UNITEDSTATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF1934

For thequarterly period ended June 30, 2009

OR

[  ] TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGEACT OF 1934

CommissionFile Number: 0-18590

GOODTIMES RESTAURANTS, INC.

(ExactName of Registrant as Specified in Its Charter)

|  NEVADA                                                        |  |  84-1133368                                      |
|--------------------------------------------------------------------------|--|-------------------------------------------------------|
| (State  or Other Jurisdiction of  

Incorporation  or Organization) |  |     (I.R.S. Employer Identification Number) |

601CORPORATE CIRCLE, GOLDEN, CO 80401

(Addressof Principal Executive Offices, Including Zip Code)

(303) 384-1400

(Registrant'sTelephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed allreports required to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.

Yes   x          No   [  ]

Indicate by check mark whether the registrant is a largeaccelerated filer, an accelerated filer, a non-accelerated filer or a smallerreporting company, as defined in Rule 12b-2 of the Exchange Act .

| Large accelerated filer [  ] |  | Accelerated filer   [  ]       |
|-----------------------------------|--|-----------------------------------------------|
| Non-accelerated filer [  ]   |  | Smaller reporting company    x |

Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).

Yes  [  ]     No   x

As of August14, 2009, there were 3,898,559 shares of the Registrant's common stock, parvalue $0.001 per share, issued and outstanding.

----

 

**Form10-Q**

**QuarterEnded June 30, 2009**

| ** ** | **INDEX**                                                                              | **PAGE**     |
|------------|----------------------------------------------------------------------------------------|--------------|
|            |                                                                                        |              |
|            | **PART  I - FINANCIAL INFORMATION**                                                    |              |
|            |                                                                                        |              |
| Item  1.   | Financial Statements                                                                   |              |
|            |                                                                                        |              |
|            | Condensed Consolidated Balance Sheets -                                                |              |
|            | June 30, 2009  (unaudited) and September 30, 2008                                      | 3 - 4        |
|            |                                                                                        |              |
|            | Condensed  Consolidated Statements of Operations (unaudited)                      |              |
|            | For the three and nine  months ended June 30, 2009 and 2008                            | 5            |
|            |                                                                                        |              |
|            | Condensed  Consolidated Statements of Cash Flow (unaudited)                            |              |
|            | For the nine months  ended June 30, 2009 and 2008                                      | 6            |
|            |                                                                                        |              |
|            | Notes  to Condensed Consolidated Financial Statements                                  | 7 - 12       |
|            |                                                                                        |              |
| Item  2.   | Management's  Discussion and Analysis of Financial Condition and Results of Operations | 12 - 21      |
|            |                                                                                        |              |
| Item  3.   | Quantitative  and Qualitative Disclosures About Market Risk                            | 22           |
|            |                                                                                        |              |
| Item 4T.   | Controls  and Procedures                                                               | 22           |
|            |                                                                                        |              |
|            | **PART  II - OTHER INFORMATION**                                                       |              |
|            |                                                                                        |              |
| Item 1.    | Legal  Proceedings                                                                     | 22           |
|            |                                                                                        |              |
| Item 1A.   | Risk  Factors                                                                          | 22           |
|            |                                                                                        |              |
| Item  2.   | Unregistered  Sales of Equity Securities and Use of Proceeds                           | 22           |
|            |                                                                                        |              |
| Item  3.   | Defaults  Upon Senior Securities                                                       | 22           |
|            |                                                                                        |              |
| Item  4.   | Submission  of Matters to a Vote of Security Holders                                   | 22           |
|            |                                                                                        |              |
| Item  5.   | Other  Information.                                                                    | 22           |
|            |                                                                                        |              |
| Item  6.   | Exhibits                                                                               | 23           |
|            |                                                                                        |              |
|            | **SIGNATURES**                                                                         | 23           |
|            | ** **                                                                             |              |
|            | **CERTIFICATIONS**                                                                     | Exhibit 31.1 |
|            | ** **                                                                             | Exhibit 31.2 |
|            | ** **                                                                             | Exhibit 32.1 |

2

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**PART I - FINANCIALINFORMATION**

**ITEM 1.            FINANCIAL STATEMENTS**

**GOOD TIMESRESTAURANTS INC. AND SUBSIDIARIES**

**CONDENSEDCONSOLIDATED BALANCE SHEETS**

** **

**ASSETS**

|                                                                                            | **Unaudited**                   |        |                                       |
|--------------------------------------------------------------------------------------------|---------------------------------|--------|---------------------------------------|
|                                                                                            | June 30,                        |        | September 30,                         |
|                                                                                            | 2009                            |   | 2008                                  |
| CURRENT  ASSETS:                                                                           |                                 |        |                                       |
|       Cash  and cash equivalents                                  | $671,000                        |        | $1,414,000                            |
|       Receivables,  net of allowance for doubtful

accounts of $0 | 140,000                         |        | 160,000                               |
|       Prepaid  expenses and other                                 | 94,000                          |        | 79,000                                |
|       Inventories                                                 | 221,000                         |        | 240,000                               |
|       Notes  receivable                                           |      40,000 |   |       35,000 |
|            Total  current assets         | 1,166,000                       |        | 1,928,000                             |
|                                                                                            |                                 |        |                                       |
| PROPERTY  AND EQUIPMENT, at cost:                                                          |                                 |        |                                       |
|       Land  and building                                          | 6,594,000                       |        | 6,566,000                             |
|       Leasehold  improvements                                     | 4,107,000                       |        | 4,017,000                             |
|       Fixtures  and equipment                                     |   8,441,000                |   |   8,303,000                      |
|                                                                                            | 19,142,000                      |        | 18,886,000                            |
|                                                                                            |                            |   |                                  |
|       Less  accumulated depreciation and amortization             | (11,544,000)                    |   | (10,602,000)                          |
|                                                                                            | 7,598,000                       |        | 8,284,000                             |
|                                                                                       |                            |   |                                  |
|       Assets  held for sale                                       | 1,595,000                       |        | 1,574,000                             |
|                                                                                       |                            |   |                                  |
| OTHER  ASSETS:                                                                             |                            |   |                                  |
|       Notes  receivable, net of current portion                   | 83,000                          |        | 83,000                                |
|       Deposits  and other assets                                  |   61,000                   |   |   51,000                         |
|                                                                                            | 144,000                         |   |  134,000                         |
|                                                                                            |                                 |        |                                       |
| TOTAL  ASSETS                                                                              | $10,503,000                     |   | $11,920,000                           |
|                                                                                            |                                 |        |                                       |

### LIABILITIES AND STOCKHOLDERS' EQUITY

3

See accompanyingnotes to condensed consolidated financial statements

----

|  CURRENT  LIABILITIES:                                                                                      |                            |        |                      |
|------------------------------------------------------------------------------------------------------------------|----------------------------|--------|----------------------|
|       Current  maturities of long-term debt                                             | $879,000                   |        | $2,304,000           |
|       Accounts  payable                                                                 | 365,000                    |        | 628,000              |
|       Deferred  income                                                                  | 158,000                    |        | 139,000              |
|       Other  accrued liabilities                                                        |    851,000       |        |    939,000 |
|             Total  current liabilities                    | 2,253,000                  |        | 4,010,000            |
|                                                                                                                  |                            |        |                      |
| LONG-TERM  LIABILITIES:                                                                                          |                       |   |                 |
|       Debt, net of  current portion and net of discount of $35,000 and $0, respectively | 2,650,000                  |        | 846,000              |
|       Deferred  liabilities                                                             |     980,000 |        | 1,071,000            |
|             Total  long-term liabilities                  | 3,630,000                  |        | 1,917,000            |
|                                                                                                                  |                            |        |                      |

 

**GOOD TIMESRESTAURANTS INC. AND SUBSIDIARIES**

**CONDENSEDCONSOLIDATED BALANCE SHEETS (Continued)**

|                                                                                                                                                                                                | **Unaudited**          |        |                              |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|--------|------------------------------|
|                                                                                                                                                                                                | June 30,               |        | September 30,                |
|                                                                                                                                                                                                | 2009                   |   | 2008                         |
| MINORITY INTERESTS IN PARTNERSHIPS                                                                                                                                                                  | 470,000                |        | 584,000                      |
| Preferred  stock, $.01 par value;                                                                                                                                                                   |                        |        |                              |
|             5,000,000  shares authorized, none issued                                                                                        |                        |        |                              |
|             and  outstanding as of September 30, 2008 and

            June  30, 2009 | -                      |        | -                            |
|                                                                                                                                                                                                     |                        |        |                              |
| Common  stock, $.001 par value; 50,000,000 shares                                                                                                                                                   |                        |        |                              |
|             Authorized,  3,898,559 shares issued and                                                                                         |                        |        |                              |
|             outstanding  as of September 30, 2008 and

