FLANIGANS ENTERPRISES INC 10-K

ITEM 9A. 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 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 reporting. 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 2, 2021, our internal control over financial reporting was effective. Changes in Internal Control Over Financial Reporting During the 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. Remediation Measures To address 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 of ASC 842; (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; and (iv) reporting on the remediation measures to the Audit Committee and the Board of Directors. 55 Table of Contents 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 reporting. 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. ITEM 9B. OTHER INFORMATION. None. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. 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. ITEM 11. EXECUTIVE COMPENSATION . 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. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The information required by Item 12 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. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE. 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. 56 Table of Contents ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. 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. PART IV ITEM 15. 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 Schedules All 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. (a)(3) Exhibits The exhibits listed on the accompanying Index to Exhibits are filed as part of this Annual Report. Incorporated by Reference Exhibit Number Exhibit Description Form Date Number Filed Herewith 2 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 SB-2 5/5/1987 2 3 Restated Articles of Incorporation, adopted January 9, 1984 10-K 12/29/1982 3 10(a)(1) Employment Agreement with Joseph G. Flanigan* DEF14A 1/27/1988 10(a)(1) 10(a)(2) Form of Employment Agreement between Joseph G. Flanigan and the Company (as ratified and amended by the stockholders at the 1988 annual meeting is incorporated herein by reference).* 10-K 10(a)(1) 57 Table of Contents 10(c) Consent Agreement regarding the Company's Trademark Litigation 8-K 4/10/1985 10( c) 10(d) King of Prussia(#850)Partnership Agreement* 8-K 4/10/1985 10(d) 10(o) Management Agreement for Atlanta, Georgia, (#600)* 10-K 10/3/1992 10(o) 10(p) Settlement Agreement with Former Vice Chairman of the Board of Directors (re #5) 10-K 10/3/1992 10(p) 10(q) Hardware Purchase Agreement and Software License Agreement for restaurant point of sale system. 10-KSB 10/2/1993 10(q) 10(a)(3) Key Employee Incentive Stock Option Plan DEF14A 1/26/1994 10(a)(3) 10( r) 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. * 10-KSB 9/30/1995 10(r) 10(s) Form of Franchise Agreement between Flanigan's Enterprises, Inc. and Franchisees. * 10-KSB 9/30/1995 10(s) 10(t) Licensing Agreement between Flanigan's Enterprises, Inc. and James B. Flanigan, dated November 4, 1996, for non-exclusive use of the service mark "Flanigan's" in the Commonwealth of Pennsylvania. * 10-KSB 9/28/1996 10(t) 10(u) Limited Partnership Agreement of CIC Investors #15 Ltd., dated March 28, 1997, between B.D. 15 Corp. as General Partner and numerous limited partners, including Flanigan's Enterprises, Inc. as a limited partner owning twenty five percent of the limited partnership. * 10-KSB 9/27/1997 10(u) 58 Table of Contents 10(v) 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. as limited partner owning forty percent of the limited partnership. * 10-KSB 9/27/1997 10(v) 10(w) Stipulated Agreed Order of Dismissal upon Mediation with former franchisee. 10-KSB 9/27/1997 10(w) 10(x) Limited 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 limited partner owning forty percent of the limited partnership. * 10-KSB 10/02/1999 10(x) 10(y) 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. * 10-KSB 9/29/2001 10(y) 10(z) 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. as limited partner owning twenty eight percent of the limited partnership. * 10-KSB 9/29/2001 10(z) 59 Table of Contents 10(bb) 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. * 10-K 10/2/2004 10(bb) 10(cc) 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. as limited partner owning thirty nine percent of the limited partnership. * 10-K 