FLEX unannounced

[Bluerotor]

PONY 14U Nationals: a batter is put out for the first out of the inning after which the offensive coach walks by me (plate ump) and casually states in a barely audible voice, "I just batted my FLEX," to which I replied, “Well nobody has said anything.” FLEX batted as the 10th batter--DP was in the 7th position. The next batter, the leadoff, hits the first pitch and achieves first base. Now the defensive coach requests time and asks, “Can the runner on first can bat without any penalty?” Defensive coach also states the offense batted their FLEX. How would you rule on this situation?