-----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, Jouk6Qpc0HdW1qUA+xX3nROY1WlPTSk7Ri4rGBZcfvIga6AOOYzgz6Vy/4PF9+j3 CJuaT0+KSQisvRDpYgWjXQ== 0000825324-99-000006.txt : 19990511 0000825324-99-000006.hdr.sgml : 19990511 ACCESSION NUMBER: 0000825324-99-000006 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990510 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: 10KSB SEC ACT: SEC FILE NUMBER: 000-18590 FILM NUMBER: 99615352 BUSINESS ADDRESS: STREET 1: 601 CORPORATE CIRCLE CITY: GOLDEN STATE: CO ZIP: 80401 BUSINESS PHONE: 3033841400 MAIL ADDRESS: STREET 1: 601 CORPORATE CIRCLE CITY: GOLDEN STATE: CO ZIP: 80401 FORMER COMPANY: FORMER CONFORMED NAME: PARAMOUNT VENTURES INC DATE OF NAME CHANGE: 19900205 10KSB 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: March 31, 1999 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.) 601 CORPORATE CIRCLE, GOLDEN, CO 80401 (Address of principal executive offices) (Zip Code) (303) 384-1400 (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 March 31, 1999. 1,865,675 SHARES OF COMMON STOCK, .001 PAR VALUE _________ Form 10-QSB Quarter Ended March 31, 1999 INDEX PAGE PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Balance Sheets - 3 March 31, 1999 and September 30, 1998 Consolidated Statements of Operations - 5 For the three months ended March 31, 1999 and 1998 and for the six months ended March 31, 1999 and 1998 Consolidated Statements of Cash Flow - 6 For the three months ended March 31, 1999 and 1998 and for the six months ended March 31, 1999 and 1998 Notes to Financial Statements 7 ITEM 2. Management's Discussion and Analysis 8 PART II - OTHER INFORMATION ITEMS 1 through 6. 12 Signature 14 GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS March 31, September 30, 1999 1998 CURRENT ASSETS: Cash and cash equivalent $1,198,000 $ 768,000 Receivables 246,000 281,000 Inventories 49,000 52,000 Prepaid expenses and other 27,000 8,000 Notes receivable 98,000 42,000 _________ ________ Total current assets 1,618,000 1,151,000 PROPERTY AND EQUIPMENT, at cost: Land and building 2,541,000 2,511,000 Leasehold improvements 2,316,000 2,298,000 Fixtures and equipment 2,796,000 2,735,000 _________ _________ 7,653,000 7,544,000 Less accumulated depreciation and amortization (2,952,000) (2,625,000) _________ _________ 4,701,000 4,919,000 OTHER ASSETS: Notes receivable 417,000 483,000 Deposits & other 43,000 25,000 _________ _________ 460,000 508,000 TOTAL ASSETS $6,779,000 $6,578,000 ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ 35,000 $ 96,000 Accounts payable 440,000 441,000 Accrued liabilities - Las Vegas 14,000 16,000 Accrued liabilities - RTC 136,000 148,000 Accrued liabilities - other 609,000 564,000 _________ _________ Total current liabilities 1,234,000 1,265,000 LONG-TERM LIABILITIES: Debt 448,000 463,000 Las Vegas accrued liabilities 117,000 124,000 RTC accrued liabilities 241,000 291,000 Deferred liabilities 300,000 288,000 _________ _________ Total long-term liabilities 1,106,000 1,166,000 MINORITY INTERESTS IN PARTNERSHIPS 1,389,000 1,465,000 STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value; 5,000,000 shares authorized, None issued and outstanding
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Cont.) March 31, September 30, 1999 1998 Common stock, $.001 par value; 50,000,000 shares authorized, 1,865,675 shares issued and outstanding as of March 31, 1999 and 1,747,919 shares issued and outstanding as of September 30, 1998 2,000 2,000 Capital contributed in excess of par value 12,167,000 11,851,000 Accumulated deficit (9,119,000) (9,171,000) __________ __________ Total stockholders' equity 3,050,000 2,682,000 __________ __________ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,779,000 $6,578,000 ========= =========
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Six Months Ended March 31, March 31, 1999 1998 1999 1998 NET REVENUES: Restaurant sales, net $3,191,000 $2,982,000 $6,623,000 $6,040,000 Franchise net revenues 61,000 32,000 128,000 80,000 _________ __________ _________ _________ Total revenues 3,252,000 3,014,000 6,751,000 6,120,000 RESTAURANT OPERATING EXPENSES: Food & paper costs 1,143,000 1,073,000 2,426,000 2,151,000 Labor, occupancy & other 1,282,000 1,346,000 2,627,000 2,695,000 Accretion of deferred rent 7,000 10,000 14,000 20,000 Depreciation & amortization 155,000 169,000 309,000 334,000 _________ _________ _________ ________ Total restaurant 2,587,000 2,598,000 5,376,000 5,200,000 operating costs INCOME FROM RESTAURANT 665,000 416,000 1,375,000 920,000 