| UNITED STATES                                                                                                                                                                                                                                                                                               |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| SECURITIES  AND EXCHANGE COMMISSION                                                                                                                                                                                                                                                                         |
| Washington, D.C. 20549                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                             |
| FORM  10-QSB                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                             |
| QUARTERLY REPORT  UNDER SECTION 13 OR 15(d) OF                                                                                                                                                                                                                                                              |
| THE SECURITIES  EXCHANGE ACT OF 1934                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                             |
| For quarterly  period ended: March 31, 2008                                                                                                                                                                                                                                                                 |
| Commission file  number: 0-18590                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                             |
| GOOD TIMES  RESTAURANTS INC.                                                                                                                                                                                                                                                                                |
| (Exact name of  registrant as specified in its charter)                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                             |
| NEVADA                                                                                                                                                                                                                                                                                                      |
| (State or other  jurisdiction of incorporation or organization)                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                             |
| 84-1133368                                                                                                                                                                                                                                                                                                  |
| (I.R.S. Employer  Identification No.)                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                             |
| 601 CORPORATE  CIRCLE, GOLDEN, CO   80401                                                                                                                                                                                                                                                         |
| (Address of  principal executive offices)                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                             |
| (303) 384-1400                                                                                                                                                                                                                                                                                              |
| (Issuer's telephone  number)                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                             |
| (Former name, former  address and former fiscal year, since last report.)                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                             |
| 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. |
|                                                                                                                                                                                                                                                                                                             |
| [X]   Yes    [  ]    No                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                             |
| APPLICABLE  ONLY TO CORPORATE ISSUERS                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                             |
| Total number of  shares of stock outstanding at May 14, 2008.                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                             |
| 3,898,559 SHARES OF  COMMON STOCK, .001 PAR VALUE                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                             |
| Transitional Small  Business Disclosure Format (check one):  [  ]   Yes    [X ]  No                                                                                                                                                                                 |

----

**Form10-QSB**

**QuarterEnded March 31, 2008**

| ** ** | **INDEX**                                                   | **PAGE**     |
|------------|-------------------------------------------------------------|--------------|
|            |                                                             |              |
|            | **PART  I - FINANCIAL INFORMATION**                         |              |
|            |                                                             |              |
| Item  1.   | Financial Statements                                        |              |
|            |                                                             |              |
|            | Condensed Consolidated Balance Sheets -                     |              |
|            | March 31, 2008 and September 30, 2007                       | 3 - 4        |
|            |                                                             |              |
|            | Condensed  Consolidated Statements of Operations -          |              |
|            | For the three and  six months ended March 31, 2008 and 2007 | 5            |
|            |                                                             |              |
|            | Condensed  Consolidated Statements of Cash Flow -           |              |
|            | For the six months  ended March 31, 2008 and 2007           | 6            |
|            |                                                             |              |
|            | Notes  to Financial Statements                              | 7 - 10       |
|            |                                                             |              |
| Item  2.   | Management's  Discussion and Analysis                       | 10 - 17      |
|            |                                                             |              |
| Item  3.   | Quantitative  and Qualitative Disclosures About Market Risk | 17           |
|            |                                                             |              |
| Item  4.   | Controls  and Procedures                                    | 17           |
|            |                                                             |              |
|            | **PART  II - OTHER INFORMATION**                            |              |
|            |                                                             |              |
| Item  1.   | Legal  Proceedings                                          | 18           |
|            |                                                             |              |
| Item  2.   | Changes  in Securities and Use of Proceeds                  | 18           |
|            |                                                             |              |
| Item  3.   | Defaults  Upon Senior Securities                            | 18           |
|            |                                                             |              |
| Item  4.   | Submission  of Matters to a Vote of Security Holders        | 18           |
|            |                                                             |              |
| Item  5.   | Other  Information.                                         | 18           |
|            |                                                             |              |
| Item  6.   | Exhibits  and Reports on Form 8-K                           | 18           |
|            |                                                             |              |
|            | **SIGNATURES**                                              | 18           |
|            | ** **                                                  |              |
|            | **CERTIFICATIONS**                                          | Exhibit 31.1 |
|            | ** **                                                  | Exhibit 32.1 |

2

----

**PART I - FINANCIALINFORMATION**

** **

**ITEM1.     FINANCIAL STATEMENTS**

**GOOD TIMESRESTAURANTS INC. AND SUBSIDIARIES**

**CONDENSEDCONSOLIDATED BALANCE SHEETS**

**ASSETS**

**                 (Unaudited)                  **

|                                                                                                                                                                                                       |    March 31,           |        | September 30,                   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|--------|---------------------------------|
|                                                                                                                                                                                                       | 2008                                  |        | 2007                            |
| CURRENT  ASSETS:                                                                                                                                                                                      |                                       |        |                                 |
|       Cash  and cash equivalents                                                                                                                                             | $1,819,000                            |        | $2,465,000                      |
|       Receivables,  net of allowance for doubtful                   accounts of $0 | 258,000                               |        | 187,000                         |
|       Prepaid  expenses and other                                                                                                                                            | 91,000                                |        | 39,000                          |
|       Inventories                                                                                                                                                            | 229,000                               |        | 191,000                         |
|       Notes  receivable                                                                                                                                                      |      60,000       |   |      88,000 |
|            Total  current assets                                                                                                                    | 2,457,000                             |        | 2,970,000                       |
|                                                                                                                                                                                                       |                                       |        |                                 |
| PROPERTY  AND EQUIPMENT, at cost:                                                                                                                                                                     |                                       |        |                                 |
|       Land  and building                                                                                                                                                     | 5,511,000                             |        | 5,252,000                       |
|       Leasehold  improvements                                                                                                                                                | 3,858,000                             |        | 3,737,000                       |
|       Fixtures  and equipment                                                                                                                                                |  7,975,000                       |   |   7,798,000                |
|                                                                                                                                                                                                       | 17,344,000                            |        | 16,787,000                      |
|                                                                                                                                                                                                       |                                  |        |                            |
|       Less  accumulated depreciation and amortization                                                                                                                        | (9,948,000)                           |        | (9,371,000)                     |
|                                                                                                                                                                                                       | 7,396,000                             |        | 7,416,000                       |
|                                                                                                                                                                                                  |                                  |   |                            |
|        Assets held for sale                                                                                                                                                  | 183,000                               |   | 779,000                         |
|                                                                                                                                                                                                  |                                  |   |                            |
| OTHER  ASSETS:                                                                                                                                                                                        |                                  |   |                            |
|       Notes  receivable, net of current portion                                                                                                                              | 35,000                                |        | 300,000                         |
|       Deposits  and other assets                                                                                                                                             |       78,000 |        |      79,000 |
|                                                                                                                                                                                                       |     113,000            |        |    379,000            |
|                                                                                                                                                                                                       |                                       |        |                                 |
| TOTAL  ASSETS                                                                                                                                                                                         | $10,149,000                           |        | $11,544,000                     |
|                                                                                                                                                                                                       |                                       |        |                                 |