9/30/2006 10(cc) 10(dd) 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. * 10-K 9/29/2007 10(dd) 10(ee) 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. * 10-K 9/29/2007 10(ee) 60 Table of Contents 10(ff) 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. * 10-K 9/29/2012 10(ff) 13 Registrant's Form 10-K constitutes the Annual Report to Shareholders for the fiscal year ended October 2, 2021. X 21(a) Company's subsidiaries are set forth in this Annual Report on Form 10-K. X 31.1 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 . X 31.2 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. X 32.1 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. X 32.2 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. X * Compensatory plan or arrangement. List of XBRL documents as exhibits 101 ITEM 16. FORM 10-K SUMMARY None. 61 Table of Contents SIGNATURES 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. FLANIGAN'S ENTERPRISES, INC. By: /s/ JAMES G. FLANIGAN II JAMES G. FLANIGAN II Chief Executive Officer Date: 1/14/2022 By: /s/ JEFFREY D. KASTNER JEFFREY D. KASTNER Chief Financial Officer and Secretary (Principal Financial and Accounting Officer) Date: 1/14/2022 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. /s/ JAMES G. FLANIGAN II Chairman of the Board, Date: 1/14/2022 James G. Flanigan II Chief Executive Officer, and Director /s/ JEFFREY D. KASTNER Chief Financial Officer, Date: 1/14/2022 Jeffrey D. Kastner Secretary and Director /s/ AUGUST BUCCI Chief Operating Officer Date: 1/14/2022 August Bucci and Director /s/ MICHAEL B. FLANIGAN Director Date: 1/14/2022 Michael B. Flanigan /s/ PATRICK J. FLANIGAN Director Date: 1/14/2022 Patrick J. Flanigan /s/ CHRISTOPHER O’NEIL Vice President of Package Date: 1/14/2022 Christopher O’Neil Operations and Director /s/ MARY ELIZABETH BENNETT Director Date: 1/14/2022 Mary Elizabeth Bennett /s/ CHRISTOPHER J. NELMS Director Date: 1/14/2022 Christopher J. Nelms /s/ JOHN P. FOSTER Director Date: 1/14/2022 John P. Foster 62 Table of Contents Flanigan’s Enterprises, Inc. and Subsidiaries CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 2, 2021 AND OCTOBER 3, 2020 Table of Contents Flanigan’s Enterprises, Inc. and Subsidiaries INDEX TO CONSOLIDATED FINANCIAL STATEMENTS   PAGE     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-1   CONSOLIDATED FINANCIAL STATEMENTS   Balance Sheets F-2   Statements of Income F-3   Statements of Stockholders’ Equity F-4   Statements of Cash Flows F-5  – F-6   Notes to Financial Statements F-7  – F-39 Table of Contents 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 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. 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. 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 Marcum llp We have served as the Company’s auditor since 1999. West Palm Beach, FL January 14, 2022 F-1 Table of Contents   Flanigan’s Enterprises, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS OCTOBER 2, 2021 AND OCTOBER 3, 2020 (rounded to the nearest thousandth, except share amounts) ASSETS 2021 2020 Current Assets: Cash and cash equivalents $ 32,676,000 $ 29,922,000 Prepaid income taxes 139,000 74,000 Other receivables 450,000 681,000 Inventories 4,283,000 3,624,000 Prepaid expenses 2,242,000 2,207,000 Total current assets 39,790,000 36,508,000   Property and Equipment, Net 51,441,000 46,003,000 Construction in progress 5,445,000 981,000 56,886,000 46,984,000   Right-of-use asset, finance leases — 4,749,000 Right-of-use asset, operating leases 28,559,000 22,150,000 28,559,000 26,899,000   Investment in Limited Partnerships 1,122,000 621,000   Other Assets: Liquor licenses 822,000 630,000 Deferred tax assets — 352,000 Leasehold interests, net 118,000 200,000 Other 705,000 290,000 Total other assets 1,645,000 1,472,000 Total assets $ 128,002,000 $ 112,484,000   LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued expenses $ 9,770,000 $ 9,238,000 Due to franchisees 4,478,000 3,142,000 Current portion of long-term debt 2,555,000 5,094,000 Finance lease liability, current — 4,772,000 Operating lease liability, current 2,009,000 3,116,000 Deferred revenue 1,411,000 — Total current liabilities 20,223,000 25,362,000   Long-Term Debt, Net of Current Portion 19,560,000 21,229,000   Operating lease liability, non current 27,183,000 20,337,000 Deferred tax liabilities 406,000 — Total liabilities 67,372,000 66,928,000   Commitments and Contingencies — —   Equity: Flanigan's Enterprises, Inc. stockholders' equity Common stock, $. 