            June  30, 2009     | 4,000                  |        | 4,000                        |
|                                                                                                                                                                                                     |                        |        |                              |
|             Accumulated  other comprehensive loss                                                                                            | -                      |        | (68,000)                     |
|             Capital  contributed in excess of par value                                                                                      | 17,732,000             |        | 17,633,000                   |
|             Accumulated  deficit                                                                                                             | (13,586,000)           |        | (12,160,000)                 |
|                   Total  stockholders' equity                                                                  |    4,150,000 |        |     5,409,000 |
|                                                                                                                                                                                                     |                        |        |                              |
| TOTAL  LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                         | $10,503,000            |        | $ 11,920,000                 |

4

See accompanyingnotes to condensed consolidated financial statements

----

**GOOD TIMESRESTAURANTS INC. AND SUBSIDIARIES**

**CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS**

**(Unaudited)**

|                                                                                               | **Three Months Ended June 30,**             | **Nine Months Ended June 30,** |
|----------------------------------------------------------------------------------------------------|---------------------------------------------|--------------------------------|
|                                                                                                    | **2009**                                    |                                | **2008** |  | **2009** |  | **2008** |
| NET  REVENUES:                                                                                     |                                             |                                |  |  |  |  |  |
|       Restaurant sales, net                                                    | $6,193,000                                  |                                | $6,827,000 |  | $17,120,000 |  | $18,745,000 |
|       Franchise revenues                                                       |    138,000                        |                           |     169,000 |   |      412,000 |          |       491,000 |
|            Total revenues                             | 6,331,000                                   |                                | 6,996,000 |  | 17,532,000 |  | 19,236,000 |
|                                                                                                    |                                             |                                |  |  |  |  |  |
| RESTAURANT  OPERATING COSTS:                                                                       |                                             |                                |  |  |  |  |  |
|       Food and packaging costs                                                 | 2,115,000                                   |                                | 2,156,000 |  | 5,774,000 |  | 5,832,000 |
|       Payroll and other employee benefit costs                                 | 2,072,000                                   |                                | 2,266,000 |  | 6,099,000 |  | 6,543,000 |
|       Occupancy and other operating costs                                      | 1,234,000                                   |                                | 1,261,000 |  | 3,625,000 |  | 3,558,000 |
|       Accretion of deferred rent                                               | -                                           |                                | 9,000 |  | - |  | 24,000 |
|       Opening costs                                                            | -                                           |                           | 7,000 |   | 15,000 |   | 7,000 |
|       Depreciation and amortization                                            |    317,000                        |                           |     332,000 |   |      944,000 |   |       955,000 |
|            Total restaurant operating costs           | 5,738,000                                   |                                | 6,031,000 |  | 16,457,000 |  | 16,919,000 |
|                                                                                                    |                                             |                           |  |   |  |  |  |
|       General and administrative costs                                         | 346,000                                     |                           | 540,000 |   | 1,238,000 |  | 1,580,000 |
|       Advertising costs                                                        | 347,000                                     |                                | 403,000 |  | 969,000 |  | 1,134,000 |
|       Franchise costs                                                          | 35,000                                      |                                | 88,000 |  | 108,000 |  | 275,000 |
|       (Gain) loss on sale of restaurant building and equipment                 |     (7,000)                  |                                |      (9,000) |  |    (22,000) |  |   (28,000) |
|                                                                                                    |                                             |                                |  |  |  |  |  |
| LOSS  FROM OPERATIONS                                                                              | (128,000)                                   |                                | (57,000) |  | (1,218,000) |  | (644,000) |
|                                                                                                    |                                             |                                |  |  |  |  |  |
| OTHER  INCOME AND (EXPENSES):                                                                      |                                             |                                |  |  |  |  |  |
|       Minority income (expense), net                                           | (3,000)                                     |                                | (56,000) |  | 60,000 |  | (97,000) |
|       Unrealized  gain (loss) on interest rate swap                            | 29,000                                      |                                | - |  | (87,000) |  | - |
|       Interest income (expense), net                                           | (78,000)                                    |                                | (8,000) |  |     (182,000) |  |     (5,000) |
|            Total other expenses                       | (52,000)                                    |                                |     (64,000) |  |     (209,000) |  | (102,000) |
|                                                                                                    |                                        |                           |   |   |   |   |   |
| NET  LOSS                                                                                          | ($180,000)                                  |                           | ($ 121,000) |   | ($1,427,000) |   | (746,000) |
|                                                                                                    |                                        |                           |   |   |   |   |   |
| BASIC  AND DILUTED NET LOSS PER COMMON SHARE                                                       | ($       .05) |                           | ($       .03) |   | ($          .37) |   | ($        .19) |
|                                                                                                    |                                             |                                |  |  |  |  |  |
| WEIGHTED  AVERAGE COMMON SHARES AND EQUIVALENTS

USED  IN PER SHARE CALCULATION: BASIC AND DILUTED | 3,898,559                                   |                                | 3,895,745 |  | 3,898,559 |  | 3,882,758 |

    5

See accompanyingnotes to condensed consolidated financial statements

----

**GOODTIMES RESTAURANTS INC. AND SUBSIDIARIES**

**CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

|                                                                                                                                           | For the Nine Months  Ended

June 30,                            |
|-------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------|
| CASH FLOWS FROM  OPERATING ACTIVITIES:                                                                                                    | 2009                                                            |  | 2008 |
|      Net  loss                                                                                                        | ($1,427,000)                                                    |  | ($746,000) |
|      Adjustments  to reconcile net loss to net cash                                                                   |                                                                 |  |  |
|        provided  by (used in) operating activities:                                                         |                                                                 |  |  |
|          Depreciation  and amortization                                                           | 944,000                                                         |  | 955,000 |
|          Amortization  of discount on notes payable                                               | 7,000                                                           |  | - |
|          Stock  based compensation expense                                                        | 58,000                                                          |  | 69,000 |
|          Unrealized  loss on interest rate swap                                                   | 87,000                                                          |  | - |
|          Accretion  of deferred rent                                                              | -                                                               |  | 24,000 |
|          Minority  interest                                                                       | (60,000)                                                        |  | 97,000 |
|          Expenses  associated with exit activity                                                  | -                                                               |  | 95,000 |
|          Recognition  of deferred (gain) on sale of restaurant building                           | (22,000)                                                        |  | (23,000) |
|          Loss  (gain) on sale of assets                                                           | -                                                               |  | (5,000) |
|          Changes  in operating assets and liabilities:                                            |                                                                 |  |  |
|               (Increase)  decrease in:                                   |                                                                 |  |  |
|                  Receivables  and other assets            | -                                                               |  | (130,000) |
|                  Inventories                              | 19,000                                                          |  | (20,000) |
|             (Decrease)  increase in:                                               |                                                                 |  |  |
|                  Accounts  payable                        | (263,000)                                                       |  | 55,000 |
|                  Accrued  liabilities and deferred income | (164,000)                                                       |  | (58,000) |
|              Net  cash provided by (used in) operating activities             | (821,000)                                                       |  | 313,000 |
|                                                                                                                                           |                                                                 |  |  |
| CASH FLOWS USED IN  INVESTING ACTIVITIES                                                                                                  |                                                                 |  |  |
|      Payments  for the purchase of property and equipment                                                             | (277,000)                                                       |  | (729,000) |
|      Proceeds  from sale of fixed assets                                                                              | -                                                               |  | 747,000 |
|      Purchase  of franchisee assets                                                                                   | -                                                               |  | (273,000) |
|      Loans  made to franchisees and to others                                                                         | (31,000)                                                        |  | - |
|      Payments  received on loans to franchisees and to others                                                         |   26,000                                                   |  | 59,000 |
|                Net  cash used in investing activities               | (282,000)                                                       |  | (196,000) |
|                                                                                                                                           |                                                                 |  |  |
| CASH FLOWS FROM  FINANCING ACTIVITIES:                                                                                                    |                                                                 |  |  |
|      Principal  payments on notes payable, and long-term debt                                                         | (91,000)                                                        |  | (89,000) |
|      Net  Proceeds (repayments) on revolving lines of credit                                                          | 320,000                                                         |  | (750,000) |
|      Proceeds  from notes payable                                                                                     | 185,000                                                         |  | - |
|      Proceeds  from exercise of options                                                                               | -                                                               |  | 103,000 |
|      Distributions  paid to minority interests in partnerships                                                        |  (54,000)                                                  |  | (219,000) |
|                Net  cash provided by (used in) financing activities | 360,000                                                         |  | (955,000) |
|                                                                                                                                           |                                                                 |  |  |
| NET CHANGE IN CASH AND CASH EQUIVALENTS                                                                                                   | (743,000)                                                       |  | (838,000) |
|                                                                                                                                           |                                                                 |  |  |
| CASH AND CASH EQUIVALENTS, beginning of period                                                                                            | $ 1,414,000                                                     |  | $2,465,000 |
|                                                                                                                                           |                                                                 |  |  |
| CASH AND CASH EQUIVALENTS, end of period                                                                                                  | $    671,000                                     |  | $1,627,000 |
|                                                                                                                                           |                                                                 |  |  |
| SUPPLEMENTAL  DISCLOSURES OF CASH FLOW INFORMATION:                                                                                       |                                                                 |  |  |
|      Cash  paid for interest                                                                                          | $207,000                                                        |  | $  64,000 |
|      Non-cash  deferred hedging losses                                                                                | $           - |  | $  55,000 |
|      Non-cash  acquisition price of franchise stores (notes receivable)                                               | $           - |  | $250,000 |