###  

### LIABILITIES AND STOCKHOLDERS' EQUITY

| CURRENT  LIABILITIES:                                                                           |                        |        |                        |
|-------------------------------------------------------------------------------------------------|------------------------|--------|------------------------|
|       Current  maturities of long-term debt                            | $  121,000        |        | $ 870,000              |
|       Accounts  payable                                                | 378,000                |        | 387,000                |
|       Deferred  income                                                 | 69,000                 |        | 119,000                |
|       Other  accrued liabilities                                       |    1,181,000 |        |    1,062,000 |
|             Total  current liabilities   | 1,749,000              |        | 2,438,000              |
|                                                                                                 |                        |        |                        |
| LONG-TERM  LIABILITIES:                                                                         |                   |   |                   |
|       Debt, net of  current portion                                    | 910,000                |        | 970,000                |
|       Deferred  liabilities                                            | 1,086,000              |        | 1,052,000              |
|             Total  long-term liabilities | 1,996,000              |        | 2,022,000              |
|                                                                                                 |                        |        |                        |
| MINORITY INTERESTS IN PARTNERSHIPS                                                              | 668,000                |        | 751,000                |

See accompanying notes to condensed consolidatedfinancial statements

3

----

**GOOD TIMESRESTAURANTS INC. AND SUBSIDIARIES**

**CONDENSEDCONSOLIDATED BALANCE SHEETS (Continued)**

** **

**                                                    (Unaudited)**

|                                                                                                                               | March 31,              |   | September 30,          |
|------------------------------------------------------------------------------------------------------------------------------------|------------------------|--------|------------------------|
|                                                                                                                               | 2008                   |   | 2007                   |
| STOCKHOLDERS'  EQUITY:                                                                                                             |                   |   |                   |
| Preferred  stock, $.01 par value;                                                                                                  |                        |        |                        |
|             5,000,000  shares authorized, none issued                       |                        |        |                        |
|             and  outstanding as of September 30, 2007 and                   |                        |        |                        |
|             March 31, 2008                                                  | -                      |        | -                      |
|                                                                                                                                    |                        |        |                        |
| Common  stock, $.001 par value; 50,000,000 shares                                                                                  |                        |        |                        |
|             Authorized,  3,898,559 shares issued and                        |                        |        |                        |
|             Outstanding  as of March 31, 2008 and                           |                        |        |                        |
|             3,866,896  shares issued and outstanding as                     |                        |        |                        |
|             of  September 30, 2007                                          | 4,000                  |        | 4,000                  |
|              Accumulated other comprehensive loss                           | (87,000)               |        | (26,000)               |
|             Capital  contributed in excess of par value                     | 17,528,000             |        | 17,439,000             |
|             Accumulated  deficit                                            | (11,709,000)           |        | (11,084,000)           |
|                   Total  stockholders' equity |    5,736,000 |        |    6,333,000 |
|                                                                                                                                    |                        |        |                        |
| TOTAL  LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                        | $ 10,149,000           |   | $11,544.000            |

Seeaccompanying notes to condensed consolidated financial statements

4

----

**GOOD TIMESRESTAURANTS INC. AND SUBSIDIARIES**

**CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS**

**(Unaudited)**

|                                                                                               | **Three Months Ended March 31,**                                                       | **Six Months Ended March 31,** |
|----------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------|--------------------------------|
|                                                                                                    | **2008**                                                                               | ** **                     | **2007** |  | **2008** | ** ** | **2007** |
| NET  REVENUES:                                                                                     |                                                                                        |                                |  |  |  |  |  |
|       Restaurant sales, net                                                    | $5,883,000                                                                             |                                | $5,365,000 |  | $11,918,000 |  | $10,532,000 |
|       Franchise revenues                                                       |     160,000                                                             |                           |     211,000 |   |       322,000 |   |       337,000 |
|            Total revenues                             | 6,043,000                                                                              |                                | 5,576,000 |  | 12,240,000 |  | 10,869,000 |
|                                                                                                    |                                                                                        |                                |  |  |  |  |  |
| RESTAURANT  OPERATING COSTS:                                                                       |                                                                                        |                                |  |  |  |  |  |
|       Food and packaging costs                                                 | 1,829,000                                                                              |                                | 1,633,000 |  | 3,675,000 |  | 3,212,000 |
|       Payroll and other employee benefit costs                                 | 2,149,000                                                                              |                                | 1,906,000 |  | 4,278,000 |  | 3,705,000 |
|       Occupancy and other operating costs                                      | 1,179,000                                                                              |                                | 1,038,000 |  | 2,297,000 |  | 2,090,000 |
|       Accretion of deferred rent                                               | 8,000                                                                                  |                                | 10,000 |  | 15,000 |  | 20,000 |
|       Opening costs                                                            | -                                                                                      |                           | 2,000 |   | - |   | 2,000 |
|       Depreciation and amortization                                            |     314,000                                                             |                           |     296,000 |   |      623,000 |   |       595,000 |
|            Total restaurant operating costs           | 5,479,000                                                                              |                                | 4,885,000 |  | 10,888,000 |  | 9,624,000 |
|                                                                                                    |                                                                                        |                           |  |   |  |  |  |
|       General and administrative costs                                         | 484,000                                                                                |                           | 438,000 |   | 1,039,000 |  | 899,000 |
|       Advertising costs                                                        | 361,000                                                                                |                                | 345,000 |  | 731,000 |  | 672,000 |
|       Franchise costs                                                          | 91,000                                                                                 |                                | 57,000 |  | 188,000 |  | 92,000 |
|       (Gain) loss on sale of restaurant building and equipment                 |      (11,000)                                                      |                                |        (7,000) |  |       (19,000) |  |       (15,000) |
|                                                                                                    |                                                                                        |                                |  |  |  |  |  |
| LOSS  FROM OPERATIONS                                                                              | (361,000)                                                                              |                                | (142,000) |  | (587,000) |  | (403,000) |
|                                                                                                    |                                                                                        |                                |  |  |  |  |  |
| OTHER  INCOME AND (EXPENSES):                                                                      |                                                                                        |                                |  |  |  |  |  |
|       Minority income (expense), net                                           | (9,000)                                                                                |                                | (18,000) |  | (41,000) |  | (30,000) |
|       Interest, net                                                            |                - |                                |         14,000 |  |          3,000 |  |         29,000 |
|            Total other income and (expenses)          |       (9,000)                                                 |                                |        (4,000) |  |       (38,000) |  |       (1,000) |
|                                                                                                    |                                                                                   |                           |   |   |   |   |   |
| NET  LOSS                                                                                          | ($370,000)                                                                             |                           | ($146,000) |   |     (625,000) |   |     (404,000) |
|                                                                                                    |                                                                                   |                           |   |   |   |   |   |
| BASIC  AND DILUTED NET LOSS PER COMMON SHARE                                                       |         ($.10)                                           |                           |         ($.04) |   |          ($.16) |   |          ($.11) |
|                                                                                                    |                                                                                        |                                |  |  |  |  |  |
| WEIGHTED  AVERAGE COMMON SHARES AND EQUIVALENTS