OPERATIONS OTHER OPERATING EXPENSES: Selling, general & 562,000 558,000 1,131,000 1,110,000 Administrative expenses Loss, (income) from 13,000 6,000 17,000 12,000 Operating RTC stores _______ _______ _________ _________ Total other operating 575,000 564,000 1,148,000 1,122,000 Expenses INCOME (LOSS) FROM OPERATIONS 90,000 (148,000) 227,000 (202,000) OTHER INCOME & (EXPENSES) Minority income (expense) (90,000) (36,000) (182,000) (81,000) Net Interest, net 0 (15,000) (2,000) (30,000) Loss from RTC & 0 (55,000) 0 (55,000) Las Vegas lease liabilities Other, net 2,000 1,000 9,000 53,000 ______ _______ _______ ________ Total other income (88,000) (105,000) (175,000) (113,000) & expenses NET INCOME (LOSS) $2,000 ($253,000) $52,000 ($315,000) ======= ======== ======= ======== PREFERRED STOCK DIVIDENDS 0 20,000 0 45,000 IN ARREARS NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS $2,000 ($273,000) $52,000 ($360,000) ======== ======== ======= ======== NET INCOME (LOSS) PER $.0 ($.21) $.03 ($.28) COMMON SHARE ======== ======= ====== ======= WEIGHTED AVERAGE COMMON SHARES AND EQUIVALENTS USED IN PER SHARE CALCULATION BASIC 1,764,369 1,306,912 1,757,647 1,301,300 DILUTED 1,796,831 1,306,912 1,783,932 1,301,000
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended Six Months Ended March 31, March 31, 1999 1998 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 2,000 ($253,000) $52,000 ($315,000) Depreciation and 164,000 182,000 327,000 360,000 amortization Changes in operating assets & liabilities-- (Increase) decrease in: Prepaids & 125,000 51,000 17,000 262,000 receivables Inventories 17,000 17,000 3,000 (4,000) Other assets (7,000) 19,000 (8,000) 35,000 Opening expenses 0 0 0 0 (Decrease) increase in: Accounts payable 33,000 (26,000) (1,000) (36,000) Accrued interest 0 0 0 0 Accrued property taxes 33,000 33,000 63,000 39,000 Accrued payroll & 6,000 2,000 (3,000) (10,000) P/R taxes Other accrued liabilities 17,000 24,000 (74,000) (130,000) /deferred income ______ ______ ______ _______ Net cash provided by (Used in) operating activity 390,000 49,000 376,000 201,000 CASH FLOWS FROM INVESTING ACTIVITIES: (Purchase) sale - FF&E, land, building & improvements (89,000) (39,000) (110,000) (142,000) CASH FLOWS FROM FINANCING ACTIVITIES: Debt incurred (paid) (40,000) 63,000 (76,000) 26,000 Minority interest (38,000) (38,000) (75,000) (78,000) Paid in capital activity 300,000 0 316,000 15,000 ------- ------ ------- ------- Net cash provided by 222,000 25,000 165,000 (37,000) (Used in) financing activities INCREASE (DECREASE) IN CASH $ 523,000 $ 35,000 $ 431,000 $22,000
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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 March 31, 1999, the results of its operations and its cash flow for the three month period ended March 31, 1999 and for the six month period ended March 31, 1999. Operating results for the three month period ended March 31, 1999 and for the six month period ended March 31, 1999 are not necessarily indicative of the results that may be expected for the year ending September 30, 1999. The consolidated balance sheet as of September 30, 1998 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, 1998. 2. REVERSE STOCK SPLIT: On February 12, 1998, the shareholders approved a one-for-five reverse stock split of the Company=s Common Stock. All references to number of shares, except shares authorized, and to per share information in the consolidated financial statements have been adjusted to reflect the reverse stock split on a retroactive basis. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE COMPANY General Year 2000 Compliance. Computer programs or other embedded technology that have been written using two digits to define the applicable year and that have time-sensitive logic may recognize a date using A00" as the Year 1900 rather than the Year 2000. This could result in widespread miscalculations or system failures. If we and our vendors and suppliers are unable to address Year 2000 issues in a timely manner, under a worst case scenario it could result in material financial risk, including the loss of revenue and substantial unanticipated costs. Therefore, we plan to devote all resources necessary to resolve significant Year 2000 issues in a timely manner. Both information technology systems and non-IT systems using embedded technology may be affected by the Year 2000. We have initiated an enterprise-wide program to prepare out IT and non-IT systems and applications for the Year 2000. We have completed the