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 Quarter Ended: March 31, 1999 Commission File Number: 0-18590
GOOD TIMES RESTAURANTS INC.
(Exact name of registrant 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) (Zip Code)
(303) 384-1400
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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 March 31, 1999.
1,865,675 SHARES OF COMMON STOCK, .001 PAR VALUE
_________
Form 10-QSB
Quarter Ended March 31, 1999
INDEX
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets - 3
March 31, 1999 and September 30, 1998
Consolidated Statements of Operations - 5
For the three months ended March 31,
1999 and 1998 and for the six months ended
March 31, 1999 and 1998
Consolidated Statements of Cash Flow - 6
For the three months ended March 31,
1999 and 1998 and for the six months
ended March 31, 1999 and 1998
Notes to Financial Statements 7
ITEM 2. Management's Discussion and Analysis 8
PART II - OTHER INFORMATION
ITEMS 1 through 6. 12
Signature 14
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<C> <C> <C>
March 31, September 30,
1999 1998
CURRENT ASSETS:
Cash and cash equivalent $1,198,000 $ 768,000
Receivables 246,000 281,000
Inventories 49,000 52,000
Prepaid expenses and other 27,000 8,000
Notes receivable 98,000 42,000
_________ ________
Total current assets 1,618,000 1,151,000
PROPERTY AND EQUIPMENT, at cost:
Land and building 2,541,000 2,511,000
Leasehold improvements 2,316,000 2,298,000
Fixtures and equipment 2,796,000 2,735,000
_________ _________
7,653,000 7,544,000
Less accumulated depreciation
and amortization (2,952,000) (2,625,000)
_________ _________
4,701,000 4,919,000
OTHER ASSETS:
Notes receivable 417,000 483,000
Deposits & other 43,000 25,000
_________ _________
460,000 508,000
TOTAL ASSETS $6,779,000 $6,578,000
========= =========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<C> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt $ 35,000 $ 96,000
Accounts payable 440,000 441,000
Accrued liabilities - Las Vegas 14,000 16,000
Accrued liabilities - RTC 136,000 148,000
Accrued liabilities - other 609,000 564,000
_________ _________
Total current liabilities 1,234,000 1,265,000
LONG-TERM LIABILITIES:
Debt 448,000 463,000
Las Vegas accrued liabilities 117,000 124,000
RTC accrued liabilities 241,000 291,000
Deferred liabilities 300,000 288,000
_________ _________
Total long-term liabilities 1,106,000 1,166,000
MINORITY INTERESTS IN PARTNERSHIPS 1,389,000 1,465,000
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;
5,000,000 shares authorized,
None issued and outstanding
</TABLE>
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Cont.)
<TABLE>
<C> <C> <C>
March 31, September 30,
1999 1998
Common stock, $.001 par value;
50,000,000 shares authorized,
1,865,675 shares issued and
outstanding as of March 31,
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 12,167,000 11,851,000
Accumulated deficit (9,119,000) (9,171,000)
__________ __________
Total stockholders' equity 3,050,000 2,682,000
__________ __________
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $6,779,000 $6,578,000
========= =========
</TABLE>
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
March 31, March 31,
1999 1998 1999 1998
<TABLE>
<C> <C> <C> <C> <C>
NET REVENUES:
Restaurant sales, net $3,191,000 $2,982,000 $6,623,000 $6,040,000
Franchise net revenues 61,000 32,000 128,000 80,000
_________ __________ _________ _________
Total revenues 3,252,000 3,014,000 6,751,000 6,120,000
RESTAURANT OPERATING EXPENSES:
Food & paper costs 1,143,000 1,073,000 2,426,000 2,151,000
Labor, occupancy & other 1,282,000 1,346,000 2,627,000 2,695,000
Accretion of deferred rent 7,000 10,000 14,000 20,000
Depreciation & amortization 155,000 169,000 309,000 334,000
_________ _________ _________ ________
Total restaurant 2,587,000 2,598,000 5,376,000 5,200,000
operating costs
INCOME FROM RESTAURANT 665,000 416,000 1,375,000 920,000
OPERATIONS
OTHER OPERATING EXPENSES:
Selling, general & 562,000 558,000 1,131,000 1,110,000
Administrative expenses
Loss, (income) from 13,000 6,000 17,000 12,000
Operating RTC stores _______ _______ _________ _________
Total other operating 575,000 564,000 1,148,000 1,122,000
Expenses
INCOME (LOSS) FROM OPERATIONS 90,000 (148,000) 227,000 (202,000)
OTHER INCOME & (EXPENSES)
Minority income (expense) (90,000) (36,000) (182,000) (81,000)
Net
Interest, net 0 (15,000) (2,000) (30,000)
Loss from RTC & 0 (55,000) 0 (55,000)
Las Vegas lease liabilities
Other, net 2,000 1,000 9,000 53,000
______ _______ _______ ________
Total other income (88,000) (105,000) (175,000) (113,000)
