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: December 31, 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 February 4,
2000.
2,226,995 SHARES OF COMMON STOCK, .001 PAR VALUE
___________________________________________________
Transitional Small Business Disclosure Format (check one):
[ ]Yes [X ] No
Form 10-QSB
Quarter Ended December 31, 1999
INDEX PAGE
PART I - FINANCIAL INFORMATION
1. Financial Statements
Consolidated Balance Sheets - 3
December 31, 1999 and September 30, 1999
Consolidated Statements of Operations - 5
For the three months ended December 31, 1999
and 1998
Consolidated Statements of Cash Flow - 6
For the three months ended December 31, 1999
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
December 31, September 30,
1999 1999
____ ____
<TABLE>
<C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalent $ 745,000 $1,748,000
Investments, at fair value 299,000 299,000
Receivables 305,000 192,000
Inventories 72,000 55,000
Prepaid expenses and other 45,000 37,000
Notes receivable 49,000 48,000
_________ _________
Total current assets 1,515,000 2,379,000
PROPERTY AND EQUIPMENT, at cost:
Land and building 3,530,000 3,340,000
Leasehold improvements 2,450,000 2,349,000
Fixtures and equipment 3,306,000 3,039,000
_________ _________
9,286,000 8,728,000
Less accumulated depreciation
and amortization (3,242,000) (3,080,000)
_________ _________
6,044,000 5,648,000
OTHER ASSETS:
Notes receivable 437,000 435,000
Deposits & other 71,000 75,000
_________ _________
508,000 510,000
TOTAL ASSETS $8,067,000 $8,537,000
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of
long-term debt and
capital leases $ 422,000 $ 399,000
Accounts payable 201,000 607,000
Lease obligations, RTC
and Las Vegas 202,000 202,000
Accrued liabilities - other 511,000 607,000
_________ _________
Total current
liabilities 1,336,000 1,815,000
LONG-TERM LIABILITIES:
Debt and capitalized
leases, net of current
portion 950,000 747,000
Lease obligations, RTC and
Las Vegas, net of current
portion 229,000 260,000
Deferred liabilities 319,000 313,000
_________ _________
Total long-term
liabilities 1,498,000 1,320,000
MINORITY INTERESTS IN PARTNERSHIPS 1,272,000 1,310,000
</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.)
December 31, September 30,
1999 1999
____ ____
<TABLE>
<C> <C> <C>
Common stock, $.001 par value;
50,000,000 shares authorized,
2,226,995 shares issued and
outstanding as of December 31,
1999 and 2,221,507 shares
issued and outstanding as
of September 30, 1999 2,000 2,000
Capital contributed in excess
of par value 13,221,000 13,203,000
Accumulated deficit (9,262,000) (9,113,000)
__________ __________
Total stockholders' equity 3,961,000 4,092,000
__________ __________
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 8,067,000 $ 8,537,000
========== ==========
</TABLE>
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
December 31,
1999 1998
____ ____
<TABLE>
<C> <C> <C>
NET REVENUES:
Restaurant sales, net $3,277,000 $3,432,000
Franchise revenues, net 52,000 67,000
_________ _________
Total revenues 3,329,000 3,499,000
RESTAURANT OPERATING EXPENSES:
Food & paper costs 1,144,000 1,283,000
Labor, occupancy & other 1,376,000 1,345,000
Opening expenses 49,000 -0-
Accretion of deferred rent 6,000 7,000
Depreciation & amortization 169,000 154,000
_________ _________
Total restaurant operating
costs 2,744,000 2,789,000
INCOME FROM RESTAURANT OPERATIONS 585,000 710,000
OTHER OPERATING EXPENSES:
Selling, general &
administrative expenses 678,000 569,000
Loss (Income) from operating
RTC stores 8,000 4,000
________ _________
Total other operating costs 686,000 573,000
INCOME (LOSS) FROM OPERATIONS (101,000) 137,000
OTHER INCOME & (EXPENSES)
Minority income (expense), net (46,000) (92,000)
Interest, net (2,000) (2,000)
Other, net (1,000) (7,000)
________ ________
Total other income
& (expenses) (49,000) (87,000)
NET INCOME (LOSS) $ (150,000) $ 50,000
========= ========
BASIC AND DILUTED NET INCOME (LOSS)
PER COMMON SHARE $ (.07) $ .03
========= ========
WEIGHTED AVERAGE COMMON SHARES AND
EQUIVALENTS USED IN PER SHARE CALCULATION:
BASIC 2,222,521 1,751,071
========= =========
DILUTED N/A 1,770,593
========= =========
</TABLE>
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
December 31,
<TABLE>
<C> <C> <C>
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $(150,000) $ 50,000
Depreciation and amortization 181,000 163,000
Changes in operating assets
& liabilities --
(Increase) decrease in:
Prepaids & receivables (121,000) (108,000)
Inventories (17,000) (14,000)
Other assets 1,000 (1,000)
(Decrease) increase in:
Accounts payable (406,000) (34,000)
Accrued interest 1,000 -0-
Accrued property taxes 37,000 30,000
Accrued payroll & P/R taxes 3,000 (9,000)
Other accrued liabilities/
deferred income (162,000) (91,000)
Net cash provided by (used in)
operating activities (633,000) (14,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase) sale - FF&E, land,
building and improvements (576,000) (21,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt incurred (paid) 226,000 (36,000)
Minority interest (37,000) (37,000)
Paid in capital activity 17,000 16,000
_________ _________
Net cash provided by (used in)
financing activities 206,000 (57,000)
INCREASE (DECREASE) IN CASH $(1,003,000) $ (92,000)
========== =========
</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 December 31, 1999, the results of its
operations and its cash flow for the three month period ended
December 31, 1999. Operating results for the three month period
ended December 31, 1999 are not necessarily indicative of the
results that may be expected for the year ending September 30, 2000.