6

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**GOOD TIMESRESTAURANTS INC. AND SUBSIDIARIES**

**NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**Note 1.Basis of Presentation**

In the opinion of management, theaccompanying unaudited condensed consolidated financial statements contain allof the normal recurring adjustments necessary to present fairly the financialposition of the Company as of June 30, 2009, the results of its operations andits cash flows for the three and nine month periods ended June, 2009. Operatingresults for the three and nine month periods ended June 30, 2009 are notnecessarily indicative of the results that may be expected for the year endingSeptember 30, 2009. The condensed consolidated balance sheet as of September30, 2008 is derived from the audited financial statements, but does not includeall disclosures required by generally accepted accounting principles.  As aresult, these financial statements should be read in conjunction with theCompany's Form 10-KSB for the fiscal year ended September 30, 2008.

**Note 2. Recent Developments**

After several years of same store salesgrowth, including several months of double digit growth in fiscal 2007 andearly fiscal 2008, we experienced a dramatic change in our sales trends,beginning in early calendar 2008 and continuing through June 2009, as theeconomy slowed and competitive pricing pressures intensified.  Due to thedramatic decline in consumer spending, the unprecedented rise in commoditycosts and the upheaval in the credit markets, we suspended most of ourrestaurant development.

On April 20, 2009 as reported on form 8-K,Good Times Restaurants Inc. (the "Company") and Good Times Drive Thru Inc.("GTDT"), a wholly owned subsidiary of the Company, enteredinto a loan agreement with Golden Bridge, LLC ("Golden Bridge"), pursuant towhich Golden Bridge made a loan of $185,000 (the "Loan") to GTDT to be used forrestaurant marketing and other working capital costs. The Loan is evidenced bya promissory note dated April 20, 2009 (the "Note") made by the Company andGTDT, as co-makers, and shall bear interest at a rate of 10% per annum on theunpaid principal balance.  The Note provides for monthly interest payments andwill mature and be due and payable in full on July 10, 2010.

The Loan Agreement and the Note are subjectto the terms of an intercreditor agreement dated April 20, 2009 (the"Intercreditor Agreement"), among the Company, GTDT, Golden Bridge and PFGI II, LLC ("PFGI").  As previously reported by the Company, GTDT currently has a$2,500,000 revolving line of credit with PFGI (the "PFGI Loan"), which wasscheduled to mature on July 10, 2009, under which $2,500,000 was outstanding asof April 20, 2009. In connection with PFGI's entry into the IntercreditorAgreement, GTDT and the Company entered into a first amendment to the amendedand restated promissory note dated April 20, 2009 (the "PFGI Note Amendment"),which extended the maturity date of the PFGI Loan until July 10, 2010 andeliminated a loan balance threshold for release of the collateral securing thePFGI Loan.

In connection with the Loan, the Companyissued a three-year warrant dated April 20, 2009 (the "Warrant") to GoldenBridge which provides that Golden Bridge may at any time from April 20, 2009until April 20, 2012 purchase up to 92,500 shares of the Company's common stock(the "Warrant Shares") at an exercise price of $1.15 per share. The fair valueof the warrants issued was determined to be $42,000 with the followingassumptions; 1) risk free interest rate of 1.27%, 2) an expected life of 3years, and 3) an expected dividend yield of zero. The fair value of $42,000 wascharged to the note discount and credited to Additional Paid in Capital. Thenote discount will be amortized over fourteen months and charged to interestexpense.

See *Financing Activities*under the *Liquidityand Capital Resources* section of Item 2. Management's Discussion andAnalysis of Financial Condition and Results of Operations below for furtherdetails of the above transaction.

** **

7

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** **

****

** **

** **

** **

**Note 3. Debt Covenant Compliance**

As reported on theform 8-K filed on January 23, 2009, we are in default of certain technical loancovenants on our note payable to Wells Fargo Bank, N.A. ("the Bank"). Thereforeall amounts owing under this facility are reflected as current in theaccompanying Condensed Consolidated Balance Sheet as of June 30, 2009. We havenever been in payment default on the note and expect to be able to remaincurrent on payments in fiscal 2009, depending on our sales trends and cash flowfrom operations.  On February 9, 2009 we received a Reservation of Rightsletter from the Bank formally notifying us of the default of the EarningsBefore Interest Taxes and Depreciation ("EBITDA") Coverage Ratio of not lessthan 1.5 to 1.0 and the Tangible Net Worth of not less than $5,000,000 as setforth in the Credit Agreement for the period ending December 31, 2008. Theletter serves as notice that notwithstanding the foregoing events of default,the Bank is reserving all of its rights and remedies under the Credit Agreementand related agreements.

The Bank is not accelerating the Loan at thistime and is continuing to accept regularly scheduled payments of principal andinterest under the Loan, however the acceptance of payments under the Loan doesnot constitute a modification of the Credit Agreement or a waiver of any of thecovenants or of the Bank's rights or remedies under the Credit Agreement,including the right to accelerate the loan in the future after the giving ofnotice.  We will continue to work with the Bank on a Required Corrective Actionfor compliance with existing or modified loan covenants.  There can be no assurancethat the Bank will agree to modify or waive any of the loan covenants or waiveany of its rights or remedies under the Credit Agreement and we would requireadditional financing to repay the loan balance.  The loan is secured bysecurity agreements in the equipment of four restaurants.

**Note 4. Stock-Based Compensation**

The Company measures the compensationcost associated with share-based payments by estimating the fair value of stockoptions as of the grant date using the Black-Scholes option pricing model. TheCompany believes that the valuation technique and the approach utilized todevelop the underlying assumptions are appropriate in calculating the fairvalues of the Company's stock options granted during all years presented.Estimates of fair value are not intended to predict actual future events or thevalue ultimately realized by the employees who receive equity awards.

Our net loss for the nine months endedJune 30, 2009 and June 30, 2008 includes $58,000 and $69,000, respectively, ofcompensation costs related to our stock-based compensation arrangements.

During the nine months ended June 30, 2009, we granted12,000 non-statutory stock options and 68,400 incentive stock options both withexercise prices of $1.47. The per share weighted average fair value was $.97 forboth non-statutory stock option grants and incentive stock option grants.

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)   | **6.5 **                | 6.7                         |
| Expected volatility     | **69.7%**                    | 69.2%                            |
| Risk-free interest rate | **2.79%**                    | 2.84%                            |
| Expected dividends      | **0**                        | 0                                |

We estimate expected volatility based onhistorical weekly price changes of our common stock for a period equal to thecurrent expected term of the options. The risk-free interest rate is based onthe United States treasury yields in effect at the time of grant correspondingwith the expected term of the options. The expected option term is the numberof years we estimate that options will be outstanding prior to exerciseconsidering vesting 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 three and nine months ended June 30, 2009.

8

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Asummary of stock option activity under our share-based compensation plan forthe nine months ended June 30, 2009 is presented in the following table:

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

**Life (Yrs.)** | **Aggregate Intrinsic  Value** |
|--------------------------|-----------------|--------------------------------------|--------------------------------------------------------------|--------------------------------|
| Outstanding-beg of year  |  353,942   | $4.04                                |                                                              |                                |
| Granted                  |  80,400    | $1.47                                |                                                              |                                |
| Exercised                | -               |                                      |                                                              |                                |
| Forfeited                |  (14,760)  | $4.91                                |                                                              |                                |
| Expired                  |   (39,951) | $3.21                                |                                                              |                                |
| Outstanding Jun 30, 2009 | 379,631         | $3.55                                | 5.8                                                          | $0                             |
|                          |                 |                                      |                                                              |                                |
| Exercisable Jun 30, 2009 | 271,356         | $3.68                                | 4.6                                                          | $0                             |

Asof June 30, 2009, the total remaining unrecognized compensation cost related tounvested stock-based arrangements was $125,000 and is expected to be recognizedover a period of 2.33 years.

There were no stock options exercisedduring the nine months ended June 30, 2009.

**Note 5. ComprehensiveIncome (Loss)**

Comprehensive income includes net income or loss, changesin certain assets and liabilities that are reported directly in equity such asadjustments resulting from unrealized gains or losses on held-to-maturityinvestments and certain hedging transactions.