& expenses
NET INCOME (LOSS) $2,000 ($253,000) $52,000 ($315,000)
======= ======== ======= ========
PREFERRED STOCK DIVIDENDS 0 20,000 0 45,000
IN ARREARS
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCKHOLDERS $2,000 ($273,000) $52,000 ($360,000)
======== ======== ======= ========
NET INCOME (LOSS) PER $.0 ($.21) $.03 ($.28)
COMMON SHARE ======== ======= ====== =======
WEIGHTED AVERAGE COMMON SHARES AND
EQUIVALENTS USED IN PER SHARE CALCULATION
BASIC 1,764,369 1,306,912 1,757,647 1,301,300
DILUTED 1,796,831 1,306,912 1,783,932 1,301,000
</TABLE>
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended Six Months Ended
March 31, March 31,
1999 1998 1999 1998
<TABLE>
<C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 2,000 ($253,000) $52,000 ($315,000)
Depreciation and 164,000 182,000 327,000 360,000
amortization
Changes in operating
assets & liabilities--
(Increase) decrease in:
Prepaids & 125,000 51,000 17,000 262,000
receivables
Inventories 17,000 17,000 3,000 (4,000)
Other assets (7,000) 19,000 (8,000) 35,000
Opening expenses 0 0 0 0
(Decrease) increase in:
Accounts payable 33,000 (26,000) (1,000) (36,000)
Accrued interest 0 0 0 0
Accrued property taxes 33,000 33,000 63,000 39,000
Accrued payroll & 6,000 2,000 (3,000) (10,000)
P/R taxes
Other accrued liabilities 17,000 24,000 (74,000) (130,000)
/deferred income ______ ______ ______ _______
Net cash provided by
(Used in)
operating activity 390,000 49,000 376,000 201,000
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase) sale - FF&E, land,
building & improvements (89,000) (39,000) (110,000) (142,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt incurred (paid) (40,000) 63,000 (76,000) 26,000
Minority interest (38,000) (38,000) (75,000) (78,000)
Paid in capital activity 300,000 0 316,000 15,000
------- ------ ------- -------
Net cash provided by 222,000 25,000 165,000 (37,000)
(Used in)
financing activities
INCREASE (DECREASE) IN CASH $ 523,000 $ 35,000 $ 431,000 $22,000
</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 March 31, 1999,
the results of its operations and its cash flow for the three month period ended
March 31, 1999 and for the six month period ended March 31, 1999. Operating
results for the three month period ended March 31, 1999 and for the six month
period ended March 31, 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE COMPANY
General
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
June 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 not completed the
process of verification of whether vendors and suppliers with which we have
material relationships are year 2000 compliant. We intend to complete this
verification process with our vendors and suppliers by the quarter ending
June 30, 1999. The process of verification includes contacting each 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.
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 commission
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 two
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; and 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.
Drive Thru had twenty-nine units open at March 31, 1998, of which fourteen
were franchised units, nine joint-venture units and six company-owned units
compared to twenty-seven units open at March 31, 1998, of which eleven were
franchised units, nine joint-venture units and seven company-owned units.
Management anticipates that Drive Thru and its existing franchisees will develop
a total of four to six 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 and Drive Thru for the three months and six months ended March 31,
1998 and the results of the Company and Drive Thru for the three months and six
months ended March 31, 1999.
Results of Operations
Net Revenues. Net restaurant sales for the three months ended March 31,
1999, increased $209,000 (+7%) to $3,191,000 from $2,982,000 for the same prior
year period. Net restaurant sales decreased ($246,000) from one company-owned
restaurant that was closed in March 1998 due to condemnation of the development
(the restaurant will be relocated to a new site in 1999), and 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 $455,000
(+16.6%) for the three months ended March 31, 1999 from the same prior year
period. Franchise revenue increased $29,000 for the three months ended March 31,
1999 due to an increase in franchise royalty income from the same prior year
period.
Net restaurant sales for the six months ended March 31, 1999 increased
$583,000 (+9.7%) to $6,623,000 from $6,040,000 for the same prior year period.
