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 27, 2008

                                       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, a non-accelerated  filer, or a smaller reporting company. See
the definitions of "large accelerated  filer",  "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Securities  Exchange Act of 1934. (Check
one):

Large  accelerated  filer [ ] Accelerated  filer [ ]  Non-accelerated  filer [ ]
Smaller reporting company [X]

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

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  was  $6,838,000  as of March 29, 2008,  the last business day of the
registrant's most recently completed second fiscal quarter,  at a price of $8.05
per share.

There were 1,875,333 shares of the Registrant's  Common Stock,  $0.10 par value,
outstanding as of December 22, 2008

                       DOCUMENTS INCORPORATED BY REFERENCE

Information required by Part III is incorporated by reference to portions of the
Registrant's  Proxy statement for the 2009 Annual Meeting of Shareholders  which
will be filed with the Securities and Exchange Commission by January 26, 2009.

                                        2

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES
                  ---------------------------------------------

                               INDEX TO FORM 10-K

<TABLE>
<S>              <C>                                                                         <C>
PART I.

    Item 1       Business                                                                     5

    Item 1A      Risk Factors                                                                19

    Item 2       Properties                                                                  23

    Item 3       Legal Proceedings                                                           28

    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.                                  29

    Item 6       Selected Financial Data.                                                    31

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

    Item 7A      Quantitative and Qualitative Disclosures About Market Risk.                 43

    Item 8       Financial Statements and Supplementary Data.                                43

    Item 9       Changes in and Disagreements with Accountants on Accounting and Financial
                 Disclosure.                                                                 44

    Item 9A(T)   Controls and Procedures.                                                    44

    Item 9B.     Other Information                                                           45

PART III.

    Item 10      Directors, Executive Officers and Corporate Governance                      45

    Item 11      Executive Compensation                                                      45

    Item 12      Security Ownership of Certain Beneficial Owners and Management and
                 Related Stockholders Matters                                                45

    Item 13      Certain Relationships and Related Transactions, and Director
                 Independence.                                                               45

    Item 14      Principal Accountant Fees and Services                                      46

PART IV

    Item 15      Exhibits and Financial Statement Schedules.                                 46

SIGNATURES
CERTIFICATIONS
</TABLE>

                                        3

<PAGE>

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.  We undertake no
obligation  to  update   forward-looking   statements   to  reflect   events  or
circumstances occurring after the date of this annual report on Form 10-K.

General
-------

      At  September  27,  2008,  we (i) operate 23 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 27, 2008 and as compared to
September  29, 2007.  With the  exception of "The Whale's  Rib", a restaurant we
operate but do not own, 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
                                                   YEAR      YEAR      NOTE
TYPES OF UNITS                                     2008      2007      NUMBER
--------------------------------------------------------------------------------
Company Owned:
-------------
   Combination package liquor store and
      restaurant                                     4         4
   Restaurant only                                   3         3       (1)
   Package liquor store only                         5         5

Company Managed Restaurants Only:
--------------------------------
   Limited partnerships                              9         7       (2)(3)
   Franchise                                         1         1
   Unrelated Third Party                             1         1

Company Owned Club:                                  1         1
------------------
--------------------------------------------------------------------------------
TOTAL - Company
   Owned/Operated Units:                            24        22

FRANCHISED - units                                   6         6       (4)
                                                    --        --

                                        5

<PAGE>

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 Pembroke  Pines,  Florida  which is
owned by a limited  partnership in which we are the sole general partner and own
17% of the limited  partnership  interest and commenced operating on October 29,
2007.

      (3) Includes a restaurant  located in Davie,  Florida  which is owned by a
limited  partnership in which we are the sole general partner and own 48% of the
limited partnership interest and commenced operating on July 28, 2008.

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

      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 7 to the
consolidated financial statements and the discussion of franchised units on page
8.

      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.

                                        6

<PAGE>

      Our package  liquor  stores  emphasize  high volume  business by providing
customers  with a wide variety of brand name and private  label  merchandise  at
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             40

CIC Investors #50, Limited Partnership                 Florida             17

CIC Investors #55, Limited Partnership                 Florida             48

CIC Investors #60, Limited Partnership                 Florida             45

CIC Investors #65, Limited Partnership                 Florida             28

CIC Investors #70, Limited Partnership                 Florida             41

CIC Investors #75, Limited Partnership                 Florida             13

CIC Investors #80, Limited Partnership                 Florida             27

CIC Investors #95, Limited Partnership                 Florida             30

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
depending upon our actual advertising costs.

      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  of the
business premises thereafter, whether by lease or ownership. In

                                        8

<PAGE>

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.

      For accounting purposes, we do not consolidate the revenue and expenses of
our franchisees'  operations with our revenue and expenses.  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 ten limited  partnerships  which currently own and
operate ten 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 on the investors'
investment,  as a return of capital. Once all of the investors,  (including us),
have  received,  in full,  amounts  equal  to their  cash  invested,  an  annual
management  fee becomes  payable to us equal to one-half (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 on the
investors'  investment.  As of September 27, 2008, limited  partnerships  owning
three (3)  restaurants,  (Surfside,  Florida,  Kendall,  Florida and West Miami,
Florida  locations),  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 ten limited partnerships which own and operate
"Flanigan's Seafood Bar and Grill" restaurants:

                                        9

<PAGE>

Pinecrest, Florida

      We are the sole  general  partner and 40% 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.
15.0% 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 2008,  this  limited  partnership  has  returned  to its  investors
approximately 18% 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.  58.8% 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 2008,  this limited  partnership  has returned to its
investors all cash  invested,  but since we are not the general  partner of this
limited  partnership,  we do not  receive an annual  management  fee.  We have a
franchise arrangement with this limited partnership and for accounting purposes,
we do not  consolidate  the  operations  of this  limited  partnership  into our
operations.

Surfside, Florida

      We are the sole general  partner and a 45% 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.  34.9%
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 2008,  this limited  partnership has returned to its investors all of their
initial cash invested and we receive an annual  management fee equal to one-half
(1/2) of the cash available for distribution by this limited partnership.

Kendall, Florida

      We are the sole general  partner and a 41% limited partner in this limited
partnership which has owned and operated a restaurant in Kendall,  Florida under
our "Flanigan's  Seafood Bar and Grill" service mark since April 4, 2000.  29.7%
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 2008,  this limited  partnership has returned to its investors all of their
initial cash invested and we receive an annual  management fee equal to one-half
(1/2) of the cash available for distribution by this limited partnership.

West Miami, Florida

      We are the sole general  partner and a 27% limited partner in this limited
partnership  which has owned and  operated a restaurant  in West Miami,  Florida
under our  "Flanigan's  Seafood Bar and Grill"  service  mark since  October 11,
2001. 34.1% of the remaining  limited  partnership  interest is

                                       10

<PAGE>

owned by persons who are either our officers, directors or their family members.
As of the end of our fiscal year 2008, this limited  partnership has returned to
its  investors  all of their  initial  cash  invested  and we  receive an annual
management fee equal to one-half (1/2) of the cash available for distribution by
this limited partnership.

Weston, Florida

      We are the sole general  partner and a 30% 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, 2004.
35.1% 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 2008,  this  limited  partnership  has  returned  to its  investors
approximately 73.75% of their initial cash invested. During the first quarter of
our fiscal  year 2009,  no  distribution  was made to limited  partners  as this
limited  partnership  had limited cash flow  generated by this  restaurant.  The
limited cash flow was primarily attributable to increased competition,  which we
expect to continue into our fiscal year 2009.

Stuart, Florida

      We are the sole  general  partner and 13% 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 2008,  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  years  2007  and  2008,  no
distributions were made to limited partners as this limited  partnership had net
losses of $98,000 and $8,000 from the  operation  of the  restaurant  during the
fiscal years 2007 and 2008, respectively,  before depreciation and amortization,
and owed the Company  $203,000 and  $216,000,  as of the end of our fiscal years
2007 and 2008, respectively, in advances made to meet operating losses.

Wellington, Florida

      We are the sole general  partner and a 28% limited partner in this limited
partnership  which has owned and operated a restaurant  in  Wellington,  Florida
under our  "Flanigan's  Seafood Bar and Grill"  service mark since May 27, 2005.
25.7% 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 2008,  this  limited  partnership  has  returned  to its  investors
approximately 41% of their initial cash invested.

Davie, Florida

      We are the sole general  partner and a 48% limited partner in this limited
partnership  which has owned and operated a restaurant  in Davie,  Florida under
our "Flanigan's Seafood Bar and Grill" service mark since July

                                       11

<PAGE>

28, 2008. 9.7% 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  2008,  this  limited  partnership  has yet to  return  to its
investors any of their initial cash invested.

Pembroke Pines, Florida

      We are the sole general  partner and a 17% limited partner in this limited
partnership which has owned and operated a restaurant in Pembroke Pines, Florida
under our  "Flanigan's  Seafood Bar and Grill"  service  mark since  October 29,
2007. 17.9% 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 2008,  this limited  partnership  has returned to its  investors
approximately 7.0% of their initial cash invested.

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  27, 2008 and
September 29, 2007, we generated $150,000 and $160,000 of revenue, respectively,
from providing these management services.

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  27, 2008 and  September  29,  2007,  we generated
$238,000 and $203,000 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

                                       12

<PAGE>

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 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  the  second  quarter of our fiscal  year,  we  contracted  for the
purchase of a new point of sale computer  system for our package  liquor stores,
at a cost of  approximately  $237,000,  including the cost to customize and test
the new system,  but  excluding a  surveillance  camera system which we estimate
will cost an additional $118,000. We also paid approximately $50,000 to purchase
universal  wireless  hand-held  scanners,  which  payment is in  addition to the
contracted  amount.  The  testing of the new point of sale  computer  system was
successfully  completed  during  our  fiscal  year  2008,  we used the  wireless
hand-held  scanners  to take our fiscal  year end liquor  inventory  and the new
point of sale  computer  system was  installed  during the first  quarter of our
fiscal year 2009.  The package  liquor  stores began using the new point of sale
computer  system on  November  2, 2008.  The final cost of the new point of sale
computer  system,   including   hand-held,   wireless   scanners  but  excluding
surveillance  camera system, is approximately  $287,000,  of which approximately
$266,000 has been paid to date.

      Negotiations   with  food   suppliers  are  conducted  by  our  purchasing
department at our corporate headquarters.  We believe this ensures that the

                                       13

<PAGE>

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 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.

                                       14

<PAGE>

      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 and 2008, 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 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 year 2007 and again
in fiscal year 2008 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.

                                       15

<PAGE>

      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 our $50,000  self-insured
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 our liability  insurance  coverage could have a materially  adverse effect on
the Company.

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

      For the policy year commencing  December 30, 2008, our property  insurance
will provide for full insurance  coverage for property  losses,  including those
caused by windstorm,  such as a hurricane, and will be the first year of our two
(2) year  property  insurance  policy with our insurance  carrier.  For property
losses caused by windstorm,  the property  insurance will have deductibles of 5%
per  location,  per  occurrence.  For all other  property  losses,  the property
insurance will have  deductibles of $10,000 per location,  per  occurrence.  Our
insurance  expense for the policy year commencing  December 30, 2008,  including
insurance  coverage  for our  consolidated  limited  partnerships,  estimated at
$294,000, decreased by approximately $140,000, (32%), due primarily to decreases
in  windstorm  insurance  coverage.  Our  insurance  expense for the policy year
commencing  December  30, 2009 will  remain the same  excluding  only  increases
and/or decreases in insurance expense due to changes in insurable values.

      For the policy  year which  commenced  December  30,  2007,  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  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 our locations west of I-95 for which
we  and/or  our  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

                                       16

<PAGE>

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,
2007 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, 2007,  including insurance coverage for our consolidated
limited  partnerships,   estimated  at  $434,000,   decreased  by  approximately
$153,000,  (26%),  due primarily to decreases in windstorm  insurance  coverage.
During the policy year commencing  December 30, 2007, neither we, nor any of our
limited partnerships, made a claim against our property insurance.

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

                                       17

<PAGE>

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
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 2008,  we employed  1003  persons,  of which 752
were  full-time  and 251 were  part-time.  Of  these,  36 were  employed  at the
corporate  offices  in   administrative   capacities  and  5  were  employed  in
maintenance.  Of the remaining  employees,  44 were  employed in package  liquor
stores and 918 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        44            (1)
                        of Directors, Chief
                        Executive Officer and
                        President

August Bucci            Chief Operating Officer      64           2002
                        and Executive Vice
                        President

Jeffrey D. Kastner      Chief Financial Officer      55            (2)
                        General Counsel and
                        Secretary

Jean Picard             Vice President of            70           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 2004;  Secretary  since 1995;  and General
      Counsel since 1982.

                                       18

<PAGE>

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 27, 2008 and September 29, 2007,  the Board of
Directors approved  discretionary  matching  contributions  totaling $30,000 and
$29,000, 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.

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

      The disruption  experienced in the United States and global credit markets
during the second half of calendar year 2008 has adversely  affected  disposable
consumer income and consumer confidence.  Prolonged negative changes in domestic
and global economic conditions or disruptions of either or both of the financial
and  credit  markets  may have a  material  adverse  effect  on our  results  of
operations,  financial  condition  and  liquidity.  At this time,  it is unclear
whether and to what extent the actions taken by the

                                       19

<PAGE>

United States  government,  including,  without  limitation,  the passage of the
Emergency Economic  Stabilization Act of 2008 and other measures currently being
implemented  or  contemplated,  will  mitigate  the effect of the  crisis.  With
respect to the  Company,  while we have no  immediate  need to access the credit
markets  in the  foreseeable  future,  the impact of the  current  crisis on our
ability to obtain financing in the future, if needed,  and the cost and terms of
the same is unclear. From an operating standpoint,  the current financial crisis
has  resulted  in reduced  customer  traffic  in some or all of our  restaurants
and/or package  liquor stores,  reduced  revenues and  profitability,  increased
costs and imposed  practical limits on our menu pricing.  A continued decline in
revenues and/or  profitability  may result in a  deterioration  of our financial
position.

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.

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 fiscal year 2008, due to
delays in the permitting process and construction,  the Pembroke Pines,  Florida
and Davie,  Florida restaurants were opened after substantial delays.  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, 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.

                                       20

<PAGE>

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 Inability to Attract  Employees
Could Harm Our Business
--------------------------------------------------------------------------------

      Our employees are essential to our  operations  and our ability to deliver
an enjoyable dining experience to our customers. 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 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.

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.

                                       21

<PAGE>

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.

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

      During  our  fiscal  year  2007,   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

                                       22

<PAGE>

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.

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 $700,000 for our refurbishing  program for fiscal
year 2009. See Item 7,  "Liquidity and Capital  Resources" for discussion of the
amounts spent in fiscal year 2008.

      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 10/31/09
Flanigan's Enterprises                                      and Annual Options
Inc.                                                        to 10/31/15
1550 W. 84th Street
Hialeah, FL

                                       23

<PAGE>

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

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

Flanigan's Seafood          5,000      180    Company       11/15/92 to
Bar and Grill #12                                           11/15/09
Flanigan's Enterprises,                                     Option to
Inc. (11)                                                   11/15/10
2405 Tenth Ave. North
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

Flanigan's Seafood          4,000       90    Franchise/    3/2/76 to 8/31/11
Bar and Grill #15                             Limited
CIC Investors #15 Ltd.(1)(2)                  Partnership
1479 E. Commercial Blvd.
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

                                       24

<PAGE>

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

Flanigan's Seafood          5,100      140    Company       7/15/68 to 12/31/09
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 12/31/09
                                                            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

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,                                          Option 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

                                       25

<PAGE>

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

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

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       5/01/05 to 6/30/15
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       4/1/00 to 3/31/10
Bar and Grill #70                             Partnership   Options to 3/31/30
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

                                       26

<PAGE>

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

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.

(3)   We own 52% 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 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 opened for business on July 28, 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.

                                       27

<PAGE>

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

      During 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 October 2013.

      During 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 as of the end of our fiscal year 2008 is leased to an  unaffiliated
third party.  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
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
fiscal year 2007,  the  appellate  court  affirmed  and upon  re-hearing,  again
affirmed the granting of a summary judgment in favor of the shopping center. The
seller from whom we  purchased  the  building  was named as a  defendant  in the
lawsuit and is currently asserting a claim against us for reimbursement

                                       28

<PAGE>

of its attorneys' fees and costs resulting from the litigation.  We disputed the
seller's  entitlement to  reimbursement  of its attorney's  fees and costs,  but
during the first quarter of our fiscal year 2009,  the appellate  court affirmed
the ruling  against us by the trial court.  We are  disputing  the amount of the
seller's claim as excessive.

      During  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 40%  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.

                                     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  22,  2008,   there  were
approximately  335 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 2008 and 2007 as  reported  by the  American  Stock
Exchange:

                              Fiscal 2008    Fiscal 2007
                             ------------    -------------
                             High     Low     High    Low
                             ----    ----    -----   -----

First quarter                9.75    7.65    11.75    8.91
Second quarter               9.90    6.56    12.30   10.28
Third quarter                8.54    6.35    12.00   10.17
Fourth quarter               6.85    5.09    11.30    8.65

                                       29

<PAGE>

      We have  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.

-------------------------------------------------------------------------------
                      ISSUER PURCHASES OF EQUITY SECURITIES
-------------------------------------------------------------------------------
                                                                  (d) Maximum
                                                  (c) Total       Number (or
                                                  Number of       Approximate
                                                 Shares (or    Dollar Value) of
                                                   Units)         Shares (or
                                       (b)      Purchased as    Units) that May
                        (a) Total    Average       Part of          Yet Be
                        Number of     Price       Publicly         Purchased
                       Shares (or   Paid per      Announced        Under the
                         Units)       Share       Plans or         Plans or
    Period              Purchased   (or Unit)     Programs         Programs
-------------------------------------------------------------------------------
June 29, 2008
- August 2, 2008             none                                        92,600
-------------------------------------------------------------------------------
August 3, 2008
- August 30, 2008             600   $    6.60            600             92,000
-------------------------------------------------------------------------------
August 31, 2008
- September 27, 2008          900   $  6.1999            900             91,100
-------------------------------------------------------------------------------
Total as of
September 27, 2008          1,500                      1,500             91,100
-------------------------------------------------------------------------------

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

      Pursuant to a discretionary plan approved by the Board of Directors at its
meeting  on May 17,  2007,  the  Board of  Directors  authorized  management  to
purchase up to 100,000 shares of our common stock.  During our fiscal year 2008,
we purchased 6,400 shares of our common stock for an aggregate purchase price of
$48,935. Of the shares purchased,  we purchased 1,200 shares of our common stock
from the Joseph G. Flanigan  Charitable Trust for $9,600 and 2,500 shares of our
common  stock from an  employee  for $20,000 in off market  transactions,  which
reflected an actual per share  purchase price which was equal to the average per
share  market  price on the date of  purchase.  The balance of our common  stock
purchased,  2,700  shares,  was  purchased  on the open market for an  aggregate
purchase  price of $19,335.  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 market  private  transaction,  at an
aggregate  purchase  price of  $28,000,

                                       30

<PAGE>

which  reflected  an actual  per share  purchase  price  which was less than the
closing  per share  market  price on the date of  purchase.  The  balance of our
common stock purchased,  832 shares, were purchased from a former employee, (332
shares),  for $3,500,  and from the Joseph G. Flanigan  Charitable  Trust,  (500
shares),  for $4,500 in off market  transactions,  which reflected an actual per
share  purchase  price which was equal to the average per share  market price on
the date of purchase.

      Information  regarding our equity compensation  plan(s) is set forth under
page F-26 of this report.

Item 6. Selected Financial Data
-------------------------------

      As a Smaller  Reporting  Company as defined by Rule 12b-2 of the  Exchange
Act and in Item 10(f)(1) of Regulation  S-K, we are electing  scaled  disclosure
reporting  obligations and therefore are not required to provide the information
requested by this Item 6.

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 2008
Consolidated   Financial  Statements  and  the  related  Notes  to  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 two fiscal years ended September
27,  2008 and  September  29,  2007 is set forth in the  consolidated  financial
statements which are attached hereto.

General
-------

      At  September  27,  2008,  we (i) operate 23 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)

                                       31

<PAGE>

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

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

REVENUES (in thousands):
--------------------------------------------------------------------------------
                                            Fifty Two            Fifty Two
                                            Weeks Ended          Weeks Ended
                                            Sept. 27, 2008       Sept. 29, 2007

Sales
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Restaurant, food                           $ 40,906   65.2%     $ 38,047   63.8%
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Restaurant, bar                               9,494   15.1%        8,764   14.7%
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Package goods                                12,317   19.7%       12,784   21.5%
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Total                                        62,717  100.0%       59,595  100.0%
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Franchise revenues                            1,066                1,134
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Owner's fee                                     238                  203
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Other operating income                          188                  169
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
Total Revenues                             $ 64,209             $ 61,101
--------------------------------------------------------------------------------

                                       32

<PAGE>

Comparison of Fiscal Years Ended September 27, 2008 and September 29, 2007
--------------------------------------------------------------------------

      Revenues.  Total revenue for our fiscal year 2008 increased  $3,108,000 or
5.09% to $64,209,000  from  $61,101,000  for our fiscal year 2007. This increase
resulted from sales from three restaurant locations,  the Davie, Florida limited
partnership  owned  restaurant  ($818,000) which opened for business on July 28,
2008,  the  Pembroke  Pines,   Florida  limited   partnership  owned  restaurant
($3,189,000)  which  opened for  business on October 29,  2007,  and the Company
owned Lake Worth, Florida restaurant  ($1,636,000),  which was acquired on March
4,  2007,  offset  by a  decline  in same  store  restaurant  food and bar sales
($1,872,000).  Prior to March 4, 2007,  the Lake Worth,  Florida  restaurant was
franchised  by  the  Company.  The  Lake  Worth,  Florida  restaurant  generated
$1,018,000 of revenue during our fiscal year 2007.  Without giving effect to the
revenue generated from the Pembroke Pines, Florida restaurant ($3,189,000),  the
Davie,  Florida  restaurant  ($818,000) and the increased revenue generated from
the Lake Worth,  Florida  restaurant,  ($619,000),  total revenue for our fiscal
year  2008  would  have  decreased  $1,518,000  or  2.48%  to  $59,583,000  from
$61,101,000 for our fiscal year 2007. 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  $40,906,000  for our fiscal  year 2008 as  compared to
$38,047,000  for our fiscal year 2007. This increase in restaurant food sales is
due to sales from the Davie,  Florida,  Pembroke Pines,  Florida and Lake Worth,
Florida restaurants. The Davie, Florida, Pembroke Pines, Florida and Lake Worth,
Florida restaurants  generated $662,000,  $2,677,000 and $1,225,000 of revenues,
respectively,  from the sale of food during our fiscal year 2008, while the Lake
Worth,  Florida  restaurant  generated $769,000 of revenue from the sale of food
during our fiscal year 2007. Without giving effect to the revenue generated from
the  Davie,  Florida  restaurant  ($662,000)  and the  Pembroke  Pines,  Florida
restaurant ($2,677,000) and the increased revenue generated from the Lake Worth,
Florida  restaurant,  ($456,000),  from the sale of food  during our fiscal year
2008,  restaurant revenue generated from the sale of food during our fiscal year
2008 would have decreased  $936,000 or 2.46% to $37,111,000 from $38,047,000 for
our fiscal year 2007.  Comparable  weekly restaurant food sales (for restaurants
open  for  all  of our  fiscal  years  2008  and  2007,  which  consists  of six
restaurants  owned  by us and  seven  restaurants  owned by  affiliated  limited
partnerships)  was  $682,000  and  $716,000  for our fiscal years 2008 and 2007,
respectively,  a decrease of 4.75%.  Comparable weekly restaurant food sales for
Company  owned  restaurants  only was $299,000 and $297,000 for our fiscal years
2008 and 2007, respectively,  an increase of 0.67%. Comparable weekly restaurant
food  sales  for  affiliated  limited  partnership  owned  restaurants  only was
$383,000  and  $419,000  for our  fiscal  years 2008 and 2007,  respectively,  a
decrease  of

                                       33

<PAGE>

8.59%. We anticipate that restaurant food sales will increase through our fiscal
year 2009 due to, among other  things,  the  operation  of the Davie  restaurant
through  our  entire  fiscal  year  2009,  offset  by a  decline  in same  store
restaurant food sales.