10 par value; 5,000,000 shares authorized; 4,197,642 shares issued; 1,858,647 outstanding for years ended 2020 and 2019 420,000 420,000 Capital in excess of par value 6,240,000 6,240,000 Retained earnings 50,632,000 38,848,000 Treasury stock, at cost, 2,338,995 shares for the years ended 2021 and 2020 ( 6,077,000 ) ( 6,077,000 ) Total Flanigan's Enterprises, Inc. stockholders' equity 51,215,000 39,431,000 Noncontrolling interests 9,415,000 6,125,000 Total equity 60,630,000 45,556,000 Total liabilities and equity $ 128,002,000 $ 112,484,000 See notes to consolidated financial statements. F-2 Table of Contents Flanigan’s Enterprises, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME Years Ended October 2, 2021 and October 3, 2020 (rounded to the nearest thousandth, except share and per share amounts) 2021 2020 Revenues: Restaurant food sales $ 84,466,000 $ 68,685,000 Restaurant bar sales 20,832,000 15,967,000 Package store sales 29,304,000 26,276,000 Franchise-related revenues 1,673,000 1,260,000 Other operating income 262,000 109,000 Rental income 770,000 680,000 137,307,000 112,977,000 Costs and Expenses: Cost of merchandise sold: Restaurants and lounges 35,974,000 28,518,000 Package goods 22,348,000 19,192,000 Payroll and related costs 43,465,000 35,399,000 Occupancy costs 6,595,000 7,040,000 Selling, general and administrative expenses 20,275,000 19,917,000 128,657,000 110,066,000   Income from Operations 8,650,000 2,911,000   Other Income (Expense): Interest expense ( 938,000 ) ( 836,000 ) Interest and other income 58,000 49,000 Gain on forgiveness of PPP loans 10,136,000 — Gain on sale of property and equipment 44,000 — 9,300,000 ( 787,000 )   Income Before Provision for Income Taxes 17,950,000 2,124,000   Benefit (Provision) for Income Taxes ( 1,185,000 ) 60,000   Net Income 16,765,000 2,184,000   Less: Net Income Attributable to Noncontrolling Interests ( 4,981,000 ) ( 1,074,000 )   Net Income Attributable to Flanigan's Enterprises, Inc. Stockholders $ 11,784,000 $ 1,110,000       Net Income Per Common Share: Basic and Diluted $ 6.34 $ 0.60   Weighted Average Shares and Equivalent Shares Outstanding: Basic and Diluted 1,858,647 1,858,647 See notes to consolidated financial statements. F-3 Table of Contents Flanigan’s Enterprises, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY YEARS ENDED OCTOBER 2, 2021 AND OCTOBER 3, 2020 (rounded to nearest thousandth, except share amounts) Common Stock Capital in Treasury Stock Excess of Retained Noncontrolling Shares Amount Par Value Earnings Shares Amount Interests Total   Balance, October 3, 2020 4,197,642 $ 420,000 $ 6,240,000 $ 38,848,000 2,338,995 $ ( 6,077,000 ) $ 6,125,000 $ 45,556,000 Net income — — — 11,784,000 — — 4,981,000 16,765,000 Distributions to noncontrolling interests — — — — — — ( 1,691,000 ) ( 1,691,000 ) Balance, October 2, 2021 4,197,642 420,000 6,240,000 50,632,000 2,338,995 ( 6,077,000 ) 9,415,000 60,630,000         Balance, September 28, 2019   4,197,642 420,000 6,240,000 37,738,000 2,338,995 ( 6,077,000 ) 6,208,000 44,529,000 Net income — — — 1,110,000 — — 1,074,000 2,184,000 Distributions to noncontrolling interests — — — — — — ( 1,157,000 ) ( 1,157,000 ) Balance, October 3, 2020 4,197,642 $ 420,000 $ 6,240,000 $ 38,848,000 2,338,995 $ ( 6,077,000 ) $ 6,125,000 $ 45,556,000 See notes to consolidated financial statements. F-4 Table of Contents Flanigan’s Enterprises, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED OCTOBER 2, 2021 AND OCTOBER 3, 2020 (rounded to nearest thousandth) 2021 2020 Cash Flows from Operating Activities: Net income $ 16,765,000 $ 2,184,000 Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: Depreciation and amortization 2,981,000 3,144,000 Amortization of leasehold interests 82,000 96,000 Amortization of finance lease right-of-use asset 198,000 — Amortization of operating lease right-of-use asset 2,345,000 3,050,000 Gain on forgiveness of PPP loans ( 10,136,000 ) — Non-cash interest expense 109,000 — Gain on sale of property and equipment ( 44,000 ) 53,000 Loss on abandonment of property and equipment 56,000 — Amortization of deferred loan costs 75,000 33,000 Deferred income taxes 758,000 ( 103,000 ) Deferred revenues 1,411,000 — Income from unconsolidated limited partnership ( 125,000 ) ( 7,000 ) Changes in operating assets