-----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, Q17eeQAzth/GaHVFA6YSKEJX4CINgY3lZ4xHXvrcsETAT1D/xs7AL1gJWXLGJj7r 8rsdnbMHRpusc+1pg1E8Jg== 0000825324-97-000007.txt : 19970222 0000825324-97-000007.hdr.sgml : 19970222 ACCESSION NUMBER: 0000825324-97-000007 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970212 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: 97525813 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:December 31, 1996 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 December 31, 1996. 6,397,778 SHARES OF COMMON STOCK, .001 PAR VALUE Form 10-QSB Quarter Ended December 31, 1996 INDEX PAGE PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Balance Sheets - 3 December 31, 1996 and September 30, 1996 Consolidated Statements of Operations - 5 For the three months ended December 31, 1996 and 1995 Consolidated Statement of Cash Flow - 6 For the three months ended December 31, 1996 and 1995 Notes to Financial Statements 7 ITEM 2. Management's Discussion and Analysis 8 PART II - OTHER INFORMATION ITEMS 1 through 6. 10 Signature 11 GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET ASSETS December 31, September 30, 1996 1996 CURRENT ASSETS: Cash and cash equivalent $ 453,000 $ 540,000 Receivables 147,000 211,000 Inventories 58,000 48,000 Prepaid expenses and other 119,000 19,000 Total current assets 777,000 818,000 PROPERTY AND EQUIPMENT, at cost: Land and building 2,235,000 2,211,000 Leasehold improvements 2,443,000 2,424,000 Fixtures and equipment 2,895,000 2,879,000 7,573,000 7,514,000 Less accumulated depreciation and amortization (1,976,000) (1,819,000) 5,597,000 5,695,000 OTHER ASSETS: Assets held for sale -0- 98,000 Note receivables 427,000 435,000 Deposits & other 67,000 116,000 494,000 649,000 TOTAL ASSETS $6,868,000 $7,162,000 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of capital lease obligations $ 112,000 $ 109,000 Accounts payable 350,000 368,000 Accrued liabilities 812,000 1,073,000 Total current liabilities 1,274,000 1,550,000 LONG-TERM DEBT & CAPITAL LEASE OBLIGATIONS Net of current maturities 451,000 479,000 CONVERTIBLE NOTE PAYABLE -0- 250,000 DEFERRED LIABILITIES 235,000 223,000 MINORITY INTERESTS IN PARTNERSHIPS 1,622,000 1,653,000 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value; 5,000,000 shares authorized, 500,000 shares of Series A Convertible Cumulative Preferred Stock issued and outstanding as of December 31, 1996 and none issued and outstanding at September 30, 1996 (liquidation preference of $244,375, includes unpaid dividends of $10,000) 5,000 -0- GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Cont.) December 31, September 30, 1996 1996 Common stock, $.001 par value; 50,000,000 shares authorized, 6,397,778 shares issued and outstanding as of December 31, 1996 and 6,314,820 shares issued and outstanding as of September 30, 1996 6,000 6,000 Capital contributed in excess of par value 11,287,000 10,845,000 Accumulated deficit (8,012,000) (7,844,000) Total stockholders' equity 3,286,000 3,007,000 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,868,000 $7,162,000 GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended December 31, 1996 1995 NET REVENUES: Restaurant sales, net $2,770,000 $3,312,000 Franchise revenues, net 22,000 20,000 Total revenues 2,792,000 3,332,000 RESTAURANT OPERATING EXPENSES: Food & paper costs 1,042,000 1,235,000 Labor, occupancy & other 1,302,000 1,620,000 Depreciation & amortization 149,000 170,000 Total restaurant operating costs 2,493,000 3,025,000 INCOME FROM RESTAURANT OPERATIONS 299,000 307,000 SELLING, GENERAL & ADMINISTRATIVE EXPENSES 488,000 718,000 INCOME (LOSS) FROM OPERATIONS (189,000) (411,000) OTHER INCOME & (EXPENSES) Minority income (expense), net (11,000) 26,000 Interest, net (6,000) (19,000) Other, net 37,000 (9,000) Total other income & (expenses) 20,000 (2,000) NET INCOME (LOSS) $ (169,000) $ (413,000) PREFERRED STOCK DIVIDENDS IN ARREARS 10,000 -0- NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS (179,000) (413,000) NET INCOME (LOSS) PER COMMON SHARE $ (.03) $ (0.06) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,397,778 6,940,000 GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended December 31, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $(169,000) $(413,000) Depreciation and amortization 177,000 239,000 Changes in operating assets & liabilities -- (Increase) decrease in: Prepaids & receivables (43,000) 67,000 Inventories (6,000) (5,000) Other assets 20,000 (327,000) Opening expenses -0- (70,000) (Decrease) increase in: Accounts payable (19,000) (138,000) Accrued interest -0- -0- Accrued property taxes 26,000 42,000 Accrued payroll & P/R taxes 7,000 (26,000) Other accrued liabilities/ deferred income (297,000) (224,000) Net cash provided by (used in) operating activities (304,000) (855,000) CASH FLOWS FROM INVESTING ACTIVITIES: (Purchase) sale - FF&E, land, building and improvements 370,000 (479,000) CASH FLOWS FROM FINANCING ACTIVITIES: Debt incurred (paid) (622,000) 614,000 Minority interest (32,000) 324,000 Paid in capital activity 500,000 41,000 Net cash provided by (used in) financing activities (154,000) 979,000 INCREASE (DECREASE) IN CASH $ (88,000) $(355,000) 1. FINANCIAL STATEMENTS: In the opinion of management, the accompanying consolidated financial statements contain all of the normal recurring adjustments necessary to present fairly the financial position of the Company as of December 31, 1996, the results of its operations and its cash flow for the three months ended December 31, 1996. Operating results for the three months ended December 31, 1996 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. Beginning in fiscal 1996, the administrative and accounting functions of the Company were consolidated with Drive Thru's operations. 