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<SEC-DOCUMENT>0000825324-07-000002.txt : 20070214
<SEC-HEADER>0000825324-07-000002.hdr.sgml : 20070214
<ACCEPTANCE-DATETIME>20070214110232
ACCESSION NUMBER:		0000825324-07-000002
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20061231
FILED AS OF DATE:		20070214
DATE AS OF CHANGE:		20070214

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GOOD TIMES RESTAURANTS INC
		CENTRAL INDEX KEY:			0000825324
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-EATING PLACES [5812]
		IRS NUMBER:				841133368
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-18590
		FILM NUMBER:		07614866

	BUSINESS ADDRESS:	
		STREET 1:		601 CORPORATE CIRCLE
		CITY:			GOLDEN
		STATE:			CO
		ZIP:			80401
		BUSINESS PHONE:		3033841400

	MAIL ADDRESS:	
		STREET 1:		601 CORPORATE CIRCLE
		CITY:			GOLDEN
		STATE:			CO
		ZIP:			80401

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PARAMOUNT VENTURES INC
		DATE OF NAME CHANGE:	19900205
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>quarter107ed.htm
<TEXT>
<HTML>
<HEAD>
<META ="Content-Type" CONTENT="text/html; charset=windows-1252">
<META NAME="Generator" CONTENT="Microsoft Word 97">
<TITLE>UNITED STATES</TITLE>
</HEAD>
<BODY VLINK="#800080">

<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<TR><TD VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">UNITED STATES</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">SECURITIES AND EXCHANGE COMMISSION</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">Washington, D.C. 20549</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">FORM 10-QSB</B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">THE SECURITIES EXCHANGE ACT OF 1934</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">For quarterly period ended: <U>December 31, 2006</U></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">Commission file number: <U>0-18590</U></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">GOOD TIMES RESTAURANTS INC.</U></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">(Exact name of registrant as specified in its charter)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">NEVADA</U></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">(State or other jurisdiction of incorporation or organization)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">84-1133368</U></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">(I.R.S. Employer Identification No.)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">601 CORPORATE CIRCLE, GOLDEN, CO   80401</U></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">(Address of principal executive offices)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">(303) 384-1400 </U></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">(Issuer's telephone number)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">(Former name, former address and former fiscal year, since last report.)</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">[X]   Yes    [  ]   No</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">APPLICABLE ONLY TO CORPORATE ISSUERS </B></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">Total number of shares of stock outstanding at February 14, 2007.</FONT></TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">3,840,227 SHARES OF COMMON STOCK, .1 PAR VALUE</U></FONT></TD>
</TR>
<TR><TD VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">Transitional Small Business Disclosure Format (check one):  [  ]   Yes    [X ]  No</FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=3>
<B><P>Form 10-QSB</P>
<P>Quarter Ended December 31, 2006</P>
</B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=619>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">
<B><U><FONT FACE="Arial" SIZE=3><P>INDEX</B></U></FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<B><U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">PAGE</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P>PART I - FINANCIAL INFORMATION</B></FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Item 1.</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="JUSTIFY">Financial Statements</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="JUSTIFY">Condensed Consolidated Balance Sheets -</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>December 31, 2006 and September 30, 2006</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">3 - 4</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Condensed Consolidated Statements of Operations - </FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>For the three months ended December 31, 2006 and 2005</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">5</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Condensed Consolidated Statements of Cash Flow -</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>For the three months ended December 31, 2006 and 2005</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">6</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Notes to Financial Statements</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">7 - 9</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Item 2.</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Management's Discussion and Analysis</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">9 - 14</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Item 3.</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Quantitive and Qualitive Disclosures About Market Risk</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">14</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Item 4.</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Controls and Procedures</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">14</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P>PART II - OTHER INFORMATION</B></FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Item 1.</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Legal Proceedings</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">14</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Item 2.</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Changes in Securities and Use of Proceeds</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">14</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Item 3.</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Defaults Upon Senior Securities</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">14</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Item 4.</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Submission of Matters to a Vote of Security Holders</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">15</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Item 5.</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Other Information.</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">15</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Item 6.</FONT></TD>
<TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Exhibits and Reports on Form 8-K</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">15</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P>SIGNATURES</B></FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">15</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P>CERTIFICATIONS</B></FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">Exhibit 31.1</FONT></TD>
</TR>
<TR><TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">Exhibit 32.1</FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=3>
<P ALIGN="CENTER">&nbsp;</P>
<B><P ALIGN="CENTER">GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES</P>
<P ALIGN="CENTER">CONDENSED CONSOLIDATED BALANCE SHEETS</P>
<P ALIGN="CENTER">ASSETS</P>
<P ALIGN="CENTER">(Unaudited)</P>
</B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=625>
<TR><TD WIDTH="58%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">December 31,</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">September 30,</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP"><DIR>

<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">2006</DIR>
</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP"><DIR>

<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">2006</DIR>
</U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>CURRENT ASSETS:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Cash and cash equivalents</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$1,492,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$2,613,000</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Receivables</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">145,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">90,000</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Prepaid expenses and other</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">30,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">43,000</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Inventories</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">200,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">204,000</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Notes receivable</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">     92,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">     97,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Total current assets</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">1,959,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">3,047,000</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>PROPERTY AND EQUIPMENT, at cost:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Land and building</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">4,902,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">4,863,000</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Leasehold improvements</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">3,543,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">3,501,000</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Fixtures and equipment</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT"> 7,301,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">  7,224,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">15,746,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">15,588,000</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Less accumulated depreciation and amortization</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(8,681,000)</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(8,386,000)</U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">7,065,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">7,202,000</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>OTHER ASSETS:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Notes receivable, net of current portion</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">318,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">338,000</FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Deposits and other assets</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">    108,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">     106,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">    426,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">     444,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>TOTAL ASSETS</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$9,450,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$10,693,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="58%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=3><P> </P>
<B><P ALIGN="CENTER">LIABILITIES AND STOCKHOLDERS' EQUITY</P>
</B><P ALIGN="JUSTIFY"> </P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=625>
<TR><TD WIDTH="59%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>CURRENT LIABILITIES:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Current maturities of long-term debt</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$  242,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$ 229,000</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Accounts payable</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">229,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">267,000</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Deferred income</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">169,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">162,000</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Other accrued liabilities</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">   857,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">   842,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Total current liabilities</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">1,497,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">1,500,000</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>LONG-TERM LIABILITIES:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Debt, net of current portion</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">250,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">1,293,000</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Deferred liabilities</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">1,027,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">1,023,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Total long-term liabilities</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">1,277,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">2,316,000</FONT></TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="59%" VALIGN="TOP" HEIGHT=5>
<FONT FACE="Arial" SIZE=3><P>MINORITY INTERESTS IN PARTNERSHIPS</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=5>
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">745,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=5><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=5>
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">795,000</FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=3>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P ALIGN="CENTER"><A NAME="OLE_LINK2">See accompanying notes to condensed consolidated financial statements</P>
<P ALIGN="CENTER"></A></P>
<B><P ALIGN="CENTER">GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES</P>
<P ALIGN="CENTER">CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)</P>
<P ALIGN="CENTER">(Unaudited)</P>
</B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=690>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">December 31,</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP"><DIR>

