What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-12-27 compared with 2023-12-29 · 612 added, 593 removed, 861 unchanged (58% of the section changed)

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Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as of September 28, 2024.

Material Weakness in Internal Control Over Financial

A material weakness is a deficiency,

or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material

misstatement of our interim or annual financial statements will not be prevented or detected on a timely basis.

Remediation of Material Weakness in Internal

Control Over Financial Reporting

During the course of our independent

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statements to be included in our Form 10-Q for the first quarter of our 2023 fiscal year, we became aware of certain errors made by management

in recording certain transactions and in performing debt covenant calculations.

As a result of these errors we concluded that we did not

have a sufficient complement of trained and knowledgeable accounting personnel to prevent and detect errors on a timely basis and that

this deficiency constitutes a material weakness in our internal control over financial reporting as of September 30, 2023.

During our fiscal year 2023, we

began the process of addressing this material weakness by engaging qualified accounting consultants who have been brought on to enhance,

and continue to enhance, our internal controls over financial reporting.

These individuals are licensed CPA’s with appropriate levels

of knowledge and experience in public accounting.

Subsequent to the end of our fiscal year 2023, the Company has begun to staff the newly

formed Financial Reporting Division of our Accounting Department.

This Department is headed by a Financial Reporting Manager who reports

directly to the CFO.

This individual is a qualified CPA with experience in financial reporting and the restaurant industry.

also hired a Senior Accountant to report under this Financial Reporting Manager and has been enlisted with the preparation of various

schedules and entries.

We will continue our efforts in our fiscal year 2024 of improving our accounting and finance related processes.

in recording certain transactions and in performing debt covenant calculations, which constituted material weaknesses in our internal

As a result of this finding, during the second quarter of our fiscal year 2023, we began the process of addressing these material

weaknesses by bolstering our internal controls over the review of certain financial transactions and their impact on our interim and annual

financial statements, as well as our review of the debt covenant calculations.

During the second quarter of our fiscal year 2024 the additional

controls had been implemented and evaluated by management and determined to be operating effectively and as a result of our findings,

as of the end of the second quarter of our fiscal year 2024, we have concluded that our previously listed material weaknesses had been

Material Weaknesses in Internal Control Over

Financial Reporting

A material weakness is a deficiency,

or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material

misstatement of our interim or annual financial statements will not be prevented or detected on a timely basis.

Information technology general

controls (ITGCs) were not designed and implemented effectively to ensure (i) that access to applications and data, and the ability to

make program and database changes, were adequately restricted to appropriate personnel and (ii) that database changes were logged completely

and accurately.

Business process controls (automated and manual) that are dependent on the affected ITGCs were also deemed ineffective

because they could have been adversely impacted.

The material weaknesses identified

above did not result in any material misstatements in our financial statements or disclosures, and there were no changes to previously

released financial results.

However, as a result of this finding, during the first quarter of our fiscal year 2025, we began the process

of addressing these material weaknesses to our ITGCs.

Changes in Internal Control Over Financial Reporting

During the period covered by this

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

to materially affect, our internal control over financial reporting.

Apart from the changes discussed

above we have not made any additional changes to our internal controls over financial reporting that have materially affected, or are

reasonably likely to materially affect, our internal controls over financial reporting.

Management’s Assessment on Internal Control

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

This annual report does not include an attestation

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

Management’s report

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

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

This annual report does not include

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

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

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

OTHER INFORMATION.

During the three months ended

September 28, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or

terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in

Item 408(a) of Regulation S-K under the Exchange Act.

A copy of our insider trading

policy and related Rule 10b5-1 trading plan policy has been filed as Exhibit 19.1 to this Annual Report.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not Applicable.

The information required by Item

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Registrant's Form 10-K constitutes the Annual Report to Shareholders for the fiscal year ended September 28, 2024.

Insider Trading Policy and related Rule 10b5-1 Trading Plan Policy

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

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

Incentive Compensation Clawback Policy

Compensatory plan or arrangement.

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CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023 AND OCTOBER 1, 2022

SEPTEMBER 28, 2024 AND SEPTEMBER 30, 2023

Enterprises, Inc.

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sheets of Flanigan’s Enterprises, Inc.

and subsidiaries (the “Company”) as of September 30, 2023 and October 1, 2022,

and subsidiaries (the “Company”) as of September 28, 2024 and September 30, 2023,

the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the two years

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

30, 2023 and October 1, 2022, and the results of its operations and its cash flows for each of the two years in the period ended September

28, 2024 and September 30, 2023, and the results of its operations and its cash flows for each of the two years in the period ended September

28, 2024, in conformity with accounting principles generally accepted in the United States of America.

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Critical Audit Matters

Critical audit matters are matters arising

from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee

Critical audit matters are matters arising from

the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and

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

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CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2023 AND OCTOBER 1, 2022

SEPTEMBER 28, 2024 AND SEPTEMBER 30, 2023

(in thousands, except share and per share amounts)

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Total other assets

See notes to consolidated financial

See notes to consolidated financial statements.

Enterprises, Inc.

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CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2023 AND OCTOBER 1, 2022

SEPTEMBER 28, 2024 AND SEPTEMBER 30, 2023

(in thousands, except share and per share amounts)

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Total liabilities

Commitments and Contingencies

Stockholder’s Equity:

Flanigan’s Enterprises, Inc.

Commitments and Contingencies Note 12

Stockholders’ Equity:

Flanigan’s Enterprises, Inc.’s Stockholders’ Equity

Common stock, $ .10 par value, 5,000,000 shares authorized;

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Treasury stock, at cost, 2,338,995 shares

Total Flanigan’s Enterprises, Inc.

stockholders’ equity

Total Flanigan’s Enterprises, Inc.’s Stockholders’ Equity

Noncontrolling interests

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CONSOLIDATED STATEMENTS OF INCOME

Years Ended September 30, 2023 and October 1,

Years Ended September 28, 2024 and September

(in thousands, except share and per share amounts)

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Rental income

Other operating income

Other revenues

Costs and Expenses:

Cost of merchandise sold:

Restaurant and lounges

Package goods

Payroll and related costs

Operating Expenses

Occupancy costs

Selling, general and administrative expenses

Depreciation and amortization

Income from Operations

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Interest and other income

Gain on forgiveness of PPP loans

Gain on sale of property and equipment

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Net Income Attributable to Noncontrolling Interests

Net Income Attributable to Flanigan’s Enterprises Inc.

