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<SEC-DOCUMENT>0000825324-07-000024.txt : 20071228
<SEC-HEADER>0000825324-07-000024.hdr.sgml : 20071228
<ACCEPTANCE-DATETIME>20071228120305
ACCESSION NUMBER:		0000825324-07-000024
CONFORMED SUBMISSION TYPE:	10KSB
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20070930
FILED AS OF DATE:		20071228
DATE AS OF CHANGE:		20071228

FILER:

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

	FILING VALUES:
		FORM TYPE:		10KSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-18590
		FILM NUMBER:		071330889

	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>10KSB
<SEQUENCE>1
<FILENAME>ksb1.htm
<TEXT>
<html>

<head>
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</head>

<body lang=EN-US link=blue vlink=purple>



<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=636
 style='width:477.0pt;margin-left:9.9pt;border-collapse:collapse'>
 <tr style='height:.3in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal align=center style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:53.1pt;text-align:center'><b>&nbsp;</b></p>
  <p class=MsoNormal align=center style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:53.1pt;text-align:center'><b>&nbsp;</b></p>
  <p class=MsoNormal align=center style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:53.1pt;text-align:center'><b>TABLE OF
  CONTENTS</b></p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'><b>&nbsp;</b></p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:0in'><b>FORM
  10-KSB - PART I</b></p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'><b>&nbsp;</b></p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:0in'>Item
  1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Description of Business</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>24 - 35</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:0in'>Item
  2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Description of Property</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>35</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:0in'>Item
  3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Legal Proceedings</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>35</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:45.6pt;text-indent:-45.6pt'>Item 4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Submission of Matters
  to a Vote of Security Holders</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>35</p>
  </td>
 </tr>
 <tr>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:0in'><b>PART
  II</b></p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'><b>&nbsp;</b></p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:45.6pt;text-indent:-45.6pt'>Item 5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Market for Common
  Equity and Related Stockholder Matters</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>36</p>
  </td>
 </tr>
 <tr style='height:.5in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.5in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  0in;margin-left:45.6pt;margin-bottom:.0001pt;text-indent:-45.6pt'>Item 6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selected
  Financial Data</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.5in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;text-align:right'>37</p>
  </td>
 </tr>
 <tr style='height:.5in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.5in'>
  <p class=MsoNormal style='margin-left:45.6pt;text-indent:-45.6pt'>Item 7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Management's
  Discussion and Analysis of Financial Condition and Results of Operations</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.5in'>
  <p class=MsoNormal align=right style='margin-bottom:6.0pt;text-align:right'>38 - 42</p>
  </td>
 </tr>
 <tr>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:6.0pt'>Item 8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial Statements</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-bottom:6.0pt;text-align:right'>F1 - F16</p>
  </td>
 </tr>
 <tr style='height:.5in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.5in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:45.6pt;text-indent:-45.6pt'>Item 9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes In and
  Disagreements with Accountants on Accounting and Financial Disclosure</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.5in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>43</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:0in'>Item
  9A&nbsp;&nbsp;&nbsp;&nbsp; Controls and Procedures</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>43</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:0in'>Item
  9B&nbsp;&nbsp;&nbsp;&nbsp; Other Information</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>43</p>
  </td>
 </tr>
 <tr>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt'><b><br clear=all
  style='page-break-before:always'>
  </b>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:0in'><b>PART
  III</b></p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'><b>&nbsp;</b></p>
  </td>
 </tr>
 <tr style='height:.5in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.5in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:45.35pt;text-indent:-45.35pt'>Item 10&nbsp;&nbsp;&nbsp;&nbsp; Directors, Executive
  Officers, Promoter, Control Persons and Corporate Governance; Compliance with
  Section 16(a) of the Exchange Act</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.5in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>43</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:0in'>Item
  11&nbsp;&nbsp;&nbsp;&nbsp; Executive Compensation</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>43</p>
  </td>
 </tr>
 <tr style='height:.5in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.5in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:45.6pt;text-indent:-45.6pt'>Item 12&nbsp;&nbsp;&nbsp;&nbsp; Security Ownership of
  Certain Beneficial Owners and Management and Related Stockholder Matters</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.5in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>43</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:45.6pt;text-indent:-45.6pt'>Item 13&nbsp;&nbsp;&nbsp;&nbsp; Certain Relationships,
  Related Transactions, and Director Independence</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>44</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:0in'>Item
  14&nbsp;&nbsp;&nbsp;&nbsp; Principal Accountant Fees and Services</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>44</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:0in'>Item
  15&nbsp;&nbsp;&nbsp;&nbsp; Exhibits</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:.3in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>44 - 46</p>
  </td>
 </tr>
 <tr>
  <td width=540 valign=top style='width:405.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:
  6.0pt;margin-left:0in'>Signatures</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:0in;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>47</p>
  </td>
 </tr>
</table>





<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>



<br
clear=all style='page-break-before:always'>












<p class=MsoNormal align=center style='text-align:center'><b>UNITED STATES
SECURITIES AND EXCHANGE COMMISSION</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>Washington,
D.C.&nbsp; 20549</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>&nbsp;</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>FORM 10-KSB</b></p>



<p class=MsoNormal align=center style='text-align:center'>(Mark One)</p>



<p class=MsoNormal align=center style='text-align:center'>(X)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES</p>

<p class=MsoNormal align=center style='text-align:center'>EXCHANGE ACT
OF 1934</p>



<p class=MsoNormal align=center style='text-align:center'>For the fiscal
year ended:&nbsp; <u>September 30, 2007</u></p>



<p class=MsoNormal align=center style='text-align:center'>OR</p>



<p class=MsoNormal align=center style='text-align:center'>(&nbsp; )&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES</p>

<p class=MsoNormal align=center style='text-align:center'>EXCHANGE ACT
OF 1934</p>



<p class=MsoNormal align=center style='text-align:center'>For the
transition period from ____________ to _____________</p>



<p class=MsoNormal align=center style='text-align:center'>Commission
file number: <u>000-18590</u></p>



<p class=MsoNormal align=center style='text-align:center'><b>Good Times
Restaurants Inc.</b></p>

<p class=MsoNormal align=center style='text-align:center'>(Name of small
business issuer in its charter)</p>

<p class=MsoNormal align=center style='text-align:center'><u>&nbsp;</u></p>

<p class=MsoNormal align=center style='text-align:center'><u>Nevada&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
84-1133368</u></p>

<p class=MsoNormal align=center style='text-align:center'>(State or
other jurisdiction of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (I.R.S. Employer</p>

<p class=MsoNormal align=center style='text-align:center'>incorporation
or organization)&nbsp;&nbsp;&nbsp;&nbsp; Identification No.)</p>



<p class=MsoNormal align=center style='text-align:center'><u>601 Corporate
Circle, Golden, Colorado&nbsp;&nbsp;&nbsp;&nbsp; 80401</u></p>

<p class=MsoNormal align=center style='text-align:center'>(Address of
principal executive offices)&nbsp;&nbsp;&nbsp;&nbsp; (Zip Code)</p>



<p class=MsoNormal align=center style='text-align:center'>Issuer's
telephone number:&nbsp; <u>(303) 384-1400</u></p>



<p class=MsoNormal align=center style='text-align:center'>Securities
registered under Section 12(b) of the Exchange Act:</p>



<p class=MsoNormal>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Title
of each class</u> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Name of each exchange
on which registered</u></p>

<p class=MsoNormal align=right style='margin-right:49.5pt;text-align:right'>Common Stock
$.001 par value, Preferred Stock $.01 par value&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The NASDAQ Stock
Market, LLC</p>





<p class=MsoNormal align=center style='text-align:center'>&nbsp;(Title of
class)</p>



<p class=MsoNormal align=center style='text-align:center'>Securities
registered under Section 12(g) of the Exchange Act:</p>



<p class=MsoNormal align=center style='text-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.</p>

<p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'>Yes&nbsp;&nbsp; [X]&nbsp;&nbsp;
No&nbsp;&nbsp; [&nbsp;&nbsp; ]</p>

<p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'>Check if there
is no disclosure of delinquent filers in response to Item 405 of Regulation S-B
contained in this form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB [X]</p>

<p class=MsoNormal align=center style='margin-top:6.0pt;margin-right:0in;
margin-bottom:6.0pt;margin-left:0in;text-align:center'>Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes [&nbsp;&nbsp; ] &nbsp;&nbsp;&nbsp;&nbsp;No [X]</p>

<p class=MsoNormal align=center style='margin-top:6.0pt;margin-right:0in;
margin-bottom:6.0pt;margin-left:0in;text-align:center'>The issuer's revenues for its
most recent fiscal year ended September 30, 2007 were $24,955,000.</p>

<p class=MsoNormal align=center style='margin-top:6.0pt;margin-right:0in;
margin-bottom:6.0pt;margin-left:0in;text-align:center'>As of December 6, 2007, the
aggregate market value of the 1,926,389 shares of common stock held by
non-affiliates of the issuer, based on the closing sales price of the common
stock on December 6, 2007 of $6.00 per share as reported on the Nasdaq Capital
Market, was $11,558,334.</p>



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<p class=MsoNormal align=center style='margin-top:6.0pt;margin-right:0in;
margin-bottom:6.0pt;margin-left:0in;text-align:center'>As of December 6, 2007, the
issuer had 3,875,472 shares of common stock outstanding.</p>

<p class=MsoNormal align=center style='margin-top:12.0pt;margin-right:0in;
margin-bottom:6.0pt;margin-left:0in;text-align:center'><b>DOCUMENTS
INCORPORATED BY REFERENCE</b></p>

<p class=MsoNormal align=center style='margin-top:6.0pt;margin-right:0in;
margin-bottom:6.0pt;margin-left:0in;text-align:center'>The information required by
Items 10 through 13 and 15 of Part III of this form is incorporated by
reference from the issuer's definitive proxy statement to be filed with the SEC
not later than 120 days after the end of the fiscal year covered by this form
in connection with the issuer's annual meeting of shareholders to be held on January
24, 2008.</p>

<p class=MsoFooter>Transitional
Small Business Disclosure Format&nbsp; Yes [&nbsp; &nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp; No [X] </p>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:-.7pt;margin-bottom:
6.0pt;margin-left:0in'><b>PART
I</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Item 1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Description of
Business.</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify;line-height:97%'><b>Overview:</b>
Good Times Restaurants Inc., a Nevada corporation (the &quot;Company&quot;),
was organized in 1987.&nbsp; The Company is essentially a holding company for its
wholly owned subsidiary, Good Times Drive Thru Inc., which is engaged in the
business of developing, owning, operating and franchising hamburger-oriented
drive-through restaurants under the name Good Times Burgers &amp; Frozen
Custard.&nbsp; Most of our restaurants are located in the front range communities of
Colorado but we also have franchised restaurants in Idaho, North Dakota and
Wyoming. &nbsp;The terms &quot;Good Times&quot;, &quot;we&quot;, &quot;us&quot; and
&quot;our&quot; where used herein refer to the operations of Good Times Drive
Thru Inc. and of the Company.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify;line-height:97%'>Recent
Developments: 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.&nbsp; We had certain mandatory conversion rights which
were exercised on June 8, 2006.&nbsp; The preferred shares accrued dividends at the
rate of 6% per annum beginning on the first anniversary of the issuance of the
shares.&nbsp; A declared dividend of $25,000 for the period from February 10, 2006
to March 31, 2006 was paid on May 15, 2006.&nbsp; Upon the mandatory conversion of
the preferred shares to common shares on June 8, 2006 dividends of $35,000 were
paid for the period April 1, 2006 to June 8, 2006. We used the net proceeds
from the preferred stock offering for the development of new restaurants and
for the refurbishment of existing restaurants.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>The initial store of a dual brand test with a
large regional Mexican quick service restaurant chain, Taco John's International,
opened in the spring of 2004. We converted two existing underperforming Good
Times to the dual brand format in June 2005 and February 2006 and we opened a
new dual brand company-owned restaurant in August 2006.&nbsp; Four additional
franchised dual brand restaurants were opened during fiscal 2006 in Colorado
and North Dakota and two additional franchised dual brand restaurants were
opened during fiscal 2007 in Wyoming and North Dakota.&nbsp; Initial sales at the test
stores are generally meeting or exceeding expectations.&nbsp; However, operating
costs are higher than anticipated and customer service measures are lower in
the dual brand operation so we are evaluating the future expansion potential
and strategic fit for the dual brand concept. In December 2007 we granted
permission for a North Dakota franchisee to terminate their Good Times
franchise agreement in the dual brand concept.&nbsp; We have extended our Dual Brand
Test Agreement with Taco John's International through March 31, 2008. </p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify;line-height:97%'>Over the past
few years, we have been developing new restaurants with a building format that
includes a 70 seat dining room, incorporates a new design on the exterior and has
a higher level of finishes on the interior, including slate, stone and
extensive use of wood.&nbsp; The last seven stores opened under this format have
average annual sales of approximately $1.2 million, which is approximately 30%
higher than the average annual sales of stores under the older, double drive
thru format.&nbsp; We anticipate that all future stores will be developed with this
format.&nbsp; We are refining the prototype design to heighten the merchandising and
format for our fountain menu category, to maximize the exterior curb appeal and
visibility of the building and to gain additional labor efficiencies within the
restaurant.&nbsp; </p>

<p class=BodyText1 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-indent:0in'>On
December 3, 2007, we entered into a development agreement with Zen Partners LLC
that is comprised of a Development Agreement, a Management Agreement and a Site
Selection, Construction Management and Pre-Opening Services Agreement.&nbsp; David
Grissen, a significant stockholder and a member of our board of directors, has
a 20% ownership interest in Zen Partners LLC.&nbsp; The agreements provide for the
development of up to twenty-five restaurants with a five year development
schedule for up to ten restaurants with an option to develop an additional
fifteen restaurants, exercisable any time during the initial five year period.&nbsp;
We will operate the restaurants utilizing our employees on the same basis as we
would company-owned restaurants; however, Zen Partners LLC will provide all
development and operating capital.&nbsp; For each restaurant that is developed, we
will receive a monthly management fee of 5% of gross operating revenues for the
restaurant, and a services fee of $25,000.&nbsp; We may provide a limited lease
guarantee on the initial three restaurants developed, for which we will receive
a lease guaranty fee equal to 1% of net sales of the restaurant for so long as
the lease guaranty is in effect.&nbsp; We may also arrange sale leaseback
transactions for sites of the restaurants developed, for which we will receive
a sale leaseback fee of $7,500 per restaurant.&nbsp; We will also participate in the
ongoing profitability of the restaurants by receiving an incentive fee equal to
(i) 30% of the incentive income (as defined in the Management Agreement) per
year until Zen Partners LLC has received a 25% return on its net equity
investment and (ii) 20% of the incentive income per year thereafter.&nbsp; The total
future amounts of these fees and participations, if any, to be received by us,
and the interest therein of David Grissen, in connection with this transaction
are not currently determinable.</p>

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<p class=BodyText1 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-indent:0in'>On
October 1, 2007 we hired a new Vice President of Franchise Sales &amp; Development
to lead a new franchise growth initiative into the Midwestern states of
Nebraska, Iowa, Missouri, Kansas, South Dakota and Western Illinois.&nbsp;&nbsp; We plan
on seeking both experienced multi-unit franchisees of other restaurant concepts
interested in developing multiple restaurants and other experienced operators
interested in owning and operating individual restaurants. Our expansion
strategy will be based on concentrating multiple sites within each defined
television market (Designated Marketing Area) to gain media, distribution and
operational efficiencies.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify;line-height:97%'><b>Concept and
Business Strategy:</b> We operate with two different formats
that have evolved over the course of our history:&nbsp; a smaller, 880 square foot
double drive thru building focused on drive thru service and limited walk up
service; and a newer 2,400 to 2,700 square foot, 70 seat dining room format that
is the model for future stores.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>The most reliable measure of customer loyalty is
their likelihood to recommend a brand.&nbsp; Our objective is to have every customer
and every employee want to recommend Good Times to their friends.&nbsp; To achieve
this, we have developed the following strategies.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify;text-indent:0in'>&sect;&nbsp;&nbsp;
<i>Focus
on our most important drivers of success:</i></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:37.05pt;text-align:justify;text-indent:-19.95pt'>o&nbsp;&nbsp;&nbsp;
<i>Values.&nbsp;
</i>We
strive to build and develop behaviors and expectations around what we value
most throughout the company: integrity, continued improvement, customer loyalty
and respect for each other.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:37.05pt;text-align:justify;text-indent:-19.95pt'>o&nbsp;&nbsp;&nbsp;
<i>People.
</i>&nbsp;Beginning
with our Operating Partner Program, people are our strongest asset.&nbsp; We seek to
hire high quality people throughout and provide them with comprehensive
training programs to ensure that we deliver consistently superior products and
service.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:37.05pt;text-align:justify;text-indent:-19.95pt'>o&nbsp;&nbsp;&nbsp;
<i>Distinctive
quality.&nbsp; </i>We
strive to offer unique, highly distinctive tastes with the highest quality
ingredients available in the quick service restaurant category.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:37.05pt;text-align:justify;text-indent:-19.95pt'>o&nbsp;&nbsp;&nbsp;
<i>Excellent
systems. </i>&nbsp;We
strive to provide the best systems and processes in every area to free our
management to focus on leading their people.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:17.1pt;text-align:justify;text-indent:-.25in'>&sect;&nbsp;
<i>Offer
high quality, unique menu items that provide exceptional value.&nbsp; </i>Our
restaurants feature menu items that are unique in the quick service segment,
and flavor profiles that are associated more with casual theme than with fast
food.&nbsp; Whenever possible, products support the brand umbrella of &quot;fresh, high
quality ingredients&quot; such as fresh frozen custard made fresh throughout the day
in every restaurant, 100% all natural Coleman beef, fresh squeezed lemonade,
fresh leaf lettuce, grilled honey cured bacon, sliced Bermuda onions and
toppings such as real guacamole,&nbsp; grilled pineapple and saut&#233;ed mushrooms.&nbsp;
Each menu category has signature recipes with fun, irreverent names that build
Good Times' non-traditional personality such as Wild Fries with Wild Dippin
Sauce, Big Daddy Bacon Cheeseburger, Mighty Deluxe, Burnin' Buffalo Chicken and
Cappuccino Mocha Joe, Raspberry Torte and Strawberry Cheesecake Addiction Custard
Spoonbenders.&nbsp; We use a culinary consultant to assist in the ongoing
development of new products and validate a product's appeal through research,
testing and customer feedback panels prior to its rollout.&nbsp; We rolled out a new
100% all natural Coleman beef snack-sized burger available in 3 packs and 5
packs called the Bambino Burger to appeal to the more budget conscious consumer
in May of 2007.&nbsp; We are following that with the system-wide rollout of Chicken
Bambinos in January, 2008.&nbsp;&nbsp; We do not offer $.99 menu items and we anticipate
this strategy will increase customer frequency and provide a broader customer
base.&nbsp; We also anticipate refining our frozen custard menu in fiscal 2008,
adjusting portion sizing and pricing, adding some new menu items and changing
our approach to design in new restaurants in order to increase that category's
overall sales mix.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:17.1pt;text-align:justify;text-indent:-.25in'>&sect;&nbsp;
<i>Continually
improve our fast, friendly, personal customer service. </i>We strive to
optimize and personalize the interaction between our employees and customers,
particularly at the points of order and payment to build a reputation as having
the friendliest service.&nbsp; We manage the face to face interaction with our
customers through extensive employee screening and hospitality training to
ensure their experience is punctuated by attentive, friendly service.&nbsp; Speed of
service through our drive thru lanes is important to the consumers' need for
convenience but is always secondary to delivering the highest quality product
possible.&nbsp; We monitor each car's service time and have developed incentive
programs for management and employees to maintain our quick service standards.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:17.1pt;text-align:justify;text-indent:-.25in'>&sect;&nbsp;
<i>Build
customer loyalty through a unique brand experience.&nbsp; </i>In addition to
fast friendly service and great tasting products, we strive to maintain clean,
safe and appealing facilities with a particular emphasis on well groomed
landscaping, freshly painted exteriors and merchandising that highlights the
unique product attributes and flavors of our products.&nbsp; We believe that
everything the customer sees, smells, hears and feels influences their overall
impression and reputation of Good Times and that Good Times' target customer is
seeking more out of even a quick service restaurant experience.&nbsp; While
providing an excellent value at an average check slightly over $5 per person,
we do not focus on offering the lowest price or the biggest portions.&nbsp; We
strive to continually elevate each element of the customer's overall experience
with the goal of delivering the most &quot;Addictive Experience&quot; in quick service.</p>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:17.3pt;text-align:justify;text-indent:-.25in'>&sect;&nbsp;
<i>Build
awareness of the Good Times Burgers &amp; Frozen Custard brand. </i>We believe
that Good Times has built substantial brand equity among our customers and has
become known for our quality, service and signature tastes, particularly within
the hamburger category.&nbsp; We believe there is significant opportunity to
continue to build that reputation within the hamburger category by continuing
to build a stronger overall value proposition and increase awareness of our frozen
custard and fountain category.&nbsp;&nbsp; We plan additional product introductions in
those categories in the next two fiscal years and anticipate an increase in
their overall contribution to our sales mix.&nbsp; As we continue to build out the
Colorado market, our media advertising presence will increase, raising our
overall awareness and building a highly differentiated brand personality.&nbsp; Our
objective is to create customer loyalty and affinity for Good Times.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:17.3pt;text-align:justify;text-indent:-.25in'>&sect;&nbsp;
<i>Continually
improve our employees' knowledge and proficiency of our core processes. </i>Our customers'
experience is driven by the ability of our management and employees to
consistently execute clearly defined processes in every area of our business.&nbsp;
We believe that our employees' abilities and attitudes are directly related to
our ability to provide well designed service, production and operating
processes and effective training that allows them to continually learn, improve
and succeed.&nbsp; We train, test, certify and retrain all employees and management
on all of our core operating and management processes to continually improve
levels of proficiency.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Current fiscal year initiatives</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:18.9pt;text-align:justify;text-indent:-18.9pt'>1.&nbsp;&nbsp;&nbsp; <b>Consistently
Grow Same Store Sales:</b> We will continue to focus on comparable restaurant
sales driven by increases in guest counts and increases in the average guest
check.&nbsp; Same store sales increased 5.9% in fiscal 2007 and began to accelerate
in the last half of the year as we introduced a new television advertising
campaign and our new Bambino Burger value proposition.&nbsp; We finished the year with
15 consecutive quarters of growth in same store sales (factoring out the effect
of lost sales days due to storms in December and January).&nbsp;&nbsp; We aim to increase
guest counts in fiscal 2008 through a multi-faceted approach to continually
improve the Good Times brand experience for our customers by:</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:31.35pt;text-align:justify;text-indent:-14.25pt'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Augmenting
and growing our Bambino value proposition for the budget constrained consumer.&nbsp;
While our consumer target profile is one who is &quot;seeking more out of life&quot; and
more out of their restaurant experience than simply convenience or price, that
profile crosses through all demographic segments, including those that only
have a few dollars to spend for a high quality quick meal.&nbsp; We are currently
testing and plan on rolling out a smaller sized, lower priced 100% all breast
meat chicken Bambino that can be bundled in the same 3 pack and 5 pack multiples
as the Bambino Burgers.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:31.35pt;text-align:justify;text-indent:-14.25pt'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Expanding
our core consumer target to include more 16 to 29 year olds, who show a higher
affinity for all natural products and are amongst the heaviest users of quick
service restaurants.&nbsp; Historically, we have focused our marketing, pricing and
promotions toward a slightly older 18 to 54 consumer.&nbsp; That group will continue
to be an important part of our customer base, but we believe we have a
significant opportunity as our brand resonates with a younger consumer.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:31.35pt;text-align:justify;text-indent:-14.25pt'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Growing
our transactions from the fountain category.&nbsp; Historically, our brand has been
identified with great burgers.&nbsp; We have evolved our fountain menu to include a
wider selection of frozen custard treats, fresh squeezed flavored lemonades,
frozen flavored Glacier lemonades, soft drinks, fresh brewed iced tea and
shakes.&nbsp;&nbsp; We believe that we still have an opportunity to significantly
increase our sales from this category with additional television advertising,
product development and new merchandising.&nbsp; We are redesigning our prototype to
elevate the presentation of these offerings as we enter new markets.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:31.35pt;text-align:justify;text-indent:-14.25pt'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Increasing
our media presence with more television advertising and increased frequency of
messaging.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:31.35pt;text-align:justify;text-indent:-14.25pt'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Improving
our execution on customer service and the delivery of our brand experience
through evaluating our labor allocations and staffing levels. </p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:31.35pt;text-align:justify;text-indent:-14.25pt'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Continuing
to reinvest in our existing facilities with enhanced landscaping, patios and
exterior building finishes to improve the restaurants' curb appeal and
appearance.&nbsp; We will be remodeling select restaurants with finishes consistent
with our new restaurants so that we have a common image, regardless of the
format or age of the restaurant.&nbsp; </p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:23.05pt;text-align:justify;text-indent:-23.05pt'>2.&nbsp;&nbsp;&nbsp;&nbsp; <b>Manage
Restaurant Operating Costs:</b> Fiscal 2007 was a challenging macro environment
for food, paper and labor costs in the restaurant industry, with unprecedented
increases in commodity costs that affected most of our product ingredient
costs. We implemented a cumulative total weighted menu price increase of 7.3%
from January to September, 2007, enabling us to maintain our gross profit
margin, but we don't believe we will have much pricing flexibility in fiscal
2008 unless the competitive pricing environment changes.&nbsp; Colorado minimum wage
increased from $5.15 to $6.85 per hour on January 1, 2007 (and will increase to
$7.02 on January 1, 2008) which increased our overall wage scale by
approximately $.60 per employee hour. &nbsp;&nbsp;During fiscal 2008, our goal is to
engineer labor hours out of our system through improved efficiencies without
affecting our service levels.&nbsp; Typically, our newly opened restaurants
initially experience higher operating costs in both dollars and percentage of
revenues when compared to our restaurants open for more than a year.&nbsp;
Accordingly, sales volumes, timing of openings and initial operating margins of
our new restaurants are expected to have an impact on our overall profitability
until our restaurant operating base is large enough to mitigate the impact of
these opening costs and inefficiencies.</p>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:22.5pt;text-align:justify;text-indent:-23.05pt'>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>New
Company Restaurant Growth:</b> &nbsp;Our newer prototype model stores located on
high profile pad sites in big box retail and strip centers in higher income
demographic areas are performing consistently above the average of our older
stores.&nbsp; We are pursuing a disciplined growth strategy for company-owned
restaurants in Colorado on those types of sites and we believe that we can add
an additional 10 to 15 restaurants over the next several years as sites become
available.&nbsp; We believe this enables us to enhance consumer convenience and ease
of access, leverage existing operating infrastructure and increase media
advertising efficiencies and brand awareness.&nbsp; As we add to the development pipeline
for Colorado, we are acquiring new sites in the Nebraska market and evaluating
sites in other new markets for joint venture and franchise expansion that we
may augment with additional company owned development in order to accelerate
market penetration of select markets.&nbsp; Good Times is also offering franchises
for the development of additional Good Times restaurants.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Expansion strategy and site selection:</b> Our longer
term strategy is to become a super regional brand in select continuous markets,
maximizing our overall brand awareness and distribution, marketing and
operational efficiencies.&nbsp; Currently, we plan on expanding east from Colorado
into Nebraska, Kansas, Missouri, Iowa, South Dakota and Western Illinois and we
will focus our franchising efforts on those markets. </p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>We plan on developing our new prototype restaurant
design on sites that are on or adjacent to big box or grocery store anchored
shopping centers in high activity and employment areas.&nbsp; Our site selection for
new restaurants is oriented toward slightly higher income demographic areas
than many of our urban locations and most of our targeted trade areas are in
relatively high growth areas of the Denver, Colorado Springs and northern
Colorado markets.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>We lease most of our sites. &nbsp;When we do purchase
and develop a site, we intend to sell the developed site into the sale-leaseback
market under a long term lease.&nbsp; Our primary site objective is to secure a
suitable site, with the decision to buy or lease as a secondary objective.&nbsp; Our
site criteria includes a mix of substantial daily traffic, density of at least
30,000 people within a three mile radius, strong daytime population and
employment base, retail and entertainment traffic generators, good visibility
and easy access.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Restaurant locations:</b> We currently
operate and franchise a total of fifty-four Good Times restaurants, of which forty-seven
are in Colorado, with forty-two in the Denver greater metropolitan area, three
in Colorado Springs, one in Grand Junction and one in Silverthorne.</p>

