Business Context and Reporting Period
This Form 8-K Current Report was filed by Flanigan's Enterprises, Inc. (BDL) on February 22, 2023, with the report date of March 1, 2023. The filing addresses two critical events: a breach of a financial covenant under its institutional loans as of December 31, 2022, and a notice of noncompliance from the NYSE American regarding the failure to timely file its Form 10-Q for the quarter ended December 31, 2022.
Key Financial Metrics and Covenant Status
- Covenant Breach: The Company failed to meet the Post-Distribution Basic Fixed Charge Coverage Ratio covenant for the twelve months ended December 31, 2022.
- Required Ratio: 1.15 to 1.00.
- Actual Ratio: 1.13 to 1.00.
- Debt Structure: The covenant applies to six (6) loans with an unrelated third-party institutional lender.
- Waiver Status: On February 23, 2023, the lender granted a written waiver of the non-compliance and waived the right to exercise certain remedies.
- Liquidity and Cash Flow: The filing text does not provide specific values for revenue, profit, cash flow, or total debt levels.
Material Changes and Listing Status
The Company received a notice of noncompliance from the NYSE American on February 22, 2023, due to the failure to file its Form 10-Q by the February 21, 2023 deadline. The delay is attributed to the time needed to finalize the report and furnish required XBRL Interactive Data File exhibits. Consequently, the Company is subject to a six-month "Initial Cure Period" monitored by the Exchange. If the delinquency is not cured, the Exchange may allow an additional six-month "Additional Cure Period" or commence suspension and delisting procedures. A late filer (".LF") indicator has been applied to the ticker symbol.
Outlook, Risks, and Management Commentary
- Compliance Outlook: Management believes it may regain compliance with the Post-Distribution/Fixed Charge Covenant by the end of the second fiscal quarter of the fiscal year ending September 30, 2023.
- Delisting Risk: There is no assurance that the Company will file the delayed Form 10-Q within the cure periods. Failure to do so could result in suspension and delisting.
- Acceleration Risk: Continued non-compliance with financial covenants grants the lender the right to accelerate indebtedness, making it immediately due and payable, which would have a material adverse effect on the Company.
- Forward-Looking Statements: The Company disclaims any obligation to update forward-looking statements regarding the timing of the Form 10-Q filing.
Investor Verification Checklist
- Verify the filing date of the delayed Form 10-Q for the period ended December 31, 2022.
- Monitor the status of the ".LF" (late filer) indicator on the NYSE American.
- Confirm whether the Company regains compliance with the Post-Distribution Basic Fixed Charge Coverage Ratio by the end of the second fiscal quarter of 2023.
- Review any subsequent communications regarding the potential acceleration of debt or further waivers from the Institutional Lender.