What changed in this filing

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Item 9A. Controls and Procedures

2022-01-14 compared with 2021-01-15 · 769 added, 1217 removed, 391 unchanged (84% of the section changed)

CONTROLS AND PROCEDURES .

Evaluation of Disclosure Controls and Procedures

Based on evaluations as

of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer, with the participation

of our management team, have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)

to the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) were effective to ensure that information

the Company is required to disclose in reports that it files or submits under the Securities Exchange Act is accumulated and communicated

to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure and is recorded,

processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

Management’s Assessment on Internal

Control over Financial Reporting

Evaluation of Disclosure Controls

and Procedures

Based on evaluations as of the

end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer, with the participation of our management

team, have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) to the Securities Exchange

Act of 1934, as amended (the “Exchange Act”)) were effective to ensure that information the Company is required to disclose

in reports that it files or submits under the Securities Exchange Act is accumulated and communicated to management, including the CEO

and CFO, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized, and reported

within the time periods specified in the SEC’s rules and forms.

Assessment on Internal Control over Financial Reporting

Our management is responsible

for establishing and maintaining adequate internal control over financial reporting.

Management, including our Chief Executive

Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the Company's internal control over financial

This evaluation was based on criteria established in Internal Control –

Integrated Framework issued

by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 (“COSO”).

Based on that evaluation, our

Chief Executive Officer and Chief Financial Officer have concluded that as of October 3, 2020, our internal control over financial

reporting was effective.

Limitations on the Effectiveness of Controls

and Permitted Omission from Management’s Assessment

Our internal control over

financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation

of financial statements for external purposes in accordance with generally accepted accounting principles.

All internal control

systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention

or overriding of controls.

Accordingly, even effective internal controls can only provide reasonable assurance with respect to

financial statement preparation.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk

that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures

may deteriorate.

This annual report does

not include an attestation report of our independent registered public accounting firm regarding internal control over financial

Management’s report was not subject to attestation by our independent registered public accounting firm pursuant

to rules of the SEC that permit us to provide only management’s report in this Annual Report on Form 10-K.

Management, including our Chief Executive Officer

and Chief Financial Officer, performed an evaluation of the effectiveness of the Company's internal control over financial reporting.

evaluation was based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations

of the Treadway Commission in 2013 (“COSO”).

Based on that evaluation, our Chief Executive Officer and Chief Financial

Officer have concluded that as of October 2, 2021, our internal control over financial reporting was effective.

in Internal Control Over Financial Reporting

period covered by this report, we identified and addressed a material weakness in internal control related to our effectiveness in distinguishing

between an operating lease and a finance lease for purposes of applying Accounting Standards Codification 842, Leases (“ASC 842”).

We adopted ASC 842 on September 29, 2019.

There have been changes in our internal control over financial reporting that has materially

affected, or is reasonably likely to materially affect our internal control over financial reporting.

Management has made changes in internal

control that are summarized in the Remediation Measures section below.

the material weakness described above we have implemented measures designed to ensure that control deficiencies contributing to the material

weakness are remediated and that such controls are designed, implemented and operating effectively.

The remediation actions include (i)

developing a training program for our accounting personnel designed to ensure that they have the relevant expertise related to the application

(ii) developing and maintaining documentation relating to ASC 842 to promote knowledge transfer when changes occur in personnel;

(iii) implementing a management review plan to monitor the impact of ASC 842 with focus on our financial reporting processes;

reporting on the remediation measures to the Audit Committee and the Board of Directors.

on the Effectiveness of Controls and Permitted Omission from Management’s Assessment

Our internal control over financial

reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with generally accepted accounting principles.

All internal control systems, no matter

how well designed, have inherent limitations, including the possibility of human error and the circumvention or overriding of controls.

Accordingly, even effective internal controls can only provide reasonable assurance with respect to financial statement preparation.

projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of

changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

This annual report does not include

an attestation report of our independent registered public accounting firm regarding internal control over financial reporting.

report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us

to provide only management’s report in this Annual Report on Form 10-K.

OTHER INFORMATION.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required

by Item 10 is incorporated by reference to our Proxy Statement for our 2021 Annual Meeting of Shareholders, which will be filed

with the Securities and Exchange Commission no later than 120 days from the end of our 2020 fiscal year.

The information under

the heading “Executive Officers”

in Part I of this Form 10-K is also incorporated herein by reference.

The information required by Item

10 is incorporated by reference to our Proxy Statement for our 2022 Annual Meeting of Shareholders, which will be filed with the Securities

and Exchange Commission no later than 120 days from the end of our 2021 fiscal year.

The information under the heading “Executive

Officers” in Part I of this Form 10-K is also incorporated herein by reference.

EXECUTIVE COMPENSATION .

The information required

by Item 11 is incorporated by reference to our Proxy Statement for our 2021 Annual Meeting of Shareholders, which will be filed

with the Securities and Exchange Commission no later than 120 days from the end of our 2020 fiscal year.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The information required by Item

11 is incorporated by reference to our Proxy Statement for our 2022 Annual Meeting of Shareholders, which will be filed with the Securities

and Exchange Commission no later than 120 days from the end of our 2021 fiscal year.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER

The information required by Item 12 is incorporated

2 unchanged sentences

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

The information required

by Item 13 is incorporated by reference to our Proxy Statement for our 2021 Annual Meeting of Shareholders, which will be filed

with the Securities and Exchange Commission no later than 120 days from the end of our 2020 fiscal year.

The information required by Item

13 is incorporated by reference to our Proxy Statement for our 2022 Annual Meeting of Shareholders, which will be filed with the Securities

and Exchange Commission no later than 120 days from the end of our 2021 fiscal year.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required

by Item 14 is incorporated by reference to our Proxy Statement for our 2021 Annual Meeting of Shareholders, which will be filed

with the Securities and Exchange Commission no later than 120 days from the end of our 2020 fiscal year.

The information required by Item

14 is incorporated by reference to our Proxy Statement for our 2022 Annual Meeting of Shareholders, which will be filed with the Securities

and Exchange Commission no later than 120 days from the end of our 2021 fiscal year.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES .

(a)(1) Financial Statements

See Part II, Item 8, “Financial

Statements and Supplementary Data”

for Financial Statements included with this Annual Report on Form 10-K.

(a)(2) Financial Statement

other schedules have been omitted because the required information is not applicable or the information is included in the consolidated

financial statements or the Notes thereto.

See Part II, Item 8, “Financial

Statements and Supplementary Data” for Financial Statements included with this Annual Report on Form 10-K.

(a)(2) Financial Statement Schedules

schedules have been omitted because the required information is not applicable or the information is included in the consolidated financial

statements or the Notes thereto.

(a)(3) Exhibits

The exhibits listed on

the accompanying Index to Exhibits are filed as part of this Annual Report.

The exhibits listed on the accompanying

Index to Exhibits are filed as part of this Annual Report.

Incorporated by Reference

1 unchanged sentence

Exhibit Description

Plan of Reorganization, Amended Disclosure Statement, Amended Plan of Reorganization, Modification of Amended Plan of Reorganization, Second Modification of Amended Plan of Reorganization, Order Confirming Plan of Reorganization

Restated Articles of Incorporation, adopted January 9, 1984

Plan of Reorganization, Amended Disclosure

Statement, Amended Plan of Reorganization, Modification of Amended Plan of Reorganization, Second Modification of Amended Plan of Reorganization,

Order Confirming Plan of Reorganization

Restated Articles of Incorporation, adopted

January 9, 1984

Employment Agreement with Joseph G.

Form of Employment Agreement between Joseph G.

Form of Employment Agreement between

Flanigan and the Company (as ratified and amended by the stockholders at the 1988 annual meeting is incorporated herein by reference).*

2 unchanged sentences

Management Agreement for Atlanta, Georgia, (#600)*

Settlement Agreement with Former Vice Chairman of the Board of Directors (re #5)

Hardware Purchase Agreement and Software License Agreement for restaurant point of sale system.

Settlement Agreement with Former Vice Chairman of the

Board of Directors (re #5)

Hardware Purchase Agreement and Software License Agreement

for restaurant point of sale system.

Key Employee Incentive Stock Option Plan

Limited Partnership Agreement of CIC Investors #13, Ltd,.

between Flanigan's Enterprises, Inc., as General Partner and fifty percent owner of the limited partnership, and Hotel Properties, LTD.

Form of Franchise Agreement between Flanigan's Enterprises, Inc.

Partnership Agreement of CIC Investors #13, Ltd,.

between Flanigan's Enterprises, Inc., as General Partner and fifty percent owner of

the limited partnership, and Hotel Properties, LTD.

of Franchise Agreement between Flanigan's Enterprises, Inc.

and Franchisees.

Licensing Agreement between Flanigan's Enterprises, Inc.

Flanigan, dated November 4, 1996, for non-exclusive use of the service mark "Flanigan's"

in the Commonwealth of Pennsylvania.

Limited Partnership Agreement of CIC Investors

#15 Ltd., dated March 28, 1997, between B.D.

as General Partner and numerous limited partners, including Flanigan's Enterprises,

Agreement between Flanigan's Enterprises, Inc.

Flanigan, dated November 4, 1996, for non-exclusive use of the service mark

"Flanigan's" in the Commonwealth of Pennsylvania.

Limited Partnership Agreement of CIC Investors #15 Ltd., dated March 28, 1997, between B.D.

as General Partner and numerous limited

partners, including Flanigan's Enterprises, Inc.

as a limited partner owning twenty five percent of the limited partnership.

Limited Partnership Agreement of CIC Investors #60 Ltd., dated July 8, 1997, between Flanigan's Enterprises, Inc., as General Partner and numerous limited partners, including Flanigan's Enterprises, Inc.

Partnership Agreement of CIC Investors #60 Ltd., dated July 8, 1997, between Flanigan's Enterprises, Inc., as General Partner and numerous

limited partners, including Flanigan's Enterprises, Inc.

as limited partner owning forty percent of the limited partnership.

Stipulated Agreed Order of Dismissal upon Mediation with former franchisee.

Limited Partnership Agreement of CIC Investors #70, Ltd.

Agreed Order of Dismissal upon Mediation with former franchisee.

Partnership Agreement of CIC Investors #70, Ltd.

dated February 1999 between Flanigan's Enterprises, Inc.

as General Partner and numerous limited partners, including Flanigan's Enterprises, Inc.

as General Partner and numerous

limited partners, including Flanigan's Enterprises, Inc.

as limited partner owning forty percent of the limited partnership.

Limited Partnership Agreement of CIC Investors #80, Ltd., dated May 2001, between Flanigan's Enterprises, Inc.

as General Partner and numerous limited partners, including Flanigan's Enterprises, Inc., as limited partner owning twenty five percent of the limited partnership.

Limited Partnership Agreement of CIC Investors #95, Ltd., dated July 2001, between Flanigan's Enterprises, Inc., as General Partner and numerous limited partners, including Flanigan's Enterprises, Inc.

Partnership Agreement of CIC Investors #80, Ltd., dated May 2001, between Flanigan's Enterprises, Inc.

as General Partner and numerous

limited partners, including Flanigan's Enterprises, Inc., as limited partner owning twenty five percent of the limited partnership.

Partnership Agreement of CIC Investors #95, Ltd., dated July 2001, between Flanigan's Enterprises, Inc., as General Partner and numerous

limited partners, including Flanigan's Enterprises, Inc.

as limited partner owning twenty eight percent of the limited partnership.

Limited Partnership Agreement of CIC Investors #65, Ltd., dated June 24, 2004, between Flanigan’s Enterprises, Inc., as General Partner, and numerous limited partners, including Flanigan’s Enterprises, Inc.

Limited Partnership Agreement of

CIC Investors #65, Ltd., dated June 24, 2004, between Flanigan’s Enterprises, Inc., as General Partner, and numerous limited partners,

including Flanigan’s Enterprises, Inc.

as limited partner owning twenty six percent of the limited partnership.

Amended and Restated Limited Partnership Certificate and Agreement of CIC Investors #13, Ltd., dated March 1, 2006, between Flanigan’s Enterprises, Inc., as General Partner, Flanigan’s Management Services, Inc.

and numerous limited partners, including Flanigan’s Enterprises, Inc.

and Restated Limited Partnership Certificate and Agreement of CIC Investors #13, Ltd., dated March 1, 2006, between Flanigan’s Enterprises,

Inc., as General Partner, Flanigan’s Management Services, Inc.

and numerous limited partners, including Flanigan’s Enterprises,

as limited partner owning thirty nine percent of the limited partnership.

Limited Partnership Agreement of CIC Investors #50, Ltd., dated October 17, 2006, between Flanigan’s Enterprises, Inc., as General Partner, Flanigan’s Management Services, Inc.

and numerous limited partners, including Flanigan’s Enterprises, Inc.

as limited partner owning sixteen percent of the limited partnership.

Limited Partnership Agreement of CIC Investors #55, Ltd., dated December 12, 2006, between Flanigan’s Enterprises, Inc., as General Partner, Flanigan’s Management Services, Inc.

and numerous limited partners, including Flanigan’s Enterprises, Inc.

as limited partner owning forty eight percent of the limited partnership.

Limited Partnership Agreement of CIC Investors #90, Ltd., dated January 18, 2012, between Flanigan’s Enterprises, Inc., as General Partner, Flanigan’s Management Services, Inc.

and numerous limited partners, including Flanigan’s Enterprises, Inc.

as limited partner owning five percent of the limited partnership.

Registrant's Form 10-K constitutes the Annual

Report to Shareholders for the fiscal year ended October 3, 2020.

Company's subsidiaries are set forth in this Annual Report on Form 10-K.

Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended of Chief Executive Officer .

Certification Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended of Chief Financial Officer.

Certification Pursuant to 18 U.S.C.

Partnership Agreement of CIC Investors #50, Ltd., dated October 17, 2006, between Flanigan’s Enterprises, Inc., as General Partner,

Flanigan’s Management Services, Inc.

and numerous limited partners, including Flanigan’s Enterprises, Inc.

as limited partner

owning sixteen percent of the limited partnership.

Partnership Agreement of CIC Investors #55, Ltd., dated December 12, 2006, between Flanigan’s Enterprises, Inc., as General Partner,

Flanigan’s Management Services, Inc.

and numerous limited partners, including Flanigan’s Enterprises, Inc.

as limited partner

owning forty eight percent of the limited partnership.

Partnership Agreement of CIC Investors #90, Ltd., dated January 18, 2012, between Flanigan’s Enterprises, Inc., as General Partner,

Flanigan’s Management Services, Inc.

and numerous limited partners, including Flanigan’s Enterprises, Inc.

as limited partner

owning five percent of the limited partnership.

Registrant's Form 10-K constitutes the Annual Report to Shareholders for the fiscal

year ended October 2, 2021.

Company's subsidiaries are set forth

in this Annual Report on Form 10-K.

Certification

Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended of Chief Executive Officer .

Certification

Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended of Chief Financial Officer.

Certification

Pursuant to 18 U.S.C.

Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer.

Certification Pursuant to 18 U.S.C.

Certification

Pursuant to 18 U.S.C.

Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer.

Compensatory plan or arrangement.

of XBRL documents as exhibits 101

documents as exhibits 101

FORM 10-K SUMMARY

Pursuant to the requirements

of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf

by the undersigned thereunto duly authorized.

of Section 13 or 15(d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by

the undersigned thereunto duly authorized.

FLANIGAN'S ENTERPRISES, INC.

4 unchanged sentences

Pursuant to the requirements

of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant

and in their capacities and on the dates indicated.

of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in

their capacities and on the dates indicated.

Chairman of the Board,

7 unchanged sentences

/s/ PATRICK J.

/s/ CHRISTOPHER O’NEIL

Vice President of Package

Christopher O’Neil

Operations and Director

3 unchanged sentences

Christopher J.

F LANIGAN’S

E NTERPRISES, I NC.

AND S UBSIDIARIES

Flanigan’s Enterprises, Inc.

and Subsidiaries

CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 3, 2020 AND SEPTEMBER 28, 2019

F LANIGAN’S

E NTERPRISES,

AND S UBSIDIARIES

OCTOBER 2, 2021 AND OCTOBER 3, 2020

Flanigan’s Enterprises, Inc.

and Subsidiaries

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

3 unchanged sentences

Statements of Income

Statements of Stockholders’

Statements of Cash Flows

F-5  – F-6

Notes to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

To the Shareholders and Board of Directors

Flanigan’s Enterprises, Inc.

F-7  – F-39

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Flanigan’s Enterprises, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of Flanigan’s Enterprises, Inc.

(the “Company”) as of October 3, 2020 and September 28, 2019,

the related consolidated statements of income, stockholders’

equity and cash flows for each of the two years in the period

ended October 3, 2020 and September 28, 2019, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of

October 3, 2020 and September 28, 2019, and the results of its operations and cash flows for each of the two years in the period

ended October 3, 2020, in conformity with accounting principles generally accepted in the United States of America.

Adoption of New Accounting Standard

As discussed in Note 1 to the consolidated

financial statements, the Company changed its method of accounting for leases due to the adoption of ASU No.

2016-02, Leases (Topic

842), as amended, effective September 29, 2019, using the modified retrospective approach.

We have audited the accompanying consolidated balance sheets of Flanigan’s Enterprises, Inc.

(the “Company”) as of October 2, 2021 and October 3, 2020, the related consolidated statements of income, stockholders’

equity and cash flows for each of the two years in the period ended October 2, 2021 and October 3, 2020, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of October 2, 2021 and October 3, 2020, and the results of its operations and cash flows for each of the two years in the period ended October 2, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility

of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with

the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether

the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have,

nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required

to obtain an understanding of internal control over financial reporting but not for expressing an opinion on the effectiveness

of the Company's internal control over financial reporting.

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to

assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made

by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provides

a reasonable basis for our opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provides a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ Marcum llp

We have served as the Company’s auditor

Fort Lauderdale, FL

We have served as the Company’s auditor since 1999.

West Palm Beach, FL

January 14, 2022

F LANIGAN’S ENTERPRISES, INC.

Flanigan’s Enterprises, Inc.

and Subsidiaries

CONSOLIDATED BALANCE SHEETS

OCTOBER 3, 2020 AND SEPTEMBER 28, 2019

OCTOBER 2, 2021 AND OCTOBER 3, 2020

(rounded to the nearest thousandth, except share amounts)

15 unchanged sentences

Total other assets

$ 112,484,000

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES AND STOCKHOLDERS'

Current Liabilities:

4 unchanged sentences

Operating lease liability, current

Deferred rent

Deferred revenue

Total current liabilities

1 unchanged sentence

Operating lease liability, non current

Deferred tax liabilities

Total liabilities

Commitments and Contingencies

Flanigan's Enterprises, Inc.

stockholders' equity

Common stock, $.10 par value;

Flanigan's Enterprises, Inc.

stockholders'

Common stock, $.