Net restaurant sales increased $136,000 from one company-owned restaurant that
was not open for the full prior year period. Net restaurant sales decreased
($537,000) 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 will be relocated to a new site
in 1999).
Same store net restaurant sales for company-owned and joint-venture units
increased $984,000 or 18.7% for the six months ended March 31, 1999 from the
same prior year period. Of that increase approximately 16.8% was attributable
to an increase in the average per person check and approximately 1.9% was
attributable to an increase in customer traffic. The increase in average per
person check and customer traffic was the result of a new television advertising
campaign that was initiated in September 1998 featuring the introduction of a
new onion ring product as well as more favorable weather conditions for the six
months ended March 31, 1999, compared to the same prior year period. Franchise
revenue increased $48,000 for the six months ended March 31, 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 35.8% of net
restaurant sales for the three months ended March 31, 1999, compared to 35.9%
for the same prior year period.
Food and paper costs increased to 36.6% of net restaurant sales for the six
months ended March 31, 1999 compared to 35.6% for the same prior year period.
The increase in Drive Thru=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 three month period ended March 31, 1999. Additionally
a price increase of approximately 5.3% was implemented February 1, 1999 further
reducing the cost of sales as a percentage of sales.
Labor, Occupancy and Other Expenses. For the three months ended March 31,
1999 Drive Thru=s labor, occupancy and other expenses decreased $64,000 from
$1,346,000 (45.1% of net restaurant revenues) to $1,282,000 (40.2% of net
restaurant revenues) compared to the same prior year period.
For the six months ended March 31, 1999 Drive Thru=s labor, occupancy and other
expenses decreased $68,000, from $2,695,000 (44.6% of net restaurant revenues)
to $2,627,000 (39.7% 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 six months ended March 31, 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 March
31, 1999 Drive Thru=s depreciation and amortization expenses decreased $14,000,
from $169,000 to $155,000 compared to the same prior year period.
For the six months ended March 31, 1999 Drive Thru's depreciation and
amortization expenses decreased $25,000, from $334,000 to $309,000 compared to
the same prior year period.
The decrease in depreciation and amortization expenses for both the three months
and six months ended March 31, 1999 is attributable to the restaurant that was
sold to a franchisee in September 1998.
Income From Restaurant Operations. For the three months ended March 31,
1999, income from restaurant operations increased to $665,000 from $416,000 for
the same prior year period. Drive Thru=s income from restaurant operations as a
percentage of net restaurant sales increased to 20.8% for the three months ended
March 31, 1999 from 13.9% for the same prior year period.
Cash flow from restaurant operations (income from restaurant operations plus
depreciation and amortization) increased to 25.7% of net restaurant sales for
the three months ended March 31, 1999 from 19.6% for the same prior year period.
For the six months ended March 31, 1999, income from restaurant operations
increased to $1,375,000 from $920,000 for the same prior year period. Drive
Thru's income from restaurant operations as a percentage of net restaurant sales
increased to 20.8% for the six months ended March 31, 1999 from 15.2% for the
same prior year period.
Cash flow from restaurant operations (income from restaurant operations plus
depreciation and amortization) increased to 25.4% of net restaurant sales for
the six months ended March 31, 1999 from 20.7% 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
$90,000 in the three months ended March 31, 1999 compared to a loss from
operations of ($148,000) for the same prior year period. The improvement in
income from operations of $238,000 is primarily attributable to an increase in
income from restaurant operations of $249,000, offset by an increase in
advertising expenses of $22,000, an increase in the loss from operating RTC
stores of $7,000, and a decrease in general and administrative expenses of
$18,000 compared to the same prior year period.
The Company had income from operations of $227,000 in the six months ended
March 31, 1999 compared to a loss from operations of ($202,000) in the same
prior year period. The improvement in income from operations of $429,000 is
primarily attributable to an increase in income from restaurant operations of
$455,000 offset by an increase in advertising expenses of $58,000, an
increase in the loss from operating RTC stores of $5,000 and a decrease in
general and administrative expenses of $37,000.
The increase in advertising expenses for both the three months and six months
ended March 31, 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 both the three months
and six months ended March 31, 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 periods.
