What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-12-29 compared with 2023-01-18 · 329 added, 382 removed, 204 unchanged (78% of the section changed)

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and the related Notes to Consolidated Financial Statements included elsewhere in this report.

Financial Information

Concerning Industry Segments

Financial Information Concerning Industry Segments

Our business is conducted principally

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Financial information broken into these two principal industry

segments for the two fiscal years ended October 1, 2022 and October 2, 2021 is set forth in the Consolidated Financial Statements which

segments for the two fiscal years ended September 30, 2023 and October 1, 2022 is set forth in the Consolidated Financial Statements which

are attached hereto.

As of October 1, 2022, we (i)

As of September 30, 2023, we (i)

operated 31 units, consisting of restaurants, sports bar, package liquor stores and combination restaurants/package liquor stores that

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restaurants (one of which we operate) and three combination restaurants/package liquor stores.

An additional limited partnership owned

restaurant located at 11225 Miramar Parkway #250, Miramar, Florida (Store #25) is expected to open for business in February, 2023.

In exchange for our providing management and related services to our franchisees and granting them the right to use our

service marks "Flanigan's Seafood Bar and Grill" and "Big Daddy's Liquors", our franchisees (four of which are franchised to members of

the family of our Chairman of the Board, officers and/or directors), are required to (i) pay to us a royalty equal to 1% of gross package

liquor sales and 3% of gross restaurant sales;

and (ii) make advertising expenditures equal to between 1.5% to 3% of all gross sales based

upon our actual advertising costs allocated between stores, pro-rata, based upon gross sales.

Limited Partnership Owned Units .

We manage and control the operations of the ten restaurants owned by limited partnerships, except

the Fort Lauderdale, Florida restaurant which is managed and controlled by a related franchisee.

Accordingly, the results of operations

of all limited partnership owned restaurants, except the Fort Lauderdale, Florida restaurant are consolidated with our results of operations

for accounting purposes.

The results of operations of the Fort Lauderdale, Florida restaurant are accounted for by us utilizing the equity

Franchised Units .

for our providing management and related services to our franchisees and granting them the right to use our service marks "Flanigan's

Seafood Bar and Grill" and "Big Daddy's Liquors", our franchisees (four of which are franchised to members of the family

of our Chairman of the Board, officers and/or directors), are required to (i) pay to us a royalty equal to 1% of gross package liquor

sales and 3% of gross restaurant sales;

and (ii) make advertising expenditures equal to between 1.5% to 3% of all gross sales based upon

our actual advertising costs allocated between stores, pro-rata, based upon gross sales.

Affiliated Limited Partnership

Owned Units .

We manage and control the operations of the ten restaurants owned by limited partnerships, except the Fort Lauderdale,

Florida restaurant which is managed and controlled by a related franchisee.

Accordingly, the results of operations of all limited partnership

owned restaurants, except the Fort Lauderdale, Florida restaurant are consolidated with our results of operations for accounting purposes.

The results of operations of the Fort Lauderdale, Florida restaurant are accounted for by us utilizing the equity method.

RESULTS OF OPERATIONS

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-----------------------52 Weeks Ended-----------------------

52 Weeks Ended

October 1, 2022

September 30, 2023

October 1, 2022

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Total Revenue

Comparison of Fiscal Years Ended October 1, 2022 and October

Total revenue for our fiscal year 2022 increased $20,825,000 or 15.17% to $158,132,000 from $137,307,000 for our fiscal year 2021 due

primarily to increased package liquor store and restaurant sales, increased menu prices, revenue generated from the opening of our limited

partnership owned restaurant in Sunrise, Florida, (Store #85) in March 2022 and the comparatively less adverse effects of COVID-19 on

our operations during our fiscal year 2022 as compared with our fiscal year 2021.

Effective October 3, 2021 and then effective December

19, 2021 we increased menu prices for our food offerings to target an increase to our food revenues of approximately 2.38% and 3.34% annually,

respectively, to offset higher food costs and higher overall expenses and effective December 12, 2021 we increased menu prices for our

bar offerings to target an increase to our bar revenues of approximately 7.80% annually, (collectively the “Recent Price Increases”).

Prior to these increases, we previously raised menu prices in the third quarter of our fiscal year 2021.

Comparison of Fiscal Years Ended September 30, 2023 and October 1,

revenue for our fiscal year 2023 increased $16,264,000 or 10.29% to $174,396,000 from $158,132,000 for our fiscal year 2022 due primarily

to increased package liquor store and restaurant sales, increased menu prices, revenue generated from the opening of our limited partnership

owned restaurant in Miramar, Florida (Store #25) in April 2023, the operation of our limited partnership owned restaurant in Sunrise,

Florida (Store #85) and the operation of Brendan’s Sports Pub (Store #30) for our entire fiscal year 2023 as opposed to a part of

our fiscal year 2022, the opening of the package liquor store in Hollywood, Florida (Store #19P) in December 2022, the opening of the

package liquor store in Miramar, Florida (Store #24) in March, 2023 and the comparatively less adverse effects of COVID-19 on our operations

for our current fiscal year.

Additionally, effective March 26, 2023 we increased menu prices for our food offerings to target an increase

to our food revenues of approximately 2.06% and effective March 19, 2023 we increased menu prices for our bar offerings to target an increase

to our bar revenues of approximately 5.65% annually, to offset higher food costs and higher overall expenses (collectively the “Recent

Price Increases”).

Prior to these increases, we previously raised menu prices in the first quarter of our fiscal year 2022.

that the Recent Price Increases also contributed to our increased revenues

Restaurant Food Sales .

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to restaurant food sales during our fiscal year 2022 is attributable to the Recent Price Increases, restaurant food sales generated from

the opening of our limited partnership owned restaurant in Sunrise, Florida, (Store #85) in March 2022, the opening of Brendan’s

Sports Pub (Store #30) in June, 2022 and the comparatively greater adverse effects of COVID-19 on our operations during our fiscal year

2021 as compared with our fiscal year 2022.

Comparable weekly restaurant food sales (for restaurants open for all of our fiscal years

2022 and 2021 respectively, which consists of nine restaurants owned by us and eight restaurants owned by affiliated limited partnerships,

(excluding our Sunrise, Florida location, (Store #85), and Brendan’s Sports Pub, (Store #30), both of which opened for business

during the second quarter of our fiscal year 2022) was $1,798,000 and $1,610,000 for our fiscal years 2022 and 2021, respectively, an

increase of 11.68%.

the opening of our limited partnership owned restaurant in Miramar, Florida (Store #25) in April 2023, and the operation of our limited

partnership owned restaurant in Sunrise, Florida (Store #85) and the operation of Brendan’s Sports Pub (Store #30) for our entire

fiscal year 2023 as opposed to a part of our fiscal year 2022 and the comparatively greater adverse effects of COVID-19 on our operations

during the our fiscal year 2022 as compared with our fiscal year 2023.

Comparable weekly restaurant food sales (for restaurants open for

all of our fiscal years 2023 and 2022 respectively, which consists of nine restaurants owned by us and nine restaurants owned by affiliated

limited partnerships, (excluding our Miramar, Florida location (Store #25), Brendan’s Sports Pub, (Store #30), and Sunrise, Florida

location (Store #85), which opened for business during the third quarter of our fiscal year 2023, the third quarter of our fiscal year

2022 and the second quarter of our fiscal year 2022, respectively) was $1,734,000 and $1,798,000 for our fiscal years 2023 and 2022, respectively,

a decrease of 3.56%.

Comparable weekly restaurant food sales for Company owned restaurants only was $835,000 and $886,000 for our fiscal

years 2022 and 2021, respectively, an increase of 11.17%.

years 2023 and 2022, respectively, a decrease of 5.76%.

Comparable weekly restaurant food sales for affiliated limited partnership owned

restaurants only, (excluding Store #85 which opened for business during the second quarter of our fiscal year 2022), was $912,000 and

$813,000 for our fiscal years 2022 and 2021 respectively, an increase of 12.18%.

We expect that restaurant food sales, including non-alcoholic

beverages, for our fiscal year 2023 will increase due to increased restaurant traffic and the opening for business of the 2023 Miramar

Restaurant during our fiscal year 2023.

restaurants only, (excluding Store #25 which opened for business during the third quarter of our fiscal year 2023 and Store #85 which

opened for business during the second quarter of our fiscal year 2022), was $898,000 and $912,000 for our fiscal years 2023 and 2022 respectively,

a decrease of 1.54%.

We expect that restaurant food sales, including non-alcoholic beverages, for our fiscal year 2024 will increase due

to increased restaurant traffic, Store #25 being open for business for our entire fiscal year 2024 and the opening of our reconstructed

restaurant in Hollywood, Florida (Store #19R) for business during our fiscal year 2024.

Restaurant Bar Sales .

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The increase in restaurant bar sales during our fiscal year 2023 is primarily due to the Recent

Price Increases, restaurant bar sales generated from the opening of our limited partnership owned restaurant in Sunrise, Florida, (Store

#85) in March 2022, the opening of Brendan’s Sports Pub (Store #30) in June, 2022 and the comparatively more adverse effects of

COVID-19 on our operations during our fiscal year 2021 as compared with our fiscal year 2022.

Comparable weekly restaurant bar sales (for

restaurants open for all of our fiscal years 2022 and 2021 respectively, which consists of nine restaurants owned by us and eight restaurants

owned by affiliated limited partnerships, (excluding our Sunrise, Florida location (Store #85) and Brendan’s Sports Pub (Store #30)

both of which opened for business during the second quarter of our fiscal year 2022) was $487,000 for our fiscal year 2022 and $401,000

Price Increases, restaurant bar sales generated from the opening of our limited partnership owned restaurant in Miramar, Florida (Store

#25) in April 2023, and the operation of our limited partnership owned restaurant in Sunrise, Florida (Store #85) and the operation of

Brendan’s Sports Pub (Store #30) for our entire fiscal year 2023 as opposed to a part of our fiscal year 2022 and the comparatively

greater adverse effects of COVID-19 on our operations during the our fiscal year 2022 as compared with our fiscal year 2023.

weekly restaurant bar sales (for restaurants open for all of our fiscal years 2023 and 2022 respectively, which consists of nine restaurants

owned by us and nine restaurants owned by affiliated limited partnerships, (excluding our Miramar, Florida location (Store #25), Brendan’s

Sports Pub (Store #30), and Sunrise, Florida (Store #85), which opened for business during the third quarter of our fiscal year 2023,

the third quarter of our fiscal year 2022 and the second quarter of our fiscal year 2022, respectively) was $481,000 for our fiscal year

2023 and $487,000 for our fiscal year 2022, a decrease of 1.23%.

Comparable weekly restaurant bar sales for Company owned restaurants

only was $196,000 and $211,000 for our fiscal years 2023 and 2022, respectively, a decrease of 7.11%.

Comparable weekly restaurant bar

sales for affiliated limited partnership owned restaurants only was $286,000 and $276,000 for our fiscal years 2023 and 2022 respectively,

an increase of 3.62%.

We expect that restaurant bar sales for our fiscal year 2024 will increase due to increased restaurant traffic,

Store #25 being open for business for our entire fiscal year 2024 and the opening of our reconstructed restaurant in Hollywood, Florida

(Store #19R) for business during our fiscal year 2024.

Package Liquor Store Sales .

Revenue generated

from sales of liquor and related items at package liquor stores totaled $35,187,000 for our fiscal year 2023 as compared to $31,692,000

for our fiscal year 2022, an increase of $3,495,000.

Comparable weekly restaurant bar sales for Company owned restaurants only was $211,000

and $172,000 for our fiscal years 2022 and 2021, respectively, an increase of 22.67%.

Comparable weekly restaurant bar sales for affiliated

limited partnership owned restaurants only was $276,000 and $229,000 for our fiscal years 2022 and 2021 respectively, an increase of 20.05%.

We expect that restaurant bar sales for our fiscal year 2023 will increase due to increased restaurant traffic and the opening for business

of the 2023 Miramar Restaurant during our fiscal year 2023.

Liquor Store Sales .

Revenue generated from sales of liquor and related items at package liquor stores totaled $31,692,000 for

our fiscal year 2022 as compared to $29,304,000 for our fiscal year 2021, an increase of $2,388,000.

This increase was primarily due to

increased package liquor store traffic due to what appears to be continued increased demand for package liquor store products resulting

from the COVID-19 pandemic.

The weekly average of same store package liquor store sales, which includes nine (9) Company-owned package

liquor stores, (excluding Store #19, which was closed for our fiscal years 2022 and 2021 due to a fire on October 2, 2018 but re-opened

subsequent to our fiscal year ended October 1, 2022 ), was $609,000 and $564,000 for our fiscal years 2022

and 2021 respectively, an increase of 7.98%.

We expect that package liquor store sales for our fiscal year 2023 will increase due to increased

package liquor store traffic and the opening of the package liquor stores located at 7990 Davie Road Extension, Hollywood, Florida (Store

#19P) which opened for business subsequent to our fiscal year end 2023 and 11225 Miramar Parkway, Miramar, Florida (Store #24)

which we anticipate will open for business during our fiscal year 2023.

This increase was primarily due to increased package liquor store traffic due to

what appears to be continued increased demand for package liquor store products resulting from the COVID-19 pandemic and package liquor

sales generated from the opening of our package liquor store in Hollywood, Florida (Store #19P) in December 2022 and the opening of our

package liquor store in Miramar, Florida (Store #24) in March, 2023.

The weekly average of same store package liquor store sales, which

includes nine (9) Company-owned package liquor stores, (excluding Store #19P, which was closed for our fiscal year 2022 due to a fire

on October 2, 2018 but re-opened for business during the first quarter of our fiscal year 2023 and excluding Store #24 which opened for

business during the second quarter of our fiscal year 2023), was $631,000 and $609,000 for our fiscal years 2023 and 2022 respectively,

an increase of 3.61%.

We expect that package liquor store sales for our fiscal year 2024 will increase due to increased package liquor

store traffic and the operation of the package liquor stores located at 7990 Davie Road Extension, Hollywood, Florida (Store #19P) which

opened for business during the first quarter of our fiscal year 2023 and located at 11225 Miramar Parkway #245, Miramar, Florida (Store

#24), which opened for business during the second quarter of our fiscal year 2023, for the entire fiscal year.

Operating Costs and Expenses .

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expenses), for our fiscal year 2023 increased $16,169,000 or 10.69% to $167,372,000 from $151,203,000 for our fiscal year 2022.

was primarily due to increased payroll and an expected general increase in food costs, costs and expenses incurred from the opening of

our limited partnership owned restaurant in Sunrise, Florida, (Store #85) in March 2022, Brendan’s Sports Pub (Store #30) in June,

2022, pre-opening expenses from our limited partnership owned restaurant in Miramar, Florida (Store # 25) and pre-opening expenses from

our package liquor store in Miramar, Florida, (Store #24), partially offset by actions taken by management to reduce and/or control costs.

We anticipate that our operating costs and expenses will continue to increase through our fiscal year 2023.

Operating costs and expenses

increased as a percentage of total revenue to approximately 95.62% in our fiscal year 2022 from 93.70% in fiscal year 2021.

was primarily due to increased payroll, increased consultant fees to improve our accounting process and an expected general increase in

food costs, costs and expenses incurred from the opening of the package liquor stores in Hollywood, Florida (Store #19P) and Miramar,

Florida (Store #24), during our fiscal year 2023, the opening of our limited partnership owned restaurant in Miramar, Florida (Store #25)

during our fiscal year 2023, and the operation of our Brendan’s Sports Pub (Store #30) and limited partnership owned restaurant

in Sunrise, Florida (Store #85) for our entire fiscal year 2023 but only a part of our fiscal year 2022, partially offset by actions taken

by management to reduce and/or control costs.

We anticipate that our operating costs and expenses will increase through our fiscal year

2024 primarily due to our package liquor stores in Hollywood, Florida (Store #19P) and Miramar, Florida (Store #24) being open for business

for our entire fiscal year 2024, our limited partnership owned restaurant in Miramar, Florida (Store #25) being open for business for

our entire fiscal year 2024 and the opening of our reconstructed restaurant in Hollywood, Florida (Store #19R) for business during our

fiscal year 2024.

Operating costs and expenses increased as a percentage of total revenue to approximately 95.97% in our fiscal year 2023

from 95.62% in fiscal year 2022.

Gross Profit .

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was 66.61% for our fiscal year 2023 and 63.96% for our fiscal year 2022.

Gross profit margin for restaurant food and bar sales decreased

during our fiscal year 2022 when compared to our fiscal year 2021 due to higher food costs, partially offset by, among other things, the

Recent Price Increases which did not fully absorb increased costs of restaurant food and bar sales.

Package Liquor Store

Gross profit margin for restaurant food and bar sales increased

during our fiscal year 2023 when compared to our fiscal year 2022 due to decreases in our cost of ribs and the Recent Price Increases,

partially offset by among other things, higher food costs.

Package Store Sales .

Gross profit for package store sales for our fiscal year 2023 increased to $9,377,000 from $8,382,000 for our fiscal year 2022.

Our gross profit margin, (calculated as gross profit reflected as a percentage of package liquor store sales), for package store

sales was 26.45% for our fiscal year 2022 and 23.74% for our fiscal year 2021.

We anticipate that the gross profit margin for package

liquor store merchandise will decrease during our fiscal year 2023 due to higher costs and a reduction in pricing of certain package store

merchandise to be more competitive.

Payroll and Related

Payroll and related costs for our fiscal year 2022 increased $6,271,000 or 14.43% to $49,736,000 from $43,465,000 for our

fiscal year 2021.

Payroll and related costs for our fiscal year 2022 were higher due primarily to the opening of our limited partnership

owned restaurant in Sunrise, Florida, (Store #85) in March 2022, Brendan’s Sports Pub (Store #30) in June, 2022 and higher costs

for employees such as cooks.

Payroll and related costs as a percentage of total revenue was 31.45% for our fiscal year 2022 and 31.66%

of total revenue for our fiscal year 2021.

profit margin, (calculated as gross profit reflected as a percentage of package liquor store sales), for package store sales was 26.65%

for our fiscal year 2023 and 26.45% for our fiscal year 2022.

We anticipate that the gross profit margin for package liquor store merchandise

will remain stable during our fiscal year 2024.

Payroll and Related Costs .

Payroll and related costs for our fiscal year 2023 increased $6,871,000 or 13.81% to $56,607,000 from $49,736,000 for our fiscal year

Payroll and related costs for our fiscal year 2023 were higher due primarily to the operation of our limited partnership owned

restaurant in Sunrise, Florida (Store #85), and Brendan’s Sports Pub (Store #30) during our entire fiscal year 2023 as opposed

to a part of our fiscal year 2022 and the operation of our limited partnership owned restaurant in Miramar, Florida (Store #25), the

retail package liquor store in Hollywood, Florida (Store #19P), and the retail package liquor store in Miramar, Florida (Store #24) for

a part of our fiscal year 2023 only and higher salaries to employees to remain competitive with other potential employees in a tight

labor market.

Payroll and related costs as a percentage of total revenue was 32.46% for our fiscal year 2023 and 31.45% of total revenue

for our fiscal year 2022.

Occupancy Costs .

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from $7,031,000 for our fiscal year 2022.

The increase in occupancy costs was primarily due to the commencement of rent for our retail

package liquor store which we are developing located at 11225 Miramar Parkway, #245, Miramar, Florida (Store #24) and our restaurant location

which we are developing located at 11225 Miramar Parkway, #250, Miramar, Florida (Store #25) during the second quarter of our fiscal year

2022, both of which we anticipate will open during our fiscal year 2023 and Brendan’s Sports Pub (Store #30) which we acquired and

opened for business in June, 2022.

Selling, General and Administrative

Selling, general and administrative expenses (consisting of general corporate expenses, including but not limited to

advertising, insurance, professional costs, clerical and administrative overhead) for our fiscal year 2022 increased $6,296,000 or 31.05%

to $26,571,000 from $20,275,000 for our fiscal year 2021.

Selling, general and administrative expenses increased as a percentage of total

revenue in our fiscal year 2022 to 16.80% as compared to 14.77% in our fiscal year 2021, due primarily to increases in expenses across

all categories.

We anticipate that our selling, general and administrative expenses as a percentage of total revenue will increase during

our fiscal year 2023 due primarily to increases across all categories.

The increase in occupancy costs was primarily due to the payment of rent for our retail package

liquor store located at 11225 Miramar Parkway, #250, Miramar, Florida (Store #24), our restaurant location located at 11225 Miramar Parkway,

#250, Miramar, Florida (Store #25) and Brendan’s Sports Pub (Store #30) during our entire fiscal year 2023 as opposed to a part

of our fiscal year 2022.

Selling, General

and Administrative Expenses .

Selling, general and administrative expenses (consisting of general corporate expenses, including

but not limited to advertising, insurance, professional costs, clerical and administrative overhead) for our fiscal year 2023 increased

$5,330,000 or 18.29% to $31,901,000 from $26,571,000 for our fiscal year 2022.

Selling, general and administrative expenses increased

due primarily to Store #85 and Store #30 being open for our entire fiscal year 2023 as opposed to a part of our fiscal year 2022 and

Store #19P, Store #24and Store #25 being open during a part of our fiscal year 2023 only, increased consultant fees to improve our accounting

process, inflation and otherwise to increases in expenses across all categories.

We anticipate that our selling, general and administrative

expenses as a percentage of total revenue will increase during our fiscal year 2024 due primarily to increases across all categories.

Selling, general and administrative expenses increased as a percentage of total revenue in our fiscal year 2023 to 18.29% as compared

to 16.80% in our fiscal year 2022.

Depreciation and

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Depreciation and amortization expense for our fiscal year 2023, which is included in selling, general and administrative

expenses, decreased $51,000 or 1.67% to $3,012,000 from $3,063,000 from our fiscal year 2021.

As a percentage of total revenue, depreciation

and amortization expense was 1.90% of revenue for our fiscal year 2022 and 2.23% of revenue for our fiscal year 2021.

Interest Expense, Net .

Interest expense, net, for our fiscal year 2022 decreased $181,000 to $757,000 from $938,000 for our fiscal year 2021.

expenses, increased $572,000 or 18.99% to $3,584,000 from $3,012,000 from our fiscal year 2022.

This increase is driven by the opening

of Stores #19P, #24, and #25.

As a percentage of total revenue, depreciation and amortization expense was 2.06% of revenue for our fiscal

year 2023 and 1.90% of revenue for our fiscal year 2022.

Interest Expense,

net, decreased for our fiscal year 2022 due to the forgiveness of principal and all accrued interest on the borrowing by certain of our

limited partnerships of an additional $3.35 million of 2 nd PPP Loans during the first quarter of our fiscal year 2022, partially

offset by interest on our borrowing of $4,300,000 during the third quarter of our fiscal year 2021 from an unrelated third party lender

to re-finance our mortgage loan of our property located at 13105 – 13205 Biscayne Boulevard, North Miami, Florida (Store #20).

expense, net, will increase for our fiscal year 2023 due to interest on our borrowing of $8,900,000 during the fourth quarter of our fiscal

year 2022 from an unrelated third party lender to re-finance the mortgage loan on our property located at 4 N.

Federal Highway, Hallandale

Beach, Florida (Store #31).

Interest expense, net, for our fiscal year 2023 increased $310,000 to $1,067,000 from $757,000 for our fiscal year 2022.

Interest expense, net, increased for our fiscal year 2023 due to the interest on our borrowing of $8,900,000 from an unrelated third

party lender to re-finance the mortgage loan on our property located at 4 N.

Federal Highway, Hallandale Beach, Florida (Store #31) and

due to interest on our borrowing of $1,100,000 from a related third party lender to re-finance the mortgage loan on our property located

at 2600 West Davie Boulevard, Fort Lauderdale, Florida (Store #22) during our fiscal year 2022.

Income Taxes.

Income tax for our fiscal year 2022 was an expense of $763,000, as compared to an expense of $1,185,000 for our fiscal year 2021.

taxes as a percentage of income before provision for income taxes increased for our fiscal year 2022 (7.78%) as compared to our fiscal

year 2021 (6.60%) due primarily to the higher income attributable to the forgiveness of debt of certain of our PPP Loans during our fiscal

tax for our fiscal year 2023 was an expense of $649,000, as compared to an expense of $763,000 for our fiscal year 2022.

as a percentage of income before provision for income taxes increased for our fiscal year 2023 (10.70%) as compared to our fiscal year

2022 (7.78%).

income for our fiscal year 2023 decreased $3,633,000 or 40.15% to $5,416,000 from $9,049,000 for our fiscal year 2022 due primarily to

the higher income attributable to the forgiveness of debt of certain of our PPP Loans during our fiscal year 2021 and higher food costs

and overall increased expenses during our fiscal year 2022, partially offset by increased revenue at our restaurants during our fiscal

year 2022 and the Recent Price Increases.

As a percentage of revenue, net income for our fiscal year 2022 is 5.72%, as compared to 12.21%

for our fiscal year 2021.

the higher income attributable to the forgiveness of debt of certain of our PPP Loans during our fiscal year 2022, higher food costs and

overall increased expenses during our fiscal year 2023, partially offset by increased revenue at our retail package liquor stores and

restaurants during our fiscal year 2023 and the Recent Price Increases.

As a percentage of revenue, net income for our fiscal year 2023

is 3.11%, as compared to 5.72% for our fiscal year 2022.

Net Income Attributable

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Net income attributable to stockholders for our fiscal year 2023 decreased

$5,472,000 or 46.44% to $6,312,000 from $11,784,000 for our fiscal year 2021 due primarily to the higher income attributable to noncontrolling

interests as all income attributable to the forgiveness of debt of certain of our PPP Loans during our fiscal year 2021, higher net income

attributable to noncontrolling interests as all income attributable to the forgiveness of debt of certain of our PPP Loans was attributed

to our limited partnerships and higher food costs and overall increased expenses during our fiscal year 2022, partially offset by increased

revenue at our restaurants during our fiscal year 2022 and the Recent Price Increases.

As a percentage of revenue, net income attributable

to stockholders for our fiscal year 2022 is 3.99%, as compared to 8.58% for our fiscal year 2021.

New Limited Partnership

$2,313,000 or 36.64% to $3,999,000 from $6,312,000 for our fiscal year 2022 due primarily to the higher income attributable to the forgiveness

of debt of certain of our PPP Loans during our fiscal year 2022, higher food costs and overall increased expenses during our fiscal year

2023, and a higher portion of net income attributable to noncontrolling interests (specifically the operations of our Miramar location),

partially offset by increased revenue at our retail package liquor stores and restaurants during our fiscal year 2023 and the Recent Price

As a percentage of revenue, net income attributable to stockholders for our fiscal year 2023 is 2.29%, as compared to 3.99%

for our fiscal year 2022.

New Limited Partnership Restaurants

As new restaurants open, our income

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rent for the new locations.

During our fiscal year 2022, we opened one new restaurant location in Sunrise, Florida for business as a new

“Flanigan’s” and had a second new restaurant location in Miramar, Florida in the development stage, to house a new “Flanigan’s”.

Rent for the new restaurant location in Miramar, Florida commenced during our fiscal year 2022.

Price Increases and Trends

During our fiscal year 2022, we

increased menu prices for our food offerings (effective October 3, 2021 and December 19, 2021, respectively) to target an aggregate increase

to our food revenues of approximately 8.83% annually and we increased menu prices for our bar offerings (effective December 12, 2021)

to target an increase to our bar revenues of approximately 7.80% annually to offset higher food and liquor costs and higher overall expenses.

During our fiscal year 2023, we opened one new restaurant location in Miramar, Florida as a “Flanigan’s”.

Menu Price Increases and Trends

During the fiscal year 2023, we

increased menu prices for our food offerings (effective March 26, 2023) to target an aggregate increase to our food revenues of approximately

2.06% annually and we increased menu prices for our bar offerings (effective March 20, 2023) to target an increase to our bar revenues

of approximately 5.65% annually to offset higher food and liquor costs and higher overall expenses.

During the fiscal year 2022, we increased

menu prices for our food offerings (effective October 3, 2021 and December 19, 2021, respectively) to target an aggregate increase to

our food revenues of approximately 8.83% annually and we increased menu prices for our bar offerings (effective December 12, 2021) to

target an increase to our bar revenues of approximately 7.80% annually to offset higher food and liquor costs and higher overall expenses.

Prior to these increases, we previously raised menu prices in the third quarter of our fiscal year 2021.

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As a result, COVID-19 has materially

adversely affected our results of operations for our fiscal year 2022 and will, in all likelihood, impact our results of operations, liquidity

adversely affected our results of operations for the fiscal year 2023 and will, in all likelihood, impact our results of operations, liquidity,

and/or financial condition throughout our fiscal year 2024.

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its effect on our operations, liquidity and/or financial condition cannot be accurately predicted.

Based on current COVID-19 trends,

the Department of Health and Human Services (HHS) permitted the federal Public Health Emergency for COVID-19 (PHE) declared by the Secretary

of the Department of Health and Human Services (Secretary) under Section 319 of the Public Health Service (PHS) Act to expire at the

end of the day on May 11, 2023.

LIQUIDITY AND CAPITAL

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cash from operations and borrowings from third parties.

As of October 1, 2022, we had cash of approximately $42,138,000, an increase of

$9,462,000 from our cash balance of $32,676,000 as of October 2, 2021.

During our fiscal year 2022, we generated proceeds from the closing

of the sale, in a private offering of limited partnership interests in (i) CIC Investors #85, Ltd., the limited partnership which owns

and operates the 2022 Sunrise Restaurant, of $5,000,000, of which we purchased $370,000 of limited partnership interests;

Investors #25, Ltd., the limited partnership which owns and is developing the “Flanigan’s” restaurant located at 11225

Miramar Parkway, Suite 250, Miramar, Florida 33025 of $4,000,000.

We also generated net proceeds of $7.88 million from the re-finance

of our mortgage loan encumbering the real property and improvements located at 4 N.

Federal Highway, Hallandale Beach, Florida where our

Flanigan’s Seafood Bar and Grill restaurant and Big Daddy’s Liquors retail package liquor store operate (Store #31) with an

unrelated third-party lender, increasing the principal amount we borrowed to $8.90 million (the “Hallandale Mortgage Debt”).

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

and 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”),

which loan advance increased the principal amount we borrowed to $1.1 million (the “West Davie Mortgage Debt”).

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”) (collectively, the “Borrowers”), applied for

and received loans from an unrelated third party lender (the “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) $3.46 million was loaned

to six (6) of the LP’s;

As of September 30, 2023, we had cash and cash equivalents of approximately $25,532,000,

a decrease of $16,606,000 from our cash balance of $42,138,000 as of October 1, 2022.

This decrease is primarily due to our decision not

to finance our insurance premiums for the annual period beginning December 30, 2022 ($3,281,000), the purchase of properties at Hallandale

Beach, Florida ($8,500,000), and El Portal, Florida ($3,200,000), and the continued construction of Store #19R ($1,308,000).

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”) (collectively, the “Borrowers”), applied for and received loans from

an unrelated third party lender (the “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 $3.98 million (the “2 nd PPP Loans”), of which approximately:

(i) $3.46 million

was loaned to six (6) of the LP’s;

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

During first quarter of our fiscal year 2022, we

applied for forgiveness for all PPP Loans, including the Managed Store, and as of October 1, 2022, the entire amount of principal and

accrued interest was forgiven under the 2 nd PPP Loans.

During the third quarter of our fiscal year 2021, we generated net proceeds

of $2.8 million from the re-finance of 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) with an unrelated third-party lender, increasing the principal amount borrowed from $1.5 million

to $4.3 million.

During the fourth quarter of our fiscal year 2022 we closed on the purchase of a 4 COP Quota Liquor License for Broward

County for $446,000.

This 4 COP Quota Liquor license will be used at our package liquor store located at 11225 Miramar Parkway #245, Miramar,

Florida (Store #24), which is currently under development.

During the third quarter of our fiscal year 2022, we closed on the purchase

of 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.

During the second quarter of our fiscal year 2021, we closed on the purchase of the real property and

improvements located at 14301 West Sunrise Boulevard, Sunrise, Florida for $4,800,000 where our “Flanigan’s Seafood Bar and

Grill” restaurant (Store #85) operates.

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.

During the first quarter of our fiscal year 2021, we closed on the purchase of the

real property and improvements 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) and paid $1,200,000

cash at closing.

inflationary factors affecting our operations are food, beverage and labor costs.

During the first quarter of our fiscal

year 2022, we applied for forgiveness for all PPP Loans, including the Managed Store, and as of September 30, 2023, the entire amount

of principal and accrued interest was forgiven under the 2 nd PPP Loans.

Inflation is affecting all aspects

of our operations, including but not limited to food, beverage, fuel and labor costs.

Supply chain issues also contribute to inflation.

including supply chain issues are having a material impact on our operating results, especially rising food, fuel and labor costs.

Notwithstanding

the negative effects of COVID 19 and inflation, including supply chain issues on our operations, we believe that our current cash availability

from our cash on hand, positive cash flow from operations and borrowed funds will be sufficient to fund our operations and planned capital

expenditures for at least the next twelve months.

Any future determination to pay

cash dividends will be at our Board’s discretion and will depend upon our financial condition, operating results, capital requirements

and such other factors as our Board deems relevant.

There can be no assurances that any future dividends will be paid.

Inflation, including supply chain issues are having a material impact on our operating results.

Notwithstanding the negative effects

of COVID-19 on our operations, we believe that our current cash availability from our cash on hand, positive cash flow from operations

and borrowed funds will be sufficient to fund our operations and planned capital expenditures for at least the next twelve months.

The following table is a summary of our cash flows for our fiscal

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(in thousands)

Net cash and cash equivalents provided by operating activities

Net cash provided by operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net Increase in Cash and Cash Equivalents

Net cash (used in) provided by financing activities

Net (Decrease) Increase in Cash and Cash Equivalents

Cash and Cash Equivalents, Beginning

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In addition to using cash for

our operating expenses, we use cash to fund the development and construction of new restaurants and to fund capitalized property improvements

for our existing restaurants.

During our fiscal year 2022, we acquired property and equipment of $12,655,000, (of which $3,849,000 was

for construction in progress;

our operating expenses, we use cash generated from operations and borrowings to fund the development and construction of new restaurants

and to fund capitalized property improvements for our existing restaurants.

During the fiscal year 2023, we acquired property and equipment

and construction in progress of $20,574,000, (including non-cash items which include $2,390,000 of purchase deposits transferred to property

and equipment and $545,000 of purchase deposits transferred to construction in progress and $931,000 of construction in progress in accounts

payable) including $367,000 for renovations to three (3) existing limited partnership owned restaurants and $378,000 for renovations to

three (3) Company owned restaurants.

During our fiscal year 2022, we acquired property and equipment of $12,655,000 (of which $3,849,000

was for construction in progress;

$3,258,000 construction in progress transferred to property and equipment;

$969,000 construction in progress

in accounts payable;

$50,000 was deposits recorded in other assets;

and $512,000 was deposits transferred to construction in progress

as of October 2, 2021), which amount included $937,000 for renovations to three (3) existing limited partnership restaurants and $159,000

for renovations to two (2) Company-owned restaurants.

During our fiscal year 2021, we acquired property and equipment of $13,255,000,

(of which $58,000 was for the purchase of a motor vehicle;

$3,229,000 was for the purchase of real property;

$4,416,000 was for construction

$969,000 construction in

progress in accounts payable;

$50,000 was deposits recorded in other assets;

and $48,000 was deposits transferred to construction in progress as of October

3, 2020), which amount included $464,000 for renovations to two (2) existing limited partnership restaurants and $440,000 for renovations

to five (5) Company-owned restaurants.

We anticipate the cost of this refurbishment in our fiscal year 2023 will be approximately $650,000,

excluding construction/renovations to Store #19R (our restaurant which is being rebuilt due to damages caused by a fire) and Store #24

(our Miramar, Florida package store location in development), although capital expenditures for our refurbishing program for our fiscal

year 2023 may be significantly higher.

As of October 1, 2022, we had long

term debt of $25,389,000, as compared to $22,115,000 as of October 2, 2021.

Our long term debt increased as of October 1, 2022 as compared

to October 2, 2021 due (i) to an approximately $8.0 million increase in the amount we borrowed under the Hallandale Mortgage Debt;

to a $403,000 increase in the amounts we borrowed to finance certain insurance premiums;

and (iii) to a $697,000 increase in the amount

we borrowed under the West Davie Mortgage Debt less any payments on account thereof, partially offset by the forgiveness of all principal

and accrued interest of the 2 nd PPP Loans.

As of October 1, 2022, we are in compliance with the covenants of all loans with

(See Item 7A.

Quantitative and Qualitative Disclosures About Market Risk for a discussion of interest rate swap agreements

that we used to fix interest rate fluctuations on certain of our borrowings on page 52.)

We repaid long term debt,

including auto loans, financed insurance premiums and mortgages in the amount of $3,736,000 and $4,100,000 in our fiscal years 2022 and

and $512,000 was deposits transferred to construction in

progress as of October 2, 2021), which amount included $937,000 for renovations to three (3) existing limited partnership restaurants

and $159,000 for renovations to two (2) Company-owned restaurants.

As of September 30, 2023, we had

long term debt (including the current portion) of $23,128,000, as compared to $25,389,000 as of October 1, 2022.

Our long-term debt decreased

as of September 30, 2023 as compared to October 1, 2022 because we satisfied the principal balance and all accrued interest ($367,000)

due on our $5.5 million term loan.

In addition, we did not finance our insurance premiums for our annual insurance renewal effective December

In February 2023, we determined

that as of December 31, 2022, we did not meet the required Post-Distribution Basic Fixed Charge Coverage Ratio (the “Post-Distribution/Fixed

Charge Covenant”) contained in each of our six (6) loans (the “Institutional Loans”) with our unrelated third-party

institutional lender (the “Institutional Lender’).

On February 23, 2023, we received from the Institutional Lender, a written

waiver of the non-compliance with the Post-Distribution/Fixed Charge Covenant (the “Covenant Non-Compliance”), pursuant to

which, among other things, the Institutional Lender waived (1) the non-compliance as of December 31, 2022 and (2) their right to exercise

certain remedies under the Institutional Loans, including the right to accelerate the indebtedness owed by us thereunder, resulting in

the indebtedness under the Institutional Loans to be immediately due and payable, which would have a material adverse effect on the Company.

The Post-Distribution/Fixed Charge Covenant requires we maintain a ratio of at least 1.15 to 1.00 and for the twelve

(12) months ended September 30, 2023 our ratio was calculated to be 1.40 to 1.00.

We have prepared projections going forward

and expect to be in compliance.

As a result, our classification of debt is appropriate as of September 30, 2023.

We repaid long term debt, including

auto loans, financial insurance premiums, and mortgages in the amount of $2,299,000 and $3,736,000 in our fiscal years 2023 and 2022,

respectively.

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Fort Lauderdale, Florida

During our fiscal year 2022, we

requested and received a loan advance of $697,000 from an entity controlled by a member of our Board of Directors, 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.

During our fiscal year 2022, we requested and received

a loan advance of $697,000 from an entity controlled by a member of our Board of Directors, 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 September 30, 2023 is $1,049,000.

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.

(b) Re-Finance of Mortgage on Real Property

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(c ) 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:

policy year beginning December 30, 2021, our general liability insurance, excluding limited partnerships, is a one (1) year policy with

our insurance carriers.

The one (1) year general liability insurance premium is in the amount of $467,000;

the policy year beginning December 30, 2021, our general liability insurance for our limited partnerships is a one (1) year policy with

our insurance carriers.

The one (1) year general liability insurance premium is in the amount of $589,000;

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

The one (1) year automobile insurance

premium is in the amount of $194,000;

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

The one (1) year property insurance premium

is in the amount of $700,000;

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;

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

The one (1) year terrorist insurance premium

is in the amount of $8,900;

(vii) For the policy year beginning December 30, 2021,

our equipment breakdown insurance is a one (1) year policy.

The one (1) year equipment breakdown insurance premium is in the amount of

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 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

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.

Prior to fiscal year 2023, we

financed our annual insurance premiums.

Due to higher interest rates, during the first quarter of our fiscal year 2023, for the policy

year commencing December 30, 2022, we paid the premiums for property, general liability, excess liability and terrorist policies, totaling

approximately $3.281 million, in full, which includes coverage for our franchisees (which is $658,000), which are not included in our

consolidated financial statements.

Due to continuing higher interest rates for the policy year commencing December 30, 2023, we will pay

the premiums for property, general liability, excess liability, crime and terrorism policies in full ($3.932 million), which includes

coverage for our franchises (approximately $786,000).

We paid the $3.281 million annual

premium amounts on January 9, 2023, which includes coverage for our franchisees which are not included in our consolidated financial

We secured property insurance for the period commencing after the expiration of the current policy on December 30, 2023.

Subsequent Events for a discussion of property insurance for the period commencing December 30, 2023 on page 31.)

Construction Contracts

(a) 7990 Davie Road Extension, Hollywood, Florida

(Store #19 – “Big Daddy’s Wine & Liquors”)

During the third quarter of our

fiscal year 2019, we entered into an agreement with a third party unaffiliated general contractor for site work at this location totaling

$1,618,000, (i) to connect the real property where this restaurant operated (Store #19) to city sewer and (ii) to construct a new building

on the adjacent parcel of real property for the operation of a package liquor store.

During our fiscal years 2020, 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”)

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.

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.

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 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.

(d) 11225 Miramar Parkway, #250, Miramar, Florida

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.

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 totaling $2,515,000

and during our fiscal year 2023 we agreed to change orders increasing the total contract price by $1,021,000 to $3,536,000, of which $1,534,000

has been paid through September 30, 2023 and $1,090,000 has been paid subsequent to the end of our fiscal year 2023.

Sunrise Boulevard, Sunrise, Florida

(Store #85- "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.

(e) 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.

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 the end of our fiscal year 2023 we agreed to change orders to the agreement increasing the total contract

price by $327,000 to $670,000, of which the full amount has been paid as of the end of our fiscal year 2023.

Purchase Commitments/Supply

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adequate supply of baby back ribs for our restaurants for calendar years 2023 and 2024, 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 as compared to

calendar year 2022 is due to a decrease in market price.

rib supplier, whereby we agreed to purchase approximately $7.0 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 year 2023, at a prescribed cost, which

we believe is competitive.

The increase in our cost of baby back ribs for calendar year 2024 compared to calendar year 2023 is due to

the increase in volume of our purchase of ribs for Store #25, Miramar, Florida being open for the entire calendar year and Store #19,

Hollywood, Florida anticipated to be open for a part of the calendar year, offset by 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.

Fish Company, LLC

As of October 1, 2022, Flanigan’s

Flanigan’s Fish Company, LLC

As of September 30, 2023, Flanigan’s

Fish Company, LLC, a Florida limited liability company (“FFC”) supplies certain of the fish to all of our restaurants.

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of FFC owned by the unrelated third party is recognized as a noncontrolling interest in our consolidated financial statements.

Purchase of Limited Partnership

Purchase of Limited Partnership Interests

During our fiscal year 2023, we

purchased 74 limited partnership units (7.4% limited partnership interest) in CIC Investors #85, Ltd.

During our fiscal year

2021, we did not purchase any limited partnership interests.

did not purchase any limited partnership interests.

During our fiscal year 2022 we purchased 74 limited partnership units (7.4% limited

partnership interest) in CIC Investors #85, Ltd.

Working Capital

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Working Capital

Our working capital increased

as of October 1, 2022 from our working capital as of October 2, 2021 due to our increased borrowings resulting from the Hallandale Mortgage

Debt and the West Davie Mortgage Debt, significant portions of which we classified as long term liabilities as of October 1, 2022.

Our working capital decreased

as of September 30, 2023 from our working capital as of October 1, 2022 primarily due to increases in (i) cash purchases of real property;

(ii) cash purchases of property and equipment;

and (iii) deposits on property and equipment.

Current assets as of October 1, 2022 increased

due to our increased borrowings resulting from the Hallandale Mortgage Debt and the West Davie Mortgage Debt, significant portions of

which we classified as long term liabilities as of September 30, 2023.

Current assets as of September 30, 2023 decreased due to our decision

not to finance our insurance premiums for the annual period beginning December 30, 2022, as well as the current year investments in the

purchase of property.

While there can be no assurance

due to, among other things, unanticipated expenses or unanticipated decline in revenues, or both, especially in the current economic conditions,

we believe that our cash on hand, cash flow from operations and funds available from our borrowings will adequately fund operations, debt

reductions and planned capital expenditures throughout our fiscal year 2023.

due to, among other things, unanticipated expenses or unanticipated decline in revenues, or both, we believe that our cash on hand, positive

cash flow from operations and borrowed funds will adequately fund operations, debt reductions and planned capital expenditures throughout

our fiscal year 2024.

During our fiscal year 2024, we

plan to use certain funds on-hand, funds raised through our private offerings, borrowed funds and/or insurance proceeds to construct a

new building on the real property we own located at 2505 N.

University Drive, Hollywood, Florida (Store #19 restaurant) where we plan

to re-build our “Flanigan’s” restaurant;

and (ii) for the cost of renovations to develop the “Big Daddy’s

Wine & Liquors” which we are currently developing at 11225 Miramar Parkway, #245, Miramar, Florida (Store #24).

no assurances as to the timing for us to re-build the restaurant for Store #19 or to complete the renovations for the retail package liquor

store for our Store #24.

Sheet Arrangements

plan to use certain funds on-hand, borrowed funds, and/or insurance proceeds to complete the construction of our new building on the real

property we own located at 2505 N.

University Drive Hollywood, Florida (Store #19R) where we plan to operate our “Flanigan’s”

There can be no assurance as to the timing for us to complete the construction of the restaurant for Store #19R.

Off-Balance Sheet Arrangements

We do not have off-balance sheet

arrangements.

Adopted and Recently Issued Accounting Pronouncements

Recently Adopted and Recently Issued Accounting

Pronouncements

Recently Adopted

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that we have recently adopted.

The FASB issued guidance, Reference

Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedient

and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected

by reference rate reform if certain criteria are met.

In response to the concerns about structural risks of interbank offered rates (“IBORs”)

and, particularly, the risk of cessation of the LIBOR, regulators in several jurisdictions around the world have undertaken reference

rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to

manipulation.

This accounting standards update provides companies with optional guidance to ease the potential accounting burden associated

with transitioning away from reference rates that are expected to be discontinued.

LIBOR rates will be published until June 30, 2023.

All principal and interest of the Term Loan was paid in full as of December 28, 2022, so the discontinuance of LIBOR rates will have no

impact on us.

There are no recently issued accounting

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

The FASB issued guidance, ASU

2022-06 Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides

optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other

transactions affected by reference rate reform if certain criteria are met.

In response to the concerns about structural risks of interbank

offered rates (“IBORs”) and, particularly, the risk of cessation of the London interbank offered rate (“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 were published until June 30, 2023.

All principal and interest of the Term Loan was paid during the first

quarter of our fiscal year 2023, so the discontinuance of LIBOR rates will have no impact on us.

The FASB issued guidance, ASU

2016-13 Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, which provides

a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present

the net carrying value at the amount expected to be collected on the financial asset.

The measurement of expected credit losses is based

on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts

that affect the collectability of the reported amount.

This guidance would be effective for the Company in the first quarter of our fiscal

however, after performing a thorough analysis the Company concluded there is no material impact.

There are no recently issued

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

Critical Accounting Policies

8 unchanged sentences

of our consolidated financial statements:

Estimated Useful Lives of Property

and Equipment

Estimated Useful Lives of Property and Equipment

The estimates of useful lives

10 unchanged sentences

adjustment is determined to be necessary.

Consolidation

of Limited Partnerships

As of October 1, 2022, we operate

Consolidation of Limited Partnerships

As of September 30, 2023, we operate

ten (10) restaurants as general partner of the limited partnerships that own the operations of these restaurants.

38 unchanged sentences

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 7. Management’s Discussion and Analysis