      Restaurant  Bar  Sales.  Restaurant  revenue  generated  from  the sale of
alcoholic  beverages at restaurants  totaled $9,494,000 for our fiscal year 2008
as compared to $8,764,000 for our fiscal year 2007. This increase of $730,000 in
restaurant bar sales is due to sales from the Davie,  Florida,  Pembroke  Pines,
Florida and Lake Worth, Florida restaurants. The Davie, Florida, Pembroke Pines,
Florida and Lake Worth,  Florida restaurants  generated  $154,000,  $511,000 and
$288,000 of revenues,  respectively, from restaurant bar sales during our fiscal
year 2008,  while the Lake  Worth,  Florida  restaurant  generated  $172,000  of
revenue from  restaurant  bar sales during our fiscal year 2007.  Without giving
effect to the revenue generated from the Davie,  Florida  restaurant  ($154,000)
and the Pembroke Pines, Florida restaurant  ($511,000) and the increased revenue
generated from the Lake Worth, Florida restaurant,  ($116,000),  from restaurant
bar sales during our fiscal year 2008,  revenue  generated  from  restaurant bar
sales  during our fiscal  year 2008  would  have  decreased  $51,000 or 0.58% to
$8,713,000  from  $8,764,000  for  our  fiscal  year  2007.   Comparable  weekly
restaurant bar sales (for  restaurants open for all of our fiscal years 2008 and
2007, which consists of six restaurants  owned by us and seven restaurants owned
by  affiliated  limited  partnerships)  was $164,000 and $166,000 for our fiscal
years  2008 and 2007,  respectively,  a  decrease  of 1.20%.  Comparable  weekly
restaurant bar sales for Company owned  restaurants only was $68,000 and $66,000
for our  fiscal  years  2008 and  2007,  respectively,  an  increase  of  3.03%.
Comparable weekly restaurant bar sales for affiliated limited  partnership owned
restaurants  only was $96,000 and  $100,000  for our fiscal years 2008 and 2007,
respectively,  a decrease of 4.00%. We anticipate that restaurant bar sales will
increase through our fiscal year 2009 due to, among other things,  the operation
of the Davie restaurant through our entire fiscal year 2009, offset by a decline
in same store restaurant bar sales.

      Package  Liquor Store Sales.  Revenue  generated  from sales of liquor and
related items at package liquor stores totaled  $12,317,000  for our fiscal year
2008 as  compared  to  $12,784,000  for our  fiscal  year 2007,  a  decrease  of
$467,000.  The weekly  average of same store package  liquor store sales,  which
includes all nine (9) Company owned package liquor stores,  was $237,000 for our
fiscal year 2008 as compared to $246,000 for our fiscal year 2007, a decrease of
3.66%.  The decrease was  primarily  due to  increased  competition  and package
liquor store sales are expected to decline through our fiscal year 2009.

      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  2008
increased  $3,208,000 or 5.44% to $62,209,000  from  $59,001,000  for our fiscal
year 2007. The increase was primarily due to pre-opening expenses related to and
the operation of the Davie, Florida restaurant and the operation of the Pembroke
Pines,  Florida and Lake Worth,  Florida  restaurants  and to a lesser  extent a
general  increase in food costs,  offset by the decreased  cost of package goods
associated  with the decline in our package store sales,  a decrease in the cost
of ribs, a decrease in repairs and maintenance to our units and actions taken by
management to reduce and/or

                                       34

<PAGE>

control costs and expenses.  We anticipate that our operating costs and expenses
will  continue  to increase  through  our fiscal  year 2009 due to,  among other
things,  the  operation  of the  Pembroke  Pines,  Florida  and  Davie,  Florida
restaurants for our entire fiscal year 2009 and an expected  general increase in
food  costs,  including  an increase  in the cost of ribs.  Operating  costs and
expenses  increased  slightly as a  percentage  of total sales to  approximately
96.89% in our fiscal year 2008 from 96.56% in our fiscal year 2007.

      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 2008 increased to $33,368,000  from  $30,653,000 for our fiscal year
2007. 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
66.21% for our  fiscal  year 2008 and  65.48%  for our  fiscal  year 2007.  This
increase in gross profit for  restaurant  and bar sales for our fiscal year 2008
was  primarily  due to menu price  increases  instituted at the end of the first
quarter  of our  fiscal  year  2008 and a  decrease  in the cost of ribs  during
calendar year 2008.

      Package  Liquor Store Sales.  Gross profit for package  liquor store sales
for our fiscal year 2008 increased to $3,661,000  from $3,584,000 for our fiscal
year 2007,  notwithstanding  a decrease in our package  store  sales.  Our gross
profit margin  (calculated as gross profit  reflected as a percentage of package
liquor  store  sales) for package  liquor  store sales was 29.72% for our fiscal
year 2008 and 28.04% for our fiscal year 2007.  The increase in our gross profit
margin,  (1.68%), was primarily due to the purchase of "close out" and inventory
reduction  merchandise from  wholesalers.  We anticipate the gross profit margin
for package  liquor store sales to remain  constant  throughout  our fiscal year
2009.

      Payroll and Related  Costs.  Payroll and related costs for our fiscal year
2008 increased  $1,772,000 or 10.25% to  $19,065,000  from  $17,293,000  for our
fiscal year 2007.  This  increase  was  primarily  due to the  operation  of the
Pembroke Pines, Florida, Davie, Florida and Lake Worth, Florida restaurants.  We
anticipate  that our payroll and related costs will increase  through our fiscal
year 2009 due to,  among  other  things,  the  operation  of the Davie,  Florida
restaurant  for our entire  fiscal year 2009.  Payroll  and  related  costs as a
percentage of total sales was 29.69% in our fiscal year 2008 and 28.30% of total
sales in our fiscal  year  2007.  This  increase  as a  percentage  of sales was
primarily due to the need to pay higher wages to attract and retain employees.

      Occupancy  Costs.   Occupancy  costs  (consisting  of  rent,  common  area
maintenance,   repairs,  real  property  taxes  and  amortization  of  leasehold
purchases)  for our fiscal year 2008  increased  $110,000 or 2.84% to $3,977,000
from  $3,867,000  for our fiscal year 2007.  This increase is due to, (i) rental
payments  for our  entire  fiscal  year  2008  at  three  additional  restaurant
locations (Pembroke Pines, Florida, - $175,000,  Davie, Florida - $246,000,  and
Lake Worth,  Florida - $98,000)= $519,000,  as compared to rental payments for a
part of our fiscal year 2007 at the same three additional  restaurant locations,
(Pembroke  Pines,  Florida - $18,000  (non-cash  pre-opening  rent) and $125,000
(cash pre-opening  rent),  Davie,  Florida - $138,000 and Lake Worth,  Florida -
$61,000)=  $342,000;  and (ii)  increases in real property taxes and

                                       35

<PAGE>

common area maintenance,  which generally  includes a pro-rata share of property
insurance  for  units  located  within  shopping  centers,  offset  by a general
decrease in repairs and maintenance. We anticipate that our occupancy costs will
stabilize  through our fiscal year 2009 with no rental  payments for  additional
restaurant locations being developed by the Company.

      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 2008 increased $996,000 or 7.98% to
$13,479,000  from  $12,483,000  for our fiscal year 2007.  Selling,  general and
administrative  expenses  increased as a percentage of total sales in our fiscal
year 2008 to approximately 20.99% as compared to 20.43% in our fiscal year 2007.
This increase is due primarily to the operation of the Pembroke Pines,  Florida,
Davie,  Florida and Lake Worth,  Florida  restaurants and an overall increase in
expenses.  We anticipate that our selling,  general and administrative  expenses
will increase  throughout  our fiscal year 2009 due to, among other things,  the
operation of our Pembroke Pines,  Florida and Davie, Florida restaurants for our
entire fiscal year 2009 and an overall  increase in expenses,  which will not be
offset in their entirety by increased  advertising  credits and rebates from our
food distributor.

      Depreciation.  Depreciation for our fiscal year 2008 increased $182,000 or
9.34% to $2,131,000 from $1,949,000 for our fiscal year 2007. As a percentage of
total sales,  depreciation  expense was  relatively  constant over both periods,
representing  3.32% of revenue for our fiscal year 2008 and 3.19% of revenue for
our fiscal year 2007.

      Other  Income and  Expense.  Other  income and  expenses was an expense of
$392,000  for our fiscal  year 2008 as compared to an expense of $35,000 for our
fiscal year 2007.  Other income and expense for our fiscal year 2007  includes a
gain of $393,000  from the sale of real  property.  Other income and expense for
our fiscal  year 2008  includes  interest  expense of  $495,000,  as compared to
interest  expense of $508,000 for our fiscal year 2007. The decrease in interest
expense is attributable to a lower variable  interest rate on our line of credit
during our fiscal year 2008.

      Interest Expense, Net. Interest expense for our fiscal year 2008 decreased
$13,000 to $495,000  from  $508,000 for our fiscal year 2007.  This  decrease is
attributable to a lower variable  interest rate on our line of credit during our
fiscal year 2008.

      Net  Income.  Net income for our fiscal  year 2008  decreased  $210,000 or
16.57% to $1,057,000  from  $1,267,000 for our fiscal year 2007. As a percentage
of sales,  net income for our fiscal year 2008 is 1.65%, as compared to 2.07% in
our fiscal year 2007. Our net income during our fiscal year 2007 includes a gain
of  $393,000  from  the  sale of  real  property,  offset  by our  share  of the
pre-opening  expenses  associated with the Pembroke Pines,  Florida  restaurant,
($341,000),  and the Davie,  Florida  restaurant,  ($174,000),  which  adversely
affected net income.  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, which as
a percentage  of sales is 1.65%.  Without  giving effect to the sale of the real
property  for our fiscal year 2007,  net income for our fiscal  year 2008,  as a
percentage of sales, was equal to that for our fiscal year 2007 primarily due to
higher gross profit in both our restaurant  and package liquor store  divisions,
improved control

                                       36

<PAGE>

over expenses,  offset by our share of the pre-opening  expenses associated with
the Davie, Florida restaurant, ($632,000).

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

      The  limited  partnership  owned  restaurant  located in  Pembroke  Pines,
Florida  opened for  business  during the first  quarter of our fiscal year 2008
(October  29,  2007) and the limited  partnership  owned  restaurant  located in
Davie,  Florida opened for business during the fourth quarter of our fiscal year
2008 (July 28, 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 2008, we recognized non-cash  pre-opening rent in the approximate amount of
$6,000 and recognized cash pre-opening rent in the approximate amount of $12,000
for the Pembroke Pines, Florida restaurant. During our fiscal year 2008, we also
paid and expensed pre-opening rent in the approximate amount of $246,000 for the
Davie, Florida restaurant,  which is the full rent provided in the lease. 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 Pembroke Pines,  Florida  restaurant and pre-opening rent in
the approximate amount of $104,000 for the Davie,  Florida restaurant,  which is
the full rent  provided  in the  lease.  We are  recognizing  rent  expense on a
straight line basis over the term of the lease.

      During our fiscal year 2008, the limited partnership  restaurant in Davie,
Florida  reported losses of $632,000  primarily due to pre-opening  costs,  thus
contributing  to a reduction in the  operating  income for our fiscal year 2008.
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 operating income for our fiscal year 2007.

      Until we find a new restaurant  location,  our income from operations will
not be adversely affected by pre-opening costs.  During our fiscal year 2009, we
do not expect our income from operations to be materially  adversely affected by
pre-opening  costs for new restaurant  locations.  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.

Trends
------

      During the next twelve months, we expect continued  increases in aggregate
restaurant sales as compared to prior periods due primarily to the restaurant in
Davie,  Florida being open for the entire  twelve month  period.  We expect same
store restaurant food and bar sales to decline over the next twelve month period
due primarily to the current  domestic and global  financial  crisis.  We expect
package  liquor store sales to decrease due primarily to increased  competition.
We expect higher food costs and higher  overall  expenses,  which will adversely
affect our net income.  In December,  2007,  we raised menu prices to offset the
higher food costs and overall

                                       37

<PAGE>

expenses.  We plan to limit  menu  price  increases  as long as  possible  while
maintaining  our high quality of food and service and without  reducing our food
portions.  We have  increased our  advertising to attract  customers.  As a last
resort, we will raise menu prices whenever necessary and wherever  competitively
possible.

