-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ClCxwY7Pf3VVT0VL3MTSR+vG7g37rgzUfkXrZk4oMyWJYtOpVclXYA5bDTVBKRu+ H9mSsvEakw21xKuzPX3wOQ== 0000825324-97-000013.txt : 19970814 0000825324-97-000013.hdr.sgml : 19970814 ACCESSION NUMBER: 0000825324-97-000013 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOOD TIMES RESTAURANTS INC CENTRAL INDEX KEY: 0000825324 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 841133368 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-18590 FILM NUMBER: 97658437 BUSINESS ADDRESS: STREET 1: 8620 WOLFF CT STE 330 CITY: WESTMINSTER STATE: CO ZIP: 80030 BUSINESS PHONE: 3034274221 MAIL ADDRESS: STREET 1: 8620 WOLFF COURT STREET 2: SUITE 330 CITY: WESTMINSTER STATE: CO ZIP: 80030 FORMER COMPANY: FORMER CONFORMED NAME: PARAMOUNT VENTURES INC DATE OF NAME CHANGE: 19900205 10QSB 1 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: June 30, 1997 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.) 8620 WOLFF COURT, SUITE 330, WESTMINSTER, CO 80030 (Address of principal executive offices) (Zip Code) (303) 427-4221 (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 June 30, 1997. 6,397,778 SHARES OF COMMON STOCK, .001 PAR VALUE Form 10-QSB Quarter Ended June 30, 1997 INDEX PAGE PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Balance Sheets - 3 June 30, 1997 and September 30, 1996 Consolidated Statements of Operations - 5 For the three months ended June 30, 1997 and 1996 and for the nine months ended June 30, 1997 and 1996 Consolidated Statements of Cash Flow - 6 For the three months ended June 30, 1997 and 1996 and for the nine months ended June 30, 1997 and 1996 Notes to Financial Statements 7 ITEM 2. Management's Discussion and Analysis 8 PART II - OTHER INFORMATION ITEMS 1 through 6. 11 Signature 12 GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS
June 30, September 30, 1997 1996 CURRENT ASSETS: Cash and cash equivalent $ 288,000 $ 540,000 Receivables 171,000 211,000 Inventories 60,000 48,000 Prepaid expenses and other 206,000 19,000 Total current assets 725,000 818,000 PROPERTY AND EQUIPMENT, at cost: Land and building 2,384,000 2,211,000 Leasehold improvements 2,636,000 2,424,000 Fixtures and equipment 3,078,000 2,879,000 8,098,000 7,514,000 Less accumulated depreciation and amortization (2,290,000) (1,819,000) 5,808,000 5,695,000 OTHER ASSETS: Assets held for sale -0- 98,000 Note receivables 424,000 435,000 Deposits & other 71,000 116,000 495,000 649,000 TOTAL ASSETS $7,028,000 $7,162,000 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of capital lease obligations $ 114,000 $ 109,000 Accounts payable 462,000 368,000 Accrued liabilities 850,000 1,073,000 Total current liabilities 1,426,000 1,550,000 LONG-TERM DEBT & CAPITAL LEASE OBLIGATIONS Net of current maturities 392,000 479,000 CONVERTIBLE NOTE PAYABLE -0- 250,000 ACCRUED LEASE LIABILITY ASSOCIATED WITH THE EXIT OF A BUSINESS ACTIVITY 250,000 0 DEFERRED LIABILITIES 254,000 223,000 MINORITY INTERESTS IN PARTNERSHIPS 1,672,000 1,653,000 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value; 5,000,000 shares authorized, 1,000,000 shares of Series A Convertible Cumulative Preferred Stock issued and outstanding as of June 30, 1997 and none issued and outstanding at September 30, 1996 (liquidation preference of $513,750 includes unpaid dividends of $45,000) 10,000 -0- GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Cont.) June 30, September 30, 1997 1996 Common stock, $.001 par value; 50,000,000 shares authorized, 6,397,778 shares issued and outstanding as of June 30, 1997 and 6,314,820 shares issued and outstanding as of September 30, 1996 6,000 6,000 Capital contributed in excess of par value 11,822,000 10,845,000 Accumulated deficit (8,804,000) (7,844,000) Total stockholders' equity 3,034,000 3,007,000 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $7,028,000 $7,162,000
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended June 30, June 30, 1997 1996 1997 1996 NET REVENUES: Restaurant sales, net $3,119,000 $3,199,000 $8,337,000 $9,435,000 Franchise revenues, net 46,000 30,000 108,000 83,000 Total revenues 3,165,000 3,229,000 8,445,000 9,518,000 RESTAURANT OPERATING EXPENSES: Food & paper costs 1,143,000 1,173,000 3,102,000 3,529,000 Labor, occupancy & other 1,331,000 1,381,000 3,836,000 4,500,000 Accretion of deferred rent 12,000 15,000 36,000 41,000 Depreciation & amortization 153,000 177,000 445,000 543,000 Total restaurant operating costs 2,639,000 2,746,000 7,419,000 8,613,000 INCOME FROM RESTAURANT OPERATIONS 526,000 483,000 1,026,000 905,000 SELLING, GENERAL & ADMINISTRATIVE EXPENSES 519,000 597,000 1,490,000 1,962,000 INCOME (LOSS) FROM OPERATIONS 7,000 (114,000) (464,000) (1,057,000) OTHER INCOME & (EXPENSES) Minority income (expense), net (62,000) (2,000) (79,000) 102,000 Interest, net (10,000) (31,000) (25,000) (68,000) Loss from RTC & Las Vegas lease liabilities (44,000) 0 (368,000) 0 Other, net (42,000) 53,000 (24,000) 35,000 Total other income & (expenses) (158,000) 20,000 (496,000) 69,000 NET INCOME (LOSS) ($151,000) ($94,000) ($960,000) ($988,000) PREFERRED STOCK DIVIDENDS IN ARREARS 20,000 0 45,000 0 NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS (171,000) (94,000) (1,005,000) (988,000) NET INCOME (LOSS) PER COMMON SHARE ($0.03) ($0.01) ($0.16) ($0.15) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,397,778 6,314,825 6,397,778 6,638,425
