Nevada
|
84-1133368
|
|
(State or other jurisdiction of incorporation or
organization)
|
(I.R.S. Employer Identification Number)
|
141 Union Blvd., #400, Lakewood, Colorado
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80228
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Name of each exchange on which registered
|
Common Stock $.001 par value
|
NASDAQ Capital Market
|
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
|
Yes oNo x
|
||
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
|
Yes oNo x
|
||
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 and (2) has been subject to such filing requirements for the past 90 days.
|
Yes xNo o
|
||
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)
|
Yes xNo o
|
||
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
|
x
|
||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer”, “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
|
|||
Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer oSmaller Reporting Companyx
|
|||
Indicate by check mark whether the registration is a shell company (as defined in Rule 12b-2 of the Exchange Act).
|
Yes oNo x
|
||
As of December 16, 2015, the aggregate market value of the 11,192,942 shares of common stock held by non-affiliates of the registrant, based on the closing sales price of the common stock on December 16, 2015 of $4.47 per share as reported on the NASDAQ Capital Market, was $50,032,451.
|
|||
As of December 16, 2015, the registrant had 12,259,550 shares of common stock outstanding.
|
PAGE
|
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PART I
|
||
4
|
||
16
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||
23
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23
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23
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23
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PART II
|
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24
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||
25
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||
26
|
||
32
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32
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32
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33
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33
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PART III
|
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34
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34
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34
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34
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34
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PART IV
|
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35
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||
38 |
BUSINESS
|
|
·
|
The Good Times brand has had twenty-one consecutive quarters of same store sales growth.
|
|
·
|
We had a 6.9% increase in same store sales for the fiscal year ended September 30, 2015 (“fiscal 2015”) in addition to the increase in same store sales for fiscal 2014 of 14.6%.
|
|
·
|
We ended fiscal 2015 with $13.8 million in cash and total notes payable of $3.7 million.
|
|
·
|
Our net revenues for fiscal 2015 increased by $16,314,000 (+58.8%) to $44,057,000 from $27,743,000 in fiscal year 2014, primarily due to increased same store sales at Good Times, the opening of two Good Times and one Bad Daddy’s locations during fiscal 2015, and the inclusion of revenues for the Bad Daddy’s locations acquired on May 7, 2015.
|
|
·
|
Our loss from operations was $239,000 in fiscal 2015 compared to $219,000 in fiscal 2014. Fiscal 2015 included $648,000 of acquisition costs related to the BDI acquisition.
|
|
·
|
Our net loss was $300,000 for fiscal 2015 compared to $370,000 for fiscal 2014, including $784,000 and $669,000 of preopening costs in fiscal 2015 and fiscal 2014, respectively.
|
|
·
|
During fiscal 2012, we began a reimaging and remodeling program for our older Good Times restaurants that continued through fiscal 2015 and that we plan to continue into fiscal 2016. In fiscal 2015 we spent approximately $1,592,000 on recurring and remodeling capital expenditures and we plan to spend approximately $1,250,000 on recurring and remodeling capital expenditures in fiscal 2016.
|
|
·
|
We believe Good Times is the only quick service restaurant concept in Colorado offering all natural beef, chicken and bacon with no hormones, no steroids, no antibiotics and humanely raised, vegetarian fed animals with no animal byproducts in the feed in all of our hamburger, chicken and bacon menu items.
|
|
·
|
We continued our television campaign in fiscal 2015 that began in March of 2013 with four distinct product windows, communicating Good Times’ core brand attributes of fresh, all natural, hand crafted products with taste profiles available only at Good Times, which has contributed to our continued same store sales increases through fiscal 2015.
|
|
·
|
We opened two Good Times restaurants in fiscal 2015, each with new interior design finishes and décor that we believe continues to help set Good Times apart from mainstream hamburger quick service restaurants, utilizing finishes and design elements more commonly seen in fast casual restaurants. We plan to build additional Good Times Burgers & Frozen Custard company-owned restaurants in Colorado, utilizing our 2,200 square foot, 48 seat dining room design, our 2,400 square foot, 70 seat dining room design as well as converting buildings from other restaurant concepts.
|
|
·
|
Our third Bad Daddy’s restaurant in Colorado opened on January 7, 2015 and we completed the acquisition of BDI in May 2015, which added seven additional restaurants. We opened two additional Bad Daddy’s restaurants subsequent to the end of fiscal 2015 and plan to open several more during fiscal 2016.
|
Good Times
Ownership
|
Royalty Rate
to BDFD
|
||||||||||||||||||||
Location
|
Date
Opened
|
Type
|
Pre
|
Post
|
Pre
|
Post
|
|||||||||||||||
Acquisition
|
Acquisition
|
||||||||||||||||||||
Huntersville, NC (Birkdale)
|
2012
|
Company
|
0 | % | 100 | % | 1 | % | 0 | % | (1) | ||||||||||
Charlotte, NC
|
2007
|
Company
|
0 | % | 100 | % | 1 | % | 0 | % | (1) | ||||||||||
Ballantyne, NC
|
2009
|
Company
|
0 | % | 100 | % | 1 | % | 0 | % | (1) | ||||||||||
Raleigh, NC
|
2012
|
Joint-Venture
|
0 | % | 51 | % | 1 | % | 1 | % | |||||||||||
Winston-Salem, NC
|
2014
|
Joint-Venture
|
0 | % | 24 | % | 1 | % | 1 | % | |||||||||||
Cary, NC
|
2013
|
Joint-Venture
|
0 | % | 53 | % | 1 | % | 1 | % | |||||||||||
Mooresville, NC
|
2015
|
Company
|
0 | % | 100 | % | 1 | % | 0 | % | (1) | ||||||||||
Denver, CO (Northglenn)
|
2014
|
Company
|
100 | % | 100 | % | 3 | % | 0 | % | (1) | ||||||||||
Denver, CO (Cherry Creek)
|
2014
|
Company
|
100 | % | 100 | % | 3 | % | 0 | % | (1) | ||||||||||
Denver, CO (Southlands)
|
2015
|
Company
|
100 | % | 100 | % | 3 | % | 0 | % | (1) | ||||||||||
Knoxville, TN
|
2015
|
Franchise
|
0 | % | 0 | % | 3 | % | 3 | % | (2) | ||||||||||
Greensville, SC
|
2013
|
Franchise
|
0 | % | 0 | % | 3 | % | 3 | % | |||||||||||
Charlotte Airport
|
2011
|
License
|
0 | % | 0 | % | 0 | % | 4.25 | % | (3) |
|
(1)
|
100% Company-owned stores no longer pay a royalty following completion of our acquisition of BDI
|
|
(2)
|
Knoxville royalty escalates from 3% in 2015 to 4% in 2016 and 5% in 2017.
|
|
(3)
|
Charlotte airport pays a royalty fee of 4.25% of gross revenue directly to Good Times through its 100% ownership of BDI.
|
|
·
|
Values. Each brand focuses on developing behaviors and expectations around our core values of Integrity, Respect, Continued Improvement, and Fun.
|
|
·
|
People. Each brand seeks to hire high quality people throughout and provide them with comprehensive training programs designed to ensure that they deliver consistently superior products and service. Each has an incentive program at the restaurant level based on balanced metrics that drive customer service, personnel development, and financial performance.
|
|
·
|
Distinctive quality. Each brand strives to offer unique, high quality menu items with distinctive taste profiles made with fresh, high quality ingredients.
|
|
·
|
Excellent systems. Each brand takes a “best practices” approach, cross-pollinating the best ideas that are applicable to either brand. We seek to provide the best operating systems and processes to ease the administrative burden of management, enabling them to focus on leading their team members. Our philosophy is that systems and processes drive financial success and leadership serves as an example and motivating force to our crew members who interact with our guests, driving sales and customer loyalty.
|
|
·
|
Good Times is a 28 year old company with a vibrant, high quality brand position in Colorado.
|
|
·
|
We have a relatively low level of bank debt, a healthy balance sheet with positive cash flow from operations and twenty-one consecutive quarters of same store sales growth at Good Times.
|
|
·
|
We now own the Bad Daddy’s Burger Bar concept, which we believe is an exciting new, emerging growth concept.
|
|
·
|
We have an existing infrastructure with sophisticated systems and processes in place that can be significantly leveraged with a new growth concept.
|
1.
|
Pursue Disciplined Growth of Company-operated Bad Daddy’s Burger Bar Restaurants. We have opened two new Bad Daddy’s restaurants in Colorado subsequent to September 30 2015, have additional restaurants under construction to open in fiscal 2016 and we are in various stages of lease negotiation for additional sites for development in 2016 and 2017. Additionally, we have one lease signed for a new restaurant in Charlotte, North Carolina and one in Raleigh, North Carolina with expected openings in 2017 and we plan to pursue additional sites for development in Charlotte, Raleigh and other cities in North Carolina. We intend to follow a disciplined strategy of initially developing restaurants in other metropolitan areas in the Mid-Atlantic region and in states contiguous to Colorado that meet our demographic, real estate and investment criteria in order to maximize the efficiency of our regional and brand management and cost control.
|
2.
|
Develop joint venture and/or franchised Bad Daddy’s. We believe Bad Daddy’s market position and return on capital will attract considerable interest from experienced restaurateurs to franchise or joint venture the concept. Prior to aggressively pursuing this option, however, we intend to further demonstrate the brand’s appeal through the development of additional company-operated restaurants. We believe that by further proving the consumer acceptance and successful financial performance of the brand we will attract the highest quality development partners. Our goal is to continue to explore and refine purchasing efficiencies, menu engineering and product development, labor efficiencies, restaurant staffing strategies and restaurant operating systems to reduce the total combined cost of sales and total labor and benefits costs (“Prime Costs”) for the Bad Daddy’s concept.
|
3.
|
Remodel/Refresh our Good Times restaurants. There are two levels to our remodel program that began in fiscal 2012: a refreshing of the restaurant exterior that includes painting, landscaping, new exterior finishes, new graphics and signage and upgraded patio accoutrements; and a larger scale remodeling of the restaurant that includes new dining room finishes and décor and the rebuilding of select locations. We have remodeled one and refreshed thirteen company-owned restaurants, and refreshed four franchised restaurants to date, and plan on refreshing and remodeling additional company-owned and franchised locations during fiscal 2016 and 2017. We anticipate that Good Times will generate sufficient cash flow from operations in fiscal 2016 and 2017 to fund its refresh and remodel capital expenditures. The specific sales increases attributable to the remodel/refresh program are difficult to quantify due to the overall sales growth in all our restaurants. However, we believe that the refresh and remodel investment brings the restaurants up to our current brand standards, improves the appearance and street appeal of the restaurants, improves the overall customer experience and supports the brand’s quality positioning.
|
4.
|
Expand the number of Good Times Burger & Frozen Custard locations. We opened two new locations in Denver during fiscal 2015 and have one purchase agreement signed and additional sites under negotiation in Colorado for future development. In evaluating the cost of real estate, the competitive environment and the cost of labor in new markets outside of Colorado for potential development of Good Times, we believe it is in our best interest to continue to develop Good Times in Colorado as sties become available and focus our new unit growth on Bad Daddy’s.
|
5.
|
Increase same-store sales in both brands. We intend to continue to focus on increasing our same-store sales, although we believe the rate of increase is likely to moderate as we compare to a high rate of prior year increases. We plan to further strengthen our fresh, handcrafted, all natural brand position with menu innovation and quality improvements in each of our menu categories, such as our recent introduction of all natural Bacon, Smothered Fries, Summer Shakes, and all natural Flavored Tenders. We will also continue our broadcast marketing program while expanding our social media activities to elevate our online consumer facing conversation around the attributes of our all natural platform for each of our core products. We believe that the completion of the remodeling and reimaging of our Good Times restaurants will positively impact our same-store sales trends over time. We intend to increase Bad Daddy’s same store sales through continual innovation in both ongoing menu engineering and chef-special temporary menu items that we believe drive increased customer visits as well as the per person average check. We also plan to promote our local, microbrew craft beer selections at each restaurant and increase our employees’ knowledge of each beer’s attributes and taste profile. Bad Daddy’s marketing is targeted to individual trade areas, community involvement and “four wall” marketing activities that focus on optimizing the guests’ food, bar and service experience.
|
Company-Owned/Co-Developed/Joint Venture
|
|||||||||||||||||||||||||
State
|
Good Times Burgers &
Frozen Custard
|
Bad Daddy’s
Burger Bar
|
Total
|
||||||||||||||||||||||
2015
|
2014
|
2015
|
2014
|
2015
|
2014
|
||||||||||||||||||||
Colorado
|
27 | 26 | 5 | 2 | 32 | 28 | |||||||||||||||||||
North Carolina
|
0 | 0 | 7 | 0 | 7 | 0 | |||||||||||||||||||
Total:
|
27 | 26 | 12 | 2 | 39 | 28 |
Franchise/License
|
|||||||||||||||||||||||||
State
|
Good Times Burgers &
Frozen Custard
|
Bad Daddy’s
Burger Bar
|
Total
|
||||||||||||||||||||||
2015
|
2014
|
2015
|
2014
|
2015
|
2014
|
||||||||||||||||||||
Colorado
|
9 | 9 | 0 | 0 | 9 | 9 | |||||||||||||||||||
North Carolina
|
0 | 0 | 1 | 0 | 1 | 0 | |||||||||||||||||||
South Carolina
|
0 | 0 | 1 | 0 | 1 | 0 | |||||||||||||||||||
Tennessee
|
0 | 0 | 1 | 0 | 1 | 0 | |||||||||||||||||||
Wyoming
|
2 | 2 | 0 | 0 | 2 | 2 | |||||||||||||||||||
Total:
|
11 | 11 | 3 | 0 | 14 | 11 |
|
·
|
Restaurant point of sale;
|
|
·
|
Restaurant back-of-house;
|
|
·
|
Financial;
|
|
·
|
Payroll/human resources; and
|
|
·
|
Internal operational reports.
|
·
|
the effects of our recent completion of the acquisition of BDI;
|
·
|
realizing the synergies contemplated by the acquisition of BDI;
|
·
|
effectively and timely integrating BDI;
|
·
|
business objectives and strategic plans;
|
·
|
operating strategies;
|
·
|
our ability to open and operate additional restaurants profitably and the timing of such openings;
|
·
|
restaurant and franchise acquisitions;
|
·
|
anticipated price increases;
|
·
|
expected future revenues and earnings, comparable and non-comparable restaurant sales, results of operations, and future restaurant growth (both company-owned and franchised);
|
·
|
estimated costs of opening and operating new restaurants, including general and administrative, marketing, franchise development and restaurant operating costs;
|
·
|
anticipated selling, general and administrative expenses and restaurant operating costs, including commodity prices, labor and energy costs;
|
·
|
future capital expenditures;
|
·
|
our expectation that we will have adequate cash from operations and credit facility borrowings to meet all future debt service, capital expenditure and working capital requirements in fiscal year 2016;
|
·
|
the sufficiency of the supply of commodities and labor pool to carry on our business;
|
·
|
success of advertising and marketing activities;
|
·
|
the absence of any material adverse impact arising out of any current litigation in which we are involved;
|
·
|
impact of the adoption of new accounting standards and our financial and accounting systems and analysis programs;
|
·
|
expectations regarding competition and our competitive advantages;
|
·
|
impact of our trademarks, service marks, and other proprietary rights; and
|
·
|
effectiveness of our internal control over financial reporting.
|
|
·
|
the inability to successfully combine our business as it existed prior to the acquisition with BDI in a manner that permits us to achieve the synergies and other benefits contemplated by the acquisition;
|
|
·
|
the challenge of integrating complex systems, operating procedures, regulatory compliance programs, technology, networks and other assets of BDI in a seamless manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies;
|
|
·
|
potential unknown liabilities, liabilities that are significantly larger than we anticipated and unforeseen increased expenses associated with the acquisition, including cash costs to integrate the two businesses that may exceed the cash costs that we anticipated; and
|
|
·
|
challenges coordinating geographically separate organizations.
|
|
·
|
operating results that vary from the expectations of management, securities analysts and investors;
|
|
·
|
developments in our business;
|
|
·
|
the operating and securities price performance of companies that investors consider to be comparable to us;
|
|
·
|
announcements of strategic developments, acquisitions and other material events by us or our competitors;
|
|
·
|
negative economic conditions that adversely affect the economy, commodity prices, the job market and other factors that may affect the markets in which we operate;
|
|
·
|
publication of research reports about us or the sectors in which we operate generally;
|
|
·
|
changes in market valuations of similar companies;
|
|
·
|
additions or departures of key management personnel;
|
|
·
|
actions by institutional shareholders;
|
|
·
|
speculation in the press or investment community; and
|
|
·
|
the realization of any of the other risk factors included in this prospectus supplement or the prospectus.