10 par value;

5,000,000 shares authorized;

5 unchanged sentences

ended 2021 and 2020

Total Flanigan's Enterprises, Inc.

stockholders' equity

Total Flanigan's Enterprises, Inc.

stockholders'

Noncontrolling interests

Total liabilities and equity

$ 112,484,000

F LANIGAN’S ENTERPRISES, INC.

See notes to consolidated financial statements.

Flanigan’s Enterprises, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

Years Ended October 3, 2020 and September 28, 2019

Years Ended October 2, 2021 and October 3, 2020

(rounded to the nearest thousandth, except share and per share amounts)

16 unchanged sentences

Interest and other income

Insurance recovery, net of casualty loss

Gain on forgiveness of PPP loans

Gain on sale of property and equipment

Income Before Provision for Income Taxes

1 unchanged sentence

Net Income Attributable to Noncontrolling Interests

Net Income Attributable to Flanigan's Enterprises, Inc.

Net Income Per Common Share:

2 unchanged sentences

Basic and Diluted

F LANIGAN’S ENTERPRISES, INC.

See notes to consolidated financial statements.

Flanigan’s Enterprises, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED OCTOBER 3, 2020 AND SEPTEMBER 28, 2019

(rounded to nearest

thousandth, except share amounts)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

YEARS ENDED OCTOBER 2, 2021 AND OCTOBER 3, 2020

(rounded to nearest thousandth, except share amounts)

Treasury Stock

Noncontrolling

Balance, September 28, 2019

Balance, October 3, 2020

Distributions to noncontrolling interests

Balance, October 2, 2021

Balance September 29, 2018:

Balance, September 28, 2019  

Distributions to noncontrolling interests

Purchase of noncontrolling interests

Dividends paid

Balance, September 28, 2019

F LANIGAN’S ENTERPRISES, INC.

Balance, October 3, 2020

See notes to consolidated financial statements.

Flanigan’s Enterprises, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED OCTOBER 3, 2020 AND SEPTEMBER 28, 2019

(rounded to nearest

YEARS ENDED OCTOBER 2, 2021 AND OCTOBER 3, 2020

(rounded to nearest thousandth)

Cash Flows from Operating Activities:

3 unchanged sentences

Amortization of leasehold interests

Amortization of finance lease right-of-use asset

Amortization of operating lease right-of-use asset

Gain/loss on sale/abandonment of property and equipment

Insurance recovery, net of casualty loss

Gain on forgiveness of PPP loans

Non-cash interest expense

Gain on sale of property and equipment

Loss on abandonment of property and equipment

Amortization of deferred loan costs

Deferred income taxes

Deferred rent

Deferred revenues

Income from unconsolidated limited partnership

6 unchanged sentences

Accounts payable and accrued expenses

Lease liabilities

Operating lease liabilities

Due to franchisees

3 unchanged sentences

Purchase of construction in progress

Deposit on purchase of fixed assets

Deposit on property and equipment

Purchase of liquor license

Proceeds from sale of fixed assets

5 unchanged sentences

Payments of long-term debt

Deferred loan costs

Proceeds from long-term debt

Dividends paid

Proceeds from PPP loans

Principal payments on finance leases

Distributions to noncontrolling interests

Purchase of noncontrolling interests

Net cash and cash equivalents provided by (used in)

financing activities

Net cash and cash equivalents provided by financing activities

Net Increase in Cash and Cash Equivalents

1 unchanged sentence

Cash and Cash Equivalents, Ending

F LANIGAN’S ENTERPRISES, INC.

See notes to consolidated financial statements.

Flanigan’s Enterprises, Inc.

and Subsidiaries

8 unchanged sentences

Construction in progress transferred to property and equipment

Insurance recovery receivable

Finance lease liabilities arising from right-of-use

Finance lease liabilities arising from right-of-use asset

Operating lease liabilities arising from right-of-use asset

F LANIGAN’S

E NTERPRISES, I NC.

AND S UBSIDIARIES

Purchase of vehicle in exchange for debt

Purchase of property in exchange for debt

Construction in progress in accounts payable

See notes to consolidated financial statements.

Flanigan’s Enterprises, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED OCTOBER 3, 2020 AND SEPTEMBER 28,

YEARS ENDED OCTOBER 2, 2021 AND OCTOBER 3, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Capitalization

The Company was incorporated in 1959

and operates in South Florida as a chain of full-service restaurants and package liquor stores.

Restaurant food and beverage sales

make up the majority of our total revenue.

As of October 3, 2020, we (i) operated 27 units consisting of restaurants, package liquor

stores and combination restaurants/package liquor stores that we either own or have operational control over and partial ownership

and (ii) franchise an additional five units, consisting of two restaurants, (one of which we operate) and three combination

restaurants/package liquor stores.

With the exception of one restaurant we operate under the name “The Whale’s Rib”,

and in which we do not have an ownership interest, all of the restaurants operate under our service mark “Flanigan’s

Seafood Bar and Grill”

and all of the package liquor stores operate under our service mark “Big Daddy’s Liquors”.

The Company’s Articles of

Incorporation, as amended, authorize us to issue and have outstanding at any one time 5,000,000 shares of common stock at a par

value of $0.10 per share.

We operate under a 52-53 week year

ending the Saturday closest to September 30.

Our fiscal year 2020 is comprised of a 53-week period and our fiscal year 2019 is

comprised of a 52-week period.

The Company was incorporated in 1959 and operates in South Florida as a chain of full-service restaurants and package liquor stores.

Restaurant food and beverage sales make up the majority of our total revenue.

As of October 2, 2021, we (i) operated 27 units consisting of restaurants, package liquor stores and combination restaurants/package liquor stores that we either own or have operational control over and partial ownership in;

and (ii) franchise an additional five units, consisting of two restaurants, ( one of which we operate) and three combination restaurants/package liquor stores.

With the exception of one restaurant we operate under the name “The Whale’s Rib”, and in which we do not have an ownership interest, all of the restaurants operate under our service marks “Flanigan’s Seafood Bar and Grill”

or “Flanigan’s”

and all of the package liquor stores operate under our service marks “Big Daddy’s Liquors”

or “Big Daddy’s Wine & Liquors”.

The Company’s Articles of Incorporation, as amended, authorize us to issue and have outstanding at any one time 5,000,000 shares of common stock at a par value of $ 0.10 per share.

We operate under a 52-53 week year ending the Saturday closest to September 30.

Our fiscal year 2021 is comprised of a 52-week period and our fiscal year 2020 is comprised of a 53-week period.

Principles of Consolidation

The consolidated financial statements

include the accounts of the Company and our subsidiaries, all of which are wholly owned, and the accounts of the eight limited

partnerships in which we act as general partner and have controlling interests.

All significant intercompany transactions and balances

have been eliminated in consolidation.

Noncontrolling interests in consolidated

subsidiaries are included in the consolidated balance sheets as a separate component of equity.

We report consolidated net income

inclusive of both the Company’s and the noncontrolling interests’

share, as well as amounts of consolidated net income

(loss) attributable to each of the Company and the noncontrolling interests.

The consolidated financial statements include the accounts of the Company and our subsidiaries, all of which are wholly owned, and the accounts of the eight limited partnerships in which we act as general partner and have controlling interests.

All significant intercompany transactions and balances have been eliminated in consolidation.

Noncontrolling interests in consolidated subsidiaries are included in the consolidated balance sheets as a separate component of equity.

We report consolidated net income inclusive of both the Company’s and the noncontrolling interests’

share, as well as amounts of consolidated net income (loss) attributable to each of the Company and the noncontrolling interests.

Use of Estimates

The consolidated financial statements

and related disclosures are prepared in conformity with accounting principles generally accepted in the United States.

We are required

to make estimates and assumptions that affect the reported amounts of assets and liabilities, the

The consolidated financial statements and related disclosures are prepared in conformity with accounting principles generally accepted in the United States.

We are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates (Continued)

disclosure of contingent assets

and liabilities at the date of the financial statements, and revenue and expenses during the period reported.

estimates include assessing the estimated useful lives of tangible assets, the recognition of deferred tax assets and

liabilities and estimates relating to the calculation of incremental borrowing rates and length of leases associated with

right-of-use assets and corresponding liabilities.

Estimates and assumptions are reviewed periodically and the effects of

revisions are reflected in our consolidated financial statements in the period they are determined to be necessary.

these estimates are based on our knowledge of current events and actions we may undertake in the future, they may ultimately

differ from actual results.

disclosure of contingent assets and liabilities at the date of the financial statements, and revenue and expenses during the period reported.

These estimates include assessing the estimated useful lives of tangible assets, the recognition of deferred tax assets and liabilities and estimates relating to the calculation of incremental borrowing rates and length of leases associated with right-of-use assets and corresponding liabilities.

Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in our consolidated financial statements in the period they are determined to be necessary.

Although these estimates are based on our knowledge of current events and actions we may undertake in the future, they may ultimately differ from actual results.

Cash and Cash Equivalents

We consider all highly liquid investments

with an original maturity of three months or less at the date of purchase to be cash equivalents.

Our inventories, which consist primarily

of package liquor products, are stated at the lower of average cost or net realizable value.

We consider all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents.

Our inventories, which consist primarily of package liquor products, are stated at the lower of average cost or net realizable value.

Liquor Licenses

In accordance with the Financial

Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 350, “

Intangibles - Goodwill and

Other ”, our liquor licenses are indefinite lived assets, which are not being amortized, but are tested annually for impairment

(see Note 10).

In accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 350, “

Intangibles - Goodwill and Other ”, our liquor licenses are indefinite lived assets, which are not being amortized, but are tested annually for impairment (see Note 13).

Property and Equipment

and equipment are stated at cost.

We capitalize expenditures for major improvements and depreciation commences when the assets

are placed in service.

Our property and equipment are stated at cost less accumulated depreciation and amortization.

We capitalize expenditures for major improvements and depreciation commences when the assets are placed in service.

We record depreciation on a straight-line basis over the estimated useful lives of the respective assets.

We charge maintenance and repairs, which do not improve or extend the life of the respective assets, to expense as incurred.

we dispose of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included

Our estimated

useful lives range from three to five years for vehicles and three to seven years for furniture and equipment.

Leasehold improvements

are currently being amortized over the shorter of the life of the lease or the life of the asset up to a maximum of 20 years.

building and building improvements of our corporate offices in Fort Lauderdale, Florida;

our building and building improvements

of our construction office/warehouse in Fort Lauderdale, Florida;

our combination restaurant and package liquor store in Hallandale,

When we dispose of assets, the cost and related accumulated depreciation are removed from the accounts and any gain or loss is included in income.

Our estimated useful lives range from three to five years for vehicles and three to seven years for furniture and equipment.

Leasehold improvements are currently being amortized over the shorter of the life of the lease or the life of the asset up to a maximum of 15 years.

Our buildings of our corporate offices in Fort Lauderdale, Florida;

our construction office/warehouse in Fort Lauderdale, Florida;

our combination restaurant and package liquor stores in Hallandale, Florida and North Lauderdale, Florida;

our restaurants in N.

Miami and Fort Lauderdale, Florida;

our package store in N.

Miami, Florida, our shopping center

in Miami, Florida and property in Fort Lauderdale, Florida, all of which we own, are being depreciated over forty years.

our property in Sunrise, Florida which we lease to a limited partnership (Store #85), our property in Fort Lauderdale, Florida which we lease to a franchisee (Store #15), our package store in N.

Miami, Florida, and our shopping center in Miami, Florida, all of which we own, are being depreciated over forty years .

Building improvements are being depreciated over 20 years.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Leasehold Interests

Our purchase of an existing restaurant

location usually includes a lease to the business premises.

As a result, a portion of the purchase price is allocated to the leasehold

Our purchase of an existing restaurant location usually includes a lease to the business premises.

As a result, a portion of the purchase price is allocated to the leasehold interest.

We capitalize the cost of the leasehold interest and amortization commences upon our assumption of the lease.

leasehold interests on a straight line basis over the remaining term of the lease.

We amortize leasehold interests on a straight line basis over the remaining term of the lease.

Investment in Limited Partnerships

We use the consolidation method

of accounting when we have a controlling interest in other companies and limited partnerships.

We use the equity method of

accounting when we have significant influence and an interest between twenty to fifty percent in other companies and limited

partnerships, but do not exercise control.

Under the equity method, our original investments are recorded at cost and are

adjusted for our share of undistributed earnings or losses.

All significant intercompany profits are eliminated.

Concentrations of Credit

Financial instruments that potentially

subject us to concentrations of credit risk are cash and cash equivalents.

We use the consolidation method of accounting when we have a controlling interest in other companies and limited partnerships.

We use the equity method of accounting when we have significant influence and an interest between twenty to fifty percent in other companies and limited partnerships, but do not exercise control.

Under the equity method, our original investments are recorded at cost and are adjusted for our share of undistributed earnings or losses.

All intercompany profits are eliminated.

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk are cash and cash equivalents.

Cash and Cash Equivalents

We maintain deposit balances

with financial institutions which balances may, from time to time, exceed the federally insured limits, which are $250,000 for

interest and non-interest bearing accounts.

We maintain deposit balances with financial institutions which balances may, from time to time, exceed the federally insured limits, which are $ 250,000 for interest and non-interest bearing accounts.

We have not experienced any losses in such accounts.

Major Suppliers

Throughout our

fiscal years 2020 and 2019, we purchased substantially all of our food products from one major supplier pursuant to a master distribution

agreement which entitled us to receive certain purchase discounts, rebates and advertising allowances that are recorded as a reduction

of cost of merchandise sold in periods in which they are earned.

We believe that several other alternative vendors are available,

if necessary.

Throughout our fiscal years 2020

and 2019, we purchased the majority of our alcoholic beverages from three local distributors.

Each distributor has exclusive rights

from the manufacturers to sell specific brands in given areas, so unless the exclusive distribution rights are transferred to another

vendor, there are no alternate distributors available.

Throughout our fiscal years 2021 and 2020, we purchased substantially all of our food products from one major supplier.

This major supplier represents 41 % and 48 % of our cost of goods sold and 24 % and 27 % of our accounts payable and accrued expenses as of October 2, 2021 and October 3, 2020, respectively.

We believe that several other alternative vendors are available, if necessary.

Throughout our fiscal years 2021 and 2020, we purchased the majority of our alcoholic beverages from three local distributors.

One of these three local distributors represents 26 % and 27 % of our cost of goods sold and 2 % and 5 % of our accounts payable and accrued expenses as of October 2, 2021 and October 3, 2020, respectively.

Each distributor has exclusive rights from the manufacturers to sell specific brands in given areas, so unless the exclusive distribution rights are transferred to another vendor, there are no alternate distributors available.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue related to food, bar

and package sale are recorded at the point of sale.

Royalty-related revenues, which are 1% of package sales and 3% of

restaurant sales, are recorded as income on a weekly basis, in arrears.

Revenue Recognition

Revenue-related to food, bar and package sales are recorded at the point of sale.

Royalty-related revenues, which are 1 % of package sales and 3 % of restaurant sales, are recorded as income on a weekly basis, in arrears.

We report our sales net of sales tax.

As new restaurants open, our income

from operations will be adversely affected due to our obligation to fund pre-opening costs are those typically associated with

the opening of a new restaurant and generally include payroll costs associated with the new restaurant opening, rent and promotional

Our Big Daddy’s Good Customer Loyalty Program awards customers with a $20 Good Customer Gift Card, (“Gift Card”) to be used at our Flanigan’s Seafood Bar and Grill restaurants for every ten (10) purchases of at least $25 made by such customer at our Big Daddy’s Liquors package liquor stores.

Pursuant to ASC 606, we recognize deferred revenue in the amount of the Gift Card upon the issuance of the Gift Card and reduce package liquor store revenue by a like amount.

We recognize revenue when the Gift Card is redeemed in our restaurants or when it expires unused.

Pre-opening Costs

As new restaurants open, our income from operations will be adversely affected due to our obligation to fund pre-opening costs.

Pre-opening costs are those typically associated with the opening of a new restaurant and generally include payroll costs associated with the new restaurant opening, rent and promotional costs.

We expense pre-opening costs as incurred.

advertising costs are expensed as incurred.

Advertising costs incurred during our fiscal years ended October 3, 2020 and September

28, 2019 were approximately ($113,000) and $97,000 respectively.

Advertising costs incurred

during our fiscal year ended October 3, 2020 were a credit as a result of lower advertising costs during the fiscal year due to

COVID-19 and advertising allowances.

Advertising Costs

Our advertising costs are expensed as incurred.

Advertising costs incurred during our fiscal years ended October 2, 2021 and October 3, 2020 were approximately $ 218,000 and $ 330,000 , respectively.

General Liability Insurance

We have general

liability insurance which incorporates a deductible of $10,000 per occurrence for both us and the limited partnerships.

Our insurance

carrier is responsible for $1,000,000 coverage per occurrence above our deductible, up to a maximum aggregate of $2,000,000 per

During our fiscal year ended October 3, 2020, we were able to purchase excess liability insurance, whereby our excess insurance

carrier is responsible for $10,000,000 coverage above our primary general liability insurance coverage.

We are un-insured against

liability claims in excess of $11,000,000 per occurrence and in the aggregate.

Our general policy

is to settle only those legitimate and reasonable claims asserted and to aggressively defend and go to trial, if necessary, on

frivolous and unreasonable claims.

Under our current liability insurance policy, any expense incurred by us in defending a claim,

including attorney's fees, are a part of our $10,000 deductible.

Value of Financial Instruments

The respective carrying value of

certain of our on-balance-sheet financial instruments approximated their fair value.

These instruments include cash and cash equivalents,

We have general liability insurance which incorporates a deductible of $ 10,000 per occurrence for both us and the limited partnerships.

Our insurance carrier is responsible for $ 1,000,000 coverage per occurrence above our deductible, up to a maximum aggregate of $ 2,000,000 per year.

During our fiscal year ended October 2, 2021, we were able to purchase excess liability insurance, whereby our excess insurance carrier is responsible for $ 10,000,000 coverage above our primary general liability insurance coverage.

We are un-insured against liability claims in excess of $ 11,000,000 per occurrence and in the aggregate.

Our general policy is to settle only those legitimate and reasonable claims asserted and to aggressively defend and go to trial, if necessary, on frivolous and unreasonable claims.