and liabilities: (Increase) decrease in: Prepaid income taxes ( 65,000 ) ( 19,000 ) Other receivables 231,000 57,000 Inventories ( 659,000 ) ( 332,000 ) Prepaid expenses 1,524,000 930,000 Other assets 32,000 305,000 Increase (decrease) in: Accounts payable and accrued expenses 190,000 590,000 Operating lease liabilities ( 3,015,000 ) ( 1,785,000 ) Due to franchisees 1,336,000 589,000 Net cash and cash equivalents provided by operating activities 14,049,000 8,785,000   Cash Flows from Investing Activities: Purchase of property and equipment ( 6,519,000 ) ( 2,259,000 ) Purchase of construction in progress ( 4,104,000 ) ( 379,000 ) Deposit on property and equipment ( 509,000 ) ( 446,000 ) Purchase of liquor license ( 192,000 ) — Proceeds from sale of fixed assets 111,000 64,000 Insurance recovery — 132,000 Distributions from unconsolidated limited partnership 28,000 22,000 Investment in limited partnership ( 404,000 ) ( 405,000 ) Net cash and cash equivalents used in investing activities ( 11,589,000 ) ( 3,271,000 )   Cash Flows from Financing Activities: Payments of long-term debt ( 4,100,000 ) ( 2,540,000 ) Deferred loan costs ( 56,000 ) — Proceeds from long-term debt 2,758,000 4,397,000 Proceeds from PPP loans 3,464,000 10,036,000 Principal payments on finance leases ( 81,000 ) — Distributions to noncontrolling interests ( 1,691,000 ) ( 1,157,000 ) Net cash and cash equivalents provided by financing activities 294,000 10,736,000   Net Increase in Cash and Cash Equivalents 2,754,000 16,250,000   Cash and Cash Equivalents, Beginning 29,922,000 13,672,000   Cash and Cash Equivalents, Ending $ 32,676,000 $ 29,922,000 See notes to consolidated financial statements. F-5 Table of Contents Flanigan’s Enterprises, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (rounded to nearest thousandth) 2021 2020 Supplemental Disclosure of Cash Flow Information: Cash paid during the year for: Interest $ 938,000 $ 836,000 Income taxes $ 371,000 $ 61,000 Supplemental Disclosure for Non-Cash Investing and Financing Activities: Financing of insurance contracts $ 1,429,000 $ 1,317,000 Purchase deposits transferred to property and equipment $ 14,000 $ 118,000 Purchase deposits transferred to construction in progress $ 48,000 $ 10,000 Construction in progress transferred to property and equipment $ — $ 700,000 Finance lease liabilities arising from right-of-use asset $ — $ 4,772,000 Operating lease liabilities arising from right-of-use asset $ 8,754,000 $ 25,177,000 Purchase of vehicle in exchange for debt $ 58,000 $ — Purchase of property in exchange for debt $ 2,200,000 $ — Construction in progress in accounts payable $ 312,000 $ — See notes to consolidated financial statements. F-6 Table of Contents Flanigan’s Enterprises, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED OCTOBER 2, 2021 AND OCTOBER 3, 2020 NOTE 1. 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 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. 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 F-7 Table of Contents NOTE 1. 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. 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. Inventories 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 13). Property and Equipment 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. 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 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. F-8 Table of Contents NOTE 1. 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 interest. We capitalize the cost of the leasehold interest and amortization commences upon our assumption 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 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 have not experienced any losses in such accounts. Major Suppliers 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. F-9 Table of Contents NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. 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 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 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. F-10 Table of Contents NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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” 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). Income Taxes 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. F-11 Table of Contents NOTE 1. 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. 