Net Income (Loss). The net income for the Company was $2,000 for the three
months ended March 31, 1999 compared to a net loss for the Company of ($253,000)
for the same prior year period. Minority interest expense increased $54,000 in
the three months ended March 31, 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 $15,000 for the three months ended March 31, 1999 from the
same prior year period. This decrease was attributable to a reduction in
interest expense of $8,000 and an increase in interest income of $7,000 compared
to the same prior year period. The loss from RTC and Las Vegas lease liabilities
decreased $55,000 for the three months ended March 31, 1999 compared to the same
prior year period. During the three months ended March 31, 1998 there was a
loss of ($55,000) due to an increase in the reserve for future lease liabilities
from one RTC restaurant.
For the six months ended March 31, 1999, the net income for the Company was
$52,000 compared to a net loss for the Company of ($315,000) for the same prior
year period. Minority interest expense increased $101,000 in the six months
ended March 31, 1999 from the same prior year period. Other income for the six
months ended March 31, 1999 decreased $44,000 from the same prior year period.
Included in other income for the six months ended March 31, 1998 was a gain of
$53,000 related to the sale of a long-term land investment held by the Company.
Liquidity and Capital Resources
As of March 31, 1999, the Company and Drive Thru had $1,198,000 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
$384,000 as of March 31, 1999.
During the three months ended March 31, 1999 the Company completed an agreement
for the 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 is due on June 30, 1999. The Company also completed a lease
agreement for up to $100,000 for upgrading its Management Information Systems
hardware and software and is negotiating a financing commitment of $1.5 million
for new buildings and equipment in addition to the $3 million mortgage financing
commitment in place.
Management anticipates developing two new franchised restaurants and two to
three new company-owned restaurants during the balance of fiscal 1999.
Cash flow from operating activities for the three months ended March 31,
1999 includes the receipt of $166,000 from the Good Times Advertising
Cooperative for a short term loan repayment.
Cash flow from investing activities for the three months ended March 31,
1999 of $89,000 includes $35,000 of recurring restaurant related capital
expenditures, $32,000 for a building exterior remodel and $22,000 for new
restaurant development costs.
Cash flow from financing activities for the three months ended March 31, 1999
includes proceeds of $300,000 from the private sale of common stock.
For the six months ended March 31, 1999, cash increased $430,000. Cash provided
by operations was $376,000, cash used in investing activities was $110,000 and
cash provided by financing activities was $165,000.
Cash provided by financing activities for the six months ended March 31, 1999
includes $300,000 received from the private common stock sale offset by debt
reduction of $76,000 and a reduction in minority interest of $75,000.
Neither the Company nor Drive Thru have any bank lines of credit.
Impact of Inflation
Drive Thru 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 Drive Thru are subject to seasonal fluctuation based primarily
on weather conditions adversely affecting restaurant sales in January, February
and March.
GOOD TIMES RESTAURANTS INC. & SUBSIDIARIES
Part II. - Other Information
Item 1. - Legal Proceedings
Good Times Restaurants is not involved in any material 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.
Item 2. - Changes in Securities
On April 6, 1999, the Good Times Restaurants 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 consist 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.
Item 3. - Defaults Upon Senior Securities
None.
Item 4. - Submission of Matters to a Vote of Security Holders
On January 22, 1999, Good Times Restaurants held its annual meeting of
shareholders. At that meeting the following matters were voted upon as
indicated below:
1. Election of the following directors to serve during the ensuing year:
FOR WITHHOLD
GEOFFREY R. BAILEY 628,565 1,240
DAN W. JAMES, II 628,565 1,240
BOYD E. HOBACK 628,565 1,240
RICHARD J. STARK 628,565 1,240
THOMAS P. MCCARTY 628,565 1,240
ALAN A. TERAN 628,565 1,240
DAVID E. BAILEY 628,557 1,240
2. Proposal to increase the number of shares of Good Times Restaurants common
stock authorized under the 1992 Incentive Stock Option Plan from 150,000 to
525,000.
For: 582,626 Against: 42,529 Abstain: 4,650
_______ ______ _____
3. Proposal to increase the number of shares of Good Times Restaurants common
stock authorized under the 1992 Non-Statutory Stock Option Plan from 60,000 to
125,000.
For: 582,366 Against: 42,789 Abstain: 4,650
_______ ______ _____
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
4.1 Fourth Amended and Restated Warrant Agreement made effective as
of February 10, 1999 between Good Times Restaurants Inc. and American Securities
Transfer, Inc. regarding the Series A Warrants of Good Times Restaurants Inc.
(Filed as Exhibit 7.1 to the Good Times Restaurants Inc. Current Report on Form
8-K dated April 6, 1999 and incorporated herein by reference).
4.2 Second Amended and Restated Warrant Agreement made effective as
of February 10, 1999 between Good Times Restaurants Inc. and American Securities
Transfer, Inc. regarding the Series B Warrants of Good Times Restaurants Inc.
