What changed in this filing

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Item 9A. Controls and Procedures

2023-01-18 compared with 2022-01-14 · 346 added, 493 removed, 667 unchanged (56% of the section changed)

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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.

We maintain disclosure controls

and procedures that are designed to ensure that information required to be disclosed in our reports filed with the U.S.

Securities and

Exchange Commission (the “SEC”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s

rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief

Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of October 1, 2022, an evaluation

was performed under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial

Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e)

and 15d-15(e) to the Securities Exchange Act of 1934).

Based on that evaluation, management, including our Chief Executive Officer and

Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of October 1, 2022.

in Internal Control Over Financial Reporting

During the period covered by this

report, we have not made any change to our internal control over financial reporting that has materially affected, or is reasonably likely

to materially affect, our internal control over financial reporting.

Assessment on Internal Control over Financial Reporting

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

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

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.

in Internal Control Over Financial Reporting

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

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

We adopted ASC 842 on September 29, 2019.

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

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

Management has made changes in internal

control that are summarized in the Remediation Measures section below.

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

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

The remediation actions include (i)

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

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

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

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

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

have concluded that as of October 1, 2022, our internal control over financial reporting was effective.

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

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OTHER INFORMATION.

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.

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.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER

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.

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.

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.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS .

information required by Item 10 (Directors, Executive Officers and Corporate Governance), Item 11 (Executive Compensation), Item 12 (

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters), Item 13 (Certain Relationships and Related

Transactions, and Director Independence), and Item 14 (Principal Accountant Fees and Services) is incorporated by reference to our Proxy

Statement for our 2023 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission no later than 120

days from the end of our 2022 fiscal year.

The information under the heading “Executive Officers” in Part I of this Form 10-K

is also incorporated herein by reference.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES .

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owning five percent of the limited partnership.

Limited Partnership Agreement of CIC Investors #85, Ltd., dated

April 4, 2019, between Flanigan’s Enterprises, Inc., as General Partner, Flanigan’s Management Services, Inc.

limited partners, including Flanigan’s Enterprises, Inc.

as limited partner owning seven percent of the limited partnership.

Limited Partnership Agreement of CIC Investors #25, Ltd., dated

September 21, 2021, between Flanigan’s Enterprises, Inc., as General Partner, Flanigan’s Management Services, Inc.

limited partners, excluding Flanigan’s Enterprises, Inc.

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

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Christopher J.

Flanigan’s Enterprises, Inc.

and Subsidiaries

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OCTOBER 1, 2022 AND OCTOBER 2, 2021

Flanigan’s Enterprises, Inc.

and Subsidiaries

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

(PCAOB ID 688 )

CONSOLIDATED FINANCIAL STATEMENTS

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Statements of Income

Statements of Stockholders’

Statements of Stockholders’ Equity

Statements of Cash Flows

F-5  – F-6

Notes to Financial Statements

F-7  – F-39

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Flanigan’s Enterprises, Inc.

To the Stockholders 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.

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

(the “Company”) as of

October 1, 2022, and October 2, 2021, the related consolidated statements of income, stockholders’ equity and cash flows for

each of the two years in the period ended October 1, 2022, 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 1, 2022 and October 2, 2021, and the results of its operations and cash flows for each of the two years in

the period ended October 1, 2022, 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.

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.

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

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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.

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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.

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

Critical Audit Matters

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/s/ Marcum llp

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

West Palm Beach, FL

January 17, 2023

Flanigan’s Enterprises, Inc.

and Subsidiaries

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OCTOBER 1, 2022 AND OCTOBER 2, 2021

(rounded to the nearest thousandth, except share amounts)

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

Current Assets:

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Construction in Progress

Right-of-use asset, finance leases

Right-of-Use Asset, Operating Leases

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Liquor licenses

Deferred tax assets

Leasehold interests, net

Deposits on property and equipment

Total other assets

LIABILITIES AND STOCKHOLDERS'

LIABILITIES AND EQUITY

Current Liabilities:

Accounts payable and accrued expenses

Accrued compensation

Due to franchisees

Current portion of long-term debt

Finance lease liability, current

Operating lease liability, current

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Operating lease liability, non current

Deferred tax liabilities

Deferred tax liabilities, net

Total liabilities

Commitments and Contingencies

Flanigan's Enterprises, Inc.

stockholders'

Common stock, $.

10 par value;

Flanigan's Enterprises, Inc.

stockholders' equity:

Common stock, $ .10 par value;

5,000,000 shares authorized;

4,197,642 shares

1,858,647 outstanding for years ended 2020 and 2019

4,197,642 shares issued;

1,858,647 outstanding for the years ended 2022 and 2021

Capital in excess of par value

Retained earnings

Treasury stock, at cost, 2,338,995 shares for the years

ended 2021 and 2020

Total Flanigan's Enterprises, Inc.

stockholders'

Treasury stock, at cost, 2,338,995 shares for the years ended 2022 and 2021

Total Flanigan's Enterprises, Inc.

stockholders' equity

Noncontrolling interests

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See notes to consolidated financial statements.

Flanigan’s Enterprises, Inc.

and Subsidiaries

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Interest and other income

Gain on forgiveness of PPP loans

Gain on forgiveness of debt

Gain on sale of property and equipment

Income Before Provision for Income Taxes

Benefit (Provision) for Income Taxes

Provision for Income Taxes

Net Income Attributable to Noncontrolling Interests

Net Income Attributable to Flanigan's Enterprises, Inc.