<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">September 30,</DIR>
</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">2006</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP"><DIR>

<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">2006</DIR>
</U></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>STOCKHOLDERS' EQUITY:</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Preferred stock, $.01 par value;</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;5,000,000 shares authorized, none issued</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;and outstanding as of September 30, 2006 and</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;December 31, 2006</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP"><DIR>

<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">-</DIR>
</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Common stock, $.001 par value; 50,000,000 shares</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Authorized, 3,840,227 shares issued and</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Outstanding as of December 31, 2006 and</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;3,811,151 shares issued and outstanding as</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;of September 30, 2006</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">4,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP"><DIR>

<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">4,000</DIR>
</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Capital contributed in excess of par value</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">17,298,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP"><DIR>

<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">17,193,000</DIR>
</FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Accumulated deficit</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(11,371,000)</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP"><DIR>

<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(11,115,000)</DIR>
</U></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Total stockholders' equity</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">   5,931,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP"><DIR>

<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">   6,082,000</DIR>
</U></FONT></TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="57%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY</FONT></TD>
<TD WIDTH="19%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$ 9,450,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP"><DIR>

<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$10,693.000</DIR>
</U></FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=3><P ALIGN="JUSTIFY"></P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">See accompanying notes to condensed consolidated financial statements</P>
<P ALIGN="CENTER"></P>
<B><P ALIGN="CENTER">GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES</P>
<P ALIGN="CENTER">CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS</P>
<P ALIGN="CENTER">(Unaudited)</P>
</B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=696>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="34%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">For the Three Months Ended</P>
<P ALIGN="CENTER">December 31,</FONT></TD>
</TR>
</TABLE>