USED  IN PER SHARE CALCULATION: BASIC AND DILUTED | 3,878,833                                                                              |                                | 3,840,314 |  | 3,876,300 |  | 3,829,407 |

Seeaccompanying notes to condensed consolidated financial statements

----

**GOODTIMES RESTAURANTS INC. AND SUBSIDIARIES**

**CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

|  | For the Six Months  Ended

March 31, |
|--|--------------------------------------|

|                                                                                                                                                     | 2008                             |  | 2007                                                                              |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------|--|-----------------------------------------------------------------------------------|
| CASH FLOWS FROM  OPERATING ACTIVITIES:                                                                                                              |                                  |  |                                                                                   |
|      Net  loss                                                                                                                  | ($625,000)                       |  | ($404,000)                                                                        |
|      Adjustments  to reconcile net loss to net cash                                                                             |                                  |  |                                                                                   |
|         provided by (used in) operating activities:                                                                        |                                  |  |                                                                                   |
|          Depreciation  and amortization                                                                     | 623,000                          |  | 595,000                                                                           |
|          Stock  based compensation expense                                                                  | 48,000                           |  | 41,000                                                                            |
|          Accretion  of deferred rent                                                                        | 15,000                           |  | 20,000                                                                            |
|          Minority  interest                                                                                 | 41,000                           |  | 30,000                                                                            |
|          Recognition  of deferred (gain) on sale of restaurant building                                     | (16,000)                         |  | (15,000)                                                                          |
|           Loss (gain) on sale of assets                                                                     |  (3,000)                    |  | -                                                                                 |
|          Changes  in operating assets and liabilities:                                                      |                                  |  |                                                                                   |
|               (Increase)  decrease in:                                             |                                  |  |                                                                                   |
|                  Receivables  and other                             | (107,000)                        |  | (142,000)                                                                         |
|                  Inventories                                        |  (24,000)                   |  | 1,000                                                                             |
|                  Deposits  and other                                | (3,000)                          |  | 0                                                                                 |
|             (Decrease)  increase in:                                                         |                                  |  |                                                                                   |
|                  Accounts  payable                                  | (9,000)                          |  | 54,000                                                                            |
|                  Accrued  liabilities and deferred income           |      62,000  |  | 170,000                                                                           |
|          Net  cash provided by operating activities                                                         |    2,000               |  | 350,000                                                                           |
|                                                                                                                                                     |                                  |  |                                                                                   |
| CASH FLOWS USED IN  INVESTING ACTIVITIES                                                                                                            |                                  |  |                                                                                   |
|      Payments  for the purchase of property and equipment                                                                       | (276,000)                        |  | (1,366,000)                                                                       |
|      Proceeds  from sale of fixed assets                                                                                        | 747,000                          |  | -                                                                                 |
|      Purchase  of franchisee assets                                                                                             | (272,000)                        |  | -                                                                                 |
|      Payments  received on loans to franchisees and to others                                                                   |     43,000        |  |       51,000                                                  |
|                Net  cash provided by (used in) investing activities           | 242,000                          |  | (1,315,000)                                                                       |
|                                                                                                                                                     |                                  |  |                                                                                   |
| CASH FLOWS FROM  FINANCING ACTIVITIES:                                                                                                              |                                  |  |                                                                                   |
|      Principal  payments on notes payable, capital leases, and long-term debt                                                   | (59,000)                         |  | (116,000)                                                                         |
|      Net  repayments on revolving lines of credit                                                                               | (750,000)                        |  | (150,000)                                                                         |
|      Proceeds  from exercise of options                                                                                         | 41,000                           |  | 90,000                                                                            |
|      Distributions,  net of contributions paid to minority interests in partnerships                                            |   (122,000)                 |  | (108,000)                                                                         |
|                Net  cash used in financing activities                         | (890,000)                        |  | (284,000)                                                                         |
|                                                                                                                                                     |                                  |  |                                                                                   |
| NET CHANGE IN CASH AND CASH EQUIVALENTS                                                                                                             | (646,000)                        |  | ($1,249,000)                                                                      |
|                                                                                                                                                     |                                  |  |                                                                                   |
| CASH AND CASH EQUIVALENTS, beginning of period                                                                                                      | $2,465,000                       |  | $2,613,000                                                                        |
|                                                                                                                                                     |                                  |  |                                                                                   |
| CASH AND CASH EQUIVALENTS, end of period                                                                                                            | $1,819,000                       |  | $1,364,000                                                                        |
|                                                                                                                                                     |                                  |  |                                                                                   |
| SUPPLEMENTAL  DISCLOSURES OF CASH FLOW INFORMATION:                                                                                                 |                                  |  |                                                                                   |
|      Cash  paid for interest                                                                                                    | $     41,000 |  | $     21,000                                                  |
|      Non-Cash  - Acquisition price of franchise stores for forgiveness of notes        receivable | $   250,000            |  | $              0 |

Seeaccompanying notes to condensed consolidated financial statements

----

**GOOD TIMESRESTAURANTS INC. AND SUBSIDIARIES**

**NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**Note 1. Basis of Presentation**

Inthe opinion of management, the accompanying unaudited condensed consolidatedfinancial statements contain all of the normal recurring adjustments necessaryto present fairly the financial position of the Company as of March 31, 2008, the results of its operations and its cash flows for the three and sixmonth periods ended March 31, 2008.  Operating results for the three and sixmonth periods ended March 31, 2008 are not necessarily indicative of theresults that may be expected for the year ending September 30, 2008.

Thecondensed consolidated balance sheet as of September 30, 2007 is derived from the audited financial statements, but does not include all disclosuresrequired by generally accepted accounting principles.  As a result, thesefinancial statements should be read in conjunction with the Company's Form10-KSB for the fiscal year ended September 30, 2007.

Certainprior year balances have been reclassified to conform to the current year'spresentation. Such reclassifications had no effect on the net loss.

**Note 2. Recent Developments**

On December 3, 2007, we entered into a development agreement with Zen PartnersLLC that is comprised of a Development Agreement, a Management Agreement and aSite Selection, Construction Management and Pre-Opening Services Agreement. The agreements provide for the development of up to twenty five restaurantswith a five year development schedule for up to ten of the restaurants with anoption to develop an additional fifteen restaurants, exercisable any timeduring the initial five year period.   We will manage and operate therestaurants utilizing our employees on the same basis as we would company-ownedrestaurants; however the Zen Partners LLC will provide all development andoperating capital.  We will receive a fixed fee for the development of eachrestaurant and a recurring management fee based on a percentage of sales forthe operation of the restaurants.   We may provide a limited lease guarantee onthe initial three restaurants developed, for which we will receive anadditional recurring guarantee fee.  We will also participate in the ongoingprofitability of the restaurants after Zen Partners LLC has received a priorityreturn on its invested capital.  A member of our Board of Directors andsignificant shareholder, David Grissen, is an owner of Zen Partners LLC.