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 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 Adopted 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. F-12 Table of Contents NOTE 1. 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. NOTE 2. PROPERTY AND EQUIPMENT 2021 2020   Furniture and equipment $ 12,970,000 $ 12,381,000 Leasehold improvements 26,456,000 25,355,000 Land and land improvements 25,922,000 21,289,000 Building and improvements 20,418,000 19,455,000 Vehicles 1,856,000 1,635,000 87,622,000 80,115,000 Less accumulated depreciation and amortization ( 36,181,000 ) ( 34,112,000 ) 51,441,000 46,003,000 Construction in progress 5,445,000 981,000 $ 56,886,000 $ 46,984,000 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. NOTE 3. LEASEHOLD INTERESTS 2021 2020   Leasehold interests, at cost $ 3,024,000 $ 3,024,000 Less accumulated amortization 2,906,000 2,824,000 $ 118,000 $ 200,000 Future leasehold amortization as of October 2, 2021 is as follows: 2022 $ 33,000 2023 22,000 2024 22,000 2025 22,000 2026 18,000 Thereafter 1,000 Total $ 118,000 Leasehold amortization expense for the fiscal years ended October 2, 2021 and October 3, 2020 was approximately $ 82,000 and $ 96,000 , respectively. NOTE 4. 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 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. F-13 Table of Contents NOTE 4. INVESTMENTS IN LIMITED PARTNERSHIPS (Continued) 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 on the investors’ investment. 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” restaurants: 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. 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” 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. This entity is consolidated in the accompanying financial statements. F-14 Table of Contents NOTE 4. INVESTMENTS IN LIMITED PARTNERSHIPS (Continued) 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 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” 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. 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” 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. This entity is consolidated in the accompanying financial statements. F-15 Table of Contents NOTE 4. INVESTMENTS IN LIMITED PARTNERSHIPS (Continued) Pembroke Pines, Florida 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. 23.8 % 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 ( 1/2 ) of the cash available for distribution by this limited partnership. 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” 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 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. 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” 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. This entity is consolidated in the accompanying financial statements. 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; 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 $ 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. F-16 Table of Contents NOTE 4. 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” service mark since April 1, 1997. 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 unaudited financial information pertaining to our limited partnership investment in Fort Lauderdale, Florida: October 2, 2021 October 3, 2020 Financial Position: Current Assets $ 624,000 $ 591,000 Non-Current Assets 701,000 655,000 Total Assets 1,325,000 1,246,000   Current Liabilities 259,000 562,000 Non-Current Liabilities - - Total Liabilities 259,000 562,000 Equity 1,066,000 684,000   1,325,000 1,246,000 Operating Results: Revenues 4,172,000 3,430,000 Gross profit 2,735,000 2,279,000 Net income 495,000 24,000 F-17 Table of Contents NOTE 5. 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”) 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 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. NOTE 6. 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. NOTE 7. EXECUTION OF LEASES FOR NEW LOCATIONS: 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. 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. F-18 Table of Contents NOTE 7. EXECUTION OF LEASES FOR NEW LOCATIONS: (Continued) 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. 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. NOTE 8. 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. F-19 Table of Contents NOTE 9. 