Net Income Per Common Share:

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See notes to consolidated financial statements.

Flanigan’s Enterprises, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDERS'

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED OCTOBER 1, 2022 AND OCTOBER 2, 2021

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Distributions to noncontrolling interests

Sale of minority interest

Dividends paid

Balance, October 1, 2022

Balance, September 28, 2019  

Balance, October 3, 2020

Distributions to noncontrolling interests

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See notes to consolidated financial statements.

Flanigan’s Enterprises, Inc.

and Subsidiaries

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Cash Flows from Operating Activities:

Adjustments to reconcile net income to net cash and cash equivalents provided by

operating activities:

Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:

Depreciation and amortization

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Deferred income taxes

Deferred revenues

Income from unconsolidated limited partnership

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Due to franchisees

Deferred revenue

Net cash and cash equivalents provided by operating activities

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Proceeds from sale of fixed assets

Insurance recovery

Distributions from unconsolidated limited partnership

Business acquisition

Investment in limited partnership

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Principal payments on finance leases

Dividends paid

Distributions to noncontrolling interests

Proceeds from minority interest offering

Net cash and cash equivalents provided by financing activities

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See notes to consolidated financial statements.

Flanigan’s Enterprises, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED OCTOBER 1, 2022 AND OCTOBER 2, 2021

(rounded to nearest thousandth)

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Construction in progress transferred to property and equipment

Finance lease liabilities arising from right-of-use asset

Operating lease liabilities arising from right-of-use asset

Construction in progress in accounts payable and accrued expenses

Operating lease liabilities arising from right-of-use assets

Purchase of vehicle in exchange for debt

Purchase of property in exchange for debt

Construction in progress in accounts payable

See notes to consolidated financial statements.

Flanigan’s Enterprises, Inc.

and Subsidiaries

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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.

With the exception of one restaurant we operate under the name “The Whale’s Rib”, a restaurant in which we do not have an ownership interest, and “Brendan’s Sports Pub”, a restaurant/bar we own, 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.

Our fiscal years 2022 and 2021 are each comprised of a 52-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.

The consolidated financial statements include the accounts of the Company and our subsidiaries, all of which are wholly owned, and the accounts of the ten 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.

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.

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.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

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.

We are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenue and expenses during the period reported.

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.

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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.

We consider all highly liquid investments with an original maturity of three months or less at the date of purchase and receivables from our credit card merchants to be 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 on such accounts.

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).

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 11).

Property and Equipment

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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.

Throughout our fiscal years 2022 and 2021, we purchased a significant portion of our food products from one major supplier.

This major supplier represents 42 % and 41 % of our cost of goods sold and 22 % and 24 % of our accounts payable and accrued expenses as of October 1, 2022 and October 2, 2021, respectively.

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Throughout our fiscal years 2022 and 2021, 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.

One of these three local distributors represents 23 % and 26 % of our cost of goods sold for the years ended October 1, 2022 and October 2, 2021, respectively and 2 % of our accounts payable and accrued expenses as of both October 1, 2022 and October 2, 2021.

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.

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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.

We report our revenues 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.

Gift cards have various expiration dates based upon each program, while gift cards purchased for cash have no expiration dates.

Pre-opening Costs

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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.

We expense pre-opening costs as incurred and during our fiscal year ended October 1, 2022 we expensed $ 65,000 for CIC Investors #25, Ltd, and $ 388,000 for CIC Investors #85, Ltd

Advertising Costs

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During our fiscal year ended October 1, 2022, 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.

We are un-insured against liability claims in excess of $ 11,000,000 per occurrence and in the aggregate (See Note 20.

Subsequent Events for a discussion of general liability and excess liability insurance for the period commencing December 30, 2022)

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.

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

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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).

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.

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 do not recognize changes in fair value through earnings because we currently have two derivatives which we have designated as effective hedges (See Note 15).

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.

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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 applied these changes to tax positions for our fiscal years ended October 1, 2022 and October 2, 2021.

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

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

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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.

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.

Comparative Amounts

amounts presented in the financial statements previously issued for the fiscal year ended October 2, 2021 have been reclassified to

conform to the current year's presentation.

Recently Adopted and Recently Issued Accounting Pronouncements

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

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

We adopted the standard using the modified retrospective approach.

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

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

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

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

There are no accounting pronouncements that we have recently adopted.

Recently Issued

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

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

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

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

PROPERTY AND EQUIPMENT

LIBOR rates will be published until June 30, 2023.

All principal and interest of the Term Loan was paid in full subsequent to October 1, 2022 so the discontinuance of LIBOR rates will have no impact on us.

There are no other recently issued accounting pronouncements that we have not yet adopted that we believe will have a material effect on our financial statements.

PROPERTY AND EQUIPMENT, NET

Furniture and equipment

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Leasehold amortization expense for the fiscal years ended October 1, 2022 and October 2, 2021 was approximately $ 32,000 and $ 82,000 , respectively.

INVESTMENTS IN LIMITED PARTNERSHIPS

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

or “Flanigan’s”.

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

INVESTMENTS IN LIMITED PARTNERSHIPS (Continued)

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’

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.

INVESTMENT IN LIMITED PARTNERSHIPS

We have invested along with others (some of whom are affiliated with our officers and directors) in ten limited partnerships which currently 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 ten 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.

INVESTMENT 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 1, 2022, all limited partnerships, with the exception of the 2022 Sunrise Restaurant, which opened for business in March, 2022 and the 2023 Miramar Restaurant, which we anticipate will open for business in February, 2023, have returned all cash invested and we receive an annual management fee equal to one-half (½) of the cash available for distribution by the limited partnership.

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

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”

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 eleven 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.

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 consolidated 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.

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.

INVESTMENTS IN LIMITED PARTNERSHIPS (Continued)

This entity is consolidated in the accompanying consolidated financial statements.

INVESTMENT 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.

This entity is consolidated in the accompanying consolidated 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.

This entity is consolidated in the accompanying consolidated 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.

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.

INVESTMENTS IN LIMITED PARTNERSHIPS (Continued)

This entity is consolidated in the accompanying consolidated financial statements.

INVESTMENT 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 entity is consolidated in the accompanying financial statements.

This entity is consolidated in the accompanying consolidated 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.

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 entity is consolidated in the accompanying financial statements.

This entity is consolidated in the accompanying consolidated 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.

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.

This entity is consolidated in the accompanying consolidated 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.

INVESTMENTS IN LIMITED PARTNERSHIPS (Continued)

We are the sole general partner and a 7 % limited partner in this limited partnership which has owned and operated a restaurant in Sunrise, Florida under our “Flanigan’s” service mark since March 20, 2022.

31.3 % of the remaining limited partnership interest is owned by persons who are either our officers, directors or their family members.

As of the end of our fiscal year 2022, this limited partnership has returned to its investors approximately 2.0% of their initial cash invested and as a result, we are currently not entitled to receive any management fees from this limited partnership.

This entity is consolidated in the accompanying consolidated financial statements.

INVESTMENT 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.

We are the sole general partner in this limited partnership which is developing a restaurant in Miramar, Florida under our “Flanigan’s” service mark.

No units of limited partnership interest were purchased by the Company.

24.0 % of the limited partnership interest is owned by persons who are either our officers, directors or their family members.

We anticipate that this new restaurant will commence operations in February, 2023.

This entity is consolidated in the accompanying consolidated financial statements.

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.

2 unchanged sentences

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

Our investment in this entity is reported using the equity method in the accompanying consolidated financial statements.

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

Financial Position:

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Total Liabilities

Total Liabilities and Equity

Operating Results:

PURCHASE OF REAL PROPERTY:

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

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

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

restaurant and “Big Daddy’s Liquors”

package liquor store (Store #40).

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

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

We paid all cash at closing.

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

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

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

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

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

Sunrise Boulevard, Sunrise, Florida.

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

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

PRIVATE OFFERINGS:

CIC Investors #85, Ltd.

(Flanigan’s, Sunrise, Florida)

On February 15, 2022, a Florida limited partnership (CIC Investors #85, Ltd.) in which the Company serves as general partner, completed a private placement of 1,000 Units of limited partnership interests at $ 5,000 per Unit for proceeds of $ 5,000,000 , 74 Units of which ($ 370,000 ) were purchased by the Company upon the same terms and conditions as all other investors.

The Company’s investment is eliminated in consolidation.

The proceeds of the private placement were used to satisfy (including reimbursement to us for advances we have made), build-out and renovation expenses and the purchase of such furniture, fixtures and equipment necessary for operation of our Sunrise, Florida restaurant under the service mark “Flanigan’s”, which commenced operations on March 22, 2022.

Capital raised from private investors is credited to sale of noncontrolling interests in our Statements of Stockholders’ Equity.

Under ASC 810, Consolidation, the Company, which is the entity issuing financial statements, is required to consolidate CIC Investors #85, Ltd.

as we have a controlling interest in CIC Investors #85, Ltd.

as general partner, although the Company only has a 7.40 % ownership.

CIC Investor #25, Ltd.

(Flanigan’s, Miramar, Florida)

On February 15, 2022, a Florida limited partnership (CIC Investors #25, Ltd.) in which the Company serves as general partner, completed a private placement of 800 Units of limited partnership interests at $ 5,000 per Unit for gross proceeds of $ 4,000,000 .

No units of limited partnership interest were purchased by the Company.

The proceeds of the private placement are being used to satisfy (including reimbursement to us for advances we have made), build-out and renovation expenses and the purchase of such furniture, fixtures and equipment necessary for operation of our Miramar, Florida restaurant under the service mark “Flanigan’s”, which we believe will commence operations in February, 2023.

Capital raised from private investors is credited to sale of noncontrolling interests in our Statements of Stockholders’ Equity.

Under ASC 810, Consolidation, the Company, which is the entity issuing financial statements, is required to consolidate CIC Investors #25, Ltd.

as we have a controlling interest in CIC Investors #25, Ltd.

as general partner, although the Company has no direct ownership.

PURCHASE OF 4 COP LIQUOR LICENSE

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

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

EXECUTION OF LEASES FOR NEW LOCATIONS:

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

During 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.

EXECUTION OF LEASES FOR NEW LOCATIONS:

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

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

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

EXTENSION OF LEASES FOR EXISTING LOCATIONS

Pinecrest, Florida

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

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

The fixed annual rental was reduced by 7½

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

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

Surfside, Florida

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

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

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

EXPANSION OF LEASED PREMISES;

EXTENSION OF LEASE

Miami, Florida

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

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

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

MORTGAGE / FINANCED INSURANCE PREMIUMS:

(a) Mortgage on Real Property - Sunrise, Florida

Sunrise Boulevard, Sunrise, Florida.

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

(b) Mortgage on Real Property –

North Miami, Florida

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

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

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

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

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

During our fiscal year 2022, we purchased a 4 COP quota liquor license for Broward County, Florida from an unrelated third party for $ 446,000 .