Under our current liability insurance policy, any expense incurred by us in defending a claim, including attorney's fees, are a part of our $10,000 deductible.

Fair Value of Financial Instruments

The respective carrying value of certain of our on-balance-sheet financial instruments approximated their fair value.

These instruments include cash and cash equivalents, other receivables, accounts payables, accrued expenses and debt.

We have assumed carrying values to approximate fair values for those financial instruments, which are short-term in nature or are receivable or payable on demand.

We estimated the fair value of debt based on current rates offered to us for debt of comparable maturities and similar collateral requirements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Value of Financial

Instruments (Continued)

receivables, accounts payables,

accrued expenses and debt.

We have assumed carrying values to approximate fair values for those financial instruments, which are

short-term in nature or are receivable or payable on demand.

We estimated the fair value of debt based on current rates offered

to us for debt of comparable maturities and similar collateral requirements.

In accordance with FASB ASC Topic

820-10-50-1, we utilized a valuation model to determine the fair value of our swap agreements.

As the valuation models for the

swap agreements were based upon observable inputs, they are classified as Level 2 (see Note 14).

Fair Value of Financial Instruments (Continued)

In accordance with FASB ASC Topic 820-10-50-1, we utilized a valuation model to determine the fair value of our swap agreements.

As the valuation models for the swap agreements were based upon observable inputs, they are classified as Level 2 (see Note 17).

Derivative Instruments

We account for derivative instruments

in accordance with FASB ASC Topic 815-10-05-4, “

Accounting for Derivative Instruments and Hedging Activities”

amended, which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments

embedded in other contracts, and hedging activities.

In accordance with FASB ASC Topic 815-10-05-4, derivative instruments are

recognized as assets or liabilities in the Company’s consolidated balance sheets and are measured at fair value.

all changes in fair value through earnings unless the derivative is determined to be an effective hedge.

We currently have two

derivatives which we have designated as effective hedges (See Note 14).

We account for our income taxes using

FASB ASC Topic 740, “

Income Taxes ”, which requires the recognition of deferred tax liabilities and assets for

expected future tax consequences of events that have been included in the consolidated financial statements or tax returns.

this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax

bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

the provisions regarding Accounting for Uncertainty in Income Taxes, which require the recognition of a financial statement

benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position

following an audit.

For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements

is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant

tax authority.

We applied these changes to tax positions for our fiscal years ending October 3, 2020 and September 28, 2019.

had no material unrecognized tax benefits and no adjustments to our financial position, results of operations or cash flows were

Generally, federal, state and local authorities may examine the Company’s tax returns for three years from the

date of filing and the current and prior three years remain subject to examination as of October 3, 2020.

We do not expect that

unrecognized tax benefits will increase within the next twelve months.

We recognize accrued interest and penalties related to uncertain

tax positions as income tax expense.

We account for derivative instruments in accordance with FASB ASC Topic 815-10-05-4, “

Accounting for Derivative Instruments and Hedging Activities”

as amended, which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and hedging activities.

In accordance with FASB ASC Topic 815-10-05-4, derivative instruments are recognized as assets or liabilities in the Company’s consolidated balance sheets and are measured at fair value.

We recognize all changes in fair value through earnings unless the derivative is determined to be an effective hedge.

We currently have two derivatives which we have designated as effective hedges (See Note 17).

We account for our income taxes using FASB ASC Topic 740, “

Income Taxes ”, which requires the recognition of deferred tax liabilities and assets for expected future tax consequences of events that have been included in the consolidated financial statements or tax returns.

Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

We follow the provisions regarding Accounting for Uncertainty in Income Taxes, which require the recognition of a financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit.

For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

For our fiscal years ending October 2, 2021 and October 3, 2020, we had no material unrecognized tax benefits and no adjustments to our financial position, results of operations or cash flows were required.

Generally, federal, state and local authorities may examine the Company’s tax returns for three years from the date of filing and the current and prior three years remain subject to examination as of October 2, 2021.

We do not expect that unrecognized tax benefits will increase within the next twelve months.

We recognize accrued interest and penalties related to uncertain tax positions as income tax expense.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Long-Lived Assets

We continually evaluate whether events

and circumstances have occurred that may warrant revision of the estimated life of our intangible and other long-lived assets or

whether the remaining balance of our intangible and other long-lived assets should be evaluated for possible impairment.

when such factors, events or circumstances indicate that intangible or other long-lived assets should be evaluated for possible

impairment, we will determine the fair value of the asset by making an estimate of expected future cash flows over the remaining

lives of the respective assets and compare that fair value with the carrying value of the assets in measuring their recoverability.

In determining the expected future cash flows, the assets will be grouped at the lowest level for which there are cash flows, at

the individual store level.

We continually evaluate whether events and circumstances have occurred that may warrant revision of the estimated life of our intangible and other long-lived assets or whether the remaining balance of our intangible and other long-lived assets should be evaluated for possible impairment.

If and when such factors, events or circumstances indicate that intangible or other long-lived assets should be evaluated for possible impairment, we will determine the fair value of the asset by making an estimate of expected future cash flows over the remaining lives of the respective assets and compare that fair value with the carrying value of the assets in measuring their recoverability.

In determining the expected future cash flows, the assets will be grouped at the lowest level for which there are cash flows, at the individual store level.

Earnings Per Share

We follow FASB

ASC Topic 260 - “

Earnings per Share .”

This section provides for the calculation of basic and diluted earnings

We follow FASB ASC Topic 260 - “

Earnings per Share .”

This section provides for the calculation of basic and diluted earnings per share.

Basic earnings per share includes no dilution.

Earnings per share are computed by dividing income available to common

stockholders by the basic and diluted weighted average number of common shares.

Recently Adopted and

Recently Issued Accounting Pronouncements

Effective September 29, 2019,

we adopted Accounting Standards Codification 842, Leases (“ASC 842”).

The new guidance requires that lease

arrangements be presented on the lessee’s balance sheet by recording a right-of-use asset and a lease liability equal

to the present value of the related future minimum lease payments.

We adopted the standard in the first quarter of fiscal

2020, using the modified retrospective approach.

Upon adoption, the Company recorded a right-of-use asset of $27.8 million

and a lease liability of $27.8 million.

At October 1, 2020 the Company decreased the operating lease right-of-use asset by

$2.6 million and the operating lease right-of-use liability by $2.6 million with the reclassification of an operating lease

to a finance lease due to the exercise of a purchase option subsequent to the end of our fiscal year 2020.

recorded a finance lease right-of-use asset of $4.8 million and a finance lease liability of $4.8 million.

We elected the transition package

of practical expedients, under which the Company does not have to reassess (1) whether any expired or existing contracts are leases,

or contain leases, (2) the lease classification for any expired or existing leases, and (3) initial direct costs for any existing

In addition, we made an accounting policy election to exclude leases with an initial term of 12 months or less from the

balance sheet.

This standard had a material impact on the Condensed Consolidated Statements of Income due to the escalations of

rent in the extensions but did not have a material impact on the Condensed Consolidated Statement of Cash Flows.

There are no recently issued accounting

pronouncements that we have not yet adopted that we believe will have a material effect on our financial statements.

Earnings per share are computed by dividing income available to common stockholders by the basic and diluted weighted average number of common shares.

Recently Adopted and Recently Issued Accounting Pronouncements

Effective September 29, 2019, we adopted Accounting Standards Codification 842, Leases (“ASC 842”).

The new guidance requires that lease arrangements be presented on the lessee’s balance sheet by recording a right-of-use asset and a lease liability equal to the present value of the related future minimum lease payments.

We adopted the standard using the modified retrospective approach.

Upon adoption, we recorded a right-of-use asset of $ 27.8 million and a lease liability of $ 27.8 million.

We elected the transition package of practical expedients, under which we are not required to reassess (1) whether any expired or existing contracts are leases, or contain leases, (2) the lease classification for any expired or existing leases, and (3) initial direct costs for any existing leases.

In addition, we made an accounting policy election to exclude leases with an initial term of twelve (12) months or less from the balance sheet.

This standard had a material impact on the Consolidated Balance Sheets due to the recording of a right-of-use asset and lease liability and on the Consolidated Statements of Income due to the escalations of rent in the extensions but did not have a material impact on the Consolidated Statement of Cash Flows.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Issued

The FASB issued guidance, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

In response to the concerns about structural risks of interbank offered rates (“IBORs”) and, particularly, the risk of cessation of the LIBOR, regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation.

This accounting standards update provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued.

LIBOR rates will be published until June 30, 2023 and all principal and interest of the $1.405M Loan will be due in full on January 23, 2023 and all principal and interest of the Term Loan will be fully amortized and paid in full as of December 28, 2022 so the discontinuance of LIBOR rates will have no impact on us.

PROPERTY AND EQUIPMENT

4 unchanged sentences

Less accumulated depreciation and amortization

(34,112,000 )

(31,311,000 )

Construction in progress

Depreciation and amortization expense

for the fiscal years ended October 3, 2020 and September 28, 2019 was approximately $3,144,000 and $2,919,000, respectively.

Depreciation and amortization expense for the fiscal years ended October 2, 2021 and October 3, 2020 was approximately $ 2,981,000 and $ 3,144,000 , respectively.

LEASEHOLD INTERESTS

1 unchanged sentence

Less accumulated amortization

Future leasehold amortization as of October 3, 2020

is as follows:

Future leasehold amortization as of October 2, 2021 is as follows:

Leasehold amortization expense for the fiscal years ended October 2, 2021 and October 3, 2020 was approximately $ 82,000 and $ 96,000 , respectively.

INVESTMENTS IN LIMITED PARTNERSHIPS

We have invested

with others (some of whom are affiliated with our officers and directors) in nine limited partnerships which own and operate nine

South Florida based restaurants under our service mark “Flanigan’s Seafood Bar and Grill”.

In addition to being

a limited partner in these limited partnerships, we are the sole general partner of eight of these

limited partnerships and manage and control the operations of the restaurants except for the restaurant located in Fort Lauderdale,

Florida where we only hold a limited partnership interest.

Generally, the terms of the limited

partnership agreements provide that until the investors’

cash investment in a limited partnership (including any cash invested

by us) is returned in full, the limited partnership distributes to the investors annually out of available cash from the operation

of the restaurant, as a return of capital, up to 25% of the cash invested in the limited

We have invested with others (some of whom are affiliated with our officers and directors) in nine limited partnerships which own and operate nine South Florida based restaurants under our service marks “Flanigan’s Seafood Bar and Grill”

or “Flanigan’s”.

In addition to being a limited partner in these limited partnerships, we are the sole general partner of eight of these limited partnerships and manage and control the operations of the restaurants except for the restaurant located in Fort Lauderdale, Florida where we only hold a limited partnership interest.

INVESTMENTS IN LIMITED PARTNERSHIPS (Continued)

partnership, with no management fee

Any available cash in excess of the 25% of the cash invested in the limited partnership distributed to the investors

annually, is paid one-half (½) to us as a management fee and one-half (1/2) to the investors (including us) prorata based

upon the investors’

Generally, the terms of the limited partnership agreements provide that until the investors’

cash investment in a limited partnership (including any cash invested by us) is returned in full, (available cash is distributed to the investors pro-rata based on ownership interest), the limited partnership distributes to the investors annually out of available cash from the operation of the restaurant, as a return of capital, up to 25 % of the cash invested in the limited partnership, with no management fee paid to us.

Any available cash in excess of the 25 % of the cash invested in the limited partnership distributed to the investors annually, is paid one-half ( ½

) to us as a management fee and one-half ( ½

) to the investors, (including us), pro-rata based on the investors’

investment, as a return of capital.

Once all of the investors (including us) have received, in full,

amounts equal to their cash invested, an annual management fee becomes payable to us equal to one-half (½) of cash available

to be distributed, with the other one half (½) of available cash distributed to the investors (including us) as a profit

distribution, pro-rata based upon the investors’

of October 3, 2020, limited partnerships owning eight (8) restaurants, (Surfside, Florida, Kendall, Florida, West Miami, Florida,

Pinecrest, Florida, Wellington, Florida, Miami, Florida, Pembroke Pines, Florida and Davie, Florida locations), have returned all

cash invested and we receive an annual management fee equal to one-half (½) of the cash available for distribution by the

limited partnership.

In addition to our receipt of distributable amounts from the limited partnerships, we receive a fee

equal to 3% of gross sales for use of our “Flanigan’s Seafood Bar and Grill”

service mark, which use is authorized

only while we act as general partner.

This 3% fee is “earned”

when sales are made by the limited partnerships and is

paid weekly, in arrears.

We are the sole general partner and

a 46% limited partner in this limited partnership which has owned and operated a restaurant in Surfside, Florida under our “Flanigan’s

Seafood Bar and Grill”

Once all of the investors, (including us), have received, in full, amounts equal to their cash invested, an annual management fee becomes payable to us equal to one-half ( ½

) of cash available to be distributed, with the other one-half ( ½

) of available cash distributed to the investors (including us), as a profit distribution, pro-rata based on the investors’

As of October 2, 2021, all eight ( 8 ) limited partnerships where we are the general partner and are eligible to receive a management fee, have returned to their respective investors all cash invested and we receive an annual management fee equal to one-half (½) of the cash available for distribution by these limited partnerships.

In addition to our receipt of distributable amounts from the limited partnerships, we receive a fee equal to 3 % of gross sales for use of our “Flanigan’s Seafood Bar and Grill”

or “Flanigan’s”

service marks, which use is authorized while we act as general partner only.

This 3% fee is “earned”

when sales are made by the limited partnerships and is paid weekly, in arrears.

Whether we will have any additional restaurants under development in the future will be dependent, among other things, on market conditions and our ability to raise capital.

We anticipate that we will continue to form limited partnerships to raise funds to own and operate restaurants under our service marks “Flanigan’s Seafood Bar and Grill”

or “Flanigan’s”

using the same or substantially similar financial arrangements.

Below is information on the nine limited partnerships which own and operate “Flanigan’s Seafood Bar and Grill”

or “Flanigan’s”

Surfside, Florida

We are the sole general partner and a 46 % limited partner in this limited partnership which has owned and operated a restaurant in Surfside, Florida under our “Flanigan’s Seafood Bar and Grill”

service mark since March 6, 1998.

33.3% of the remaining limited partnership interest is owned by

persons who are either our officers, directors or their family members.

This limited partnership has returned to its investors

all of their initial cash invested and we receive an annual management fee equal to one-half (½) of the cash available for

distribution by the limited partnership.

33.3 % of the remaining limited partnership interest is owned by persons who are either our officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash invested and we receive an annual management fee equal to one-half ( ½

) of the cash available for distribution by the limited partnership.

This entity is consolidated in the accompanying financial statements.

Kendall, Florida

We are the sole general partner and

a 41% limited partner in this limited partnership which has owned and operated a restaurant in Kendall, Florida under our “Flanigan’s

Seafood Bar and Grill”

We are the sole general partner and a 41 % limited partner in this limited partnership which has owned and operated a restaurant in Kendall, Florida under our “Flanigan’s Seafood Bar and Grill”

service mark since April 4, 2000.

28.3% of the remaining limited partnership interest is owned by

persons who are either our officers, directors or their family members.

This limited partnership has returned to its investors

all of their initial cash invested and we receive an annual management fee equal to one-half (½) of the cash available for

distribution by the limited partnership.

28.3 % of the remaining limited partnership interest is owned by persons who are either our officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash invested and we receive an annual management fee equal to one-half ( ½

) of the cash available for distribution by the limited partnership.

This entity is consolidated in the accompanying financial statements.

West Miami, Florida

We are the sole general partner and

a 27% limited partner in this limited partnership which has owned and operated a restaurant in West Miami, Florida under our “Flanigan’s

Seafood Bar and Grill”

service mark since October 11, 2001.

32.7% of the remaining limited partnership interest is owned

by persons who are either our officers, directors or their family members.

This limited partnership has returned to its investors

all of their initial cash invested and we

INVESTMENTS IN LIMITED PARTNERSHIPS (Continued)

West Miami, Florida

receive an annual management fee

equal to one-half (½) of the cash available for distribution by the limited partnership.

This entity is consolidated in

the accompanying financial statements.

We are the sole general partner and a 27 % limited partner in this limited partnership which has owned and operated a restaurant in West Miami, Florida under our “Flanigan’s Seafood Bar and Grill”

service mark since October 11, 2001.

32.7 % of the remaining limited partnership interest is owned by persons who are either our officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash invested and we receive an annual management fee equal to one-half ( ½

) of the cash available for distribution by the limited partnership.

This entity is consolidated in the accompanying financial statements.

Wellington, Florida

We are the sole general partner

and a 28% limited partner in this limited partnership which has owned and operated a restaurant in Wellington, Florida under our

“Flanigan’s Seafood Bar and Grill”

We are the sole general partner and a 28 % limited partner in this limited partnership which has owned and operated a restaurant in Wellington, Florida under our “Flanigan’s Seafood Bar and Grill”

service mark since May 27, 2005.

22.4% of the remaining limited partnership

interest is owned by persons who are either our officers, directors or their family members.

This limited partnership has returned

to its investors all of their initial cash invested and we receive an annual management fee equal to one-half (½) of the

cash available for distribution by the limited partnership.

22.4 % of the remaining limited partnership interest is owned by persons who are either our officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash invested and we receive an annual management fee equal to one-half ( ½

) of the cash available for distribution by the limited partnership.

This entity is consolidated in the accompanying financial statements.

Pinecrest, Florida

We are the sole general partner and

45% limited partner in this limited partnership which has owned and operated a restaurant in Pinecrest, Florida under our “Flanigan’s

Seafood Bar and Grill”

We are the sole general partner and 45 % limited partner in this limited partnership which has owned and operated a restaurant in Pinecrest, Florida under our “Flanigan’s Seafood Bar and Grill”

service mark since August 14, 2006.

20.2% of the remaining limited partnership interest is owned by

persons who are either our officers, directors or their family members.

This limited partnership has returned to its investors

all of their initial cash invested and we receive an annual management fee equal to one-half (1/2) of the cash available for distribution

by this limited partnership.

entity is consolidated in the accompanying financial statements.

20.2 % of the remaining limited partnership interest is owned by persons who are either our officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash invested and we receive an annual management fee equal to one-half ( 1/2 ) of the cash available for distribution by this limited partnership.

This entity is consolidated in the accompanying financial statements.

INVESTMENTS IN LIMITED PARTNERSHIPS (Continued)

Pembroke Pines, Florida

the sole general partner and a 24% limited partner in this limited partnership which has owned and operated a restaurant in Pembroke

Pines, Florida under our “Flanigan’s Seafood Bar and Grill”

We are the sole general partner and a 24 % limited partner in this limited partnership which has owned and operated a restaurant in Pembroke Pines, Florida under our “Flanigan’s Seafood Bar and Grill”

service mark since October 29, 2007.

the remaining limited partnership interest is owned by persons who are either our officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash invested and we receive an annual management fee

equal to one-half (1/2) of the cash available for distribution by this limited partnership.

This entity is consolidated in the

accompanying financial statements.

23.8 % of the remaining limited partnership interest is owned by persons who are either our officers, directors or their family members.

This entity is consolidated in the accompanying financial statements.

Davie, Florida

We are the sole

general partner and a 49% limited partner in this limited partnership which has owned and operated a restaurant in Davie, Florida

under our “Flanigan’s Seafood Bar and Grill”

We are the sole general partner and a 49 % limited partner in this limited partnership which has owned and operated a restaurant in Davie, Florida under our “Flanigan’s Seafood Bar and Grill”

service mark since July 28, 2008.

12.3% of the remaining limited

partnership interest is owned by persons who are either our officers, directors or their family members.

This limited partnership

has returned to its investors all of their initial cash invested and we receive an

INVESTMENTS IN LIMITED PARTNERSHIPS (Continued)

Davie, Florida (continued)

annual management

fee equal to one-half (1/2) of the cash available for distribution by this limited partnership.

This entity is consolidated in

the accompanying financial statements.

12.3 % of the remaining limited partnership interest is owned by persons who are either our officers, directors or their family members.

This entity is consolidated in the accompanying financial statements.

Miami, Florida

We are the sole general partner and

a 5% limited partner in this limited partnership which has owned and operated a restaurant in Miami, Florida under our “Flanigan’s

Seafood Bar and Grill”

We are the sole general partner and a 5 % limited partner in this limited partnership which has owned and operated a restaurant in Miami, Florida under our “Flanigan’s Seafood Bar and Grill”

service mark since December 27, 2012.

26.8% of the remaining limited partnership interest is owned

by persons who are either our officers, directors or their family members.

This limited partnership has returned to its investors

all of their initial cash invested and we receive an annual management fee equal to one-half (½) of the cash available for

distribution by this limited partnership.

26.8 % of the remaining limited partnership interest is owned by persons who are either our officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash invested and we receive an annual management fee equal to one-half ( ½

) of the cash available for distribution by this limited partnership.

This entity is consolidated in the accompanying financial statements.

During the second quarter of our

fiscal year 2019, we entered into a Lease Agreement (the “Sunrise Lease Agreement”) with a non-affiliated third party

to rent approximately 6,900 square feet of commercial space in Sunrise, Florida where, subject to certain conditions, we anticipate

opening a new restaurant location under our “Flanigan’s Seafood Bar and Grill”

Sunrise, Florida

During the second quarter of our fiscal year 2019, we entered into a Lease Agreement (the “Sunrise Lease Agreement”) with a non-affiliated third party to rent approximately 6,900 square feet of commercial space in Sunrise, Florida where, subject to certain conditions, we anticipate opening a new restaurant location under our “Flanigan’s”

service mark.

During the third

quarter of our fiscal year 2019, we assigned the Sunrise Lease Agreement to a newly formed limited partnership in which we currently

are (i) the sole general partner;

During the third quarter of our fiscal year 2019, we assigned the Sunrise Lease Agreement to a newly formed limited partnership in which we currently are (i) the sole general partner;

and (ii) our wholly owned subsidiary is the sole limited partner.

While there can be no assurances

that we will be successful in doing so, we intend to sell limited partnership interests to third parties as well as affiliates

of the Company in order to raise net proceeds, in the amount of $5,000,000, which proceeds will be used to renovate this potential

restaurant location.

We anticipate that the new restaurant location’s ownership and operating structure will be substantially

similar to that of our other restaurants owned by limited partnerships.

While there can be no assurances that we will be successful in doing so, we are currently selling limited partnership interests to third parties as well as affiliates of the Company in order to raise net proceeds, in the amount of $ 5,000,000 , which proceeds will be used to renovate this potential restaurant location.

We anticipate that the new restaurant location’s ownership and operating structure will be substantially similar to that of our other restaurants owned by limited partnerships.

Through October 2, 2021, we have made capital contributions of $ 2,982,000 , including construction in progress of $ 2,224,000 , in this limited partnership.

INVESTMENTS IN LIMITED PARTNERSHIPS (Continued)

Miramar, Florida

During the fourth quarter of our fiscal year 2019, we entered into a Lease Agreement (the “Miramar Lease Agreement”) with a non-affiliated third party to rent approximately 6,000 square feet of commercial space in Miramar, Florida where, subject to certain conditions, we anticipate opening a new restaurant location under our “Flanigan’s”

service mark.

Subsequent to the end of our fiscal year 2021, we assigned the Miramar Lease Agreement to a newly formed limited partnership in which we currently are (i) the sole general partner;

and (ii) our wholly owned subsidiary is the sole limited partner.

While there can be no assurances that we will be successful in doing so, we are currently selling limited partnership interests to third parties as well as affiliates of the Company in order to raise net proceeds, in the amount of $ 4,000,000 , which proceeds will be used to renovate this potential restaurant location.

We anticipate that the new restaurant location’s ownership and operating structure will be substantially similar to that of our other restaurants owned by limited partnerships.

Through October 2, 2021, we have made capital contributions of $ 313,000 , including construction on progress of $ 260,000 , in this limited partnership.

Fort Lauderdale, Florida

A corporation, owned by a member

of our Board of Directors, acts as sole general partner of a limited partnership which has owned and operated a restaurant in Fort

Lauderdale, Florida under our “Flanigan’s Seafood Bar and Grill”

A corporation, owned by a member of our Board of Directors, acts as sole general partner of a limited partnership which has owned and operated a restaurant in Fort Lauderdale, Florida under our “Flanigan’s Seafood Bar and Grill”

service mark since April 1, 1997.

25% limited partnership interest in this limited partnership.

31.9% of the remaining limited partnership interest is owned by persons

who are either our officers, directors or their family members.

We have a 25% limited partnership interest in this limited partnership.

31.9 % of the remaining limited partnership interest is owned by persons who are either our officers, directors or their family members.

We have a franchise arrangement with this limited partnership.

For accounting purposes, we do not consolidate the operations of this limited partnership into our operations.

This entity is reported

using the equity method in the accompanying consolidated financial statements.

The following is a summary of condensed unaudited

financial information pertaining to our limited partnership investment in Fort Lauderdale, Florida:

This entity is reported using the equity method in the accompanying consolidated financial statements.

The following is a summary of unaudited financial information pertaining to our limited partnership investment in Fort Lauderdale, Florida:

October 2, 2021

October 3, 2020

Financial Position:

2 unchanged sentences

Current Liabilities

Non-Current Liabilities

Total Liabilities

Operating Results:

INVESTMENT IN REAL PROPERTY;

OPTION TO LEASE AGREEMENT:

Pompano Beach, Florida

During the second quarter of our

fiscal year 2019, we purchased from an unrelated third party the vacant real property (the “Property”), located at

9 th Street, Pompano Beach, Florida for $1,300,000 cash at closing.

The Property is adjacent to property owned

by a third party unaffiliated with us and leased to another third party unaffiliated with us for use as a restaurant (the “Adjacent

Property”).

At closing, we executed an Option to Lease Agreement to lease the Adjacent Property for a 50 year term commencing

in November, 2022.

We will either (i) sublease the building on the Adjacent Property to a related franchisee for operation as a

“Flanigan’s Seafood Bar and Grill”

restaurant and use the Property as parking;

or (ii) renovate the building

on the Adjacent Property for operation as a “Flanigan’s Seafood Bar and Grill”

restaurant and use the Property

If we renovate this new restaurant location on the Adjacent Property, we plan to raise funds using our limited partnership

ownership model.

PURCHASE OF REAL PROPERTY:

North Lauderdale, Florida (“Flanigan’s Seafood Bar and Grill”/”Big Daddy’s Liquors”)

On October 7, 2014, we entered into an Amendment to Lease Agreement (the “Lease Amendment”) with a non-affiliated third party from whom we rented approximately 4,600 square feet of commercial space located at 5450 N.

State Road 7, North Lauderdale, Florida where we operate a combination “Flanigan’s Seafood Bar and Grill”

restaurant and “Big Daddy’s Liquors”

package liquor store (Store #40).

The Lease Amendment extended the term of the Lease Agreement until December 31, 2020 and granted us the option to purchase, (the “Option to Purchase”), the real property and improvements through December 31, 2020 for $ 1,200,000 .

During the fourth quarter of our fiscal year 2020 we exercised the Option to Purchase and closed on the acquisition of the property on December 31, 2020.

We paid all cash at closing.

Sunrise, Florida (“Flanigan’s Seafood Bar and Grill”)

Sunrise Boulevard, Sunrise, Florida where, subject to certain conditions, we anticipate opening a new restaurant location.

The Sunrise Lease Agreement granted us an option to purchase, (the “Option to Purchase”) the real property and improvements by March 2, 2021 for $ 4,800,000 .

During the third quarter of our fiscal year 2019, we assigned the Sunrise Lease Agreement, excluding the Option to Purchase, to a newly formed limited partnership.

During the first quarter of our fiscal year 2021, we exercised the Option to Purchase and during the second quarter of our fiscal year 2021 we closed on the acquisition of the real property located at 14301 W.

Sunrise Boulevard, Sunrise, Florida.

We financed this acquisition with a loan from an unrelated third party lender in the principal amount of $ 2.2 million and paid cash for the balance.

The mortgage loan accrues interest at the fixed annual rate of 3.65 %, is amortized over fifteen ( 15 ) years, and requires us to pay monthly payments of principal and interest in the amount of $ 15,900 with the entire principal balance and all accrued but unpaid interest due in March, 2036.

PURCHASE OF 4 COP LIQUOR LICENSE

During the third quarter of our fiscal year 2021, we purchased a 4 COP quota liquor license, which permits the sale of beer, wine and liquor for on and/or off premises consumption, for Broward County, Florida from an unrelated third party for $ 192,000 .

The liquor license is currently inactive, but we intend to use it in connection with the operation of a package liquor store we are developing in Miramar, Florida.

EXECUTION OF LEASES FOR NEW LOCATIONS:

Miramar, Florida

(“Flanigan’s Seafood Bar and Grill”)

During fourth quarter of our fiscal

year 2019, we entered into a Lease Agreement for a non-affiliated restaurant location in a shopping center in Miramar, Florida.

The shopping center is currently in the developmental stage and the Lease Agreement is still contingent upon our receipt of delivery

of the leased premises by August 28, 2021.

We plan to assign the Lease Agreement to a limited partnership in which (i) we will

be the sole general partner;

and (ii) a wholly owned subsidiary will be the limited partner.

While there can be no assurances that

we will be successful in doing so, we intend to sell limited partnership interests to third parties as well as affiliates of the

Company in order to raise net proceeds, in an amount to be determined, which proceeds will be used to renovate this potential restaurant

We anticipate that the new restaurant location’s ownership and operating structure will be substantially similar

to that of our other restaurants owned by limited partnerships.

Any amounts we advance to the limited partnership will be applied

as a credit to limited partnership equity in the limited partnership we may acquire (which equity shall be purchased at the same

price and upon the same terms as other equity investors).

If we do not acquire equity in the limited partnership for at least $250,000,

Miramar, Florida (“Flanigan’s Seafood Bar and Grill”)

During the fourth quarter of our fiscal year 2019, we entered into a Lease Agreement with a non-affiliated third party, (the “Landlord”), to rent approximately 6,000 square feet of commercial space for a restaurant location in a shopping center at 11225 Miramar Parkway, #250, Miramar, Florida 33024 (Store #25), which shopping center was under construction and where we anticipate opening a new restaurant location.

We assigned this Lease Agreement to a newly formed limited partnership in which we currently are (i) the sole general partner;

and (ii) our wholly owned subsidiary is the sole limited partner.

While there can be no assurances that we will be successful in doing so, we are currently selling limited partnership interests to third parties, as well as affiliates of the Company, in order to raise net proceeds in an amount of $ 4,000,000 , which proceeds will be used to build out this potential restaurant location.

The new restaurant location’s ownership and operating structure will be substantially similar to that of our other restaurants owned by limited partnerships.

Any amounts we advance to the limited partnership will be applied as a credit to limited partnership equity in the limited partnership we may acquire (which equity shall be purchased at the same price and upon the same terms as other equity investors).

Any excess amounts advanced by us will be reimbursed to us by the limited partnership without interest.

Through October 3, 2020,

we have no advances to the limited partnership.

Miramar, Florida

(“Big Daddy’s Liquors”)

During the fourth quarter of our

fiscal year 2019, we entered into a Lease Agreement for a non-affiliated package liquor store location in a shopping center in

Miramar, Florida, directly adjacent to the new non-affiliated restaurant location.

The shopping center is currently in the developmental

stage and the Lease Agreement is still contingent upon our receipt of delivery of the leased premises by August 28, 2021.

package liquor store location will be Company owned.

During the fourth quarter of our fiscal year 2021, we received notification from the Landlord that it had completed substantially all of the Landlord’s work under the Lease Agreement and was delivering possession of the leased premises to us.

Through October 2, 2021, we made advances of $ 313,000 to the limited partnership.

EXECUTION OF LEASES FOR NEW LOCATIONS:

Miramar, Florida (“Big Daddy’s Liquors”)

During the fourth quarter of our fiscal year 2019, we entered into a Lease Agreement with a non-affiliated third party, (the “Landlord”), to rent approximately 2,000 square feet of commercial space for a package liquor store glocation in a shopping center at 11225 Miramar Parkway, #245, Miramar, Florida 33024 (Store #24), which shopping center was under construction and where we anticipate opening a new retail package liquor store.

The new package liquor store location will be Company-owned.

EXTENSION OF LEASES FOR EXISTING LOCATIONS

Pinecrest, Florida

During the second quarter of our fiscal year 2021, the lease with an unrelated third party for the space located at 11415 S.

Dixie Highway, Pinecrest, Florida (Store #13) where a limited partnership owned restaurant operates, was extended through January 31, 2031 with one ( 1 ) five ( 5 ) year renewal option.

The fixed annual rental was reduced by 7½

% and the fixed annual rental increases were reduced to 2 % from 3 % for the first seven ( 7 ) years.

Otherwise the extended lease is on substantially the same terms and conditions, including fixed annual rental increases and continued percentage rent as existed before the extension.

Surfside, Florida

During the second quarter of our fiscal year 2021, the lease with an unrelated third party for the space located at 9516 Harding Avenue, Surfside, Florida (Store #60) where a limited partnership owned restaurant operates was extended through December 31, 2026.

The fixed annual rental increases were increased from $ 0.75 per square foot annually to $ 1.00 per square foot effective January 1, 2022 .

Otherwise, the extended lease is on substantially the same terms and conditions as existed before the extension.

EXPANSION OF LEASED PREMISES;

EXTENSION OF LEASE

Miami, Florida

During the third quarter of our fiscal year 2021, the lease with an unrelated third party for the space located at 9857 SW 40 th Street, Miami, Florida (Store #90), where a limited partnership owned restaurant operates, was amended to add approximately 2,100 square feet to the leased premises and extend the term of the lease through March 31, 2031 , with one ( 1 ) five ( 5 ) year renewal option.

The fixed annual rental for the expanded leased premises was increased by $ 5,000 monthly, with fixed annual rental increases.

Otherwise, the extended lease is on substantially the same terms and conditions as existed before the expansion and extension.

MORTGAGE / FINANCED INSURANCE PREMIUMS:

(a) Mortgage on Real

On November 27, 2019,

our wholly owned subsidiary, Flanigan’s Calusa Center, LLC, re-financed its mortgage loan with an unrelated third party lender,

increasing the principal amount borrowed from $2.72 million to $7.21 million.

The principal balance and all accrued interest of

the mortgage loan that had been outstanding matured November 30, 2019.

The re-financed mortgage loan earns interest at the fixed

annual rate of 3.86%, is amortized over twenty (20) years, requires us to pay monthly payments of principal and interest in the

amount of $43,373 with the entire principal balance and all accrued interest due in November 2026.

We intend to use the excess

funds we received from the re-financing of this mortgage loan (approximately $4.4 million) for working capital.

(b) Financed Insurance

During our fiscal year 2020, we

bound and financed through an unrelated third party lender the premiums on the following property, general liability, excess liability

and terrorism insurance policies:

the policy year beginning December 30, 2019, our general liability insurance, excluding limited partnerships, is a one (1) year

policy, including automobile and excess liability coverage.

The annual premium for this insurance coverage is $418,000;

the policy year beginning December 30, 2019, our general liability insurance for our limited partnerships is a one (1) year policy,

including excess liability coverage.

The annual premium for this insurance coverage is $459,000;

the policy year beginning December 30, 2019, our property insurance is a one (1) year policy and the annual premium for this insurance

coverage is $561,000 ;

the policy year beginning December 30, 2019, our excess liability insurance is a one (1) year policy and the annual premium for

this insurance coverage is $360,000;

the policy year beginning December 30, 2019, our terrorism insurance is a one (1) year policy and the annual premium for this insurance

coverage is $12,000.

Of the $1,810,000 annual premium

amounts, which includes coverage for our franchises which are not included in our consolidated financial statements, we financed

$1,656,000 through an unaffiliated third party lender.

The finance agreement obligates us to repay the amounts financed together

with interest at the rate of 2.55% per annum, over 11 months, with monthly payments of principal and interest, each in the amount

of $153,000 .

The finance agreement is secured by a first priority security interest in all insurance policies, all unearned

premium, return premiums, dividend payments and loss payments thereof.

As of October 3, 2020, the aggregate

principal balance owed to the third party lender from the financing of our insurance policies is $365,000, excluding amounts which

are reimbursed by our franchises for insurances covering their operations, but including the annual premiums for boiler insurance

($2,000) and directors and officers liability insurance ($34,000), which were added to the finance agreement during the third quarter

of our fiscal year 2020 and are financed over the balance of the term of the same.

During the third quarter of our fiscal

year 2020, we, certain of the entities owning the limited partnership stores (the “LP’s”), franchised stores

(the “Franchisees”), as well as the store we manage but do not own (the “Managed Store”) (collectively,

the “Borrowers”), applied for and received loans from an unrelated third party lender pursuant to the Paycheck Protection

Program (the “PPP”) under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) enacted

March 27, 2020, in the aggregate principal amount of approximately $13.1 million, (the “PPP Loans”), of which approximately:

(a) Mortgage on Real Property - Sunrise, Florida

Sunrise Boulevard, Sunrise, Florida.