<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=696>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">2006</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">2005</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>NET REVENUES:</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Restaurant sales, net</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$5,167,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$4,252,000</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Franchise revenues</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">   126,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">   110,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Total net revenues</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">5,293,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">4,362,000</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>RESTAURANT OPERATING COSTS:</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Food and packaging costs</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">1,579,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">1,367,000</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Payroll and other employee benefit costs</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">1,799,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">1,459,000</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Occupancy and other operating costs</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">1,052,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">852,000</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Accretion of deferred rent</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">10,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">9,000</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Opening costs </FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">41,000</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Depreciation and amortization</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">   299,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">   215,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Total restaurant operating costs</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">4,739,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">3,943,000</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=18><P></P></TD>
<TD WIDTH="17%" VALIGN="TOP" HEIGHT=18><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=18><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=18><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;General and administrative costs</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">459,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">445,000</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Advertising costs</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">328,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">266,000</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Gain on sale of restaurant building</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">   (8,000)</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">   (30,000)</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>LOSS FROM OPERATIONS</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(225,000)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(262,000)</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>OTHER INCOME AND (EXPENSES)</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Minority income (expense), net</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(12,000)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(32,000)</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Interest, net</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">15,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">26,000</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Other, net</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(36,000)</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(54,000)</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Total other income and (expenses)</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(33,000)</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(60,000)</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>NET LOSS</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">($258,000)</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">($322,000)</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>BASIC AND DILUTED LOSS PER COMMON SHARE</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$       (.07)  </U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$       (.13)</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>WEIGHTED AVERAGE COMMON SHARES AND EQUIVALENTS</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>  USED IN PER SHARE CALCULATION:</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;BASIC AND DILUTED</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">3,818,738</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">2,501,774</U></FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=3>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P ALIGN="CENTER">See accompanying notes to condensed consolidated financial statements</P>
<P ALIGN="CENTER"></P>
<B><P ALIGN="CENTER">GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES</P>
<P ALIGN="CENTER">CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS</P>
<P ALIGN="CENTER">(Unaudited)</P>
</B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=691>
<TR><TD WIDTH="66%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="34%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">For the Three Months Ended</P>
<P ALIGN="CENTER">December 31,</FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=2></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=743>
<TR><TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">2006</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">     <U>2005</U></FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>CASH FLOWS FROM OPERATING ACTIVITIES:</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Net loss</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">($258,000)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">($322,000)</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Adjustments to reconcile net loss to net cash</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;  provided by (used in) operating activities:</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Depreciation and amortization</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">299,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">217,000</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Stock based compensation expense</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">19,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Accretion of deferred rent</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">10,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">9,000</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Minority interest</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">12,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">32,000</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Recognition of deferred (gain) on sale of restaurant building</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(8,000)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(6,000)</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;(Gain) on sale of restaurant property</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(24,000)</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Changes in operating assets and liabilities:</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;(Increase) decrease in:</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Receivables and other</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(42,000)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">58,000</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Inventories</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">4,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(30,000)</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Deposits and other</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(5,000)</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;(Decrease) increase in:</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Accounts payable</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(38,000)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">55,000</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Accrued liabilities and deferred income</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">  17,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">55,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Net cash provided by operating activities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">15,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">39,000</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>CASH FLOWS USED IN INVESTING ACTIVITIES</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Payments for the purchase of property and equipment</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(131,000)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(1,078,000)</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Sale of investments</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">1,900,000</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Loans made to franchisees and to others</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(74,000)</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Payments received on loans to franchisees and to others</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">    25,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">   43,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Net cash provided by (used in) investing activities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(106,000)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">791,000</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>CASH FLOWS FROM FINANCING ACTIVITIES:</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Principal payments on notes payable, capital leases, and long-term debt</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(57,000)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(54,000)</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Repayments on revolving lines of credit</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(1,000,000)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Preferred stock offering expenses</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">-</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(14,000)</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Proceeds from exercise of options</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">89,000</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">12,000</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Distributions, net of contributions paid to minority interests in partnerships</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">    (62,000)</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">  (58,000)</U></FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Net cash used in financing activities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(1,030,000)</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(114,000)</U></FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(1,121,000)</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">716,000</FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>CASH AND CASH EQUIVALENTS, beginning of period</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$2,613,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$1,763,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>CASH AND CASH EQUIVALENTS, end of period</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$1,492,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$2,479,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Cash paid for interest</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$     13,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$     14,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="69%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&#9;Purchase of equipment with debt</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$     27,000</U></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">$              0</U></FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">See accompanying notes to condensed consolidated financial statements</P>
<P ALIGN="CENTER"></P>
<B><P ALIGN="CENTER">GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES</P>
<P ALIGN="CENTER">NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</P>
<P ALIGN="CENTER">(Unaudited)</P>
</B><P>1.&#9;UNAUDITED FINANCIAL STATEMENTS</P>
<P>In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all of the normal recurring adjustments necessary to present fairly the financial position of the Company as of December 31, 2006, the results of its operations and its cash flows for the three month period ended December 31, 2006.  Operating results for the three month period ended December 31, 2006 are not necessarily indicative of the results that may be expected for the year ending September 30, 2007.</P>
<P>The condensed consolidated balance sheet as of September 30, 2006 is derived from the audited financial statements, but does not include all disclosures required by generally accepted accounting principles.  As a result, these financial statements should be read in conjunction with the Company's Form 10-KSB for the fiscal year ended September 30, 2006.</P>
<I><STRONG><P>Stock-Based Compensation</P>
</I></STRONG><P>Effective October 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standard (&quot;SFAS&quot;) No. 123(R), <I>Share-Based Payment</I>, using the modified prospective application transition method. Under the provisions of SFAS 123(R), 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 employee service period (generally the vesting period of the grant).</P>
<P>On August 3, 2006, the Company's Board of Directors, upon the review and recommendation by the Compensation Committee of the Board, approved the acceleration of the vesting, effective August 3, 2006, of outstanding unvested stock options to purchase a total of approximately 108,235 shares of the Company's common stock, representing all outstanding unvested stock options granted under the Company's 2001 Stock Option Plan that are held by current employees, including all executive officers of the Company. Stock options held by the Company's non-employee members of the Board were not accelerated. As a result, the accelerated options, which would otherwise have vested at various times over the next four years, became fully vested on August 3, 2006. As a result there were no unvested options outstanding as of October 1, 2006.</P>
<P>The Company measures the compensation cost associated with share-based payments by estimating the fair value of stock options as of the grant date using the Black-Scholes option 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 granted during fiscal 2007. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by the employees who receive equity awards.</P>
<P>Our net loss for the three months ended December 31, 2006 includes $19,000 of compensation costs related to our stock-based compensation arrangements.</P>
<P>During the three months ended December 31, 2006, we granted 12,000 non-statutory stock options and 52,775 incentive stock options both with exercise prices of $6.38. The per share weighted average fair values were $3.83 for non-statutory stock option grants and $3.66 for incentive stock option grants.</P>
<P>&nbsp;</P>
<P>In addition to the exercise and grant date prices of the awards, certain weighted average assumptions that were used to estimate the fair value of stock option grants are listed in the following table:</P></FONT>
<TABLE BORDER CELLSPACING=1 BORDERCOLOR="#000000" WIDTH=588>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>&nbsp;</FONT></TD>
<TD WIDTH="33%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><STRONG><P ALIGN="CENTER">Incentive Stock Options</FONT></STRONG></TD>
<TD WIDTH="39%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><STRONG><P ALIGN="CENTER">Non-Statutory Stock Options</FONT></STRONG></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P>Expected term (years)</FONT></TD>
<TD WIDTH="33%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><STRONG><P ALIGN="CENTER">6.0&nbsp;</FONT></STRONG></TD>
<TD WIDTH="39%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">6.7&nbsp;</B></FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP" BGCOLOR="#ffffff">
<FONT FACE="Arial" SIZE=3><P>Expected volatility</FONT></TD>
<TD WIDTH="33%" VALIGN="TOP" BGCOLOR="#ffffff">
<FONT FACE="Arial" SIZE=3><STRONG><P ALIGN="CENTER">56%</FONT></STRONG></TD>
<TD WIDTH="39%" VALIGN="TOP" BGCOLOR="#ffffff">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">56%</B></FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P>Risk-free interest rate</FONT></TD>
<TD WIDTH="33%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><STRONG><P ALIGN="CENTER">4.6%</FONT></STRONG></TD>
<TD WIDTH="39%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">4.6%</B></FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP" BGCOLOR="#ffffff">
<FONT FACE="Arial" SIZE=3><P>Expected dividends</FONT></TD>
<TD WIDTH="33%" VALIGN="TOP" BGCOLOR="#ffffff">
<FONT FACE="Arial" SIZE=3><STRONG><P ALIGN="CENTER">0</FONT></STRONG></TD>
<TD WIDTH="39%" VALIGN="TOP" BGCOLOR="#ffffff">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">0</B></FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=3><P>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.</P>
<P>SFAS 123(R) requires the cash flows resulting from the tax benefits for tax deductions in excess of the compensation expense recorded for those options (excess tax benefits) to be classified as financing cash flows. These excess tax benefits were $0 for the quarter ended December 31, 2006.</P>
<P>A summary of incentive stock option activity under our share-based compensation plan for the quarter ended December 31, 2006 is presented in the following table:</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=638>
<TR><TD WIDTH="30%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P><A NAME="OLE_LINK1"></B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<U><P ALIGN="CENTER">Options</B></U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">Weighted Average <U>Exercise Price</B></U></FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">Weighted Average Remaining Contractual</P>
<U><P ALIGN="CENTER">Life (Yrs.)</B></U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">Aggregate Intrinsic <U>Value</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P></A>Outstanding-beg of year</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">&nbsp;320,775</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P>$3.25</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" BGCOLOR="#c0c0c0">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#c0c0c0">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Granted</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">&nbsp;52,775</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>$6.38</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P>Exercised</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(23,076)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P>$2.69</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" BGCOLOR="#c0c0c0">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#c0c0c0">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Forfeited or expired</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">&nbsp;<U>         0</U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">        -</U></FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P>Outstanding Dec 31, 2006</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">350,474</U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<U><FONT FACE="Arial" SIZE=3><P>$3.72</U></FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">5.7</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">$821,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Exercisable Dec 31, 2006</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">297,699</U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P>$3.24</U></FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">5.0</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">$821,000</U></FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=3><P>A summary of non-statutory stock option activity under our share-based compensation plan for the quarter ended December 31, 2006 is presented in the following table:</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=637>
<TR><TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<U><P ALIGN="CENTER">Options</B></U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">Weighted Average <U>Exercise Price</B></U></FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">Weighted Average Remaining Contractual</P>
<U><P ALIGN="CENTER">Life (Yrs.)</B></U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">Aggregate Intrinsic <U>Value</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P>Outstanding-beg of year&nbsp;</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">38,000</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P>$3.61</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" BGCOLOR="#c0c0c0">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#c0c0c0">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Granted</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">12,000</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>$6.38</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P>Exercised</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">(6,000)</FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P>$1.75</FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" BGCOLOR="#c0c0c0">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#c0c0c0">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Forfeited or expired</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">         0</U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">       -</U></FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<FONT FACE="Arial" SIZE=3><P>Outstanding Dec 31, 2006</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">44,000</U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<U><FONT FACE="Arial" SIZE=3><P>$4.62</U></FONT></TD>
<TD WIDTH="21%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">7.5</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" BGCOLOR="#c0c0c0">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">$65,000</U></FONT></TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="21%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="30%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Exercisable Dec 31, 2006</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">44,000</U></FONT></TD>
<TD WIDTH="20%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P>$4.62</U></FONT></TD>
<TD WIDTH="21%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">7.5</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">$65,000</U></FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=3><P>As of December 31, 2006, the total remaining unrecognized compensation cost related to unvested stock-based arrangements was $211,000 and is expected to be recognized over a weighted average period of 4.2 years.</P>
<P>&nbsp;</P>
<P>The total intrinsic value of incentive and non-statutory stock options exercised during the three months ended December 31, 2006, was $60,000 and $24,000 respectively. Cash received from stock option exercises for the three months ended December 31, 2006 was $89,000.</P>
<P>2.&#9;CONTINGENT LIABILITY</P>
<P>We remain contingently liable on various restaurant leases that were previously sold.  We have never experienced any losses nor do we anticipate any future losses from these contingent liabilities.</P>
<P>3.&#9;STOCK TRANSACTIONS</P>
<P>None.</P>
<B><P>ITEM 2.&#9;MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION</P>
<P>&#9;AND RESULTS OF OPERATIONS FOR THE COMPANY</P>
<U><P>General</P>
</B></U><P>This Form 10-QSB contains or incorporates by reference forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended.  Also, documents subsequently filed by us with the SEC and incorporated herein by reference may contain forward-looking statements.  We caution investors that any forward-looking statements made by us are not guarantees of future performance and actual results could differ materially from those in the forward-looking statements as a result of various factors, including but not limited to the following:</P>
<P>(I)&#9;We compete with numerous well established competitors who have substantially greater financial resources and longer operating histories than we do.  Competitors have increasingly offered selected food items and combination meals, including hamburgers, at discounted prices, and continued discounting by competitors may adversely affect revenues and profitability of Company restaurants.</P><DIR>
<DIR>