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  <td width=234 valign=top style='width:175.5pt;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>&nbsp;</b></p>
  </td>
  <td width=59 valign=bottom style='width:43.95pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>Total</b></p>
  </td>
  <td width=95 valign=top style='width:71.25pt;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>Denver, CO</b></p>
  <p class=MsoNormal align=center style='text-align:center'><b>Greater
  Metro</b></p>
  </td>
  <td width=74 valign=bottom style='width:55.8pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>Colorado</b></p>
  <p class=MsoNormal align=center style='text-align:center'><b>Other</b></p>
  </td>
  <td width=54 valign=bottom style='width:40.5pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>Idaho</b></p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>Wyoming</b></p>
  </td>
  <td width=66 valign=bottom style='width:49.5pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>North Dakota</b></p>
  </td>
 </tr>
 <tr>
  <td width=234 valign=top style='width:175.5pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Good
  Times co-owned &amp; co-developed</p>
  </td>
  <td width=59 valign=top style='width:43.95pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>24</p>
  </td>
  <td width=95 valign=top style='width:71.25pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>21</p>
  </td>
  <td width=74 valign=top style='width:55.8pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>3</p>
  </td>
  <td width=54 valign=top style='width:40.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=78 valign=top style='width:58.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=66 valign=top style='width:49.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=234 valign=top style='width:175.5pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Good
  Times franchised</p>
  </td>
  <td width=59 valign=top style='width:43.95pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>20</p>
  </td>
  <td width=95 valign=top style='width:71.25pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>16</p>
  </td>
  <td width=74 valign=top style='width:55.8pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>2</p>
  </td>
  <td width=54 valign=top style='width:40.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>1</p>
  </td>
  <td width=78 valign=top style='width:58.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>1</p>
  </td>
  <td width=66 valign=top style='width:49.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=234 valign=top style='width:175.5pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Dual
  brand co-owned</p>
  </td>
  <td width=59 valign=top style='width:43.95pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>3</p>
  </td>
  <td width=95 valign=top style='width:71.25pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>3</p>
  </td>
  <td width=74 valign=top style='width:55.8pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=54 valign=top style='width:40.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=78 valign=top style='width:58.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=66 valign=top style='width:49.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=234 valign=top style='width:175.5pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Dual
  brand franchised</p>
  </td>
  <td width=59 valign=top style='width:43.95pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.5pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>7</p>
  </td>
  <td width=95 valign=top style='width:71.25pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.5pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>2</p>
  </td>
  <td width=74 valign=top style='width:55.8pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.5pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=54 valign=top style='width:40.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.5pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=78 valign=top style='width:58.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.5pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>2</p>
  </td>
  <td width=66 valign=top style='width:49.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.5pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>3</p>
  </td>
 </tr>
 <tr>
  <td width=234 valign=top style='width:175.5pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='text-align:right'>Total</p>
  </td>
  <td width=59 valign=top style='width:43.95pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>54</p>
  </td>
  <td width=95 valign=top style='width:71.25pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>42</p>
  </td>
  <td width=74 valign=top style='width:55.8pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>5</p>
  </td>
  <td width=54 valign=top style='width:40.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>1</p>
  </td>
  <td width=78 valign=top style='width:58.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>3</p>
  </td>
  <td width=66 valign=top style='width:49.5pt;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>3</p>
  </td>
 </tr>
</table>

<table class=MsoNormalTable border=1 cellspacing=0 cellpadding=0 align=left
 width=660 style='margin-left:5.4pt;border-collapse:collapse;border:none;
 margin-left:6.75pt;margin-right:6.75pt'>
 <tr>
  <td width=660 colspan=3 valign=top style='width:495.0pt;border:none;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-top:12.0pt;margin-right:0in;
  margin-bottom:0in;margin-left:3.3in;margin-bottom:.0001pt;text-align:center'><b>DECEMBER</b></p>
  </td>
 </tr>
 <tr>
  <td width=306 valign=top style='width:229.5pt;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=182 valign=top style='width:1.9in;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>2006</b></p>
  </td>
  <td width=172 valign=top style='width:128.7pt;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>2007</b></p>
  </td>
 </tr>
 <tr>
  <td width=306 valign=top style='width:229.5pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Company-owned restaurants</p>
  </td>
  <td width=182 valign=top style='width:1.9in;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>17</p>
  </td>
  <td width=172 valign=top style='width:128.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>18</p>
  </td>
 </tr>
 <tr>
  <td width=306 valign=top style='width:229.5pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Joint venture restaurants</p>
  </td>
  <td width=182 valign=top style='width:1.9in;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>9</p>
  </td>
  <td width=172 valign=top style='width:128.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>9</p>
  </td>
 </tr>
 <tr>
  <td width=306 valign=top style='width:229.5pt;border-top:none;border-left:
  solid windowtext 1.0pt;border-bottom:solid windowtext 1.5pt;border-right:
  solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Franchise operated restaurants</p>
  </td>
  <td width=182 valign=top style='width:1.9in;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.5pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>23</p>
  </td>
  <td width=172 valign=top style='width:128.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.5pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>27</p>
  </td>
 </tr>
 <tr>
  <td width=306 valign=top style='width:229.5pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='text-align:right'>Total
  restaurants</p>
  </td>
  <td width=182 valign=top style='width:1.9in;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>49</p>
  </td>
  <td width=172 valign=top style='width:128.7pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>54</p>
  </td>
 </tr>
</table>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>In fiscal 2007 we opened one new company-owned
restaurant in Littleton, Colorado in May 2007 and one new company-owned restaurant
in Colorado Springs, Colorado in August 2007.&nbsp; In May 2007 we sold one existing
company-owned restaurant to a new franchisee.&nbsp; One new franchised Good Times
restaurant opened in Longmont, Colorado in March 2007, and two new franchised
dual brand restaurants opened in February 2007, one in Gillette, Wyoming and
one in Dickinson, North Dakota.&nbsp; Seven additional Good Times restaurants are
under development, three in Colorado and four in Omaha, Nebraska.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Menu:</b> The menu of a
Good Times Burgers &amp; Frozen Custard restaurant is limited to hamburgers,
cheeseburgers, chicken sandwiches, french fries, onion rings, fresh squeezed and
frozen lemonades, soft drinks and frozen custard products.&nbsp; Each menu item is
made to order at the time the customer places the order and is not
pre-prepared.</p>

<div style='border:none;border-top:solid windowtext 1.5pt;padding:1.0pt 0in 0in 0in'>

<p class=MsoFooter align=center style='text-align:center;border:none;
padding:0in'>27</p>

</div>

<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>



<br
clear=all style='page-break-before:always'>










<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>The hamburger patty is prepared with specially
formulated and seasoned Coleman 100% natural beef, served on a 4 1/4 inch bun.&nbsp;
Hamburgers and cheeseburgers are garnished with fresh leaf lettuce, fresh
sliced sweet red
onions, mayonnaise, mustard,
ketchup, pickles and fresh sliced tomatoes.&nbsp; Other specialty hamburger toppings
include guacamole, fresh grilled honey cured bacon, and proprietary sauces.&nbsp;
The chicken products include a spiced, battered whole muscle breast patty and a
grilled seasoned breast patty, both served with mayonnaise, lettuce and
tomatoes on a whole grain bun and Chicken Dunkers, whole breast meat breaded
strips. Signature chicken sandwiches include the Burnin' Buffalo, Tasty
Teriyaki, Peppercorn Ranch and Guacamole Chicken.&nbsp; Equipment has been automated
and equipped with compensating computers to deliver a consistent product and
minimize variability in operating systems.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Coleman beef is raised without the use of any
hormones, antibiotics or animal byproducts that are normally used in the open
beef market.&nbsp; We believe that Coleman beef delivers a better tasting product
and, because of the rigorous protocols and testing that are a part of the
Coleman processes, also minimizes the risk of any food-borne bacteria-related
illnesses.&nbsp; Good Times is the only quick service restaurant chain serving
exclusively Coleman 100% natural beef.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Fresh frozen custard is a premium ice cream
(requiring in excess of 10% butterfat content) with a proprietary vanilla blend
that is prepared from highly specialized equipment that minimizes the amount of
air that is added to the mix and that creates smaller ice crystals than other
frozen dairy desserts.&nbsp; The custard is scooped similarly to hard-packed ice
cream but is served at a slightly warmer temperature. The resulting product is
smoother, creamier and thicker than typical soft serve or hard-packed ice cream
products.&nbsp; Good Times serves the frozen custard in cups and cones, specialty
sundaes and &quot;Spoonbenders&quot;, a mix of custard and toppings, and we
anticipate it will continue to become a larger percentage of sales as we
continue to develop custard products and awareness.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Marketing &amp; Advertising:</b> Our marketing
strategy focuses on:&nbsp; 1) driving comparable restaurant sales through attracting
new customers and increasing the frequency of visits by current customers; 2)
communicating specific product news and attributes to build strong points of
difference from competitors; and 3) communicating a unique, strong and
consistent brand.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Media is an important component of building Good
Times' brand awareness and distinctiveness.&nbsp; We spent our ad dollars on both television
and radio media during fiscal 2007.&nbsp; The Colorado market is an expensive media
market, so most of our ad placement is not in prime time but in early and late
fringe, prime access and late news time slots.&nbsp; As we continue to develop more
and more distinctiveness to Good Times' brand and increase penetration of the
Colorado market, we anticipate we will continue to use media advertising to increase
overall awareness.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Another important component of our marketing
efforts is point-of-sale and on-site merchandising.&nbsp; We rotate new four color product
point-of-purchase displays every other month and support new product
introductions with extensive merchandising. Our restaurants with dining rooms
have back-lit and front-lit product displays, table tents and product messaging
throughout.&nbsp; Menu boards are kept fresh with new food photography and graphics
each month.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>During fiscal 2006 we re-designed and expanded the
use of our website and have begun to use email marketing as a tool to build
customer loyalty.&nbsp; We have a marketing agreement with the Pepsi Center in
Denver, Colorado to serve and promote Good Times' products in that venue in
fiscal 2008.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>As we develop new markets, our marketing will
focus on generating new customer trial through grand opening campaigns, public
relations, direct response mail and charitable tie-ins.&nbsp; We plan on
concentrating our new market development to attain a critical mass of
restaurants in each market to support radio and television advertising. </p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Operations</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Restaurant Management:</b> We are
developing Operating Partners in most of our restaurants as we are able to
recruit qualified candidates.&nbsp; We believe that this is a distinct competitive
advantage that provides a higher level of service, quality control and
stability over time. The objective of the Operating Partner Program is to have
each partner develop a relationship with the employees, the customers and the
community at their restaurant and develop an ownership mentality with
commensurate rewards as sales increase over a longer period of time.&nbsp; The
program allows an Operating Partner to earn 25% of a restaurant's improvement
in cash flow over an established baseline.&nbsp; Each Good Times unit employs an
operating partner or a general manager, one to two assistant managers and
approximately 15 to 25 employees, most of whom work part-time during three
shifts.&nbsp; An eight to ten week training program is utilized to train restaurant
managers on all phases of the operation.&nbsp; Ongoing training is provided as
necessary. We believe that incentive compensation of our restaurant managers is
essential to the success of our business.&nbsp; Accordingly, in addition to a
salary, managerial employees may be paid a bonus based upon proficiency in
meeting financial, customer service and quality performance objectives tied to
a monthly scorecard of measures.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Operational systems and processes:</b> We believe
that we have some of the best operating systems and processes in the industry.&nbsp;
Detailed processes have been developed for hourly, daily, weekly and monthly
responsibilities that drive consistency across our system of restaurants and
performance against our standards within different day parts.&nbsp; We utilize a
labor program to determine optimal staffing needs of each restaurant based on
its actual customer flow and demand.&nbsp; We also employ several additional
operational tools to continuously monitor and improve speed of service, food
waste, food quality, sanitation, financial management and employee
development.&nbsp; We are moving toward automating and computerizing as many of
these systems as possible into an integrated, digital management system.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>The order system at each Good Times restaurant is
equipped with an internal timing device that displays and records the time each
order takes to prepare and deliver.&nbsp; The total transaction time for the
delivery of food at the window is approximately 30 to 60 seconds during peak
times.</p>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>We use several sources of customer feedback to
evaluate each restaurant's service and quality performance, including an
extensive, computerized secret shopper program, customer comment phone line,
telephone surveys and web site comments.&nbsp; Additionally, management uses both
its own primary consumer research for product development and to determine
customer usage and attitude patterns as well as third party market research
that evaluates Good Times' performance ratings on several different operating
attributes against key competitors.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Training:</b> We strive to
maintain quality and consistency in each of our restaurants through the careful
training and supervision of all our employees at all levels and the
establishment of, and adherence to, high standards relating to personnel
performance, food and beverage preparation and maintenance of our restaurants.&nbsp;
Each manager must complete an eight to ten week training program, be certified
on several core processes and is then closely supervised to show both
comprehension and capability before they are allowed to manage autonomously.&nbsp;
All of our training and development is based upon a &quot;train, test, certify,
retrain&quot; cycle around standards and operating processes at all levels.&nbsp; We
conduct a semi-annual performance review with each manager to discuss prior performance
and future performance goals.&nbsp; We have a defined weekly and monthly goal
setting process around service, employee development, financial management and
store maintenance goals for every restaurant.&nbsp; During fiscal 2008, we will
begin to develop our On-line Campus consisting of &nbsp;video and other multi-media
training tools, operating manuals, reference documents and other information
used by restaurant management and franchisees.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Recruiting and retention:</b> We seek to
hire experienced restaurant managers and Operating Partners.&nbsp; We support
employees by offering competitive wages and benefits, including a 401(k) plan,
medical insurance, stock options for regional managers and incentives plans at
every level that are tied to performance against key goals and objectives.&nbsp; We
motivate and prepare our employees by providing them with opportunities for
increased responsibilities and advancement.&nbsp; We also provide various other
incentives, including vacations, car allowances, monthly performance bonuses
and monetary rewards for managers who develop future managers for our
restaurants.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Franchising:</b> Good Times
has prepared prototype area rights and franchise agreements, a Uniform
Franchise Offering Circular and advertising material to be utilized in
soliciting prospective franchisees.&nbsp; We seek to attract franchisees that are
experienced restaurant operators, well capitalized and have demonstrated the
ability to develop one to five restaurants.&nbsp; We currently review sites selected
for franchises and monitor performance of franchise units.&nbsp; We are currently
considering potential franchisees for development of units in Nebraska and will
be soliciting franchisees in additional markets, subject to state franchise
registration requirements.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>We estimate that it will cost a franchisee on
average approximately $750,000 to $1,000,000 to open a restaurant with dining
room seating, including pre-opening costs and working capital, assuming the
land is leased.&nbsp; A franchisee typically will pay a royalty of 4% of net sales,
an advertising materials fee of at least 1.5% of net sales, plus participation
in regional advertising up to an additional 4% of net sales, or a higher amount
approved by the advertising cooperative, and initial development and franchise
fees totaling $25,000 per restaurant.&nbsp; Among the services and materials which
we provide to franchisees are site selection assistance, plans and
specifications for construction of the Good Times Burgers and Frozen Custard
restaurants, an operating manual which includes product specifications and
quality control procedures, training, on-site opening supervision and advice
from time to time relating to operation of the franchised restaurants.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>After a franchise agreement is signed, we actively
work with and monitor our franchisees to ensure successful franchise operations
as well as compliance with Good Times systems and procedures.&nbsp; During the
development phase, we assist in the selection of sites and the development of
prototype and building plans, including all required changes by local
municipalities and developers.&nbsp; We provide an opening team of trainers to
assist in the opening of the restaurant and training of the employees.&nbsp; We
advise the franchisee on menu, management training, marketing, and employee
development.&nbsp; On an ongoing basis we conduct standards reviews of all franchise
restaurants in key areas including product quality, service standards,
restaurant cleanliness and sanitation, food safety and people development.</p>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>We have entered into fourteen franchise agreements
in the greater Denver metropolitan area.&nbsp; Sixteen franchise restaurants and nine
joint-venture restaurants are operating in the Denver metropolitan area media
market.&nbsp; Good Times franchise restaurants also operate in Colorado Springs and
Grand Junction, Colorado; Boise, Idaho; and, Laramie, Wyoming.&nbsp; Dual branded
franchised restaurants operate in Cheyenne and Gillette, Wyoming; Ft. Collins
and Windsor, Colorado; and Bismarck, Dickinson and Williston, North Dakota.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Management Information Systems:</b> Financial and
management control is maintained through the use of automated data processing
and centralized accounting and management information systems that we
provide.&nbsp;&nbsp;&nbsp; Sales, labor and cash data is collected daily via a restaurant back
office system which gathers data from the restaurant point-of-sale system.&nbsp;
Management receives daily, weekly and monthly reports identifying food, labor
and operating expenses and other significant indicators of restaurant
performance.&nbsp; We believe that these reporting systems are sophisticated, and
enhance our ability to control and manage operations.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Food Preparation, Quality Control
&amp; Purchasing:</b>
We believe that we have some of the highest food quality standards in the quick
service restaurant industry.&nbsp; Our systems are designed to protect our food
supply throughout the preparation process.&nbsp; We inspect specific qualified
manufacturers and work together with those manufacturers to provide
specifications and quality controls.&nbsp; Our operations management teams are
trained in a comprehensive safety and sanitation course provided by the
National Restaurant Association.&nbsp; Minimum cook temperature requirements and
line checks throughout the day ensure the safety and quality of both burgers
and other items we use in our restaurants.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>We currently purchase 100% of our restaurant food
and paper supplies from Yancey's Food Service.&nbsp; We do not believe that the
current reliance on this sole vendor will have any long-term material adverse
effect since we believe that there are a sufficient number of other suppliers
from which food and paper supplies could be purchased.&nbsp; We do not anticipate
any difficulty in continuing to obtain an adequate quantity of food and paper
supplies of acceptable quality and at acceptable prices.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Employees:</b> At December 6,
2007, we had approximately 551 employees of which 453 are part time hourly
employees and 98 are salaried employees working full time.&nbsp; We consider
our employee relations to be good.&nbsp; None of our employees are covered by a
collective bargaining agreement.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Competition:</b> The
restaurant industry, including the fast food segment, is highly competitive.&nbsp;
Good Times competes with a large number of other hamburger-oriented fast food
restaurants in the areas in which it operates.&nbsp; Many of these restaurants are
owned and operated by regional and national restaurant chains, many of which
have greater financial resources and experience than we do.&nbsp; Restaurant
companies that currently compete with Good Times in the Denver market include
McDonald's, Burger King, Wendy's, Carl's Jr. and Sonic.&nbsp; Double drive-through
restaurant chains such as Rally's Hamburgers and Checker's Drive-In
Restaurants, which currently operate a total of over 800 double drive-through
restaurants in various markets in the United States, are not currently operating
in Colorado.&nbsp; Management believes that these double drive-through restaurant
chains will not expand into Colorado based on their publicly reported
objectives and resources.&nbsp; Culver's is the only significant competitor offering
frozen custard as a primary menu item operating in the Denver and Colorado
Springs markets and has a significant presence in the targeted Midwestern
markets for expansion.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Our management believes that we may have a
competitive advantage in terms of quality of product compared to traditional
fast food hamburger chains.&nbsp; Early development of our double drive-through
concept in Colorado has given us an advantage over other double drive-through
chains that may seek to expand into Colorado because of our brand awareness and
present restaurant locations.&nbsp; Nevertheless, we may be at a competitive
disadvantage to other restaurant chains with greater name recognition and
marketing capability.&nbsp; Furthermore, most of our competitors in the fast-food
business operate more restaurants, have been established longer, and have
greater financial resources and name recognition than we do.&nbsp; There is also
active competition for management personnel, as well as for attractive
commercial real estate sites suitable for restaurants.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Trademarks</b>: Good Times
has registered its mark &quot;Good Times! Drive Thru Burgers&quot;(SM) with the
State of Colorado. &nbsp;We have also registered our mark &quot;Good Times Burgers &amp;
Frozen Custard&quot; federally and with the State of Colorado.&nbsp; Good Times received
approval of its federal registration of &quot;Good Times&quot; in 2003.&nbsp; In
addition we own trademarks or service marks that have been registered, or for
which applications are pending, with the United States Patent and Trademark
Office including but not limited to: &quot;Mighty Deluxe&quot;, &quot;Wild Fries&quot;,
&quot;Spoonbender&quot;,&nbsp; &quot;Chicken Dunkers&quot; &quot;Big Daddy Bacon Cheeseburger&quot;, and
&quot;Wild Dippin' Sauce&quot;. Trademarks expire between 2009 and 2015.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Government Regulation:</b> Each Good
Times restaurant is subject to the regulations of various health, sanitation,
safety and fire agencies in the jurisdiction in which the restaurant is
located.&nbsp; Difficulties or failures in obtaining the required licenses or
approvals could delay or prevent the opening of a new Good Times restaurant.&nbsp;
Federal and state environmental regulations have not had a material effect on
our operations. More stringent and varied requirements of local governmental
bodies with respect to zoning, land use and environmental factors could delay
or prevent development of new restaurants in particular locations.&nbsp; We are
subject to the Fair Labor Standards Act, which governs such matters as minimum
wages, overtime, and other working conditions.&nbsp; In addition, we are subject to
the Americans With Disabilities Act, which requires restaurants and other
facilities open to the public to provide for access and use of facilities by
the handicapped.&nbsp; Management believes that we are in compliance with the
Americans With Disabilities Act.</p>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>We are also subject to federal and state laws
regulating franchise operations, which vary from registration and disclosure
requirements in the offer and sale of franchises to the application of
statutory standards regulating franchise relationships.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Available Information:</b> Our Internet
website address is www.goodtimesburgers.com.&nbsp; We make available free of charge
through our website's investor information section our annual reports on Form
10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K, and any
amendments to those reports filed with or furnished to the SEC under applicable
securities laws as soon as reasonably practical after we electronically file
such material with, or furnish it to, the SEC.&nbsp; Our website information is not
part of or incorporated by reference into this Annual Report on Form 10-KSB.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Special Note About Forward-Looking
Statements:</b>
From time-to-time the Company makes oral and written statements that reflect
the Company's current expectations regarding future results of operations,
economic performance, financial condition and achievements of the Company.&nbsp; We
try, whenever possible, to identify these forward-looking statements by using
words such as &quot;anticipate,&quot; &quot;assume,&quot; &quot;believe,&quot;
&quot;estimate,&quot; &quot;expect,&quot; &quot;intend,&quot; &quot;plan,&quot;
&quot;project,&quot; &quot;may,&quot; &quot;will,&quot; &quot;would,&quot; and
similar expressions&nbsp; Certain forward-looking statements are included in this
Form 10-KSB, principally in the sections captioned &quot;Description of Business,&quot;
and &quot;Management's Discussion and Analysis of Financial Condition and
Results of Operations.&quot;&nbsp; Forward-looking statements are related to, among
other things:</p>

<p class=MsoNormal style='margin-left:17.1pt;text-align:justify;text-indent:
- -17.1pt'>&sect;&nbsp; business
objectives and strategic plans;</p>

<p class=MsoNormal style='margin-left:14.25pt;text-align:justify;text-indent:
- -14.25pt'>&sect;&nbsp; operating
strategies;</p>

<p class=MsoNormal style='margin-left:14.25pt;text-align:justify;text-indent:
- -14.25pt'>&sect;&nbsp; our ability to
open and operate additional restaurants profitably and the timing of such
openings;</p>

<p class=MsoNormal style='margin-left:14.25pt;text-align:justify;text-indent:
- -14.25pt'>&sect;&nbsp; restaurant and
franchise acquisitions;</p>

<p class=MsoNormal style='margin-left:14.25pt;text-align:justify;text-indent:
- -14.25pt'>&sect;&nbsp; anticipated
price increases;</p>

<p class=MsoNormal style='margin-left:14.25pt;text-align:justify;text-indent:
- -14.25pt'>&sect;&nbsp; expected
future revenues and earnings, comparable and non-comparable restaurant sales,
results of operations, and future restaurant growth (both company-owned and
franchised);</p>

<p class=MsoNormal style='margin-left:14.25pt;text-align:justify;text-indent:
- -14.25pt'>&sect;&nbsp; estimated
costs of opening and operating new restaurants, including general and
administrative, marketing, franchise development and restaurant operating
costs;</p>

<p class=MsoNormal style='margin-left:14.25pt;text-align:justify;text-indent:
- -14.25pt'>&sect;&nbsp; anticipated
selling, general and administrative expenses and restaurant operating costs,
including commodity prices, labor and energy costs; </p>

<p class=MsoNormal style='margin-left:14.25pt;text-align:justify;text-indent:
- -14.25pt'>&sect;&nbsp; future capital
expenditures;</p>

<p class=MsoNormal style='margin-left:25.9pt;text-align:justify;text-indent:
- -11.5pt'>-&nbsp;&nbsp;&nbsp; our
expectation that we will have adequate cash from operations and credit facility
borrowings to meet all future debt service, capital expenditure and working
capital requirements in fiscal year 2007;</p>

<p class=MsoNormal style='margin-left:25.9pt;text-align:justify;text-indent:
- -11.5pt'>-&nbsp;&nbsp;&nbsp; the
sufficiency of the supply of commodities and labor pool to carry on our business;</p>

<p class=MsoNormal style='margin-left:25.9pt;text-align:justify;text-indent:
- -11.5pt'>-&nbsp;&nbsp;&nbsp; success of
advertising and marketing activities;</p>

<p class=MsoNormal style='margin-left:25.9pt;text-align:justify;text-indent:
- -11.5pt'>-&nbsp;&nbsp;&nbsp; the absence of
any material adverse impact arising out of any current litigation in which we
are involved;</p>

<p class=MsoNormal style='margin-left:25.9pt;text-align:justify;text-indent:
- -11.5pt'>-&nbsp;&nbsp;&nbsp; impact of the
adoption of new accounting standards and our financial and accounting systems
and analysis programs;</p>

<p class=MsoNormal style='margin-left:25.9pt;text-align:justify;text-indent:
- -11.5pt'>-&nbsp;&nbsp;&nbsp; expectations
regarding competition and our competitive advantages;</p>

<p class=MsoNormal style='margin-left:25.9pt;text-align:justify;text-indent:
- -11.5pt'>-&nbsp;&nbsp;&nbsp; impact of our
trademarks, service marks, and other proprietary rights; and</p>