(Filed as Exhibit 7.2 to the Good Times Restaurants inc. Current Report on Form
8-K dated April 6, 1999 and incorporated herein by reference).
10.1 Agreement between Good Times Restaurants Inc. and The Bailey
Company dated March 12, 1999 for the purchase by The Bailey Company of 350,000
shares of Good Times Restaurants common stock.*
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 March 17, 1999, which reported under
Item 5, Other Events, that Good Times Restaurants had entered into an agreement
to sell 350,000 shares of its common stock at $3.00 per share to The Bailey
Company, a principal shareholder of Good Times Restaurants.
*filed herewith
SIGNATURE
Pursuant to the requirements of The Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GOOD TIMES RESTAURANTS INC.
DATE: BY: /s/ Boyd E. Hoback, President
_________ and Chief Executive Officer
BY:/s/ Sue Knutson, Controller
March 12, 1999
The Bailey Company, LLLP
601 Corporate Circle
Golden, CO 80401
Attention: Mr. William D. Whitehurst
Chief Financial Officer and Vice President
Gentlemen:
This letter will set forth the agreement between Good Times Restaurants
Inc. ("Good times") and The Bailey Company, LLLP with respect to the purchase
by The Bailey Company, LLLP and persons or entities controlling, controlled by
or under common control with it, all of which are tegether hereinafter
referred to as "Bailey", of shares of Good Times common stock (the "Stock").
1. On March 31, 1999, (the "First Closing") Bailey shall purchase from
Good Times 100,000 shares of Stock at a purchase price of $3.00 per share for
an aggregate purchase price of $300,000. On June 30, 1999, or upon such
earlier date as Bailey obtains a loan intended to be utilized in part for the
purchase of the Stock (the "Second Closing") Bailey shall purchase from Good
Times 250,000 shares of Stock at a purchase price of $3.00 per share for an
aggregate purchase price of $750,000. At each Closing, Bailey shall pay the
purchase price to Good Times in cash and Good Times shall issue a certificate
for the Stock to such entity or entities as designated by Bailey.
Notwithstanding the foregoing, Bailey shall not be required to purchase the
Stock at the Second Closing if prior thereto there has benn a substantial
adverse change in the business, financial condition or future prospects of
Good Times involving, for example, a disease caused by Good Times' food
products, commencement of a bankruptcy proceeding or comparable catastrophic
occurrence.
2. At the Second Closing, Good Times shall issue to Bailey a warrant
entitling Bailey to purchase at any time or times on or before March 31, 2004,
up to 25,000 shares of common stock of Good Times at a purchase price of $4.00
per share (the "Warrant"). Notwithstanding the foregoing, (I) the Warrant
shall terminate prior to March 31, 2004, upon any acquisition of substantially
all of the assets or capital stock of Good Times (an "Acquisition"); (ii)
Bailey shall receive thirty days prior written notice of an Acquisition; and
(iii) Bailey shall have the right to exercise the Warrant prior to the closing
of an Acquisition. Upon each exercise of the Warrant, Bailey shall pay the
Warrant exercise price to Good Times in cash and Good Times shall issue a
certificate for the purchased common stock of Good Times to such entity or
entities as diesngnated by Bailey. The Warrant shall contain reclassification
of the common stock of Good Times or as a result of a divident paid in common
stock of Good Times. The Warrant shall contain such other terms and
conditions as are customary and as are approved by Bailey, with such approval
not to be unreasonably withheld.
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] SEP-30-1999
[PERIOD-END] MAR-31-1999
[CASH] 1,198,000
[SECURITIES] 0
[RECEIVABLES] 246,000
[ALLOWANCES] 0
[INVENTORY] 49,000
[CURRENT-ASSETS] 1,618,000
[PP&E] 7,653,000
[DEPRECIATION] (2,952,000)
[TOTAL-ASSETS] 6,779,000
[CURRENT-LIABILITIES] 1,234,000
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 2,000
[OTHER-SE] 3,050,000
[TOTAL-LIABILITY-AND-EQUITY] 6,779,000
[SALES] 3,191,000
[TOTAL-REVENUES] 3,252,000
[CGS] 1,143,000
[TOTAL-COSTS] 2,587,000
[OTHER-EXPENSES] 575,000
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 0
[INCOME-PRETAX] 2,000
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 2,000
[EPS-PRIMARY] 0
[EPS-DILUTED] 0
</TABLE>