assessment phase of our Year 2000 program. We believe that we are fully prepared to implement all computer hardware and software replacements and upgrades by the quarter ending June 30, 1999 and have completed a comprehensive plan for the organization-wide implementation. We expect to incur internal staff costs as well as consulting and other expenses related to our Year 2000 program. We have not completed the process of verification of whether vendors and suppliers with which we have material relationships are year 2000 compliant. We intend to complete this verification process with our vendors and suppliers by the quarter ending June 30, 1999. The process of verification includes contacting each vendor's IT department to determine their state of Year 2000 readiness and requesting written documentation outlining each vendor's Year 2000 compliance plan. We have contacted our major food supplier and have received assurances that such supplier has addressed the Year 2000 issue and the specific actions that are being taken in connection with its business operations. We estimate that expenditures for Year 2000 issues will be approximately $125,000 for fiscal 1999. However, we are not able to determine the total costs for our Year 2000 program or whether the Year 2000 will have a material effect on our financial condition, results of operations or cash flows. This Form 10-QSB contains or incorporates by reference forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended. Also, documents subsequently filed by the Company with the commission and incorporated herein by reference may contain forward-looking statements. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance and that actual results could differ materially from those in the forward-looking statements as a result of various factors, including but not limited to the following: (I) The Company competes with numerous well established competitors who have substantially greater financial resources and longer operating histories than the Company. Competitors have increasingly offered selected food items and combination meals, including hamburgers, at discounted prices, and continued discounting by competitors may adversely affect revenues and profitability of Company restaurants. (II) The Company may be negatively impacted if the Company is unable to sustain same store sales increases that were experienced during the first two quarters of Fiscal 1999. Sales increases will be dependent, among other things, on the success of Company advertising and promotion of new and existing menu items. No assurances can be given that such advertising and promotions will in fact be successful. The Company may also be negatively impacted by other factors common to the restaurant industry such as: changes in consumer tastes away from red meat and fried foods; increases in the cost of food, paper, labor, health care, workers= compensation or energy; and inadequate number of hourly paid employees; and/or decreases in the availability of affordable capital resources. The Company cautions the reader that such risk factors are not exhaustive, particularly with respect to future filings. Drive Thru had twenty-nine units open at March 31, 1998, of which fourteen were franchised units, nine joint-venture units and six company-owned units compared to twenty-seven units open at March 31, 1998, of which eleven were franchised units, nine joint-venture units and seven company-owned units. Management anticipates that Drive Thru and its existing franchisees will develop a total of four to six Good Times units in the Denver ADI in 1999. 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 six months ended March 31, 1998 and the results of the Company and Drive Thru for the three months and six months ended March 31, 1999. Results of Operations Net Revenues. Net restaurant sales for the three months ended March 31, 1999, increased $209,000 (+7%) to $3,191,000 from $2,982,000 for the same prior year period. Net restaurant sales decreased ($246,000) from one company-owned restaurant that was closed in March 1998 due to condemnation of the development (the restaurant will be relocated to a new site in 1999), and one company-owned restaurant that was sold to a franchisee in September 1998. Same store net revenues for company-owned and joint-venture restaurants increased $455,000 (+16.6%) for the three months ended March 31, 1999 from the same prior year period. Franchise revenue increased $29,000 for the three months ended March 31, 1999 due to an increase in