-----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, SydhKHRJo23iWAiYYODgkUzIadsAky4IBh+55hf/aygDytXOFJDML/ypKd3v+iez iCBM1ZzJnf/Ygc3GPGM9Rw== 0000825324-98-000004.txt : 19980227 0000825324-98-000004.hdr.sgml : 19980227 ACCESSION NUMBER: 0000825324-98-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980130 DATE AS OF CHANGE: 19980226 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOOD TIMES RESTAURANTS INC CENTRAL INDEX KEY: 0000825324 STANDARD INDUSTRIAL CLASSIFICATION: 5812 IRS NUMBER: 841133368 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-18590 FILM NUMBER: 98546101 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, 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 December 31, 1997. 6,520,186 SHARES OF COMMON STOCK, .001 PAR VALUE Form 10-QSB Quarter Ended December 31, 1997 INDEX PAGE PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Balance Sheets - 3 December 31, 1997 and September 30, 1997 Consolidated Statements of Operations - 5 For the three months ended December 31, 1997 and 1996 Consolidated Statement of Cash Flow - 6 For the three months ended December 31, 1997 and 1996 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, 1997 1997 CURRENT ASSETS: Cash and cash equivalent $ 395,000 $ 408,000 Receivables 26,000 81,000 Inventories 71,000 51,000 Prepaid expenses and other 45,000 11,000 Receivable from settlement of RTC Claims 110,000 300,000 Notes receivable 48,000 41,000 Total current assets 695,000 892,000 PROPERTY AND EQUIPMENT, at cost: Land and building 2,606,000 2,561,000 Leasehold improvements 2,646,000 2,646,000 Fixtures and equipment 3,141,000 3,082,000 8,393,000 8,289,000 Less accumulated depreciation and amortization (2,637,000) (2,459,000) 5,756,000 5,830,000 OTHER ASSETS: Notes receivable 407,000 414,000 Deposits & other 40,000 56,000 447,000 470,000 TOTAL ASSETS $6,898,000 $7,192,000 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ 26,000 $ 25,000 Current portion of capital lease obligations 124,000 122,000 Accounts payable 456,000 465,000 Accrued liabilities - Las Vegas 24,000 14,000 Accrued liabilities - RTC 101,000 125,000 Accrued liabilities - other 570,000 675,000 Total current liabilities 1,301,000 1,426,000 LONG-TERM LIABILITIES: Debt 471,000 478,000 Las Vegas accrued liabilities 149,000 166,000 RTC accrued liabilities 260,000 277,000 Capital lease obligations, net of current portion 36,000 68,000 Deferred liabilities 257,000 265,000 Total long-term liabilities 1,173,000 1,254,000 MINORITY INTERESTS IN PARTNERSHIPS 1,579,000 1,619,000 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 December 31, 1997 and 1,000,000 issued and outstanding at September 30, 1997 (liquidation preference of $513,750 includes unpaid dividends of $45,000) 10,000 10,000 GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Cont.) December 31, September 30, 1997 1997 Common stock, $.001 par value; 50,000,000 shares authorized, 6,520,186 shares issued and outstanding as of December 31, 1997 and 6,434,849 shares issued and outstanding as of September 30, 1997 6,000 6,000 Capital contributed in excess of par value 11,836,000 11,822,000 Accumulated deficit (9,007,000) (8,945,000) Total stockholders' equity 2,845,000 2,893,000 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,898,000 $7,192,000 GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended December 31, 1997 1996 NET REVENUES: Restaurant sales, net $3,058,000 $2,770,000 Franchise revenues, net 49,000 22,000 Total revenues 3,107,000 2,792,000 RESTAURANT OPERATING EXPENSES: Food & paper costs 1,078,000 1,042,000 Labor, occupancy & other 1,350,000 1,302,000 Accretion of deferred rent 10,000 12,000 Depreciation & amortization 165,000 149,000 Total restaurant operating costs 2,603,000 2,505,000 INCOME FROM RESTAURANT OPERATIONS 504,000 287,000 OTHER OPERATING EXPENSES: Selling, general & administrative expenses 553,000 488,000 Loss (Income) from operating RTC stores 7,000 (31,000) Total other operating costs 560,000 457,000 INCOME (LOSS) FROM OPERATIONS (56,000) (170,000) OTHER INCOME & (EXPENSES) Minority income (expense), net (44,000) (11,000) Interest, net (14,000) (6,000) Other, net 52,000 18,000 Total other income & (expenses) (6,000) 1,000 NET INCOME (LOSS) $ (62,000) $ (169,000) PREFERRED STOCK DIVIDENDS IN ARREARS 20,000 10,000 NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS $ (82,000) $ (179,000) NET INCOME (LOSS) PER COMMON SHARE $ (.01) $ (.03) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 6,520,186 6,397,778 GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended December 31, 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ (62,000) $(169,000) Depreciation and amortization 177,000 177,000 Changes in operating assets & liabilities -- (Increase) decrease in: Prepaids & receivables 210,000 (43,000) Inventories (21,000) (6,000) Other assets 16,000 20,000 Opening expenses 1,000 -0- (Decrease) increase in: Accounts payable (9,000) (19,000) Accrued interest -0- -0- Accrued property taxes 6,000 26,000 Accrued payroll & P/R taxes (13,000) 7,000 Other accrued liabilities/ deferred income (154,000) (297,000) Net cash provided by (used in) operating activities 151,000 (304,000) CASH FLOWS FROM INVESTING ACTIVITIES: (Purchase) sale - FF&E, land, building and improvements (103,000) 370,000 CASH FLOWS FROM FINANCING ACTIVITIES: Debt incurred (paid) (37,000) (622,000) Minority interest (40,000) (32,000) Paid in capital activity 15,000 500,000 Net cash provided by (used in) financing activities (61,000) (154,000) INCREASE (DECREASE) IN CASH $ (13,000) $ (88,000) 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, 1997, the results of its operations and its cash flow for the three months ended December 31, 1997. Operating results for the three months ended December 31, 1997 are not necessarily indicative of the results that may be expected for the year ending September 30, 1998. The consolidated balance sheet as of September 30, 1997 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, 1997. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE COMPANY General On September 30, 1995, the Company completed the sale of Round The Corner Restaurants, Inc. ("RTC") to Hot Concepts Management Group, L.L.C. In October 1996, RTC filed for Chapter 11 bankruptcy. The Company has entered into a settlement agreement with RTC whereby RTC will pay the Company $300,000 in two installments for the settlement of all of the Company's claims against RTC. One installment has been received and the remaining payment is due February, 1998. Drive Thru had twenty-eight units open at December 31, 1997, of which eleven were franchised units, nine joint-venture units and eight company-owned units compared to twenty-four units open at December 31, 1996, of which ten were franchised units, seven joint-venture units and seven company-owned units. Management anticipates that Drive Thru and its existing franchisees will develop a total of four to seven Good Times units in the Denver ADI in 1998. 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, 1996 and the results of the Company and Drive Thru for the three months ended December 31, 1997. Results of Operations Net Revenues. Net revenues for the three months ended December 31, 1997, increased $315,000 (+11.3%) to $3,107,000 from $2,792,000 for the same prior year period. Increased net revenues of $330,000 were attributable to Good Times units that were not open for the prior year period and decreased net revenues of $69,000 were attributable to one joint-venture unit that was sold to a franchisee in November, 1996. Same store net restaurant sales for company-owned and joint-venture Drive Thru units increased $27,000 (+1%) for the three months ended December 31, 1997 from the same prior year period. Management estimates that it lost approximately $80,000 in net restaurant sales from the October blizzard due to most of its restaurants being closed. Factoring out the effects of the blizzard, same store net restaurant sales would have increased 4% in the quarter ended December 31, 1997 over the same prior year period. Same store net restaurant sales variances from the prior year for October, November and December, 1997 were -2.2%, -0.5% and +6.3%, respectively. Franchise revenue increased $27,000 for the three months ended December 31, 1997 due to an increase in franchise royalty income over the same prior year period as well as the recognition of $18,000 of deferred royalties associated with the sale of a company-owned unit in 1996. Food and Paper Costs. Food and paper costs were 35.3% of net restaurant sales for Drive Thru for the three months ended December 31, 1997, compared to 37.6% for the same prior year period. The decrease in Drive Thru's food and paper costs is primarily attributable to menu price increases taken during the last eight months of the fiscal year ended September 30, 1997, with less than proportionate increases in food and paper costs. Income From Restaurant Operations. For the three months ended December 31, 1997 income from restaurant operations increased to $504,000 from $287,000 for the same prior year period. $29,000 of the increase was due to a one-time property tax expense reversal. Drive Thru's income from restaurant operations as a percentage of net