FLANIGANS ENTERPRISES INC 10-K

ITEM 2. PROPERTIES . Our operations are conducted primarily on leased property with the exception of the following: 29 Table of Contents (i) a 10,000 square foot stand-alone building located in Fort Lauderdale, Florida that we purchased in December 1999, which since April 2001 has housed our corporate headquarters; (ii) a 4,600 square foot stand-alone building located in Hallandale, Florida that we purchased in July 2006 and which since September 1968 has housed our Hallandale, Florida Company-owned combination restaurant and package liquor store (Store #31); (iii) a 4,120 square foot stand-alone building in Hollywood, Florida we constructed in November 2003, upon real property we acquired in September 2001 pursuant to a 25 year ground lease interest, (a portion of this building is leased to an unaffiliated third party), and which since November 2003 has housed our Hollywood, Florida Company-owned package liquor store (Store #4); (iv) a 4,500 square foot stand-alone building located in Hollywood, Florida that we purchased in October 2009 and which housed our Hollywood, Florida Company-owned combination restaurant and package liquor store (Store #19) from March, 1972 until it was destroyed by fire on October 2, 2018 and the vacant parcel of real property adjacent thereto which we purchased in February 2015. Subsequent to the fire, (i) we have constructed a 3,000 square foot stand-alone building on the vacant parcel of real property for the operation of our Company-owned package liquor store (Store #19P), which opened for business subsequent to the end of our fiscal year 2022; and (ii) are constructing a 4,500 square foot stand-alone building here for the operation of the Company-owned restaurant, (Store #19R), which we anticipate will open for business subsequent to our fiscal year end 2023. (v) a 4,600 square foot stand-alone building located in Fort Lauderdale, Florida that we purchased in August 2010 and which since December 1968 has housed our Fort Lauderdale, Florida Company-owned restaurant (Store #22); (vi) a 5,100 square foot stand-alone building in North Miami, Florida that we purchased in November 2010; the two parcels of real property adjacent thereto which we purchased in December 2012, one of which is contiguous to the real property and which we previously leased for non-exclusive parking and the vacant parcel of real property adjacent to the two parcels of real property which we purchased in March 2017. The stand-alone building housed our North Miami, Florida Company-owned combination restaurant and package liquor store, (Store #20), from July, 1968 until June 2017 when the package liquor store was re-located to a new building we constructed on the adjacent property; (vii) a 23,678 square foot two building shopping center in Miami, Florida that we purchased in November 2010: (A) one stand-alone building, approximately 18,828 square feet, (i) houses our recently opened (October 2019) new package liquor store and (ii) is otherwise leased to ten unaffiliated third party retailers; and (B) the second stand-alone building, approximately 4,850 square feet, has housed our limited partnership owned Kendall, Florida based restaurant since April 4, 2000, (Store #70); (viii) a 6,400 square foot building in Fort Lauderdale, Florida that we purchased in February 2014, 4,000 square feet of which has been leased to a related franchisee (Store #15) since April 1, 1997 and the balance (2,400 square feet) of which we use as storage. In August 2018 we purchased the real property and quadraplex adjacent thereto to insure adequate parking for the franchised restaurant in the future, if needed; (ix) a 6,000 square foot stand-alone building in Fort Lauderdale, Florida and the vacant real property diagonally adjacent that we purchased in October 2015, which we use as office and warehouse space, covered parking for our food truck and as a storage yard; and (x) a 6,900 square foot stand-alone building in Sunrise, Florida, which we purchased in March, 2021 and houses our limited partnership owned Sunrise, Florida based restaurant, (Store #85), which opened for business in March, 2022. All of our units require periodic refurbishing in order to remain competitive. We have budgeted $650,000 for our refurbishing program for fiscal year 2023, although capital expenditures of our refurbishing program for our fiscal year 2023 may be significantly higher. See Item 7, "Liquidity and Capital Resources" for discussion of the amounts spent in fiscal year 2022. 30 Table of Contents The following table summarizes information related to the properties upon which our operations are conducted. For all locations that include lease options, the lessor must extend the term of the lease for a location if we exercise the lease option. If there is no lease option or if we do not exercise the same, the lessor is not required to extend the term of the lease upon expiration. Name and Location Approx. Square Footage Seats Franchised/ Owned by Lease Terms Big Daddy's Liquors #4 Flanigan's Enterprises Inc. (5) 7003 Taft Street Hollywood, Florida 1,978 N/A Company 3/1/02 to 2/28/27 Options to 2/28/47 Big Daddy's Liquors #7 Flanigan's Enterprises, Inc. 1550 W. 84th Street Hialeah, Florida 1,450 N/A Company 11/1/00 to 10/31/25 Big Daddy's Liquors #8 Flanigan's Enterprises, Inc. 959 State Road 84 Fort Lauderdale, Florida 4,084 N/A Company 5/1/99 to 4/30/24 Option to 4/30/29 Flanigan’s Seafood Bar and Grill #9 Flanigan’s Enterprises, Inc. 1550 W. 84th Street Hialeah, Florida 4,700 130 Company 1/1/10 to 12/31/24 Options to 12/31/49 Flanigan's Legends Seafood Bar and Grill #11 11 Corporation, Inc. (1) 330 Southern Blvd. W. Palm Beach, Florida 5,000 150 Franchise 1/4/00 to 1/3/25 Flanigan's Seafood Bar and Grill #12 Flanigan’s Enterprises, Inc. 2405 Tenth Ave. North Lake Worth, Florida 5,000 180 Company 11/16/92 to 11/15/23 Options to 11/15/38 Flanigan's Seafood Bar and Grill #14 Big Daddy's #14, Inc. (1) (4) 2041 NE Second St. Deerfield Beach, Florida 3,320 90 Franchise 6/1/79 to 6/1/24 Options to 6/1/34 Flanigan’s Seafood Bar and Grill #15 CIC Investors #15 Ltd. (1) (7) 1479 E. Commercial Blvd. Ft. Lauderdale, Florida 4,000 90 Franchise/ Limited Partnership 1/1/09 to 8/31/26 Options to 8/31/36 31 Table of Contents Name and Location Approx. Square Footage Seats Franchised/ Owned by Lease Terms Flanigan’s Seafood Bar and Grill #18 Twenty Seven Birds Corp. (1) (2) 2721 Bird Avenue Miami, Florida 4,500 200 Franchise 2/15/72 to 12/31/25 Options to 12/31/35 Big Daddy's Liquors #18 Twenty Seven Birds Corp. (1) (2) 2988 S.W. 27 th Avenue Miami, Florida 3,000 N/A Franchise 2/15/72 to 12/31/25 Options to 12/31/35 Flanigan’s Wine & Liquors #19 (8) Flanigan’s Enterprises, Inc. 7990 Davie Road Extension Hollywood, Florida 3,000 N/A Company Company-Owned Flanigan’s Seafood Bar and Grill #19 (9) Flanigan’s Enterprises, Inc. 2505 N. University Dr. Hollywood, Florida 4,500 160 Company Company-Owned Flanigan's Seafood Bar and Grill #20 Flanigan's Enterprises, Inc. 13205 Biscayne Blvd. North Miami, Florida 5,100 150 Company Company-Owned Big Daddy’s Liquors #20 Flanigan's Enterprises, Inc. 13185 Biscayne Blvd. North Miami, Florida 2,500 N/A Company Company-Owned Flanigan's Seafood Bar and Grill #22 Flanigan's Enterprises, Inc. 2600 W. Davie Blvd. Ft. Lauderdale, Florida 4,100 200 Company Company-Owned Big Daddy’s Wine & Liquors #24 Flanigan’s Enterprises, Inc. (12) 11225 Miramar Parkway, #245 Miramar, Florida 2,000 N.A. Company 3/5/22 to 3/5/32 Options to 3/5/47 32 Table of Contents Name and Location Approx. Square Footage Seats Franchised/ Owned by Lease Terms Brendan’s Sports Pub 3,500 85 Company 6/16/22 to 6/30/72 Flanigan’s Enterprises, Inc. 868 S. Federal Highway Pompano Beach, Florida Flanigan's Seafood Bar and Grill #31 Flanigan's Enterprises, Inc. 4 N. Federal Highway Hallandale, Florida 4,600 150 Company Company-Owned Flanigan's Seafood Bar and Grill #33 Flanigan’s Enterprises, Inc. 45 S. Federal Highway Boca Raton, Florida 4,620 130 Company 10/1/10 to 6/30/30 Big Daddy's Liquors #34 Flanigan's Enterprises, Inc. 9494 Harding Ave. Surfside, Florida 3,000 N/A Company 5/29/97 to 5/28/27 Options to 5/28/37 Flanigan's Seafood Bar and Grill #40 Flanigan's Enterprises, Inc. 5450 N. State Road 7 N. Lauderdale, Florida 4,600 140 Company Company-Owned Piranha Pat's #43 BD 43 Corporation (1) (2) 2500 E. Atlantic Blvd. Pompano Beach, Florida 4,500 90 Franchise 12/1/72 to 11/30/27 Big Daddy’s Liquors #45 Flanigan’s Enterprises, Inc. 12776 S.W. 88th Street Miami, Florida 3,250 N/A Company 7/1/19 to 6/30/24 Options to 6/30/34 Big Daddy's Liquors #47 Flanigan's Enterprises, Inc. (3) 8600 Biscayne Blvd. Miami, Florida 6,000 N/A Company 12/21/68 to 1/1/30 Options to 1/1/50 Flanigan’s Seafood Bar and Grill #13 CIC Investors #13, Ltd. 11415 S. Dixie Highway Pinecrest, Florida 8,000 200 Limited Partnership 6/01/91 to 1/31/31 Option to 1/31/36 33 Table of Contents Name and Location Approx. Square Footage Seats Franchised/ Owned by Lease Terms Flanigan’s #25 CIC Investors #25, Ltd. (11) 11225 Miramar Parkway, #250 Miramar, Florida 6,000 200 Limited Partnership 3/5/22 to 3/5/32 Options to 3/5/47 Flanigan’s Seafood Bar and Grill #50 CIC Investors #50, Ltd. 17185 Pines Boulevard Pembroke Pines, Florida 4,000 200 Limited Partnership 10/24/06 to 10/23/26 and Options to 10/23/31 Flanigan’s Seafood Bar and Grill #55 CIC Investors #55, Ltd. 2190 S. University Drive Davie, Florida 5,900 200 Limited Partnership 1/5/07 to 12/31/26 Option to 12/31/31 Flanigan’s Seafood Bar and Grill #60 CIC Investors #60 Ltd. 9516 Harding Avenue Surfside, Florida 6,800 200 Limited Partnership 8/1/97 to 12/31/26 Flanigan’s Seafood Bar and Grill #65 CIC Investors #65, Ltd. 2335 State Road 7, Suite 100 Wellington, Florida 6,128 200 Limited Partnership 5/01/05 to 6/30/25 Flanigan's Seafood Bar and Grill #70 CIC Investors #70 Ltd. 12790 SW 88 St. Miami, Florida 4,850 200 Limited Partnership 4/1/00 to 3/31/25 Option to 3/31/30 Flanigan’s Seafood Bar and Grill #75 Flanigan’s Enterprises, Inc. 950 S. Federal Highway Stuart, Florida 7,000 200 Company 5/1/10 to 4/30/26 Option to 4/30/31 Flanigan's Seafood Bar and Grill #80 CIC Investors #80 Ltd. 8695 N.W. 12th St Miami, Florida 5,000 165 Limited Partnership 6/15/01 to 2/14/24 Options to 2/14/39 Flanigan's Seafood Bar and Grill #85 CIC Investors #85 Ltd. (10) 14301 W. Sunrise Blvd. Sunrise, Florida 6,900 200 Limited Partnership 3/1/19 to 2/28/29 Options to 2/28/44 Company-Owned 34 Table of Contents Name and Location Approx. Square Footage Seats Franchised/ Owned by Lease Terms Flanigan's Seafood Bar and Grill #90 CIC Investors #90 Ltd. 9857 S.W. 40 th Street Miami, Florida 6,400 200 Limited Partnership 4/1/11 to 3/31/31 Option to 3/31/36 Flanigan's Seafood Bar and Grill #95 Flanigan’s Enterprises, Inc. 2460 Weston Road Weston, Florida 5,700 235 Company 10/1/17 to 9/30/27 Option to 9/30/32 Flanigan’s Calusa Center, LLC (6) 12750 – 12790 S.W. 88 th Street Miami, Florida 23,700 Company Company-owned shopping center --------------------------------------------- (1) Franchised by Company. (2) Lease assigned to franchisee. We are no longer contingently liable on the lease. (3) In 1974, we sold and assigned the underlying ground lease to unaffiliated third parties and simultaneously subleased it back. We have re-purchased from the unaffiliated third parties and currently own 52% of the underlying ground lease, as well as the sublease agreement. As a result, we pay all rent due under the ground lease, but only 48% of the rent due under the sublease agreement. (4) Effective December 1, 1998, we purchased the Management Agreement to operate the franchised restaurant for the franchisee. (5) Ground lease executed by us on September 25, 2001. We constructed a 4,120 square foot building, of which 1,978 square feet is used by us for the operation of a package liquor store and the other 2,142 square feet is subleased to an unaffiliated third party as retail space. The package liquor store opened for business on November 17, 2003. (6) During the first quarter of our fiscal year 2012, our wholly owned subsidiary, Flanigan’s Calusa Center, LLC, closed on the purchase of a two building shopping center in Miami, Florida, which consists of (i) one stand-alone building which is leased to ten unaffiliated third parties and houses our recently opened (October 2019) package liquor store (approximately 3,250 square feet) and (ii) a second stand-alone building where our limited partnership owned restaurant located at 12790 SW 88 th Street, Miami, Florida, (Store #70), operates. 35 Table of Contents (7) During the second quarter of our fiscal year 2014, we closed on the purchase of the building in Fort Lauderdale, Florida, which is leased to our franchisee owned restaurant located at 1479 E. Commercial Boulevard, Fort Lauderdale, Florida, (Store #15). (8) During the first quarter of our fiscal year 2019, our combination package liquor store and restaurant located at 2505 N. University Drive, Hollywood, Florida (Store #19), was damaged by a fire and was forced to close. We determined that Store #19 should be demolished and rebuilt as separate buildings. As a result, the package liquor store has been closed since our first quarter year 2019, but re-opened for business subsequent to the end of our fiscal year 2022 in a newly constructed stand-alone building. (9) During the first quarter of our fiscal year 2019, our combination package liquor store and restaurant located at 2505 N. University Drive, Hollywood, Florida (Store #19), was damaged by a fire and was forced to close. We determined that Store #19 should be demolished and rebuilt as separate buildings. As a result, the restaurant has been closed since our first quarter year 2019. (10) During the second quarter of our fiscal year 2019, we entered into a lease for this location, which lease was subsequently assigned to a limited partnership. We raised funds to renovate this new location for operation as a “Flanigan’s Seafood Bar and Grill” restaurant using our limited partnership ownership model. The option to purchase was retained by the Company when the lease was assigned to the limited partnership and the option to purchase was exercised by the Company during the second quarter of our fiscal year 2021. This new restaurant opened for business during the second quarter of our fiscal year 2022. (11) During the fourth quarter of our fiscal year 2019, we entered into a lease for this location, which lease was subsequently assigned to a limited partnership. We raised funds to renovate this new location for operation as a “Flanigan’s” restaurant using our limited partnership ownership model, which location we believe will open for business in February, 2023. (12) During the fourth quarter of our fiscal year 2019, we entered into a lease for this location. We are developing this new location for operation as a “Big Daddy’s Wine & Liquors” retail package liquor store. Casualty Loss During the first quarter of our fiscal year 2019, our combination package liquor store and restaurant located at 2505 N. University Drive, Hollywood, Florida (Store #19) was damaged by a fire and was forced to close. Due to the damage caused by the fire, we determined that Store #19 should be demolished and rebuilt and as a result, the package liquor store and restaurant were closed for our fiscal years 2022, 2021, 2020 and 2019. The package liquor store re-opened for business subsequent to the end of our fiscal year 2022 in a newly constructed stand-alone building. We believe the restaurant will reopen for business in our fiscal year 2024 in a newly constructed stand-alone building where our combination package liquor store and restaurant at 2505 N. University Drive, Hollywood, Florida was previously located. Private Offerings CIC Investors #85, Ltd. (Flanigan’s, Sunrise, Florida) On February 15, 202 2 , 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 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. 36 Table of Contents 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. Execution of Lease for New Location; Business Acquisition of “Brendan’s Sports Pub” Lease 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, where we operate “Brendan’s Sports Pub” (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. Assets 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 disclosures required under ASC 805. Purchase of 4 COP Liquor License During our fiscal year 2022, we purchased a 4 COP Quota Liquor License for Broward County, Florida from an unrelated third party for $445,000. 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 4 COP 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”. 37 Table of Contents Re-Financing of Existing Mortgages Re-Finance of Mortgage on Real Property – Fort Lauderdale, Florida During our fiscal year 2022, we requested and received a loan advance of $697,000 from an entity managed by a member of our Board of Directors who is also our Chief Financial Officer, which entity currently holds a first priority mortgage note on our real property and improvements where our restaurant located at 2600 West Davie Boulevard, Fort Lauderdale, Florida operates (the “West Davie Mortgage Note”). Including the $697,000 advance, the principal amount outstanding amount owed under the West Davie Mortgage Note as of October 1, 2022 is $1,100,000. The West Davie Mortgage Note accrues 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 mortgage debt with our non-affiliated third-party lender relating to 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 increasing the principal balance owed by us to $8,900,000, (the “$8.90M Mortgage”). The $8.90M 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. Subsequent Events 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. The one (1) year general liability insurance premium is in the amount of $512,000; (ii) For the policy year beginning December 30, 2022, our general liability insurance for our limited partnerships is a one (1) year policy with our insurance carriers. The one (1) year general liability insurance premium is in the amount of $672,000; (iii) For the policy year beginning December 30, 2022, our automobile insurance is a one (1) year policy. The one (1) year automobile insurance premium is in the amount of $190,000; (iv) For the policy year beginning December 30, 2022, our property insurance is a one (1) year policy. The one (1) year property insurance premium is in the amount of $1,248,000; (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. The one (1) year terrorist insurance premium is in the amount of $14,000; and (vii) For the policy year beginning December 30, 2022, our equipment breakdown insurance is a one (1) year policy. The one (1) year equipment breakdown insurance premium is in the amount of $11,000. 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. 38 Table of Contents