franchise royalty income from the same prior year period. Net restaurant sales for the six months ended March 31, 1999 increased $583,000 (+9.7%) to $6,623,000 from $6,040,000 for the same prior year period. Net restaurant sales increased $136,000 from one company-owned restaurant that was not open for the full prior year period. Net restaurant sales decreased ($537,000) from one company-owned unit that was sold to a franchisee in September 1998 and one company-owned unit that was closed in March 1998 due to condemnation of the development (the restaurant will be relocated to a new site in 1999). Same store net restaurant sales for company-owned and joint-venture units increased $984,000 or 18.7% for the six months ended March 31, 1999 from the same prior year period. Of that increase approximately 16.8% was attributable to an increase in the average per person check and approximately 1.9% was attributable to an increase in customer traffic. The increase in average per person check and customer traffic was the result of a new television advertising campaign that was initiated in September 1998 featuring the introduction of a new onion ring product as well as more favorable weather conditions for the six months ended March 31, 1999, compared to the same prior year period. Franchise revenue increased $48,000 for the six months ended March 31, 1999 due to an increase in franchise royalty income from the same prior year period. Food and Paper Costs. Food and paper costs decreased to 35.8% of net restaurant sales for the three months ended March 31, 1999, compared to 35.9% for the same prior year period. Food and paper costs increased to 36.6% of net restaurant sales for the six months ended March 31, 1999 compared to 35.6% for the same prior year period. The increase in Drive Thru=s food and paper costs as a percent of net restaurant sales is primarily attributable to the addition of the new onion ring product introduced in September 1998 and the product's disproportionately high percent of sales. Management has successfully worked to reduce the cost of sales on the onion ring product for the three month period ended March 31, 1999. Additionally a price increase of approximately 5.3% was implemented February 1, 1999 further reducing the cost of sales as a percentage of sales. Labor, Occupancy and Other Expenses. For the three months ended March 31, 1999 Drive Thru=s labor, occupancy and other expenses decreased $64,000 from $1,346,000 (45.1% of net restaurant revenues) to $1,282,000 (40.2% of net restaurant revenues) compared to the same prior year period. For the six months ended March 31, 1999 Drive Thru=s labor, occupancy and other expenses decreased $68,000, from $2,695,000 (44.6% of net restaurant revenues) to $2,627,000 (39.7% of net restaurant revenues) compared to the same prior year period. The decrease in labor, occupancy and other expenses for both the three months and six months ended March 31, 1999 is attributable to 1) the prior year period expenses include two additional restaurants, one of which was closed in March of 1998 and the other was sold to a franchisee in September of 1998; and 2) an increase in same store net restaurant sales, which causes restaurant expenses to decrease as a percentage of net restaurant sales. Depreciation and Amortization Expenses. For the three months ended March 31, 1999 Drive Thru=s depreciation and amortization expenses decreased $14,000, from $169,000 to $155,000 compared to the same prior year period. For the six months ended March 31, 1999 Drive Thru's depreciation and amortization expenses decreased $25,000, from $334,000 to $309,000 compared to the same prior year period. The decrease in depreciation and amortization expenses for both the three months and six months ended March 31, 1999 is attributable to the restaurant that was sold to a franchisee in September 1998. Income From Restaurant Operations. For the three months ended March 31, 1999, income from restaurant operations increased to $665,000 from $416,000 for the same prior year period. Drive Thru=s income from restaurant operations as a percentage of net restaurant sales increased to 20.8% for the three months ended March 31, 1999 from 13.9% for the same prior year period. Cash flow from restaurant operations (income from restaurant operations plus depreciation and amortization) increased to 25.7% of net restaurant sales for the three months ended March 31, 1999 from 19.6% for the same prior year period. For the six months ended March 31, 1999, income from restaurant