We financed this acquisition with a loan from an unrelated third party lender in the principal amount of $ 2.2 million.

(b) Mortgage on Real Property –

North Miami, Florida

During the third quarter of our fiscal year 2021, we re-financed with a loan from an unrelated third party lender, our mortgage loan encumbering the real property and improvements located at 13105 –

13205 Biscayne Boulevard, North Miami, Florida where our Flanigan’s Seafood Bar and Grill restaurant and Big Daddy’s Liquors retail package liquor store operate (Store #20), increasing the principal amount borrowed from $ 1.5 million to $ 4.3 million.

We received the net cash proceeds from the refinancing transaction ($ 2.8 million) shortly after the end of the third quarter of our fiscal year 2021.

The re-financed mortgage loan earns interest at the fixed annual rate of 3.63 %, is amortized over fifteen ( 15 ) years, requires us to pay monthly payments of principal and interest in the amount of $ 31,129 with the entire principal balance and all accrued interest due in July, 2036.

We intend to use the excess funds we received from the re-financing of this mortgage loan for working capital purposes.

During our fiscal year 2021, we financed the premiums on the following property, general liability, excess liability and terrorist policies, totaling approximately $ 1.94 million, which property, general liability, excess liability and terrorist insurance includes coverage for our franchises which are not included in our consolidated financial statements:

MORTGAGE / FINANCED INSURANCE PREMIUMS:

(i) For the policy year beginning December 30, 2020, our general liability insurance, excluding limited partnerships, is a one ( 1 ) year policy with our insurance carriers.

The one (1) year general liability insurance premium is in the amount of $ 340,000 ;

(ii) For the policy year beginning December 30, 2020, our general liability insurance for our limited partnerships is a one ( 1 ) year policy with our insurance carriers.

The one (1) year general liability insurance premium is in the amount of $ 426,000 ;

(iii) For the policy year beginning December 30, 2020, our automobile insurance is a one (1) year policy.

The one ( 1 ) year automobile insurance premium is in the amount of $ 93,000 ;

(iv) For the policy year beginning December 30, 2020, our property insurance is a one (1) year policy.

The one ( 1 ) year property insurance premium is in the amount of $ 627,000 ;

(v) For the policy year beginning December 30, 2020, our excess liability insurance is a one (1) year policy.

The one ( 1 ) year excess liability insurance premium is in the amount of $ 443,000 ;

(vi) For the policy year beginning December 30, 2020, our terrorist insurance is a one (1) year policy.

The one ( 1 ) year terrorist insurance premium is in the amount of $ 5,000 ;

(vii) For the policy year beginning December 30, 2020, our equipment breakdown insurance is a one (1) year policy.

The one ( 1 ) year equipment breakdown insurance premium is in the amount of $ 6,000 .

Of the $1,940,000 annual premium amounts, which includes coverage for our franchises which are not included in our consolidated financial statements, we financed $ 1,776,000 through an unaffiliated third party lender.

The finance agreement obligates us to repay the amounts financed together with interest at the rate of 2.45 % per annum, over 11 months , with monthly payments of principal and interest of $ 164,000 .

The finance agreement is secured by a first priority security interest in all insurance policies, all unearned premium, return premiums, dividend payments and loss payments thereof.

During the third quarter of our fiscal year 2021, we financed the premium of our directors and officers liability insurance policy for the one ( 1 ) year period commencing April 15, 2021.

The one ( 1 ) year directors and officers liability insurance policy premium is in the amount of $ 55,000 .

Of the $ 55,000 annual premium amount, we financed $ 50,000 through an unaffiliated third party lender.

The finance agreement obligates us to repay the amount financed together with interest at the rate of 4.00 % per annum, over 11 months, with monthly payments of principal and interest of $ 4,700 .

The finance agreement is secured by a first priority security interest in all insurance policies, all unearned premium, return premiums, dividend payments and loss payments thereof.

As of October 2, 2021, the aggregate principal balance owed from the financing of our property and general liability insurance policies, including the financing of our directors and officers liability insurance policy, but excluding coverage for our franchises, (of approximately $ 113,000 ), which are not included in our consolidated financial statements is $ 409,000 .

CORONAVIRUS PANDEMIC:

In March 2020, a novel strain of coronavirus was declared a global pandemic and a National Public Health Emergency.

The novel coronavirus pandemic and related “shelter-in-place”

orders and other governmental mandates relating thereto (collectively, “COVID-19”) adversely affected and will, in all likelihood continue to adversely affect, our restaurant operations and financial results for the foreseeable future.

Throughout our fiscal year 2021, in accordance with guidance from health officials, we offered both indoor and outdoor food and bar options at all of our restaurants, with among other precautions, appropriate social distancing and mask requirements for all customers and employees.

During the third quarter of our fiscal year 2020, we, certain of the entities owning the limited partnership stores (the “LP’s”), franchised stores (the “Franchisees”) as well as the store we manage but do not own (the “Managed Store”), (collectively, the “Borrowers”), applied for and received loans from an unrelated third party lender pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) enacted March 27, 2020, in the aggregate principal amount of approximately $ 13.1 million, (the “PPP Loans”), of which approximately:

(i) $ 5.9 million was loaned to us;

(ii) $4.1 million was loaned to 8 of the LP’s ;

(iii) $2.6 million was loaned to 5 of

the Franchisees;

(ii) $ 4.1 million was loaned to 8 of the LP’s;

(iii) $ 2.6 million was loaned to 5 of the Franchisees;

and (iv) $ 0.5 million was loaned to the Managed Store.

The PPP Loans to the Franchisees and the Managed Store

are not included in our consolidated financial statements.

The PPP Loans, which are in

the form of Notes issued by each of the Borrowers, mature two years from the date of funding (dates ranging from May 5, 2022

to May 11, 2022) and bear interest at a rate of 1.00% per annum, payable monthly commencing approximately six months from the

date of issuance of the Notes (issuance dates ranging from April 30, 2020 to May 6, 2020).

The Notes may be prepaid by the

applicable Borrower at any time prior to maturity with no prepayment penalties.

Proceeds from the PPP Loans will be available

to the respective Borrower to fund designated expenses, including certain payroll costs, group health care benefits and other

permitted expenses, including rent and interest on mortgages and other debt obligations incurred before February 15, 2020.

Under the terms of the PPP, up to the entire amount of principal and accrued interest may be forgiven to the extent the

proceeds of the PPP Loans are used for qualifying expenses as described in the CARES Act and applicable implementing guidance

issued by the U.S.

Small Business Administration under the PPP.

No assurance can be given that the Borrowers will obtain

forgiveness of the PPP Loans in whole or in part.

With respect to any portion of any

of the PPP Loans that is not forgiven under the terms of the PPP, such amounts will be subject to customary provisions for a loan

of this type, including customary events of default relating to, among other things, payment defaults, breaches of the provisions

of the applicable PPP Note and cross-defaults on any other loan with the Lender or other creditors.

The PPP Loans to the Franchisees and the Managed Store are not included in our consolidated financial statements.

During our fiscal year 2021, we applied for and received forgiveness the entire amount of principal and accrued interest on all PPP Loans, including Franchisees and the Managed Store.

CORONAVIRUS PANDEMIC:

In March 2020, a novel strain of

coronavirus was declared a global pandemic and a National Public Health Emergency.

The novel coronavirus pandemic and related “shelter-in-place”

orders and other governmental mandates relating thereto (collectively, “COVID-19”) adversely affected and will, in

all likelihood continue to adversely affect, our restaurant operations and financial results for the foreseeable future.

COVID-19, from mid-March 2020 through mid-May 2020, we ceased all dining and bar services at all of our restaurants, limiting service

to take-out and delivery only of food, and implemented reduced hours at our retail package liquor stores.

From mid-May 2020 through

the beginning of July 2020, there was a gradual elimination of restrictions on our restaurant operations, permitting us to, among

other things, provide dining for outdoor seating patrons with appropriate social distancing and provide dining for indoor patrons

at up to 50% capacity (depending on the location of the restaurant), but with no bar service and increased operating hours at our

package liquor stores.

From the beginning of July 2020 through the beginning of September 2020, we ceased dine-in service at all

of our Miami-Dade County, Florida restaurants, (two Company-owned and six limited partnership owned restaurants).

Since the beginning

of September 2020, we have been offering both food and bar options at all of our restaurants, including those located in Miami-Dade

County, Florida, with appropriate social distancing and dine-in service at up to 100% capacity, including outdoor dining.

Due to COVID-19, we implemented (i)

certain cost cutting measures including material layoffs at our restaurants and reduced corporate personnel salaries;

a number of changes to our operations such as the establishment of an in-house delivery service and an adjustment to our traditional

staffing model to meet customer demand.

We have been in regular contact with our suppliers and while to date we have not experienced

significant disruptions in our supply chain, we could see future disruptions should the impacts of COVID-19 extend for a considerable

amount of time.

To support our employees, we have implemented work from home support, increased sanitization of high touch, high

traffic areas in our restaurants, retail package liquor stores and corporate offices, provided personal protective equipment for

our employees and increased the frequency of personal hygiene practices.

From March 29, 2020 through May 9, 2020, the salaries

of all our non-executive corporate office personnel were reduced by 20%, the base salaries of our Chief Operating Officer and Chief

Financial Officer were each reduced by 50% and our Chief Executive Officer waived his base salary, representing salary savings

of approximately $135,000 during this period.

Our employee headcount as of fiscal year end 2020 was 1,804 persons reduced from

1,870 persons as of our fiscal year end 2019.

In addition and also due to COVID-19, we did not make any

quarterly distributions to our limited partners for the quarter ended March 31, 2020.

For each of the quarters ended June 30, 2020

and September 30, 2020, we made quarterly distributions to our limited partners equal to one-half (½) of the amounts that

would have been distributed for the quarter ended March 31, 2020.

During the third quarter of fiscal

year end 2020, the United States government passed a $2.0 trillion Coronavirus Aid, Relief and Economic Security Act (“CARES

Act”) designed primarily to help keep businesses running during and after the COVID-19 pandemic.

The CARES Act included provisions

for certain deductions and tax credits, filing deadline extensions, filing payment deadlines and making available certain grant

money to assist businesses.

This CARES ACT allowed us to take advantage of credits, deferments, and deductions, and PPP Loans (described

below) during the third quarter of our fiscal year 2020.

As a result, during the third and fourth quarter of 2020, we reversed

certain of our cost cutting measures, including (i) reinstating employees laid off at our restaurants in anticipation of resuming

dine-in service, (ii) restoring corporate personnel and executive salaries and (iii) paying prior salary reductions.

During the third quarter of our fiscal

year 2020, we, certain of the entities owning the limited partnership stores (the “LP’s”), franchised stores

(the “Franchisees”) as well as the store we manage but do not own (the “Managed Store”), (collectively,

the “Borrowers”), applied for and received loans from an unrelated third party lender pursuant to the Paycheck Protection

Program (the “PPP”) under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) enacted

March 27, 2020, in the aggregate principal amount of approximately $13.1 million, (the “PPP Loans”), of which approximately:

(i) $5.9 million was loaned to us;

(ii) $4.1 million was loaned to 8 of the LP’s;

(iii) $2.6 million was loaned to 5 of the

During the second quarter of our fiscal year 2021, certain of the LPs, as well as the Managed Store, applied for and received 2nd PPP loans, in the aggregate principal amount of approximately $ 3.98 million (the “2nd PPP Loans”), of which approximately:

(i) $ 3.46 million was loaned to 6 of the LP’s;

and (iv) $ 0.52 million was loaned to the Managed Store.

The PPP Loans to the Franchisees and the Managed Store are

not included in our consolidated financial statements.

Due to our receipt of the PPP Loans, we reversed certain cost cutting measures,

including reinstating employees laid off at our restaurants in anticipation of resuming dine-in service and restoring corporate

personnel salaries.

The PPP Loans, which are in

the form of Notes issued by each of the Borrowers, mature two years from the date of funding (dates ranging from May 5, 2022

to May 11, 2022) and bear interest at a rate of 1.00% per annum, payable monthly commencing approximately six months from the

date of issuance of the Notes (issuance dates ranging from April 30, 2020 to May 6, 2020).

The Notes may be prepaid by the

applicable Borrower at any time prior to maturity with no prepayment penalties.

Proceeds from the PPP Loans have been used

and are available to the respective Borrower to fund designated expenses, including certain payroll costs, group health care

benefits and other permitted expenses, including rent and interest on mortgages and other debt obligations incurred before

February 15, 2020.

Under the terms of the PPP, up to the entire amount of principal and accrued interest may be forgiven to

the extent the proceeds of the PPP Loans are used for qualifying expenses as described in the CARES Act and applicable

implementing guidance issued by the U.S.

The 2 nd PPP Loans, which are in the form of notes issued by each of the Borrowers, mature five (5) years from the date of funding (March 23, 2021) and bear interest at a rate of 1.00 % per annum, payable monthly commencing after the U.S.

Small Business Administration makes a determination of the forgiveness of the 2 nd PPP Loans.

The notes may be prepaid by the applicable Borrower at any time prior to maturity with no prepayment penalties.

Proceeds from the PPP Loans have been available to the respective Borrower to fund designated expenses, including certain payroll costs, group health care benefits and other permitted expenses, including rent and interest on mortgages and other debt obligations incurred before February 15, 2020.

Under the terms of the PPP, up to the entire amount of principal and accrued interest may be forgiven to the extent the proceeds of the 2 nd PPP Loans are used for qualifying expenses as described in the CARES Act and applicable implementing guidance issued by the U.S.

Small Business Administration under the PPP.

No assurance can be given that the

Borrowers will obtain forgiveness of the PPP Loans in whole or in part.

With respect to any portion of any

of the PPP Loans that is not forgiven under the terms of the PPP, such amounts will be subject to customary provisions for a loan

of this type, including customary events of default relating to, among other things, payment defaults, breaches of the provisions

of the applicable PPP Note and cross-defaults on any other loan with the Lender or other creditors.

We do not believe COVID-19 has had

a material adverse effect on our access to supplies or labor, although there can be no assurance that there will not be a significant

adverse impact on our supply chain or access to labor in the future.

We are actively monitoring our food suppliers to assess how

they are managing their operations to mitigate supply flow and food safety risks.

To ensure we mitigate potential supply availability

risk, we are building additional inventory back stock levels when appropriate and we have also identified alternative supply sources

in key product categories including but not limited to food, sanitation and safety supplies.

Prior to obtaining the PPP Loans,

we were in compliance with the financial covenants contained in our loans with our unrelated third party institutional lender (the

“Institutional Lender”) under which as of October 3, 2020, we owe in the aggregate, approximately $12,209,000 (the

“Institutional Loans”).

We determined that as of the end of the third quarter of our fiscal year 2020, we were not

in compliance with our financial covenants contained in the Institutional Loans related to the Rent Adjusted Funded Debt to EBITDA

Ratio because our consolidated debt during the third quarter of our fiscal year 2020 increased due to our repayment obligations

under the PPP Loans (the “Covenant Breach’).

Pursuant to the terms of the Institutional Loans, the Covenant Breach,

grants the Institutional Lender the right to exercise certain remedies under the Institutional Loans, including the right to accelerate

the indebtedness owed by us to the Institutional Lender thereunder.

On August 10, 2020, we received a written waiver of the Covenant

Breach from the Institutional Lender, which, among other things, waives the Covenant Breach through June 30, 2021.

As of October

3, 2020, we are in compliance with the financial covenants contained in our loans with our Institutional Lender.

There can be no assurances that we

will be in compliance with our financial covenants thereafter due to, among other things, that our results of operations will likely

continue to be materially impacted by the COVID-19 pandemic.

Absent a waiver, failure to be in compliance with our financial covenants

would constitute a default under the Institutional Loans with our Institutional Lender when reported.

Such a default, if not cured

or waived, would allow the Institutional Lender to accelerate the maturity of the indebtedness we owe under the Institutional Loans,

making it due and payable at the time.

If maturity of the Institutional Loans were accelerated, it would have a material adverse

impact on our consolidated financial statements and results of operations.

CASUALTY LOSS:

During the first quarter of our fiscal

year 2019, our combination package liquor store and restaurant located at 2505 N.

University Drive, Hollywood, Florida (Store #19)

was damaged by a fire and was forced to close.

Due to the damage caused by the fire, we determined that Store #19 should be demolished

and rebuilt and as a result, the package liquor store and restaurant were closed for at least our fiscal years 2020 and 2019.

had insurance coverage of $1,975,000, in the aggregate, which our insurance carrier paid.

We sustained a loss of $1,373,000 on

our building and business personal property, against which we received insurance proceeds of $1,200,000 resulting in a loss of

We had a gain of $775,000 on our business interruption coverage, which when netted against our loss of $173,000 on our

building and business personal property produced a gain of $602,000 during our fiscal year 2019.

LIQUOR LICENSES

Subsequent to the end of our fiscal year 2021, we applied for and received forgiveness of the entire amount of principal and accrued interest on all 2 nd PPP Loans.

We believe COVID-19 has had a material adverse effect on our access to supplies or labor and will have a significant adverse impact on our supply chain or access to labor in the future.

We are actively monitoring our food suppliers to assess how they are managing their operations to mitigate supply flow and food safety risks.

To ensure we mitigate potential supply availability risk, we are building additional inventory back stock levels when appropriate and we have also identified alternative supply sources in key product categories including but not limited to food, sanitation and safety supplies.

As of October 2, 2021, we are in compliance with the financial covenants contained in our loans with our unrelated third party institutional lender (the “Institutional Lender”) under which we owe in the aggregate, approximately $ 17,096,000 (the “Institutional Loans”).

There can be no assurances that we will be in compliance with our financial covenants thereafter due to, among other things, that our results of operations will likely continue to be materially impacted by the COVID-19 pandemic.

Absent a waiver, failure to be in compliance with our financial covenants would constitute a default under the Institutional Loans with our Institutional Lender when reported.

Such a default, if not cured or waived, would allow the Institutional Lender to accelerate the maturity of the indebtedness we owe under the Institutional Loans, making it due and payable at the time.

If maturity of the Institutional Loans were accelerated, it would have a material adverse impact on our consolidated financial statements and results of operations.

RE-CONSTRUCTION FOLLOWING CASUALTY LOSS:

During the first quarter of our fiscal year 2019, our combination package liquor store and restaurant located at 2505 N.