<P>(II)&#9;We may be negatively impacted if we experience consistent same store sales declines.  Same store sales comparisons will be dependent, among other things, on the success of our advertising and promotion of new and existing menu items.  No assurances can be given that such advertising and promotions will in fact be successful.</P></DIR>
</DIR>

<P>We may also be negatively impacted by other factors common to the restaurant industry such as: changes in consumer tastes away from red meat and fried foods; increases in the cost of food, paper, labor, health care, workers' compensation or energy; inadequate number of hourly paid employees; and/or decreases in the availability of affordable capital resources.  We caution the reader that such risk factors are not exhaustive, particularly with respect to future filings.</P>
<I><P>Preferred Stock Offering</P>
</I><P>On February 10, 2005 we closed on the private placement of a total of 1,240,000 shares of Series B Preferred Stock for $2.50 per share, including 60,000 shares issued to one of the investors in consideration for advice and assistance with respect to the sale of 1,000,000 shares of the Series B Preferred Stock.  A current significant stockholder purchased 180,000 of the shares of Series B Preferred Stock. The aggregate purchase price for the 1,180,000 shares issued for cash was $2,950,000.  Net proceeds of approximately $2,666,000 included $133,336 paid to Eric W. Reinhard (Board Chairman) for a fee related to raising capital. We had certain mandatory conversion rights which were exercised on June 8, 2006.  The preferred shares accrued dividends at the rate of 6% per annum beginning on the first anniversary of the issuance of the shares.  A declared dividend of $25,000 for the period from February 10, 2006 to March 31, 2006 was paid on May 15, 2006.  Upon the mandatory conversion of the preferred share
s to common shares on June 8, 2006 dividends of $35,000 were paid for the period April 1, 2006 to June 8, 2006.</P>