<p class=MsoNormal style='margin-left:25.9pt;text-align:justify;text-indent:
- -11.5pt'>-&nbsp;&nbsp;&nbsp; effectiveness
of our internal control over financial reporting.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Although we believe that the expectations
reflected in our forward-looking statements are based on reasonable
assumptions, such expectations may prove to be materially incorrect due to
known and unknown risks and uncertainties.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>In some cases, information regarding certain
important factors that could cause actual results to differ materially from any
forward-looking statements appears together with such statement.&nbsp; In addition,
the factors described under Critical Accounting Policies and Estimates in Item
6 and Risk Factors in this Item 1, as well as other possible factors not
listed, could cause actual results to differ materially from those expressed in
forward-looking statements, including, without limitation, the following:
concentration of restaurants in certain markets and lack of market awareness in
new markets; changes in disposable income; consumer spending trends and habits;
increased competition in the quick service restaurant market; costs and
availability of food and beverage inventory; our ability to attract qualified managers,
employees, and franchisees; changes in the availability of capital or credit
facility borrowings; costs and other effects of legal claims by employees,
franchisees, customers, vendors, stockholders and others, including settlement
of those claims; effectiveness of management strategies and decisions; weather
conditions and related events in regions where our restaurants are operated;
and changes in accounting standards policies and practices or related
interpretations by auditors or regulatory entities.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>All forward-looking statements speak only as of
the date made.&nbsp; All subsequent written and oral forward-looking statements
attributable to us, or persons acting on our behalf, are expressly qualified in
their entirety by the cautionary statements.&nbsp; Except as required by law, we
undertake no obligation to update any forward-looking statement to reflect
events or circumstances after the date on which it is made or to reflect the
occurrence of anticipated or unanticipated events or circumstances.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Risk Factors:</b> You should
consider carefully the following risk factors before making an investment
decision with respect to Good Times Restaurants' securities. You are cautioned
that the risk factors discussed below are not exhaustive.</p>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b><i>We have accumulated losses.</i></b> We have
incurred losses in every fiscal year since inception except 1999, 2002, 2006 and
2007.&nbsp; As of September 30, 2007 we had an accumulated deficit of $11,084,000.&nbsp;
We cannot assure you that we will not have a loss for the current fiscal year
ending September 30, 2008.&nbsp; As of September 30, 2007, we had working capital of
$532,000.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b><i>We must sustain same store sales increases</i></b><b>.</b><i> </i>As we develop
additional restaurants, we expect that the increase in operating income
generated by those restaurants will improve our financial results.&nbsp; However, we
cannot assure you that we will sustain profitability on a consistent basis.&nbsp; We
must sustain same store sales increases in existing restaurants to sustain
profitability.&nbsp; Sales increases will depend in part on the success of our
advertising and promotion of new and existing menu items and consumer
acceptance.&nbsp; We cannot assure that our advertising and promotional efforts will
in fact be successful.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b><i>New restaurants, once opened, may not
be profitable, if at all, for several months</i></b><i>.</i> &nbsp;&nbsp;We
anticipate that our new restaurants will generally take several months to reach
normalized operating levels due to inefficiencies typically associated with new
restaurants, including lack of market awareness, the need to hire and train a
sufficient number of employees, operating costs, which are often materially
greater during the first several months of operation then thereafter,
pre-opening costs and other factors.&nbsp; Further, some, or all of our new
restaurants may not attain anticipated operating results or results similar to
those of our existing restaurants.&nbsp; We have experienced delays in opening some
of our restaurants and may experience delays in the future.&nbsp; In addition,
restaurants opened in new markets may open at lower average weekly sales
volumes than restaurants opened in existing markets, and may have higher
restaurant-level operating expense ratios than in existing markets.&nbsp; Sales at
restaurants opened in new markets may take longer to reach average annual
company-owned restaurant sales, if at all, thereby affecting the profitability
of these restaurants.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b><i>Our operations are susceptible to the
cost of and changes in food availability which could adversely affect our
operating results.</i></b>&nbsp; Our profitability depends in part on our ability
to anticipate and react to changes in food costs.&nbsp; Various factors beyond our
control, including adverse weather conditions, governmental regulation,
production, availability, recalls of food products and seasonality may affect
our food costs or cause a disruption in our supply chain.&nbsp; We enter into annual
contracts with our beef and chicken suppliers.&nbsp; Our contracts for chicken are fixed
price contracts.&nbsp; Our contracts for beef are generally based on current market
prices plus a processing fee.&nbsp; Changes in the price or availability of chicken
or beef could materially adversely affect our profitability.&nbsp; We cannot predict
whether we will be able to anticipate and react to changing food costs by
adjusting our purchasing practices and menu prices, and a failure to do so
could adversely affect our operating results.&nbsp; In addition, because we provide
a &quot;value-priced&quot; product, we may not be able to pass along price
increases to our guests.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b><i>Price increases may impact guest
visits.</i></b>&nbsp;
We may take price increases on selected menu items in order to offset increased
operating expenses we believe will be recurring.&nbsp; Although we have not
experienced significant consumer resistance to our past price increases, we
cannot provide assurance that this or other future price increases will not
deter guests from visiting our restaurants or affect their purchasing
decisions.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b><i>The hamburger restaurant market is highly
competitive</i></b><b>.</b> The hamburger
restaurant market is highly competitive.&nbsp; Our competitors include many
recognized national and regional fast-food hamburger restaurant chains such as
McDonald's, Burger King, Wendy's, Carl's Jr., Sonic and Culver's.&nbsp; We also
compete with small regional and local hamburger and other fast-food
restaurants, many of which feature drive-through service.&nbsp; Most of our
competitors have greater financial resources, marketing programs and name
recognition.&nbsp; All of the major hamburger chains have increasingly offered
selected food items and combination meals at discounted prices and have
recently intensified their promotions of value priced meals.&nbsp; Continued
discounting by competitors may adversely affect the revenues and profitability
of our restaurants.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b><i>Sites may be difficult to acquire.</i></b> Location of
our restaurants in high-traffic and readily accessible areas is an important
factor for our success.&nbsp; Drive-through restaurants require sites with specific
characteristics and there are a limited number of suitable sites available in
our geographic markets.&nbsp; Since suitable locations are in great demand, we may not
be able to obtain optimal sites at a reasonable cost.&nbsp; In addition, we cannot
assure you that the sites we do obtain will be successful.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b><i>We may require additional financing</i></b><b>.</b> In order to
fully develop the Denver and Colorado Springs/Pueblo markets and to expand into
markets outside of Colorado, we will require additional financing.&nbsp; Although we
have recently obtained debt facilities for the borrowing of additional capital,
we cannot assure you that these facilities will adequately finance our planned
developments or that additional financing will be available on reasonable
terms.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b><i>If our franchisees cannot develop or
finance new restaurants, build them on suitable sites or open them on schedule,
our growth and success may be impeded.</i></b>&nbsp; Under our current form of
area development agreement, some franchisees must develop a predetermined
number of restaurants according to a schedule that lasts for the term of their
development agreement.&nbsp; Franchisees may not have access to the financial or
management resources that they need to open the restaurants required by their
development schedules, or may be unable to find suitable sites on which to
develop them.&nbsp; Franchisees may not be able to negotiate acceptable lease or
purchase terms for the sites, obtain the necessary permits and government
approvals or meet construction schedules.&nbsp; From time to time in the past, we
have agreed to extend or modify develop schedules and we may do so in the
future.&nbsp; Any of these problems could slow our growth and reduce our franchise
revenues.</p>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Additionally, our franchisees depend upon
financing from banks and other financial institutions in order to construct and
open new restaurants.&nbsp; If any franchisee experienced difficulty in obtaining
adequate financing, the lack of adequate availability of such financing could
adversely affect the number and rate of new restaurant openings by our
franchisees and adversely affect our future franchise revenues.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b><i>The dual brand test and future
expansion could be terminated.</i></b> We are currently operating under a
test agreement with Taco John's International and the test agreement is
terminable by either party.&nbsp; If the agreement is terminated, it will require us
to discontinue the development of additional dual brand restaurants.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b><i>Our franchisees could take actions
that could harm our business.</i></b>&nbsp; Franchisees are independent
contractors but are not our employees.&nbsp; We provide training and support to
franchisees; however, franchisees operate their restaurants as independent
businesses.&nbsp; Consequently, the quality of franchised restaurant operations may
be diminished by any number of factors beyond our control.&nbsp; Moreover,
franchisees may not successfully operate restaurants in a manner consistent
with our standards and requirements, or may not hire and train qualified managers
and other restaurant personnel.&nbsp; Our image and reputation, and the image and
reputation of other franchisees, may suffer materially and system-wide sales
could significantly decline if our franchisees do not operate successfully.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b><i>We depend on key management employees</i></b><b>.</b> We believe
our current operations and future success depend largely on the continued
services of our management employees, in particular Boyd E. Hoback, our
president and chief executive officer and Scott LeFever, our vice president of operations.&nbsp;
Although we have entered into an employment agreement with Mr. Hoback, he may
voluntarily terminate his employment with us at any time.&nbsp; In addition, we do
not maintain key-person insurance on Mr. Hoback's or Mr. Lefever's life.&nbsp; The
loss of Mr. Hoback's or Mr. LeFever's services, or other key management
personnel, could have a material adverse effect on our financial condition and
results of operations.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b><i>Labor shortages could slow our growth
or harm our business.</i></b> Our success depends in part upon our ability to
attract, motivate and retain a sufficient number of qualified, high-energy
employees.&nbsp; Qualified individuals needed to fill these positions are in short
supply in some areas.&nbsp; The inability to recruit and retain these individuals
may delay the planned openings of new restaurants or result in high employee
turnover in existing restaurants, which could harm our business.&nbsp; Additionally,
competition for qualified employees could require us to pay higher wages to
attract sufficient employees, which could result in higher labor costs.&nbsp; Most
of our employees are paid on an hourly basis.&nbsp; The employees are paid in
accordance with applicable minimum wage regulations.&nbsp; Accordingly, any increase
in the minimum wage, whether state or federal, could have a material adverse
impact on our business.</p>

<p style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;margin-left:
0in;text-align:justify'><b><i>Nevada law and our articles of incorporation and bylaws
have provisions that discourage corporate takeovers and could prevent
stockholders from realizing a premium on their investment.</i></b> We
are subject to anti-takeover laws for Nevada corporations.&nbsp; These anti-takeover
laws prevent a Nevada corporation from engaging in a business combination with
any stockholder, including all affiliates and associates of the stockholder,
who owns 10% or more of the corporation's outstanding voting stock, for three
years following the date that the stockholder acquired 10% or more of the
corporation's voting stock, unless specified conditions are met.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Our articles of incorporation and our bylaws
contain a number of provisions that may deter or impede takeovers or changes of
control or management.&nbsp; These provisions:</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.25in;text-align:justify;text-indent:-.25in'>&sect;&nbsp;
authorize
our board of directors to establish one or more series of preferred stock, the
terms of which can be determined by the board of directors at the time of
issuance;</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.25in;text-align:justify;text-indent:-.25in'>&sect;&nbsp;
do
not allow for cumulative voting in the election of directors unless required by
applicable law.&nbsp; Under cumulative voting, a minority stockholder holding a
sufficient percentage of a class of shares may be able to ensure the election
of one or more directors;</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.25in;text-align:justify;text-indent:-.25in'>&sect;&nbsp;
state
that special meetings of our stockholders may be called only by the chairman of
the board, the president or any two directors, and must be called by the
president upon the written request of the holders of ten percent of the
outstanding shares of capital stock entitled to vote at such special meeting;
and</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.25in;text-align:justify;text-indent:-.25in'>&sect;&nbsp;
provide
that the authorized number of directors is currently set at seven.</p>

<p class=BodyText5 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-indent:0in'>These provisions, alone or in combination with each
other, may discourage transactions involving actual or potential changes of
control, including transactions that otherwise could involve payment of a
premium over prevailing market prices to stockholders for their common stock.</p>

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<p class=BodyText5 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-indent:0in'><b><i>Future changes in financial accounting standards may
cause adverse unexpected operating results and affect our reported results of
operations.</i></b>&nbsp; Changes in accounting standards can have a significant
effect on our reported results and may affect our reporting of transactions
completed before the change is effective.&nbsp; As an example, in 2006, we have adopted
the change that requires us to record compensation expense in the statement of
operations for employee stock options using the fair value method.&nbsp; See Note 1
to our Consolidated Financial Statements for further discussion.&nbsp; New
pronouncements and varying interpretations of pronouncements have occurred and
may occur in the future.&nbsp; Changes to existing rules or differing
interpretations with respect to our current practices may adversely affect our
reported financial results.</p>

<p class=BodyText5 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-indent:0in'><b><i>Our
NASDAQ Listing Is Important.</i></b><i>
</i>Our common
stock is currently listed for trading on the NASDAQ Capital Market.&nbsp; The NASDAQ
maintenance rules require among other things that our common stock price
remains above $1.00 per share and that we have minimum net tangible assets in
excess of $2 million.&nbsp; We were required to obtain shareholder approval in 1998
for a reverse stock split to maintain a sufficient per share price to preserve
our NASDAQ listing.</p>

<p class=BodyText5 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-indent:0in'><b><i>We
are subject to extensive government regulation that may adversely hinder or
impact our ability to govern various aspects of our business including our
ability to expand and develop our restaurants.</i></b>&nbsp; The restaurant industry is
subject to various federal, state and local government regulations, including
those relating to the sale of food.&nbsp; While in the past we have been able to
obtain and maintain the necessary governmental licenses, permits and approvals,
our failure to maintain these licenses, permits and approvals, including food
licenses, could adversely affect our operating results.&nbsp; Difficulties or
failures in obtaining the required licenses and approvals could delay or result
in our decision to cancel the opening of new restaurants.&nbsp; Local authorities
may suspend or deny renewal of our food licenses if they determine that our conduct
does not meet applicable standards or if there are changes in regulations.</p>

<p class=BodyText5 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-indent:0in'>Various
federal and state labor laws govern our relationship with our employees and
affect operating costs.&nbsp; These laws govern minimum wage requirements, such as
those to be imposed by recently enacted legislation in Colorado, overtime pay,
meal and rest breaks, unemployment tax rates, workers' compensation rates,
citizenship or residency requirements, child labor regulations and sales
taxes.&nbsp; Additional government-imposed increases in minimum wages, overtime pay,
paid leaves of absence and mandated health benefits.</p>

<p class=BodyText5 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-indent:0in'>The
federal Americans with Disabilities Act prohibits discrimination on the basis
of disability in public accommodations and employment.&nbsp; Although our
restaurants are designed to be accessible to the disabled, we could be required
to make modifications to our restaurants to provide service to, or make
reasonable accommodations for, disabled persons.</p>

<p class=BodyText5 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-indent:0in'>We
are also subject to federal and state laws that regulate the offer and sale of
franchises and aspects of the licensor-licensee relationship.&nbsp; Many state
franchise laws impose restrictions on the franchise agreement, including
limitations on non-competition provisions and the termination or non-renewal of
a franchise.&nbsp; Some states require that franchise materials be registered before
franchises can be offered or sold in the state.</p>

<p class=BodyText5 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-indent:0in'><b><i>Compliance
with changing regulation of corporate governance and public disclosure may
result in additional expenses.</i></b>&nbsp;
Keeping abreast of, and in compliance with, changing laws, regulations and
standards relating to corporate governance and public disclosure, including the
Sarbanes-Oxley Act of 2002, new SEC regulations and The NASDAQ&nbsp; Market rules,
has required an increased amount of management attention.&nbsp; We remain committed
to maintaining high standards of corporate governance and public disclosure.&nbsp;
As a result, we intend to invest all reasonably necessary resources to comply
with evolving standards, and this investment has resulted in and will continue
to result in increased general and administrative expenses and a diversion of
management time and attention from revenue-generating activities to compliance
activities.</p>

<p class=BodyText5 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-indent:0in'><b><i>Risks
related to internal controls.</i></b>&nbsp;
Public companies in the United States are required to review their internal
controls as set forth in the Sarbanes-Oxley Act of 2002.&nbsp; It should be noted
that any system of controls, however well designed and operated, can provide
only reasonable, and not absolute, assurance that the objectives of the system
are met.&nbsp; In addition, the design of any control system is based in part upon
certain assumptions about the likelihood of future events.&nbsp; Because of these
and other inherent limitations of control systems, there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions, regardless of how remote.&nbsp; If the internal controls put in
place by us are not adequate or in conformity with the requirements of the
Sarbanes-Oxley Act of 2002, and the rules and regulations promulgated by the
Securities and Exchange Commission, we may be forced to restate our financial
statements and take other actions which will take significant financial and
managerial resources, as well as be subject to fines and other government
enforcement actions.</p>

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<p class=BodyText5 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-indent:0in'><b><i>Health
concerns relating to the consumption of beef, chicken or other food products
could affect consumer preferences and could negatively impact our results of
operations.</i></b>&nbsp;
Like other restaurant chains, consumer preferences could be affected by health
concerns about the avian influenza, also knows as bird flu, or the consumption
of beef, the key ingredient in many of our menu items, or negative publicity
concerning food quality, illness and injury generally, such as negative
publicity concerning E. coli, &quot;mad cow&quot; or &quot;foot-and-mouth&quot;
disease, publication of government or industry findings concerning food
products served by us, or other health concerns or operating issues stemming
from one restaurant or a limited number of restaurants.&nbsp; This negative
publicity may adversely affect demand for our food and could result in a
decrease in guest traffic to our restaurants.&nbsp; If we react to the negative
publicity by changing our concept or our menu we may lose guests who do not
prefer the new concept or menu, and may not be able to attract a sufficient new
guest base to produce the revenue needed to make our restaurants profitable.&nbsp;
In addition, we may have different or additional competitors for our intended
guests as a result of a concept change and may not be able to compete
successfully against those competitors.&nbsp; A decrease in guest traffic to our
restaurants as a result of these health concerns or negative publicity or as a
result of a change in our menu or concept could materially harm our business.</p>

<p class=BodyText5 style='margin-top:12.0pt;margin-right:0in;margin-bottom:
6.0pt;margin-left:0in;text-indent:0in'><b>Item
2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Description of Property.</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>We currently lease approximately 3,700 square feet
of space for our executive offices in Golden, Colorado for approximately $54,000
per year.&nbsp; The lease is for a two year term ending September 2008. The space is
leased from The Bailey Company, a significant stockholder, at their corporate
headquarters.&nbsp; We anticipate extending the lease or leasing comparable space on
terms similar to our current lease.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>As of December 6, 2007, Good Times has an
ownership interest in twenty-seven Good Times units, all of which are located
in Colorado.&nbsp; Nine of these restaurants are held in joint venture limited
partnerships of which Good Times is the general partner and has a 50% interest
in seven of the partnership restaurants, a 78% interest in one restaurant and a
51% interest in another restaurant.&nbsp; There are eighteen Good Times units that
are wholly owned by Good Times.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Most of our existing Good Times restaurants are a
combination of free-standing structures containing approximately 880 square
feet for the double drive thru format and approximately 2400 square feet for
our prototype building with a 70 seat dining room.&nbsp; In addition, we have
several restaurants that are conversions from other concepts in various sizes
ranging from 1700 square feet to 3500 square feet. &nbsp;The buildings are situated
on lots of approximately 18,000 to 50,000 square feet.&nbsp; Certain restaurants
serve as collateral for the underlying debt financing arrangements as discussed
in the Notes to Consolidated Financial Statements included in this report.&nbsp; We
intend to acquire new sites both through ground leases and purchase agreements
supported by mortgage and leasehold financing arrangements and through sale-leaseback
agreements.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'>All of the restaurants are regularly maintained by
our repair and maintenance staff as well as by outside contractors, when
necessary.&nbsp; We believe that all of our properties are in good condition and
that there will be a need for periodic capital expenditures to maintain the
operational and aesthetic integrity of our properties for the foreseeable
future, including recurring maintenance and periodic capital improvements.&nbsp; All
of our properties are covered up to replacement cost under our property and
casualty insurance policies and in the opinion of management are adequately
covered by insurance.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Item 3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Legal Proceedings.</b></p>

<p class=MsoNormal style='margin-top:0in;margin-right:-1.45pt;margin-bottom:
12.0pt;margin-left:0in'>We
are not involved in any material legal proceedings.&nbsp; We are subject, from time
to time, to various lawsuits in the normal course of business.&nbsp; These lawsuits
are not expected to have a material impact.</p>

<p class=MsoNormal style='margin-right:-1.45pt'><b>Item 4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Submission of
Matters to a Vote of Security Holders.</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'>No matters were submitted to a vote of security
holders during the fourth quarter of the fiscal year ended September 30, 2007.</p>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'><b>PART II</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Item 5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Market for Common
Equity and Related Stockholder Matters.</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'>Shares of Good Times Restaurants Inc. common stock
are listed for trading on the NASDAQ Capital Market under the symbol &quot;GTIM.&quot;&nbsp; The following table presents the quarterly high and low bid prices for Good Times
Restaurants common stock as reported by the NASDAQ Capital Market for each
quarter within the last two fiscal years.&nbsp; The quotations reflect interdealer
prices, without retail mark-ups, markdowns or commissions and may not represent
actual transactions.</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='margin-left:.45in;border-collapse:collapse'>
 <tr>
  <td width=300 colspan=3 valign=top style='width:225.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><u>2006</u></b></p>
  </td>
  <td width=306 colspan=4 valign=top style='width:229.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><u>2007</u></b></p>
  </td>
 </tr>
 <tr>
  <td width=168 valign=top style='width:125.9pt;padding:0in 5.4pt 0in 5.4pt'><b><br
  clear=all style='page-break-before:always'>
  <br clear=all style='page-break-before:always'>
  </b>
  <p class=MsoNormal style='text-align:justify'><b><u>Quarter Ended</u></b></p>
  </td>
  <td width=67 valign=top style='width:.7in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><u>High</u></b></p>
  </td>
  <td width=65 valign=top style='width:48.7pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><u>Low</u></b></p>
  </td>
  <td width=170 valign=top style='width:127.7pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b><u>Quarter Ended</u></b></p>
  </td>
  <td width=67 valign=top style='width:.7in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><u>High</u></b></p>
  </td>
  <td width=67 valign=top style='width:.7in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b><u>Low</u></b></p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width=1><p class='MsoNormal'>&nbsp;</td>
 </tr>
 <tr>
  <td width=168 valign=top style='width:125.9pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>December 31, 2005</p>
  </td>
  <td width=67 valign=top style='width:.7in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>5.47</p>
  </td>
  <td width=65 valign=top style='width:48.7pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>4.90</p>
  </td>
  <td width=170 valign=top style='width:127.7pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>December 31, 2006</p>
  </td>
  <td width=67 valign=top style='width:.7in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>$6.89</p>
  </td>
  <td width=67 valign=top style='width:.7in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>$5.51</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width=1><p class='MsoNormal'>&nbsp;</td>
 </tr>
 <tr>
  <td width=168 valign=top style='width:125.9pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>March 31, 2006</p>
  </td>
  <td width=67 valign=top style='width:.7in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>5.25</p>
  </td>
  <td width=65 valign=top style='width:48.7pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>5.25</p>
  </td>
  <td width=170 valign=top style='width:127.7pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>March 31, 2007</p>
  </td>
  <td width=67 valign=top style='width:.7in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>$6.00</p>
  </td>
  <td width=67 valign=top style='width:.7in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>$4.75</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width=1><p class='MsoNormal'>&nbsp;</td>
 </tr>
 <tr>
  <td width=168 valign=top style='width:125.9pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>June 30, 2006</p>
  </td>
  <td width=67 valign=top style='width:.7in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>5.39</p>
  </td>
  <td width=65 valign=top style='width:48.7pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>5.00</p>
  </td>
  <td width=170 valign=top style='width:127.7pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>June 30, 2007</p>
  </td>
  <td width=67 valign=top style='width:.7in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>$6.00</p>
  </td>
  <td width=67 valign=top style='width:.7in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>$4.99</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width=1><p class='MsoNormal'>&nbsp;</td>
 </tr>
 <tr>
  <td width=168 valign=top style='width:125.9pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>September 30, 2006</p>
  </td>
  <td width=67 valign=top style='width:.7in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>6.24</p>
  </td>
  <td width=65 valign=top style='width:48.7pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>6.03</p>
  </td>
  <td width=170 valign=top style='width:127.7pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>September 30, 2007</p>
  </td>
  <td width=67 valign=top style='width:.7in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>$6.25</p>
  </td>
  <td width=67 valign=top style='width:.7in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>$3.95</p>
  </td>
  <td style='border:none;padding:0in 0in 0in 0in' width=1><p class='MsoNormal'>&nbsp;</td>
 </tr>
</table>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>As of December 6, 2007 there were approximately 311
holders of record of Common Stock.&nbsp; However management estimates that there are
not fewer than 1,390 beneficial owners of our Common Stock.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Dividend Policy:</b> We have never
paid dividends on our common stock and do not anticipate paying dividends in
the foreseeable future.&nbsp; In addition, we have obtained financing under
loan agreements that restrict the payment of dividends.&nbsp; Our ability to
pay future dividends will necessarily depend on our earnings and financial
condition.&nbsp; However, since restaurant development is capital intensive, we
currently intend to retain any earnings for that purpose.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Subject to the provisions of the Series B
Preferred Stock Agreement, cash dividends of $61,000 were paid in fiscal 2006
prior to the mandatory conversion of all the outstanding preferred stock on
June 8, 2006.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Disclosure with Respect to the
Company's Equity Compensation Plans:</b> We maintain the 2001 Good Times Restaurants
Stock Option Plan, pursuant to which we may grant equity awards to eligible
persons, and have outstanding stock options granted under our 1992 Incentive
Stock Option Plan and 1992 Non-Statutory Stock Option Plan.&nbsp; For additional
information, see Note 10, Stock-Based Compensation, in the Notes to the
Consolidated Financial Statements included in this report. The following table
gives information about equity awards under our plans as of September 30, 2007.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Equity Compensation Plan Information</b></p>

<table class=MsoNormalTable border=1 cellspacing=0 cellpadding=0 width=679
 style='border-collapse:collapse;border:none'>
 <tr>
  <td width=194 valign=top style='width:145.45pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'><b><br clear=all style='page-break-before:always'>
  </b>
  <p class=MsoNormal align=center style='text-align:center'><b>&nbsp;</b></p>
  </td>
  <td width=152 valign=top style='width:114.0pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>(a)</b></p>
  </td>
  <td width=147 valign=top style='width:110.45pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>(b)</b></p>
  </td>
  <td width=186 valign=top style='width:139.5pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-right:3.0pt;text-align:center'><b>(c)</b></p>
  </td>
 </tr>
 <tr>
  <td width=194 valign=bottom style='width:145.45pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>Plan category</b></p>
  </td>
  <td width=152 valign=bottom style='width:114.0pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>Number of
  securities to be issued upon exercise of outstanding options, warrants &amp;
  rights</b></p>
  </td>
  <td width=147 valign=bottom style='width:110.45pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>Weighted-average
  exercise price of outstanding options, warrants &amp; rights</b></p>
  </td>
  <td width=186 valign=bottom style='width:139.5pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-right:3.0pt;text-align:center'><b>Number of
  securities remaining available for future issuance under equity compensation
  plans (excluding securities reflected in column (a))</b></p>
  </td>
 </tr>
 <tr>
  <td width=194 valign=top style='width:145.45pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Equity
  compensation plans approved by security holders</p>
  </td>
  <td width=152 valign=bottom style='width:114.0pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>366,905</p>
  </td>
  <td width=147 valign=bottom style='width:110.45pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-left:1.55pt;text-align:center'>$3.89</p>
  </td>
  <td width=186 valign=bottom style='width:139.5pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:3.0pt;
  margin-bottom:0in;margin-left:1.65pt;margin-bottom:.0001pt;text-align:center'>66,830</p>
  </td>
 </tr>
 <tr>
  <td width=194 valign=top style='width:145.45pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Total</p>
  </td>
  <td width=152 valign=bottom style='width:114.0pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>366,905</p>
  </td>
  <td width=147 valign=bottom style='width:110.45pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-left:1.55pt;text-align:center'>$3.89</p>
  </td>
  <td width=186 valign=bottom style='width:139.5pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:3.0pt;
  margin-bottom:0in;margin-left:1.65pt;margin-bottom:.0001pt;text-align:center'>66,830</p>
  </td>
 </tr>
</table>

<div style='border:none;border-top:solid windowtext 1.5pt;padding:1.0pt 0in 0in 0in'>

<p class=MsoFooter align=center style='text-align:center;border:none;
padding:0in'>36</p>

</div>

<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>



<br
clear=all style='page-break-before:always'>










<p class=MsoNormal style='margin-left:.75in;text-indent:-.75in'><b>Item 6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Selected
Financial Data.</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'>The selected financial data on the following pages
are derived from our historical financial statements and is qualified in its
entirety by such financial statements which are included in Item 8 hereof.</p>

<p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'><b>GOOD TIMES
RESTAURANTS INC. AND SUBSIDIARY</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The following
presents certain historical financial information of the Company.&nbsp; This
financial information includes the combined operations of the Company and its
subsidiary for the fiscal years ended September 30, 2006 and 2007.</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=660
 style='margin-left:.9pt;border-collapse:collapse'>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:-20.55pt;text-align:justify'><b>&nbsp;</b></p>
  </td>
  <td width=264 colspan=2 valign=top style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:12.6pt;
  margin-bottom:0in;margin-left:44.1pt;margin-bottom:.0001pt;text-align:center'><b><u>September</u></b></p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:-20.55pt;text-align:justify'><b>Operating
  Data:</b></p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:17.1pt;text-align:right'><b><u>2007</u></b></p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:12.6pt;
  margin-bottom:0in;margin-left:.3in;margin-bottom:.0001pt;text-align:center'><b><u>2006</u></b></p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Restaurant
  sales</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>$24,215,000</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>$20,329,000</p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Franchise
  fees and royalties</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp; 740,000</u></p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp; 606,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Total Net Revenues</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>24,955,000</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>20,935,000</p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-top:12.0pt'>Restaurant Operating Costs:</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>&nbsp;&nbsp;&nbsp;&nbsp;
  Food and packaging costs</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>7,589,000</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>6,338,000</p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>&nbsp;&nbsp;&nbsp;&nbsp;
  Payroll and other employee benefit costs</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>8,063,000</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>6,584,000</p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>&nbsp;&nbsp;&nbsp;&nbsp;
  Occupancy and other operating costs</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>4,393,000</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>3,797,000</p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>&nbsp;&nbsp;&nbsp;&nbsp;
  New store pre-opening costs</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>118,000</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>182,000</p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>&nbsp;&nbsp;&nbsp;&nbsp;
  Depreciation and amortization</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'><u>&nbsp; 1,223,000</u></p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp; 997,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total restaurant operating
  costs</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>21,386,000</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>17,898,000</p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:-5.4pt'>&nbsp;&nbsp;&nbsp;&nbsp; Selling, General &amp;
  Administrative Expenses</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>3,226,000</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>2,733,000</p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'>&nbsp;&nbsp;&nbsp;&nbsp; Gain on disposal of restaurants
  and equipment</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'><u>&nbsp; (17,000)</u></p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'><u>&nbsp;&nbsp; (57,000)</u></p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Income
  from Operations</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>$&nbsp; 360,000</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>$&nbsp; 361,000</p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-top:12.0pt'>Other Income and (expenses)</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>&nbsp;&nbsp;&nbsp; Minority
  income (expense), net</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>(211,000)</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>(246,000)</p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>&nbsp;&nbsp;&nbsp;&nbsp;
  Interest income, net</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>40,000</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>87,000</p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>&nbsp;&nbsp;&nbsp;&nbsp;
  Other, net</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'><u>(160,000)</u></p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'><u>(185,000)</u></p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other income and
  (expenses)</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>(331,000)</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>(344,000)</p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Net
  Income available to Common Shareholders</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'><u>$29,000</u></p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'><u>$17,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-top:12.0pt'>Basic and Diluted Earnings Per Share</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-top:12.0pt;margin-right:12.6pt;
  margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:right'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; .01</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-top:12.0pt;margin-right:8.1pt;
  margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:right'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; .01</p>
  </td>
 </tr>
</table>

<p class=MsoNormal style='margin-top:3.0pt;margin-right:.6pt;margin-bottom:
3.0pt;margin-left:0in'>Weighted
average shares and equivalents used in per share calculations</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=660
 style='margin-left:.9pt;border-collapse:collapse'>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Basic</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>3,838,867</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>2,913,077</p>
  </td>
 </tr>
 <tr>
  <td width=396 valign=top style='width:297.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  Diluted</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>3,975,957</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>3,054,952</p>
  </td>
 </tr>
</table>

<p class=MsoNormal style='margin-top:3.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><i>Balance Sheet Data:</i></p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=661
 style='border-collapse:collapse'>
 <tr>
  <td width=397 valign=top style='width:297.9pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Working Capital</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>$&nbsp;&nbsp;&nbsp; 532,000</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>$1,547,000</p>
  </td>
 </tr>
 <tr>
  <td width=397 valign=top style='width:297.9pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Total assets</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>11,544,000</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>10,693,000</p>
  </td>
 </tr>
 <tr>
  <td width=397 valign=top style='width:297.9pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Minority Interest</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>751,000</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>795,000</p>
  </td>
 </tr>
 <tr>
  <td width=397 valign=top style='width:297.9pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Long-term debt</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>970,000</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>1,293,000</p>
  </td>
 </tr>
 <tr>
  <td width=397 valign=top style='width:297.9pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Stockholders' equity</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.6pt;text-align:right'>$ 6,333,000</p>
  </td>
  <td width=126 valign=top style='width:94.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.1pt;text-align:right'>$6,082,000</p>
  </td>
 </tr>
</table>

<div style='border:none;border-top:solid windowtext 1.5pt;padding:1.0pt 0in 0in 0in'>

<p class=MsoFooter align=center style='text-align:center;border:none;
padding:0in'>37</p>

