-----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, GrQWt+HVavlDeGZ8RITSy96TQwwePuT9uDzwzkPvAjD3If2AndeOBXDC9TPtRY6W P99WPkvjrSlZBWjV/pxzdg== 0001076636-99-000007.txt : 19990201 0001076636-99-000007.hdr.sgml : 19990201 ACCESSION NUMBER: 0001076636-99-000007 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990129 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: SEC FILE NUMBER: 000-18590 FILM NUMBER: 99516326 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, 1998 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) 384-1440 ______________ (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, 1998. 1,754,991 SHARES OF COMMON STOCK, .001 PAR VALUE ________________________________________________ Form 10-QSB Quarter Ended December 31, 1998 INDEX _____ PAGE PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Balance Sheets - 3 December 31, 1998 and September 30, 1998 Consolidated Statements of Operations 5 For the three months ended December 31, 1998 and 1997 Consolidated Statement of Cash Flow - 6 For the three months ended December 31, 1998 and 1997 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, 1998 1998 CURRENT ASSETS: Cash and cash equivalent $ 676,000 $ 768,000 Receivables 376,000 281,000 Inventories 66,000 52,000 Prepaid expenses and other 21,000 8,000 Notes receivable 54,000 42,000 __________ __________ Total current assets 1,193,000 1,151,000 PROPERTY AND EQUIPMENT, at cost: Land and building 2,511,000 2,511,000 Leasehold improvements 2,303,000 2,298,000 Fixtures and equipment 2,751,000 2,735,000 __________ __________ 7,565,000 7,544,000 Less accumulated depreciation and amortization (2,788,000) (2,625,000) ___________ ___________ 4,777,000 4,919,000 OTHER ASSETS: Notes receivable 466,000 483,000 Deposits & other 31,000 25,000 __________ __________ 497,000 508,000 __________ __________ TOTAL ASSETS $6,467,000 $6,578,000 ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $ 68,000 $ 96,000 Accounts payable 407,000 441,000 Accrued liabilities - Las Vegas 14,000 16,000 Accrued liabilities - RTC 142,000 148,000 Accrued liabilities - other 533,000 564,000 _________ __________ Total current liabilities 1,164,000 1,265,000 LONG-TERM LIABILITIES: Debt 456,000 463,000 Las Vegas accrued liabilities 121,000 124,000 RTC accrued liabilities 256,000 291,000 Deferred liabilities 295,000 288,000 _________ __________ Total long-term liabilities 1,128,000 1,166,000 MINORITY INTERESTS IN PARTNERSHIPS 1,427,000 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.) December 31, September 30, 1998 1998 Common stock, $.001 par value; 50,000,000 shares authorized, 1,754,991 shares issued and outstanding as of December 31, 1998 and 1,747,919 shares issued and outstanding as of September 30, 1998 2,000 2,000 Capital contributed in excess of par value 11,867,000 11,851,000 Accumulated deficit (9,121,000) (9,171,000) __________ __________ Total stockholders' equity 2,748,000 2,682,000 __________ __________ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,467,000 $6,578,000 ========== ==========
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended December 31, 1998 1997 NET REVENUES: Restaurant sales, net $3,432,000 $3,058,000 Franchise revenues, net 67,000 49,000 __________ __________ Total revenues 3,499,000 3,107,000 RESTAURANT OPERATING EXPENSES: Food & paper costs 1,283,000 1,078,000 Labor, occupancy & other 1,345,000 1,350,000 Accretion of deferred rent 7,000 10,000 Depreciation & amortization 154,000 165,000 __________ __________ Total restaurant operating costs 2,789,000 2,603,000 INCOME FROM RESTAURANT OPERATIONS 710,000 504,000 OTHER OPERATING EXPENSES: Selling, general & administrative expenses 569,000 553,000 Loss (Income) from operating RTC stores 4,000 7,000 _________ _________ Total other operating costs 573,000 560,000 INCOME (LOSS) FROM OPERATIONS 137,000 (56,000) OTHER INCOME & (EXPENSES) Minority income (expense), net (92,000) (44,000) Interest, net (2,000) (14,000) Other, net 7,000 52,000 _________ _________ Total other income & (expenses) (87,000) (6,000) NET INCOME (LOSS) $ 50,000 $ (62,000) ========= ========= PREFERRED STOCK DIVIDENDS IN ARREARS -0- 20,000 _________ __________ NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS $ 50,000 $ (82,000) ========= ========= BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE $ .03 $ (.06) ========= ========== WEIGHTED AVERAGE COMMON SHARES AND EQUIVALENTS USED IN PER SHARE CALCULATION: BASIC 1,751,071 1,304,037 ========== ========== DILUTED 1,770,593 N/A ========== ==========