<I><P>Restaurant Locations</P>
</I><P>We currently operate and franchise a total of forty-nine Good Times restaurants, of which forty-four are in Colorado, with forty in the Denver greater metropolitan area, two in Colorado Springs, one in Grand Junction and one in Silverthorne.</P></FONT>
<TABLE BORDER CELLSPACING=2 CELLPADDING=7 WIDTH=673>
<TR><TD WIDTH="37%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=2>
</B><P>&nbsp;</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">Total</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">Denver, CO</P>
<P ALIGN="CENTER">Greater Metro</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">Colorado</P>
<P ALIGN="CENTER">Other</B></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">Idaho</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">&nbsp;</P>
<P ALIGN="CENTER">Wyoming</B></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">North Dakota</B></FONT></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Good Times co-owned &amp; co-developed</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">23</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">22</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">1</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Good Times franchised</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">18</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">15</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">1</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">1</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">1</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Dual brand co-owned</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">3</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">3</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Dual brand franchised</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">5</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">2</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">1</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">2</FONT></TD>
</TR>
<TR><TD WIDTH="37%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">Total</B></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">49</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">42</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">2</B></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">1</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">2</B></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">2</B></FONT></TD>
</TR>
</TABLE>

<FONT FACE="Arial" SIZE=3><P ALIGN="JUSTIFY">Good Times is also offering franchises for the development of additional Good Times restaurants.</P><DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>
<DIR>

<B><P ALIGN="CENTER">December</P></DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</DIR>
</B></FONT>
<P ALIGN="LEFT"><TABLE BORDER CELLSPACING=2 CELLPADDING=7 WIDTH=433>
<TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="25%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">2005</B></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">2006</B></FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="JUSTIFY">Company-owned restaurants</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">13</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">17</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="JUSTIFY">Joint venture restaurants</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">8</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">9</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="JUSTIFY">Franchise operated restaurants</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">20</FONT></TD>
<TD WIDTH="25%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">23</FONT></TD>
</TR>
<TR><TD WIDTH="51%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="RIGHT">Total restaurants</B></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">41</B></FONT></TD>
<TD WIDTH="25%" VALIGN="TOP">
<B><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER">49</B></FONT></TD>
</TR>
</TABLE>
</P>

<FONT FACE="Arial" SIZE=3><P>In fiscal 2006 we opened one new company-owned restaurant in Thornton, Colorado in December 2005, one new co-developed restaurant in downtown Denver, Colorado in July 2006, and one new company-owned dual branded restaurant in Loveland, Colorado in August 2006.  On December 1, 2005 we purchased an existing Good Times restaurant from a franchisee and converted the restaurant to the dual brand format.  The remodeled restaurant, in Colorado Springs, Colorado, re-opened as a dual brand in February 2006.  We purchased another existing Good Times franchised restaurant in July 2006.  One new franchised Good Times restaurant opened in Colorado Springs, Colorado in June 2006, and four new franchised dual brand restaurants opened during the fiscal year; one in Ft. Collins, Colorado in December 2005, one in Bismarck, North Dakota in January 2006, one in Williston, North Dakota in August 2006 and one in Windsor, Colorado in September 2006.  Three additional dual brand restaurants are under de
velopment and we anticipate opening and franchising a total of four to five dual branded restaurants in fiscal 2007.  Three additional Good Times restaurants (two co-owned and one franchise) are under development.  We anticipate accelerating the acquisition of sites for company owned development in fiscal 2007 and beyond in Colorado and in one new market.</P>
<P>The following presents certain historical financial information of our operations.  This financial information includes results for the three months ended December 31, 2005 and results for the three months ended December 31, 2006.</P>
<B><U><P>Results of Operations</P>
</B></U><I><P>Net Revenues</P>
</I><P>Net revenues for the three months ended December 31, 2006 increased $931,000 (21.3%) to $5,293,000 from $4,362,000 for the three months ended December 31, 2005.  Same store restaurant sales decreased $199,000 (5.6%) during the three months ended December 31, 2006 for the restaurants that were open for the full periods ending December 31, 2006 and December 31, 2005.  Restaurants are included in same store sales after they have been open a full fifteen months and only Good Times restaurants are included with co-branded restaurants excluded.  Restaurant sales increased $1,048,000 due to seven new or acquired company-owned restaurants.  Three were purchased from existing franchisees in fiscal 2005 and 2006 and four new restaurants were opened beginning in late fiscal 2005 through fiscal 2006.  Restaurant sales increased $66,000 due to one non-traditional company-owned restaurant not included in same store sales.</P>
<P>Our same store restaurant sales were severely impacted by adverse weather conditions in the Denver, Colorado metropolitan area in December 2006.  The severe weather caused store closures and limited operating hours on two separate occasions during December.  December 2006 was the fifth snowiest month on record in the Denver area, and the eighth coldest on record as well.  Management estimates that lost sales due to the storms were approximately $268,000 in its company-owned and co-developed restaurants.  The estimate is based on sales trends prior to the severe weather.</P>
<P>Franchise revenues increased $16,000 to $126,000 from $110,000 for the three months ended December 31, 2005 due to an increase in franchise royalties offset by a decrease in franchise fee income.  Same store franchise restaurant sales decreased 5.7% during the three months ended December 31, 2006 for the franchise restaurants that were open for the full periods ending December 31, 2006 and December 31, 2005.  Franchise restaurant sales increased $215,000 during the three months ended December 31, 2006 for one Good Times restaurant that opened in June 2006 and co-branded franchise restaurant sales increased $388,000 during the three months ended December 31, 2006 due to the opening of four new restaurants in fiscal 2006.</P>
<I><P>Restaurant Operating Costs</P>
</I><P>Restaurant operating costs as a percent of restaurant sales were 91.7% during the three months ended December 31, 2006 compared to 92.7% in the same prior year period.</P>
<P>The changes in restaurant-level costs are explained as follows:</P></FONT>
<P ALIGN="RIGHT"><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=593>
<TR><TD WIDTH="86%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3>
<P>&nbsp;</P>
<P>Restaurant-level costs for the three month period ended December 31, 2005</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>92.7%</FONT></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Decrease in food and packaging costs</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>(1.6%)</FONT></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Increase in payroll and other employee benefit costs</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>.5%</FONT></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Increase in occupancy and other operating costs</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>.3%</FONT></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Increase in depreciation and amortization</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>.7%</FONT></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Decrease in opening costs</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>(.9%)</FONT></TD>
</TR>
<TR><TD WIDTH="86%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>Restaurant-level costs for the three month period ended December 31, 2006</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT FACE="Arial" SIZE=3><P>91.7%</FONT></TD>
</TR>
</TABLE>
</P>