</div>

<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.75in;text-indent:-.75in'><b>Item 7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Management's Discussion
and Analysis of Financial Condition and Results of Operations.</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Results of Operations</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Net Revenues:</b> Net revenues
for fiscal 2007 increased $4,020,000 (19.2%) to $24,955,000 from $20,935,000
for fiscal 2006. &nbsp;Same store restaurant sales increased $991,000 or 5.9%,
during fiscal 2007. Restaurants are included in same store sales after they
have been open a full fifteen months and only Good Times restaurants are
included with dual branded restaurants excluded.&nbsp; Restaurant sales increased $223,000
due to one non-traditional company-owned restaurant not included in same store
sales and increased $2,032,000 due to five new, acquired or dual branded company-owned
restaurants that were opened or acquired in fiscal 2005 and 2006.&nbsp; Restaurant
sales also increased $640,000 due to two new company-owned restaurants opened
in May and August of 2007. Net revenues increased $134,000 in fiscal 2007 due
to an increase in franchise fees of $10,000 and an increase in franchise
royalties of $124,000.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Our same store restaurant sales were severely
impacted by adverse weather conditions in the Denver, Colorado metropolitan
area in December 2006 and January 2007.&nbsp; The severe weather caused store
closures and limited operating hours on two separate occasions during
December.&nbsp; December 2006 was the fifth snowiest month on record in the Denver
area, and the eighth coldest on record.&nbsp; Management estimates that lost sales
due to the storms were approximately $425,000 in its company-owned and
co-developed restaurants.&nbsp; The estimate is based on sales trends prior to the
severe weather.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>In May 2007 we launched a television advertising
campaign featuring our new &quot;Bambino&quot; burgers. &nbsp;The new product launch was
supported with television advertising and our same store sales increased 9.5%
and 14.1% in May and June 2007, respectively and increased 11.9% in the fourth
quarter.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>We have had same store sales increases in each of
the last fifteen quarters with the exception of the quarter ending December 31,
2006 due to the weather issues discussed above.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Total restaurant sales for Good Times and its
franchisees were $42,304,000 for fiscal 2007 compared to $35,312,000 for fiscal
2006.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Average restaurant sales (including double drive
thru restaurants and restaurants with dining rooms but excluding dual brand
restaurants) for fiscal 2006 and 2007 were as follows:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='margin-left:28.2pt;border-collapse:collapse'>
 <tr style='height:15.9pt'>
  <td width=258 valign=top style='width:193.8pt;padding:0in 5.4pt 0in 5.4pt;
  height:15.9pt'>
  <p class=MsoNormal><b>&nbsp;</b></p>
  </td>
  <td width=106 valign=top style='width:79.8pt;padding:0in 5.4pt 0in 5.4pt;
  height:15.9pt'>
  <p class=MsoNormal><b><u>Fiscal
  2007</u></b></p>
  </td>
  <td width=106 valign=top style='width:79.8pt;padding:0in 5.4pt 0in 5.4pt;
  height:15.9pt'>
  <p class=MsoNormal><b><u>Fiscal
  2006</u></b></p>
  </td>
 </tr>
 <tr style='height:14.75pt'>
  <td width=258 valign=top style='width:193.8pt;padding:0in 5.4pt 0in 5.4pt;
  height:14.75pt'>
  <p class=MsoNormal>Company
  operated</p>
  </td>
  <td width=106 valign=top style='width:79.8pt;padding:0in 5.4pt 0in 5.4pt;
  height:14.75pt'>
  <p class=MsoNormal style='margin-left:6.75pt'>$930,000</p>
  </td>
  <td width=106 valign=top style='width:79.8pt;padding:0in 5.4pt 0in 5.4pt;
  height:14.75pt'>
  <p class=MsoNormal style='margin-left:8.35pt'>$858,000</p>
  </td>
 </tr>
 <tr style='height:14.75pt'>
  <td width=258 valign=top style='width:193.8pt;padding:0in 5.4pt 0in 5.4pt;
  height:14.75pt'>
  <p class=MsoNormal>Franchise
  operated</p>
  </td>
  <td width=106 valign=top style='width:79.8pt;padding:0in 5.4pt 0in 5.4pt;
  height:14.75pt'>
  <p class=MsoNormal style='margin-left:6.75pt'>$819,000</p>
  </td>
  <td width=106 valign=top style='width:79.8pt;padding:0in 5.4pt 0in 5.4pt;
  height:14.75pt'>
  <p class=MsoNormal style='margin-left:8.35pt'>$787,000</p>
  </td>
 </tr>
</table>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Restaurant Operating Costs:</b> Restaurant
operating costs as a percent of restaurant sales were 88.3% for fiscal 2007
compared to 88.1% in fiscal 2006.</p>

<p class=MsoNormal style='text-align:justify'>The changes in restaurant-level costs
are explained as follows:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=660
 style='margin-left:5.4pt;border-collapse:collapse'>
 <tr>
  <td width=521 valign=top style='width:390.45pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoBodyText style='margin-right:-5.4pt'>Restaurant-level costs for the
  period ended September 30, 2006</p>
  </td>
  <td width=139 valign=top style='width:104.55pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoBodyText align=right style='margin-right:8.1pt;text-align:right'>88.1%</p>
  </td>
 </tr>
 <tr>
  <td width=521 valign=top style='width:390.45pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoBodyText style='margin-right:-5.4pt'>Increase in food and packaging costs</p>
  </td>
  <td width=139 valign=top style='width:104.55pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoBodyText align=right style='margin-right:8.1pt;text-align:right'>.1%</p>
  </td>
 </tr>
 <tr>
  <td width=521 valign=top style='width:390.45pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoBodyText style='margin-right:-5.4pt'>Increase in payroll and other
  employee benefit costs</p>
  </td>
  <td width=139 valign=top style='width:104.55pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoBodyText align=right style='margin-right:8.1pt;text-align:right'>.9%</p>
  </td>
 </tr>
 <tr>
  <td width=521 valign=top style='width:390.45pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoBodyText style='margin-right:-5.4pt'>Decrease in occupancy and other operating
  costs</p>
  </td>
  <td width=139 valign=top style='width:104.55pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoBodyText align=right style='margin-right:.05in;text-align:right'>(.6%)</p>
  </td>
 </tr>
 <tr>
  <td width=521 valign=top style='width:390.45pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoBodyText style='margin-right:-5.4pt'>Decrease in pre-open costs</p>
  </td>
  <td width=139 valign=top style='width:104.55pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoBodyText align=right style='margin-right:.05in;text-align:right'>(.4%)</p>
  </td>
 </tr>
 <tr>
  <td width=521 valign=top style='width:390.45pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoBodyText style='margin-right:-5.4pt'>Increase in depreciation and
  amortization costs</p>
  </td>
  <td width=139 valign=top style='width:104.55pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoBodyText align=right style='margin-top:0in;margin-right:8.1pt;
  margin-bottom:0in;margin-left:2.05pt;margin-bottom:.0001pt;text-align:right'><u>&nbsp;.2%</u></p>
  </td>
 </tr>
 <tr>
  <td width=521 valign=top style='width:390.45pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoBodyText style='margin-right:-5.4pt'>Restaurant-level costs for the
  period ended September 30, 2007</p>
  </td>
  <td width=139 valign=top style='width:104.55pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoBodyText align=right style='margin-right:8.1pt;text-align:right'>88.3%</p>
  </td>
 </tr>
</table>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Food and Packaging Costs:</b> Food and
packaging costs for fiscal 2007 increased $1,251,000 from $6,338,000 (31.2% of
restaurant sales) in fiscal 2006 to $7,589,000 (31.3% of restaurant sales). We
experienced unprecedented increases in commodity costs including beef, bakery,
soft drinks, cheese, dairy and packaging costs with the majority of those
increases occurring in April through September 2007.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Our weighted food and packaging costs have
increased approximately 6.5% since the beginning of the fiscal 2007 year.&nbsp; However,
food and packaging costs increased only slightly as a percent of restaurant
sales due to menu price increases taken in January, July and September 2007.&nbsp;
The cumulative weighted menu price increases taken during the fiscal year were
approximately 7.3%.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Payroll and Other Employee Benefit
Costs</b>:
For fiscal 2007 payroll and other employee benefit costs increased $1,479,000
from $6,584,000 (32.4% of restaurant sales) in fiscal 2006 to $8,063,000 (33.3%
of restaurant sales).</p>

<div style='border:none;border-top:solid windowtext 1.5pt;padding:1.0pt 0in 0in 0in'>

<p class=MsoFooter align=center style='text-align:center;border:none;
padding:0in'>38</p>

</div>

<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>The increase in payroll and other employee benefit
costs for fiscal 2007 is primarily due to an increase in restaurant sales and
the addition of new company-owned and co-developed restaurants opened in late
fiscal 2006 and during 2007, as well as a state mandated increase in the minimum
wages paid to hourly employees in January 2007.&nbsp; Payroll and benefit costs are
semi-variable and therefore increase or decrease as sales fluctuate.&nbsp;
Additionally, 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.&nbsp; The three dual branded restaurants also have a higher
labor cost as a percent of sales than Good Times single brand restaurants.&nbsp; In
November 2006 Colorado voters approved an increase in the minimum wage from
$5.15 to $6.85 as of January 1, 2007.&nbsp; The impact on wages paid in fiscal 2007
due to the increase is estimated to be approximately $187,000 (.8% of
restaurant sales).</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Occupancy and Other Costs:</b> For fiscal
2007 occupancy and other costs increased $596,000 from $3,797,000 (18.7% of
restaurant sales) in fiscal 2006 to $4,393,000 (18.1% of restaurant sales).&nbsp;
The $596,000 increase in occupancy and other costs are primarily attributable
to:</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:17.1pt;text-align:justify;text-indent:-17.1pt'>&sect;&nbsp;
Increases
in building rent of $290,000 due to the addition of company-owned and
co-developed restaurants.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:17.1pt;text-align:justify;text-indent:-17.1pt'>&sect;&nbsp;
Increases
in bank fees of $39,000 due to a greater number of customer transactions using credit
cards in addition to the new restaurants.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:17.1pt;text-align:justify;text-indent:-17.1pt'>&sect;&nbsp;
Increases
in property taxes related to the new and purchased restaurants.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:17.1pt;text-align:justify;text-indent:-17.1pt'>&sect;&nbsp;
Increases
in utility costs related to the new and purchased restaurants.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Occupancy costs may 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 increased property taxes on
those locations.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>New Store Pre-opening Costs:</b> For fiscal
2007 new store pre-opening costs decreased $64,000 from $182,000 in fiscal 2006
to $118,000.&nbsp; New store pre-opening costs in fiscal 2007 are related to the
opening of two new company-owned restaurants.&nbsp; Fiscal 2006 new store
pre-opening costs were related to the opening of two new company-owned
restaurants, one new co-developed restaurant and the purchase of one restaurant
from a franchisee that was converted to the dual brand format.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Depreciation and Amortization</b> Costs: For
fiscal 2007 depreciation and amortization costs increased $226,000 from $997,000
in fiscal 2006 to $1,223,000.&nbsp; Depreciation costs increased due to the addition
of new company-owned and co-developed restaurants in late fiscal 2006 and two
new company-owned restaurants opened in fiscal 2007.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Selling General and Administrative
Costs:</b>
Selling, general and administrative costs increased $493,000 from $2,733,000 (13.4%
of restaurant sales) in fiscal 2006 to $3,226,000 (13.3% of restaurant sales)
in fiscal 2007.&nbsp; The increase in selling, general and administrative costs are
partially attributable to increased advertising costs, which increased to $1,427,000
(5.9% of restaurant sales) for fiscal 2007 from $1,185,000 (5.8% of restaurant
sales) for fiscal 2006, and an increase in general and administrative costs,
which increased to $1,799,000 (7.4% of restaurant sales) for fiscal 2007 from
$1,548,000 (7.6% of restaurant sales) for fiscal 2006 (as explained below).</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>The increase in advertising costs is due to the
increase in restaurant sales (contributions based on sales are made to the
advertising funds) as well as the addition of a Director of Marketing to the
internal corporate staff.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Management anticipates that fiscal 2008
advertising will consist primarily of television advertising, on-site and point-of-purchase
merchandising totaling approximately 5.8% of restaurant sales.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>The $251,000 increase in general and
administrative cost is primarily attributable to:</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:17.3pt;text-align:justify;text-indent:-.25in'>&sect;&nbsp;
Incentive
stock options compensation expense of $84,000 related to the adoption of FSAS
No. 123.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:17.3pt;text-align:justify;text-indent:-.25in'>&sect;&nbsp;
Human
resource and training costs increase of $50,000 primarily related to the
development of video training.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:17.1pt;text-align:justify;text-indent:-.25in'>&sect;&nbsp;
Corporate
salary and bonus expense increase of $96,000.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:-.7pt;text-align:justify'><b>Gain on disposal of restaurants and
equipment:</b>
For fiscal 2007 the gain on disposal of restaurants and equipment decreased $40,000
to $17,000 from $57,000.&nbsp; The $17,000 gain on disposal of restaurants and
equipment in fiscal 2007 is from the partial recognition of deferred gains
related to two sale-leaseback transactions that were completed in fiscal 2004
and 2006, offset by the write off of $29,000 of goodwill related to a
restaurant sold to a franchisee in May 2007.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:-.7pt;text-align:justify'><b>Income from Operations:</b> Income from
operations was $360,000 in fiscal 2007 compared to income from operations of $361,000
in fiscal 2006.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify;line-height:97%'><b>Net Income:</b>
Net income was $29,000 for fiscal 2007 compared to net income of $17,000 in
fiscal 2006.&nbsp; The change from fiscal 2006 to fiscal 2007 was primarily
attributable to the matters discussed in the &quot;Net Revenues&quot;, &quot;Food
and Packaging Costs&quot;, &quot;Selling General and Administrative Costs&quot;
and &quot;New Store Pre-opening Costs&quot; sections of Item 6.&nbsp; In addition,
1) minority interest expense decreased $35,000 due to decreased income from
restaurant operations of the joint venture restaurants for fiscal 2007; 2) net interest
income decreased $47,000 to $40,000 from $87,000 in fiscal 2006 due to increased
interest expense on debt and reduced earnings on cash reserves in the current
period; and, 3) other expenses decreased $25,000 to $160,000 from $185,000 in
fiscal 2006.&nbsp; Other expenses include $160,000 in franchise related expenses
compared to $166,000 in the same prior year period.&nbsp; Franchise expenses in the
current year include all support costs related to the three franchised
restaurants that opened in fiscal 2007.</p>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Liquidity and Capital Resources</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Cash and Working Capital:</b> As of
September 30, 2007, we had $2,465,000 of 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
financing, for the development of new company-owned restaurants.&nbsp; Management
believes that the current cash on hand and additional cash expected from
operations in fiscal 2008 will be sufficient to cover our working capital
requirements for fiscal 2008.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>As of September 30, 2007, we had working capital
of $532,000.&nbsp; 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 Good Times
restaurants are opened.</p>

<p class=MsoBodyText style='margin-top:6.0pt;margin-right:0in;margin-bottom:
6.0pt;margin-left:0in;text-align:justify'>In July 2006 we purchased an existing
restaurant from a franchisee for total consideration of $329,000, which
included forgiving a note receivable due from the franchisee in the amount of
$77,000, payment in full of the franchisee's note payable with GE Capital in
the amount of $140,000 and cash of approximately $112,000.&nbsp; The transaction
resulted in the recording of $33,000 of goodwill.&nbsp; In May 2007 we sold the
restaurant to an unrelated third party franchisee, resulting in the write off
of the goodwill.&nbsp; The land, building and improvements for this site were
originally sold in a sale leaseback transaction.&nbsp; We will remain contingently
liable on that lease which was subleased to the new franchisee.&nbsp; We maintained
ownership of the fixtures and equipment and entered into a lease agreement for
those assets with the franchisee.</p>

<p class=MsoBodyText style='margin-top:6.0pt;margin-right:0in;margin-bottom:
6.0pt;margin-left:0in;text-align:justify'>In August 2007 we completed a sale-leaseback
transaction related to a company-owned restaurant that opened that month.&nbsp; The
net proceeds to us were approximately $1,580,000, which were equal to the cost
of the land, building and improvements of the new restaurant, and a gain of
$15,000.</p>

<p class=MsoBodyText style='margin-top:6.0pt;margin-right:0in;margin-bottom:
6.0pt;margin-left:0in;text-align:justify'>We are also 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.&nbsp; We also anticipate investing approximately $600,000 during fiscal
2008 in existing company-owned and joint venture restaurants to upgrade the
exterior building finishes and dining rooms as well as to improve the patios.</p>

<p class=MsoBodyText style='margin-top:6.0pt;margin-right:0in;margin-bottom:
6.0pt;margin-left:0in;text-align:justify'><b>Financing:</b> In May 2007
the Company borrowed $1,100,000 from Wells Fargo Bank under a note payable with
an eight year term with a floating interest rate at .50% below prime.&nbsp; We
simultaneously entered into an interest rate swap transaction with Wells Fargo
Bank for the full $1,100,000 with a fixed interest rate of 7.7% for the full
eight year term coinciding with the note payable.&nbsp; Partial proceeds from the
loan were used to: 1) payoff our existing GE Capital notes payable of $398,000;
and, 2) fund new store construction.&nbsp; The balance of the proceeds will be used
to partially fund the purchase of an existing restaurant from a franchisee.</p>

<p class=MsoBodyText style='margin-top:6.0pt;margin-right:0in;margin-bottom:
6.0pt;margin-left:0in;text-align:justify'>In August 2006 we entered into a
$1,000,000 promissory note with an unrelated third party (PFGI II, LLC) and in March 2007 we entered into a second $1,000,000 promissory note with the same
third party.&nbsp; The promissory notes constitute revolving lines of credit for the
development of new restaurants which may be advanced and repaid on a monthly
basis from time to time.&nbsp; Prior to maturity, no principal payments are required,
and monthly payments of interest only at the prime rate plus 2% are due, with
all unpaid principal due on July 10, 2008.&nbsp; The loans are secured by separate
leasehold deeds of trust related to six company-owned restaurants.&nbsp; The total
outstanding balance on both lines of credit was $750,000 at September 30,
2007.&nbsp; Subsequent to the fiscal year end the balance was repaid in full.</p>

<p class=MsoBodyText style='margin-top:6.0pt;margin-right:0in;margin-bottom:
6.0pt;margin-left:0in;text-align:justify'><b>Cash Flows:</b> Net cash
provided by operating activities was $1,763,000 for fiscal 2007 compared to $1,454,000
in fiscal 2006.&nbsp; The increased net cash provided by operating activities for
fiscal 2007 was the result of net income of $29,000 and non-cash reconciling
items totaling $1,734,000 (comprised principally of depreciation and
amortization of $1,223,000, minority interest of $211,000 and increases in
operating assets and liabilities totaling $300,000).</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Net cash used in investing activities in fiscal
2007 was $2,057,000 compared to $1,382,000 in fiscal 2006.&nbsp; The fiscal 2007
activity reflects payments for the purchase of property and equipment of $3,738,000,
proceeds from a sale-leaseback transaction of $1,580,000 and payments received
on loans made to franchisees of $101,000.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>Net cash provided by financing activities in
fiscal 2007 was $146,000 compared to $778,000 in fiscal 2006.&nbsp; The fiscal 2007
activity includes principal payments on notes payable and long term debt of $559,000,
borrowings on notes payable and long-term debt of $1,100,000, distributions to
minority interests in partnerships of $319,000, contributions from minority
interest partners of $10,000, proceeds from the exercise of stock options of $164,000
and net repayments on the revolving lines-of-credit of $250,000.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Contingencies and Off-Balance Sheet
Arrangements:</b>
We are contingently liable on several ground leases that have been subleased or
assigned to franchisees.&nbsp; We have never experienced any losses nor do we
anticipate any future losses from these contingent lease liabilities.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Critical Accounting Policies and
Estimates</b></p>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Notes Receivable:</b> We evaluate
the collectability of our note receivables from franchisees annually.&nbsp;
Historically, such amounts have been fully repaid and we believe the collateral
and guarantees are adequate to provide for future payments; therefore no
allowances for amounts estimated to be uncollectable have been provided.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Impairment of Long-Lived Assets:</b> We review our
long-lived assets annually for potential impairment as well as their estimated
remaining life. Historically, we have not been required to impair our long-term
assets nor revise their estimated life, however, the restaurant industry is
extremely competitive and we continue to be responsive to changes in its
operating environment.&nbsp; Therefore such estimates are considered significant and
subject to change.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Income Taxes:</b> The deferred
tax assets are reviewed periodically for recoverability, and valuation
allowances are adjusted as necessary.&nbsp; We believe it is more likely than not
that the recorded deferred tax assets will be realized.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Variable Interest Entities</b>: In December
2003, the Financial Accounting Standards Board (the &quot;FASB&quot;) finalized
FASB Interpretation No. 46R, Consolidation of Variable Interest Entities--An
Interpretation of ARB51 (FIN 46R).&nbsp; FIN 46R expands the scope of ARB51 and can require consolidation of &quot;Variable Interest Entities (VIEs).&quot;&nbsp; Once an
entity is determined to be a VIE, the party with the controlling financial
interest, the primary beneficiary, is required to consolidate it.&nbsp; We have
several franchisees with notes payable to the Company and after analysis we
have determined that, while these franchisees are Variable Interest Entities as
defined by FIN 46R, we are not the primary beneficiary of the entities, and
therefore they are not required to be consolidated under FIN 46R.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>New Accounting Pronouncements:</b> In June 2006,
the FASB issued FIN 48, &quot;Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement 109,&quot; which clarifies the accounting for
uncertainty in income taxes recognized in an enterprise's financial statements
in accordance with FAS 109, &quot;Accounting for Income Taxes.&quot;&nbsp; FIN 48 prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in
a tax return.&nbsp; FIN 48 is effective for fiscal years beginning after December
15, 2006, which will be our fiscal year beginning October 1, 2007.&nbsp; <a
name="OLE_LINK3">The adoption of this statement will not have a material impact
on the Company's financial position or results of operations.</a></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify;text-autospace:none'>In September 2006, the FASB
issued Statement of Financial Accounting Standards No. 157, &quot;Fair Value
Measurements&quot; (&quot;SFAS 157&quot;).&nbsp;&nbsp;SFAS 157 defines fair value, establishes
a framework for using fair value to measure assets and liabilities, and expands
disclosures about fair value measurements.&nbsp;&nbsp;This statement applies
under other accounting pronouncements that currently require or permit fair
value measurements and is effective for fiscal years beginning after November
15, 2007, which will be our fiscal year beginning October 1,
2008.&nbsp;&nbsp;In February 2007, the FASB issued Statement of Financial Accounting
Standards No. 159, &quot;The Fair Value Option for Financial Assets and Financial
Liabilities&quot; (&quot;SFAS 159&quot;).&nbsp;&nbsp;SFAS 159 permits companies to choose to
measure many financial instruments and certain other items at fair
value.&nbsp;&nbsp;If the fair value option is elected, unrealized gains and
losses will be recognized in earnings at each subsequent reporting
date.&nbsp;&nbsp;SFAS 159 has the same effective date as SFAS
157.&nbsp;&nbsp;The adoption of these statements is not expected to have a
material impact on the Company's financial position or results of operations.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>In November&nbsp;2007, the FASB issued SFAS
No.&nbsp;141 (revised 2007), <i>Business Combination</i> (FAS&nbsp;141(R)) and
SFAS No.&nbsp;160, <i>Noncontrolling Interests in Consolidated Financial
Statements, an amendment of ARB No.&nbsp;51</i> <a name="jump_exp_1"></a>(FAS&nbsp;<a
name="jump_exp_2"></a>160). FAS&nbsp;141(R) will change how business
acquisitions are accounted for and will impact financial statements both on the
acquisition date and in subsequent periods. <a name="jump_exp_3"></a>FAS&nbsp;<a
name="jump_exp_4"></a>160 will change the accounting and reporting for minority
interests, which will be recharacterized as noncontrolling interests and
classified as a component of equity. FAS&nbsp;141(R) and <a name="jump_exp_5"></a>FAS&nbsp;<a
name="jump_exp_6"></a>160 are effective for both public and private companies
for fiscal years beginning on or after December&nbsp;15, 2008 (fiscal 2010 for
the Company). FAS&nbsp;141(R) will be applied prospectively. <a
name="jump_exp_7"></a>FAS&nbsp;<a name="jump_exp_8"></a>160 requires
retroactive adoption of the presentation and disclosure requirements for
existing minority interests. All other requirements of <a name="jump_exp_9"></a>FAS&nbsp;<a
name="jump_exp_10"></a>160 will be applied prospectively. Early adoption is
prohibited for both standards. Management is currently evaluating the
requirements of FAS&nbsp;141(R) and <a name="jump_exp_11"></a>FAS&nbsp;<a
name="jump_exp_12"></a>160 and has not yet determined the impact on its
financial statements.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify;line-height:97%'><b>Subsequent
Events: </b>On December 3, 2007, we entered into a development
agreement with Zen Partners LLC that is comprised of a Development Agreement, a
Management Agreement and a Site Selection, Construction Management and
Pre-Opening Services Agreement.&nbsp; The agreements provide for the development of
up to twenty five restaurants with a five year development schedule for up to ten
of the restaurants with an option to develop an additional fifteen restaurants,
exercisable any time during the initial five year period.&nbsp;&nbsp; We will manage and
operate the restaurants utilizing our employees on the same basis as we would
company-owned restaurants, however the Zen Partners LLC will provide all
development and operating capital.&nbsp; We will receive a fixed fee for the
development of each restaurant and a recurring management fee based on a
percentage of sales for the operation of the restaurants.&nbsp;&nbsp; We may provide a
limited lease guarantee on the initial three restaurants developed, for which
we will receive an additional recurring guarantee fee.&nbsp; We will also
participate in the ongoing profitability of the restaurants after Zen Partners
LLC has received a priority return on its invested capital.&nbsp; A member of our
Board of Directors and significant shareholder, David Grissen, is an owner of
Zen Partners LLC.</p>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Pre-approval of non-audit services:</b> On November 17,
2007, the Audit Committee of the Board of Directors of Good Times Restaurants
Inc. approved in advance certain non-audit services to be performed by Hein
&amp; Associates, Good Times' independent auditor.&nbsp; These non-audit services
are to consist primarily of corporate income tax compliance services.</p>



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<p class=MsoNormal style='margin-bottom:.5in;text-align:justify'><b>Item 8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial
Statements</b></p>

<p class=MsoNormal align=center style='margin-bottom:.25in;text-align:center'><b>INDEX TO
FINANCIAL STATEMENTS</b></p>

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  <p class=MsoNormal align=right style='text-align:right'><b><u>PAGE</u></b></p>
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  </td>
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  <p class=MsoNormal>Report
  of Independent Registered Public Accounting Firm</p>
  </td>
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  <p class=MsoNormal align=right style='text-align:right'>F-2</p>
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  </td>
 </tr>
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  <td width=583 valign=top style='width:437.4pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Consolidated
  Balance Sheet - September 30, 2007</p>
  </td>
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  <p class=MsoNormal align=right style='text-align:right'>F-3</p>
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  </td>
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  <p class=MsoNormal>Consolidated
  Statements of Operations - For the Years Ended September 30, 2007 and 2006</p>
  </td>
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  <p class=MsoNormal align=right style='text-align:right'>F-4</p>
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  <p class=MsoNormal>Consolidated
  Statements of Stockholders' Equity - For the Period from October 1, 2005
  through September 30, 2007</p>
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  </td>
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  </td>
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  </td>
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  <p class=MsoNormal>Consolidated
  Statements of Cash Flows - For the Years Ended September 30, 2007 and 2006</p>
  </td>
  <td width=66 valign=top style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='text-align:right'>F-6</p>
  </td>
 </tr>
 <tr>
  <td width=583 valign=top style='width:437.4pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=66 valign=top style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=583 valign=top style='width:437.4pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Notes
  to Consolidated Financial Statements</p>
  </td>
  <td width=66 valign=top style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='text-align:right'>F-7</p>
  </td>
 </tr>
</table>



<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>





<br
clear=all style='page-break-before:always'>












<p class=MsoNormal align=center style='margin-bottom:.5in;text-align:center'><b>REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</b></p>

<p class=MsoNormal style='text-align:justify'>To the Stockholders and</p>

<p class=MsoNormal style='text-align:justify'>Board of Directors</p>

<p class=MsoNormal style='text-align:justify'>Good Times Restaurants, Inc.</p>

<p class=MsoNormal style='margin-bottom:.25in;text-align:justify'>Golden,
Colorado</p>

<p class=MsoNormal style='text-align:justify'>We have audited the accompanying
consolidated balance sheet of Good Times Restaurants, Inc. and Subsidiary as of
September&nbsp;30, 2007, and the related consolidated statements of operations,
stockholders' equity, comprehensive income and cash flows for the years ended
September&nbsp;30, 2007 and 2006.&nbsp; These consolidated financial statements are
the responsibility of the Company's management.&nbsp; Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United States).&nbsp;
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement.&nbsp; An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.&nbsp; An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:30.0pt;
margin-left:0in;text-align:justify'>In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the
financial position of Good Times Restaurants, Inc. and Subsidiary as of
September&nbsp;30, 2007, and the results of their operations and their cash
flows for the years ended September&nbsp;30, 2007 and 2006, in conformity with
U.S. Generally Accepted Accounting Principles.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><i>HEIN &amp; ASSOCIATES LLP</i> </p>

<p class=MsoNormal style='text-align:justify'>Denver, Colorado</p>

<p class=MsoNormal style='text-align:justify'>December 13, 2007</p>

<p class=MsoFooter align=center style='text-align:center'>F-2</p>



<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>



<br
clear=all style='page-break-before:always'>










<p class=MsoNormal align=center style='text-align:center'>GOOD TIMES
RESTAURANTS INC. AND SUBSIDIARY</p>

<p class=MsoNormal align=center style='text-align:center'>CONSOLIDATED
BALANCE SHEET</p>