On March 1, 2008, we purchased two restaurants from anexisting franchisee for total consideration of $1,330,000. We thensimultaneously sold the land, building and improvements related to one of therestaurants in a sale-leaseback transaction, proceeds of which were used forthe purchase of the restaurants. Net cash used in the purchase transaction was$272,000. After accounting for both the acquisition and the sale-leaseback assetsof $490,000 were recorded, a deferred gain of $26,000 was recognized as a costof the consideration and notes receivable due from the franchisee of $250,000were forgiven. We believe the $1,330,000 represents the fair value of thefranchisee acquired.

**Note 3. Stock-BasedCompensation**

Effective October 1, 2006, the Company adopted theprovisions of Statement of Financial Accounting Standard ("SFAS") No. 123(R), *Share-BasedPayment*, using the modified prospective application transition method.Under the provisions of SFAS 123(R), stock-based compensation is measured atthe grant date, based on the calculated fair value of the award, and isrecognized as an expense over the requisite employee service period (generallythe vesting period of the grant).

----

TheCompany measures the compensation cost associated with share-based payments byestimating the fair value of stock options as of the grant date using theBlack-Scholes option pricing model. The Company believes that the valuationtechnique and the approach utilized to develop the underlying assumptions areappropriate in calculating the fair values of the Company's stock optionsgranted during all years presented. Estimates of fair value are not intended topredict actual future events or the value ultimately realized by the employeeswho receive equity awards.

Our net loss for the six months ended March 31, 2008 and March 31, 2007 includes $48,000 and $41,000, respectively, of compensation costsrelated to our stock-based compensation arrangements.

During the six months ended March 31, 2008, we granted 12,000 non-statutory stock options and 16,700 incentive stock options both withexercise prices of $5.75. The per share weighted average fair values were $3.26for non-statutory stock option grants and $3.10 for incentive stock optiongrants.

In addition to the exercise and grant date prices of theawards, certain weighted average assumptions that were used to estimate thefair value of stock option grants are listed in the following table:

|                          | **Incentive Stock  Options** | **Non-Statutory Stock  Options** |
|--------------------------|------------------------------|----------------------------------|
| Expected  term (years)   | **6.0 **                | **6.7 **                    |
| Expected  volatility     | **51%**                      | **51%**                          |
| Risk-free  interest rate | **4.4%**                     | **4.4%**                         |
| Expected  dividends      | **0**                        | **0**                            |

We estimate expected volatility based on historicalweekly price changes of our common stock for a period equal to the currentexpected 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 theexpected term of the options. The expected option term is the number of yearswe estimate that options will be outstanding prior to exercise consideringvesting schedules and our historical exercise patterns.

SFAS123(R) requires the cash flows resulting from the tax benefits for taxdeductions in excess of the compensation expense recorded for those options(excess tax benefits) to be classified as financing cash flows. These excesstax benefits were $0 for the quarter ended March 31, 2008.

Asummary of stock option activity under our share-based compensation plan forthe six months ended March 31, 2008 is presented in the following table:

| ** **                | ** **

** **

** **

** Options** | ** **

** **

**Weighted Average Exercise  Price** | **Weighted Average  Remaining Contractual**

**Life (Yrs.)** | ** **

** **

**Aggregate Intrinsic  Value** |
|---------------------------|-------------------------------------------------------|--------------------------------------------------------------|--------------------------------------------------------------|--------------------------------------------------------|
| Outstanding-beg  of year  |  366,905                                         | $3.89                                                        |                                                              |                                                        |
| Granted                   |  28,700                                          | $5.75                                                        |                                                              |                                                        |
| Exercised                 | (11,963)                                              | $3.42                                                        |                                                              |                                                        |
| Forfeited  or expired     |          -    |         -                 |                                                              |                                                        |
| Outstanding  Mar 31, 2008 | 383,642                                               | $4.04                                                        | 5.5                                                          | $574,000                                               |
|                           |                                                       |                                                              |                                                              |                                                        |
| Exercisable  Mar 31, 2008 | 319,444                                               | $3.61                                                        | 4.8                                                          | $574,000                                               |

Asof March 31, 2008, the total remaining unrecognized compensation cost relatedto unvested stock-based arrangements was $185,000 and is expected to berecognized over a period of 3.25 years.

Thetotal intrinsic value of stock options exercised during the six months ended March 31, 2008, was $32,000. Cash received from stock option exercises for the six monthsended March 31, 2008 was $41,000.

8

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** **

** **

**Note 4. Comprehensive Income (Loss)**

Comprehensive incomeincludes net income or loss, changes in certain assets and liabilities that arereported directly in equity such as adjustments resulting from unrealized gainsor losses on held-to-maturity investments and certain hedging transactions.

In May 2007, theCompany entered into an interest rate swap agreement, designated as a cash flowhedge, which hedges the Company's exposure to interest rate fluctuations on theCompany's floating rate $1,100,000 term loan. The Company records the fairvalue of these contracts in the balance sheet, with the offset to othercomprehensive loss. The contract requires monthly settlements of the differencebetween the amounts to be received and paid under the agreement, the amount ofwhich is recognized in current earnings as interest expense.

**Note5. Contingent Liabilities**

We remaincontingently liable on various restaurant leases that were previously sold.  Wehave never experienced any losses nor do we anticipate any future losses fromthese contingent liabilities.

**Note 6. Assets Heldfor Sale**

We have classified $183,000as assets held for sale in the accompanying condensed consolidated balancesheet.  These costs are related to four sites for new construction, all ofwhich are under development and are expected to be marketed in the sale-lease backmarket.

**Note 7. AccountingPolicies**

In June 2006, theFASB issued FIN 48, "Accounting for Uncertainty in Income Taxes - aninterpretation of FASB Statement 109," which clarifies the accounting foruncertainty in income taxes recognized in an enterprise's financial statementsin accordance with FAS 109, "Accounting for Income Taxes."  FIN 48provides interpretive guidance for the financial statement recognition andmeasurement of a tax position taken, or expected to be taken, in a tax return.FIN 48 requires the affirmative evaluation that it is more-likely-than-not,based on the technical merits of a tax position, that an enterprise is entitledto economic benefits resulting from positions taken in income tax returns. If atax position does not meet the "more-likely-than-not" recognition threshold,the benefit of that position is not recognized in the financial statements. FIN 48 was effective for the fiscal year beginning October 1, 2007 and there is no cumulative effect of applying FIN 48.

**Note 8. Income Taxes**

On October 1, 2007, the Company adopted the provisions of FIN 48. There were no material taxpositions not meeting the "more-likely-than-not" recognition threshold andtherefore there is no cumulative effect of applying FIN 48.

Although the Companyhas not incurred interest and penalties associated with unrecognized taxbenefits; future interest and penalties associated with unrecognized taxbenefits, if any, will be recognized in income tax expense in the ConsolidatedStatements of Operations and the corresponding liability in income taxespayable or income taxes receivable, net on the Consolidated Balance Sheets. 