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. NOTE 10. MORTGAGE / FINANCED INSURANCE PREMIUMS: (a) Mortgage on Real Property - Sunrise, Florida 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. 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. (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. (c) Financed Insurance Premiums 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: F-20 Table of Contents NOTE 10. MORTGAGE / FINANCED INSURANCE PREMIUMS: (Continued) (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 ; and (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 . F-21 Table of Contents NOTE 11. 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; 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. 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. F-22 Table of Contents NOTE 11. CORONAVIRUS PANDEMIC: (Continued) 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 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. 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. NOTE 12. 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. F-23 Table of Contents NOTE 13. LIQUOR LICENSES 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. 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. NOTE 14. INCOME TAXES The components of our provision for income taxes for our fiscal years 2021 and 2020 are as follows: 2021 2020 Current: Federal $ 251,000 $ ( 70,000 ) State 176,000 113,000 Deferred: 427,000 43,000 Federal 649,000 ( 88,000 ) State 109,000 ( 15,000 ) 758,000 ( 103,000 ) $ 1,185,000 $ ( 60,000 ) A reconciliation of income tax computed at the statutory federal rate to income tax expense is as follows: 2021 2020 Tax provision at the statutory rate $ 3,770,000 $ 446,000 Non-controlling interests ( 1,046,000 ) ( 226,000 ) State income taxes, net of federal income tax 196,000 43,000 FICA tip credit ( 297,000 ) ( 418,000 ) True up adjustment 115,000 43,000 Tax effect of rate change due to Tax Reform ( 1,000 ) 13,000 PPP forgiveness ( 1,576,000 ) — Other permanent items 24,000 39,000 $ 1,185,000 $ ( 60,000 ) 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. F-24 Table of Contents NOTE 14. INCOME TAXES (Continued) The components of our deferred tax assets at October 2, 2021 and October 3, 2020 were as follows: 2021 2020 Long-Term: Reversal of aged payables $ 18,000 $ 18,000 Capitalized inventory costs 26,000 22,000 Accrued bonuses 96,000 166,000 Accruals for potential uninsured claims 34,000 27,000 Gift cards 195,000 162,000 Limited partnership management fees ( 720,000 ) ( 192,000 ) Tip credit 85,000 7,000 Book/tax differences in property and equipment ( 886,000 ) ( 507,000 ) Book/tax differences in operating leases 428,000 279,000 Limited partnership investments 264,000 307,000 Accrued limited retirement 54,000 63,000 Total Deferred Tax Assets (Liabilities) $ ( 406,000 ) $ 352,000 F-25 Table of Contents NOTE 15. DEBT Long-Term Debt 2021 2020 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 . 6,821,000 7,070,000   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 . 4,246,000 --   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 . 2,145,000 --   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. -- 1,508,000   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 . 954,000 1,017,000   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 – Daily Floating Rate + 2.25% , ( 2.33 % at October 2, 2021). Effective December 28, 2017, an interest rate swap agreement requires us to pay interest for a five ( 5 ) year period 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, Daily Floating Rate, plus 2.25 %, per annum (2.33% at October 2, 2021) on the same notional principal amount, with a final payment on December 28, 2022 . 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. 1,650,000 2,750,000 F-26 Table of Contents NOTE 15. 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 . 633,000 679,000   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 $ 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 . 442,000 483,000   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 $ 6,519 , with a final payment on December 28, 2031 . As of October 2, 2021, the net book value of the collateral securing this mortgage was $ 981,000 . 647,000 693,000   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 . The principal balance and all accrued interest was paid in full on April, 2021. -- 423,000   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 . 