued payroll &
P/R taxes 1,000 7,000 (2,000) (3,000)
Other accrued liabilities
/deferred income (23,000) (36,000) (97,000) (167,000)
_______ _______ _______ _______
Net cash provided by
(used in)operating
activities (469,000) 47,000 (94,000) 247,000
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase) sale - FF&E, land,
building & improvements (141,000) (21,000) (251,000) (163,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt incurred (paid) 173,000 (136,000) 97,000 (110,000)
Minority interest (43,000) (37,000) (118,000) (115,000)
Paid in capital activity 1,037,000 0 1,353,000 15,000
_________ _______ _________ _______
Net cash provided by
(Used in) financing
activities 1,167,000 (173,000) 1,332,000 (210,000)
INCREASE (DECREASE) IN CASH $ 557,000 ($147,000) $ 987,000 ($126,000)
========= ======== ======== ========
</TABLE>
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. UNAUDITED FINANCIAL STATEMENTS:
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all of the normal recurring adjustments
necessary to present fairly the financial position of the Company as of June
30, 1999, the results of its operations and its cash flow for the three month
period ended June 30, 1999 and for the nine month period ended June 30, 1999.
Operating results for the three month period ended June 30, 1999 and for the
nine month period ended June 30, 1999 are not necessarily indicative of the
results that may be expected for the year ending September 30, 1999.
The consolidated balance sheet as of September 30, 1998 is derived from
the audited financial statements, but does not include all disclosures
required by generally accepted accounting principles. As a result, these
financial statements should be read in conjunction with the Company's Form
10-KSB for the fiscal year ended September 30, 1998.
2. REVERSE STOCK SPLIT:
On February 12, 1998, the shareholders approved a one-for-five reverse
stock split of the Company's Common Stock. All references to number of
shares, except shares authorized, and to per share information in the
consolidated financial statements have been adjusted to reflect the reverse
stock split on a retroactive basis.
3. CONTINGENT LIABILITY
The Company remains contingently liable on several leases of restaurants
that were previously sold. The Company is also a guarantor on a Small
Business Administration loan to a franchisee.
4. STOCK TRANSACTIONS
During the three months ended June 30, 1999, Good Times Restaurants
completed the private placement of 350,000 shares of its common stock at $3.00
per share with The Bailey Company, a principal shareholder of Good Times
Restaurants. Of the total proceeds, $300,000 was received on March 31, 1999
and the balance of $750,000 was received on June 1, 1999. In addition, Good
Times Restaurants issued to The Bailey Group a warrant to purchase on or
before March 31, 2004 up to 25,000 shares of common stock at an exercise price
of $4.00 per share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE COMPANY
General
This Form 10-QSB contains or incorporates by reference forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended. Also, documents subsequently filed by the Company with the SEC and
incorporated herein by reference may contain forward-looking statements. The
Company cautions investors that any forward-looking statements made by the
Company are not guarantees of future performance and that actual results could
differ materially from those in the forward-looking statements as a result of
various factors, including but not limited to the following:
(I) The Company competes with numerous well established competitors who
have substantially greater financial resources and longer operating histories
than the Company. Competitors have increasingly offered selected food items
and combination meals, including hamburgers, at discounted prices, and
continued discounting by competitors may adversely affect revenues and
profitability of Company restaurants.
(II) The Company may be negatively impacted if the Company is unable to
sustain same store sales increases that were experienced during the first
three quarters of Fiscal 1999. Sales increases will be dependent, among other
things, on the success of Company advertising and promotion of new and
existing menu items. No assurances can be given that such advertising and
promotions will in fact be successful.
The Company may also be negatively impacted by other factors common to the
restaurant industry such as: changes in consumer tastes away from red meat and
fried foods; increases in the cost of food, paper, labor, health care,
workers' compensation or energy; an inadequate number of hourly paid
employees; and/or decreases in the availability of affordable capital
resources. The Company cautions the reader that such risk factors are not
exhaustive, particularly with respect to future filings.
The Company had twenty-nine units open at June 30, 1999, of which
fourteen were franchised units, nine joint-venture units and six company-owned
units compared to twenty-eight units open at June 30, 1998, of which twelve
were franchised units, nine joint-venture units and seven company-owned units.
Management anticipates that the Company and its existing franchisees will
develop a total of four to five Good Times units in the Denver ADI in 1999.