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended Nine Months Ended June 30, June 30, 1997 1996 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ($151,000) ($ 94,000) ($960,000) ($988,000) Depreciation and amortization 169,000 216,000 504,000 707,000 Changes in operating assets & liabilities-- (Increase) decrease in: Prepaids & receivables 33,000 383,000 (98,000) (105,000) Inventories (2,000) 2,000 (8,000) 26,000 Other assets 1,000 (14,000) 23,000 (424,000) Opening expenses (62,000) 0 (65,000) (70,000) (Decrease) increase in: Accounts payable 78,000 (70,000) 92,000 (234,000) Accrued interest 0 0 0 0 Accrued property taxes (60,000) (96,000) (18,000) (37,000) Accrued payroll & P/R taxes 21,000 (2,000) 36,000 (50,000) Deposits 0 0 0 0 Other accrued liabilities/deferred income 69,000 (68,000) 25,000 (83,000) Net cash provided by (used in) operating activities 96,000 $257,000 (469,000) (1,258,000) CASH FLOWS FROM INVESTING ACTIVITIES: (Purchase) sale - FF&E, land, building & improvements (446,000) 380,000 (162,000) 160,000 CASH FLOWS FROM FINANCING ACTIVITIES: Debt incurred (paid) (29,000) (294,000) (678,000) 489,000 Minority interest 59,000 (141,000) 18,000 435,000 Paid in capital activity 250,000 0 1,039,000 41,000 Net cash provided by (used in) 280,000 (435,000) 379,000 965,000 financing activities INCREASE (DECREASE) IN CASH ($70,000) $202,000 ($252,000) ($133,000)
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, 1997, the results of its operations and its cash flow for the three month period ended June 30, 1997 and for the nine month period ended June 30, 1997. Operating results for the three month period ended June 30, 1997 and for the nine month period ended June 30, 1997 are not necessarily indicative of the results that may be expected for the year ending September 30, 1997. The consolidated balance sheet as of September 30, 1996 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, 1996. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE COMPANY General On July 27, 1992, the stockholders of Good Times Restaurants Inc. (the "Company") approved a merger with Round The Corner Restaurants, Inc. ("RTC"). For financial statement purposes, RTC was considered the acquiring company and the transaction was treated as a purchase by RTC of the Company, effective August 1, 1992. For legal purposes, however, the Company remained the surviving entity and the combined entity retained the Company's capital structure. In February 1993, the Company's operations and management were reorganized to allow Good Times Drive Thru Inc. ("Drive Thru") and RTC to function as separately accountable entities and to allow RTC's and Drive Thru's managements to focus exclusively on their respective businesses. On September 29, 1995, the Company completed the sale of RTC to Hot Concepts Management Group, L.L.C. In October 1996, RTC filed for Chapter 11 bankruptcy. The Company recorded a reserve for anticipated losses in its September 30, 1996 financial statements. Drive Thru had twenty-seven units open at June 30, 1997, of which eleven were franchised units, nine joint-venture units and seven company-owned units compared to twenty-three units open at June 30, 1996, of which eight were franchised units, eight joint-venture units and seven company-owned units. During the three months ended June 30, 1997 two new joint-venture units were opened. The Company anticipates opening three additional company-owned, franchise or joint-venture restaurants during 1997. 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 nine months ended June 30, 1996 and the results of the Company and Drive Thru for the three months and nine months ended June 30, 1997. Results of Operations Net Revenues. Net restaurant revenues for the three months ended June 30, 1997 decreased $80,000 (2.5%) to $3,119,000 from $3,199,000 for the same prior year period. $147,000 of the decrease was attributable to three under-performing units that were sold or subleased in April and May 1996, one of which was company-owned and two were joint-venture units. $102,000 of the decrease was attributable to one joint-venture unit that was sold to a franchisee in November 1996. The Company's additional revenues of $185,000 from two joint-venture units not open during the prior year period were offset by a decline in same store sales for Company operated units of $16,000 or (.60%). Franchise revenue increased $16,000 for the three months