409,000 365,000   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 $ 6,000 , with a balloon payment of approximately $ 484,000 due in April, 2021 . The principal balance and all accrued interest was paid in full on April, 2021. -- 511,000   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 $ 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 . 713,000 743,000 F-27 Table of Contents NOTE 15. 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 . 171,000 197,000   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 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). --- 10,036,000   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 $ 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. 3,464,000 ---   Other 74,000 45,000   Less unamortized loan costs ( 254,000 ) ( 197,000 ) 22,115,000 26,323,000 Less current portion 2,555,000 5,094,000 $ 19,560,000 $ 21,229,000 Long-term debt at October 2, 2021 matures as follows: 2022 $ 2,555,000 2023 2,970,000 2024 1,862,000 2025 1,559,000 2026 1,595,000 Thereafter 11,828,000 $ 22,369,000 Less unamortized loan costs ( 254,000 ) $ 22,115,000 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. 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. F-28 Table of Contents NOTE 16. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS Construction Contracts a. 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. b. 2505 N. 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. c. 14301 W. 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 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. d. 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. 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. 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. F-29 Table of Contents NOTE 16. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued) e. 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. 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. 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 $ 317,000 , of which none has been paid. 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. 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. Leases 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: 52 Weeks 53 Weeks Ended Ended October 2, 2021 October 3, 2020 Finance Lease Amortization $ 198,000 $ - Finance Lease Expense, which is included in interest expense 109,000 - Operating Lease Expense, which is included in occupancy costs 3,601,000 4,521,000 $ 3,908,000 $ 4,521,000 F-30 Table of Contents NOTE 16. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued) Supplemental balance sheet information related to leases as follows: Classification on the Consolidated Balance Sheet October 2, 2021 October 3, 2020   Assets Finance lease assets $ - $ 4,749,000 Operating lease assets 28,559,000 22,150,000 $ 28,559,000 $ 26,899,000   Liabilities Finance current liabilities $ - $ 4,772,000 Operating current liabilities 2,009,000 3,116,000 Operating lease non-current liabilities $ 27,183,000 $ 20,337,000   Weighted Average Remaining Lease Term: Finance leases - 0.42 Years Operating leases 8.93 Years 7.71 Years   Weighted Average Discount: Finance leases - 5.5 % Operating leases 4.62 % 5.5 % For fiscal year Operating Finance 2022 $ 3,297,000 $ - 2023 3,501,000 - 2024 3,544,000 - 2025 3,537,000 - 2026 3,371,000 - Thereafter $ 19,830,000 $ -   Total lease payments (Undiscounted cash flows) $ 37,080,000 $ - Less imputed interest ( 7,888,000 ) ( - ) Total $ 29,192,000 $ - Purchase Commitments 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. F-31 Table of Contents NOTE 16. 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 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: • James G. Flanigan, our Chairman of the Board of Directors, Chief Executive Officer and President of the Company, and Michael B. 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). • Patrick J. 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). • 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). • Patrick J. 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). F-32 Table of Contents NOTE 16. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued) Franchise Program (Continued) 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. 