|
|
·
|
authorize our board of directors to establish one or more series of preferred stock the terms of which can be determined by the board of directors at the time of issuance;
|
|
·
|
do not allow for cumulative voting in the election of directors unless required by applicable law. Under cumulative voting a minority stockholder holding a sufficient percentage of a class of shares may be able to ensure the election of one or more directors;
|
|
·
|
state that special meetings of our stockholders may be called only by the chairman of the board of directors, the president or any two directors and must be called by the president upon the written request of the holders of 25% of the outstanding shares of capital stock entitled to vote at such special meeting; and
|
|
·
|
provide that the authorized number of directors is no more than seven, as determined by our board of directors.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
|
2014
|
2015
|
||||||||||||
QUARTER ENDED
|
HIGH
|
LOW
|
QUARTER ENDED
|
HIGH
|
LOW
|
||||||||
December 31, 2013
|
$ 2.93 | $ 2.06 |
December 31, 2014
|
$ 7.75 | $ 4.81 | ||||||||
March 31, 2014
|
$ 3.12 | $ 2.50 |
March 31, 2015
|
$ 8.73 | $ 6.60 | ||||||||
June 30, 2014
|
$ 4.07 | $ 2.75 |
June 30, 2015
|
$ 10.19 | $ 6.58 | ||||||||
September 30, 2014
|
$ 6.12 | $ 2.92 |
September 30, 2015
|
$ 9.50 | $ 5.80 |
Equity Compensation Plan Information:
|
|||||||||
(a)
|
(b)
|
(c)
|
|||||||
Plan category
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants & rights
|
Weighted-average
exercise price of
outstanding
options, warrants
& rights
|
Number of securities
remaining available for
future issuance under equity
compensation plans
(excluding securities
reflected in column (a))
|
||||||
Equity compensation plans
approved by security holders
|
688,870 | $4.14 | 264,253 |
SELECTED FINANCIAL DATA
|
Years ended September 30,
(in thousands)
|
||||||||||||||||||||
Operating Data:
|
2015
|
2014
|
2013
|
2012
|
2011
|
|||||||||||||||
Restaurant sales
|
$ | 43,517 | $ | 27,368 | $ | 22,523 | $ | 19,274 | $ | 20,183 | ||||||||||
Franchise fees and royalties
|
540 | 375 | 369 | 432 | 420 | |||||||||||||||
Total Net Revenues
|
44,057 | 27,743 | 22,892 | 19,706 | 20,603 | |||||||||||||||
Restaurant Operating Costs
|
||||||||||||||||||||
Food and packaging costs
|
14,567 | 9,273 | 7,655 | 6,592 | 7,241 | |||||||||||||||
Payroll and other employee benefit costs
|
14,387 | 8,915 | 7,809 | 6,691 | 7,043 | |||||||||||||||
Occupancy and other operating costs
|
7,179 | 4,599 | 4,345 | 3,939 | 4,172 | |||||||||||||||
New store pre-opening costs
|
784 | 669 | 99 | - | - | |||||||||||||||
Depreciation and amortization
|
1,246 | 636 | 719 | 795 | 888 | |||||||||||||||
Total restaurant operating costs
|
38,163 | 24,092 | 20,627 | 18,017 | 19,344 | |||||||||||||||
Selling, General & Administrative costs
|
5,365 | 3,790 | 2,608 | 2,154 | 2,038 | |||||||||||||||
Acquisition costs
|
648 | - | - | - | - | |||||||||||||||
Franchise costs
|
111 | 96 | 67 | 60 | 70 | |||||||||||||||
Loss (Gain) on restaurant assets
|
9 | (16 | ) | (18 | ) | (51 | ) | (184 | ) | |||||||||||
Loss from Operations
|
$ | (239 | ) | $ | (219 | ) | $ | (392 | ) | $ | (474 | ) | $ | (665 | ) | |||||
Other Income and (expenses)
|
||||||||||||||||||||
Unrealized gain (loss) on interest rate swap
|
- | - | - | 20 | 27 | |||||||||||||||
Other income (expense)
|
(7 | ) | (10 | ) | (6 | ) | (15 | ) | 22 | |||||||||||
Affiliate investment income (loss)
|
(5 | ) | (146 | ) | (102 | ) | - | - | ||||||||||||
Interest income (expense), net
|
(49 | ) | 5 | (44 | ) | (199 | ) | (279 | ) | |||||||||||
Total other income (expense)
|
(61 | ) | (151 | ) | (152 | ) | (194 | ) | (230 | ) | ||||||||||
Net Loss
|
$ | (300 | ) | $ | (370 | ) | $ | (544 | ) | $ | (668 | ) | $ | (895 | ) | |||||
Income attributable to non-controlling interest
|
(491 | ) | (320 | ) | (143 | ) | (109 | ) | (118 | ) | ||||||||||
Net Loss attributable to Good Times Restaurants Inc
|
$ | (791 | ) | $ | (690 | ) | $ | (687 | ) | $ | (777 | ) | $ | (1,013 | ) | |||||
Preferred stock dividends
|
- | 59 | 120 | - | - | |||||||||||||||
Net Loss attributable to common shareholders
|
$ | (791 | ) | $ | (749 | ) | $ | (807 | ) | $ | (777 | ) | $ | (1,013 | ) | |||||
Basic and Diluted Loss Per Share
|
$ | (.08 | ) | $ | (.12 | ) | $ | (.27 | ) | $ | (.29 | ) | $ | (.42 | ) | |||||
Balance Sheet Data:
|
||||||||||||||||||||
Working Capital (Deficit)
|
$ | 7,470 | $ | 7,841 | $ | 4,834 | $ | 848 | $ | (488 | ) | |||||||||
Total assets
|
48,228 | 16,881 | 9,875 | 7,061 | 6,999 | |||||||||||||||
Long-term debt
|
1,104 | 219 | 94 | 139 | 2,067 | |||||||||||||||
Non-controlling interests
|
1,615 | 279 | 242 | 203 | 215 | |||||||||||||||
Total stockholders' equity
|
$ | 38,257 | $ | 13,321 | $ | 7,321 | $ | 3,260 | $ | 2,520 |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Fiscal Year
|
Fiscal Year
|
|||||||||||||||
2015
|
2014
|
|||||||||||||||
Good Times:
|
||||||||||||||||
Restaurant sales
|
$ | 28,521 | 98.7 | % | $ | 25,565 | 98.6 | % | ||||||||
Franchise revenues
|
380 | 1.3 | % | 375 | 1.4 | % | ||||||||||
Restaurant operating costs:
|
||||||||||||||||
Food and packaging
|
9,734 | 34.1 | % | 8,655 | 33.8 | % | ||||||||||
Payroll and employee benefits
|
8,967 | 31.5 | % | 8,092 | 31.7 | % | ||||||||||
Occupancy and other
|
4,768 | 16.7 | % | 4,237 | 16.6 | % | ||||||||||
Depreciation & amortization
|
678 | 2.4 | % | 563 | 2.2 | % | ||||||||||
Preopening costs
|
172 | 0.6 | % | 6 | 0.0 | % | ||||||||||
Total restaurant operating costs
|
$ | 24,319 | 85.3 | % | $ | 21,553 | 84.3 | % | ||||||||
General & administrative costs
|
2,773 | 9.6 | % | 2,483 | 9.6 | % | ||||||||||
Advertising costs
|
1,188 | 4.1 | % | 947 | 3.6 | % | ||||||||||
Franchise costs
|
92 | 0.3 | % | 96 | 0.4 | % | ||||||||||
Loss (Gain) on restaurant assets
|
9 | (0.0 | %) | (16 | ) | (0.1 | %) | |||||||||
Income from Operations
|
$ | 520 | 1.8 | % | $ | 877 | 3.4 | % | ||||||||
Bad Daddy’s (1):
|
||||||||||||||||
Restaurant sales
|
$ | 14,996 | 98.9 | % | $ | 1,803 | 100.0 | % | ||||||||
Franchise revenues
|
160 | 1.1 | % | 0 | 0.0 | % | ||||||||||
Restaurant operating costs:
|
||||||||||||||||
Food and packaging
|
4,833 | 32.2 | % | 618 | 34.3 | % | ||||||||||
Payroll and employee benefits
|
5,420 | 36.1 | % | 823 | 45.6 | % | ||||||||||
Occupancy and other
|
2,411 | 16.1 | % | 362 | 20.1 | % | ||||||||||
Depreciation & amortization
|
568 | 3.8 | % | 73 | 4.1 | % | ||||||||||
Preopening costs
|
612 | 4.1 | % | 663 | 36.8 | % | ||||||||||
Total restaurant operating costs
|
$ | 13,844 | 92.3 | % | $ | 2,539 | 140.9 | % | ||||||||
General & administrative costs
|
1,328 | 8.8 | % | 320 | 17.8 | % | ||||||||||
Advertising costs
|
76 | 0.5 | % | 40 | 2.3 | % | ||||||||||
Acquisition costs
|
648 | 4.3 | % | 0 | 0.0 | % | ||||||||||
Franchise costs
|
19 | 0.1 | % | 0 | 0.0 | % | ||||||||||
Loss (Gain) on restaurant assets
|
0 | 0.0 | % | 0 | 0.0 | % | ||||||||||
Loss from Operations
|
$ | (759 | ) | (5.0 | %) | $ | (1,096 | ) | (60.8 | %) |
Fiscal Year Ended
|
||||||||
September 30,(1)
|
||||||||
2015
|
2014
|
|||||||
Revenues
|
$ | 54,416 | $ | 42,744 | ||||
Net income
|
$ | 619 | ($147 | ) | ||||
Net income (loss) attributable to Good Times
Restaurants, Inc.
|
$ | 159 | ($636 | ) | ||||
Net income (loss) attributable to common shareholders
|
$ | 159 | ($695 | ) | ||||
Basic and diluted income (loss) per share
|
$ | .01 | ($.07 | ) |
Fiscal 2015
|
Fiscal 2014
|
|||||||
Company-operated
|
$ | 1,091,000 | $ | 1,035,000 |
|
·
|
Increase of $300,000 in occupancy and other restaurant operating costs due to the two new restaurants opened in fiscal 2015.
|
|
·
|
Increases in various other restaurant operating costs of $230,000 at existing restaurants comprised primarily of repairs and maintenance, restaurant supplies and bank fees.
|
|
·
|
Increase in payroll and employee benefit costs of $577,000
|
|
·
|
Increase in incentive stock compensation cost of $315,000
|
|
·
|
Net increases in all other expenses of $406,000.
|
|
·
|
$3,389,000 in costs for the development of Bad Daddy’s locations in Colorado
|
|
·
|
$160,000 for miscellaneous capital expenditures related to our Bad Daddy’s restaurants
|
|
·
|
$1,270,000 in costs related to our existing Good Times locations, for reimaging and remodeling
|
|
·
|
$2,415,000 for the development of two Good Times locations, including the purchase of land for a new location that opened on May 5, 2015
|
|
·
|
$321,000 for miscellaneous capital expenditures related to our Good Times restaurants
|
|
·
|
$78,000 for miscellaneous capital expenditures related to our corporate office
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
CONTROLS AND PROCEDURES
|
OTHER INFORMATION
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
EXECUTIVE COMPENSATION
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
a)
|
The following documents have been filed as part of this report or, where noted, incorporated by reference:
|
|
1)
|
Financial Statements
|
|
2)
|
Financial Statement Schedules
|
|
3)
|
Exhibits
|
Exhibit
|
Description
|
2.1**
|
Membership Interest Purchase Agreement, dated April 24, 2015, among Good Times Restaurants Inc., FS-BDI Holdings, LLC, Thompson Family Associates, LLC, Keeper Investments, LLC, James C. Verney and Fenner Restaurant Group, LLC (previously filed as Exhibit 2.1 to the registrant’s Current Report on Form 8-K filed April 28, 2015 (File No. 000-18590) and incorporated herein by reference)
|
3.1
|
Articles of Incorporation of Good Times Restaurants Inc. (previously filed on November 30, 1988 as Exhibit 3.1 to the registrant’s Registration Statement on Form S-18 (File No. 33-25810-LA) and incorporated herein by reference)
|
3.2
|
Amendment to Articles of Incorporation of Good Times Restaurants Inc. dated January 23, 1990 (previously filed on January 18, 1990 as Exhibit 3.1 to the registrant’s Current Report on Form 8-K (File No. 000-18590) and incorporated herein by reference)
|
3.3
|
Amendment to Articles of Incorporation of Good Times Restaurants Inc. dated June 15, 1994 (previously filed as Exhibit 3.3 to the registrant’s Amendment No. 1 to Registration Statement on Form S-1 filed June 7, 2013 (File No. 333-188183) and incorporated herein by reference)
|
3.4
|
Amendment to Articles of Incorporation of Good Times Restaurants Inc. dated September 23, 1996 (previously filed as Exhibit 3.5 to the registrant’s Annual Report on Form 10-KSB for the fiscal year ended September 30, 1996 (File No. 000-18590) and incorporated herein by reference)
|
3.5
|
Certificate of Designations, Preferences, and Rights of Series B Convertible Preference Stock of Good Times Restaurants Inc. (previously filed as Exhibit 1 to the Amendment No. 6 to Schedule 13D filed by The Erie County Investment Co., The Bailey Company, LLLP and Paul T. Bailey (File No. 005-42729) on February 14, 2005 and incorporated herein by reference)
|
3.6
|
Certificate of Change of Good Times Restaurants Inc. (previously filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed January 12, 2011 (File No. 000-18590) and incorporated herein by reference)
|
3.7
|
Certificate of Designations, Preferences, and Rights of Series C Convertible Preferred Stock of Good Times Restaurants Inc. (previously filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed September 20, 2012 (File No. 000-18590) and incorporated herein by reference)
|
3.8
|
Restated Bylaws of Good Times Restaurants Inc. dated November 7, 1997 (previously filed as Exhibit 3.6 to the registrant’s Annual Report on Form 10-KSB for the fiscal year ended September 30, 1997 (File No. 000-18590) and incorporated herein by reference)
|
3.9
|
Amendment to Restated Bylaws of Good Times Restaurants Inc. dated August 14, 2007 (previously filed as Exhibit 3.1 to the registrant's Current Report on Form 8-K filed December 31, 2007 (File No. 000-18590) and incorporated herein by reference)
|
3.10
|
Amendment to Restated Bylaws of Good Times Restaurants Inc. dated August 30, 2013 (previously filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed September 6, 2013 (File No. 000-18590) and incorporated herein by reference)
|
3.11
|
Amendment to Restated Bylaws of Good Times Restaurants Inc. dated May 2, 2014 (previously filed as Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed May 7, 2014 (File No. 000-18590) and incorporated herein by reference)
|
3.12
|
Amendment to Restated Bylaws of Good Times Restaurants Inc. dated December 18, 2014 (previously filed as Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed December 22, 2014 (File No. 000-18590) and incorporated herein by reference)
|
4.1
|
Specimen Common Stock Certificate (previously filed as Exhibit 4.1 to the registrant’s Amendment No. 1 to Registration Statement on Form S-1 filed June 7, 2013 (File No. 333-188183) and incorporated herein by reference)
|
4.2
|
Form of 3.25% Promissory Note (previously filed as Exhibit 4.1 to the registrant’s Current Report on Form 8-K filed April 28, 2015 (File No. 000-18590) and incorporated herein by reference)
|
10.1
|
Good Times Restaurants Inc. 2008 Omnibus Equity Incentive Compensation Plan (previously filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed January 30, 2008 (File No. 000-18590) and incorporated herein by reference)
|
10.2
|
Employment Agreement dated as of October 1, 2007 between Good Times Restaurants Inc. and Boyd E. Hoback (previously filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed January 30, 2008 (File No. 000-18590) and incorporated herein by reference)
|
10.3
|
First Amendment to Amended and Restated Credit Agreement and Waiver of Defaults dated December 27, 2011 among Good Times Restaurants Inc., Good times Drive Thru, Inc. and Wells Fargo Bank, N.A. (previously filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed December 28, 2011 (File No. 000-18590) and incorporated herein by reference)
|
10.4
|
Second Amended and Restated Term Note dated December 27, 2011 by Good Times Restaurants Inc. and Good Times Drive Thru, Inc. to Wells Fargo Bank, N.A. (previously filed as Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed December 28, 2011 (File No. 000-18590) and incorporated herein by reference)
|
10.5
|
Financial Advisory Services Agreement dated April 6, 2012 between Good Times Restaurants Inc. and Heathcote Capital LLC (previously filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed April 11, 2012 (File No. 000-18590) and incorporated herein by reference) and incorporated herein by reference)
|
10.6
|
Amendment to the Good Times Restaurants Inc. 2008 Omnibus Equity Incentive Compensation Plan dated September 14, 2012 (previously filed as Exhibit 10.10 to the registrant’s Registration Statement on Form S-1 filed April 26, 2013 (File No. 333-188183) and incorporated herein by reference)
|
10.7
|
Supplemental Agreement dated September 28, 2012 between Good Times Restaurants Inc. and Small Island Investments Limited (previously filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed October 1, 2012 (File No. 000-18590) and incorporated herein by reference)
|
10.8
|
Amendment to Supplemental Agreement dated October 16, 2012 between Good Times Restaurants Inc. and Small Island Investments Limited (previously filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed October 16, 2012 (File No. 000-18590) and incorporated herein by reference)
|
10.9
|
Letter Agreement dated December 5, 2012 between Good Times Restaurants Inc. and GT Burgers of Colorado, Inc. (previously filed as Exhibit 10.13 to the registrant’s Registration Statement on Form S-1 filed April 26, 2013 (File No. 333-188183) and incorporated herein by reference)
|
10.10
|
Amendment to Financial Advisory Services Agreement dated March 25, 2013 between Good Times Restaurants Inc. and Heathcote Capital LLC (previously filed as Exhibit 10.14 to the registrant’s Registration Statement on Form S-1 filed April 26, 2013 (File No. 333-188183) and incorporated herein by reference)
|
10.11
|
Subscription Agreement dated April 9, 2013 between Good Times Restaurants Inc. and Bad Daddy’s Franchise Development, LLC (previously filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed April 15, 2013 (File No. 000-18590) and incorporated herein by reference)
|
10.12
|
Amended and Restated Operating Agreement of Bad Daddy’s Franchise Development, LLC dated April 9, 2013 (previously filed as Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed April 15, 2013 (File No. 000-18590) and incorporated herein by reference)
|
10.13
|
Management Services Agreement dated April 9, 2013 between Good Times Restaurants Inc. and Bad Daddy’s Franchise Development, LLC (previously filed as Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed April 15, 2013 (File No. 000-18590) and incorporated herein by reference)
|
10.14
|
License Agreement dated April 9, 2013 between Bad Daddy’s Franchise Development, LLC and BD of Colorado LLC (previously filed as Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed April 15, 2013 (File No. 000-18590) and incorporated herein by reference)
|
10.15
|
Term Sheet for Joint Venture Agreement dated April 9, 2013 between Good Times Restaurants Inc. and Bad Daddy’s International, LLC (previously filed as Exhibit 10.5 to the registrant’s Current Report on Form 8-K filed April 15, 2013 (File No. 000-18590) and incorporated herein by reference)
|
10.16
|
Consent and Waiver of Small Island Investments Limited dated June 3, 2013 (previously filed as Exhibit 10.20 to Amendment No. 2 to Registration Statement on Form S-1 filed June 26, 2013 (File No. 333-188183) and incorporated herein by reference)
|
10.17
|
Amendment to Financial Advisory Services Agreement dated September 27, 2013 between Good Times Restaurants Inc. and Heathcote Capital LLC (previously filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed October 1, 2013 (File No. 000-18590) and incorporated herein by reference)
|
10.18
|
Amendment to Amended and Restated Operating Agreement of Bad Daddy’s Franchise Development, LLC, dated October 31, 2013 (previously filed as Exhibit 10.20 to the registrant’s Annual Report on Form 10-K filed December 27, 2013 (File No. 000-18590) and incorporated herein by reference)
|
10.19
|
Employment Agreement, effective December 1, 2013, by and between Good Times Restaurants Inc. and Boyd E. Hoback (previously filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed January 10, 2014 (File No. 000-18590) and incorporated herein by reference)
|
10.20
|
Securities Purchase Agreement, dated May 2, 2014, among Hoak Public Equities, L.P., Rest Redux LLC, and Small Island Investments Limited (previously filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed May 7, 2014 (File No. 000-18590) and incorporated herein by reference)
|
10.21
|
Registration Rights Agreement, dated May 2, 2014, among Good Times Restaurants Inc., Hoak Public Equities, L.P., and Rest Redux LLC (previously filed as Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed May 7, 2014 (File No. 000-18590) and incorporated herein by reference)
|
10.22
|
Agreement between Good Times Restaurants Inc. and Robert Stetson, effective May 2, 2014 (previously filed as Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed May 7, 2014 (File No. 000-18590) and incorporated herein by reference)
|
10.23
|
Development Line Loan and Security Agreement, dated July 30, 2014, between Good times Drive Thru, Inc. and United Capital Business Lending, Inc. (previously filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed August 5, 2014 (File No. 000-18590) and incorporated herein by reference)
|
10.24
|
Collateral Assignment of Franchise Agreements, Management Agreement, and Partnership Interests, dated July 30, 2014, between Good times Drive Thru, Inc. and United Capital Business Lending, Inc. (previously filed as Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed August 5, 2014 (File No. 000-18590) and incorporated herein by reference)
|
10.25
|
Promissory Note (previously filed as Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed August 5, 2014 (File No. 000-18590) and incorporated herein by reference)
|
10.26
|
Guaranty Agreement (previously filed as Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed August 5, 2014 (File No. 000-18590) and incorporated herein by reference)
|
10.27
|
Employment Agreement, effective March 31, 2015, by and between Good Times Restaurants Inc. and James Zielke (previously filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed April 6, 2015 (File No. 000-18590) and incorporated herein by reference)
|
10.28
|
Transition Services Agreement, dated April 24, 2015, among Good Times Restaurants Inc. and FS Food Group, LLC (previously filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed April 28, 2015 (File No. 000-18590) and incorporated herein by reference)
|
10.29
|
Pledge Agreement, dated May 7, 2015, between Bad Daddy’s International, LLC, Good Times Restaurants Inc. and Joseph F. Scibelli (previously filed as Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed May 7, 2015 (File No. 000-18590) and incorporated herein by reference)
|
21.1*
|
Subsidiaries of the Company
|
23.1*
|
Consent of Hein & Associates LLP, Independent Registered Public Accounting Firm
|
31.1*
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)
|
31.2*
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)
|
32.1*
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350
|
101
|
The following financial information from the Company’s Annual Report on Form 10-K for the year ended September 30, 2015, filed with the SEC on December 29, 2015 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Operations for the years ended September 30, 2015 and 2014, (ii) the Consolidated Balance Sheets at September 30, 2015 and 2014, (iii) the Consolidated Statement of Stockholders’ Equity at September 30, 2015, 2014 and 2013, (iv) the Consolidated Statements of Cash Flows for the years ended September 30, 2015 and 2014, and (v) Notes to Consolidated Financial Statements.