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-four units open at December 31, 1996, of which ten were franchised units, seven joint-venture units and seven company-owned units compared to twenty-six units open at December 31, 1995, of which seven were franchised units, ten joint-venture units and nine company-owned units. (The four units sold or subleased in February, April and May, 1996 are included in the total stores for the prior year period.) The Company anticipates opening six to eight new company-owned, franchise and 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 ended December 31, 1995 and the results of the Company and Drive Thru for the three months ended December 31, 1996. Results of Operations Net Revenues. Net revenues for the three months ended December 31, 1996, decreased $540,000 (16%) to $2,792,000 from $3,332,000 for the same prior year period. $192,000 of the decrease was attributable to a company-owned unit that was sold to a franchisee in February 1996 and $350,000 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. The Company's additional revenues from a Good Times unit that was not open for the full prior year period was offset by a decline in same store sales for company-owned and joint-venture Drive Thru units of approximately $97,000 (3.7%) for the three months ended December 31, 1996 from the same prior year period. Food and Paper Costs. Food and paper costs were 37.6% of net restaurant sales for Drive Thru for the three months ended December 31, 1996, compared to 37.3% for the same prior year period. Income From Restaurant Operations. For the three months ended December 31, 1996 income from restaurant operations decreased to $299,000 from $307,000 for the same prior year period. Drive Thru's income from restaurant operations as a percentage of net restaurant sales increased to 10.8% for the three months ended December 31, 1996 from 9.3% for the three months ended December 31, 1995. Cash flow from restaurant operations (income from restaurant operations plus depreciation and amortization) increased to 16.2% of net restaurant sales for the three months ended December 31, 1996 from 14.4% 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 focus on improving restaurant labor efficiencies. Income (Losses) From Operations. The Company had a loss from operations of ($189,000) for the three months ended December 31, 1996 compared to a loss from operations of ($411,000) for the three months ended December 31, 1995. The improvement in income from operations of $222,000 is attributable to a decrease in selling, general and administrative expenses of $230,000 for the three months ended December 31, 1996 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 only in the Colorado market. Net Income (Loss). The net loss for the Company was ($169,000) for the three months ended December 31, 1996 compared to a net loss for the Company of ($413,000) for the comparable prior year period. Minority interest expense increased $37,000 in the three months ended December 31, 1996 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. Net interest expense decreased $13,000 for the three months ended December 31, 1996 from the same prior year period. This decrease was attributable to the repayment of a capital lease obligation in April 1996. Other net income for the three months ended December 31, 1996 includes income of $31,000 from 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 does not anticipate future income from these operations and is actively marketing the restaurants for sale. Liquidity and Capital Resources As of December 31, 1996, the Company and Drive Thru had $453,000 cash and cash equivalents on hand. This amount is believed sufficient to cover working capital needs of the Company for the balance of the 1997 fiscal year. The Company had a working capital deficit of ($507,000) including $112,000 of current maturities of capital lease obligations and $217,000 of accrued expenses associated with the RTC bankruptcy. The Company's cash position decreased ($88,000) for the three months ended December 31, 1996. 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, $250,000 was received in cash on October 1, 1996 and the balance of the preferred stock investment is due in installments of $250,000 on 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 operating, investing and financing activities for the three months ended December 31, 1996 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. Cash flow from financing activities for the three months ended December 31, 1996 includes the receipt of $250,000 cash and the cancellation of a $250,000 note payable in conjunction with the closing of the preferred stock sale on October 1, 1996. The Company anticipates using approximately $400,000 for the development of one company-owned restaurant, one joint-venture restaurant and one restaurant remodel in the second and third quarters of fiscal 1997. 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 that any inflationary increases in operating costs will be recovered by increasing menu prices. 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 - 5. Not Applicable. Item 6. Exhibits and Reports on Form 8-K (a) No Exhibits. (b) Report on Form 8-K filed on October 15, 1996 with respect to the Registrant's closing of the first installment of the sale of an aggregate of one million shares Series A Convertible Preferred Stock ("Series A Preferred Stock") to The Bailey Company ("Bailey") pursuant to the Series A Convertible Preferred Stock Purchase Agreement dated as of May 31, 1996, as amended (the "Purchase Agreement"). 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: February 7, 1997 BY: /s/ Boyd E. Hoback, President & Chief Executive Officer Boyd E. Hoback, President & Chief Executive Officer BY: /s/ Sue Knutson, Controller & Secretary/Treasurer Sue Knutson, Controller & Secretary/Treasurer EX-27 2
5 3-MOS SEP-30-1997 DEC-31-1996 453000 0 147000 0 58000 777000 7573000 (1976000) 6868000 1274000 0 0 5000 6000 3286000 6868000 2770000 2792000 1042000 2493000 488000 0 (6000) (169000) 0 0 0 0 0 (169000) (.03) (.03)
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