XML 36 R18.htm IDEA: XBRL DOCUMENT v2.4.0.8
Subsequent Events
9 Months Ended
Jun. 30, 2014
Subsequent Events [Abstract]  
Subsequent Events

Note 13.

Subsequent Events

As reported on the Company's current form 8K dated August 4, 2014, on July 30, 2014, Good Times Drive Thru Inc. (the "Borrower"), the wholly-owned subsidiary of Good Times Restaurants Inc. ("Good Times"), entered into a Development Line Loan and Security Agreement (the "Loan Agreement") with United Capital Business Lending ("Lender"), pursuant to which Lender agreed to loan Borrower up to $2,100,000 (the "Loan") and entered into a Collateral Assignment of Franchise Agreements, Management Agreement and Partnership Interests (the "Collateral Assignment") with Lender. As of July 30, 2014, Borrower has borrowed approximately $196,000 under the Loan Agreement.  In addition, on July 30, 2014, Good Times entered into a Guaranty Agreement ("the Guaranty Agreement") with Lender, pursuant to which Good Times guaranteed the repayment of the Loan.  The Loan Agreement, Collateral Assignment, Notes (as defined below) and Guaranty Agreement are referred to herein as the "Loan Documents."

Under the terms of the Loan Agreement, Borrower may use up to $750,000 of the Loan to purchase a Point of Sale System and up to $1,350,000 of the Loan for the development of three new Good Times restaurants.   Borrower may request disbursements under the Loan Agreement for development costs of Good Times restaurants on or before July 1, 2015.  In connection with each disbursement under the Loan Agreement, Borrower shall execute a

Promissory Note (the "Notes") in the full amount of each disbursement request.  The Notes incur interest at a rate of 6.69% per annum, are repayable in monthly installments of principal and interest over 84 months, and contain other customary terms and conditions.  The Notes are subject to certain prepayment fees ranging between 1% and 3% of the unpaid balance at such time if Borrower repays a Note in certain circumstances prior to the thirty seventh monthly installment under such Note.

The Loan Agreement and Notes contain customary representations, warranties and affirmative and negative covenants, including without limitation, covenants to maintain certain insurance coverage and to maintain a certain debt service coverage ratio, leverage ratio, and quick ratio.