|
*
|
Filed herewith
|
**
|
The schedules to this agreement have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the SEC upon request; provided, however, that the registrant may request confidential treatment of omitted items.
|
GOOD TIMES RESTAURANTS INC.
|
|
December 29, 2015
|
/s/ Boyd E. Hoback
|
Boyd E. Hoback
President and Chief Executive Officer
|
/s/ Robert J. Stetson
|
/s/ Eric W. Reinhard
|
|
Robert J. Stetson, Chairman
December 29, 2015
|
Eric W. Reinhard, Director
December 29, 2015
|
|
/s/ Geoffrey R. Bailey
|
/s/ Susan M. Knutson
|
|
Geoffrey R. Bailey, Director
December 29, 2015
|
Susan M. Knutson, Controller
December 29, 2015
|
|
/s/ Gary J. Heller
|
/s/ Alan A. Teran
|
|
Gary J. Heller, Director
December 29, 2015
|
Alan A. Teran, Director
December 29, 2015
|
|
/s/ Boyd E. Hoback
|
/s/ James K. Zielke
|
|
Boyd E. Hoback, Director and
President and CEO
December 29, 2015
|
James K. Zielke, Chief Financial Officer
December 29, 2015
|
|
/s/ Steven M. Johnson
|
||
Steven M. Johnson, Director
December 29, 2015
|
ITEM 8
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
PAGE
|
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7 – F-20
|
For the Years Ended September 30,
|
||||||||
2015
|
2014
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$ | 13,809 | $ | 9,894 | ||||
Receivables
|
189 | 150 | ||||||
Prepaid expenses and other
|
161 | 55 | ||||||
Inventories
|
510 | 282 | ||||||
Notes receivable
|
59 | 10 | ||||||
Total current assets
|
14,728 | 10,391 | ||||||
PROPERTY AND EQUIPMENT
|
||||||||
Land and building
|
5,054 | 4,736 | ||||||
Leasehold improvements
|
10,294 | 4,710 | ||||||
Fixtures and equipment
|
12,096 | 8,796 | ||||||
27,444 | 18,242 | |||||||
Less accumulated depreciation and amortization
|
(13,222 | ) | (12,488 | ) | ||||
14,222 | 5,754 | |||||||
OTHER ASSETS:
|
||||||||
Notes receivable, net of current portion
|
71 | 82 | ||||||
Trademarks
|
3,900 | 0 | ||||||
Other intangibles, net
|
117 | 0 | ||||||
Goodwill
|
15,066 | 96 | ||||||
Investment in affiliate
|
0 | 502 | ||||||
Deposits and other assets
|
124 | 56 | ||||||
19,278 | 736 | |||||||
TOTAL ASSETS
|
$ | 48,228 | $ | 16,881 |
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Current maturities of long-term debt and capital lease obligations
|
$ | 2,617 | $ | 69 | ||||
Accounts payable
|
2,733 | 1,085 | ||||||
Deferred income
|
25 | 88 | ||||||
Other accrued liabilities
|
1,883 | 1,308 | ||||||
Total current liabilities
|
7,258 | 2,550 | ||||||
LONG-TERM LIABILITIES:
|
||||||||
Maturities of long-term debt due after one year
|
$ | 1,093 | $ | 177 | ||||
Capital lease obligations due after one year
|
11 | 42 | ||||||
Deferred and other liabilities
|
1,609 | 791 | ||||||
Total long-term liabilities
|
2,713 | 1,010 | ||||||
COMMITMENTS AND CONTINGENCIES (Note5)
|
||||||||
STOCKHOLDERS’ EQUITY:
|
||||||||
Good Times Restaurants Inc stockholders’ equity:
|
||||||||
Preferred stock, $.01 par value;
|
||||||||
5,000,000 shares authorized, 0 shares issued and outstanding
|
||||||||
and outstanding as of September 30, 2015 and 2014, respectively
|
0 | 0 | ||||||
Common stock, $.001 par value; 50,000,000 shares
|
||||||||
authorized, 12,259,550 and 8,256,591 shares issued and outstanding
|
||||||||
as of September 30, 2015 and 2014, respectively
|
12 | 8 | ||||||
Capital contributed in excess of par value
|
57,434 | 33,047 | ||||||
Accumulated deficit
|
(20,804 | ) | (20,013 | ) | ||||
Total Good Times Restaurants Inc stockholders' equity
|
36,642 | 13,042 | ||||||
Non-controlling interests
|
1,615 | 279 | ||||||
Total stockholders’ equity
|
38,257 | 13,321 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$ | 48,228 | $ | 16,881 |
For the Years Ended September 30,
|
||||||||
2015
|
2014
|
|||||||
NET REVENUES:
|
||||||||
Restaurant sales
|
$ | 43,517 | $ | 27,368 | ||||
Area development and franchise fees
|
0 | 6 | ||||||
Franchise royalties
|
540 | 369 | ||||||
Total net revenues
|
44,057 | 27,743 | ||||||
RESTAURANT OPERATING COSTS:
|
||||||||
Food and packaging costs
|
14,567 | 9,273 | ||||||
Payroll and other employee benefit costs
|
14,387 | 8,915 | ||||||
Restaurant occupancy costs
|
5,113 | 3,607 | ||||||
Other restaurant operating costs
|
2,066 | 992 | ||||||
Preopening costs
|
784 | 669 | ||||||
Depreciation and amortization
|
1,246 | 636 | ||||||
Total restaurant operating costs
|
38,163 | 24,092 | ||||||
General and administrative costs
|
4,101 | 2,803 | ||||||
Advertising costs
|
1,264 | 987 | ||||||
Acquisition costs
|
648 | 0 | ||||||
Franchise costs
|
111 | 96 | ||||||
Loss (Gain) on restaurant asset sale
|
9 | (16 | ) | |||||
LOSS FROM OPERATIONS
|
(239 | ) | (219 | ) | ||||
OTHER INCOME (EXPENSES):
|
||||||||
Interest income
|
44 | 14 | ||||||
Interest expense
|
(93 | ) | (9 | ) | ||||
Other expense
|
(7 | ) | (10 | ) | ||||
Affiliate investment loss
|
(5 | ) | (146 | ) | ||||
Total other expenses, net
|
(61 | ) | (151 | ) | ||||
NET LOSS
|
$ | (300 | ) | $ | (370 | ) | ||
Income attributable to non-controlling interests
|
$ | (491 | ) | (320 | ) | |||
NET LOSS ATTRIBUTABLE TO GOOD TIMES RESTAURANTS INC.
|
$ | (791 | ) | $ | (690 | ) | ||
Preferred stock dividends
|
$ | 0 | $ | 59 | ||||
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS
|
$ | (791 | ) | $ | (749 | ) | ||
BASIC AND DILUTED LOSS PER SHARE:
|
||||||||
Net loss attributable to Good Times Restaurants Inc.
|
$ | (.08 | ) | $ | (.12 | ) | ||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
||||||||
Basic
|
10,510,105 | 6,151,603 | ||||||
Diluted
|
N/A | N/A |
Preferred Stock
|
Common Stock
|
|||||||||||||||||||||||||||||||
Issued
Shares
|
Par
Value
|
Issued
Shares (1)
|
Par
Value (1)
|
Capital
Contributed in
Excess of Par
Value
|
Non-
Controlling
Interest In
Partnerships
|
Accumulated
Deficit
|
Total
|
|||||||||||||||||||||||||
BALANCES, October 1, 2013
|
355,451 | $ | 4 | 4,926,214 | $ | 5 | $ | 26,334 | $ | 242 | $ | (19,264 | ) | $ | 7,321 | |||||||||||||||||
Stock issuance expense
|
(31 | ) | (31 | ) | ||||||||||||||||||||||||||||
Stock compensation cost
|
162 | 162 | ||||||||||||||||||||||||||||||
Preferred stock conversion
|
(355,451 | ) | (4 | ) | 710,902 | 1 | 0 | (3 | ) | |||||||||||||||||||||||
Warrant exercise
|
2,609,149 | 2 | 6,820 | 6,822 | ||||||||||||||||||||||||||||
Warrant exercise costs
|
(258 | ) | (258 | ) | ||||||||||||||||||||||||||||
Stock option exercise
|
10,326 | 20 | 20 | |||||||||||||||||||||||||||||
Non-controlling interest in Partnerships
|
37 | 37 | ||||||||||||||||||||||||||||||
Net loss attributable to Good Times
Restaurants Inc and comprehensive loss
|
(690 | ) | (690 | ) | ||||||||||||||||||||||||||||
Preferred stock dividends
|
(59 | ) | (59 | ) | ||||||||||||||||||||||||||||
BALANCES, September 30, 2014
|
0 | $ | 0 | 8,256,591 | $ | 8 | $ | 33,047 | $ | 279 | ($20,013 | ) | $ | 13,321 | ||||||||||||||||||
Stock issuance expense
|
(2,070 | ) | (2,070 | ) | ||||||||||||||||||||||||||||
Stock sale
|
2,783,810 | 3 | 22,685 | 22,688 | ||||||||||||||||||||||||||||
Stock compensation cost
|
477 | 477 | ||||||||||||||||||||||||||||||
Warrant exercise
|
1,182,600 | 1 | 3,251 | 3,252 | ||||||||||||||||||||||||||||
Warrant exercise-costs
|
(31 | ) | (31 | ) | ||||||||||||||||||||||||||||
Stock option exercise
|
36,549 | 75 | 75 | |||||||||||||||||||||||||||||
Non-controlling interests:
|
||||||||||||||||||||||||||||||||
Income
|
491 | 491 | ||||||||||||||||||||||||||||||
Distributions
|
(431 | ) | (431 | ) | ||||||||||||||||||||||||||||
Acquired through acquisition
|
1,276 | 1,276 | ||||||||||||||||||||||||||||||
Net Loss attributable to Good Times
Restaurants Inc and comprehensive loss
|
(791 | ) | (791 | ) | ||||||||||||||||||||||||||||
BALANCES, September 30, 2015
|
0 | $ | 0 | 12,259,550 | $ | 12 | $ | 57,434 | $ | 1,615 | $ | (20,804 | ) | $ | 38,257 |
For the Years Ended
September 30,
|
||||||||
2015
|
2014
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net Loss
|
$ | (300 | ) | $ | (370 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
1,332 | 682 | ||||||
Accretion of deferred rent
|
234 | 33 | ||||||
Amortization of lease incentive obligation
|
(39 | ) | 0 | |||||
Loss (gain) on disposal of assets
|
9 | (16 | ) | |||||
Affiliate investment loss
|
5 | 146 | ||||||
Stock based compensation expense
|
477 | 162 | ||||||
Changes in operating assets and liabilities:
|
||||||||
(Increase) decrease in:
|
||||||||
Other receivables
|
118 | 44 | ||||||
Inventories
|
(95 | ) | (98 | ) | ||||
Deposits and other assets
|
(96 | ) | 7 | |||||
(Decrease) increase in:
|
||||||||
Accounts payable
|
1,442 | 384 | ||||||
Accrued and other liabilities
|
81 | 464 | ||||||
Net cash provided by operating activities
|
3,168 | 1,438 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Payments for the purchase of property and equipment
|
(7,633 | ) | (3,397 | ) | ||||
Proceeds from sale leaseback transactions
|
1,522 | 0 | ||||||
BDI acquisition, net of cash acquired
|
(17,612 | ) | 0 | |||||
Investment in affiliate
|
0 | (375 | ) | |||||
Payments received on (loans to) franchisees and to others
|
8 | (77 | ) | |||||
Net cash used in investing activities
|
(23,715 | ) | (3,849 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Principal payments on notes payable, capital leases, and long-term debt
|
(139 | ) | (46 | ) | ||||
Borrowings on notes payable and long-term debt
|
1,118 | 0 | ||||||
Proceeds (costs) from stock sales
|
20,618 | (31 | ) | |||||
Net proceeds from warrant exercises
|
3,221 | 6,561 | ||||||
Proceeds from stock option exercises
|
75 | 20 | ||||||
Preferred dividend paid
|
0 | (59 | ) | |||||
Distributions to non-controlling interests
|
(431 | ) | (283 | ) | ||||
Net cash provided by financing activities
|
24,462 | 6,162 | ||||||
INCREASE IN CASH AND CASH EQUIVALENTS
|
3,915 | 3,751 | ||||||
CASH AND CASH EQUIVALENTS, beginning of year
|
9,894 | 6,143 | ||||||
CASH AND CASH EQUIVALENTS, end of year
|
$ | 13,809 | $ | 9,894 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
Cash paid for interest
|
$ | 58 | $ | 9 | ||||
Non-cash purchase of property and equipment
|
$ | 2,454 | $ | 196 |
1.
|
Organization and Summary of Significant Accounting Policies:
|
Level 1:
|
Quoted market prices in active markets for identical assets and liabilities.
|
Level 2:
|
Observable inputs other than defined in Level 1, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
Level 3:
|
Unobservable inputs that are not corroborated by observable market data.
|
2.