      We continue to search for new  locations to open  restaurants  and thereby
expand our business,  but we are now looking for locations that will not require
an extensive  and costly  renovation.  Any new  locations  will likely be opened
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
-------------------------------

      We fund our operations  through cash from  operations and borrowings  from
our line of credit.  As of  September  27,  2008,  we had cash of  approximately
$3,244,000,  an increase of $1,021,000 from our cash balance of $2,223,000 as of
September 29, 2007.  The increase in cash as of September 27, 2008 was primarily
from our operations  due to minimal demand upon our cash flow for  extraordinary
items.

Cash Flows
----------
--------------------------------------------------------------------------------
                                                        Fiscal Years
--------------------------------------------------------------------------------
                                                    2008            2007
--------------------------------------------------------------------------------
                                                       (in thousands)
--------------------------------------------------------------------------------
Net cash and cash equivalents provided by
operating activities                              $ 3,747         $ 2,138
--------------------------------------------------------------------------------
Net cash and cash equivalents used in
investing activities                               (3,967)         (2,761)
--------------------------------------------------------------------------------
Net cash and cash equivalents provided by
financing activities                                1,241           1,148
--------------------------------------------------------------------------------
Net increase
in cash and equivalents                             1,021             525
--------------------------------------------------------------------------------
Cash and equivalents,
beginning of year                                   2,223           1,698
--------------------------------------------------------------------------------
Cash and equivalents,
end of year                                       $ 3,244         $ 2,223
--------------------------------------------------------------------------------

                                       38

<PAGE>

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  $4,337,000,  (of which  $26,000 was  financed  and
$593,000 of which was purchase deposits  transferred to property and equipment),
during our fiscal  year 2008,  including  $358,000  for  renovations  to one (1)
existing Company owned restaurant,  as compared to $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.  The additions to fixed assets during our fiscal year
2008 included  most of the  renovations  to the business  premises of the Davie,
Florida  restaurant,  while 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.

      In  addition,  during our fiscal year 2008,  we purchased a 4% interest in
the  underlying  lease which we sublease  for our El Portal,  Florida  location,
($27,000),  from an unrelated sublessor, the cost of which is being amortized as
additional  rent over the life of the lease,  including  the first ten (10) year
renewal option.  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  2008  was
$358,000.  We anticipate the cost of this  refurbishment in our fiscal year 2009
will be approximately $700,000, which funds will be provided from operations.

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

      As of the end of our fiscal year 2008,  we had long term debt,  (including
our line of credit),  of $6,514,000,  as compared to $6,080,000 as of the end of
our fiscal year 2007.

      As of the end of our fiscal year 2008,  the amount  outstanding  under our
line of  credit  from an  unaffiliated  financial  institution  was  $1,562,000.
Subsequent  to the end of our fiscal year 2008,  we changed our primary  banking
relationship to another unaffiliated financial institution, which includes a new
line of credit of $2,500,000.  The outstanding  balance on our line of credit of
$1,586,000  as of November 30, 2008,  bears  interest at BBA LIBOR 1 month rate,
plus 2.25%, (4.20625% as of December 7, 2008), with monthly payments of interest
only and the unpaid  principal  balance and all accrued  interest due in full on
October 7, 2009. We granted our lender a security  interest in substantially all
of our assets and a second  mortgage on our  corporate  offices as collateral to
secure our repayment obligations under our credit line.

                                       39

<PAGE>

      We repaid  long term debt,  including  auto loans,  mortgages  and capital
lease  obligations  in the amount of $192,000  and  $213,000 in our fiscal years
2008 and 2007, respectively.

      We repaid our line of credit in the amount of $-0- and  $1,000,000  in our
fiscal  years  2008 and 2007  respectively.  During our  fiscal  year  2008,  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.  During our fiscal year 2007, we borrowed $1,200,000 on
our line of credit,  primarily  to advance  the  purchase  price for the limited
partnership  which owns the Pembroke Pines,  Florida  restaurant to close on the
purchase of its restaurant location ($340,000) and the limited partnership which
owns the Davie,  Florida  restaurant to close on the purchase of its  restaurant
location ($650,000).

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

      In order to fix the cost and ensure  adequate supply of baby back ribs for
our restaurants, on November 26, 2008, we entered into a purchase agreement with
our rib supplier, whereby we agreed to purchase approximately $3,800,000 of baby
back ribs during  calendar year 2009 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 Limited Partnership Interests
-----------------------------------------

      During our fiscal  year  2008,  we  purchased  from two  separate  limited
partners (neither of whom are officers,  directors or family members of officers
or directors) limited partnership  interests of varying amounts (0.13% to 2.67%)
in nine (9) limited partnerships which own restaurants for an aggregate purchase
price of $125,000.

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

      The table below  summarizes our current  assets,  current  liabilities and
working capital for our fiscal years 2008 and 2007:

                                                      Sept. 27        Sept. 29
(in thousands)                                          2008            2007

Current assets                                         $6,852          $6,322

Current liabilities                                     4,504           4,567

Working capital                                         2,348           1,755

      Working  capital as of September 27, 2008  increased by $593,000 or 33.79%
from working  capital as of September  29, 2007.  Our working  capital  improved
during our fiscal year 2008 due to minimal demand upon our cash flow

                                       40

<PAGE>

for extraordinary items during the fiscal year. During our fiscal year 2007, the
limited partnership which owns the Pembroke Pines,  Florida restaurant completed
its private  offering  and  reimbursed  us $300,000  for advances we made to the
limited  partnership for pre-opening  expenses.  In addition,  during our fiscal
year 2007,  we sold the real  property  located at 732 - 734 N.E.  125th Street,
North Miami,  Florida,  realizing net sale proceeds in the approximate amount of
$763,000. 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
when the limited  partnership  completed its private  offering during our fiscal
year 2008.

      While there can be no assurance due to, among other things,  unanticipated
expenses or unanticipated decline in revenues, or both, we believe that positive
cash flow from operations will adequately fund  operations,  debt reductions and
planned  capital  expenditures  in our fiscal year 2009. We also anticipate that
during our fiscal year 2009,  working capital will be affected by the payment of
the  balance  for the  purchase  of a new point of sale  system for our  package
liquor stores ($21,000) and a surveillance camera system ($118,000).

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

      We had no off-balance sheet  arrangements as of the end of our fiscal year
2008 or our fiscal year 2007.

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 the 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

                                       41

<PAGE>

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  27,  2008,  we operate  nine (9)  restaurants  as general
partner  of  the  limited   partnerships   that  own  the  operations  of  these
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 13% to 48% of the total units
outstanding.  As a result of these  controlling  interests,  we consolidate  the
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 9 to the consolidated  financial  statements for
our fiscal year 2008.

      On September 30, 2007, we adopted the  provisions of Financial  Accounting
Standard Board (FASB)  Interpretation  48,  Accounting for Uncertainty in Income
Taxes (FIN 48). We previously had accounted for tax  contingencies in accordance
with   Statement  of  Financial   Accounting   Standards   5,   Accounting   for
Contingencies.  As required by FIN 48, which  clarifies  FASB Statement No. 109,
Accounting for Income Taxes, we recognize the financial  statement  benefit of a
tax position only after  determining  that the relevant tax authority would more
likely than not sustain  the  position  following  an audit.  For tax  positions
meeting  the more  likely  than not  threshold,  the  amount  recognized  in the
financial  statements is the largest  benefit that has a greater than 50 percent
likelihood  of being  realized upon  ultimate  settlement  with the relevant tax
authority. At the adoption date, we applied FIN 48 to tax positions for all open
tax years.  We had no material  unrecognized  tax benefits and no adjustments to
our financial position, results of operations or cash flows were required. We do
not expect that  unrecognized  tax benefits will increase within the next twelve
months.  We recognize  accrued  interest and penalties  related to uncertain tax
positions as income tax expense.

      During the first quarter of our fiscal year 2008, the corporate income tax
returns for our fiscal years ending September 29, 2007 and September 30,

                                       42

<PAGE>

2006 were audited by the Internal Revenue Service.  As a result of the audit, we
paid additional  corporate  income tax of $6,227 and $2,637 for our fiscal years
ending September 29, 2007 and September 30, 2006,  respectively.  The effects of
the Internal  Revenue Service  adjustments were considered in the computation of
our income tax provision for our fiscal year ended September 27, 2008.

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.  To date,  inflation  has not had a material  impact on our
operating  results,  but this  circumstance may change in the future if food and
fuel costs continue to rise.

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

      We do not ordinarily  hold market risk sensitive  instruments  for trading
purposes.  As of September  27, 2008 and  September  29, 2007, we held no equity
securities.

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

      At September 27, 2008,  borrowings  under our line of credit bear interest
at a variable annual rate equal to the prime rate of interest. Subsequent to the
end of our fiscal  year 2008,  we changed our primary  banking  relationship  to
another unaffiliated financial institution, which includes a new line of credit.
The  outstanding  balance on our line of credit  bears  interest  at BBA LIBOR 1
month rate,  plus 2.25%.  Increases in interest rates may have a material affect
upon results of operations,  depending upon the outstanding principal balance on
our line of credit from time to time.

      At September 27, 2008, 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 or that an increase will not have a material adverse effect
on our operations.

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

      Our Financial  Statements and supplementary  data are on pages F-1 through
F-6.

                                       43

<PAGE>

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

      None

Item 9A(T). Controls and Procedures.
-----------------------------------

Disclosure Controls and Procedures
----------------------------------

      Based on  evaluations  as of the end of the period covered by this report,
our Chief Executive Officer and Chief Financial Officer,  with the participation
of our  management  team,  have  concluded  that  our  disclosure  controls  and
procedures  (as  defined in Rules  13a-15(e)  and  15d-15(e)  to the  Securities
Exchange Act of 1934, as amended (the "Exchange Act")) were effective.

Limitations  on the  Effectiveness  of  Controls  and  Permitted  Omission  from
Management's Assessment
--------------------------------------------------------------------------------

      Our  internal  control  over  financial  reporting  is designed to provide
reasonable  assurance  regarding the reliability of financial  reporting and the
preparation  of financial  statements for external  purposes in accordance  with
generally  accepted  accounting  principles.  All internal control  systems,  no
matter how well designed,  have inherent limitations,  including the possibility
of human error and the  circumvention  or overriding  of controls.  Accordingly,
even  effective  internal  controls can only provide  reasonable  assurance with
respect to financial statement preparation.  Also, projections of any evaluation
of  effectiveness  to future  periods are subject to the risk that  controls may
become  inadequate  because  of  changes  in  conditions,  or that the degree of
compliance with the policies or procedures may deteriorate.

Management's Report on Internal Control Over Financial Reporting
----------------------------------------------------------------

      We are responsible for  establishing  and  maintaining  adequate  internal
control over financial reporting,  as such term is defined in Exchange Act Rules
13a-15(f).

      Under  the  supervision  and with  the  participation  of our  management,
including  our Chief  Executive  Officer  and our Chief  Financial  Officer,  we
conducted  an  evaluation  of the  effectiveness  of our  internal  control over
financial  reporting  based  on the  framework  in  Internal  Control-Integrated
Framework  issued by the Committee of Sponsoring  Organizations  of the Treadway
Commission.  Base on this evaluation, we believe that, as of September 27, 2008,
our internal  control over  financial  reporting  was  effective  based on those
criteria.

      This  report  does not  include  an  attestation  report of the  Company's
registered  public  accounting  firm regarding  internal  control over financial
reporting. Our report was not subject to attestation by the Company's

                                       44

<PAGE>

registered  public accounting firm pursuant to temporary rules of the Securities
and Exchange  Commission that permit us to provide only  management's  report in
this report.

Changes in Internal Control Over Financial Reporting
----------------------------------------------------

      During the period  covered by this report,  we have not made any change to
our internal control over financial reporting that has materially  affected,  or
is reasonably likely to materially  affect,  our internal control over financial
reporting.

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 2009 Annual Meeting of Shareholders, which will be filed
with the Securities and Exchange Commission by January 26, 2009.

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

      The  information  required by Item 11 is  incorporated by reference to our
Proxy Statement for our 2009 Annual Meeting of Shareholders, which will be filed
with the Securities and Exchange Commission by January 26, 2009.

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

      The  information  required by Item 12 is incorporated by reference to
our Proxy Statement for our 2009 Annual Meeting of Shareholders, which will
be filed with the Securities and Exchange Commission by January 26, 2009.

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 2009 Annual Meeting of Shareholders, which will be filed
with the Securities and Exchange Commission by January 26, 2009.

                                       45

<PAGE>

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

      The  information  required by Item 14 is  incorporated by reference to our
Proxy Statement for our 2009 Annual Meeting of Shareholders, which will be filed
with the Securities and Exchange Commission by January 26, 2009.