University Drive, Hollywood, Florida (Store #19) was damaged by a fire and was forced to close.

Due to the damage caused by the fire, we determined that Store #19 should be demolished and rebuilt and as a result, the package liquor store and restaurant were closed for our fiscal years 2021, 2020 and 2019.

During our fiscal year 2022, we expect to complete construction of the new building for our package liquor store and open for business.

We also expect to receive building permits to construct the new building for our restaurant, but do not expect to open for business during our fiscal year 2022.

LIQUOR LICENSES

which are indefinite lived assets, are tested for impairment in September of each of our fiscal years.

The fair value of liquor

licenses at October 3, 2020, exceeded the carrying amount;

Liquor licenses, which are indefinite lived assets, are tested for impairment in September of each of our fiscal years.

The fair value of liquor licenses at October 2, 2021, exceeded the carrying amount;

therefore, we recognized no impairment loss.

The fair value of the liquor

licenses was evaluated by comparing the carrying value to recent sales for similar liquor licenses in the County issued.

3, 2020 and September 28, 2019, the total carrying amount of our liquor licenses was $630,000.

We acquired no liquor licenses in

our fiscal year 2020.

The components of our provision for

income taxes for our fiscal years 2020 and 2019 are as follows:

A reconciliation of income tax computed

at the statutory federal rate to income tax expense is as follows:

The fair value of the liquor licenses was evaluated by comparing the carrying value to recent sales for similar liquor licenses in the County issued.

At October 2, 2021 and October 3, 2020, the total carrying amount of our fifteen (15) 4 COP quota liquor licenses was $ 822,000 and $ 630,000 , respectively.

We acquired a 4 COP quota liquor license in our fiscal year 2021 for $ 192,200 for use in Broward County, Florida which we intend to use it in connection with the operation of a package liquor store we are developing in Miramar, Florida.

The components of our provision for income taxes for our fiscal years 2021 and 2020 are as follows:

A reconciliation of income tax computed at the statutory federal rate to income tax expense is as follows:

Tax provision at the statutory rate

4 unchanged sentences

Tax effect of rate change due to Tax Reform

PPP forgiveness

Other permanent items

We have deferred tax assets which

arise primarily due to depreciation recorded at different rates for tax and book purposes offset by cost basis differences in depreciable

assets due to the deferral of the recognition of insurance recoveries on casualty losses for tax purposes, investments in and management

fees paid by limited partnerships, accruals for potential uninsured claims, bonuses accrued for book purposes but not paid within

two and a half months for tax purposes, the capitalization of certain inventory costs for tax purposes not recognized for financial

reporting purposes, the recognition of revenue from gift cards not redeemed within twelve months of issuance, allowances for uncollectable

receivables, unfunded limited retirement commitments and tax credit carryforwards generated as a result of the application of alternative

minimum taxes.

The components of our deferred tax

assets at October 3, 2020 and September 28, 2019 were as follows:

We have deferred tax assets which arise primarily due to depreciation recorded at different rates for tax and book purposes offset by cost basis differences in depreciable assets due to the deferral of the recognition of insurance recoveries on casualty losses for tax purposes, investments in and management fees paid by limited partnerships, accruals for potential uninsured claims, bonuses accrued for book purposes but not paid within two and a half months for tax purposes, the capitalization of certain inventory costs for tax purposes not recognized for financial reporting purposes, the recognition of revenue from gift cards not redeemed within twelve months of issuance, allowances for uncollectable receivables, unfunded limited retirement commitments and FICA tax credit.

INCOME TAXES (Continued)

The components of our deferred tax assets at October 2, 2021 and October 3, 2020 were as follows:

Reversal of aged payables

7 unchanged sentences

Accrued limited retirement

Total Deferred Tax Assets

Total Deferred Tax Assets (Liabilities)

Long-Term Debt

Mortgage payable to unrelated third party, secured by a first mortgage on real

property and improvements, bearing interest at 3.86%, amortized over twenty (20) years, payable in monthly installments of

principal and interest of approximately $43,000, with a balloon payment of approximately $5,373,000 due on November 27, 2026.

Mortgage payable to institutional lender, secured by a first mortgage on real property and improvements, bearing interest at 3.86 %, amortized over twenty ( 20 ) years, payable in monthly installments of principal and interest of approximately $ 43,000 , with a balloon payment of approximately $ 5,373,000 due on November 27, 2026 .

As of October 2, 2021, the net book value of the collateral securing this mortgage was $ 5,535,000 .

Mortgage payable to unrelated third party, secured by first mortgage on real property and improvements, bearing interest at 7½%, amortized over twenty (20) years, payable in monthly installments of principal and interest of approximately $15,700, with a balloon payment of approximately $1,331,000 in December, 2022.

Mortgage payable to institutional lender, secured by first mortgage on real property and improvements, bearing interest at the fixed rate of 3.63 % per annum, fully amortized over fifteen ( 15 ) years, payable in monthly installments of principal and interest of approximately $ 31,000 , with a final payment of July 1, 2036 .

As of October 2, 2021, the net book value of the collateral securing this mortgage was $ 11,563,000 .

Mortgage payable to lender, secured by a first mortgage on real property and improvements, bearing interest at BBA LIBOR –

Mortgage payable to institutional lender, secured by first mortgage on real property and improvements, bearing interest at the fixed rate of 3.65 % per annum, fully amortized over fifteen ( 15 ) years, payable in monthly installments of principal and interest of approximately $ 15,950 , with a final payment of March 2, 2036 .

As of October 2, 2021, the net book value of the collateral securing this mortgage was $ 4,542,000 .

Mortgage payable to unrelated third party, secured by first mortgage on real property and improvements, bearing interest at 7½

%, amortized over twenty ( 20 ) years, payable in monthly installments of principal and interest of approximately $ 15,700 , with a balloon payment of approximately $ 1,331,000 in December, 2022 .

The principal balance and all accrued interest was paid in full on July 1, 2021.

Mortgage payable to institutional lender, secured by a first mortgage on real property and improvements, bearing interest at BBA LIBOR –

1 Month + 2.25 % , ( 2.33 % at October 2, 2021), but with the interest fixed at 4.35 % pursuant to a swap agreement, amortized over twenty ( 20 ) years, payable in monthly installments of principal and interest of approximately $ 8,775 , with a balloon payment of approximately $ 858,000 on January 22, 2023 .

As of October 2, 2021, the net book value of the collateral securing this mortgage was $ 3,497,000 .

Revolving credit line/term loan payable to lender, which entitled the Company to borrow, from time to time through December 28, 2017, up to $5,500,000, (the “Credit Line”), secured by a blanket lien on all Company assets, bearing interest through December 28, 2017 at LIBOR –

Revolving credit line/term loan payable to lender, which entitled the Company to borrow, from time to time through December 28, 2017, up to $ 5,500,000 , (the “Credit Line”), secured by a blanket lien on all Company assets, bearing interest through December 28, 2017 at LIBOR –

Daily Floating Rate + 2.25% , ( 2.33 % at October 2, 2021).

1 unchanged sentence

On December 21, 2017, we borrowed the remaining $ 3,500,000 and on December 28, 2017 the entire principal balance under the Credit Line ($5,500,000) converted to the Term Loan.

Mortgage payable to lender, secured by a first mortgage on real property and improvements, bearing interest at the fixed rate of 4.65% per annum, fully amortized over fifteen (15) years, payable in monthly installments of principal and interest of approximately $6,384, with a final payment on December 28, 2031.

DEBT (Continued)

Mortgage payable to institutional lender, secured by a first mortgage on real property and improvements, bearing interest at the fixed rate of 4.65 % per annum, fully amortized over fifteen ( 15 ) years, payable in monthly installments of principal and interest of approximately $ 6,384 , with a final payment on December 28, 2031 .

As of October 2, 2021, the net book value of the collateral securing this mortgage was $ 827,000 .

Mortgage payable to a related party, an entity the owners of which include persons who are either our officers, directors or their family members, secured by first mortgage on real property and improvements, bearing interest at 5%, amortized over fifteen (15) years, payable in monthly installments of principal and interest of approximately $5,700, with a balloon payment of approximately $465,000 due in March, 2021.

Mortgage payable to a related party, an entity the owners of which include persons who are either our officers, directors or their family members, secured by first mortgage on real property and improvements, bearing interest at 5 %, amortized over fifteen ( 15 ) years, payable in monthly installments of principal and interest of approximately $ 5,700 , with a balloon payment of approximately $ 302,000 due in July, 2024 .

As of October 2, 2021, the net book value of the collateral securing this mortgage was $ 1,534,000 .

As of October 2, 2021, the net book value of the collateral securing this mortgage was $ 981,000 .

Mortgage payable to related party, an entity the owners of which include persons who are either our officers, directors or their family members, secured by first mortgage on real property and improvements, bearing interest at 5 %, amortized over fifteen ( 15 ) years, payable in monthly installments of principal and interest of approximately $ 4,900 , with a balloon payment of approximately $ 398,000 in May, 2021 .

As of October 3, 2020, the net book value of the collateral securing this mortgage was $2,384,000.

The principal balance and all accrued interest was paid in full on April, 2021.

Financed insurance premiums, secured by all insurance policies, bearing interest at 2.45 % payable in monthly installments of principal and interest in the aggregate amount of $ 164,000 a month through November 30, 2021 .

Mortgage payable to related party, an entity the owners of which include persons who are either our officers, directors or their family members, secured by first mortgage on real property and improvements, bearing interest at 5 %, amortized over fifteen ( 15 ) years, payable in monthly installments of principal and interest of approximately $ 6,000 , with a balloon payment of approximately $ 484,000 due in April, 2021 .

As of October 3, 2020, the net book value of the collateral securing this mortgage was $1,599,000.

The principal balance and all accrued interest was paid in full on April, 2021.

Mortgage payable to unrelated third party, secured by first mortgage on real property and improvements, bearing interest at 7½

%, amortized over twenty ( 20 ) years, payable in monthly installments of principal and interest of approximately $ 7,300 , with a final payment due in March, 2034 .

As of October 2, 2021, the net book value of the collateral securing this mortgage was $ 1,104,000 .

DEBT (Continued)

Mortgage payable to related third party, secured by first mortgage on real property and improvements, bearing interest at 4 %, amortized over eight ( 8 ) years, payable in monthly installments of principal and interest of approximately $ 3,000 , with a final payment due in November, 2026 .

As of October 2, 2021, the net book value of the collateral securing this mortgage was $ 511,000 .

Loans from an unrelated third party lender pursuant to the Paycheck

Protection Program (the “PPP”) under the Coronavirus Aid, Relief and Economic Security Act (the “CARES

Act”) enacted March 27, 2020, in the aggregate principal amount of approximately $10.0 million, (the “PPP

Loans”), of which approximately $5.9 million was loaned to us and $4.1 million was loaned to 8 of the limited

partnerships.

The PPP Loans, which are in the form of Notes issued by each of the Borrowers, mature two years from the date

of funding (dates ranging from May 5, 2022 to May 11, 2022) and bear interest at a rate of 1.00% per annum, payable monthly

commencing approximately six months from the date of issuance of the Notes (issuance dates ranging from April 30, 2020 to May

Loans from an unrelated third party lender pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) enacted March 27, 2020, in the aggregate principal amount of approximately $ 10.0 million, (the “PPP Loans”), of which approximately $ 5.9 million was loaned to us and $ 4.1 million was loaned to 8 of the limited partnerships.

The PPP Loans, which are in the form of Notes issued by each of the Borrowers, mature five years from the date of funding (dates ranging from May 5, 2025to May 11, 2025) and bear interest at a rate of 1.00 % per annum, payable monthly commencing approximately six months from the date of issuance of the Notes (issuance dates ranging from April 30, 2020 to May 6, 2020).

Loans from an unrelated third party lender pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) enacted March 27, 2020, in the aggregate principal amount of approximately $ 3.46 million, (the “2nd PPP Loans”), which was loaned to 6 of the limited partnerships.

The 2nd PPP Loans, which are in the form of Notes issued by each of the Borrowers, mature five years from the date of funding (March 23, 2021) and bear interest at a rate of 1.00 % per annum, payable monthly commencing after the U.S.

Small Business Administration makes a determination of the forgiveness of 2nd PPP Loans).

Subsequent to the end of our fiscal year 2021, the principal balance and all accrued interest due on the 2nd PPP Loans was forgiven in full.

Less unamortized loan costs

Less current portion

Long-term debt

at October 3, 2020 matures as follows:

Long-term debt at October 2, 2021 matures as follows:

Less unamortized loan costs

Prior to obtaining the PPP Loans,

we were in compliance with the financial covenants contained in our loans with our unrelated third party institutional lender (the

“Institutional Lender”) under which as of October 3, 2020, we owe in the aggregate, approximately $12,209,000 (the

“Institutional Loans”).

We determined that as of the end of the third quarter of our fiscal year 2020, we were not

in compliance with our financial covenants contained in the Institutional Loans related to the Rent Adjusted Funded Debt to EBITDA

Ratio because our consolidated debt during the third quarter of our fiscal year 2020 increased due to our repayment obligations

under the PPP Loans (the “Covenant Breach’).

Pursuant to the terms of the Institutional Loans, the Covenant Breach,

grants the Institutional Lender the right to exercise certain remedies under the Institutional Loans, including the right to accelerate

the indebtedness owed by us to the Institutional Lender thereunder.

On August 10, 2020, we received a written waiver of the Covenant

Breach from the Institutional Lender, which, among other things, waives the Covenant Breach through June 30, 2021.

As of October

3, 2020, we are in compliance with the financial covenants contained in our loans with our Institutional Lender.

There can be no assurances that we

will be in compliance with our financial covenants thereafter due to, among other things, that our results of operations will likely

continue to be materially impacted by the COVID-19 pandemic.

Absent a waiver, failure to be in compliance with our financial covenants

would constitute a default under the Institutional Loans with our Institutional Lender when reported.

Such a default, if not cured

or waived, would allow the Institutional Lender to accelerate the maturity of the indebtedness we owe under the Institutional Loans,

making it due and payable at the time.

If maturity of the Institutional Loans were accelerated, it would have a material adverse

impact on our consolidated financial statements and results of operations.

As of October 2, 2021, we are in compliance with the financial covenants contained in our loans with our unrelated third party institutional lender (the “Institutional Lender”).

We owe in the aggregate, approximately $ 17,097,000 (the “Institutional Loans”), as of October 2, 2021.

Absent a waiver, failure to be in compliance with our financial covenants would constitute a default under the Institutional Loans with our Institutional Lender when reported.

If maturity of the Institutional Loans were accelerated, it would have a material adverse impact on our consolidated financial statements and results of operations.

COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

Construction Contracts

University Drive,

Hollywood, Florida (Store #19)

During the third quarter of

our fiscal year 2019, we entered into an agreement with a third party unaffiliated architect for design and development

services totaling $77,000 for the re-build of our restaurant located at 2505 N.

University Drive, Hollywood, Florida (Store

#19) which has been closed since October 2018 due to damages caused by a fire, of which $62,000 has been paid.

Additionally,

during the third quarter of our fiscal year 2019, we entered into an agreement with a third party unaffiliated general

contractor for site work at this location totaling $1,618,000, (i) to connect the real property where this restaurant

operated (Store #19) to city sewer and (ii) to construct a new building on the adjacent parcel of real property for the

operation of a package liquor store.

During our fiscal year 2020, we agreed to change orders to the agreement for additional

construction services increasing the total contract price by $112,000 to $1,730,000, of which $-0- has been paid through

October 3, 2020.

Subsequent to the end of our fiscal year 2020, we agreed to additional change orders to the agreement for

additional price by $28,000 to $1,757,000, of which $64,000 has been paid.

Boulevard, Sunrise, Florida (Store #85)

During the third quarter of our

fiscal year 2019, we entered into an agreement with a third party unaffiliated design group for design and development

services of our new location at 14301 W.

7990 Davie Road Extension, Hollywood, Florida (Store #19 –

“Big Daddy’s Wine & Liquors”)

During the third quarter of our fiscal year 2019, we entered into an agreement with a third party unaffiliated general contractor for site work at this location totaling $ 1,618,000 , (i) to connect the real property where this restaurant operated (Store #19) to city sewer and (ii) to construct a new building on the adjacent parcel of real property for the operation of a package liquor store.

During our fiscal years 2020 and 2021, we agreed to change orders to the agreement for additional construction services increasing the total contract price by $ 502,000 to $ 2,120,000 , of which $ 1,092,000 of the total amount obligated has been paid through October 2, 2021 and an additional $ 335,000 has been paid subsequent to the end of our fiscal year 2021.

University Drive, Hollywood, Florida (Store #19 –

“Flanigan’s”)

During the third quarter of our fiscal year 2019, we entered into an agreement with an unaffiliated third party architect for design and development services totaling $ 77,000 for the re-build of our restaurant located at 2505 N.

University Drive, Hollywood, Florida (Store #19), which has been closed since October 2, 2018 due to damages caused by a fire, of which $ 62,000 has been paid.

Subsequent to the end of our fiscal year 2021, we entered into an agreement with a third party unaffiliated general contractor to re-build our restaurant at this location totaling $ 2,515,000 , of which none has been paid.

Sunrise Boulevard, Sunrise, Florida (Store #85 –

“Flanigan’s”)

During the third quarter of our fiscal year 2019, we also entered into an agreement with an unaffiliated third party design group for design and development services of our new location at 14301 W.

Sunrise Boulevard, Sunrise, Florida 33323 (Store #85) for a total contract price of $ 122,000 .

During the first quarter of our fiscal year 2020, we agreed upon changes to the agreement for additional design and

development services which had the effect of increasing the total contract price of the same by $18,000 to $140,000, of which

$106,000 has been paid.

Additionally, during the fourth quarter of our fiscal year 2020, we entered into an agreement with a

third party unaffiliated general contractor for interior renovations at this location totaling $1,236,000, of which $-0- has

been paid through October 3, 2020.

Subsequent to October 3, 2020, $111,000 has been paid.

COMMITMENTS, CONTINGENCIES

AND OTHER MATTERS (Continued)

Our sale of alcoholic

beverages subjects us to “dram shop”

statutes, which allow an injured person to recover damages from an establishment

that served alcoholic beverages to an intoxicated person.

If we receive a judgment substantially in excess of our insurance coverage

or if we fail to maintain our insurance coverage, our business, financial condition, operating results or cash flows could be materially

and adversely affected.