The Company iscurrently not undergoing any examinations by any taxing jurisdictions, with thetax years for the Fiscal Years Ending September 30, 2003 through 2007 remaining open to examination.

9

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**Note 9. NewAccounting Pronouncements**

In February 2007, theFASB issued SFAS No. 159, "The Fair Value Option for Financial Assets andFinancial Liabilities - including an amendment of FASB Statement No. 115"("SFAS 159"). SFAS 159 provides companies with an option to report selectedfinancial assets and financial liabilities at fair value. Unrealized gains andlosses on items for which the fair value option has been elected are reportedin earnings at each subsequent reporting date. SFAS 159 is effective for fiscalyears beginning after November 15, 2007 which will be effective for ourfiscal year beginning October 1, 2008. The adoption of this statement is notexpected to have a material impact on the Company's financial position orresults of operations.

In December 2007, theFASB issued FASB Statement No. 141 (revised 2007), "Business Combinations"("FAS 141(R)"), which establishes accounting principles and disclosurerequirements for all transactions in which a company obtains control overanother business.  This accounting pronouncement is effective forfiscal years beginning after December 15, 2008, which will be effective for ourfiscal year beginning October 1, 2009. We are currently evaluating therequirements of FAS 141 and have not yet determined the impact on our financialstatements.

In December 2007, theFASB issued FASB Statement No. 160, "Noncontrolling Interests in ConsolidatedFinancial Statements and amendment to ARB No. 51" ("FAS 160").  Thisstandard prescribes the accounting by a parent company for minority interestsheld by other parties in a subsidiary of the parent company.  FAS 160is effective for fiscal years beginning after December 15, 2008, which will be effective for our fiscal year beginning October 1, 2009.  We are currently evaluating the requirements of FAS 160 and have not yetdetermined the impact on our financial statements.

In March 2008, theFASB issued SFAS No. 161, "Disclosures about Derivative Instruments and HedgingActivities" ("SFAS 161").  SFAS 161 amends and expands thedisclosure requirements in SFAS 133, "Accounting for Derivative Instruments andHedging Activities".  SFAS 161 is effective for fiscal years and interim periodsbeginning after November 15, 2008, which will be effective for our interimperiod beginning January 1, 2009. We are currently evaluating therequirements of FAS 161 and have not yet determined the impact on our financialstatements.

**Note 10. StockTransactions**

None.

**ITEM 2.      MANAGEMENT'SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION**

**                  AND RESULTS OF OPERATIONS FOR THE COMPANY**

### General

ThisForm 10-QSB contains or incorporates by reference forward-looking statementswithin the meaning of Section 27A of the Securities Act of 1933, as amended andthe disclosure of risk factors in the Company's form 10-KSB for the fiscal yearended September 30, 2007.  Also, documents subsequently filed by us with theSEC and incorporated herein by reference may contain forward-lookingstatements.  We caution investors that any forward-looking statements made byus are not guarantees of future performance and actual results could differmaterially from those in the forward-looking statements as a result of variousfactors, including but not limited to the following:

(I)         Wecompete with numerous well established competitors who have substantiallygreater financial resources and longer operating histories than we do. Competitors have increasingly offered selected food items and combinationmeals, including hamburgers, at discounted prices, and continued discounting bycompetitors may adversely affect revenues and profitability of Companyrestaurants.

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(II)        Wemay be negatively impacted if we experience consistent same store salesdeclines.  Same store sales comparisons will be dependent, among other things,on the success of our advertising and promotion of new and existing menuitems.  No assurances can be given that such advertising and promotions will infact be successful.

Wemay also be negatively impacted by other factors common to the restaurantindustry such as: changes in consumer tastes away from red meat and friedfoods; increases in the cost of food, paper, labor, health care, workers'compensation or energy; inadequate number of hourly paid employees; and/ordecreases in the availability of affordable capital resources.  We caution thereader that such risk factors are not exhaustive, particularly with respect tofuture filings.

*Restaurant Locations*

Wecurrently operate and franchise a total of fifty-two Good Times restaurants, ofwhich forty-seven are in Colorado, with forty-two in the Denver greater metropolitanarea, three in Colorado Springs, one in Grand Junction and one in Silverthorne.Eight of these restaurants are "dual brand", operated pursuant to a Dual BrandTest Agreement with Taco John's International, of which there is one in North Dakota, two in Wyoming, and five in Colorado.

| ** **                              | ** **

** **

**Total** | **Denver****, CO**

**Greater Metro** | ** **

**Colorado**

**Other** | ** **

** **

**Idaho** | ** **

** **

**Wyoming** | ** **

**North Dakota** |
|-----------------------------------------|-----------------------------------|---------------------------------------|-------------------------------------|-----------------------------------|-------------------------------------|------------------------------|
| Good  Times co-owned & co-developed | 26                                | 23                                    | 3                                   |                                   |                                     |                              |
| Good  Times franchised                  | 18                                | 14                                    | 2                                   | 1                                 | 1                                   |                              |
| Dual  brand co-owned                    | 3                                 | 3                                     |                                     |                                   |                                     |                              |
| Dual  brand franchised                  | 5                                 | 2                                     |                                     |                                   | 2                                   | 1                            |
| **Total**                               | **52**                            | **42**                                | **5**                               | **1**                             | **3**                               | **1**                        |

**April**

|                                | **2007** | **2008** |
|--------------------------------|----------|----------|
| Company-owned restaurants      | 17       | 20       |
| Joint venture restaurants      | 9        | 9        |
| Franchise operated restaurants | 26       | 23       |
| **Total restaurants**          | **52**   | **52**   |

Infiscal 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.  In May 2007 we sold one existing company-owned restaurant to anew franchisee.  One new franchised Good Times restaurant opened in Longmont, Colorado in March 2007, and two new franchised dual brand restaurants opened inFebruary 2007, one in Gillette, Wyoming and one in Dickinson, North Dakota.  Fiveadditional Good Times restaurants are under various stages of development andentitlement, two in Colorado and three in Omaha, Nebraska and one additionaldual brand restaurant is under development in Sheridan, Wyoming.

InJanuary 2008 a North Dakota franchisee terminated their Good Times franchiseagreement in the dual brand concept and has stopped selling Good Times productsin their two locations. In March 2008 we purchased two Good Times restaurantsfrom an existing franchisee. 

Thefollowing presents certain historical financial information of our operations. This financial information includes results for the three and six months ended March 31, 2007 and results for the three and six months ended March 31, 2008.

11

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**Resultsof Operations**

*NetRevenues*

Netrevenues for the three months ended March 31, 2008 increased $467,000 (8.4%) to $6,043,000 from $5,576,000 for the three months ended March 31, 2007.  Same store restaurant sales increased $172,000 (4%) during the three months ended March 31, 2008 for the restaurants that were open for the full three month periods ending March 31, 2008 and March 31, 2007.  Restaurants are included in same store sales afterthey have been open a full fifteen months and only Good Times restaurants areincluded with dual branded restaurants excluded.  Restaurant sales increased $363,000due to five company-owned restaurants not included in same store sales. Twowere opened in late fiscal 2007 and three are dual branded restaurants. Restaurantsales increased $108,000 due to two restaurants purchased from a franchisee inMarch 2008. Restaurant sales also increased $45,000 due to one non-traditionalcompany-owned restaurant not included in same store sales. Restaurant salesdecreased $170,000 due to one company-owned restaurant sold to a franchisee inMay 2007.

Netrevenues for the six months ended March 31, 2008 increased $1,371,000 (12.6%) to $12,240,000 from $10,869,000 for the six months ended March 31, 2007.  Same store restaurant sales increased $631,000 (7.6%) during the six months ended March 31, 2008 for the restaurants that were open for the full six month periods ending March 31, 2 008 and March 31, 2007.  Restaurants are included in same store sales afterthey have been open a full fifteen months and only Good Times restaurants areincluded with dual branded restaurants excluded.  Restaurant sales increased $816,000due to six company-owned restaurants not included in same store sales. Threewere opened beginning in late fiscal 2006 through fiscal 2007 and three aredual branded restaurants. Restaurant sales increased $108,000 due to tworestaurants purchased from a franchisee in March 2008. Restaurant sales alsoincreased $157,000 due to one non-traditional company-owned restaurant notincluded in same store sales.  Restaurant sales decreased $326,000 due to onecompany-owned restaurant sold to a franchisee in May 2007.

Oursame store restaurant sales were severely impacted by adverse weatherconditions in the Denver, Colorado metropolitan area in December 2006.  Thesevere weather caused store closures and limited operating hours on twoseparate occasions during December 2006. In December 2007 we were againimpacted by below average weather conditions in the Denver metropolitan area. 

Franchiserevenues for the three months ended March 31, 2008 decreased $51,000 to $160,000 from $211,000 for the three months ended March 31, 2007 primarily due to a decrease in franchise fee income. Same store Good Times franchiserestaurant sales increased 2.5% during the three months ended March 31, 2008 for the franchise restaurants that were open for the full three month periodsending March 31, 2008 and March 31, 2007.  Franchise restaurant sales increased$181,000 during the three months ended March 31, 2008 from one Good Times restaurant that opened in March 2007 and dual branded franchise restaurant sales decreased$268,000 during the three months ended March 31, 2008 due to the closing of two restaurants in January 2008.

Franchiserevenues for the six months ended March 31, 2008 decreased $15,000 to $322,000 from $337,000 for the six months ended March 31, 2007 due to an increase in franchise royalties offset by a $50,000 decrease in franchise fee income.Same store Good Times franchise restaurant sales increased 5.5% during the sixmonths ended March 31, 2008 for the franchise restaurants that were open forthe full six month periods ending March 31, 2008 and March 31, 2007.  Franchise restaurant sales increased $403,000 during the six months ended March 31, 2008 from one Good Times restaurant that opened in March 2007 anddual branded franchise restaurant sales decreased $118,000 during the six monthsended March 31, 2008 due to the closing of two restaurants in January 2008.

*RestaurantOperating Costs*

Restaurantoperating costs as a percent of restaurant sales were 93.1% during the threemonths ended March 31, 2008 compared to 91.1% in the same prior year period andwere 91.4% during both six month periods ending March 31, 2008 and March 31, 2007.

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Thechanges in restaurant-level costs are explained as follows:

|                                                             | Three  Months Ended

March   31, 2008 | Six Months  Ended

March   31, 2008 |
|-------------------------------------------------------------|---------------------------------------|-------------------------------------|
| Restaurant-level  costs for the period ended March 31, 2007 | 91.1%                                 | 91.4%                               |
| Increase  in food and packaging costs                       | .7%                                   | .4%                                 |
| Increase  in payroll and other employee benefit costs       | 1.0%                                  | .7%                                 |
| Increase  (decrease) in occupancy and other operating costs | .6%                                   | (.6%)                               |
| Decrease  in depreciation and amortization                  | (.2%)                                 | (.4%)                               |
| Decrease  in opening costs and deferred rent                | (.1%)                                 | (.1%)                               |
| Restaurant-level costs for the  period ended March 31, 2008 | 93.1%                                 | 91.4%                               |

* *

*Foodand Packaging Costs*

Forthe three months ended March 31, 2008 our food and paper costs, increased $196,000to $1,829,000 (31.1% of restaurant sales) from $1,633,000 (30.4% of restaurantsales) compared to the same prior year period.

Forthe six month ended March 31, 2008 our food and paper costs increased $463,000to $3,675,000 (30.8% of restaurant sales) from $3,212,000 (30.5% of restaurantsales) for the same prior year period.

Ourweighted food and packaging costs increased approximately 7% during fiscal 2007and have increased approximately 3% in fiscal 2008. We have taken weighted menuprice increases of 1.8% in January 2007, 2.3% in July 2007.and 3.3% in October2007 to offset the food and packaging cost increases. We anticipate moderate increasesto food and packaging costs as a percentage of sales and moderate menu priceincreases for the balance of fiscal 2008.

*Payroll**and Other Employee Benefit Costs*

Forthe three months ended March 31, 2008 our payroll and other employee benefitcosts increased $243,000 to $2,149,000 (36.5% of restaurant sales) from $1,906,000(35.5% of restaurant sales) compared to the same prior year period.

Forthe six months ended March 31, 2008 our payroll and other employee benefitcosts increased $573,000 to $4,278,000 (35.9% of restaurant sales) from $3,705,000(35.2% of restaurant sales) compared to the same prior year period. 

Theincrease in payroll and other employee benefit expenses as a percent ofrestaurant sales is primarily the result of mandated increases in the minimumwage paid to hourly employees in the state of Colorado which increased from$5.15 to $6.85 beginning January 1, 2007, and then increased to $7.02 beginning January 1, 2008, as well as additional labor required to execute sales of thenew "Bambino" burger added in May 2007.  Additionally, our new restaurantsoperate at a higher labor cost as a percent of sales due to higher initiallabor costs at new stores until they reach mature staffing levels.  The dualbrand restaurants also have a higher labor cost as a percent of sales.

Thecurrent three and six month periods ending March 31, 2008 include twoadditional company-owned restaurants opened in fiscal 2007 and two restaurantspurchased from a franchisee in March 2008 that represent $183,000 and $337,000,respectively, of the increase compared to the same prior year periods. 

13

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*Occupancyand Other Operating Costs*

Forthe three months ended March 31, 2008 our occupancy and other operating costsincreased $141,000 to $1,179,000 (20% of restaurant sales) from $1,038,000 (19.3%of restaurant sales) compared to the same prior year period.  The current threemonth period ending March 31, 2008 includes two new company-owned restaurantsopened in fiscal 2007 and two restaurants purchased from a franchisee in March2008 that represent $116,000 of the increase compared to the same prior year period.

Forthe six months ended March 31, 2008 our occupancy and other operating costsincreased $207,000 to $2,297,000 (19.3% of restaurant sales) from $2,090,000 (19.8%of restaurant sales) compared to the same prior year period.  The current sixmonth period ending March 31, 2008 includes four additional company-ownedrestaurants opened or acquired in fiscal 2007 and fiscal 2008 that represent $203,000of the increase compared to the same prior year period.

Forthe three and six months ended March 31, 2008 we also experienced an increasein property taxes and common area costs related to our newest restaurantsopened in fiscal 2006 and fiscal 2007 compared to the same prior year period.Occupancy and other operating costs may increase as a percent of sales as newcompany-owned restaurants are developed due to higher rent associated withsale-leaseback operating leases, as well as higher property taxes at thoselocations.

*OpeningCosts*

Forthe three and six month periods ending March 31, 2008, new store opening costs were$0 compared to $2,000 for the same prior year periods. Each new company-ownedrestaurant developed in fiscal 2008 will have approximately $50,000 to $60,000of pre-open expenses.

*Depreciation andAmortization*

Forthe three months ended March 31, 2008 depreciation and amortization increased $18,000to $314,000 (5.3% of restaurant sales) from $296,000 (5.5% of restaurant sales)compared to the same prior year period. The increase in depreciation andamortization for the three months ended March 31, 2008 is primarily due to the addition of two new company-owned restaurants opened in fiscal 2007 and tworestaurants purchased from a franchisee in March 2008.

Forthe six months ended March 31, 2008 depreciation and amortization increased $28,000to $623,000 (5.2% of restaurant sales) from $595,000 (5.6% of restaurant sales)compared to the same prior year period.  The increase in depreciation andamortization for the six months ended March 31, 2008 is primarily due to the addition of two new company-owned restaurants opened in fiscal 2007 and tworestaurants purchased from a franchisee in March 2008.

*Generaland Administrative Costs*

Forthe three months ended March 31, 2008, general and administrative costsincreased $46,000 to $484,000 (8.0% of total revenues) from $438,000 (7.9% oftotal revenues) for the same prior year period.

Forthe six months ended March 31, 2008 general and administrative costs increased$140,000 to $1,039,000 (8.5% of total revenues) from $899,000 (8.3% of totalrevenues) for the same prior year period.

Theincreases in general and administrative costs compared to the same prior yearperiods is primarily attributable to increases in payroll and employee benefitcosts, professional services and training and recruiting costs. Professional servicesincreased $78,000 for the six month period ending March 31, 2008 primarily attributable to legal fees relating to the joint venture agreement for the Omaha expansion, legal fees relating to the Company's Omnibus Equity Compensation Plan andconsulting fees related to our mandated Sarbanes Oxley compliance project.

*AdvertisingCosts*

Forthe three months ended March 31, 2008 advertising costs increased $16,000 to $361,000(6.1% of restaurant sales) from $345,000 (6.4% of restaurant sales) for the sameprior year period.

14

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Forthe six months ended March 31, 2008 advertising costs increased $59,000 to $731,000(6.1% of restaurant sales) from $672,000 (6.4% of restaurant sales) for thesame prior year period.

Theincrease in advertising costs is primarily due to the increase in restaurantsales.  Contributions are made to the advertising materials fund and regionaladvertising cooperative based on a percentage of sales.

*FranchiseCosts*

Forthe three months ended March 31, 2008, franchise costs increased $34,000 to $91,000(.15% of total revenues) from $57,000 (.1% of total revenues) for the sameprior year period. 

Forthe six months ended March 31, 2008, franchise costs increased $96,000 to $188,000(.2% of total revenues) from $92,000 (.1% of total revenues) for the same prioryear period.

Theincrease in franchise costs for both the three and six month periods ending March 31, 2008 is primarily attributable to the addition of a Vice President of FranchiseDevelopment hired on October 1, 2007, who will be recruiting both experiencedmulti-unit operators as well as individual owner-operator franchisees forplanned expansion into new states. We also incurred $13,000 in legal costs inthe six months ended March 31, 2008 related to franchise registration filings inconnection with our planned expansion.

*Lossfrom Operations*

Wehad a loss from operations of ($361,000) in the three months ended March 31, 2008 compared to a loss from operations of ($142,000) for the same prior yearperiod.

Wehad a loss from operations of ($587,000) in the six months ended March 31, 2008 compared to a loss from operations of ($403,000) for the same prior yearperiod.

Theincrease in loss from operations for both the three and six month periods isdue primarily to the increase in net revenues offset by other matters discussedin the "Restaurant Operating Costs", "General and AdministrativeCosts" and "Franchise Costs" sections of Item 2.

*NetLoss*

Thenet loss was ($370,000) for the three months ended March 31, 2008 compared to a net loss of ($146,000) for the same prior year period. The change from the threemonth period ended March 31, 2007 to March 31, 2008 was primarily attributableto the increase in loss from operations for the three months ended March 31,2008, as well as: 1) a decrease in net interest income of $14,000 compared tothe same prior year period; and, 2) a decrease in minority interest expense of$9,000 compared to the same prior year period.

The net loss was ($625,000) for the sixmonths ended March 31, 2008 compared to a net loss of ($404,000) for the sameprior year period. The change from the six month period ended March 31, 2007 toMarch 31, 2008 was primarily attributable to the increase in loss fromoperations for the six months ended March 31, 2008, as well as: 1) a decreasein net interest income of $26,000 compared to the same prior year period; and, 2)an increase in minority interest expense of $11,000 compared to the same prioryear period.

**Liquidityand Capital Resources**

*Cashand Working Capital*

Asof March 31, 2008, we had $1,819,000 cash and cash equivalents on hand. Wecurrently plan to use the cash balance and cash generated from operations forincreasing our working capital reserves and, along with additional debt andequity financing, for the development of new company-owned restaurants.  Webelieve that the current cash on hand and additional cash expected fromoperations in fiscal 2008 will be sufficient to cover our working capitalrequirements for fiscal 2008.

15

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Asof March 31, 2008, we had working capital of $708,000.  Because restaurantsales are collected in cash and accounts payable for food and paper productsare paid two to four weeks later, restaurant companies often operate withworking capital deficits.  We anticipate that working capital deficits will beincurred in the future as new restaurants are opened.

*Financing Activities*

InJanuary 2008 the board of directors approved an increase in the existing lineof credit with PFGI II from the current $2,000,000 to $2,500,000. The newagreement is expected to be entered into in June 2008. The funds of the line ofcredit will be used for new store construction on sites which will then be soldin the sale-leaseback market.

