Recent Developments	9 Months Ended
Jun. 30, 2012
Recent Developments	Note 2. Recent Developments As reported on its Form 8K filed June 13, 2012 Good Times Restaurants Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Small Island Investments Limited, a Bermuda corporation (the “Investor”), pursuant to which the Company has agreed to sell and issue to the Investor 473,934 shares (the “Shares”) of a new series of the Company’s preferred stock, par value $0.001 per share, to be designated as “Series C Convertible Preferred Stock” (“Series C Preferred Stock”), at a purchase price of $4.22 per share, or an aggregate purchase price of $2,000,001. Each share of the Series C Preferred Stock is convertible into two shares of the Company’s common stock, par value $0.001 per share (“Common Stock”). The closing of the investment transaction (the “Investment Transaction”) under the Purchase Agreement (the “Closing”) is subject to certain conditions, including the receipt of stockholder approval of the Investment Transaction. The Company expects the Closing to occur promptly following the satisfaction of such condition and prior to September 30, 2012. We sold one company-owned restaurant in Littleton, Colorado to an unrelated third party. The sale closed on December 29, 2011 with net proceeds of $305,000 which resulted in a $9,000 gain on the sale. As described below $100,000 of the proceeds were used to prepay principal on our Wells Fargo Bank note. Subsequent to June 30, 2012 we sold one company-owned restaurant in Loveland, Colorado to an unrelated third party. The sale closed on July 9, 2012 with net proceeds of $605,000 which resulted in an $80,000 gain on the sale. We used $300,000 of the net proceeds to prepay principal on our PFGI II, LLC note to release the collateral held by PFGI II on the property that was sold. We are actively marketing one restaurant property for a sale leaseback transaction related to our company-owned restaurant in Firestone, Colorado. If consummated the transaction would provide approximately $1,400,000 of net proceeds. We anticipate using the proceeds from the transaction to reduce notes payable of $1,334,000 and to increase our working capital, however there can be no assurances that the transaction will be consummated. As previously disclosed in the Company’s current report on Form 8-K filed December 9, 2011, we received notice from Wells Fargo Bank, N.A. (the “Bank”) that the Company was not in compliance with certain covenants under the Amended and Restated Credit Agreement dated December 10, 2010 (the “Credit Agreement”), including covenants requiring that the Company’s tangible net worth not be less than $2,500,000 at any time and that the Company deliver certain landlord’s disclaimer and consent documents to the Bank. As previously disclosed in the Company’s current report on Form 8-K filed December 27, 2011 we entered into a First Amendment to the Amended Credit Agreement and Waiver of Defaults and a Second Amended and Restated Term Note with Wells Fargo Bank (together, the “Amendments”) that waived the current covenant defaults and modified the loan covenants and note terms. The Amendments revised the amortization and maturity date of the remaining loan balance as of January 2, 2012 of $349,000 to December 31, 2013. There was no change to the interest rate of the loan. As reported on its Form 8K on April 6, 2012, the Company entered into a financial advisory services agreement (the “Agreement”) with Heathcote Capital LLC (“Heathcote”), pursuant to which Heathcote will provide the Company with exclusive financial advisory services in connection with a possible strategic transaction (the “Transaction”). The services to be provided by Heathcote may involve identifying and contacting potential acquisition targets and/or sources of financing for the Company, advising and assisting the Company in evaluating various structures and forms of any Transaction, assisting in the preparation of proposals and evaluation of offers, and assisting the Company in negotiating the financial aspects of the Transaction. Gary J. Heller, a member of the Company’s Board of Directors, is the principal of Heathcote. Accordingly, the Agreement constitutes a related party transaction and was reviewed and approved by the Audit Committee of the Company’s Board of Directors. In fiscal 2012 we sold two Company-operated restaurants and two franchise restaurants closed. In fiscal 2011, we sold two Company-operated restaurants and a franchisee closed one restaurant. We continue to evaluate the near term realizable asset value of each restaurant compared to its longer term cash flow value and we may choose to sell, sublease or close a limited number of additional lower performing restaurants in fiscal 2012 as we position the company for growth in new store development and reposition our stores away from trade areas that may have shifted demographically or from our current concept direction. We will require additional capital sources to develop additional company-owned restaurants. We anticipate that the sale of lower volume restaurants will improve our operating margins as a percentage of revenue and provide cash resources for the further reduction of our long term debt and an increase to our working capital.