The following presents certain historical financial information of the
operations of the Company. This financial information includes the results of
the Company for the three months and nine months ended June 30, 1998 and the
results of the Company for the three months and nine months ended June 30,
1999.
Results of Operations
Net Revenues. Net restaurant sales for the three months ended June 30,
1999, decreased ($27,000) (-.8%) to $3,331,000 from $3,358,000 for the same
prior year period. Net restaurant sales decreased ($188,000) from one
company-owned restaurant that was sold to a franchisee in September 1998.
Same store net revenues for company-owned and joint-venture restaurants
increased $161,000 (+5.1%) for the three months ended June 30, 1999 from the
same prior year period. Franchise revenue increased $19,000 for the three
months ended June 30, 1999 due to an increase in franchise royalty income from
the same prior year period.
Net restaurant sales for the nine months ended June 30, 1999 increased
$556,000 (+5.9%) to $9,954,000 from $9,398,000 for the same prior year period.
Net restaurant sales increased $139,000 from one company-owned restaurant that
was not open for the full prior year period. Net restaurant sales decreased
($725,000) from one company-owned unit that was sold to a franchisee in
September 1998 and one company-owned unit that was closed in March 1998 due to
condemnation of the development (the restaurant was sold to a franchisee and
relocated to a new site in May of 1999). Same store net restaurant sales for
company-owned and joint-venture units increased $1,142,000 or 13.8% for the
nine months ended June 30, 1999 from the same prior year period. Franchise
revenue increased $67,000 for the nine months ended June 30, 1999 due to an
increase in franchise royalty income from the same prior year period.
Food and Paper Costs. Food and paper costs decreased to 34.5% of net
restaurant sales for the three months ended June 30, 1999, compared to 35.7%
for the same prior year period. A price increase of approximately 5.3% was
implemented February 1, 1999 reducing the cost of sales as a percentage of net
restaurant sales.
Food and paper costs increased to 35.9% of net restaurant sales for the
nine months ended June 30, 1999 compared to 35.6% for the same prior year
period. The increase in the Company's food and paper costs as a percent of
net restaurant sales is primarily attributable to the addition of the new
onion ring product introduced in September 1998 and the product's
disproportionately high percent of sales. Management has successfully worked
to reduce the cost of sales on the onion ring product for the nine month
period ended June 30, 1999. Additionally a price increase of approximately
5.3% was implemented February 1, 1999 further reducing the cost of sales as a
percentage of net restaurant sales.
Labor, Occupancy and Other Expenses. For the three months ended June 30,
1999 the Company's labor, occupancy and other expenses decreased $96,000 from
$1,381,000 (41.1% of net restaurant revenues) to $1,285,000 (38.6% of net
restaurant revenues) compared to the same prior year period.
For the nine months ended June 30, 1999 the Company's labor, occupancy and
other expenses decreased $164,000, from $4,076,000 (43.4% of net restaurant
revenues) to $3,912,000 (39.3% of net restaurant revenues) compared to the
same prior year period.
The decrease in labor, occupancy and other expenses for both the three months
and nine months ended June 30, 1999 is attributable to 1) the prior year
period expenses include two additional restaurants, one of which was closed in
March of 1998 and the other was sold to a franchisee in September of 1998; and
2) an increase in same store net restaurant sales, which causes restaurant
expenses to decrease as a percentage of net restaurant sales.
Depreciation and Amortization Expenses. For the three months ended June
30, 1999 The Company's depreciation and amortization expenses decreased
$10,000, from $162,000 to $152,000 compared to the same prior year period.
For the nine months ended June 30, 1999 the Company's depreciation and
amortization expenses decreased $35,000, from $496,000 to $461,000 compared to
the same prior year period.
The decrease in depreciation and amortization expenses for both the three
months and nine months ended June 30, 1999 is attributable to the restaurant
that was sold to a franchisee in September 1998.
Income From Restaurant Operations. For the three months ended June 30,
1999, income from restaurant operations increased to $821,000 from $667,000
for the same prior year period. The Company's income from restaurant
operations as a percentage of net restaurant sales increased to 24.6% for the
three months ended June 30, 1999 from 19.9% for the same prior year period.
Cash flow from restaurant operations (income from restaurant operations
plus depreciation and amortization) increased to 29.2% of net restaurant sales
for the three months ended June 30, 1999 from 24.7% for the same prior year
period.