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 2021 and 2020 amounted to approximately $ 1,530,000 and $ 679,000 , respectively. Management Agreements 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 2, 2021 and October 3, 2020, we generated $ 400,000 and $ 150,000 of revenue respectively, from providing these management services. F-33 Table of Contents NOTE 17. 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; 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. Interest Rate Swap Agreements 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”). F-34 Table of Contents NOTE 17. 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 2, 2021, the interest rate swap agreement is an effective hedging agreement and the fair value was not material; and (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. NOTE 18. COMMON STOCK Treasury Stock 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. F-35 Table of Contents NOTE 19. BUSINESS 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 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. We do not have any operations outside of the United States and transactions between restaurants and package liquor stores are not material. 2021 2020 Operating Revenues: Restaurants $ 105,298,000 $ 84,652,000 Package stores 29,304,000 26,276,000 Other revenues 2,705,000 2,049,000 Total operating revenues $ 137,307,000 $ 112,977,000   Income from Operations Reconciled to Income after Income Taxes and Net Income Attributable to Noncontrolling Interests: Restaurants $ 9,424,000 $ 4,532,000 Package stores 1,643,000 1,699,000 11,067,000 6,231,000 Corporate expenses, net of other revenues ( 2,417,000 ) ( 3,320,000 ) Income from Operations 8,650,000 2,911,000 Interest expense ( 938,000 ) ( 836,000 ) Interest and Other Income 58,000 49,000 Gain on forgiveness of PPP loans 10,136,000 — Gain on sale of property and equipment 44,000 — Income before provision for income taxes $ 17,950,000 $ 2,124,000 Benefit (Provision) for Income Taxes ( 1,185,000 ) 60,000 Net Income 16,765,000 2,184,000 Net Income Attributable to Noncontrolling Interests ( 4,981,000 ) ( 1,074,000 ) Net Income Attributable to Flanigan’s Enterprises, Inc, Stockholders $ 11,784,000 $ 1,110,000   Identifiable Assets: Restaurants $ 67,978,000 $ 55,030,000 Package store 15,653,000 13,771,000 83,631,000 68,801,000 Corporate 44,371,000 43,683,000 Consolidated Totals $ 128,002,000 $ 112,484,000 Capital Expenditures Restaurants $ 10,842,000 $ 1,834,000 Package stores 1,240,000 260,000 12,082,000 2,094,000 Corporate 1,173,000 672,000 Total Capital Expenditures $ 13,255,000 $ 2,766,000 F-36 Table of Contents NOTE 19. BUSINESS SEGMENTS (Continued) Depreciation and Amortization: Restaurants $ 2,332,000 $ 2,495,000 Package stores 348,000 355,000 2,680,000 2,850,000 Corporate 383,000 390,000 Total Depreciation and Amortization $ 3,063,000 $ 3,240,000 NOTE 20. 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 Jan. 2, 2021 April 3, 2021 July 3, 2021 Oct. 2, 2021 Revenues $ 31,380,000 $ 34,357,000 $ 37,935,000 $ 33,635,000 Income from operations 1,270,000 2,793,000 2,609,000 1,978,000 Net income attributable to stockholders 780,000 2,451,000 7,199,000 1,354,000 Net income per share – basic and diluted 0.42 1.32 3.87 0.73 Weighted average common stock outstanding – basic and diluted 1,858,647 1,858,647 1,858,647 1,858,647 Quarter Ended Dec. 28, 2019 March 28, 2020 June 27, 2020 Oct. 3, 2020 Revenues $ 30,941,000 $ 30,128,000 $ 23,663,000 $ 28,245,000 Income from operations 1,231,000 1,517,000 ( 732,000 ) 895,000 Net income (loss) attributable to stockholders 494,000 648,000 ( 455,000 ) 423,000 Net income (loss) per share – basic and diluted 0.27 0.35 ( 0.24 ) 0.22 Weighted average common stock outstanding – basic and diluted 1,858,647 1,858,647 1,858,647 1,858,647 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. F-37 Table of Contents NOTE 21. 401(k) PLAN 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. NOTE 22. SUBSEQUENT EVENTS Menu Price Increases 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, 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; Deductibles 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 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 ; (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 ; (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 ; F-38 Table of Contents (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 ; and (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.   F-39