Note 2. Recent Developments

As reported on its Form 8K filed June 13, 2012 Good Times Restaurants Inc. (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Small Island Investments Limited, a Bermuda corporation (the “Investor”), pursuant to which the Company has agreed to sell and issue to the Investor 473,934 shares (the “Shares”) of a new series of the Company’s preferred stock, par value $0.001 per share, to be designated as “Series C Convertible Preferred Stock” (“Series C Preferred Stock”), at a purchase price of $4.22 per share, or an aggregate purchase price of $2,000,001. Each share of the Series C Preferred Stock is convertible into two shares of the Company’s common stock, par value $0.001 per share (“Common Stock”). The closing of the investment transaction (the “Investment Transaction”) under the Purchase Agreement (the “Closing”) is subject to certain conditions, including the receipt of stockholder approval of the Investment Transaction. The Company expects the Closing to occur promptly following the satisfaction of such condition and prior to September 30, 2012.

We sold one company-owned restaurant in Littleton, Colorado to an unrelated third party. The sale closed on December 29, 2011 with net proceeds of $305,000 which resulted in a $9,000 gain on the sale. As described below $100,000 of the proceeds were used to prepay principal on our Wells Fargo Bank note.

Subsequent to June 30, 2012 we sold one company-owned restaurant in Loveland, Colorado to an unrelated third party. The sale closed on July 9, 2012 with net proceeds of $605,000 which resulted in an $80,000 gain on the sale. We used $300,000 of the net proceeds to prepay principal on our PFGI II, LLC note to release the collateral held by PFGI II on the property that was sold.

We are actively marketing one restaurant property for a sale leaseback transaction related to our company-owned restaurant in Firestone, Colorado. If consummated the transaction would provide approximately $1,400,000 of net proceeds. We anticipate using the proceeds from the transaction to reduce notes payable of $1,334,000 and to increase our working capital, however there can be no assurances that the transaction will be consummated.

As previously disclosed in the Company’s current report on Form 8-K filed December 9, 2011, we received notice from Wells Fargo Bank, N.A. (the “Bank”) that the Company was not in compliance with certain covenants under the Amended and Restated Credit Agreement dated December 10, 2010 (the “Credit Agreement”), including covenants requiring that the Company’s tangible net worth not be less than $2,500,000 at any time and that the Company deliver certain landlord’s disclaimer and consent documents to the Bank. As previously disclosed in the Company’s current report on Form 8-K filed December 27, 2011 we entered into a First Amendment to the Amended Credit Agreement and Waiver of Defaults and a Second Amended and Restated Term Note with Wells Fargo Bank (together, the “Amendments”) that waived the current covenant defaults and modified the loan covenants and note terms. The Amendments revised the amortization and maturity date of the remaining loan balance as of January 2, 2012 of $349,000 to December 31, 2013. There was no change to the interest rate of the loan.

As reported on its Form 8K on April 6, 2012, the Company entered into a financial advisory services agreement (the “Agreement”) with Heathcote Capital LLC (“Heathcote”), pursuant to which Heathcote will provide the Company with exclusive financial advisory services in connection with a possible strategic transaction (the “Transaction”). The services to be provided by Heathcote may involve identifying and contacting potential acquisition targets and/or sources of financing for the Company, advising and assisting the Company in evaluating various structures and forms of any Transaction, assisting in the preparation of proposals and evaluation of offers, and assisting the Company in negotiating the financial aspects of the Transaction. Gary J. Heller, a member of the Company’s Board of Directors, is the principal of Heathcote. Accordingly, the Agreement constitutes a related party transaction and was reviewed and approved by the Audit Committee of the Company’s Board of Directors.

In fiscal 2012 we sold two Company-operated restaurants and two franchise restaurants closed. In fiscal 2011, we sold two Company-operated restaurants and a franchisee closed one restaurant. We continue to evaluate the near term realizable asset value of each restaurant compared to its longer term cash flow value and we may choose to sell, sublease or close a limited number of additional lower performing restaurants in fiscal 2012 as we position the company for growth in new store development and reposition our stores away from trade areas that may have shifted demographically or from our current concept direction. We will require additional capital sources to develop additional company-owned restaurants. We anticipate that the sale of lower volume restaurants will improve our operating margins as a percentage of revenue and provide cash resources for the further reduction of our long term debt and an increase to our working capital.