<p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center'>SEPTEMBER 30,
2007</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=612
 style='margin-left:42.0pt;border-collapse:collapse'>
 <tr>
  <td width=612 colspan=3 valign=top style='width:459.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=center style='text-align:center'><u>ASSETS</u></p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal>Current Assets:</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Cash and cash equivalents</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:0in;margin-left:7.5pt;margin-bottom:.0001pt;text-align:right'>$2,465,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Receivables, net of allowance for
  doubtful accounts of $0</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:0in;margin-left:7.5pt;margin-bottom:.0001pt;text-align:right'>187,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Inventories</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:0in;margin-left:7.5pt;margin-bottom:.0001pt;text-align:right'>191,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Prepaid expenses and other</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:0in;margin-left:7.5pt;margin-bottom:.0001pt;text-align:right'>39,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Notes receivable</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:0in;margin-left:7.5pt;margin-bottom:.0001pt;text-align:right'><u>88,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
  margin-left:51.45pt'>Total
  current assets</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:6.0pt;margin-left:7.5pt;text-align:right'>2.970,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal>Property and Equipment:</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Land and building</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:0in;margin-left:7.5pt;margin-bottom:.0001pt;text-align:right'>5,252,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Leasehold improvements</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:0in;margin-left:7.5pt;margin-bottom:.0001pt;text-align:right'>3,737,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Fixtures and equipment</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:0in;margin-left:7.5pt;margin-bottom:.0001pt;text-align:right'><u>7,798,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:0in;margin-left:7.5pt;margin-bottom:.0001pt;text-align:right'>16,787,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Less accumulated depreciation</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:0in;margin-left:7.5pt;margin-bottom:.0001pt;text-align:right'><u>(9,371,000</u>)</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:0in;margin-left:7.5pt;margin-bottom:.0001pt;text-align:right'>7,416,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Assets held for sale</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:0in;margin-left:7.5pt;margin-bottom:.0001pt;text-align:right'>779,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal>Other Assets:</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Notes receivable</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:0in;margin-left:7.5pt;margin-bottom:.0001pt;text-align:right'>300,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Other</p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:0in;margin-left:7.5pt;margin-bottom:.0001pt;text-align:right'><u>79,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:6.0pt;margin-left:7.5pt;text-align:right'><u>379,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-bottom:6.0pt'>Total Assets </p>
  </td>
  <td width=192 colspan=2 valign=top style='width:143.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:6.0pt;margin-left:7.5pt;text-align:right'><u>$11,544,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=612 colspan=3 valign=top style='width:459.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center'><u>LIABILITIES AND STOCKHOLDERS' EQUITY</u></p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal>Current Liabilities:</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=top style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Current maturities of long-term debt
  and leases</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=top style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'>$870,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Accounts payable</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=top style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'>387,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Deferred income</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=top style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'>119,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Other accrued liabilities</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=top style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'><u>1,062,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
  margin-left:51.45pt'>Total
  current liabilities</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=top style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>2,438,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal>Long-Term Liabilities:</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=top style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Debt and leases, net of current
  portion </p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=top style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'>970,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Deferred and other liabilities</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=top style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'><u>1,052,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
  margin-left:51.45pt'>Total
  long-term liabilities</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=top style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>2,022,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-bottom:3.0pt'>Minority
  Interests in Partnerships</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=top style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'>751,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-bottom:3.0pt'>Commitments and Contingencies   (Notes
  3, 5 and 11)</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=top style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'><br
  clear=all style='page-break-before:always'>

  <p class=MsoNormal>Stockholders' Equity:</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=top style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:25.5pt;text-indent:-9.3pt'>Preferred
  stock, $.01 par value, 5,000,000&nbsp;shares authorized, none issued and
  outstanding</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=bottom style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'>-</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:25.5pt;text-indent:-9.3pt'>Common stock,
  $.01 par value; 50,000,000 shares authorized, 3,866,896 issued and
  outstanding</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=bottom style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'>4,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Accumulated other comprehensive loss</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=bottom style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'>(26,000)</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Capital contributed in excess of par
  value</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=bottom style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'>17,439,000</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Accumulated deficit</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=bottom style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'><u>(11,084,000</u>)</p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
  margin-left:51.45pt'>Total
  stockholders' equity</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=bottom style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:7.5pt;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'><u>&nbsp; 6,333,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=420 valign=top style='width:315.2pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal>Total Liabilities and Stockholders' Equity</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=180 valign=bottom style='width:134.8pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'><u>$11,544,000</u></p>
  </td>
 </tr>
</table>



<p class=MsoFooter align=center style='text-align:center'><b><i>See
accompanying notes to these consolidated financial statements.</i></b></p>

<p class=MsoFooter align=center style='text-align:center'>F-3</p>

<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>





<br
clear=all style='page-break-before:always'>












<p class=MsoNormal align=center style='text-align:center'>GOOD TIMES
RESTAURANTS INC. AND SUBSIDIARY</p>

<p class=MsoNormal align=center style='text-align:center'>CONSOLIDATED
STATEMENTS OF OPERATIONS</p>



<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=599
 style='margin-left:51.45pt;border-collapse:collapse'>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=6 valign=top style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=317 colspan=3 valign=top style='width:238.05pt;border:none;
  border-bottom:solid windowtext 1.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=center style='text-align:center'>For the Years Ended</p>
  <p class=MsoNormal align=center style='text-align:center'>September 30,</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=6 valign=top style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=top style='width:116.55pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:16.5pt;
  margin-bottom:0in;margin-left:38.55pt;margin-bottom:.0001pt;text-align:center'>2007</p>
  </td>
  <td width=6 valign=top style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=top style='width:117.0pt;border-top:solid windowtext 1.0pt;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none;
  padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:16.5pt;
  margin-bottom:0in;margin-left:39.0pt;margin-bottom:.0001pt;text-align:center'>2006</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal>Net Revenues:</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 style='width:116.55pt;border:none;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Restaurant sales</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'>$24,215,000</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>$20,329,000</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Area development and franchise fees</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'>70,000</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>60,000</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Franchise royalties </p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'><u>670,000</u></p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'><u>546,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
  margin-left:33.8pt'>Total
  net revenues</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:21.0pt;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>24,955,000</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:16.5pt;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>20,935,000</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal>Restaurant Operating Costs:</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Food and packaging costs</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'>7,589,000</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>6,338,000</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Payroll and other employee benefit
  costs</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'>8,063,000</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>6,584,000</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Restaurant occupancy costs</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'>3,310,000</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>2,877,000</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Accretion of deferred rent</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'>32,000</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>35,000</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Other restaurant operating costs</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'>1,051,000</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>885,000</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>New store pre-opening costs</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'>118,000</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>182,000</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Depreciation and amortization</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'><u>1,223,000</u></p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal><u>&nbsp;</u></p>
  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'><u>997,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
  margin-left:33.8pt'>Total
  restaurant operating costs</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:21.0pt;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'><u>21,386,000</u></p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:16.5pt;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'><u>17,898,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>General and administrative</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'>1,799,000</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>1,548,000</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Advertising</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'>1,427,000</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>1,185,000</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
  margin-left:25.5pt;text-indent:-9.3pt'>Gain on disposal of restaurants and
  equipment</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:21.0pt;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'><u>(17,000</u>)</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-bottom:6.0pt'><u>&nbsp;</u></p>
  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:16.5pt;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'><u>(57,000</u>)</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-bottom:3.0pt'>Income From
  Operations</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:21.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'>360,000</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:16.5pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'>361,000</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal>Other Income (Expenses):</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Interest income</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'>99,000</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>141,000</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Interest expense</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'>(59,000)</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>(54,000)</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Minority interest in income of
  partnerships</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'>(211,000)</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>(246,000)</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Other, net</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'><u>(160,000</u>)</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'><u>(185,000</u>)</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:3.0pt;
  margin-left:33.8pt'>Total
  other expenses, net</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:21.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'><u>(331,000</u>)</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:16.5pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'><u>(344,000</u>)</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:3.0pt;
  margin-left:16.2pt;text-indent:-16.2pt'>Net Income </p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:21.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'><u>$29,000</u></p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:16.5pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'><u>$17,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-bottom:3.0pt'>Basic Income
  per Share</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:21.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'>$0.01</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:16.5pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'>$0.01</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-bottom:3.0pt'>Diluted
  Income per Share</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:21.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'>$0.01</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:16.5pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'>$0.01</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt;text-indent:-16.2pt'>Weighted Average Common Shares Outstanding:</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:.45in;text-indent:-16.2pt'>Basic</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'>3,838,867</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>2,913,077</p>
  </td>
 </tr>
 <tr>
  <td width=276 valign=top style='width:207.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:.45in;text-indent:-16.2pt'>Diluted</p>
  </td>
  <td width=6 style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=155 valign=bottom style='width:116.55pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:21.0pt;text-align:right'>3,975,957</p>
  </td>
  <td width=6 valign=bottom style='width:4.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=156 valign=bottom style='width:117.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>3,054,952</p>
  </td>
 </tr>
</table>

<p class=MsoFooter align=center style='text-align:center'><b><i>See
accompanying notes to these consolidated financial statements.</i></b></p>

<p class=MsoFooter align=center style='text-align:center'>F-4</p>

<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>





<br
clear=all style='page-break-before:always'>












<p class=MsoNormal align=center style='text-align:center'>GOOD TIMES
RESTAURANTS INC. AND SUBSIDIARY</p>

<p class=MsoNormal align=center style='text-align:center'>CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY</p>

<p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center'>FOR THE PERIOD
FROM OCTOBER 1, 2005 THROUGH SEPTEMBER 30, 2007</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=906
 style='margin-left:-26.5pt;border-collapse:collapse'>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=150 colspan=2 valign=bottom style='width:112.5pt;border:none;
  border-bottom:solid windowtext 1.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=center style='text-align:center'>Preferred
  Stock</p>
  </td>
  <td width=138 colspan=2 valign=bottom style='width:103.5pt;border:none;
  border-bottom:solid windowtext 1.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=center style='text-align:center'>Common Stock</p>
  </td>
  <td width=162 colspan=2 valign=bottom style='width:121.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=top style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=96 valign=bottom style='width:1.0in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='text-align:right'>Issued</p>
  <p class=MsoNormal align=right style='text-align:right'>Shares</p>
  </td>
  <td width=72 valign=bottom style='width:.75in;border-top:solid windowtext 1.5pt;
  border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none;
  padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=center style='text-align:center'>Par</p>
  <p class=MsoNormal align=center style='text-align:center'>Value</p>
  </td>
  <td width=72 valign=bottom style='width:.75in;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=center style='text-align:center'>Issued</p>
  <p class=MsoNormal align=center style='text-align:center'>Shares</p>
  </td>
  <td width=66 valign=bottom style='width:49.5pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=center style='margin-right:3.0pt;text-align:center'>Par</p>
  <p class=MsoNormal align=center style='margin-right:3.0pt;text-align:center'>Value</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=center style='text-align:center'>Capital
  Contributed in Excess of Par Value</p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=center style='text-align:center'>Accumulated
  Deficit</p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=center style='margin-right:4.0pt;text-align:center'>Accumulated
  Other Comprehensive Loss</p>
  </td>
  <td width=96 valign=bottom style='width:1.0in;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=center style='text-align:center'>Comprehensive
  Income</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=center style='text-align:center'>Total</p>
  </td>
 </tr>
 <tr style='height:10.25pt'>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt;
  height:10.25pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;border:none;padding:0in .5pt 0in .5pt;
  height:10.25pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;border:none;padding:0in .5pt 0in .5pt;
  height:10.25pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;border:none;padding:0in .5pt 0in .5pt;
  height:10.25pt'>

  </td>
  <td width=66 valign=bottom style='width:49.5pt;border:none;padding:0in .5pt 0in .5pt;
  height:10.25pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;border:none;padding:0in .5pt 0in .5pt;
  height:10.25pt'>

  </td>
  <td width=84 valign=top style='width:63.0pt;border:none;padding:0in .5pt 0in .5pt;
  height:10.25pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;border:none;padding:0in .5pt 0in .5pt;
  height:10.25pt'>

  </td>
  <td width=96 valign=top style='width:1.0in;border:none;padding:0in .5pt 0in .5pt;
  height:10.25pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;border:none;padding:0in .5pt 0in .5pt;
  height:10.25pt'>

  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal style='margin-left:13.0pt;text-indent:-13.0pt'>Balances,
  October 1, 2005</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>1,240,000</p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal style='margin-right:8.5pt'>&nbsp;$&nbsp;&nbsp; 12,000</p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>2,497,647</p>
  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=center style='margin-right:7.5pt;text-align:center'>$&nbsp; 2,000</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>$17,054,000</p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>$(11,069,000)</p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 0</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:13.0pt;text-align:right'>$5,999,000</p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt;
  height:1.0pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt;
  height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;</u></p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt;
  height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;</u></p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt;
  height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;</u></p>
  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt;
  height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'><u>&nbsp;</u></p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt;
  height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;</u></p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt;
  height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;</u></p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt;
  height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;</u></p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt;
  height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;</u></p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt;
  height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:13.0pt;text-align:right'><u>&nbsp;</u></p>
  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal style='margin-left:22.5pt;text-indent:-9.0pt'>Preferred
  stock issuance</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:4.0pt;text-align:right'>&nbsp;(19,000)</p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:13.0pt;text-align:right'>(19,000)</p>
  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal style='margin-left:22.5pt;text-indent:-9.0pt'>Preferred
  dividends</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>(61,000)</p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:13.0pt;text-align:right'>(61,000)</p>
  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal style='margin-left:22.5pt;text-indent:-9.0pt'>Preferred
  stock conversion</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>(1,240,000)</p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>(12,000)</p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>1,240,000</p>
  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'>1,000</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:13.0pt;text-align:right'>(11,000)</p>
  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal style='margin-left:22.5pt;text-indent:-9.0pt'><a
  name="_Hlk184521674">Stock
  issued for exercised stock options</a></p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>73,504</p>
  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'>1,000</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>156,000</p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:13.0pt;text-align:right'>157,000</p>
  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal style='margin-left:22.5pt;text-indent:-9.0pt'>Net income</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>17,000</u></p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:13.0pt;text-align:right'><u>&nbsp;&nbsp;&nbsp; 17,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal style='margin-left:13.0pt;text-indent:-13.0pt'>Balances,
  September&nbsp;30, 2006</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>0</p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>0</p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>3,811,151</p>
  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'>4,000</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>17,191,000</p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>(11,113,000)</p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:8.5pt;
  margin-bottom:0in;margin-left:-.5pt;margin-bottom:.0001pt;text-align:right'>0</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>0</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:13.0pt;text-align:right'>6,082,000</p>
  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal style='margin-left:22.5pt;text-indent:-9.0pt'>Stock option
  compensation cost</p>
  </td>
  <td width=78 valign=top style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>84,000</p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:13.0pt;text-align:right'>84,000</p>
  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal style='margin-left:22.5pt;text-indent:-9.0pt'>Stock issued
  for exercised stock options</p>
  </td>
  <td width=78 valign=top style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>55,745</p>
  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>164,000</p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:13.0pt;text-align:right'>164,000</p>
  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal style='margin-left:22.5pt;text-indent:-9.0pt'>Comprehensive
  income (Loss)</p>
  </td>
  <td width=78 valign=top style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal style='margin-left:22.5pt;text-indent:-9.0pt'>&nbsp;&nbsp;&nbsp; Net
  Income</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>29,000</p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:8.5pt;
  margin-bottom:0in;margin-left:4.0pt;margin-bottom:.0001pt;text-align:right'>29,000</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:13.0pt;text-align:right'>29,000</p>
  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal style='margin-left:22.5pt;text-indent:-9.0pt'>&nbsp;&nbsp;&nbsp; Deferred
  hedging losses</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'>(26,000)</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:13.0pt;text-align:right'>(26,000)</p>
  </td>
 </tr>
 <tr>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Comprehensive
  loss</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>(26,000)</u></p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt'>
  <p class=MsoNormal align=right style='margin-right:13.0pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
 </tr>
 <tr style='height:5.4pt'>
  <td width=198 valign=top style='width:148.5pt;padding:0in .5pt 0in .5pt;
  height:5.4pt'>
  <p class=MsoNormal style='margin-left:13.0pt;text-indent:-13.0pt'>Balances,
  September&nbsp;30, 2007</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt;
  height:5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt;
  height:5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in .5pt 0in .5pt;
  height:5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>3,866,896</u></p>
  </td>
  <td width=66 valign=bottom style='width:49.5pt;padding:0in .5pt 0in .5pt;
  height:5.4pt'>
  <p class=MsoNormal align=right style='margin-right:7.5pt;text-align:right'><u>$&nbsp;&nbsp; 4,000</u></p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt;
  height:5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>$17,439,000</u></p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt;
  height:5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>$(11,084,000</u>)</p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in .5pt 0in .5pt;
  height:5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>$&nbsp;&nbsp;&nbsp; (26,000)</u></p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in .5pt 0in .5pt;
  height:5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.5pt;text-align:right'><u>$&nbsp;&nbsp; 3,000</u></p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .5pt 0in .5pt;
  height:5.4pt'>
  <p class=MsoNormal align=right style='margin-right:13.0pt;text-align:right'><u>$6,333,000</u></p>
  </td>
 </tr>
</table>

<p class=MsoFooter align=center style='text-align:center'><b><i>See
accompanying notes to these consolidated financial statements.</i></b></p>

<p class=MsoFooter align=center style='text-align:center'>F-5</p>

<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>





<br
clear=all style='page-break-before:always'>












<p class=MsoNormal align=center style='text-align:center'>GOOD TIMES
RESTAURANTS INC. AND SUBSIDIARY</p>

<p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center'>CONSOLIDATED
STATEMENTS OF CASH FLOWS</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=690
 style='margin-left:10.5pt;border-collapse:collapse'>

  <tr style='height:24.75pt'>
   <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt;
   height:24.75pt'>

   </td>
   <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt;
   height:24.75pt'>

   </td>
   <td width=234 colspan=3 valign=top style='width:175.5pt;border:none;
   border-bottom:solid windowtext 1.0pt;padding:0in 1.5pt 0in 1.5pt;height:
   24.75pt'>
   <p class=MsoNormal align=center style='text-align:center'>For the Years Ended</p>
   <p class=MsoNormal align=center style='text-align:center'>September 30,</p>
   </td>
  </tr>
  <tr>
   <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>

   </td>
   <td width=12 valign=top style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

   </td>
   <td width=108 valign=top style='width:81.0pt;border:none;border-bottom:solid windowtext 1.0pt;
   padding:0in 1.5pt 0in 1.5pt'>
   <p class=MsoNormal align=center style='margin-top:0in;margin-right:7.5pt;
   margin-bottom:0in;margin-left:16.5pt;margin-bottom:.0001pt;text-align:center'>2007</p>
   </td>
   <td width=24 valign=top style='width:.25in;border:none;border-top:solid windowtext 1.0pt;
   padding:0in 1.5pt 0in 1.5pt'>

   </td>
   <td width=102 valign=top style='width:76.5pt;border-top:solid windowtext 1.0pt;
   border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none;
   padding:0in 1.5pt 0in 1.5pt'>
   <p class=MsoNormal align=center style='margin-top:0in;margin-right:3.0pt;
   margin-bottom:0in;margin-left:12.0pt;margin-bottom:.0001pt;text-align:center'>2006</p>
   </td>
  </tr>

 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal>Cash Flows from Operating
  Activities:</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:7.5pt'>Net income</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'> $29,000</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>$17,000</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:25.5pt;text-indent:-9.3pt'>Adjustments
  to reconcile net income to net cash provided by operating&nbsp;activities:</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:25.5pt'>Depreciation and amortization</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'> 1,223,000</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>997,000</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:25.5pt'>Accretion of deferred rent</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'> 32,000</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>35,000</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:25.5pt'>Minority interest expense</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'> 211,000</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>246,000</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:34.5pt;text-indent:-9.0pt'>Gain on
  disposal of property, restaurants and equipment</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'> (17,000)</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>(57,000)</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:34.5pt;text-indent:-9.0pt'>Stock option
  compensation cost</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'> 84,000</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>-</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:34.5pt;text-indent:-9.0pt'>Write off of
  future site costs</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>-</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>13,000</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:34.5pt;text-indent:-9.0pt'>Changes in
  operating assets and liabilities:</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:34.5pt;text-indent:-9.0pt'>(Increase)
  decrease in:</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:39.0pt'>Receivables</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>(97,000)</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>65,000</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:39.0pt'>Inventories</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>13,000</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>(72,000)</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:39.0pt'>Prepaid expenses and other</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>4,000</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>(6,000)</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:39.0pt'>Deposits and other assets</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>(18,000)</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>(26,000)</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:34.5pt;text-indent:-9.0pt'>(Decrease)
  increase in:</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:39.0pt'>Accounts payable</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>120,000</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>24,000</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:39.0pt'>Accrued and other liabilities</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>229,000</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>173,000</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:39.0pt'>Deferred franchise fees</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'><u>&nbsp; (50,000)</u></p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal><u>&nbsp;</u></p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;45,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:3.0pt;
  margin-left:44.2pt;text-indent:-10.4pt'>Net cash provided by operating
  activities</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:12.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'><u>1,763,000</u></p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-bottom:3.0pt'><u>&nbsp;</u></p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:12.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'><u>1,454,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal>Cash Flows From Investing
  Activities:</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt;text-indent:-8.7pt'>Payments for
  the purchase of property and equipment </p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>(3,738,000)</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>(3,975,000)</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt;text-indent:-13.5pt'>&nbsp;Proceeds
  from the sale of assets</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>-</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>651,000</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt;text-indent:-13.5pt'>&nbsp;Proceeds
  from sale-leaseback transaction</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>1,580,000</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>-</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt;text-indent:-13.5pt'>&nbsp;Proceeds
  from sale of investments</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>-</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>1,900,000</p>
  </td>
 </tr>
 <tr style='height:10.35pt'>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt;
  height:10.35pt'>
  <p class=MsoNormal style='margin-left:16.6pt;text-indent:-13.7pt'>&nbsp;Loans made
  to franchisees and to others</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt;height:10.35pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt;
  height:10.35pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>-</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt;
  height:10.35pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt;
  height:10.35pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>(102,000)</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:7.5pt;text-indent:-4.8pt'>&nbsp;Payments
  received on loans to franchisees and to others</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'><u>&nbsp;&nbsp;&nbsp; 101,000</u></p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal><u>&nbsp;</u></p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp; 144,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:3.0pt;
  margin-left:46.4pt;text-indent:-10.4pt'>Net cash (used in) investing
  activities</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:12.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'><u>(2,057,000</u>)</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:12.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'><u>(1,382,000</u>)</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal>&nbsp;Cash Flows From Financing Activities:</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt;text-indent:-8.7pt'>Principal
  payments on notes payable, capital leases, and long&#8209;term debt</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>(809,000)</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>(217,000)</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt;text-indent:-8.7pt'>Borrowings on
  notes payable and long-term debt</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>1,100,000</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>1,000,000</p>
  </td>
 </tr>
 <tr style='height:.1in'>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt;
  height:.1in'>
  <p class=MsoNormal style='margin-left:16.2pt;text-indent:-8.7pt'>Proceeds
  (expenses) from preferred stock offering</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt;height:.1in'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt;
  height:.1in'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>-</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt;
  height:.1in'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt;
  height:.1in'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>(30,000)</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt;text-indent:-8.7pt'>Proceeds from
  exercise of stock options</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>164,000</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>157,000</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt;text-indent:-8.7pt'>Preferred
  dividends paid</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>-</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>(61,000)</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt;text-indent:-8.7pt'>Distributions
  paid to minority interests in partnerships</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>(319,000)</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'>(316,000)</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt;text-indent:-8.7pt'>Contributions
  from minority interests in partnerships</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'><u>&nbsp;&nbsp; 10,000</u></p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp; 245,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:3.0pt;
  margin-left:46.4pt;text-indent:-10.4pt'>Net cash provided by financing
  activities</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:12.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'><u>&nbsp;146,000</u></p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-bottom:3.0pt'><u>&nbsp;</u></p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:12.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp; 778,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:3.0pt;
  margin-left:16.2pt;text-indent:-16.2pt'>Net Change in Cash and Cash Equivalents</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:12.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'>(148,000)</p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:12.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'>850,000</p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:3.0pt;
  margin-left:16.2pt;text-indent:-16.2pt'>Cash and Cash Equivalents, beginning of year</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:12.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'><u>2,613,000</u></p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-bottom:3.0pt'><u>&nbsp;</u></p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:12.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'><u>1,763,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-bottom:3.0pt'>Cash and Cash Equivalents, end of year</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:12.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'><u>$2,465,000</u></p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-bottom:3.0pt'><u>&nbsp;</u></p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:12.0pt;
  margin-bottom:3.0pt;margin-left:0in;text-align:right'><u>$2,613,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt;text-indent:-16.2pt'>Supplemental Disclosures of Cash Flow Information:</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Cash paid for interest</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'><u>$ 106,000</u></p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal><u>&nbsp;</u></p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 54,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=444 valign=top style='width:333.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal style='margin-left:16.2pt'>Purchase of equipment with debt</p>
  </td>
  <td width=12 style='width:9.0pt;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=108 valign=bottom style='width:81.0pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'><u>$  &nbsp;27,000</u></p>
  </td>
  <td width=24 valign=bottom style='width:.25in;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal><u>&nbsp;</u></p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt'>
  <p class=MsoNormal align=right style='margin-right:12.0pt;text-align:right'><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  -</u></p>
  </td>
 </tr>
</table>

<p class=MsoFooter align=center style='text-align:center'><b><i>See
accompanying notes to these consolidated financial statements.</i></b></p>

<p class=MsoFooter align=center style='text-align:center'>F-6</p>

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<p class=Level1 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.5in'>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<u>Organization and Summary of Significant Accounting
Policies</u>:</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.4in;text-align:justify'><u>Organization</u> - Good Times
Restaurants Inc. (Good Times or the Company) is a Nevada corporation. The
Company operates through its wholly owned subsidiary Good Times Drive Thru Inc.
(Drive Thru).</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.4in;text-align:justify'>Drive Thru commenced operations in 1986 and, as of
September&nbsp;30, 2007, operates twenty-seven&nbsp;company-owned and joint
venture drive-thru fast food hamburger restaurants.&nbsp; The Company's restaurants
are located in Colorado. In addition, Drive Thru has twenty-seven franchises,
twenty operating in Colorado, three in Wyoming, one in Idaho and three in North
Dakota, and is offering franchises for development of additional Drive Thru
restaurants.&nbsp; </p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.4in;text-align:justify'><u>Principles of Consolidation</u> - The
consolidated financial statements include the accounts of Good Times, its
subsidiary and two limited partnerships, in which the Company exercises control
as general partner.&nbsp; The Company owns an approximate 51% interest in both
partnerships, is the sole general partner and receives a management fee prior
to any distributions to the limited partners.&nbsp; Because the Company owns an
approximate 51% interest in the partnerships and exercises complete management
control over all decisions for the partnerships, except for certain veto
rights, the financial statements of the partnerships are consolidated into the
Company's financial statements.&nbsp; The equity interests of the unrelated limited
partners are shown on the accompanying consolidated balance sheet as minority
interest, and the limited partners' shares of net income in the partnerships is
shown as minority interest expense in the accompanying consolidated statement
of operations. All inter-company accounts and transactions are eliminated.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.4in;text-align:justify'><u>Accounting Estimates</u> - The
preparation of consolidated financial statements in conformity with U.S.
Generally Accepted Accounting Principles requires management to make estimates
and assumptions that affect the amounts reported in these consolidated
financial statements and the accompanying notes.&nbsp; Actual results could differ
from those estimates.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.4in;text-align:justify'><u>Cash and Cash Equivalents</u> - The Company
considers all highly liquid debt instruments purchased with an initial maturity
of three months or less to be cash equivalents.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.4in;text-align:justify'><u>Accounts Receivable</u> - Accounts
receivable include uncollateralized receivables from our franchisees and our
advertising fund, due in the normal course of business, generally requiring
payment within thirty days of the invoice date. On a periodic basis the Company
monitors all accounts for delinquency and provides for estimated losses of
uncollectible accounts. Currently and historically there have been no
allowances for unrecoverable accounts receivable.<u> </u></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.4in;text-align:justify'><u>Inventories</u> - Inventories
are stated at the lower of cost or market, determined by the first-in,
first-out method, and consist of restaurant food items and related packaging
supplies.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.4in;text-align:justify'><u>Property and Equipment</u> -
Depreciation is recognized using the straight-line method over the estimated
useful lives of the assets or the lives of the related leases, if shorter, as
follows:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='margin-left:135.9pt;border-collapse:collapse'>
 <tr>
  <td width=204 valign=top style='width:153.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Buildings</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>15 years</p>
  </td>
 </tr>
 <tr>
  <td width=204 valign=top style='width:153.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Leasehold improvements</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>7-15 years</p>
  </td>
 </tr>
 <tr>
  <td width=204 valign=top style='width:153.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Fixtures and equipment</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>3-8 years</p>
  </td>
 </tr>
</table>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:25.9pt;text-align:justify'>Maintenance and repairs are charged to
expense as incurred, and expenditures for major improvements are capitalized.&nbsp;
When assets are retired, or otherwise disposed of, the property accounts are
relieved of costs and accumulated depreciation with any resulting gain or loss
credited or charged to income.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'>Assets held for sale of $779,000 shown
in the accompanying condensed consolidated&nbsp; balance sheet is related to two
sites, one of which is under development and will be marketed in the sale
lease-back market, the second is under contract as of September 30, 2007 with
expected proceeds of approximately $750,000.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>Impairment of Long-Lived Assets</u> - The Company
reviews undiscounted cash flows of each restaurant as compared to the net book
value of each restaurant's respective properties.&nbsp; If the undiscounted cash
flows of each restaurant are less than their respective net book values, the
respective properties are written down to their fair market values. </p>