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

The 4COP quota liquor license for Broward County, Florida which we purchased during the third quarter of our fiscal year 2021 and was inactive, was transferred for use in our operation of “Brendan’s Sports Pub”.

EXECUTION OF LEASE FOR NEW LOCATION;

BUSINESS ACQUISITION OF “BRENDAN’S SPORTS PUB”

Pompano Beach, Florida (Brendan’s Sports Pub)

During the third quarter of our fiscal year 2022, we entered into a Lease (the “BSP Lease”) with a non-affiliated third party from whom we rented approximately 3,556 square feet of commercial space located at 868 South Federal Highway, Pompano Beach, Florida, from where we operate the existing “Brendan’s Sports Pub” business (Store #30), the assets of which we simultaneously purchased.

The term of the BSP Lease is for fifty (50) years , triple net to the landlord with fixed rent of $ 78,000 per year, with two ( 2 %) percent annual increases commencing in year five.

Brendan’s Sports Pub, Pompano Beach, Florida

During the third quarter of our fiscal year 2022 and simultaneously with the execution of the BSP Lease, we purchased the assets of the business known as “Brendan’s Sports Pub” located at 868 South Federal Highway, Pompano Beach, Florida for a purchase price of $ 75,000 , including but not limited to the furniture, fixtures, equipment and service mark, “Brendan’s Sports Pub”, but excluding the 4 COP liquor license used in the operation of the business.

We did not assume any obligations of the business.

We accounted for the purchase of the assets of the business known as "Brendan's Sports Pub" as a business combination that is insignificant for purposes of all of the disclosuress required under ASC 805

RE-FINANCING OF EXISTING MORTGAGES;

FINANCED INSURANCE PREMIUMS:

Re-Finance of Mortgage on Real Property – Fort Lauderdale, Florida

During our fiscal year 2022, we requested and received an advance of $ 697,000 from the payee of an entity managed by a member of our Board of Directors and who is also our Chief Financial Officer, which holds a mortgage note in the original principal amount of $ 1,000,000 (the “$ 1,000,000 Note”), resulting in a principal amount outstanding thereunder of $ 1,100,000 as of August 1, 2022.

Our repayment obligations under the $ 1,000,000 Note continue to be secured by a first mortgage on the real property and improvements where our restaurant located at 2600 West Davie Boulevard, Fort Lauderdale, Florida operates.

The terms of the $ 1,000,000 Note are that it bears interest at 6 % annually (increased from 5 % annually), is amortizable over 15 years with monthly installments of principal and interest of approximately $ 9,300 required to be made and a final balloon payment of approximately $ 487,000 required to be made August 1, 2032.

Re-Finance of Mortgage on Real Property – Hallandale Beach, Florida

During our fiscal year 2022, we re-financed our debt with our non-affiliated third-party lender secured by our real property located at 4 N.

Federal Highway, Hallandale, Florida where our combination package liquor store and restaurant (Store #31) operates and borrowed an additional $ 8,012,000 raising the principal balance to $ 8,900,000 , (the “$8.90M Mortgage”).

The $ 8.90 M Mortgage bears interest at a variable rate equal to the BSBY Screen Rate – 1 Month plus 1.50% .

We entered into an interest rate swap agreement to hedge the interest rate risk, which fixed the interest rate on the $8.90M Mortgage at 4.90 % per annum throughout its term.

The $8.90M Mortgage is fully amortized over fifteen (15) years, with our monthly payment of principal and interest totaling $ 33,000 .

Financed Insurance Premiums

During our fiscal year 2022, 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:

MORTGAGE / FINANCED INSURANCE PREMIUMS:

(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.

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The one ( 1 ) year property insurance premium is in the amount of $ 700,000 ;

(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 ;

(v) For the policy year beginning December 30, 2021, our excess liability insurance are two (2) one (1) year policies.

The aggregate one ( 1 ) year excess liability insurance premiums are in the amount of $ 576,000 ;

(vi) For the policy year beginning December 30, 2021, our terrorist insurance is a one (1) year policy.

5 unchanged sentences

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 .

As of October 1, 2022, the aggregate principal balance owed from the financing of our property and general liability insurance policies, excluding coverage for our franchises (of approximately $ 136,000 ), which are not included in our consolidated financial statements is $ 507,000 .

CORONAVIRUS PANDEMIC:

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

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

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

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

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

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.

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 United States 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;

(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.

CORONAVIRUS PANDEMIC:

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.

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

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

During the first quarter of our fiscal year 2021, the entire amount of principal and accrued interest for all PPP Loans was forgiven

During the second quarter of our fiscal year 2021, certain of the entities owning the limited partnership stores (the “LP’s”), as well as the store we manage but do not own (the “Managed Store”), 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 $ 3.98 million, (the “2 nd PPP Loans”), of which approximately:

(i) $ 3.35 million was loaned to six of the LP’s;

and (ii) $ 0.63 million was loaned to the Managed Store.

The 2 nd PPP Loan to the Managed Store is not included in our consolidated financial statements.

During the first quarter of our fiscal year 2022, we applied for and received forgiveness of the entire amount of principal and accrued interest for all 2 nd PPP Loans, including the Managed Store.

COVID-19 has had a material adverse effect on our access to supplies or labor and there can be no assurance that there will not be a significant adverse impact on our supply chain or access to labor in the future.

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

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

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

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

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

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

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

RE-CONSTRUCTION FOLLOWING CASUALTY LOSS:

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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 2022, 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.