|
Business Combinations
|
Allocated Fair Value
|
||||
Cash
|
$ | 1,376 | ||
Receivables
|
124 | |||
Prepaid expenses and other
|
49 | |||
Inventories
|
133 | |||
Deposits
|
52 | |||
Property and equipment
|
3,672 | |||
Trademarks (1)
|
3,900 | |||
Franchise agreements (1)
|
116 | |||
Non-compete agreements (1)
|
15 | |||
Goodwill (2)
|
14,970 | |||
Total assets purchased
|
24,407 | |||
Accounts payable and other accrued liabilities
|
(750 | ) | ||
Unfavorable lease liability
|
(481 | ) | ||
Non-controlling interests
|
(1,276 | ) | ||
Total liabilities assumed
|
(2,507 | ) | ||
Investment in BDFD balance
|
(498 | ) | ||
Total purchase price
|
$ | 21,402 | ||
Cash
|
$ | 18,988 | ||
Notes payable
|
2,414 | |||
Total purchase price
|
$ | 21,402 |
(1)
|
The value of the identifiable intangible assets were determined by an independent Corporate Finance and Business Valuation firm.
|
(2)
|
The excess of the purchase price over the aggregate fair value of net assets acquired was allocated to goodwill. The portion of the purchase price attributable to goodwill represents benefits expected as a result of the acquisition, including sales and unit growth opportunities.
|
Estimated
Fair Value
|
Weighted Average
Estimated Useful Life (yrs)
|
||||||
Trademarks and trade names
|
$ | 3,900 |
Indefinite
|
||||
Franchise Agreements
|
116 | 3 – 9 | |||||
Non-Compete Agreements
|
15 | 3 | |||||
Goodwill, including assembled workforce
|
14,970 |
Indefinite
|
Fiscal Year Ended
September 30,(1)
|
||||||||
2015
|
2014
|
|||||||
Revenues
|
$ | 54,416 | $ | 42,744 | ||||
Net income
|
$ | 619 | $ | (147 | ) | |||
Net income (loss) attributable to Good Times Restaurants, Inc.
|
$ | 159 | $ | (636 | ) | |||
Net income (loss) attributable to common shareholders
|
$ | 159 | $ | (695 | ) | |||
Basic and diluted income (loss) per share
|
$ | .01 | $ | (.07 | ) |
3.
|
Investment in Affiliate
|
4.
|
Goodwill and Intangible Assets
|
September 30, 2015
|
September 30, 2014
|
|||||||||||||||||||||||
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
|||||||||||||||||||
Intangible assets subject to
amortization
|
||||||||||||||||||||||||
Franchise rights
|
116 | (11 | ) | 105 | 0 | 0 | 0 | |||||||||||||||||
Non-compete agreements
|
15 | (3 | ) | 12 | 0 | 0 | 0 | |||||||||||||||||
$ | 131 | $ | (14 | ) | $ | 117 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
Indefinite-lived intangible
assets:
|
||||||||||||||||||||||||
Trademarks
|
$ | 3,900 | $ | 0 | $ | 3,900 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
Intangible assets, net
|
$ | 4,031 | $ | (14 | ) | $ | 4,017 | $ | 0 | $ | 0 | $ | 0 | |||||||||||
Goodwill
|
$ | 15,066 | $ | 0 | $ | 15,066 | $ | 96 | $ | 0 | $ | 96 |
2016
|
$ | 28 | ||
2017
|
28 | |||
2018
|
19 | |||
2019
|
10 | |||
2020
|
10 | |||
Thereafter
|
22 | |||
$ | 117 |
5.
|
Debt and Capital Leases:
|
2015
|
2014
|
|||||||
Notes payable with United Capital Business Lending with payments of principal and interest (6.7%) due monthly through April 2022. The loans are secured by the fixtures and equipment of the Company’s Good Times Drive Thru restaurants
|
1,225 | 194 | ||||||
Note payable associated with the purchase of BDI and BDFD, due in full along with accrued interest of 3.25% in May 2016. The promissory note is secured by a pledge of the ownership of the two entities which own two of the acquired restaurants.
|
2,414 | 0 | ||||||
Capital signage leases with Yesco, LLC with payments of principal and interest (8%) due monthly
|
42 | 74 | ||||||
Notes payable with Ally Financial with payments of principal and interest (3.9% to 5%) due monthly. The loans are secured by vehicles
|
40 | 20 | ||||||
3,721 | 288 | |||||||
Less current portion
|
(2,617 | ) | (69 | ) | ||||
Long term portion
|
$ | 1,104 | $ | 219 |
Years Ending September 30,
|
||||
2016
|
$ | 2,617 | ||
2017
|
188 | |||
2018
|
189 | |||
2019
|
202 | |||
2020
|
209 | |||
Thereafter
|
316 | |||
$ | 3,721 |
6.
|
Other Accrued Liabilities:
|
2015
|
2014
|
|||||||
Wages and other employee benefits
|
$ | 583 | $ | 530 | ||||
Taxes, other than income tax
|
829 | 594 | ||||||
Other
|
471 | 184 | ||||||
Total
|
$ | 1,883 | $ | 1,308 |
7.
|
Commitments and Contingencies:
|
2015
|
2014
|
|||||||
Minimum rentals
|
$ | 2,944 | $ | 2,382 | ||||
Less sublease rentals
|
(375 | ) | (436 | ) | ||||
Net rent paid
|
$ | 2,569 | $ | 1,946 |
Years Ending September 30,
|
||||
2016
|
$ | 4,091 | ||
2017
|
4,233 | |||
2018
|
4,157 | |||
2019
|
3,865 | |||
2020
|
3,364 | |||
Thereafter
|
14,595 | |||
34,305 | ||||
Less sublease rentals
|
(1,918 | ) | ||
$ | 32,387 |
8.
|
Income Taxes:
|
2015
|
2014
|
|||||||||||||||
Current
|
Long Term
|
Current
|
Long Term
|
|||||||||||||
Deferred assets (liabilities):
|
||||||||||||||||
Tax effect of net operating loss carry-forward
|
$ | 0 | $ | 2,948 | $ | 0 | $ | 2,830 | ||||||||
General business credits
|
0 | 201 | 0 | 0 | ||||||||||||
Partnership/Joint Venture basis differences
|
0 | 84 | 0 | 194 | ||||||||||||
Deferred revenue
|
0 | 88 | 0 | 98 | ||||||||||||
Property and equipment basis differences
|
0 | 7 | 0 | 409 | ||||||||||||
Intangibles basis differences
|
0 | (225 | ) | 0 | 0 | |||||||||||
Other accrued liability and asset difference
|
66 | 332 | 40 | 186 | ||||||||||||
Net deferred tax assets
|
66 | 3,435 | 40 | 3,717 | ||||||||||||
Less valuation allowance*
|
(66 | ) | (3,435 | ) | (40 | ) | (3,717 | ) | ||||||||
Net deferred tax assets
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 |
2015
|
2014
|
|||||||
Total expense (benefit) computed by applying the U.S. Statutory rate (35%)
|
$ | (277 | ) | $ | (242 | ) | ||
State income tax, net of federal tax benefit
|
(24 | ) | (21 | ) | ||||
FICA tax credit
|
(108 | ) | 0 | |||||
Expiration of net operating loss carry-forward
|
616 | 1 | ||||||
Effect of change in valuation allowance
|
(256 | ) | 243 | |||||
Permanent differences
|
88 | 51 | ||||||
Other
|
(39 | ) | (32 | ) | ||||
Provision for income taxes
|
$ | 0 | $ | 0 |
9.
|
Related Parties:
|
10.
|
Stockholders’ Equity:
|
Fiscal 2015
Incentive
Stock Options
|
Fiscal 2015
Non-Statutory
Stock Options
|
Fiscal 2014
Incentive
Stock Options
|
|||||||||
Expected term (years)
|
6.5 | 6.5 | 6.5 | ||||||||
Expected volatility
|
83% to 87.40%
|
87.4% | 112.11% | ||||||||
Risk-free interest rate
|
1.74% to 1.85%
|
1.85% | 1.94% | ||||||||
Expected dividends
|
0 | 0 | 0 |
Shares
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contractual Life (Yrs.)
|
|||||||
Outstanding-beg of year
|
396,910 | $3.87 | |||||||
Options granted
|
193,464 | $7.82 | |||||||
Options exercised
|
(36,550 | ) | $2.05 | ||||||
Forfeited
|
(1,527 | ) | $9.17 | ||||||
Expired
|
(11,853 | ) | $9.33 | ||||||
Outstanding Sept 30, 2015
|
540,444 | $5.27 | 7.4 | ||||||
Exercisable Sept 30, 2015
|
148,586 | $5.89 | 4.3 |
Shares
|
Grant Date Fair
Value Per Share
|
|||||||
Non-vested shares at beg of year
|
123,840 | $ | 3.23 | |||||
Granted
|
24,586 | $ | 8.23 to $8.60 | |||||
Vested
|
0 | |||||||
Non-vested shares at Sept 30, 2015
|
148,426 |
Number
of Shares
|
Weighted Average
Exercise Price Per Share
|
|||||||
Outstanding-beg of year
|
1,262,500 | $2.75 | ||||||
Expired
|
(79,900 | ) | $2.75 | |||||
Exercised
|
(1,182,600 | ) | $2.75 | |||||
Outstanding and exercisable at Sept 30, 2015
|
0 |
Good Times
|
Bad Daddy’s
|
Total
|
||||||||||
Balance at September 30, 2014
|
$ | 279,000 | $ | 0 | $ | 279,000 | ||||||
Income
|
$ | 367,000 | $ | 124,000 | $ | 491,000 | ||||||
Acquired through the BDI acquisition
|
$ | 0 | $ | 1,276,000 | $ | 1,276,000 | ||||||
Distributions
|
$ | (326,000 | ) | $ | (105,000 | ) | $ | (431,000 | ) | |||
Balance at September 30, 2015
|
$ | 320,000 | $ | 1,295,000 | $ | 1,615,000 |
11.
|
Retirement Plan:
|
12.
|
Segment Reporting:
|
Twelve Months Ended
|
||||||||
September 30,
|
||||||||
2015
|
2014
|
|||||||
Revenues
|
||||||||
Good Times
|
$ | 28,901 | $ | 25,940 | ||||
Bad Daddy’s
|
15,156 | 1,803 | ||||||
$ | 44,057 | $ | 27,743 | |||||
Income (loss) from operations
|
||||||||
Good Times
|
$ | 520 | $ | 877 | ||||
Bad Daddy’s
|
(759 | ) | (1,096 | ) | ||||
$ | (239 | ) | $ | (219 | ) | |||
Capital Expenditures
|
||||||||
Good Times
|
$ | 4,006 | $ | 1,311 | ||||
Bad Daddy’s
|
3,549 | 2,215 | ||||||
Corporate
|
118 | 67 | ||||||
$ | 7,673 | $ | 3,593 | |||||
Property & Equipment, net
|
||||||||
Good Times
|
$ | 5,268 | $ | 3,499 | ||||
Bad Daddy’s
|
8,836 | 2,188 | ||||||
Corporate
|
118 | 67 | ||||||
$ | 14,222 | $ | 5,754 |
13.
|
Subsequent Events:
|
I, Boyd E. Hoback, certify that:
|
1.
|
I have reviewed this annual report on Form 10-K of Good Times Restaurants Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Boyd E. Hoback
|
|
Boyd E. Hoback
President and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of Good Times Restaurants Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ James K. Zielke
|
|
James K. Zielke
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Boyd E. Hoback
|
/s/ James K. Zielke
|
|
Boyd E. Hoback
|
James K. Zielke
|
|
Chief Executive Officer
|
Chief Financial Officer
|
|
December 29, 2015
|
December 29, 2015
|
Document and Entity Information - USD ($) |
12 Months Ended | |
---|---|---|
Sep. 30, 2015 |
Dec. 16, 2015 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-K | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | FY | |
Trading Symbol | GTIM | |
Entity Registrant Name | GOOD TIMES RESTAURANTS INC | |
Entity Central Index Key | 0000825324 | |
Current Fiscal Year End Date | --09-30 | |
Entity Well-known Seasoned Issuer | No | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 12,259,550 | |
Entity Public Float | $ 50,032,451 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2015 |
Sep. 30, 2014 |
---|---|---|
Consolidated Balance Sheets [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 12,259,550 | 8,256,591 |
Common stock, shares outstanding | 12,259,550 | 8,256,591 |
Organization and Summary of Significant Accounting Policies |
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Sep. 30, 2015 | |
Organization and Summary of Significant Accounting Policies [Abstract] | |
Organization and Summary of Significant Accounting Policies | 1. Organization and Summary of Significant Accounting Policies:
Organization Good Times Restaurants Inc. (Good Times or the Company) is a Nevada corporation. The Company operates through its wholly owned subsidiaries Good Times Drive Thru, Inc. (Drive Thru), BD of Colorado, LLC (BD of Colo), Bad Daddy's Franchise Development, LLC (BDFD) and Bad Daddy's International, LLC (BDI). Drive Thru commenced operations in 1986 and, as of September 30, 2015, operates twenty company-owned and seven joint venture drive-thru fast food hamburger restaurants under the name Good Times Burgers & Frozen Custard. The Company's restaurants are located in Colorado. In addition, Drive Thru has eleven franchises, nine operating in Colorado and two in Wyoming. BD of Colo commenced operations in 2013 and, as of September 30, 2015, operates three company-owned full-service upscale casual dining restaurants under the name Bad Daddy's Burger Bar, all of which are located in Colorado. BDI and BDFD were acquired on May 7, 2015 (see Note 2 below). As of September 30, 2015, BDI operates four company-owned and three joint venture full-service upscale casual dining restaurants, also under the name Bad Daddy's Burger Bar, all of which are located in North Carolina. BDFD has two franchises operating in South Carolina and Tennessee. Prior to the acquisition of BDFD in May 2015 the Company had a 48% voting ownership interest in the franchisor entity and the investment was accounted for using the equity method. We follow accounting standards set by the Financial Accounting Standards Board, commonly referred to as the FASB. The FASB sets generally accepted accounting principles (GAAP) that we follow to ensure we consistently report our financial condition, results of operations and cash flows. Principles of Consolidation The consolidated financial statements include the accounts of Good Times, its subsidiaries, one limited partnership, in which the Company exercises control as general partner, and three limited liability companies, in which the Company exercises control as managing member. The Company owns an approximate 51% interest in the Drive Thru limited partnership, is the sole general partner and receives a management fee prior to any distributions to the limited partner. Because the Company owns an approximate 51% interest in the partnership and exercises complete management control over all decisions for the partnership, except for certain veto rights, the financial statements of the partnership are consolidated into the Company's financial statements. The Company owns an approximate 52%, 51% and 24% interest, respectively, each in three Bad Daddy's limited liability companies. The Company is the managing member and receives a royalty fee and management fee prior to any distributions to the other members. Because the Company exercises complete management control over all decisions for the three companies, except for certain veto rights, the financial statements of the limited liability companies are consolidated into the Company's financial statements. The equity interests of the unrelated limited partner and members are shown on the accompanying consolidated balance sheet in the stockholders' equity section as a non-controlling interest and is adjusted each period to reflect the limited partner's and members' share of the net income or loss as well as any cash distributions to the limited partners and members for the period. The limited partner's or members' share of the net income or loss in the entities is shown as non-controlling interest income or expense in the accompanying consolidated statement of operations. All inter-company accounts and transactions are eliminated. Basis of Presentation The Company analyzes its operations on a regional basis, when evaluating closed restaurant operations for consideration as to the classification between continuing operations and discontinued operations. As most of the Company's Drive Thru restaurants are within the Denver metropolitan region and share common advertising, distribution, supervision, and to a certain extent even customers, the Company believes it's appropriate to perform its analysis on a regional basis. Reclassification Certain prior year balances have been reclassified to conform to the current year's presentation. Such reclassifications had no effect on the net income or loss. Accounting Estimates The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles requires management to make estimates and assumptions the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Examples include provisions for bad debts and inventory reserves, accounting for business combinations, valuation of reporting units for purposes of assessing goodwill and other indefinite-lived intangible assets for impairment, valuation of asset groups for impairment testing, accruals for employee benefits, and certain contingencies. We base our estimates on historical experience, market participant fair value considerations, projected future cash flows, and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid debt instruments purchased with an initial maturity of three months or less to be cash equivalents. The Company maintains cash and cash equivalents at financial institutions with balances that at times may be in excess of the Federal Deposit Insurance Corporation (FDIC) insured limits of up to $250,000. The Company has not experienced any losses related to such accounts and management believes that the Company is not exposed to any significant risks on these accounts. Certain of the Company's accounts exceeded the FDIC insured limits as of September 30, 2015. Accounts Receivable Accounts receivable include uncollateralized receivables from our franchisees and our advertising fund, due in the normal course of business, generally requiring payment within thirty days of the invoice date. On a periodic basis the Company monitors all accounts for delinquency and provides for estimated losses of uncollectible accounts. Currently and historically there have been no allowances for unrecoverable accounts receivable. Inventories Inventories are stated at the lower of cost or market, determined by the first-in first-out method, and consist of restaurant food items and related packaging supplies. Property and Equipment Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the related assets, generally three to eight years. Property and equipment under capital leases are stated at the present value of minimum lease payments and are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the shorter of the term of the lease or the estimated useful life of the asset. Maintenance and repairs are charged to expense as incurred, and expenditures for major improvements are capitalized. When assets are retired, or otherwise disposed of, the property accounts are relieved of costs and accumulated depreciation with any resulting gain or loss credited or charged to income. Impairment of Long-Lived Assets We review our long-lived assets including land, property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the capitalized costs of the assets to the future undiscounted net cash flows expected to be generated by the assets and the expected cash flows are based on recent historical cash flows at the restaurant level. An analysis was performed for impairment at September 30, 2015 and given the results of our analysis there were no restaurants which are impaired. Trademarks Trademarks have been determined to have an indefinite life. We evaluate our trademarks for impairment annually and on an interim basis as events and circumstances warrant by comparing the fair value of the trademarks with their carrying amount. Goodwill The Company is required to test goodwill for impairment on an annual basis or whenever indications of impairment arise including, but not limited to, a significant decline in cash flows from store operations. Such tests could result in impairment charges. As of September 30, 2015, the Company had $96,000 of goodwill related to the purchase of a Good Times franchise operation on December 31, 2012 and $14,970,000 of goodwill related to the acquisition of BDI on May 7, 2015. There was no impairment required to the acquired goodwill as of September 30, 2015 or 2014. Sales of Restaurants and Restaurant Equity Interests Sales of restaurants or non-controlling equity interests in restaurants developed by the Company are recorded under either the full accrual method or the installment method of accounting. Under the full accrual method, a gain is not recognized until the collectability of the sales price is reasonably assured and the earnings process is virtually complete without further contingencies. When a sale does not meet the requirements for income recognition, the related gain is deferred until those requirements are met. Under the installment method, the gain is incrementally recognized as principal payments on the related notes receivable are collected. If the initial payment is less than specified percentages, use of the installment method is followed. The Company accounts for the sale of restaurants when the risks and other incidents of ownership have been transferred to the buyer. Specifically, a) no continuing involvement by the Company exists in restaurants that are sold, b) sales contracts and related income recognition are not dependent on the future successful operations of the sold restaurants, and c) the Company is not involved as a guarantor on the purchasers' debts. Deferred Liabilities Rent expense is reflected on a straight-line basis over the term of the lease for all leases containing step-ups in base rent. An obligation representing future payments (which totaled $1,056,000 as of September 30, 2015) is reflected in the accompanying consolidated balance sheet as a deferred liability. Lease incentives are recorded as a deferred liability when received and subsequently credited to rent expense on a straight line basis over the life of the lease. The balance of the lease incentive obligations at September 30, 2015 was $310,000 and is reflected in the accompanying consolidated balance sheet as a deferred liability. Also included in the $1,609,000 deferred and other liabilities balance is a $207,000 deferred gain on the sale of the building and improvements of one Company-owned restaurant in a sale leaseback transaction. The building and improvements were subsequently leased back from the third party purchaser. The gain will be recognized in future periods in proportion to the rents paid on the twenty year lease. Revenue Recognition Revenue from company restaurant sales is recognized when the food and beverage products are sold and are presented net of sales taxes. Preopening Costs Restaurant opening costs are expensed as incurred. Advertising The Company incurs advertising expenses in connection with the marketing of its restaurant operations. Advertising costs are expensed when the related advertising begins. Franchise and Area Development Fees Individual franchise fee revenue is deferred when received and is recognized as income when the Company has substantially performed all of its obligations under the franchise agreement and the franchisee has commenced operations. The Company's commitments and obligations pursuant to the franchise agreements consist of a) development assistance; including site selection, building specifications and equipment purchasing and b) operating assistance; including training of personnel and preparation and distribution of manuals and operating materials. All of these obligations are effectively complete upon the opening of the restaurant at which time the franchise fee and the portion of any development fee allocable to that restaurant is recognized. There are no additional material commitments or obligations. The Company has not recognized any franchise fees that have not been collected. The Company segregates initial franchise fees from other franchise revenue in the statement of operations. Revenues and costs related to company-owned restaurants are segregated from revenues and costs related to franchised restaurants in the statement of operations. Continuing royalties from franchisees, which are a percentage of the gross sales of franchised operations, are recognized as income when earned. Franchise development expenses, which consist primarily of legal costs and restaurant opening expenses associated with developing and opening franchise restaurants, are expensed against the related franchise fee income. Income Taxes We account for income taxes under the liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. The deferred tax assets are reviewed periodically for recoverability, and valuation allowances are adjusted as necessary. We believe it is more likely than not that the recorded deferred tax assets will be realized. The Company is subject to taxation in various jurisdictions. The Company continues to remain subject to examination by U.S. federal authorities for the years 2012 through 2015 and several state authorities for 2011 through 2015. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on the Company's financial condition, results of operations, or cash flows. Therefore, no reserves for uncertain income tax positions have been recorded. The Company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense. No accrual for interest and penalties was considered necessary as of September 30, 2015. Net Income (Loss) Per Common Share Basic Earnings per Share is calculated by dividing the income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Options for 364,479 and 396,910 shares of common stock, and warrants for 0 and 1,262,500 shares of common stock, were not included in computing diluted EPS for 2015 and 2014, respectively, because their effects were anti-dilutive. Financial Instruments and Concentrations of Credit Risk Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. Financial instruments with off-balance-sheet risk to the Company include lease liabilities whereby the Company is contingently liable as a guarantor of certain leases that were assigned to third parties in connection with various sales of restaurants to franchisees (see Note 7). Financial instruments potentially subjecting the Company to concentrations of credit risk consist principally of receivables. At September 30, 2015 notes receivable totaled $130,000 and is due from four entities. Additionally, the Company has other current receivables totaling $189,000, which includes $73,000 of franchise receivables, and $116,000 for miscellaneous receivables which are all due in the normal course of business. The Company believes it will collect fully on all notes and receivables. The Company purchases most of its restaurant food and paper from two vendors. The Company believes a sufficient number of other suppliers exist from which food and paper could be purchased to prevent any long-term, adverse consequences. The Company operates in one industry segment, restaurants. A geographic concentration exists because the Company's customers are generally located in the Colorado and North Carolina. Stock-Based Compensation Stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite service period (generally the vesting period of the grant). See Note 10 for additional information. Variable Interest Entities Once an entity is determined to be a variable interest entity (VIE), the party with the controlling financial interest, the primary beneficiary, is required to consolidate it. The Company has three franchisees with notes payable to the Company. These franchisees are VIE's, however, the owners of the franchise operations are the primary beneficiaries of the entities, not the Company. Therefore they are not required to be consolidated. Fair Value of Financial Instruments Fair value, is defined under a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The following three levels of inputs may be used to measure fair value and requires that the assets or liabilities carried at fair value are disclosed by the input level under which they were valued. Level 1: Quoted market prices in active markets for identical assets and liabilities. Level 2: Observable inputs other than defined in Level 1, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are not corroborated by observable market data. Non-controlling Interests - The equity interests of the unrelated limited partners and members are shown on the accompanying consolidated balance sheet in the stockholders' equity section as a non-controlling interest and is adjusted each period to reflect the limited partners' and members' share of the net income or loss as well as any cash distributions to the limited partners and members for the period. The limited partners' and members' share of the net income or loss in the partnership is shown as non-controlling interest income or expense in the accompanying consolidated statement of operations. All inter-company accounts and transactions are eliminated. Prior to the acquisition of BDI our non-controlling interest consisted of one joint venture partnership involving Good Times restaurants, as part of the acquisition of BDI (see note 2 below) additional non-controlling interests were acquired in three joint venture partnerships. Recent Accounting Pronouncements - In April 2015, the Financial Accounting Standards Board (FASB) issued guidance which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the related debt liability rather than an asset. The recognition and measurement guidance for debt issuance costs are not affected by this guidance. This new guidance is effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. The Company does not expect that this guidance will have a material impact on its consolidated financial statements. |
Business Combinations |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations | 2. Business Combinations The Company believes the Bad Daddy Burger Bar brand has significant growth potential and can be expanded beyond its current regional footprint. In order to acquire control over the Bad Daddy's Burger Bar brand to take advantage of this growth potential, on April 28, 2015, the Company entered into a Membership Interest Purchase Agreement (the Purchase Agreement) to purchase from five sellers all of the membership interests in BDI, a North Carolina limited liability company. The Company closed on the purchase of BDI on May 7, 2015, and BDI became a wholly-owned subsidiary of the Company. BDI owns all of the member interests in four limited liability companies, each of which owns and operates a Bad Daddy's Burger Bar restaurant in North Carolina. In addition, BDI owns a portion of the member interests in three other limited liability companies, each of which also owns a Bad Daddy's Burger Bar restaurant in North Carolina. BDI also owns the intellectual property associated with the Bad Daddy's Burger Bar concept and owns 52% of the member interests in BDFD, which has granted franchises for the ownership and operation of Bad Daddy's Burger Bar restaurants in South Carolina and Tennessee. BDI has also granted a license for the operation of a Bad Daddy's Burger Bar at the Charlotte airport. As a result of the purchase of BDI, the Company has acquired all of the foregoing interests and assets. Prior to the acquisition, the Company owned the remaining 48% of the member interests in BDFD and carried an Investment in Affiliates balance of $498,000. The aggregate price paid by the Company for the purchase of BDI was $21,402,000, comprised of $18,988,000 payable in cash and a one-year secured promissory note bearing interest at 3.25% in the amount of $2,414,000. The total price paid is subject to adjustments for the final calculation of the net working capital balance. Pursuant to a Pledge Agreement (the Pledge Agreement), the promissory note is secured by a pledge of the ownership of the two entities which own two of the acquired restaurants. Upon the reduction of the principal of the promissory note by at least 50% the sellers are to select one of the entities for release from the pledge. The Company acquired all of BDI's ownership interests. The Company incurred non-recurring costs of $648,000 for the fiscal year ended September 30, 2015 related to the BDI acquisition which are included in the condensed consolidated statements of operations. In accordance with Accounting Standards Codification ("ASC") 805, Business Combinations ("ASC 805"), the total purchase consideration is allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of May 7, 2015 (the acquisition date). The purchase price was allocated based on the information currently available, and may be adjusted after obtaining more information regarding, among other things, liabilities assumed and revisions of preliminary estimates. The estimated fair values of the assets acquired and liabilities assumed for the acquisition approximated the following:
Included in the consolidated statement of operations for the fiscal year ended September 30, 2015 are revenues of $7,639,000 and net income of $189,000 attributed to BDI and BDFD from the date of acquisition. Estimates of acquired goodwill and identifiable intangible assets related to the acquisition are as follows:
The table below presents the proforma revenue and net income for the fiscal years ended September 30, 2015 and 2014, assuming the acquisition had occurred on October 1, 2013. This proforma information does not purport to represent what the actual results of operations of the Company would have been had the acquisition occurred on this date nor does it purport to predict the results of operations for future periods. $
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Investment in Affiliate |
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Investment in Affiliate [Abstract] | |
Investment in Affiliate | 3. Investment in Affiliate On April 15, 2013, the Company executed a Subscription Agreement for the purchase of 4,800 Class A Units of BDFD, representing a 48% non-controlling voting membership interest in BDFD, for the aggregate subscription price of $750,000. The subscription price was payable in two equal installments. The first $375,000 installment was paid on the date of execution of the Subscription Agreement and the remaining $375,000 installment was paid in December 2013. As explained in Note 2 above, the Company acquired the remaining 52% interest in BDFD on May 7, 2015. Prior to the acquisition, the Company accounted for this investment using the equity method. For the fiscal year ended September 30, 2015 and 2014 the Company recorded net income of $5,000 and a net loss of ($145,000), respectively, for its share of BDFD's operating results. The carrying value at September 30, 2014 was $502,000, which is represented as Investment in Affiliate in the accompanying consolidated balance sheets. |
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets | 4. Goodwill and Intangible Assets The following table presents goodwill and intangible assets as of September 30, 2015 and September 30, 2014:
The Company had no goodwill impairment losses in the periods presented in the above table or any prior periods. There were no impairments to intangible assets during the fiscal years ended September 30, 2015 and 2014. The aggregate amortization expense related to intangible assets subject to amortization was $14,000 and $0 for the fiscal years ended September 30, 2015 and 2014, respectively. The estimated aggregate future amortization expense as of September 30, 2015 is as follows, (in thousands):
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Debt and Capital Leases |
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Debt and Capital Leases | 5. Debt and Capital Leases:
On July 30, 2014 Drive Thru entered into a Development Line Loan and Security Agreement with United Capital Business Lending (Lender), pursuant to which Lender agreed to loan Drive Thru up to $2,100,000 (the Loan) and entered into a Collateral Assignment of Franchise Agreements, Management Agreement and Partnership Interests with Lender. In addition, on July 30, 2014, the Company entered into a Guaranty Agreement (the Guaranty Agreement) with Lender, pursuant to which the Company guaranteed the repayment of the Loan. The Loan Agreement, Collateral Assignment, Notes (as defined below) and Guaranty Agreement are referred to herein as the Loan Documents. As of September 30, 2015, Drive Thru had borrowed approximately $1,314,000 under the Loan Agreement, of which $1,118,000 was borrowed during the twelve month period ended September 30, 2015. As of July 1, 2015 Drive Thru could no longer request additional draw downs. In connection with each disbursement under the Loan Agreement, Drive Thru executed a Promissory Note (the Notes) in the full amount of each disbursement request. The Notes incur interest at a rate of 6.69% per annum, are repayable in monthly installments of principal and interest over 84 months, and contain other customary terms and conditions. The Notes are subject to certain prepayment fees ranging between 1% and 3% of the unpaid balance at such time if Drive Thru repays a Note in certain circumstances prior to the thirty seventh monthly installment under such Note. The Loan Agreement and Notes contain customary representations, warranties and affirmative and negative covenants, including without limitation, annual covenants to maintain certain insurance coverage and to maintain a certain debt service coverage ratio, leverage ratio, and quick ratio. At September 30, 2015 the company was in compliance with all the required covenants. In May 2015, in connection with the BDI purchase, the Company entered into a one-year secured promissory note bearing interest at 3.25% in the amount of $2,414,000, as described in Note 2. As of September 30, 2015, principal payments on debt become due as follows:
Total interest expense on notes payable and capital leases was $93,000 and $9,000 for fiscal 2015 and fiscal 2014, respectively. |
Other Accrued Liabilities |
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Other Accrued Liabilities | 6. Other Accrued Liabilities: Other accrued liabilities consist of the following at September 30:
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Commitments and Contingencies |
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Commitments and Contingencies | 7. Commitments and Contingencies: The Company's office space, and the land and buildings related to the Drive Thru and Bad Daddy's restaurant facilities are classified as operating leases and expire over the next 20 years. Some leases contain escalation clauses over the lives of the leases. Most of the leases contain one to three five-year renewal options at the end of the initial term. Certain leases include provisions for additional contingent rent payments if sales volumes exceed specified levels. The Company paid no material contingent rentals during fiscal 2015 and 2014. Following is a summary of operating lease activity for the fiscal years ended September 30, 2015 and 2014:
As of September 30, 2015, future minimum rental commitments required under the Company's operating leases that have initial or remaining non-cancellable lease terms in excess of one year are as follows:
The Company is contingently liable on the sublease rentals disclosed above. The subleased and assigned leases expire between 2018 and 2024. In the past the Company has never been required to pay any significant amount in connection with its guarantees and currently we have not been notified nor are we aware of any leases in default by the franchisees, however there can be no assurance that there will not be such defaults in the future which could have a material effect on our future operating results. |
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Income Taxes | 8. Income Taxes: Deferred tax assets (liabilities) are comprised of the following at September 30:
* The valuation allowance decreased by $256,000 during the year ended September 30, 2015. The Company has net operating loss carry-forwards available for future periods, as discussed below, of approximately $2,272,000 from 2014 and 2015, and $5,430,000 from 2013 and prior for income tax purposes which expire from 2018 through 2035. Based on the change in control, which occurred in 2011, the utilization of the loss carry-forwards incurred for periods prior to 2012 is limited to approximately $160,000 per year. The Company has general business tax credits of $201,000 from 2014 and 2015 which expire from 2034 through 2035. Total income tax expense for the years ended 2015 and 2014 differed from the amounts computed by applying the U.S. Federal statutory tax rates to pre-tax income as follows:
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Related Parties |
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Related Parties [Abstract] | |
Related Parties | 9. Related Parties: In April 2012 the Company entered into a financial advisory services agreement with Heathcote Capital LLC (Heathcote) pursuant to which they were to provide the Company with exclusive financial advisory services in connection with a possible strategic transaction. Gary J. Heller, a member of the Company's Board of Directors, is the principal of Heathcote. Accordingly, the agreement constitutes a related party transaction and was reviewed and approved by the Audit Committee of the Company's Board of Directors. On March 25, 2013, the Company and Heathcote modified this agreement to exclude any transactions involving the Maxim Group LLC and for Heathcote to continue to provide non-exclusive financial advisory services to the Company. On September 27, 2013, the Company and Heathcote further modified this agreement to provide for investor relations activities specifically related to the exercise of the outstanding warrants and the trading volume in the Company's stock and other corporate finance projects as determined by the CEO of the company. On November 5, 2014, the Company and Heathcote further modified this agreement to provide for investor relations activities and corporate finance projects as determined by the CEO of the company. The modifications were approved by the Audit Committee of the Company's Board of Directors. Total amounts paid to Heathcote were $40,000 and $136,500 in fiscal 2015 and fiscal 2014, respectively. In April 2013 the Company entered into a management services agreement with BDFD pursuant to which the Company provided general management services as well as accounting and administrative services. Income received from the agreement by the Company was fully recognized in income and then proportionately offset by the 48% equity investment in BDFD. Total amounts received from BDFD per the management services agreement were $14,000 and $24,000 in fiscal 2015 and 2014, respectively. In addition to the management services the Company performed scope of work services and total amounts received from BDFD for these services were $0 and $64,000 in fiscal 2015 and fiscal 2014, respectively. In conjunction with the purchase of BDI in May 2015 the Company now owns 100% of BDFD and has fully consolidated their accounts in the accompanying consolidated financial statements. |
Stockholders' Equity |