For the nine months ended June 30, 1999, income from restaurant
operations increased to $2,196,000 from $1,587,000 for the same prior year
period. The Company's income from restaurant operations as a percentage of
net restaurant sales increased to 22.1% for the nine months ended June 30,
1999 from 16.9% for the same prior year period.
Cash flow from restaurant operations (income from restaurant operations
plus depreciation and amortization) increased to 26.7% of net restaurant sales
for the nine months ended June 30, 1999 from 22.2% for the same prior year
period.
The improvement in both income and cash flow from restaurants as a
percentage of net restaurant sales is a direct result of 1) management's focus
on improving restaurant labor efficiencies and restaurant expenses; and 2) an
increase in same store net restaurant sales, including a weighted average menu
price increase of approximately 5.3% on February 1, 1999, which causes
restaurant expenses to decrease as a percentage of net restaurant sales.
Income (Losses) From Operations. The Company had income from operations
of $307,000 in the three months ended June 30, 1999 compared to income from
operations of $126,000 for the same prior year period. The improvement in
income from operations of $181,000 is primarily attributable to an increase in
income from restaurant operations of $154,000 and a $66,000 gain from the sale
to a franchisee of a restaurant building and equipment (the restaurant sold
had been closed in March of 1998 due to condemnation of the development),
offset by an increase in advertising expenses of $12,000, an increase in the
loss from operating RTC stores of $7,000, and an increase in general and
administrative expenses of $20,000 compared to the same prior year period.
The Company had income from operations of $538,000 in the nine months
ended June 30, 1999 compared to a loss from operations of ($76,000) in the
same prior year period. The improvement in income from operations of $614,000
is primarily attributable to an increase in income from restaurant operations
of $609,000 and a $66,000 gain from the sale to a franchisee of a restaurant
building and equipment (the restaurant sold had been closed in March of 1998
due to condemnation of the development), offset by an increase in advertising
expenses of $70,000, an increase in the loss from operating RTC stores of
$12,000 and a decrease in general and administrative expenses of $17,000.
The increase in advertising expenses for both the three months and nine months
ended June 30, 1999 is attributable to increased contributions to the
advertising cooperative due to increased net restaurant sales compared to the
same prior year periods and a higher contribution rate of 6% of net restaurant
sales compared to 5.5% of net restaurant sales in the same prior year periods.
The decrease in general and administrative expenses for the nine months ended
June 30, 1999 is primarily attributable to a reduction in corporate office
rent expense as well as reductions in professional services costs and
financial relations expenses compared to the same prior year period.
Net Income (Loss). The net income for the Company was $134,000 for the
three months ended June 30, 1999 compared to net income for the Company of
$21,000 for the same prior year period. Minority interest expense increased
$41,000 in the three months ended June 30, 1999 from the same prior year
period. This increase was attributable to the improved income from restaurant
operations from the joint-venture units compared to the same prior year
period. Net interest expense decreased $27,000 for the three months ended
June 30, 1999 from the same prior year period. This decrease was attributable
to a reduction in interest expense of $7,000 and an increase in interest
income of $20,000 compared to the same prior year period. Other expenses
increased $54,000 for the three months ended June 30, 1999 compared to the
same prior year period. During the three months ended June 30, 1999 other
expenses include a ($67,000) reserve for anticipated losses related to the
condemnation of a property in March of 1998.
For the nine months ended June 30, 1999, the net income for the Company
was $186,000 compared to a net loss for the Company of ($294,000) for the same
prior year period. Minority interest expense increased $142,000 in the nine
months ended June 30, 1999 from the same prior year period. Other income for
the nine months ended June 30, 1999 decreased $102,000 from the same prior
year period. Included in other income for the nine months ended June 30, 1998
was a gain of $53,000 related to the sale of a long-term land investment held
by the Company, included in other expenses for the nine months ended June 30,
1999 is a ($67,000) reserve for anticipated losses related to the condemnation
of a property in March of 1998.
Liquidity and Capital Resources
As of June 30, 1999, the Company had $1,755,000 cash and cash equivalents
on hand. The Company's cash balance and cash generated from operations will
be used for the development of Company operated restaurants and other general
corporate purposes. The Company had a working capital surplus of $1,685,000
as of June 30, 1999.