<I><FONT FACE="Arial" SIZE=3><P>Food and Packaging Costs</P>
</I><P>For the three months ended December 31, 2006 our food and paper costs, increased $212,000 to $1,579,000 (30.6% of restaurant sales) from $1,367,000 (32.1% of restaurant sales) compared to the same prior year period.  Food and packaging costs decreased as a percentage of restaurant sales primarily due to: 1) limited menu price increases; 2) menu product engineering in portions and ingredients; 3) new purchasing agreements; and, 4) reductions in commodity costs compared to the same prior year period.  We anticipate stable to moderate decreases to food and packaging costs as a percentage of sales for the balance of fiscal 2007 from limited menu price increases.</P>
<I><P>Payroll and Other Employee Benefit Costs</P>
</I><P>For the three months ended December 31, 2006 our payroll and other employee benefit costs increased $340,000 to $1,799,000 (34.8% of restaurant sales) from $1,459,000 (34.3% of restaurant sales) compared to the same prior year period.  The increase in payroll and other employee benefit expenses as a percent of restaurant sales is partially the result of decreased same store sales for the period.  Payroll and benefit costs are semi-variable and therefore increase or decrease as sales fluctuate.  The current three-month period ending December 31, 2006 includes five additional company-owned restaurants opened or acquired in fiscal 2006 that represent $342,000 of the increase compared to the same prior year period.  The new restaurants operate at a higher labor cost as a percent of sales due to higher initial labor costs at new stores until they reach mature staffing levels.  The co-brand restaurants also have a higher labor cost as a percent of sales.</P>

<I><P>Occupancy and Other Operating Costs</P>
</I><P>For the three months ended December 31, 2006 our occupancy and other operating costs increased $200,000 to $1,052,000 (20.4% of restaurant sales) from $852,000 (20% of restaurant sales) compared to the same prior year period.  The current three month period ending December 31, 2006 includes five additional company-owned restaurants opened or acquired in fiscal 2006 that represent $211,000 of the increase compared to the same prior year period.  Occupancy and other operating costs will continue to increase as a percent of sales as new company-owned restaurants are developed due to higher rent associated with sale-leaseback operating leases, as well as higher property taxes at those locations.</P>
<I><P>Opening Costs</P>
</I><P>For the three months ended December 31, 2006, new store opening costs were $0 compared to $41,000 for the same prior year period.  The costs in the prior year period were associated with a company-owned restaurant that opened in late December 2005 as well as the remodeling of a company-owned restaurant in Silverthorne, Colorado.  The restaurant in Silverthorne, Colorado was remodeled to add a Dazbog co-branded coffee operation.  Each new company-owned restaurant developed in fiscal 2007 will have approximately $50,000 of pre-open expenses.</P>
<I><P>Depreciation and Amortization</P>
</I><P>For the three months ended December 31, 2006 depreciation and amortization increased $84,000 to $299,000 (5.8% of restaurant sales) from $215,000 (5% of restaurant sales) compared to the same prior year period.  The $84,000 increase in depreciation and amortization for the three months ended December 31, 2006 is primarily due to the addition of five company-owned restaurants.</P>
<I><P>General and Administrative Costs</P>
</I><P>For the three months ended December 31, 2006, general and administrative costs increased $14,000 to $459,000 (8.7% of total revenues) from $445,000 (10.2% of total revenues) for the same prior year period.  The increase in general and administrative costs compared to the same prior year period is primarily attributable to increases in payroll and employee benefit costs and stock-based compensation cost, offset by decreases in professional services and training and recruiting costs.</P>
<I><P>Advertising Costs</P>
</I><P>For the three months ended December 31, 2006 advertising costs increased $62,000 to $328,000 (6.3% of restaurant sales) from $266,000 (6.3% of restaurant sales) for the same prior year period.  The increase in advertising costs is primarily due to the increase in restaurant sales.  Contributions are made to the cooperative based on sales.</P>
<I><P>Loss From Operations</P>
</I><P>We had a loss from operations of ($225,000) in the three months ended December 31, 2006 compared to a loss from operations of ($262,000) for the same prior year period. The decrease in loss from operations of $37,000 is due primarily to the increase in net revenues offset by other matters discussed in the "Restaurant Operating Costs" and "General and Administrative Costs" sections of Item 2.</P>
<I><P>Net Loss</P>
</I><P>The net loss was ($258,000) for the three months ended December 31, 2006 compared to a net loss of ($322,000) for the same prior year period.  We estimate that the December storms reduced net income by approximately $70,000 - $80,000 based on our historical flow through to net income on incremental sales.  The change from the three month period ended December 31, 2005 to December 31, 2006 was primarily attributable to the decrease in loss from operations for the three months ended December 31, 2006, as well as: 1) a decrease in net interest income of $11,000 compared to the same prior year period; 2) a decrease in minority interest expense of $20,000 compared to the same prior year period; and, 3) a decrease in other expenses of $18,000 compared to the same prior year period.  The decrease in other expenses is primarily attributable to a $15,000 legal expense in the prior year period related to the settlement of a minor civil suit.</P>
<B><U><P>Liquidity and Capital Resources</P>
</B></U><I><P>Cash and Working Capital</P>
</I><P>As of December 31, 2006, we had $1,492,000 cash and cash equivalents on hand.  We currently plan to use the cash balance and cash generated from operations for increasing our working capital reserves and, along with additional debt and equity financing, for the development of new company-owned restaurants.  We believe that the current cash on hand and additional cash expected from operations in fiscal 2007 will be sufficient to cover our working capital requirements for fiscal 2007.</P>
<P>As of December 31, 2006, we had working capital of $462,000.  Because restaurant sales are collected in cash and accounts payable for food and paper products are paid two to four weeks later, restaurant companies often operate with working capital deficits.  We anticipate that working capital deficits will be incurred in the future as new restaurants are opened.</P>
<I><P>Capital Expenditures</P>
</I><P>We are currently negotiating purchase and lease agreements for additional company-owned and franchise restaurants and are negotiating debt and sale-leaseback financing for the development of those restaurants.  We anticipate opening three company-owned Good Times or co-branded restaurants in 2007.  We also anticipate increasing the level of reinvestment in existing company-owned and joint venture restaurants to upgrade the exterior building image and improve the patios.</P>
<I><P>Cash Flows</P>
</I><P>Net cash provided by operating activities was $15,000 for the three months ended December 31, 2006.  The net cash provided by operating activities for the three months ended December 31, 2006 was the result of a net loss of ($258,000) and non-cash reconciling items totaling $273,000 (comprised of depreciation and amortization of $299,000, minority interest of $12,000 and a net decrease in other operating assets and liabilities of $38,000).</P>
<P>Net cash provided by operating activities was $39,000 for the three months ended December 31, 2005.  The net cash provided by operating activities for the three months ended December 31, 2005 was the result of a net loss of ($322,000) and non-cash reconciling items totaling $361,000 (comprised of depreciation and amortization of $217,000, minority interest of $32,000, an increase in accounts payable of $55,000 and a net decrease in other operating assets and liabilities of $57,000).</P>
<P>Net cash used in investing activities for the three months ended December 31, 2006 was $106,000 which reflects payments of $131,000 for the purchase of property and equipment (including $77,000 for new store development and $54,000 for miscellaneous restaurant related capital expenditures) and $25,000 in principal payments received on loans to franchisees.</P>
<P>Net cash used in investing activities for the three months ended December 31, 2005 was $791,000, which reflects payments of $1,078,000 for the purchase of property and equipment (including $834,000 for new store development; $199,000 for remodeled restaurant costs; and, $45,000 for miscellaneous restaurant related capital expenditures); $1,900,000 for the sale of investments; $74,000 in loans made to franchisees and others; and, $43,000 in principal payments received on loans to franchisees.</P>
<P>Net cash used in financing activities for the three months ended December 31, 2006 was $1,030,000, which includes principal payments on notes payable and long term debt of $57,000; a repayment on our revolving line of credit of $1,000,000; net distributions to minority interests in partnerships of $62,000; and, paid in capital activity of $89,000, related to the exercise of stock options.</P>