operations increased to $1,375,000 from $920,000 for the same prior year period. Drive Thru's income from restaurant operations as a percentage of net restaurant sales increased to 20.8% for the six months ended March 31, 1999 from 15.2% for the same prior year period. Cash flow from restaurant operations (income from restaurant operations plus depreciation and amortization) increased to 25.4% of net restaurant sales for the six months ended March 31, 1999 from 20.7% 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; and 2) an increase in same store net restaurant sales, including a weighted average menu price increase of approximately 5.3% on February 1, 1999, which causes restaurant expenses to decrease as a percentage of net restaurant sales. Income (Losses) From Operations. The Company had income from operations of $90,000 in the three months ended March 31, 1999 compared to a loss from operations of ($148,000) for the same prior year period. The improvement in income from operations of $238,000 is primarily attributable to an increase in income from restaurant operations of $249,000, offset by an increase in advertising expenses of $22,000, an increase in the loss from operating RTC stores of $7,000, and a decrease in general and administrative expenses of $18,000 compared to the same prior year period. The Company had income from operations of $227,000 in the six months ended March 31, 1999 compared to a loss from operations of ($202,000) in the same prior year period. The improvement in income from operations of $429,000 is primarily attributable to an increase in income from restaurant operations of $455,000 offset by an increase in advertising expenses of $58,000, an increase in the loss from operating RTC stores of $5,000 and a decrease in general and administrative expenses of $37,000. The increase in advertising expenses for both the three months and six months ended March 31, 1999 is attributable to increased contributions to the advertising cooperative due to increased net restaurant sales compared to the same prior year periods and a higher contribution rate of 6% of net restaurant sales compared to 5.5% of net restaurant sales in the same prior year periods. The decrease in general and administrative expenses for both the three months and six months ended March 31, 1999 is primarily attributable to a reduction in corporate office rent expense as well as reductions in professional services costs and financial relations expenses compared to the same prior year periods. Net Income (Loss). The net income for the Company was $2,000 for the three months ended March 31, 1999 compared to a net loss for the Company of ($253,000) for the same prior year period. Minority interest expense increased $54,000 in the three months ended March 31, 1999 from the same prior year period. This increase was attributable to the improved income from restaurant operations from the joint-venture units compared to the same prior year period. Net interest expense decreased $15,000 for the three months ended March 31, 1999 from the same prior year period. This decrease was attributable to a reduction in interest expense of $8,000 and an increase in interest income of $7,000 compared to the same prior year period. The loss from RTC and Las Vegas lease liabilities decreased $55,000 for the three months ended March 31, 1999 compared to the same prior year period. During the three months ended March 31, 1998 there was a loss of ($55,000) due to an increase in the reserve for future lease liabilities from one RTC restaurant. For the six months ended March 31, 1999, the net income for the Company was $52,000 compared to a net loss for the Company of ($315,000) for the same prior year period. Minority interest expense increased $101,000 in the six months ended March 31, 1999 from the same prior year period. Other income for the six months ended March 31, 1999 decreased $44,000 from the same prior year period. Included in other income for the six months ended March 31, 1998 was a gain of $53,000 related to the sale of a long-term land investment held by the Company. Liquidity and Capital Resources As of March 31, 1999, the Company and Drive Thru had $1,198,000 cash and cash equivalents on hand. The Company=s cash balance and cash generated from operations will be used for the development of Company operated restaurants and other general corporate purposes. The Company had a working capital surplus of $384,000 as of March 31, 1999. During the three months ended March 31, 1999 the Company completed an agreement for the sale of 350,000 shares of restricted common stock at $3 per share. Of the $1,050,000 total proceeds, $300,000 was received on March 31, 1999 and the balance of $750,000 is due on June 30, 1999. The Company also completed a lease agreement for up to $100,000 for upgrading its Management Information Systems hardware and software and is negotiating a financing commitment of $1.5 million for new buildings and equipment in addition to the $3 million mortgage financing commitment in place. Management anticipates developing two new franchised restaurants and two to three new company-owned restaurants during the balance of fiscal 1999. Cash flow from operating activities for the three months ended March 31, 1999 includes the receipt of $166,000 from the Good Times Advertising Cooperative for a short term loan repayment. Cash flow from investing activities for the three months ended March 31, 1999 of $89,000 includes $35,000 of recurring restaurant related capital expenditures, $32,000 for a building exterior remodel and $22,000 for new restaurant development costs. Cash flow from financing activities for the three months ended March 31, 1999 includes proceeds of $300,000 from the private sale of common stock. For the six months ended March 31, 1999, cash increased $430,000. Cash provided by operations was $376,000, cash used in investing activities was $110,000 and cash provided by financing activities was $165,000. Cash provided by financing activities for the six months ended March 31, 1999 includes $300,000 received from the private common stock sale offset by debt reduction of $76,000 and a reduction in minority interest of $75,000. 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 Good Times Restaurants is not involved in any material legal proceedings. Good Times Restaurants is subject to legal proceedings which are incidental to its business. These legal proceedings are not expected to have a material impact on Good Times Restaurants. Item 2. - Changes in Securities On April 6, 1999, the Good Times Restaurants board of directors resolved to extend the expiration date of its Series A Warrants and Series B Warrants (as discussed below), from April 12, 1999 to June 30, 1999 and to reduce the exercise price of its Series A Warrants and Series B Warrants to $3.00 per share. The Series A Warrants consist in the aggregate of 215,003 warrants which were issued by Good Times Restaurants in connection with a Form S-3 Registration Statement in 1993 and public offerings in 1992, 1990 and 1989. The Series B Warrants were issued by Good Times Restaurants in connection with a public offering in 1994 of up to 321,600 units, with each unit consisting of two shares of common stock and one redeemable warrant to purchase one share of common stock. Item 3. - Defaults Upon Senior Securities None. Item 4. - Submission of Matters to a Vote of Security Holders On January 22, 1999, Good Times Restaurants held its annual meeting of shareholders. At that meeting the following matters were voted upon as indicated below: 1. Election of the following directors to serve during the ensuing year: FOR WITHHOLD GEOFFREY R. BAILEY 628,565 1,240 DAN W. JAMES, II 628,565 1,240 BOYD E. HOBACK 628,565 1,240 RICHARD J. STARK 628,565 1,240 THOMAS P. MCCARTY 628,565 1,240 ALAN A. TERAN 628,565 1,240 DAVID E. BAILEY 628,557 1,240 2. Proposal to increase the number of shares of Good Times Restaurants common stock authorized under the 1992 Incentive Stock Option Plan from 150,000 to 525,000. For: 582,626 Against: 42,529 Abstain: 4,650 _______ ______ _____ 3. Proposal to increase the number of shares of Good Times Restaurants common stock authorized under the 1992 Non-Statutory Stock Option Plan from 60,000 to 125,000. For: 582,366 Against: 42,789 Abstain: 4,650 _______ ______ _____ Item 5. - Other Information None. Item 6. - Exhibits and Reports on Form 8-K (a) Exhibits. The following exhibits are furnished as part of this report: Exhibit No. Description 4.1 Fourth Amended and Restated Warrant Agreement made effective as of February 10, 1999 between Good Times Restaurants Inc. and American Securities Transfer, Inc. regarding the Series A Warrants of Good Times Restaurants Inc. (Filed as Exhibit 7.1 to the Good Times Restaurants Inc. Current Report on Form 8-K dated April 6, 1999 and incorporated herein by reference). 4.2 Second Amended and Restated Warrant Agreement made effective as of February 10, 1999 between Good Times Restaurants Inc. and American Securities Transfer, Inc. regarding the Series B Warrants of Good Times Restaurants Inc. (Filed as Exhibit 7.2 to the Good Times Restaurants inc. Current Report on Form 8-K dated April 6, 1999 and incorporated herein by reference). 10.1 Agreement between Good Times Restaurants Inc. and The Bailey Company dated March 12, 1999 for the purchase by The Bailey Company of 350,000 shares of Good Times Restaurants common stock.* 27.1 Financial Data Schedule.* (b) During the quarter for which this report is filed, Good Times Restaurants filed the following report on Form 8-K: Current Report on Form 8-K dated March 17, 1999, which reported under Item 5, Other Events, that Good Times Restaurants had entered into an agreement to sell 350,000 shares of its common stock at $3.00 per share to The Bailey Company, a principal shareholder of Good Times Restaurants. *filed herewith 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 _________ and Chief Executive Officer BY:/s/ Sue Knutson, Controller EX-1 2 March 12, 1999 The Bailey Company, LLLP 601 Corporate Circle Golden, CO 80401 Attention: Mr. William D. Whitehurst Chief Financial Officer and Vice President Gentlemen: This letter will set forth the agreement between Good Times Restaurants Inc. ("Good times") and The Bailey Company, LLLP with respect to the purchase by The Bailey Company, LLLP and persons or entities controlling, controlled by or under common control with it, all of which are tegether hereinafter referred to as "Bailey", of shares of Good Times common stock (the "Stock"). 1. On March 31, 1999, (the "First Closing") Bailey shall purchase from Good Times 100,000 shares of Stock at a purchase price of $3.00 per share for an aggregate purchase price of $300,000. On June 30, 1999, or upon such earlier date as Bailey obtains a loan intended to be utilized in part for the purchase of the Stock (the "Second Closing") Bailey shall purchase from Good Times 250,000 shares of Stock at a purchase price of $3.00 per share for an aggregate purchase price of $750,000. At each Closing, Bailey shall pay the purchase price to Good Times in cash and Good Times shall issue a certificate for the Stock to such entity or entities as designated by Bailey. Notwithstanding the foregoing, Bailey shall not be required to purchase the Stock at the Second Closing if prior thereto there has benn a substantial adverse change in the business, financial condition or future prospects of Good Times involving, for example, a disease caused by Good Times' food products, commencement of a bankruptcy proceeding or comparable catastrophic occurrence. 2. At the Second Closing, Good Times shall issue to Bailey a warrant entitling Bailey to purchase at any time or times on or before March 31, 2004, up to 25,000 shares of common stock of Good Times at a purchase price of $4.00 per share (the "Warrant"). Notwithstanding the foregoing, (I) the Warrant shall terminate prior to March 31, 2004, upon any acquisition of substantially all of the assets or capital stock of Good Times (an "Acquisition"); (ii) Bailey shall receive thirty days prior written notice of an Acquisition; and (iii) Bailey shall have the right to exercise the Warrant prior to the closing of an Acquisition. Upon each exercise of the Warrant, Bailey shall pay the Warrant exercise price to Good Times in cash and Good Times shall issue a certificate for the purchased common stock of Good Times to such entity or entities as diesngnated by Bailey. The Warrant shall contain reclassification of the common stock of Good Times or as a result of a divident paid in common stock of Good Times. The Warrant shall contain such other terms and conditions as are customary and as are approved by Bailey, with such approval not to be unreasonably withheld. EX-2 3 [ARTICLE] 5 [PERIOD-TYPE] 3-MOS [FISCAL-YEAR-END] SEP-30-1999 [PERIOD-END] MAR-31-1999 [CASH] 1,198,000 [SECURITIES] 0 [RECEIVABLES] 246,000 [ALLOWANCES] 0 [INVENTORY] 49,000 [CURRENT-ASSETS] 1,618,000 [PP&E] 7,653,000 [DEPRECIATION] (2,952,000) [TOTAL-ASSETS] 6,779,000 [CURRENT-LIABILITIES] 1,234,000 [BONDS] 0 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [COMMON] 2,000 [OTHER-SE] 3,050,000 [TOTAL-LIABILITY-AND-EQUITY] 6,779,000 [SALES] 3,191,000 [TOTAL-REVENUES] 3,252,000 [CGS] 1,143,000 [TOTAL-COSTS] 2,587,000 [OTHER-EXPENSES] 575,000 [LOSS-PROVISION] 0 [INTEREST-EXPENSE] 0 [INCOME-PRETAX] 2,000 [INCOME-TAX] 0 [INCOME-CONTINUING] 0 [DISCONTINUED] 0 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] 2,000 [EPS-PRIMARY] 0 [EPS-DILUTED] 0
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