InMay 2007 we borrowed $1,100,000 from Wells Fargo Bank under a note payable withan eight year term with a floating interest rate at .50% below prime.  Wesimultaneously entered into an interest rate swap transaction with Wells FargoBank for the full $1,100,000 with a fixed interest rate of 7.77% for the fulleight year term coinciding with the note payable, see note 4 in item one above.Partial proceeds from the loan were used to: 1) payoff our existing GE Capitalnotes payable of $398,000; and, 2) fund new store construction. The balance ofthe proceeds was used to partially fund the purchase of two existingrestaurants from a franchisee.

*CapitalExpenditures*

On March 1, 2008, we purchased two restaurants from an existing franchisee fortotal consideration of $1,330,000. We then simultaneously sold the land,building and improvements related to one of the restaurants in a sale-leasebacktransaction, proceeds of which were used for the purchase of the restaurants.Net cash used in the purchase transaction was $272,000. After accounting forboth the acquisition and the sale-leaseback assets of $490,000 were recorded, adeferred gain of $26,000 was recognized as a cost of the consideration andnotes receivable due from the franchisee of $250,000 were forgiven. We believethe $1,330,000 represents the fair value of the franchisee acquired.

Weare currently negotiating purchase and lease agreements for additionalcompany-owned and joint venture restaurants and are negotiating debt andsale-leaseback financing for the development of those restaurants. We alsoanticipate investing approximately $500,000 during the balance of fiscal 2008in existing company-owned and joint venture restaurants to upgrade the exteriorbuilding finishes and dining rooms as well as to improve the patios.

*Cash Flows*

Netcash provided by operating activities was $2,000 for the six months ended March 31, 2008.  The net cash provided by operating activities for the six months ended March31, 2008 was the result of a net loss of ($625,000) and non-cash reconcilingitems totaling $627,000 (comprised of depreciation and amortization of $623,000,minority interest of $41,000, stock based compensation expense of $48,000 and anet decrease in other operating assets and liabilities of $85,000).

Netcash provided by operating activities was $350,000 for the six months ended March 31, 2007. The net cash provided by operating activities for the six months endedMarch 31, 2007 was the result of a net loss of ($404,000) and non-cashreconciling items totaling $754,000 (comprised of depreciation and amortizationof $595,000, minority interest of $30,000, stock based compensation expense of$41,000 and a net increase in other operating assets and liabilities of $88,000).

Netcash provided by investing activities for the six months ended March 31, 2008was $242,000 which reflects payments of $276,000 for the purchase of propertyand equipment (including $140,000 for new store development, $48,000 forrestaurant remodeling costs and $88,000 for miscellaneous restaurant relatedcapital expenditures), $272,000 for the purchase of two existing franchiserestaurants, $747,000 from the sale of fixed assets and $43,000 in principalpayments received on loans to franchisees.

16

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Netcash used in investing activities for the six months ended March 31, 2007 was$1,315,000 which reflects payments of $1,366,000 for the purchase of propertyand equipment (including $1,108,000 for new store development , $38,000 forrestaurant remodeling costs and $220,000 for miscellaneous restaurant relatedcapital expenditures) and $51,000 in principal payments received on loans tofranchisees.

Netcash used in financing activities for the six months ended March 31, 2008 was $890,000,which includes principal payments on notes payable and long term debt of $59,000,a repayment on our revolving line of credit of $750,000, distributions tominority interests in partnerships of $122,000 and paid in capital activity of$41,000 related to the exercise of stock options.

Netcash used in financing activities for the six months ended March 31, 2007 was $284,000,which includes principal payments on notes payable and long term debt of $116,000,a repayment on our revolving line of credit of $150,000, net distributions tominority interests in partnerships of $108,000 and paid in capital activity of$90,000 related to the exercise of stock options.

*Contingencies*

Weare contingently liable on several ground leases that have been subleased orassigned to franchisees.  We have never experienced any losses nor do weanticipate any future losses from these contingent lease liabilities.

**Impact of Inflation**

Weexperienced moderation in commodity costs during fiscal 2005 and 2006 and significantincreases in fiscal 2007 and fiscal 2008.  State increases in the minimum wage resultedin an increase in our average hourly wage of $.60 per employee hour duringfiscal 2007 and approximately $.15 per employee hour in fiscal 2008. It isanticipated that we will take moderate price increases during fiscal 2008,which may or may not be sufficient to recover increased commodity costs orincreases in other operating expenses.

**Seasonality**

Revenues of the Company are subject toseasonal fluctuation based primarily on weather conditions adversely affectingrestaurant sales in December, January, February and March.

**ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

There were no materialchanges in our exposure to market risk for the quarter ended March 31, 2008

**ITEM 4.   CONTROLS AND PROCEDURES**

Wemaintain a system of disclosure controls and procedures that are designed forthe purposes of ensuring that information required to be disclosed in our SECreports is recorded, processed, summarized and reported within the time periodsspecified in the SEC's rules and forms, and that such information isaccumulated and communicated to our management, including the Chief ExecutiveOfficer and the Controller, who currently performs the functions of principalfinancial officer for the Company, as appropriate to allow timely decisionsregarding required disclosures.

Wehave carried out an evaluation, under the supervision and with theparticipation of our management, including the Chief Executive Officer and theController, of the effectiveness of the design and operation of our disclosurecontrols and procedures.  Based upon that evaluation, the Chief ExecutiveOfficer and the Controller concluded that our disclosure controls andprocedures are effective for the purposes discussed above as of the end of theperiod covered by this report.  There have been no significant changes in ourinternal controls or in other factors that could significantly affect thesecontrols during the quarter ended March 31, 2008.

17

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**GOOD TIMES RESTAURANTSINC. AND SUBSIDIARIES**

**PART II - OTHERINFORMATION**

Item 1.    Legal Proceedings

GoodTimes Restaurants is subject to legal proceedings which are incidental to itsbusiness.  These legal proceedings are not expected to have a material impacton the Company.

Item 2.    Changesin Securities and Use of Proceeds

None.

Item 3.    Defaultsupon Senior Securities

None.

Item 4.    Submissionof Matters to a Vote of Security Holders

None.

Item 5.    OtherInformation

None.

Item 6.    Exhibits and Reports on Form 8-K

(a)        Exhibits. The following exhibits are furnished as part of this report:

      Exhibit No.                                    Description

*31.1     Certification of Chief ExecutiveOfficer pursuant to 18 U.S.C. Section 1350

*32.1     Certification of Controllerpursuant to 18 U.S.C. Section 1350

*32.1     Certification of Chief ExecutiveOfficer and Controller pursuant to Section 906

*filedherewith

**SIGNATURES**

Inaccordance with the requirements of the Exchange Act, the registrant causedthis report to be signed on its behalf by the undersigned, thereunto dulyauthorized.

|                | **GOOD TIMES RESTAURANTS INC.**                       |
|---------------------|-------------------------------------------------------|
| DATE:  May 14, 2008 |                                                       |
|                     | /s/ Boyd E. Hoback                                    |
|                     | Boyd E. Hoback

President and Chief Executive Officer |
|                     |                                                       |
|                     | * *                                              |
|                     | /s/ Susan M. Knutson                                  |
|                     |  Susan M. Knutson

Controller                    |

18

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