We currently have no “dram shop”

During our fiscal year 2020,we agreed upon amendments to the $122,000 Contract for additional design and development services which had the effect of increasing the total contract price by $ 18,000 to $ 140,000 , of which $ 131,000 has been paid through October 2, 2021.

Additionally, during the fourth quarter of our fiscal year 2020, we entered into an agreement with a third party unaffiliated general contractor for interior renovations at this location totaling $ 1,236,000 , and during our fiscal year 2021 we agreed to change orders to the agreement for additional interior renovations increasing the total contract price by $ 183,000 to $ 1,419,000 , of which $ 1,081,000 has been paid through October 2, 2021 and an additional $ 187,000 has been paid subsequent to the end of our fiscal year 2021.

11225 Miramar Parkway, #250, Miramar, Florida (“Flanigan’s”)

During the fourth quarter of our fiscal year 2019, we entered into a Lease Agreement with a non-affiliated third party, (the “Landlord”) to rent approximately 6,000 square feet of commercial space for a restaurant location in a shopping center at 11225 Miramar Parkway, #250, Miramar, Florida (Store #25), which shopping center was under construction.

During the second quarter of our fiscal year 2021, we entered into an Architectural Professional Services Agreement with a third-party unaffiliated architect for design and development services for this, new location (Store #25) for a total contract price of $ 73,850 , which contract price has been paid in full through October 2, 2021.

Subsequent to the end of our fiscal year 2021, we entered into an agreement with a third party unaffiliated general contractor for interior renovations at this location totaling $ 1,421,000 , of which none has been paid.

COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

11225 Miramar Parkway, #245, Miramar, Florida (“Big Daddy’s Wine and Liquors”)

During the fourth quarter of our fiscal year 2019, we entered into a Lease Agreement with a non-affiliated third party, (the “Landlord”) to rent approximately 2,000 square feet of commercial space for a retail package liquor store location in a shopping center at 11225 Miramar Parkway, #245, Miramar, Florida (Store #24), which shopping center was under construction.

During the second quarter of our fiscal year 2021, we entered into an Architectural Professional Services Agreement with a third-party unaffiliated architect for design and development services for this, new location (Store #24) for a total contract price of $ 18,650 , which contract price has been paid in full through October 2, 2021.

Legal Matters

Our sale of alcoholic beverages subjects us to “dram shop”

statutes, which allow an injured person to recover damages from an establishment that served alcoholic beverages to an intoxicated person.

If we receive a judgment substantially in excess of our insurance coverage or if we fail to maintain our insurance coverage, our business, financial condition, operating results or cash flows could be materially and adversely affected.

We currently have no “dram shop”

claims pending.

party to various other claims, legal actions and complaints arising in the ordinary course of our business.

It is our opinion

that all such matters are without merit or involve such amounts that an unfavorable disposition would not have a material

adverse effect on our financial position or results of operations.

To conduct certain

of our operations, we lease restaurant and package liquor store space in South Florida from unrelated third parties.

have remaining lease terms of up to 10 years, some of which include options to renew and extend the lease terms for up to an additional

We presently intend to renew some of the extension options available to us and for purposes of computing the right-of-use

assets and lease liabilities required by ASC 842, we have incorporated into all lease terms which may be extended, an additional

term of the lesser of (i) the amount of years the lease may be extended;

We are a party to various other claims, legal actions and complaints arising in the ordinary course of our business.

It is our opinion, in consultation with legal counsel, that all such matters are without merit or involve such amounts that an unfavorable disposition would not have a material adverse effect on our financial position or results of operations.

To conduct certain of our operations, we lease restaurant and package liquor store space in South Florida from unrelated third parties.

Our leases have remaining lease terms of up to 10 years, some of which include options to renew and extend the lease terms for up to an additional 30 years.

We presently intend to exercise certain of the extension options available to us and for purposes of computing the right-of-use assets and lease liabilities required by ASC 842, we have incorporated into all lease terms which may be extended, an additional term of the lesser of (i) the amount of years the lease may be extended;

or (ii) 15 years.

Following adoption

of ASC 842, common area maintenance and property taxes are not considered to be lease components.

The components

of lease expense are as follows:

Following adoption of ASC 842, common area maintenance and property taxes are not considered to be lease components.

The components of lease expense are as follows:

October 2, 2021

October 3, 2020

Finance Lease Amortization

Finance Lease Expense, which is included in interest expense

Operating Lease Expense, which is included in occupancy costs

COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

Supplemental balance sheet information related to leases as follows:

Classification on the Condensed Consolidated Balance Sheet

Classification on the Consolidated Balance Sheet

October 2, 2021

October 3, 2020

Finance lease assets

9 unchanged sentences

Operating leases

The following table outlines the minimum future lease

payments for the next five years and thereafter:

For fiscal year

Operating Leases

Finance Leases

Total lease payments (Undiscounted cash flows)

Less imputed interest

Total rent expense

for all of our operating leases was approximately $3,963,000 in our fiscal year 2019 and is included in “Occupancy Costs”

in our accompanying consolidated statements of income.

The total rent expense is comprised of the following:

Minimum Base Rent

Contingent Percentage Rent

Purchase Commitments

In order to fix the cost and ensure

adequate supply of baby back ribs for our restaurants during calendar year 2021, on November 9, 2020, we entered into a purchase

agreement with our current rib supplier, whereby we agreed to purchase approximately $6,420,000 of baby back ribs during calendar

year 2021 from this vendor at a fixed cost.

While we anticipate purchasing all

of our rib supply from this vendor, we believe that several other alternative vendors are available, if necessary.

During the third quarter of our

fiscal year 2020, we temporarily suspended the operation of the Flanigan’s Fish Company, LLC, a Florida limited

liability company (“FFC”) due to the decrease in demand for imported fresh fish caused by restrictions placed

upon the operation of our restaurants due to COVID-19, relying instead on outside fresh fish purveyors.

The suspension of

operations lasted approximately 5 ½

weeks, after which we resumed operations.

As of October 3, 2020, FFC supplies

certain of the fish to all of our restaurants.

Since we hold the controlling interest of FFC, the balance sheet and operating

results of this entity are consolidated into the accompanying financial statements of the Company, but eliminated upon consolidation.

Sales and purchases of fish are recognized in restaurant food sales and restaurant and lounges (cost of merchandise sold),

respectively, in the consolidated statements of income at the time of sale to the restaurant.

In addition, the 49% of FFC

owned by the unrelated third party is recognized as noncontrolling interest in our consolidated financial statements.

COMMITMENTS, CONTINGENCIES

AND OTHER MATTERS (Continued)

Purchase of Limited Partnership Interests

During our fiscal year 2020, we did

not purchase any limited partnership interests.

During our fiscal year 2019, we purchased from one limited partner (who is not

an officer, director or family member of officers or directors) a limited partnership interest of 0.63% in a limited partnership

which owns a restaurant, for a purchase price of $4,800.

In order to fix the cost and ensure adequate supply of baby back ribs for our restaurants, on November 9, 2020, we entered into a purchase agreement with our current rib supplier, whereby we agreed to purchase approximately $ 6,420,000 of baby back ribs during calendar year 2021 from this vendor at a fixed cost.

During the third quarter of our fiscal year 2021, we agreed to increase the fixed cost of the remaining baby back ribs for our calendar year 2021 by approximately $ 408,000 and our current rib supplier guaranteed adequate supply for our restaurants during calendar year 2022.

In order to ensure adequate supply of baby back ribs for our restaurants for calendar year 2022, on October 4, 2021, we entered into a purchase agreement with our current rib supplier, whereby we agreed to purchase approximately $ 10,414,000 of baby back ribs during calendar year 2022 from this vendor at market cost.

Our purchase agreement provides for the purchase of 2.25 & Down Baby Back Ribs, at a monthly cost of the average market price per pound of the prior 4 weeks.

While we anticipate purchasing all of our rib supply from this vendor, we believe there are several other alternative vendors available, if needed.

COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

Flanigan’s Fish Company, LLC

As of October 2, 2021, Flanigan’s Fish Company, LLC, a Florida limited liability company (“FFC”) supplies certain of the fish to all of our restaurants.

Since we hold the controlling interest of FFC, the balance sheet and operating results of this entity are consolidated into the accompanying financial statements of the Company.

Sales and purchases of fish are recognized in restaurant food sales and restaurant and lounges (cost of merchandise sold), respectively, in the consolidated statements of income at the time of sale to the restaurant.

In addition, the 49 % of FFC owned by the unrelated third party is recognized as noncontrolling interest in our consolidated financial statements.

Franchise Program

October 3, 2020 and September 28, 2019, we were the franchisor of five units under franchise agreements.

Of the five franchised

stores, three are combination restaurant/package liquor stores and two are restaurants (one of which we operate).

Four franchised

stores are owned and operated by related parties as follows:

At October 2, 2021 and October 3, 2020, we were the franchisor of five units under franchise agreements.

Of the five franchised stores, three are combination restaurant/package liquor stores and two are restaurants (one of which we operate).

Four franchised stores are owned and operated by related parties as follows:

Flanigan, our Chairman of the Board of Directors, Chief Executive Officer and President of the Company, and Michael B.

a member of our Board of Directors and James G.

Flanigan’s brother, are each a 35.24% owner of a company which has a franchise

arrangement with us for the operation of a restaurant and adjacent package liquor store located in Coconut Grove, Florida (Store

Flanigan, a member of our Board of Directors and James G.

Flanigan’s brother, are each a 35.24 % owner of a company which has a franchise arrangement with us for the operation of a restaurant and adjacent package liquor store located in Coconut Grove, Florida (Store #18).

Flanigan, brother to both James G.

Flanigan and Michael B.

Flanigan and a member of our Board of Directors, owns 100% of a company

which has a franchise arrangement with us for the operation of a combination restaurant/package liquor store located in Pompano

Beach, Florida (Store #43).

officers and directors collectively own 30% of the shareholder interest of a company which has a franchise arrangement with us

for the operation of a restaurant located in Deerfield Beach, Florida.

Flanigan and a member of our Board of Directors, owns 100 % of a company which has a franchise arrangement with us for the operation of a combination restaurant/package liquor store located in Pompano Beach, Florida (Store #43).

Our officers and directors collectively own 30 % of the shareholder interest of a company which has a franchise arrangement with us for the operation of a restaurant located in Deerfield Beach, Florida.

The shareholder interest of James G.

Flanigan’s family

represents an additional 60% of the total invested capital in this franchised location (Store #14).

Flanigan is the sole general partner and a 25% limited partner in a limited partnership which has a franchise arrangement with

us for the operation of a restaurant located in Fort Lauderdale, Florida.

The Company is a 25% limited partner in this limited

partnership and officers and directors of the Company (excluding Patrick J.

Flanigan) own an additional 31.9% limited partnership

interest in this franchised location (Store #15).

Under the franchise

agreements, we provide guidance, advice and management assistance to the franchisees.

In addition and for an additional annual

fee of approximately $25,000, we also act as fiscal agent for the franchisees whereby we collect

all revenues and pay all expenses and distributions.

We also, from time to time, advance

COMMITMENTS, CONTINGENCIES

AND OTHER MATTERS (Continued)

Flanigan’s family represents an additional 60 % of the total invested capital in this franchised location (Store #14).

Flanigan is the sole general partner and a 25 % limited partner in a limited partnership which has a franchise arrangement with us for the operation of a restaurant located in Fort Lauderdale, Florida.

The Company is a 25% limited partner in this limited partnership and officers and directors of the Company (excluding Patrick J.

Flanigan) own an additional 31.9 % limited partnership interest in this franchised location (Store #15).

COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

Franchise Program (Continued)

funds on behalf of

the franchisees for the cost of renovations.

The resulting amounts receivable from and payable to these franchisees are reflected

in the accompanying consolidated balance sheet as either an asset or a liability.

We also agree to sponsor and manage cooperative

buying groups on behalf of the franchisees for the purchase of inventory.

The franchise agreements provide for royalties to us

of approximately 3% of gross restaurant sales and 1% of gross package liquor sales.

During our fiscal years 2020 and 2019, we earned

royalties of $666,000 and $751,000, respectively, from our related franchises.

Under the franchise agreements, we provide guidance, advice and management assistance to the franchisees.

In addition and for an additional annual fee of approximately $ 25,000 each, we also act as fiscal agent for the franchisees whereby we collect all revenues and pay all expenses and distributions.

We also, from time to time, advance funds on behalf of the franchisees for the cost of renovations.

The resulting amounts receivable from and payable to these franchisees are reflected in the accompanying consolidated balance sheet as either an asset or a liability.

We also agree to sponsor and manage cooperative buying groups on behalf of the franchisees for the purchase of inventory.

The franchise agreements provide for royalties to us of approximately 3 % of gross restaurant sales and 1 % of gross package liquor sales.

During our fiscal years 2021 and 2020, we earned royalties of $ 786,000 and $ 666,000 , respectively, from our related franchises.

We are not currently offering or accepting new franchises.

Agreements/Bonuses

As of October 3, 2020 and September

28, 2019, we had no employment agreements.

Our Board of Directors

approved an annual performance bonus, with 14.75% of the corporate pre-tax net income, plus or minus non-recurring items, but before

depreciation and amortization in excess of $650,000 paid to the Chief Executive Officer and 5.25% paid to other members of management.

Employment Agreements/Bonuses

As of October 2, 2021 and October 3, 2020, we had no employment agreements.

Our Board of Directors approved an annual performance bonus, with 14.75 % of the corporate pre-tax net income, plus or minus non-recurring items, but before depreciation and amortization in excess of $650,000 paid to the Chief Executive Officer and 5.25 % paid to other members of management.

Bonuses for our fiscal years 2021 and 2020 amounted to approximately $ 3,730,000 and $ 933,000 , respectively.

Our Board of Directors also approved

an annual performance bonus, with 5% of the pre-tax net income before depreciation and amortization from our restaurants in excess

of $1,875,000 and our share of the pre-tax net income before depreciation and amortization from the restaurants owned by the limited

partnerships paid to the Chief Operating Officer and 5% paid to the Chief Financial Officer.

Bonuses for our fiscal years 2020

and 2019 amounted to approximately $679,000 and $970,000, respectively.

Our Board of Directors also approved an annual performance bonus, with 5 % of the pre-tax net income before depreciation and amortization from our restaurants in excess of $ 1,875,000 and our share of the pre-tax net income before depreciation and amortization from the restaurants owned by the limited partnerships paid to the Chief Operating Officer and 5 % paid to the Chief Financial Officer.

Bonuses for our fiscal years 2021 and 2020 amounted to approximately $ 1,530,000 and $ 679,000 , respectively.

Management Agreements

Beach, Florida

Since January 2006,

we have managed “The Whale’s Rib”, a casual dining restaurant located in Deerfield Beach, Florida, pursuant to

a management agreement.

Deerfield Beach, Florida

Since January 2006, we have managed “The Whale’s Rib”, a casual dining restaurant located in Deerfield Beach, Florida, pursuant to a management agreement.

We paid $ 500,000 in exchange for our rights to manage this restaurant.

The management agreement was amortized

on a straight-line basis over the life of the initial term of the agreement, ten (10) years.

The restaurant is owned by a third

party unaffiliated with us.

In exchange for providing management, bookkeeping and related services, we receive one-half (½)

of the net profit, if any, from the operation of the restaurant.

During the third quarter of our fiscal year 2011, the term of

the management agreement was extended through January 9, 2036.

For the fiscal years ended October 3, 2020 and September 28, 2019,

we generated $150,000 and $375,000 of revenue respectively, from providing these management services.

FAIR VALUE MEASUREMENTS OF

FINANCIAL INSTRUMENTS

FASB (ASC) Topic 820, “

Fair Value Measurements and Disclosures ”, for financial assets and liabilities and

for non-financial assets and liabilities that are recognized or disclosed at fair value on at least an annual basis.

820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an

orderly transaction between market participants at the measurement date.

When determining the fair value measurements for

assets and liabilities required or permitted to be recorded at fair value, we consider the principal or most advantageous

market in which it would transact and consider assumptions that market participants would use when pricing the asset or

liability, such as inherent risk, transfer restrictions and risk of non-performance.

Topic 820 establishes a fair market

hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when

measuring fair value.

The management agreement was amortized on a straight-line basis over the life of the initial term of the agreement, ten ( 10 ) years.

The restaurant is owned by a third party unaffiliated with us.

In exchange for providing management, bookkeeping and related services, we receive one-half (½) of the net profit, if any, from the operation of the restaurant.

During the third quarter of our fiscal year 2011, the term of the management agreement was extended through January 9, 2036.

For the fiscal years ended October 2, 2021 and October 3, 2020, we generated $ 400,000 and $ 150,000 of revenue respectively, from providing these management services.

FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS

We follow FASB (ASC) Topic 820, “

Fair Value Measurements and Disclosures ”, for financial assets and liabilities and for non-financial assets and liabilities that are recognized or disclosed at fair value on at least an annual basis.

Topic 820 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, we consider the principal or most advantageous market in which it would transact and consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of non-performance.

Topic 820 establishes a fair market hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Topic 820 establishes three levels of inputs that may be used to measure fair value:

Level 1 Inputs –

Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 Inputs -- Inputs other than quoted prices included in Level 1 that are either directly

or indirectly observable through correlation with market data.

These include quoted prices for similar assets or liabilities in

active markets;

Level 2 Inputs –

Inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data.

These include quoted prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities in markets that are not active;

and inputs to evaluation

models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest

rates and volatility, can be corroborated by readily observable market data.

Level 3 Inputs -- One or more significant inputs that are unobservable and supported by little

or no market activity, and that reflect the use of significant management judgment.

Level 3 assets and liabilities include those

whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation

techniques, and significant management judgment or estimation.

and inputs to evaluation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data.

Level 3 Inputs –

One or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment.

Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, and significant management judgment or estimation.

Interest Rate Swap Agreements

At October 3, 2020, we had two variable

rate debt instruments outstanding that are impacted by changes in interest rates.

The interest rate of both variable rate debt

instruments is equal to the lender’s LIBOR Rate plus two and one-quarter percent (2.25%) per annum.

The debt instruments

further provide that the “LIBOR Rate”

is a rate of interest equal to the British Bankers Association LIBOR Rate or

successor thereto approved by the lender if the British Bankers Association is no longer making a LIBOR rate available.

2013, we refinanced the mortgage loan encumbering the property where our combination package liquor store and restaurant located

Federal Highway, Hallandale, Florida, (Store #31) operates, which mortgage loan is held by an unaffiliated third party

lender (the “$1.405M Loan”).

In December, 2016, we closed on a secured revolving line of credit which entitled us to

borrow, from time to time through December 28, 2017, up to $5,500,000 (the “Credit Line”), which on December 28, 2017

converted to the term loan (the “Term Loan”).