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Stockholders' Equity | 10. Stockholders' Equity: Preferred Stock The Company has the authority to issue 5,000,000 shares of preferred stock. The Board of Directors has the authority to issue such preferred shares in series and determine the rights and preferences of the shares as may be determined by the Board of Directors. On March 28, 2014, Small Island Investments Limited converted all 355,451 shares of the Company's Series C Convertible Preferred Stock, par value $0.01 per share, into 710,902 shares of the Company's Common Stock, par value $0.001 per share. The effects of the conversion were to eliminate the Company's payment of dividends on the Series C Convertible Preferred Stock and to eliminate the possible need for the Company to redeem the Series C Convertible Preferred Stock for a cash payment. Common Stock On August 21, 2013, the Company completed a public offering of 2,200,000 shares of common stock, together with warrants to purchase 2,200,000 shares of our common stock (A Warrants) and additional warrants to purchase 1,100,000 shares of our common stock (B Warrants) with a per unit purchase price of $2.50. One share of common stock was sold together with one A Warrant, with each A Warrant being exercisable on or before August 16, 2018 for one share of common stock at an exercise price of $2.75 per share, and together with one B Warrant, with two B Warrants being exercisable on or before May 16, 2014 for one share of common stock at an exercise price of $2.50 per share. Additionally we issued 330,000 A warrants to purchase 330,000 shares of common stock and 330,000 B warrants to purchase 165,000 of common stock to the underwriters in connection with the public offering with the same terms as the A and B warrants sold in the offering. Also in connection with the public offering we issued 154,000 representative warrants to purchase 154,000 of common stock at an exercise price of $3.125 to the underwriters. The representative warrants were exercisable beginning May 16, 2014 and expired on August 16, 2016. As of September 30, 2015 we had received $9,782,000 in net proceeds from the exercise of warrants, there were no longer any warrants outstanding at September 30, 2015. On September 5, 2014, the registrant filed with the Securities and Exchange Commission a registration statement on Form S-1, which was subsequently amended by Amendment No. 1 to Form S-1, filed on September 23, 2014 and declared effective on September 24, 2014, and Post-Effective Amendment No. 1 to Form S-1, filed on January 29, 2015 and declared effective on February 4, 2015. The Form S-1 was filed to register the resale by the selling stockholders named in the prospectus included in the Form S-1 of up to 2,094,236 shares of the registrant's common stock, par value $0.01 per share. The Post-Effective Amendment No. 2 on Form S-3 was filed by the Company to convert the Form S-1 into a registration statement on Form S-3 On January 26, 2015, the Company filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission ("SEC") which was declared effective by the SEC on March 25, 2015. The registration statement allows the Company to issue common stock from time to time up to an aggregate amount of $75 million. On January 29, 2015, the Company filed an Amendment No. 1 to the Initial Registration Statement on Form S-1 which registered for sale 2,094,236 shares of the Company's common stock by certain selling Stockholders as further described in in our Annual Report on Form 10-K/A for the fiscal year ended September 30, 2014. The Amendment No. 1 was filed to update the financial information and other disclosures, among other things, including the Company's audited consolidated financial statements for the fiscal year ended September 30, 2014. On May 7, 2015, the Company completed a public offering of 2,783,810 shares of its common stock, which included the full exercise of the underwriters' over-allotment option, at $8.15 per share for net proceeds, after deducting underwriting discounts and commissions and offering expenses, of approximately $20.6 million. Net proceeds were used for the acquisition of BDI and to fund the remodeling and reimaging of existing Good Times Burgers & Frozen Custard restaurants, for the development of new Bad Daddy's Burger Bar restaurants, as working capital reserves and for future investment at the discretion of our Board of Directors. Common Stock Dividend Restrictions As long as at least two-thirds of the shares of common stock into which the Series B Preferred Stock was converted remains held by the former holders of such converted Series B Preferred Stock, without the written consent or affirmative vote of the holders of three-quarters of the then outstanding votes of the shares of the Series B Preferred Stock and the shares of the common stock, the Company cannot institute any payment of cash dividends or other distributions on any shares of common stock. Stock Plans The Company has an Omnibus Equity Incentive Compensation Plan (the 2008 Plan), approved by shareholders in fiscal 2008, which is the successor equity compensation plan to the Company's 2001 Stock Option Plan (the 2001 Plan). Pursuant to stockholder approval in September 2012 and February 2014 the total number of shares available for issuance under the 2008 Plan was increased to 1,000,000. As of September 30, 2015, 264,253 shares were available for future grants of nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and stock-based awards. The 2008 Plan serves as the successor to our 2001 Plan, as amended (the Predecessor Plan), and no further awards shall be made under the Predecessor Plan from and after the effective date of the 2008 Plan. All outstanding awards under the Predecessor Plan immediately prior to the effective date of the 2008 Plan shall be incorporated into the 2008 Plan and shall accordingly be treated as awards under the 2008 Plan. However, each such award shall continue to be governed solely by the terms and conditions of the instrument evidencing such grant or issuance, and, except as otherwise expressly provided in the 2008 Plan or by the Committee that administers the 2008 Plan, no provision of the 2008 Plan shall affect or otherwise modify the rights or obligations of holders of such incorporated awards. Stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite service period (generally the vesting period of the grant). The Company recorded $478,000 and $162,000 in total stock option and restricted stock compensation expense during fiscal years 2015 and 2014, respectively that was classified as general and administrative costs. Stock Option awards The Company measures the compensation cost associated with stock option awards by estimating the fair value of the award as of the grant date using the Black-Scholes pricing model. The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the Company's stock options and stock awards granted during fiscal 2015 and 2014. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by the employees who receive equity awards. During the fiscal year ended September 30, 2015, the Company granted a total of 80,871 non-statutory stock options and a total of 112,593 incentive stock options, from available shares under its 2008 Plan, as amended, with exercise prices between of $6.64 and $9.17 and per-share weighted average fair values between $4.82 and $6.88. During the fiscal year ended September 30, 2014, the Company granted 89,500 incentive stock options from available shares under its 2008 Plan, as amended, with an exercise price of $2.48 and a per-share weighted average fair value of $2.12. In addition to the exercise and grant date prices of the stock option awards, certain weighted average assumptions that were used to estimate the fair value of stock option grants are listed in the following table:
We estimate expected volatility based on historical weekly price changes of our common stock for a period equal to the current expected term of the options. The risk-free interest rate is based on the United States treasury yields in effect at the time of grant corresponding with the expected term of the options. The expected option term is the number of years we estimate that options will be outstanding prior to exercise considering vesting schedules and our historical exercise patterns.
The following table summarizes stock option activity for fiscal year 2015 under all plans:
As of September 30, 2015, the aggregate intrinsic value of the outstanding and exercisable options was $1,216,000 and $443,000, respectively. Only options whose exercise price is below the current market price of the underlying stock are included in the intrinsic value calculation. As of September 30, 2015, the total remaining unrecognized compensation cost related to non-vested stock options was $1,010,000 and is expected to be recognized over a weighted average period of approximately 2.98 years. There were 36,549 stock options exercised during the twelve months ended September 30, 2015 with proceeds of $75,000. Restricted Stock Grants During the fiscal year 2015, the Company granted a total of 24,586 shares of restricted stock to certain employees and executive officers from available shares under its 2008 Plan, as amended. The shares were issued with grant date fair market values between $8.23 and $8.60 which is equal to the closing price of the stock on the date of the grants. The restricted stock grants vest over three years following the grant date. During the fiscal year 2014, the Company issued 123,840 shares of restricted stock to certain employees and executive officers from available shares under its 2008 Plan, as amended. The shares were issued with a grant date fair market value of $3.23 which is equal to the closing price of the stock on the date of the grants. The restricted stock grant vests three years following the grant date. A summary of the status of non-vested restricted stock as of September 30, 2015 and changes during fiscal 2015 is presented below.
As of September 30, 2015, there was $437,000 of total unrecognized compensation cost related to non-vested restricted stock. This cost is expected to be recognized over a weighted average period of approximately 2.75 years. Warrants In connection with the public offering in August 2013 we issued 2,200,000 warrants to purchase 2,200,000 shares of our common stock (A Warrants) and an additional 2,200,000 warrants to purchase 1,100,000 shares of our common stock (B Warrants). Additionally we issued 330,000 A warrants to purchase 330,000 shares of common stock and 330,000 B warrants to purchase 165,000 of common stock to the underwriters in connection with the public offering. Each A Warrant was exercisable on or before August 16, 2018 for one share of common stock at an exercise price of $2.75 per share and two B Warrants were exercisable on or before May 16, 2014 for one share of common stock at an exercise price of $2.50 per share. Also, in connection with the public offering we issued 154,000 representative warrants to purchase 154,000 shares of common stock at an exercise price of $3.125 to the underwriters. The representative warrants were exercisable beginning May 16, 2014 and expired on August 16, 2016. In October, 2014 the Company mailed a notice of redemption to all holders of the Company's A Warrants. Each A Warrant was exercisable for one share of common stock at $2.75 per share until 5:00 p.m. Colorado Time on Friday, November 14, 2014. Holders of the A Warrants are no longer entitled to exercise their warrants for common stock and have no rights, except to receive the redemption price of $.01 per A Warrant, upon surrender of their Series A Warrants. No other warrants remain outstanding. As of September 30, 2015 we had received proceeds, net of expenses related to the exercise of the warrants, of $9,782,000, including $3,221,000 during the twelve month period ending September 30, 2015. A summary of warrant activity for the year ended September 30, 2015 is presented in the following table:
Non-controlling Interests - The equity interests of the unrelated limited partners and members are shown on the accompanying consolidated balance sheet in the stockholders' equity section as a non-controlling interest and is adjusted each period to reflect the limited partners' and members' share of the net income or loss as well as any cash distributions to the limited partners and members for the period. The limited partners' and members' share of the net income or loss in the partnership is shown as non-controlling interest income or expense in the accompanying consolidated statement of operations. All inter-company accounts and transactions are eliminated. The following table summarizes the activity in non-controlling interests during the year ended September 30, 2015:
Prior to the acquisition of BDI our non-controlling interest consisted of one joint venture partnership involving Good Times restaurants, as part of the acquisition of BDI additional non-controlling interests were acquired in three joint venture entities. |
Retirement Plan |
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Retirement Plan [Abstract] | |
Retirement Plan | 11. Retirement Plan: The Company sponsors a qualified defined contribution 401(k) plan for employees meeting certain eligibility requirements. Under the plan, employees are entitled to make contributions on both a pre-tax basis or on an after-tax basis (Roth Contributions). In fiscal 2015 the Company modified the plan to include a provision to make a Safe Harbor Matching Contribution to all participating employees. The Company will match, on a dollar-for-dollar basis, the first 3% of eligible pay contributed by employees. The Company will also match 50% of each dollar contributed between 3% and 5% of eligible pay contributed by employees. The Company may, at its discretion, make additional contributions to the Plan or change the matching percentage. The Company's matching contributions in fiscal 2015 and 2014 were $45,000 and $0, respectively. |
Segment Information |
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Segment Information | 12. Segment Reporting: All of our Good Times Burgers and Frozen Custard restaurants (Good Times) compete in the quick-service drive-through dining industry while our Bad Daddy's Burger Bar restaurants (Bad Daddy's) compete in the full-service upscale casual dining industry. We believe that providing this additional financial information for each of our brands will provide a better understanding of our overall operating results. Income (loss) from operations represents revenues less restaurant operating costs and expenses, directly allocable general and administrative expenses, and other restaurant-level expenses directly associated with each brand including depreciation and amortization, pre-opening costs and losses or gains on disposal of property and equipment. Unallocated corporate capital expenditures are presented below as reconciling items to the amounts presented in the consolidated financial statements. The following tables present information about our reportable segments for the respective periods:
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Subsequent Events |
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Subsequent Events [Abstract] | |
Subsequent Events | 13. Subsequent Events: None. |
Organization and Summary of Significant Accounting Policies (Policy) |
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Organization and Summary of Significant Accounting Policies [Abstract] | |
Organization | Organization Good Times Restaurants Inc. (Good Times or the Company) is a Nevada corporation. The Company operates through its wholly owned subsidiaries Good Times Drive Thru, Inc. (Drive Thru), BD of Colorado, LLC (BD of Colo), Bad Daddy's Franchise Development, LLC (BDFD) and Bad Daddy's International, LLC (BDI). Drive Thru commenced operations in 1986 and, as of September 30, 2015, operates twenty company-owned and seven joint venture drive-thru fast food hamburger restaurants under the name Good Times Burgers & Frozen Custard. The Company's restaurants are located in Colorado. In addition, Drive Thru has eleven franchises, nine operating in Colorado and two in Wyoming. BD of Colo commenced operations in 2013 and, as of September 30, 2015, operates three company-owned full-service upscale casual dining restaurants under the name Bad Daddy's Burger Bar, all of which are located in Colorado. BDI and BDFD were acquired on May 7, 2015 (see Note 2 below). As of September 30, 2015, BDI operates four company-owned and three joint venture full-service upscale casual dining restaurants, also under the name Bad Daddy's Burger Bar, all of which are located in North Carolina. BDFD has two franchises operating in South Carolina and Tennessee. Prior to the acquisition of BDFD in May 2015 the Company had a 48% voting ownership interest in the franchisor entity and the investment was accounted for using the equity method. We follow accounting standards set by the Financial Accounting Standards Board, commonly referred to as the FASB. The FASB sets generally accepted accounting principles (GAAP) that we follow to ensure we consistently report our financial condition, results of operations and cash flows. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Good Times, its subsidiaries, one limited partnership, in which the Company exercises control as general partner, and three limited liability companies, in which the Company exercises control as managing member. The Company owns an approximate 51% interest in the Drive Thru limited partnership, is the sole general partner and receives a management fee prior to any distributions to the limited partner. Because the Company owns an approximate 51% interest in the partnership and exercises complete management control over all decisions for the partnership, except for certain veto rights, the financial statements of the partnership are consolidated into the Company's financial statements. The Company owns an approximate 52%, 51% and 24% interest, respectively, each in three Bad Daddy's limited liability companies. The Company is the managing member and receives a royalty fee and management fee prior to any distributions to the other members. Because the Company exercises complete management control over all decisions for the three companies, except for certain veto rights, the financial statements of the limited liability companies are consolidated into the Company's financial statements. The equity interests of the unrelated limited partner and members are shown on the accompanying consolidated balance sheet in the stockholders' equity section as a non-controlling interest and is adjusted each period to reflect the limited partner's and members' share of the net income or loss as well as any cash distributions to the limited partners and members for the period. The limited partner's or members' share of the net income or loss in the entities is shown as non-controlling interest income or expense in the accompanying consolidated statement of operations. All inter-company accounts and transactions are eliminated. |
Basis of Presentation | Basis of Presentation The Company analyzes its operations on a regional basis, when evaluating closed restaurant operations for consideration as to the classification between continuing operations and discontinued operations. As most of the Company's Drive Thru restaurants are within the Denver metropolitan region and share common advertising, distribution, supervision, and to a certain extent even customers, the Company believes it's appropriate to perform its analysis on a regional basis. |
Reclassification | Reclassification Certain prior year balances have been reclassified to conform to the current year's presentation. Such reclassifications had no effect on the net income or loss. |
Accounting Estimates | Accounting Estimates The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles requires management to make estimates and assumptions the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Examples include provisions for bad debts and inventory reserves, accounting for business combinations, valuation of reporting units for purposes of assessing goodwill and other indefinite-lived intangible assets for impairment, valuation of asset groups for impairment testing, accruals for employee benefits, and certain contingencies. We base our estimates on historical experience, market participant fair value considerations, projected future cash flows, and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid debt instruments purchased with an initial maturity of three months or less to be cash equivalents. The Company maintains cash and cash equivalents at financial institutions with balances that at times may be in excess of the Federal Deposit Insurance Corporation (FDIC) insured limits of up to $250,000. The Company has not experienced any losses related to such accounts and management believes that the Company is not exposed to any significant risks on these accounts. Certain of the Company's accounts exceeded the FDIC insured limits as of September 30, 2015. |
Accounts Receivable | Accounts Receivable Accounts receivable include uncollateralized receivables from our franchisees and our advertising fund, due in the normal course of business, generally requiring payment within thirty days of the invoice date. On a periodic basis the Company monitors all accounts for delinquency and provides for estimated losses of uncollectible accounts. Currently and historically there have been no allowances for unrecoverable accounts receivable. |