During the three months ended June 30, 1999 the Company completed the
private sale of 350,000 shares of restricted common stock at $3 per share. Of
the $1,050,000 total proceeds, $300,000 was received on March 31, 1999 and the
balance of $750,000 was received on June 1, 1999. The Company also completed
a capital lease agreement for up to $100,000 for upgrading its Management
Information Systems hardware and software and a capital lease agreement for
$111,000 for the purchase of new, higher technology grills for all company-owned
and co-developed restaurants. The Company is negotiating a financing
commitment of $1.5 million for new buildings and equipment to be developed on
leasehold properties, in addition to the $3 million mortgage financing
commitment in place.
On June 30, 1999 105,832 publicly traded Series A and Series B warrants
were exercised at $3 per share generating approximately $291,000 in net
proceeds to the Company. Those Series A and Series B warrants that were not
exercised, expired as of June 30, 1999.
Management anticipates developing one new franchised restaurant and three
to four new company-owned restaurants during the balance of 1999.
Cash flow used in operating activities for the three months ended June
30, 1999 includes the issuance of a $310,000 note receivable to a franchisee
for the purchase of a restaurant and a $317,000 receivable relating to the
public warrants that were exercised on June 30, 1999. Of the $310,000 due
from the franchisee, $280,000 was received in July 1999 and the balance of
$30,000 will be received in September 1999. The $317,000 for the warrants was
received in July 1999. Approximately $110,000 was used to pay annual property
taxes to various taxing authorities in the three months ended June 30, 1999.
Cash flow used in investing activities for the three months ended June
30, 1999 of $141,000 includes $28,000 of recurring restaurant related capital
expenditures, $86,000 for new restaurant development costs, $80,000 for
upgrading the Company's Management Information Systems hardware and software
and $111,000 to purchase new grills for all company owned and co-developed
restaurants, off set by ($164,000) of net assets removed from the balance
sheet from the sale of a restaurant to a franchisee.
Cash provided by financing activities for the three months ended June 30,
1999 includes net proceeds of $746,000 from the private sale of common stock,
net proceeds of $291,000 from the warrant exercise, and $190,000 in lease
financing proceeds for the corporate Management Information Systems upgrade
and restaurant grills.
Cash provided by financing activities for the nine months ended June 30,
1999 includes $1,046,000 received from the private common stock sale, $291,000
received from the warrant exercise, debt incurred of $97,000 offset by a
reduction in minority interest of ($118,000).
For the nine months ended June 30, 1999, cash increased $987,000. Cash
used in operations was ($94,000), cash used in investing activities was
($251,000) and cash provided by financing activities was $1,332,000.
The Company does not have any bank lines of credit.
Impact of Inflation
The Company has not experienced a significant impact from inflation. It
is anticipated any operating expense increases will be recovered by increasing
menu prices to the extent that is prudent considering competition.
Seasonality
Revenues of the Company are subject to seasonal fluctuation based
primarily on weather conditions adversely affecting restaurant sales in
January, February and March.
Year 2000 Compliance
Computer programs or other embedded technology that have been written
using two digits to define the applicable year and that have time-sensitive
logic may recognize a date using A00" as the Year 1900 rather than the Year
2000. This could result in widespread miscalculations or system failures. If
we and our vendors and suppliers are unable to address Year 2000 issues in a
timely manner, under a worst case scenario it could result in material
financial risk, including the loss of revenue and substantial unanticipated
costs. Therefore, we plan to devote all resources necessary to resolve
significant Year 2000 issues in a timely manner.
Both information technology systems and non-IT systems using embedded
technology may be affected by the Year 2000. We have initiated an
enterprise-wide program to prepare out IT and non-IT systems and applications
for the Year 2000. We have completed the assessment phase of our Year 2000
program. We believe that we are fully prepared to implement all computer
hardware and software replacements and upgrades by the quarter ending September
30, 1999 and have completed a comprehensive plan for the organization-wide
implementation. We expect to incur internal staff costs as well as consulting
and other expenses related to our Year 2000 program. We have completed the
process of verification of whether vendor's IT department to determine their
state of Year 2000 readiness and requesting written documentation outlining
each vendor's Year 2000 compliance plan. We have contacted our major food
supplier and have received assurances that such supplier has addressed the
Year 2000 issue and the specific actions that are being taken in connection
with its business operations.