restaurant sales increased to 16.5% for the three months ended December 31, 1997 from 10.4% for the three months ended December 31, 1996. Cash flow from restaurant operations (income from restaurant operations plus depreciation and amortization) increased to 21.9% of net restaurant sales for the three months ended December 31, 1997 from 15.7% 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 1) management's focus on improving restaurant labor efficiencies and restaurant expenses; 2) a reduction in food and paper costs as a percentage of net restaurant sales due to menu price increases; and 3) an increase in same store net restaurant sales, which causes restaurant expenses to decrease as a percentage of net restaurant sales. Income (Losses) From Operations. The Company had a loss from operations of ($56,000) for the three months ended December 31, 1997 compared to a loss from operations of ($170,000) for the three months ended December 31, 1996. The improvement in income from operations of $114,000 is primarily attributable to an increase in income from restaurant operations of $217,000, offset by an increase in advertising expenses of $50,000, an increase in general and administrative expenses of $15,000 and an increase in the loss from operating RTC stores of $38,000 compared to the same prior year period. The increase in advertising expenses is attributable to a television advertising campaign launched in September, 1997. The general and administrative expense increase was due to a timing difference in expensing the Company's annual audit costs. Management anticipates minimal future losses associated with operating RTC stores as negotiations are underway for sublease agreements or lease terminations on the two remaining stores within the Company's control. Net Income (Loss). The net loss for the Company was ($62,000) for the three months ended December 31, 1997 compared to a net loss for the Company of ($169,000) for the comparable prior year period. Minority interest expense increased $33,000 in the three months ended December 31, 1997 from the same prior year period. This was attributable to the sale of the Boise, Idaho joint-venture unit in November, 1996 and to the improved income from restaurant operations of the Colorado joint-venture units compared to the same prior year period. Net interest expense increased $8,000 for the three months ended December 31, 1997 from the same prior year period, attributable to a reduction in interest income of ($9,000). Other net income for the three months ended December 31, 1997 includes a gain of $52,000 related to the sale of a long-term land investment held by the Company. Liquidity and Capital Resources As of December 31, 1997, the Company and Drive Thru had $395,000 cash and cash equivalents on hand. Management anticipates entering into a short-term working capital loan during its second fiscal quarter to cover the Company's working capital needs for the balance of the 1998 fiscal year. Additional sources of financing will be required to fund the development of additional company-owned restaurants. The Company had a working capital deficit of ($606,000) including $124,000 of current maturities of capital lease obligations, $26,000 in current maturities of long-term debt and $125,000 of accrued lease expenses associated with the RTC and Las Vegas lease liabilities. 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. Cash flow from operating activities for the three months ended December 31, 1997 includes the receipt of $190,000 from RTC as the first installment for the settlement of all of the Company's claims against RTC, and $80,000 in proceeds received from the sale of a long-term land investment previously held by the Company. Cash flow from investing activities for the three months ended December 31, 1997 includes net costs of $94,000 incurred to remodel and add inside seating to a previously closed company-owned store. The remodeled store reopened in November, 1997. Cash flow from financing activities for the three months ended December 31, 1997 includes the issuance of $15,000 of stock to employees pursuant to the Company's 401(K) Savings & Investment Plan matching program. 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) No reports on Form 8-K. 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: /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-30-1998 DEC-31-1997 395000 0 26000 0 71000 695000 8393000 (2637000) 6898000 1301000 0 0 10000 6000 2845000 6898000 3058000 3107000 1078000 2603000 560000 0 (14000) (62000) 0 0 0 0 0 (62000) (.01) (.01)
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