ended June 30, 1997 due to an increase in franchise royalty income over the same prior year period. Net restaurant revenues for the nine months ended June 30, 1997 decreased $1,098,000 (12%) to $8,337,000 from $9,435,000 for the same prior year period. $1,268,000 of the decrease is attributable to the sale of two units to franchisees in February and November, 1996 and the sale or sublease of three under-performing units in April and May, 1996. Same store sales for Company operated units open for the full nine month periods in 1996 and 1997 decreased $141,000 or 2%. Net restaurant revenues for the nine month period ended June 30, 1997 increased $311,000 due to three new joint-venture units that were not open for the full prior year period. Two of these joint-venture units opened in the three month period ended June 30, 1997. Franchise revenue increased $25,000 during the nine months ended June 30, 1997 from the same prior year period due to higher franchise royalty fees. Food and Paper Costs. Food and paper costs were 36.7% of net restaurant sales for the three months ended June 30, 1997, compared to 36.7% for the same prior year period. Food and paper costs decreased to 37.2% of net restaurant sales for the nine months ended June 30, 1997 compared to 37.4% for the same prior year period. Income From Restaurant Operations. For the three months ended June 30, 1997, income from restaurant operations increased to $526,000 from $483,000 for the same prior year period. Drive Thru's income from restaurant operations as a percentage of net restaurant sales increased to 16.9% for the three months ended June 30, 1997 from 15.1% for the same prior year period. Cash flow from restaurant operations (income from restaurant operations plus depreciation and amortization) increased to 21.8% of net restaurant sales for the three months ended June 30, 1997 from 20.6% for the same prior year period. For the nine months ended June 30, 1997, income from restaurant operations increased to $1,026,000 from $905,000 for the same prior year period. Drive Thru's income from restaurant operations as a percentage of net restaurant sales increased to 12.3% for the nine months ended June 30, 1997 from 9.6% for the same prior year period. Cash flow from restaurant operations (income from restaurant operations plus depreciation and amortization) increased to 17.6% of net restaurant sales for the nine months ended June 30, 1997 from 15.3% 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 management's continued focus on improving restaurant labor efficiencies and restaurant expenses. Income (Losses) From Operations. The Company had income from operations of $7,000 in the three months ended June 30, 1997 compared to a loss from operations of ($114,000) for the three months ended June 30, 1996. The improvement in income from operations of $121,000 for the three months ended June 30, 1997 is attributable to an increase in income from restaurant operations of $43,000 and a decrease in selling, general and administrative expenses of $78,000 compared to the same prior year period. The decrease in selling, general and administrative expenses is due to reductions in staff and administrative expenses as management has positioned the Company for growth and development in the Colorado market. For the nine months ended June 30, 1997, losses from operations decreased to ($464,000) from ($1,057,000) in the same prior year period. The improvement in income from operations of $593,000 for the nine months ended June 30, 1997 is attributable to an increase in income from restaurant operations of $121,000 and a decrease in selling, general and administrative expenses of $472,000 compared to the same prior year period. Net Income (Loss). The net loss for the Company was ($151,000) for the three months ended June 30, 1997 compared to a net loss for the Company of ($94,000) for the comparable prior year period. Minority interest expense increased $60,000 in the three months ended June 30, 1997 from the same prior year period. This was attributable to the elimination of two under-performing joint venture Drive Thru units in Colorado that were sold or subleased in April and May 1996 and the sale of the Boise, Idaho joint-venture unit in November 1996 and to the increase in income from restaurants, which increased minority interest expense to joint-venture partners. Net interest expense decreased $21,000 for the three months ended June 30, 1997 from the same prior year period, attributable to the repayment of a capital lease obligation in April 1996. The loss from RTC and Las Vegas lease liabilities of ($44,000) for the three months ended June 30, 1997 is attributable to the operation of three RTC restaurants currently operated by Drive Thru under an agreement with RTC related to the Company's contingent lease guaranty obligations. Management is actively marketing the RTC restaurants for sale or