We estimate that expenditures for Year 2000 issues will be approximately
$125,000 for fiscal 1999. However, we are not able to determine the total
costs for our Year 2000 program or whether the Year 2000 will have a material
effect on our financial condition, results of operations or cash flows.
GOOD TIMES RESTAURANTS INC. & SUBSIDIARIES
Part II. - Other Information
Item 1. - Legal Proceedings
Good Times Restaurants is subject to legal proceedings which are
incidental to its business. These legal proceedings are not expected to have
a material impact on Good Times Restaurants.
The Company has been involved in condemnation proceedings with
Westminster Plaza LLC and the Westminster Economic Development Association as
a result of one of its restaurants being part of a condemnation of a larger
development on which it leased land from Westminster Plaza LLC. In June, 1999
the court ruled against the Company's claim for compensation for its leasehold
improvements and value of its lease. The Company intends to appeal the
decision and continues to carry a portion of the abandoned assets on its
balance sheet.
Item 2. - Changes in Securities and Use of Proceeds
On April 6, 1999, the Good Times Restaurants Inc.'s board of directors
resolved to extend the expiration date of its Series A Warrants and Series B
Warrants (as discussed below), from April 12, 1999 to June 30, 1999 and to
reduce the exercise price of its Series A Warrants and Series B Warrants to
$3.00 per share.
The Series A Warrants consisted in the aggregate of 215,003 warrants
which were issued by Good Times Restaurants in connection with a Form S-3
Registration Statement in 1993 and public offerings in 1992, 1990 and 1989.
The Series B Warrants were issued by Good Times Restaurants in connection
with a public offering in 1994 of up to 321,600 units, with each unit
consisting of two shares of common stock and one redeemable warrant to
purchase one share of common stock.
On June 30, 1999, a total of 105,832 of the Series A warrants and Series
B warrants were exercised and the remaining unexercised Series A warrants and
Series B warrants expired pursuant to their amended terms.
During the three months ended June 30, 1999, Good Times Restaurants
completed the private placement of 350,000 shares of its common stock at $3.00
per share with The Bailey Company, a principal shareholder of Good Times
Restaurants. Of the total proceeds, $300,000 was received on March 31, 1999
and the balance of $750,000 was received on June 1, 1999. In addition, Good
Times Restaurants issued to The Bailey Group a warrant to purchase on or
before March 31, 2004 up to 25,000 shares of common stock at an exercise price
of $4.00 per share. The shares of common stock and warrant were issued in
reliance upon the exemption from registration provided by Section 4(2) of the
Securities Act of 1933.
Item 3. - Defaults Upon Senior Securities
None.
Item 4. - Submission of Matters to a Vote of Security Holders
None.
Item 5. - Other Information
None.
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are furnished as part of this
report:
Exhibit No. Description
___________ ___________
27.1 Financial Data Schedule.*
(b) During the quarter for which this report is filed, Good Times
Restaurants filed the following report on Form 8-K:
Current Report on Form 8-K dated April 6, 1999, which reported under Item
5, Other Events, that Good Times Restaurants had extended the expiration date
of its Series A warrants and Series B warrants from April 12, 1999 to June 30,
1999 and reduced the exercise price of the Series A warrants and Series B
warrants to $3.00 per share.
*filed herewith
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GOOD TIMES RESTAURANTS INC.
DATE: August 12, 1999 BY:/s/Boyd E. Hoback
_________________
President and Chief Executive Officer
BY:/s/Susan Knutson
________________
Controller
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] SEP-30-1999
[PERIOD-END] JUN-30-1999
[CASH] 1,755,000
[SECURITIES] 0
[RECEIVABLES] 593,000
[ALLOWANCES] 0
[INVENTORY] 50,000
[CURRENT-ASSETS] 2,862,000
[PP&E] 7,675,000
[DEPRECIATION] (3,007,000)
[TOTAL-ASSETS] 7,962,000
[CURRENT-LIABILITIES] 1,177,000
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 2,000
[OTHER-SE] 4,220,000
[TOTAL-LIABILITY-AND-EQUITY] 7,962,000
[SALES] 3,331,000
[TOTAL-REVENUES] 3,413,000
[CGS] 1,148,000
[TOTAL-COSTS] 2,592,000
[OTHER-EXPENSES] 514,000
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] (12,000)
[INCOME-PRETAX] 134,000
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 134,000
[EPS-BASIC] .07
[EPS-DILUTED] .07
</TABLE>