                                     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  27,  2008 and
                  September 29, 2007

            -     Consolidated   Statements   of  Income  for  the  years  ended
                  September 27, 2008 and September 29, 2007

            -     Consolidated  Statements of Stockholders' Equity for the years
                  ended September 27, 2008 and September 29, 2007

            -     Consolidated  Statements  of Cash  Flow  for the  years  ended
                  September 27, 2008 and September 29, 2007

            -     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.

      3. Exhibits

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

                                       46

<PAGE>

<TABLE>
<CAPTION>
                                                           Incorporated by Reference
 Exhibit                                                                                   Filed
  Number                  Exhibit Description              Form      Date       Number    Herewith
<S>        <C>                                           <C>      <C>          <C>        <C>
       2   Plan of Reorganization,  Amended Disclosure   SB-2         5/5/87          2
           Statement,  Amended Plan of Reorganization,
           Modification    of    Amended    Plan    of
           Reorganization,   Second   Modification  of
           Amended  Plan  of   Reorganization,   Order
           Confirming Plan of Reorganization

       3   Restated Articles of Incorporation,           10-K       12/29/02          3
           adopted January 9, 1984

10(a)(1)   Employment Agreement with Joseph G.           DEF14A    1/27/1988   10(a)(1)
           Flanigan*

10(a)(2)   Form  of   Employment   Agreement   between   10-K                  10(a)(1)
           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     8-K       4/10/1985      10(c)
           Trademark Litigation

   10(d)   King of Prussia(#850)Partnership Agreement*   8-K       4/10/1985      10(d)

   10(o)   Management Agreement for Atlanta, Georgia,    10-K      10/3/1992      10(o)
           (#600)*

   10(p)   Settlement Agreement with Former Vice         10-K      10/3/1992      10(p)
           Chairman of the Board of Directors (re #5)

   10(q)   Hardware Purchase Agreement and Software      10-KSB    10/2/1993      10(q)
           License Agreement for restaurant point of
           sale system.

10(a)(3)   Key Employee Incentive Stock Option Plan      DEF14A    1/26/1994   10(a)(3)

  10(r)    Limited   Partnership   Agreement   of  CIC   10-KSB   9/30/1995      10(r)
           Investors  #13,  Ltd,.  between  Flanigan's
           Enterprises,  Inc., as General  Partner and
           fifty   percent   owner   of  the   limited
           partnership, and Hotel Properties, LTD.*

   10(s)   Form of Franchise Agreement between           10-KSB    9/30/1995      10(s)
           Flanigan's Enterprises, Inc. and
           Franchisees.*
</TABLE>
                                       47

<PAGE>

<TABLE>
<S>        <C>                                           <C>      <C>          <C>
   10(t)   Licensing   Agreement  between   Flanigan's   10-KSB    9/28/1996      10(t)
           Enterprises,  Inc.  and James B.  Flanigan,
           dated November 4, 1996,  for  non-exclusive
           use of the servicemark  "Flanigan's" in the
           Commonwealth of Pennsylvania.  *

   10(u)   Limited   Partnership   Agreement   of  CIC   10-KSB    9/27/1997      10(u)
           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.  *

   10(v)   Limited   Partnership   Agreement   of  CIC   10-KSB    9/27/1997      10(v)
           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. *

   10(w)   Stipulated  Agreed Order of Dismissal  upon   10-KSB    9/27/1997      10(w)
           Mediation with former franchisee.

   10(x)   Limited   Partnership   Agreement   of  CIC   10-KSB   10/02/1999      10(x)
           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.  *

   10(y)   Limited   Partnership   Agreement   of  CIC   10-KSB    9/29/2001      10(y)
           Investors  #80,   Ltd.,   dated  May  2001,
           between  Flanigan's  Enterprises,  Inc.  as
           General   Partner  and   numerous   limited
</TABLE>

                                       48

<PAGE>

<TABLE>
<S>        <C>                                           <C>      <C>          <C>
           partners,        including       Flanigan's
           Enterprises,   Inc.,  as  limited   partner
           owning  twenty five  percent of the limited
           partnership.  *

   10(z)   Limited   Partnership   Agreement   of  CIC   10-KSB    9/29/2001      10(z)
           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.  *

  10(aa)   Limited   Partnership   Agreement   of  CIC   10-K        9/27/03     10(aa)
           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.  *

  10(bb)   Limited   Partnership   Agreement   of  CIC   10-K      10/2/2004     10(bb)
           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.  *

  10(cc)   Amended and  Restated  Limited  Partnership   10-K      9/30/2006     10(cc)
           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.  *

  10(dd)   Limited   Partnership   Agreement   of  CIC   10-K      9/29/2007     10(dd)
           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   10-K      9/29/2007     10(ee)
           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   Flanigan's
           Enterprises,   Inc.   as  limited   partner
           owning
</TABLE>

                                       49

<PAGE>

<TABLE>
<S>        <C>                                           <C>      <C>          <C>        <C>
           forty eight percent of the limited
           partnership. *

      13   Registrant's   Form  10-K  constitutes  the                                       X
           Annual  Report  to  Shareholders   for  the
           fiscal year ended September 27, 2008.

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

    31.1   Certification  Pursuant  to Section  302 of                                       X
           Sarbanes-Oxley   Act  of  2002   of   Chief
           Executive Officer.

    31.2   Certification  Pursuant  to Section  302 of                                       X
           Sarbanes-Oxley   Act  of  2002   of   Chief
           Financial Officer.

    32.1   Certification   Pursuant   to   18   U.S.C.                                       X
           Section   1350  as  Adopted   Pursuant   to
           Section  906 of the  Sarbanes-Oxley  Act of
           2002 of Chief Executive Officer.

    32.2   Certification   Pursuant   to   18   U.S.C.                                       X
           Section   1350  as  Adopted   Pursuant   to
           Section  906 of the  Sarbanes-Oxley  Act of
           2002 of Chief Financial Officer.
</TABLE>

*     Compensatory plan or arrangement.

                                       50

<PAGE>

                                   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: 12/22/08

      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: 12/22/08
------------------------      Chief Executor Officer,
James G. Flanigan II             and Director

/s/ JEFFREY D. KASTNER        Chief Financial Officer      Date: 12/22/08
----------------------        Secretary and Director
Jeffrey D. Kastner

/s/ MICHAEL ROBERTS           Director                     Date: 12/22/08
----------------------
MICHAEL ROBERTS

/s/ GERMAINE M. BELL          Director                     Date: 12/22/08
----------------------
Germaine M. Bell

/s/  BARBARA J. KRONK         Director                     Date: 12/22/08
----------------------
Barbara J. Kronk

/s/ AUGIE BUCCI               Chief Operating Officer      Date: 12/22/08
----------------------        and Director
Augie Bucci

/s/ MICHAEL B. FLANIGAN       Director                     Date: 12/22/08
-----------------------
Michael B. Flanigan

/s/ PATRICK J. FLANIGAN       Director                     Date: 12/22/08
-----------------------
Patrick J. Flanigan

/s/ CHRISTOPHER O'NEIL        Director                     Date: 12/22/08
-----------------------
Christopher O'Neil

                                       51


<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                    SEPTEMBER 27, 2008 AND SEPTEMBER 29, 2007

<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 - F-6

   Notes to Financial Statements                                     F-7 - F-31

<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 27, 2008 and September 29,
2007 and the related consolidated statements of income, stockholders' equity and
cash flows for the years then ended. Flanigan's  Enterprises,  Inc.'s management
is responsible for these consolidated  financial statements.  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  27, 2008 and
September 29, 2007, and the  consolidated  results of their operations and their
cash flows for the years then ended in  conformity  with  accounting  principles
generally accepted in the United States.

                                   RACHLIN LLP

Fort Lauderdale, Florida
December 22, 2008

                                       F-1

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                    SEPTEMBER 27, 2008 AND SEPTEMBER 29, 2007

<TABLE>
<CAPTION>
                                                                         2008          2007
                                                                    ------------   ------------
<S>                                                                 <C>            <C>
                      ASSETS
                      ------
Current Assets:
   Cash and cash equivalents                                        $  3,244,000   $  2,223,000
   Note receivable, current maturities, net                               16,000         14,000
   Prepaid income taxes                                                  176,000             --
   Due from franchisees                                                  351,000        735,000
   Other receivables                                                     107,000        137,000
   Inventories                                                         2,168,000      2,165,000
   Prepaid expenses                                                      547,000        840,000
   Deferred tax assets                                                   243,000        208,000
                                                                    ------------   ------------
     Total current assets                                              6,852,000      6,322,000
                                                                    ------------   ------------
Property and Equipment, Net                                           21,601,000     19,410,000
                                                                    ------------   ------------
Investment in Limited Partnership                                        151,000        142,000
                                                                    ------------   ------------
Other Assets:
   Liquor licenses, net                                                  345,000        347,000
   Note receivable, net                                                   28,000         44,000
   Deferred tax assets                                                   729,000        492,000
   Leasehold purchases, net                                            1,880,000      2,085,000
   Other                                                                 987,000      1,495,000
                                                                    ------------   ------------
     Total other assets                                                3,969,000      4,463,000
                                                                    ------------   ------------
     Total assets                                                   $ 32,573,000   $ 30,337,000
                                                                    ============   ============

         LIABILITIES AND STOCKHOLDERS' EQUITY
         ------------------------------------
Current Liabilities:
   Accounts payable and accrued expenses                            $  4,040,000   $  3,666,000
   Income taxes payable                                                       --        331,000
   Due to franchisees                                                    223,000        312,000
   Current portion of long-term debt                                     188,000        196,000
   Deferred revenues                                                      34,000         45,000
   Deferred rent                                                          19,000         17,000
                                                                    ------------   ------------
     Total current liabilities                                         4,504,000      4,567,000
                                                                    ------------   ------------
Long-Term Debt, Net of Current Maturities                              4,764,000      4,922,000
                                                                    ------------   ------------
Line of Credit                                                         1,562,000        962,000
                                                                    ------------   ------------
Deferred Rent, Net of Current Portion                                    214,000        232,000
                                                                    ------------   ------------
Minority Interests in Equity of Consolidated Limited Partnerships      8,437,000      7,570,000
                                                                    ------------   ------------
Stockholders' Equity:
   Common stock, $.10 par value; 5,000,000 shares authorized;
     4,197,642 shares issued                                             420,000        420,000
   Capital in excess of par value                                      6,240,000      6,240,000
   Retained earnings                                                  12,388,000     11,331,000
   Treasury stock, at cost, 2,313,309 and 2,306,909 shares            (5,956,000)    (5,907,000)
                                                                    ------------   ------------
     Total stockholders' equity                                       13,092,000     12,084,000
                                                                    ------------   ------------
     Total liabilities and stockholders' equity                     $ 32,573,000   $ 30,337,000
                                                                    ============   ============
</TABLE>

                 See notes to consolidated financial statements.

                                       F-2

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

              YEARS ENDED SEPTEMBER 27, 2008 AND SEPTEMBER 29, 2007

<TABLE>
<CAPTION>
                                                                                      2008           2007
                                                                                  ------------   ------------
<S>                                                                               <C>            <C>
Revenues:
   Restaurant food sales                                                          $ 40,906,000   $ 38,047,000
   Restaurant beverage sales                                                         9,494,000      8,764,000
   Package goods sales                                                              12,317,000     12,784,000
   Franchise-related revenues                                                        1,066,000      1,134,000
   Owner's fee                                                                         238,000        203,000
   Other operating income                                                              188,000        169,000
                                                                                  ------------   ------------
                                                                                    64,209,000     61,101,000
                                                                                  ------------   ------------
Costs and Expenses:
   Cost of merchandise sold:
     Restaurants and lounges                                                        17,032,000     16,158,000
     Package goods                                                                   8,656,000      9,200,000
   Payroll and related costs                                                        19,065,000     17,293,000
   Occupancy costs                                                                   3,977,000      3,867,000
   Selling, general and administrative expenses                                     13,479,000     12,483,000
                                                                                  ------------   ------------
                                                                                    62,209,000     59,001,000
                                                                                  ------------   ------------
Income from Operations                                                               2,000,000      2,100,000
                                                                                  ------------   ------------
Other Income (Expense):
   Interest expense                                                                   (495,000)      (508,000)
   Interest and other income                                                            82,000         79,000
   Limited partnership income                                                           21,000          1,000
   Gain on sale of property and equipment                                                   --        393,000
                                                                                  ------------   ------------
                                                                                      (392,000)       (35,000)
                                                                                  ------------   ------------
Income Before Provision for Income Taxes and
   Minority Interests in Earnings of Consolidated
   Limited Partnerships                                                              1,608,000      2,065,000

Provision for Income Taxes                                                            (564,000)      (698,000)

   Minority interests in (earnings) losses of consolidated
     limited partnerships                                                               13,000       (100,000)
                                                                                  ------------   ------------
Net Income                                                                        $  1,057,000   $  1,267,000
                                                                                  ============   ============
Net Income Per Common Share:
   Basic                                                                          $       0.56   $       0.67
                                                                                  ============   ============
   Diluted                                                                        $       0.56   $       0.66
                                                                                  ============   ============
Weighted Average Shares and Equivalent Shares Outstanding:
   Basic                                                                             1,888,000      1,889,000
                                                                                  ============   ============
   Diluted                                                                           1,889,000      1,910,000
                                                                                  ============   ============
</TABLE>

                 See notes to consolidated financial statements.