In May 2007, the Company entered into an interest rateswap agreement, designated as a cash flow hedge, which hedges the Company'sexposure to interest rate fluctuations on the Company's floating rate $1,100,000term loan. The contract requires monthly settlements of the difference betweenthe amounts to be received and paid under the agreement, the amount of which isrecognized in current earnings as interest expense.

As of December 31, 2008 and continuingthrough June 30, 2009 we are in default of certain technical covenants on theunderlying term loan (see note 3 above) and we have therefore recognized anunrealized loss of $87,000 for the nine months ended June 30, 2009 in theaccompanying Condensed Consolidated Statement of Operations. As long as theunderlying loan is in covenant default we will adjust the unrealized gain orloss through the statement of operations as non-cash income or expense.

**Note 6. Contingent Liabilities**

We remain contingently liable on various landleases underlying restaurants that were previously sold to franchisees.  Wehave never experienced any losses related to these contingent leaseliabilities, however if a franchisee defaults on the payments under the leases,we would be liable for the lease payments as the assignor or sublessor of thelease.  Currently we have not been notified nor are we aware of any leases indefault by the franchisees, however there can be no assurance that there willnot be in the future which could have a material effect on our future operatingresults.

**Note 7. Related Party Transactions**

The Company entered into a loan agreementwith Golden Bridge, LLC ("Golden Bridge"), pursuant to which Golden Bridge made a loan of $185,000 to the Company.  Eric Reinhard, Ron Goodson, DavidGrissen, Richard Stark, and Alan Teran, who are all members of the Company'sBoard of Directors and stockholders of the Company, are the sole members of Golden Bridge.  Eric Reinhard is the sole manager of Golden Bridge.  The Company's andGTDT's obtaining of the Loanfrom Golden Bridge and related transactions were duly approved in advance bythe Company's Board of Directors by the affirmative vote of members thereof whodid not have an interest in the transaction.   See Note 2 above for theterms of the loan.  Amounts due to related parties that are included in notespayable are $185,000 and $0 at June 30, 2009 and 2008, respectively.

9

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**Note 8. Assets Held for Sale**

We have classified $1,595,000 as assets heldfor sale in the accompanying condensed consolidated balance sheet. These costsare related to a site in Firestone, Colorado which has been fully developed.  A sale and leaseback agreement that was under contract in the first quarter offiscal 2009 was terminated and the restaurant is being marketed for sale andleaseback.  The proceeds of a sale leaseback transaction, if consummated, arerequired to be used for the reduction of the line of credit payable to PFGI II, LLC. The effect on our operating cash flow is not material as the interest expense onthe line of credit is approximately equal to the proposed rental rate on a saleleaseback transaction.

**Note 9. Impairment of Long-Lived Assets**

TheCompany reviews its long-lived assets in accordance with SFAS No. 144,including land, property and equipment for impairment whenever events orchanges in circumstances indicate that the carrying amount of an asset may notbe recoverable. Recoverability of assets to be held and used is measured by acomparison of the capitalized costs of the assets to the future undiscountednet cash flows expected to be generated by the assets and the expected cashflows are based on recent historical cash flows at the restaurant level (thelowest level that cash flows can be determined).

Theanalysis is performed on a restaurant by restaurant basis. Assumptions used inpreparing expected cash flows were as follows: 1) beginning in fiscal 2010 restaurantsales are projected to increase at the rate of 3% annually and 2) restaurantlevel costs are projected to increase at the rate of 1% annually. 

To datewe have not written down any assets due to impairment, however projecting thecash flows for the impairment analysis involves significant estimates withregard to the performance of each restaurant, and it is reasonably possiblethat the estimates of cash flows may change in the near term resulting in theneed to write down operating assets to fair value. If the assets are determinedto be impaired, the amount of impairment recognized is the amount by which thecarrying amount of the assets exceeds their fair value. Fair value would bedetermined using forecasted cash flows discounted using an estimated averagecost of capital and the impairment charge would be recognized at the restaurantlevel.

**Note 10. Fair Value Measurements**

InSeptember 2006, the Financial Accounting Standards Board (FASB) issuedStatement of Financial Accounting Standards No. 157, "Fair ValueMeasurements" ("SFAS 157"). SFAS 157 defines fair value,establishes a framework for measuring fair value and expands disclosures aboutfair value measurements. Effective October 1, 2008, the Company adopted the provisions of SFAS 157 related to financial assets and liabilities, as well asother assets and liabilities carried at fair value on a recurring basis. Theseprovisions, which have been applied prospectively, did not have a materialimpact on the Company's consolidated financial statements. Certain otherprovisions of SFAS 157 related to other non-financial assets and liabilitieswill be effective for the Company on July 1, 2009, and will be applied prospectively. The adoption of the provisions of SFAS 157 related to othernon-financial assets and liabilities is not expected to have a material impacton the consolidated financial statements of the Company.

SFAS 157defines three levels of inputs that may be used to measure fair value andrequires that the assets or liabilities carried at fair value be disclosed bythe input level under which they were valued. The input levels defined underSFAS 157 are as follows:

Level 1:Quoted market prices in active markets for identical assets and liabilities.

Level 2:Observable inputs other than defined in Level 1, such as quoted prices forsimilar assets or liabilities; quoted prices in markets that are not active; orother inputs that are observable or can be corroborated by observable marketdata for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs thatare not corroborated by observable market data.

The following table summarizesfinancial assets and liabilities that are measured at fair value on a recurringbasis as of June 30, 2009:

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Level 2

Interest Rate Swap liability       $87,000

**Note11. Accounting Policies**

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."  FIN48 provides 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.

In February 2007, theFinancial Accounting Standards Board ("FASB") issued SFAS No. 159.  "The FairValue Option for Financial Assets and Financial Liabilities - including anamendment of FASB Statement No. 115" ("SFAS 159"). SFAS 159 provides companieswith an option to report selected financial assets and financial liabilities atfair value.  Unrealized gains and losses on items for which the fair valueoption has been elected are reported in earnings at each subsequent reportingdate.  SFAS 159 was effective for the fiscal year beginning October 1, 2008. The adoption of SFAS 159 did not have any effect on the Company'sfinancial position, results of operations or cash flows.

In March 2008, theFASB issued SFAS No. 161, "Disclosures about Derivative instruments and HedgingActivities" ("SFAS 161").  SFAS 161 amends and expands the disclosurerequirements in SFAS 133, "Accounting for Derivative Instruments and HedgingActivities".  SFAS 161 is effective for fiscal years and interim periodsbeginning after November 15, 2008, which became effective for our interimperiod beginning January 1, 2009.  The adoption of SFAS 161 did not have anyeffect on the Company's financial position, results of operations or cashflows.

In May 2009, the FASBissued SFAS No. 165, "Subsequent Events" ("SFAS 165").  SFAS 165establishes general standards of accounting for and disclosure of events thatoccur after the balance sheet date but before financial statements are issued orare available to be issued. SFAS 165 was effective for interim or annualfinancial periods ending after June 15, 2009, the quarter ending June 30, 2009for the Company. The adoption of SFAS 165 did not have any effect on theCompany's financial position, results of operations or cash flows.

**Note 12. 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 is currently not undergoing anyexaminations by any taxing jurisdictions, with the tax years for the FiscalYears Ending September 30, 2004 through 2008 remaining open to examination.

**Note 13. New Accounting Pronouncements**

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 for fiscal yearsbeginning after December 15, 2008, which will effective for our fiscal yearbeginning October 1, 2009.  The requirements of FAS 141 will only impact futurebusiness combination transactions into which we may enter.

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In December 2007, theFASB issued FASB Statement No. 160, "Noncontrolling Interests in ConsolidatedFinancial Statements and amendment to ARB No. 51" ("FAS 160").  This standardprescribes the accounting by a parent company for minority interests held byother parties in a subsidiary of the parent company.  FAS 160 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 160 and have not yet determined the impact on our financialstatements.

In June 2009, theFASB issued SFAS No. 168, "The FASB Accounting Standards Codification and theHierarchy of Generally Accepted Accounting Principles - a replacement of FASBStatement No. 162" ("SFAS 168").  SFAS 168 provides for the FASBAccounting Standards Codification (the "Codification") to become the singleofficial source of authoritative, nongovernmental U.S. generally acceptedaccounting principles (GAAP).  The Codification did not change GAAPbut reorganizes the literature.  SFAS 168 is effective for interimand annual periods ending after September 15, 2009, which will be effective forour fiscal year ending September 30, 2009.

**Note 14. Stock Transactions**

None.

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

**                  AND RESULTS OF OPERATIONS**

### General

ThisForm 10-Q 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, 2008.  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)   We compete withnumerous well established competitors who have substantially greater financialresources and longer operating histories than we do.  Competitors haveincreasingly offered selected food items and combination meals, includinghamburgers, at discounted prices, and continued discounting by competitors mayadversely affect revenues and profitability of Company restaurants.

(II)  We may benegatively impacted if we continue to 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/or decreasesin the availability of affordable capital resources.  We caution the readerthat such risk factors are not exhaustive, particularly with respect to futurefilings.

*RestaurantLocations*

Wecurrently operate and franchise a total of fifty-two Good Times restaurants, ofwhich forty-eight are in Colorado, with forty-three in the Denver greatermetropolitan area, three in Colorado Springs, one in Grand Junction and one inSilverthorne. Eight of these restaurants are "dual brand", operated pursuant toa Dual Brand Test Agreement with Taco John's International, of which there is onein North Dakota, two in Wyoming, and five in Colorado.

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

**Greater Metro** | **Colorado**

**Other** | **Idaho** | **Wyoming** | **North Dakota** |
|-----------------------------------------|-----------|---------------------------------------|-------------------------|-----------|-------------|------------------|
| Good  Times co-owned & co-developed | 27        | 24                                    | 3                       |           |             |                  |
| Good  Times franchised                  | 17        | 14                                    | 2                       | 1         |             |                  |
| Dual  brand co-owned                    | 3         | 3                                     |                         |           |             |                  |
| Dual  brand franchised                  | 5         | 2                                     |                         |           | 2           | 1                |
| **Total**                               | **52**    | **43**                                | **5**                   | **1**     | **2**       | **1**            |

|                                | **As of July** |
|--------------------------------|----------------|
|                                | **2008**       | **2009** |
| Company-owned restaurants      | 20             | 21 |
| Co-developed restaurants       | 9              | 9 |
| Franchise operated restaurants | 22             | 22 |
| **Total restaurants**          | **51**         | **52** |

*Fiscal 2008:* In January 2008 a North Dakota franchise terminated their Good Times franchise agreement in the dual brandconcept and stopped selling Good Times products in their two locations.  InMarch 2008 we purchased two Good Times restaurants from an existingfranchisee.  In June 2008 the Good Times franchisee operating at the University of Wyoming Food Court ceased operations when the contract to operate in the foodcourt expired.  There are no plans for this franchisee to operate in anotherlocation.

*Fiscal 2009:* In October 2008 weopened one new company-owned restaurant in Firestone, Colorado. In December2008 a Wyoming franchisee terminated their Good Times franchise agreement inthe dual brand concept and has stopped selling Good Times products in onelocation. Also in December 2008 a franchisee opened a new dual brand restaurantin Sheridan, Wyoming.

Thefollowing presents certain historical financial information of our operations. This financial information includes results for the three and nine months endedJune 30, 2008 and results for the three and nine months ended June 30, 2009.

**Resultsof Operations**

*NetRevenues*

Netrevenues for the three months ended June 30, 2009 decreased $665,000 (9.5%) to$6,331,000 from $6,996,000 for the three months ended June 30, 2008.  Samestore restaurant sales decreased $699,000 (12.5%) during the three months endedJune 30, 2009 for the restaurants that were open for the full periods ending June30, 2009 and June 30, 2008.  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 had a net increaseof $119,000 due to six company-owned restaurants not included in same storesales. Three are dual branded restaurants, two were purchased from a franchiseein March 2008 and one opened in October 2008. Restaurant sales decreased $54,000due to one non-traditional company-owned restaurant not included in same storesales.

Netrevenues for the nine months ended June 30, 2009 decreased $1,704,000 (8.9%) to$17,532,000 from $19,236,000 for the nine months ended June 30, 2008.  Samestore restaurant sales decreased $2,141,000 (13.8%) during the nine monthsended June 30, 2009 for the restaurants that were open for the full periodsending June 30, 2009 and June 30, 2008.  Restaurants are included in same storesales after they have been open a full fifteen months and only Good Timesrestaurants are included with dual branded restaurants excluded.  Restaurant saleshad a net increase of $761,000 due to six company-owned restaurants notincluded in same store sales. Three are dual branded restaurants, two werepurchased from a franchisee in March 2008 and one opened in October 2008. Restaurant sales decreased $235,000 due to one non-traditional company-ownedrestaurant not included in same store sales.

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Oursame store restaurant sales declines of 14.8%, 13.5% and 12.5% for the first,second and third fiscal quarters, respectively, reflect the adverse impact themacroeconomic environment is having on consumers' discretionary spending andthe proliferation of heavy promotion of $1 value menus and discounting bycompetitors. We are comparing the 2009 sales declines to same store salesincreases of 11.6% and 7.6% in the first and second quarters of fiscal 2008,respectively, and a sales decline of 5.7% in the third quarter of fiscal 2008. Weexperienced severe snow storms in March and April 2009, and we estimate that welost approximately $250,000 in sales due to the storms. Our outlook for fiscal2009 remains cautious as the economic pressures may continue to impact consumerspending and we anticipate that we will continue to face increased competitivepricing pressure. 

Whilewe are implementing several broad product and brand initiatives during fiscal2009 to improve our core value proposition, we are not planning to implement abroader $1 menu and our sales may continue to be adversely affected during theeconomic recession.

Franchiserevenues decreased $31,000 to $138,000 from $169,000 for the three months endedJune 30, 2009 due to a decrease in franchise royalties. Same store Good Times franchiserestaurant sales decreased 14.6% during the three months ended June 30, 2009for the franchise restaurants that were open for the full periods ending June30, 2009 and June 30, 2008.  Total dual branded franchise restaurant sales decreased2.4% during the three months ended June 30, 2009, compared to the same prioryear period.

Franchise revenues decreased $79,000to $412,000 from $491,000 for the nine months ended June 30, 2009 due to adecrease in franchise royalties of $92,000 offset by an increase in franchisefee income of $12,000. Same store Good Times franchise restaurant sales decreased15.7% during the nine months ended June 30, 2009 for the franchise restaurantsthat were open for the full periods ending June 30, 2009 and June 30, 2008.  Totaldual branded franchise restaurant sales decreased 3.5% during the nine monthsended June 30, 2009, compared to the same prior year period, primarily due tothe closure of two restaurants in January 2008, offset by the opening of onenew dual branded restaurant in December 2008.

*RestaurantOperating Costs*

Restaurantoperating costs as a percent of restaurant sales were 92.7% during the threemonths ended June 30, 2009 compared to 88.3% in the sameprior year period and were 96.1% during nine month period ended June 30, 2009 compared to 90.3% in the same prior year period.

Thechanges in restaurant-level costs are explained as follows:

|                                                             | Three  Months Ended

June 30,  2009 | Nine  Months Ended

June 30,  2009 |
|-------------------------------------------------------------|-------------------------------------|------------------------------------|
| Restaurant-level  costs for the period ended June  30, 2008 | 88.3%                               | 90.3%                              |
| Increase  in food and packaging costs                       | 2.5%                                | 2.6%                               |
| Increase in  payroll and other employee benefit costs       | .3%                                 | .7%                                |
| Increase  in occupancy and other operating costs            | 1.5%                                | 2.2%                               |
| Increase in  depreciation and amortization                  | .3%                                 | .4%                                |
| Decrease  in opening costs and deferred rent                | (.2%)                               | (.1%)                              |
| Restaurant-level  costs for the period ended June  30, 2009 | 92.7%                               | 96.1%                              |

*Food and Packaging Costs*

For the three monthsended June 30, 2009 our food and paper costs, decreased $41,000 to $2,115,000(34.1% of restaurant sales) from $2,156,000 (31.6% of restaurant sales)compared to the same prior year period.

For the nine monthsended June 30, 2009 our food and paper costs, decreased $58,000 to $5,774,000(33.7% of restaurant sales) from $5,832,000 (31.1% of restaurant sales)compared to the same prior year period.

We have implementedsignificant product portion and ingredient changes in the first nine months ofthe current fiscal year to improve our overall value to the customer which hasresulted in an approximate 1.25% increase in our food and paper costs as apercentage of restaurant sales.

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We experienced unprecedented increases incommodity costs during fiscal 2008 including beef, bakery, soft drinks, dairyand packaging costs with the majority of those increases occurring in Maythrough July 2008. Our weighted food and packaging costs increasedapproximately 12% in the fiscal 2008 year. During the first nine months offiscal 2009 we experienced a moderation in food and packaging cost increases. Wetook cumulative weighted menu price increases during fiscal 2008 ofapproximately 4.8% and have taken cumulative weighted increases in fiscal 2009of approximately 2.6%.  We do not anticipate any additional price increases forthe balance of fiscal 2009 with more stable commodity costs.

*Payroll and Other Employee BenefitCosts*

Forthe three months ended June30, 2009 our payroll andother employee benefit costs decreased $194,000 to $2,072,000 (33.5% ofrestaurant sales) from $2,266,000 (33.2% of restaurant sales) compared to thesame prior year period.

Forthe nine months ended June30, 2009 our payroll andother employee benefit costs decreased $444,000 to $6,099,000 (35.6% ofrestaurant sales) from $6,543,000 (34.9% of restaurant sales) compared to thesame prior year period.