The consolidated balance sheet as of September 30, 1999 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, 1999.
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 December 31, 1999 Good Times
Restaurants issued 5,488 shares of its Common Stock to the Company's
401(k) profit sharing plan, this represented a 25% matching of
employee contributions for the twelve months ended September 30,
1999.
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
experiences consistent same store sales declines. Same store sales
comparisons 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 thirty-two restaurants open at December 31,
1999, of which fifteen were franchised restaurants, nine joint-venture
restaurants and eight company-owned restaurants compared to
twenty-nine restaurants open at December 31, 1998, of which fourteen
were franchised restaurants, nine joint-venture restaurants and six
company-owned restaurants. Management anticipates that the Company
and its existing franchisees will develop a total of two to four
Good Times restaurants in the Denver ADI in 2000.
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
ended December 31, 1998 and the results of the Company for the three
months ended December 31, 1999.
RESULTS OF OPERATIONS
NET REVENUES. Net restaurant sales for the three months ended
December 31, 1999, decreased $155,000 (-4.5%) to $3,277,000 from
$3,432,000 for the same prior year period. Net restaurant sales
increased $202,000 from two company-owned restaurants that opened in
October and December 1999. Same store net revenues for company-owned and
joint-venture restaurants decreased $357,000 (-10.4%) for
the three months ended December 31, 1999 from the same prior year
period. In the three months ended December 31, 1998 same store
sales increased 20.6% due to the introduction of a new product in
September 1998. Franchise revenue decreased $15,000 for the three
months ended December 31, 1999 due to a decrease in franchise
royalty income from the same prior year period.
FOOD AND PAPER COSTS. Food and paper costs decreased to 34.9% of
net restaurant sales for the three months ended December 31, 1999,
compared to 37.4% 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.
Additionally, the cost of sales for the three months ended December
31, 1998 was high due to the addition of a new onion ring product
introduced in September 1998 and the product's disproportionately
high percentage of sales. Management has since reduced the cost of
sales on the onion ring product.
LABOR, OCCUPANCY AND OTHER EXPENSES. For the three months
ended December 31, 1999 the Company's labor, occupancy and other
expenses increased $31,000 from $1,345,000 (39.2% of net restaurant
revenues) to $1,376,000 (41.9% of net restaurant revenues) compared
to the same prior year period.
The increase in labor, occupancy and other expenses for the three
months ended December 31, 1999 is attributable to 1) the current
year period expenses include two additional restaurants that opened
in the period; and 2) a decrease in same store net restaurant sales,
which causes restaurant expenses to increase as a percentage of net
restaurant sales.
DEPRECIATION AND AMORTIZATION EXPENSES. For the three months
ended December 31, 1999 the Company's depreciation and amortization
expenses increased $15,000, from $154,000 to $169,000 compared to
the same prior year period. The increase in depreciation and
amortization expenses for the three months ended December 31, 1999
is attributable to the two new company-owned restaurants that opened
in October and December 1999.
INCOME FROM RESTAURANT OPERATIONS. For the three months ended
December 31, 1999, income from restaurant operations decreased to
$585,000 (17.9% of net restaurant sales) from $710,000 (20.7% of net
restaurant sales) for the same prior year period.
Cash flow from restaurant operations (income from restaurant
operations plus depreciation and amortization) decreased to 23.0% of
net restaurant sales for the three months ended December 31, 1999
from 25.2% for the same prior year period.
The decrease in both income and cash flow from restaurants as
a percentage of net restaurant sales is a direct result of a
decrease in same store net restaurant sales, which causes restaurant
expenses to increase as a percentage of net restaurant sales.
Additionally, the current year period includes new store pre-opening
expenses of $49,000 compared to $0 for the same prior year period.
INCOME (LOSS) FROM OPERATIONS. The Company had a loss from
operations of ($101,000) in the three months ended December 31, 1999
compared to income from operations of $137,000 for the same prior
year period. The reduction in income from operations of $238,000 is
primarily attributable to a decrease in income from restaurant
operations of $125,000, an increase in advertising expenses of
$72,000, an increase in the loss from operating RTC stores of
$4,000, and an increase in general and administrative expenses of
$37,000 compared to the same prior year period.
The increase in advertising expenses for the three months ended
December 31, 1999 is attributable to increased contributions to the
advertising cooperative due to a higher contribution rate of 8.5% of
net restaurant sales compared to 6.0% of net restaurant sales in the
same prior year period. The increase in general and administrative
expenses for the three months ended December 31, 1999 is primarily
attributable to an increase in corporate salaries and benefits
expense as well as an increase in depreciation expense compared to
the same prior year period.
NET INCOME (LOSS). The net loss for the Company was ($150,000)
for the three months ended December 31, 1999 compared to net income
for the Company of $50,000 for the same prior year period. Minority
interest expense decreased ($46,000) in the three months ended
December 31, 1999 from the same prior year period. This decrease was
attributable to the reduced income from restaurant operations from
the joint-venture restaurants compared to the same prior year
period.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1999, the Company had $745,000 cash and
cash equivalents and $299,000 in marketable securities 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 $179,000 as of December 31, 1999.
Management believes the current cash on hand, cash generated
from operations, and existing financing commitments will be
sufficient to fund the Company's working capital and capital
expenditure requirements. Management anticipates developing one new
franchised restaurant and one to three new company-owned restaurants
during the balance of 2000.
Cash flow used in operating activities for the three months
ended December 31, 1999 of $633,000 includes a reduction in accounts
payable of $406,000, a decrease in other accrued liabilities of
$162,000 and an increase in prepaids and receivables of $121,000.
Accounts payable at September 30, 1999 included $260,000 of new
store construction billings that were paid in October 1999. The
decrease in other accrued liabilities included payments on the RTC
and Las Vegas lease liabilities of $89,000 and payments of $60,000
against accrued bonuses.
Cash flow used in investing activities for the three months
ended December 31, 1999 of $576,000 includes $52,000 of recurring
restaurant related capital expenditures and $524,000 for new
restaurant development.
Cash provided by financing activities for the three months
ended December 31, 1999 includes $232,000 in debt financing proceeds
for one new restaurant. As of December 31, 1999 the Company had
made capital expenditures of $487,000 for two new restaurants.
Management estimates the total capital expenditure for the two new
restaurants will be $1,100,000 of which $600,000 will be funded
through a $1.5 million debt financing commitment.
The Company has remaining debt financing commitments of
$2,000,000 for the purchase of land and restaurant development and
$1.5 million for the development of new restaurants on leased land.
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.
GOOD TIMES RESTAURANTS INC. & SUBSIDIARIES
Part II. - Other Information
Item 1. - Legal Proceedings
The Company is subject to legal proceedings which are
incidental to its business. These legal proceedings are not
expected to have a material impact on The Company.
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 has appealed the court's decision.
Item 2. - Changes in Securities and Use of Proceeds
None.
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) Form 8-K: None filed in this quarter.
*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: February 1, 2000 BY:/s/ Boyd E. Hoback
________________ ___________________________
Boyd E. Hoback, President
and Chief Executive Officer
BY:/s/ Susan Knutson
___________________________
Susan Knutson, Controller
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] SEP-30-2000
[PERIOD-END] DEC-31-1999
[CASH] 745,000
[SECURITIES] 299,000
[RECEIVABLES] 305,000
[ALLOWANCES] 0
[INVENTORY] 72,000
[CURRENT-ASSETS] 1,515,000
[PP&E] 9,286,000
[DEPRECIATION] (3,242,000)
[TOTAL-ASSETS] 8,067,000
[CURRENT-LIABILITIES] 1,336,000
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 2,000
[OTHER-SE] 3,961,000
[TOTAL-LIABILITY-AND-EQUITY] 8,067,000
[SALES] 3,277,000
[TOTAL-REVENUES] 3,329,000
[CGS] 1,144,000
[TOTAL-COSTS] 2,744,000
[OTHER-EXPENSES] 686,000
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 2,000
[INCOME-PRETAX] (150,000)
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (150,000)
[EPS-BASIC] (.07)
[EPS-DILUTED] (.07)
</TABLE>