The package liquor store re-opened for business subsequent to the end of our fiscal year 2022.

We also expect to receive building permits to construct the new building for our restaurant and expect to open for business during our fiscal year 2023.

LIQUOR LICENSES

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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.

At October 1, 2022 and October 2, 2021, the total carrying amount of our liquor licenses was $ 1,268,000 and $ 822,000 , respectively.

In our fiscal year 2022, we acquired a 4 COP Quota Liquor License for $ 446,000 for use in Broward County, Florida which we intend to use in connection with the operation of a package liquor store we are developing in Miramar, Florida.

During our fiscal year 2021, we acquired a 4 COP Quota Liquor License for $ 192,200 for use in Broward County, Florida which we currently use in the operation of “Brendan’s Sports Pub”, the restaurant/bar in Pompano Beach, Florida we purchased during our fiscal year 2022.

The components of our provision for income taxes for our fiscal years 2022 and 2021 are as follows:

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PPP forgiveness

Other permanent items

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

INCOME TAXES (Continued)

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

Other permanent items, net

We have deferred tax liabilities and 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.

The components of our deferred tax assets (liabilities) at October 1, 2022 and October 2, 2021 were as follows:

Reversal of aged payables

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Accrued limited retirement

Total Deferred Tax Assets (Liabilities)

Total Deferred Tax Liabilities, Net

Debt consists of the following as of October 1, 2022 and October 2, 2021:

Long-Term Debt

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As of October 1, 2022, the net book value of the collateral securing this mortgage was $ 5,473,000 .

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 1, 2022, the net book value of the collateral securing this mortgage was $ 11,349,000 .

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 1, 2022, the net book value of the collateral securing this mortgage was $ 4,524,000 .

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

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

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

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

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

Mortgage payable to institutional lender, secured by a first mortgage on real property and improvements, bearing interest at BSBY Screen Rate – 1 Month +1.50% , ( 3.40 % at October 1, 2022), but with the interest fixed at 4.90 % pursuant to a swap agreement, amortized over fifteen ( 15 ) years, payable in monthly installments of principal and interest of approximately $ 33,000 .

From the re-financing of this mortgage, we withdrew $ 8,012,000 during our fiscal year ended October 1, 2022.

As of October 1, 2022, the net book value of the collateral securing this mortgage was $ 3,477,000 .

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).

Revolving credit line/term loan payable to institutional 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 % , ( 3.40 % at October 1, 2022).

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 (3.40% at October 1, 2022) 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.

DEBT (Continued)

On December 28, 2022, we paid the outstanding principal balance ($ 367,000 ) and accrued interest ($- 0 -) in full.

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 1, 2022, the net book value of the collateral securing this mortgage was $ 810,000 .

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 .

DEBT (Continued)

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 6 %, amortized over fifteen ( 15 ) years, payable in monthly installments of principal and interest of approximately $ 9,300 , with a balloon payment of approximately $ 487,000 due in August, 2032.

As of October 1, 2022, the net book value of the collateral securing this mortgage was $ 1,589,000 .

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As of October 1, 2022, the net book value of the collateral securing this mortgage was $ 936,000 .

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.

Financed insurance premiums, secured by all insurance policies, bearing interest at 2.55 % payable in monthly installments of principal and interest in the aggregate amount of $ 215,000 a month through November 30, 2022.

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.

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 .

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 1, 2022, the net book value of the collateral securing this mortgage was $ 1,085,000 .

DEBT (Continued)

Mortgage payable to related third party, secured by first mortgage on real property and improvements, bearing interest at 4 %, amortized over eight ( 8 ) years, payable in monthly installments of principal and interest of approximately $ 3,000 , with a final payment due in November, 2026.

As of October 1, 2022, the net book value of the collateral securing this mortgage was $ 498,000 .

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).

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.

Loans from an unrelated third party lender pursuant to the Paycheck Protection Program (the “PPP”) under the United States 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 “2 nd PPP Loans”), which was loaned to 6 of the limited partnerships.

The 2 nd 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).

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

Subsequent to the end of our fiscal year 2021, the principal balance and all accrued interest due on the 2 nd PPP Loans was forgiven in full.

DEBT (Continued)

Less unamortized loan costs

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Less unamortized loan costs

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.

As of October 1, 2022, 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 $ 23,272,000 (the “Institutional Loans”), as of October 1, 2022.

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Construction Contracts

7990 Davie Road Extension, Hollywood, Florida (Store #19 –

“Big Daddy’s Wine & Liquors”)

7990 Davie Road Extension, Hollywood, Florida (Store #19 – “Big Daddy’s Wine & Liquors”)

During the third quarter of our fiscal year 2019, we entered into an agreement with a third party unaffiliated general contractor for site work at this location totaling $ 1,618,000 , (i) to connect the real property where this restaurant operated (Store #19) to city sewer and (ii) to construct a new building on the adjacent parcel of real property for the operation of a package liquor store.

During our fiscal years 2020 and 2021, we agreed to change orders to the agreement for additional construction services increasing the total contract price by $ 502,000 to $ 2,120,000 , of which $ 1,092,000 of the total amount obligated has been paid through October 2, 2021 and an additional $ 335,000 has been paid subsequent to the end of our fiscal year 2021.

University Drive, Hollywood, Florida (Store #19 –

“Flanigan’s”)

During our fiscal years 2020, 2021 and 2022, we agreed to change orders to the agreement for additional construction services increasing the total contract price by $ 624,000 to $ 2,242,000 , of which $ 1,951,000 has been paid through October 1, 2022 and $-0- has been paid subsequent to the end of our fiscal year 2022 through the date of filing of this annual report.

University Drive, Hollywood, Florida (Store #19 – “Flanigan’s”)

During the third quarter of our fiscal year 2019, we entered into an agreement with an unaffiliated third party architect for design and development services totaling $ 77,000 for the re-build of our restaurant located at 2505 N.

University Drive, Hollywood, Florida (Store #19), which has been closed since October 2, 2018 due to damages caused by a fire, of which $ 62,000 has been paid.

Subsequent to the end of our fiscal year 2021, we entered into an agreement with a third party unaffiliated general contractor to re-build our restaurant at this location totaling $ 2,515,000 , of which none has been paid.

Sunrise Boulevard, Sunrise, Florida (Store #85 –

“Flanigan’s”)

During the third quarter of our fiscal year 2019, we also entered into an agreement with an unaffiliated third party design group for design and development services of our new location at 14301 W.

During the first quarter of our fiscal year 2022, we entered into an agreement with a third party unaffiliated general contractor to re-build our restaurant at this location for $ 2,515,000 , of which $ 226,000 has been paid through October 1, 2022 and $75,000 has been paid subsequent to the end of our fiscal year 2022 through the date of filing of this annual report.

COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

Construction Contracts (Continued)

Sunrise Boulevard, Sunrise, Florida (Store #85 – “Flanigan’s”)

During the third quarter of our fiscal year 2019, we 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 1, 2022.

Additionally, during the fourth quarter of our fiscal year 2020, we entered into an agreement with a third party unaffiliated general contractor for interior renovations at this location totaling $ 1,236,000 , and during our fiscal year 2021 we agreed to change orders to the agreement for additional interior renovations increasing the total contract price by $ 183,000 to $ 1,419,000 , of which $ 1,081,000 has been paid through October 2, 2021 and an additional $ 187,000 has been paid subsequent to the end of our fiscal year 2021.

11225 Miramar Parkway, #250, Miramar, Florida (“Flanigan’s”)

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

During the second quarter of our fiscal year 2021, we entered into an Architectural Professional Services Agreement with a third-party unaffiliated architect for design and development services for this, new location (Store #25) for a total contract price of $ 73,850 , which contract price has been paid in full through October 2, 2021.

Subsequent to the end of our fiscal year 2021, we entered into an agreement with a third party unaffiliated general contractor for interior renovations at this location totaling $ 1,421,000 , of which none has been paid.

COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

11225 Miramar Parkway, #245, Miramar, Florida (“Big Daddy’s Wine and Liquors”)

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

During the second quarter of our fiscal year 2021, we entered into an Architectural Professional Services Agreement with a third-party unaffiliated architect for design and development services for this, new location (Store #24) for a total contract price of $ 18,650 , which contract price has been paid in full through October 2, 2021.

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 through our fiscal year 2022 we agreed to change orders to the agreement for additional interior renovations increasing the total contract price by $ 215,000 to $ 1,451,000 , which has been paid in full by the end of our fiscal year 2022.

During the second quarter of our fiscal year 2022, we entered into an agreement with a third party unaffiliated general contractor for exterior renovations at this location totaling $ 343,000 and through our fiscal year 2022 we agreed to change orders to the agreement for additional interior renovations increasing the total contract price by $ 61,000 to $ 404,000 , of which $ 353,000 has been paid through October 1, 2022 and $- 0 - has been paid subsequent to the end of our fiscal year 2022 through the date of filing of this annual report.

11225 Miramar Parkway, #250, Miramar, Florida (“Flanigan’s”)

During the second quarter of our fiscal year 2022, we entered into an agreement with a third party unaffiliated general contractor for interior renovations at this location totaling $ 1,421,000 , and through our fiscal year 2022 we agreed to change orders to the agreement increasing the total contract price by $ 128,000 to $ 1,549,000 of which $ 932,000 has been paid through October 1, 2022 and $ 226,000 has been paid subsequent to the end of our fiscal year 2022 through the date of filing of this annual report.

11225 Miramar Parkway, #245, Miramar, Florida (“Big Daddy’s Wine and Liquors”)

During the first quarter of our fiscal year 2022, we entered into an agreement with a third party unaffiliated general contractor for interior renovations at this location totaling $ 317,000 , and through our fiscal year 2022 we agreed to change orders to the agreement increasing the total contract price by $ 45,000 to $ 362,000 of which $ 316,000 has been paid through October 1, 2022 and $-0- has been paid subsequent to the end of our fiscal year 2022 through the date of filing of this annual report.

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.

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 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.

It is our opinion that all such matters are without merit or involve such amounts that an unfavorable disposition would not have a material adverse effect on our financial position or results of operations.

To conduct certain of our operations, we lease restaurant and package liquor store space in South Florida from unrelated third parties.

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;

We presently intend to renew some of the extension options available to us and for purposes of computing the right-of-use assets and lease liabilities required by ASC 842, we have incorporated into all lease terms which may be extended, an additional term of the lesser of (i) the amount of years the lease may be extended;

or (ii) 15 years.

Following adoption of ASC 842, common area maintenance and property taxes are not considered to be lease components.

Following adoption of ASC 842 during our fiscal year ended October 3, 2020, common area maintenance and property taxes are not considered to be lease components.