Theincrease in payroll and other employee benefit expenses as a percent ofrestaurant sales for the three and nine months ended June 30, 2009 is primarily the result of lower restaurant sales.Because payroll costs aresemi-variable in nature they increase as a percentage of restaurant sales whenthere is a decrease in restaurant sales.  Additionally,our new restaurant that opened in October 2008 operated at a higher labor costas a percent of sales due to higher initial labor costs until it reached maturestaffing levels in January 2009.

Beginningin December 2008 we reduced our labor hours allocation through increasedefficiencies and improved our sales per employee hour efficiencies on servicehours, thereby eliminating approximately $190,000 of annual payroll costs. Inaddition, beginning in March 2009 we implemented further reductions in our employeeand other benefit costs totaling approximately $300,000 in annual costs throughthe restructuring of regional supervision personnel along with other reductionsin fixed employee benefit costs.

The current nine month period ending June 30, 2009 includes two additional company-owned restaurantspurchased from a franchisee in March 2008 and one new company-owned restaurantopened in October 2008 that represents $322,000 of the total payroll and otheremployee benefit costs in the current period.

*Occupancy and Other Operating Costs*

Forthe three months ended June30, 2009 our occupancyand other operating costs decreased $27,000 to $1,234,000 (19.9% of restaurantsales) from $1,261,000 (18.4% of restaurant sales) compared to the same prioryear period.

Forthe nine months ended June30, 2009 our occupancyand other operating costs increased $67,000 to $3,625,000 (21.2% of restaurantsales) from $3,558,000 (19% of restaurant sales) compared to the same prioryear period.

The current nine month period ending June 30, 2009 includes two additional company-owned restaurants purchasedfrom a franchisee in March 2008and one new company-owned restaurant opened in October 2008 that represents $168,000 of theincrease compared to the same prior year period. Additionally we experiencedreductions in common area maintenance fees, repairs and maintenance, utilitiesand personal property taxes compared to the same prior year period. Occupancyand other operating costs may increase as a percent of sales as new company-ownedrestaurants are developed due to higher rent associated with sale-leasebackoperating leases, as well as higher property taxes at those locations.

*OpeningCosts*

Forthe three months ended June 30, 2009 our new store opening costs were $0 compared to $7,000 for the same prior year period.

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For the nine months ended June, 2009our new store opening costs were $15,000 compared to $7,000 for the same prioryear period. The current and prior year costs are related to one newcompany-owned restaurant that opened in October 2008.

*Depreciationand Amortization*

Forthe three months ended June 30, 2009, our depreciation and amortization decreased$15,000 to $317,000 (5.1% of restaurant sales) from $332,000 (4.8% ofrestaurant sales) compared to the same prior year period. The $15,000 decreasein depreciation and amortization for the three months ended June 30, 2009 isdue to $11,000 of depreciation expense in the new company-owned restaurant thatopened in October 2008, offset by declining depreciation expense in our agingcompany-owned restaurants.

For the nine months ended June 30,2009, our depreciation and amortization decreased $11,000 to $944,000 (5.5% ofrestaurant sales) from $955,000 (5.1% of restaurant sales) compared to the sameprior year period. The $11,000 decrease in depreciation and amortization forthe nine months ended June 30, 2009 is due to $62,000 of depreciation expensein the three acquired and new company-owned restaurants, offset by decliningdepreciation expense in our aging company-owned restaurants.

*Generaland Administrative Costs*

Forthe three months ended June 30, 2009, general and administrative costs decreased$194,000 to $346,000 (5.5% of total revenues) from $540,000 (7.7% of totalrevenues) for the same prior year period.

Forthe nine months ended June 30, 2009, general and administrative costs decreased$342,000 to $1,238,000 (7.1% of total revenues) from $1,580,000 (8.2% of totalrevenues) for the same prior year period.

Thedecrease in general and administrative costs for the three months ended June 30,2009 compared to the same prior year period is primarily attributable to decreasesin: 1) payroll and employee benefit costs of $58,000, 2) training andrecruiting expenses of $30,000, 3) costsassociated with the exit from the Omaha planned expansion of $81,000, 4) professional servicesof $11,000 and 5) net reductions in various other fixed expenses of $14,000.

The decrease in general andadministrative costs for the nine months ended June 30, 2009 compared to thesame prior year period is primarily attributable to decreases in: 1) payrolland employee benefit costs of $147,000, 2) training and recruiting expenses of$52,000, 3) costsassociated with the exit from the Omaha planned expansion of $81,000, 4) professional servicesof $30,000 and 5) net reductions in various other fixed expenses of $32,000.

We have reduced annualizedselling, general and administrative and franchise costs by approximately $475,000for fiscal 2009, compared to fiscal 2008, through the elimination of executivemanagement positions, salary reductions and professional service costreductions.

*Advertising Costs*

Forthe three months ended June 30, 2009 advertising costs decreased $56,000 to $347,000(5.6% of restaurant sales) from $403,000 (5.9% of restaurant sales) for thesame prior year period.

Forthe nine months ended June 30, 2009 advertising costs decreased $165,000 to $969,000(5.7% of restaurant sales) from $1,134,000 (6% of restaurant sales) for thesame prior year period.

The decrease in advertising costs forboth the three and nine month periods is primarily due to the decrease inrestaurant sales, as contributionsare made to the advertising materials fund and regional advertising cooperativebased on a percentage of sales. In addition, $75,000 of payroll and employeebenefit costs have been eliminated in the current nine month period due to theretirement of our Vice President of Marketing in November 2008. We currentlyhave no plans to fill the position in the immediate future.

* *

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*Franchise Costs*

For the three months ended June 30, 2009, franchise costsdecreased $53,000 to $35,000 (.6% of total revenues) from $88,000 (1.3% oftotal revenues) for the same prior year period.

For the nine months ended June 30, 2009, franchise costsdecreased $167,000 to $108,000 (.6% of total revenues) from $275,000 (1.4% oftotal revenues) for the same prior year period.

The decrease infranchise costs for both the three and nine month periods is primarilyattributable to the reduction in payroll and employee benefit costs related to theVice President of Franchise Development position that was eliminated in July2008 in conjunction with Good Times' exit from the planned Midwest expansion. Wealso incurred $12,000 in legal costs in the prior nine month period ended June30, 2008 related to franchise registration filings.

*Lossfrom Operations*

Wehad a loss from operations of ($128,000) in the three months ended June 30, 2009compared to a loss from operations of ($57,000) for the same prior year period.

Wehad a loss from operations of ($1,218,000) in the nine months ended June 30,2009 compared to a loss from operations of ($644,000) for the same prior yearperiod.

The increase in loss from operations forboth the three and nine month periods is due primarily to the decrease in netrevenues and by other matters discussed in the "Restaurant OperatingCosts", "General and Administrative Costs" and "Franchise Costs"sections of Item 2.

*NetLoss*

Thenet loss was ($180,000) for the three months ended June 30, 2009 compared to anet loss of ($121,000) for the same prior year period. The change from thethree month period ended June 30, 2008 to June 30, 2009 was primarilyattributable to the increase in loss from operations for the three months endedJune 30, 2009, as well as: 1) a decrease in minority interest expense of $53,000compared to the same prior year period, 2) an increase in net interest expenseof $70,000 compared to the same prior year period, which is primarily relatedto the $2,500,000 PFGI II line of credit and 3) a $29,000 unrealized gain inthe current period related to our interest rate swap liability.

Thenet loss was ($1,427,000) for the nine months ended June 30, 2009 compared to anet loss of ($746,000) for the same prior year period. The change from the ninemonth period ended June 30, 2008 to June 30, 2009 was primarily attributable tothe increase in loss from operations for the nine months ended June 30, 2009,as well as: 1) a decrease in minority interest expense of $157,000 compared tothe same prior year period; 2) an increase in net interest expense of $177,000compared to the same prior year period; and 3) an $87,000 unrealized loss inthe current period related to our interest rate swap liability.

**Liquidityand Capital Resources**

*Cashand Working Capital*

Asof June 30, 2009, we had $671,000 cash and cash equivalents on hand. Wecurrently plan to use the cash balance and any cash generated from operationsfor our working capital needs in fiscal 2009. If we continue to experiencesignificant declines in our sales trends we will require additional workingcapital. As reported on form 8-K filed on April 20, 2009 we raised $185,000 offinancing for additional working capital and extended the maturity of our$2,500,000 line of credit with PFGI II, LLC to July, 2010 (see "FinancingActivities" below).  As a result, we currently do not anticipate the need foradditional working capital during fiscal 2009, however there is no assurancethat our sales and cash flow from operating activities will meet our projections.However, our cash flow from operating activities is largely dependent on oursales trends and if our same store sales trends do not improve we may requireadditional working capital in fiscal 2010.

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As of June 30, 2009, we had a working capitaldeficit of $1,087,000 primarily because the entire note payable to Wells FargoBank, N.A. of $876,000 is shown as a current liability due to certain technicalloan covenant defaults that exist as of June 30, 2009, which are described inNote 3 of the Condensed Consolidated Financial Statements. As noted in Note 3to the Condensed Consolidated Financial Statements, we have received aForbearance and Reservation of Rights letter from Wells Fargo Bank stating thatthey are accepting current principal and interest payments and are notcurrently accelerating the note, subject to agreeing to an acceptable RequiredCorrective Action for the covenant defaults.  It is unlikely that we will havean acceptable Required Corrective Action until our Earnings Before InterestTaxes and Depreciation ("EBITDA") improves.  If Wells Fargo were to acceleratethe note payable, we would need additional financing and we do not currentlyhave a source for such financing.  Additionally, we have recorded an $87,000 currentliability related to the unrealized loss on our interest rate swap, as noted inNote 5 to the Condensed Consolidated Financial Statements.

*FinancingActivities*

In May 2007 weborrowed $1,100,000 from Wells Fargo Bank under a note payable with an eightyear term with a floating interest rate at .50% below prime.  We simultaneouslyentered into an interest rate swap transaction with Wells Fargo Bank for thefull $1,100,000 with a fixed interest rate of 7.77% for the full eight yearterm coinciding with the note payable (see note 5 in item I. above). Asdiscussed above we are in default of certain technical loan covenants as of June30, 2009 on this Wells Fargo note, however we are not currently, and have neverbeen, in payment default under the note.

On March 1, 2008, weacquired the assets of two restaurants from an existing franchisee for a totalpurchase price of $1,330,000, including the land, site improvements, buildingand equipment for one restaurant and site improvements, building and equipmenton one restaurant.  The purchase price was funded primarily from cash on handof $272,000 and $849,000 in net proceeds from a simultaneous sale-leasebacktransaction to a third party investor involving the land, building andimprovements of one of the restaurants acquired.

As additionalconsideration and accounting in the acquisition, notes receivable from thefranchisee of $250,000 were forgiven, and a deferred gain of $26,000 waswritten off. The deferred gain was related to a prior sale to the franchisee ofone of the restaurants acquired. We did not record a gain or loss related tothis acquisition. The financial results of the two restaurants have beenincluded in our financial results from the acquisition date forward.

The acquisition ofthe two restaurants was accounted for using the purchase method as defined inSFAS No. 141, Business Combinations, (SFAS 141). The purchase price wasallocated as follows:

| Current assets net of current liabilities                                    |    $        14,000 |
|------------------------------------------------------------------------------|------------------------------------------------------------|
| Property and equipment          |      1,316,000                         |
| Total purchase price                                                         | $ 1,330,000                                                |

The sale-leaseback transaction was enteredinto simultaneously with the acquisition and involved selling the land,building and improvements of one of the acquired restaurants for net proceedsof $849,000. The sale-leaseback was the funding vehicle for the purchase of thetwo restaurants and was not used to raise cash for the Company or increase ourliquidity. The assets sold in the sale-leaseback transaction were neverrecorded in our financial statements as the long term lease entered into doesnot meet any of the criteria for a capital lease and therefore qualifies as anoperating lease, as defined in SFAS No. 13, Accounting for Leases. After thesale-leaseback transaction was accounted for, it resulted in $476,000 in fixedassets and $14,000 in current assets recorded on our financial statements. Webelieve the $476,000 represents the fair value of the net assets acquired(after completion of the simultaneous sale-leaseback transaction) consisting offurniture, fixtures and equipment in two restaurants and the site improvementsand building in one restaurant.

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In July 2008, we entered into a $2,500,000 promissorynote with an unrelated third party (PFGI II, LLC) and amended that note onApril 20, 2009.  The promissory note constitutes a revolving line-of-credit forthe development of new restaurants which may be advanced and repaid on amonthly basis from time to time.  Prior to maturity, no principal payments arerequired and monthly payments of interest only at the prime rate plus 2% (witha minimum rate of 8%) are due, with all unpaid principal due in July 2010.  Theloan is secured by separate leasehold deeds of trust and security agreementsrelated to six company-owned restaurants and first deeds of trust on two realproperties funded by the line of credit. The total outstanding balance on theline of credit was $2,500,000 at June 30, 2009.  Of the $2,500,000 outstandingbalance, $1,595,000 is related to the construction of one company-ownedrestaurant in Firestone, Colorado that opened in October 2008. The fullydeveloped restaurant is currently being marketed in the sale-leaseback market. The remaining balance is related to the purchase, entitlement and otherdevelopment fees on a parcel of land in Aurora, Colorado that will be eitherdeveloped into a company-owned restaurant or sold.

On April 20, 2009 asreported on form 8-K, Good Times Restaurants Inc. (the "Company") and GoodTimes Drive Thru Inc. ("GTDT"), a wholly owned subsidiary of the Company, entered into a loan agreement with GoldenBridge, LLC ("Golden Bridge"), pursuant to which Golden Bridge made a loan of$185,000 (the "Loan") to GTDT to be used for restaurant marketing and otherworking capital costs.  Eric Reinhard, Ron Goodson, David Grissen, RichardStark, and Alan Teran, who are all members of the Company's Board of Directorsand stockholders of the Company, are the sole members of Golden Bridge.  Eric Reinhard is the sole manager of Golden Bridge.  The Company's and GTDT's obtaining of the Loan from Golden Bridge andrelated transactions were duly approved in advance by the Company's Board ofDirectors by the affirmative vote of members thereof who did not have aninterest in the transaction.

The Loan is evidencedby a promissory note dated April 20, 2009 (the "Note") made by the Company andGTDT, as co-makers, and shall bear interest at a rate of 10% per annum on theunpaid principal balance.  The Note provides for monthly interest payments andwill mature and be due and payable in full on July 10, 2010.  The commitmentfee for the Loan is $3,700.  The Loan Agreement contains customary event ofdefault provisions and a cross-default provision with respect to the loanagreement for the PFGI II, LLC loan (as described above).

The Loan Agreementand the Note are subject to the terms of an intercreditor agreement dated April20, 2009 (the "Intercreditor Agreement"), among the Company, GTDT, Golden Bridge and PFGI II, LLC ("PFGI").  As previously reported by the Company, GTDTcurrently has a $2,500,000 revolving line of credit with PFGI (the "PFGILoan"), which was scheduled to mature on July 10, 2009, under which $2,500,000was outstanding as of April 20, 2009.  Under the Intercreditor Agreement, PFGIand Golden Bridge agreed that, upon any payments of principal or interest onthe Loan or the PFGI Loan by GTDT, PFGI and Golden Bridge shall each beentitled to its pro rata share of such payments in the amount of 93.1% for PFGIand 6.9% for Golden Bridge.  The Intercreditor Agreement also provides thatGTDT and the Company may prepay the Loan in whole or in part with the priorconsent of PFGI, and that any other indebtedness of the Company or GTDT to PFGIor Golden Bridge shall be subordinate in payment and lien priority to the Loanand the PFGI Loan to the extent of the proceeds of the collateral.  Under theIntercreditor Agreement, all money received from any foreclosure on thecollateral securing the PFGI Loan shall be applied to PFGI and Golden Bridgefor their expenses related to such event and then on a pari passu basis to PFGIand Golden Bridge in accordance with their respective pro rata shares.

Prior to the closingof the Loan, borrowings under the PFGI Loan were secured by GTDT's leaseholdestates and business assets with respect to certain of GTDT's restaurantslocated in Boulder, Adams, Jefferson and Larimer counties in Colorado and firstdeeds of trust on real property in Arapahoe and Weld counties in Coloradodeveloped under the PFGI Loan.  In connection with PFGI's entry into theIntercreditor Agreement, GTDT and the Company entered into a first amendment tothe amended and restated promissory note dated April 20, 2009 (the "PFGI NoteAmendment"), which extended the maturity date of the PFGI Loan until July 10,2010 and eliminated a loan balance threshold for release of the collateralsecuring the PFGI Loan.

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In connection with the Loan, the Companyissued a three-year warrant dated April 20, 2009 (the "Warrant") to GoldenBridge which provides that Golden Bridge may at any time from April 20, 2009until April 20, 2012 purchase up to 92,500 shares of the Company's common stock(the "Warrant Shares") at an exercise price of $1.15 per share.  The number ofWarrant Shares and the exercise price are subject to customary antidilutionadjustments upon the occurrence of any stock dividends, stock splits, reversestock splits, recapitalizations, reclassifications, stock combinations orsimilar events. The fair value of the warrants issued was determined to be $42,000with the following assumptions; 1) risk free interest rate of 1.27%, 2) an expectedlife of 3 years, and 3) an expected dividend yield of zero. The fair value of$42,000 was charged to the note discount and credited to Additional Paid inCapital. The note discount will be amortized over fourteen months and chargedto interest expense.

*CapitalExpenditures*

We do not have any plans for any significantcapital expenditures for the balance of fiscal 2009, other than normalrecurring capital expenditures for existing restaurants. Additional commitmentsfor the development of new restaurants in fiscal 2009 and beyond will depend onthe Company's sales trends, cash generated from operations and our access to additionalcapital.

*Cash Flows*

Netcash used in operating activities was $821,000 for the nine months ended June30, 2009. The net cash used in operating activities for the nine months ended June30, 2009 was the result of a net loss of ($1,427,000) as well as cash andnon-cash reconciling items totaling $606,000 (comprised of depreciation andamortization of $944,000, an unrealized loss of $87,000 related to our interestrate swap liability, minority interest of $60,000, an accounts payable decreaseof $263,000 and a net increase in other operating assets and liabilities of $102,000).

Netcash provided by operating activities was $313,000 for the nine months ended June 30, 2008.  The net cash provided by operating activities for the nine months ended June30, 2008 was the result of a net loss of ($746,000) and non-cash reconcilingitems totaling $1,059,000 (comprised of depreciation and amortization of $955,000,minority interest of $97,000, stock based compensation expense of $69,000,$95,000 in costs associated with the Omaha exit activity and a net decrease inother operating assets and liabilities of $157,000).

Netcash used in investing activities for the nine months ended June 30, 2009 was $282,000which reflects payments of $277,000 for the purchase of property and equipment(including $217,000 for new store development and $60,000 for miscellaneousrestaurant and corporate office related capital expenditures), $31,000 in loansmade to franchisees and $26,000 in principal payments received on loans tofranchisees.

Netcash used in investing activities for the nine months ended June 30, 2008 was $196,000which reflects payments of $729,000 for the purchase of property and equipment(including $302,000 for new store development, $289,000 for restaurantremodeling costs and $138,000 for miscellaneous restaurant related capitalexpenditures), $273,000 for the purchase of two existing franchise restaurants,$747,000 from the sale of fixed assets and $59,000 in principal paymentsreceived on loans to franchisees.

Netcash provided by financing activities for the nine months ended June 30, 2009was $360,000, which includes principal payments on notes payable and long termdebt of $91,000; borrowings on notes payable of $185,000; an advance on ourrevolving line of credit of $320,000; and distributions to minority interestsin partnerships of $54,000.

Net cash used in financing activitiesfor the nine months ended June 30, 2008 was $955,000, which includes principalpayments on notes payable and long term debt of $89,000, a repayment on ourrevolving line of credit of $750,000, distributions to minority interests inpartnerships of $219,000 and paid in capital activity of $103,000 related tothe exercise of stock options.

*Contingencies*

We remain contingently liable on various landleases underlying restaurants that were previously sold to franchisees.  Wehave never experienced any losses related to these contingent leaseliabilities, however if a franchisee defaults on the payments under the leases,we would be liable for the lease payments as the assignor or sublessor of thelease.  Currently we have not been notified nor are we aware of any leases indefault under which we are contingently liable, however there can be noassurance that there will not be in the future, which could have a materialeffect on our future operating results.

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*Subsequent Events*

* *

On August 14, 2009 we announced that ourBoard of Directors has formed a Special Committee comprised of directorsRichard Stark, Alan Teran and Geoff Bailey to explore and evaluate strategicalternatives aimed at enhancing shareholder value and explore alternatives toreduce the cost burdens of being a publicly held entity. The Company has hiredMastodon Ventures, Inc. to provide strategic advisory services and exploreother strategic alternatives that will further the long-term businessprospects of the Company and provide incremental value to its shareholders.

There can be no assuranceregarding the timing of or whether the Board will elect to pursue any of thestrategic alternatives it may consider, or that any such alternatives willresult in changes to the Company's plans or will be consummated and there is nocertainty that any strategic alternative will involve a transaction forshareholders at a share price equal to or above thecurrent trading price of the Company's shares, bearing in mind thatthe trading market for the Company's shares is relatively inactive and that theCompany has realized losses from operations during recentperiods.  The Company does not intend to provide updates or make anyfurther comment until the outcome of the process is determined or until thereare significant developments.  

The strategic advisory servicesagreement (the "Agreement") with Mastodon Ventures, Inc. ("Mastodon"), providesthat Mastodon will provide the Company with exclusive advisory services relatedto the possible restructuring of certain lease and debt agreements of theCompany and the identification of possible additional sources of capital forthe Company.  The services include but are not limited to assistance with thepreparation of information, structuring of a plan, negotiations with potentialinvestors, preparation of any documents required to be filed with federal andstate agencies relating to a Restructuring Plan and analyzing other strategicalternatives.   

The term of the Agreement is forsix months and terminable by the Company or Mastodon upon thirty days writtennotice.  Mastodon will receive an initial retainer fee of $25,000 together withthree monthly payments of $7,500 each in October, November and December 2009and a Success Fee of up to $250,000 upon the completion of a RestructuringEvent.  The Maximum Aggregate Fees to Mastodon shall not exceed $297,500 andthe Agreement includes provisions for the payment of lesser fees based upon theamount and type of capital raised, type of Restructuring Plan implemented or ifthe Company enters into an agreement with  persons or entities identified bythe Company within forty five days of the Agreement. 

While the Agreement provides that Mastodon isbeing engaged by the Company as an advisor to the Company to explorestrategic options, Mastodon understands that the Board of Directors of theCompany has appointed a Special Committee to consider certain of suchoptions on behalf of the shareholders of the Company.  Mastodon agreesthat its services shall include communicating with such Special Committeeas it may reasonably request and, if directed by such committee,Mastodon shall hold such communications in confidence

**Impactof Inflation**

We experienced moderation in commoditycosts during fiscal 2005 and 2006 and significant increases in fiscal 2007 andfiscal 2008.  State increases in the minimum wage resulted in an increase inour average hourly wage of $.60 per employee hour during fiscal 2007,approximately $.23 per employee hour in fiscal 2008 and $.07 per employee hourin January 2009. We have taken moderate price increases during fiscal 2009,which may or may not be sufficient to recover increased commodity costs orincreases in other operating expenses.

**Seasonality**

Revenuesof the Company are subject to seasonal fluctuation based primarily on weatherconditions adversely affecting restaurant sales in December, January, Februaryand March.

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

      Notrequired.

**ITEM 4T.  CONTROLS AND PROCEDURES**

**Conclusion Regardingthe Effectiveness of Disclosure Controls and Procedures**

Based on anevaluation of the Company's disclosure controls and procedures (as defined inRules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, asamended), as of the end of the period covered by this report on form 10Q, theCompany's Chief Executive Officer and Controller (its principal executiveofficer and principal financial officer, respectively) have concluded that theCompany's disclosure controls and procedures were effective.

**Changes in Internal Control overFinancial Reporting**

Therehave been no significant changes in the Company's internal control overfinancial reporting that occurred during the Company's fiscal quarter ended June 30,2009 that have materially affected, or are reasonably likely to materiallyaffect, the Company's internal control over financial reporting.

**PARTII - OTHER INFORMATION**

**ITEM 1.   LEGAL PROCEEDINGS**

Good Times Restaurants is subject tolegal proceedings which are incidental to its business.  These legal proceedingsare not expected to have a material impact on the Company.

**ITEM 1A. RISK FACTORS**

Not required.

**ITEM 2.   UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

None.

**ITEM 3.   DEFAULTSUPON SENIOR SECURITIES**

Weare in default of certain technical loan covenants as of June 30, 2009 on our $876,000note payable to Wells Fargo Bank, N.A. ("the Bank"). We have never been inpayment default on the note. On February 9, 2009 we received a Reservation ofRights letter from the Bank formally notifying us of the default of theEarnings Before Interest Taxes and Depreciation ("EBITDA") Coverage Ratio ofnot less than 1.5 to 1.0 and the Tangible Net Worth of not less than $5,000,000as set forth in the Credit Agreement for the period ending December 31, 2008. Theletter serves as notice that notwithstanding the foregoing events of default,the Bank is reserving all of its rights and remedies under the Credit Agreementand related agreements. The Bank is not now accelerating the Loan and iswilling to continue to accept regularly scheduled payments of principal andinterest under the Loan.

**ITEM4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

None.

**ITEM 5.   OTHERINFORMATION**

None.

** **

** **

** **

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**ITEM 6.   EXHIBITS**

(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

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

*32.1     Certificationof Chief Executive Officer and Controller pursuant to Section 906

*filed herewith

**SIGNATURES**

In accordance with the requirements ofthe Exchange Act, the registrant caused this report to be signed on its behalfby the undersigned, thereunto duly authorized.

|                   | **GOOD TIMES RESTAURANTS INC.**                       |
|------------------------|-------------------------------------------------------|
| DATE:  August 14, 2009 |                                                       |
|                        | /s/ Boyd E. Hoback                                    |
|                        | Boyd E. Hoback

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

Controller                          |

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