                                       F-3

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

              YEARS ENDED SEPTEMBER 27, 2008 AND SEPTEMBER 29, 2007

<TABLE>
<CAPTION>
                                       Common Stock        Capital in                      Treasury Stock
                                  ---------------------    Excess of      Retained     ------------------------
                                    Shares      Amount     Par Value      Earnings       Shares       Amount          Total
                                  ---------   ---------   -----------   ------------   ---------   ------------   ------------
<S>                               <C>         <C>         <C>           <C>            <C>         <C>            <C>
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

Year Ended September 27, 2008:
   Net income                            --          --            --      1,057,000          --             --      1,057,000
   Purchase of treasury stock            --          --            --             --       6,400        (49,000)       (49,000)
                                  ---------   ---------   -----------   ------------   ---------   ------------   ------------
Balance, September 27, 2008       4,197,642   $ 420,000   $ 6,240,000   $ 12,388,000   2,313,309   $ (5,956,000)  $ 13,092,000
                                  =========   =========   ===========   ============   =========   ============   ============
</TABLE>

                 See notes to consolidated financial statements.

                                       F-4

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

              YEARS ENDED SEPTEMBER 27, 2008 AND SEPTEMBER 29, 2007

<TABLE>
<CAPTION>
                                                                                               2008          2007
                                                                                           -----------   -----------
<S>                                                                                        <C>           <C>
Cash Flows from Operating Activities:
   Net income                                                                              $ 1,057,000   $ 1,267,000
   Adjustments to reconcile net income to net cash and cash equivalents provided by
      operating activities:
         Depreciation and amortization                                                       2,131,000     1,949,000
         Amortization of leasehold purchases                                                   232,000       206,000
         Gain on sale of property and equipment                                                     --      (393,000)
         Loss on abandonment of property and equipment                                          43,000        94,000
         Deferred income taxes                                                                (272,000)     (116,000)
         Deferred rent                                                                         (16,000)       12,000
         Minority interests in earnings (losses) of consolidated limited partnerships          (13,000)      100,000
         Income from unconsolidated limited partnership                                        (21,000)       (1,000)
         Recognition of deferred revenues                                                      (11,000)       (9,000)
         Changes in operating assets and liabilities:
            (Increase) decrease in:
               Due from franchisees                                                            384,000      (166,000)
               Other receivables                                                                30,000       191,000
               Prepaid income taxes                                                           (176,000)           --
               Inventories                                                                      (3,000)       50,000
               Prepaid expenses                                                                293,000       (27,000)
               Other assets                                                                    135,000      (700,000)
            Increase (decrease) in:
               Accounts payable and accrued expenses                                           374,000      (430,000)
               Income taxes payable                                                           (331,000)       67,000
               Due to franchisees                                                              (89,000)       44,000
                                                                                           -----------   -----------
                  Net cash and cash equivalents provided by operating activities             3,747,000     2,138,000
                                                                                           -----------   -----------

Cash Flows from Investing Activities:
   Collections on note receivable                                                               14,000        12,000
   Purchase of property and equipment                                                       (3,691,000)   (3,131,000)
   Deposits on property and equipment                                                         (294,000)           --
   Purchase of leasehold                                                                       (27,000)     (955,000)
   Purchase of assets of franchised restaurant                                                      --      (100,000)
   Proceeds from sale of fixed assets                                                           19,000       908,000
   Proceeds from sale of marketable securities                                                      --       381,000
   Distributions from unconsolidated limited partnership                                        12,000        12,000
   Proceeds from insurance settlement                                                               --       112,000
                                                                                           -----------   -----------
                  Net cash and cash equivalents used in investing activities                (3,967,000)   (2,761,000)
                                                                                           -----------   -----------

Cash Flows from Financing Activities:
   Payments of long-term debt                                                                 (192,000)   (1,001,000)
   Payment of line of credit                                                                        --    (1,000,000)
   Proceeds from long-term debt                                                                     --       960,000
   Proceeds from line of credit                                                                600,000     1,200,000
   Purchase of minority limited partnership interest                                          (125,000)           --
   Purchase of treasury stock                                                                  (49,000)      (36,000)
   Distributions to limited partnerships' minority partners                                 (1,018,000)   (1,006,000)
   Proceeds from limited partnership interests                                               2,025,000 *   1,970,000 *
   Proceeds from exercise of stock options                                                          --        61,000
                                                                                           -----------   -----------
                  Net cash and cash equivalents provided by financing activities             1,241,000     1,148,000
                                                                                           -----------   -----------

Net Increase in Cash and Cash Equivalents                                                    1,021,000       525,000

Cash and Cash Equivalents, Beginning                                                         2,223,000     1,698,000
                                                                                           -----------   -----------

Cash and Cash Equivalents, Ending                                                          $ 3,244,000   $ 2,223,000
                                                                                           ===========   ===========
</TABLE>

                 See notes to consolidated financial statements.

                                       F-5

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Continued)

<TABLE>
<CAPTION>
                                                                                   2008         2007
                                                                                ----------   ----------
<S>                                                                             <C>          <C>
Supplemental Disclosure of Cash Flow Information:
   Cash paid during the year for:
      Interest                                                                  $  495,000   $  508,000
                                                                                ==========   ==========
      Income taxes                                                              $1,432,000   $  631,000
                                                                                ==========   ==========

   Non-Cash Financing and Investing Activities:
      Purchase of vehicles in exchange for debt                                 $   26,000   $       --
                                                                                ==========   ==========
      Purchase deposits transferred to property and equipment                   $  593,000   $       --
                                                                                ==========   ==========
      Purchase of real property in exchange for debt                            $       --   $  700,000
                                                                                ==========   ==========
</TABLE>

*     exclusive of the Company's investment in the limited partnership owning
      the restaurant in Davie, Florida of $1,850,000 in fiscal year 2008 and
      exclusive of the Company's investment in the limited partnership owning
      the restaurant in Pembroke Pines, Florida of $380,000 in fiscal year 2007.

                 See notes to consolidated financial statements.

                                       F-6

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    SEPTEMBER 27, 2008 AND SEPTEMBER 29, 2007

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 27, 2008, we (i) operated 23 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 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".

            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 2008 and 2007 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 8).

      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
            shorter  of the life of the  lease or 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 remaining 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
            note receivable.

      Cash and Cash Equivalents

            We maintain deposit balances with financial  institutions which from
            time to time, may exceed the federally  insured limits. At September
            27, 2008,  we had  approximately  $3,121,000  on deposit that was in
            excess  of  the  federal  depository  insurance  coverage  limit  of
            $100,000 per entity.  The FDIC  insurance  limits were  increased to
            $250,000 on October 10, 2008 and will stay in effect until  December
            31, 2009.  We have not  experienced  any losses in such accounts and
            management  believes  it is not  exposed to any  significant  credit
            risks on cash and  cash  equivalents  despite  the  current  banking
            environment.

      Note Receivable

            Our note  receivable  arises  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  2008  and  2007,   we   purchased
            substantially  all of our  food  products  from one  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

                                       F-9

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

      Revenue Recognition (Continued)

            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.

      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 2008,
            the limited partnership restaurant in Davie, Florida reported losses
            of $632,000,  primarily due to pre-opening costs.  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.

      Advertising Costs

            Our advertising  costs are expensed as incurred.  Advertising  costs
            incurred  during our  fiscal  years  ended  September  27,  2008 and
            September  29,  2007  were   approximately   $217,000  and  $234,000
            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,  note  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.

                                      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

            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,
            "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  subsequent  thereto,  including  our fiscal  years 2008 and
            2007,  so there is no  impact of SFAS No.  123R on our  consolidated
            financial statements for our fiscal years 2008 or 2007.

      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 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.

      Recently Issued Accounting Pronouncements

            In March  2008,  the FASB  issued  SFAS No. 161  "Disclosures  about
            Derivative  Instruments  and  Hedging  Activities"  ("SFAS  161") to
            enhance   disclosures  about  an  entity's  derivative  and  hedging
            activities.  SFAS  161 is  effective  for all  financial  statements
            issued in fiscal years and interim periods  beginning after November
            15,  2008  and  early  application  is  encouraged.  SFAS  161  also
            encourages but does not require comparative  disclosures for earlier
            periods  at  initial  adoption.  As we do not  currently  engage  in
            derivative transactions or hedging activities,  we do not anticipate
            any significant financial statement disclosure impact as a result of
            our evaluation of SFAS 161.

                                      F-11

<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)

            In February  2008, the FASB issued FASB Staff Position No. FAS 157-2
            ("FSP 157-2").  FSP 157-2 delays the  implementation of SFAS 157 for
            nonfinancial assets and nonfinancial  liabilities,  except for items
            that are  recognized  or  disclosed  at fair value in the  financial
            statements on a recurring basis. This statement defers the effective
            date to fiscal years  beginning  after November 15, 2008 and interim
            periods within those fiscal years, which is fiscal year 2010 for the
            Company.

            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  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
            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 on our
            consolidated results of operations and financial condition.

            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

                                      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)

            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 do not
            anticipate any significant financial statement impact as a result of
            SFAS 157.

NOTE 2. ACQUISITIONS

      Purchase of Real Property

            On April 2, 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). We paid $600,000 for this  property,  $450,000 of which
            we borrowed from an  unaffiliated  third party first  mortgagee.  We
            fully  attributed  the purchase  price to the fair value of the land
            and building.

            On October 20,  2006,  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.

      Purchase of Franchised Unit

            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.

      Purchase of Leasehold Interests

            On March 31, 2008,  we purchased a four (4%)  percent  interest,  as
            lessee,  in the  Ninety  Nine  Year  Ground  Lease,  and a four (4%)
            percent interest,  as sublessor,  in the Sublease Agreement by which
            we  sublease  the real  property  and  improvements  for our package
            liquor store and warehouse  located at 8600 Biscayne  Boulevard,  El
            Portal,  Miami-Dade County,  Florida,  (Store #47) for $27,000. With
            this   purchase,   we  increased  our  ownership   interest  in  the
            Ninety-Nine  Year Ground Lease and the  Sublease  Agreement to fifty
            two (52%) percent.

                                      F-13

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 2. ACQUISITIONS

      Purchase of Limited Partnership Interests

            During fiscal year 2008, we purchased from a limited  partner (not a
            family  member  of  any  of  our  directors  or  officers)   limited
            partnership interests of 0.76% to 2.67% in our limited partnerships,
            with the only exception  being CIC Investors #55, Ltd. for $120,000.
            We also purchased from another  limited partner (not a family member
            of any of our directors or officers) a limited partnership  interest
            of 0.13% in our limited  partnership  which owns the Davie,  Florida
            restaurant, for $5,000.

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 liquor
            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 for the
            sale.

NOTE 4. NOTE RECEIVABLE

            Our note receivable  consists of the following at September 27, 2008
            and September 29, 2007:

                                                              2008       2007
                                                            --------   --------
                  Note receivable from related party,
                     bearing interest at 14% and due in
                     installments through August, 2011        44,000     58,000
                                                            --------   --------

                  Current portion                             16,000     14,000
                                                            --------   --------
                                                            $ 28,000   $ 44,000
                                                            ========   ========

            The remaining note 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 is  deferred  and  recognized  only as payments on the note are
            received by us. We  recognized  approximately  $11,000 and $9,000 of
            deferred  gain on  collections  of such note  receivable  during our
            fiscal  years ended  September  27,  2008 and  September  29,  2007,
            respectively.