The components of lease expense are as follows:

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COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

Supplemental balance sheet information related to leases as follows:

Leases (Continued)

Supplemental balance sheet information related to leases is as follows:

Classification on the Consolidated Balance Sheet

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October 2, 2021

Finance lease assets

Operating lease assets

Finance current liabilities

Operating current liabilities

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Weighted Average Remaining Lease Term:

Finance leases

Operating leases

Weighted Average Discount:

Finance leases

Operating leases

The following table outlines the minimum future lease payments for the next five years and thereafter:

For fiscal year

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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.

In order to fix the cost and ensure adequate supply of baby back ribs for our restaurants for calendar years 2022 and 2023, we entered into purchase agreements with our current rib supplier, whereby we agreed to purchase approximately $ 10.4 million and $ 6.8 million of “2.25 & Down Baby Back Ribs” (industry jargon for the weight range in which slabs of baby back ribs are sold) from this vendor during calendar years 2022 and 2023, at prescribed costs, which we believe are competitive.

The decrease in our cost of baby back ribs for calendar year 2023 compared to calendar 2022 is due to a decrease in market price.

While we anticipate purchasing all of our rib supply from this vendor, we believe there are several other alternative vendors available, if needed.

COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

Flanigan’s Fish Company, LLC

As of October 2, 2021, Flanigan’s Fish Company, LLC, a Florida limited liability company (“FFC”) supplies certain of the fish to all of our restaurants.

Since we hold the controlling interest of FFC, the balance sheet and operating results of this entity are consolidated into the accompanying financial statements of the Company.

Flanigan’s Fish Company, LLC

As of October 1, 2022, 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 consolidated 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.

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Flanigan, a member of our Board of Directors and James G.

Flanigan’s brother, are each a 35.24 % owner of a company which has a franchise arrangement with us for the operation of a restaurant and adjacent package liquor store located in Coconut Grove, Florida (Store #18).

Flanigan, brother to both James G.

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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).

COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

Franchise Program (Continued)

• Our officers and directors collectively own 30 % of the shareholder interest of a company which has a franchise arrangement with us for the operation of a restaurant located in Deerfield Beach, Florida.

The shareholder interest of James G.

Flanigan’s family represents an additional 60 % of the total invested capital in this franchised location (Store #14).

Flanigan is the sole general partner and a 25 % limited partner in a limited partnership which has a franchise arrangement with us for the operation of a restaurant located in Fort Lauderdale, Florida.

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Flanigan) own an additional 31.9 % limited partnership interest in this franchised location (Store #15).

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.

In addition and for an additional annual fee of approximately $ 25,000 , we also act as fiscal agent for the franchisees whereby we collect all revenues and pay all expenses and distributions.

We also, from time to time, advance funds on behalf of the franchisees for the cost of renovations.

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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.

During our fiscal years 2022 and 2021, we earned royalties of $ 1,132,000 and $ 786,000 , respectively, from our related franchises, which royalties are included in Franchise-related revenues in our Consolidated Statements of Income.

We are not currently offering or accepting new franchises.

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As of October 1, 2022 and October 2, 2021, 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.

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, (the “Officers Bonus”).

Officers Bonuses for our fiscal years 2022 and 2021 amounted to approximately $ 2,167,000 and $ 3,730,000 , respectively.

Our Board of Directors also approved an additional 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 (the “Restaurant Bonus’').

Restaurant Bonuses for our fiscal years 2022 and 2021 amounted to approximately $ 1,340,000 and $ 1,530,000 , 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 management agreement was amortized and paid 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.

For the fiscal years ended October 1, 2022 and October 2, 2021, we generated $ 400,000 of revenue from each fiscal year from providing these management services.

FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS

We follow FASB (ASC) Topic 820, “

Fair Value Measurements and Disclosures ”, for financial assets and liabilities and for non-financial assets and liabilities that are recognized or disclosed at fair value on at least an annual basis.

We follow FASB (ASC) Topic 820, “Fair Value Measurement”, 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.

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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.

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;

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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 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”).

At October 1, 2022, we had two variable rate instruments outstanding that are impacted by changes in interest rates.

The interest rate of the first variable rate debt instrument is equal to the lender’s LIBOR Rate plus two and one-quarter percent ( 2.25 %) per annum and the second variable rate debt instrument is equal to the lender’s BSBY Screen Rate plus one and one-half percent ( 1.50 %) per annum.

The debt instrument further provides 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 and the “BSBY Screen Rate is a rate of interest equal to the Bloomberg Short-Term Bank Yield Interest Rate or successor thereto approved by the lender.

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 a term loan (the “Term Loan”).

Subsequent to the end of our fiscal year 2022, (December 28, 2022) we paid the balance of the Term Loan in full.

In September 2022, we refinanced the mortgage loan encumbering the property where our combination package liquor store and restaurant located at 4 N.

Federal Highway, Hallandale Beach, Florida, (Store #31) operates, which mortgage loan is held by an unaffiliated third party lender (the “$ 8.90 M Loan”).

FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (Continued)

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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.

(i) The first interest rate swap agreement entered into in December 2016 and became effective December 28, 2017, relates to the Term Loan (the “Term Loan Swap”).

The Term Loan Swap 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 – 1 Month, plus 2.25% , on the same amortizing notional principal amount.

We determined that at October 1, 2022, the interest rate swap agreement is an effective hedging agreement and the fair value was not material.

(ii) The second interest rate swap agreement entered into in December, 2016, which became effective December 28, 2017, relates to the Credit Line (the “Line of Credit Swap”).

The Line of Credit Swap requires us to pay interest for a five ( 5 ) year period, commencing December 28, 2017 at a fixed rate of 4.61 % on an initial amortizing notional principal amount of $ 5,500,000 , while receiving interest for the same period at LIBOR –

1 Month, plus 2.25% , on the same amortizing notional principal amount.

Subsequent to the end of our fiscal year 2022 (December 28, 2022) we paid the balance of the Term Loan in full, which was the same date the swap agreement matured;

(ii) The second interest rate swap agreement entered into in September 2022 relates to the $ 8.90 M Loan (the “$ 8.90 M Term Loan Swap”).

The $ 8.90 M Term Loan Swap requires us to pay interest for a fifteen ( 15 ) year period at a fixed rate of 4.90 % on an initial amortizing notional principal amount of $ 8,900,000 , while receiving interest for the same period at BSBY Screen Rate – 1 Month, plus 1.50% , on the same amortizing notional principal amount.

We determined that at October 1, 2022, the interest rate swap agreement is an effective hedging agreement and the fair value was not material.

Beginning January 1, 2022, our unrelated third party lender will no longer originate, renew or modify loans at LIBOR, except in limited situations.

The limited exceptions include our LIBOR transactions which reduce or hedge our LIBOR exposure on contracts entered into before January 1, 2022, including our $1.405M Term Loan Swap and our Line of Credit Swap.

In addition, the principal balance and all accrued interest are due in full on January 23, 2023 on our $1.405M Term Loan Swap and the principal balance and all accrued interest on our Line of Credit Swap is fully amortized and due on December 27, 2022.

Consequently, the transition of our unrelated third party lender from LIBOR to alternate measures should not have an effect on us.

Treasury Stock

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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.

The Internal Revenue Service will impose a 1.0 % tax on stock repurchases after December 31, 2022.

BUSINESS SEGMENTS

We operate in two reportable segments –

package stores and restaurants.

We operate principally in two reportable segments – package stores and restaurants.

The operation of package stores consists of retail liquor sales and related items.

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Interest and Other Income

Gain on forgiveness of PPP loans

Gain on forgiveness of debt

Gain on sale of property and equipment

Income before provision for income taxes

Benefit (Provision) for Income Taxes

Provision for Income Taxes

Net Income Attributable to Noncontrolling Interests

Net Income Attributable to Flanigan’s Enterprises, Inc, Stockholders

Identifiable Assets:

Package store

Package stores

Consolidated Totals

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Total Capital Expenditures

BUSINESS SEGMENTS (Continued)

Depreciation and Amortization:

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Net income attributable to stockholders

Net income per share –

basic and diluted

Weighted average common stock outstanding –

basic and diluted

Net income per share – basic and diluted

Weighted average common stock outstanding – basic and diluted

QUARTERLY INFORMATION (UNAUDITED) (Continued)

Quarter Ended

Income from operations

Net income (loss) attributable to stockholders

Net income (loss) per share –

basic and diluted

Weighted average common stock outstanding –

basic and diluted

Net income attributable to stockholders

Net income per share – basic and diluted

Weighted average common stock outstanding – basic and diluted

Quarterly operating results are not necessarily representative of our operations for a full year for various reasons including the seasonal nature of both the restaurant and package store segments.

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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.

We are not required to contribute to the plan but may make discretionary profit sharing and/or matching contributions.

During our fiscal years ended October 1, 2022 and October 2, 2021, the Board of Directors approved discretionary matching contributions totaling $ 71,000 and $ 59,000 , respectively

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;

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:

Re-Opening of Re-Constructed Package Liquor Store – Hollywood, Florida

Subsequent to the end of our fiscal year 2022, the package liquor store which was formerly a part of our combination package liquor store and restaurant located at 2505 N.

University Drive, Hollywood, Florida (Store #19) and was forced to close due to damage from a fire during the first quarter of our fiscal year 2019 re-opened for business in a newly constructed, free-standing building on the adjacent property located at 7990 Dave Road Extension, Hollywood, Florida (Store #19P).

Insurance Premiums

Subsequent to the end of our fiscal year 2022, for the policy year commencing December 30, 2022, we bound coverage on the following property, general liability, excess liability and terrorist policies, with premiums totaling approximately $ 3.281 million, which property, general liability, excess liability and terrorist insurance includes coverage for our franchises (which is $ 658,000 ), which are not included in our consolidated financial statements:

(i) For the policy year beginning December 30, 2022, our general liability insurance, excluding limited partnerships, is a one (1) year policy with our insurance carriers.

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The one ( 1 ) year property insurance premium is in the amount of $ 1,248,000 ;

(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 ;

(v) For the policy year beginning December 30, 2022, our excess liability insurance is a one (1) year policy.

The one ( 1 ) year excess liability insurance premium is in the amount of $ 634,000 ;

(vi) For the policy year beginning December 30, 2022, our terrorist insurance is a one (1) year policy.

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The one ( 1 ) year equipment breakdown insurance premium is in the amount of $ 11,000 .

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.

Of the $ 3,281,000 annual premium amounts, which includes coverage for our franchises which are not included in our consolidated financial statements, we paid the annual premium amounts in full with no financing due to high interest rates.

Payoff of Term Loan

Subsequent to the end of our fiscal year 2022, we satisfied the principal balance and all accrued interest due on our $ 5.5 million term loan to our unrelated lender.

The outstanding principal balance ($ 367,000 ) and accrued interest ($- 0 -) was paid in full on December 28, 2022.

Subsequent events have been evaluated through the date these consolidated financial statements were issued and except as disclosed herein, no other events required disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures