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

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

                    For the fiscal year ended October 2, 2004

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


                                       1
<PAGE>

The aggregate market value of the voting stock held by non-affiliates of the
registrant was $6,293,800 as of December 28, 2004.

There were 1,916,825 shares of the Registrant's Common Stock ($0.10) Par Value
outstanding as of October 2, 2004


                                       2
<PAGE>

                       DOCUMENTS INCORPORATED BY REFERENCE

Information contained in the Registrant's 2005 definitive proxy material has
been incorporated by reference in Items 10, 11, 12 and 13 of Part III of this
Annual Report on Form 10-K.

                        Exhibit Index Begins on Page 42

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

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

General
-------

      Flanigan's  Enterprises,   Inc.,  (the  "Company")  owns  and/or  operates
restaurants with lounges,  package liquor stores and an  entertainment  oriented
club  (collectively  the "units").  At October 2, 2004, the Company  operated 18
units,  and had  equity  interests  in seven  additional  units  which have been
franchised  by the Company.  The table below  summarizes  the type and number of
units being operated during each of the last three fiscal years.

                               FISCAL     FISCAL      FISCAL
                               YEAR       YEAR        YEAR        NOTE
                               2004       2003        2002        NUMBER
TYPES OF UNITS
--------------------------------------------------------------------------------
Company Owned:
--------------
  Combination package
  and restaurant                4          4           4
Restaurant only                 2          2           2
Package store only              5          4           4         (1)(2)(3)

Company Managed
---------------
 Restaurants Only:
 -----------------
  Limited partnerships          5          4           4         (4)(5)(6)(7)(8)
  Franchise                     1          1           1

Company Owned Club:             1          1           1
------------------
--------------------------------------------------------------------------------
TOTAL - Company
  Owned/Operated Units:        18         16          16

FRANCHISED - units              7          7           7         (9)
                               --         --


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<PAGE>

Notes:

      (1) During the fourth  quarter of fiscal year 2000,  the  Company  entered
into a lease for the  operation of a package  liquor store in Hialeah,  Florida.
This package liquor store opened for business during the first quarter of fiscal
year  2002.

      (2) During the fourth  quarter of fiscal year 2001,  the  Company  entered
into a ground  lease for an out parcel in  Hollywood,  Florida.  The Company has
constructed a building on the out parcel, one-half (1/2) of which is used by the
Company for the operation of a package liquor store and the other one-half (1/2)
is  subleased  by the  Company as retail  space.  The package  store  opened for
business on November 17, 2003.

      (3) During the second quarter of fiscal year 2001,  the Company  completed
renovations  to its new  corporate  offices and  relocated to the same.  The new
corporate  offices consist of a two (2) story building,  with space set aside on
the ground floor for a package liquor store.  The Company filed the  application
for its building  permits  during the third quarter of fiscal year 2002,  but is
still  involved  in  litigation  with  the  adjacent  shopping  center  over the
Company's  right  to  non-exclusive   parking  in  the  shopping   center.   The
construction of the package liquor store has been postponed until the litigation
is  concluded,  which should occur during fiscal year 2005.  The package  liquor
store is not included in the table of units.

      (4) During the third  quarter of fiscal year 2001,  the  Company  formed a
limited  partnership  which raised funds through a private  offering to purchase
the assets of a  restaurant  in West Miami,  Florida and  renovate  the same for
operation under the "Flanigan's Seafood Bar and Grill" servicemark.  The Company
acts as general partner and has a twenty five percent ownership  interest in the
partnership. The restaurant opened for business on October 11, 2001.

      (5) During fiscal year 2000, the Company  received  official  notification
from the State of Transportation,  Department of Transportation,  ("DOT"),  that
the DOT was  exercising its right of eminent domain to "take" the hotel property
upon which a restaurant, operated by the Company as general partner of a limited
partnership,  was located.  The  restaurant was closed at the end of business on
March 30, 2002 and is not included in the table of units.

            During  the third  quarter  of fiscal  year 2003,  the  Company,  as
general  partner of the  limited  partnership,  entered  into a Sale of Business
Agreement for the purchase of an existing business in Pinecrest,  Florida, which
transaction closed during the first quarter of fiscal year 2004. The Company, as
general  partner  of the  limited  partnership,  is  proceeding  with  necessary
structural  repairs,  while  preserving  its right to pursue a claim against the
landlord  for  its  contribution  to  the  additional   structural  repairs  and
reimbursement  of rent  paid  while  the  processing  of its  building  plans is
delayed. The structural repairs should be completed during the second quarter of
fiscal year 2005, after which the limited  partnership's  building plans will be
processed by Pinecrest,  Florida,  building  permits issued and the  renovations
made to the business premises.  It is anticipated


                                       4
<PAGE>

that the  renovated  restaurant  will be open for  business by the end of fiscal
year 2005 and is not included in the table of units.

      (6) During the fourth  quarter of fiscal year 2001, a limited  partnership
was formed  with the  Company  as general  partner,  which  limited  partnership
entered into a sublease  agreement to own and operate an existing  restaurant in
Weston,  Florida.  During the fourth  quarter of fiscal year 2002, the sublessor
resolved  the zoning and  related  matters  and the  limited  partnership  began
raising  funds to renovate the business  premises for operation as a "Flanigan's
Seafood Bar and Grill" restaurant. The Company acts as general partner and has a
twenty eight  percent  ownership  interest in the  partnership.  The  restaurant
opened for business on January 20, 2003.

      (7) During the third  quarter of fiscal year 2003,  a limited  partnership
was formed  with the  Company  as general  partner,  which  limited  partnership
entered  into a lease  agreement  to own and  operate a  restaurant  in a Howard
Johnson's  Hotel in Stuart,  Florida.  During the fourth  quarter of fiscal year
2003,  the  limited  partnership  raised  funds  through a private  offering  to
renovate the business  premises for operation as a  "Flanigan's  Seafood Bar and
Grill" restaurant. The Company acts as general partner and owns a twelve percent
limited partnership interest.  The restaurant opened for business on January 11,
2004.

      (8) During the fourth  quarter of fiscal year 2004, a limited  partnership
was formed  with the  Company  as general  partner,  which  limited  partnership
entered into a lease  agreement to own and operate a restaurant  in  Wellington,
Florida under the "Flanigan's Seafood Bar and Grill" service mark. Subsequent to
the end of fiscal year 2004,  the limited  partnership  raised  funds  through a
private  offering  to  renovate  the  business   premises  for  operation  as  a
"Flanigan's  Seafood  Bar and Grill"  restaurant.  The  Company  acts as general
partner  and owns a twenty  six  percent  limited  partnership  interest.  It is
anticipated that the renovated restaurant will open for business by the start of
the third quarter of fiscal year 2005 and is not included in the table of units.

      (9)  Since the  fourth  quarter  of 1999,  the  Company  has  managed  the
restaurant for a franchisee.  The franchised restaurant is included in the table
of units as a  restaurant  operated  by the Company  and the  franchise  is also
included  as a unit  franchised  by the  Company and in which the Company has an
interest.

      All of the Company's  package  liquor  stores,  restaurants  and clubs are
operated on leased properties.

      The  Company  was  incorporated  in Florida in 1959 and  operated in South
Florida as a chain of small cocktail lounges and package liquor stores. By 1970,
the Company had established a chain of "Big Daddy's"  lounges and package liquor
stores between Vero Beach and Homestead, Florida. From 1970 to 1979, the Company
expanded its package liquor store and lounge operations  throughout  Florida and
opened clubs in five other "Sun Belt" states. In 1975, the Company  discontinued
most of its package  store  operations  in Florida  except in the South  Florida
areas of Dade,  Broward,  Palm Beach and Monroe  Counties.  In 1982 the  Company
expanded its club operations into the Philadelphia, Pennsylvania area as general
partner of several limited partnerships  organized by the Company. In March 1985
the Company began


                                       5
<PAGE>

franchising its package liquor stores and lounges in the South Florida area. See
Note 9 to the consolidated financial statements and the discussion of franchised
units on page 8.

      During  fiscal year 1987,  the  Company  began  renovating  its lounges to
provide full restaurant food service, and subsequently  renovated and added food
service to most of its lounges.  The restaurant  concept,  as the Company offers
it,  has been so well  received  by the  public  that food  sales now  represent
approximately 78% of total restaurant sales.

      The Company's  package  liquor stores  emphasize  high volume  business by
providing  customers  with a wide  variety  of  brand  name  and  private  label
merchandise at discount  prices.  The Company's  restaurants  provide  efficient
service of alcoholic  beverages  and full food service with  abundant  portions,
reasonably priced, served in a relaxed, friendly and casual atmosphere.

      The  Company's  principal  sources  of  revenue  are the  sale of food and
alcoholic beverages.

      The Company conducts its operations directly and through a number of joint
ventures  and  wholly  owned  subsidiaries.  The joint  ventures  and  operating
subsidiaries are as follows:

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

Flanigan's Management Services, Inc.              Florida               100

Flanigan's Enterprises, Inc. of Georgia           Georgia               100

Seventh Street Corp.                              Florida               100

Flanigan's Enterprises, Inc. of Pa.             Pennsylvania            100

CIC Investors #13, Limited Partnership            Florida               100

CIC Investors #60, Limited Partnership            Florida                42

CIC Investors #65, Limited Partnership            Florida                26

CIC Investors #70, Limited Partnership            Florida                40

CIC Investors #75, Limited Partnership            Florida                12

CIC Investors #80, Limited Partnership            Florida                25

CIC Investors #95, Limited Partnership            Florida                28

      The income  derived and expenses  incurred by the Company  relating to the
aforementioned  joint ventures and  subsidiaries are consolidated for accounting
purposes  with the  income  and  expenses  of the  Company  in the  consolidated
financial statements in this Form 10-K.


                                       6
<PAGE>

      The  Company's  executive  offices,  which are owned by the  Company,  are
located in a two story  building  at 5059 N.E.  18th  Avenue,  Fort  Lauderdale,
Florida 33334 and its telephone number at such address is (954) 377-1961.

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

      The Company's  business is carried out  principally  in two segments:  the
restaurant segment and the package liquor store segment.

      Financial  information  broken into these two principal  industry segments
for the three  fiscal  years  ended  October 2,  2004,  September  27,  2003 and
September 28, 2002 is set forth in the consolidated  financial  statements which
are attached hereto, and incorporated herein by reference.

The Company's Package Liquor Stores and Restaurants
---------------------------------------------------

      The Company's  package  liquor stores are operated  under the "Big Daddy's
Liquors"  servicemark  and the  Company's  restaurants  are  operated  under the
"Flanigan's  Seafood Bar and Grill"  servicemark.  The Company's  package liquor
stores  emphasize  high  volume  business  by  providing  customers  with a wide
selection of brand name and private label liquors,  beer and wines.  The Company
has a policy of meeting  the  published  sales  prices of its  competitors.  The
Company provides extensive sales training to its package liquor store personnel.
All package liquor stores are open 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.

      The Company's  restaurants offer full food and alcoholic  beverage service
with  approximately  78% of their sales being food items.  These restaurants are
operated  under the  "Flanigan's  Seafood Bar and Grill"  servicemark.  Although
these  restaurants  provide a neighborhood  atmosphere,  they have the degree of
standardization  prevalent in casual dining restaurant  chains,  including menu.
The interior  decor is nautical with numerous  fishing and boating  pictures and
decorations.  Drink prices may vary between  locations to meet local conditions.
Food prices are standardized. The restaurants' hours of operation are from 11:00
a.m.  to  1:00-5:00  a.m.  The  Company  continues  to develop  strong  customer
recognition of its "Flanigan's  Seafood Bar and Grill" servicemark  through very
competitive  pricing and efficient and friendly  service.  The Company's package
liquor  stores and  restaurants  were  designed  to permit  minor  modifications
without significant capital expenditures. However, from time to time the Company
is required to redesign and refurbish its units at significant cost. See Item 2,
Properties and Item 7 for further discussion.


                                       7
<PAGE>

Franchised Package Liquor Stores and Restaurants
------------------------------------------------

      In March 1985, the Company's  Board of Directors  approved a plan to sell,
on a  franchise  basis,  up to 26 of the  Company's  package  liquor  stores and
lounges in the South  Florida  area.  The Company  had  limited  response to its
franchise  offering and suspended  its franchise  plan at the end of fiscal year
1986.  Many of the units that were  originally  offered as franchises  have been
sold outright and are no longer operated as Flanigan's or Big Daddy's stores. As
of the end of fiscal year 2004, seven units were franchised, of which five units
were  franchised  to  members  of the  family of the  Chairman  of the Board and
Officers and Directors of the Company.

      During fiscal year 1995, the Company completed its new franchise agreement
for a franchisee to operate a restaurant  under the "Flanigan's  Seafood Bar and
Grill"  servicemark  pursuant to a license from the Company.  The new  franchise
agreement provides the Company with the ability to maintain a high level of food
quality and service at its  franchised  restaurants,  which are  essential  to a
successful  operation.  A  franchisee  is  required  to execute a new  franchise
agreement  for the balance of the term of its lease for the  business  premises,
extended  by the  franchisee's  continued  occupancy  of the  business  premises
thereafter,  whether by lease or ownership. The new franchise agreement provides
for a royalty to the  Company in the amount of  approximately  3% of gross sales
plus a  contribution  to  advertising in an amount between 1-1/2% to 3% of gross
sales. All existing  franchisees who operate  restaurants  under the "Flanigan's
Seafood  Bar and  Grill" or other  authorized  servicemarks  have  executed  new
franchise agreements.

      The units that  continue to be  franchised  are doing well and continue to
generate income for the Company.

Investment in Joint Ventures
----------------------------

      The Company had determined that all but one joint venture  discussed below
should be consolidated by virtue of control,  as evidence by general partnership
interests  held by the  Company.  As a  result,  the  accompanying  consolidated
financial  statements  reflect  the joint  ventures in which they have a general
partnership  interest on a consolidated  basis.  The remaining  joint venture in
which the Company does not have control has been  accounted  for  utilizing  the
equity method.

      Beginning  with the  limited  partnership  which  owns the  restaurant  in
Surfside, Florida and for all limited partnerships formed subsequent thereto for
the purpose of owning and operating a restaurant  under the "Flanigan's  Seafood
Bar and Grill"  servicemark,  a standard financial  arrangement has been used in
each limited partnership agreement. Under this financial arrangement,  until the
limited  partnership  has  received  an  aggregate  sum  equal  to  the  initial
investment of all limited partners from the net profit from the operation of the
restaurant,  the limited  partnership  receives an aggregate sum equal to 25% of
the  initial  investment  of all  limited  partners  first each  year,  with any
additional net profit  divided  equally  between the Company,  as manager of the
restaurant,  and the  limited  partnership.  Once the  limited  partnership  has
received  an  aggregate  sum  equal to the  initial


                                       8
<PAGE>

investment of all limited partners from the net profit from the operation of the
restaurant, the net profit is divided equally between the Company, as manager of
the  restaurant,  and the limited  partnership.  As of October 2, 2004, only the
limited  partnership which owns the restaurant in Kendall,  Florida has received
an aggregate sum equal to the initial  investment  of all limited  partners from
the net profit from the  operation of the  restaurant  and the Company  receives
one-half (1/2) of the net profit as manager of the restaurant. The Company plans
to  continue  forming  limited  partnerships  to raise  funds to own and operate
restaurants under the "Flanigan's  Seafood Bar and Grill"  servicemark using the
same financial arrangement.

      Each limited partnership agreement, excluding only the limited partnership
agreement for the  franchised  restaurant in Fort  Lauderdale,  Florida which is
governed by a franchise  agreement,  gives the limited  partnership the right to
use the "Flanigan's  Seafood Bar and Grill" servicemark for a fee equal to 3% of
the gross sales from the operation of the restaurant,  while the Company acts as
general partner only.

Miami, Florida

      The Company operated a restaurant in Miami,  Florida under the "Flanigan's
Seafood Bar and Grill" servicemark  pursuant to a limited partnership  agreement
through the end of the second  quarter of fiscal year 2002.  The Company acts as
the general  partner and owned a fifty percent limited  partnership  interest at
that  time.  The  State  of  Florida,  Department  of  Transportation,  ("DOT"),
exercised  its right of eminent  domain to "take" the hotel  property upon which
this  restaurant was located.  During fiscal year 2002, the Company,  as general
partner of the limited partnership,  settled its apportionment claim against the
hotel owner for $700,000,  which settlement  resulted in a gain from disposition
of approximately  $459,000 to the Company during the fiscal year ended September
28,  2002,  which is included  in "Other  Income  (Expense)  on Page F-3 of this
report.  During fiscal year 2003, the limited partnership settled all claims for
additional compensation from the DOT for $27,000 and during the third quarter of
fiscal  year  2004  received  a  final  payment  from  the DOT  for  $10,000  as
reimbursement of expenses during the eminent domain proceedings.  The additional
compensation  and  reimbursement of expenses from the DOT belonged solely to the
Company.   The  unrelated  joint  venture  partner  received  $350,000  in  full
settlement of its interest and the Company  controls 100% of the  partnership as
of October 2, 2004.

      During the third  quarter of fiscal  year 2003,  the  Company,  as general
partner of the limited  partnership,  entered into a Sale of Business  Agreement
for  the  purchase  of  an  existing  business  in  Pinecrest,   Florida,  which
transaction  closed during the first  quarter of fiscal year 2004.  The purchase
price of  approximately  $340,000  related to the  acquisition of a below market
lease and will  therefore be  recognized  as  additional  lease expense over the
remaining life of the lease once operation of the  restaurant  commences.  As of
October 2, 2004, the $340,000 is included in the  accompanying  balance sheet in
other assets. The Company agreed to  unconditionally  guaranty the lease for the
business  premises  in order to  procure  the  consent  of the  landlord  to the
assignment of the lease. During the second quarter of fiscal year 2004 and after
removing the interior  finishes in anticipation of completing its building plans
for the  renovation  of the  building  premises,  the  Company  found  numerous,
substantial  structural


                                       9
<PAGE>

deficiencies  which needed to be rectified prior to any renovations  being made.
During the third quarter of fiscal year 2004, the Company, as general partner of
the limited  partnership,  and the landlord  agreed upon the structural  repairs
required, as set forth by the landlord's  engineering firm, and to equally share
the cost thereof in order to minimize  further  delay to the  renovation  of the
business  premises.  During fourth  quarter of fiscal year 2004,  the structural
repairs were made by the  landlord's  contractor.  Upon  submitting its building
plans to Pinecrest,  Florida for review and the issuance of building plans,  the
Company  was  advised  that there  were  structural  problems  that had not been
addressed and other  structural  problems that were not adequately  repaired and
that its building plans would not be reviewed until the structural problems were
rectified.  The  Company,  as general  partner of the  limited  partnership,  is
proceeding with the necessary structural repairs,  while preserving its right to
pursue a claim  against the  landlord  for its  contribution  to any  additional
structural  repairs and  reimbursement  of rent paid while the processing of its
building plans is delayed. The structural repairs should be completed during the
second  quarter  of fiscal  year 2005,  after  which the  limited  partnership's
building plans will be processed by Pinecrest,  Florida, building permits issued
and the renovations made to the business premises. The limited partnership still
intends to raise funds  through a private  offering to renovate  the  restaurant
once the  renovation  costs have been  determined.  As of the end of fiscal year
2004,  the Company had advanced the sum of $798,862 to the limited  partnership,
the use of  which  included,  but was not  limited  to,  funds  to  close on the
purchase  of the  existing  business,  architectural  and  engineering  fees and
contribution to structural repairs made to date. The Company continues to act as
general  partner and will also be the owner of up to thirty three and  one-third
percent  limited  partnership  interest.  It is  anticipated  that the renovated
restaurant will be open for business by the end of fiscal year 2005.

Fort Lauderdale, Florida

      A related  third  party acts as general  partner of a limited  partnership
which owns and  operates a franchised  restaurant  in Fort  Lauderdale,  Florida
under the  "Flanigan's  Seafood  Bar and Grill"  servicemark.  The  Company is a
twenty  five  percent  owner of the  limited  partnership  as are other  related
parties, including, but not limited to officers and directors of the Company and
their  families.  This joint  venture is not  consolidated  in the  accompanying
consolidated financial statements of the Company.

Surfside, Florida

      The Company acts as general  partner of a limited  partnership  which owns
and operates a restaurant in Surfside, Florida under the "Flanigan's Seafood Bar
and Grill"  servicemark.  The Company is also a forty two  percent  owner of the
limited partnership as are other related parties,  including, but not limited to
officers and directors of the Company and their families. This restaurant opened
for business in the second quarter of fiscal year 1998.

Kendall, Florida

      The Company acts as general  partner of a limited  partnership  which owns
and operates a restaurant in Kendall,  Florida under the "Flanigan's Seafood Bar
and Grill" servicemark. The Company is also a forty percent owner of the


                                       10
<PAGE>

limited partnership as are other related parties,  including, but not limited to
officers and directors of the Company and their families. This restaurant opened
for business on April 9, 2000.

West Miami, Florida

      The Company acts as general  partner of a limited  partnership  which owns
and operates a restaurant in West Miami,  Florida under the "Flanigan's  Seafood
Bar and Grill"  servicemark.  The Company is also a twenty five percent owner of
the limited partnership as are other related parties, including, but not limited
to officers and  directors of the Company and their  families.  This  restaurant
opened for business on October 11, 2001.

Weston, Florida

      During the fourth  quarter of fiscal year 2002,  the  Company,  as general
partner of a limited  partnership,  began raising funds to renovate the business
premises  of an  existing  restaurant  in Weston,  Florida  for  operation  as a
"Flanigan's Seafood Bar and Grill" restaurant.  The Company is also the owner of
twenty eight percent of the limited  partnership,  as are other related parties,
including  but not limited to officers  and  directors  of the Company and their
families. The restaurant, which had operated under its existing servicemark, was
closed  on July  13,  2002 and  building  permits  were  issued  to the  limited
partnership at the start of fiscal year 2003. The restaurant opened for business
on January 20, 2003.

Stuart, Florida

      During the third  quarter of fiscal year 2003, a limited  partnership  was
formed with the Company as general partner,  which limited  partnership  entered
into a lease  agreement  to own and operate a restaurant  in a Howard  Johnson's
Hotel in Stuart,  Florida.  During the first  quarter of fiscal  year 2004,  the
limited  partnership  completed  its  private  offering,   raising  the  sum  of
$1,500,000  to renovate the business  premises  for  operation as a  "Flanigan's
Seafood  Bar and Grill"  restaurant.  The  Company  continues  to act as general
partner and is also the owner of a twelve percent limited partnership  interest,
as are  other  related  parties,  including  but not  limited  to  officers  and
directors of the Company and their families. The renovated restaurant opened for
business on January 11, 2004.

Wellington, Florida

      During the fourth quarter of fiscal year 2004, a limited  partnership  was
formed with the Company as general partner,  which limited  partnership  entered
into a lease  agreement to own and operate a restaurant in  Wellington,  Florida
under the  "Flanigan's  Seafood Bar and Grill"  service mark.  During the fourth
quarter of fiscal year 2004, the limited partnership began raising funds through
a private  offering  to  renovate  the  business  premises  for  operation  as a
"Flanigan's  Seafood  Bar and Grill"  restaurant.  As of the end of fiscal  year
2004,  the Company had advanced the sum of $148,902 to the limited  partnership,
the use of which included, but is not limited to funds due upon the execution of
the lease agreement as security deposit and prepaid rent, architect, engineering
and initial contracting fees. The advance represented eight percent of the funds
to be raised through the private offering to renovate and prepare the restaurant
to open for business,


                                       11
<PAGE>

including  working  capital.  Subsequent  to the end of fiscal  year  2004,  the
limited  partnership  completed  its  private  offering,   raising  the  sum  of
$1,850,000.  The  Company  continues  to act as general  partner and is also the
owner of a twenty six percent limited partnership interest, as are other related
parties,  including but not limited to officers and directors of the Company and
their families.  It is anticipated  that the renovated  restaurant will open for
business by the start of the third quarter of fiscal year 2005.

Clubs
-----

      As of the end of fiscal year 2004,  the Company owned one club in Atlanta,
Georgia, which was operated by an unaffiliated third party, as discussed below.

Operation of Unit by Unaffiliated Third Party
----------------------------------------------

      During fiscal year 1992, the Company  entered into a Management  Agreement
with Mardi Gras  Management,  Inc. for the  operation of the  Company's  club in
Atlanta,  Georgia  through the balance of the initial term of the lease,  unless
sooner terminated by Mardi Gras Management,  Inc. upon thirty days prior written
notice,  with  or  without  cause.  Mardi  Gras  Management,  Inc.  assumed  the
management of this club  effective  November 1, 1991 and is currently  operating
the club under an adult  entertainment  format.  During  fiscal  year 1997,  the
Company agreed to modify the Management Agreement to give Mardi Gras Management,
Inc.  one five year renewal  option to extend the term of the same,  without the
right to  terminate  the same upon thirty  days prior  written  notice,  with or
without cause,  provided the Company was satisfied with the financial  condition
of Mardi  Gras  Management,  Inc.  within  its sole  discretion,  and Mardi Gras
Management,  Inc.  agreed to modify the owner's fee to $150,000  per year versus
ten percent of gross sales from the club, whichever is greater.  Pursuant to the
Management Agreement, as modified, the Company receives a monthly owner's fee of
$12,500,  subject to adjustment each year on or about July 1, with an additional
owners fee equal to 10% of the gross sales exceeding $1,500,000 for the prior 12
month  period,  being due the Company.  During the first  quarter of fiscal year
2001, the Company accepted the exercise of the five year renewal option by Mardi
Gras   Management   upon  its  receipt  of  a  security   deposit  of  $200,000.
Simultaneously,  with its  acceptance  of the exercise of the renewal  option by
Mardi Gras Management,  the Company exercised its five year renewal option under
the ground lease for the business premises.

      During the third quarter of fiscal year 2004, Mardi Gras Management,  Inc.
entered into a new lease  agreement  with the landlord of the Company's  club in
Atlanta,  Georgia.  The new lease  agreement  is for a period of ten (10)  years
commencing  when the current lease  expires on April 30, 2006,  with one (1) ten
(10) year renewal option.  The Company did not execute or guaranty the new lease
and has no liability on the same. Since Mardi Gras  Management,  Inc. will still
operate the club under the  Management  Agreement,  the Company will continue to
receive an owner's  fee of $150,000  per year versus ten (10%)  percent of gross
sales from the club, whichever is greater,  until the rental increases under the
new lease take  effect.  The Company


                                       12
<PAGE>

agreed that one-half (1/2) of the rental  increases will be credited against any
owner's  fee in excess of $150,000  per year for  purposes  of  calculating  the
owner's fee, provided the owner's fee is never less than $150,000 per year.

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

      The Company  emphasizes  systematic  operations  and control of all units.
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  Company
guidelines  and  procedures.  The Company has in effect an incentive  cash bonus
program  for its  managers  and  salespersons  based  upon  various  performance
criteria. The Company's 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 store,  restaurant and club operations
in specific geographic districts.

      All of the Company's managers and salespersons  receive extensive training
in sales  techniques.  The Company  arranges 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. Liquor inventory purchased can normally be
returned only if defective or broken.

      All Company  purchases of liquor inventory are made through its purchasing
department  from the  Company's  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 the Company's liquor inventory is shipped by
the wholesalers or  distributors  directly to the Company's  units.  The Company
significantly  increases  its inventory  prior to Christmas,  New Year's eve and
other  holidays.  Pursuant  to  Florida  law,  the  Company  pays for its liquor
purchases within ten days of delivery.

      In September 2002, the Company  changed the accounting  method for valuing
inventories from first in first out to average cost.

      All  negotiations  with  food  suppliers  are  handled  by  the  Company's
purchasing department at the Company's corporate headquarters. This ensures that
the best  quality and prices  will be  available  to each unit.  Orders for food
products are prepared by each unit's kitchen  manager and reviewed by the unit's
general  manager  before being placed with the approved  vendor.


                                       13
<PAGE>

Merchandise  is  delivered  by the  supplier  directly to each unit.  Orders are
placed  several  times a week to ensure  product  freshness.  Food  inventory is
primarily paid for monthly.

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

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

      Alcoholic beverage control regulations require each of the Company's units
to apply to a state  authority and, in certain  locations,  county and municipal
authorities,  for a  license  or  permit  to  sell  alcoholic  beverages  on the
premises.

      In the State of Florida,  which represents all but one of the total liquor
licenses held by the Company,  most of the Company's  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 the
Company  allow the sale of liquor for on and off premises  consumption  only. In
Florida,  the other liquor licenses held by the Company or limited  partnerships
of which the Company is 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 the Company allow the sale of liquor for on premises consumption only.

      In the State of Georgia,  the other  state in which the Company  operates,
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 the  Company's  units,
including,   minimum  age  of  patrons  and  employees,   hours  of  operations,
advertising,  wholesale  purchasing,  inventory control,  handling,  storage and
dispensing  of  alcoholic   beverages,   internal  control  and  accounting  and
collection of state alcoholic beverage taxes.

      As the  sale of  alcoholic  beverages  constitutes  a large  share  of the
Company's  revenue,  the failure to receive or retain, or a delay in obtaining a


                                       14
<PAGE>

liquor  license in a particular  location could  adversely  affect the Company's
operations  in that  location and could impair the  Company's  ability to obtain
licenses elsewhere.

      The  Company  is  subject  in  certain  states to "dram  shop" or  "liquor
liability" statutes,  which generally provide a person injured by an intoxicated
person the right to recover damages from an establishment that wrongfully served
alcoholic  beverages to such  person.  See Item 1,  Insurance  and Item 3, Legal
Proceedings for further  discussion.  The Company maintains a continuous program
of  training  and  surveillance  from  its  corporate   headquarters  to  assure
compliance with all applicable  liquor laws and  regulations.  During the fiscal
years  ended  September  28,  2002,  September  27, 2003 and October 2, 2004 and
through the present time, no significant  pending matters have been initiated by
the Department of Alcohol, Beverages and Tobacco concerning any of the Company's
licenses  which might be expected to result in a revocation of a liquor  license
or other significant actions against the Company.

      The Company is not aware of any  statute,  ordinance,  rule or  regulation
under  present  consideration  which would  significantly  limit or restrict its
business as now conducted.  However,  in view of the number of  jurisdictions in
which the Company does 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.

      Federal and state environmental regulations have not had a material effect
on the Company's operation.

Insurance
---------

      The  Company  has  general  liability   insurance  which   incorporates  a
semi-self-insured  plan under  which the  Company  assumes  the full risk of the
first $50,000 of exposure per  occurrence.  The Company's  insurance  carrier is
responsible  for  $1,000,000   coverage  per  occurrence   above  the  Company's
self-insured  deductible,  up to a maximum  aggregate  of  $2,000,000  per year.
During  fiscal year 2002,  fiscal  year 2003,  and again in fiscal year 2004 the
Company was able to purchase excess liability insurance at a reasonable premium,
whereby the Company's  excess  insurance  carrier is responsible  for $5,000,000
coverage above the Company's primary general liability insurance  coverage.  The
Company is self-insured against liability claims in excess of $6,000,000.

      The  Company's  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. The Company has established a
select  group of  defense  attorneys  which  it uses in  conjunction  with  this
program.  Under the Company's  current liability  insurance policy,  any expense
incurred by the Company in defending a claim, including adjusters and attorney's
fees, are a part of the $50,000 self-insured retention.

      An accrual for the Company's 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 the


                                       15
<PAGE>

Company in excess of its liability  insurance  coverage  could have a materially
adverse effect on the Company.

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.  The Company believes that the principal means
of competition  among package  liquor stores is price and that, in general,  the
principal means of competition  among  restaurants  include  location,  type and
quality of facilities and type, quality and price of beverage and food served.

      The Company's  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,  the Company has had to adjust its pricing to
stay  competitive,  including  meeting  all  competitor's  advertisements.  Such
practices will continue in the package liquor business. It is the opinion of the
Company's  management that the Company has a competitive  position in its market
because of widespread consumer recognition of the "Big Daddy's" and "Flanigan's"
names.

      As previously noted, at October 2, 2004 the Company owned and operated six
restaurants,  all of which had  formerly  been  lounges  and were  renovated  to
provide full food service, operated one restaurant for a franchisee and operated
an additional five restaurants as general partner of limited partnerships. These
restaurants  compete directly with other restaurants serving liquor in the area.
The Company's restaurants are competitive due to four factors:  product quality,
portion size,  moderate  pricing and a  standardization  throughout  the Company
owned and operated restaurants and most of the franchises.

      The  Company's  business  is subject to seasonal  effects,  in that liquor
purchases tend to increase during the holiday seasons.

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

      The Company operates  principally under three servicemarks;  "Flanigan's",
"Big Daddy's",  and "Flanigan's  Seafood Bar and Grill".  Throughout Florida the
Company's  package  liquor stores are operated  under the "Big Daddy's  Liquors"
servicemark.  The Company's  rights to the use of the "Big Daddy's"  servicemark
are set forth  under a consent  decree of a Federal  Court  entered  into by the
Company in settlement of federal  trademark  litigation.  The consent decree and
the settlement  agreement allow the Company to continue,  and expand, its use of
the "Big Daddy's"  servicemark in connection  with limited food and liquor sales
in Florida.  The consent decree further  contained a restriction upon all future
sales of distilled  spirits in Florida under the "Big Daddy's" name by the other
party who has a federally  registered  servicemark  for "Big Daddy's" use in the
restaurant  business.  The Federal Court  retained  jurisdiction  to enforce the
consent decree.  The


                                       16
<PAGE>

Company has acquired a registered  Federal  trademark on the principal  register
for its "Flanigan's" servicemark.

      The  standard  symbolic  trademark  associated  with the  Company  and its
facilities  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 the Company.

Employees
---------

      As of year end,  the Company  employed  776  employees,  of which 547 were
full-time and 229 were  part-time.  Of these,  35 were employed at the corporate
offices. Of the remaining  employees,  46 were employed in package liquor stores
and 695 in restaurants.

      None of the Company's  employees are represented by collective  bargaining
organizations. The Company considers its labor relations to be favorable.

                      EXECUTIVE OFFICERS OF THE REGISTRANT

                        Positions and Offices              Office or Position
       Name                 Currently Held          Age        Held Since
       ----             ---------------------       ---    ------------------
Joseph G. Flanigan      Chairman of the Board        75            1959
                        of Directors, Chief
                        Executive Officer

James G. Flanigan       President                    40            2002

August Bucci            Chief Operating Officer      60            2002
                        and Executive Vice
                        President

William Patton          Vice President               81            1975
                        Community Relations

Jeffrey D. Kastner      Chief Financial Officer      51            1995
                        General Counsel and
                        Secretary

Jean Picard             Vice President of            66            2002
                        Package Store
                        Operations


                                       17
<PAGE>

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

      Effective July 1, 2004, the Company 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. The Company is not required to
contribute to the plan but may make discretionary profit sharing and/or matching
contributions.  No Company  contributions were made during the fiscal year ended
October 2, 2004,  but at its meeting on December 9, 2004, the Board of Directors
approved a discretionary  matching  contribution of $25,000 effective January 3,
2005.

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

      The Company's  operations  are all  conducted on leased  property with the
exception of the Corporate  Headquarters  Office Building which was purchased in
December,  1999 and has been occupied by the Company since April 2001. Initially
most of these  properties  were  leased by the Company on  long-term  ground and
building  leases with the  buildings  either  constructed  by the lessors  under
build-to-suit leases or constructed by the Company. A relatively small number of
business  locations involve the lease or acquisition of existing  buildings.  In
almost every instance where the Company  initially owned the land or building on
leased property, the Company entered into a sale and lease-back transaction with
investors to recover a substantial portion of its per unit investment.

      All of the  Company's  units  require  periodic  refurbishing  in order to
remain  competitive.  The Company has  budgeted  $325,000  for its  refurbishing
program for fiscal year 2005. See Item 7, "Liquidity and Capital  Resources" for
discussion of the amounts spent in fiscal year 2004.

      The following table  summarizes the Company's  properties as of October 2,
2004 including franchise locations, a club and Company managed locations.

<TABLE>
<CAPTION>
                                                                 Franchise/
                                         Square                  License            Lease
Name and Location                        Footage    Seats        Owned by           Terms
-----------------                        -------    -----        --------           -----
<S>                                      <C>          <C>        <C>            <C>
Big Daddy's Liquors #4                   1,978       N/A         Company        3/1/02 to 2/28/27
Flanigan's Enterprises Inc. (10)                                                  and Options to
7003 Taft Street                                                                  2/28/37
Hollywood, FL


Big Daddy's Liquors #7                   1,450       N/A         Company        11/1/00 to 10/31/05
Flanigan's Enterprises Inc.                                                       and Options to
1550 W. 84th Street                                                               10/31/15
Hialeah, FL
</TABLE>


                                       18
<PAGE>

<TABLE>
<CAPTION>
                                                                 Franchise/
                                         Square                  License           Lease
Name and Location                        Footage     Seats       Owned by          Terms
-----------------                        -------     -----       --------          -----
<S>                                      <C>          <C>        <C>            <C>
Big Daddy's Liquors #8                   1,800        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
Flanigan's Enterprises Inc. (1)
1550 W.84th Street
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 (3)(12)
330 Southern Blvd
W. Palm Beach, FL

Flanigan's Legends                       5,000        180        Franchise      11/15/92 to
Seafood Bar and Grill                                                           11/15/12
#12 Galeon Tavern, Inc.(3)
2401 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.(2)(3)(5)(9)
2041 NE Second St
Deerfield Beach, FL

Piranha Pats II-#15                      4,000         90        Joint          3/2/76 to 8/31/06
CIC Investors #15 Ltd.(3)(5)                                     Venture        Option to 8/31/11
1479 E. Commercial Blvd
Ft. Lauderdale, FL

Flanigan's Seafood                       4,300        100        Franchise      2/15/72 to12/31/05
Bar and Grill #18                                                               Options to 12/31/20
Twenty Seven Birds                                                              Option to purchase
Corp. (2)(3)(5)
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. (2)(4)
2505 N. University Dr.
Hollywood, FL
</TABLE>


                                       19
<PAGE>

<TABLE>
<CAPTION>
                                                                 Franchise/
                                         Square                  License           Lease
Name and Location                        Footage     Seats       Owned by          Terms
-----------------                        -------     -----       --------          -----
<S>                                      <C>          <C>        <C>            <C>
Flanigan's Seafood                       5,100        140        Company        7/15/68 to 12/31/05
Bar and Grill #20                                                               Annual options
Flanigan's Enterprises Inc. (2)                                                 until the Company
13205 Biscayne Blvd.                                                            fails to exercise
North Miami, FL                                                                 Additional Lease
                                                                                5/1/69 to 12/31/05
                                                                                Annual options
                                                                                until the Company
                                                                                fails to exercise

Flanigan's Seafood                       4,100        200        Company        12/16/68 to
Bar and Grill #22                                                               12/31/05
Flanigan's Enterprises Inc. (2)(4)                                              Options to 12/31/20
2600 W. Davie Blvd.                                                             Option to purchase
Ft. Lauderdale, FL

Flanigan's Enterprises Inc. #27 (8)      3,000         90        Company        7/1/50 to 6/30/49
732-734 NE 125th St.
North Miami, FL

Flanigan's Seafood                       4,600        150        Company        9/6/68 to 12/31/05
Bar and Grill #31                                                               Options to 12/31/20
Flanigan's Enterprises Inc. (2)(13)                                             Option to purchase
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. (2)(3)(5)
45 S. Federal Highway
Boca Raton, FL

Big Daddy's Liquors                      3,000        N/A        Company        5/29/97 to 5/28/07
#34, Flanigan's                                                                 Options to 5/28/17
Enterprises, Inc. (1)
9494 Harding Ave.
Surfside, FL

Flanigan's Seafood                       4,600        140        Company        4/1/71 to 12/31/05
Bar and Grill #40                                                               Options to 12/31/15
Flanigan's Enterprises Inc. (2)
5450 N. State Road 7
Ft. Lauderdale, FL
</TABLE>


                                       20
<PAGE>

<TABLE>
<CAPTION>
                                                                 Franchise/c
                                         Square                  License           Lease
Name and Location                        Footage     Seats       Owned by          Terms
-----------------                        -------     -----       --------          -----
<S>                                      <C>          <C>        <C>            <C>

Piranha Pat's #43                        4,500        90         Franchise      12/1/72 to 11/30/07
BD 43 Corporation (2)(3)(5)                                                     Option to 11/30/12
2500 E. Atlantic Blvd
Pompano Beach, FL

Big Daddy's Liquors                      6,000       N/A         Company        12/21/68 to 1/1/10
#47, Flanigan's                                                                 Options to 1/1/60
Enterprises, Inc. (6)
8600 Biscayne Blvd
Miami, FL

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

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

Flanigan's Seafood                       6,128       200         Joint          4/01/05 to 3/31/15
Bar and Grill #65 (12)                                           Venture        Options to 3/31/25
CIC Investors #65, Ltd
2335 State Road 7,Suite 100
Wellington, FL

Flanigan's Seafood                       4,850       161         Joint          4/1/98 to 3/31/08
Bar and Grill #70                                                Venture        Options to 3/31/28
CIC Investors #70 Ltd.
12790 SW 88 St
Kendall, FL

Flanigan's Seafood                       7,000       200         Joint          10/1/03 to 9/30/06
Bar and Grill #75                                                Venture        Options to 9/30/27
CIC Investors # 75 Ltd.
950 S. Federal Highway
Stuart, FL 34994

Flanigan's Seafood                       5,000       165         Joint          4/15/01 to 12/14/19
Bar and Grill #80                                                Venture        Options to 12/14/39
CIC Investors #80 Ltd.
8695 N.W. 12th St
Miami, FL
</TABLE>


                                       21
<PAGE>

<TABLE>
<CAPTION>
                                                                 Franchise/
                                         Square                  License           Lease
Name and Location                        Footage     Seats       Owned by          Terms
-----------------                        -------     -----       --------          -----
<S>                                      <C>          <C>        <C>            <C>

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

Flanigan's Enterprises #600 (7)          10,000      400         Company        5/1/76 to 4/30/06
Powers Ferry Landing
Atlanta, GA
</TABLE>

(1)   License subject to chattel mortgage.

(2)   License pledged to secure lease rental.

(3)   Franchised by Company.

(4)   Former franchised unit returned and now operated by Company.

(5)   Lease assigned to franchisee

(6)   During fiscal year 1996, the Company purchased 37% of the underlying
      leasehold from the unaffiliated third parties to whom the lease had been
      assigned and subleased back. An additional 11% was purchased during fiscal
      year 1997, bringing the total interest purchased to 48%.

(7)   Location managed by an unaffiliated third party.

(8)   Location was closed in May 1998. The Company entered into a five year
      sub-lease agreement, with two five year options, with an unaffiliated
      third party who is presently operating a restaurant at this location.

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

(10)  Ground lease executed by the Company on September 25, 2001. The Company
      constructed a building of 4,120 square feet, 1,978 square feet is used by
      the Company 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.

(11)  Location estimated to open for business by the end of fiscal year 2005.

(12)  Location scheduled to open for business at the start of the third quarter
      of fiscal year 2005.

(13)  During the fourth quarter of fiscal year 2004, the Company exercised its
      option purchase the real property and for an assignment of a


                                       22
<PAGE>

      ground lease of this location pursuant to an option to purchase contained
      in the Sublease Agreement.

Exercise of Option to Purchase.
-------------------------------

      During the fourth quarter of fiscal year 2004,  the Company  exercised the
option to purchase  contained  in the  Sublease  Agreement  for the  combination
restaurant  and  package  liquor  store  located  at 4  North  Federal  Highway,
Hallandale,  Florida,  (Store #31). The purchase  includes real property and the
assignment of a ground lease for a small  portion of the  property.  The Company
has procured  financing  for this  purchase.  The option to purchase  contains a
formula  whereby each party  retains an appraiser to determine  the "fair market
value" for the purchase of the property and if the two  appraisers  cannot agree
upon the same, then a third appraiser is selected,  whose  determination  of the
"fair market price" is binding.  Subsequent to the fiscal year ending October 2,
2004, it was determined  that the parties would need to retain a third appraiser
to determine the purchase  price. It is anticipated  that the  transaction  will
close during the second quarter of fiscal year 2005.

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

      Due to the nature of the  business,  the Company is sued from time to time
by patrons,  usually for alleged  personal  injuries  occurring at the Company's
business  locations.  The Company has liability  insurance which  incorporates a
semi-self-insured  plan under  which the  Company  assumes  the full risk of the
first  $50,000  of  exposure  per  occurrence.  The  Company's  primary  general
liability   insurance  carrier  is  responsible  for  $1,000,000   coverage  per
occurrence  above  the  Company's  self-insured  deductible,  up  to  a  maximum
aggregate of $2,000,000 per year. During the fiscal year 2002, fiscal year 2003,
and again in fiscal year 2004, the Company was able to purchase excess liability
insurance,  at a reasonable  premium,  whereby the  Company's  excess  insurance
carrier is  responsible  for  $5,000,000  coverage  above the Company's  primary
general liability insurance coverage. Certain states have liquor liability (dram
shop) laws which allow a person injured by an "obviously  intoxicated person" to
bring a civil  suit  against  the  business  (or  social  host)  who had  served
intoxicating  liquors to an already "obviously  intoxicated  person".  Dram shop
claims  normally  involve traffic  accidents and the Company  generally does not
learn of dram shop  claims  until  after a claim is filed  and then the  Company
vigorously  defends  these claims on the grounds that its employee did not serve
an  "obviously  intoxicated  person".  Damages  in  most  dram  shop  cases  are
substantial.  At the present time,  there are no dram shop cases pending against
the  Company.  The  Company has in place  insurance  coverage to protect it from
losses, if any.

      During  fiscal year 2000,  the Company was served with several  complaints
alleging  violations of the Americans with Disabilities Act, ("ADA"),  at all of
its  locations.  The  lawsuits  included  the  restaurants  owned by the limited
partnerships and franchises.  The ADA has no notice provision and the first time
that the Company  received  notice of any ADA  violations was when it was served
with a copy of the  complaint.  Of the law  suits  filed,  only a few have


                                       23
<PAGE>

been  actively  pursued.  The Company  retained an ADA expert who has  inspected
locations  involved in active lawsuits,  including the limited  partnerships and
franchises,  and provided a report setting forth ADA violations which need to be
corrected.  The Company agreed to correct ADA violations noted by its ADA expert
and then  vigorously  defended the lawsuits  arguing that the locations  were in
compliance. During fiscal year 2001 and fiscal year 2002, the Company, including
three  (3)  of  its  franchises,   settled  all  active  lawsuits  alleging  ADA
violations.

      During fiscal year 2003, the Company was served with a complaint  alleging
violations  of  the  ADA at one of its  locations.  The  Company  corrected  all
violations  noted in the complaint and during the fourth  quarter of fiscal year
2004, settled the lawsuit.

      During  fiscal year 2003,  the Company,  as general  partner of one of its
limited  partnerships,  and  one  of  its  franchisees,  received  notifications
alleging their failure to complete  correcting ADA violations  pursuant to their
respective settlement agreements from previous lawsuits alleging ADA violations.
The Company, as general partner of the limited  partnership,  and the franchisee
corrected any uncorrected ADA violations and during the fourth quarter of fiscal
year 2004, settled any claims arising out of the same.

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

      During the fourth  quarter of fiscal  year 2004 the Company did not submit
any matter to a vote of the security holders.

                                     PART II
                                     -------

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
------------------------------------------------------------------------------

                       Fiscal 2004        Fiscal 2003       Fiscal 2002
                       -----------        -----------       -----------
                       High    Low        High    Low       High    Low
                       ----    ---        ----    ---       ----    ---

First quarter          6.85    6.00       6.10    4.90      6.20    4.25
Second quarter         6.90    6.13       6.10    5.50      6.21    5.65
Third quarter          6.70    6.20       6.37    5.99      7.20    6.00
Fourth quarter         6.65    6.21       6.60    6.00      6.85    5.40

      On December 13, 2001 the Company  declared a cash dividend of 25 cents per
share  payable on January 17,  2002 to  shareholders  of record on December  30,
2001.


                                       24
<PAGE>

      On April 30, 2002,  the Company  purchased  36,000 shares of the Company's
common stock from the Company's Chief Executive Officer at $6.60 per share which
was the fair market price as of that date.

      On December 19, 2002, the Company declared a cash dividend of 27 cents per
share payable on January 30, 2003 to shareholders of record on January 17, 2003.

      On December 18, 2003 the Company  declared a cash dividend of 30 cents per
share  payable on January 15,  2004 to  shareholders  of record on December  30,
2003.

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

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

<TABLE>
<CAPTION>
                             2004            2003            2002            2001            2000
                             ----            ----            ----            ----            ----
                                      Statement of Operations Data
----------------------------------------------------------------------------------------------------
<S>                      <C>             <C>             <C>             <C>             <C>
Revenue                  $45,933,000     $40,253,000     $39,124,000     $36,038,000     $32,640,000
                         -----------     -----------     -----------     -----------     -----------

Income from
 Operations              $ 1,273,000     $ 2,024,000     $ 2,788,000     $ 2,583,000     $ 2,216,000
                         -----------     -----------     -----------     -----------     -----------

Net income               $   440,000     $   888,000     $ 1,383,000     $ 1,529,000     $ 1,364,000
                         ===========     ===========     ===========     ===========     ===========

Earnings
 per share               $      0.23     $      0.46     $      0.71     $      0.80     $      0.73
                         ===========     ===========     ===========     ===========     ===========

<CAPTION>
                                           Balance Sheet Data
----------------------------------------------------------------------------------------------------
<S>                      <C>             <C>             <C>             <C>             <C>
Total
 assets                   19,774,000     $18,733,000     $17,367,000     $16,728,000     $15,477,000
                         ===========     ===========     ===========     ===========     ===========

Long-term
liabilities              $ 1,217,000     $ 1,314,000     $ 1,593,000     $ 2,010,000     $ 1,672,000
                         ===========     ===========     ===========     ===========     ===========

Net working
 capital                 $ 2,131,000     $ 2,093,000     $ 2,980,000     $ 2,436,000     $ 1,373,000
                         ===========     ===========     ===========     ===========     ===========

Stockholders' equity     $10,101,000     $10,351,000     $ 9,957,000     $ 8,968,000     $ 7,667,000
                         ===========     ===========     ===========     ===========     ===========

Dividends declared       $   581,000     $   520,000     $   499,000     $   231,000     $   215,000
                         ===========     ===========     ===========     ===========     ===========
</TABLE>


                                       25
<PAGE>

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

Overview
---------

      The Company owns and/or operates restaurants with lounges,  package liquor
stores and an  entertainment  oriented  club. As of October 2, 2004, the Company
was operating  eighteen units.  The Company had interests in an additional seven
units which had been  franchised  by the Company,  which  interests  include the
franchised  restaurant  managed by the  Company.  Of the units  operated  by the
Company,  four were combination package liquor store and restaurant,  eight were
restaurants  only and five were package  liquor stores only.  There was one club
operated by an  unaffiliated  third party under a management  agreement.  During
fiscal year 2001, the restaurant located in Weston,  Florida,  was acquired by a
limited  partnership  of  which  the  Company  acts  as  general  partner.   The
restaurant,  which was being  operated  by the  Company  under the  restaurant's
servicemark, was closed during the fourth quarter of fiscal year 2002, renovated
for  operation  under the  "Flanigan's  Seafood Bar and Grill"  servicemark  and
re-opened  for business  during the second  quarter of fiscal year 2003.  During
fiscal year 2001,  the Company  entered  into a ground lease and  constructed  a
building in Hollywood,  Florida for the operation of a package liquor store from
one half (1/2) of the building  and to sublease  retail space from the other one
half (1/2).  The  package  liquor  store  opened for  business  during the first
quarter of fiscal year 2004 and the retail space was subleased during the second
quarter  of  fiscal  year  2004.  At the  start of  fiscal  year  2001,  another
restaurant  located in West Miami,  Florida,  owned by a limited  partnership of
which the  Company  acts as general  partner,  was opened for  business.  During
fiscal year 2003,  the Company also entered  into a lease  agreement  and at the
start of the second quarter of fiscal year 2004,  another  restaurant located in
Stuart,  Florida,  owned by a limited  partnership  of which the Company acts as
general partner, was opened for business.

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

THE FISCAL YEAR ENDING OCTOBER 2, 2004,  ("FISCAL 2004"), WAS A FIFTY THREE WEEK
FISCAL YEAR WHILE THE FISCAL YEARS ENDING  SEPTEMBER 27, 2003,  ("FISCAL 2003"),
AND SEPTEMBER 28, 2002,  ("FISCAL 2002"),  WERE FIFTY TWO WEEK FISCAL YEARS. THE
EXTRA WEEK IN THE FISCAL YEAR 2004  CONTRIBUTED  TO  INCREASES  IN REVENUES  AND
EXPENSES  FOR THE FISCAL YEAR WHEN  COMPARING  THEM TO REVENUES AND EXPENSES FOR
THE FISCAL YEARS 2003 and 2002, WITH THE EXCEPTION OF THE WEEKLY AVERAGE OF SAME
STORE SALES.


                                       26
<PAGE>

REVENUES (in thousands):

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------

                            Fifty Three             Fifty Two                 Fifty Two
                            Weeks Ended            Weeks Ended               Weeks Ended
                           Oct. 2, 2004           Sept. 27, 2003           Sept. 28, 2002
<S>                    <C>           <C>        <C>         <C>         <C>            <C>
Sales
------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------
Restaurant, food       $26,347       59.1%      $22,489     57.7%       $22,086        58.4%
------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------
Restaurant, bar          7,351       16.5%        6,705     17.2%         6,533       17.3%
------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------
Package goods           10,911       24.4%        9,777     25.1%         9,174       24.3%
------------------------------------------------------------------------------------------------

Total                   44,609      100.0%       38,971    100.0%        37,793      100.0%
------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------
Franchise revenues         958                      904                     985
------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------
Owners fee                 265                      260                     251
------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------
Other operating
  income                   101                      118                      95
------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------
Total Revenues         $45,933                  $40,253                $39,124
------------------------------------------------------------------------------------------------
</TABLE>

      As the  table  above  illustrates,  total  revenues  have  increased  when
compared to fiscal 2004, 2003 and 2002.  During fiscal year 2005, total revenues
are expected to continue  increasing  primarily due to the restaurant in Stuart,
Florida  being  open for the entire  year,  the  anticipated  opening of the new
restaurant  in  Wellington,  Florida at the start of the third quarter of fiscal
year 2005 and the new package liquor store in Hollywood,  Florida being open for
the  entire  year.  If the new  restaurant  in  Pinecrest,  Florida  is open for
business  prior to the end of fiscal  year 2005,  revenues  will  increase  even
further during the fiscal year.

      Restaurant food sales represented 59.1% of total sales for the fiscal 2004
as  compared  to 57.7%  and  58.4%  of total  sales  in  fiscal  2003 and  2002,
respectively.  The weekly average of same store restaurant food sales, which now
includes three joint venture restaurants instead of one, was $404,000 for fiscal
2004  as  compared  to  $388,000   and   $385,000  for  fiscal  2003


                                       27
<PAGE>

and 2002, respectively,  an increase of 4.1% and 4.9% from fiscal 2003 and 2002,
respectively.  The weekly average of restaurant  food sales increased for fiscal
2004 as  compared  to  fiscal  2003  and 2002 due to menu  price  increases  and
increased  volume.  The  percentage  of  restaurant  food  sales to total  sales
decreased due to increased package store sales.

      Restaurant bar sales  represented  16.5% of total sales for fiscal 2004 as
compared   to  17.2%  and  17.3%  of  total  sales  in  fiscal  2003  and  2002,
respectively. The weekly average of same store restaurant bar sales was $101,000
for fiscal 2004 as compared to $104,000  and  $106,000  for fiscal 2003 and 2002
respectively, a decrease of 2.9% from fiscal 2003 and 4.7% from fiscal 2002. The
decrease in the weekly average of same store restaurant bar sales is expected to
continue as the Company's perception as a family restaurant continues to grow.

      Package  store sales  represented  24.4% of total sales for fiscal 2004 as
compared   to  25.1%  and  24.3%  of  total  sales  in  fiscal  2003  and  2002,
respectively.  The weekly  average of same store  package sales was $180,000 for
fiscal  2004 as  compared  to  $177,000  and  $170,000  for fiscal 2003 and 2002
respectively,  an  increase  of  1.7%  and  5.9%  from  fiscal  2003  and  2002,
respectively.  The increase was primarily due to increased volume. During fiscal
year 2005,  package  store sales are expected to increase due to the new package
liquor  store in  Hollywood,  Florida  being  open for the  entire  year and the
continued increase in the weekly average of same store package stores.

      The gross profit margin for restaurant  sales was 64.4% for fiscal 2004 as
compared  to 65.8% and 66.6% for fiscal 2003 and 2002,  respectively.  The gross
profit margin for  restaurant  sales for fiscal 2004 was  adversely  affected by
increasing  costs. The Company has offset increased costs by price increases and
expects to reverse this trend during fiscal year 2005. The Company will continue
to offset  increased costs by price  increases,  where  competitively  possible,
during fiscal year 2005.

      The gross profit  margin for package goods sales was 27.9% for fiscal 2004
as compared to 27.0% and 25.9% for the fiscal 2003 and 2002,  respectively.  For
the fiscal 2004,  the increase in gross profit is  attributed to the purchase of
"close  out"  and  inventory  reduction  merchandise  from  wholesalers  and the
implementation of a new training program for package store employees. For fiscal
2002, the gross profit margin for package good sales was adversely affected by a
charge due to a change in accounting method. The gross profit margin for package
good sales is expected to remain constant during fiscal year 2005.

      Overall gross profits were 55.5% for fiscal 2004, as compared to 56.1% and
57.1% for the fiscal 2003 and 2002,  respectively.  The decline in overall gross
profits is primarily  attributed to increasing costs and a higher  percentage of
restaurant food and package sales versus a decline in restaurant beverage sales.
During fiscal 2004,  the Company began  offsetting  the decline in overall gross
profits by price  increases and expects to reverse this trend during fiscal year
2005.

      Franchise revenue,  which includes but is not limited to rental income and
franchise-related income such as franchise royalties, bookkeeping and accounting
fees and reimbursement of attorney's fees, increased to $958,000 for fiscal 2004
as compared to $904,000 and $985,000 for fiscal 2003 and


                                       28
<PAGE>

2002, respectively,  an increase of 6.0% from fiscal 2003 and a decrease of 3.8%
from fiscal 2002.

Operating Costs and Expenses
----------------------------

      Operating costs and expenses for fiscal 2004 were  $44,660,000 as compared
to  $38,229,000  and  $36,336,000  for the fiscal  2003 and 2002,  respectively.
Operating  expenses are comprised of the cost of merchandise  sold,  payroll and
related costs, occupancy costs and selling, general and administrative expenses.
Operating  costs and  expenses  for fiscal 2004  increased by 16.8% and 22.9% as
compared to operating costs and expenses for fiscal 2003 and 2002, primarily due
to the opening of the new restaurant in Stuart, Florida on January 11, 2004, the
opening of the new package store in Hollywood,  Florida on November 17, 2003 and
the restaurant in Weston, Florida being open for the entire fiscal 2004, as well
as a general  increase in overall  operating  costs and expenses.  During fiscal
year 2005,  operating  costs and expenses  are  expected to continue  increasing
primarily  due to the  restaurant  in Stuart,  Florida being open for the entire
year, the opening of the new  restaurant in Wellington,  Florida at the start of
the third  quarter  of  fiscal  year 2005 and the new  package  liquor  store in
Hollywood, Florida being open for the entire fiscal year. The opening of the new
restaurant in Pinecrest,  Florida,  or even the  preparation  for opening of the
same for business by the end of fiscal year 2005, will increase  operating costs
and  expenses  for the fiscal year.  Overall,  operating  costs and expenses for
existing stores are also expected to continue increasing slightly.

      Payroll and related costs were $12,523,000 for fiscal 2004, as compared to
$11,423,000 and $11,377,000 for fiscal 2003 and 2002, respectively.  Payroll and
related  costs for the fiscal 2004  increased as compared to payroll and related
costs  for  fiscal  2003  and  2002,  primarily  due to the  opening  of the new
restaurant  in Stuart,  Florida  on January  11,  2004,  the  opening of the new
package store in Hollywood,  Florida on November 17, 2003 and the  restaurant in
Weston, Florida being open for the entire fiscal 2004.

      Occupancy costs, which include rent, common area maintenance,  repairs and
taxes  were  $2,740,000  for the  fiscal  2004 as  compared  to  $2,158,000  and
$1,756,000  for fiscal 2003 and 2002,  respectively.  The  increase in occupancy
costs  during the fiscal 2004 was due  primarily  to the payment of rent for the
restaurant in Weston,  Florida for the entire  fiscal year,  the payment of rent
for the new  restaurant  in Stuart,  Florida  and the  payment of rent for a new
restaurant location in Pinecrest,  Florida commencing at the start of the second
quarter of fiscal 2004.

      Selling,  general and  administrative  expenses were $9,525,000 for fiscal
2004 as  compared  to  $7,534,000  and  $6,785,000  for  fiscal  2003 and  2002,
respectively.  The  increase in selling,  general  and  administrative  expenses
during fiscal 2004 was primarily due to the restaurant in Weston,  Florida being
open for the entire  fiscal year,  the opening of the new  restaurant in Stuart,
Florida  on  January  11,  2004  and the  opening  of the new  package  store in
Hollywood, Florida on November 11, 2003.


                                       29
<PAGE>

      During  fiscal  2004,   the  following   non-recurring   expenses   and/or
adjustments in selling,  general and  administrative  expense adversely effected
earnings:

First Quarter Fiscal Year 2004:

      a.    Adjustment for store supplies                         $104,000

Second Quarter Fiscal Year 2004:

      a.    Adjustment for allocations of insurance
            premiums related to franchises                        $178,000

      b.    Past Due Real Property Taxes                          $ 52,000


      c.    Excess opening costs of joint venture                 $ 74,000
            restaurant in Stuart, Florida

Third Quarter Fiscal Year 2004:

      a.    Past Due Real Property Taxes                          $ 59,000

                                                                  --------
      Total:                                                      $467,000
                                                                  ========

New Joint Venture Restaurants
-----------------------------

      As the  Company  opens new joint  venture  restaurants  on a more  regular
basis,  the Company's  income from operations will be adversely  effected by the
higher  costs  associated  with the  opening of the same.  To insure  that a new
restaurant  opens  with the high  quality of  service  for which the  Company is
known,  the Company has a select group of  employees,  known as "new  restaurant
openers",  who  travel to new  restaurants  for that  purpose.  "New  restaurant
openers"  may  spend up to 90 days at a new  restaurant.  In the case of the new
joint venture restaurant in Stuart, Florida,  lodging had to be provided for the
"new restaurant  openers",  which increased the opening cost  significantly over
the opening cost of local  restaurants.  In addition,  immediately  prior to the
opening of a new  restaurant  and in order to provide a "test run" for the same,
the Company sponsors pre-opening parties for its joint venture investors and the
Company  employees.  By way of  illustration,  the opening of the last two joint
venture  restaurants  in  Stuart,  Florida  and  Weston,  Florida  incurred  the
following pre-opening and opening expenses:


                                       30
<PAGE>

                                     #75 - Stuart, Fl.        #95 - Weston, Fl.
                                     -----------------        -----------------

Pre-Opening Rent:                        $17,000                  $ 72,000

Pre-Opening Payroll:                     $22,000*                 $ 36,000

Post-Opening Increased                   $42,000*                 $ 18,000
Payroll Costs (90 days):

Promotional Costs:                       $ 7,000                  $  9,000
                                         -------                  --------

Total:                                   $88,000                  $135,000

      *     excludes lodging and per diem allowances, ($74,000), for new
            restaurant openers incurred due to the proximity of this location.

      The  pre-opening  rent is generally  less for new leases,  rather than the
purchase of an existing  location  which  includes the assumption of an existing
lease.  In the  negotiation  of a new lease,  there is  normally a  construction
period before which the rent begins. In the case of the joint venture restaurant
in Stuart, Florida, the sublease agreement included a ninety (90) day period for
renovations,  although the  restaurant did not open for six and one half (6 1/2)
months from the execution of the sublease agreement.  The sublease agreement for
the location in Weston,  Florida  provided  for five (5) months for  renovations
before rent began,  although the commencement date of the sublease agreement was
delayed  while  licensing  matters had to be resolved.  Since the opening of the
joint venture restaurant in Surfside,  Florida, the pre-opening rent expense for
joint venture  restaurants  has ranged from $17,000 - $137,000.  The pre-opening
rent expense for the new joint  venture  restaurant  in  Pinecrest,  Florida has
already proven to be an exception to the customary  pre-opening rent expense due
to  structural  repairs  which must be made to the  business  premises  prior to
renovations beginning.  As of October 2, 2004, pre-opening rent was $153,000 and
continuing  at $17,000 per month.  The Company has  preserved its right to argue
with the landlord that some of the pre-opening  rent is not due while structural
repairs have delayed its renovations.

      During fiscal 2004, the joint venture in Stuart,  Florida  reported a loss
of $276,000 and the joint venture  restaurant in  Pinecrest,  Florida,  which is
still undergoing structural repairs at this time, has already reported a loss of
$239,000 thus  contributing to the reduction in operating income for fiscal 2004
when compared to fiscal 2003. During fiscal year 2005,  operating income will be
adversely affected by the opening costs to be incurred for the new joint venture
restaurant in Wellington, Florida, and continuing opening costs of the new joint
venture restaurant in Pinecrest, Florida.

Other Income and Expenses
-------------------------

      Other income and expenses, which include minority interest in consolidated
limited partnerships,  were an expense of ($663,000) for fiscal 2004 as compared
to ($594,000) and ($717,000) for fiscal 2003 and 2002,


                                       31
<PAGE>

respectively.  During the fourth  quarter of fiscal 2004,  management  inspected
fixed assets stored in the Company's  warehouses and  restaurants and determined
that most of the fixed  assets  stored  there were  obsolete or  unusable.  As a
result, other income and expense of fiscal 2004 includes the expense of $367,000
relating to the  abandonment  of fixed  assets.  Other  income and  expenses for
fiscal 2002 includes the gain of $459,000 on disposition relating to the eminent
domain proceedings.

Trends
------

      During the next twelve months management  expects  continued  increases in
restaurant sales, due primarily to the restaurant in Stuart,  Florida being open
for the entire fiscal year,  the opening of the new  restaurant  in  Wellington,
Florida,  and  continued  increases in same store sales.  The opening of the new
restaurant  in Pinecrest,  Florida for business  prior to the end of fiscal year
2005 will  further  increase  restaurant  sales.  Package  goods  sales are also
expected to  increase  due  primarily  to the new  package  store in  Hollywood,
Florida being open for the entire  fiscal year and  continued  increases in same
store sales.  Franchise  royalties are expected to increase due to restaurant in
Stuart,  Florida being open for the entire  fiscal year,  the opening of the new
restaurant in  Wellington,  Florida and continued  increases in same store sales
for the limited  partnerships and franchises.  The opening of the new restaurant
in Pinecrest, Florida prior to the end of fiscal year 2005 will further increase
franchise royalties. At the same time, management also expects higher food costs
and overall  expenses to increase  generally,  although  the Company has already
raised some of its menu prices to offset the higher food costs and will continue
to do so wherever competitively possible.

      The Company intends to open additional  restaurants as suitable  locations
become  available,  using  limited  partnerships,  of  which  it is the  general
partner, to raise funds to own and operate the same.

      The  Company  does  not  plan to  construct  any  more  buildings  for the
operation of a package store and is not actively searching for locations, but if
an appropriate location for a package store becomes available,  the Company will
consider the same.


                                       32
<PAGE>

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

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

      The following table is a summary of the Company's cash flows for fiscal
2004, 2003 and 2002:

--------------------------------------------------------------------------------
                                  Fiscal Years
--------------------------------------------------------------------------------
                                          2004            2003           2002
--------------------------------------------------------------------------------
                                           (in thousands)
--------------------------------------------------------------------------------
Net cash provided by
operating activities                    $ 3,752         $ 4,418         $ 2,495
--------------------------------------------------------------------------------
Net cash used in
investing activities                     (1,630)         (3,269)           (881)
--------------------------------------------------------------------------------
Net cash used in
financing activities                       (773)           (705)         (2,020)
--------------------------------------------------------------------------------
Net increase (decrease)
in cash and equivalents                   1,349             444            (406)
--------------------------------------------------------------------------------
Cash and equivalents
beginning of year                         1,587           1,143           1,549
--------------------------------------------------------------------------------
Cash and equivalents
end of year                             $ 2,936         $ 1,587         $ 1,143
--------------------------------------------------------------------------------

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

      Capital  expenditures  were $1,873,000,  $3,028,000 and $1,216,000  during
fiscal 2004,  2003 and 2002,  respectively.  The capital  expenditures  for each
fiscal year included  upgrading  existing units serving food and improvements to
package  liquor  stores.  The  capital  expenditures  for fiscal  2004  included
renovations  to the business  premises by the joint venture in Stuart,  Florida,
($432,000), and the completion of the construction of the building in Hollywood,
Florida for the operation of a package liquor store, ($84,000).


                                       33
<PAGE>

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

                                         Less Than         1-5          After
                            Total         1 Year          Years        5 Years
                            -----         ------          -----        -------
Employment contract     $   150,000     $  150,000     $       --     $       --
Long-term debt            1,314,000         97,000      1,217,000             --
Operating leases         18,134,000      2,264,000      7,379,000      8,491,000
Rib Contract              3,600,000      3,600,000             --             --
                        -----------     ----------     ----------     ----------

Total                   $23,198,000     $6,111,000     $8,596,000     $8,491,000
                        ===========     ==========     ==========     ==========

      All of the  Company's  units  require  periodic  refurbishing  in order to
remain  competitive.  During  fiscal 1992,  as cash flow  improved,  the Company
embarked on a refurbishing  program which continues.  The budget for fiscal year
2005 includes  approximately $325,000 for this purpose, which is not included in
the above  table.  The Company  expects the funds for these  improvements  to be
provided  from  operations.  In  addition it is  anticipated  that two new joint
ventures,   (Wellington,   Florida  and   Pinecrest,   Florida),   will  require
approximately  $4,000,000 in capital  expenditures  during fiscal year 2005, the
majority of which will be raised through  private  offerings.  Subsequent to the
end of fiscal 2004,  the limited  partnership  which owns the new  restaurant in
Wellington,  Florida,  completed  its  private  offering,  raising  the  sum  of
$1,850,000.   The  table  also  does  not  include  any  lease   guarantees  for
franchisees, which approximate $2,600,000.

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

      Effective  November 1, 2004, the company entered into a purchase agreement
with its rib  supplier.  The terms of the agreement  stipulate  that the Company
will purchase  approximately  1 million pounds of baby back ribs during calendar
year 2005 at a fixed cost of $3.60 per pound.  The Company  purchases all of its
rib  supply  from this  vendor,  but  management  believes  that  several  other
alternative vendors are available, if needed.

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

      During  the  fourth  quarter  of fiscal  2002,  the  Company  closed on an
unsecured  $456,000  loan from  BankAtlantic,  which loan was used to prepay the
principal  balance  due on a  $1,000,000  loan from Bank of  America,  (formerly
NationsBank),  which loan  originated  during the second quarter of fiscal 2000.
The loan was paid in full during the fourth quarter of fiscal 2004.

      During the fourth quarter of fiscal 2001, the Company  borrowed the sum of
$895,000 from Bank of America (formerly Nations Bank). The promissory note earns
interest at the rate of 8.62% per annum,  amortized over 20 years with principal
and interest payable monthly,  with the entire unpaid principal  balance and all
accrued  interest  due on August 1, 2008.  The  promissory  note is secured by a
mortgage on the office  building  purchased  by the  Company  for its  corporate
offices, which office building was released from the lien


                                       34
<PAGE>

granted by the Company to Bank of America (formerly Nations Bank), as collateral
for the  $1,000,000  loan in the  second  quarter  of fiscal  2000.  In order to
achieve  the fixed  interest  rate,  the  Company  entered  into an ISDA  Master
Agreement with Bank of America, ("SWAP Agreement"), and in the event the Company
elects  to  prepay  the  promissory  note,  there  may be a  prepayment  penalty
associated  therewith.  The outstanding balance as of the end of fiscal 2004 was
$836,000.

      During the fourth  quarter of fiscal year 1997,  the  Company,  as general
partner of a limited partnership, purchased the assets of an existing restaurant
in Surfside,  Florida for renovation and operation as a "Flanigan's  Seafood Bar
and Grill"  restaurant.  The purchase  price was seller  financed,  secured by a
chattel mortgage upon the assets of the limited partnership, bearing interest at
the rate of 8% per annum and being  fully  amortized  over 10 years  with  equal
monthly installments of principal and interest, each in the amount of $6,066.40.
The principal balance due as of October 2, 2004 was $189,000.

      During  the third  quarter  of fiscal  year 1997,  the  Company  purchased
unimproved real property adjacent to one of its units to ensure adequate parking
for the  restaurant.  The  purchase  price was  seller  financed,  secured  by a
mortgage upon the real property  purchased,  bearing  interest at the rate of 8%
per annum and being  payable in equal  monthly  installments  of  principal  and
interest, each in the amount of $3,042.55, until April 24, 2007, when the entire
principal balance and all accrued interest is due in full. The principal balance
due as of October 2, 2004 was $289,000.

      The Company  repaid  long term debt,  including  the Bank of America  note
payable,  the Bank Atlantic note payable,  mortgages,  capital lease obligations
and  Chapter 11  bankruptcy  damages in the amount of  $278,000,  $346,000,  and
$498,000 in fiscal 2004, 2003 and 2002 respectively.

      Subsequent to the end of fiscal 2004,  the Company  closed on an unsecured
$100,000  loan  from  BankAtlantic,  which  funds  will be used as a part of the
purchase  price of the real property and for an assignment  and  assumption of a
ground lease at one location owned by the Company pursuant to the exercise of an
option to  purchase.  The  promissory  note earns  interest at prime rate and is
fully  amortized  over 36 months,  with equal monthly  payments of principal and
interest.

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

      The table below  summarizes the current  assets,  current  liabilities and
working capital for fiscal 2004, 2003 and 2002:

                                   Oct. 2            Sept. 27         Sept. 28
                                     2004               2003             2002
                                     ----               ----             ----

Current assets                    $5,889,000        $4,958,000        $5,354,000

Current liabilities                3,758,000         2,865,000         2,374,000

Working capital                    2,131,000         2,093,000         2,980,000


                                       35
<PAGE>

      Working  capital for fiscal 2004 increased by 2% from the working  capital
for fiscal 2003 and  decreased by 28% from the working  capital for fiscal 2002.
The increase in working  capital from the working capital for fiscal 2003 is due
to the fact that the  construction  of the building in  Hollywood,  Florida from
which the Company operates a package liquor store was substantially completed by
the end of fiscal 2003. The Company  currently has no plans to construct another
building for the purpose of operating a package  liquor  store.  The increase in
working  capital would have been greater had the Company not advanced  funds for
capital  improvements  and on-going  expenses for the  restaurant  in Pinecrest,
Florida,  ($799,000).  During fiscal year 2005 and the completion of the private
offering by the limited partnership owning the restaurant in Pinecrest, Florida,
the Company will be  reimbursed  for advances  made in excess of its  investment
($700,000 investment at a minimum), thereby improving working capital.

      Management   believes  that  positive  cash  flow  from   operations  will
adequately fund operations,  debt reductions and planned capital expenditures in
fiscal year 2005.  However, it is also anticipated that during fiscal year 2005,
working capital will be adversely  affected by the annual dividend,  investments
and/or advances made by the Company to limited partnership in Pinecrest, Florida
pending  reimbursement  of  advances  made  by  the  Company  in  excess  of its
investment once the private offering by the limited partnership is completed and
the  exercise  by the Company of its option to purchase  the real  property  and
ground lease of one location currently leased by the Company.

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

      The Company's significant  accounting policies are more fully described in
Note 1 to the Company's  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.  The Company
believes  that  the  following  critical  accounting  policies  are  subject  to
estimates and judgments used in the  preparation of its  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.  Management  estimates the
useful life of those assets by  considering,  among other things,  expected use,
life of the lease on the  building,  and warranty  period,  if  applicable.  The
assets are then  depreciated  using a straight line method over those  estimated
lives.  These  estimated  lives  are  reviewed


                                       36
<PAGE>

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.

      In  fiscal  2004,  management  reviewed  the  estimated  useful  lives for
leasehold improvements and recorded an adjustment which was not significant.

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

      The  Company  operates 5  restaurants  as general  partner for the limited
partnership that owns the operations of these restaurants. The Company refers to
these  entities as joint  ventures or limited  partnerships.  Additionally,  the
Company  expects that any expansion which takes place in opening new restaurants
will also result in the Company operating the restaurants as general partner. In
addition to the general partnership  interest the Company also purchases limited
partnership units ranging from 12% to 42% of the total units  outstanding.  As a
result of these controlling  interests,  the Company consolidates the operations
of these  limited  partnerships  with those of the Company  despite the fact the
Company does 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  joint  ventures  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
the  Company's  carryforwards  refer  to  Note 7 to the  consolidated  financial
statements for fiscal 2004.

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

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

      The Company does not believe that  inflation  has had any material  effect
during the past three fiscal years.  To the extent allowed by  competition,  the
Company recovers increased costs by increasing prices.


                                       37
<PAGE>

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

      The Company does not ordinarily hold market risk sensitive instruments for
trading purposes, but as of October 2, 2004 holds one equity security, at a cost
of $303,000,  for dividend payments.  Even if the price of the equity securities
decreased  by 10% below its cost,  results  of  operations  would be  reduced by
$30,000, an amount management considers immaterial.

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

      At October 2, 2004,  the Company has no risk from interest rate  exposure.
The Company has only one debt  arrangement  which has a variable  interest rate.
For this  instrument,  a mortgage note, the Company has entered into an interest
rate swap  agreement to hedge the interest  rate risk.  The mortgage note has an
outstanding  principal  balance at October 2, 2004 of  $836,000.  The other debt
instrument  which had a variable  interest rate was satisfied in full during the
fourth quarter of fiscal year 2004.

      Subsequent  to the end of fiscal year 2004,  the  Company  closed on a new
unsecured loan from  BankAtlantic,  in the principal  amount of $100,000,  which
funds are to be used in connection  with the Company's  exercise of an option to
purchase the real  property and take an  assignment  of a ground lease at one of
its locations.  The promissory note has a variable interest,  at prime. but even
if interest rates  increased by 10%,  results of operations  would be reduced by
less than $10,000, an amount management considers immaterial.

      At October 2, 2004, the Company's cash resources earn interest at variable
rates.  Accordingly,  the  Company's  return  on  these  funds  is  affected  by
fluctuations  in interest  rates.  Any  decrease  in interest  rates will have a
negative  effect on the  Company's  earnings.  In addition,  the Company  incurs
interest charges on debt at variable rates, which to the extent that the Company
has not entered into  interest rate swap  agreements  to hedge this risk,  could
negatively  impact the Company's  earnings.  There is no assurance that interest
rates will increase or decrease over the next fiscal year.

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

      Financial statements of the Company at October 2, 2004, September 27, 2003
and  September  28,  2002,  which  include each of the three years in the period
ended October 2, 2004 and the independent  certified public  accountants' report
thereon, are included herein.

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

(a)   Evaluation of Disclosure Controls and Procedures.

      Our  Chief  Executive  Officer  and our  Chief  Financial  Officer,  after
      evaluating the  effectiveness  of the Company's  "disclosure  controls and
      procedures"  (as defined in the Securities  Exchange Act of 1934


                                       38
<PAGE>

      (Exchange  Act) Rules  13a-15(e) or 15d-15(e)) as of the end of the period
      covered by this annual report, have concluded that our disclosure controls
      and procedures are effective  based on their  evaluation of these controls
      and  procedures  required by paragraph (b) of Exchange Act Rules 13a-15 or
      15d-15.

(b)   Changes in Internal Control over Financial Reporting.