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

Net Income Per Common Share:

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years Ended September 30, 2023 and October 1,

Years Ended September 28, 2024 and September

(in thousands)

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED SEPTEMBER 30, 2023 AND OCTOBER 1,

YEARS ENDED SEPTEMBER 28, 2024 AND SEPTEMBER

(in thousands, except share amounts)

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Noncontrolling

Balance, October 1, 2022

Other Comprehensive Income

Balance, September 30, 2023

Other comprehensive loss

Distributions to noncontrolling interests

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Balance, October 1, 2022

Other comprehensive income

Distributions to noncontrolling interests

Sale of minority interest

Dividends paid

Balance, October 1, 2022

Balance, September 30, 2023

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED SEPTEMBER 30, 2023 AND OCTOBER 1,

YEARS ENDED SEPTEMBER 28, 2024 AND SEPTEMBER

(in thousands)

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Amortization of operating lease right-of-use assets

Gain on forgiveness of PPP Loans

Gain on sale of property and equipment

Loss on abandonment of property and equipment

Gain on casualty loss

Amortization of deferred loan costs

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Deposits on property and equipment

Purchase of liquor license

Purchase of leaseholds

Proceeds from sale of property and equipment

Business acquisition

Distributions from unconsolidated limited partnership

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CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED SEPTEMBER 30, 2023 AND OCTOBER 1,

YEARS ENDED SEPTEMBER 28, 2024 AND SEPTEMBER

(in thousands)

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Payments on long term debt

Deferred loan costs

Proceeds from long-term debt

Proceeds from noncontrolling interest offering

Dividends paid

Distributions to limited partnerships’ noncontrolling interests

Net cash and cash equivalents (used in) provided by financing activities

Net (Decrease) Increase in Cash and Cash Equivalents

Net cash and cash equivalents used in financing activities

Net Decrease in Cash and Cash Equivalents

Cash and Cash Equivalents - Beginning of Period

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Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Financing of insurance contracts

Change in fair value of interest rate swap

(Decrease) Increase in fair value of interest rate swap

Purchase deposits capitalized to property and equipment

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Construction in progress in accounts payable and accrued expenses

Operating lease liabilities arising from right-of-use assets

Remeasurement of right-of-use operating lease

See notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2023 AND OCTOBER 1, 2022

YEARS ENDED SEPTEMBER 28, 2024 AND SEPTEMBER 30, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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of our total revenue.

As of September 30, 2023, we (i) operated 31 units consisting of restaurants, package liquor stores and combination

As of September 28, 2024, we (i) operate 32 units consisting of restaurants, package liquor stores and combination

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

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intercompany profits are eliminated.

Certain amounts in the prior year consolidated financial

statements and related disclosures have been reclassified herein to conform to the presentation of the fiscal year ended September 28,

2024 consolidated financial statements and related disclosures for reporting, which did not have a material impact on our net income or

total assets.

Use of Estimates

The consolidated financial statements and related

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

We are required to make estimates

and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the

date of the financial statements, and revenue and expenses during the periods reported.

These estimates include assessing the estimated

useful lives of tangible assets, the recognition of deferred tax assets and liabilities and estimates relating to the calculation of incremental

borrowing rates and length of leases associated with right-of-use assets and corresponding liabilities, and estimates relating to loyalty

reward programs.

Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in our consolidated financial

statements in the period they are determined to be necessary.

Although these estimates are based on our knowledge of current events and

actions we may undertake in the future, they may ultimately differ from actual results.

The consolidated financial statements and

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

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

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

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

and estimates relating to the calculation of incremental borrowing rates and length of leases associated with right-of-use assets

and corresponding liabilities, and estimates relating to loyalty reward programs.

Estimates and assumptions are reviewed

periodically and the effects of revisions are reflected in our consolidated financial statements in the period they are determined

to be necessary.

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

they may ultimately differ from actual results.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cash and Cash Equivalents

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bearing accounts.

The deposit balances that exceed the federally insured limits are approximately $ 14,479,000 as of September 28, 2024.

We have not experienced any losses on such accounts.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Other Receivables

Our receivables consist primarily of rebates due to our restaurant or

package stores.

Our inventories, which consist primarily of

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

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

The movement of inventory approximates

first in, first out (FIFO).

Liquor Licenses

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Major Suppliers

Throughout our fiscal years 2024 and 2023,

we purchased a significant portion of our food products from one major supplier.

This major supplier represents 42 % and 42 % of our cost

of goods sold and 29 % and 22 % of our accounts payable and accrued expenses as of September 30, 2023 and October 1, 2022, respectively.

we purchased a significant portion of our food products from two major suppliers.

The first major supplier represents 38 % and 42 % of our

cost of goods sold and 31 % and 29 % of our accounts payable and accrued expenses as of September 28, 2024 and September 30, 2023, respectively.

The second major supplier represents 11 % and 6 % of our cost of goods sold and 2 % and 1 % of our accounts payable and accrued expenses as

of September 28, 2024 and September 30, 2023, respectively.

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

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One of these three local distributors represents 23 %

and 23 % of our cost of goods sold for the years ended September 30, 2023 and October 1, 2022, respectively and 5 % and 2 % of our accounts

payable and accrued expenses as of September 30, 2023 and October 1, 2022, respectively.

Each distributor has exclusive rights from the

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

are no alternate distributors available.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

and 24 % of our cost of goods sold for the years ended September 28, 2024 and September 30, 2023, respectively and 6 % and 5 % of our accounts

payable and accrued expenses as of September 28, 2024 and September 30, 2023, respectively.

Each distributor has exclusive rights from

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

there are no alternate distributors available.

Revenue Recognition

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We report our revenues net of sales tax.

We sell gift cards which do not have expiration

Revenue from gift cards is recognized when gift cards are redeemed by the customer.

Our Big Daddy’s Good Customer Loyalty

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

Lunch Club Loyalty Program awards customers

with a free lunch once they have earned a required number of points.

Pursuant to ASC 606, we recognize deferred revenue in the amount

of the free lunch and reduce restaurant store revenue by a like amount.

We recognize revenue when the free lunch is redeemed in our restaurants

or when it expires unused.

Holiday Promotional Card Program awards customers

with a $ 20 promotional gift card (“Promo Gift Card”) when they spend $ 100 in the restaurants on food/drink or purchase a $ 100

This $ 20 promotional card can only be redeemed within a three month window.

Pursuant to ASC 606, we recognize deferred revenue

in the amount of the Promo Gift Card upon issuance and reduce restaurant store revenue by a like amount.

We recognize revenue when the

Gift Card is redeemed in our restaurants or when it expires unused.

Pre-opening Costs

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

We expense pre-opening costs as incurred and during our fiscal year ended September 30, 2023 we expensed $ 188,000 for CIC Investors #25.

During our fiscal year ended October 1, 2022 we expensed $ 65,000 for CIC Investors #25, Ltd, and $ 388,000 for CIC Investors #85, Ltd.

We expense pre-opening costs as incurred and during our fiscal year ended September 28, 2024 we expensed $ 77,000 for our store #19R.

our fiscal year ended September 30, 2023 we expensed $ 188,000 for CIC Investors #25, LTD (Store #25).