<P>Net cash used in financing activities for the three months ended December 31, 2005 was $114,000, which includes principal payments on notes payable and long term debt of $54,000; distributions to minority interests in partnerships of $58,000; paid in capital activity of $12,000, related to the exercise of stock options; and, $14,000 for preferred stock offering expenses</P>
<I><P>Contingencies</P>
</I><P>We are contingently liable on several ground leases that have been subleased or assigned to franchisees.  We have never experienced any losses nor do we anticipate any future losses from these contingent lease liabilities.</P>
<B><U><P>Impact of Inflation</P>
</B></U><P>We experienced a moderation in commodity costs during fiscal 2005 and 2006.  It is anticipated that we will take moderate price increases during fiscal 2007, which may or may not be sufficient to recover increased commodity costs or increases in other operating expenses.</P>
<B><U><P>Seasonality</P>
</B></U><P>Revenues of the Company are subject to seasonal fluctuation based primarily on weather conditions adversely affecting restaurant sales in January, February and March.</P>
<B><P>ITEM 3.&#9;QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</P>
</B><P>There were no material changes in our exposure to market risk for the quarter ended December 31, 2006</P>
<B><P>ITEM 4.&#9;CONTROLS AND PROCEDURES</P>
</B><P>We maintain a system of disclosure controls and procedures that are designed for the purposes of ensuring that information required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Controller, who currently performs the functions of principal financial officer for the Company, as appropriate to allow timely decisions regarding required disclosures.</P>
<P>We have carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and the Controller, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based upon that evaluation, the Chief Executive Officer and the Controller concluded that our disclosure controls and procedures are effective for the purposes discussed above as of the end of the period covered by this report.  There have been no significant changes in our internal controls or in other factors that could significantly affect these controls during the quarter ended December 31, 2006.</P>
<B><P ALIGN="CENTER">GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES</P>
</B><P>Part II.&#9;Other Information</P><DIR>
<DIR>
<DIR>

<P>Item 1.&#9;Legal Proceedings</P></DIR>
</DIR>
</DIR>

<P>Good Times Restaurants is subject to legal proceedings which are incidental to its business.  These legal proceedings are not expected to have a material impact on the Company.</P><DIR>
<DIR>
<DIR>

<P>Item 2.&#9;Changes in Securities and Use of Proceeds</P></DIR>

<P>None.</P><DIR>

<P>Item 3.&#9;Defaults Upon Senior Securities</P></DIR>

<P>None.</P><DIR>

<P>Item 4.&#9;Submission of Matters to a Vote of Security Holders</P></DIR>

<P>None.</P><DIR>

<P>Item 5.&#9;Other Information</P></DIR>

<P>None.</P><DIR>

<P>Item 6.&#9;Exhibits and Reports on Form 8-K</P></DIR>

<P>(a)&#9;Exhibits.  The following exhibits are furnished as part of this report:</P></DIR>
</DIR>

<P>&#9;<U>Exhibit No.</U>&#9;<U>Description</P><DIR>
<DIR>

</U><P>*31.1&#9;Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350</P>
<P>*32.1&#9;Certification of Controller pursuant to 18 U.S.C. Section 1350</P>
<P>*32.1&#9;Certification of Chief Executive Officer and Controller pursuant to Section 906</P>
</DIR>
</DIR>

<P>*filed herewith</P>

<P>&nbsp;</P>
<B><P>SIGNATURES</P>
</B>
<P>In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</P>

<P>&nbsp;</P>
<P>&nbsp;</P></FONT>
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<B><FONT FACE="Arial" SIZE=3><P>GOOD TIMES RESTAURANTS INC.</B></FONT></TD>
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<FONT FACE="Arial" SIZE=3><P>DATE: February 14, 2007</FONT></TD>
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<TD WIDTH="61%" VALIGN="TOP"><DIR>

<I><FONT FACE="Arial" SIZE=3><P>/s/ Boyd E. Hoback</P>
</I><P>&#9;</DIR>
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<FONT FACE="Arial" SIZE=3><P>         Boyd E. Hoback</P>
<P>         President and Chief Executive Officer</FONT></TD>
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<I><FONT FACE="Arial" SIZE=3><P>/s/ Susan M. Knutson</DIR>
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<FONT FACE="Arial" SIZE=3><P>        Susan M. Knutson</P>
<P>        Controller</FONT></TD>
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<TYPE>EX-99.CERT
<SEQUENCE>2
<FILENAME>quarter1ex311ceo.htm
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<TITLE>Exhibit 31</TITLE>
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<BODY>

<U><FONT FACE="Arial" SIZE=2><P>Exhibit 31.1</P>
</U><B><P ALIGN="CENTER">CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER</P>
</B><DIR>

<P ALIGN="JUSTIFY">I, Boyd E. Hoback, certify that:</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">1.&#9;I have reviewed this quarterly report on Form 10-QSB of Good Times Restaurants Inc.;</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">2.&#9;Based on my knowledge, this quarterly 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 quarterly report;</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">3.&#9;Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">4.&#9;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-15e and 15d-15e) for the registrant and have:</P>
<P ALIGN="JUSTIFY"></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">a)&#9;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;</P>
<P ALIGN="JUSTIFY">b)&#9;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</P>
<P ALIGN="JUSTIFY">c)&#9;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.</P>
<P ALIGN="JUSTIFY"></P></DIR>
</DIR>

<P ALIGN="JUSTIFY">5.&#9;The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):</P>
<P ALIGN="JUSTIFY"></P><DIR>
<DIR>

<P ALIGN="JUSTIFY"><A NAME="OLE_LINK1">a)&#9;All significant deficiencies in the design or operation of internal controls which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and</P>
<P ALIGN="JUSTIFY">b)&#9;Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.</P></DIR>
</DIR>
</DIR>

<P ALIGN="JUSTIFY"></A></P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">/s/ Boyd E. Hoback</P>

<P>Boyd E. Hoback</P>
<I><P>President and Chief Executive Officer</P>
</I><P>February 14, 2007</P></FONT></BODY>
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<DOCUMENT>
<TYPE>EX-99.CERT
<SEQUENCE>3
<FILENAME>quarter1ex311controller.htm
<TEXT>
<HTML>
<HEAD>
<META ="Content-Type" CONTENT="text/html; charset=windows-1252">
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<TITLE>Exhibit 31</TITLE>
</HEAD>
<BODY>

<U><FONT FACE="Microsoft Sans Serif" SIZE=2><P>Exhibit 31.1</P>
</U><B><P ALIGN="CENTER">CERTIFICATION OF THE CONTROLLER</P>
</B><DIR>

<P ALIGN="JUSTIFY">I, Susan M. Knutson, certify that:</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">1.&#9;I have reviewed this quarterly report on Form 10-QSB of Good Times Restaurants Inc.;</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">2.&#9;Based on my knowledge, this quarterly 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 quarterly report;</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">3.&#9;Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;</P>
<P ALIGN="JUSTIFY"></P>
<P ALIGN="JUSTIFY">4.&#9;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-15e and 15d-15e) for the registrant and have:</P>
<P ALIGN="JUSTIFY"></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">a)&#9;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;</P>
<P ALIGN="JUSTIFY">b)&#9;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</P>
<P ALIGN="JUSTIFY">c)&#9;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.</P>
<P ALIGN="JUSTIFY"></P></DIR>
</DIR>

<P ALIGN="JUSTIFY">5.&#9;The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):</P>
<P ALIGN="JUSTIFY"></P><DIR>
<DIR>

<P ALIGN="JUSTIFY">a)&#9;All significant deficiencies in the design or operation of internal controls which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and</P>
<P ALIGN="JUSTIFY">b)&#9;Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.</P>
<P ALIGN="JUSTIFY"></P>
<P>&nbsp;</P></DIR>
</DIR>
</DIR>

<P>/s/ Susan M. Knutson</P>

<P>Susan M. Knutson</P>
<I><P>Controller</P>
</I><P>February 14, 2007</P></FONT></BODY>
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<DOCUMENT>
<TYPE>EX-99.906 CERT
<SEQUENCE>4
<FILENAME>quarter1ex321eoandcontroller.htm
<TEXT>
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<TITLE>Exhibit 32</TITLE>
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<U><FONT FACE="Microsoft Sans Serif" SIZE=2><P>Exhibit 32.1</P>
</U><B><P ALIGN="CENTER">CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, </P>
<P ALIGN="CENTER">AS ADOPTED PURSUANT TO</P>
<P ALIGN="CENTER">SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</P>
</B>
<P ALIGN="JUSTIFY">In connection with the Quarterly Report on Form 10-QSB of Good Times Restaurants Inc. (the &quot;Company&quot;) for the period ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the &quot;Report&quot;), I, Boyd E. Hoback, Chief Executive Officer and Susan M. Knutson, Controller of the Company, hereby certifies, pursuant to and solely for the purpose of 18 U.S.C. &nbsp;1350, as adopted pursuant to &nbsp;906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:</P>
<P ALIGN="JUSTIFY">(1)&#9;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</P>
<P ALIGN="JUSTIFY">(2)&#9;The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>/s/ Boyd E. Hoback&#9;/s/ Susan M. Knutson</P>

<P>&nbsp;</P>
<P>Boyd E. Hoback&#9;Susan M. Knutson</P>
<P>Chief Executive Officer&#9;Controller (principal financial officer)</P>
<P>February 14, 2007&#9;February 14, 2007</P>
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