      During the  fourth  quarter  of fiscal  year  2004,  as well as the entire
      fiscal year 2004, the Company continued to assess the effectiveness of our
      "internal  controls  over  financial  reporting"  on an account by account
      basis as a part of our on-going  accounting and financial reporting review
      process. The assessments were made by management, under the supervision of
      our  Chief  Financial   Officer.   During  the  course  of  assessing  the
      effectiveness  of our  internal  controls  over  financial  reporting,  we
      identified a number of items for review and began an  extensive  effort to
      analyze  our  financial  information  and related  accounting  records for
      fiscal year 2004. As a result, we made a number of significant  changes in
      our internal control over financial reporting during the fourth quarter of
      fiscal year 2004,  as well as the entire  fiscal year 2004,  as summarized
      below.  Other than as  described  below,  we made no other  changes in our
      internal  control over financial  reporting  during the fiscal year ending
      October 2, 2004 that have materially affected, or are reasonably likely to
      materially   affect,   the  Company's   internal  control  over  financial
      reporting.

      As a result of our efforts,  we have concluded that the following internal
      control issues over our financial reporting constituted  weaknesses and/or
      deficiencies  during the fiscal year ending  October 2, 2004.  At the same
      time, we also identified  opportunities to correct these weaknesses and/or
      deficiencies,  all of  which  have  been or are in the  process  of  being
      implemented.

            a.    Deficiencies  related to design of policies  and  execution of
                  processes  related to accounting  for  transactions  involving
                  insurance premiums, real property taxes and supplies inventory
                  as they pertain to Company, joint venture and franchisees.  We
                  identified  deficiencies  in accounting for certain aspects of
                  our operations  relating to account reviews and  verification;
                  and accounting for property and equipment.

            b.    Deficiencies related to the internal control environment. As a
                  result of the deficiencies  described above, we concluded that
                  there were deficiencies in our control environment relating to
                  accounting,  financial  reporting and internal controls during
                  the fiscal year ended October 2, 2004,  which  constituted  at
                  times, material weaknesses and at other times, deficiencies as
                  described  below.  We continue to emphasize the  importance of
                  establishing  the  appropriate   environment  in  relation  to
                  accounting,  financial  reporting  and  internal  control over
                  financial   reporting  and  continue  to  identify   areas  of
                  improvement  and to create  and  implement  new  policies  and
                  procedures where material weaknesses or deficiencies exist.

      During  fiscal year 2004,  we have taken a number of steps that we believe
      will impact the  effectiveness  of our internal control over our financial
      reporting including the following:


                                       39
<PAGE>

            a.    We appointed a new Chief Financial Officer.

            b.    We added a financial  expert to our Board of Directors and the
                  Audit Committee.

            c.    We  have  implemented  a new  computerized  system  for  store
                  supplies  stored in the  corporate  offices  to insure  proper
                  inventory count,  security and charging the appropriate entity
                  when   supplies  are   transferred   to  joint   ventures  and
                  franchises.

            d.    Throughout  the fiscal year, we instituted  policies to review
                  accounts  for  accuracy  and if possible to simplify the same.
                  This is being  accomplished  through  a system  of  checks  on
                  accounting entries by more than one employee.

            e.    In July,  2004, we began a review of property and equipment in
                  Company warehouses and at restaurant  locations and determined
                  that a significant amount of property and equipment located in
                  Company   warehouses   was  obsolete  and  unusable.   We  are
                  implementing  a  system  of  inventory  control,  whereby  all
                  property and equipment  moved in or out of Company  warehouses
                  will be  documented  both  upon  its  arrival  at and then its
                  transfer from the warehouse,  as well as at its arrival at and
                  its  removal  from a  corporate,  joint  venture or  franchise
                  location.  Regular  inspections  of fixed  assets  in  Company
                  warehouses and locations are also being implemented.

            f.    In October, 2004, we hired a new corporate comptroller.

            g.    In December,  2004, we retained an independent  third party to
                  assist in the  preparation  of the Company's  compliance  with
                  Rule 404 of the Sarbanes-Oxley Act of 2002.

      We believe  that the steps  taken to date have  addressed  the  weaknesses
      and/or  deficiencies  that affected our internal  controls over  financial
      reporting  in  fiscal  year  2004.  We will  continue  with  our  on-going
      evaluation and will improve our internal controls over financial reporting
      as  necessary  to  assure  their   effectiveness.   Notwithstanding,   the
      effectiveness of our system of internal  control over financial  reporting
      is subject to certain limitations,  including the exercise of our judgment
      in evaluating  the same. As a result,  there can be no assurance  that our
      internal controls over financial reporting will prevent all errors.

      The  statements  contained  in Exhibit  31.1 and  Exhibit  31.2  should be
      considered in light of, and read together with, the  information set forth
      in this Item 9A.



                                       40
<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of the Registrant.
------------------------------------------------------------

      The information set forth under the caption "Election of Directors" in the
Company's   definitive   Proxy   Statement  for  its  2005  Annual   Meeting  of
Shareholders,  filed with the  Securities  and Exchange  Commission  pursuant to
regulation  14A under the  Securities  and Exchange Act of 1934, as amended (the
2005 Proxy Statement),  is incorporated herein by reference. See also "Executive
Officers of the Registrant" included in Part I hereof.

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

      The  information  set forth in the 2005 Proxy  Statement under the caption
"Executive Compensation" is incorporated by reference.

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

      The information set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the 2005 Proxy Statement is incorporated by
reference.

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

      The  information  set forth under the  caption  "Election  of  Directors -
Certain  Relationships and Related  Transactions" in the 2005 Proxy Statement is
incorporated by reference.

                                     PART IV

Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K.
-------------------------------------------------------------------------

(a)   1.    Financial Statements

            All the  financial  statements,  financial  statement  schedule  and
supplementary  data listed in the  accompanying  Index to Exhibits  are filed as
part of this Annual Report.

      2.    Exhibits

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

(b)   Reports on Form 8-K


                                       41
<PAGE>

      No reports on form 8-K were filed during the fourth quarter of fiscal year
2004 or subsequent to year end.

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

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

(2)  Plan of  Reorganization,  Amended  Disclosure  Statement,  Amended  Plan of
reorganization,   Modification  of  Amended  Plan  of   Reorganization,   Second
Modification  of  Amended  Plan  of  Reorganization,  Order  Confirming  Plan of
Reorganization, (Item 7 (c) of Quarterly Report on Form 8-K filed May 5, 1987 is
incorporated herein by reference).

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

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

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

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

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

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

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

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

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

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


                                       42
<PAGE>

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

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

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

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

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

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

(10)(y)  Limited  Partnership  Agreement of CIC Investors #80,  Ltd.,  dated May
2001,  between  Flanigan's  Enterprises,  Inc. as General  Partner and  numerous
limited partners,  including  Flanigan's  Enterprises,  Inc., as limited partner
owning  twenty five percent of the limited  partnership.  (Item 14(a) (10)(y) of
Form 1--KSB dated September 29, 2001 is incorporated herein by reference.)

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

(10)(aa)  Limited  Partnership  Agreement of CIC Investors #75, Ltd., dated June
17, 2003, between Flanigan's Enterprises, Inc., as General Partner, and numerous
limited  partners,  including  Flanigan's  Enterprises,  Inc. as limited partner
owning twelve percent of the limited partnership.

(10)(bb)  Limited  Partnership  Agreement of CIC Investors #65, Ltd., dated June
24, 2004, between Flanigan's Enterprises, Inc., as General Partner, and numerous
limited  partners,  including  Flanigan's  Enterprises,  Inc. as limited partner
owning twenty six percent of the limited partnership.

(13)  Registrant's  Form 10-K  constitutes the Annual Report to Shareholders for
the fiscal year ended October 2, 2004.


                                       43
<PAGE>

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

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

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

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

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

                                   SIGNATURES

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

                                     Flanigan's Enterprises, Inc.
                                     Registrant


                                     By: /s/ JOSEPH G. FLANIGAN
                                         ------------------------
                                         JOSEPH G. FLANIGAN
                                         Chief Executive Officer

Date: 12/30/04

      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/ JOSEPH G. FLANIGAN        Chairman of the Board,        Date: 12/30/04
-----------------------       Chief Executive Officer,
Joseph G. Flanigan            and Director

/s/ JEFFREY D. KASTNER        Chief Financial Officer       Date: 12/30/04
-----------------------       Secretary and Director
Jeffrey D. Kastner

/s/ MICHAEL ROBERTS           Director                      Date: 12/30/04
-----------------------
MICHAEL ROBERTS

/s/ GERMAINE M. BELL          Director                      Date: 12/30/04
-----------------------
Germaine M. Bell

/s/ CHARLES E. MCMANUS        Director                      Date: 12/30/04
-----------------------
Charles E. McManus

WILLIAM PATTON                Vice President, Public        Date: 12/30/04
-----------------------       Relations and Director
William Patton

/s/ JAMES G. FLANIGAN         President and Director        Date: 12/30/04
-----------------------
James G. Flanigan

/s/ PATRICK J. FLANIGAN       Director                      Date: 12/30/04
-----------------------
Patrick J. Flanigan

/s/ BARBARA KRONK             Director                      Date: 12/30/04
-----------------------
Barbara Kronk


                                       44


<PAGE>

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

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

           OCTOBER 2, 2004, SEPTEMBER 27, 2003 AND SEPTEMBER 28, 2002

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

<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                          INDEX TO 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 October 2, 2004 and September 27, 2003,
and the related consolidated statements of income, stockholders' equity and cash
flows for each of the three  years in the period  ended  October 2, 2004.  These
consolidated financial statements are the fiscal responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes 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 financial  statements  referred to above present fairly, in
all  material  respects,  the  consolidated  financial  position  of  Flanigan's
Enterprises, Inc. and Subsidiaries as of October 2, 2004 and September 27, 2003,
and the  consolidated  results of their operations and their cash flows for each
of the three fiscal years in the period ended October 2, 2004 in conformity with
U.S generally accepted accounting principles.


                            RACHLIN COHEN & HOLTZ LLP

Fort Lauderdale, Florida
December 2, 2004


                                      F-1
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                     OCTOBER 2, 2004 AND SEPTEMBER 27, 2003

<TABLE>
<CAPTION>
                                   ASSETS                            2004            2003
                                   ------                            ----            ----
<S>                                                              <C>             <C>
Current Assets:
    Cash and cash equivalents                                    $  2,936,000    $  1,587,000
    Investments:
      Certificate of deposit                                               --         354,000
      Marketable securities                                           328,000         185,000
    Notes and mortgages receivable, current maturities, net            25,000          23,000
    Other receivables                                                 271,000         377,000
    Inventories                                                     1,650,000       1,362,000
    Refundable deposit, major supplier                                     --          77,000
    Prepaid expenses                                                  565,000         881,000
    Deferred tax assets                                               114,000         112,000
                                                                 ------------    ------------
      Total current assets                                          5,889,000       4,958,000
                                                                 ------------    ------------

Property and Equipment                                             12,432,000      12,413,000
                                                                 ------------    ------------

Investments in Joint Ventures                                         124,000         132,000
                                                                 ------------    ------------

Other Assets:
    Liquor licenses, net                                              347,000         347,000
    Notes and mortgages receivable, net                               128,000         149,000
    Deferred tax assets                                               368,000         208,000
    Other                                                             486,000         526,000
                                                                 ------------    ------------
         Total other assets                                         1,329,000       1,230,000
                                                                 ------------    ------------
         Total assets                                            $ 19,774,000    $ 18,733,000
                                                                 ============    ============

                    LIABILITIES AND STOCKHOLDERS' EQUITY
                    ------------------------------------
Current Liabilities:
    Accounts payable and accrued expenses                        $  2,824,000    $  2,108,000
    Due to franchisees                                                767,000         409,000
    Current portion of long-term debt                                  97,000         278,000
    Deferred revenues                                                  70,000          70,000
                                                                 ------------    ------------
         Total current liabilities                                  3,758,000       2,865,000
                                                                 ------------    ------------

Long-Term Debt, Net of Current Maturities                           1,217,000       1,314,000
                                                                 ------------    ------------

Minority Interest in Equity of Consolidated Joint Ventures          4,698,000       4,203,000
                                                                 ------------    ------------

Commitments, Contingencies and Other Matters                               --              --

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                                  6,147,000       6,103,000
    Retained earnings                                               8,974,000       9,115,000
    Accumulated other comprehensive income                             25,000          26,000
    Treasury stock, at cost, 2,280,817 and 2,271,172 shares        (5,465,000)     (5,313,000)
                                                                 ------------    ------------
         Total stockholders' equity                                10,101,000      10,351,000
                                                                 ------------    ------------
         Total liabilities and stockholders' equity              $ 19,774,000    $ 18,733,000
                                                                 ============    ============
</TABLE>

                 See notes to consolidated financial statements.


                                      F-2
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

     YEARS ENDED OCTOBER 2, 2004, SEPTEMBER 27, 2003 AND SEPTEMBER 28, 2002

<TABLE>
<CAPTION>
                                                                       2004            2003            2002
                                                                       ----            ----            ----
                                                                                                    (Restated)
<S>                                                                <C>             <C>             <C>
Revenues:
    Restaurant food sales                                          $ 26,347,000    $ 22,489,000    $ 22,086,000
    Restaurant beverage sales                                         7,351,000       6,705,000       6,533,000
    Package goods sales                                              10,911,000       9,777,000       9,174,000
    Franchise-related revenues                                          958,000         904,000         985,000
    Owner's fee                                                         265,000         260,000         251,000
    Other operating income                                              101,000         118,000          95,000
                                                                   ------------    ------------    ------------
                                                                     45,933,000      40,253,000      39,124,000
                                                                   ------------    ------------    ------------
Costs and Expenses:
    Cost of merchandise sold:
       Restaurants and lounges                                       12,002,000       9,978,000       9,620,000
       Package goods                                                  7,870,000       7,136,000       6,798,000
    Payroll and related costs                                        12,523,000      11,423,000      11,377,000
    Occupancy costs                                                   2,740,000       2,158,000       1,756,000
    Selling, general and administrative expenses                      9,525,000       7,534,000       6,785,000
                                                                   ------------    ------------    ------------
                                                                     44,660,000      38,229,000      36,336,000
                                                                   ------------    ------------    ------------

Income from Operations                                                1,273,000       2,024,000       2,788,000
                                                                   ------------    ------------    ------------

Other Income (Expense):
    Interest expense                                                   (136,000)       (140,000)       (175,000)
    Minority interest in earnings of consolidated joint ventures       (301,000)       (599,000)     (1,130,000)
    Interest income                                                      56,000          45,000          60,000
    Joint venture income                                                  6,000          20,000          27,000
    Other income                                                         79,000          80,000         501,000
    Loss on abandonment of property and equipment                      (367,000)             --              --
                                                                   ------------    ------------    ------------
                                                                       (663,000)       (594,000)       (717,000)
                                                                   ------------    ------------    ------------

Income Before Provision for Income Taxes                                610,000       1,430,000       2,071,000
                                                                   ------------    ------------    ------------

Provision for Income Taxes:
    Current                                                             332,000         375,000         519,000
    Deferred                                                           (162,000)        167,000         169,000
                                                                   ------------    ------------    ------------
                                                                        170,000         542,000         688,000
                                                                   ------------    ------------    ------------

Net Income                                                         $    440,000    $    888,000    $  1,383,000
                                                                   ============    ============    ============

Net Income Per Common Share:
    Basic                                                          $       0.23    $       0.46    $       0.71
                                                                   ============    ============    ============
    Diluted                                                        $       0.23    $       0.45    $       0.70
                                                                   ============    ============    ============

Weighted Average Shares and Equivalent Shares Outstanding:
    Basic                                                             1,922,000       1,926,000       1,961,000
                                                                   ============    ============    ============
    Diluted                                                           1,933,000       1,955,000       1,989,000
                                                                   ============    ============    ============
</TABLE>

                 See notes to consolidated financial statements.


                                      F-3
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

     YEARS ENDED OCTOBER 2, 2004, SEPTEMBER 27, 2003 AND SEPTEMBER 28, 2002

<TABLE>
<CAPTION>
                                                                                                                Notes
                                                                                                              Receivable
                                                           Common Stock          Capital in                   on Sale of
                                                           ------------           Excess of     Retained        Common
                                                       Shares        Amount       Par Value     Earnings         Stock
                                                     -----------   -----------   -----------   -----------    -----------
<S>                                                    <C>         <C>           <C>           <C>            <C>
Balance, September 29, 2001                            4,197,462   $   420,000   $ 6,028,000   $ 7,863,000    $  (291,000)

Year Ended September 28, 2002:
    Dividends paid ($0.25 per share)                          --            --            --      (499,000)            --
    Net income                                                --            --            --     1,383,000             --
    Purchase of treasury stock                                --            --            --            --             --
    Exchange of shares - exercise of stock options            --            --        75,000            --             --
    Payments received on notes receivable                     --            --            --            --        291,000
                                                     -----------   -----------   -----------   -----------    -----------

Balance, September 28, 2002                            4,197,462       420,000     6,103,000     8,747,000             --

Year Ended September 27, 2003:
    Comprehensive income:
       Net income                                             --            --            --       888,000             --
       Net unrealized gain on securities                      --            --            --            --             --
                                                     -----------   -----------   -----------   -----------    -----------
                                                              --            --            --       888,000             --

    Dividends paid ($0.27 per share)                          --            --            --      (520,000)            --
                                                     -----------   -----------   -----------   -----------    -----------

Balance, September 27, 2003                            4,197,462       420,000     6,103,000     9,115,000             --
                                                     -----------   -----------   -----------   -----------    -----------

Year Ended October 2, 2004:
    Comprehensive income:
       Net income                                             --            --            --       440,000             --
       Net unrealized loss on securities                      --            --            --            --             --
                                                     -----------   -----------   -----------   -----------    -----------
                                                              --            --            --       440,000             --

    Purchase of treasury stock                                --            --            --            --             --
    Exchange of shares - exercise of stock options            --            --        44,000            --             --
    Dividends paid ($0.30 per share)                          --            --            --      (581,000)            --
                                                     -----------   -----------   -----------   -----------    -----------

Balance, October 2, 2004                               4,197,462   $   420,000   $ 6,147,000   $ 8,974,000    $        --
                                                     ===========   ===========   ===========   ===========    ===========

<CAPTION>

                                                       Accumulated
                                                          Other           Treasury Stock
                                                      Comprehensive       --------------
                                                          Income       Shares         Amount           Total
                                                      -------------  ----------    -----------    ------------
<S>                                                      <C>          <C>          <C>            <C>
Balance, September 29, 2001                                    --     2,275,164    $(5,052,000)   $  8,968,000

Year Ended September 28, 2002:
    Dividends paid ($0.25 per share)                           --            --             --        (499,000)
    Net income                                                 --            --             --       1,383,000
    Purchase of treasury stock                                 --        68,803       (423,000)       (423,000)
    Exchange of shares - exercise of stock options             --       (72,795)       162,000         237,000
    Payments received on notes receivable                      --            --             --         291,000
                                                         --------    ----------    -----------    ------------

Balance, September 28, 2002                                    --     2,271,172     (5,313,000)      9,957,000

Year Ended September 27, 2003:
    Comprehensive income:
       Net income                                              --            --             --         888,000
       Net unrealized gain on securities                   26,000            --             --          26,000
                                                         --------    ----------    -----------    ------------
                                                           26,000            --             --         914,000

    Dividends paid ($0.27 per share)                           --            --             --        (520,000)
                                                         --------    ----------    -----------    ------------

Balance, September 27, 2003                                26,000     2,271,172     (5,313,000)     10,351,000
                                                         --------    ----------    -----------    ------------

Year Ended October 2, 2004:
    Comprehensive income:
       Net income                                              --            --             --         440,000
       Net unrealized loss on securities                   (1,000)           --             --          (1,000)
                                                         --------    ----------    -----------    ------------
                                                           (1,000)           --             --         439,000

    Purchase of treasury stock                                 --        30,400       (201,000)       (201,000)
    Exchange of shares - exercise of stock options             --       (20,755)        49,000          93,000
    Dividends paid ($0.30 per share)                           --            --             --        (581,000)
                                                         --------    ----------    -----------    ------------

Balance, October 2, 2004                                 $ 25,000     2,280,817    $(5,465,000)   $ 10,101,000
                                                         ========    ==========    ===========    ============
</TABLE>

                 See notes to consolidated financial statements.