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended December 31, 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 50,000 $(62,000) Depreciation and amortization 163,000 177,000 Changes in operating assets & liabilities -- (Increase) decrease in: Prepaids & receivables (108,000) 210,000 Inventories (14,000) (21,000) Other assets (1,000) 16,000 Opening expenses -0- 1,000 (Decrease) increase in: Accounts payable (34,000) (9,000) Accrued interest -0- -0- Accrued property taxes 30,000 6,000 Accrued payroll & P/R taxes (9,000) (13,000) Other accrued liabilities/ deferred income (91,000) (154,000) Net cash provided by (used in) operating activities (14,000) 151,000 CASH FLOWS FROM INVESTING ACTIVITIES: (Purchase) sale - FF&E, land, building and improvements (21,000) (103,000) CASH FLOWS FROM FINANCING ACTIVITIES: Debt incurred (paid) (36,000) (36,000) Minority interest (37,000) (40,000) Paid in capital activity 16,000 15,000 _________ _________ Net cash provided by (used in) financing activities (57,000) (61,000) INCREASE (DECREASE) IN CASH $ (92,000) $ (13,000) ========= =========
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. UNAUDITED 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, 1998, the results of its operations and its cash flow for the three months ended December 31, 1998. Operating results for the three months ended December 31, 1998 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 (rather than four) to define the applicable year and that have time-sensitive logic may recognize a date using "00" as the Year 1900 rather than the Year 2000, which could result in widespread miscalculations or system failures. Both information technology ("IT") systems and non-IT systems using embedded technology may be affected by the Year 2000. The Company has initiated an enterprise-wide program to prepare the Company's IT systems and applications for the Year 2000. The Company has completed the assessment phase of its Year 2000 program and expects to incur internal staff costs as well as consulting and other expenses related to the Company's Year 2000 program. In addition, the Company has not completed the process of verification of whether vendors and suppliers with which the Company has material relationships are Year 2000 compliant, however the Company has contacted its major food supplier and has been told that such supplier has addressed the Year 2000 issue in connection with its business operations. If the Company and such third parties are unable to address Year 2000 issues in a timely manner, it could result in material financial risk to the Company, including the loss of revenue and substantial unanticipated costs. Accordingly, the Company plans to devote all resources necessary to resolve significant Year 2000 issues in a timely manner. Expenditures for Year 2000 issues are currently estimated to be $125,000 in fiscal 1999. The Company however is not able to determine the total costs for its Year 2000 program or whether the Year 2000 will have a material effect on the Company's 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 quarter 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; an 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 December 31, 1998, of which fourteen were franchised units, nine joint-venture units and six company-owned units compared to twenty-eight units open at December 31, 1997, of which eleven were franchised units, nine joint-venture units and eight 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 ended December 31, 1997 and the results of the Company and Drive Thru for the three months ended December 31, 1998. Results of Operations _____________________ Net Revenues. Net revenues for the three months ended December 31, 1998, increased $392,000 (+12.6%) to $3,499,000 from $3,107,000 for the same prior year period. Net revenues increased $113,000 due to one company-owned restaurant that was not open for the full prior year period. Net revenues decreased ($291,000) 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 $552,000 (20.6%) for the three months ended December 31, 1998 from the same prior year period, of that increase approximately 16.6% was attributable to an increase in the average per person check and approximately 4.0% 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 three months ended December 31, 1998, Compared to the same prior year period. Franchise revenue increased $18,000 for the three months ended December 31, 1998 due to an increase in franchise royalty income over the same prior year period. Food and Paper Costs. Food and paper costs were 37.4% of net restaurant sales for Drive Thru for the three months ended December 31, 1998, compared to 35.3% for the same prior year period. The increase in Drive Thru's food and paper costs is primarily attributable to the addition of the new onion ring product introduced in September 1998 and the product's disproportionately high percentage of sales. Management is actively working to reduce the cost of sales on the onion ring product. Additionally a price increase will be implemented on February 1, 1999 and cost of sales is anticipated to be reduced by 1.5%. Income From Restaurant Operations. For the three months ended December 31, 1998 income from restaurant operations increased to $710,000 from $504,000 for the same prior year period. Drive Thru's income from restaurant