            Future  scheduled  payments on our note  receivable at September 27,
            2008 consists of the following:

                  2009                  $ 16,000
                  2010                    19,000
                  2011                     9,000
                                        --------
                                        $ 44,000
                                        ========

                                      F-14

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 5. PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                           2008           2007
                                                       ------------   ------------
<S>                                                    <C>            <C>
      Furniture and equipment                          $  9,184,000   $  7,909,000
      Leasehold improvements                             18,195,000     15,413,000
      Land and land improvements                          5,104,000      5,104,000
      Building and improvements                           2,385,000      2,383,000
      Vehicles                                              685,000        670,000
                                                       ------------   ------------
                                                         35,553,000     31,479,000
      Less accumulated depreciation and amortization     13,952,000     12,069,000
                                                       ------------   ------------
                                                       $ 21,601,000   $ 19,410,000
                                                       ============   ============
</TABLE>

      Depreciation  expense for the fiscal  years ended  September  27, 2008 and
      September  29,  2007  was   approximately   $2,057,000   and   $1,949,000,
      respectively.

NOTE 6. LEASEHOLD PURCHASES

<TABLE>
<CAPTION>
                                                           2008          2007
                                                        -----------   ----------
<S>                                                     <C>           <C>
      Leasehold purchases, at cost                      $ 2,938,000   $ 2,911,000
      Less accumulated amortization                       1,058,000       826,000
                                                        -----------   -----------
                                                        $ 1,880,000   $ 2,085,000
                                                        ===========   ===========
</TABLE>

NOTE 7. INVESTMENTS IN LIMITED PARTNERSHIPS

            We have  invested with others,  (some of whom are or are  affiliated
            with our officers and directors),  in ten limited partnerships which
            own and  operate  ten  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

                                      F-15

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 7. INVESTMENTS IN LIMITED PARTNERSHIPS (Continued)

            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  27,  2008,  limited  partnerships  owning three (3)
            restaurants, (Surfside, Florida, Kendall, Florida and Miami, Florida
            locations), 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 45% 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.  34.9% 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 2008,  this  limited  partnership  has  returned to its
            investors  all of their  initial  cash  invested  and we  receive an
            annual  management fee equal to one-half (1/2) of the cash available
            for  distribution  by  the  limited  partnership.   This  entity  is
            consolidated in the accompanying financial statements.

      Kendall, Florida

            We are the sole  general  partner and a 41% limited  partner in this
            limited  partnership  which has owned and operated a  restaurant  in
            Kendall,  Florida  under  our  "Flanigan's  Seafood  Bar and  Grill"
            service  mark since April 4, 2000.  29.7% 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 2008,  this  limited  partnership  has  returned to its
            investors  all of their  initial  cash  invested  and we  receive an
            annual  management fee equal to one-half (1/2) of the cash available
            for  distribution  by  the  limited  partnership.   This  entity  is
            consolidated in the accompanying financial statements.

      West Miami, Florida

            We are the sole  general  partner and a 27% limited  partner in this
            limited  partnership  which has owned and operated a  restaurant  in
            West Miami,  Florida  under our  "Flanigan's  Seafood Bar and Grill"
            service mark since October 11, 2001. 34.2% of the remaining  limited
            partnership  interest  is  owned  by  persons  who  are  either  our
            officers,  directors or their family

                                      F-16

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 7. INVESTMENTS IN LIMITED PARTNERSHIPS (Continued)

      West Miami, Florida (Continued)

            members.  As of the  end of  our  fiscal  year  2008,  this  limited
            partnership  has returned to its investors all of their initial cash
            invested and we receive an annual  management  fee equal to one-half
            (1/2)  of  the  cash  available  for  distribution  by  the  limited
            partnership.   This  entity  is  consolidated  in  the  accompanying
            financial statements.

      Weston, Florida

            We are the sole  general  partner and a 30% 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.  35.1%  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 2008,  this  limited  partnership  has  returned to its
            investors  approximately  73.75%  of their  initial  cash  invested.
            During the first  quarter of our fiscal year 2009,  no  distribution
            was made to limited partners as this limited partnership had limited
            cash flow  generated by this  restaurant.  The limited cash flow was
            primarily attributable to increased competition,  which we expect to
            continue into our fiscal year 2009.  This entity is  consolidated in
            the accompanying financial statements.

      Stuart, Florida

            We are the sole  general  partner and a 13% 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  2008,  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 years 2007 and 2008, no distributions were made to
            limited  partners  as this  limited  partnership  had net  losses of
            $98,000 and $8,000 from the operation of the  restaurant  during the
            fiscal years 2007 and 2008,  respectively,  before  depreciation and
            amortization,  and owed the Company $203,000 and $216,000, as of the
            end of our fiscal  years 2007 and 2008,  respectively,  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 28% limited  partner in this
            limited  partnership  which has owned and operated a  restaurant  in
            Wellington, Florida under our "Flanigan's Seafood

                                      F-17

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 7.  INVESTMENTS IN LIMITED PARTNERSHIPS (Continued)

      Wellington, Florida (Continued)

            Bar and  Grill"  service  mark  since  May 27,  2005.  25.7%  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 2008,  this limited  partnership has returned
            to its investors  approximately  41% of their initial cash invested.
            This  entity  is   consolidated   in  the   accompanying   financial
            statements.

      Pinecrest, Florida

            We are the sole  general  partner  and 40%  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.  15.0% 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 2008,  this  limited  partnership  has  returned to its
            investors  approximately  18% 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 in this
            limited  partnership  which has owned and operated a  restaurant  in
            Davie,  Florida under our "Flanigan's Seafood Bar and Grill" service
            mark since July 28, 2008. 9.7% 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 2008, this
            limited  partnership has yet to return to its investors any of their
            initial  cash  invested.   This  entity  is   consolidated   in  the
            accompanying financial statements.

      Pembroke Pines, Florida

            We are the sole  general  partner and a 17% limited  partner in this
            limited  partnership  which has owned and operated a  restaurant  in
            Pembroke Pines, Florida under our "Flanigan's Seafood Bar and Grill"
            service mark since October 29, 2007. 17.9% 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 2008,  this  limited  partnership  has  returned to its
            investors  approximately  7.0% of their initial cash invested.  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

                                      F-18

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 7. INVESTMENTS IN LIMITED PARTNERSHIPS (Continued)

      Fort Lauderdale, Florida (Continued)

            partnership  interest  in this  limited  partnership.  58.8%  of the
            remaining limited  partnership  interest is owned by persons who are
            either our officers,  directors or their family  members.  We have a
            franchise arrangement with this limited partnership.  For accounting
            purposes,  we do not  consolidate  the  operations  of this  limited
            partnership  into our operations.  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:

                                                    2008         2007
                                                -----------   -----------
                  Financial Position:
                     Current assets             $    75,000   $    49,000
                     Non-current assets             549,000       615,000
                     Current liabilities             87,000       152,000
                     Non-current liabilities         44,000        58,000

                  Operating Results:
                     Revenues                     2,287,000     2,286,000
                     Gross profit                 1,525,000     1,507,000
                     Net income                      86,000         5,000

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 27,
            2008,  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 27, 2008 and September
            29,  2007,  the total  carrying  amount of our liquor  licenses  was
            approximately  $345,000 and $347,000,  respectively.  We acquired no
            liquor licenses in fiscal year 2008 which required capitalization.

NOTE 9. INCOME TAXES

            The  components  of our  provision  for income  taxes for our fiscal
            years 2008 and 2007 are as follows:

                                                    2008          2007
                                                -----------   -----------
                  Current:
                     Federal                    $   687,000   $   664,000
                     State                          148,000       150,000
                                                -----------   -----------
                                                    835,000       814,000
                                                -----------   -----------
                  Deferred:
                     Federal                       (245,000)      (99,000)
                     State                          (26,000)      (17,000)
                                                -----------   -----------
                                                   (271,000)     (116,000)
                                                -----------   -----------
                                                $   564,000   $   698,000
                                                ===========   ===========

                                      F-19

<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:

                                                              2008       2007
                                                           ---------  ---------
            Tax provision at the statutory rate of 34%     $ 563,000  $ 749,000
            State income taxes, net of federal income tax     72,000     88,000
            Tax benefit of tip credit generated             (160,000)  (141,000)
            Sec. 179 phase out and other permanent items      85,000         --
            Other                                              4,000      2,000
                                                           ---------  ---------
                                                           $ 564,000  $ 698,000
                                                           =========  =========

            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,  bonuses accrued for book
            purposes but not paid within two and a half months for tax purposes,
            the  capitalization  of certain inventory costs for tax purposes not
            recognized for financial  reporting  purposes and the recognition of
            revenue  from  gift  cards  not  redeemed  within  twelve  months of
            issuance.

            The  components of our deferred tax assets at September 27, 2008 and
            September 29, 2007 were as follows:

                                                                2008      2007
                                                              --------  --------
            Current:
               Reversal of aged payables                      $ 27,000  $ 27,000
               Capitalized inventory costs                      22,000    22,000
               Accrued bonuses                                 142,000   135,000
               Accruals for potential uninsured claims          43,000    24,000
               Gift cards                                        9,000        --
                                                              --------  --------
                                                              $243,000  $208,000
                                                              ========  ========
            Long-Term:
               Book/tax differences in property and equipment $421,000  $321,000
               Limited partnership investments                 308,000   171,000
                                                              --------  --------
                                                              $729,000  $492,000
                                                              ========  ========

            Internal  Revenue  Service Audit of Company's  Corporate  Income Tax
            Return for the Fiscal Years Ending  September 29, 2007 and September
            30, 2006

            During our fiscal year 2008,  the  corporate  income tax returns for
            our fiscal years ending  September  29, 2007 and  September 30, 2006
            were audited by the  Internal  Revenue  Service.  We agreed that the
            sums of $6,227 and $2,637 were due as  additional  corporate  income
            tax

                                      F-20

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 9. INCOME TAXES (Continued)

            for our fiscal years ending  September  29, 2007 and  September  30,
            2006, respectively. The effects of the settlement of the audits were
            considered  in the  computation  of tax  amounts for our fiscal year
            ended September 27, 2008.

NOTE 10. DEBT

      Long-Term Debt

<TABLE>
<CAPTION>
                                                                     2008         2007
                                                                  ----------   ----------
<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 October, 2013.     $3,363,000   $3,446,000

Mortgage payable to bank, secured by first mortgage on a
building, bearing interest at 7.25%; payable in monthly
installments of principal and interest of approximately $8,000,
maturing in December, 2013.                                          962,000      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 May, 2017.                       446,000      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.                                                                 122,000      161,000

Other                                                                 59,000       77,000
                                                                  ----------   ----------
                                                                   4,952,000    5,118,000
Less current portion                                                 188,000      196,000
                                                                  ----------   ----------
                                                                  $4,764,000   $4,922,000
                                                                  ==========   ==========
</TABLE>

Long-term debt at September 27, 2008 matures as follows:

   2009                                                           $  188,000
   2010                                                              236,000
   2011                                                              157,000
   2012                                                              154,000
   2013                                                              166,000
   Thereafter                                                      4,051,000
                                                                  ----------
                                                                  $4,952,000
                                                                  ==========

                                      F-21

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 10. DEBT (Continued)

      Line of Credit

            As of the end of our fiscal year 2008, we have a $2,650,000  line of
            credit,  which  has a  variable  interest  rate at  prime,  (5.0% at
            September  27,  2008),  and is payable in  monthly  installments  of
            interest only on the outstanding  principal balance, with a maturity
            in the third 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 27, 2008, our
            line of credit had a principal balance of $1,562,000, as compared to
            $962,000 as of September 29, 2007.

            Subsequent  to the end of our  fiscal  year  2008,  we  changed  our
            primary  banking  relationship  to  another  unaffiliated  financial
            institution,  which  includes a new $2,500,000  line of credit.  The
            outstanding  balance  on our  line of  credit  of  $1,586,000  as of
            November 30, 2008,  bears  interest at BBA LIBOR 1 month rate,  plus
            2.25%,  (4.20625% as of December 7, 2008),  with monthly payments of
            interest  only and the  unpaid  principal  balance  and all  accrued
            interest  due in full on October 7,  2009.  We granted  our lender a
            security  interest in  substantially  all of our assets and a second
            mortgage  on our  corporate  offices  as  collateral  to secure  our
            repayment obligations under our credit line.

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 2009 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 5.5% of annual sales in excess of the base rent paid.  We
            recognize rent expense on a straight 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.

                                      F-22

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

      Leases (Continued)

            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  to an unrelated  third
            party as retail space.  Rent for the retail space commenced  January
            1, 2005,  and we generated  $49,000 and $46,000 of revenue from this
            source  during  our  fiscal  years  ended  September  27,  2008  and
            September  29, 2007,  respectively.  Total future  minimum  sublease
            payments under the non-cancelable  sublease are $340,000,  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 27, 2008 are as follows:

                 2009                                                $ 2,485,000
                 2010                                                  2,169,000
                 2011                                                  1,721,000
                 2012                                                  1,209,000
                 2013                                                  1,094,000
                 Thereafter                                            5,335,000
                                                                     -----------
                    Total                                            $14,013,000
                                                                     ===========

            Total rent expense for all of our operating leases was approximately
            $2,697,000  and  $2,625,000  in our  fiscal  years  2008  and  2007,
            respectively,   and  is  included  in   "Occupancy   costs"  in  our
            accompanying  consolidated  statements  of  income.  This total rent
            expense is comprised of the following:

                                                           2008          2007
                                                       -----------   -----------
                 Minimum Base Rent                     $ 2,301,000   $ 2,259,000
                 Contingent Percentage Rent                396,000       366,000
                                                       -----------   -----------
                 Total                                 $ 2,697,000   $ 2,625,000
                                                       ===========   ===========

            We guarantee various leases for franchisees and stores sold in prior
            years.  Remaining rental payments  required under these leases total
            approximately $2,475,000.

      Purchase Commitments

            Effective  November 24, 2008,  we entered into a purchase  agreement
            with our rib supplier.  The terms of the agreement stipulate that we
            will purchase approximately  $3,800,000 of baby back ribs during the
            2009  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 purchase all of our rib
            supply  from  this  vendor,   but  we  believe  that  several  other
            alternative vendors are available, if necessary.

                                      F-23

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

      Franchise Program

            At September 27, 2008 and September 29, 2007, we were the franchisor
            of six  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  27,  2008  and  September  29,  2007,  we  had  no
            employment agreements.

            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 2008 and 2007
            amounted to approximately $492,000 and $438,000, respectively.

            Our Board of Directors  also approved an annual  performance  bonus,
            with  5%  of  the  pre-tax  net  income  before   depreciation   and
            amortization  from our  restaurants 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 2008 and 2007  amounted to  approximately  $357,000 and
            $323,000, respectively.

            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.  During the
            second quarter of fiscal year 2008, our Board of Directors  modified
            the annual performance bonus,  eliminating the 2% of the pre-tax net
            income before  depreciation and amortization from the package liquor
            stores paid to the package store supervisor.  Bonuses for our fiscal
            years 2008 and 2007 amounted to  approximately  $22,000 and $36,000,
            respectively.

                                      F-24

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

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

      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  27, 2008 and
                  September  29,  2007,  we  generated  $238,000 and $203,000 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  years
                  ended  September 27, 2008 and September 29, 2007, we generated
                  $150,000 and $160,000 of revenue, respectively, from providing
                  these management services.

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 2008,  we  purchased  6,400
                  shares of our common stock for an aggregate  purchase price of
                  $49,000. Of the shares purchased, we purchased 1,200 shares of
                  our common stock from the Joseph G. Flanigan  Charitable Trust
                  for  $9,600  and 2,500  shares  of our  common  stock  from an
                  employee  for  $20,000  in  off  market  transactions,   which
                  reflected an actual per share  purchase  price which was equal
                  to the average per share market price on the date of

                                      F-25

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 12. COMMON STOCK (Continued)

            Purchase of Common Shares (Continued)

                  purchase.  The balance of our common  stock  purchased,  2,700
                  shares,  were  purchased  on the open market for an  aggregate
                  purchase  price of $19,400.  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 market private transaction, at
                  an aggregate  purchase  price of $28,000,  which  reflected an
                  actual  per  share  purchase  price  which  was less  than the
                  avarage per share market  price on the date of  purchase.  The
                  balance  of our  common  stock  purchased,  832  shares,  were
                  purchased from a former  employee,  (332 shares),  for $3,500,
                  and  from  the  Joseph  G.  Flanigan  Charitable  Trust,  (500
                  shares),  for  $4,500  in  off  market   transactions,   which
                  reflected an actual per share  purchase  price which was equal
                  to the average per share market price on the date of purchase.

            Sale of Common Shares

                  During our fiscal years 2008 and 2007, we sold an aggregate of
                  -0-  and  9,510  shares  of our  common  stock,  respectively,
                  pursuant to the exercise of options,  to certain employees and
                  officers  for a total  of  approximately  $-0-,  and  $61,000,
                  respectively.

      Stock Options

            We granted no options during our fiscal years 2008 and 2007.

            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  years  ended
            September 27, 2008 and September 29, 2007, so no  compensation  cost
            has been recognized on our consolidated financial statements for our
            fiscal years ended September 27, 2008 and September 29, 2007.

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

                                                                2008      2007
                                                               ------    ------
                  Outstanding at beginning of year             50,300    67,850
                  Options granted                                  --        --
                  Options exercised                                --    (9,510)
                  Options expired                                (950)   (8,040)
                                                               ------    ------
                  Outstanding at end of year                   49,350    50,300
                                                               ------    ------
                  Exercisable at end of year                   49,350    50,300
                                                               ======    ======

                                      F-26

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 12. COMMON STOCK (Continued)

      Stock Options (Continued)

            The  intrinsic  value as of the  exercise  date of the -0- and 9,510
            stock options  exercised during our fiscal years ended September 27,
            2008 and  September  29, 2007 were  approximately  $-0- and $45,000,
            respectively.

            Weighted  average option  exercise price  information for our fiscal
            years 2008 and 2007 is as follows:

                                                               2008    2007
                                                              -----   -----
              Outstanding at beginning of year                $6.31   $6.27
                                                              =====   =====
              Granted during the year                         $   -   $   -
                                                              =====   =====
              Exercised during the year                       $   -   $6.23
                                                              =====   =====
              Outstanding at end of year                      $6.31   $6.31
                                                              =====   =====
              Exercisable at end of year                      $6.31   $6.31
                                                              =====   =====

            Our significant  option groups outstanding at September 27, 2008 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      9,350         9,350        $6.14         0.0*
                5-20-04     40,000        40,000        $6.35       0.625

                  *expired unexercised on October 3, 2008.

            The  weighted-average  remaining  contractual  terms  of  our  stock
            options  outstanding and stock options  exercisable at September 27,
            2008 was 0.507 years.  The aggregate  intrinsic value of our options
            outstanding and stock options  exercisable at September 27, 2008 was
            $-0-.

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 if the  weighted
            average  market  price  exceeds the  exercise  price.  In the fourth
            quarter,  the options  granted on May 20, 2004 became  anti-dilutive
            and were not  included  in the  computation  of diluted  EPS for the
            fourth  quarter.  Earnings per share are computed by dividing income
            available to common  stockholders by the basic and diluted  weighted
            average number of common shares.

                                      F-27

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 13. NET INCOME PER COMMON SHARE (Continued)

<TABLE>
<CAPTION>
                                                                   2008        2007
                                                                 ---------   ---------
<S>                                                              <C>         <C>
            Basic weighted average shares                        1,888,000   1,889,000

            Incremental shares relating to outstanding
               Options                                               1,000      21,000
                                                                 ---------   ---------

            Diluted weighted average shares                      1,889,000   1,910,000
                                                                 =========   =========
</TABLE>

NOTE 14. RELATED PARTY TRANSACTIONS

            Our Chief Executive Officer manages one of our franchised stores.

            Also see Notes 7 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 2008 and 2007,  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,  note
            receivable and real property, improvements, furniture, equipment and
            vehicles  used at our  corporate  headquarters.  We do not  have any
            operations  outside of the United  States and  transactions  between
            restaurants and package liquor stores are not material.

                                                          2008         2007
                                                      -----------   -----------
            Operating Revenues:
               Restaurants                            $50,400,000   $46,811,000
               Package stores                          12,317,000    12,784,000
               Other revenues                           1,492,000     1,506,000
                                                      -----------   -----------
                  Total operating revenues            $64,209,000   $61,101,000
                                                      ===========   ===========

                                      F-28

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 15. BUSINESS SEGMENTS (Continued)

<TABLE>
<CAPTION>
                                                                                    2008         2007
                                                                                -----------   -----------
<S>                                                                             <C>           <C>
            Operating Income Reconciled to Income before
               Income Taxes and Minority Interest in earnings (losses)
               of Consolidated Limited Partnerships:
                  Restaurants                                                   $ 3,669,000   $ 3,281,000
                  Package stores                                                    491,000       470,000
                                                                                -----------   -----------
                                                                                  4,160,000     3,751,000
                  Corporate expenses, net of other revenues                      (2,160,000)   (1,651,000)
                                                                                -----------   -----------
                  Operating income                                                2,000,000     2,100,000
                  Equity in net income of limited partnership                        21,000         1,000
                     Minority interest in (earnings) losses of consolidated
                     limited partnerships                                            13,000      (100,000)
                  Interest expense, net of interest income                         (413,000)     (494,000)
                  Other                                                                  --       458,000
                                                                                -----------   -----------
                        Income Before Income Taxes                              $ 1,621,000   $ 1,965,000
                                                                                ===========   ===========

            Identifiable Assets:
               Restaurants                                                      $19,699,000   $18,202,000
               Package store                                                      3,673,000     3,577,000
                                                                                -----------   -----------
                                                                                 23,372,000    21,779,000
               Corporate                                                          9,201,000     8,558,000
                                                                                -----------   -----------
            Consolidated Totals                                                 $32,573,000   $30,337,000
                                                                                ===========   ===========

            Capital Expenditures:
               Restaurants                                                      $ 3,825,000   $ 3,505,000
               Package stores                                                       194,000       274,000
                                                                                -----------   -----------
                                                                                  4,019,000     3,779,000
               Corporate                                                            318,000     1,107,000
                                                                                -----------   -----------
            Total Capital Expenditures                                          $ 4,337,000   $ 4,886,000
                                                                                ===========   ===========

            Depreciation and Amortization:
               Restaurants                                                      $ 1,759,000   $ 1,550,000
               Package stores                                                       252,000       245,000
                                                                                -----------   -----------
                                                                                  2,011,000     1,795,000
               Corporate                                                            352,000       360,000
                                                                                -----------   -----------
            Total Depreciation and Amortization                                 $ 2,363,000   $ 2,155,000
                                                                                ===========   ===========
</TABLE>

                                      F-29

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 16. QUARTERLY INFORMATION (UNAUDITED)

            The  following is a summary of our  unaudited  quarterly  results of
            operations for the quarters in our fiscal years 2008 and 2007.

<TABLE>
<CAPTION>
                                                                      Quarter Ended
                                                --------------------------------------------------------
                                                December 29,    March 29,      June 28,    September 27,
                                                    2007          2008           2008          2008
                                                ------------   -----------   -----------   -------------
<S>                                             <C>            <C>           <C>           <C>
            Revenues                            $ 15,904,000   $16,983,000   $15,765,000   $  15,557,000
            Income from operations                   180,000       970,000       651,000         199,000
            Net income                               185,000       470,000       336,000          66,000
            Net income per share -
               Basic                                    0.10          0.25          0.18            0.03
            Net income per share -
               Diluted                                  0.10          0.25          0.18            0.03
            Weighted average common
               stock outstanding - basic           1,890,372     1,889,121     1,886,077       1,885,274
            Weighted average common
               stock outstanding - diluted         1,903,300     1,899,992     1,895,378       1,885,573
</TABLE>

<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
            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                 ($181,000)
            Adjusting estimated income taxes to actual                   95,000
                                                                      ---------
                                                                      ($ 86,000)
                                                                      =========

                                      F-30

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 16. QUARTERLY INFORMATION (UNAUDITED) (Continued)

            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
                  contributions.  During our fiscal years 2008 and 2007, we made
                  discretionary    contributions   of   $30,000   and   $29,000,
                  respectively.

      Schedule II - Valuation and Qualifying Accounts

            We maintain no accounts  that qualify for this  schedule for each of
            our two fiscal  years ended  September  27, 2008 or,  September  29,
            2007.

                                      F-31