Inventories | Inventories Inventories are stated at the lower of cost or market, determined by the first-in first-out method, and consist of restaurant food items and related packaging supplies. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the related assets, generally three to eight years. Property and equipment under capital leases are stated at the present value of minimum lease payments and are amortized using the straight-line method over the shorter of the lease term or the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the shorter of the term of the lease or the estimated useful life of the asset. Maintenance and repairs are charged to expense as incurred, and expenditures for major improvements are capitalized. When assets are retired, or otherwise disposed of, the property accounts are relieved of costs and accumulated depreciation with any resulting gain or loss credited or charged to income. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets We review our long-lived assets including land, property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the capitalized costs of the assets to the future undiscounted net cash flows expected to be generated by the assets and the expected cash flows are based on recent historical cash flows at the restaurant level. An analysis was performed for impairment at September 30, 2015 and given the results of our analysis there were no restaurants which are impaired. |
Trademarks | Trademarks Trademarks have been determined to have an indefinite life. We evaluate our trademarks for impairment annually and on an interim basis as events and circumstances warrant by comparing the fair value of the trademarks with their carrying amount. |
Goodwill | Goodwill The Company is required to test goodwill for impairment on an annual basis or whenever indications of impairment arise including, but not limited to, a significant decline in cash flows from store operations. Such tests could result in impairment charges. As of September 30, 2015, the Company had $96,000 of goodwill related to the purchase of a Good Times franchise operation on December 31, 2012 and $14,970,000 of goodwill related to the acquisition of BDI on May 7, 2015. There was no impairment required to the acquired goodwill as of September 30, 2015 or 2014. |
Sales of Restaurants and Restaurant Equity Interests | Sales of Restaurants and Restaurant Equity Interests Sales of restaurants or non-controlling equity interests in restaurants developed by the Company are recorded under either the full accrual method or the installment method of accounting. Under the full accrual method, a gain is not recognized until the collectability of the sales price is reasonably assured and the earnings process is virtually complete without further contingencies. When a sale does not meet the requirements for income recognition, the related gain is deferred until those requirements are met. Under the installment method, the gain is incrementally recognized as principal payments on the related notes receivable are collected. If the initial payment is less than specified percentages, use of the installment method is followed. The Company accounts for the sale of restaurants when the risks and other incidents of ownership have been transferred to the buyer. Specifically, a) no continuing involvement by the Company exists in restaurants that are sold, b) sales contracts and related income recognition are not dependent on the future successful operations of the sold restaurants, and c) the Company is not involved as a guarantor on the purchasers' debts. |
Deferred Liabilities | Deferred Liabilities Rent expense is reflected on a straight-line basis over the term of the lease for all leases containing step-ups in base rent. An obligation representing future payments (which totaled $1,056,000 as of September 30, 2015) is reflected in the accompanying consolidated balance sheet as a deferred liability. Lease incentives are recorded as a deferred liability when received and subsequently credited to rent expense on a straight line basis over the life of the lease. The balance of the lease incentive obligations at September 30, 2015 was $310,000 and is reflected in the accompanying consolidated balance sheet as a deferred liability. Also included in the $1,609,000 deferred and other liabilities balance is a $207,000 deferred gain on the sale of the building and improvements of one Company-owned restaurant in a sale leaseback transaction. The building and improvements were subsequently leased back from the third party purchaser. The gain will be recognized in future periods in proportion to the rents paid on the twenty year lease. |
Revenue Recognition | Revenue Recognition Revenue from company restaurant sales is recognized when the food and beverage products are sold and are presented net of sales taxes. |
Preopening Costs | Preopening Costs Restaurant opening costs are expensed as incurred. |
Advertising | Advertising The Company incurs advertising expenses in connection with the marketing of its restaurant operations. Advertising costs are expensed when the related advertising begins. |
Franchise and Area Development Fees | Franchise and Area Development Fees Individual franchise fee revenue is deferred when received and is recognized as income when the Company has substantially performed all of its obligations under the franchise agreement and the franchisee has commenced operations. The Company's commitments and obligations pursuant to the franchise agreements consist of a) development assistance; including site selection, building specifications and equipment purchasing and b) operating assistance; including training of personnel and preparation and distribution of manuals and operating materials. All of these obligations are effectively complete upon the opening of the restaurant at which time the franchise fee and the portion of any development fee allocable to that restaurant is recognized. There are no additional material commitments or obligations. The Company has not recognized any franchise fees that have not been collected. The Company segregates initial franchise fees from other franchise revenue in the statement of operations. Revenues and costs related to company-owned restaurants are segregated from revenues and costs related to franchised restaurants in the statement of operations. Continuing royalties from franchisees, which are a percentage of the gross sales of franchised operations, are recognized as income when earned. Franchise development expenses, which consist primarily of legal costs and restaurant opening expenses associated with developing and opening franchise restaurants, are expensed against the related franchise fee income. |
Income Taxes | Income Taxes We account for income taxes under the liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. The deferred tax assets are reviewed periodically for recoverability, and valuation allowances are adjusted as necessary. We believe it is more likely than not that the recorded deferred tax assets will be realized. The Company is subject to taxation in various jurisdictions. The Company continues to remain subject to examination by U.S. federal authorities for the years 2012 through 2015 and several state authorities for 2011 through 2015. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on the Company's financial condition, results of operations, or cash flows. Therefore, no reserves for uncertain income tax positions have been recorded. The Company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense. No accrual for interest and penalties was considered necessary as of September 30, 2015. |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share Basic Earnings per Share is calculated by dividing the income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Options for 364,479 and 396,910 shares of common stock, and warrants for 0 and 1,262,500 shares of common stock, were not included in computing diluted EPS for 2015 and 2014, respectively, because their effects were anti-dilutive. |
Financial Instruments and Concentrations of Credit Risk | Financial Instruments and Concentrations of Credit Risk Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. Financial instruments with off-balance-sheet risk to the Company include lease liabilities whereby the Company is contingently liable as a guarantor of certain leases that were assigned to third parties in connection with various sales of restaurants to franchisees (see Note 7). Financial instruments potentially subjecting the Company to concentrations of credit risk consist principally of receivables. At September 30, 2015 notes receivable totaled $130,000 and is due from four entities. Additionally, the Company has other current receivables totaling $189,000, which includes $73,000 of franchise receivables, and $116,000 for miscellaneous receivables which are all due in the normal course of business. The Company believes it will collect fully on all notes and receivables. The Company purchases most of its restaurant food and paper from two vendors. The Company believes a sufficient number of other suppliers exist from which food and paper could be purchased to prevent any long-term, adverse consequences. The Company operates in one industry segment, restaurants. A geographic concentration exists because the Company's customers are generally located in the Colorado and North Carolina. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite service period (generally the vesting period of the grant). See Note 10 for additional information. |
Variable Interest Entities | Variable Interest Entities Once an entity is determined to be a variable interest entity (VIE), the party with the controlling financial interest, the primary beneficiary, is required to consolidate it. The Company has three franchisees with notes payable to the Company. These franchisees are VIE's, however, the owners of the franchise operations are the primary beneficiaries of the entities, not the Company. Therefore they are not required to be consolidated. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value, is defined under a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The following three levels of inputs may be used to measure fair value and requires that the assets or liabilities carried at fair value are disclosed by the input level under which they were valued. Level 1: Quoted market prices in active markets for identical assets and liabilities. Level 2: Observable inputs other than defined in Level 1, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are not corroborated by observable market data. |
Non-controlling Interests | Non-controlling Interests - The equity interests of the unrelated limited partners and members are shown on the accompanying consolidated balance sheet in the stockholders' equity section as a non-controlling interest and is adjusted each period to reflect the limited partners' and members' share of the net income or loss as well as any cash distributions to the limited partners and members for the period. The limited partners' and members' share of the net income or loss in the partnership is shown as non-controlling interest income or expense in the accompanying consolidated statement of operations. All inter-company accounts and transactions are eliminated. Prior to the acquisition of BDI our non-controlling interest consisted of one joint venture partnership involving Good Times restaurants, as part of the acquisition of BDI (see note 2 below) additional non-controlling interests were acquired in three joint venture partnerships. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements - In April 2015, the Financial Accounting Standards Board (FASB) issued guidance which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the related debt liability rather than an asset. The recognition and measurement guidance for debt issuance costs are not affected by this guidance. This new guidance is effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted. The Company does not expect that this guidance will have a material impact on its consolidated financial statements. |
Business Combinations (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Estimate of Assets Acquired and Liabilities Assumed |
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Schedule of Intangible Assets Acquired |
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Pro-Forma Revenue and Net Income | $
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Goodwill and Intangible Assets (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill and Intangible Assets |
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Schedule of Estimated Aggregate Future Amortization Expense For Finite-Lived Intangible Assets |
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Debt and Capital Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Capital Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt and Capital Leases |
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Schedule of Principal Payments of Debt | As of September 30, 2015, principal payments on debt become due as follows:
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Other Accrued Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Accrued Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Accrued Liabilities | Other accrued liabilities consist of the following at September 30:
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Commitments and Contingencies (Tables) |
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Sep. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Operating Lease Activities | Following is a summary of operating lease activity for the fiscal years ended September 30, 2015 and 2014:
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Schedule of Future Minimum Rental Commitments | As of September 30, 2015, future minimum rental commitments required under the Company's operating leases that have initial or remaining non-cancellable lease terms in excess of one year are as follows:
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Tax Assets and Liabilities |
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Schedule of Income Tax Expense |
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Stockholders' Equity (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted Average Assumptions Used to Estimate Fair Value of Stock Option Grants | In addition to the exercise and grant date prices of the stock option awards, certain weighted average assumptions that were used to estimate the fair value of stock option grants are listed in the following table:
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Schedule of Stock Option Activity under Share Based Compensation Plan | The following table summarizes stock option activity for fiscal year 2015 under all plans:
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Schedule of Non-vested Restricted Stock Activity | A summary of the status of non-vested restricted stock as of September 30, 2015 and changes during fiscal 2015 is presented below.
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Schedule of Warrant Activity | A summary of warrant activity for the year ended September 30, 2015 is presented in the following table:
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Schedule of Noncontrolling Interest |
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Segment Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reportable Segments |
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Business Combinations (Narrative) (Details) - USD ($) |
1 Months Ended | 12 Months Ended | |
---|---|---|---|
May. 07, 2015 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Business Acquisition [Line Items] | |||
Aggregate price paid | $ 21,402,000 | ||
Cash purchase price | 18,988,000 | ||
Amount of promissory note | $ 2,414,000 | ||
Acquisition costs | $ 648,000 | $ 0 | |
Bad Daddy's International, LLC [Member] | |||
Business Acquisition [Line Items] | |||
Remaining interest acquired | 52.00% | ||
Ownership interest in affiliate | 48.00% | ||
Aggregate price paid | $ 21,402,000 | ||
Cash purchase price | 18,988,000 | ||
Amount of promissory note | $ 2,414,000 | ||
Payment period | 1 year | ||
Interest rate | 3.25% | ||
Payment threshold for release of subsidiary | 50.00% | ||
Revenue attributed to BDI from acquisition date included in statement of operations | 7,639,000 | ||
Acquisition costs | 648,000 | ||
BDFD [Member] | |||
Business Acquisition [Line Items] | |||
Revenue attributed to BDI from acquisition date included in statement of operations | $ 189,000 |
Business Combinations (Preliminary Estimated Fair Values of Assets Acquired and Liabilities Assumed) (Details) - USD ($) $ in Thousands |
1 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
May. 07, 2015 |
Sep. 30, 2015 |
Sep. 30, 2014 |
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Business Combinations [Abstract] | |||||||||
Cash | $ 1,376 | ||||||||
Receivables | 124 | ||||||||
Prepaid expenses and others | 49 | ||||||||
Inventories | 133 | ||||||||
Deposits | 52 | ||||||||
Property and equipment | 3,672 | ||||||||
Trademarks | [1] | 3,900 | |||||||
Franchise agreements | [1] | 116 | |||||||
Non-compete agreements | [1] | 15 | |||||||
Goodwill | 14,970 | [2] | $ 15,066 | $ 96 | |||||
Total assets purchased | 24,407 | ||||||||
Accounts payable and other accrued liabilities | (750) | ||||||||
Unfavorable lease liability | (481) | ||||||||
Non-controlling interests | (1,276) | ||||||||
Total liabilities assumed | (2,507) | ||||||||
Investment in BDFD balance | (498) | ||||||||
Total purchase price | 21,402 | ||||||||
Cash purchase price | 18,988 | ||||||||
Notes payable | 2,414 | ||||||||
Total purchase price | $ 21,402 | ||||||||
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Business Combinations (Estimates of Acquired Intangible Assets) (Details) - USD ($) $ in Thousands |
1 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
May. 07, 2015 |
Sep. 30, 2015 |
Sep. 30, 2014 |
||||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||||
Goodwill, including assembled Workforce | $ 14,970 | [1] | $ 15,066 | $ 96 | ||
Trademarks and Trade Names [Member] | ||||||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||||
Estimated Fair Value | 3,900 | |||||
Franchise Agreements [Member] | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated Fair Value | 116 | |||||
Franchise Agreements [Member] | Minimum [Member] | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Weighted Average Estimated Useful Life | 3 years | |||||
Franchise Agreements [Member] | Maximum [Member] | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Weighted Average Estimated Useful Life | 9 years | |||||
Non-Compete Agreements [Member] | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated Fair Value | $ 15 | |||||
Weighted Average Estimated Useful Life | 3 years | |||||
|
Business Combinations (Schedule of Proforma Revenue and Net Income) (Details) - USD ($) |
12 Months Ended | ||||
---|---|---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||
Revenues | $ 54,416,000 | $ 42,744,000 | [1] | ||
Net income | 619,000 | (147,000) | [1] | ||
Net income (loss) attributable to Good Times Restaurants, Inc. | 159,000 | (636,000) | [1] | ||
Net income (loss) attributable to common shareholders | $ 159,000 | $ (695,000) | [1] | ||
Basic and diluted income (loss) per share | $ 0.01 | $ (0.07) | [1] | ||
Acquisition-related Costs [Member] | |||||
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||
Net income | $ 648,000 | ||||
|
Investment in Affiliate (Details) |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2013
USD ($)
|
Apr. 15, 2013
USD ($)
Installment
shares
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2014
USD ($)
|
|
Investments in and Advances to Affiliates [Line Items] | ||||
Affiliate investment loss | $ (5,000) | $ (146,000) | ||
Investment in affiliate | 0 | 502,000 | ||
BDFD [Member] | ||||
Investments in and Advances to Affiliates [Line Items] | ||||
Subscription agreement for the purchase of Class A Units | shares | 4,800 | |||
Ownership interest | 48.00% | |||
Aggregate subscription price | $ 750,000 | |||
Number of installments | Installment | 2 | |||
Affiliate investment loss | $ 5,000 | $ (145,000) | ||
BDFD [Member] | First Installment [Member] | ||||
Investments in and Advances to Affiliates [Line Items] | ||||
Investment in affiliate, payment | $ 375,000 | |||
BDFD [Member] | Second Installment [Member] | ||||
Investments in and Advances to Affiliates [Line Items] | ||||
Investment in affiliate, payment | $ 375,000 |
Goodwill and Intangible Assets (Narrative) (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Goodwill and Intangible Assets [Abstract] | ||
Amortization of Intangible Assets | $ 14,000 | $ 0 |
Goodwill and Intangible Assets (Schedule of Goodwill and Intangible Assets) - USD ($) $ in Thousands |
Sep. 30, 2015 |
May. 07, 2015 |
[1] | Sep. 30, 2014 |
||
---|---|---|---|---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||||||
Gross Carrying Amount | $ 131 | $ 0 | ||||
Accumulated Amortization | (14) | 0 | ||||
Net Carrying Amount | 117 | 0 | ||||
Indefinite-lived Intangible Assets [Line Items] | ||||||
Intangible assets, gross carrying amount | 4,031 | 0 | ||||
Intangible Assets, Net (Excluding Goodwill) | 4,017 | 0 | ||||
Goodwill, Gross | 15,066 | 96 | ||||
Goodwill, Impaired, Accumulated Impairment Loss | 0 | 0 | ||||
Goodwill | 15,066 | $ 14,970 | 96 | |||
Franchise Rights [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Gross Carrying Amount | 116 | 0 | ||||
Accumulated Amortization | (11) | 0 | ||||
Net Carrying Amount | 105 | 0 | ||||
Noncompete Agreements [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Gross Carrying Amount | 15 | 0 | ||||
Accumulated Amortization | (3) | 0 | ||||
Net Carrying Amount | 12 | 0 | ||||
Trademarks [Member] | ||||||
Indefinite-lived Intangible Assets [Line Items] | ||||||
Indefinite-Lived Intangible Assets (Excluding Goodwill) | $ 3,900 | $ 0 | ||||
|
Goodwill and Intangible Assets (Estimated Aggregate Future Amortization Expense) (Details) - USD ($) $ in Thousands |
Sep. 30, 2015 |
Sep. 30, 2014 |
---|---|---|
Goodwill and Intangible Assets [Abstract] | ||
2016 | $ 28 | |
2017 | 28 | |
2018 | 19 | |
2019 | 10 | |
2020 | 10 | |
Thereafter | 22 | |
Net Carrying Amount | $ 117 | $ 0 |
Debt and Capital Leases (Schedule of Debt and Capital Leases) (Details) - USD ($) $ in Thousands |
Sep. 30, 2015 |
Sep. 30, 2014 |
---|---|---|
Debt Instrument [Line Items] | ||
Capital signage leases with Yesco, LLC with payments of principal and interest (8%) due monthly | $ 42 | $ 74 |
Debt and Capital Leases | 3,721 | 288 |
Less current portion | (2,617) | (69) |
Long term portion | 1,104 | 219 |
Notes payable with United Capital Business Lending with payments of principal and interest (6.7%) due monthly through April 2022. The loans are secured by the fixtures and equipment of the Company's Good Times Drive Thru restaurants [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable | 1,225 | 194 |
Note payable associated with the purchase of BDI and BDFD, due in full along with accrued interest of 3.25% in May 2016. The promissory note is secured by a pledge of the ownership of the two entities which own two of the acquired restaurants [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable | 2,414 | 0 |
Notes payable with Ally Financial with payments of principal and interest (3.9% to 5%) due monthly [Member] | ||
Debt Instrument [Line Items] | ||
Notes payable | $ 40 | $ 20 |
Debt and Capital Leases (Schedule of Debt and Capital Leases) (Paranthetical) (Details) |
12 Months Ended |
---|---|
Sep. 30, 2015 | |
Notes payable with United Capital Business Lending with payments of principal and interest (6.7%) due monthly through April 2022. The loans are secured by the fixtures and equipment of the Company's Good Times Drive Thru restaurants [Member] | |
Debt Instrument [Line Items] | |
Interest rate | 6.70% |
Maturity date | Apr. 30, 2022 |
Note payable associated with the purchase of BDI and BDFD, due in full along with accrued interest of 3.25% in May 2016. The promissory note is secured by a pledge of the ownership of the two entities which own two of the acquired restaurants [Member] | |
Debt Instrument [Line Items] | |
Interest rate | 3.25% |
Maturity date | May 31, 2016 |
Capital signage leases with Yesco, LLC with payments of principal and interest (8%) due monthly [Member] | |
Debt Instrument [Line Items] | |
Interest rate | 8.00% |
Notes payable with Ally Financial with payments of principal and interest (3.9% to 5%) due monthly [Member] | |
Debt Instrument [Line Items] | |
Interest rate, minimum | 3.90% |
Interest rate, maximum | 5.00% |
Debt and Capital Leases (Narrative) (Details) - USD ($) |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
May. 07, 2015 |
Jul. 31, 2014 |
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Debt Instrument [Line Items] | ||||
Loan Agreement, amount | $ 2,414,000 | |||
Borrowings on notes payable and long-term debt | $ 1,118,000 | $ 0 | ||
Total interest expense | 93,000 | $ 9,000 | ||
Bad Daddy's International, LLC [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 3.25% | |||
Payment period | 1 year | |||
Good Times Drive Thru Inc. (Borrower) [Member] | ||||
Debt Instrument [Line Items] | ||||
Loan Agreement, amount | $ 2,100,000 | |||
Loan Agreement, amount outstanding | 1,314,000 | |||
Borrowings on notes payable and long-term debt | $ 1,118,000 | |||
Good Times Drive Thru Inc. (Borrower) [Member] | Promissory Note [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 6.69% | |||
Frequency of payment | monthly | |||
Payment period | 84 months | |||
Good Times Drive Thru Inc. (Borrower) [Member] | Promissory Note [Member] | Minimum [Member] | ||||
Debt Instrument [Line Items] | ||||
Prepayment fees, percent | 1.00% | |||
Good Times Drive Thru Inc. (Borrower) [Member] | Promissory Note [Member] | Maximum [Member] | ||||
Debt Instrument [Line Items] | ||||
Prepayment fees, percent | 3.00% |
Debt and Capital Leases (Schedule of Principal Payments on Debt) (Details) $ in Thousands |
Sep. 30, 2015
USD ($)
|
---|---|
Debt and Capital Leases [Abstract] | |
2015 | $ 2,617 |
2016 | 188 |
2017 | 189 |
2018 | 202 |
2019 | 209 |
Thereafter | 316 |
Long-term Debt, Total | $ 3,721 |
Other Accrued Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2015 |
Sep. 30, 2014 |
---|---|---|
Other Accrued Liabilities [Abstract] | ||
Wages and other employee benefits | $ 583 | $ 530 |
Taxes, other than income tax | 829 | 594 |
Other | 471 | 184 |
Total | $ 1,883 | $ 1,308 |
Commitments and Contingencies (Narrative) (Details) |
12 Months Ended |
---|---|
Sep. 30, 2015 | |
Operating Leased Assets [Line Items] | |
Term of operating leases | 20 years |
Minimum [Member] | |
Operating Leased Assets [Line Items] | |
Lease Expiration Date | Jan. 01, 2018 |
Maximum [Member] | |
Operating Leased Assets [Line Items] | |
Lease Expiration Date | Dec. 31, 2024 |
Commitments and Contingencies (Summary of Operating Lease Activities) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Commitments and Contingencies [Abstract] | ||
Minimum rentals | $ 2,944 | $ 2,382 |
Less sublease rentals | (375) | (436) |
Net rent paid | $ 2,569 | $ 1,946 |
Commitments and Contingencies (Future Minimum Rental Commitments) (Details) $ in Thousands |
Sep. 30, 2015
USD ($)
|
---|---|
Commitments and Contingencies [Abstract] | |
2016 | $ 4,091 |
2017 | 4,233 |
2018 | 4,157 |
2019 | 3,865 |
2020 | 3,364 |
Thereafter | 14,595 |
Total | 34,305 |
Less sublease rentals | (1,918) |
Operating Leases Future Minimum Payments Due, Net | $ 32,387 |
Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands |
Sep. 30, 2015 |
Sep. 30, 2014 |
---|---|---|
Current [Member] | ||
Schedule of Deferred Income Tax Assets and Liabilities [Line Items] | ||
Tax effect of net operating loss carry-forward | $ 0 | $ 0 |
General business credits | 0 | 0 |
Partnership basis difference | 0 | 0 |
Deferred revenue | 0 | 0 |
Property and equipment basis differences | 0 | 0 |
Intangibles basis difference | 0 | 0 |
Other accrued liability and asset difference | 66 | 40 |
Net deferred tax assets | 66 | 40 |
Less valuation allowance | (66) | (40) |
Net deferred tax assets | 0 | 0 |
Long Term [Member] | ||
Schedule of Deferred Income Tax Assets and Liabilities [Line Items] | ||
Tax effect of net operating loss carry-forward | 2,948 | 2,830 |
General business credits | 201 | 0 |
Partnership basis difference | 84 | 194 |
Deferred revenue | 88 | 98 |
Property and equipment basis differences | 7 | 409 |
Intangibles basis difference | (225) | 0 |
Other accrued liability and asset difference | 332 | 186 |
Net deferred tax assets | 3,435 | 3,717 |
Less valuation allowance | (3,435) | (3,717) |
Net deferred tax assets | $ 0 | $ 0 |
Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Paranthetical) (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Schedule of Deferred Income Tax Assets and Liabilities [Line Items] | ||
Effect of decrease in valuation allowance | $ 256,000 | $ (243,000) |
Long Term [Member] | ||
Schedule of Deferred Income Tax Assets and Liabilities [Line Items] | ||
Tax effect of net operating loss carry-forward, charitable carry-forward | $ 15,500 |
Income Taxes (Schedule of Income Tax Expense) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Income Taxes [Abstract] | ||
Total expense (benefit) computed by applying the U.S. Statutory rate (35%) | $ (277) | $ (242) |
State income tax, net of federal tax benefit | (24) | (21) |
FICA tax credit | (108) | 0 |
Expiration of net operating loss carry-forward | 616 | 1 |
Effect of change in valuation allowance | (256) | 243 |
Permanent differences | 88 | 51 |
Other | (39) | (32) |
Provision for income taxes | $ 0 | $ 0 |
U.S. statutory rate | 35.00% | 35.00% |
Income Taxes (Narrative) (Detail) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2013 |
Sep. 30, 2012 |
|
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carry forwards | $ 2,272,000 | $ 2,198,000 | $ 5,430,000 | |
Operating loss carry-forwards utilization limit | $ 160,000 | |||
Minimum [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating Loss Carryforwards, Expiration year | 2018 | |||
Maximum [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating Loss Carryforwards, Expiration year | 2035 |
Related Parties (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
Mar. 31, 2015 |
|
Heathcote Capital LLC [Member] | |||
Related Party Transaction [Line Items] | |||
Total amount paid to advisory service agreement | $ 40,000 | $ 136,500 | |
BDFD [Member] | |||
Related Party Transaction [Line Items] | |||
Ownership interest in affiliate | 48.00% | ||
Management services | 14,000 | 24,000 | |
Scope of work services | $ 0 | $ 64,000 |
Stockholders' Equity (Narrative) (Details) - USD ($) |
1 Months Ended | 12 Months Ended | 26 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
May. 07, 2015 |
Jan. 29, 2015 |
Mar. 28, 2014 |
Aug. 21, 2013 |
Sep. 30, 2015 |
Sep. 30, 2014 |
Sep. 30, 2015 |
Nov. 14, 2014 |
|
Schedule Of Stockholders Equity [Line Items] | ||||||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | 5,000,000 | |||||
Preferred stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | |||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Aggregate amount of stock value authorized by SEC to be issued | $ 75,000,000 | |||||||
Aggregate amount of stock shares authorized by SEC to be issued | 2,094,236 | |||||||
Issuance of common shares and warrants in public offering, shares | 2,783,810 | |||||||
Public offering, shares issued, price per unit | $ 8.15 | $ 2.50 | ||||||
Proceeds from shares issued | $ 20,600,000 | |||||||
Stock based compensation expense | $ 478,000 | $ 162,000 | ||||||
Stock option exercise | 75,000 | 20,000 | ||||||
Net proceeds from warrant exercises | $ 3,221,000 | $ 6,561,000 | $ 9,782,000 | |||||
Non-Statutory Stock Options [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Stock options granted, shares | 80,871 | |||||||
Stock Options [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Stock options granted, shares | 193,464 | |||||||
Stock options granted, exercise price | $ 7.82 | |||||||
Remaining total unrecognized compensation cost related to unvested stock-based arrangements | $ 1,010,000 | 1,010,000 | ||||||
Employee service share-based compensation, nonvested awards, total compensation cost not yet recognized, period for recognition | 2 years 11 months 23 days | |||||||
Restricted Stock [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Restricted stock granted, shares | 24,586 | |||||||
Restricted stock granted, weighted average grant date fair value per share | $ 3.23 | |||||||
Vesting period | 3 years | |||||||
Remaining total unrecognized compensation cost related to unvested stock-based arrangements | $ 437,000 | $ 437,000 | ||||||
Employee service share-based compensation, nonvested awards, total compensation cost not yet recognized, period for recognition | 2 years 9 months | |||||||
Incentive Stock Options [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Stock options granted, shares | 112,593 | 89,500 | ||||||
Stock options granted, exercise price | $ 2.48 | |||||||
Stock options granted, per-share weighted average fair value | $ 2.12 | |||||||
2008 Plan [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Shares authorized to issue under plan | 1,000,000 | 1,000,000 | ||||||
Shares available for future grants | 264,253 | 264,253 | ||||||
Minimum [Member] | Non-Statutory Stock Options [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Stock options granted, exercise price | $ 6.64 | |||||||
Stock options granted, per-share weighted average fair value | 4.82 | |||||||
Minimum [Member] | Restricted Stock [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Restricted stock granted, weighted average grant date fair value per share | 8.23 | |||||||
Maximum [Member] | Non-Statutory Stock Options [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Stock options granted, exercise price | 9.17 | |||||||
Stock options granted, per-share weighted average fair value | 6.88 | |||||||
Maximum [Member] | Restricted Stock [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Restricted stock granted, weighted average grant date fair value per share | $ 8.60 | |||||||
Common Stock [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Conversion of stock, shares issued upon conversion | 710,902 | |||||||
Common stock, par value | $ 0.001 | |||||||
Issuance of common shares and warrants in public offering, shares | 2,200,000 | 2,783,810 | ||||||
Stock issued from exercise of warrants | 1,182,600 | 2,609,149 | ||||||
A Warrants [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Warrants issued | 2,200,000 | |||||||
Number of common stock to be purchased by warrants | 2,200,000 | |||||||
Number of shares in each unit | 1 | |||||||
Number of warrants in each unit | 1 | |||||||
Shares covered by each warrant | 1 | 1 | ||||||
Exercise date | Aug. 16, 2018 | |||||||
Exercise price | $ 2.75 | $ 0.01 | $ 0.01 | $ 2.75 | ||||
A Warrants [Member] | Underwriters [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Warrants issued | 330,000 | |||||||
Number of common stock to be purchased by warrants | 330,000 | |||||||
B Warrants [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Warrants issued | 2,200,000 | |||||||
Number of common stock to be purchased by warrants | 1,100,000 | |||||||
Number of shares in each unit | 1 | |||||||
Number of warrants in each unit | 2 | |||||||
Shares covered by each warrant | 1 | |||||||
Exercise date | May 16, 2014 | |||||||
Exercise price | $ 2.50 | |||||||
B Warrants [Member] | Underwriters [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Warrants issued | 330,000 | |||||||
Number of common stock to be purchased by warrants | 165,000 | |||||||
Representative Warrants [Member] | Underwriters [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Warrants issued | 154,000 | |||||||
Number of common stock to be purchased by warrants | 154,000 | |||||||
Exercise price | $ 3.125 | |||||||
Representative Warrants [Member] | Underwriters [Member] | Minimum [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Exercise date | May 16, 2014 | |||||||
Representative Warrants [Member] | Underwriters [Member] | Maximum [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Exercise date | Aug. 16, 2016 | |||||||
Series C Convertible Preferred Stock [Member] | ||||||||
Schedule Of Stockholders Equity [Line Items] | ||||||||
Conversion of stock, shares converted | 355,451 | |||||||
Preferred stock, par value | $ 0.01 |
Stockholders' Equity (Weighted Average Assumptions Used to Estimate Fair Value of Stock Option Grants) (Details) $ in Thousands |
12 Months Ended |
---|---|
Sep. 30, 2015
USD ($)
| |
Fiscal 2015 Incentive Stock Options [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (years) | 6 years 6 months |
Expected volatility, minimum | 83.00% |
Expected volatility, maximum | 87.40% |
Risk free interest rate, minimum | 1.74% |
Risk free interest rate, maximum | 1.85% |
Expected dividends | $ 0 |
Fiscal 2015 Non-Statutory Stock Options [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (years) | 6 years 6 months |
Expected volatility | 87.40% |
Risk-free interest rate | 1.85% |
Expected dividends | $ 0 |
Fiscal 2014 Incentive Stock Options [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (years) | 6 years 6 months |
Expected volatility | 112.11% |
Risk-free interest rate | 1.94% |
Expected dividends | $ 0 |
Stockholders' Equity (Summary of Stock Option Activity under Share Based Compensation Plan) (Details) - Stock Options [Member] |
12 Months Ended |
---|---|
Sep. 30, 2015
USD ($)
$ / shares
shares
| |
Shares | |
Outstanding-beg of year | shares | 396,910 |
Options granted | shares | 193,464 |
Options exercised | shares | (36,550) |
Forfeited | shares | (1,527) |
Expired | shares | (11,853) |
Outstanding Sept 30, 2015 | shares | 540,444 |
Exercisable Sept 30, 2015 | shares | 148,586 |
Weighted Average Exercise Price | |
Outstanding-beg of year | $ / shares | $ 3.87 |
Options granted | $ / shares | 7.82 |
Options exercised | $ / shares | 2.05 |
Forfeited | $ / shares | 9.17 |
Expired | $ / shares | 9.33 |
Outstanding Sept 30, 2015 | $ / shares | 5.27 |
Exercisable Sept 30, 2015 | $ / shares | $ 5.89 |
Weighted Average Remaining Contractual Life (Yrs.) | |
Outstanding Sept 30, 2015 | 7 years 4 months 24 days |
Exercisable Sept 30, 2015 | 4 years 3 months 18 days |
Aggregate Intrinsic Value | |
Outstanding Sept 30, 2015 | $ | $ 1,216,000 |
Exercisable Sept 30, 2015 | $ | $ 443,000 |
Stockholders' Equity (Summary of Non-vested Restricted Stock Activity) (Details) - Restricted Stock [Member] - $ / shares |
12 Months Ended | |
---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Shares | ||
Non-vested shares at beg of year | 123,840 | |
Granted | 24,586 | |
Vested | 0 | |
Non-vested shares at Sept 30, 2015 | 148,426 | 123,840 |
Weighted Average Grant Date Fair Value Per Share | ||
Non-vested shares at beg of year | ||
Granted | $ 3.23 | |
Vested | ||
Non-vested shares at Sept 30, 2015 | ||
Minimum [Member] | ||
Weighted Average Grant Date Fair Value Per Share | ||
Granted | $ 8.23 | |
Maximum [Member] | ||
Weighted Average Grant Date Fair Value Per Share | ||
Granted | $ 8.60 |
Stockholders' Equity (Summary of Warrant Activity) (Details) - Warrant [Member] |
12 Months Ended |
---|---|
Sep. 30, 2015
$ / shares
shares
| |
Number of Shares | |
Outstanding-beg of year | shares | 1,262,500 |
Expired | shares | (79,900) |
Exercised | shares | (1,182,600) |
Outstanding and exercisable at Sept 30, 2015 | shares | 0 |
Weighted Average Exercise Price Per Share | |
Outstanding-beg of year | $ / shares | $ 2.75 |
Issued | $ / shares | |
Expired | $ / shares | $ 2.75 |
Exercised | $ / shares | $ 2.75 |
Stockholders' Equity (Summary of Activity in Non-Controlling Interests) (Details) |
12 Months Ended |
---|---|
Sep. 30, 2015
USD ($)
| |
Noncontrolling Interest [Line Items] | |
Balance at September 30, 2014 | $ 279,000 |
Income | 491,000 |
Acquired through the BDI acquisition | 1,276,000 |
Distributions | (431,000) |
Balance at September 30, 2015 | 1,615,000 |
Good Times Drive Thru Inc. [Member] | |
Noncontrolling Interest [Line Items] | |
Balance at September 30, 2014 | 279,000 |
Income | 367,000 |
Acquired through the BDI acquisition | 0 |
Distributions | (326,000) |
Balance at September 30, 2015 | 320,000 |
Bad Daddy's International, LLC [Member] | |
Noncontrolling Interest [Line Items] | |
Balance at September 30, 2014 | 0 |
Income | 124,000 |
Acquired through the BDI acquisition | 1,276,000 |
Distributions | (105,000) |
Balance at September 30, 2015 | $ 1,295,000 |
Retirement Plan (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Retirement Plan [Abstract] | ||
Percentage of gross pay matched by employer on dollar-for-dollar basis | 3.00% | |
Percentage of each dollar of employee contributions matched by employer | 50.00% | |
Maximum employee contribution percentage | 5.00% | |
Matching contributions | $ 45,000 | $ 0 |
Segment Information (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Sep. 30, 2015 |
Sep. 30, 2014 |
|
Segment Reporting Information [Line Items] | ||
Revenues | $ 44,057 | $ 27,743 |
Income (loss) from operations | (239) | (219) |
Capital Expenditures | 7,673 | 3,593 |
Property & Equipment, net | 14,222 | 5,754 |
Good Times [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 28,901 | 25,940 |
Income (loss) from operations | 520 | 877 |
Capital Expenditures | 4,006 | 1,311 |
Property & Equipment, net | 5,268 | 3,499 |
Bad Daddy's [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 15,156 | 1,803 |
Income (loss) from operations | (759) | (1,096) |
Capital Expenditures | 3,549 | 2,215 |
Property & Equipment, net | 8,836 | 2,188 |
Corporate [Member] | ||
Segment Reporting Information [Line Items] | ||
Capital Expenditures | 118 | 67 |
Property & Equipment, net | $ 118 | $ 67 |
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