negotiating lease terminations and anticipates agreements on two of the three restaurants by fiscal year end. Other expenses of $42,000 for the three months ended June 30, 1997 includes $17,000 in lease termination charges associated with an under- performing joint-venture unit that was closed in May 1996 and a $25,000 accrual for the settlement of a legal dispute associated with a lease termination on an undeveloped site. For the nine month period ended June 30, 1997, the net loss for the Company was ($960,000) compared to a net loss for the Company of ($988,000) in the same prior year period. Minority interest expense increased $181,000 in the nine months ended June 30, 1997 from the same prior year period due to increased income from operations and a higher share of that income by joint-venture partners. Liquidity and Capital Resources As of June 30, 1997, the Company and Drive Thru had $288,000 cash and marketable securities on hand. This amount along with projected cash flow from operations is believed sufficient to cover working capital needs of the Company for the balance of the 1997 fiscal year. However, additional capital from joint-venture partners, sale of existing restaurants or other sources of financing will be required for the development of additional company-owned and joint-venture restaurants. The Company had a working capital deficit of ($701,000) including $114,000 of current maturities of capital lease obligations and $140,000 of accrued expenses associated with the RTC bankruptcy. The Company's cash position decreased ($70,000) for the three months ended June 30, 1997. Because restaurant sales are collected in cash and accounts payable for food and paper products are paid two to four weeks later, restaurant companies often operate with working capital deficits. On October 1, 1996, the Company closed the sale of $1 million of preferred stock, $250,000 of which was the conversion of a note payable and payments of $250,000 were received on October 1, 1996, January 1, 1997 and April 1, 1997. The proceeds of the preferred stock sale are required to be used for the development of new Good Times restaurants by December 31, 1997 unless unanimously approved otherwise by the Company's Board of Directors. Cash flow from investing activities for the three months ended June 30, 1997 includes the use of $446,000 toward the development of two new joint- venture restaurants and the remodel of one company-owned unit. Cash flow from financing activities for the three months ended June 30, 1997 includes the receipt of $250,000 cash in conjunction with the closing of the preferred stock sale on April 1, 1997. For the nine months ended June 30, 1997, cash decreased $252,000. Cash used in operations was $469,000, cash used in net investing activities was $162,000, and cash provided by financing activities was $379,000. Cash flow from operating, investing and financing activities for the nine months ended June 30, 1997 includes the sale of one joint-venture restaurant in Boise, Idaho to a franchisee, which decreased other accrued liabilities $175,000, decreased fixed assets $429,000 and decreased notes payable $346,000. The Company entered into a co-development agreement with a current franchisee to develop one joint-venture unit in Ft. Collins, Colorado, which opened in June 1997. In conjunction therewith, the Co-Development Limited Partnership has entered into a $200,000 bank loan jointly guaranteed by the Company and the franchisee to finance the development of the Ft. Collins unit. 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 On April 29, 1997, Drive Thru received notice of a Complaint filed against it by College Park Realty Company of Las Vegas, Nevada for breach of lease. The lease had been assigned to Steakout, King of Steaks, Inc. and one of its franchisees. While Drive Thru is obligated under the lease, it has cause of action against the franchisee that executed a personal guaranty of the lease and management does not believe any financial statement adjustment is warranted. The Company is a defendant in two lawsuits filed by two former hourly employees alleging sexual harassment. The Company denies any wrong doing and intends to vigorously defend itself. Management does not believe any financial statement adjustment is warranted. Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Shareholders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K None. 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:____________________________________ Boyd E. Hoback, President and Chief Executive Officer BY:____________________________________ Susan Knutson, Controller EX-27 2
5 9-MOS SEP-30-1997 JUN-30-1997 288000 0 171000 0 60000 725000 8098000 (2290000) 7028000 1426000 0 0 10000 6000 3034000 7028000 3119000 3165000 1143000 2639000 519000 0 (10000) (151000) 0 0 0 0 0 (151000) (.03) (.03)
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