Good Times Restaurants Inc. has a market cap of $3 million; its shares were traded at around $0.77 with and P/S ratio of 0.13.
Highlight of Business Operations:As of June 30, 2010, we had a working capital deficit of $2,378,000 due primarily to the following: 1) the entire note payable to Wells Fargo Bank, N.A. of $755,000 is shown as a current liability due to certain loan covenant defaults that existed as of June 30, 2010; 2) an $85,000 current liability related to the unrealized loss on our interest rate swap, as described in Note 10 below; 3) a current liability of approximately $430,000 related to 2009 accrued property taxes which will be paid out of cash generated from operations through the end of fiscal 2010; 4) a $185,000 bridge loan that was due July 15, 2010 on which we are continuing to make monthly payments of interest only; and 5) a $400,000 bridge loan with a maturity date of December 31, 2010. We anticipate both of the bridge loans being paid out of the proceeds from a larger recapitalization event.
On June 1, 2010 we sold our interest in one co-developed restaurant in Denver, Colorado to a new franchisee owner operator. The sale resulted in net cash proceeds of $100,000 and a loss on the sale of $64,000.
As reported on Form 8k dated February 3, 2010, the Company entered into a loan agreement with W Capital, John T. MacDonald and Golden Bridge, LLC (collectively "the Lender"), pursuant to which the Lender made a loan of $200,000, with up to an additional $200,000 loan available through April 30, 2010 (the "Loan"), to be used for restaurant marketing and other working capital uses of the Company. At June 30, 2010 the entire $400,000 had been advanced to the Company.
The Loan Agreement and the Note are subject to the terms of a Leasehold Deed of Trust Agreement and Security Agreement with respect to certain of GTDT's restaurants that were not previously pledged as collateral under the Wells Fargo Bank or PFGI II, LLC borrowings. The Note is convertible into shares of common stock of the Company (the "Conversion Shares") at any time prior to repayment at a conversion price of 25% less than the average price of the Company's common stock during the 20 days prior to the conversion date, provided however that the conversion price shall not be below $.75 per share nor above $1.08 per share (the "Conversion Price").
The fair value of the warrants of $38,000 will be accredited to interest over the term of the loan. The intrinsic value of the embedded beneficial conversion feature of $161,000 will be accredited to interest over the term of the loan.
Effective January 2, 2010 and as reported on Form 8k, the Company entered into an agreement to amend its loan with PFGI II LLC. The maturity date was extended to December 31, 2012, the interest rate was increased to 8.65% and monthly payments of principal and interest are payable beginning January 31, 2010, based upon a 25 year amortization prior to maturity. In connection with the agreement the Company also issued in January 2010 112,612 warrants exercisable at $1.11. The fair value of the warrants of $79,000 will be accredited to interest over the term of the loan.
Read the The complete Report