                                      F-4
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

     YEARS ENDED OCTOBER 2, 2004, SEPTEMBER 27, 2003 AND SEPTEMBER 28, 2002

<TABLE>
<CAPTION>
                                                                          2004           2003           2002
                                                                          ----           ----           ----
<S>                                                                   <C>            <C>            <C>
Cash Flows from Operating Activities:
   Net income                                                         $   440,000    $   888,000    $ 1,383,000
   Adjustments to reconcile net income to net cash provided by
     operating activities:
       Depreciation and amortization                                    1,545,000      1,187,000      1,041,000
       Loss on abandonment of property and equipment                      367,000             --             --
       Deferred income taxes                                             (162,000)       167,000        169,000
       Minority interest in earnings of consolidated joint ventures       301,000        599,000      1,130,000
       Recognition of deferred revenues                                        --         (5,000)        (5,000)
       Gain on disposal of property, equipment and liquor licenses             --             --       (440,000)
       Joint venture income                                                (6,000)       (20,000)       (27,000)
       Changes in operating assets and liabilities:
         (Increase) decrease in:
           Due from franchisees                                                --        140,000        412,000
           Other receivables                                              106,000         84,000        (84,000)
           Inventories                                                   (288,000)        60,000        (48,000)
           Prepaid expenses                                               316,000       (346,000)      (110,000)
           Refundable deposit, major supplier                              77,000        902,000       (979,000)
           Other assets                                                   (18,000)       199,000        (98,000)
         Increase in:
           Accounts payable and accrued expenses                          716,000        203,000        118,000
           Due to franchisees                                             358,000        360,000         33,000
                                                                      -----------    -----------    -----------
             Net cash provided by operating activities                  3,752,000      4,418,000      2,495,000
                                                                      -----------    -----------    -----------

Cash Flows from Investing Activities:
   Collections on notes and mortgages receivable                           19,000         80,000         12,000
   Notes receivable issued                                                     --             --        (39,000)
   Purchase of property and equipment                                  (1,873,000)    (3,028,000)    (1,216,000)
   Proceeds from redemption of certificate of deposit                     354,000             --             --
   Investment in certificate of deposit                                        --         (4,000)      (350,000)
   Investment in marketable securities                                   (144,000)      (159,000)            --
   Purchase of liquor licenses                                                 --             --        (50,000)
   Sale of liquor license                                                      --             --         45,000
   Proceeds from eminent domain                                                --             --        700,000
   Deposit on investment                                                       --       (188,000)            --
   Distributions from unconsolidated joint venture                         14,000         30,000         17,000
                                                                      -----------    -----------    -----------
             Net cash used in investing activities                     (1,630,000)    (3,269,000)      (881,000)
                                                                      -----------    -----------    -----------

Cash Flows from Financing Activities:
   Payments of long-term debt                                            (278,000)      (346,000)      (381,000)
   Payments of damages payable on terminated or rejected leases                --             --       (117,000)
   Collections on notes receivable, sale of common stock                       --             --        291,000
   Distributions to joint venture minority partners                    (1,131,000)      (987,000)    (1,128,000)
   Proceeds from joint ventures interests                               1,325,000      1,148,000             --
   Purchase of treasury stock                                            (201,000)            --       (423,000)
   Dividends paid                                                        (581,000)      (520,000)      (499,000)
   Proceeds from exercise of stock options                                 93,000             --        237,000
                                                                      -----------    -----------    -----------
             Net cash used in financing activities                       (773,000)      (705,000)    (2,020,000)
                                                                      -----------    -----------    -----------

Net Increase (Decrease) in Cash and Cash Equivalents                    1,349,000        444,000       (406,000)

Cash and Cash Equivalents, Beginning                                    1,587,000      1,143,000      1,549,000
                                                                      -----------    -----------    -----------

Cash and Cash Equivalents, Ending                                     $ 2,936,000    $ 1,587,000    $ 1,143,000
                                                                      ===========    ===========    ===========

                                                                                                     (Continued)
</TABLE>

                 See notes to consolidated financial statements.


                                      F-5
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

     YEARS ENDED OCTOBER 2, 2004, SEPTEMBER 27, 2003 AND SEPTEMBER 28, 2002

                                   (Continued)

<TABLE>
<CAPTION>
                                                      2004        2003        2002
                                                      ----        ----        ----
<S>                                                 <C>         <C>         <C>
Supplemental Disclosure of Cash Flow Information:
   Cash paid during the year for:
     Interest                                       $136,000    $140,000    $175,000
                                                    ========    ========    ========
     Income taxes                                   $173,000    $425,000    $493,000
                                                    ========    ========    ========

   Non-Cash Financing and Investing Activities:
     Notes receivable for sale of liquor license    $     --    $     --    $ 67,000
                                                    ========    ========    ========
</TABLE>

                 See notes to consolidated financial statements.


                                      F-6
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

           OCTOBER 2, 2004, SEPTEMBER 27, 2003 AND SEPTEMBER 28, 2002

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Organization and Capitalization

             Incorporated in 1959, Flanigan's Enterprises, Inc. ("Flanigan's" or
             the "Company") 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 total  revenue.  At October 2, 2004,
             the Company owned and operated two full-service  restaurants,  five
             package liquor stores and four combination full-service restaurants
             and package liquor stores in Florida. In addition,  Flanigan's owns
             one club in  Georgia,  which is operated  pursuant to a  management
             agreement  with  an  unrelated  third  party.   The  Company  holds
             interests in seven of the thirteen  franchised  units through joint
             venture  investments.  The  Company  owns  100% of one of the joint
             venture  investments  as a result of an eminent  domain action (see
             Note  5).  The  Company's   restaurants   are  operated  under  the
             "Flanigan's  Seafood Bar and Grill" servicemark while the Company's
             package  stores  are  operated  under  the  "Big  Daddy's  Liquors"
             servicemark.

             The Company's Articles of Incorporation,  as amended, authorize the
             Company  to issue and have  outstanding  at any one time  5,000,000
             shares of common stock at a par value of $.10.

             The Company  operates  under a 52-53 week year ending the  Saturday
             closest to September 30. Fiscal year 2004 is comprised of a 53-week
             period and  fiscal  years  2003 and 2002 are  comprised  of 52-week
             periods.

         Principles of Consolidation

             The  consolidated  financial  statements  include  the  accounts of
             Flanigan's Enterprises, Inc. and its subsidiaries, all of which are
             wholly owned,  and the accounts of seven of the eight joint venture
             investments,   which  are   consolidated   due  to  the   Company's
             controlling interests.  All significant  intercompany  transactions
             and balances have been eliminated in consolidation.

         Use of Estimates

             The financial  statements and related  disclosures  are prepared in
             conformity with U.S. accounting principles.  Management is 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 the financial  statements in the period
             they are determined to be necessary.  Although these  estimates are
             based on  management's  knowledge of current  events and actions it
             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

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

         Investments

             In accordance with Statement of Financial  Accounting Standards No.
             115,  "Accounting  for Certain  Debt and Equity  Securities"  (SFAS
             115),  securities are  classified  into three  categories:  held-to
             maturity, available-for-sale, and trading.

             The   Company's    marketable    securities   are   classified   as
             available-for-sale,  which  means they may be sold in  response  to
             changes in interest rates, liquidity needs, and for other purposes.
             Available-for-sale securities are reported at fair value.

             Unrealized  holding gains and losses are excluded from earnings and
             reported,  net of any income tax effect, as a separate component of
             stockholders'  equity.  Realized  gains and losses are  reported in
             earnings based on the adjusted cost of the specific security sold.

         Inventories

             Inventories,  which consist  primarily of packaged 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),  liquor
             licenses are no longer being amortized, but are tested annually for
             impairment (see Note 6).

         Property and Equipment

             For financial reporting,  the Company uses the straight-line method
             for  providing   depreciation  and  amortization  on  property  and
             equipment.  Depreciation and amortization  commences when the asset
             is placed in service.  The estimated  useful lives range from three
             to five years for vehicles,  and three to seven years for furniture
             and equipment.

             Leasehold  interests are amortized over the term of the lease up to
             a maximum of 15 years. In fiscal year 2003, the Company reevaluated
             its  estimate of the useful lives for its  leasehold  improvements.
             Leasehold  improvements are currently being amortized over the life
             of the lease up to a maximum of 20 years.  The  change in  estimate
             has been accounted for prospectively in the accompanying  financial
             statements  and did  not  result  in a  significant  adjustment  to
             amortization expense.

             The office building and building improvements are being depreciated
             over forty years. If the locations are sold or abandoned before the
             end of the amortization period, the unamortized costs are expensed.


                                      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 Joint Ventures

             The Company uses the  consolidation  method of accounting  when the
             Company  has a  controlling  interest  in  other  companies,  joint
             ventures,  and partnerships.  The Company uses the equity method of
             accounting when the Company has an interest between twenty to fifty
             percent in other companies,  joint ventures, and partnerships,  and
             does not  exercise  control.  Under  the  equity  method,  original
             investments are recorded at cost and are adjusted for the Company's
             share  of  undistributed   earnings  or  losses.   All  significant
             intercompany profits are eliminated.

         Concentrations of Credit Risk

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

             Cash and Cash Equivalents

                From time to time during the year,  the Company had  deposits in
                financial  institutions  in  excess  of  the  federally  insured
                limits.  At October 2, 2004,  the Company had deposits in excess
                of federally  insured limits of  approximately  $2,999,000.  The
                Company   maintains   its  cash  with  high  quality   financial
                institutions, which the Company believes limits these risks.

             Marketable Securities

                In addition,  the Company maintains an investment account with a
                financial  institution  that is not  insured by the FDIC.  These
                funds, which were invested primarily in marketable securities at
                October 2, 2004, may be subject to insurance by SIPC, Securities
                Investor Protection Corporation, subject to various limitations.
                At  October 2, 2004,  approximately  $328,000  was held in these
                accounts.

             Notes and Mortgages Receivable

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


                                      F-9
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Major Suppliers

             In September  2003,  the Company  terminated a master  distribution
             agreement  with its major  supplier  which  entitled the Company to
             receive  certain  purchase   discounts,   rebates  and  advertising
             allowances. Upon termination,  the Company received a refund of its
             $750,000 deposit (less any outstanding  balance on their account at
             that time) and subsequently  entered into a new master distribution
             agreement which still provided for revised  advertising  allowance,
             discounts  and  rebates.  Throughout  2004,  the Company  purchased
             substantially all of its food products from this supplier; however,
             management  believes  that several  other  alternative  vendors are
             available if necessary.

         Revenue Recognition

             The Company records  revenues from normal  recurring sales upon the
             sale  of  food  and  beverages  and the  sale  of  packaged  liquor
             products. Continuing royalties, which are a percentage of net sales
             of franchised stores, are accrued as income when earned.

         Pre-opening Costs

             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  the  Company's  high
             standards  for  quality  are  met),  rent  and  promotional  costs.
             Pre-opening  costs are  expensed  as  incurred.  Pre-opening  costs
             incurred for the years ended October 2, 2004 and September 27, 2003
             were approximately $315,000 and $135,000, respectively.

         Advertising Costs

             Advertising  costs are  expensed  as  incurred.  Advertising  costs
             incurred for the years ended  October 2, 2004,  September  27, 2003
             and September 28, 2002 were  approximately  $319,000,  $296,000 and
             $263,000, respectively.

         Fair Value of Financial Instruments

             The respective carrying value of certain on-balance-sheet financial
             instruments   approximated  their  fair  value.  These  instruments
             include cash and cash equivalents,  accounts receivable, marketable
             securities,  notes and mortgages receivable,  other receivables and
             accounts payables. Fair values were assumed to approximate carrying
             values for those  financial  instruments,  which are  short-term in
             nature or are receivable or payable on demand.

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


                                      F-10
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Derivative Financial Instruments and Hedging Activities

             The Company holds a derivative financial instrument for the purpose
             of  hedging  the  risk  of  certain  identifiable  and  anticipated
             transactions.  In general, the type of risk hedged is that relating
             to the  variability  of future  earnings  and cash flows  caused by
             movements  in  interest  rates.  In hedging  the  transaction,  the
             Company,  in the normal course of business,  holds an interest rate
             swap,  which  hedges the fair value of variable  rate debt and cash
             flows of variable-rate financial assets.

             Derivatives  are held only for the  purpose of hedging  such risks,
             not for  speculation.  Generally,  the  Company  entered  into  the
             hedging  relationship  such that changes in the fair values or cash
             flows of items and  transactions  being  hedged are  expected to be
             offset by corresponding changes in the value of the derivative.  At
             October 2, 2004,  a hedging  relationship  existed for the mortgage
             obligation described in Note 8.

         Income Taxes

             The  Company  accounts  for its 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  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.

         Comprehensive Income

             The Company  reports  comprehensive  income in accordance  with the
             Statement of  Financial  Accounting  Standard  No. 130,  "Reporting
             Comprehensive  Income"  ("SFAS 130").  This  statement  establishes
             standards for the reporting and display of comprehensive income and
             its  components  in  a  full  set  of   general-purpose   financial
             statements.  Comprehensive  income generally represents all changes
             in stockholders' equity during the year except those resulting from
             investments by, or distributions to, stockholders.

         Stock-Based Compensation

             Statement of Financial  Accounting  Standards No. 123,  "Accounting
             for Stock-Based  Compensation"  ("SFAS No. 123"),  encourages,  but
             does not require companies to record stock-based compensation plans
             using a fair value based method. The Company has chosen to continue
             to account for stock-based  compensation  using the intrinsic value
             based method prescribed in Accounting  Principles Board Opinion No.
             25,  "Accounting  for  Stock  Issued  to  Employees."  Accordingly,
             compensation  cost for stock options is measured as the excess,  if
             any, of the quoted  market price of the  Company's  common stock at
             the date of the  grant  over the  amount  an  employee  must pay to
             acquire the stock.


                                      F-11
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Long-Lived Assets

             The Company continually  evaluates whether events and circumstances
             have  occurred that may warrant  revision of the estimated  life of
             its intangible and other long-lived assets or whether the remaining
             balance of its  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,  the Company
             will determine the fair value of the asset by making an estimate of
             expected  future  cash  flows  over  the  remaining  lives  of  the
             respective  assets and  compare  that fair value with the  carrying
             value  of  the  assets  in  measuring  their   recoverability.   In
             determining  the  expected  future cash  flows,  the assets will be
             grouped at the lowest level for which there are cash flows,  at the
             individual store level.

         Reclassifications

             Certain  amounts in the prior year financial  statements  have been
             reclassified  to conform to the  presentation of the 2004 financial
             statements.

         Recently Issued Accounting Pronouncements

             In December 2004, the Financial  Accounting  Standards Board issued
             SFAS  Statement No.  123(R),  "Share-Based  Payment," a revision of
             SFAS  Statement  No.  123,  that  will  significantly   change  the
             accounting  for  employee  stock  options  and  other  equity-based
             compensation.  The standard requires  companies to expense the fair
             value of stock  options  on the  grant  date and is  effective  for
             interim  or  annual  periods  beginning  after  June 15,  2005.  In
             accordance with the revised statement, the Company will be required
             to recognize the expense  attributable  to stock options granted or
             vested subsequent to July 1, 2005.

             In May 2003, the Financial  Accounting  Standards Board issued SFAS
             No.  150,  "Accounting  for  Certain  Financial   Instruments  with
             Characteristics  of Both  Liabilities  and  Equity."  SFAS No.  150
             affects the  issuer's  accounting  for three types of  freestanding
             financial  instruments.  One type is mandatorily redeemable shares,
             which the issuing  company is obligated to buy back in exchange for
             cash or other assets. A second type, which includes put options and
             forward  purchase  contracts,  involves  instruments that do or may
             require the issuer to buy back some of its shares in  exchange  for
             cash or other  assets.  The third type of  instrument  consists  of
             obligations that can be settled with shares,  the monetary value of
             which is fixed,  tied solely or predominantly to a variable such as
             a market index, or varies  inversely with the value of the issuers'
             shares.  SFAS No.  150 does not  apply to  features  embedded  in a
             financial instrument that is not a derivative in its entirety. SFAS
             No.  150  also  requires  disclosures  about  alternative  ways  of
             settling  the  instruments  and the capital  structure of entities,
             whose shares are  mandatorily  redeemable.  Most of the guidance in
             SFAS No. 150 is effective  for all  financial  instruments  entered
             into or modified  after May 31,  2003,  and  otherwise is effective
             from the start of the first interim period beginning after June 15,
             2003. The adoption of this standard did not have a material  impact
             on the Company's results of operations or financial position.


                                      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)

             In April 2003, the Financial Accounting Standards Board issued SFAS
             No. 149,  "Amendment  of Statement  133 on  Derivative  Instruments
             Hedging Activities." This statement amends and clarifies accounting
             for   derivative   instruments,    including   certain   derivative
             instruments embedded in other contracts, and for hedging activities
             under SFAS No. 133. SFAS No. 149 became effective during the fourth
             quarter of fiscal  2003 and did not have a  material  impact on the
             Company's results of operations or financial position.

             In January 2003, the Financial  Accounting  Standards  Board issued
             Interpretation 46, "Consolidation of Variable Interest Entities" an
             Interpretation  of ARB 51. This  statement  requires  under certain
             circumstances   consolidation   of   variable   interest   entities
             (primarily joint ventures and other participating activities).  The
             adoption of this statement did not have a significant impact on the
             Company's financial position or results of operations.

             In December 2002, the Financial  Accounting  Standards Board issued
             SFAS No. 148, "Accounting for Stock-Based Compensation - Transition
             and Disclosure."  SFAS No. 148 amends SFAS No. 123 as it relates to
             the  transition by an entity to the fair value method of accounting
             for stock-based employee  compensation.  The provisions of SFAS No.
             148 are effective for financial  statements for fiscal years ending
             after  December 15, 2002.  The adoption of this  statement  did not
             have a significant  impact on the Company's  financial  position or
             results of operations.

             In November 2002, the Financial  Accounting  Standards Board issued
             Interpretation   45,   "Guarantor's   Accounting   and   Disclosure
             Requirements  for  Guarantees,  Including  Indirect  Guarantees  of
             Indebtedness of Others" and  interpretation  of SFAS No. 5, 57, and
             107 and  rescission of SFAS  Interpretation  No. 34. This statement
             addresses the  disclosures to be made by a guarantor in its interim
             and  annual  financial   statements  about  its  obligations  under
             guarantees.  This  interpretation  also clarifies the  requirements
             related to the  recognition  of a liability  by a guarantor  at the
             inception of a guarantee  for the  obligations  the  guarantor  has
             undertaken  in  issuing  that  guarantee.   The  adoption  of  this
             statement  did  not  have a  significant  impact  on the  Company's
             financial position or results of operations.

             In June 2002, the Financial  Accounting Standards Board issued SFAS
             No. 146,  "Accounting  for Costs  Associated  with Exit or Disposal
             Activities."  This  statement  addresses  financial  accounting and
             reporting for costs  associated  with exit or disposal  activities.
             SFAS 146 became  effective in the second quarter of fiscal 2003 and
             did not have a  significant  impact on the results of operations or
             financial position of the Company.

             In August 2001,  the Financial  Accounting  Standards  Board issued
             SFAS  No.  144,  "Accounting  for the  Impairment  or  Disposal  of
             Long-Lived Assets".  SFAS No. 144, which was adopted by the Company
             in  the  first  quarter  of  fiscal  2003,   requires  testing  for
             recoverability    of   long-lived   assets   whenever   events   or
             circumstances   indicate  that  the  carrying   value  may  not  be
             recoverable.  An  impairment  loss  shall  be  recognized  when the
             carrying  value of a long-lived  asset exceeds its fair value.  The
             adoption  of SFAS No.  144 did not have a  material  effect  on the
             consolidated financial statements.


                                      F-13
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Recently Issued Accounting Pronouncements (Continued)

             In June 2001, the Financial  Accounting Standards Board issued SFAS
             No.  143,  "Accounting  for  Asset  Retirement  Obligations".   The
             statement  addresses  accounting  for  and  reporting   obligations
             relating to the  retirement of long lived assets by requiring  that
             the fair value of a liability for an asset retirement obligation be
             recognized  in the period in which it is incurred  if a  reasonable
             estimate of fair value can be made. The statement was effective for
             the  Company's  financial  statements  for the  fiscal  year  ended
             September  27,  2003.  The  adoption of SFAS No. 143 did not have a
             material effect on the consolidated financial statements.

             Also in June 2001, the Financial  Accounting Standards Board issued
             SFAS No. 142, "Goodwill and Other Intangible Assets".  SFAS No. 142
             requires companies to account for goodwill and other intangibles in
             the following manner. Intangible assets which are acquired shall be
             recognized and measured based on fair value.  Recognized intangible
             assets are to be amortized  over their  useful  life.  Goodwill and
             intangible  assets  determined to have an  indefinite  life are not
             amortized.  Intangible  assets that are not  amortized and goodwill
             shall be tested for impairment annually. The provisions of SFAS No.
             142 were applied by the Company in fiscal year ended  September 27,
             2003.  The adoption of SFAS No. 142 did not have a material  effect
             on the consolidated financial statements.

         Restatement

             In fiscal year 2003,  the Company  determined  that  certain  joint
             venture  revenue  and costs of  approximately  equal  amounts  were
             reflected twice in the accompanying  consolidated  income statement
             for the year ended September 28, 2002. As a result, the Company has
             restated the accompanying  consolidated income statement to reflect
             this change.  This restatement  resulted in no change to net income
             or the related earnings per share information,  or to stockholders'
             equity.

NOTE 2.  INVESTMENTS

         Cost and fair value of investments available for sale are as follows:

                                                   2004          2003
                                                   ----          ----

         Cost - equity instruments               $303,000      $159,000
         Gross unrealized gains                    25,000        26,000
                                                 --------      --------
         Total                                   $328,000      $185,000
                                                 ========      ========

         Certificate of Deposit                  $     --      $354,000
                                                 ========      ========

         All funds invested in marketable securities are in one entity.


                                      F-14
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 3.  NOTES AND MORTGAGES RECEIVABLE

         Receivables,  net of allowances for uncollectible  amounts,  consist of
         the following at October 2, 2004 and September 27, 2003:

<TABLE>
<CAPTION>
                                                                                   2004       2003
                                                                                   ----       ----
<S>                                                                              <C>        <C>
         Notes and mortgages receivable from unrelated parties, bearing
            interest at rates ranging from 10.5% to 15% and due in varying
            installments through 2013                                            $ 60,000   $ 70,000

         Notes and mortgages receivable from related parties, bearing interest
            at rates ranging from 10% to 14% and due in varying installments
            through 2007                                                           93,000    102,000
                                                                                 --------   --------
                                                                                  153,000    172,000
         Current portion                                                           25,000     23,000
                                                                                 --------   --------
                                                                                 $128,000   $149,000
                                                                                 ========   ========
</TABLE>

         The majority of the notes and mortgages  receivable  represent  amounts
         owed to the  Company  for store  operations  which were sold.  Unless a
         significant  amount of cash is received on the sale, a pro rata portion
         of the gain is deferred  and  recognized  only as payments on the notes
         and  mortgages  are  received  by the  Company.  Any losses on sales of
         stores are recognized currently.  Approximately $6,000 of deferred gain
         was  recognized  on  collections  of such notes  receivable  during the
         fiscal year ended October 2, 2004, and $5,000 was recognized during the
         fiscal years ended September 27, 2003 and September 28, 2002.

         Future scheduled payments on the receivables at October 2, 2004 consist
         of the following:

          2005                                                         $  25,000
          2006                                                            12,000
          2007                                                            71,000
          2008                                                                --
          2009                                                                --
          Thereafter                                                      45,000
                                                                       ---------
                                                                       $ 153,000
                                                                       =========

NOTE 4.  PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                              2004          2003
                                                              ----          ----
<S>                                                       <C>           <C>
         Furniture and equipment                          $ 7,436,000   $ 8,501,000
         Leasehold interests and improvements              12,016,000    11,360,000
         Land and land improvements                         1,013,000     1,013,000
         Building and improvements                          1,159,000     1,159,000
         Vehicles                                             247,000       231,000
         Construction in progress                             474,000       501,000
                                                          -----------   -----------
                                                           22,345,000    22,765,000
         Less accumulated depreciation and amortization     9,913,000    10,352,000
                                                          -----------   -----------
                                                          $12,432,000   $12,413,000
                                                          ===========   ===========
</TABLE>


                                      F-15
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 5.  INVESTMENTS IN JOINT VENTURES

         The Company has  determined  that all but one joint  venture  discussed
         below  should be  consolidated  by virtue of  control as  evidenced  by
         general  partnership  interests held by the Company.  As a result,  the
         accompanying   consolidated  financial  statements  reflect  the  joint
         ventures in which the Company has a general  partnership  interest on a
         consolidated  basis.  The remaining  joint venture in which the Company
         does not have  control  has been  accounted  for  utilizing  the equity
         method.

         Beginning  with the limited  partnership  which owns the  restaurant in
         Surfside,  Florida and for all limited  partnerships  formed subsequent
         thereto for the purpose of owning and operating a restaurant  under the
         "Flanigan's  Seafood Bar and Grill"  servicemark,  a standard financial
         arrangement has been used in each limited partnership agreement.  Under
         this financial arrangement,  until the limited partnership has received
         an  aggregate  sum  equal  to the  initial  investment  of all  limited
         partners from the net profit from the operation of the restaurant,  the
         limited partnership first receives an aggregate sum equal to 25% of the
         initial  investment of all limited  partners first each year,  with any
         additional net profit divided equally  between the Company,  as manager
         of the  restaurant,  and the  limited  partnership.  Once  the  limited
         partnership  has  received  an  aggregate  sum  equal  to  the  initial
         investment  of all  limited  partners  from  the net  profit  from  the
         operation of the restaurant,  the net profit is divided equally between
         the Company, as manager of the restaurant, and the limited partnership.
         As of October  2, 2004,  only the  limited  partnership  which owns the
         restaurant  in Kendall,  Florida has received an aggregate sum equal to
         the initial investment of all limited partners from the net profit from
         the operation of the restaurant and the Company receives one-half (1/2)
         of  the  net  profit  as  manager  of  the  restaurant,  recorded  as a
         management   fee.  The  Company  plans  to  continue   forming  limited
         partnerships  to raise funds to own and operate  restaurants  under the
         "Flanigan's Seafood Bar and Grill" servicemark using the same financial
         arrangement.

         Pinecrest, Florida

            The  Company  operated  a  restaurant  in Miami,  Florida  under the
            "Flanigan's  Seafood Bar and Grill" servicemark  pursuant to a joint
            venture  agreement.  The  Company is the  general  partner and had a
            fifty percent limited partnership  interest.  The Company closed the
            restaurant  in the second  quarter of 2002 as a result of an eminent
            domain  action.  The  partnership  received  $700,000 in the eminent
            domain  action and  recognized  a gain on disposal of  approximately
            $459,000,  which is  included  in other  income in the  accompanying
            consolidated  statement  of  income.  The  unrelated  joint  venture
            partner  received  $350,000 in full settlement of their interest and
            the Company controls 100% of the partnership as of October 2, 2004.

            During the third quarter of fiscal year 2003, Flanigan's, as general
            partner of the limited partnership,  entered into a Sale of Business
            Agreement  for the purchase of an existing  restaurant in Pinecrest,
            Florida. The purchase price of approximately $340,000 related to the
            aquisition of a below market lease and will  therefore be recognized
            as additional  lease  expense over the  remaining  life of the lease
            once operation of the restaurant  commences.  As of October 2, 2004,
            the $340,000 is included in the accompanying  balance sheet in other
            assets. During the first quarter of fiscal year 2004, Flanigan's, as
            general   partner  of  the  limited   partnership,   closed  on  the
            transaction with Flanigan's agreeing to unconditionally guaranty the
            lease for the  business  premises  (see Note 9), as  required by the
            landlord in order to procure its  consent to the  assignment  of the
            lease.  This entity is  consolidated in the  accompanying  financial
            statements.


                                      F-16
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 5.  INVESTMENTS IN JOINT VENTURES (Continued)

         Pinecrest, Florida (Continued)

             The  limited  partnership  expects  to  raise  equity  funds in the
             approximate  amount of  $2,500,000  to renovate  the  premises  and
             provide working capital to begin operations. The Company expects to
             retain up to a 33%  limited  partnership  interest,  as well as its
             general  partnership  interest.  The Company  anticipates  that the
             restaurant will open by the end of fiscal 2005.

         Fort Lauderdale, Florida

             The  Company  has  a  franchise  agreement  with  a  unit  in  Fort
             Lauderdale. The Company is a twenty-five percent limited partner in
             the franchise.  Other related parties,  including,  but not limited
             to,  officers and  directors of the Company and their  families are
             also investors.  This entity is reported using the equity method in
             the accompanying financial statements.

         Surfside, Florida

             The  Company  has an  investment  in a limited  partnership,  which
             purchased  the assets of a  restaurant  in  Surfside,  Florida  and
             renovated it for operation  under the  "Flanigan's  Seafood Bar and
             Grill"  servicemark.  The  Company  acts as general  partner of the
             limited  partnership  and  is  also  a  forty-two  percent  limited
             partner.  Other  related  parties,  including,  but not limited to,
             officers and  directors of the Company and their  families are also
             investors.   This  entity  is  consolidated  in  the   accompanying
             financial statements.

         Kendall, Florida

             The Company  owns an  investment  in a limited  partnership,  which
             constructed  and now  operates a restaurant  under the  "Flanigan's
             Seafood   Bar  and  Grill"   servicemark   in   Kendall,   Florida.
             Construction  began in late 1999 and the restaurant opened in April
             2000.  The Company is the general  partner and has a forty  percent
             limited  partnership  interest.  As of April 1, 2003,  the  limited
             partners had  received  distribution  from the limited  partnership
             equal to their  original  investment  and  pursuant  to the limited
             partnership  agreement,   the  Company  thereafter  receives  fifty
             percent of the net profit from the operation of the restaurant as a
             management  fee. This entity is  consolidated  in the  accompanying
             financial statements.

         West Miami, Florida

             The Company  owns an  investment  in a limited  partnership,  which
             purchased,  renovated  and now  operates  a  restaurant  under  the
             "Flanigan's  Seafood  Bar and  Grill"  servicemark  in West  Miami,
             Florida.  The Company is the general  partner and has a twenty-five
             percent  limited  partnership  interest.   Other  related  parties,
             including,  but not  limited  to,  officers  and  directors  of the
             Company  and their  families  are also  investors.  This  entity is
             consolidated in the accompanying financial statements.


                                      F-17
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 5.  INVESTMENTS IN JOINT VENTURES (Continued)

         Weston, Florida

             During  2002,   the  Company  made  an   investment  in  a  limited
             partnership,  which  acquired and renovated a restaurant  under the
             "Flanigan's Seafood Bar and Grill" servicemark in Weston,  Florida.
             The restaurant  opened for business in January 2003. The Company is
             the  general  partner  and  has  a  twenty-eight   percent  limited
             partnership  interest as of October 2, 2004. Other related parties,
             including,  but not  limited  to,  officers  and  directors  of the
             Company  and their  families  are also  investors.  This  entity is
             consolidated in the accompanying financial statements.

         Stuart, Florida

             During  2004,   the  Company  made  an   investment  in  a  limited
             partnership,  which  acquired and renovated a restaurant  under the
             "Flanigan's Seafood Bar and Grill" servicemark in Stuart,  Florida.
             The  Company  became the  general  partner  and  purchased a twelve
             percent  limited  partnership  interest.   Other  related  parties,
             including,  but not  limited  to,  officers  and  directors  of the
             Company  and their  families  are also  investors.  The Company had
             incurred  approximately  $501,000 of construction  costs associated
             with the new location on behalf of the joint  venture,  which costs
             were repaid. The partnership,  in a private placement,  raised $1.5
             million of investment capital as of October 2, 2004. This entity is
             consolidated in the accompanying financial statements.

         Wellington, Florida

             During  the  fourth   quarter  of  fiscal  year  2004,   a  limited
             partnership was formed with the Company as a general partner, which
             limited  partnership  entered  into a  lease  agreement  to own and
             operate a restaurant in Wellington,  Florida under the  "Flanigan's
             Seafood Bar and Grill"  servicemark.  During the fourth  quarter of
             fiscal  year 2004,  the limited  partnership  began  raising  funds
             through a private  offering to renovate the  business  premises for
             operation as a "Flanigan's Seafood Bar and Grill" restaurant, which
             funds were held in escrow at year end.  As of the end of the fiscal
             year 2004,  the  Company  had  advanced  the sum of $148,902 to the
             limited partnership,  the use of which included, but is not limited
             to, funds due upon the execution of the lease agreement as security
             deposit  and  prepaid  rent,  architect,  engineering  and  initial
             contracting  fees.  The advance  represented  eight  percent of the
             funds to be raised  through  the private  offering to renovate  and
             prepare the  restaurant  to open for  business,  including  working
             capital.  Subsequent  to the end of fiscal  year 2004,  the limited
             partnership  completed  its  private  offering,  raising the sum of
             $1,850,000.  The Company  continues to act as a general partner and
             is also the  owner  of a twenty  six  percent  limited  partnership
             interest.  Other  related  parties,  including  but not limited to,
             officers and  directors of the Company and their  families are also
             investors.  The limited partnership agreement gives the partnership
             the right to use the "Flanigan's Seafood Bar and Grill" servicemark
             for a fee equal to 3% of the gross sales from the  operation of the
             restaurant,  while the Company acts as general  partner only. It is
             anticipated that the renovated restaurant will open for business by
             the start of the third quarter of fiscal year 2005.


                                      F-18
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 5.  INVESTMENTS IN JOINT VENTURES (Continued)

         Summary

             All joint ventures, other than Fort Lauderdale, are consolidated in
             the  accompanying  financial  statements  due  to  the  controlling
             interest of the Company as the general partner.  The following is a
             summary of condensed unaudited financial information  pertaining to
             the Company's joint venture investment in Fort Lauderdale, Florida:

                                               2004         2003         2002
                                               ----         ----         ----
               Financial Position:
                 Current assets            $  109,000   $   63,000   $   59,000
                 Non-current assets           483,000      492,000      545,000
                 Current liabilities          118,000       26,000       57,000
                 Non-current liabilities       91,000       99,000      106,000

               Operating Results:
                 Revenues                   2,244,000    2,165,000    2,066,000
                 Gross profit               1,438,000    1,401,000    1,291,000
                 Net income                    25,000      125,000      107,000

NOTE 6.  LIQUOR LICENSES

         The Company  stopped  amortizing  liquor  licenses  September 29, 2002.
         Liquor  licenses are tested for  impairment in September of each fiscal
         year.  The fair value of liquor  licenses at October 2, 2004,  exceeded
         the carrying amount; therefore, no impairment loss was recognized.  The
         fair value of the liquor licenses was estimated using the present value
         of future cash flows.  At October 2, 2004, the total carrying amount of
         liquor  licenses  was  approximately  $347,000.  There  were no  liquor
         licenses acquired in fiscal year 2004 which require capitalization.

NOTE 7.  INCOME TAXES

         The  components  of the  Company's  provision  for income taxes for the
         fiscal years ended 2004, 2003 and 2002 are as follows:

                                               2004          2003         2002
                                               ----          ----         ----
           Current:
              Federal                       $ 252,000      $284,000     $383,000
              State                            80,000        91,000      136,000
                                            ---------      --------     --------
                                              332,000       375,000      519,000
                                            ---------      --------     --------
           Deferred:
              Federal                        (146,000)      160,000      161,000
              State                           (16,000)        7,000        8,000
                                            ---------      --------     --------
                                             (162,000)      167,000      169,000
                                            ---------      --------     --------
                                            $ 170,000      $542,000     $688,000
                                            =========      ========     ========


                                      F-19
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 7.  INCOME TAXES (Continued)

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

<TABLE>
<CAPTION>
                                                              2004         2003         2002
                                                              ----         ----         ----
<S>                                                        <C>          <C>          <C>
           Tax provision at the statutory rate of 34%      $ 290,000    $ 485,000    $ 704,000
           State income taxes, net of federal income tax      40,000       43,000       62,000
           Tax benefit of tip credit generated              (125,000)     (99,000)    (103,000)
           Other                                             (35,000)     113,000       25,000
                                                           ---------    ---------    ---------
                                                           $ 170,000    $ 542,000    $ 688,000
                                                           =========    =========    =========
</TABLE>

         At October 2, 2004, the Company has available tip credit  carryforwards
         of  approximately  $94,000,  which expire through 2015, and alternative
         minimum tax credit  carryforwards of  approximately $ 74,000,  which do
         not expire.

         In addition to tax credit  carryforwards,  the Company had deferred tax
         assets which arise primarily due to depreciation  recorded at different
         rates for tax and book  purposes,  investment  in joint  ventures,  and
         accruals  for  potential   uninsured   claims  recorded  for  financial
         reporting purposes but not recognized for tax purposes.

         The components of the deferred tax assets were as follows at October 2,
         2004 and September 27, 2003:

<TABLE>
<CAPTION>
                                                                 2004        2003
                                                                 ----        ----
<S>                                                            <C>        <C>
           Current:
              Tip credit carryforward                          $ 94,000   $  92,000
              Accruals for potential uninsured claims            20,000      20,000
                                                               --------   ---------
                                                               $114,000   $ 112,000
                                                               ========   =========
           Long-Term:
              Book/tax differences in property and equipment   $265,000   $ 160,000
              Alternative minimum tax credit                     74,000      74,000
              Joint venture investments                          29,000     (26,000)
                                                               --------   ---------
                                                               $368,000   $ 208,000
                                                               ========   =========
</TABLE>


                                      F-20
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 8.  LONG-TERM DEBT

<TABLE>
<CAPTION>
                                                                                         2004            2003
                                                                                         ----            ----
<S>                                                                                    <C>             <C>
           Mortgage  payable to bank;  secured  by first  mortgage  on a  building;
           payable  $1,594 per month,  plus  interest  through  maturity in August,
           2008, at which time the unpaid principal of approximately  $736,000 plus
           unpaid  interest  becomes  due. The Company has entered into an interest
           rate swap  agreement for a notional  amount of  approximately  $895,000.
           The interest rate swap  agreement  hedges the variable  interest rate of
           the mortgage payable to a fixed rate of 8.62%.                              $  836,000      $  857,000

           Mortgage  payable,  secured by land,  bearing interest at 8%; payable in
           monthly installments of principal and interest of approximately  $3,000,
           maturing in April 2007.                                                        289,000         302,000

           Note  payable,  chattel  mortgage  secured by general  assets of a joint
           venture,  bearing  interest at 8%, payable  monthly in  installments  of
           principal and interest of approximately $6,100, maturing in July 2007.         189,000         243,000

           Note  payable  to bank,  unsecured,  bearing  interest  at prime  (4% at
           October 2,  2004);  payable in monthly  installments  of  principal  and
           interest of approximately $20,000, final payment made July 2004.                    --         190,000
                                                                                        1,314,000       1,592,000
           Less current portion                                                            97,000         278,000
                                                                                       ----------      ----------
                                                                                       $1,217,000      $1,314,000
                                                                                       ==========      ==========

         Long-term debt at October 2, 2004 matures as follows:

           2005                                                                        $   97,000
           2006                                                                           105,000
           2007                                                                           351,000
           2008                                                                           761,000
                                                                                       ----------
                                                                                       $1,314,000
                                                                                       ==========
</TABLE>

         Subsequent  to the end of fiscal year 2004,  the  Company  closed on an
         unsecured $100,000 loan from a bank, which funds will be used as a part
         of the purchase  price of the real property and for an  assignment  and
         assumption  of a ground  lease  at one  location  owned by the  Company
         pursuant to the exercise of an option to purchase.  The promissory note
         earns  interest  at prime rate and is fully  amortized  over 36 months,
         with equal monthly payments of principal and interest.


                                      F-21
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 9.  COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

         Legal Matters

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

             During  fiscal  year 2000,  the  Company  was served  with  several
             complaints  alleging  violations of the Americans with Disabilities
             Act  ("ADA") at all of its  locations.  As of October 2, 2004,  the
             Company, as general partner of one of the limited partnerships, and
             one of the  franchisees  corrected  any  and  all  uncorrected  ADA
             violations  and  during the  fourth  quarter  of fiscal  year 2004,
             settled any claims arising out of these complaints.

         Leases

             The Company  leases a substantial  portion of the land and building
             used in its  operations  under leases with initial  terms  expiring
             between 2005 and 2049. Renewal options are available on many of the
             leases.  Most of the  leases  are  fixed  rent  agreements.  In two
             instances,  lease  rentals are subject to sales  overrides  ranging
             from 1.75% to 4% of annual  sales in excess of  between  $1,162,000
             and $1,200,000. Rent expense is recognized on a straight line basis
             over the term of the lease.  Certain  of the leases are  subject to
             fair  market  rental  appraisals  at the time of  renewal.  Certain
             properties are subleased through various expiration dates.

             During the fourth quarter of fiscal year 2001, the Company  entered
             into a ground lease for an out parcel in  Hollywood,  Florida.  The
             Company constructed a building on the out parcel, one-half (1/2) of
             which is used by the Company for the operation of a package  liquor
             store and the other  one-half (1/2) was subleased by the Company as
             retail space during the second quarter of fiscal 2004;  however, as
             of October 2, 2004,  no income was derived  from this  source.  The
             Company  opened  the  package  liquor  store  for  business  during
             November 2003.

             Future minimum lease payments under non-cancelable operating leases
             are as follows:

              2005                                                  $ 2,264,000
              2006                                                    2,207,000
              2007                                                    1,872,000
              2008                                                    1,675,000
              2009                                                    1,625,000
              Thereafter                                              8,491,000
                                                                    -----------
                 Total                                              $18,134,000
                                                                    ===========


                                      F-22
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 9.  COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

         Leases (Continued)

             Total rent  expense  for all  operating  leases  was  approximately
             $1,957,000,  $1,632,000,  and  $1,350,000  in 2004,  2003 and 2002,
             respectively,   and  is  included  in  "Occupancy   costs"  in  the
             accompanying  consolidated  statements  of income.  This total rent
             expense is comprised of the following:

                                      2004          2003          2002
                                      ----          ----          ----

               Minimum             $1,856,000    $1,468,000    $1,207,000
               Contingent             101,000       164,000       143,000
                                   ----------    ----------    ----------
               Total               $1,957,000    $1,632,000    $1,350,000
                                   ==========    ==========    ==========

             The Company  guarantees  various leases for franchisees.  Remaining
             rental  payments  required  under these leases total  approximately
             $2,600,000.

         Exercise of Option to Purchase

             During  the  fourth  quarter  of  fiscal  year  2004,  the  Company
             exercised  the  option  to  purchase   contained  in  the  Sublease
             Agreement for the  combination  restaurant and package liquor store
             located at 4 North Federal  Highway,  Hallandale,  Florida,  (Store
             #31).  The purchase  includes real property and the assignment of a
             ground lease for a small portion of the  property.  The Company has
             procured  financing  for this  purchase.  The  option  to  purchase
             contains a formula  whereby  each party  retains  an  appraiser  to
             determine  the "fair market value" for the purchase of the property
             and if the two appraisers  cannot agree upon the same, then a third
             appraiser  is  selected,  whose  determination  of the "fair market
             price" is binding.  Subsequent  to the fiscal year ended October 2,
             2004,  it was  determined  that the parties  would need to retain a
             third  appraiser to determine the purchase price. It is anticipated
             that the transaction will close during the second quarter of fiscal
             year 2005.

         Purchase Commitments

             Effective  November 1, 2004,  the Company  entered  into a purchase
             agreement  with  its  rib  supplier.  The  terms  of the  agreement
             stipulate  that the Company will purchase  approximately  1,000,000
             pounds of baby back ribs during the 2005  calendar  year at a fixed
             cost of $3.60 per pound. The Company purchases all of its supply of
             ribs from this vendor;  however,  management  believes 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 9.  COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Continued)

         Franchise Programs

             At October 2, 2004,  the  Company  operated  thirteen  units  under
             franchise  agreements,  six of which the Company  has an  ownership
             interest in pursuant to joint venture agreements.  Of the remaining
             seven  franchised  stores,  four are owned and  operated by related
             parties.  Under the  franchise  agreements,  the Company  agrees to
             provide   guidance,   advice  and  management   assistance  to  the
             franchisees.  In addition, the Company acts as fiscal agent for the
             franchisees  whereby the Company collects all revenues and pays all
             expenses and  distributions.  The Company also,  from time to time,
             advances  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,  except for those
             joint   ventures   which  are   consolidated;   those  amounts  are
             appropriately eliminated in consolidation.  The Company also agrees
             to sponsor and manage  cooperative  buying  groups on behalf of the
             franchisees for the purchase of inventory. The franchise agreements
             provide for fees to the Company of approximately 3% of gross sales.
             The Company is not currently  offering or accepting new  franchises
             other than those with joint  ventures  in which the  Company has an
             ownership interest.

         Employment Agreements

             The Company  entered into an  employment  agreement  with the Chief
             Executive Officer,  which is renewable annually on December 31. The
             agreement  provided,  among other things,  for a base annual salary
             not to exceed  $150,000  and a  performance  bonus  equal to twenty
             percent of pre-tax net income before  depreciation and amortization
             in excess of  $650,000,  10% of which is to be  allocated  to other
             members of management. Bonuses for fiscal years 2004, 2003 and 2002
             amounted  to   approximately   $224,000,   $156,000  and  $363,000,
             respectively.

         Management Agreement

             During fiscal 2004, 2003 and 2002, the Company  received an owner's
             fee  pursuant  to a  management  agreement  with  a  company  which
             operates a club in  Atlanta,  Georgia,  owned by the  Company.  The
             management  agreement  provided for a security deposit of $200,000,
             which is  included in accounts  payable and accrued  expenses.  The
             Company  received  the  greater of  $150,000  or 10% of gross sales
             annually,  paid monthly. In 2004, 2003 and 2002, the fee earned was
             $265,000, $260,000, and $251,000, respectively.

             During the third  quarter of fiscal 2004,  the  management  company
             entered  into a new lease  with the  landlord  which  altered  this
             management  agreement.  The  Company  will  continue  to receive an
             owner's fee of $150,000 per year versus ten (10%)  percent of gross
             sales  from the  club,  whichever  is  greater,  until  the  rental
             increases under the new lease take effect.  The Company agreed that
             one-half (1/2) of the rental increases will be credited against any
             owner's  fee in  excess  of  $150,000  per  year  for  purposes  of
             calculating the owner's fee, provided the owner's fee is never less
             than $150,000 per year.


                                      F-24
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 10. COMMON STOCK

         Treasury Stock

             Purchase of Common Shares

                During 2004 and 2002,  the  Company  purchased a total of 30,400
                and  68,803  shares of Company  common  stock at a total cost of
                approximately  $201,000 and $423,000 under a repurchase  program
                authorized  by the  Board  of  Directors.  The  Company  did not
                purchase any shares of Company common stock during 2003.

             Sale of Common Shares

                During 2004 and 2002,  the Company  sold an  aggregate of 20,755
                and 72,795  shares of  treasury  common  stock  pursuant  to the
                exercise of options to certain  employee/officers for a total of
                approximately  $93,000 and $237,000,  respectively.  The Company
                did not sell any common shares in 2003.

         Stock Options

             In May 2004, the Company  granted options to purchase 50,000 shares
             of Company common stock to certain employees.  The options vest one
             year from the grant date,  have a five-year  life,  and an exercise
             price of $6.35  per  share,  the then  market  price of the  common
             stock. At October 2, 2004, options to purchase 50,000 shares remain
             outstanding.

             In October 2003,  the Company  granted  options to purchase  16,550
             shares of Company  common stock to certain  employees.  The options
             vest one year from the grant date,  have a five-year  life,  and an
             exercise  price of $6.14 per share,  the then  market  price of the
             common stock. At October 2, 2004, options to purchase 14,250 shares
             remain outstanding and exercisable.

             There were no options granted during fiscal 2003.

             In April 2002,  the  Company  granted  options to  purchase  25,500
             shares of Company  common stock to certain  employees.  The options
             vest one year from the grant date,  have a five-year  life,  and an
             exercise  price of $6.10 per share,  the then  market  price of the
             common stock. At October 2, 2004, 13,350 shares remain  outstanding
             and exercisable.

             In April 2001,  the  Company  granted  options to  purchase  57,800
             shares of Company  common stock to certain  employees.  The options
             vest one year from the grant date,  have a five-year  life,  and an
             exercise  price of $4.16 per share,  the then  market  price of the
             common stock. At October 2, 2004, 24,300 shares remain  outstanding
             and exercisable.

             The  Company  applies  APB No. 25 and  related  interpretations  in
             accounting for its stock-based compensation plans. Accordingly,  no
             compensation  cost  has  been  recognized  in  connection  with the
             granting of these stock options.


                                      F-25
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 10. COMMON STOCK (Continued)

         Stock Options (Continued)

             Had compensation  cost for the options been determined based on the
             fair  value at the grant date  during  fiscal  year 2004,  2003 and
             2002, consistent with SFAS 123, the Company's net income would have
             been as follows:

                                            2004          2003          2002
                                            ----          ----          ----
              Net income:
                 As Reported              $440,000      $888,000     $1,383,000
                 Pro Forma                $415,000      $836,000     $1,268,000

              Earnings Per Share:
                 Basic:
                    As Reported               $.23          $.46           $.71
                    Pro Forma                 $.22          $.43           $.65
                 Diluted:
                    As Reported               $.23          $.45           $.70
                    Pro Forma                 $.21          $.43           $.64

             The  Company  used  the  Black-Scholes   option-pricing   model  to
             determine  the fair  value of  grants  made in 2004 and  2002.  The
             following  assumptions  were applied in  determining  the pro forma
             compensation cost:

                                                       2004             2002
                                                       ----             ----

              Risk Free Interest Rate                   3.1%             4.0%
              Expected Dividend Yield                   5.0%             5.0%
              Expected Option Life                    5 years          5 years
              Expected Stock Price Volatility           24%              75%

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

                                                  2004       2003        2002
                                                  ----       ----        ----

              Outstanding at beginning of year   122,660    128,900     207,595
              Options granted                     66,550         --      25,500
              Options exercised                  (20,755)        --     (72,795)
              Options expired                    (66,555)    (6,240)    (31,400)
                                                --------   --------    --------
              Outstanding at end of year         101,900    122,660     128,900
                                                --------   --------    --------
              Exercisable at end of year          51,900    122,660     103,400
                                                ========   ========    ========

             Weighted average option exercise price information for fiscal years
             2004, 2003 and 2002 is as follows:

                                                    2004       2003        2002
                                                    ----       ----        ----

              Outstanding at beginning of year     $4.61      $4.69       $3.97
                                                   =====      =====       =====
              Granted during the year              $6.30      $  --       $6.10
                                                   =====      =====       =====
              Exercised during the year            $4.50      $  --       $3.25
                                                   =====      =====       =====
              Outstanding at end of year           $5.77      $4.61       $4.69
                                                   =====      =====       =====
              Exercisable at end of year           $5.20      $4.61       $4.34
                                                   =====      =====       =====


                                      F-26
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 10. COMMON STOCK (Continued)

         Stock Options (Continued)

             Significant  option  groups  outstanding  at  October  2,  2004 and
             related weighted average price and life information are as follows:

<TABLE>
<CAPTION>
                     Grant        Options         Options     Exercise    Remaining
                      Date      Outstanding     Exercisable     Price    Life (Years)
                      ----      -----------     -----------     -----    ------------
<S>                 <C>            <C>             <C>          <C>          <C>
                     4-2-01        24,300          24,300       $4.16        1.5
                     4-2-02        13,350          13,350       $6.10        2.5
                    10-1-03        14,250          14,250       $6.14        4.0
                    5-20-04        50,000              --       $6.35        4.5
</TABLE>

NOTE 11. NET INCOME PER COMMON SHARE

         The Company  follows  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  exercising  warrants and options granted and
         convertible  preferred stock and debt.  Earnings per share are computed
         by dividing  income  available to common  stockholders by the basic and
         diluted weighted average number of common shares.

<TABLE>
<CAPTION>
                                                                2004          2003         2002
                                                                ----          ----         ----
<S>                                                           <C>           <C>          <C>
         Basic weighted average shares                        1,922,000     1,926,000    1,961,000
         Incremental shares relating to outstanding
           options                                               11,000        29,000       28,000
                                                              ---------     ---------    ---------
         Diluted weighted average shares                      1,933,000     1,955,000    1,989,000
                                                              =========     =========    =========
</TABLE>

NOTE 12. RELATED PARTY TRANSACTIONS

         The  Company's  President  and a relative  manage one of the  Company's
         franchised stores.

         During fiscal 2004,  2003 and 2002, the Company  incurred legal fees in
         the form of salary of  approximately  $55,000,  $153,000 and  $151,000,
         respectively,  for  services  provided  by a  member  of the  Board  of
         Directors.  These legal fees ceased  during fiscal 2004 when this Board
         member  became a  full-time  employee  and the  associated  salary  was
         included in officers' payroll.

         The Company paid approximately $109,000, $248,000 and $275,000 in lease
         rentals to an entity owned and  controlled  by a member of its Board of
         Directors during fiscal years 2004, 2003 and 2002, respectively. During
         fiscal 2004, the related party sold all related property.

         Also  see  Notes  3,  5,  9,  and  10  for  additional   related  party
         transactions.


                                      F-27
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 13. BUSINESS SEGMENTS

         The  Company  operates  principally  in two  segments - retail  package
         stores and  restaurants.  The operation of package  stores  consists of
         retail liquor sales.

         Information concerning the revenues and operating income for the fiscal
         years ended 2004,  2003 and 2002, and  identifiable  assets for the two
         segments  in which the  Company  operates,  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 the
         Company's operations in each segment.  Corporate assets are principally
         cash and notes and mortgages receivable.  The Company does not have any
         operations  outside of the United States and intersegment  transactions
         are not material.

<TABLE>
<CAPTION>
                                                                   2004            2003            2002
                                                                   ----            ----            ----
<S>                                                            <C>             <C>             <C>
         Operating Revenues:
            Restaurants                                        $ 33,698,000    $ 29,194,000    $ 28,619,000
            Retail package stores                                10,911,000       9,777,000       9,174,000
            Other revenues                                        1,324,000       1,282,000       1,331,000
                                                               ------------    ------------    ------------
               Total operating revenues                        $ 45,933,000    $ 40,253,000    $ 39,124,000
                                                               ============    ============    ============

         Operating Income Reconciled to Income
           before Income Taxes:
               Restaurants                                     $  3,023,000    $  3,432,000    $  3,596,000
               Retail package stores                                348,000         409,000         388,000
                                                               ------------    ------------    ------------
                                                                  3,371,000       3,841,000       3,984,000
               Corporate expenses, net of other revenues         (2,098,000)     (1,817,000)     (1,196,000)
                                                               ------------    ------------    ------------
               Operating income                                   1,273,000       2,024,000       2,788,000
               Equity in net income of joint ventures                 6,000          20,000          27,000
               Minority interest in earnings of consolidated
                  joint ventures                                   (301,000)       (599,000)     (1,130,000)
               Interest expense, net of interest income             (80,000)        (95,000)       (115,000)
               Other                                                 79,000          80,000         501,000
               Loss on abandonment of property and
                  equipment                                        (367,000)             --              --
                                                               ------------    ------------    ------------
                     Income Before Income Taxes                $    610,000    $  1,430,000    $  2,071,000
                                                               ============    ============    ============

         Identifiable Assets:
            Restaurants                                        $ 10,033,000    $  9,513,000    $  9,013,000
            Retail package store                                  2,505,000       1,958,000       1,614,000
                                                               ------------    ------------    ------------
                                                                 12,538,000      11,471,000      10,627,000
            Corporate                                             7,236,000       7,262,000       6,740,000
                                                               ------------    ------------    ------------
         Consolidated Totals                                   $ 19,774,000    $ 18,733,000    $ 17,367,000
                                                               ============    ============    ============
</TABLE>


                                      F-28
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 13. BUSINESS SEGMENTS (Continued)

<TABLE>
<CAPTION>
                                                  2004         2003         2002
                                                  ----         ----         ----
<S>                                            <C>          <C>          <C>
         Capital Expenditures:
            Restaurants                        $  897,000   $1,794,000   $  906,000
            Retail package stores                 211,000      434,000       41,000
                                               ----------   ----------   ----------
                                                1,108,000    2,228,000      947,000
            Corporate                             765,000      800,000      269,000
                                               ----------   ----------   ----------
         Total Capital Expenditures            $1,873,000   $3,028,000   $1,216,000
                                               ==========   ==========   ==========

         Depreciation and Amortization:
            Restaurants                        $1,208,000   $  822,000   $  799,000
            Retail package stores                 133,000      116,000       77,000
                                               ----------   ----------   ----------
                                                1,341,000      938,000      876,000
            Corporate                             204,000      249,000      165,000
                                               ----------   ----------   ----------
         Total Depreciation and Amortization   $1,545,000   $1,187,000   $1,041,000
                                               ==========   ==========   ==========
</TABLE>

NOTE 14. QUARTERLY INFORMATION (UNAUDITED)

         The following is a summary of the Company's unaudited quarterly results
         of operations for the quarters in fiscal years 2004 and 2003.

<TABLE>
<CAPTION>
                                                             Quarter Ended
                                          -------------------------------------------------------
                                          December 27,   March 27,     June 26,       October 2,
                                              2003          2004         2004           2004
                                              ----          ----         ----           ----
<S>                                       <C>           <C>           <C>           <C>
         Revenues                         $10,627,000   $12,301,000   $11,335,000   $ 11,670,000
         Income from operations               348,000       382,000       137,000        406,000
         Net income (loss)                    227,000       252,000         7,000        (46,000)
         Net income (loss) per share -
           basic                                 0.12          0.13          0.00          (0.02)
         Net income (loss) per share -
           diluted                               0.11          0.13          0.00          (0.02)
         Weighted average common
            stock outstanding - basic       1,935,695     1,927,893     1,925,526      1,915,786
         Weighted average common
            stock outstanding - diluted     2,022,485     1,960,042     1,957,729      1,926,077
</TABLE>


                                      F-29
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 14. QUARTERLY INFORMATION (UNAUDITED) (Continued)

         The following is a summary of the significant  fourth quarter and other
         unusual adjustments for fiscal year 2004.

<TABLE>
<S>                                                                                   <C>
          First Quarter
             Adjustment for store supplies                                            $104,000

          Second Quarter
             Adjustment for allocation of insurance premiums related to franchisees    178,000
             Past due real property taxes                                               52,000
             Excess opening costs of joint venture restaurant in Stuart, Florida        74,000

          Third Quarter
             Past due real property taxes                                               59,000

          Fourth Quarter
             Abandonment of property and equipment                                     367,000
                                                                                      --------
                                                                                      $834,000
                                                                                      ========
</TABLE>

<TABLE>
<CAPTION>
                                                             Quarter Ended
                                           -------------------------------------------------------
                                           December 28,   March 29,     June 28,     September 27,
                                               2002         2003          2003           2003
                                               ----         ----          ----           ----
<S>                                        <C>           <C>           <C>           <C>
          Revenues                         $ 9,297,000   $10,845,000   $10,588,000   $ 9,523,000
          Income from operations               835,000       706,000       367,000       116,000
          Net income (loss)                    474,000       422,000       142,000      (150,000)
          Net income (loss) per share -
            basic                                 0.25          0.22          0.07         (0.08)
          Net income (loss) per share -
            diluted                               0.24          0.21          0.07         (0.08)
          Weighted average common
             stock outstanding - basic       1,926,470     1,926,470     1,926,470     1,926,470
          Weighted average common
             stock outstanding - diluted     1,952,667     1,961,882     1,966,806     1,960,234
</TABLE>

         Quarterly  operating  results  are not  necessarily  representative  of
         operations for a full year for various  reasons  including the seasonal
         nature of both the restaurant and package store  segments.  Each of the
         first three quarters includes thirteen weeks,  while the fourth quarter
         includes fourteen weeks for fiscal year 2004.


                                      F-30
<PAGE>

                  FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 15. 401(k) PLAN

         Effective July 2004, the Company began  sponsoring a 401(k)  retirement
         plan covering  substantially all employees who met certain  eligibility
         requirements.  Employees may contribute  elective deferrals to the plan
         up to amounts  allowed under the Internal  Revenue Code. The Company is
         not  required  to  contribute  to the plan  but may make  discretionary
         profit  sharing and matching  contributions.  No Company  contributions
         were made during the year ended October 2, 2004; however, subsequent to
         the year  ending  October 2, 2004,  the Board of  Directors  approved a
         discretionary  matching  payment  of  $25,000  to the  plan,  effective
         January 3, 2005.


                                      F-31