Advertising Costs

Our advertising costs are expensed as incurred.

Advertising costs incurred during our fiscal years ended September 30, 2023 and October 1, 2022 were approximately $ 253,000 and $ 209,000 ,

Advertising costs incurred during our fiscal years ended September 28, 2024 and September 30, 2023 were approximately $ 223,000 and $ 253,000 ,

respectively.

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We have general liability insurance which incorporates

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

During the fourth quarter of our fiscal year 2023, we

converted the deductible of $ 10,000 per occurrence for both us and the limited partnerships to $ 10,000 self-insured retention per occurrence.

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

During our fiscal year ended September 30, 2023, we were able to purchase excess liability insurance, whereby our excess insurance

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

We are un-insured against liability

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

a $ 50,000 self-insured retention per occurrence for us and a $ 10,000 self-insured retention per occurrence for the limited partnerships.

Our insurance carrier is responsible for $ 1,000,000 coverage per occurrence above our self-insured retentions, up to a maximum aggregate

of $ 2,000,000 per year.

We were also able to purchase excess liability insurance, whereby our excess insurance carrier is responsible

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

We are un-insured against liability claims in excess

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

We secured general liability insurance and excess liability insurance to be effective

as of December 30, 2024.

Our general policy is to settle only those

legitimate and reasonable claims asserted and to aggressively defend and go to trial, if necessary, on frivolous and unreasonable claims.

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

our $ 10,000 deductible, and/or self-insured retention.

Under our current liability insurance policy, certain expenses incurred by us in defending a claim, including attorney's fees, are a

part of a $ 50,000 self-insured retention per occurrence for us and a $ 10,000 self-insured retention per occurrence for the limited partnerships.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Value of Financial Instruments

The respective carrying value of certain of

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

These instruments include cash and cash equivalents, other receivables,

accounts payables, accrued expenses and debt.

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

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

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

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

The respective carrying value of our on-balance-sheet

financial instruments approximate their fair value.

These instruments include cash and cash equivalents, other receivables, accounts payables,

accrued expenses and debt.

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

in nature or are receivable or payable on demand.

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

comparable maturities and similar collateral requirements.

In accordance with FASB ASC Topic 820-10-50-1,

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We account for derivative instruments in accordance

with FASB ASC Topic 815-10-05-4, “ Accounting for Derivative Instruments and Hedging Activities” as amended, which

establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other

contracts, and hedging activities.

In accordance with FASB ASC Topic 815-10-05-4, derivative instruments are recognized as assets or

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

As of September 30, 2023 the fair value

of the swap agreement is now reflected on the balance sheet in other assets and accumulated other comprehensive income.

We determined

that the interest rate swap agreement is an effective hedging agreement and that changes in fair value will be adjusted quarterly based

on the valuation statement (see Note 15).

SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES (Continued)

with FASB ASC Topic 815-10-05-4, “ Accounting for Derivative Instruments and Hedging Activities” as amended, which establishes

accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and

hedging activities.

In accordance with FASB ASC Topic 815-10-05-4, derivative instruments are recognized as assets or liabilities in the

Company’s consolidated balance sheets and are measured at fair value.

We determined that the interest rate swap agreement is an

effective hedging agreement and changes in fair value are adjusted quarterly (see Note 13).

We account for our income taxes using FASB

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likelihood of being realized upon ultimate settlement with the relevant tax authority.

We applied these changes to tax positions for our

fiscal years ended September 30, 2023 and October 1, 2022.

We had no material unrecognized tax benefits and no adjustments to our financial

position, results of operations or cash flows were required.

Generally, federal, state and local authorities may examine the Company’s

tax returns for three years from the date of filing and the current and prior three years remain subject to examination as of September

For our fiscal years ended September 28, 2024 and

September 30, 2023, we had no material unrecognized tax benefits and no adjustments to our financial position, results of operations or

cash flows were required.

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

from the date of filing and the current and prior three years remain subject to examination as of September 28, 2024.

Long-Lived Assets

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number of common shares.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Adopted and Recently Issued Accounting

Pronouncements

There are no accounting pronouncements that

we have recently adopted.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Issued

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.

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 year 2024;

however, after

performing a thorough analysis the Company concluded that there is no material impact.

The FASB issued guidance, Accounting Standards Update

(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 was effective for the Company in the first quarter of our fiscal

however, after performing a thorough analysis the Company concluded there was no material impact from the adoption of this

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting

Improvements to Reportable Segment Disclosures,” which updates reportable segment disclosure requirements, primarily

through requiring enhanced disclosures about significant segment expenses and information used to assess segment performance.

adopted this ASU in the third quarter of our fiscal year 2024 and this ASU affected the expense presentation of our Consolidated Statements

of Income and our Business Segments footnote.

For further information regarding the Company’s Business Segments, please refer to

our Consolidated Statements of Income and Business Segments footnote.

In December 2023, the FASB issued ASU 2023-09, “Income

Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which requires enhanced income tax disclosures, primarily related to

standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

This ASU will be effective

for the Company in our fiscal year 2026, with the guidance applied either prospectively or retrospectively.

Early adoption is permitted.

We are currently evaluating the impact the adoption of the new accounting guidance will have on our tax disclosures.

There are no other recently issued accounting

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

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

PROPERTY AND EQUIPMENT, NET

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Construction in progress

Depreciation and amortization expense for

the fiscal years ended September 30, 2023 and October 1, 2022 was approximately $ 3,561 ,000 and $ 2,990 ,000, respectively.

Depreciation and amortization expense for the

fiscal years ended September 28, 2024 and September 30, 2023 was approximately $ 4,268 ,000 and $ 3,561 ,000, respectively.

LEASEHOLD INTERESTS, NET

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Less accumulated amortization

LEASEHOLD INTERESTS, NET (Continued)

Future leasehold amortization as of September

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Leasehold amortization expense for the fiscal

years ended September 30, 2023 and October 1, 2022 was approximately $ 23,000 and $ 32,000 , respectively.

years ended September 28, 2024 and September 30, 2023 was approximately $ 26,000 and $ 23,000 , respectively.

INVESTMENT IN LIMITED PARTNERSHIPS

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to being a limited partner in these limited partnerships, we are the sole general partner of ten of these limited partnerships and manage

and control the operations of the restaurants except for the restaurant located in Fort Lauderdale, Florida where we only hold a limited

and control the operations of these restaurants except for the restaurant located in Fort Lauderdale, Florida where we only hold a limited

partnership interest.

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as a profit distribution, pro-rata based on the investors’ investment.

As of September 30, 2023, all limited partnerships,

with the exception of the 2022 Sunrise Restaurant, which opened for business in March, 2022 and the 2023 Miramar Restaurant, which opened

for business in April 2023, have returned all cash invested and we receive an annual management fee equal to one-half (½) of the

cash available for distribution by the limited partnership.

In addition to receipt of distributable amounts from the limited partnerships,

we receive a fee equal to 3 % of gross sales for use of our service marks “Flanigan’s Seafood Bar and Grill” or “Flanigan’s”,

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

This 3 % fee is “earned” when sales are made by the limited partnerships

and is paid weekly, in arrears.

Whether we will have any additional restaurants under development in the future will be dependent, among

other things, on market conditions and our ability to raise capital.

We anticipate that we will continue to form limited partnerships

to raise funds to own and operate restaurants under our service marks “Flanigan’s Seafood Bar and Grill” or “Flanigan’s”

using the same or substantially similar financial arrangements.

As of September 28, 2024, all limited partnerships, with

the exception of the limited partnership which owns the restaurant in Sunrise, Florida (Store #85), which opened for business in March

2022 and the limited partnership which owns the restaurant in Miramar, Florida (Store #25), which opened for business in April 2023, have

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

by the limited partnership.

In addition to receipt of distributable amounts

from the limited partnerships, we receive a fee equal to 3 % of gross sales for use of our service marks “Flanigan’s Seafood

Bar and Grill” or “Flanigan’s”, which use is authorized while we act as general partner only.

This 3 % fee is “earned”

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

Whether we will have any additional restaurants in the

future will be dependent, among other things, on market conditions and our ability to raise capital.

We anticipate that we will continue

to form limited partnerships to raise funds to own and operate restaurants under our service marks “Flanigan’s Seafood Bar

and Grill” or “Flanigan’s” using the same or substantially similar financial arrangements.

Below is information on the eleven limited

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Surfside, Florida

We are the sole general partner and a 46 %

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

Seafood Bar and Grill” service mark since March 6, 1998.

33.3 % of the remaining limited partnership interest is owned by persons

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

This limited partnership has returned to its investors all of their initial

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

We are the sole general partner and a 46 % limited

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

Bar and Grill” service mark since March 6, 1998.

33.3 % of the limited partnership interest is owned by persons who are either our

officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash invested

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

This entity is consolidated in the accompanying consolidated financial statements.

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Bar and Grill” service mark since April 4, 2000.

28.3 % of the remaining limited partnership interest is owned by persons who are

either our officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash

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

28.3 % of the limited partnership interest is owned by persons who are either our

officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash invested

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

This entity is consolidated in the accompanying consolidated financial statements.

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Seafood Bar and Grill” service mark since October 11, 2001.

32.7 % of the remaining limited partnership interest is owned by persons

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

This limited partnership has returned to its investors all of their initial

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

32.7 % of the limited partnership interest is owned by persons who are

either our officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash

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

This entity is consolidated in the accompanying consolidated financial statements.

Wellington, Florida

We are the sole general partner and a 28 %

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

We are the sole general partner and a 28 % limited

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

Seafood Bar and Grill” service mark since May 27, 2005.

22.4 % of the remaining limited partnership interest is owned by persons

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

This limited partnership has returned to its investors all of their initial

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

21.9 % of the limited partnership interest is owned by persons who are either

our officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash invested

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

This entity is consolidated in the accompanying consolidated financial statements.

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Seafood Bar and Grill” service mark since August 14, 2006.

20.2 % of the remaining limited partnership interest is owned by persons

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

This limited partnership has returned to its investors all of their initial

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

19.4 % of the limited partnership interest is owned by persons who are

either our officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash

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

This entity is consolidated in the accompanying consolidated financial statements.

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Seafood Bar and Grill” service mark since October 29, 2007.

23.8 % of the remaining limited partnership interest is owned by persons

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

This limited partnership has returned to its investors all of their initial

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

23.0 % of the limited partnership interest is owned by persons who are

either our officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash

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

This entity is consolidated in the accompanying consolidated financial statements.

Davie, Florida

We are the sole general partner and a 49 %

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

Seafood Bar and Grill” service mark since July 28, 2008.

12.3 % of the remaining limited partnership interest is owned by persons

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

This limited partnership has returned to its investors all of their initial

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

We are the sole general partner and a 49 % limited

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

Bar and Grill” service mark since July 28, 2008.

12.0 % of the limited partnership interest is owned by persons who are either our

officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash invested

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

This entity is consolidated in the accompanying consolidated financial statements.

INVESTMENT IN LIMITED PARTNERSHIPS (Continued)

Miami, Florida

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Bar and Grill” service mark since December 27, 2012.

26.8 % of the remaining limited partnership interest is owned by persons who

are either our officers, directors or their family members.

This limited partnership has returned to its investors all of their initial

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

26.3 % of the limited partnership interest is owned by persons who are either

our officers, directors or their family members.

This limited partnership has returned to its investors all of their initial cash invested

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

This entity is consolidated in the accompanying consolidated financial statements.

INVESTMENT IN LIMITED PARTNERSHIPS (Continued)

Sunrise, Florida

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service mark since March 22, 2022.

31.3 % of the remaining limited partnership interest is owned by persons who are either our officers,

directors or their family members.

32.1 % of the limited partnership interest is owned by persons who are either our officers, directors

or their family members.

As of the end of our fiscal year 2024, this limited partnership has returned to its investors approximately 19.0 %

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in this limited partnership.

31.9 % of the remaining limited partnership interest is owned by persons who are either our officers, directors

or their family members.

We have a franchise arrangement with this limited partnership.

For accounting purposes, we do not consolidate

the operations of this limited partnership into our operations.

Our investment in this entity is reported using the equity method in the

accompanying consolidated financial statements.

The following is a summary of financial information pertaining to our limited partnership

investment in Fort Lauderdale, Florida:

56.9 % of the limited partnership interest is owned by persons who are either our officers, directors or their

family members.

This limited partnership has returned to its investors all cash invested, but since we are not the general partner of

this limited partnership, we do not receive an annual management fee.

We have a franchise arrangement with this limited partnership and

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

Our investment in this

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

The following is a summary of financial

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

(in thousands)

September 28,

September 30,

Financial Position:

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Net (Loss) Income

PRIVATE OFFERINGS:

CIC Investors #85, Ltd.

Sunrise, Florida)

On February 15, 2022, a Florida limited partnership

(CIC Investors #85, Ltd.) in which the Company serves as general partner, completed a private placement of 1,000 Units of limited partnership

interests at $ 5,000 per Unit for proceeds of $ 5,000,000 , 74 Units of which ($ 370,000 ) were purchased by the Company upon the same terms

and conditions as all other investors.

The Company’s investment is eliminated in consolidation.

The proceeds of the private placement

were used to satisfy (including reimbursement to us for advances we have made), build-out and renovation expenses and the purchase of

such furniture, fixtures and equipment necessary for operation of our Sunrise, Florida restaurant under the service mark “Flanigan’s”,

which commenced operations on March 22, 2022.

Capital raised from private investors is credited to sale of noncontrolling interests in

our Statements of Stockholders’ Equity.

Under ASC 810, Consolidation, the Company,

which is the entity issuing financial statements, is required to consolidate CIC Investors #85, Ltd.

as we have a controlling interest

in CIC Investors #85, Ltd.

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

CIC Investor #25, Ltd.

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 opened for business in April 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”

Pompano Beach, Florida (Brendan’s

During the third quarter of our fiscal year

2022, we entered into a Lease (the “BSP Lease”) with a non-affiliated third party from whom we rented approximately 3,556

square feet of commercial space located at 868 South Federal Highway, Pompano Beach, Florida, from where we operate the existing “Brendan’s

Sports Pub” business (Store #30), the assets of which we simultaneously purchased.

The term of the BSP Lease is for fifty (50) years ,

triple net to the landlord with fixed rent of $ 78,000 per year, with two ( 2 %) percent annual increases commencing in year five.

Brendan’s Sports Pub, Pompano Beach,

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 REAL PROPERTY;

4 COP LIQUOR LICENSE

LEASEHOLD / SUB-LEASEHOLD INTERESTS

El Portal, Florida (“Big Daddy’s

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we closed with a non-affiliated third party on the purchase of a three building shopping center in Hallandale Beach, Florida, which consists

of one stand-alone building which is leased to two unaffiliated third parties (approximately 1,450 square feet);

a second stand-alone

building which is leased to one unaffiliated third party (approximately 1,500 square feet);

and a third stand-alone building which is

leased to one unaffiliated third party (approximately 2,500 square feet) for $ 8,500,000 .

The rental income generated by these four lease

arrangements is not material.

The real property is located adjacent to our real property located at 4 N.

Federal Highway, Hallandale Beach,

Florida, where our combination package store and restaurant (Store #31) operates.

We paid all cash at closing and accounted for this transaction

as an asset acquisition.

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 $ 446,000 .

The liquor license is currently in

use in connection with the operation of our package liquor store 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” during our fiscal year 2022.

RE-FINANCING OF EXISTING MORTGAGES;

INSURANCE PREMIUMS

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

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.

Re-Finance of Mortgage on Real Property

– Hallandale Beach, Florida

During our fiscal year 2022, we re-financed

our mortgage debt with a non-affiliated third-party lender secured by our real property located at 4 N.

Federal Highway, Hallandale, Florida

where our combination package liquor store and restaurant (Store #31) operates and borrowed an additional $ 8,012,000 raising the principal

balance to $ 8,900,000 , (the “$ 8.90 M Mortgage”).

The $ 8.90 M Mortgage bears interest at a variable rate equal to the BSBY Screen

Rate – 1 Month plus 1.50% .

We entered into an interest rate swap agreement to hedge the interest rate risk, which fixed the interest

rate on the $ 8.90 M Mortgage at 4.90 % per annum throughout its term.

The $ 8.90 M Mortgage is fully amortized over fifteen (15) years, with

our monthly payment of principal and interest totaling $ 33,000 .

Insurance Premiums

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, which includes coverage for our franchisees (which is $ 658,000 ), which are not included in our consolidated financial

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 ), at the beginning of the second quarter of our fiscal year 2024.

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 statements.

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

(See Note 20.

Subsequent Events for a discussion of insurance premiums for the period commencing December 30, 2023 on page F-29.)

CORONAVIRUS PANDEMIC

In March 2020, a novel strain of coronavirus

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

The novel coronavirus pandemic, (“COVID-19”) adversely

affected and will, in all likelihood continue to adversely affect, our restaurant operations and financial results for the foreseeable

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.

During the second quarter of our fiscal year

2021, certain of the entities owning the limited partnership stores (the “LP’s”), as well as the store we manage but

do not own (the “Managed Store”), applied for and received loans from an unrelated third party lender pursuant to the Paycheck

Protection Program (the “PPP”) under the 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 “2nd PPP Loans”),

of which approximately:

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

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

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

of one stand-alone building a portion of which is leased to one unaffiliated third party (approximately 950 square feet) and a portion

which is occupied by us (approximately 500 square feet);

a second stand-alone building which is leased to one unaffiliated third party

(approximately 1,500 square feet);

and a third stand-alone building which is leased to one unaffiliated third party (approximately 2,500

square feet) for $ 8,500,000 .

The rental income generated by these three lease arrangements is not material.

The real property is located

adjacent to our real property located at 4 N.

Federal Highway, Hallandale Beach, Florida, where our combination package store and restaurant

(Store #31) operates.

We paid all cash at closing and accounted for this transaction as an asset acquisition.

Purchase of Leasehold/Sub-leasehold Interests

In 1974, we sold the underlying ground lease to the

real property located at 8600 Biscayne Boulevard, El Portal, Florida to related and unrelated third parties and simultaneously subleased

We operate our retail package liquor store (Store #47) and warehouse from this location.

During the first quarter of our fiscal

year 2022, we applied for and received forgiveness of the entire amount of principal and accrued interest for all 2nd PPP Loans, including

the Managed Store.

COVID-19 has had a material adverse effect

on our access to supplies or labor and there can be no assurance that there will not be a significant adverse impact on our supply chain

or access to labor in the future.

We are actively monitoring our food suppliers to assess how they are managing their operations to mitigate

supply flow and food safety risks.

To ensure we mitigate potential supply availability risk, we are building additional inventory back

stock levels when appropriate and we have also identified alternative supply sources in key product categories including but not limited

to food, sanitation and safety supplies.

RE-CONSTRUCTION FOLLOWING CASUALTY LOSS

year 2024, we re-purchased a 4 % interest in the underlying ground lease, as well as the sublease agreement from an unrelated third party

for $ 31,000 and currently own 56 % of each lease.

As a result, we now only pay 44 % of the rent due under the ground lease and the sublease

INSURANCE PREMIUMS

Due to continuing higher interest rates, for

the policy year commencing December 30, 2023 we paid the premiums for property, general liability, excess liability and terrorism policies

in full with premiums totaling approximately $ 3.92 million, which includes coverage for our franchises (of approximately $ 850,000 ), which

are not included in our consolidated financial statements.

For the policy year commencing December 30, 2024, we will pay the premiums

for property, general liability, excess liability and terrorism policies in full again due to continuing higher interest rates.

DEFERRED REVENUE

Changes in deferred revenue on the consolidated

balance sheets were as follows:

Loyalty Program

September 30, 2023

Revenue deferred

Revenue recognized

September 28, 2024

October 1, 2022

Revenue deferred

Revenue recognized

September 30, 2023

RE-CONSTRUCTION FOLLOWING CASUALTY

During the first quarter of our fiscal year

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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 was previously located.

The restaurant re-opened for business during the second quarter of our fiscal year 2024 in

a newly constructed stand-alone building where our combination package liquor store and restaurant was previously located.

LIQUOR LICENSES

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

The fair value of liquor licenses at September 30, 2023, exceeded

the carrying amount;

The fair value of liquor licenses at September 28, 2024,

exceeded the carrying amount;

therefore, we recognized no impairment loss.

The fair value of the liquor licenses was evaluated by comparing the

carrying value to recent sales for similar liquor licenses in the County issued.

At September 30, 2023 and October 1, 2022, the total

carrying amount of our liquor licenses was $ 1,268,000 .

The fair value of the liquor licenses was evaluated by comparing

the carrying value to recent sales for similar liquor licenses in the County issued.

At September 28, 2024 and September 30, 2023, the

total carrying amount of our liquor licenses was $ 1,268,000 .

The components of our provision for income taxes

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True up adjustment

PPP forgiveness

Other permanent items, net

We have deferred tax liabilities and assets

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

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

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

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

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

unfunded limited retirement commitments and FICA tax credit.

The components of our deferred tax assets (liabilities)

at September 30, 2023 and October 1, 2022 were as follows:

We have deferred tax liabilities and assets which arise primarily

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

the deferral of the recognition of insurance recoveries on casualty losses for tax purposes, investments in and management fees paid by

limited partnerships, accruals for potential uninsured claims, bonuses accrued for book purposes but not paid within two and a half months

for tax purposes, the capitalization of certain inventory costs for tax purposes not recognized for financial reporting purposes, the

recognition of revenue from gift cards and other promotional programs not redeemed within twelve months of issuance, allowances for uncollectable

receivables, unfunded limited retirement commitments, book-tax differences related to operating leases, interest rate swap mark-to-market

adjustments and FICA tax credit.

The components of our deferred tax assets (liabilities) at September 28, 2024 and September 30, 2023

were as follows:

(in thousands)

Deferred tax assets:

Reversal of aged payables

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Deferred revenue

Limited partnership management fees

Book/tax differences in property and equipment

Book/tax differences in operating leases

Operating lease liabilities

Limited partnership investments

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Accrued limited retirement

Total Deferred Tax Liabilities, Net

Valuation allowance

Total net deferred tax assets

INCOME TAXES (Continued)

As of September 30, 2023, the Company has federal general business

credit carryforward of $ 570,000 .

General business credit carryovers can be carried back 1 year and carried forward 20 years.

The company's

general business credit carryforward will begin to expire in fiscal year 2040.

(in thousands)

Deferred tax liabilities:

Limited partnership management fees

Book/tax differences in property and equipment and intangible assets

Operating lease right of use assets

Total deferred tax liabilities

Net deferred tax liability

As of September 28, 2024, the Company has federal

general business credit carryforward of $ 914,000 .

General business credit carryovers can be carried back 1 year and carried forward 20

The company's general business credit carryforward will begin to expire in fiscal year 2040.

The Company and its subsidiaries file

Corporation federal income tax return and a Florida Corporation income tax return.

These returns are subject to examination by

taxing authorities for all fiscal years after 2020.

Debt consists of the following as of September

30, 2023 and October 1, 2022:

28, 2024 and September 30, 2023:

Long-Term Debt

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As of September 28, 2024, the net book value of the collateral securing this mortgage was $ 7,787,000 .

Mortgage payable to institutional lender, secured by a first mortgage on real property and improvements, bearing interest at BSBY Screen Rate – 1 Month +1.50% , ( 5.38 % at September 30, 2023), but with the interest fixed at 4.90 % pursuant to a swap agreement, amortized over fifteen ( 15 ) years, payable in monthly installments of principal and interest of approximately $ 33,000 .

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

Mortgage payable to institutional lender, secured by a first mortgage on real property and improvements, bearing interest at BSBY Screen Rate – 1 Month +1.50%, ( 5.32 % at September 28, 2024), but with the interest fixed at 4.90 % pursuant to a swap agreement, amortized over fifteen ( 15 ) years, payable in monthly installments of principal of approximately $ 36,700 , with a final payment on September 28, 2037.

As of September 28, 2024, the net book value of the collateral securing this mortgage was $ 3,438,000 .

Revolving credit line/term loan payable to institutional lender, which

entitled the Company to borrow, from time to time through December 28, 2017, up to $ 5 ,500,000, (the “Credit Line”), secured

by a blanket lien on all Company assets, bearing interest through December 28, 2017 at LIBOR – Daily Floating Rate + 2.25 % .

December 28, 2017, an interest rate swap agreement requires us to pay interest for a five (5) year period at a fixed rate of 4.61 % on

an initial amortizing notional principal amount of $ 5,500,000 , while receiving interest for the same period at LIBOR, Daily Floating Rate,

plus 2.25%, per annum on the same notional principal amount, with a final payment on December 28, 2022.

On December 21, 2017, we borrowed

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

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

Additionally, effective November 15, 2024, the publication of BSBY was terminated and as of such date, the variable rate of interest under our debt instrument is equal to the lender’s 1 Month CME Term Secured Overnight Financing Rate (“SOFR”), plus 10 basis points, as an equivalent alternative approved by the lender.

Mortgage payable to institutional lender, secured by a first mortgage on real property and improvements, bearing interest at the fixed rate of 4.65 % per annum, fully amortized over fifteen ( 15 ) years, payable in monthly installments of principal and interest of approximately $ 6,400 , with a final payment on December 28, 2031.

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As of September 28, 2024, the net book value of the collateral securing this mortgage was $ 1,002,000 .

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

Mortgage payable to unrelated third party, secured by first mortgage on real property and improvements, bearing interest at 7.5 %, amortized over twenty ( 20 ) years, payable in monthly installments of principal and interest of approximately $ 7,300 , with a final payment on March 1, 2034.

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Less unamortized loan costs ( 275 ) ( 310 )

21,912 23,128

Less current portion ( 1,400 ) ( 1,295 )

$ 20,512 $ 21,833

Long-term debt at September 28, 2024 matures

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DEBT (Continued)

As of September 30, 2023, we are in compliance

with the financial covenants contained in our loans with our unrelated third party institutional lender (the “Institutional Lender”).

We owe in the aggregate, approximately $ 21,610,000 (the “Institutional Loans”), as of September 30, 2023.

There can be no assurances that we will be

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

to be materially impacted by the COVID-19 pandemic.

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

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

Such a default, if not cured or waived, would allow

the Institutional Lender to accelerate the maturity of the indebtedness we owe under the Institutional Loans, making it due and payable

If maturity of the Institutional Loans were accelerated, it would have a material adverse impact on our financial position.

As of September 28, 2024, we are in compliance with

the financial covenants contained in our loans with our unrelated third party institutional lender (the “Institutional Lender”)

under which we owe in the aggregate, approximately $ 20,494,000 (the “Institutional Loans”), of our total loans of approximately

$ 21,912,000 .

As of September 28, 2024, the year-end fair value of our debt approximates carrying value.

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 had 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 28, 2024 our ratio

was calculated to be 1.62 to 1.00 .

As a result, our classification of debt is appropriate as of September 28, 2024.

COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

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(Store #19 – “Flanigan’s”)

During the third quarter of our fiscal year 2019,

we entered into an agreement with an unaffiliated third party architect for design and development services totaling $ 77,000 for the re-build

of our restaurant located at 2505 N.

University Drive, Hollywood, Florida (Store #19), which has been closed since October 2, 2018 due

to damages caused by a fire, of which $ 62,000 has been paid.

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 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.

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 located at 2505 N.

Drive, Building B, Hollywood, Florida (Store #19R), which had been closed since October 2, 2018 due to damage caused by a fire and re-opened

March 26, 2024.

The contract totaled $ 2,515,000 and through our fiscal year 2024 we agreed to change orders increasing the total contract

price by $ 1,512,000 to $ 4,027,000 , of which $ 3,905,000 has been paid through September 28, 2024.

Subsequent to the end of our fiscal year

2024, we agreed to final change orders increasing the total contract price by $ 3,000 to $ 4,030,000 and the balance of the contract price

of $ 125,000 has been paid subsequent to the end of our fiscal year 2024.

In the third quarter of our fiscal year 2024, we entered

into an agreement with Oracle, an unrelated third party vendor for the licensing and support of NetSuite, a cloud-based Oracle ERP solution

to replace our general ledger.

The agreement is for a period of five years at a fixed rate of approximately $ 40,000 annually, with a cap

on the percentage increase to our fees for our options to extend the term of the agreement for years six and seven .

The fee for the five

year agreement will be paid to the unrelated third party vendor over a period of five years, with a deferral of any payments for the first

six months of the agreement.

We do not expect the implementation of NetSuite to be complete and functional until the second quarter of

our fiscal year 2025.

In the third quarter of our fiscal year 2024, we also

entered into an agreement with an unrelated third party implementation partner for the implementation of NetSuite.

The fee for its implementation

services will be approximately $ 237,000 , payable as hourly services are performed and billed.

Legal Matters

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coverage, our business, financial condition, operating results or cash flows could be materially and adversely affected.

have no “dram shop” claims pending.

There are currently

no “dram shop” claims pending against us.

We are a party to various other claims, legal

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Ended September 28,

Ended October 1,

Ended September 30,

Operating Lease Expense, which is included in occupancy costs

Supplemental balance sheet information related to leases

is as follows:

Variable Lease Expense, which is included in occupancy costs

(in thousands)

Classification on the Consolidated Balance Sheets

September 30, 2023

October 1, 2022

Classification on the Condensed Consolidated Balance Sheets September 28, 2024 September 30, 2023

Operating lease assets $ 26,828 $ 26,987

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Weighted Average Remaining Lease Term:

Operating leases

Operating Leases 10.17 Years 9.86 Years

Weighted Average Discount:

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Purchase Commitments

In order to fix the cost and ensure 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 $ 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

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

In order to fix the cost and ensure adequate

supply of baby back ribs for our restaurants for calendar year 2025, we entered into a purchase agreement with a new rib supplier, whereby

we agreed to purchase approximately $ 7.8 million of “2.5 & Down Baby Back Ribs” (weight range in which baby back ribs

are sold) during calendar year 2025, at a prescribed cost, which we believe is competitive.

For calendar year 2024, we entered into a

purchase agreement with our current rib supplier, whereby we agreed to purchase approximately $ 7.0 million of “2.25 & Down Baby

Back Ribs” during calendar year 2024, at a prescribed cost, which we also believe is competitive.

The increase in our cost of baby

back ribs for calendar year 2025 compared to calendar year 2024 is due to our purchase of larger sized baby back ribs and the purchase

of baby back ribs for Store #19R, Hollywood, Florida for the entire calendar year, offset by a decrease in market price.

Flanigan’s Fish Company, LLC

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financial statements of the Company.

Sales and purchases of fish are recognized in restaurant food sales and restaurant and lounges (cost

of merchandise sold), respectively, in the consolidated statements of income at the time of sale to the restaurant.

In addition, the 49 %

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

Sales and purchases of fish are recognized in restaurant food sales and restaurant (cost of merchandise

sold), respectively, in the consolidated statements of income at the time of sale to the restaurant.

In addition, the 49 % of FFC owned

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

Franchise Program

At September 30, 2023 and October 1, 2022,

At September 28, 2024 and September 30, 2023,

we were the franchisor of five units under franchise agreements.

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of a restaurant and adjacent package liquor store located in Coconut Grove, Florida (Store #18).

Flanigan, brother to

both James G.

Flanigan, brother to both

Flanigan and Michael B.

Flanigan and a member of our Board of Directors, owns 100 % of a company which has a franchise

arrangement with us for the operation of a combination restaurant/package liquor store located in Pompano Beach, Florida (Store

• Our officers and directors

collectively own 30 % of the shareholder interest of a company which has a franchise arrangement with us for the operation of a

restaurant located in Deerfield Beach, Florida.

Flanigan and a member of our Board of Directors, owns 100 % of a company which has a franchise arrangement

with us for the operation of a combination restaurant/package liquor store located in Pompano Beach, Florida (Store #43).

• Our officers and directors collectively

own 30 % of the shareholder interest of a company which has a franchise arrangement with us for the operation of a restaurant located in

Deerfield Beach, Florida.

The shareholder interest of James G.

Flanigan’s family represents an

additional 60 % of the total invested capital in this franchised location (Store #14).

Flanigan is the sole

general partner and a 25 % limited partner in a limited partnership which has a franchise arrangement with us for the operation of a

restaurant located in Fort Lauderdale, Florida.

The Company is a 25 % limited partner in this limited partnership and officers and

directors of the Company (excluding Patrick J.

Flanigan) own an additional 31.9 % limited partnership interest in this franchised

location (Store #15).

Flanigan’s family represents an additional 60 % of the total invested

capital in this franchised location (Store #14).

Flanigan is the sole general

partner and a 25 % limited partner in a limited partnership which has a franchise arrangement with us for the operation of a restaurant

located in Fort Lauderdale, Florida.

The Company is a 25 % limited partner in this limited partnership and officers and directors of the

Company (excluding Patrick J.

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

Under the franchise agreements, we provide

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for royalties to us of approximately 3 % of gross restaurant sales and 1 % of gross package liquor sales.

During our fiscal years 2023

and 2022, we earned royalties of $ 1,163,000 and $ 1,132,000 , respectively, from our related franchises, which royalties are included in

Franchise-related revenues in our Consolidated Statements of Income.

During our fiscal years 2024 and

2023, we earned royalties of $ 1,195,000 and $ 1,163,000 , respectively, from our related franchises, which royalties are included in Franchise-related

revenues in our Consolidated Statements of Income.

We are not currently offering or accepting new franchises.

1 unchanged sentence

Employment Agreements/Bonuses

As of September 30, 2023 and October 1, 2022, we had no employment

As of September 28, 2024 and September 30, 2023, we had no employment

Our Board of Directors approved an annual performance

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January 9, 2036.

For the fiscal years ended September 30, 2023 and October 1, 2022, we generated $ 400,000 of revenue from each fiscal

year from providing these management services.

For the fiscal years ended September 28, 2024 and September 30, 2023, we generated $ 200,000 and $ 400,000 of revenue,

respectively, from providing these management services.

FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS

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three levels of inputs that may be used to measure fair value:

● Level 1 Inputs – Unadjusted quoted prices in active markets for identical

assets or liabilities.

● Level 2 Inputs – Inputs other than quoted

prices included in Level 1 that are either directly or indirectly observable through correlation with market data.

These include quoted

prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities in markets that

are not active;

and inputs to evaluation models or other pricing methodologies that do not require significant judgment because the inputs

used in the model, such as interest rates and volatility, can be corroborated by readily observable market data.

● Level 3 Inputs – One or more significant

inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment.

Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies

or similar valuation techniques, and significant management judgment or estimation.

Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data.

These include quoted prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities in markets that are not active;

and inputs to evaluation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data.

Level 3 Inputs – One or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment.

Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, and significant management judgment or estimation.

FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (Continued)

Interest Rate Swap Agreements

At September 30, 2023, we had one variable

rate instrument outstanding that is impacted by changes in interest rates.

The interest rate of our variable rate debt instrument is equal

to the lender’s BSBY Screen Rate plus one and one-half percent ( 1.50 %) per annum.

In September 2022, we refinanced the mortgage

loan encumbering the property where our combination package liquor store and restaurant located at 4 N.

Federal Highway, Hallandale Beach,

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

As a means of managing our interest rate risk

on this debt instrument, we entered into an interest rate swap agreement with our unrelated third-party lender to convert this variable

rate debt obligation to a fixed rate.

At September 28, 2024, we had one variable rate instrument

outstanding that is impacted by changes in interest rates.

The interest rate of our variable rate debt instrument is equal to the lender’s

BSBY Screen Rate plus one and one-half percent ( 1.50 %) per annum.

In September 2022, we refinanced the mortgage loan encumbering the property

where our combination package liquor store and restaurant located at 4 N.

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

which mortgage loan is held by an unaffiliated third party lender (the “$ 8.90 M Loan”).

Effective November 15, 2024, the publication

of BSBY was terminated and as of such date, the variable rate of interest under our debt instrument is equal to the lender’s 1 Month

CME Term Secured Overnight Financing Rate (“SOFR”), plus 10 basis points, as an equivalent alternative approved by the lender.

As a means of managing our interest rate risk on this

debt instrument, we entered into an interest rate swap agreement with our unrelated third-party lender to convert this variable rate debt

obligation to a fixed rate.

We are currently party to the following interest rate swap agreement:

(i) The interest rate swap agreement entered

into in September 2022 relates to the $ 8.90 M Loan (the “$ 8.90 M Term Loan Swap”).

The $ 8.90 M Term Loan Swap requires us to

pay interest for a fifteen ( 15 ) year period at a fixed rate of 4.90 % on an initial amortizing notional principal amount of $ 8,900,000 ,

while receiving interest for the same period at BSBY Screen Rate – 1 Month, plus 1.50% , on the same amortizing notional principal

As of September 30, 2023 the fair value of the swap agreement is now reflected on the balance sheet in other assets and accumulated

other comprehensive income.

We determined that the interest rate swap agreement is an effective hedging agreement and that changes in

fair value will be adjusted quarterly based on the valuation statement.

(i) The interest rate swap agreement entered into

in September 2022 relates to the $ 8.90 M Loan (the “$ 8.90 M Term Loan Swap”).

The $ 8.90 M Term Loan Swap requires us to pay interest

for a fifteen ( 15 ) year period at a fixed rate of 4.90 % on an initial amortizing notional principal amount of $ 8,900,000 , while receiving

interest for the same period at BSBY Screen Rate – 1 Month, plus 1.50% , on the same amortizing notional principal amount.

the change in the interest rate on the $ 8.9 M Loan, on November 22, 2024, we terminated the $ 8.90 M Term Loan Swap and simultaneously entered

into a new interest rate swap agreement for $ 8,015,601 , the balance due on the $ 8.90 M Loan, which requires us to pay interest for twelve

(12) years, ten (10) months, which is the balance of the original fifteen (15) year period at a fixed rate of 4.90 % on an initial amortizing

notional principal amount of $ 8,015,601 , while receiving interest for the same period at the lender’s 1 Month CME Term Secured Overnight

Financing Rate (“SOFR”), plus 10 basis points, at the same amortizing notional principal amount.

We determined that the interest

rate swap agreement is an effective hedging agreement and changes in fair value are adjusted quarterly.

Treasury Stock

Purchase of Common Shares

During our fiscal years 2023 and 2022, we did

not purchase any shares of our common stock.

During our fiscal years 2024 and 2023, we

did not purchase any shares of our common stock.

As of September 28, 2024, we still have authority to purchase 65,414 shares of our common

stock under the discretionary plan approved by the Board of Directors on May 17, 2007.

Our current repurchase plan has no expiration date

and purchases under this program may be made from time to time on the open market and in private transactions, depending on market conditions,

up to a purchase price of price of $ 15 per share.

The Internal Revenue Service will impose a 1.0 % tax on stock repurchases after December

Our current repurchase plan has no expiration

date and purchases under this program may be made from time to time on the open market and in private transactions, depending on market

conditions, up to a purchase price of price of $ 15 per share.

The Internal Revenue Service imposes a 1.0 % tax on stock repurchases after

December 31, 2022 over $ 1,000,000 within a fiscal year.

BUSINESS SEGMENTS

We operate principally in two reportable segments

We operate in two reportable segments –

package stores and restaurants.

This determination was made by the Chief Financial Officer of the Company to align our financial

reporting presentation with the major streams of revenue generation.

The operation of package stores consists of retail liquor sales and

What changed 10-K

Item 9A. Controls and Procedures