<p class=MsoFooter align=center style='text-align:center'><b><i>&nbsp;</i></b></p>

<p class=MsoFooter align=center style='text-align:center'>F-7</p>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>Sales of Restaurants and Restaurant
Equity Interests</u>
- - Sales of restaurants or non-controlling equity interests in restaurants
developed by the Company are recorded under either the full accrual method or
the installment method of accounting.&nbsp; Under the full accrual method, a gain is
not recognized until the collectibility of the sales price is reasonably
assured and the earnings process is virtually complete without further
contingencies.&nbsp; When a sale does not meet the requirements for income
recognition, the related gain is deferred until those requirements are met.&nbsp;
Under the installment method, the gain is incrementally recognized as principal
payments on the related notes receivable are collected.&nbsp; The Company's
accounting policy, with regards to the sale of restaurants, is in accordance
with SFAS No. 66.&nbsp; If the initial payment is less than the percentages set
forth, use of the installment method is required.&nbsp; The Company currently has
$29,000 collected from the sale of one restaurant, which did not meet the
initial payment test of SFAS No.&nbsp;66, and the gain from that sale has been
deferred and is being recognized ratably in proportion to the payments received
on the related notes receivable.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'>The Company's accounting for the sale
of restaurants is in accordance with SAB Topic 5-E because the risks and other
incidents of ownership have been transferred to the buyer.&nbsp; Specifically, a) no
continuing involvement by the Company exists in restaurants that are sold, b)
sales contracts and related income recognition are not dependant on the future
successful operations of the sold restaurants, and c) the Company is not
involved as a guarantor on the purchasers' debts.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>Deferred Liabilities</u> - Rent
expense is reflected on a straight-line basis over the term of the lease for
all leases containing step-ups in base rent.&nbsp; An obligation representing future
payments (which totaled $517,000 as of September&nbsp;30, 2007) is reflected in
the accompanying consolidated balance sheet as a deferred liability.&nbsp; Also
included in the $1,052,000 deferred and other liability balance is a $482,000
deferred gain on the sale of the building and improvements of two Company-owned
restaurants in two separate sale leaseback transactions.&nbsp; The building and
improvements were subsequently leased back from the third party purchasers.&nbsp;
The gains will be recognized in future periods in proportion to the rents paid
on the fifteen and twenty year leases.&nbsp; The remaining balance includes a
deferred gain of $27,000 on the sale of a restaurant, and a deferred hedging
loss liability of $26,000.&nbsp; </p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>Opening Costs</u> - Opening
costs are expensed as incurred.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>Advertising</u> - The Company
incurs advertising expenses in connection with the marketing of its restaurant
operations.&nbsp; Advertising costs are expensed when the related advertising
begins.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>Franchise and Area Development Fees</u> - Individual
franchise fee revenue is deferred when received and is recognized as income
when the Company has substantially performed all of its obligations under the
franchise agreement and the franchisee has commenced operations.&nbsp; The Company's
commitments and obligations pursuant to the franchise agreements consist of a)
development assistance; including site selection, building specifications and
equipment purchasing and b) operating assistance; including training of
personnel and preparation and distribution of manuals and operating materials.&nbsp;
All of these obligations are effectively complete upon the opening of the
restaurant at which time the franchise fee and the portion of any development
fee allocable to that restaurant is recognized.&nbsp; There are no additional
material commitments or obligations.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'>The Company has not recognized any
franchise fees that have not been collected.&nbsp; The Company segregates initial
franchise fees from other franchise revenue in the statement of operations.&nbsp;
Revenues and costs related to company-owned restaurants are segregated from
revenues and costs related to franchised restaurants in the statement of
operations.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'>Continuing royalties from franchisees,
which are a percentage of the gross sales of franchised operations, are
recognized as income when earned.&nbsp; Franchise development expenses, which
consist primarily of legal costs and restaurant opening expenses associated
with developing and opening franchise restaurants, are expensed against the
related franchise fee income.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>Accounting for Notes Receivable</u> - The
Company's notes receivables are all due from Good Times franchisees, or
franchise advertising cooperatives. All of the notes receivable are
collateralized by real estate or equipment and certain of the notes are
personally guaranteed by the franchisees. The notes are all term notes with
interest accruing at market rates. The Company reviews the notes from time to
time to access collectability. The Company has determined that all notes
receivable at September 30, 2007 are collectable and allowances for write-downs
are not necessary.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>Operating Partner Program</u> - Operating
Partners in a restaurant share in future increases of their restaurant's cash
flows above an established baseline, which is based on the preceding twelve
months' cash flow after full allocation of advertising and capital expenses.&nbsp;
This program is designed to figuratively put Operating Partners in the shoes of
an owner so that a portion of their compensation is derived solely from the
improvement in the financial performance of their respective restaurants.&nbsp; The
portion of cash flow increases allocable to the Operating Partners are expensed
as incurred on a quarterly basis, with a cumulative adjustment made for any
months where cash flows fall below the established baselines. Compensation
under this program is expensed to restaurant operations as incurred.&nbsp; No other
long term benefits accrue or vest to the Operating Partners in this program.&nbsp;
Operating Partners are employees at will and are subject to termination from
this program if certain operating, customer service and financial objectives
are not met.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>Income Taxes</u> - Income
taxes are recorded in accordance with asset and liability approaches whereby&nbsp;
the recognition of deferred tax liabilities and assets are recorded for the
expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of the Company's assets and liabilities. Valuation allowances
are provided for deferred tax assets if their recovery is more not likely than
not.</p>

<p class=MsoFooter align=center style='text-align:center'><b><i>&nbsp;</i></b></p>

<p class=MsoFooter align=center style='text-align:center'>F-8</p>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>Net Income (Loss) Per Common Share</u> - The income
(loss) per share is presented in accordance with the provisions of SFAS
No.&nbsp;128, &quot;Earnings Per Share.&quot;&nbsp; Basic EPS is calculated by dividing the
income (loss) available to common stockholders by the weighted average number
of common shares outstanding for the period.&nbsp; Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock. Options for 137,090
and 141,875 shares of common stock were included in computing diluted EPS for
2007 and 2006 respectively because they were dilutive. </p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>Financial Instruments and
Concentrations of Credit Risk</u> - Credit risk represents the
accounting loss that would be recognized at the reporting date if
counterparties failed completely to perform as contracted.&nbsp; Concentrations of
credit risk (whether on or off balance sheet) that arise from financial
instruments exist for groups of customers or counterparties when they have
similar economic characteristics that would cause their ability to meet
contractual obligations to be similarly effected by changes in economic or
other conditions.&nbsp; Financial instruments with off-balance-sheet risk to the
Company include lease liabilities whereby the Company is contingently liable as
a guarantor of certain leases that were assigned to third parties in connection
with various sales of restaurants to franchisees (see Note&nbsp;5).&nbsp; </p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'>Financial instruments potentially
subjecting the Company to concentrations of credit risk consist principally of
receivables.&nbsp; At September 30, 2007, notes receivable totaled $388,000 and are
due from eight entities.&nbsp; Additionally, the Company has other current
receivables totaling $187,000, which includes $81,000 of franchise receivables.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'>The Company purchases 100% of its
restaurant food and paper from one vendor. The Company believes a sufficient
number of other suppliers exist from which food and paper could be purchased to
prevent any long-term, adverse consequences.&nbsp; </p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'>The Company operates in one industry
segment, restaurants.&nbsp; A geographic concentration exists because the Company's
customers are generally located in the State of Colorado. </p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'>The estimated fair values of financial
instruments are determined at discrete points in time based on relevant market
information.&nbsp; These estimates involve uncertainties and cannot be determined
with precision.&nbsp; The carrying amounts of all financial instruments approximate
fair value as a result of either the instrument's short-term maturities or
interest rates that approximate the Company's current expected borrowing and
lending rates. </p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>Comprehensive Income (Loss</u>) -
Comprehensive income includes net income or loss, changes in certain assets and
liabilities that are reported directly in equity such as adjustments resulting
from unrealized gains or losses on held-to-maturity investments and certain
hedging transactions. See Note 10 for additional information. </p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>Stock-Based Compensation</u> - Effective
October 1, 2006, the Company adopted the provisions of Statement of Financial
Accounting Standard (&quot;SFAS&quot;) No. 123(R), Share-Based Payment, 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). See Note 10 for additional information.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:25.9pt;text-align:justify'><u>Variable Interest Entities</u> - In December
2003, the FASB finalized FASB Interpretation No. 46R, &quot;Consolidation of
Variable Interest Entities - An Interpretation of ARB51&quot; (FIN 46R). FIN 46R
expands the scope of ARB51 and can require consolidation of &quot;variable interest
entities&quot; (VIEs).&nbsp; Once an entity is determined to be a VIE, the party with the
controlling financial interest, the primary beneficiary, is required to
consolidate it.&nbsp; The Company has several franchisees with notes payable to the
Company.&nbsp; These franchisees are variable interest entities as defined by FIN
46R, however, the Company is not the primary beneficiary of these entities.&nbsp;
Therefore they are not required to be consolidated under FIN 46R.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>Accounting Changes and Error
Corrections</u>
- - In May 2005, FASB issued Statement of Financial Accounting Standards No. 154,
&quot;Accounting Changes and Error Corrections - A Replacement of APB Opinion No. 20
and FASB Statement No. 3&quot; (&quot;SFAS No. 154&quot;).&nbsp; SFAS No. 154 changes the requirements
for the accounting for and reporting of a change in accounting principle. The
provisions of SFAS No. 154 require, unless impracticable, retrospective
application to prior periods' financial statements of (1) all voluntary changes
in principles and (2) changes required by a new accounting pronouncement, if a
specific transition is not provided.&nbsp; SFAS No. 154 also requires that a change
in depreciation, amortization, or depletion method for long-lived,
non-financial assets be accounted for as a change in accounting estimate, which
requires prospective application of the new method.&nbsp; SFAS No. 154 is effective
for all accounting changes made in fiscal years beginning after
December&nbsp;15, 2005, which is our fiscal year beginning October 1, 2006. The
adoption of SFAS No. 154 did not have a material impact on the Company's
consolidated financial position or results of operations.</p>

<p class=MsoFooter align=center style='text-align:center'><b><i>&nbsp;</i></b></p>

<p class=MsoFooter align=center style='text-align:center'>F-9</p>

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<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>New Accounting Pronouncements</u> - In June
2006, the FASB issued FIN 48, &quot;Accounting for Uncertainty in Income Taxes - an
interpretation of FASB Statement 109,&quot; which clarifies the accounting for
uncertainty in income taxes recognized in an enterprise's financial statements
in accordance with FAS 109, &quot;Accounting for Income Taxes.&quot;&nbsp; FIN 48 prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in
a tax return.&nbsp; FIN 48 is effective for fiscal years beginning after December
15, 2006, which will be our fiscal year beginning October 1, 2007.&nbsp; The
adoption of this statement will not have a material impact on the Company's
financial position or results of operations.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify;text-autospace:none'>In September
2006, the FASB issued Statement of Financial Accounting Standards No. 157,
&quot;Fair Value Measurements&quot; (&quot;SFAS 157&quot;).&nbsp;&nbsp;SFAS 157 defines fair value,
establishes a framework for using fair value to measure assets and liabilities,
and expands disclosures about fair value measurements.&nbsp;&nbsp;This
statement applies under other accounting pronouncements that currently require
or permit fair value measurements and is effective for fiscal years beginning
after November 15, 2007, which will be our fiscal year beginning October 1,
2008.&nbsp;&nbsp;In February 2007, the FASB issued Statement of Financial
Accounting Standards No. 159, &quot;The Fair Value Option for Financial Assets and
Financial Liabilities&quot; (&quot;SFAS 159&quot;).&nbsp;&nbsp;SFAS 159 permits companies to
choose to measure many financial instruments and certain other items at fair
value.&nbsp;&nbsp;If the fair value option is elected, unrealized gains and losses
will be recognized in earnings at each subsequent reporting
date.&nbsp;&nbsp;SFAS 159 has the same effective date as SFAS
157.&nbsp;&nbsp;The adoption of these statements is not expected to have a
material impact on the Company's financial position or results of operations.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:27.0pt;text-align:justify'>In November&nbsp;2007, the FASB issued
SFAS No.&nbsp;141 (revised 2007), <i>Business Combination</i> (FAS&nbsp;141(R))
and SFAS No.&nbsp;160, <i>Noncontrolling Interests in Consolidated Financial
Statements, an amendment of ARB No.&nbsp;51</i> (FAS&nbsp;160). FAS&nbsp;141(R)
will change how business acquisitions are accounted for and will impact
financial statements both on the acquisition date and in subsequent periods.
FAS&nbsp;160 will change the accounting and reporting for minority interests,
which will be recharacterized as noncontrolling interests and classified as a
component of equity. FAS&nbsp;141(R) and FAS&nbsp;160 are effective for both
public and private companies for fiscal years beginning on or after
December&nbsp;15, 2008 (fiscal 2010 for the Company). FAS&nbsp;141(R) will be
applied prospectively. FAS&nbsp;160 requires retroactive adoption of the
presentation and disclosure requirements for existing minority interests. All
other requirements of FAS&nbsp;160 will be applied prospectively. Early
adoption is prohibited for both standards. Management is currently evaluating
the requirements of FAS&nbsp;141(R) and FAS&nbsp;160 and has not yet determined
the impact on its financial statements.</p>

<p class=Level1 style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
margin-left:25.9pt;text-align:justify;text-indent:-25.9pt;page-break-after:
avoid'>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<u>Notes Receivable</u>:</p>

<p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
margin-left:25.9pt;text-align:justify;page-break-after:avoid'>Notes
receivable consists of the following as of September 30, 2007:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=636
 style='margin-left:27.0pt;border-collapse:collapse'>
 <tr style='height:9.0pt'>
  <td width=534 valign=top style='width:400.5pt;padding:0in 0in 0in 0in;
  height:9.0pt'>
  <p class=MsoNormal style='margin-right:5.7pt;text-align:justify;page-break-after:
  avoid'>Notes
  receivable from franchisees related to the sale of restaurants; 8.15%
  interest per annum; monthly payments of principal and interest are due in the
  amount of approximately $3,100; final payment due in 2017; collateralized by
  a second security interest in buildings and equipment and guaranteed by an
  individual.</p>
  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 0in;
  height:9.0pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in 0in 0in 0in;
  height:9.0pt'>
  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right'>$255,000</p>
  </td>
 </tr>
 <tr style='height:9.0pt'>
  <td width=534 valign=top style='width:400.5pt;padding:0in 0in 0in 0in;
  height:9.0pt'>

  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 0in;
  height:9.0pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in 0in 0in 0in;
  height:9.0pt'>
  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right'><u>&nbsp;</u></p>
  </td>
 </tr>
 <tr style='height:9.0pt'>
  <td width=534 valign=top style='width:400.5pt;padding:0in 0in 0in 0in;
  height:9.0pt'>
  <p class=MsoNormal style='margin-right:5.7pt;text-align:justify'>Notes
  receivable from franchisees related to installation of certain equipment;
  8.5% to 10% interest per annum; monthly payments of principal and interest
  are due in the amount of approximately $3,200; final payment due in 2010;
  collateralized by all fixtures and equipment of the related restaurants.</p>
  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 0in;
  height:9.0pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in 0in 0in 0in;
  height:9.0pt'>
  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right'>61,000</p>
  </td>
 </tr>
 <tr style='height:9.0pt'>
  <td width=534 valign=top style='width:400.5pt;padding:0in 0in 0in 0in;
  height:9.0pt'>

  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 0in;
  height:9.0pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in 0in 0in 0in;
  height:9.0pt'>
  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right'><u>&nbsp;</u></p>
  </td>
 </tr>
 <tr style='height:9.0pt'>
  <td width=534 valign=top style='width:400.5pt;padding:0in 0in 0in 0in;
  height:9.0pt'>
  <p class=MsoNormal style='margin-right:5.7pt;text-align:justify'>Other,
  various terms</p>
  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 0in;
  height:9.0pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in 0in 0in 0in;
  height:9.0pt'>
  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right'><u>72,000</u></p>
  </td>
 </tr>
 <tr style='height:9.0pt'>
  <td width=534 valign=top style='width:400.5pt;padding:0in 0in 0in 0in;
  height:9.0pt'>

  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 0in;
  height:9.0pt'>

  </td>
  <td width=78 style='width:58.5pt;padding:0in 0in 0in 0in;height:9.0pt'>
  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right'>388,000</p>
  </td>
 </tr>
 <tr style='height:9.0pt'>
  <td width=534 valign=top style='width:400.5pt;padding:0in 0in 0in 0in;
  height:9.0pt'>
  <p class=MsoNormal>Less
  current portion</p>
  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 0in;
  height:9.0pt'>

  </td>
  <td width=78 style='width:58.5pt;padding:0in 0in 0in 0in;height:9.0pt'>
  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right'><u>(88,000</u>)</p>
  </td>
 </tr>
 <tr style='height:9.0pt'>
  <td width=534 valign=top style='width:400.5pt;padding:0in 0in 0in 0in;
  height:9.0pt'>
  <p class=MsoNormal style='margin-top:6.0pt'>Notes receivable, net of current
  portion</p>
  </td>
  <td width=24 valign=top style='width:.25in;padding:0in 0in 0in 0in;
  height:9.0pt'>

  </td>
  <td width=78 style='width:58.5pt;padding:0in 0in 0in 0in;height:9.0pt'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:9.0pt;
  margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:right'><u>$300,000</u></p>
  </td>
 </tr>
</table>



<p class=MsoFooter align=center style='text-align:center'><b><i>&nbsp;</i></b></p>

<p class=MsoFooter align=center style='text-align:center'>F-10</p>

<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>



<br
clear=all style='page-break-before:always'>












<p class=Level1 style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
margin-left:25.9pt;text-align:justify;text-indent:-25.9pt'>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<u>Debt</u>:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=641
 style='margin-left:27.4pt;border-collapse:collapse'>
 <tr>
  <td width=527 valign=top style='width:395.6pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal style='margin-right:5.7pt;text-align:justify'>Notes
  payable with PFGI II, LLC with monthly payments of interest (prime rate +2%,
  the prime rate at September 30, 2007 was 7.5%) with all unpaid principal due
  on July 10, 2008.&nbsp; The loans are secured by four Leasehold Deeds of Trust and
  <a name="OLE_LINK4">two Security Agreements</a> and Assignment of Rents and
  Fixture Filings related to those six corporate restaurants.&nbsp; The promissory
  notes constitute a revolving line of credit which may be advanced, repaid and
  re-advanced from time to time. The maximum available under these lines is
  $2,000,000.</p>
  </td>
  <td width=30 valign=bottom style='width:22.5pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:4.5pt;text-align:right'>$750,000</p>
  </td>
 </tr>
 <tr>
  <td width=527 valign=top style='width:395.6pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=30 valign=bottom style='width:22.5pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in 0in 0in 0in'>

  </td>
 </tr>
 <tr>
  <td width=527 valign=top style='width:395.6pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal style='margin-right:5.7pt;text-align:justify'>Note payable
  with Wells Fargo Bank, NA with payments of principal and interest (prime rate
  less .5%) due monthly and the final payment due in April 2015.&nbsp; The loan is
  secured by four Security Agreements related to four corporate restaurants.</p>
  </td>
  <td width=30 valign=bottom style='width:22.5pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:4.5pt;text-align:right'>1,066,000</p>
  </td>
 </tr>
 <tr>
  <td width=527 valign=top style='width:395.6pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=30 valign=bottom style='width:22.5pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=84 valign=bottom style='width:63.0pt;padding:0in 0in 0in 0in'>

  </td>
 </tr>
 <tr>
  <td width=527 valign=top style='width:395.6pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal style='text-align:justify'>Other, various terms</p>
  </td>
  <td width=30 valign=top style='width:22.5pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=84 style='width:63.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:4.5pt;text-align:right'><u>24,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=527 valign=top style='width:395.6pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=30 valign=top style='width:22.5pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=84 style='width:63.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:4.5pt;text-align:right'>1,840,000</p>
  </td>
 </tr>
 <tr>
  <td width=527 valign=top style='width:395.6pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal style='text-align:justify'>Less current portion</p>
  </td>
  <td width=30 valign=top style='width:22.5pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=84 style='width:63.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:4.5pt;text-align:right'><u>(870,000</u>)</p>
  </td>
 </tr>
 <tr>
  <td width=527 valign=top style='width:395.6pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=30 valign=top style='width:22.5pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=84 style='width:63.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-top:6.0pt;margin-right:4.5pt;
  margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;text-align:right'><u>$970,000</u></p>
  </td>
 </tr>
</table>

<p class=MsoBodyTextIndent style='margin-top:12.0pt;margin-right:0in;
margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt'>In conjunction
with the Wells Fargo Bank term loan, the Company entered into a variable to
fixed interest rate swap agreement with Wells Fargo Bank effective May 9, 2007,
with a notional amount of $1,100,000, a pay rate of 7.77% and a receive rate
based on the bank prime rate less .50%. The swap agreement has an eight-year
term and has the effect of normalizing the effective interest rate at 7.77%.</p>

<p class=MsoBodyTextIndent>As
of September 30, 2007, the fair value of the contract was a loss of $26,000.
This change in the fair value has been recorded in other comprehensive loss.</p>

<p class=MsoBodyTextIndent style='margin-top:12.0pt;margin-right:0in;
margin-bottom:12.0pt;margin-left:4.5pt'>As of September 30, 2007, principal
payments on debt became due as follows:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=360
 style='margin-left:100.5pt;border-collapse:collapse'>
 <tr>
  <td width=210 valign=top style='width:157.2pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center'>Years Ending</p>
  <p class=MsoNormal align=center style='text-align:center'><u>September
  30,</u></p>
  </td>
  <td width=12 valign=top style='width:9.3pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=138 valign=top style='width:103.2pt;padding:0in 0in 0in 0in'>

  </td>
 </tr>
 <tr>
  <td width=210 valign=top style='width:157.2pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=12 valign=top style='width:9.3pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=138 valign=top style='width:103.2pt;padding:0in 0in 0in 0in'>

  </td>
 </tr>
 <tr>
  <td width=210 valign=top style='width:157.2pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center'>2008</p>
  </td>
  <td width=12 valign=top style='width:9.3pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=138 valign=top style='width:103.2pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:.25in;
  margin-bottom:0in;margin-left:22.2pt;margin-bottom:.0001pt;text-align:right'>$&nbsp;&nbsp; 870,000</p>
  </td>
 </tr>
 <tr>
  <td width=210 valign=top style='width:157.2pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center'>2009</p>
  </td>
  <td width=12 valign=top style='width:9.3pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=138 valign=top style='width:103.2pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:.25in;
  margin-bottom:0in;margin-left:22.2pt;margin-bottom:.0001pt;text-align:right'>124,000</p>
  </td>
 </tr>
 <tr>
  <td width=210 valign=top style='width:157.2pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center'>2010</p>
  </td>
  <td width=12 valign=top style='width:9.3pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=138 valign=top style='width:103.2pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:.25in;
  margin-bottom:0in;margin-left:22.2pt;margin-bottom:.0001pt;text-align:right'>124,000</p>
  </td>
 </tr>
 <tr>
  <td width=210 valign=top style='width:157.2pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center'>2011</p>
  </td>
  <td width=12 valign=top style='width:9.3pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=138 valign=top style='width:103.2pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:.25in;
  margin-bottom:0in;margin-left:22.2pt;margin-bottom:.0001pt;text-align:right'>134,000</p>
  </td>
 </tr>
 <tr>
  <td width=210 valign=top style='width:157.2pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center'>2012</p>
  </td>
  <td width=12 valign=top style='width:9.3pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=138 valign=top style='width:103.2pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:.25in;
  margin-bottom:0in;margin-left:22.2pt;margin-bottom:.0001pt;text-align:right'>144,000</p>
  </td>
 </tr>
 <tr>
  <td width=210 valign=top style='width:157.2pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center'>Thereafter</p>
  </td>
  <td width=12 valign=top style='width:9.3pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=138 valign=top style='width:103.2pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:.25in;
  margin-bottom:0in;margin-left:22.2pt;margin-bottom:.0001pt;text-align:right'><u>&nbsp;&nbsp;&nbsp; 444,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=210 valign=top style='width:157.2pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=12 valign=top style='width:9.3pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=138 valign=top style='width:103.2pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:.25in;
  margin-bottom:0in;margin-left:22.2pt;margin-bottom:.0001pt;text-align:right'><u>&nbsp;</u></p>
  </td>
 </tr>
 <tr>
  <td width=210 valign=top style='width:157.2pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=12 valign=top style='width:9.3pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=138 valign=top style='width:103.2pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:.25in;
  margin-bottom:0in;margin-left:22.2pt;margin-bottom:.0001pt;text-align:right'><u>$1,840,000</u></p>
  </td>
 </tr>
</table>



<p class=MsoBodyTextIndent style='margin-bottom:12.0pt'>In connection with the Wells
Fargo Bank loan, the Company has agreed to certain covenants, which include
minimum tangible net worth, a total liabilities to tangible net worth ratio and
a fixed charge coverage ratio, as defined in the agreement. As of September 30,
2007, the Company was in compliance with its loan covenants.</p>

<p class=Level1 style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:26.15pt;text-align:justify;text-indent:-26.15pt'>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<u>Other Accrued Liabilities</u>:</p>

<p class=MsoBodyTextIndent>Other
accrued liabilities consist of the following at September&nbsp;30, 2007:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=347
 style='margin-left:108.75pt;border-collapse:collapse'>
 <tr>
  <td width=217 valign=top style='width:162.9pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal>Wages
  and other employee benefits</p>
  </td>
  <td width=17 valign=top style='width:12.6pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=113 valign=top style='width:84.75pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:.25in;text-align:right'>$&nbsp;&nbsp; 311,000</p>
  </td>
 </tr>
 <tr>
  <td width=217 valign=top style='width:162.9pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal>Taxes,
  other than income tax</p>
  </td>
  <td width=17 valign=top style='width:12.6pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=113 valign=top style='width:84.75pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:.25in;text-align:right'>525,000</p>
  </td>
 </tr>
 <tr>
  <td width=217 valign=top style='width:162.9pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal>Other</p>
  </td>
  <td width=17 valign=top style='width:12.6pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=113 valign=top style='width:84.75pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:.25in;text-align:right'><u>226,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=217 valign=top style='width:162.9pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=17 valign=top style='width:12.6pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=113 valign=top style='width:84.75pt;padding:0in 0in 0in 0in'>

  </td>
 </tr>
 <tr>
  <td width=217 valign=top style='width:162.9pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=17 valign=top style='width:12.6pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=113 valign=top style='width:84.75pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:.25in;text-align:right'><u>$1,062,000</u></p>
  </td>
 </tr>
</table>



<p class=MsoFooter align=center style='text-align:center'><b><i>&nbsp;</i></b></p>

<p class=MsoFooter align=center style='text-align:center'>F-11</p>

<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>



<br
clear=all style='page-break-before:always'>












<p class=Level1 style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:26.15pt;text-align:justify;text-indent:-26.15pt'>5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<u>Commitments and Contingencies</u>:</p>

<p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
margin-left:25.9pt;text-align:justify'>The Company's office space, and the
land and buildings related to the Drive Thru restaurant facilities are
classified as operating leases and expire over the next 17 years. Some leases
contain escalation clauses over the lives of the leases. Most of the leases
contain one to three five-year renewal options at the end of the initial term. Certain
leases include provisions for additional contingent rent payments if sales
volumes exceed specified levels. The Company paid no material contingent
rentals during fiscal 2007 and 2006.</p>

<p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:26.15pt;text-align:justify'>Following is a summary of operating
lease activities:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=408
 style='margin-left:1.5in;border-collapse:collapse'>
 <tr>
  <td width=204 valign=top style='width:153.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=49 valign=top style='width:37.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=155 valign=top style='width:116.0pt;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='margin-left:.05in;text-align:center'>Year Ended
  September 30,</p>
  <p class=MsoNormal align=center style='text-align:center'>2007</p>
  </td>
 </tr>
 <tr>
  <td width=204 valign=top style='width:153.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=49 valign=top style='width:37.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=155 valign=top style='width:116.0pt;border:none;padding:0in 0in 0in 0in'>

  </td>
 </tr>
 <tr>
  <td width=204 valign=top style='width:153.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal>Minimum
  rentals</p>
  </td>
  <td width=49 valign=top style='width:37.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=155 valign=top style='width:116.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:.5in;text-align:right'>$2,214,000</p>
  </td>
 </tr>
 <tr>
  <td width=204 valign=top style='width:153.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal>Less
  sublease rentals</p>
  </td>
  <td width=49 valign=top style='width:37.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=155 valign=top style='width:116.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:.5in;text-align:right'><u>&nbsp;&nbsp; (386,000</u>)</p>
  </td>
 </tr>
 <tr>
  <td width=204 valign=top style='width:153.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=49 valign=top style='width:37.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=155 valign=top style='width:116.0pt;padding:0in 0in 0in 0in'>

  </td>
 </tr>
 <tr>
  <td width=204 valign=top style='width:153.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal style='margin-left:.4in;text-indent:.4in'>Net rent
  paid</p>
  </td>
  <td width=49 valign=top style='width:37.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=155 valign=top style='width:116.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:.5in;text-align:right'><u>$1,828,000</u></p>
  </td>
 </tr>
</table>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.3in;text-align:justify'>As of September&nbsp;30, 2007, future minimum
rental commitments required under the Company's operating leases&nbsp;&nbsp; that have
initial or remaining noncancellable lease terms in excess of one year are as
follows:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=295
 style='margin-left:1.5in;border-collapse:collapse'>

  <tr>
   <td width=133 valign=top style='width:99.95pt;padding:0in .95pt 0in .95pt'>
   <p class=MsoNormal align=center style='text-align:center;page-break-after:
   avoid'>Years
   Ending <u>September 30</u>,</p>
   </td>
   <td width=60 valign=top style='width:45.0pt;padding:0in .95pt 0in .95pt'>

   </td>
   <td width=102 valign=top style='width:76.5pt;padding:0in .95pt 0in .95pt'>

   </td>
  </tr>

 <tr>
  <td width=133 valign=top style='width:99.95pt;padding:0in .95pt 0in .95pt'>

  </td>
  <td width=60 valign=top style='width:45.0pt;padding:0in .95pt 0in .95pt'>

  </td>
  <td width=102 valign=top style='width:76.5pt;padding:0in .95pt 0in .95pt'>

  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.95pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal style='page-break-after:avoid'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2008</p>
  </td>
  <td width=60 valign=top style='width:45.0pt;padding:0in .95pt 0in .95pt'>

  </td>
  <td width=102 valign=top style='width:76.5pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal align=right style='margin-right:8.05pt;text-align:right;
  page-break-after:avoid'>$ 2,345,000</p>
  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.95pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal style='page-break-after:avoid'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2009</p>
  </td>
  <td width=60 valign=top style='width:45.0pt;padding:0in .95pt 0in .95pt'>

  </td>
  <td width=102 valign=top style='width:76.5pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal align=right style='margin-right:8.05pt;text-align:right;
  page-break-after:avoid'>2,250,000</p>
  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.95pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal style='page-break-after:avoid'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2010</p>
  </td>
  <td width=60 valign=top style='width:45.0pt;padding:0in .95pt 0in .95pt'>

  </td>
  <td width=102 valign=top style='width:76.5pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal align=right style='margin-right:8.05pt;text-align:right;
  page-break-after:avoid'>2,003,000</p>
  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.95pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal style='page-break-after:avoid'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2011</p>
  </td>
  <td width=60 valign=top style='width:45.0pt;padding:0in .95pt 0in .95pt'>

  </td>
  <td width=102 valign=top style='width:76.5pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal align=right style='margin-right:8.05pt;text-align:right;
  page-break-after:avoid'>1,841,000</p>
  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.95pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal style='page-break-after:avoid'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2012</p>
  </td>
  <td width=60 valign=top style='width:45.0pt;padding:0in .95pt 0in .95pt'>

  </td>
  <td width=102 valign=top style='width:76.5pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal align=right style='margin-right:8.05pt;text-align:right;
  page-break-after:avoid'>1,729,000</p>
  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.95pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal style='page-break-after:avoid'>&nbsp;&nbsp; Thereafter</p>
  </td>
  <td width=60 valign=top style='width:45.0pt;padding:0in .95pt 0in .95pt'>

  </td>
  <td width=102 valign=top style='width:76.5pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal align=right style='margin-right:8.05pt;text-align:right;
  page-break-after:avoid'><u> 11,908,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.95pt;padding:0in .95pt 0in .95pt'>

  </td>
  <td width=60 valign=top style='width:45.0pt;padding:0in .95pt 0in .95pt'>

  </td>
  <td width=102 valign=top style='width:76.5pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal align=right style='margin-right:8.05pt;text-align:right;
  page-break-after:avoid'>22,076,000</p>
  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.95pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal style='page-break-after:avoid'>Less sublease rentals</p>
  </td>
  <td width=60 valign=top style='width:45.0pt;padding:0in .95pt 0in .95pt'>

  </td>
  <td width=102 valign=top style='width:76.5pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal align=right style='margin-right:8.05pt;text-align:right;
  page-break-after:avoid'><u> (3,465,000</u>)</p>
  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.95pt;padding:0in .95pt 0in .95pt'>

  </td>
  <td width=60 valign=top style='width:45.0pt;padding:0in .95pt 0in .95pt'>

  </td>
  <td width=102 valign=top style='width:76.5pt;padding:0in .95pt 0in .95pt'>

  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.95pt;padding:0in .95pt 0in .95pt'>

  </td>
  <td width=60 valign=top style='width:45.0pt;padding:0in .95pt 0in .95pt'>

  </td>
  <td width=102 valign=top style='width:76.5pt;padding:0in .95pt 0in .95pt'>
  <p class=MsoNormal align=right style='margin-right:8.05pt;text-align:right;
  page-break-after:avoid'><u>$18,611,000</u></p>
  </td>
 </tr>
</table>

<p class=MsoNormal style='margin-top:12.0pt;margin-right:0in;margin-bottom:
6.0pt;margin-left:.3in;text-align:justify'>The Company is contingently liable on
several ground leases that have been subleased or assigned to franchisees. The
subleased and assigned leases expire between 2008 and 2021. The Company has
never experienced any losses from these contingent lease liabilities.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.3in;text-align:justify'>The Company was a guarantor on a franchisee's
Small Business Administration note payable with a bank. The note payable was
paid in full by the franchisee in October 2006.&nbsp; The Company has no other
guarantees related to franchisees.</p>

<p class=Level1 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.3in;text-align:justify;text-indent:-.3in'>6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<u>Financing Transactions</u>:</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.3in;text-align:justify'>In July 2006, the Company purchased the equipment
and improvements from a franchisee for total consideration of $329,000.&nbsp; The
assets of the restaurant were recorded on the Company's books at the fair
market value of $296,000, resulting in the recording of goodwill in the amount
of $33,000.&nbsp; In May 2007 the Company sold the restaurant to an unrelated third
party franchisee, resulting in the write off of the goodwill. The land.
building and improvements for this site were originally sold in a sale
lease-back transaction. We will remain contingently liable on that lease which
was subleased to the new franchisee. The Company has maintained ownership of
the fixtures and equipment and entered into a lease of those assets with the
franchisee.</p>

<p class=MsoBodyText style='margin-top:6.0pt;margin-right:0in;margin-bottom:
6.0pt;margin-left:.3in;line-height:97%'>In May 2007 the
Company borrowed $1,100,000 from Wells Fargo Bank under a note payable with an
eight year term with a floating interest rate at .50% below prime.&nbsp; We
simultaneously entered into an interest rate swap transaction with Wells Fargo
Bank for the full $1,100,000 with a fixed interest rate of 7.77% for the full
eight year term coinciding with the note payable.&nbsp; Partial proceeds from the
loan were used to: 1) payoff our existing GE Capital notes payable of $398,000;
and, 2) fund new store construction. The balance of the proceeds will be used
to partially fund the purchase of an existing restaurant from a franchisee.</p>

<p class=Level1 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.3in;text-align:justify;text-indent:-.3in'>7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<u>Managed Limited Partnerships</u>:</p>

<p class=MsoFooter align=center style='text-align:center'><b><i>&nbsp;</i></b></p>

<p class=MsoFooter align=center style='text-align:center'>F-12</p>

<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>



<br
clear=all style='page-break-before:always'>










<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.3in;text-align:justify'>Drive Thru is the general partner of two limited
partnerships that were formed to develop Drive Thru restaurants.&nbsp; Limited
partner contributions have been used to construct new restaurants.&nbsp; Drive Thru,
as a general partner, generally receives an allocation of approximately 51% of
the profit and losses and a fee for its management services.&nbsp; The limited
partners' equity has been recorded as a minority interest in the accompanying
consolidated financial statements.</p>

<p class=Level1 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.3in;text-align:justify;text-indent:-.3in;page-break-after:avoid'>8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<u>Income Taxes</u>:</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.3in;text-align:justify'>Deferred tax assets (liabilities) are comprised of
the following at September 30, 2007:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=420
 style='margin-left:1.0in;border-collapse:collapse'>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=78 valign=top style='width:58.5pt;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in .65pt 0in .65pt'>
  <h3>&nbsp;&nbsp;&nbsp;&nbsp; Current</h3>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=90 valign=top style='width:67.5pt;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in .65pt 0in .65pt'>
  <h3>Long Term</h3>
  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal>Deferred
  assets (liabilities):</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=78 valign=top style='width:58.5pt;border:none;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=90 valign=top style='width:67.5pt;border:none;padding:0in .65pt 0in .65pt'>

  </td>
 </tr>
 <tr style='height:.1in'>
  <td width=228 valign=top style='width:171.0pt;padding:0in .65pt 0in .65pt;
  height:.1in'>
  <p class=MsoNormal style='margin-left:21.85pt;text-indent:-9.0pt'>Tax effect
  of net operating loss carryforward</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in .65pt 0in .65pt;
  height:.1in'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .65pt 0in .65pt;
  height:.1in'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</p>
  </td>
  <td width=12 valign=bottom style='width:9.0pt;padding:0in .65pt 0in .65pt;
  height:.1in'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;padding:0in .65pt 0in .65pt;
  height:.1in'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'>$1,703,000</p>
  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal style='margin-left:21.85pt;text-indent:-9.0pt'>Partnership
  basis difference</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'>-</p>
  </td>
  <td width=12 valign=bottom style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'>157,000</p>
  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal style='margin-left:21.85pt;text-indent:-9.0pt'>Deferred
  revenue</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'>-</p>
  </td>
  <td width=12 valign=bottom style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'>205,000</p>
  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal style='margin-left:21.85pt;text-indent:-9.0pt'>Property and
  equipment basis differences</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'>-</p>
  </td>
  <td width=12 valign=bottom style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'>34,000</p>
  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal style='margin-left:21.85pt;text-indent:-9.0pt'>Other
  accrued liability difference</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'><u>14,000</u></p>
  </td>
  <td width=12 valign=bottom style='width:9.0pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal><u>&nbsp;</u></p>
  </td>
  <td width=90 valign=bottom style='width:67.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</u></p>
  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal>Net
  deferred tax assets</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'>14,000</p>
  </td>
  <td width=12 valign=bottom style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'>2,099,000</p>
  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal>Less
  valuation allowance*</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'><u>(14,000</u>)</p>
  </td>
  <td width=12 valign=bottom style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'><u>(2,099,000</u>)</p>
  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'><u>&nbsp;</u></p>
  </td>
  <td width=12 valign=bottom style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'><u>&nbsp;</u></p>
  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal>Net
  deferred tax assets</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</u></p>
  </td>
  <td width=12 valign=bottom style='width:9.0pt;padding:0in .65pt 0in .65pt'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;padding:0in .65pt 0in .65pt'>
  <p class=MsoNormal align=right style='margin-right:7.7pt;text-align:right'><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</u></p>
  </td>
 </tr>
</table>

<p class=MsoNormal style='margin-top:12.0pt;margin-right:0in;margin-bottom:
12.0pt;margin-left:40.5pt;text-align:justify;text-indent:-13.5pt'>*&nbsp;&nbsp; The
valuation allowance increased by $55,000 during the year ended
September&nbsp;30, 2007.</p>

<p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:26.15pt;text-align:justify'>The Company has net operating loss
carryforwards of approximately $4,363,000 for income tax purposes which expire
from 2008 through 2026.&nbsp; The use of these net operating loss carryforwards may
be restricted due to changes in ownership.</p>

<p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:26.15pt;text-align:justify'>Total income tax expense for the years
ended 2007 and 2006 differed from the amounts computed by applying the U.S.
Federal statutory tax rates to pre-tax income as follows:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=420
 style='margin-left:63.0pt;border-collapse:collapse'>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=78 valign=top style='width:58.5pt;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center;page-break-after:
  avoid'>2007</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=90 valign=top style='width:67.5pt;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center;page-break-after:
  avoid'>2006</p>
  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=78 valign=top style='width:58.5pt;border:none;padding:0in 0in 0in 0in'>

  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=90 valign=top style='width:67.5pt;border:none;padding:0in 0in 0in 0in'>

  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal style='margin-left:19.05pt;text-indent:-19.05pt;
  page-break-after:avoid'>Total
  expense (benefit) computed by applying the U.S. Statutory rate (35%)</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=78 valign=bottom style='width:58.5pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right;
  page-break-after:avoid'>$10,000</p>
  </td>
  <td width=12 valign=bottom style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right;
  page-break-after:avoid'>$&nbsp;&nbsp;
  6,000</p>
  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal style='page-break-after:avoid'>State income tax, net of
  federal tax benefit</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=78 valign=top style='width:58.5pt;padding:0in 0in 0in 0in'>

  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right;
  page-break-after:avoid'>1,000</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=90 valign=top style='width:67.5pt;padding:0in 0in 0in 0in'>

  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right;
  page-break-after:avoid'>&nbsp;1,000</p>
  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal style='page-break-after:avoid'>Effect of change in valuation
  allowance</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=78 valign=top style='width:58.5pt;padding:0in 0in 0in 0in'>

  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right;
  page-break-after:avoid'>&nbsp;55,000</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=90 valign=top style='width:67.5pt;padding:0in 0in 0in 0in'>

  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right;
  page-break-after:avoid'>&nbsp;19,000</p>
  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal style='page-break-after:avoid'>Permanent differences</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=78 valign=top style='width:58.5pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right;
  page-break-after:avoid'>&nbsp;41,000</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=90 valign=top style='width:67.5pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right;
  page-break-after:avoid'>(87,000)</p>
  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal style='page-break-after:avoid'>Other</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=78 valign=top style='width:58.5pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right;
  page-break-after:avoid'><u>&nbsp;&nbsp;&nbsp;&nbsp;
  (107,000)</u></p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=90 valign=top style='width:67.5pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right;
  page-break-after:avoid'><u>(39,000)</u></p>
  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=78 valign=top style='width:58.5pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=90 valign=top style='width:67.5pt;padding:0in 0in 0in 0in'>

  </td>
 </tr>
 <tr>
  <td width=228 valign=top style='width:171.0pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal style='page-break-after:avoid'>Provision for income taxes</p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=78 valign=top style='width:58.5pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right;
  page-break-after:avoid'><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</u></p>
  </td>
  <td width=12 valign=top style='width:9.0pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=90 valign=top style='width:67.5pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=right style='margin-right:9.0pt;text-align:right;
  page-break-after:avoid'><u>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -</u></p>
  </td>
 </tr>
</table>

<p class=Level1 style='margin-top:12.0pt;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify;text-indent:0in;page-break-after:avoid'><u>&nbsp;</u></p>

<p class=MsoFooter align=center style='text-align:center'><b><i>&nbsp;</i></b></p>

<p class=MsoFooter align=center style='text-align:center'>F-13</p>

<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>



<u><br clear=all style='page-break-before:always'>
</u>









<p class=Level1 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:30.95pt;text-align:justify;text-indent:-30.95pt;page-break-after:
avoid'>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<u>Related Parties</u>:</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:30.6pt;text-align:justify'>A significant stockholder has entered
into two franchise and management agreements with the Company.&nbsp; The Company
also leases office space from this stockholder under a lease agreement which
expires in 2008.&nbsp; Rent paid to the stockholder in 2007 and 2006 for office
space was $54,000 and $53,000, respectively.&nbsp; One of the Company's Board
members is a principal of the stockholder.</p>

<p class=BodyText5 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:31.5pt;text-indent:0in'>The
Bailey Company is also the owner of two franchised Good Times Drive Thru
restaurants which are located in Thornton and Loveland, Colorado.&nbsp; The Bailey
Company has entered into two franchise and management agreements with us, and
payments under those agreements totaled $90,000 for the fiscal year ended
September 30, 2007.</p>

<p class=Level1 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:30.6pt;text-align:justify;text-indent:-30.6pt'>10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<u>Stockholders' Equity</u>:</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:30.6pt;text-align:justify'><u>Preferred Stock</u> - The Company
has the authority to issue 5,000,000 shares of preferred stock.&nbsp; The Board of
Directors has the authority to issue such preferred shares in series and
determine the rights and preferences of the shares as may be determined by the
Board of Directors.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:30.6pt;text-align:justify'>On February 10, 2005 the Company
closed on the private placement of a total of 1,240,000 shares of Series B
Preferred Stock for $2.50 per share. The aggregate purchase price for the
1,180,000 shares issued for cash was $2,950,000 with net proceeds of
approximately $2,666,000. The Company 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 shares to common shares on June 8, 2006 dividends of $35,000
were paid for the period April 1, 2006 to June 8, 2006</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:30.6pt;text-align:justify'><u>Common Stock Dividend Restrictions</u> - As long as
at least two-thirds of the shares of common stock into which the Series B
Preferred Stock was converted remains held by the former holders of such
converted Series B Preferred Stock, without the written consent or affirmative
vote of the holders of three-quarters of the then outstanding votes of the
shares of the Series B Preferred Stock and the shares of the common stock, the
Company cannot institute any payment of cash dividends or other distributions
on any shares of common stock.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:30.6pt;text-align:justify'><u>Stock Option Plans</u> - The Company
has a stock option plan (the &quot;2001 Stock Option Plan&quot;) whereby 66,830 shares
are available for future grants as either incentive stock options or
non-statutory stock options.&nbsp; No further shares are available for future grants
under the Company's 1992 Incentive Stock Option Plan and the 1992 Non-Statutory
Stock Option Plan.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'>Effective October 1, 2006, the Company
adopted the provisions of Statement of Financial Accounting Standard (&quot;SFAS&quot;)
No. 123(R), Share-Based Payment, 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 class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'>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 class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'>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 class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:26.15pt;text-align:justify'>Net income for the fiscal year ended
September 30, 2007 includes $84,000 of compensation costs related to our
stock-based compensation arrangements.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:25.9pt;text-align:justify'>During the fiscal year ended September
30, 2007, 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 $3.84 for non-statutory stock option grants and $3.67
for incentive stock option grants.</p>

<p class=MsoFooter align=center style='text-align:center'><b><i>&nbsp;</i></b></p>

<p class=MsoFooter align=center style='text-align:center'>F-14</p>

<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>



<br
clear=all style='page-break-before:always'>










<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:25.9pt;text-align:justify'>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>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=588
 style='margin-left:27.0pt;border-collapse:collapse'>
 <tr>
  <td width=222 valign=top style='width:166.5pt;padding:0in 0in 0in 0in'>

  </td>
  <td width=192 valign=top style='width:2.0in;border:none;border-bottom:solid black 1.0pt;
  padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center'>Incentive
  Stock Options</p>
  </td>
  <td width=174 valign=top style='width:130.5pt;border:none;border-bottom:solid black 1.0pt;
  padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center'>Non-Statutory
  Stock Options</p>
  </td>
 </tr>
 <tr>
  <td width=222 valign=top style='width:166.5pt;background:#EEECE1;padding:
  0in 0in 0in 0in'>
  <p class=MsoNormal style='margin-left:4.5pt'>Expected term (years)</p>
  </td>
  <td width=192 valign=top style='width:2.0in;background:#EEECE1;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center'>6.0</p>
  </td>
  <td width=174 valign=top style='width:130.5pt;background:#EEECE1;padding:
  0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center'>6.7</p>
  </td>
 </tr>
 <tr>
  <td width=222 valign=top style='width:166.5pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal style='margin-left:4.5pt'>Expected volatility</p>
  </td>
  <td width=192 valign=top style='width:2.0in;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center'>56%</p>
  </td>
  <td width=174 valign=top style='width:130.5pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center'>56%</p>
  </td>
 </tr>
 <tr>
  <td width=222 valign=top style='width:166.5pt;background:#EEECE1;padding:
  0in 0in 0in 0in'>
  <p class=MsoNormal style='margin-left:4.5pt'>Risk-free interest rate</p>
  </td>
  <td width=192 valign=top style='width:2.0in;background:#EEECE1;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center'>4.6%</p>
  </td>
  <td width=174 valign=top style='width:130.5pt;background:#EEECE1;padding:
  0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center'>4.6%</p>
  </td>
 </tr>
 <tr>
  <td width=222 valign=top style='width:166.5pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal style='margin-left:4.5pt'>Expected dividends</p>
  </td>
  <td width=192 valign=top style='width:2.0in;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center'>0</p>
  </td>
  <td width=174 valign=top style='width:130.5pt;padding:0in 0in 0in 0in'>
  <p class=MsoNormal align=center style='text-align:center'>0</p>
  </td>
 </tr>
</table>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:25.9pt;text-align:justify'>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 class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'>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
fiscal year ended September 30, 2007.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;
margin-left:25.9pt;margin-bottom:.0001pt;text-align:justify'>A summary of
stock option activity under our share-based compensation plan for the fiscal
year ended September 30, 2007 is presented in the following table:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=588
 style='margin-left:.45in;border-collapse:collapse'>
 <tr>
  <td width=180 valign=bottom style='width:135.0pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-right:12.6pt;text-align:center'>Options</p>
  </td>
  <td width=108 valign=bottom style='width:81.0pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>Weighted
  Average Exercise Price</p>
  </td>
  <td width=120 valign=bottom style='width:1.25in;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>Weighted
  Average Remaining Contractual Life (Yrs.)</p>
  </td>
  <td width=90 valign=bottom style='width:67.5pt;border:none;border-bottom:
  solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>Aggregate
  Intrinsic Value</p>
  </td>
 </tr>
 <tr>
  <td width=180 valign=top style='width:135.0pt;background:#EEECE1;padding:
  0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Outstanding-beg of year</p>
  </td>
  <td width=90 valign=top style='width:67.5pt;border:none;background:#EEECE1;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.8pt;text-align:right'>&nbsp;358,775</p>
  </td>
  <td width=108 valign=top style='width:81.0pt;border:none;background:#EEECE1;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-left:26.15pt;text-align:justify'>$3.29</p>
  </td>
  <td width=120 valign=top style='width:1.25in;border:none;background:#EEECE1;
  padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=90 valign=top style='width:67.5pt;border:none;background:#EEECE1;
  padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=180 valign=top style='width:135.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Granted</p>
  </td>
  <td width=90 valign=top style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.8pt;text-align:right'>&nbsp;64,775</p>
  </td>
  <td width=108 valign=top style='width:81.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-left:26.15pt;text-align:justify'>$6.38</p>
  </td>
  <td width=120 valign=top style='width:1.25in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=90 valign=top style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=180 valign=top style='width:135.0pt;background:#EEECE1;padding:
  0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Exercised</p>
  </td>
  <td width=90 valign=top style='width:67.5pt;background:#EEECE1;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.3pt;text-align:right'>(55,745)</p>
  </td>
  <td width=108 valign=top style='width:81.0pt;background:#EEECE1;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-left:26.15pt;text-align:justify'>$2.96</p>
  </td>
  <td width=120 valign=top style='width:1.25in;background:#EEECE1;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=90 valign=top style='width:67.5pt;background:#EEECE1;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=180 valign=top style='width:135.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Forfeited or expired</p>
  </td>
  <td width=90 valign=top style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:8.3pt;text-align:right'>&nbsp;(900)</p>
  </td>
  <td width=108 valign=top style='width:81.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-left:26.15pt;text-align:justify'>$2.37</p>
  </td>
  <td width=120 valign=top style='width:1.25in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=90 valign=top style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=180 valign=top style='width:135.0pt;background:#EEECE1;padding:
  0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:8.3pt;text-align:justify'>Outstanding
  Sept 30, 2007</p>
  </td>
  <td width=90 valign=top style='width:67.5pt;background:#EEECE1;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.8pt;text-align:right'>366,905</p>
  </td>
  <td width=108 valign=top style='width:81.0pt;background:#EEECE1;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-left:26.15pt;text-align:justify'>$3.89</p>
  </td>
  <td width=120 valign=top style='width:1.25in;background:#EEECE1;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-left:-.5pt;text-align:center'>5.5</p>
  </td>
  <td width=90 valign=top style='width:67.5pt;background:#EEECE1;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:17.1pt;
  margin-bottom:0in;margin-left:-.5pt;margin-bottom:.0001pt;text-align:right'>$650,000</p>
  </td>
 </tr>
 <tr>
  <td width=180 valign=top style='width:135.0pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=90 valign=top style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=108 valign=top style='width:81.0pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=120 valign=top style='width:1.25in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=90 valign=top style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=180 valign=top style='width:135.0pt;background:#EEECE1;padding:
  0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Exercisable Sept 30, 2007</p>
  </td>
  <td width=90 valign=top style='width:67.5pt;background:#EEECE1;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-right:12.8pt;text-align:right'>314,130</p>
  </td>
  <td width=108 valign=top style='width:81.0pt;background:#EEECE1;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-left:26.15pt;text-align:justify'>$3.47</p>
  </td>
  <td width=120 valign=top style='width:1.25in;background:#EEECE1;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-left:-.5pt;text-align:center'>4.9</p>
  </td>
  <td width=90 valign=top style='width:67.5pt;background:#EEECE1;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:17.1pt;
  margin-bottom:0in;margin-left:-.5pt;margin-bottom:.0001pt;text-align:right'>$650,000</p>
  </td>
 </tr>
</table>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:25.9pt;text-align:justify'>As of September 30, 2007, the total
remaining unrecognized compensation cost related to unvested stock-based
arrangements was $145,000 and is expected to be recognized over a weighted
average period of 3.1 years.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'>The total intrinsic value of stock
options exercised during the fiscal year ended September 30, 2007, was
$157,000. Cash received from stock option exercises for the fiscal year ended
September 30, 2007 was $164,000.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:26.15pt;text-align:justify'><u>Accumulated Other Comprehensive Loss</u> -&nbsp; In May
2007, the Company entered into an interest rate swap agreement, designated as a
cash flow hedge, which hedges the Company's exposure to interest rate
fluctuations on the Company's floating rate $1,100,000 term loan. The Company
records the fair value of these contracts in the balance sheet, with the offset
to other comprehensive loss. The contract requires monthly settlements of the
difference between the amounts to be received and paid under the agreement, the
amount of which is recognized in current earnings as interest expense. See Note
Three for additional information.</p>

<p class=Level1 style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:.5in;text-align:justify'>11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<u>Retirement Plan</u>:</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:30.25pt;text-align:justify'>The Company has a 401(k) profit
sharing plan (the &quot;Plan&quot;).&nbsp; Eligible employees may make voluntary contributions
to the Plan, which are matched by the Company, in an amount equal to 25% of the
employee's contribution up to 6% of their compensation.&nbsp; The amount of employee
contributions is limited as specified in the Plan. The Company may, at its
discretion, make additional contributions to the Plan or change the matching
percentage.&nbsp; The Company made matching contributions of $30,000 in both fiscal
2007 and fiscal 2006.&nbsp; All matching contributions are made in cash.</p>

<p class=MsoFooter align=center style='text-align:center'><b><i>&nbsp;</i></b></p>

<p class=MsoFooter align=center style='text-align:center'>F-15</p>

<div class=MsoNormal align=center style='text-align:center'>

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<p class=Level1 style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:.5in;text-align:justify'>12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<u>Subsequent Events:</u></p>

<p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:30.25pt;text-align:justify'>On December 3, 2007, we entered into a
development agreement with Zen Partners LLC that is comprised of a Development
Agreement, a Management Agreement and a Site Selection, Construction Management
 and Pre-Opening Services Agreement.&nbsp; The agreements provide for the
development of up to twenty five restaurants with a five year development schedule
for up to ten of the restaurants with an option to develop an additional
fifteen restaurants, exercisable any time during the initial five year
period.&nbsp;&nbsp; We will manage and operate the restaurants utilizing our employees on
the same basis as we would company-owned restaurants, however the Zen Partners
LLC will provide all development and operating capital.&nbsp; We will receive a
fixed fee for the development of each restaurant and a recurring management fee
based on a percentage of sales for the operation of the restaurants.&nbsp;&nbsp; We may provide a limited lease guarantee on the initial three restaurants developed, for which we
will receive an additional recurring guarantee fee.&nbsp; We will also participate
in the ongoing profitability of the restaurants after Zen Partners LLC has received a priority return on its invested capital.&nbsp; A member of our Board of Directors and significant shareholder, David Grissen, is an owner of Zen Partners LLC.</p>





<p class=MsoFooter align=center style='text-align:center'><b><i>&nbsp;</i></b></p>

<p class=MsoFooter align=center style='text-align:center'>F-16</p>

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<p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
margin-left:1.0in;text-align:justify;text-indent:-1.0in'><b>Item 9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes
In and Disagreements with Accountants on Accounting and Financial Disclosure.</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'>During the two most recent fiscal years, Good
Times Restaurants has not had any changes in or disagreements with its
independent accountants on matters of accounting or financial disclosure.</p>

<p class=MsoNormal style='margin-top:12.0pt;margin-right:0in;margin-bottom:
6.0pt;margin-left:0in;text-align:justify'><b>Item 9A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Controls and
Procedures</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>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 management,
including the Chief Executive Officer and the Controller, who currently
performs the functions of principal financial officer, as appropriate to allow
timely decisions regarding required disclosure.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>As of the end of the period covered by this
report, we carried out an evaluation, under the supervision and with the
participation of management, including the Chief Executive Officer and the
Controller, of the effectiveness of the design and operation of our disclosure
controls and procedures.&nbsp; 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.&nbsp; There was no change in our internal control
over financial reporting that occurred during the fourth quarter of the fiscal
year ended September 30, 2007 that has materially affected, or is reasonably
likely to materially affect our internal control over financial reporting.</p>

<p class=MsoNormal style='margin-top:12.0pt;margin-right:0in;margin-bottom:
6.0pt;margin-left:0in;text-align:justify'><b>Item 9B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Information</b></p>

<p class=MsoNormal style='margin-top:12.0pt;margin-right:0in;margin-bottom:
12.0pt;margin-left:0in;text-align:justify'>Nothing to report.</p>

<p class=MsoNormal style='margin-top:12.0pt;margin-right:0in;margin-bottom:
6.0pt;margin-left:0in;text-align:justify'><b>PART III</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:1.0in;text-align:justify;text-indent:-1.0in'><b>Item 10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Directors,
Executive Officers, Promoters and Control Persons and Corporate Governance;
Compliance with Section 16(a) of the Exchange Act</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>The information required by this Item concerning
our directors and executive officers is incorporated by reference to the
information provided under the captions &quot;Election of Directors&quot; and
&quot;Executive Officers&quot; in our definitive proxy statement for the annual
meeting of stockholders, to be held on January 24, 2008 and to be filed within
120 days from September 30, 2007.&nbsp; Information regarding the Company's Code of
Ethics, nominating procedures and Audit Committee can be found on page 10 of
the proxy statement.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'>The information required by this Item concerning
compliance with Section 16(a) of the Securities Exchange Act of 1934 is
incorporated by reference to the information provided under the caption
&quot;Section 16(a) Beneficial Ownership Reporting Compliance&quot; in our
definitive proxy statement for the annual meeting of stockholders, to be held
on January 24, 2008 and to be filed within 120 days from September 30, 2007.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>Item 11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Executive
Compensation</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>The information required by this Item is
incorporated by reference to the information provided under the captions
&quot;Directors' Compensation&quot; and &quot;Executive Compensation&quot; in
our definitive proxy statement for the annual meeting of stockholders to be
held on January 24, 2008 and to be filed within 120 days from September 30, 2007.</p>

<p class=MsoNormal style='margin-top:12.0pt;margin-right:0in;margin-bottom:
0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:
- -1.0in'><b>Item
12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>The information required by this Item concerning
security ownership of certain beneficial owners and management is incorporated
by reference to the information provided under the caption &quot; Ownership of common
stock by Principal Stockholders and Management&quot; in our definitive proxy
statement for the 2008 annual meeting of stockholders to be filed within 120
days from September 30, 2007.</p>

<p class=MsoNormal style='text-align:justify'>The information required by this Item
concerning securities authorized for issuance under equity compensation plans
is incorporated by reference to the information provided under the caption
&quot;Disclosure with Respect to the Company's Equity Compensation Plan&quot;
in Part II - Item 5 - Market for Common Equity and Related Stockholder Matters,
included in this Form 10-KSB.</p>

<p class=MsoFooter align=center style='text-align:center'>43</p>

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<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><b>Item 13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Certain
Relationships, Related Transactions and Director Independence.</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>The information required by this Item is
incorporated by reference to the information provided under the caption
&quot;Certain Relationships and Related Transactions&quot; in our definitive
proxy statement for the 2007 annual meeting of stockholders to be filed within
120 days from September 30, 2006.</p>

<p class=00BodyText5 style='text-align:justify;text-indent:0in'>The
information required by this Item concerning director independence is
incorporated by reference to the information provided under the captions
&quot;Nominee selection process&quot;, &quot;Nominees&quot; and &quot;Board Committees&quot; in our
definitive proxy statement for the 2008 annual meeting of stockholders to be
filed within 120 days from September 30, 2007.</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b>&nbsp;Item 14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Principal Accountant
Fees and Services</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'>The information required by this Item is
incorporated by reference to the information provided under the caption
&quot;Independent Public Accountants&quot; in our definitive proxy statement
for the 2008 annual meeting of stockholders to be filed within 120 days from
September 30, 2007.</p>

<p class=MsoNormal style='margin-top:12.0pt;margin-right:0in;margin-bottom:
6.0pt;margin-left:0in;text-align:justify'><b>Item 15.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibits</b></p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'>The following exhibits are furnished as part of
this report:</p>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;
margin-left:0in;text-align:justify'><b><u>Exhibit</u></b><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Description</u></b></p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Articles
of Incorporation of the Registrant (previously filed on November 30, 1988 as
Exhibit 3.1 to the registrant's Registration Statement on Form S-18 (File No.
33-25810-LA) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amendment
to Articles of Incorporation of the Registrant dated January 23, 1990
(previously filed on January 18, 1990 as Exhibit 3.1 to the registrant's
Current Report on Form 8-K (File No. 000-18590) and incorporated herein by
reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>3.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amendment
to Articles of Incorporation (previously filed as Exhibit 3.5 to the
registrant's Annual Report on Form 10-KSB for the fiscal year ended September
30, 1996 and (File No. 000-18590) incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>3.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Restated
Bylaws of Registrant dated November 7, 1997 (previously filed as Exhibit 3.6 to
the registrant's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 1997 (File No. 000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>4.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Certificate
of Designations, Preferences, and Rights of Series B Convertible Preference
Stock of Good Times Restaurants Inc. (previously filed as Exhibit 1 to the
Amendment No. 6 to Schedule 13D filed by The Erie County Investment Co., The
Bailey Company, LLLP and Paul T. Bailey (File No. 005-42729) on February 14,
2005 and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form
of Promissory Note dated November 3, 1995 by and between AT&amp;T Commercial
Finance Corporation, Boise Co-Development Limited Partnership, Good Times Good
Times Inc. as general partner, and Good Times Restaurants Inc. as guarantor in
the amount of $254,625 (previously filed as Exhibit 10.34 to the registrant's
Annual Report on Form 10-KSB/A for the fiscal year ended September 30, 1995
(File No. 000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form
of Promissory Note dated November 3, 1995 by and between AT&amp;T Commercial
Finance Corporation, Boise Co-Development Limited Partnership, Good Times Good
Times Inc. as general partner, and Good Times Restaurants as guarantor in the
amount of $104,055 (previously filed as Exhibit 10.35 to the registrant's Annual
Report on Form 10-KSB/A for the fiscal year ended September 30, 1995 (File No.
000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Registration
Rights Agreement dated May 31, 1996 regarding registration rights of the common
stock issuable upon conversion of the Series A Convertible Preferred Stock
(previously filed as Exhibit 10.15 to the registrant's Annual Report on Form
10-KSB/A for the fiscal year ended September 30, 1995 (File No. 000-18590) and
incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amendment
and Agreement regarding Series A Convertible Preferred Stock by and between
Good Times Restaurants Inc. and The Bailey Company dated December 3, 1997,
effective as of October 31, 1997 (previously filed as Exhibit 10.13 to the
registrant's Annual Report on Form 10-KSB for the fiscal year ended September
30, 1997 (File No. 000-18590) and incorporated herein by reference)</p>

<p class=MsoFooter align=center style='text-align:center'>44</p>

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<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Indemnification
by Dr. Kenneth Dubach to Good Times Good Times Inc. dated December 10, 1996
with respect to the promissory note of the Boise Co-Development Limited
Partnership dated November 3, 1995 in the original amount of $254,625 and the
promissory note dated November 3, 1995 in the original amount of $104,055
(previously filed as Exhibit 10.14 to the registrant's Annual Report on Form
10-KSB for the fiscal year ended September 30, 1997 (File No. 000-18590) and
incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Office
lease (previously filed as Exhibit 10.12 to the registrant's Annual Report on
Form 10-KSB for the fiscal year ended September 30, 1998 (File No. 000-18590)
and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Bailey Company Guaranty Agreement (previously filed as Exhibit 10.13 to the
registrant's Annual Report on Form 10-KSB for the fiscal year ended September
30, 1998 (File No. 000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1992
Incentive Stock Option Plan, as amended (previously filed as Exhibit 4.9 to the
registrant's Annual Report on Form 10-KSB for the fiscal year ended September
30, 1998 (File No. 000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1992
Non-Statutory Stock Option Plan, as amended (previously filed as Exhibit 4.10
to the registrant's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 1998 (File No. 000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Bailey Company Private Placement Letter Agreement dated March 12, 1999
(previously filed as Exhibit 10.1 to the registrant's Quarterly Report on Form
10-QSB for the quarter ended March 31, 1999 (File No. 000-18590) and
incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Warrant
dated April 15, 1999 Issued to The Bailey Company, LLLP for the Purchase of
25,000 Shares of Common Stock of Good Times Restaurants Inc. (previously filed
as Exhibit 4.2 to Amendment No. 4 to Schedule 13D filed on June 7, 1999 by The
Bailey Company, LLLP, The Erie County Investment Co., and Paul T. Bailey (File
No. 005-42729) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Merrill
Lynch Commitment Letter dated November 17, 1999 for Line of Credit (previously
filed as Exhibit 10.18 to the registrant's Annual Report on Form 10-KSB for the
fiscal year ended September 30, 1999 (File No. 000-18590) and incorporated
herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GE
Capital Term Note dated November 14, 2001 (previously filed as Exhibit 10.15 to
the registrant's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 2001 (File No. 000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; GE
Capital Note dated November 14, 2001 (previously filed as Exhibit 10.1 to the
registrant's Quarterly Report on Form 10-QSB for the quarter ended December 31,
2001 (File No. 000-18590 and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employment
Agreement dated October 3, 2001 between the registrant and Boyd E. Hoback</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Wells
Fargo Credit Agreement (previously filed as Exhibit 10.17 to the registrant's
Annual Report on Form 10-KSB for the fiscal year ended September 30, 2003 (File
No. 000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.17&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form
of Option Agreement (previously filed as Exhibit 10.18 to the registrant's
Annual Report on Form 10-KSB for the fiscal year ended September 30, 2004 (File
No. 000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.18&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form
of Option Grant Notice (previously filed as Exhibit 10.19 to the registrant's
Annual Report on Form 10-KSB for the fiscal year ended September 30, 2004 (File
No. 000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.19&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash
Bonus Plan for Boyd Hoback (previously filed as Exhibit 10.20 to the
registrant's Annual Report on Form 10-KSB for the fiscal year ended September
30, 2004 (File No. 000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.20&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Securities
Purchase Agreements (previously filed on the registrant's Current Report on
Form 8-K dated January 3, 2005 (File No. 000-18590) and incorporated herein by
reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.21&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amendment
to Securities Purchase Agreement (previously filed as Exhibit 10.1 to the
registrant's Form 8-K Report dated January 27, 2005 (File No. 000-18590) and
incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.22&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2001
Stock Option Plan, as amended (previously filed as Exhibit 99.1 to the
registrant's Registration Statement on Form S-8 filed on May 23, 2005
(Registration No. 333-125150) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.23&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Registration
Statement (previously filed on the registrant's Registration Statement on Form
S-3 filed on February 17, 2005 (Registration No. 333-122890) and incorporated
herein by reference</p>

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<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.24&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amendment
No. 1 to Registration Statement (previously filed on the registrant's
Registration Statement on Form S-3 filed on April 4, 2005 (Registration No.
333-122890) and incorporated herein by reference</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.25&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Conversion
of Series B Convertible Preferred Stock (previously filed as Exhibit 99.1 to
the registrant's Form 8-K Report dated June 8, 2006 (File No. 000-18590) and
incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.26&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loan
Agreement and Promissory Note (previously filed as Exhibit 10.1 and 10.2 to the
registrant's Form 8-K Report dated August 7, 2006 (File No. 000-18590) and
incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.27&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Acceleration
of Vesting of Stock Options and Form of Resale Restriction Agreement
(previously filed as Exhibit 10.1 to the registrant's Form 8-K Report dated August
8, 2006 (File No. 000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.28&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Expansion
of Loan Agreement and Promissory Note (previously filed as Exhibit 10.1 and
10.2 to the registrant's Form 8-K Report dated March 15, 2007 (File No.
000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.29&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loan
Agreement and Promissory Note (previously filed as Exhibit 10.1 and 10.2 to the
registrant's Form 8-K Report dated May 7, 2007 (File No. 000-18590) and
incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.30&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amendment
No. 1 to Loan Agreement and Promissory Note (previously filed as Exhibit 10.1
and 10.2 to the registrant's Form 8-K Report dated May 10, 2007 (File No.
000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.31&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Development
Agreement (previously filed as Exhibit 10.1to the registrant's Form 8-K Report
dated December 2, 2007 (File No. 000-18590) and incorporated herein by
reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.32&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Management
Agreement (previously filed as Exhibit 10.2 to the registrant's Form 8-K Report
dated December 2, 2007 (File No. 000-18590) and incorporated herein by
reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>10.33&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Site
Selection, Construction Management and Pre-Opening Services Agreement
(previously filed as Exhibit10.3 to the registrant's Form 8-K Report dated
December 2, 2007 (File No. 000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.3pt;text-align:justify;text-indent:
- -51.3pt'>14.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Code
of Ethics (previously filed as Exhibit 14.1 to the registrant's Annual Report
on Form 10-KSB for the fiscal year ended September 30, 2003 (File No.
000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:51.3pt;text-align:justify;text-indent:-51.3pt'>21.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subsidiaries
of registrant (previously filed as Exhibit 21.1 to the registrant's Annual
Report on Form 10-KSB for the fiscal year ended September 30, 1998 (File No.
000-18590) and incorporated herein by reference)</p>

<p class=MsoNormal style='margin-left:51.1pt;text-align:justify;text-indent:
- -51.1pt'>23.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Consent
of HEIN &amp; ASSOCIATES LLP</p>

<p class=MsoNormal style='margin-left:51.1pt;text-align:justify;text-indent:
- -51.1pt'>31.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350</p>

<p class=MsoNormal style='margin-left:51.1pt;text-align:justify;text-indent:
- -51.1pt'>31.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Certification
of Controller pursuant to 18 U.S.C. Section 1350</p>

<p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:51.1pt;text-align:justify;text-indent:-51.1pt'>32.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *Certification
of Chief Executive Officer and Controller pursuant to 18 U.S.C. Section 1350</p>

<p class=MsoNormal style='text-align:justify'>*Filed herewith.</p>

<p class=MsoFooter align=center style='text-align:center'>46</p>

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<p class=MsoNormal align=center style='text-align:center'><b>SIGNATURES</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>In accordance
with Section 13 or 15(d) of the Exchange Act, the registrant caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=595
 style='border-collapse:collapse'>
 <tr>
  <td width=307 valign=top style='width:3.2in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal><b>&nbsp;</b></p>
  </td>
  <td width=288 valign=top style='width:3.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>GOOD TIMES &nbsp;RESTAURANTS INC.</b></p>
  </td>
 </tr>
 <tr>
  <td width=307 valign=top style='width:3.2in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Date:
  December 28, 2007</p>
  </td>
  <td width=288 valign=top style='width:3.0in;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal><i>/s/
  Boyd E. Hoback</i></p>
  </td>
 </tr>
 <tr>
  <td width=307 valign=top style='width:3.2in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=288 valign=top style='width:3.0in;border:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Boyd
  E. Hoback</p>
  <p class=MsoNormal>President
  and Chief Executive Officer</p>
  </td>
 </tr>
</table>

<p class=MsoNormal style='margin-top:12.0pt;margin-right:0in;margin-bottom:
12.0pt;margin-left:0in'>In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=596
 style='border-collapse:collapse'>
 <tr>
  <td width=288 valign=top style='width:3.0in;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal><i>/s/
  Eric W. Reinhard</i></p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal><i>&nbsp;</i></p>
  </td>
  <td width=288 valign=top style='width:3.0in;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-left:.55pt'><i>/s/ Boyd E. Hoback</i></p>
  </td>
 </tr>
 <tr style='height:37.95pt'>
  <td width=288 valign=top style='width:3.0in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:37.95pt'>
  <p class=MsoNormal>Eric
  W. Reinhard, Chairman</p>
  <p class=MsoNormal>and
  Chief Development Officer</p>
  <p class=MsoNormal style='margin-bottom:6.0pt'>Date: December 28, 2007</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:37.95pt'>

  </td>
  <td width=288 valign=top style='width:3.0in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:37.95pt'>
  <p class=MsoNormal style='margin-left:.55pt'>Boyd E. Hoback, Director </p>
  <p class=MsoNormal style='margin-left:.55pt'>and President and CEO</p>
  <p class=MsoNormal style='margin-left:.55pt'>Date: December 28, 2007</p>
  </td>
 </tr>
 <tr>
  <td width=288 valign=top style='width:3.0in;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal><i>/s/
  Geoffrey R. Bailey</i></p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=288 valign=top style='width:3.0in;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal><i>/s/
  Susan M. Knutson</i></p>
  </td>
 </tr>
 <tr style='height:35.7pt'>
  <td width=288 valign=top style='width:3.0in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:35.7pt'>
  <p class=MsoNormal>Geoffrey
  R. Bailey, Director</p>
  <p class=MsoNormal>Date:
  December 28, 2007</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:35.7pt'>

  </td>
  <td width=288 valign=top style='width:3.0in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:35.7pt'>
  <p class=MsoNormal>Susan
  M. Knutson, Controller and</p>
  <p class=MsoNormal>Principal
  Financial Officer</p>
  <p class=MsoNormal style='margin-bottom:6.0pt'>Date: December 28, 2007</p>
  </td>
 </tr>
 <tr>
  <td width=288 valign=top style='width:3.0in;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal><i>/s/
  Ron Goodson</i></p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=288 valign=top style='width:3.0in;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal><i>/s/
  Richard J. Stark</i></p>
  </td>
 </tr>
 <tr style='height:26.4pt'>
  <td width=288 valign=top style='width:3.0in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:26.4pt'>
  <p class=MsoNormal>Ron
  Goodson, Director</p>
  <p class=MsoNormal style='margin-bottom:6.0pt'>Date: December 28, 2007</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:26.4pt'>

  </td>
  <td width=288 valign=top style='width:3.0in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:26.4pt'>
  <p class=MsoNormal>Richard
  J. Stark, Director</p>
  <p class=MsoNormal>Date:
  December 28, 2007</p>
  </td>
 </tr>
 <tr>
  <td width=288 valign=top style='width:3.0in;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal><i>/s/
  David Grissen</i></p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal><i>&nbsp;</i></p>
  </td>
  <td width=288 valign=top style='width:3.0in;border:none;border-bottom:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-left:.55pt'><i>/s/ Alan A. Teran</i></p>
  </td>
 </tr>
 <tr>
  <td width=288 valign=top style='width:3.0in;border:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>David
  Grissen, Director</p>
  <p class=MsoNormal>Date:
  December 28, 2007</p>
  </td>
  <td width=96 valign=top style='width:1.0in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=288 valign=top style='width:3.0in;border:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-left:.55pt'>Alan A. Teran, Director</p>
  <p class=MsoNormal style='margin-left:.55pt'>Date: December 28, 2007</p>
  </td>
 </tr>
</table>



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<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>2
<FILENAME>exhibit311certceo1.htm
<TEXT>
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<head>
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<!-- Copyright 2006 E-Services, LLC.-->
<!-- All rights reserved EDGAR2.com -->



<title>Exhibit 31</title>


</head>

<body lang=EN-US>



<p class=MsoNormal><u><font size=2 face=Arial>&nbsp;</font></u></p>

<p class=MsoNormal><u><font size=2 face=Arial>&nbsp;</font></u></p>

<p class=MsoNormal style='line-height:1.0pt'><font size=3 face="Times New Roman">&nbsp;</font></p>

<p class=MsoNormal style='line-height:1.0pt'><font size=3 face="Times New Roman">&nbsp;</font></p>

<p class=MsoHeader><font size=3 face="Times New Roman">&nbsp;</font></p>

<p class=MsoNormal style='line-height:1.0pt'><font size=3 face="Times New Roman">&nbsp;</font></p>

<p class=MsoNormal><u><font size=2 face=Arial>Exhibit 31.1</font></u></p>

<p class=MsoNormal align=center style='text-align:center'><b><font size=2
face=Arial>CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER</font></b></p>

<p class=MsoNormal style='margin-left:22.5pt;text-indent:-22.5pt'><font size=2
face=Arial>&nbsp;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face=Arial>I, Boyd E. Hoback, certify that:</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face=Arial>&nbsp;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face=Arial>1.&nbsp;&nbsp;&nbsp;&nbsp; I have reviewed this quarterly report on Form 10-KSB
of Good Times Restaurants Inc.;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face=Arial>&nbsp;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face=Arial>2.&nbsp;&nbsp;&nbsp;&nbsp; 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;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face=Arial>&nbsp;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face=Arial>3.&nbsp;&nbsp;&nbsp;&nbsp; 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;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face=Arial>&nbsp;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face=Arial>4.&nbsp;&nbsp;&nbsp;&nbsp; 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:</font></p>

<p class=MsoNormal style='margin-left:.5in;text-align:justify;text-indent:-.5in'><font
size=2 face=Arial>&nbsp;</font></p>

<p class=MsoNormal style='margin-left:49.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face=Arial>a)&nbsp;&nbsp;&nbsp;&nbsp; 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;</font></p>

<p class=MsoNormal style='margin-left:49.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face=Arial>b)&nbsp;&nbsp;&nbsp;&nbsp; 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</font></p>

<p class=MsoNormal style='margin-left:49.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face=Arial>c)&nbsp;&nbsp;&nbsp;&nbsp; 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.</font></p>

<p class=MsoNormal style='text-align:justify'><font size=2 face=Arial>&nbsp;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face=Arial>5.&nbsp;&nbsp;&nbsp;&nbsp; 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):</font></p>

<p class=MsoNormal style='text-align:justify'><font size=2 face=Arial>&nbsp;</font></p>

<p class=MsoNormal style='margin-left:49.5pt;text-align:justify;text-indent:
- -22.5pt'><a name="OLE_LINK1"><font size=2 face=Arial>a)&nbsp;&nbsp;&nbsp;&nbsp; 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</font></a></p>

<p class=MsoNormal style='margin-left:49.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face=Arial>b)&nbsp;&nbsp;&nbsp;&nbsp; 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.</font></p>

<p class=MsoNormal style='text-align:justify'><font size=2 face=Arial>&nbsp;</font></p>

<p class=MsoNormal style='text-align:justify'><font size=2 face=Arial>&nbsp;</font></p>

<p class=MsoNormal style='text-align:justify'><font size=2 face=Arial>&nbsp;</font></p>

<p class=MsoNormal><font size=2 face=Arial>&nbsp;</font></p>

<p class=MsoNormal><font size=2 face=Arial>Boyd E. Hoback</font></p>

<p class=MsoNormal><i><font size=2 face=Arial>President and Chief
Executive Officer</font></i></p>

<p class=MsoFooter><font size=2 face=Arial>December 28, 2007</font></p>

<div class=MsoNormal align=center style='text-align:center'><font size=3
face="Times New Roman">

<hr size=2 width="100%" noshade style='color:navy' align=center>

</font></div>

<p class=MsoNormal style='line-height:1.0pt'><font size=3 face="Times New Roman">&nbsp;</font></p>

<p class=MsoNormal><font face=Arial>&nbsp;</font></p>



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<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>3
<FILENAME>exhibit311certcontroller1.htm
<TEXT>
<html>

<head>
<!-- Document Prepared With E-Services, LLC HTML Software-->
<!-- Copyright 2006 E-Services, LLC.-->
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<title>Exhibit 31</title>


</head>

<body lang=EN-US>



<p class=MsoNormal><u><font size=2 face="Microsoft Sans Serif">&nbsp;</font></u></p>

<p class=MsoNormal><u><font size=2 face="Microsoft Sans Serif">&nbsp;</font></u></p>

<p class=MsoNormal style='line-height:1.0pt'><font size=3 face="Times New Roman">&nbsp;</font></p>

<p class=MsoNormal style='line-height:1.0pt'><font size=3 face="Times New Roman">&nbsp;</font></p>

<p class=MsoHeader><font size=3 face="Times New Roman">&nbsp;</font></p>

<p class=MsoNormal style='line-height:1.0pt'><font size=3 face="Times New Roman">&nbsp;</font></p>

<p class=MsoNormal><u><font size=2 face="Microsoft Sans Serif">Exhibit
31.1</font></u></p>

<p class=MsoNormal align=center style='text-align:center'><b><font size=2
face="Microsoft Sans Serif">CERTIFICATION OF THE CONTROLLER</font></b></p>

<p class=MsoNormal><font size=2 face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face="Microsoft Sans Serif">I, Susan M. Knutson, certify
that:</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face="Microsoft Sans Serif">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; I have reviewed this
quarterly report on Form 10-QSB of Good Times Restaurants Inc.;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face="Microsoft Sans Serif">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face="Microsoft Sans Serif">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face="Microsoft Sans Serif">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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:</font></p>

<p class=MsoNormal style='margin-left:.5in;text-align:justify;text-indent:-.5in'><font
size=2 face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal style='margin-left:49.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face="Microsoft Sans Serif">a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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;</font></p>

<p class=MsoNormal style='margin-left:49.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face="Microsoft Sans Serif">b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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</font></p>

<p class=MsoNormal style='margin-left:49.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face="Microsoft Sans Serif">c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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.</font></p>

<p class=MsoNormal style='text-align:justify'><font size=2
face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal style='margin-left:22.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face="Microsoft Sans Serif">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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):</font></p>

<p class=MsoNormal style='text-align:justify'><font size=2
face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal style='margin-left:49.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face="Microsoft Sans Serif">a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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</font></p>

<p class=MsoNormal style='margin-left:49.5pt;text-align:justify;text-indent:
- -22.5pt'><font size=2 face="Microsoft Sans Serif">b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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.</font></p>

<p class=MsoNormal style='text-align:justify'><font size=2
face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal><font size=2 face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal><font size=2 face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal><font size=2 face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal><font size=2 face="Microsoft Sans Serif">Susan
M. Knutson</font></p>

<p class=MsoNormal><i><font size=2 face="Microsoft Sans Serif">Controller</font></i></p>

<p class=MsoFooter><font size=2 face="Microsoft Sans Serif">August
9, 2006</font></p>

<div class=MsoNormal align=center style='text-align:center'><font size=3
face="Times New Roman">

<hr size=2 width="100%" noshade style='color:navy' align=center>

</font></div>

<p class=MsoNormal style='line-height:1.0pt'><font size=3 face="Times New Roman">&nbsp;</font></p>

<p class=MsoNormal><font face="Microsoft Sans Serif">&nbsp;</font></p>



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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>4
<FILENAME>xhibit321ceocontroller1.htm
<TEXT>
<html>

<head>
<!-- Document Prepared With E-Services, LLC HTML Software-->
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<!-- All rights reserved EDGAR2.com -->



<title>Exhibit 32</title>


</head>

<body lang=EN-US>



<p class=MsoNormal><u><font size=2 face="Microsoft Sans Serif">&nbsp;</font></u></p>

<p class=MsoNormal><u><font size=2 face="Microsoft Sans Serif">&nbsp;</font></u></p>

<p class=MsoNormal style='line-height:1.0pt'><font size=3 face="Times New Roman">&nbsp;</font></p>

<p class=MsoNormal style='line-height:1.0pt'><font size=3 face="Times New Roman">&nbsp;</font></p>

<p class=MsoHeader><font size=3 face="Times New Roman">&nbsp;</font></p>

<p class=MsoNormal style='line-height:1.0pt'><font size=3 face="Times New Roman">&nbsp;</font></p>

<p class=MsoNormal><u><font size=2 face="Microsoft Sans Serif">Exhibit
32.1</font></u></p>

<p class=TitleC><b><font size=2 face="Microsoft Sans Serif">CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350, </font></b></p>

<p class=TitleC><b><font size=2 face="Microsoft Sans Serif">AS
ADOPTED PURSUANT TO</font></b></p>

<p class=TitleC><b><font size=2 face="Microsoft Sans Serif">SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002</font></b></p>

<p class=MsoNormal><font size=2 face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=BodyText5 style='text-align:justify'><font size=2
face="Microsoft Sans Serif">In
connection with the Quarterly Report on Form 10-QSB of Good Times Restaurants
Inc. (the &quot;Company&quot;) for the period ended June 30, 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.
&sect;&nbsp;1350, as adopted pursuant to &sect;&nbsp;906 of the Sarbanes-Oxley Act of
2002, that to the best of my knowledge and belief:</font></p>

<p class=BodyText5 style='text-align:justify'><font size=2
face="Microsoft Sans Serif">(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 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</font></p>

<p class=BodyText5 style='text-align:justify'><font size=2
face="Microsoft Sans Serif">(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company.</font></p>

<p class=MsoNormal><font size=2 face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal><font size=2 face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal><font size=2 face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal><font size=2 face="Microsoft Sans Serif">/s/
Boyd E. Hoback&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; /s/
Susan M. Knutson&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font></p>

<p class=MsoNormal><font size=2 face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal><font size=2 face="Microsoft Sans Serif">&nbsp;</font></p>

<p class=MsoNormal><font size=2 face="Microsoft Sans Serif">Boyd
E. Hoback&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Susan
M. Knutson</font></p>

<p class=MsoNormal><font size=2 face="Microsoft Sans Serif">Chief
Executive Officer&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Controller
(principal financial officer)</font></p>

<p class=MsoNormal><font size=2 face="Microsoft Sans Serif">August
9, 2006&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; August
9, 2006</font></p>

<p class=MsoFooter><font size=3 face="Times New Roman">&nbsp;</font></p>

<div class=MsoNormal align=center style='text-align:center'><font size=3
face="Times New Roman">

<hr size=2 width="100%" noshade style='color:navy' align=center>

</font></div>

<p class=MsoNormal style='line-height:1.0pt'><font size=3 face="Times New Roman">&nbsp;</font></p>

<p class=MsoNormal><font face="Microsoft Sans Serif">&nbsp;</font></p>



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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>5
<FILENAME>consent1.htm
<TEXT>
<html>

<head>
<!-- Document Prepared With E-Services, LLC HTML Software-->
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<title>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</title>



</head>

<body lang=EN-US>

























<p class=MsoNormal align=center style='text-align:center'><b>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM</b></p>







<p class=MsoNormal style='text-align:justify'>We
consent to the incorporation by reference of our report dated December 13, 2007,
accompanying the consolidated financial statements of Good Times Restaurants
Inc., also incorporated by reference in the Form S-8 Registration Statements
with registration numbers 333-60813, 333-98407, and 333-125150 and Form S-3
Registration Statement 333-122890 of Good Times Restaurants, Inc., and to the
use of our name and the statements with respect to us, as appearing under the
heading &quot;Experts&quot; in the Registration Statements.</p>









<p class=MsoNormal style='text-align:justify'><b><i>HEIN &amp; ASSOCIATES LLP</i></b><b> </b></p>



<p class=MsoNormal style='text-align:justify'>Denver, Colorado</p>

<p class=MsoFooter>December 26, 2007</p>

<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>







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