FAIR VALUE MEASUREMENTS

OF FINANCIAL INSTRUMENTS

Interest Rate Swap

Agreements ( Continued)

As a means of managing our interest

rate risk on these debt instruments, we entered into interest rate swap agreements with our unrelated third party lender to convert

these variable rate debt obligations to fixed rates.

At October 2, 2021, we had two variable rate debt instruments outstanding that are impacted by changes in interest rates.

The interest rate of both variable rate debt instruments is equal to the lender’s LIBOR Rate plus two and one-quarter percent (2.25%) per annum.

The debt instruments further provide that the “LIBOR Rate”

is a rate of interest equal to the British Bankers Association LIBOR Rate or successor thereto approved by the lender if the British Bankers Association is no longer making a LIBOR rate available.

In January, 2013, we refinanced the mortgage loan encumbering the property where our combination package liquor store and restaurant located at 4 N.

Federal Highway, Hallandale, Florida, (Store #31) operates, which mortgage loan is held by an unaffiliated third party lender (the “$1.405M Loan”).

In December, 2016, we closed on a secured revolving line of credit which entitled us to borrow, from time to time through December 28, 2017, up to $ 5,500,000 (the “Credit Line”), which on December 28, 2017 converted to the term loan (the “Term Loan”).

FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (Continued)

Interest Rate Swap Agreements (Continued)

As a means of managing our interest rate risk on these debt instruments, we entered into interest rate swap agreements with our unrelated third party lender to convert these variable rate debt obligations to fixed rates.

We are currently party to the following two (2) interest rate swap agreements:

(i) One (1) interest rate swap agreement

entered into in January, 2013 relates to the $1.405M Loan (the “$1.405M Term Loan Swap”).

The $1.405M Term Loan Swap

requires us to pay interest for a twenty (20) year period at a fixed rate of 4.35% on an initial amortizing notional principal

amount of $1,405,000, while receiving interest for the same period at LIBOR –

1 Month, plus 2.25%, on the same amortizing

notional principal amount.

We determined that at October 3, 2020, the interest rate swap agreement is an effective hedging agreement

and the fair value was not material;

(ii) The second interest rate swap

agreement entered into in December, 2016, which became effective December 28, 2017, relates to the Credit Line (the “Line

of Credit Swap”).

The Line of Credit Swap requires us to pay interest for a five (5) year period, commencing December 28,

2017 at a fixed rate of 4.61% on an initial amortizing notional principal amount of $5,500,000, while receiving interest for the

same period at LIBOR –

(i) One (1) interest rate swap agreement entered into in January, 2013 relates to the $1.405M Loan (the “$1.405M Term Loan Swap”).

The $1.405M Term Loan Swap requires us to pay interest for a twenty ( 20 ) year period at a fixed rate of 4.35 % on an initial amortizing notional principal amount of $ 1,405,000 , while receiving interest for the same period at LIBOR –

1 Month, plus 2.25% , on the same amortizing notional principal amount.

We determined that at October

3, 2020, the interest rate swap agreement is an effective hedging agreement and the fair value was not material.

We determined that at October 2, 2021, the interest rate swap agreement is an effective hedging agreement and the fair value was not material;

(ii) The second interest rate swap agreement entered into in December, 2016, which became effective December 28, 2017, relates to the Credit Line (the “Line of Credit Swap”).

The Line of Credit Swap requires us to pay interest for a five ( 5 ) year period, commencing December 28, 2017 at a fixed rate of 4.61 % on an initial amortizing notional principal amount of $ 5,500,000 , while receiving interest for the same period at LIBOR –

1 Month, plus 2.25% , on the same amortizing notional principal amount.

We determined that at October 2, 2021, the interest rate swap agreement is an effective hedging agreement and the fair value was not material.

Beginning January 1, 2022, our unrelated third party lender will no longer originate, renew or modify loans at LIBOR, except in limited situations.

The limited exceptions include our LIBOR transactions which reduce or hedge our LIBOR exposure on contracts entered into before January 1, 2022, including our $1.405M Term Loan Swap and our Line of Credit Swap.

In addition, the principal balance and all accrued interest are due in full on January 23, 2023 on our $1.405M Term Loan Swap and the principal balance and all accrued interest on our Line of Credit Swap is fully amortized and due on December 27, 2022.

Consequently, the transition of our unrelated third party lender from LIBOR to alternate measures should not have an effect on us.

Treasury Stock

of Common Shares

During our fiscal

years 2020 and 2019, we did not purchase any shares of our common stock.

As of October 3, 2020, we still have authority to purchase

65,414 shares of our common stock under the discretionary plan approved by the Board of Directors on May 17, 2007.

repurchase plan has no expiration date and purchases under this program may be made from time to time on the open market and in

private transactions, depending on market conditions, up to a purchase price of price of $15 per share.

Purchase of Common Shares

During our fiscal years 2021 and 2020, we did not purchase any shares of our common stock.

As of October 2, 2021, we still have authority to purchase 65,414 shares of our common stock under the discretionary plan approved by the Board of Directors on May 17, 2007.

Our current repurchase plan has no expiration date and purchases under this program may be made from time to time on the open market and in private transactions, depending on market conditions, up to a purchase price of price of $ 15 per share.

BUSINESS SEGMENTS

We operate principally in two

reportable segments –

We operate in two reportable segments –

package stores and restaurants.

The operation of package stores consists of retail liquor sales

and related items.

Information concerning the revenues and operating income for our fiscal years ended 2020 and 2019, and

identifiable assets for the two reportable segments in which we operate, are shown in the following table.

Operating income

is total revenue less cost of merchandise sold and operating expenses relative to each segment.

In computing operating

income, none of the following items have been included:

interest expense, other non-operating income and expense and income

The operation of package stores consists of retail liquor sales and related items.

Information concerning the revenues and operating income for our fiscal years ended 2021 and 2020, and identifiable assets for the two reportable segments in which we operate, are shown in the following table.

Operating income is total revenue less cost of merchandise sold and operating expenses relative to each segment.

In computing operating income, none of the following items have been included:

interest expense, other non-operating income and expense and income taxes.

Identifiable assets by segment are those assets that are used in our operations in each segment.

Corporate assets are

principally cash and real property, improvements, furniture, equipment and vehicles used at our corporate headquarters.

not have any operations outside of the United States and transactions between restaurants and package liquor stores are not

BUSINESS SEGMENTS (Continued )

Corporate assets are principally cash and real property, improvements, furniture, equipment and vehicles used at our corporate headquarters.

We do not have any operations outside of the United States and transactions between restaurants and package liquor stores are not material.

Operating Revenues:

2 unchanged sentences

Total operating revenues

$ 112,977,000

$ 116,202,000

Income from Operations Reconciled to Income after

6 unchanged sentences

Interest and Other Income

Insurance recovery, net of casualty loss

Gain on forgiveness of PPP loans

Gain on sale of property and equipment

Income before provision for income taxes

1 unchanged sentence

Net Income Attributable to Noncontrolling Interests

Income Attributable to Flanigan’s Enterprises, Inc,

Net Income Attributable to Flanigan’s Enterprises, Inc, Stockholders

Identifiable Assets:

1 unchanged sentence

Consolidated Totals

$ 112,484,000

Capital Expenditures

1 unchanged sentence

Total Capital Expenditures

BUSINESS SEGMENTS (Continued)

Depreciation and Amortization:

1 unchanged sentence

Total Depreciation and Amortization

INFORMATION (UNAUDITED )

The following is

a summary of our unaudited quarterly results of operations for the quarters in our fiscal years 2020 and 2019.

QUARTERLY INFORMATION (UNAUDITED)

The following is a summary of our unaudited quarterly results of operations for the quarters in our fiscal years 2021 and 2020.

Quarter Ended

Income from operations

Net income (loss) attributable to stockholders

Net income (loss) per share –

Net income attributable to stockholders

Net income per share –

basic and diluted

Weighted average common stock

outstanding –

Weighted average common stock outstanding –

basic and diluted

1 unchanged sentence

Income from operations

Net income attributable to stockholders

Net income per share –

Weighted average common stock

outstanding –

Net income (loss) attributable to stockholders

Net income (loss) per share –

basic and diluted

Quarterly operating

results are not necessarily representative of our operations for a full year for various reasons including the seasonal nature

of both the restaurant and package store segments.

Effective July 2004, we began sponsoring

a 401(k) retirement plan covering substantially all employees who meet certain eligibility requirements.

Employees may contribute

elective deferrals to the plan up to amounts allowed under the Internal Revenue Code.

We are not required to contribute to the

plan but may make discretionary profit sharing and matching contributions.

During our fiscal years 2020 and 2019, we made discretionary

contributions of $81,000 and $74,000, respectively.

Weighted average common stock outstanding –

basic and diluted

Quarterly operating results are not necessarily representative of our operations for a full year for various reasons including the seasonal nature of both the restaurant and package store segments.

Effective July 2004, we began sponsoring a 401(k) retirement plan covering substantially all employees who meet certain eligibility requirements.

Employees may contribute elective deferrals to the plan up to amounts allowed under the Internal Revenue Code.

We are not required to contribute to the plan but may make discretionary profit sharing and matching contributions.

During our fiscal years 2021 and 2020, we made discretionary contributions of $ 59,000 and $ 81,000 , respectively.

SUBSEQUENT EVENTS

Menu Price Increases

Effective November 29, 2020 we increased

menu prices for our bar offerings to target an increase to our bar revenues of approximately 1.83% annually and effective December

6, 2020 we increased menu prices for our food offerings to target an increase to our food revenues of approximately 2.45% annually

to offset higher food costs and higher overall expenses.

Prior to these increases, we previously raised menu prices in the third

quarter of our fiscal year 2019.

Exercise of Options to Purchase

North Lauderdale, Florida (“Flanigan’s

Seafood Bar and Grill”/”Big Daddy’s Liquors”)

On October 7, 2014, we entered into

an Amendment to Lease Agreement (the “Lease Amendment”) with a non-affiliated third party from whom we rent approximately

4,600 square feet of commercial space located at 5450 N.

State Road 7, North Lauderdale, Florida where we operate a combination

“Flanigan’s Seafood Bar and Grill”

restaurant and “Big Daddy’s Liquors”

package liquor store

The Lease Amendment extended the term of the Lease Agreement until December 31, 2020 and granted us the option to purchase,

(the “Option to Purchase”), the real property and improvements on December 31, 2020 for $1,200,000.

During the fourth

quarter of our fiscal year 2020 we exercised the Option to Purchase and closed on December 31, 2020.

all cash at closing.

Sunrise, Florida (“Flanigan’s

Seafood Bar and Grill”)

During the second quarter of our

fiscal year 2019, we entered into a Lease Agreement (the “Sunrise Lease Agreement”) with a non-affiliated third party

to rent approximately 6,900 square feet of commercial space located at 14301 W.

Sunrise Boulevard, Sunrise, Florida where, subject

to certain conditions, we anticipate opening a new restaurant location.

The Sunrise Lease Agreement grants us an option to purchase,

(the “Option to Purchase”) the real property and improvements by February 28, 2021.

During the third quarter of our

fiscal year 2019, we assigned the Sunrise Lease Agreement, excluding the Option to Purchase, to a newly formed limited partnership.

Subsequent to the end of our fiscal year 2020, we exercised the Option to Purchase and anticipate closing during the second quarter

of our fiscal year 2021.

We intend to pay all cash at closing.

Subsequent to the end of our fiscal year 2021, we increased menu prices for our food offerings to target an increase to our food revenues of approximately 8.83 % annually and menu prices for our bar offerings to target an increase to our bar revenues of approximately 7.80 % annually to offset higher food and bar costs and higher overall expenses.

Forgiveness of 2 nd PPP Loans

Subsequent to the end of our fiscal year 2021, we applied for and received forgiveness of the entire amount of principal and accrued interest on all 2 nd PPP Loans, including the Managed Store.

During the first quarter of our fiscal year 2022, we expect to have other income of $ 3.49 million from the forgiveness of principal and accrued interest of the 2 nd PPP Loans.

Except as otherwise provided herein, subsequent events have been evaluated through the date these consolidated financial statements were issued and no other events required disclosure.

General Liability Insurance;

Excess Insurance

For the policy

year beginning December 30, 2020, we bound general liability insurance with an unrelated third party insurance carrier which incorporates

a deductible of $10,000 per occurrence for both us and the limited partnerships.

Our insurance carrier is responsible for $1,000,000

coverage per occurrence above our deductible, up to a maximum aggregate of $2,000,000 per year.

We were also able to bind excess

liability insurance at a reasonable premium, whereby our excess insurance carrier is responsible for $10,000,000 coverage above

our primary general liability insurance coverage.

We are uninsured against liability claims in excess of $11,000,000 per occurrence

and in the aggregate.

Certain expenses incurred in defending a claim, including attorney's fees, are a part of our $10,000 deductible.

For the policy year beginning December 30, 2021, we bound general liability insurance with an unrelated third party insurance carrier which incorporates a deductible of $ 10,000 per occurrence for both us and the limited partnerships.

Our insurance carrier is responsible for $ 1,000,000 coverage per occurrence above our deductible, up to a maximum aggregate of $ 2,000,000 per year.

We were also able to bind excess liability insurance at a reasonable premium, whereby our excess insurance carrier is responsible for $ 10,000,000 coverage above our primary general liability insurance coverage.

We are uninsured against liability claims in excess of $ 11,000,000 per occurrence and in the aggregate.

Certain expenses incurred in defending a claim, including attorney's fees, are a part of our $10,000 deductible.

Property Insurance;

Windstorm Insurance;

For the policy

year beginning December 30, 2020, our property insurance is a one (1) year policy with an unaffiliated third party insurance carrier,

including coverage for properties leased by us and our consolidated limited partnerships, and provides for full insurance coverage

for property losses, including those caused by windstorm, such as a hurricane.

For property losses caused by windstorm, the property

insurance has a fixed deductible of $100,000, plus 5% of all insured losses, per occurrence.

For all other property losses, the

property insurance has deductibles of $10,000 per location, per occurrence.

For the policy year beginning December 30, 2021, our property insurance is a one (1) year policy with an unaffiliated third party insurance carrier, including coverage for properties leased by us and our consolidated limited partnerships, and provides for full insurance coverage for property losses, including those caused by windstorm, such as a hurricane.

For property losses caused by windstorm, the property insurance has a fixed deductible of $ 100,000 , plus 5 % of all insured losses, per occurrence.

For all other property losses, the property insurance has deductibles of $ 10,000 per location, per occurrence.

Financed Insurance Premiums

policy year commencing December 30, 2020, we financed the premiums on the following property, general liability, excess

liability and terrorist policies, totaling approximately $1.94 million, which property, general liability, excess liability

and terrorist insurance includes coverage for our franchises which are not included in our consolidated financial statements:

the policy year beginning December 30, 2020, our general liability insurance, excluding limited partnerships, is a one (1) year

policy with our insurance carriers.

For the policy year commencing December 30, 2021, we financed the premiums on the following property, general liability, excess liability and terrorist policies, totaling approximately $ 2.54 million, which property, general liability, excess liability and terrorist insurance includes coverage for our franchises which are not included in our consolidated financial statements:

(i) For the policy year beginning December 30, 2021, our general liability insurance, excluding limited partnerships, is a one (1) year policy with our insurance carriers.

The one ( 1 ) year general liability insurance premium is in the amount of $ 467,000 ;

the policy year beginning December 30, 2020, our general liability insurance for our limited partnerships is a one (1) year policy

with our insurance carriers.

(ii) For the policy year beginning December 30, 2021, our general liability insurance for our limited partnerships is a one (1) year policy with our insurance carriers.

The one ( 1 ) year general liability insurance premium is in the amount of $ 589,000 ;

the policy year beginning December 30, 2020, our automobile insurance is a one (1) year policy.

The one (1) year automobile insurance

premium is in the amount of $93,000;

the policy year beginning December 30, 2020, our property insurance is a one (1) year policy.

The one (1) year property insurance

premium is in the amount of $627,000;

the policy year beginning December 30, 2020, our excess liability insurance is a one (1) year policy.

The one (1) year excess liability

insurance premium is in the amount of $443,000;

the policy year beginning December 30, 2020, our terrorist insurance is a one (1) year policy.

The one (1) year terrorist insurance

premium is in the amount of $5,000;

(vii) For the policy year beginning

December 30, 2020, our equipment breakdown insurance is a one (1) year policy.

The one (1) year equipment breakdown insurance premium

is in the amount of $6,000.

Of the $1,940,000

annual premium amounts, which includes coverage for our franchises which are not included in our consolidated financial statements,

we financed $1,776,000 through an unaffiliated third party lender.

The finance agreement obligates us to repay the amounts financed

together with interest at the rate of 2.45% per annum, over 11 months, with monthly payments of principal and interest, each in

the amount of $164,000.

The finance agreement is secured by a first priority security interest in all insurance policies, all

unearned premium, return premiums, dividend payments and loss payments thereof.

Except as otherwise provided herein, subsequent

events have been evaluated through the date these consolidated financial statements were issued and no other events required disclosure.

(iii) For the policy year beginning December 30, 2021, our automobile insurance is a one (1) year policy.

The one ( 1 ) year automobile insurance premium is in the amount of $ 194,000 ;

(iv) For the policy year beginning December 30, 2021, our property insurance is a one (1) year policy.

The one ( 1 ) year property insurance premium is in the amount of $ 700,000 ;

(v) For the policy year beginning December 30, 2021, our excess liability insurance are two (2) one (1) year policies.

The aggregate ( 1 ) year excess liability insurance premiums are in the amount of $ 576,000 ;

(vi) For the policy year beginning December 30, 2021, our terrorist insurance is a one (1) year policy.

The one ( 1 ) year terrorist insurance premium is in the amount of $ 8,900 ;

(vii) For the policy year beginning December 30, 2021, our equipment breakdown insurance is a one (1) year policy.

The one ( 1 ) year equipment breakdown insurance premium is in the amount of $ 6,800 .

Of the $ 2,542,000 annual premium amounts, which includes coverage for our franchises which are not included in our consolidated financial statements, we financed $ 2,328,000 through an unaffiliated third party lender.

The finance agreement obligates us to repay the amounts financed together with interest at the rate of 2.55 % per annum, over 11 months , with monthly payments of principal and interest, each in the amount of $ 215,000 .

The finance agreement is secured by a first priority security interest in all insurance policies, all unearned premium, return premiums, dividend payments and loss payments thereof.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures