UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10K

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934

                   For the fiscal year ended September 29, 2007

                                       OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) of the SECURITIES
    EXCHANGE ACT OF 1934

          For the transition period from ____________ to ____________


                          Commission File Number I-6836

                          Flanigan's Enterprises, Inc.
            ---------------------------------------------------------
             (Exact name of registrant as specified in its charter)


            Florida                               59-0877638
-------------------------------               -------------------
(State or other jurisdiction of               (I.R.S. Employer
incorporation or organization)                Identification No.)


   5059 N.E. 18th Avenue, Fort Lauderdale, FL                  33334
--------------------------------------------------           ---------
    (Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code, (954) 377-1961
                                                    --------------

Securities registered pursuant to Section 12(b) of the Act:

   Common Stock, $.10 Par Value            American Stock Exchange
   ----------------------------            -----------------------
       Title of each class                  Name of each exchange
                                            on which registered


Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the  registrant is a well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate  by  check  mark if the  registrant  is not  required  to file  reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of

                                       1
<PAGE>

1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a non-accelerated  filer. (See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Securities  Exchange Act
of 1934).

Large accelerated filer |_|    Accelerated filer |_|   Non-accelerated filer [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] No [X]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  was  $9,310,000  as of March 31, 2007,  the last business day of the
registrant's most recently completed second fiscal quarter, at a price of $11.17
per share.

There were 1,890,733  shares of the  Registrant's  Common Stock $0.10 par value,
outstanding as of December 26, 2007


                      DOCUMENTS INCORPORATED BY REFERENCE

Information required by Part III is incorporated by reference to portions of the
Registrant's  Proxy statement for the 2008 Annual Meeting of Shareholders  which
will be filed with the Securities and Exchange Commission by January 27, 2008.


                                       2
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                               INDEX TO FORM 10-K

PART I.

      Item 1     Business                                                     5

      Item 1A    Risk Factors                                                 20

      Item 2     Properties                                                   24

      Item 3     Legal Proceedings                                            29

      Item 4     Submission of Matters to a Vote of Security Holders          29

PART II

      Item 5     Market for Registrant's  Common Equity, Related Stockholder
                 Matters and Issuer Purchases of Equity Securities.           30

      Item 6     Selected Financial Data.                                     30

      Item 7     Management's Discussion and Analysis of Financial Condition
                 and Results of Operation.                                    31

      Item 7A    Quantitative and Qualitative Disclosures About Market Risk.  47

      Item 8     Financial Statements and Supplementary Data.                 48

      Item 9     Changes in and Disagreements with Accountants on Accounting
                 and Financial Disclosure.                                    48

      Item 9A    Controls and Procedures.                                     48

      Item 9B.   Other Information                                            49


PART III

      Item 10    Directors, Executive Officers and Corporate Governance.      49

      Item 11    Executive Compensation.                                      49

      Item 12    Security Ownership of Certain Beneficial Owners and
                 Management and Related Stockholder Matters.                  50

                                       3
<PAGE>

      Item 13    Certain Relationships and Related Transactions and
                 Director Independence.                                       50

      Item 14    Principal Accountant Fees and Services.                      50

PART IV

      Item 15    Exhibits and Financial Statement Schedules                   50

SIGNATURES

CERTIFICATIONS



As used in this Annual  Report on Form 10-K,  the terms  "we," "us,"  "our," the
"Company"  and   "Flanigan's"   mean  Flanigan's   Enterprises,   Inc.  and  its
subsidiaries (unless the context indicates a different meaning).


                                       4
<PAGE>

                                     PART I
Item 1. Business
----------------

      When used in this report, the words "anticipate",  "believe",  "estimate",
"will",  "intend" and "expect" and similar expressions identify  forward-looking
statements.  Forward-looking  statements  in this  report  include,  but are not
limited to, those relating to the general  expansion of the Company's  business.
Although we believe that our plans,  intentions  and  expectations  reflected in
these forward-looking  statements are reasonable,  we can give no assurance that
these plans, intentions or expectations will be achieved.


General
-------

     At September  29,  2007,  we (i)  operated 21 units,  (excluding  the adult
entertainment club referenced in (ii) below), 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; (ii) own but do
not operate one adult  entertainment club; and (iii) franchise an additional six
units,  consisting  of two  restaurants,  (one of  which  we  operate)  and four
combination   restaurants/package   liquor  stores.  The  table  below  provides
information  concerning  the type  (i.e.  restaurant,  package  liquor  store or
combination  restaurant/package  liquor  store) and ownership of the units (i.e.
whether  (i) we own 100% of the  unit;  (ii)  the  unit is  owned  by a  limited
partnership of which we are the sole general partner and/or have invested in; or
(iii) the unit is franchised by us), as of September 29, 2007 and as compared to
September 30, 2006 and October 1, 2005.  With the exception of one restaurant we
operate  under  the  name  "The  Whale's  Rib"  and in  which  we do not have an
ownership  interest,  all of the  restaurants  operate  under our  service  mark
"Flanigan's  Seafood Bar and Grill" and all of the package liquor stores operate
under our service mark "Big Daddy's Liquors".

                                 FISCAL   FISCAL  FISCAL
                                 YEAR     YEAR    YEAR     NOTE
                                 2007     2006    2005    NUMBER
TYPES OF UNITS
-------------------------------------------------------------------
Company Owned:
--------------
  Combination package liquor
    store and restaurant            4       4       4
  Restaurant only                   3       2       2     (1)
  Package liquor store only         5       5       5

Company Managed
---------------
 Restaurants Only:
 -----------------
  Limited partnerships              7       7       6     (2)
  Franchise                         1       1       1
  Unrelated Third Party             1       1      --     (3)

Company Owned Club:                 1       1       1
------------------
-------------------------------------------------------------------
TOTAL - Company

                                       5
<PAGE>

  Owned/Operated Units:            22      21      19

FRANCHISED - units                  6       7       7     (4) (5)
                                   --      --      --

Notes:

      (1) Includes a restaurant located in Lake Worth, Florida which we acquired
from a  franchisee  during the second  quarter of our fiscal year 2007 and which
commenced operating as a Company owned restaurant on March 4, 2007.

      (2) Includes a restaurant located in Pinecrest,  Florida which is owned by
a limited  partnership  in which we are the sole general  partner and own 39% of
the limited partnership interest which commenced operating on August 14, 2006.

      (3) This  represents  a  restaurant  named "The  Whale's  Rib"  located in
Deerfield  Beach,  Florida which we have managed since the second quarter of our
fiscal year 2006.

      (4) We operate a restaurant  located in Deerfield  Beach,  Florida for one
(1)  franchisee.  This  unit is  included  in the  table  both  as a  franchised
restaurant, as well as a restaurant operated by us.

      (5) Excludes a restaurant located in Lake Worth, Florida which we acquired
from a franchisee during the second quarter of our fiscal year 2007.

      With the exception of our combination package store and restaurant located
at 4 N. Federal Highway, Hallandale,  Florida, (Store #31), which is operated on
property owned by us, all of our package  liquor stores,  restaurants as well as
our adult entertainment club are operated on properties leased from unaffiliated
third parties.


History and Development of Our Business
---------------------------------------

      We were incorporated in Florida in 1959 and commenced operating as a chain
of small cocktail lounges and package liquor stores throughout South Florida. By
1970, we had  established a chain of "Big  Daddy's"  lounges and package  liquor
stores between Vero Beach and Homestead, Florida. From 1970 to 1979, we expanded
our package  liquor store and lounge  operations  throughout  Florida and opened
clubs in five other "Sun Belt"  states.  In 1975,  we  discontinued  most of our
package  store  operations  in  Florida  except  in the South  Florida  areas of
Miami-Dade,  Broward,  Palm Beach and Monroe  Counties.  In 1982 we expanded our
club operations into the  Philadelphia,  Pennsylvania area as general partner of
several limited  partnerships we organized.  In March 1985 we began  franchising
package  liquor stores and lounges in the South Florida area. See Note 10 to the
consolidated  financial  statements  and the  discussion of franchised  units on
pages 8 and 9.

      During our fiscal year 1987,  we began  renovating  our lounges to provide
full restaurant food service, and subsequently  renovated and added food service
to most of our lounges. Food sales currently represent approximately 81% and bar
sales approximately 19% of our total restaurant sales.

      Our package  liquor  stores  emphasize  high volume  business by providing
customers  with a wide variety of brand name and private  label  merchandise  at

                                       6
<PAGE>

discount prices. Our restaurants offer alcoholic beverages and full food service
with abundant portions and reasonable prices, served in a relaxed,  friendly and
casual atmosphere.

         We conduct  our  operations  directly  and  through a number of limited
partnerships and wholly owned  subsidiaries,  all of which are listed below. Our
subsidiaries and the limited partnerships,  (except for the limited partnership,
where we are not the general  partner,  which owns and operates  our  franchised
restaurant in Fort Lauderdale, Florida) are reported on a consolidated basis.

                                                  STATE OF          PERCENTAGE
               ENTITY                           ORGANIZATION           OWNED
               ------                           ------------           -----

Flanigan's Management Services, Inc.              Florida               100
Flanigan's Enterprises, Inc. of Georgia           Georgia               100
Flanigan's Enterprises, Inc. of Pa.             Pennsylvania            100
CIC Investors #13, Limited Partnership            Florida                39
CIC Investors #50, Limited Partnership            Florida                16
CIC Investors #55, Limited Partnership            Florida               100
CIC Investors #60, Limited Partnership            Florida                42
CIC Investors #65, Limited Partnership            Florida                26
CIC Investors #70, Limited Partnership            Florida                40
CIC Investors #75, Limited Partnership            Florida                12
CIC Investors #80, Limited Partnership            Florida                25
CIC Investors #95, Limited Partnership            Florida                28
Josar Investments, LLC                            Florida               100


Package Liquor Store Operations
-------------------------------

         Our package liquor stores  emphasize high volume  business by providing
customers with a wide  selection of brand name and private label  liquors,  beer
and wines while  offering  competitive  pricing by meeting the  published  sales
prices of our  competitors.  We provide  extensive sales training to our package
liquor  store  personnel.  The stores are open for  business six or seven days a
week from  9:00-10:00 a.m. to 9:00-10:00  p.m.,  depending upon demand and local
law.  Approximately  half of the  Company's  units  have  "night  windows"  with
extended evening hours.

                                       7
<PAGE>

         Company Owned Package  Liquor  Stores.  We own and operate nine package
         -------------------------------------
liquor  stores in the South  Florida area under the name "Big Daddy's  Liquors",
four of which are jointly operated with restaurants we own.

         Franchised  Package  Liquor  Stores.  We franchise  four package liquor
         -----------------------------------
stores in the South Florida area,  all of which are operated under the name "Big
Daddy's  Liquors"  and are jointly  operated  with our  franchisee's  restaurant
operations. Three of the four franchised package liquor stores are franchised to
members of the family of our Chairman of the Board,  officers and/or  directors.
We have not entered  into a franchise  arrangement  for either a package  liquor
store,  restaurant or combination package liquor store/restaurant since 1986 and
do not anticipate that we will do so in the foreseeable future.

         Generally, a franchise agreement with our franchisees for the operation
of a package  liquor store runs for the balance of the term of the  franchisee's
lease  for  the  business  premises,  extended  by  the  franchisee's  continued
occupancy of the business premises thereafter, whether by lease or ownership. In
exchange for our providing management and related services to the franchisee and
our granting the right to the  franchisee to use our service mark,  "Big Daddy's
Liquors",  franchisees of package liquor stores pay us weekly in arrears,  (i) a
royalty  equal to  approximately  1% of gross  sales;  plus (ii) an  amount  for
advertising equal to between 1-1/2% to 3% of gross sales generated at the stores
based on our actual advertising costs allocated between stores,  prorata,  based
upon gross sales.


         Restaurant Operations.
         ----------------------

         Our  restaurants  provide a neighborhood  casual,  standardized  dining
experience,  typical of restaurant chains. The interior decor of the restaurants
is nautical  with numerous  fishing and boating  pictures and  decorations.  The
restaurants  are  designed to permit  minor  modifications  without  significant
capital expenditures. However, from time to time we are required to redesign and
refurbish the  restaurants  at significant  cost.  Drink prices may vary between
locations to meet local conditions.  Food prices are substantially  standardized
for all restaurants.  The restaurants' hours of operation are from 11:00 a.m. to
1:00-5:00 a.m. depending upon demand and local law.

         Company Owned  Restaurants.  We own and operate seven  restaurants  all
         --------------------------
under our  service  mark  "Flanigan's  Seafood  Bar and Grill" four of which are
jointly operated with package liquor stores we own. We acquired one of the seven
restaurants  we own,  (the Lake Worth,  Florida  restaurant),  during the second
quarter of our fiscal year 2007 from a former franchisee who informed us that he
did not intend to continue operating the restaurant.

         Franchised  Restaurants.  We franchise  six  restaurants,  all of which
         -----------------------
operate under our service mark "Flanigan's  Seafood Bar and Grill", two of which
operate as a restaurant only and four of which operate jointly with a franchisee
operated "Big Daddy's Liquors" package liquor store.

         Generally, a franchise agreement with our franchisees for the operation
of a restaurant runs for the balance of the term of the  franchisee's  lease for
the business premises,  extended by the franchisee's  continued occupancy

                                       8
<PAGE>

of the business premises thereafter,  whether by lease or ownership. In exchange
for our providing  management  and related  services to the  franchisee  and our
granting  the  right to the  franchisee  to use our  service  mark,  "Flanigan's
Seafood Bar and Grill", our franchisees pay us weekly in arrears,  (i) a royalty
equal to  approximately  3% of gross sales;  plus (ii) an amount for advertising
equal to between 1-1/2% to 3% of gross sales from the  restaurants  based on our
actual  advertising  costs allocated between stores,  prorata,  based upon gross
sales.

         For  accounting  purposes,  we  do  not  consolidate  our  franchisees'
operations.  Franchise  royalties we receive are "earned" when sales are made by
franchisees.


Restaurants Owned by Affiliated Limited Partnerships
----------------------------------------------------

         We have invested with others,  (some of whom are or are affiliated with
our  officers  and  directors),  in nine  limited  partnerships  seven  of which
currently own and operate South Florida based restaurants under our service mark
"Flanigan's  Seafood  Bar and  Grill".  (The  Pembroke  Pines,  Florida  limited
partnership  restaurant  commenced  operating on October 29, 2007 and the Davie,
Florida limited  partnership  restaurant is expected to open for business during
the third  quarter  of our fiscal  year  2008.) In  addition  to being a limited
partner in these limited partnerships, we are the sole general partner of all of
these  limited  partnerships  and  manage  and  control  the  operations  of the
restaurants except for the restaurant located in Fort Lauderdale,  Florida where
we only hold a limited partnership interest.

         Generally, the terms of the limited partnership agreements provide that
until the investors'  cash  investment in a limited  partnership  (including any
cash invested by us) is returned in full, the limited partnership distributes to
the  investors  annually  out  of  available  cash  from  the  operation  of the
restaurant,  as a  return  of  capital,  up to 25% of the cash  invested  in the
limited  partnership,  with no management  fee paid to us. Any available cash in
excess of the 25% of the cash invested in the limited partnership distributed to
the investors  annually,  is paid one-half  (1/2) to us as a management  fee and
one-half  (1/2)  to the  investors,  (including  us),  prorata  based  upon  the
investors'  investment,  as a return  of  capital.  Once  all of the  investors,
(including us), have received, in full, amounts equal to their cash invested, an
annual  management  fee becomes  payable to us equal to  one-half  (1/2) of cash
available to be  distributed,  with the other one half (1/2) of  available  cash
distributed to the investors (including us), as a profit distribution,  pro-rata
based  upon  the  investors'  investment.  As of  September  29,  2007,  limited
partnerships owning three (3) restaurants have returned all cash invested and we
receive an annual  management  fee equal to one-half (1/2) of the cash available
for  distribution  by the  limited  partnership.  In  addition to our receipt of
distributable amounts from the limited  partnerships,  we receive a fee equal to
3% of gross  sales for use of our  "Flanigan's  Seafood  Bar and Grill"  service
mark,  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. We anticipate that we will continue to form limited  partnerships to
raise funds to own and operate  restaurants  under our service mark  "Flanigan's
Seafood  Bar and  Grill"  using  the  same or  substantially  similar  financial
arrangement.

         Below is  information  on the nine limited  partnerships  which own and
operate "Flanigan's Seafood Bar and Grill" restaurants:

                                       9
<PAGE>

Pinecrest, Florida

         We are the sole general partner and 39% limited partner in this limited
partnership  which has owned and operated a  restaurant  in  Pinecrest,  Florida
under our "Flanigan's Seafood Bar and Grill" service mark since August 14, 2006.
14.9% of the remaining limited partnership  interest is owned by persons who are
either our  officers,  directors or their family  members.  As of the end of our
fiscal  year 2007,  this  limited  partnership  has  returned  to its  investors
approximately 10% of their initial cash invested.

Fort Lauderdale, Florida

         A  corporation,  owned by one of our  directors,  acts as sole  general
partner of a limited  partnership  which has owned and operated a restaurant  in
Fort  Lauderdale,  Florida under our "Flanigan's  Seafood Bar and Grill" service
mark since  April 1, 1997.  We have a 25% limited  partnership  interest in this
limited  partnership.  57.6% 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 this limited partnership.

Surfside, Florida

         We are the sole  general  partner  and a 42%  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. 34.7% of the remaining  limited  partnership  interest is owned by persons
who are either our officers, directors or their family members. As of the end of
our fiscal year 2007, this limited partnership has returned to its investors all
of their initial cash invested.

Kendall, Florida

         We are the sole  general  partner  and a 40%  limited  partner  in this
limited  partnership  which has owned and  operated  a  restaurant  in  Kendall,
Florida under our "Flanigan's Seafood Bar and Grill" service mark since April 4,
2000. 29.5% of the remaining  limited  partnership  interest is owned by persons
who are either our officers, directors or their family members. As of the end of
our fiscal year 2007, this limited partnership has returned to its investors all
of their initial cash invested.

West Miami, Florida

         We are the sole  general  partner  and a 25%  limited  partner  in this
limited  partnership  which has owned and operated a  restaurant  in West Miami,
Florida under our "Flanigan's  Seafood Bar and Grill" service mark since October
11,  2001.  42.4% of the  remaining  limited  partnership  interest  is owned by
persons who are either our officers,  directors or their family  members.  As of
the end of our fiscal year 2007,  this limited  partnership  has returned to its
investors all of their initial cash invested.

                                       10
<PAGE>

Weston, Florida

         We are the sole  general  partner  and a 28%  limited  partner  in this
limited partnership which has owned and operated a restaurant in Weston, Florida
under our  "Flanigan's  Seafood Bar and Grill"  service  mark since  January 20,
2003. 34.3% of the remaining  limited  partnership  interest is owned by persons
who are either our officers, directors or their family members. As of the end of
our fiscal year 2007,  this limited  partnership  has returned to its  investors
approximately 64% of their initial cash invested.

Stuart, Florida

         We are the sole general partner and 12% limited partner in this limited
partnership  which has owned and  operated a  restaurant  in a Howard  Johnson's
Hotel in Stuart,  Florida under our  "Flanigan's  Seafood Bar and Grill" service
mark since January 11, 2004. 31.0% of the remaining limited partnership interest
is owned by persons  who are  either our  officers,  directors  or their  family
members.  As of the end of our fiscal year 2007,  this limited  partnership  has
returned to its investors  approximately  22.5% of their initial cash  invested.
During our fiscal year 2006,  the limited  partners of this limited  partnership
only  received  three (3) quarterly  distributions  due to the limited cash flow
generated by the restaurant.  During our fiscal year 2007, no distributions were
made to limited  partners as this limited  partnership had a net loss of $98,000
from the operation of the restaurant during the fiscal year before  depreciation
and  amortization  and owed us $203,000  in advances  made to meet its cash flow
needs.

Wellington, Florida

         We are the sole  general  partner  and a 26%  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. 25.1% of the remaining  limited  partnership  interest is owned by persons
who are either our officers, directors or their family members. As of the end of
our fiscal year 2007,  this limited  partnership  has returned to its  investors
approximately 37% of their initial cash invested.

Davie, Florida

         We are the sole general  partner and a 48% limited partner of a limited
partnership which on January 2, 2007, (when we were the sole general partner and
we and a wholly  owned  subsidiary  were the sole  limited  partners),  acquired
personal  property  assets and a leasehold  interest  of an existing  restaurant
operation  in  Davie,  Florida  for  $650,000,  which is  intended  to  commence
operations as a "Flanigan's  Seafood Bar and Grill"  restaurant during the third
quarter  of our fiscal  year 2008.  9.5% of the  remaining  limited  partnership
interest is owned by persons  who are either our  officers,  directors  or their
family members.

         We advanced to the limited  partnership  the entire  $650,000  purchase
price and have, in addition,  advanced to the limited partnership  approximately
$400,000 for expenses,  including  amounts for  renovations and upgrades at this
location.  The cost to  renovate  and equip this  location  for  operation  as a
"Flanigan's  Seafood Bar and Grill" restaurant has increased

                                       11
<PAGE>

substantially  from our original  estimates in December,  2005 due  primarily to
increases in  construction  costs and  equipment.  During the fourth  quarter of
fiscal year 2007, this limited  partnership  commenced and subsequent to the end
of fiscal  year 2007,  completed  its private  offering  of limited  partnership
interests,  raising gross proceeds of $3,875,000. The amounts we advanced to the
limited partnership  credited our obligation to pay for our equity investment in
the  limited  partnership  at the same  price as other  investors  who  acquired
limited partnership interests in the limited partnership.

Pembroke Pines, Florida

         We are the sole general  partner and a 16% limited partner in a limited
partnership  which on October 24, 2006,  (when we were the sole general  partner
and we and a wholly owned subsidiary were the sole limited  partners),  acquired
the assets and a  leasehold  interest  of an existing  restaurant  operation  in
Pembroke  Pines,  Florida  for a purchase  price of  $305,000,  which  commenced
operations  on  October  29,  2007  as a  "Flanigan's  Seafood  Bar  and  Grill"
restaurant.  17.7% of the  remaining  limited  partnership  interest is owned by
persons who are either our officers, directors or their family members.

         During the third quarter of fiscal year 2007,  the limited  partnership
completed its private offering, raising gross proceeds of $2,350,000 to complete
the  renovations and upgrades at the Pembroke Pines,  Florida  location.  We had
advanced to the limited  partnership the entire  $305,000  purchase price and in
addition,  had advanced to the limited  partnership  approximately  $375,000 for
expenses,  including  amounts for renovation and upgrades at this location.  The
amounts we advanced to the limited  partnership  credited our  obligation to pay
for our equity investment in the limited  partnership at the same price as other
investors who acquired limited partnership interests in the limited partnership.
The excess amounts advanced by us, (approximately  $300,000), were reimbursed to
us without interest from general working capital of the limited partnership.


Management Agreement for "The Whale's Rib" Restaurant
-----------------------------------------------------

         Since January, 2006, we have managed "The Whale's Rib", a casual dining
restaurant  located  in  Deerfield  Beach,  Florida,  pursuant  to a  management
agreement.  We  paid  $500,000  in  exchange  for  our  rights  to  manage  this
restaurant.  The restaurant is owned by a third party  unaffiliated  with us. In
exchange for providing management,  bookkeeping and related services, we receive
one-half (1/2) of the net profit,  if any, from the operation of the restaurant.
The term of the management  agreement,  which commenced  January 9, 2006, is for
ten (10)  years,  with four (4) five (5) year  renewal  options  in favor of the
owner of the  restaurant.  For our fiscal  years  ended  September  29, 2007 and
September 30, 2006, we generated $160,000 and $108,000 of revenue, respectively,
from providing these management services.

                                       12
<PAGE>

Adult Entertainment Club
------------------------

         We own, but do not operate, an adult entertainment nightclub located in
Atlanta,  Georgia  which  operates  under  the  name  "Mardi  Gras".  We  have a
management  agreement  with an  unaffiliated  third  party to  manage  the club.
Effective May 1, 2006, the unaffiliated third party that manages the club became
obligated  under a new lease for the business  premises  where the club operates
for a period of ten (10) years, with one (1) ten (10) year renewal option and as
of such date we are no longer  obligated  under the lease.  Under our management
agreement,  the unaffiliated  third party management firm is obligated to pay us
an annual  amount,  paid monthly,  equal to the greater of $150,000 or ten (10%)
percent of gross  sales from the club,  offset by  one-half  (1/2) of any rental
increases,  provided our fees will never be less than $150,000 per year. For our
fiscal years ended September 29, 2007 and September 30, 2006, we earned $203,000
and $224,000 of revenue, respectively, from the operation of the club.


Operations and Management
--------------------------

         We emphasize  systematic  operations  and control of all package liquor
stores and  restaurants  regardless  of whether we own,  franchise or manage the
unit. Each unit has its own manager who is responsible for monitoring  inventory
levels, supervising sales personnel, food preparation and service in restaurants
and  generally  assuring  that  the  unit is  managed  in  accordance  with  our
guidelines and procedures. We have in effect an incentive cash bonus program for
our  managers and  salespersons  based upon various  performance  criteria.  Our
operations are supervised by area supervisors.  Each area supervisor  supervises
the  operations  of the units within his or her territory and visits those units
to provide  on-site  management  and  support.  There are five area  supervisors
responsible for package liquor store, restaurant and club operations in specific
geographic districts.

         All of our  managers and  salespersons  receive  extensive  training in
sales techniques.  We arrange for independent third parties,  or "shoppers",  to
inspect  each unit in order to evaluate  the unit's  operations,  including  the
handling of cash transactions.


Purchasing and Inventory
------------------------

         The package liquor  business  requires a constant  substantial  capital
investment in inventory in the units. Our inventory consists primarily of liquor
and wine products and as such, does not become  excessive or obsolete that would
require  identifying and recording of the same.  Liquor inventory  purchased can
normally be returned only if defective or broken.

         All  of  our  purchases  of  liquor  inventory  are  made  through  our
purchasing  department  from our  corporate  headquarters.  The major portion of
inventory  is  purchased   under   individual   purchase  orders  with  licensed
wholesalers and distributors who deliver the merchandise  within one or two days
of the  placing  of an order.  Frequently  there is only one  wholesaler  in the
immediate  marketing  area with an exclusive  distributorship  of certain liquor
product  lines.  Substantially  all of our  liquor  inventory  is shipped by

                                       13
<PAGE>

the  wholesalers  or  distributors  directly  to our  stores.  We  significantly
increase our inventory  prior to Christmas,  New Year's Eve and other  holidays.
Under  Florida law, we are required to pay for our liquor  purchases  within ten
days of delivery.

         During  our fiscal  year  2006,  our Board of  Directors  approved  the
purchase of a new point of sale computer system, including surveillance cameras,
for  all of our  package  liquor  stores,  subject  to  management  testing  and
approving  the system prior to its  installation.  The testing was  successfully
completed  during the first quarter of our fiscal year 2008 and the installation
of the new system is  expected  to take place  during the second  quarter of our
fiscal year 2008.  Although we have not yet signed a contract  for the  purchase
and installation of the new point of sale package system,  the projected cost of
the new  point of sale  computer  system  is  approximately  $400,000,  of which
approximately  $90,000  has been paid to date for the  testing of the system and
purchase of new hand-held, wireless scanners.

         Negotiations  with  food  suppliers  are  conducted  by our  purchasing
department at our corporate headquarters.  We believe this ensures that the best
quality  and  prices  will be  available  to each  restaurant.  Orders  for food
products are prepared by each  restaurant's  kitchen manager and reviewed by the
restaurant's  general manager before orders are placed. Food is delivered by the
supplier directly to each restaurant.  Orders are placed several times a week to
ensure product freshness. Food inventory is primarily paid for monthly.


Government Regulation
---------------------

         Our  operations  are subject to various  federal,  state and local laws
affecting our business. In particular,  our operations are subject to regulation
by federal  agencies and to licensing and  regulation by state and local health,
sanitation,  alcoholic beverage control,  safety and fire department agencies in
the state or municipality where our units are located.

         Alcoholic beverage control  regulations require each of our restaurants
and package liquor stores to obtain a license to sell alcoholic beverages from a
state authority and in certain locations, county and municipal authorities.

         In Florida,  where all of our restaurants and package liquor stores are
located,  most of our liquor  licenses  are issued on a "quota  license"  basis.
Quota licenses are issued on the basis of a population  count  established  from
time to time under the latest  applicable  census.  Because the total  number of
liquor  licenses   available  under  a  quota  license  system  is  limited  and
restrictions  placed upon their transfer,  the licenses have purchase and resale
value  based upon  supply and demand in the  particular  areas in which they are
issued.  The quota  licenses  held by us allow the sale of liquor for on and off
premises  consumption.  In  Florida,  the other  liquor  licenses  held by us or
limited  partnerships of which we are the general partner are restaurant  liquor
licenses,  which do not have quota restrictions and no purchase or resale value.
A restaurant  liquor  license is issued to every  applicant who meets all of the
state and local licensing requirements, including, but not limited to zoning and
minimum  restaurant size,  seating and

                                       14
<PAGE>

menu. The restaurant  liquor licenses held by us allow the sale of liquor for on
premises consumption only.

         In the State of Georgia, where our adult entertainment club is located,
licensed  establishments  also do not have quota  restrictions  for  on-premises
consumption  and such  licenses are issued to any applicant who meets all of the
state and local licensing  requirements based upon extensive license application
filings and investigations of the applicant.

         All licenses  must be renewed  annually and may be revoked or suspended
for cause at any time. Suspension or revocation may result from violation by the
licensee  or its  employees  of any  federal,  state  or  local  law  regulation
pertaining to alcoholic beverage control. Alcoholic beverage control regulations
relate to  numerous  aspects of the daily  operations  of our units,  including,
minimum  age  of  patrons  and  employees,  hours  of  operations,  advertising,
wholesale  purchasing,  inventory control,  handling,  storage and dispensing of
alcoholic  beverages,  internal  control and  accounting and collection of state
alcoholic beverage taxes.

         As the sale of  alcoholic  beverages  constitutes  a large share of our
revenue,  the  failure to receive or retain,  or a delay in  obtaining  a liquor
license in a particular  location could adversely  affect our operations in that
location and could impair our ability to obtain licenses elsewhere.

         During our fiscal years 2007,  2006 and 2005,  no  significant  pending
matters  have been  initiated  concerning  any of our  licenses  which  might be
expected  to result in a  revocation  of a liquor  license or other  significant
actions against us.

         We are subject to "dram-shop" statutes due to our restaurant operations
and club  ownership.  These  statutes  generally  provide a person injured by an
intoxicated  person  the right to recover  damages  from an  establishment  that
wrongfully served alcoholic  beverages to the intoxicated  individual.  We carry
liquor  liability  coverage  as  part  of  our  existing  comprehensive  general
liability  insurance,  which we believe is consistent  with coverage  carried by
other entities in the restaurant industry. Although we are covered by insurance,
a judgment  against  us under a  dram-shop  statute  in excess of our  liability
coverage could have a material adverse effect on us.

         Our  operations  are also  subject to federal and state laws  governing
such  matters  as  wages,  working  conditions,   citizenship  requirements  and
overtime.  Some states,  including  Florida,  have set minimum wage requirements
higher than the federal level.  Significant  numbers of hourly  personnel at our
restaurants  are  paid  at  rates  related  to the  Florida  minimum  wage  and,
accordingly,  increases in the minimum wage will  increase  labor costs.  We are
also subject to the Americans With  Disability Act of 1990 (ADA),  which,  among
other  things,  may  require  certain  renovations  to our  restaurants  to meet
federally  mandated  requirements.  The  cost  of any  such  renovations  is not
expected to materially affect us.

         We are not aware of any statute,  ordinance,  rule or regulation  under
present  consideration  which would significantly limit or restrict our business
as now conducted.  However,  in view of the number of  jurisdictions in which we
conduct business, and the highly regulated nature of the liquor

                                       15
<PAGE>

business,  there can be no  assurance  that  additional  limitations  may not be
imposed in the future, even though none are presently anticipated.


General Liability Insurance
---------------------------

         We   have   general   liability    insurance   which   incorporates   a
semi-self-insured  plan under which we assume the full risk of the first $50,000
of exposure per occurrence,  while the limited partnerships assume the full risk
of the first  $10,000 of  exposure  per  occurrence.  Our  insurance  carrier is
responsible  for  $1,000,000  coverage  per  occurrence  above our  self-insured
deductible,  up to a maximum aggregate of $2,000,000 per year. During our fiscal
years 2005,  2006, and again in 2007 we were able to purchase  excess  liability
insurance  at a  reasonable  premium,  whereby our excess  insurance  carrier is
responsible  for  $6,000,000   coverage  above  our  primary  general  liability
insurance coverage.  With the exception of one (1) limited partnership which has
higher  general  liability  insurance  coverage  to comply with the terms of its
lease for the business  premises,  we are un-insured against liability claims in
excess of $7,000,000 per occurrence and in the aggregate.

         Our general  policy is to settle only those  legitimate  and reasonable
claims  asserted and to aggressively  defend and go to trial,  if necessary,  on
frivolous and unreasonable claims. We have established a select group of defense
attorneys  which we use in  conjunction  with this  program.  Under our  current
liability  insurance  policy,  any expense  incurred by us in defending a claim,
including adjusters and attorney's fees, are a part of the $50,000 retention.

         An  accrual  for our  estimated  liability  claims is  included  in the
consolidated  balance  sheets  in the  caption  "Accounts  payable  and  accrued
expenses". A significant unfavorable judgment or settlement against us in excess
of its liability  insurance  coverage could have a materially  adverse effect on
the Company.


Property Insurance; Windstorm Insurance; Deductibles
----------------------------------------------------

         For  the  policy  year  commencing  December  30,  2007,  our  property
insurance,  including  windstorm  insurance  coverage,  will  be with  the  same
insurance  carriers  and with the same  coverage as provided for the policy year
which  commenced  December 30, 2006.  Our insurance  expense for the policy year
commencing  December 30, 2007,  estimated at $434,000,  which includes insurance
coverage for our consolidated limited  partnerships,  decreased by approximately
$153,000, (26%), due primarily to decreases in windstorm insurance coverage.

         For the policy year which  commenced  December 30,  2006,  our property
insurance provided for full insurance  coverage for property losses,  other than
those caused by windstorm,  such as a hurricane. The losses caused by hurricanes
during the 2004 and 2005  hurricane  seasons  in South  Florida  made  windstorm
insurance  coverage  difficult to obtain and, where available,  expensive to the
point  that  full  windstorm   coverage  for  all  locations  was   economically
prohibitive.  For those locations east of I-95, windstorm insurance coverage was
only available  through the State of Florida  sponsored

                                       16
<PAGE>

insurance fund and then limited to $1,000,000 per building,  including  personal
property,  but without  business  interruption  insurance.  The State of Florida
sponsored  insurance fund had  deductibles of 3% per location,  per  occurrence.
Windstorm  coverage for  locations  west of I-95 was procured  through a private
insurance carrier,  including business  interruption  insurance,  which provided
coverage of $10,000,000  per occurrence and in the aggregate,  with "named storm
deductibles"  of 5% per location per  occurrence,  with a minimum  deductible of
$100,000  per  occurrence  and "other  windstorm  deductibles"  of $100,000  per
occurrence.  The  windstorm  policy  provided by the private  insurance  carrier
contained a limitation on recovery for roof  replacement,  with any roofs dating
prior to 2001 being covered for their actual replacement value, in lieu of their
replacement  cost.  We determined  that only two roofs at its locations  west of
I-95 for which it and/or its limited partnerships are responsible, pre-date 2001
so the exposure due to the roof replacement limitation was not significant.  The
private  insurance  policy also  provided  business  interruption  insurance for
locations east of I-95,  with a deductible of 5% per location,  per  occurrence,
for business interruption insurance, as well as windstorm insurance in excess of
the primary coverage provided through the State of Florida  sponsored  insurance
fund.  Management  believed  that the  windstorm  insurance  coverage  effective
December  30,  2006 would have  provided  adequate  insurance  coverage  for all
locations in the event of a hurricane,  but in the event that more than four (4)
locations  had  been  destroyed  by  a  hurricane,   thereby   requiring   total
reconstruction, the windstorm insurance coverage may have been inadequate and we
and/or the limited  partnership  may have had to bear the cost of any  uninsured
expenses,  which  may have had a  material  adverse  effect  upon the  financial
condition and/or results of operations of the Company. Our insurance expense for
the policy year commencing  December 30, 2006,  including insurance coverage for
our consolidated  limited  partnerships,  increased by  approximately  $345,000,
(141%), due primarily to increases in windstorm insurance  coverage.  During the
policy year  commencing  December 30,  2006,  neither we, nor any of our limited
partnerships, made a claim against our property insurance.

         For the policy year which commenced  December 30, 2005,  which included
windstorm  insurance  coverage  and was the third and final year of our (3) year
property insurance policy with our insurance carrier, the property insurance had
a deductible of $25,000 - $50,000 per location,  per occurrence.  In the event a
casualty,  such as a hurricane,  had impacted  every location  whereby  property
damage and business  interruption  claims reached or exceeded every  deductible,
then we and our limited  partnerships  would have faced a maximum  deductible of
$825,000.  During the policy year commencing  December 30, 2005, neither we, nor
any of our limited partnerships, made a claim against our property insurance.


Hurricane Wilma; Windstorm Claims
---------------------------------

         During our fiscal year 2006, we submitted  claims  totaling  $1,092,300
for damages and business interruption caused when Hurricane Wilma impacted South
Florida on October 24, 2005, (property insurance policy year commencing December
30,  2004).  During our fiscal  year 2007,  we settled  our claims  against  our
insurance  carrier for  $929,000,  ($979,000  less the $50,000  deductible).  In
connection  with this  settlement,  during our fiscal  year  2006,  we  received
advances  in the  aggregate  amount  of  $700,000,  ($750,000

                                       17
<PAGE>

less the $50,000  deductible),  from our insurance carrier and during our fiscal
year 2007 we received a final payment of $229,000.


Competition and the Company's Market
------------------------------------

         The liquor and  hospitality  industries are highly  competitive and are
often affected by changes in taste and entertainment trends among the public, by
local,  national and  economic  conditions  affecting  spending  habits,  and by
population  and  traffic  patterns.  We  believe  that  the  principal  means of
competition  among  package  liquor  stores is price and that,  in general,  the
principal means of competition among restaurants include the location,  type and
quality of  facilities  and the type,  quality  and price of  beverage  and food
served.

         Our package  liquor stores  compete  directly or indirectly  with local
retailers  and  discount  "superstores".  Due to the  competitive  nature of the
liquor  industry  in South  Florida,  we have had to adjust our  pricing to stay
competitive,  including meeting all competitors' advertisements.  Such practices
will  continue  in the  package  liquor  business.  We  believe  that  we have a
competitive position in our market because of widespread consumer recognition of
the "Big Daddy's" and "Flanigan's" names.

         We have many well-established  competitors, both nationally and locally
owned, with  substantially  greater financial  resources and a longer history of
operations  than  we  do.  Their  resources  and  market  presence  may  provide
advantages in marketing,  purchasing  and  negotiating  leases.  We compete with
other  restaurant  and retail  establishments  for sites and finding  management
personnel.

         Our  business is subject to  seasonal  effects,  including  that liquor
purchases tend to increase during the holiday seasons.


Trade Names
-----------

         We operate our package liquor stores and restaurants  under two service
marks;  "Big Daddy's  Liquors" and "Flanigan's  Seafood Bar and Grill",  both of
which are federally  registered  trademarks owned by us. Our right to the use of
the "Big Daddy's"  service mark is set forth under a consent decree of a Federal
Court  entered into by us in  settlement of federal  trademark  litigation.  The
consent decree and the settlement  agreement  allow us to continue to use and to
expand our use of the "Big Daddy's" service mark in connection with limited food
and liquor  sales in Florida,  while  restricting  the future sale of  distilled
spirits in Florida  under the "Big  Daddy's"  name by the other  party who has a
federally  registered  service  mark for  "Big  Daddy's"  use in the  restaurant
business. The Federal Court retained jurisdiction to enforce the consent decree.
We have acquired registered Federal trademarks on the principal register for our
"Flanigan's" and "Flanigan's Seafood Bar and Grill" service marks.

         The standard  symbolic  trademark  associated  with our  facilities and
operations  is the bearded face and head of "Big Daddy"  which is  predominantly
displayed  at all  "Flanigan's"  facilities  and all  "Big  Daddy's"  facilities

                                       18
<PAGE>

throughout  the  country.  The face  comprising  this  trademark  is that of the
Company's founder,  Joseph "Big Daddy" Flanigan,  and is a federally  registered
trademark owned by us.


Employees
---------

         As of our fiscal year end 2007,  we employed 950 persons,  of which 759
were  full-time  and 191 were  part-time.  Of  these,  44 were  employed  at our
corporate  offices  in   administrative   capacities  and  5  were  employed  in
maintenance.  Of the remaining  employees,  50 were  employed in package  liquor
stores and 851 in restaurants.

         None  of  our  employees  are  represented  by  collective   bargaining
organizations. We consider our labor relations to be favorable.


                      EXECUTIVE OFFICERS OF THE REGISTRANT

                        Positions and Offices              Office or Position
       Name                Currently Held           Age        Held Since
       ----             ---------------------       ---    ------------------

James G. Flanigan       Chairman of the Board        43            (1)
                        of Directors, Chief
                        Executive Officer and
                        President

August Bucci            Chief Operating Officer      63            2002
                        and Executive Vice
                        President

Jeffrey D. Kastner      Chief Financial Officer      54            (2)
                        General Counsel and
                        Secretary

Jean Picard             Vice President of            69            2002
                        Package Liquor Store
                        Operations

(1)   Chairman of the Board of Directors,  Chief  Executive  Officer since 2005;
      President since 2002.
(2)   Chief  Financial  Officer since 2005;  Secretary  since 1995;  and General
      Counsel since 1982.


Flanigan's 401(k) Plan
----------------------

         Effective July 1, 2004, we began  sponsoring a 401(k)  retirement  plan
covering substantially all employees who meet certain eligibility  requirements.
Employees may contribute  elective  deferrals to the plan up to amounts  allowed
under the Internal  Revenue  Code. We are not required to contribute to the plan
but may make discretionary profit sharing and/or matching contributions.  During
our fiscal years ended  September  29, 2007,  September  30, 2006 and October 1,
2005,  the Board of  Directors  approved

                                       19
<PAGE>

discretionary  matching  contributions  totaling  $29,000,  $12,000 and $37,500,
respectively.


Item 1A  Risk Factors
---------------------

         An investment in our common stock involves a high degree of risk. These
risks should be considered carefully with the uncertainties described below, and
all other  information  included  in this  Annual  Report on Form  10-K,  before
deciding   whether  to  purchase  our  common   stock.   Additional   risks  and
uncertainties  not currently  known to management or that  management  currently
deems immaterial may also become  important  factors that may harm our business,
financial  condition  or results or  operations.  The  occurrence  of any of the
following  risks could harm our  business,  financial  condition  and results of
operations.  The trading  price of our common stock could  decline due to any of
these risks and uncertainties and you may lose part or all of your investment.

         Certain statements in this report contain forward-looking  information.
In general,  forward-looking  statements  include  estimates of future revenues,
cash flows,  capital  expenditures,  or other  financial  items and  assumptions
underlying any of the foregoing. Forward-looking statements reflect management's
current expectations regarding future events and use words such as "anticipate",
"believe",   "expect",  "may",  "will"  and  other  similar  terminology.  These
statements  speak  only as of the date they  were  made and  involve a number of
risks and  uncertainties  that could cause actual  results to differ  materially
from those expressed in the forward-looking  statements.  Several factors,  many
beyond  our  control,  could  cause  actual  results to differ  materially  from
management's expectations.


Our Business Could Be Materially Adversely Affected If We Are Unable To
Expand In A Timely And Profitable Manner
----------------------------------------

         To grow  successfully,  we must open new  restaurants  on a timely  and
profitable basis. We have experienced delays in restaurant openings from time to
time and may experience  delays in the future.  During our fiscal year 2006, we,
as general  partner of the limited  partnerships  which own the Pembroke  Pines,
Florida  and  Davie,  Florida  restaurants,  submitted  building  plans  to  the
appropriate  governmental  agencies  for  building  permits and  expected,  at a
minimum,  to open these two (2) new restaurants during our fiscal year 2007. Due
to delays in the  permitting  process  and  construction,  the  Pembroke  Pines,
Florida  restaurant  only opened for business during the first quarter of fiscal
year 2008 and the Davie, Florida restaurant is not expected to open for business
before  the third  quarter  of our  fiscal  year  2008.  Increases  in labor and
building material costs increased the cost of planned  renovations to the Davie,
Florida restaurant by approximately $1,000,000.

         Our ability to open and profitably  operate  restaurants and/or package
liquor  stores  is  subject  to  various  risks  such  as   identification   and
availability of suitable and economically  viable locations,  the negotiation of
acceptable leases or the purchase terms of existing locations,  the availability
of limited partner investors or other means to raise capital,

                                       20
<PAGE>

the  need  to  obtain  all  required   governmental  permits  (including  zoning
approvals)  on a  timely  basis,  the  need  to  comply  with  other  regulatory
requirements, the availability of necessary contractors and subcontractors,  the
availability  of  construction   materials  and  labor,   the  ability  to  meet
construction  schedules and budgets,  variations in labor and building  material
costs, changes in weather or other acts of God that could result in construction
delays and  adversely  affect  the  results  of one or more  restaurants  and/or
package liquor stores for an  indeterminate  amount of time. If we are unable to
successfully  manage these risks,  we will face  increased  costs and lower than
anticipated  revenues  which will  materially  adversely  affect  our  business,
financial condition, operating results and cash flow.


General Economic Factors May Adversely Affect Results of Operations
-------------------------------------------------------------------

         National,  regional and local economic conditions, such as recessionary
economic cycles,  a protracted  economic  slowdown or a worsening  economy could
adversely affect disposable consumer income and consumer confidence. Unfavorable
changes in these factors or in other business and economic  condition  affecting
our customers  could reduce  customer  traffic in some or all of our restaurants
and/or package liquor stores,  impose  practical  limits on pricing and increase
costs, any of which could lower profit margins and have a material effect on our
results of operations.


Changes in Customer  Preferences for Casual Dining Styles Could Adversely Affect
Financial Performance
--------------------------------------------------------------------------------

         Changing customer preferences,  tastes and dietary habits can adversely
impact our  business  and  financial  performance.  We offer a large  variety of
entrees, side dishes and desserts and its continued success depends, in part, on
the  popularity  of our cuisine and casual  style of dining.  A change from this
dining style may have an adverse effect on our business.


Labor  Shortages,  an  Increase  in Labor  Costs,  or an  Inability  to  Attract
Employees Could Harm Our Business
-------------------------------------------------------------------------------

         Our employees and our ability to deliver an enjoyable dining experience
to our customers are  essential to our  operations.  If we are unable to attract
and retain enough qualified  restaurant and/or package liquor store personnel at
a reasonable  cost, and if they do not deliver an enjoyable  dining  experience,
our results may be negatively affected. Additionally,  competition for qualified
employees  could  require us to pay higher  wages,  which could result in higher
labor costs.


Increases in Employee  Minimum  Wages by the Federal or State  Government  Could
Adversely Affect Business
--------------------------------------------------------------------------------

         Certain of our Company  employees are paid wages that relate to federal
and state  minimum  wage rates.  Increases  in the minimum  wage rates,  such as
annual  cost of living  increases  in the State of  Florida  minimum  wage,  may

                                       21
<PAGE>

significantly  increase  our labor  costs.  In  addition,  since our business is
labor-intensive,  shortages  in the labor  pool or other  inflationary  pressure
could increase labor costs, which could harm our financial performance.


Fluctuations in Commodity Prices and Availability of Commodities Including Pork,
Beef, Fish, Poultry and Dairy Could Affect Our Business
--------------------------------------------------------------------------------

         A  significant  component of our costs are related to food  commodities
including  pork,  beef,  fish,  poultry  and  dairy  products.  If  there  is  a
substantial  increase in prices for these  products  and we are unable to offset
the  increases  with changes in menu  prices,  our results  could be  negatively
affected.


Due to Our Geographic  Locations,  Restaurants are Subject to Climate Conditions
that Could Affect Operations
--------------------------------------------------------------------------------

         All  but one (1) of our  restaurants  and  package  liquor  stores  are
located  in South  Florida,  with the  remaining  restaurant  located in Central
Florida.  During hurricane  season,  (June 1st through November 30th each year),
our restaurants  and/or package liquor stores may face harsh weather  associated
with hurricanes and tropical storms.  These harsh weather conditions may make it
more difficult for customers to visit our restaurants and package liquor stores,
or may  necessitate  the closure of the stores and  restaurants  for a period of
time. If customers are unable to visit our  restaurants  and/or  package  liquor
stores, our sales and operating results may be negatively affected.


Due to Our  Geographic  Locations,  We May  Not be  Able  to  Acquire  Windstorm
Insurance Coverage or Adequate Windstorm Insurance Coverage at a Reasonable Rate
-------------------------------------------------------------------------------

         Due to the anticipated active hurricane seasons in South Florida in the
future,  we may not be able to  acquire  windstorm  insurance  coverage  for our
restaurant and package liquor store locations on a year-to-year basis or may not
be able to get adequate windstorm  insurance coverage at reasonable rates. If we
are  unable  to  obtain  windstorm  insurance  coverage  or  adequate  windstorm
insurance  coverage at reasonable rates, then we will be self-insured for all or
a part of the  exposure  for  damages  caused  by a  hurricane  impacting  South
Florida,  which may have a material adverse effect upon our financial  condition
and/or results of operations.


Inability to Attract and Retain Customers Could Affect Results of Operations
----------------------------------------------------------------------------

         We take pride in our ability to attract and retain customers,  however,
if we do not deliver an enjoyable dining experience for our customers,  they may
not return and results may be negatively affected.

                                       22
<PAGE>

We May Face Liability Under Dram Shop Statutes
----------------------------------------------

         Our sale of alcoholic  beverages  subjects us to "dram shop"  statutes.
These statutes allow an injured person to recover damages from an  establishment
that  served  alcoholic  beverages  to an  intoxicated  person.  If we receive a
judgment  substantially  in excess of our insurance  coverage,  or if we fail to
maintain our insurance coverage,  our business,  financial condition,  operating
results or cash flows could be materially and adversely  affected.  We currently
have no "dram shop" claims. See "Item 1. Business--Government  Regulation" for a
discussion of the regulations with which we must comply.


We May Face Instances of Food Borne Illness
-------------------------------------------

         Recently, several nationally known restaurants experienced outbreaks of
food poisoning believed to be caused by E.coli contained in fresh spinach, which
is not  included  in any of the  items on our  menu.  In years  past,  Asian and
European  countries  experienced  outbreaks of avian flu. Incidents of "mad cow"
disease have occurred in Canadian and U.S. cattle herds.  These problems,  other
food-borne  illnesses  (such as,  hepatitis A,  trichinosis or  salmonella)  and
injuries  caused by food  tampering  have in the past,  and could in the future,
adversely  affect the price and  availability of affected  ingredients and cause
changes in consumer preference. As a result, our sales could decline.

         Instances of food-borne  illnesses,  real or perceived,  whether at our
restaurants or those of our competitors, could also result in negative publicity
about us or the restaurant  industry,  which could adversely affect sales. If we
react to negative  publicity  by  changing  our menu or other key aspects of the
dining  experience  we offer,  we may lose  customers  who do not  accept  those
changes  and may not be able to attract  enough  new  customers  to produce  the
revenue needed to make our restaurants profitable. If our guests become ill from
food-borne illnesses,  we could be forced to temporarily close some restaurants.
A  decrease  in guest  traffic  as a  result  of  health  concerns  or  negative
publicity,  or as a result  of a change in our menu or  dining  experience  or a
temporary closure of any of our restaurants, could materially harm our business.


We Face  Competition  in the  Restaurant  and Liquor  Industries,  and If We are
Unable to Compete  Effectively,  Our Business and Financial  Performance will be
Adversely Affected
--------------------------------------------------------------------------------

         The restaurant and liquor industries are intensely  competitive and are
affected  by changes in customer  tastes,  dietary  habits and by  economic  and
demographic trends. New menu items, concepts and trends are constantly emerging.
We compete on quality,  variety,  value, service,  price and location. If we are
unable to compete effectively,  our business, financial condition and results of
operations will be materially adversely affected.

                                       23
<PAGE>

Item 2. Properties
------------------

         Our  operations  are  conducted  primarily on leased  property with the
exception  of (i) our  corporate  headquarters,  which is conducted in an office
building  and the land upon which it is built,  which we  purchased in December,
1999 and have occupied since April 2001; and (ii) our combination restaurant and
package liquor store in Hallandale, Florida which operates in a building and the
land upon which it is built, which we purchased in July, 2006.

         All of our  units  require  periodic  refurbishing  in order to  remain
competitive.  We have budgeted $375,000 for our refurbishing  program for fiscal
year 2008. See Item 7,  "Liquidity and Capital  Resources" for discussion of the
amounts spent in fiscal year 2007.

         The following table  summarizes  information  related to the properties
upon which our operations are conducted:


                           Square             Franchised/
Name and Location          Footage   Seats    Owned by    Lease Terms
-----------------          -------   -----    --------    -----------

Big Daddy's Liquors #4     1,978      N/A     Company     3/1/02 to 2/28/27
Flanigan's Enterprises                                     and Options to
Inc. (6)                                                  2/28/47
7003 Taft Street
Hollywood, FL

Big Daddy's Liquors #7     1,450      N/A     Company     11/1/00 to 10/31/08
Flanigan's Enterprises                                     and Annual Options
Inc.                                                      to 10/31/15
1550 W. 84th Street
Hialeah, FL

Big Daddy's Liquors #8     1,942      N/A     Company     5/1/99 to 4/30/14
Flanigan's Enterprises
Inc.
959 State Road 84
Fort Lauderdale, FL

Flanigan's Seafood         4,300      130     Company     10/1/71 to 12/31/09
Bar and Grill #9                                           New lease 1/1/10
Flanigan's Enterprises                                     to 12/31/14
Inc.                                                       Options to
1550 W. 84th Street                                        12/31/24
Hialeah, FL

Flanigan's Legends         5,000      150     Franchise   1/4/00 to 1/3/20
Seafood Bar and Grill                                      Option to 1/3/25
#11, 11 Corporation (1)
330 Southern Blvd.
W. Palm Beach, FL

                                       24
<PAGE>

                           Square             Franchised/
Name and Location          Footage   Seats    Owned by    Lease Terms
-----------------          -------   -----    --------    -----------

Flanigan's Legends          5,000      180    Company     11/15/92 to
Seafood Bar and Grill                                      11/15/08
#12 Galeon Tavern, Inc.(11)                                Options to
2401 Tenth Ave. North                                      11/15/14
Lake Worth, FL

Flanigan's Seafood          3,320      90     Franchise   6/1/79 to 6/1/09
Bar and Grill #14,                                         Options to 6/1/19
Big Daddy's #14, Inc. (1)(2)(5)
2041 NE Second St.
Deerfield Beach, FL

Piranha Pats II-#15         4,000      90     Franchise/  3/2/76 to 8/31/11
CIC Investors #15 Ltd.(1)(2)                  Limited
1479 E. Commercial Blvd.                      Partnership
Ft. Lauderdale, FL

Flanigan's Seafood          4,300     100     Franchise   2/15/72 to 12/31/10
Bar and Grill #18                                          Options to
Twenty Seven Birds                                         12/31/20
Corp. (1)(2)
2721 Bird Avenue
Miami, FL

Flanigan's Seafood          4,500     160     Company     3/1/72 to 12/31/10
Bar and Grill #19                                          Options to 12/31/20
Flanigan's Enterprises
Inc.
2505 N. University Dr.
Hollywood, FL

Flanigan's Seafood          5,100     140     Company     7/15/68 to 12/31/08
Bar and Grill #20                                         Annual options
Flanigan's Enterprises                                    until the Company
Inc.                                                      fails to exercise
13205 Biscayne Blvd.                                      Additional Lease
North Miami, FL                                           5/1/69 to 12/31/08
                                                          Annual options
                                                          until the Company
                                                          fails to exercise

Flanigan's Seafood          4,100     200     Company     12/16/68 to
Bar and Grill #22                                         12/31/10
Flanigan's Enterprises                                    Options to 12/31/20
Inc.                                                      Option to purchase
2600 W. Davie Blvd.
Ft. Lauderdale, FL


                                       25
<PAGE>


                           Square             Franchised/
Name and Location          Footage   Seats    Owned by    Lease Terms
-----------------          -------   -----    --------    -----------

Flanigan's Seafood         4,600      150     Company     Company Owned
 Bar and Grill #31
Flanigan's Enterprises
Inc. (7)
4 N. Federal Highway
Hallandale, FL

Flanigan's Guppy's         4,620      130     Franchise   11/1/03 to 4/30/11
Seafood Bar and Grill #33
Guppies, Inc. (1)(2)
45 S. Federal Highway
Boca Raton, FL

Big Daddy's Liquors        3,000      N/A     Company     5/29/97 to 5/28/12
#34, Flanigan's                                           Option to 5/28/17
Enterprises, Inc.
9494 Harding Ave.
Surfside, FL

Flanigan's Seafood         4,600      140     Company     4/1/71 to 12/31/10
Bar and Grill #40                                        Options to 12/31/15
Flanigan's Enterprises
Inc.
5450 N. State Road 7
N. Lauderdale, FL

Piranha Pat's #43          4,500       90     Franchise   12/1/72 to 11/30/12
BD 43 Corporation (1)(2)                                  Option to 11/30/22
2500 E. Atlantic Blvd.
Pompano Beach, FL

Big Daddy's Liquors        6,000      N/A     Company     12/21/68 to 1/1/10
#47, Flanigan's                                           Options to 1/1/50
Enterprises, Inc. (3)
8600 Biscayne Blvd.
Miami, FL

Flanigan's Seafood         8,000      200     Limited     06/01/91 to 5/31/11
 Bar and Grill #13,                           Partnership  Options to 5/31/21
CIC Investors #13, Ltd
11415 S. Dixie Highway
Pinecrest, FL

Flanigan's Seafood         4,000      200     Limited     10/24/06 to 10/23/11
 Bar and Grill #50,                           Partnership  Options to 10/23/26
CIC investors #50,
Ltd.(8)
17185 Pines Boulevard
Pembroke Pines, FL

                                       26
<PAGE>

                           Square             Franchised/
Name and Location          Footage   Seats    Owned by     Lease Terms
-----------------          -------   -----    --------     -----------

Flanigan's Seafood         5,900      200     Limited       1/5/07 to 12/31/21
 Bar and Grill #55,                           Partnership  Options to 12/31/31
CIC Investors #55, Ltd.(9)
2190 S. University Drive
Davie, Florida

Flanigan's Seafood         6,800      200     Limited      8/1/97 to 12/31/11
 Bar and Grill #60,                           Partnership
CIC Investors #60 Ltd.
9516 Harding Avenue
Surfside, FL

Flanigan's Seafood         6,128      200     Limited      4/01/05 to 3/31/15
 Bar and Grill #65                            Partnership   Options to 3/31/25
CIC Investors #65, Ltd
2335 State Road 7,Suite 100
Wellington, FL

Flanigan's Seafood         4,850      161     Limited      4/1/98 to 4/30/10
 Bar and Grill #70                            Partnership   Options to 4/30/30
CIC Investors #70 Ltd.
12790 SW 88 St
Kendall, FL

Flanigan's Seafood         7,000      200     Limited      10/1/03 to 9/30/09
 Bar and Grill #75                            Partnership   Options to 9/30/27
CIC Investors # 75 Ltd.
950 S. Federal Highway
Stuart, FL 34994

Flanigan's Seafood         5,000      165     Limited      6/15/01 to 12/14/19
 Bar and Grill #80                            Partnership   Options to 12/14/39
CIC Investors #80 Ltd.
8695 N.W. 12th St
Miami, FL

Flanigan's Seafood         5,700      235     Limited      7/29/01 to 7/28/17
 Bar and Grill #95                            Partnership   Options to 7/28/32
CIC Investors #95 Ltd.
2460 Weston Road
Weston, FL

Mardi Gras                10,000      400     Company      4/30/06 to 4/30/16
Flanigan's Enterprises,                                     Option to 4/30/26
Inc., #600 (4)(10)
Powers Ferry Landing
Atlanta, GA

 (1)     Franchised by Company.

 (2)     Lease assigned to franchisee.

                                       27
<PAGE>

 (3)     We own 48% of the  underlying  leasehold  from the  unaffiliated  third
         parties to whom the lease had been assigned and subleased back.

 (4)     Location managed by an unaffiliated third party.

 (5)     Effective  December 1, 1998, we purchased the  Management  Agreement to
         operate the franchised restaurant for the franchisee.

 (6)     Ground lease  executed by us on September  25, 2001.  We  constructed a
         building of 4,120 square feet,  1,978 square feet is used by us for the
         operation of a package  liquor store and the other 2,142 square feet is
         subleased as retail space. The package liquor store opened for business
         on November 17, 2003.

 (7)     During the fourth  quarter of our fiscal year 2006,  we  purchased  the
         real  property and an  assignment  of a ground  lease of this  location
         pursuant to an option to purchase contained in the Sublease  Agreement.
         During the first quarter of our fiscal year 2007, we purchased the real
         property subject to the ground lease.

 (8)     Restaurant opened for business on October 29, 2007.

 (9)     Restaurant  estimated to open for business  during the third quarter of
         our fiscal year 2008.

(10)     During the third  quarter of our fiscal  year 2006,  our lease for this
         location expired. The unaffiliated third party entered into a new lease
         for the business premises effective May 1, 2006 and as of that date, we
         no longer have responsibility to pay any amounts under the lease.

(11)     Effective  March 4, 2007,  we  purchased  the assets of the  franchised
         restaurant from our franchisee.

         During the first quarter of our fiscal year 2007, we purchased the real
property and building where our combination  restaurant and package liquor store
located at 4 North Federal Highway, Hallandale, Florida (Store #31) operates. We
paid  $552,500  for the real  property,  which was  partially  financed  with an
advance of $250,000 on the mortgage  procured by us during the fourth quarter of
our fiscal year 2006 to purchase the limited  liability  company  which owns the
real  property  and the  ground  lease at this  location,  thereby  raising  the
principal  balance on such  mortgage to  $3,530,000.  The mortgage  amount bears
interest  at the rate of seven and  one-half  (7 1/2%)  percent  per  annum,  is
amortized  over  twenty  years with equal  monthly  payments  of  principal  and
interest,  each in the amount of $28,600 with the entire  principal  balance and
all accrued interest due in August 2013.

         During the third quarter of our fiscal year 2007, we purchased the real
property located  adjacent to the parking lot of our combination  restaurant and
package liquor store located at 4 North Federal  Highway,  Hallandale,  Florida,
(Store #31). A residence,  consisting  of  approximately  1,200 square feet,  is
located  upon the  property  and was leased to an  unaffiliated  third party who
vacated the residence during the fourth quarter of our fiscal year 2007. We paid
$600,000 for this property,  $450,000 of which we borrowed from an  unaffiliated
third party first  mortgagee.  The mortgage amount bears interest at the rate of
ten (10%)  percent  per annum,  is  amortized  over thirty (30) years with equal
monthly payments of principal and interest,  each in the

                                       28
<PAGE>

amount of $3,949, with the entire principal balance and all accrued interest due
in April 2017.

         During  the third  quarter of our  fiscal  year 2007,  we sold the real
property  located at 732 - 734 N.E.  125th Street,  North Miami,  Florida (Store
#27) and our rights under the liquor license for that location to the sublessee,
an unaffiliated third party for $780,000. We purchased this real property during
the first  quarter of our fiscal year 2007 for a purchase  price of $250,000 and
realized a gain of $393,000 from the sale.


Item 3. Legal Proceedings.
--------------------------

         From time to time,  we are a  defendant  in  litigation  arising in the
ordinary course of our business, including claims resulting from "slip and fall"
accidents,  claims  under  federal  and state  laws  governing  access to public
accommodations,  employment-related  claims  and  claims  from  guests  alleging
illness,  injury or other food quality, health or operational concerns. To date,
none of this  litigation,  some of  which is  covered  by  insurance,  has had a
material effect on us.

         We own the building where our corporate  offices are located.  On April
16, 2001,  we filed suit against the owner of the  adjacent  shopping  center to
determine our right to non-exclusive  parking in the shopping center. During the
second  quarter of our fiscal  year  2007,  the  appellate  court  affirmed  the
granting of a summary judgment in favor of the shopping center. During the third
quarter of our fiscal year 2007, the appellate  court,  upon  re-hearing,  again
affirmed the granting of a summary judgment in favor of the shopping center. The
seller from whom we  purchased  the real estate was named as a defendant  in the
lawsuit and is currently  asserting a claim against us for  reimbursement of its
attorneys' fees and costs resulting from the litigation.

      During  the first  quarter of our fiscal  year  2007,  we and the  limited
partnership  which owns the restaurant in Pinecrest,  Florida filed suit against
the limited  partnership's  landlord.  We are the sole general partner and a 39%
limited partner in this limited partnership.  We are seeking to recover the cost
of  structural  repairs to the business  premises we paid,  as we believe  these
structural  repairs  were the  landlord's  responsibility  under the lease.  The
lawsuit,  in addition to  attempting  to recover the amounts  expended by us for
structural  repairs is also  attempting  to recover the rent paid by the limited
partnership while the repairs were occurring.  The claim also includes a request
by the limited partnership for the court to determine if the limited partnership
has the  exclusive  right to the use of the pylon sign in front of the  business
premises.  The landlord filed its answer to the complaint  denying liability for
structural repairs to the business premises, denying any obligation to reimburse
the limited  partnership for any rent paid while structural repairs occurred and
denying the limited partnership's right to use the pylon sign. The lawsuit is in
the discovery stage.


Item 4. Submission of Matters to a Vote of Security Holders.
------------------------------------------------------------

         None.

                                       29
<PAGE>

                                     PART II
                                     -------

Item 5. Market for Registrant's  Common Equity,  Related Stockholder Matters and
Issuer Purchases of Equity Securities.
--------------------------------------------------------------------------------

         Our common stock is traded on the  American  Stock  Exchange  under the
symbol  "BDL".  As of the close of  business on December  26,  2007,  there were
approximately  351 holders of record of our common stock.  The  following  table
sets forth the high and low sales price of a share of our common  stock for each
quarter in our fiscal  years 2007 and 2006 as  reported  by the  American  Stock
Exchange:

                                    Fiscal 2007     Fiscal 2006
                                    -----------     -----------
                                    High    Low     High    Low
                                    ----    ---     ----    ---

First quarter                       11.75   8.91    10.55   9.38
Second quarter                      12.30  10.28    10.40   9.09
Third quarter                       12.00  10.17    11.29   9.45
Fourth quarter                      11.30   8.65    12.30   7.86

         On December 9, 2004,  we declared a cash dividend of 32 cents per share
payable on January 28, 2005 to shareholders of record on January 14, 2005.

         On January 13, 2006,  we declared a cash dividend of 35 cents per share
payable on February 15, 2006 to shareholders of record on January 31, 2006.

         We have  recently  determined  that we must retain any earnings for the
development and operation of our business and  accordingly,  we do not intend to
pay any cash dividends in the foreseeable future.


         Information  regarding  our  equity  compensation  plan(s) is set forth
under page F-27 of this report.


Item 6. Selected Financial Data.

         The following table sets forth selected historical financial data as of
and for our fiscal years 2007,  2006,  2005, 2004 and 2003 that has been derived
from,  and is  qualified  by reference  to, our audited  consolidated  financial
statements.  The information set forth below should be read in conjunction  with
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations and the Consolidated  Financial  Statements and related notes thereto
included elsewhere in this report.

                                       30
<PAGE>

(In thousands - except EPS)
---------------------------
-------------------------------------------------------------------------
              2007         2006         2005         2004         2003
-------------------------------------------------------------------------
                            Statement of Operations Data
-------------------------------------------------------------------------
Revenue      $61,101      $55,014      $49,032      $45,933      $40,253

-------------------------------------------------------------------------

Income from Operations

             $ 2,100      $ 1,638      $ 2,045      $ 1,273      $ 2,024

-------------------------------------------------------------------------

Net income   $ 1,267      $ 1,250      $ 1,107      $   440      $   888
-------------------------------------------------------------------------
Earnings per $  0.67      $  0.66      $  0.58      $  0.23      $  0.46
 share (basic)
-------------------------------------------------------------------------
                               Balance Sheet Data
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total assets $30,337      $27,398      $21,099      $19,774      $18,733
-------------------------------------------------------------------------
Long term liabilities
             $ 6,080      $ 5,181      $ 1,557      $ 1,217      $ 1,314
-------------------------------------------------------------------------
Net working capital
             $ 1,755      $ 1,396      $ 2,137      $ 2,131      $ 2,093
-------------------------------------------------------------------------
Stockholders' equity
             $12,084      $10,792      $10,273      $10,101      $10,351
-------------------------------------------------------------------------
Dividends declared
             $     0      $   658      $   609      $   581      $   520
-------------------------------------------------------------------------

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.
--------------------------------------------------------------------------------

         Except for the historical  information  contained herein, the following
discussion  contains  forward-looking  statements  that are subject to known and
unknown risks, uncertainties and other factors that may cause our actual results
to differ  materially  from those  expressed or implied by such  forward-looking
statements.  We discuss such risks,  uncertainties and other factors  throughout
this report and specifically under the captions Risk Factors.  In addition,  the
following  discussion and analysis  should be read in conjunction  with the 2007
Consolidated  Financial  Statements  and the related  Notes to the  Consolidated
Financial Statements included elsewhere in this report.


Overview
---------

Financial Information Concerning Industry Segments
--------------------------------------------------

         Our business is conducted  principally in two segments:  the restaurant
segment and the package liquor store segment.  Financial information broken into
these two principal industry segments for the three fiscal years ended

                                       31
<PAGE>

September  29, 2007,  September 30, 2006 and October 1, 2005 is set forth in the
consolidated financial statements which are attached hereto.

General
-------

         At September  29, 2007, we (i) operate 21 units,  (excluding  the adult
entertainment club referenced in (ii) below), 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; (ii) own but do
not operate one adult  entertainment club; and (iii) franchise an additional six
units,  consisting  of two  restaurants,  (one of  which  we  operate)  and four
combination restaurants/package liquor stores.

         Franchised Units. In exchange for our providing  management and related
services to our franchisees and granting them the right to use our service marks
"Flanigan's  Seafood Bar and Grill" and "Big Daddy's  Liquors",  our franchisees
(five of which are  franchised  to members of the family of our  Chairman of the
Board, officers and/or directors), are required to (i) pay to us a royalty equal
to 1% of gross package liquor sales and 3% of gross  restaurant  sales; and (ii)
make  advertising  expenditures  equal to between  1.5% to 3% of all gross sales
based upon our actual advertising costs allocated between stores, prorata, based
upon gross sales.

         Affiliated  Limited  Partnership Owned Units. We manage and control the
operations of the nine  restaurants  owned by limited  partnerships,  except the
Fort Lauderdale, Florida restaurant which is managed and controlled by a related
franchisee.  Accordingly,  the results of operations of all limited  partnership
owned   restaurants,   except  the  Fort  Lauderdale,   Florida  restaurant  are
consolidated with our results of operations for accounting purposes. The results
of operations of the Fort Lauderdale, Florida restaurant are accounted for by us
utilizing the equity method.


Results of Operations
---------------------

REVENUES (in thousands):
-----------------------------------------------------------------------------
                      Fifty Two         Fifty Two             Fifty Two
                     Weeks Ended       Weeks Ended           Weeks Ended
                    Sept. 29, 2007    Sept. 30, 2006        Oct. 1, 2005
Sales
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
Restaurant, food    $38,047   63.8%  $32,847   61.4%      $29,219   61.3%
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
Restaurant, bar       8,764   14.7%    7,610   14.2%        6,610   13.9%
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
Package goods        12,784   21.5%   13,046   24.4%       11,810   24.8%
-----------------------------------------------------------------------------

                                       32
<PAGE>

Total Sales         59,595   100.0%   53,503  100.0%       47,639  100.0%
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
Franchise revenues   1,134             1,114                  984
-----------------------------------------------------------------------------


-----------------------------------------------------------------------------
Owner's fee            203               224                  261
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
Other operating
  income               169               173                  148
-----------------------------------------------------------------------------


-----------------------------------------------------------------------------
Total Revenues     $61,101           $55,014              $49,032
-----------------------------------------------------------------------------


Comparison of Fiscal Years Ended September 29, 2007 and September 30, 2006
--------------------------------------------------------------------------

         Revenues.   Total  revenue  for  our  fiscal  year  2007  increased  by
$6,087,000  or 11.1% to  $61,101,000  from  $55,014,000  for  fiscal  year 2006.
Approximately  $5,820,000 or 95.6% of this increase resulted from sales from two
restaurant   locations  (the  Pinecrest,   Florida  limited   partnership  owned
restaurant  ($4,802,000)  and the Company owned Lake Worth,  Florida  restaurant
($1,018,000)).  The Pinecrest,  Florida restaurant opened for business on August
14, 2006 and the Lake Worth, Florida restaurant opened for business as a Company
owned  restaurant  on March 4,  2007.  Prior to March 4, 2007,  the Lake  Worth,
Florida  restaurant was  franchised by the Company and owned by an  unaffiliated
third party. To a lesser extent,  increased revenue is attributable to increased
menu prices.

         Restaurant Food Sales.  Restaurant  revenue  generated from the sale of
food at restaurants  totaled $38,047,000 for our fiscal year 2007 as compared to
$32,847,000  for our fiscal year 2006. The increase in restaurant  food sales is
due to sales from the Pinecrest,  Florida and Lake Worth,  Florida  restaurants.
Comparable  weekly  restaurant food sales (for  restaurants  open for all of our
fiscal year 2007 and our fiscal  year 2006,  which  consists of six  restaurants
owned by us and six restaurants  owned by affiliated  limited  partnerships) was
$638,000  and  $620,000  for our  fiscal  year 2007 and our  fiscal  year  2006,
respectively,  an increase of 2.9%.  Comparable weekly restaurant food sales for
Company  owned  restaurants  only was  $297,000 and $281,000 for our fiscal year
2007 and our fiscal year 2006,  respectively,  an  increase of 5.7%.  Comparable
weekly   restaurant  food  sales  for  affiliated   limited   partnership  owned
restaurants  only was  $341,000  and  $339,000  for our fiscal year 2007 and our
fiscal  year 2006,  respectively,  an  increase  of 0.59%.  We  anticipate  that
restaurant food sales will continue to increase through our fiscal year 2008 due
to, among other things, the opening of the Pembroke Pines,  Florida  restaurant,
(owned by an affiliated  limited  partnership),  during the first quarter of our
fiscal year 2008 and the

                                       33
<PAGE>

anticipated opening of the Davie,  Florida  restaurant,  (owned by an affiliated
limited partnership), during the third quarter of our fiscal year 2008.

         Restaurant  Bar Sales.  Restaurant  revenue  generated from the sale of
alcoholic  beverages at restaurants  totaled $8,764,000 for our fiscal year 2007
as compared to $7,610,000  for our fiscal year 2006.  The increase in restaurant
bar sales is due to sales from the  Pinecrest,  Florida and Lake Worth,  Florida
restaurants, as well as promotions introduced during our fiscal year 2005, which
continue to increase restaurant bar sales.  Comparable restaurant bar sales (for
restaurants open for all of our fiscal year 2007 and our fiscal year 2006, which
consists of six restaurants  owned by us and six restaurants owned by affiliated
limited partnerships) was $151,000 and $144,000 for our fiscal year 2007 and our
fiscal  year  2006,  respectively,   an  increase  of  4.9%.  Comparable  weekly
restaurant bar sales for Company owned  restaurants only was $66,000 and $62,000
for our fiscal year 2007 and our fiscal year 2006, respectively,  an increase of
6.5%.  Comparable weekly restaurant bar sales for affiliated limited partnership
owned  restaurants only was $85,000 and $82,000 for our fiscal year 2007 and our
fiscal  year  2006,  respectively,  an  increase  of 3.7%.  We  anticipate  that
restaurant bar sales will continue to increase  through our fiscal year 2008 due
to, among other things, the opening of the Pembroke Pines,  Florida  restaurant,
(owned by an affiliated  limited  partnership),  during the first quarter of our
fiscal year 2008 and the anticipated  opening of the Davie,  Florida restaurant,
(owned by an  affiliated  limited  partnership)  during the third quarter of our
fiscal year 2008.

         Package Liquor Store Sales.  Revenue generated from sales of liquor and
related items at package liquor stores totaled  $12,784,000  for our fiscal year
2007 as compared to $13,046,000  for our fiscal year 2006. The weekly average of
same store package  liquor store sales,  which now includes all nine (9) Company
owned package liquor  stores,  was $246,000 for our fiscal year 2007 as compared
to $251,000  for our fiscal  year 2006,  a decrease of 2.0%.  The  decrease  was
primarily  due to  increased  competition  and  package  liquor  store sales are
expected to decline through our fiscal year 2008. Increased  competition has had
a greater  adverse impact upon package  liquor store sales during  holidays when
customers  routinely make larger volume purchases,  which historically have been
more likely to occur during the first and second quarters of our fiscal year.

         Operating Costs and Expenses. Operating costs and expenses, (consisting
of cost of  merchandise  sold,  payroll and related costs,  occupancy  costs and
selling,  general  and  administrative  expenses),  for  our  fiscal  year  2007
increased  $5,625,000 or 10.5% to $59,001,000  from  $53,376,000  for our fiscal
year 2006. The increase was primarily due to expenses  related to the opening of
the  Pinecrest,  Florida and Lake  Worth,  Florida  restaurants  and to a lesser
extent a general  increase in food costs. We anticipate that our operating costs
and  expenses  will  continue to  increase  through our fiscal year 2008 due to,
among other things, the opening of the Pembroke Pines, Florida restaurant during
the first quarter of our fiscal year 2008 and the expected opening of the Davie,
Florida  restaurant during the third quarter of our fiscal year 2008.  Operating
costs  and  expenses  decreased  slightly  as a  percentage  of  total  sales to
approximately  96.6% in our fiscal year 2007 from 97.0% in our fiscal year 2006.
This decrease as a percentage  of sales was  primarily  due to increased  sales,
including menu price increases.

                                       34
<PAGE>

         Gross Profit.  Gross profit is calculated  by  subtracting  the cost of
merchandise sold from sales.

         Restaurant Food and Bar Sales.  Gross profit for food and bar sales for
our fiscal year 2007 increased to $30,653,000  from  $26,505,000  for our fiscal
year 2006. Our gross profit margin for restaurant food and bar sales (calculated
as gross profit reflected as a percentage of restaurant food and bar sales), was
65.5% for our fiscal  year 2007 and our fiscal year 2006.  The gross  profit for
restaurant  and bar sales for fiscal year 2007 remained  substantially  equal to
that of our fiscal year 2006 because overall increases in food costs were offset
by a  decrease  in the cost of ribs and menu price  increases  during our fiscal
year 2007.

         Package Liquor Store Sales. Gross profit for package liquor store sales
for our fiscal year 2007 decreased to $3,584,000  from $3,734,000 for our fiscal
year 2006. Our gross profit margin  (calculated  as gross profit  reflected as a
percentage  of package  liquor store  sales) for package  liquor store sales was
28.0% for our fiscal year 2007 and 28.6% for our fiscal year 2006. We anticipate
the gross  profit  margin for  package  liquor  store  sales to remain  constant
through our fiscal year 2008.

         Payroll and  Related  Costs.  Payroll and related  costs for our fiscal
year 2007 increased  $1,231,000 or 7.7% to $17,293,000  from $16,062,000 for our
fiscal  year  2006.  This  increase  is  attributable  to the  operation  of the
Pinecrest,  Florida and Lake Worth, Florida restaurants.  We anticipate that our
payroll and related costs will continue to increase through our fiscal year 2008
due  to,  among  other  things,  the  opening  of the  Pembroke  Pines,  Florida
restaurant  during the first  quarter of our fiscal  year 2008 and the  expected
opening of the Davie,  Florida restaurant during the third quarter of our fiscal
year 2008. Payroll and related costs as a percentage of total sales was 28.3% in
our fiscal year 2007 and 29.2% of total sales in our fiscal year 2006.

         Occupancy  Costs.  Occupancy  costs  (consisting  of rent,  common area
maintenance,   repairs,  real  property  taxes  and  amortization  of  leasehold
purchases)  for our fiscal year 2007  increased  $533,000 or 16.0% to $3,867,000
from  $3,334,000  for our fiscal year 2006.  This  increase is due to, (i) three
additional restaurant locations for a part of fiscal year 2007, (Pembroke Pines,
Florida  -  $125,000;  Davie,  Florida -  $138,000;  and Lake  Worth,  Florida -
$48,000) = $311,000;  and (ii)  increases in real property taxes and common area
maintenance, which generally includes a pro-rata share of property insurance for
units located within  shopping  centers.  We anticipate that our occupancy costs
will  continue to increase  through our fiscal year 2008 due to rental  payments
for the three additional restaurant locations,  (Pembroke Pines, Florida, Davie,
Florida and Lake Worth, Florida).

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative expenses (consisting of general corporate expenses, including but
not  limited  to  advertising,   insurance,  professional  costs,  clerical  and
administrative  overhead) for our fiscal year 2007 increased $1,767,000 or 16.5%
to $12,483,000 from $10,716,000 for our fiscal year 2006.  Selling,  general and
administrative  expenses  increased as a percentage of total sales in our fiscal
year 2007 to  approximately  20.4% as compared to 19.5% in our fiscal year 2006.
This increase is  attributable  to the operation of the  Pinecrest,  Florida and
Lake Worth,  Florida restaurants and an overall

                                       35
<PAGE>

increase  in  expenses,  including  but not limited to  property  and  windstorm
insurance  coverage and utilities.  We anticipate that our selling,  general and
administrative  expenses will continue to increase  through our fiscal year 2008
due  to,  among  other  things,  the  opening  of the  Pembroke  Pines,  Florida
restaurant  during the first  quarter of our fiscal  year 2008 and the  expected
opening of the Davie,  Florida restaurant during the third quarter of our fiscal
year 2008.

         Depreciation.  Depreciation for our fiscal year 2007 increased $255,000
or 15.1% to $1,949,000 from $1,694,000 for our fiscal year 2006. The increase in
depreciation  expense was due primarily to the increase in capital  expenditures
resulting  from  the  refurbishing  of  two  Company  owned  restaurants.  As  a
percentage of total sales,  depreciation expense was relatively  consistent over
both periods,  representing 3.2% of revenue for our fiscal year 2007 and 3.1% of
revenue for our fiscal year 2006.

         Other Income and  Expense.  Other income and expenses was an expense of
$35,000  for our fiscal  year 2007 as  compared  to income of  $674,000  for our
fiscal year 2006.  Other income and expense for fiscal year 2007 includes a gain
of $393,000 from the sale of real property and an interest  expense of $508,000,
as  compared to an interest  expense of $206,000  for our fiscal year 2006.  The
increase in interest  expense is primarily  due to the interest paid on our line
of credit and mortgage used to purchase the  Hallandale  property.  Other income
and  expense  for our  fiscal  year 2006  includes  insurance  recovery,  net of
casualty loss, of $666,000.

         Interest  Expense.  Interest expense for our fiscal year 2007 increased
$302,000 to $508,000 from  $206,000 for our fiscal year 2006.  This increase was
attributable  to  additional  expenses  incurred in  connection  with  mortgages
acquired  to  purchase  real  property in  Hallandale,  Florida  and  additional
borrowings under our line of credit.

         Net Income.  Net income for our fiscal year 2007  increased  $17,000 or
1.4% to $1,267,000  from $1,250,000 for our fiscal year 2006. As a percentage of
sales,  net income for our fiscal year 2007 is 2.1%,  as compared to 2.3% in our
fiscal year 2006. The decrease in net income as a percentage of sales (-0.2%) is
primarily due to higher food costs and overall expenses, including electric, gas
and real property taxes,  property and windstorm insurance coverage and interest
expense  due to our line of credit.  Our net income  during our fiscal year 2007
includes  a gain of  $393,000  from the sale of real  property.  Without  giving
effect to the sale of the real  property,  we would have generated net income of
$1,007,000  for our fiscal year 2007. Our net income during our fiscal year 2006
includes a gain of $554,000  relating to replacement cost insurance  proceeds in
excess  of net book  value of assets  destroyed.  Without  giving  effect to the
replacement  cost  insurance  proceeds  in  excess  of net book  value of assets
destroyed,  we would have  generated  net income of $876,000 for our fiscal year
2006.  Our net income was  affected  during our fiscal  year 2007 by higher food
costs and overall  expenses,  including  electric,  gas and real property taxes,
property  and  windstorm  insurance  coverage  and  interest  expense due to the
mortgage on our Hallandale property and our line of credit.

                                       36
<PAGE>

Comparison of Fiscal Years Ended September 30, 2006 and October 1, 2005
-----------------------------------------------------------------------

         Revenues.   Total  revenue  for  our  fiscal  year  2006  increased  by
$5,982,000 or 12.2% to $55,014,000  from  $49,032,000  for our fiscal year 2005.
Approximately  $4,152,000 or 69.4% of this increase resulted from sales from two
restaurant   locations  (the  Pinecrest,   Florida  limited   partnership  owned
restaurant  opening during the fourth quarter of our fiscal year 2006 ($728,000)
and the Wellington,  Florida limited partnership owned restaurant being open for
our entire fiscal year 2006 ($3,424,000)),  increases in same store sales and to
a lesser extent, increased menu prices. The Pinecrest, Florida restaurant opened
for business on August 14, 2006.

         Restaurant Food Sales.  Restaurant  revenue  generated from the sale of
food totaled $32,847,000 for our fiscal year 2006 as compared to $29,219,000 for
our fiscal year 2005. The increase in restaurant food sales is due to sales from
the Pinecrest,  Florida and Wellington,  Florida restaurants.  Comparable weekly
restaurant  food sales  (for  restaurants  open for all of fiscal  year 2006 and
fiscal  year  2005,  which  consists  of six  restaurants  owned  by us and five
restaurants owned by affiliated limited  partnerships) was $502,000 and $476,000
for our fiscal year 2006 and our fiscal year 2005, respectively,  an increase of
5.5%. Comparable weekly restaurant food sales for Company owned restaurants only
was  $281,000  and  $268,000  for our fiscal year 2006 and our fiscal year 2005,
respectively,  an increase of 4.9%.  Comparable weekly restaurant food sales for
affiliated limited  partnership owned restaurants only was $221,000 and $208,000
for our fiscal year 2006 and our fiscal year 2005, respectively,  an increase of
6.3%. The weekly average of same store  restaurant  food sales increased for our
fiscal year 2006 as compared to our fiscal year 2005 due to increased volume and
menu price increases.

         Restaurant  Bar Sales.  Revenue  generated  from the sale of  alcoholic
beverages at restaurants totaled $7,610,000 for our fiscal year 2006 as compared
to $6,610,000  for our fiscal year 2005. The increase in restaurant bar sales is
due to sales from the Pinecrest,  Florida and Wellington,  Florida  restaurants.
Comparable restaurant bar sales (for restaurants open for all of our fiscal year
2006 and our fiscal year 2005, which consists of six restaurants owned by us and
five  restaurants  owned by affiliated  limited  partnerships)  was $114,000 and
$106,000  for our fiscal  year 2006 and our fiscal year 2005,  respectively,  an
increase of 7.5%.  Comparable  weekly  restaurant  bar sales for  Company  owned
restaurants only was $62,000 and $57,000 for our fiscal year 2006 and our fiscal
year 2005,  respectively,  an increase of 8.8%. Comparable weekly restaurant bar
sales for affiliated limited  partnership owned restaurants only was $52,000 and
$49,000  for our fiscal  year 2006 and our fiscal  year 2005,  respectively,  an
increase of 6.1%. During our fiscal year 2006, we continued offering  promotions
at the bars only, during limited hours, which promotions began during our fiscal
year 2005. With this promotion, the increase in the weekly average of same store
restaurant  bar sales is  expected to  continue,  but  management  is careful to
preserve and continue promoting our perception as a family restaurant.

         Package Liquor Store Sales.  Revenue generated from sales of liquor and
related items at package liquor stores totaled  $13,046,000  for our fiscal year
2006 as compared to $11,810,000  for our fiscal year 2005. The weekly

                                       37
<PAGE>

average of same store  package  liquor  store sales was  $223,000 for our fiscal
year 2006 as  compared  to  $192,000  for our fiscal  year 2005,  an increase of
16.1%. The increase was primarily due to increased volume.

         Operating Costs and Expenses. Operating costs and expenses, (consisting
of cost of  merchandise  sold,  payroll and related costs,  occupancy  costs and
selling,  general  and  administrative  expenses),  for  our  fiscal  year  2006
increased  $6,389,000 or 13.6% to $53,376,000  from  $46,987,000  for our fiscal
year 2005. The increase was primarily due to expenses  related to the opening of
the Pinecrest,  Florida  restaurant during the fourth quarter of our fiscal year
2006, the Wellington,  Florida restaurant being open for our entire fiscal year,
increased  payroll and related costs,  as well as a general  increase in overall
expenses.  Operating costs and expenses increased as a percentage of total sales
to  approximately  97.0% in our fiscal  year 2006 from 95.8% in our fiscal  year
2005.  This  increase as a percentage  of sales was primarily due to higher food
costs and overall expenses.

         Gross Profit.  Gross profit is calculated  by  subtracting  the cost of
merchandise sold from sales.

         Restaurant Food and Bar Sales.  Gross profit for food and bar sales for
our fiscal year 2006 increased to $26,505,000  from  $23,327,000  for our fiscal
year 2005. Our gross profit margin  (calculated  as gross profit  reflected as a
percentage of sales),  for restaurant  food and bar sales increased to 65.5% for
our  fiscal  year 2006  compared  to 65.1% for our fiscal  year 2005.  We offset
increased  costs  during our fiscal year 2006 with menu price  increases,  which
resulted in an increased  gross profit margin for restaurant  food and bar sales
when  compared  to our fiscal year 2005.  Notwithstanding  the  increased  gross
profit  margin for  restaurant  food and bar sales  during our fiscal year 2006,
during the fourth  quarter of our fiscal year 2006 the gross  profit  margin for
restaurant  food and bar sales was 64.1%,  as  compared  to 66.0% for the fourth
quarter of our fiscal  year 2005.  The  decline of 1.9% in gross  profit  margin
contributed  to an  operating  loss of  $135,000  for the fourth  quarter of our
fiscal year 2006. Due to the decline in gross profit margin for restaurant  food
and bar  sales  during  the  fourth  quarter  of our  fiscal  year  2006 and the
expectation that costs will continue  increasing during our fiscal year 2007, we
instituted menu price increases during the first quarter of our fiscal year 2007
to restore and  maintain  our gross profit  margin for  restaurant  food and bar
sales.

         Package  Store  Sales.  Gross  profit for  package  store sales for our
fiscal year 2006  increased to $3,734,000  from  $3,374,000  for our fiscal year
2005.  Our gross  profit  margin  (calculated  as gross  profit  reflected  as a
percentage  of sales) for package store sales was 28.6% for our fiscal year 2006
and our fiscal year 2005.

         Payroll and  Related  Costs.  Payroll and related  costs for our fiscal
year 2006 increased  $2,426,000 or 17.8% to $16,062,000 from $13,636,000 for our
fiscal  year 2005.  This  increase  is  attributable  to the  opening of the new
restaurant in Pinecrest,  Florida  during the fourth quarter of our fiscal 2006,
the impact of the Florida  minimum wage which went into effect  during the third
quarter of our fiscal year 2005 and further impacted by its first annual cost of
living  increase  effective  January 1, 2006 and the  restaurant in  Wellington,
Florida being open for our entire fiscal year. Payroll and

                                       38
<PAGE>

related  costs as a  percentage  of total sales was 29.2% in our fiscal year
2006 and 27.8% of total sales in our fiscal year 2005.

         Occupancy  Costs.  Occupancy  costs  (consisting  of rent,  common area
maintenance,   repairs,  real  property  taxes  and  amortization  of  leasehold
purchases)  for our fiscal year 2006  increased  $358,000 or 12.0% to $3,334,000
from  $2,976,000  for our fiscal year 2005.  This increase is due to, (i) rental
payments at the Wellington,  Florida restaurant for our entire fiscal year; (ii)
the amortization of the leasehold  purchase for the Pinecrest,  Florida location
($22,000);   and  (iii)  increases  in  real  property  taxes  and  common  area
maintenance, which generally includes a pro-rata share of property insurance for
units located within shopping centers.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative expenses (consisting of general corporate expenses, including but
not  limited  to  advertising,   insurance,  professional  costs,  clerical  and
administrative  overhead) for our fiscal year 2006 increased $1,279,000 or 13.6%
to $10,716,000  from $9,437,000 for our fiscal year 2005.  Selling,  general and
administrative  expenses  increased as a percentage of total sales in our fiscal
year 2006 to  approximately  19.5% as compared to 19.2% in our fiscal year 2005.
This increase is attributable to the Pinecrest,  Florida  restaurant  during the
fourth quarter of our fiscal year 2006, the operation of the Wellington, Florida
restaurant for our entire fiscal year 2006 and an overall  increase in expenses,
including  but not limited to property  and  windstorm  insurance  coverage  and
utilities.

         Depreciation.  Depreciation for our fiscal year 2006 increased $274,000
or 19.3% to $1,694,000 from $1,420,000 for our fiscal year 2005. The increase in
depreciation  expense was due primarily to the increase in capital  expenditures
resulting  from  the  refurbishing  of  two  Company  owned  restaurants.  As  a
percentage of revenue,  depreciation expense was relatively consistent over both
periods,  representing  3.1% of  revenue  for our  fiscal  year 2006 and 2.9% of
revenue for our fiscal year 2005.

         Other  Income and  Expense.  Other  income and  expenses  was income of
$674,000  for our fiscal  year 2006 and $8,000 for our fiscal  year 2005.  Other
income and expense for our fiscal year 2006 includes insurance recovery,  net of
casualty  loss, of $666,000 which includes the deletion of the net book value of
property  and  equipment  as a result of Hurricane  Wilma  ($64,000),  repair of
damage ($138,000) and food waste ($61,000), caused by Hurricane Wilma, offset by
insurance recoveries of $929,000, ($979,000 less a $50,000 deductible), from our
insurance carrier.

         Interest  Expense.  Interest expense for our fiscal year 2006 increased
$90,000 to $206,000  from  $116,000 for our fiscal year 2005.  This increase was
attributable to additional expenses incurred in connection with borrowings under
our line of credit.

         Net Income.  Net income for our fiscal year 2006 increased  $143,000 or
12.9% to $1,250,000 from $1,107,000 for our fiscal year 2005. As a percentage of
sales,  net  income for both our  fiscal  year 2006 and our fiscal  year 2005 is
2.3%.  Our net income  during our fiscal  year 2006  includes a gain of $554,000
relating to replacement  cost insurance  proceeds in excess of net book value of
assets  destroyed.  Without  giving  effect to the  replacement

                                       39
<PAGE>

cost  insurance  proceeds  in excess of net book value of assets  destroyed,  we
would have generated net income of $876,000 for our fiscal year 2006. Net income
as a percentage of sales remained  constant because  increased sales,  including
menu price  increases,  were offset by higher  food costs and overall  expenses,
including  electric,  gas  and  real  property  taxes,  property  and  windstorm
insurance coverage and interest expense due to our line of credit.


New Limited Partnership Restaurants
-----------------------------------

         The limited  partnership  owned  restaurant  located in Pembroke Pines,
Florida  opened  for  business  subsequent  to the end of our  fiscal  year 2007
(October  29,  2007)  and we  anticipate  that  the  limited  partnership  owned
restaurant  located in Davie,  Florida will open for  business  during the third
quarter of our fiscal  year  2008.  As new  restaurants  open,  our income  from
operations will be adversely  affected due to our obligation to fund pre-opening
costs,  including  but not limited to  pre-opening  rent for the new  locations.
During our fiscal year 2007,  we  recognized  non-cash  pre-opening  rent in the
approximate  amount of  $18,000  and  recognized  cash  pre-opening  rent in the
approximate  amount of $119,000 for the recently opened Pembroke Pines,  Florida
restaurant.  During our fiscal year 2007, we also paid and expensed  pre-opening
rent in the  approximate  amount of $104,000 for the currently  unopened  Davie,
Florida  restaurant,  which is the full rent  provided in the lease.  During our
fiscal  year 2006,  we paid and  expensed  pre-opening  rent for the  Pinecrest,
Florida  restaurant,  in the approximate amount of $153,000,  which was the full
rent provided in the lease.  During our fiscal year 2005, we recognized non-cash
pre-opening  rent, in the  approximate  amount of $136,000 and  recognized  cash
pre-opening  rent in the  approximate  amount  of  $18,000  for the  Wellington,
Florida  restaurant.  We are  recognizing  rent expense on a straight line basis
over the term of the lease.

         Through our fiscal year 2008,  income from operations will be adversely
affected by pre-opening costs, including but not limited to pre-opening rent, to
be incurred  for the Pembroke  Pines,  Florida and Davie,  Florida  restaurants.
Management  believes that the Company's  current cash availability from its line
of  credit  and  expected  cash  from  operations  will  be  sufficient  to fund
operations and capital expenditures for at least the next twelve months.

         During our fiscal year 2007,  the limited  partnership  restaurants  in
Pembroke  Pines,  Florida and Davie,  Florida  reported  losses of $341,000  and
$174,000, respectively, primarily due to pre-opening costs, thus contributing to
a reduction in the operating income for our fiscal year 2007.  During our fiscal
year 2006, the limited partnership  restaurant in Pinecrest,  Florida reported a
loss of $337,000  primarily due to pre-opening  costs,  thus  contributing  to a
reduction in the  operating  income for our fiscal year 2006.  During our fiscal
year 2005, the limited partnership restaurant in Wellington,  Florida reported a
loss of $416,000  primarily due to pre-opening  costs,  thus  contributing  to a
reduction in the operating income for our fiscal year 2005.

                                       40
<PAGE>

Trends
------

         During  the next  twelve  months,  we  expect  continued  increases  in
restaurant  sales due primarily to the  restaurants  in Lake Worth,  Florida and
Pembroke  Pines,  Florida  being open for the entire twelve month period and the
anticipated  opening  of the  new  restaurant  in  Davie,  Florida.  Same  store
restaurant food and bar sales are expected to decline over the next twelve month
period,  with decreases  primarily in restaurants in Palm Beach County,  Florida
and to a lesser extent in Broward County, Florida, offset partially by increases
in same store restaurant food and bar sales in Miami-Dade County,  Florida,  due
to our strong name  recognition  in that county.  Package liquor store sales are
expected to decrease due  primarily to increased  competition.  Management  also
expects higher food costs and overall expenses to increase.  In December,  2006,
we raised menu prices to offset the higher food costs and overall  expenses.  In
December  2007,  we again  raised  menu  prices to offset  higher food costs and
overall  expenses  and will  continue to do so whenever  necessary  and wherever
competitively possible.

         We continue to search for new locations to open restaurants and thereby
expand our business, using our limited partnership ownership model.

         We are not actively  searching  for  locations for the operation of new
package liquor stores, but if an appropriate location for a package liquor store
becomes available, we will consider it.

Liquidity and Capital Resources
-------------------------------

Cash Flows
----------

-----------------------------------------------------------------------------
                                              Fiscal Years
-----------------------------------------------------------------------------
                                 2007              2006               2005
----------------------------------------------------------------------------
                                             (in thousands)
-----------------------------------------------------------------------------
Net cash provided by
operating activities            $2,138            $2,080             $2,664
-----------------------------------------------------------------------------
Net cash used in
investing activities            (2,761)           (3,594)            (2,054)
-----------------------------------------------------------------------------
Net cash provided by (used in)
financing activities             1,148               538               (872)
-----------------------------------------------------------------------------
Net increase (decrease)
in cash and equivalents            525              (976)              (262)
-----------------------------------------------------------------------------

Cash and equivalents,
beginning of year                1,698             2,674              2,936

-----------------------------------------------------------------------------
Cash and equivalents,
end of year                     $2,223            $1,698             $2,674
-----------------------------------------------------------------------------

                                       41
<PAGE>

Liquidity and Capital Resources
-------------------------------

         We fund our operations through cash from operations and borrowings from
our line of credit.  As of  September  29,  2007,  we had cash of  approximately
$2,223,000,  an increase of $525,000  from our cash balance of  $1,698,000 as of
September  30, 2006 and a decrease of $451,000  from our cash balance of October
1, 2005.  The increase in cash as of September 29, 2007 was due primarily to our
sale for cash of real  property  resulting in $763,000 of net proceeds to us and
our receipt of  approximately  $300,000 as reimbursement of expenses we advanced
to the limited partnership which owns the recently opened restaurant in Pembroke
Pines, Florida.


Capital Expenditures
--------------------

         In addition to using cash for our  operating  expenses,  we use cash to
fund the development and construction of new restaurants and secondarily to fund
capitalized  property  improvement  for our  existing  restaurants.  We acquired
property and equipment of $4,886,000 (of which $700,000 was financed) during our
fiscal year 2007,  which  included  $1,402,500 for the purchase of real property
and $615,000 for renovations to three (3) existing Company owned restaurants, as
compared to $7,721,000,  (of which  $3,350,000 was financed),  during our fiscal
year 2006,  which  included  $531,000  as a direct  result of damages  caused by
Hurricane  Wilma  and  $601,000  for  the  acquisition  of  a  subsidiary,   and
$2,397,000,  (of which $302,000 was financed),  during our fiscal year 2005. The
additions  to fixed  assets  during our fiscal  year 2007  included  most of the
renovations to the business premises of the Pembroke Pines,  Florida  restaurant
and the  purchase of leasehold  interests of our Lake Worth,  Florida , Pembroke
Pines,  Florida and Davie,  Florida  restaurants.  The additions to fixed assets
during our fiscal year 2006  included  most of the  renovations  to the business
premises of the Pinecrest,  Florida  restaurant and the purchase of a subsidiary
for $3,862,500,  while the additions to fixed assets during our fiscal year 2005
included most of the  renovations  to the business  premises of the  Wellington,
Florida restaurant and the purchase of a vehicle for $302,000.

         In  addition,  during our  fiscal  year 2007,  we  purchased  leasehold
interests for the Pembroke Pines, Florida ($305,000),  Davie, Florida ($650,000)
and  Lake  Worth,  Florida  ($45,000)  locations,  the  cost of  which  is being
amortized  as  additional  rent over the life of the lease.  The purchase of the
leasehold  interest for the Lake Worth,  Florida location  occurred as a part of
the purchase of the franchise restaurant.

         All of our owned units require periodic refurbishing in order to remain
competitive.  The  cost  of this  refurbishment  in our  fiscal  year  2007  was
$684,000.  We anticipate the cost of this  refurbishment in our fiscal year 2008
will be approximately $375,000, which funds will be provided from operations. In
addition,  we also  anticipate  that  during our fiscal  year 2008,  the limited
partnership which owns the Davie, Florida restaurant will require  approximately
$3,225,000 in capital  expenditures  to complete its renovations and preparation
for opening as a "Flanigan's  Seafood Bar and Grill" restaurant.  The funds were
raised through a private  offering which commenced  during the fourth quarter of
our fiscal year 2007 and was completed  subsequent to the end of our fiscal year
2007,  raising  the  sum of  $3,875,000,  of  which  $1,850,000  represents  our
investment in the same. We did not advance any funds to this limited partnership
in excess of our investment in the same.

                                       42
<PAGE>

Contractual Cash Obligations
----------------------------

                           Less Than     1-5      After
                    Total    1 Year     Years    5 Years
                   -------   -------   -------   -------

Long-term debt     $ 6,080   $   196   $ 1,676   $ 4,208
Operating leases    16,225     2,501     8,389     5,335
Rib Contract         3,200     3,200        --        --
                   -------   -------   -------   -------

Total              $25,505   $ 5,897   $10,065   $ 9,543
                   =======   =======   =======   =======

The table also does not include any lease guarantees for franchisees.


Purchase Commitments
--------------------

         In order to fix the cost and ensure  adequate  supply of baby back ribs
for our  restaurants,  effective  November 20, 2007,  we entered into a purchase
agreement  with our rib  supplier,  whereby we agreed to purchase  approximately
$3,200,000  of baby back ribs  during  calendar  year 2008 from this vendor at a
fixed  cost.  While we  anticipate  purchasing  all of our rib supply  from this
vendor, we believe there are several other  alternative  vendors  available,  if
needed.


Purchase of Company Common Stock
--------------------------------

         Pursuant to a  discretionary  plan  approved by our Board of Directors,
during our fiscal year 2007 we purchased 3,332 shares of our common stock for an
aggregate purchase price of $36,000. Of the shares purchased,  2,500 shares were
purchased from August Bucci, our Chief Operating Officer and Director, in an off
the market private transaction, at an aggregate purchase price of $28,000, which
reflected an actual per share purchase price which was less than the closing per
share  market  price on the date of  purchase.  During our fiscal year 2006,  we
purchased  14,350 shares of our common stock for an aggregate  purchase price of
$139,000. Of the shares purchased, 7,500 shares were purchased from Mr. Bucci in
an off the  market  private  transaction,  at an  aggregate  purchase  price  of
$77,000,  which reflected an actual per share purchase price which was less than
the closing per share market price on the date of each purchase.


Long Term Debt
--------------

         As of the  end  of our  fiscal  year  2007,  we  had  long  term  debt,
(including  our line of credit),  of  $6,080,000,  as compared to $5,181,000 and
$1,557,000  as of the end of our  fiscal  year 2006 and our  fiscal  year  2005,
respectively.  The net  increase  in long term debt as of the end of our  fiscal
year 2007 is attributed to the following:

         (i) our April 2007  borrowing  in exchange  for a mortgage  note in the
principal  amount  of  $450,000  from an  unaffiliated  third  party  lender  in
connection  with our  purchase  of the real  property  located  adjacent  to the
parking lot of our combination  restaurant and package liquor store located at 4
North Federal Highway, Hallandale, Florida. Our repayment obligations

                                       43
<PAGE>

under this  mortgage  note are secured by a first  mortgage on the real property
purchased. The mortgage note bears interest at the rate of ten (10%) percent per
annum,  is  amortized  over  thirty  (30) years with equal  monthly  payments of
principal and interest,  each in the amount of $3,949, with the entire principal
balance and all accrued interest due in ten (10) years;

         (ii) our  December  2006  borrowing  of  $250,000  as an advance on the
mortgage note procured by us to purchase the membership  interest of the limited
liability  company  which  owns  the  real  property  and  ground  lease  at our
combination restaurant and package liquor store located at 4 N. Federal Highway,
Hallandale,  Florida  (Store #31).  The mortgage  bears  interest at the rate of
seven and one-half (7 1/2%)  percent per annum,  is  amortized  over twenty (20)
years with equal monthly payments of principal and interest,  each in the amount
of $28,600,  with the entire  principal  balance and all accrued interest due on
its original maturity date in seven (7) years; and

         (iii) our  December  2006  borrowing  in the  principal  amount of $1.0
million,  in exchange for a mortgage  note we delivered in  connection  with our
re-financing an existing  mortgage note encumbering the real property upon which
our corporate  offices are located.  The mortgage  bears interest at the rate of
7.25% per annum, is amortized over twenty (20) years with equal monthly payments
of  principal  and  interest,  each in the  amount of  $8,000,  with the  entire
principal balance and all accrued interest due in seven (7) years. We incurred a
pre-payment expense of $17,000 when we re-financed.

         As of the end of our fiscal year 2007, the amount outstanding under our
line of credit from an unaffiliated  financial institution was $962,000.  During
our  fiscal  year 2007,  we  increased  our line of credit  from  $2,000,000  to
$2,650,000.  The  outstanding  balance on our line of credit  bears  interest at
prime rate,  with  monthly  payments of interest  only and the unpaid  principal
balance and all accrued  interest due in full on December  26, 2008.  We granted
our lender a second mortgage on our corporate offices as additional  collateral,
(in  addition to a security  interest in  substantially  all of our assets which
continue to be collateral to secure our repayment  obligations  under our credit
line), for the increase in the line of credit ($650,000).

         We repaid long term debt,  including  auto loans and  mortgages  in the
amount of $213,000,  $489,000  and  $309,000 in our fiscal years 2007,  2006 and
2005 respectively.

         We also repaid our line of credit in the amount of $1,000,000  and $-0-
in our fiscal  years 2006 and 2005  respectively.  Subsequent  to the end of our
fiscal year 2007, we borrowed  $600,000 on our line of credit to pay the balance
of the  purchase  price  for  our  limited  partnership  units  in  the  limited
partnership which owns the Davie, Florida location.


Working capital
---------------

         The table below summarizes our current assets,  current liabilities and
working capital for our fiscal years 2007, 2006 and 2005:

                                       44
<PAGE>



                            Sept. 29        Sept. 30       Oct. 1
(in thousands)                2007            2006           2005

Current assets               $6,322          $6,315         $6,091

Current liabilities           4,567           4,919          3,954

Working capital               1,755           1,396          2,137

         Working capital as of September 29, 2007 increased by $359,000 or 25.7%
from working capital as of September 30, 2006 and decreased by $382,000 or 17.9%
from working capital as of October 1, 2005. Our working capital  improved during
our fiscal year 2007 when the limited partnership which owns the Pembroke Pines,
Florida  restaurant   completed  its  private  offering,   raising  the  sum  of
$2,350,000.  The funds  from the  private  offering  were used to  reimburse  us
$300,000  for  advances  we  made to the  limited  partnership  for  pre-opening
expenses in excess of out investment in the same, to complete the renovations to
the business  premises for  operation  of a  "Flanigan's  Seafood Bar and Grill"
restaurant  and provide  working  capital.  In addition,  during our fiscal year
2007, we sold the real property  located at 732 - 734 N.E.  125th Street,  North
Miami, Florida for $780,000,  which further improved our working capital. On the
other  hand,  our  working  capital  during our fiscal  year 2007 was  adversely
affected by advances  made by us to the  limited  partnership  owning the Davie,
Florida  location,  ($1,085,000),  all of which ultimately  became a part of our
investment in the same subsequent to the end of our fiscal year 2007.

         Working capital as of September 30, 2006,  which was  supplemented by a
draw of  $762,000  against  our line of credit,  was  adversely  affected by the
purchase of the  management  agreement  to operate the  restaurant  in Deerfield
Beach, Florida ($500,000);  investment in the limited partnership which owns the
restaurant  in  Pinecrest,  Florida  ($1,295,000);   and  the  purchase  of  the
membership  interest  of the  limited  liability  company  which  owns  the real
property  and ground  lease to a small  portion of property  of our  combination
restaurant and package liquor store located at 4 N. Federal Highway, Hallandale,
Florida.  During our fiscal year 2006,  the limited  partnership  which owns the
Pinecrest, Florida restaurant completed its private offering, raising the sum of
$3,300,000.  The funds from the private  offering  were used to reimburse us for
advances  made to the limited  partnership  in excess of our  investment  in the
same,  ($1,506,000),  to complete the  renovations to the business  premises for
operation of a "Flanigan's Seafood Bar and Grill" restaurant and provide working
capital.

         Working  capital as of October 1, 2005 was  adversely  affected  by our
investment in the limited  partnership  which owns the restaurant in Wellington,
Florida.  During our fiscal year 2005,  the limited  partnership  completed  its
private  offering,  raising  the sum of  $1,850,000.  The funds from the private
offering  were used to complete the  renovations  to the  business  premises for
operation of a "Flanigan's Seafood Bar and Grill" restaurant and provide working
capital.

         We believe that positive cash flow from operations will adequately fund
operations and debt reductions,  but not all of the planned capital expenditures
in our fiscal  year  2008,  which will have to be  supplemented

                                       45
<PAGE>

through future  advances on our line of credit.  We also  anticipate that during
our fiscal year 2008,  working capital will be affected by our investment in the
limited  partnership which owns the restaurant in Davie,  Florida and payment of
the  balance  for the  purchase  of a new point of sale  system for our  package
liquor stores (approximately $310,000), once we execute a contract for the same.


Off-Balance Sheet Arrangements
------------------------------

         We had no off-balance  sheet  arrangements  as of the end of our fiscal
year 2007, our fiscal year 2006 or our fiscal year 2005.


Critical Accounting Policies
----------------------------

         Our significant  accounting policies are more fully described in Note 1
to our consolidated financial statements located in Item 8 of this Annual Report
on Form 10-K.  The  preparation  of  financial  statements  in  conformity  with
accounting  principles  generally  accepted  in the  United  States  of  America
requires  management to make estimates and assumptions  that affect the reported
amounts  of  assets,  liabilities,  revenues,  and  expenses,  and  the  related
disclosures of contingent  assets and  liabilities.  Actual results could differ
from those estimates under different assumptions or conditions.  We believe that
the  following  critical  accounting  policies  are  subject  to  estimates  and
judgments used in the preparation of our consolidated financial statements:


Estimated Useful Lives of Property and Equipment
------------------------------------------------

         The estimate of useful lives for property and equipment are significant
estimates.   Expenditures  for  leasehold  improvements  and  equipment  when  a
restaurant is first constructed are material. In addition, periodic refurbishing
takes place and those expenditures can be material.  We estimate the useful life
of those assets by  considering,  among other things,  expected use, life of the
lease on the building and warranty  period,  if applicable.  The assets are then
depreciated  using a straight  line method  over those  estimated  lives.  These
estimated  lives are  reviewed  periodically  and  adjusted  if  necessary.  Any
necessary  adjustment to depreciation expense is made in the income statement of
the period in which the adjustment is determined to be necessary.


Consolidation of Limited Partnerships
-------------------------------------

         As of September 29, 2007, we operate seven (7)  restaurants  as general
partner  of  the  limited   partnerships   that  own  the  operations  of  these
restaurants,  excluding the Pembroke Pines,  Florida and Davie,  Florida limited
partnership restaurants.  Additionally, we expect that any expansion which takes
place  in  opening  new  restaurants  will  also  result  in  us  operating  the
restaurants as general partner. In addition to the general partnership  interest
we also purchase limited  partnership units ranging from 12% to 42% of the total
units outstanding.  As a result of these controlling  interests,  we consolidate
the

                                       46
<PAGE>

operations of these limited  partnerships  with ours despite the fact that we do
not own in excess of 50% of the equity interests. All intercompany  transactions
are eliminated in consolidation. The minority interests in the earnings of these
limited  partnerships  are removed  from net income and are not  included in the
calculation of earnings per share.


Income Taxes
------------

         Financial  Accounting Standards Board Statement No. 109, Accounting for
Income Taxes  requires,  among other things,  recognition of future tax benefits
measured at enacted  rates  attributable  to  deductible  temporary  differences
between  financial  statement and income tax bases of assets and liabilities and
to tax net  operating  loss and tip  credit  carryforwards  to the  extent  that
realization of said benefits is more likely than not. For  discussion  regarding
our carryforwards refer to Note 8 of the consolidated  financial  statements for
our fiscal year 2007.


Other Matters
-------------

Impact of Inflation
--------------------

         The primary  inflationary  factors  affecting our  operations are food,
beverage and labor costs.  A large number of  restaurant  personnel  are paid at
rates based upon applicable  minimum wage and increases in minimum wage directly
affect labor costs. During the past three of our fiscal years, inflation has not
had a material  impact on our  operating  results.  To the extent  permitted  by
competition, we recover increased costs by increasing prices.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------

         We do not ordinarily hold market risk sensitive instruments for trading
purposes.  As of September  29, 2007 and  September  30, 2006, we held no equity
securities.  During the fourth  quarter of our fiscal year 2006, we sold the one
equity  security  which  we held as of  October  1,  2005,  realizing  a gain of
$78,000.


Interest Rate Risk
------------------

         At  September  29,  2007,  borrowings  under  our line of  credit  bear
interest  at a  variable  annual  rate  equal  to the  prime  rate of  interest.
Increases  in  interest  rates  may  have a  material  affect  upon  results  of

                                       47
<PAGE>

operations,  depending  upon the  outstanding  principal  balance on our line of
credit from time to time.

         At September  29, 2007,  our cash  resources  earn interest at variable
rates.  Accordingly,  our return on these funds is affected by  fluctuations  in
interest rates

         There is no assurance  that  interest  rates will  increase or decrease
over our next fiscal year.


Item 8. Financial Statements and Supplementary Data.
---------------------------------------------------

         Our  Financial  Statements  and  supplementary  data are on  pages  F-1
through F-31.


Item  9.  Changes  in and  Disagreements  With  Accountants  on  Accounting  and
          Financial Disclosures.
--------------------------------------------------------------------------------

         None.


Item 9A. Controls and Procedures.
---------------------------------

(a)      Evaluation of Disclosure Controls and Procedures

         Our Chief Executive  Officer and Chief Financial Officer have, with the
participation  of  management  evaluated  the  effectiveness  of the  design and
operation of the Company's  "disclosure  controls and procedures" (as defined in
the  Securities  Exchange  Act  of  1934  ("Exchange  Act")  Rule  13a-15(e)  or
15d-15(e)) as of September 29, 2007. It is the conclusion of our Chief Executive
Officer and Chief Financial Officer that such disclosure controls and procedures
operate such that  important  information  flows to  appropriate  collection and
disclosure points in a timely manner and are effective in ensuring that material
information is accumulated and  communicated to management and made known to the
Chief Executive  Officer and Chief  Financial  Officer  particularly  during the
period in which this  report  was  prepared,  as  appropriate,  to allow  timely
decisions   regarding  timely  disclosure.   In  designing  and  evaluating  the
disclosure  controls and  procedures,  management  recognizes that any system of
controls and procedures, no matter how well designed and operated, is subject to
limitations, including the exercise of our judgment in evaluating the same. As a
result,  there can be no assurance that our  disclosure  controls and procedures
will prevent all errors.

(b)      Change in Internal Control over Financial Reporting

         During our fiscal year 2007,  we continued to assess the  effectiveness
of our  "internal  controls over  financial  reporting" on an account by account
basis  as a part of our  on-going  accounting  and  financial  reporting  review
process.  The assessments were made by management,  under the supervision of our
Chief  Financial  Officer,  and reported to the Audit  Committee of the Board of
Directors.

         During  our  fiscal  year  2007,  management   significantly   expanded
procedures  to  remediate  one material  weakness in our  internal  control over
financial  reporting  which  existed  as  of  September  30,  2006,  namely  the
accounting for officers'  bonuses,  specifically  with respect to the posting of
interim payments against  officers' bonuses which directly relate to accruals of
the same. The expanded procedures include the following:

                                       48
<PAGE>

                  o posting of interim  payments of  officers'  bonuses  against
                  accruals of officers' bonuses directly from payroll;

                  o  establish  a separate  accrued  officers'  bonus  liability
                  account in lieu of the general accrued payroll account;

                  o payment of officers' bonuses by written memorandum,  thereby
                  creating a paper trail for reconciliation purposes; and

                  o additional  post-closing procedure for the reporting period,
                  including  a  reconciliation  of the accrued  officers'  bonus
                  liability account, officers' bonus payroll expense account and
                  interim or final payments of officers' bonuses.

         With the  exception  of the  changes  to the  accounting  of  officers'
bonuses  discussed  above,  we made no  changes  in our  internal  control  over
financial reporting during our fiscal year 2007 that materially affected, or are
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.  Notwithstanding, the effectiveness of our system of internal control
over financial  reporting is subject to  limitations,  including the exercise of
our judgment in evaluating the same. As a result, there can be no assurance that
our internal control over financial reporting will prevent all errors.



Item 9B.  Other Information.
----------------------------

         None.


                                    PART III

Item 10. Directors, Executive Officers and Corporate Governance.
----------------------------------------------------------------

         The information required by Item 10 is incorporated by reference to our
Proxy Statement for our 2008 Annual Meeting of Shareholders, which will be filed
with the Securities and Exchange Commission by January 27, 2008.


Item 11. Executive Compensation.
--------------------------------

         The information required by Item 11 is incorporated by reference to our
Proxy Statement for our 2008 Annual Meeting of Shareholders, which will be filed
with the Securities and Exchange Commission by January 27, 2008.


Item 12.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Shareholder Matters.
--------------------------------------------------------------------------------

         The information required by Item 12 is incorporated by reference to our
Proxy Statement for our 2008 Annual Meeting of Shareholders, which will be filed
with the Securities and Exchange Commission by January 27, 2008.

                                       49
<PAGE>

Item  13.  Certain   Relationships   and  Related   Transactions   and  Director
Independence.
--------------------------------------------------------------------------------

         The information required by Item 13 is incorporated by reference to our
Proxy Statement for our 2008 Annual Meeting of Shareholders, which will be filed
with the Securities and Exchange Commission by January 27, 2008.


Item 14.  Principal Accountant Fees and Services.
-------------------------------------------------

         The information required by Item 14 is incorporated by reference to our
Proxy Statement for our 2008 Annual Meeting of Shareholders, which will be filed
with the Securities and Exchange Commission by January 27, 2008.


                                     PART IV

Item 15. Exhibits and Financial Statement Schedules.
----------------------------------------------------

(a)(1)   Financial Statements

         See Item 8, "Financial Statements and Supplementary Data" for Financial
Statements included with this Annual Report on Form 10-K.


(a)(2)   Financial Statement Schedules

         The following financial statement schedules are filed as a part of this
report:

         1.       Financial Statements:

                  - Report of Independent Registered Public Accounting Firm

                  -  Consolidated  Balance  Sheets as of September  29, 2007 and
                  September 30, 2006

                  -  Consolidated  Statements  of  Income  for the  years  ended
                  September 29, 2007, September 30, 2006 and October 1, 2005

                  -  Consolidated  Statements  of  Stockholders'  Equity for the
                  years ended September 29, 2007, September 30, 2006 and October
                  1, 2005

                  -  Condolidated  Statements  of Cash Flows for the years ended
                  September 29, 2007, September 30, 2006 and October 1, 2005

                  - Notes to Consolidated Financial Statements

         2.       Financial Statements Schedule:

                  - Schedule II - Valuation and Qualifying Accounts

         All other schedules have been omitted because the required  information
is not applicable or the information is included in the  consolidated  financial
statements or the Notes thereto.

2.       Exhibits

         The exhibits listed on the accompanying  Index to Exhibits are filed as
part of this Annual Report.


                                Index to Exhibits
                                Item (14) (a) (2)

                                   Description
                                   -----------

(2)  Plan of  Reorganization,  Amended  Disclosure  Statement,  Amended  Plan of
Reorganization,   Modification  of  Amended  Plan  of   Reorganization,   Second
Modification  of  Amended  Plan  of  Reorganization,  Order  Confirming  Plan of

                                       50
<PAGE>

Reorganization, (Item 7 (c) of Quarterly Report on Form 8-K filed May 5, 1987 is
incorporated herein by reference).

(3) Restated Articles of Incorporation (Part IV, Item 4 (a) (2) of Annual Report
on Form 10-K filed on December 29, 1982 is incorporated herein by reference).

(10)(a)(1)  Employment Agreement with Joseph G. Flanigan (Exhibit A of the Proxy
Statement dated January 27, 1988 is incorporated herein by reference).

(10)(a)(2)  Form of  Employment  Agreement  between  Joseph G.  Flanigan and the
Company (as ratified and amended by the  stockholders at the 1988 annual meeting
is incorporated herein by reference).

(10)(c) Consent  Agreement  regarding the Company's  Trademark  Litigation (Part
7(c)(19)  of the Form  8-K  dated  April  10,  1985 is  incorporated  herein  by
reference).

(10)(d) King of Prussia  (#850)  Partnership  Agreement  (Part 7 (c) (19) of the
Form 8-K dated April 10, 1985 is incorporated herein by reference).

(10)(o) Management Agreement for Atlanta,  Georgia, (#600) (Item 14(a)(10)(o) of
the Form 10-K dated October 3, 1992 is incorporated herein by reference).

(10)(p) Settlement Agreement with Former Vice Chairman of the Board of Directors
(re  #5)  (Item  14  (a)(10)(p)  of the  Form  10-K  dated  October  3,  1992 is
incorporated herein by reference).

(10)(q)  Hardware   Purchase   Agreement  and  Software  License  Agreement  for
restaurant point of sale system. (Item 14(a)(10)(g) of Form 10-KSB dated October
2, 1993 is incorporated herein by reference).

(10)(a)(3)  Key Employee  Incentive  Stock  Option Plan  (Exhibit A of the Proxy
Statement dated January 26, 1994 is incorporated herein by reference).

(10)(r)  Limited  Partnership  Agreement of CIC  Investors  #13,  Ltd,.  between
Flanigan's Enterprises,  Inc., as General Partner and fifty percent owner of the
limited partnership,  and Hotel Properties, LTD. (Item 14 (a)(10)(r) of the Form
10-KSB dated September 30, 1995 is incorporated herein by reference).

(10)(s) Form of Franchise  Agreement between  Flanigan's  Enterprises,  Inc. and
Franchisees.  (Item 14 (a)(10)(s) of the Form 10-KSB dated September 30, 1995 is
incorporated herein by reference).

(10)(t) Licensing  Agreement between Flanigan's  Enterprises,  Inc. and James B.
Flanigan,  dated  November 4, 1996,  for  non-exclusive  use of the  servicemark
"Flanigan's"  in the  Commonwealth of  Pennsylvania.  (Item 14 (a)(10)(t) of the
Form 10-KSB dated September 28, 1996 is incorporated herein by reference).

(10)(u) Limited Partnership Agreement of CIC Investors #15 Ltd., dated March 28,
1997,  between B.D. 15 Corp. as General Partner and numerous  limited  partners,
including Flanigan's  Enterprises,  Inc. as a limited partner owning twenty five
percent of the limited  partnership (Item 14 (a)(10)(u) of the Form 10-KSB dated
September 27, 1997 is incorporated herein by reference).

                                       51
<PAGE>

(10)(v) Limited  Partnership  Agreement of CIC Investors #60 Ltd., dated July 8,
1997,  between  Flanigan's  Enterprises,  Inc., as General  Partner and numerous
limited  partners,  including  Flanigan's  Enterprises,  Inc. as limited partner
owning forty  percent of the limited  partnership  (Item 14  (a)(10)(v)  of Form
10-KSB dated September 27, 1997 is incorporated herein by reference).

(10)(w)  Stipulated  Agreed  Order  of  Dismissal  upon  Mediation  with  former
franchisee  (Item 14  (a)(10)(w)  of Form  10-KSB  dated  September  27, 1997 is
incorporated herein by reference).

(10)(x) Limited Partnership  Agreement of CIC Investors #70, Ltd. dated February
1999  between  Flanigan's  Enterprises,  Inc. as General  Partner  and  numerous
limited  partners,  including  Flanigan's  Enterprises,  Inc. as limited partner
owning forty percent of the limited  partnership.  (Item 14 (a) (10) (x) of Form
10-KSB dated October 2, 1999 is incorporated herein by reference)

(10)(y)  Limited  Partnership  Agreement of CIC Investors #80,  Ltd.,  dated May
2001,  between  Flanigan's  Enterprises,  Inc. as General  Partner and  numerous
limited partners,  including  Flanigan's  Enterprises,  Inc., as limited partner
owning  twenty five percent of the limited  partnership.  (Item 14(a) (10)(y) of
Form 10-KSB dated September 29, 2001 is incorporated herein by reference.)

(10)(z)  Limited  Partnership  Agreement of CIC Investors #95, Ltd.,  dated July
2001,  between  Flanigan's  Enterprises,  Inc., as General  Partner and numerous
limited  partners,  including  Flanigan's  Enterprises,  Inc. as limited partner
owning twenty eight percent of the limited  partnership.(Item  14 (a) (10)(z) of
Form 10-KSB dated September 29, 2001 is incorporated herein by reference.)

(10)(aa)  Limited  Partnership  Agreement of CIC Investors #75, Ltd., dated June
17, 2003, between Flanigan's Enterprises, Inc., as General Partner, and numerous
limited  partners,  including  Flanigan's  Enterprises,  Inc. as limited partner
owning twelve percent of the limited  partnership.  (Item  14(a)(10)(aa) of Form
10-K dated September 27, 2003 is incorporated herein by reference.)

(10)(bb)  Limited  Partnership  Agreement of CIC Investors #65, Ltd., dated June
24, 2004, between Flanigan's Enterprises, Inc., as General Partner, and numerous
limited  partners,  including  Flanigan's  Enterprises,  Inc. as limited partner
owning twenty six percent of the limited  partnership.  (Item  14(a)(10)(bb)  of
Form 10-K dated October 2, 2004 is incorporated herein by reference.)

(10)(cc) Amended and Restated Limited  Partnership  Certificate and Agreement of
CIC Investors #13, Ltd., dated March 1, 2006,  between  Flanigan's  Enterprises,
Inc., as General  Partner,  Flanigan's  Management  services,  Inc. and numerous
limited  partners,  including  Flanigan's  Enterprises,  Inc. as limited partner
owning thirty nine percent of the limited  partnership.  (Item  14(a)(10)(cc) of
Form 10-K dated September 30, 2006 is incorporated herein by reference.)

(10)(dd) Limited Partnership Agreement of CIC Investors #50, Ltd., dated October
17, 2006, between Flanigan's Enterprises,  Inc., as General Partner,  Flanigan's
Management  Services,  Inc. and numerous limited partners,  including Flanigan's
Enterprises,  Inc.  as limited  partner  owning  sixteen  percent of the limited
partnership.

(10)(ee)  Limited  Partnership  Agreement  of CIC  Investors  #55,  Ltd.,  dated
December 12, 2006,  between  Flanigan's  Enterprises,  Inc., as General Partner,
Flanigan's  Management Services,  Inc. and numerous limited partners,  including

                                       52
<PAGE>

Flanigan's  Enterprises,  Inc. as limited  partner owning forty eight percent of
the limited partnership.

(13)  Registrant's  Form 10-K  constitutes the Annual Report to Shareholders for
the fiscal year ended September 29, 2007.

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

31.1     CERTIFICATION  PURSUANT TO 302 OF SARBANES-OXLEY  ACT OF 2002  OF CHIEF
EXECUTIVE OFFICER

31.2     CERTIFICATION  PURSUANT  TO 302 OF SARBANES-OXLEY  ACT OF 2002 OF CHIEF
FINANCIAL OFFICER

32.1     CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

32.2     CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934 the  registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.

                            Flanigan's Enterprises, Inc.
                            Registrant

                            By: /s/ JAMES G. FLANIGAN II
                                ------------------------
                                JAMES G. FLANIGAN II
                                Chief Executive Officer
                                Date: 12/28/07


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in their capacities and on the dates indicated.

/s/ JAMES G. FLANIGAN II      Chairman of the Board,        Date: 12/28/07
----------------------        Chief Executor Officer,
James G. Flanigan II            and Director


/s/ JEFFREY D. KASTNER        Chief Financial Officer       Date: 12/28/07
----------------------        Secretary and Director
Jeffrey D. Kastner


/s/ MICHAEL ROBERTS           Director                      Date: 12/28/07
----------------------
MICHAEL ROBERTS

                                       53
<PAGE>

/s/ GERMAINE M. BELL          Director                      Date: 12/28/07
----------------------
Germaine M. Bell


/s/ BARBARA J. KRONK          Director                      Date: 12/28/07
----------------------
Barbara J. Kronk


/s/ AUGIE BUCCI               Chief Operating Officer       Date: 12/28/07
----------------------        and Director
Augie Bucci


/s/ MICHAEL B. FLANIGAN       Director                      Date: 12/28/07
----------------------
Michael B. Flanigan

/s/ PATRICK J. FLANIGAN       Director                      Date: 12/28/07
-----------------------
Patrick J. Flanigan


/s/ CHRISTOPHER O'NEIL        Director                      Date: 12/28/07
-----------------------
Christopher O'Neil


                                       54
<PAGE>
================================================================================







                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

           SEPTEMBER 29, 2007, SEPTEMBER 30, 2006 AND OCTOBER 1, 2005






================================================================================


<PAGE>



                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------




                                                                       PAGE
                                                                       ----



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                F-1


CONSOLIDATED FINANCIAL STATEMENTS

   Balance Sheets                                                      F-2

   Statements of Income                                                F-3

   Statements of Stockholders' Equity                                  F-4

   Statements of Cash Flows                                            F-5

   Notes to Financial Statements                                    F-7 - F-32


<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------


Board of Directors and Stockholders
Flanigan's Enterprises, Inc.
Fort Lauderdale, Florida


We have  audited the  accompanying  consolidated  balance  sheets of  Flanigan's
Enterprises,  Inc. and  Subsidiaries  as of September 29, 2007 and September 30,
2006 and the related consolidated statements of income, stockholders' equity and
cash flows for each of the years in the  three-year  period ended  September 29,
2007. These  consolidated  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material  misstatement.  The Company is not  required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial reporting.  Our audit included  consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Flanigan's  Enterprises,  Inc. and  Subsidiaries  as of  September  29, 2007 and
September 30, 2006, and the  consolidated  results of their operations and their
cash flows for each of the years in the  three-year  period ended  September 29,
2007 in conformity with accounting  principles  generally accepted in the United
States.


                            RACHLIN COHEN & HOLTZ LLP


Fort Lauderdale, Florida
December 27, 2007


                                      F-1
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                    SEPTEMBER 29, 2007 AND SEPTEMBER 30, 2006

<TABLE>
<CAPTION>
                              ASSETS                                    2007            2006
                              ------                                    ----            ----
<S>                                                                      <C>             <C>
Current Assets:
    Cash and cash equivalents                                      $  2,223,000    $  1,698,000
    Notes and mortgages receivable, current maturities                   14,000          12,000
    Due from franchisees                                                735,000         569,000
    Other receivables                                                   137,000         821,000
    Inventories                                                       2,165,000       2,215,000
    Prepaid expenses                                                    840,000         813,000
    Deferred tax assets                                                 208,000         187,000
                                                                   ------------    ------------
      Total current assets                                            6,322,000       6,315,000
                                                                   ------------    ------------

Property and Equipment, Net                                          19,410,000      17,967,000
                                                                   ------------    ------------

Investment in Limited Partnership                                       142,000         153,000
                                                                   ------------    ------------

Other Assets:
    Liquor licenses, net                                                347,000         347,000
    Notes and mortgages receivable                                       44,000         103,000
    Deferred tax assets                                                 492,000         397,000
    Leasehold purchase                                                2,085,000       1,291,000
    Other                                                             1,495,000         825,000
                                                                   ------------    ------------
         Total other assets                                           4,463,000       2,963,000
                                                                   ------------    ------------
         Total assets                                              $ 30,337,000    $ 27,398,000
                                                                   ============    ============

               LIABILITIES AND STOCKHOLDERS' EQUITY
               ------------------------------------
Current Liabilities:
    Accounts payable and accrued expenses                          $  3,666,000    $  4,096,000
    Income taxes payable                                                331,000         264,000
    Due to franchisees                                                  312,000         268,000
    Current portion of long-term debt                                   196,000         223,000
    Deferred revenues                                                    45,000          54,000
    Deferred rent                                                        17,000          14,000
                                                                   ------------    ------------
         Total current liabilities                                    4,567,000       4,919,000
                                                                   ------------    ------------

Long-Term Debt, Net of Current Maturities                             4,922,000       4,196,000
                                                                   ------------    ------------

Line of Credit                                                          962,000         762,000
                                                                   ------------    ------------

Deferred Rent, Net of Current Portion                                   232,000         223,000
                                                                   ------------    ------------

Minority Interest in Equity of Consolidated Limited Partnerships      7,570,000       6,506,000
                                                                   ------------    ------------

Commitments, Contingencies and Subsequent Events

Stockholders' Equity:
    Common stock, $.10 par value; 5,000,000 shares authorized;
      4,197,642 shares issued for the years ended 2007 and 2006         420,000         420,000
    Capital in excess of par value                                    6,240,000       6,203,000
    Retained earnings                                                11,331,000      10,064,000
    Treasury stock, at cost, 2,306,909 and 2,313,087 shares          (5,907,000)     (5,895,000)
                                                                   ------------    ------------
         Total stockholders' equity                                  12,084,000      10,792,000
                                                                   ------------    ------------
         Total liabilities and stockholders' equity                $ 30,337,000    $ 27,398,000
                                                                   ============    ============
</TABLE>

                See notes to consolidated financial statements.

                                      F-2
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

     YEARS ENDED SEPTEMBER 29, 2007, SEPTEMBER 30, 2006 AND OCTOBER 1, 2005

<TABLE>
<CAPTION>
                                                                 2007            2006            2005
                                                                 ----            ----            ----
<S>                                                               <C>             <C>             <C>
Revenues:
    Restaurant food sales                                    $ 38,047,000    $ 32,847,000    $ 29,219,000
    Restaurant beverage sales                                   8,764,000       7,610,000       6,610,000
    Package store sales                                        12,784,000      13,046,000      11,810,000
    Franchise-related revenues                                  1,134,000       1,114,000         984,000
    Owner's fee                                                   203,000         224,000         261,000
    Other operating income                                        169,000         173,000         148,000
                                                             ------------    ------------    ------------
                                                               61,101,000      55,014,000      49,032,000
                                                             ------------    ------------    ------------
Costs and Expenses:
    Cost of merchandise sold:
      Restaurants and lounges                                  16,158,000      13,952,000      12,502,000
      Package goods                                             9,200,000       9,312,000       8,436,000
    Payroll and related costs                                  17,293,000      16,062,000      13,636,000
    Occupancy costs                                             3,867,000       3,334,000       2,976,000
    Selling, general and administrative expenses               12,483,000      10,716,000       9,437,000
                                                             ------------    ------------    ------------
                                                               59,001,000      53,376,000      46,987,000
                                                             ------------    ------------    ------------

Income from Operations                                          2,100,000       1,638,000       2,045,000
                                                             ------------    ------------    ------------

Other Income (Expense):
    Interest expense                                             (508,000)       (206,000)       (116,000)
    Interest and other income                                      79,000         183,000         106,000
    Limited partnership income                                      1,000          31,000          18,000
    Insurance recovery, net of casualty loss                           --         666,000              --
    Gain on sale of property and equipment                        393,000              --              --
                                                             ------------    ------------    ------------
                                                                  (35,000)        674,000           8,000
                                                             ------------    ------------    ------------

Income Before Provision for Income Taxes and
    Minority Interest in Earnings of Consolidated
    Limited Partnerships                                        2,065,000       2,312,000       2,053,000
                                                             ------------    ------------    ------------

Provision for Income Taxes:
    Current                                                       814,000         870,000         525,000
    Deferred                                                     (116,000)       (120,000)         18,000
                                                             ------------    ------------    ------------
                                                                  698,000         750,000         543,000
                                                             ------------    ------------    ------------

    Minority Interest in Earnings of Consolidated
    Limited Partnerships                                         (100,000)       (312,000)       (403,000)
                                                             ------------    ------------    ------------


Net Income                                                   $  1,267,000    $  1,250,000    $  1,107,000
                                                             ============    ============    ============

Net Income Per Common Share:
    Basic                                                    $       0.67    $       0.66    $       0.58
                                                             ============    ============    ============
    Diluted                                                  $       0.66    $       0.65    $       0.58
                                                             ============    ============    ============

Weighted Average Shares and Equivalent Shares Outstanding:
    Basic                                                       1,889,000       1,884,000       1,895,000
                                                             ============    ============    ============
    Diluted                                                     1,910,000       1,909,000       1,923,000
                                                             ============    ============    ============
</TABLE>
                See notes to consolidated financial statements.

                                      F-3
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

     YEARS ENDED SEPTEMBER 29, 2007, SEPTEMBER 30, 2006 AND OCTOBER 1, 2005

<TABLE>
<CAPTION>

                                      Common Stock                               Accumulated     Treasury Stock
                                      ------------      Capital in                 Other         --------------
                                                        Excess of     Retained Comprehensive
                                   Shares     Amount    Par Value     Earnings     Income      Shares       Amount         Total
                                 ---------  ---------  -----------  -----------   --------   ----------   -----------   -----------
<S>                              <C>        <C>        <C>          <C>           <C>         <C>         <C>           <C>
Balance, October 2, 2004         4,197,642  $ 420,000  $ 6,147,000  $ 8,974,000   $ 25,000    2,280,817   $(5,465,000)  $10,101,000

Year Ended October 1, 2005:
   Comprehensive income:
      Net income                        --         --           --    1,107,000         --           --            --     1,107,000
      Net unrealized gain
       on securities                    --         --           --           --     25,000           --            --        25,000
                                 ---------  ---------  -----------  -----------   --------   ----------   -----------   -----------
                                        --         --           --    1,107,000     25,000           --            --     1,132,000

   Purchase of treasury stock           --         --           --           --         --       42,720      (353,000)     (353,000)
   Exchange of shares -
    exercise of stock options           --         --        1,000           --         --         (490)        1,000         2,000
   Dividends paid ($0.32 per
    share)                              --         --           --     (609,000)        --           --            --      (609,000)
                                 ---------  ---------  -----------  -----------   --------   ----------   -----------   -----------

Balance, October 1, 2005         4,197,642    420,000    6,148,000    9,472,000     50,000    2,323,047    (5,817,000)   10,273,000

Year ended September 30, 2006:
   Comprehensive income:
      Net income                        --         --           --    1,250,000         --           --            --     1,250,000
      Net unrealized gain on
       securities                       --         --           --           --    (50,000)          --            --       (50,000)
                                 ---------  ---------  -----------  -----------   --------   ----------   -----------   -----------
                                        --         --           --    1,250,000    (50,000)          --            --     1,200,000

   Purchase of treasury stock           --         --           --           --         --       14,350      (139,000)     (139,000)
   Exchange of shares - exercise
    of stock options                    --         --       55,000           --         --      (24,310)       61,000       116,000
   Dividends paid ($0.35 per
    share)                              --         --           --     (658,000)        --           --            --      (658,000)
                                 ---------  ---------  -----------  -----------   --------   ----------   -----------   -----------
Balance, September 30, 2006      4,197,642    420,000    6,203,000   10,064,000         --    2,313,087    (5,895,000)   10,792,000

Year Ended September 29, 2007:
   Net income                           --         --           --    1,267,000         --           --            --     1,267,000
   Purchase of treasury stock           --         --           --           --         --        3,332       (36,000)      (36,000)
   Exchange of shares -
    exercise of stock options           --         --       37,000           --         --       (9,510)       24,000        61,000
                                 ---------  ---------  -----------  -----------   --------   ----------   -----------   -----------
Balance, September 29, 2007      4,197,642  $ 420,000  $ 6,240,000  $11,331,000   $     --    2,306,909   $(5,907,000)  $12,084,000
                                 =========  =========  ===========  ===========   ========   ==========   ===========   ===========
</TABLE>
                See notes to consolidated financial statements.

                                      F-4
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

     YEARS ENDED SEPTEMBER 29, 2007, SEPTEMBER 30, 2006 AND OCTOBER 1, 2005

<TABLE>
<CAPTION>
                                                                                2007           2006           2005
                                                                                ----           ----           ----
<S>                                                                              <C>           <C>            <C>
Cash Flows from Operating Activities:
   Net income                                                               $ 1,267,000    $ 1,250,000    $ 1,107,000
   Adjustments to reconcile net income to net cash provided by
     operating activities:
       Depreciation and amortization                                          1,949,000      1,694,000      1,420,000
       Amortization of leasehold purchases                                      206,000        145,000        123,000
       Gain on sale of property and equipment                                  (393,000)            --             --
       Loss on abandonment of property and equipment                             94,000         61,000        121,000
       Insurance recovery, net of casualty loss                                      --       (666,000)            --
       Gain on sale of marketable securities                                         --        (78,000)            --
       Deferred income taxes                                                   (116,000)      (120,000)        18,000
       Deferred rent                                                             12,000        (18,000)            --
       Minority interests in earning of consolidated limited partnerships       100,000        312,000        403,000
       Income from unconsolidated limited partnership                            (1,000)       (31,000)       (18,000)
       Recognition of deferred revenues                                          (9,000)        (8,000)        (8,000)
       Changes in operating assets and liabilities:
         (Increase) decrease in:
           Due from franchisees                                                (166,000)      (450,000)      (119,000)
           Other receivables                                                    191,000       (221,000)        82,000
           Inventories                                                           50,000       (225,000)      (340,000)
           Prepaid expenses                                                     (27,000)       (92,000)      (156,000)
           Other assets                                                        (700,000)      (397,000)       (82,000)
         Increase (decrease) in:
           Accounts payable and accrued expenses                               (430,000)     1,180,000         83,000
           Income taxes payable                                                  67,000        (31,000)       304,000
           Due to franchisees                                                    44,000       (225,000)      (274,000)
                                                                            -----------    -----------    -----------
            Net cash provided by operating activities                         2,138,000      2,080,000      2,664,000
                                                                            -----------    -----------    -----------

Cash Flows from Investing Activities:
   Collections on notes and mortgages receivable                                 12,000         17,000         21,000
   Purchase of property and equipment                                        (3,131,000)    (3,710,000)    (2,095,000)
   Acquisition of subsidiary                                                         --       (601,000)            --
   Purchase of leaseholds                                                      (955,000)            --             --
   Purchase of assets of franchised restaurant                                 (100,000)            --             --
   Proceeds from sale of fixed assets                                           908,000             --             --
   Proceeds from sale of marketable securities                                  381,000             --             --
   Distributions from unconsolidated limited parnterships                        12,000             --         20,000
   Proceeds from insurance settlement                                           112,000        700,000             --
                                                                            -----------    -----------    -----------
            Net cash used in investing activities                            (2,761,000)    (3,594,000)    (2,054,000)
                                                                            -----------    -----------    -----------

Cash Flows from Financing Activities:
   Payments of long-term debt                                                (1,001,000)      (489,000)      (309,000)
   Payment of line of credit                                                 (1,000,000)            --             --
   Proceeds from long-term debt                                                 960,000             --        250,000
   Proceeds from line of credit                                               1,200,000        762,000             --
   Dividends paid                                                                    --       (658,000)      (609,000)
   Purchase of treasury stock                                                   (36,000)      (139,000)      (353,000)
   Distributions to limited partnerships' minority partners                  (1,006,000)    (1,054,000)    (1,218,000)
   Proceeds from limited partnership interests                                1,970,000*     2,000,000*     1,365,000*
   Proceeds from exercise of stock options                                       61,000        116,000          2,000
                                                                            -----------    -----------    -----------
            Net cash provided by (used in) financing activities               1,148,000        538,000       (872,000)
                                                                            -----------    -----------    -----------

Net Increase (Decrease) in Cash and Cash Equivalents                            525,000       (976,000)      (262,000)

Cash and Cash Equivalents, Beginning                                          1,698,000      2,674,000      2,936,000
                                                                            -----------    -----------    -----------

Cash and Cash Equivalents, Ending                                           $ 2,223,000    $ 1,698,000    $ 2,674,000
                                                                            ===========    ===========    ===========
</TABLE>
*        exclusive of the Company's investment in the limited partnership owning
         the  restaurant in Pembroke  Pines,  Florida of $380,000 in fiscal year
         2007;  exclusive of the Company's investment in the limited partnership
         owning the  restaurant  in  Pinecrest,  Florida of $1,295,000 in fiscal
         year 2006;  and  exclusive of the  Company's  investment in the limited
         partnership owning the restaurant in Wellington, Florida of $485,000 in
         fiscal year 2005.

                See notes to consolidated financial statements.

                                      F-5
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

     YEARS ENDED SEPTEMBER 29, 2007, SEPTEMBER 30, 2006 AND OCTOBER 1, 2005

<TABLE>
<CAPTION>

                                                                           2007         2006          2005
                                                                           ----         ----          ----
<S>                                                                    <C>           <C>           <C>
Supplemental Disclosure of Cash Flow Information:
   Cash paid during the year for:
     Interest                                                          $   508,000   $   206,000   $   116,000
                                                                       ===========   ===========   ===========
     Income taxes                                                      $   631,000   $   881,000   $   225,000
                                                                       ===========   ===========   ===========

   Non-Cash Financing and Investing Activities:
     Purchase of vehicles in exchange for debt                         $        --   $    70,000   $   302,000
                                                                       ===========   ===========   ===========
     Purchase of Josar Investments, LLC in exchange for debt           $        --   $ 3,280,000   $        --
                                                                       ===========   ===========   ===========
     Sale of marketable securities not settled by September 30, 2006   $        --   $   381,000   $        --
                                                                       ===========   ===========   ===========
     Purchase of real property in exchange for debt                    $   700,000   $        --   $        --
                                                                       ===========   ===========   ===========
</TABLE>



                See notes to consolidated financial statements.

                                      F-6
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

           SEPTEMBER 29, 2007, SEPTEMBER 30, 2006 AND OCTOBER 1, 2005


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Organization and Capitalization

             The Company was  incorporated in 1959 and operates in South Florida
             as a chain of  full-service  restaurants and package liquor stores.
             Restaurant  food and  beverage  sales make up the  majority  of our
             total  revenue.  At September  29, 2007,  we (i) operated 21 units,
             (excluding the adult  entertainment club referenced in (ii) below),
             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; (ii) own but do
             not operate one adult  entertainment  club; and (iii)  franchise an
             additional six units, consisting of two restaurants,  (one of which
             we operate) and four combination restaurants/package liquor stores.
             With the exception of one  restaurant we operate but do not have an
             ownership  interest in which  operates  under the name "The Whale's
             Rib",  all  of the  restaurants  operate  under  our  service  mark
             "Flanigan's  Seafood Bar and Grill" and all of the  package  liquor
             stores operate under our service mark "Big Daddy's Liquors".

             The Company's Articles of Incorporation,  as amended,  authorize us
             to issue and have  outstanding at any one time 5,000,000  shares of
             common stock at a par value of $0.10 per share.

             We operate  under a 52-53 week year ending the Saturday  closest to
             September  30.  Our  fiscal  years  2007,  2006  and  2005 are each
             comprised of a 52-week period.

         Principles of Consolidation

             The consolidated  financial  statements include the accounts of the
             Company and our  subsidiaries,  all of which are wholly owned,  and
             the  accounts of the nine limited  partnerships  in which we act as
             general  partner and have  controlling  interests.  All significant
             intercompany  transactions  and balances  have been  eliminated  in
             consolidation.

         Use of Estimates

             The consolidated  financial  statements and related disclosures are
             prepared  in  conformity  with  accounting   principles   generally
             accepted  in the  U.S.  We  are  required  to  make  estimates  and
             assumptions   that  affect  the  reported  amounts  of  assets  and
             liabilities, the disclosure of contingent assets and liabilities at
             the date of the  financial  statements,  and revenue  and  expenses
             during the period reported.  These estimates  include assessing the
             estimated   useful  lives  of  tangible   assets.   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.

                                      F-7
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Cash and Cash Equivalents

             We consider  all highly  liquid debt  instruments  with an original
             maturity of three months or less at the date of purchase to be cash
             equivalents.

         Inventories

             Our  inventories,   which  consist   primarily  of  package  liquor
             products, are stated at the lower of average cost or market.

         Liquor Licenses

             In accordance with Statement of Financial  Accounting Standards No.
             142,  "Goodwill and Other Intangible Assets" (SFAS 142), our liquor
             licenses  are not being  amortized,  but are  tested  annually  for
             impairment (see Note 7).

         Property and Equipment

             Our  property  and  equipment  are  stated at cost.  We  capitalize
             expenditures for major improvements and depreciation commences when
             the assets  are  placed in  service.  We record  depreciation  on a
             straight-line   basis  over  the  estimated  useful  lives  of  the
             respective assets. We charge maintenance and repairs,  which do not
             improve or extend the life of the respective  assets, to expense as
             incurred.   When  we  dispose  of  assets,  the  cost  and  related
             accumulated depreciation are removed from the accounts and any gain
             or loss is included in income.

             Our  estimated  useful  lives  range  from  three to five years for
             vehicles,  and three to seven years for  furniture  and  equipment.
             Leasehold  improvements are currently being amortized over the life
             of the lease up to a maximum of 20 years. The building and building
             improvements of our corporate  offices in Fort Lauderdale,  Florida
             and  our  combination   restaurant  and  package  liquor  store  in
             Hallandale,  Florida,  both of which we own, are being  depreciated
             over forty years.

         Leasehold Purchases

             Our purchase of an existing  restaurant location usually includes a
             lease to the  business  premises.  As a result,  a  portion  of the
             purchase  price is allocated to the  leasehold  interest,  which we
             refer to as a leasehold  purchase.  We  capitalize  the cost of the
             leasehold  purchase and amortization  commences upon our assumption
             of the lease. We amortize leasehold  purchases over the term of the
             lease up to a maximum of 15 years.

                                      F-8
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Investment in Limited Partnerships

             We use  the  consolidation  method  of  accounting  when  we have a
             controlling  interest in other companies and limited  partnerships.
             We use the equity  method of  accounting  when we have an  interest
             between  twenty to fifty  percent in other  companies  and  limited
             partnerships, but do not exercise control. Under the equity method,
             our original  investments are recorded at cost and are adjusted for
             our share of  undistributed  earnings  or losses.  All  significant
             intercompany profits are eliminated.

         Concentrations of Credit Risk

             Financial instruments that potentially subject us to concentrations
             of credit risk are cash and cash equivalents, other receivables and
             notes and mortgages receivable.

         Cash and Cash Equivalents

             From time to time during the year,  we had  deposits  in  financial
             institutions  in  excess  of  the  federally   insured  limits.  At
             September 29, 2007, we had deposits in excess of federally  insured
             limits of approximately  $3,246,000. We maintain our cash with high
             quality  financial  institutions,  which we  believe  limits  these
             risks.

         Notes and Mortgages Receivable

             Our notes and mortgages receivable arise primarily from the sale of
             operating  assets,  including  liquor  licenses.  Generally,  those
             assets serve as collateral for the receivable.  We believe that the
             collateral,  coupled  with the credit  standing of the  purchasers,
             limits these risks.

         Major Supplier

             Throughout  our fiscal  years  2007,  2006 and 2005,  we  purchased
             substantially  all of our food  products  from our  major  supplier
             pursuant to a master  distribution  agreement  which entitled us to
             receive  certain  purchase   discounts,   rebates  and  advertising
             allowances.  We believe that several other alternative  vendors are
             available, if necessary.

         Revenue Recognition

             We record  revenues  from normal  recurring  sales upon the sale of
             food and  beverages  and the sale of package  liquor  products.  We
             report our sales net of sales tax. Continuing royalties,  which are
             a  percentage  of net sales of  franchised  stores,  are accrued as
             income when earned.

                                      F-9
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Pre-opening Costs

             Our  pre-opening  costs are  those  typically  associated  with the
             opening of a new  restaurant  and generally  include  payroll costs
             associated  with the "new  restaurant  openers"  (a team of  select
             employees  who travel to new  restaurants  to ensure  that our high
             standards  for quality are met),  rent and  promotional  costs.  We
             expense pre-opening costs as incurred. During our fiscal year 2007,
             the limited partnership  restaurants in Pembroke Pines, Florida and
             Davie,   Florida   reported   losses  of  $341,000  and   $174,000,
             respectively, primarily due to pre-opening costs. During our fiscal
             year 2006, the limited partnership restaurant in Pinecrest, Florida
             reported a loss of $337,000  and during our fiscal  year 2005,  the
             limited  partnership  restaurant in Wellington,  Florida reported a
             loss of $416,000, primarily due to pre-opening costs.

         Advertising Costs

             Our advertising  costs are expensed as incurred.  Advertising costs
             incurred   during  our  fiscal  years  ended  September  29,  2007,
             September 30, 2006 and October 1, 2005 were approximately $234,000,
             $464,000, and $375,000 respectively.

         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,  notes and mortgages
             receivable,  other  receivables,   accounts  payables  and  accrued
             expenses.  We have  assumed  fair  values to  approximate  carrying
             values for those  financial  instruments,  which are  short-term in
             nature or are receivable or payable on demand.

             We  estimated  the fair  value of  long-term  debt based on current
             rates offered to us for debt of comparable  maturities  and similar
             collateral requirements.

         Income Taxes

             We account for our income taxes using SFAS No. 109, "Accounting for
             Income  Taxes",  which  requires  the  recognition  of deferred tax
             liabilities  and assets for  expected  future tax  consequences  of
             events  that  have  been  included  in the  consolidated  financial
             statements  or  tax  returns.  Under  this  method,   deferred  tax
             liabilities  and  assets  are  determined  based on the  difference
             between  the  financial  statement  and tax  bases  of  assets  and
             liabilities using enacted tax rates in effect for the year in which
             the differences are expected to reverse.

         Stock-Based Compensation

             On January  1,  2006,  we  adopted  SFAS No.  123  (revised  2004),
             "Share-Based  Payment,"  (SFAS No. 123R) to account for stock-based
             employee compensation.  Among other items, SFAS 123R eliminates the
             use of Accounting Principles Board Opinion ("APB") No. 25,

                                      F-10
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Stock-Based Compensation (Continued)

             "Accounting for Stock Issued to Employees," and the intrinsic value
             method of accounting  and requires  companies to recognize the cost
             of employee  services  received in exchange for stock-based  awards
             based  on the  grant  date  fair  value of  those  awards  in their
             financial  statements.  We elected to use the modified  prospective
             method for  adoption,  which  requires  compensation  expense to be
             recorded  for all  unvested  stock  options  beginning in the first
             quarter of adoption.  For  stock-based  awards  granted or modified
             subsequent to January 1, 2006,  compensation expense,  based on the
             fair value on the date of grant, is recognized in the  consolidated
             financial  statements  over the vesting  period.  This  application
             requires us to record  compensation  expense for all awards granted
             to employees  and  directors  after the  adoption  date and for the
             unvested  portion of awards  that were  outstanding  at the date of
             adoption.  We had no unvested  stock  options as of January 1, 2006
             and granted no stock options during fiscal year 2007 or in the nine
             months ended  September 30, 2006, so there is no impact of SFAS No.
             123R on our consolidated  financial statements for our fiscal years
             2007 or 2006. In accordance with the modified  prospective  method,
             our  consolidated  financial  statements for prior periods have not
             been  restated to reflect and do not include the impact of SFAS No.
             123R.

             Had compensation  cost for the options been determined based on the
             fair value at the grant date during  fiscal  year 2005,  consistent
             with SFAS 123, our net income would have been as follows:

                                                                2005
                                                                ----

               Net income, as reported                     $   1,107,000
               Deduct:  Total stock-based employee
                  compensation expense determined
                  under fair value based method for
                  all awards, net of related tax effects         (88,000)
                                                           -------------

               Pro forma net income                        $   1,019,000
                                                           =============

               Earnings Per Share:
                  Basic:
                     As reported                           $        0.58
                     Pro forma                             $        0.54
                  Diluted:
                     As reported                           $        0.58
                     Pro forma                             $        0.53

         Long-Lived Assets

             We  continually  evaluate  whether  events and  circumstances  have
             occurred  that may warrant  revision of the  estimated  life of our
             intangible and other long-lived assets or

                                      F-11
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Long-Lived Assets (Continued)

             whether  the  remaining   balance  of  our   intangible  and  other
             long-lived assets should be evaluated for possible  impairment.  If
             and when  such  factors,  events  or  circumstances  indicate  that
             intangible  or other  long-lived  assets  should be  evaluated  for
             possible impairment,  we will determine the fair value of the asset
             by making an  estimate  of  expected  future  cash  flows  over the
             remaining  lives of the  respective  assets and  compare  that fair
             value  with the  carrying  value of the assets in  measuring  their
             recoverability.  In determining the expected future cash flows, the
             assets will be grouped at the lowest level for which there are cash
             flows, at the individual store level.

         Reclassifications

             We have reclassified certain amounts in the prior year consolidated
             financial  statements  to conform to the  presentation  of the 2007
             consolidated financial statements.

         Recently Issued Accounting Pronouncements

             In December  2007,  the FASB issued  SFAS No. 141  (revised  2007),
             "Business   Combinations"  ("SFAS  141R").  SFAS  141R  establishes
             principles  and  requirements  for how an acquirer  recognizes  and
             measures  in  its  financial  statements  the  identifiable  assets
             acquired,  the liabilities assumed, any noncontrolling  interest in
             the acquiree and the goodwill acquired.  SFAS 141R also establishes
             disclosure  requirements to enable the evaluation of the nature and
             financial  effects  of  the  business  combination.  SFAS  141R  is
             effective for the fiscal years  beginning  after  December 15, 2008
             and will be adopted by us in the first  quarter of our fiscal  year
             2010. We are currently  evaluating the potential impact, if any, of
             the adoption of SFAS 141R on our consolidated results of operations
             and financial condition.

             In December 2007, the FASB issued Statement of Financial Accounting
             Standard  No.  160,   Noncontrolling   Interests  in   Consolidated
             Financial Statements, an amendment of ARB No. 51 ("SFAS 160"). SFAS
             160  will  change  the   accounting   and  reporting  for  minority
             interests,   which  will  be   recharacterized   as  noncontrolling
             interests  (NCI) and classified as a component of equity.  This new
             consolidation  method will significantly  change the accounting for
             transactions with minority interest holders.  SFAS 160 is effective
             for fiscal years beginning after December 15, 2008 (our fiscal year
             2010).  We have not yet determined the impact,  if any, of SFAS 160
             on our consolidated financial statements.

             In February  2007, the FASB issued SFAS 159, "Fair Value Option for
             Financial Assets and Liabilities" which permits an entity to choose
             to measure many  financial  instruments  and certain other items at
             fair  value.  The  standard  contains  an  amendment  to  SFAS  115
             pertaining  to  available-for-sale  and  trading  securities.   The
             objective  of the  standard is to improve  financial  reporting  by
             providing entities with the opportunity to mitigate volatility in

                                      F-12
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Recently Issued Accounting Pronouncements (Continued)

             reported   earnings   caused  by  measuring   related   assets  and
             liabilities  differently  without  having  to apply  complex  hedge
             accounting provisions. The provisions of SFAS 159 are effective for
             financial  statements  issued  for  fiscal  years  beginning  after
             November 15, 2007.  We do not expect the adoption of Statement  159
             at the beginning of fiscal year 2009 to have a material impact.

             In September  2006,  the SEC issued Staff  Accounting  Bulletin No.
             108,  "Considering  the  Effects of Prior Year  Misstatements  when
             Quantifying  Misstatements  in Current Year  Financial  Statements"
             (SAB 108). SAB 108 requires  companies to evaluate the  materiality
             of identified  unadjusted  errors on each  financial  statement and
             related  disclosures  using both the  rollover and the iron curtain
             approach. SAB 108 applies to annual financial statements for fiscal
             years ending after November 15, 2006.  There was no material impact
             on our  financial  condition  or  results  of  operation  from  the
             adoption  of SAB 108  during the fiscal  year ended  September  29,
             2007.

             In  September   2006,  the  FASB  issued   Statement  of  Financial
             Accounting  Standards  No. 157,  "Fair Value  Measurements"  ("SFAS
             157").  SFAS 157  provides  a common  definition  of fair value and
             establishes  a framework to make the  measurement  of fair value in
             generally  accepted  accounting   principles  more  consistent  and
             comparable.  SFAS 157 also requires expanded disclosures to provide
             information about the extent to which fair value is used to measure
             assets and liabilities, the methods and assumptions used to measure
             fair value and the effect of fair value measures on earnings.  SFAS
             157 is effective for fiscal years beginning after November 15, 2007
             (our fiscal year 2009),  although early  adoption is permitted.  In
             September  2007,  the FASB  provided  a one-year  deferral  for the
             implementation of SFAS 157 only with regard to nonfinancial  assets
             and liabilities.  We have not yet determined the impact, if any, of
             SFAS 157 on our consolidated financial statements.

             In July 2006,  the  Financial  Accounting  Standards  Board  (FASB)
             issued  Interpretation No. 48, Accounting for Uncertainty in Income
             Taxes,   an   interpretation   of  SFAS  Statement  No.  109.  This
             Interpretation  clarifies the accounting for  uncertainty in income
             taxes  recognized  in  an  enterprise's   financial  statements  in
             accordance  with SFAS  Statement  No.  109,  Accounting  for Income
             Taxes. This Interpretation  prescribes a recognition  threshold and
             measurement  attribute for the financial statement  recognition and
             measurement  of a tax  position  taken or expected to be taken in a
             tax  return.   This   Interpretation   also  provides  guidance  on
             de-recognition,  classification, interest and penalties, accounting
             in interim periods, disclosure, and transition. This Interpretation
             is effective for fiscal years beginning after December 15, 2006. We
             do  not  expect  the  adoption  of  Interpretation  No.  48 at  the
             beginning of our fiscal year 2008 to have a material impact.

             In March 2006,  the FASB  Emerging  Issues Task Force  issued Issue
             06-3 "How Sales Taxes  Collected  From  Customers  and  Remitted to
             Government Authorities Should Be Presented in

                                      F-13
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Recently Issued Accounting Pronouncements (Continued)

             the Income  Statement"  (EITF 06-3). A consensus was reached that a
             company should  disclose its accounting  policy (i.e.  gross or net
             presentation)  regarding  presentation of taxes within the scope of
             EITF 06-3. If taxes are reported on a gross basis, a company should
             disclose  the  amount of such  taxes for each  period  for which an
             income  statement  is  presented.  The  guidance is  effective  for
             periods beginning after December 15, 2006.

             In May 2005, the FASB issued SFAS No. 154,  "Accounting for Changes
             and Error Corrections, a Replacement of APB Opinion No. 20 and FASB
             Statement  No. 3".  SFAS 154  applies to all  voluntary  changes in
             accounting  principle  and requires  retrospective  application  to
             prior  periods'  financial  statements  of  changes  in  accounting
             principle.   This   statement   also  requires  that  a  change  in
             depreciation,  amortization,  or depletion  method for  long-lived,
             non-financial  assets be  accounted  for as a change in  accounting
             estimate  effected by a change in  accounting  principle.  SFAS 154
             carries  forward  without change the guidance  contained in Opinion
             No.  20 for  reporting  the  correction  of an error in  previously
             issued  financial  statements and a change in accounting  estimate.
             This statement is effective for accounting  changes and corrections
             of errors made in fiscal years  beginning  after December 15, 2005.
             We adopted this SFAS in the first  quarter of our fiscal year 2007.
             The  implementation  did not have an effect on the  results  of our
             operations or financial position.


NOTE 2.  ACQUISITIONS

             On March 4, 2007, we acquired the assets of a franchised restaurant
             located in Lake Worth, Florida for $100,000 of total consideration.
             We have included the assets acquired in our consolidated  financial
             statements as of that date. We allocated the purchase price $55,000
             to the value of property and  equipment and $45,000 to the value of
             the leasehold purchased.

             On July 26, 2006, we acquired  Josar  Investments,  LLC (Josar) for
             $3,876,000 of total consideration. The assets acquired, liabilities
             assumed and the  results of  operations  have been  included in our
             consolidated  financial statements as of that date. The acquisition
             of Josar included our purchase of 100% of the membership  interests
             of Josar,  which became our wholly owned  subsidiary.  We purchased
             Josar for the purpose of acquiring  the land and building  owned by
             Josar and leased by us for our  combination  restaurant and package
             liquor store  operation.  We fully attributed the purchase price to
             the fair value of the land and building.

             Contemporaneous  to closing on the  purchase  of Josar,  we entered
             into  a  mortgage  loan  on the  property  acquired  together  with
             property owned by us adjacent thereto for $3,280,000. Proceeds from
             the  mortgage  loan were used to satisfy a portion of the  purchase
             price,  to  retire  the  previous  mortgage  loan  on our  adjacent
             property for $266,000 and to pay certain fees  associated  with the
             transaction.

NOTE 3 - DISPOSITIONS

             On April 23,  2007,  we sold our real  property  located at 732-734
             N.E.  125th Street,  North Miami,  Florida and our rights under the
             liqour  license for that location for $780,000.  We purchased  this
             real property  during the first quarter of our fiscal year 2007 for
             a purchase  price of $250,000 and realized a gain of $393,000  from
             the sale.

                                      F-14
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 4.  NOTES AND MORTGAGES RECEIVABLE

             Our receivables  consist of the following at September 29, 2007 and
             September 30, 2006:
<TABLE>
<CAPTION>
                                                                                            2007       2006
                                                                                            ----       ----
<S>                                                                                         <C>        <C>
             Note and mortgage receivable from an unrelated party, bearing
             interest at the rate of 15% per annum.  Interest only payments were due
             through 2013.  During our fiscal year 2007, this note was paid in full.      $     --   $ 45,000
                                                                                          --------   --------

             Mortgage receivable from related party, bearing interest at 14% and due in
             installments through August, 2011                                              58,000     70,000
                                                                                          --------   --------
                                                                                            58,000    115,000
             Current portion                                                                14,000     12,000
                                                                                          --------   --------
                                                                                          $ 44,000   $103,000
                                                                                          ========   ========
</TABLE>

             The remaining  note and mortgage  receivable  represents the amount
             owed to us for a store operation  which was sold.  Since we did not
             receive  a  significant  amount  of cash on the  sale,  a pro  rata
             portion of the gain are deferred and recognized only as payments on
             the  note  and   mortgage  is   received   by  us.  We   recognized
             approximately  $9,000 of deferred gain on  collections of such note
             receivable  during our fiscal year ended  September  29, 2007;  and
             approximately  $8,000 was recognized  during our fiscal years ended
             September 30, 2006 and October 1, 2005, respectively.

             Future scheduled  payments on our receivables at September 29, 2007
             consist of the following:

                2008                                              $14,000
                2009                                               16,000
                2010                                               19,000
                2011                                                9,000
                                                                  -------
                                                                  $58,000
                                                                  =======

NOTE 5.  PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                                  2007          2006
                                                                  ----          ----
<S>                                                             <C>           <C>
             Furniture and equipment                          $ 7,909,000   $ 8,057,000
             Leasehold improvements                            15,413,000    14,146,000
             Land and land improvements                         5,104,000     4,203,000
             Building and improvements                          2,383,000     2,122,000
             Vehicles                                             670,000       665,000
                                                              -----------   -----------
                                                               31,479,000    29,193,000
             Less accumulated depreciation and amortization    12,069,000    11,226,000
                                                              -----------   -----------
                                                              $19,410,000   $17,967,000
                                                              ===========   ===========
</TABLE>

                                      F-15
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 6.    LEASEHOLD PURCHASES
                                                2007         2006
                                                ----         ----

             Leasehold purchase, at cost     $2,911,000   $1,911,000
             Less accumulated amortization      826,000      620,000
                                             ----------   ----------
                                             $2,085,000   $1,291,000
                                             ==========   ==========


NOTE 7.  INVESTMENTS IN LIMITED PARTNERSHIPS

             We have invested with others,  (some of whom are or are  affiliated
             with our officers  and  directors),  in nine  limited  partnerships
             which own and operate nine South  Florida based  restaurants  under
             our service mark "Flanigan's Seafood Bar and Grill". In addition to
             being a limited partner in these limited  partnerships,  we are the
             sole  general  partner  of all of these  limited  partnerships  and
             manage and control the operations of the restaurants except for the
             restaurant located in Fort Lauderdale, Florida where we only hold a
             limited partnership interest.

             Generally,  the terms of the limited partnership agreements provide
             that until the investors' cash investment in a limited  partnership
             (including  any cash  invested  by us) is  returned  in  full,  the
             limited  partnership  distributes to the investors  annually out of
             available cash from the operation of the restaurant, as a return of
             capital, up to 25% of the cash invested in the limited partnership,
             with no management  fee paid to us. Any available cash in excess of
             the 25% of the cash invested in the limited partnership distributed
             to the  investors  annually,  is  paid  one-half  (1/2)  to us as a
             management fee and one-half (1/2) to the investors, (including us),
             prorata  based  upon the  investors'  investment,  as a  return  of
             capital. Once all of the investors,  (including us), have received,
             in full, amounts equal to their cash invested, an annual management
             fee becomes payable to us equal to one-half (1/2) of cash available
             to be distributed,  with the other one half (1/2) of available cash
             distributed   to  the  investors   (including   us),  as  a  profit
             distribution, pro-rata based upon the investors' investment.

             As of September  29, 2007,  limited  partnerships  owning three (3)
             restaurants  have  returned  all cash  invested  and we  receive an
             annual management fee equal to one-half (1/2) of the cash available
             for  distribution  by the limited  partnership.  In addition to our
             receipt of distributable amounts from the limited partnerships,  we
             receive a fee equal to 3% of gross sales for use of our "Flanigan's
             Seafood Bar and Grill" service mark,  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.  We  anticipate  that we  will  continue  to form  limited
             partnerships  to raise funds to own and operate  restaurants  under
             our service mark "Flanigan's  Seafood Bar and Grill" using the same
             or substantially similar financial arrangement.

         Surfside, Florida

             We are the sole general  partner and a 42% limited  partner in this
             limited  partnership  which has owned and operated a restaurant  in
             Surfside, Florida under our "Flanigan's Seafood Bar

                                      F-16
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 7.   INVESTMENTS IN LIMITED PARTNERSHIPS   (Continued)

          Surfside, Florida (Continued)

             and Grill" service mark since March 6, 1998. 34.7% of the remaining
             limited partnership interest is owned by persons who are either our
             officers,  directors or their family members.  As of the end of our
             fiscal year 2007,  this  limited  partnership  has  returned to its
             investors  all of their  initial  cash  invested.  This  entity  is
             consolidated in the accompanying financial statements.

         Kendall, Florida

             We are the sole general  partner and a 40% limited  partner in this
             limited  partnership  which has owned and operated a restaurant  in
             Kendall,  Florida  under our  "Flanigan's  Seafood  Bar and  Grill"
             service mark since April 4, 2000.  29.5% of the  remaining  limited
             partnership  interest  is  owned  by  persons  who are  either  our
             officers,  directors or their family members.  As of the end of our
             fiscal year 2007,  this  limited  partnership  has  returned to its
             investors  all of their  initial  cash  invested.  This  entity  is
             consolidated in the accompanying financial statements.

         West Miami, Florida

             We are the sole general  partner and a 25% limited  partner in this
             limited  partnership  which has owned and operated a restaurant  in
             West Miami,  Florida under our  "Flanigan's  Seafood Bar and Grill"
             service mark since October 11, 2001. 42.4% of the remaining limited
             partnership  interest  is  owned  by  persons  who are  either  our
             officers,  directors or their family members.  As of the end of our
             fiscal year 2007,  this  limited  partnership  has  returned to its
             investors  all of their  initial  cash  invested.  This  entity  is
             consolidated in the accompanying financial statements.

         Weston, Florida

             We are the sole general  partner and a 28% limited  partner in this
             limited  partnership  which has owned and operated a restaurant  in
             Weston,  Florida  under  our  "Flanigan's  Seafood  Bar and  Grill"
             service mark since January 20, 2003. 34.3% of the remaining limited
             partnership  interest  is  owned  by  persons  who are  either  our
             officers,  directors or their family members.  As of the end of our
             fiscal year 2007,  this  limited  partnership  has  returned to its
             investors  approximately  64% of their initial cash invested.  This
             entity is consolidated in the accompanying financial statements.

         Stuart, Florida

             We are the sole general  partner and a 12% limited  partner in this
             limited  partnership which has owned and operated a restaurant in a
             Howard Johnson's Hotel in Stuart, Florida under our

                                      F-17
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 7.  INVESTMENTS IN LIMITED PARTNERSHIPS   (Continued)

         Stuart, Florida  (Continued)

             "Flanigan's  Seafood Bar and Grill"  service mark since January 11,
             2004. 31.0% of the remaining limited partnership  interest is owned
             by persons who are either our  officers,  directors or their family
             members.  As of the  end of our  fiscal  year  2007,  this  limited
             partnership  has returned to its investors  approximately  22.5% of
             their  initial  cash  invested.  During our fiscal  year 2006,  the
             limited  partners of this limited  partnership  only received three
             (3) quarterly  distributions due to the limited cash flow generated
             by the restaurant.

             During our fiscal year 2007, no distributions  were made to limited
             partners as this limited partnership had a net loss of $98,000 from
             the  operation  of the  restaurant  during the fiscal  year  before
             depreciation  and  amortization  and owed the  Company  $203,000 in
             advances made to meet operating losses. This entity is consolidated
             in  the  accompanying   financial   statements  and  therefore  the
             intercompany transactions are eliminated.

         Wellington, Florida

             We are the sole general  partner and a 26% 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.  25.1% of the  remaining  limited
             partnership  interest  is  owned  by  persons  who are  either  our
             officers,  directors or their family members.  As of the end of our
             fiscal year 2007,  this  limited  partnership  has  returned to its
             investors approximately 37% of their initial cash invested.

         Pinecrest, Florida

             We are the sole  general  partner and 39%  limited  partner in this
             limited  partnership  which has owned and operated a restaurant  in
             Pinecrest,  Florida  under our  "Flanigan's  Seafood Bar and Grill"
             service mark since August 14, 2006. 14.9% of the remaining  limited
             partnership  interest  is  owned  by  persons  who are  either  our
             officers,  directors or their family members.  As of the end of our
             fiscal year 2007,  this  limited  partnership  has  returned to its
             investors  approximately  10% of their initial cash invested.  This
             entity is consolidated in the accompanying financial statements.

         Davie, Florida

             We are the sole  general  partner  and a 48%  limited  partner of a
             limited  partnership  which on January  2, 2007,  (when we were the
             sole general partner and we and a wholly owned  subsidiary were the
             sole limited  partners),  acquired  personal  property assets and a
             leasehold  interest in an existing  restaurant  operation in Davie,
             Florida for $650,000, which is intended to commence operations as a
             "Flanigan's  Seafood  Bar and  Grill"  restaurant  during the third
             quarter of our  fiscal  year 2008.  9.5% of the  remaining  limited
             partnership  interest  is  owned  by  persons  who are  either  our
             officers, directors or their family members.

                                      F-18
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 7.  INVESTMENTS IN LIMITED PARTNERSHIPS   (Continued)

         Davie, Florida  (Continued)

             We advanced to the limited partnership the entire $650,000 purchase
             price and have,  in addition,  advanced to the limited  partnership
             approximately   $400,000  for  expenses,   including   amounts  for
             renovations  and  upgrades  at this  location.  During  the  fourth
             quarter of fiscal year 2007, this limited partnership commenced and
             subsequent  to the end of fiscal year 2007,  completed  its private
             offering of limited partnership  interests,  raising gross proceeds
             of $3,875,000.  The amounts we advanced to the limited  partnership
             credited our  obligation  to pay for our equity  investment  in the
             limited  partnership  at the  same  price as  other  investors  who
             acquired limited partnership interests in the limited partnership.

         Pembroke Pines, Florida

             We are the sole  general  partner  and a 16%  limited  partner in a
             limited  partnership  which on October 24, 2006,  (when we were the
             sole general partner and we and a wholly owned  subsidiary were the
             sole  limited  partners),  acquired  the  assets  and  a  leasehold
             interest of an existing  restaurant  operation  in Pembroke  Pines,
             Florida  for  a  purchase  price  of  $305,000,   which   commenced
             operations  on October  29, 2007 as a  "Flanigan's  Seafood Bar and
             Grill"  restaurant.  17.7%  of the  remaining  limited  partnership
             interest is owned by persons who are either our officers, directors
             or their family members.

             During  the  third  quarter  of  fiscal  year  2007,   the  limited
             partnership completed its private offering,  raising gross proceeds
             of  $2,350,000  to complete  the  renovations  and  upgrades at the
             Pembroke  Pines,  Florida  location.  We  advanced  to the  limited
             partnership the entire $305,000 purchase price and in addition, had
             advanced  to the limited  partnership  approximately  $375,000  for
             expenses,  including  amounts for  renovation  and upgrades at this
             location.  The  amounts  we  advanced  to the  limited  partnership
             credited our  obligation  to pay for our equity  investment  in the
             limited  partnership  at the  same  price as  other  investors  who
             acquired limited partnership  interests in the limited partnership.
             The excess amounts advanced by us, (approximately  $300,000),  were
             reimbursed to us without  interest from general  working capital of
             the  limited  partnership.  This  entity  is  consolidated  in  the
             accompanying financial statements.

         Fort Lauderdale, Florida

             A corporation,  owned by one of our directors, acts as sole general
             partner  of a limited  partnership  which has owned and  operated a
             restaurant  in  Fort  Lauderdale,  Florida  under  our  "Flanigan's
             Seafood Bar and Grill"  service mark since April 1, 1997. We have a
             25% limited partnership interest in this limited partnership. 57.6%
             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

                                      F-19
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 7.  INVESTMENTS IN LIMITED PARTNERSHIPS   (Continued)

         Fort Lauderdale, Florida  (Continued)

             limited  partnership  into our operations.  This entity is reported
             using the equity method in the accompanying  consolidated financial
             statements.

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

                                             2007          2006         2005
                                             ----          ----         ----
             Financial Position:
               Current assets            $   49,000   $   68,000   $   47,000
               Non-current assets           615,000      588,000      544,000
               Current liabilities          152,000       88,000      134,000
               Non-current liabilities       58,000       71,000       81,000

             Operating Results:
               Revenues                   2,286,000    2,171,000    2,111,000
               Gross profit               1,507,000    1,426,000    1,378,000
               Net income                     5,000      122,000       72,000

NOTE 8.  LIQUOR LICENSES

             Liquor  licenses are tested for  impairment in September of each of
             our fiscal  years.  The fair value of liquor  licenses at September
             29, 2007, 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 29, 2007
             and September  30, 2006,  the total  carrying  amount of our liquor
             licenses was approximately $347,000. We acquired no liquor licenses
             in fiscal year 2007 which required capitalization.

NOTE 9.  INCOME TAXES

             The  components  of our  provision  for income taxes for our fiscal
             years 2007, 2006 and 2005 are as follows:

                             2007         2006         2005
                             ----         ----         ----
             Current:
                Federal   $ 664,000    $ 703,000    $ 407,000
                State       150,000      167,000      118,000
                          ---------    ---------    ---------
                            814,000      870,000      525,000
                          ---------    ---------    ---------
             Deferred:
                Federal     (99,000)     (94,000)      21,000
                State       (17,000)     (26,000)      (3,000)
                          ---------    ---------    ---------
                           (116,000)    (120,000)      18,000
                          ---------    ---------    ---------
                          $ 698,000    $ 750,000    $ 543,000
                          =========    =========    =========

                                      F-20
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 9.   INCOME TAXES   (Continued)

             A  reconciliation  of income tax computed at the statutory  federal
             rate to income tax expense is as follows:

<TABLE>
<CAPTION>
                                                                2007         2006         2005
                                                                ----         ----         ----
<S>                                                             <C>          <C>          <C>
             Tax provision at the statutory rate of 34%      $ 749,000    $ 795,000    $ 561,000
             State income taxes, net of federal income tax      88,000       93,000       76,000
             Tax benefit of tip credit generated              (141,000)    (127,000)    (118,000)
             Tax benefit of employee retention credit               --      (14,000)          --
             Other                                               2,000        3,000       24,000
                                                             ---------    ---------    ---------
                                                             $ 698,000    $ 750,000    $ 543,000
                                                             =========    =========    =========
</TABLE>

             At  October  1,  2005,  we  had  alternative   minimum  tax  credit
             carryforwards   available  of  approximately  $61,000,  which  were
             utilized in our fiscal year ending September 30, 2006.

             We  have   deferred  tax  assets  which  arise   primarily  due  to
             depreciation  recorded at different rates for tax and book purposes
             offset by cost basis  differences in depreciable  assets due to the
             deferral of the  recognition  of insurance  recoveries  on casualty
             losses  for tax  purposes,  investments  in  limited  partnerships,
             accruals for  potential  uninsured  claims and bonuses  accrued for
             book  purposes  but not paid  within two and a half  months for tax
             purposes, and the capitalization of certain inventory costs for tax
             purposes not recognized for financial reporting purposes.

             The components of our deferred tax assets at September 29, 2007 and
             September 30, 2006 were as follows:
<TABLE>
<CAPTION>
                                                                   2007       2006
                                                                   ----       ----
<S>                                                               <C>        <C>
             Current:
                Reversal of aged payables                        $ 27,000   $ 27,000
                Capitalized inventory costs                        22,000     22,000
                Accrued bonuses                                   135,000    132,000
                Accruals for potential uninsured claims            24,000      6,000
                                                                 --------   --------
                                                                 $208,000   $187,000
                                                                 ========   ========
             Long-Term:
                Book/tax differences in property and equipment   $321,000   $233,000
                Limited partnership investments                   171,000    164,000
                                                                 --------   --------
                                                                 $492,000   $397,000
                                                                 ========   ========
</TABLE>

       Internal Revenue Service Audit of Company's Corporate Income Tax Return
         for the Fiscal Year Ending October 1, 2005

             During the first quarter of fiscal year 2007, the corporate  income
             tax return for our fiscal year  ending  October 1, 2005 was audited
             by the Internal Revenue Service. We agreed that the sum of $107,000
             was due as  additional  corporate  income tax for our  fiscal  year
             ending October 1,

                                      F-21
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 9.  INCOME TAXES   (Continued)

             2005. The effects of the settlement of the audit were considered in
             the  computation of tax amounts for our fiscal year ended September
             30, 2006.


NOTE 10. DEBT

         Long-Term Debt
<TABLE>
<CAPTION>
                                                                                      2007         2006
                                                                                      ----         ----
<S>                                                                                <C>          <C>
             Mortgage payable to bank, secured by land and building, bearing
             interest at 7.5%; payable in monthly installments of principal and
             interest of $28,600, maturing in August 2013.                         $3,446,000   $3,274,000

             Mortgage payable to bank, secured by first mortgage on a building,
             bearing interest at 7.5%; payable in monthly installments of
             principal and interest of approximately $8,000, maturing in
             December 2013.                                                           985,000           --

             Mortgage payable, secured by land and building, bearing interest at
             10.0%; payable in monthly installments of principal and interest of
             $3,949, maturing in April, 2017.                                         449,000           --

             Note payable to finance company, secured by vehicle, bearing
             interest at 9.25%, payable in monthly installments of principal and
             interest of approximately  $4,500 through maturity in July 2010, at
             which time the unpaid principal of $45,000 becomes due.                  161,000      196,000

             Mortgage payable to bank; secured by first mortgage on a building;
             payable $2,248 per month, plus interest through maturity in August,
             2008. We prepaid this mortgage during the first quarter of fiscal
             year 2007, with the re-financing of the building.
                                                                                           --      788,000

             Other                                                                     77,000      161,000
                                                                                   ----------   ----------
                                                                                    5,118,000    4,419,000
             Less current portion                                                     196,000      223,000
                                                                                   ----------   ----------
                                                                                   $4,922,000   $4,196,000
                                                                                   ----------   ----------
</TABLE>

                                      F-22
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 10. DEBT    (Continued)

         Long-Term Debt   (Continued)

             Long-term debt at September 29, 2007 matures as follows:

             2008                                                    $  196,000
             2009                                                       180,000
             2010                                                       228,000
             2011                                                       150,000
             2012                                                       155,000
             Thereafter                                               4,209,000
                                                                     ----------
                                                                     $5,118,000
                                                                     ==========


Line of Credit

             As of the end of our fiscal year 2007, we have a $2,650,000 line of
             credit,  which has a  variable  interest  rate at prime,  (7.75% at
             September  29,  2007),  and is payable in monthly  installments  of
             interest only on the outstanding principal balance, with a maturity
             in the  first  quarter  of  our  fiscal  year  2009.  The  original
             agreement  provides for a security interest in substantially all of
             our  assets.  We  granted  our  lender  a  second  mortgage  on our
             corporate offices as additional  collateral for the increase in the
             line of credit in the first  quarter of our fiscal year 2007. As of
             September 29, 2007,  our line of credit had a principal  balance of
             $962,000  as  compared  to  $762,000  as  of  September  30,  2006.
             Subsequent to the end of our fiscal year 2007,  we drew  additional
             funds on our line of credit, in the amount of $600,000, raising the
             total outstanding balance to $1,562,000.


NOTE 11. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

         Legal Matters

             We are a party to various  claims,  legal  actions  and  complaints
             arising in the ordinary  course of our business.  It is our opinion
             that all such  matters are without  merit or involve  such  amounts
             that an unfavorable  disposition  would not have a material adverse
             effect on our financial position or results of operations.

         Leases

             We lease a substantial  portion of the land and  buildings  used in
             our  operations  under leases with initial terms  expiring  between
             2008 and 2049. Renewal options are available on many of our leases.
             Most of our leases are fixed rent agreements. For two Company-owned
             restaurant/package  liquor store combination  units,  lease rentals
             are subject to sales  overrides  ranging from 1.75% to 4% of annual
             sales  in  excess  of   established   amounts.   For  four  limited
             partnership  restaurants,   lease  rentals  are  subject  to  sales
             overrides  ranging  from 2% to 5% of annual  sales in excess of the
             base rent paid. We recognize rent lease expense on a straight

                                      F-23
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 11. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS   (Continued)

         Leases   (Continued)

             line basis  over the term of the  lease.  Certain of our leases are
             subject to fair market rental appraisals at the time of renewal. We
             have the option to purchase  the real  property  which we lease for
             the operation of our Fort Lauderdale, Florida restaurant.

             We have a ground  lease  for an out  parcel in  Hollywood,  Florida
             where we  constructed a building on the out parcel,  one-half (1/2)
             of which is used by us for the operation of a package  liquor store
             and the other  one-half (1/2) of which is subleased by us as retail
             space.  Rent for the retail space commenced January 1, 2005, and we
             generated $46,000,  $45,000 and $31,000 of revenue from this source
             during our fiscal years ending  September  29, 2007,  September 30,
             2006 and October 1, 2005,  respectively.  Future  minimum  sublease
             payments under the non-cancelable  sublease is $412,000,  including
             Florida sales tax (currently 6%).

             Future  minimum  lease  payments,   including   Florida  sales  tax
             (currently 6% to 7%) under our  non-cancelable  operating leases as
             of September 29, 2007 are as follows:

              2008                                            $ 2,501,000
              2009                                              2,327,000
              2010                                              2,130,000
              2011                                              1,650,000
              2012                                              1,188,000
              Thereafter                                        6,429,000
                                                              -----------
                 Total                                        $16,225,000
                                                              ===========

             Total  rent   expense   for  all  of  our   operating   leases  was
             approximately  $2,625,000,  $2,355,000 and $2,158,000 in our fiscal
             years  2007,  2006  and  2005,  respectively,  and is  included  in
             "Occupancy  costs" in our accompanying  consolidated  statements of
             income. This total rent expense is comprised of the following:

                                             2007         2006         2005
                                             ----         ----         ----

             Minimum Base Rent            $2,259,000   $2,079,000   $1,903,000
             Contingent Percentage Rent      366,000      276,000      255,000
                                          ----------   ----------   ----------
             Total                        $2,625,000   $2,355,000   $2,158,000
                                          ==========   ==========   ==========

             We  guarantee  various  leases for  franchisees  and stores sold in
             prior years.  Remaining rental payments required under these leases
             total   approximately   $3,004,000.    Our   guarantees   increased
             substantially  during  fiscal year 2007 due to the exercise of five
             year renewal  options by one franchisee and the lessee of one store
             sold in prior years.

         Purchase Commitments

             Effective  December 1, 2007,  we entered into a purchase  agreement
             with our rib supplier. The terms of the agreement stipulate that we
             will purchase approximately $3,200,000 of baby back ribs during the
             2008 calendar year at a fixed cost. We contract for the purchase of
             baby  back  ribs on an  annual  basis to fix the  cost  and  ensure
             adequate supply for the calendar year. We

                                      F-24
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 11. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS   (Continued)

         Purchase Commitments   (Continued)

             purchase  all of our rib supply  from this  vendor,  but we believe
             that several other alternative vendors are available, if necessary.

         Franchise Program

             At September  29, 2007,  we were the  franchisor of six units under
             franchise agreements. At September 30, 2006 and October 1, 2005, we
             were the franchisor of seven units under franchise  agreements.  On
             March 4, 2007, we acquired the assets of the franchised  restaurant
             in Lake Worth,  Florida.  Of the six  franchised  stores,  four are
             combination   restaurant/package   liquor   stores   and   two  are
             restaurants.  Four  franchised  stores  are owned and  operated  by
             related  parties.  Under  the  franchise  agreements,   we  provide
             guidance,  advice and management assistance to the franchisees.  In
             addition and for an additional annual fee of approximately $25,000,
             we also act as fiscal agent for the franchisees  whereby we collect
             all revenues and pay all expenses and distributions.  We also, from
             time to time,  advance funds on behalf of the  franchisees  for the
             cost of  renovations.  The resulting  amounts  receivable  from and
             payable to these  franchisees  are  reflected  in the  accompanying
             consolidated  balance  sheet as either an asset or a liability.  We
             also  agree to  sponsor  and manage  cooperative  buying  groups on
             behalf  of the  franchisees  for the  purchase  of  inventory.  The
             franchise  agreements  provide for royalties to us of approximately
             3% of gross  restaurant sales and 1% of gross package liquor sales.
             We are not currently offering or accepting new franchises.

         Employment Agreement/Bonuses

             As of September  29, 2007,  September 30, 2006 and October 1, 2005,
             we had no employment agreements.

             During the second  quarter  of our fiscal  year 2005,  our Board of
             Directors  approved an annual  performance  bonus,  with 14% of the
             corporate pre-tax net income,  plus or minus  non-recurring  items,
             but before depreciation and amortization in excess of $650,000 paid
             to the Chief  Executive  Officer  and 6% paid to other  members  of
             management.  Bonuses  for our  fiscal  years  2007,  2006  and 2005
             amounted  to   approximately   $438,000,   $523,000  and  $448,000,
             respectively.

             During  the  second  quarter  of  fiscal  year  2005,  our Board of
             Directors also approved an annual performance bonus, with 5% of the
             pre-tax net income before  depreciation and  amortization  from our
             restaurants  and  our  share  of  the  pre-tax  net  income  before
             depreciation  and  amortization  from the restaurants  owned by the
             limited  partnerships  paid to the Chief  Operating  Officer and 5%
             paid to the Chief Financial  Officer.  Bonuses for our fiscal years
             2007, 2006 and 2005 amounted to  approximately  $323,000,  $298,000
             and $216,000, respectively.

                                      F-25
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 11. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS   (Continued)

         Employment Agreement/Bonuses   (Continued)

             During  the  second  quarter  of  fiscal  year  2005,  our Board of
             Directors  approved  an annual  performance  bonus,  with 3% of the
             pre-tax net income before  depreciation and  amortization  from the
             package  liquor  stores  paid  to the  Vice  President  of  Package
             Operations and 2% paid to the package store supervisor. Bonuses for
             our fiscal  years 2007,  2006 and 2005  amounted  to  approximately
             $36,000, $52,000 and $48,000, respectively.

         Management Agreements

         Atlanta, Georgia

             We  own,  but do not  operate,  an  adult  entertainment  nightclub
             located in Atlanta,  Georgia which  operates  under the name "Mardi
             Gras". We have a management  agreement with an  unaffiliated  third
             party to manage the club.  Effective May 1, 2006, the  unaffiliated
             third  party that  manages the club  became  obligated  under a new
             lease  for the  business  premises  where the club  operates  for a
             period of ten (10) years, with one (1) ten (10) year renewal option
             and as of such date we are no  longer  obligated  under the  lease.
             Under  our  management  agreement,  the  unaffiliated  third  party
             management  firm is  obligated  to pay us an  annual  amount,  paid
             monthly,  equal to the greater of $150,000 or ten (10%)  percent of
             gross sales from the club,  offset by one-half  (1/2) of any rental
             increases,  provided our fees will never be less than  $150,000 per
             year.  For our fiscal years ended  September 29, 2007 and September
             30,  2006,   we   generated   $203,000  and  $224,000  of  revenue,
             respectively, from the operation of the club.

         Deerfield Beach, Florida

             Since  January,  2006,  we have managed "The Whale's Rib", a casual
             dining restaurant located in Deerfield Beach, Florida,  pursuant to
             management  agreement.  We paid $500,000 in exchange for our rights
             to  manage  this  restaurant.  The  management  agreement  is being
             amortized  straight  line over the life of the initial  term of the
             agreement, ten (10) years. The restaurant is owned by a third party
             unaffiliated  with  us.  In  exchange  for  providing   management,
             bookkeeping and related services,  we receive one-half (1/2) of the
             net profit, if any, from the operation of the restaurant.  The term
             of the management  agreement,  which commenced  January 9, 2006, is
             for ten (10) years,  with four (4) five (5) year renewal options in
             favor of the owner of the  restaurant.  For our  fiscal  year ended
             September 29, 2007 and the nine months in our fiscal year September
             30,  2006,   we   generated   $160,000  and  $108,000  of  revenue,
             respectively, from providing these management services.

                                      F-26
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 12. COMMON STOCK

         Treasury Stock

         Purchase of Common Shares

             Pursuant  to  a  discretionary   plan  approved  by  our  Board  of
             Directors,  during our fiscal year 2007, we purchased  3,332 shares
             of our common stock for an aggregate purchase price of $36,000.  Of
             the shares  purchased,  2,500  shares  were  purchased  from August
             Bucci,  our Chief  Operating  Officer and  Director,  in an off the
             market  private  transaction,  at an  aggregate  purchase  price of
             $28,000,  which  reflected an actual per share purchase price which
             was less than the  closing  per share  market  price on the date of
             purchase.  During our fiscal year 2006, we purchased  14,350 shares
             of our common stock for an aggregate purchase price of $139,000. Of
             the shares purchased, 7,500 shares were purchased from Mr. Bucci in
             an off the market  private  transaction,  at an aggregate  purchase
             price of  $77,000,  which  reflected  an actual per share  purchase
             price which was less than the closing per share market price on the
             date of each  purchase.  During our fiscal year 2005,  we purchased
             42,720 shares of our common stock for an aggregate  purchase  price
             of $353,000.

         Sale of Common Shares

             During our fiscal years 2007,  2006 and 2005,  we sold an aggregate
             of 9,510, 24,120, and 490 shares of our common stock, respectively,
             pursuant  to the  exercise  of options,  to certain  employees  and
             officers for a total of approximately $61,000, $116,000 and $2,000,
             respectively.

         Stock Options

             We granted no options during our fiscal years 2007, 2006 and 2005.

             Effective  January 1, 2006, we adopted SFAS No. 123 (revised 2004),
             "Share-Based  Payment,"  (SFAS No. 123R) to account for stock-based
             employee  compensation.  We elected to use the modified prospective
             method for  adoption,  which  requires  compensation  expense to be
             recorded  for all  unvested  stock  options  beginning in the first
             quarter of adoption. We had no unvested stock options as of January
             1, 2006 and  granted  no stock  options  in the  fiscal  year ended
             September 29, 2007 or in the nine months ended  September 30, 2006,
             so no  compensation  cost has been  recognized on our  consolidated
             financial  statements for our fiscal years ended September 29, 2007
             and September 30, 2006.

             Changes in our outstanding incentive stock options for common stock
             are as follows:

                                                 2007        2006        2005
                                                 ----        ----        ----

             Outstanding at beginning of year    67,850     100,810     101,900
             Options granted                         --          --          --
             Options exercised                   (9,510)    (24,120)       (490)

                                      F-27
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


             Options expired                     (8,040)     (8,840)       (600)
                                               --------    --------    --------
             Outstanding at end of year          50,300      67,850     100,810
                                               --------    --------    --------
             Exercisable at end of year          50,300      67,850     100,810
                                               ========    ========    ========

             The intrinsic  value as of the exercise date of the 9,510,  24,120,
             and 490 stock  options  exercised  during  our fiscal  years  ended
             September  29,  2007,  September  30, 2006 and October 1, 2005 were
             approximately $45,000, $124,000 and $2,000 , respectively.

             Weighted  average option exercise price  information for our fiscal
             years 2007, 2006 and 2005 is as follows:
                                                  2007       2006       2005
                                                  ----       ----       ----

             Outstanding at beginning of year   $   6.27   $   5.75   $   5.77
                                                ========   ========   ========
             Granted during the year            $     --   $     --   $     --
                                                ========   ========   ========
             Exercised during the year          $   6.23   $   4.83   $   4.56
                                                ========   ========   ========
             Outstanding at end of year         $   6.31   $   6.27   $   5.75
                                                ========   ========   ========
             Exercisable at end of year         $   6.31   $   6.27   $   5.75
                                                ========   ========   ========


             Our significant option groups outstanding at September 29, 2007 and
             related weighted average price and life information are as follows:

              Grant       Options        Options      Exercise      Remaining
               Date     Outstanding    Exercisable     Price      Life (Years)
               ----     -----------    -----------     -----      ------------

             10-1-03       10,300         10,300       $6.14          1.0
             5-20-04       40,000         40,000       $6.35          1.625

             The  weighted-average  remaining  contractual  terms  of our  stock
             options  outstanding and stock options exercisable at September 29,
             2007 was 1.5 years.  The aggregate  intrinsic  value of our options
             outstanding and stock options exercisable at September 29, 2007 was
             approximately $125,000.


NOTE 13. NET INCOME PER COMMON SHARE

         We follow SFAS No. 128, "Earnings per Share." SFAS 128 provides for the
         calculation of basic and diluted earnings per share. Basic earnings per
         share includes no dilution and is computed by dividing income available
         to common  stockholders by the weighted average number of common shares
         outstanding  for the  period.  Diluted  earnings  per share  assume the
         exercise  of  options  granted.  Earnings  per  share are  computed  by
         dividing  income  available  to  common  stockholders  by the basic and
         diluted weighted average number of common shares.

                                      F-28
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 13. NET INCOME PER COMMON SHARE   (Continued)

<TABLE>
<CAPTION>
                                                            2007        2006        2005
                                                            ----        ----        ----
<S>                                                       <C>         <C>         <C>
             Basic weighted average shares                1,889,000   1,884,000   1,895,000
             Incremental shares relating to outstanding
               Options                                       21,000      25,000      28,000
                                                          ---------   ---------   ---------
             Diluted weighted average shares              1,910,000   1,909,000   1,923,000
                                                          =========   =========   =========
</TABLE>


NOTE 14. RELATED PARTY TRANSACTIONS

         Our Chief Executive Officer manages one of our franchised stores.

         Also see Notes 6, 10, and 11 for additional related party transactions.


NOTE 15. BUSINESS SEGMENTS

         We operate  principally in two reportable  segments -package stores and
         restaurants.  The operation of package stores consists of retail liquor
         sales and  related  items.  Information  concerning  the  revenues  and
         operating  income for our fiscal years ended 2007,  2006 and 2005,  and
         identifiable  assets  for the  two  reportable  segments  in  which  we
         operate,  are shown in the following  table.  Operating income is total
         revenue less cost of merchandise sold and operating  expenses  relative
         to each segment.  In computing  operating income, none of the following
         items have been included:  interest expense, other non-operating income
         and expense and income taxes.  Identifiable assets by segment are those
         assets  that  are used in our  operations  in each  segment.  Corporate
         assets are  principally  cash,  notes and  mortgages  receivable,  real
         property,  improvements,  furniture,  equipment and vehicles. We do not
         have any  operations  outside  of the United  States  and  transactions
         between restaurants and package liquor stores are not material.

<TABLE>
<CAPTION>
                                                                       2007            2006            2005
                                                                       ----            ----            ----
<S>                                                                  <C>             <C>             <C>
             Operating Revenues:
                Restaurants                                        $ 46,811,000    $ 40,457,000    $ 35,829,000
                Package stores                                       12,784,000      13,046,000      11,810,000
                Other revenues                                        1,506,000       1,511,000       1,393,000
                                                                   ------------    ------------    ------------
                   Total operating revenues                        $ 61,101,000    $ 55,014,000    $ 49,032,000
                                                                   ============    ============    ============

             Operating Income Reconciled to Income
             before Income Taxes and Minority Interest in
             Earnings of Consolidated Limited Partnerships
                   Restaurants                                     $  3,281,000    $  3,083,000    $  3,355,000
                   Package stores                                       470,000         817,000         725,000
                                                                   ------------    ------------    ------------
                                                                      3,751,000       3,900,000       4,080,000

                                      F-29
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

<CAPTION>
<S>                                                                  <C>             <C>             <C>
                   Corporate expenses, net of other revenues         (1,651,000)     (2,262,000)     (2,035,000)
                                                                   ------------    ------------    ------------

                   Operating income                                   2,100,000       1,638,000       2,045,000
                   Equity in net income of limited partnership            1,000          31,000          18,000
                   Minority interest in earnings of consolidated
                     limited partnerships                              (100,000)       (312,000)       (403,000)
                   Interest expense, net of interest income            (494,000)       (164,000)        (68,000)
                   Other                                                458,000         807,000          58,000
                                                                   ------------    ------------    ------------
                         Income Before Income Taxes                $  1,965,000    $  2,000,000    $  1,650,000
                                                                   ============    ============    ============


             Identifiable Assets:
                Restaurants                                        $ 18,202,000    $ 15,635,000    $ 10,277,000
                Package store                                         3,577,000       3,602,000       3,527,000
                                                                   ------------    ------------    ------------
                                                                     21,779,000      19,237,000      13,804,000
                Corporate                                             8,558,000       8,161,000       7,295,000
                                                                   ------------    ------------    ------------
             Consolidated Totals                                   $ 30,337,000    $ 27,398,000    $ 21,099,000
                                                                   ============    ============    ============

             Capital Expenditures:
                Restaurants                                        $  3,505,000    $  6,832,000    $  1,848,000
                Package stores                                          274,000         148,000         251,000
                                                                   ------------    ------------    ------------
                                                                      3,779,000       6,980,000       2,099,000
                Corporate                                             1,107,000         741,000         298,000
                                                                   ------------    ------------    ------------
             Total Capital Expenditures                            $  4,886,000    $  7,721,000    $  2,397,000
                                                                   ============    ============    ============

             Depreciation and Amortization:
                Restaurants                                        $  1,550,000    $  1,277,000    $  1,166,000
                Package stores                                          245,000         229,000         163,000
                                                                   ------------    ------------    ------------
                                                                      1,795,000       1,506,000       1,329,000
                Corporate                                               360,000         333,000         214,000
                                                                   ------------    ------------    ------------
             Total Depreciation and Amortization                   $  2,155,000    $  1,839,000    $  1,543,000
                                                                   ============    ============    ============
</TABLE>


NOTE 16. QUARTERLY INFORMATION (UNAUDITED)

         The  following  is a summary  of our  unaudited  quarterly  results  of
         operations for the quarters in our fiscal years 2007 and 2006.
<TABLE>
<CAPTION>
                                                                  Quarter Ended
                                              -------------------------------------------------------
                                              December 30,   March 31,      June 30     September 29,
                                                 2006          2007           2007          2007
                                                 ----          ----           ----          ----
<S>                                           <C>           <C>           <C>           <C>
             Revenues                         $14,985,000   $16,304,000   $15,407,000   $14,405,000
             Income from operations               712,000       810,000       288,000       290,000
             Net income                           324,000       332,000       427,000       184,000

                                      F-30
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 16. QUARTERLY INFORMATION (UNAUDITED) (Continued)

<CAPTION>
<S>                                           <C>           <C>           <C>           <C>
             Net income per share -
               Basic                                 0.17          0.18          0.23          0.10
             Net income per share -
               Diluted                               0.17          0.17          0.22          0.10
             Weighted average common
                stock outstanding - basic       1,884,201     1,887,917     1,892,891     1,890,543
             Weighted average common
                stock outstanding - diluted     1,911,022     1,915,176     1,914,986     1,908,462
</TABLE>

             The  following  is a  summary  of the  significant  fourth  quarter
             adjustments for our fiscal year 2007:

             Decrease in accrual for officers' bonuses              ($191,000)
             Adjusting estimated income taxes to actual                95,000
                                                                    ---------
                                                                    ($ 96,000)
                                                                    =========
<TABLE>
<CAPTION>

                                                                   Quarter Ended
                                              ----------------------------------------------------------
                                               December 31,     April 1,       July 1,     September 30,
                                                   2005          2006           2006           2006
                                                   ----          ----           ----           ----
<S>                                           <C>            <C>            <C>            <C>
             Revenues                         $ 13,249,000   $ 14,477,000   $ 13,851,000   $ 13,437,000
             Income (loss) from operations         662,000        512,000        650,000       (186,000)
             Net income (loss)                     363,000        582,000        203,000        102,000
             Net income (loss) per share -
               basic                                   .19            .31            .11            .05
             Net income (loss) per share -
               Diluted                                 .19            .30            .11            .05
             Weighted average common
                stock outstanding - basic        1,874,776      1,879,809      1,893,486      1,887,167
             Weighted average common
                stock outstanding - diluted      1,913,990      1,908,919      1,920,472      1,912,147
</TABLE>

             The  following  is a  summary  of the  significant  fourth  quarter
             adjustments for our fiscal year 2006:

             Additional accrual for officers' bonuses                 $ 116,000
                                                                      =========

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


NOTE 17. 401(k) PLAN

             Effective July 2004, we began  sponsoring a 401(k)  retirement plan
             covering  substantially  all employees who meet certain eligibility
             requirements.  Employees may contribute  elective  deferrals to the
             plan up to amounts allowed under the Internal  Revenue Code. We are
             not required to contribute  to the plan but may make  discretionary
             profit sharing and matching

                                      F-31
<PAGE>


                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)


NOTE 17. 401(k) PLAN    (Continued)

         contributions.  During our fiscal  years 2007,  2006 and 2005,  we made
         discretionary   contributions   of  $29,000,   $12,000   and   $37,500,
         respectively.



Schedule II - Valuation and Qualifying Accounts

         We maintain no accounts  that qualify for this schedule for each of our
         three fiscal years ended  September  29,  2007,  September  30, 2006 or
         October 1, 2005.



================================================================================



                                      F-32