operations as a percentage of net restaurant sales increased to 20.7% for the three months ended December 31, 1998 from 16.5% for the three months ended December 31, 1997. Cash flow from restaurant operations (income from restaurant operations plus depreciation and amortization) increased to 25.2% of net restaurant sales for the three months ended December 31, 1998 from 21.9% 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 3.5%, which causes restaurant expenses to decrease as a percentage of net restaurant sales. Income (Losses) From Operations. The Company had income from operations of $137,000 for the three months ended December 31, 1998 compared to a loss from operations of ($56,000) for the three months ended December 31, 1997. The improvement in income from operations of $193,000 is primarily attributable to an increase in income from restaurant operations of $206,000 and a decrease in general and administrative expenses of $20,000, offset by an increase in advertising expenses of $36,000, compared to the same prior year period. The increase in advertising expenses is attributable to increased contributions to the advertising cooperative due to increased net restaurant sales compared to the same prior year period and a higher contribution rate of 6% of net restaurant sales compared to 5.5% of net restaurant sales in the same prior year period. The decrease in general and administrative expenses is primarily attributable to a reduction in corporate office rent expense as well as a reduction in professional services costs compared to the same prior year period. Net Income (Loss). The net income for the Company was $50,000 for the three months ended December 31, 1998 compared to a net loss for the Company of ($62,000) for the comparable prior year period. Minority interest expense increased $48,000 in the three months ended December 31, 1998 from the same prior year period. This was attributable to the improved income from restaurant operations of the Colorado joint-venture units compared to the same prior year period. Net interest expense decreased $12,000 for the three months ended December 31, 1998 from the same prior year period, attributable to a reduction in interest expense of $5,000 and an increase in interest income of $7,000. Other net income for the three months ended December 31, 1998 includes a gain of $7,000 related to the settlement of a securities loss from 1995. Liquidity and Capital Resources _______________________________ As of December 31, 1998, the Company and Drive Thru had $676,000 cash and cash equivalents on hand. The Company's cash balance and cash generated from operations will be used for increasing the Company's working capital reserves and for the development of new restaurants. Management believes this will be sufficient to cover the working capital needs of the Company for the 1999 fiscal year. The Company had a working capital excess of $29,000. During fiscal 1998, the Company executed a commitment letter with Safeco Credit Company for up to $3,000,000 in mortgage debt financing for the development of the new prototype restaurants, including the purchase of land underlying the restaurants. Management is seeking additional debt and lease financing for the development of additional company-owned double drive thru restaurants. Cash flow from operating activities for the three months ended December 31, 1998 includes the outlay of $166,000 for a short term loan made to the Good TimesAdvertising Cooperative. Subsequent to December 31, 1998 the Company has been paid in full for this loan. Cash flow from investing activities for the three months ended December 31, 1998 of $21,000 consists of recurring restaurant related capital expenditures. Cash flow from financing activities for the three months ended December 31, 1998 includes the issuance of $16,000 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. - Legal Proceedings O'Brien v. Harkins and Good Times Drive Thru Inc. On October 19, _________________________________________________ 1998 the Company settled this action against it by a past employee for $20,000. Such actiion was first reported in the Company's 10-QSB for the period ended March 31, 1998. Item 2. - Changes in Securities None. Item 3. - Defaults upon Senior Securities None. Item 4. - Submission of Matters to a Vote of Security Holders None. Item 5. - Other Information None. 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: January 28, 1999 /s/ Boyd E. Hoback ________________ __________________________ Boyd E. Hoback, President & Chief Executive Officer BY: /s/ Sue Knutson __________________________ Sue Knutson, Controller & Secretary/Treasurer EX-27 2
5 3-MOS SEP-30-1999 DEC-31-1998 676,000 0 376,000 0 66,000 1,193,000 7,565,000 (2,788,000) 6,467,000 1,164,000 0 0 0 2,000 2,748,000 6,467,000 3,432,000 3,499,000 1,283,000 2,789,000 573,000 0 (2,000) 50,000 0 0 0 0 0 50,000 .03 .03
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