Exhibit 99.3

 

Pro Forma Financial Information.

 

Introduction to Unaudited Pro Forma Condensed Consolidated Financial Information

 

On July 3, 2014, Chanticleer Holdings, Inc., a Delaware corporation (“Chanticleer” or “the Company”), filed a Form 8-K to report its acquisition of a sixty percent (60%) ownership interest in Hoot Parramatta Pty Ltd, Hoot Australia Pty Ltd, Hoot Penrith Pty Ltd, and TMIX Management Australia Pty Ltd (collectively, the “Australian Entities”), which own, operate, and manage Hooters restaurant locations and gaming operations in Australia. The ownership interest in the Australian Entities was purchased from the respective entities in exchange for a debt assumption, whereby the Company agreed to assume a five million dollar ($5,000,000) debt and issued two hundred fifty thousand (250,000) warrants to purchase shares of the Company’s Common Stock. The debt is collateralized by Chanticleer’s assets including all accounts, documents, instruments, general intangibles, chattel paper, equipment, inventory, personal property, intellectual property and all other business assets of Chanticleer, secondary to a first lien on all the Company’s assets . The 5,000,000 debt is to be repaid in three installments as follows: $2,000,000 on or before December 31, 2014, $2,000,000 on or before June 30, 2015, $1,000,000 plus interest and all other fees on or before December 31, 2015. Warrants were fair valued at $515,600 using a Black-scholes valuation model. The acquisition was accounted for using the purchase method in accordance with ASC 805, “Business Combinations”.

 

The following unaudited pro forma condensed consolidated financial information gives effect to the above described acquisition. The following unaudited pro forma condensed consolidated balance sheet combines the balance sheet of Chanticleer with the Australian Entities as of June 30, 2014, as if the acquisition occurred on that date. The following unaudited pro forma condensed consolidated statements of operations combine the results of operations of Chanticleer with the Australian Entities for the year ended December 31, 2013, and the six month period ended June 30, 2014, as if the acquisition of the Australian Entities had been completed as the beginning of the periods indicated. 

 

The following unaudited pro forma condensed consolidated financial information is based on historical amounts for the year ended December 31, 2013 and the six months ended June 30, 2014 and certain amounts at the close of the acquisition. The information presented is for illustrative purposes only and is not necessarily indicative of the results of operations of the consolidated company that would have occurred had the acquisition been completed as of the beginning of the periods indicated or that may be attained in the future. Actual future results will likely be materially different from these pro forma results. This unaudited pro forma financial information should be read in conjunction with the historical financial information of Chanticleer and the Australian Entities included elsewhere in this report and in other reports and documents Chanticleer files with the United States Securities and Exchange Commission.

 

 
 

 

Chanticleer Holdings, Inc. and Subsidiaries

Pro Forma Condensed Consolidated Balance Sheets

(Unaudited)

As of June 30, 2014 

 

ASSETS  Chanticleer (a)   Hooters
Australia (b)
   Pro forma
adjustments (c)
      Pro Forma Total 
Current assets:                       
Cash  $273,378   $2,077   $-      $275,455 
Accounts receivable and other receivables   163,564    -            163,564 
Inventory   475,459    47,777            523,236 
Due from related parties   113,481    -            113,481 
Prepaid expenses and other current assets   552,490    18,109            570,599 
TOTAL CURRENT ASSETS   1,578,372    67,963    -       1,646,335 
Property and equipment, net   12,697,117    1,603,557            14,300,674 
Intangible assets, net   12,790,757    220,500    8,797,183   (c)   21,808,440 
Investments at fair value   35,362    -            35,362 
Other investments   1,550,000    -            1,550,000 
Deposits and other assets   517,526    -            517,526 
TOTAL ASSETS  $29,169,134   $1,892,020   $8,797,183      $39,858,537 
                        
LIABILITIES AND STOCKHOLDERS' EQUITY                       
                        
Current liabilities:                       
                        
Current maturities of long term debt and notes payable  $1,959,579   $-           $1,959,579 
Current maturities of convertible note payable, net   289,917    -            289,917 
Derivative liability   1,734,500    -            1,734,500 
Accounts payable and accrued expenses   3,572,145    1,467,517            5,039,662 
Current maturities of capital leases payable   58,630    -            58,630 
Deferred rent   111,722    29,019            140,741 
Loan payable   1,571,646    -    3,868,600   (c)(e)   5,440,246 
Due to related parties   12,191    -            12,191 
TOTAL CURRENT LIABILITIES   9,310,330    1,496,536    3,868,600       14,675,466 
Capital leases payable, less current maturities   73,033    -            73,033 
Convertible note payable, net   916,667    -            916,667 
Deferred rent   1,852,611    -            1,852,611 
Deferred tax liabilities   1,275,317    -            1,275,317 
Long-term debt, less current maturities   180,874    -    1,000,000   (c)   1,180,874 
TOTAL LIABILITIES   13,608,832    1,496,536    4,868,600       19,973,968 
                        
Commitments and contingencies                       
Stockholders' equity:                       
Common stock:  $0.0001 par value; authorized 20,000,000                       
shares; issued and outstanding 6,499,433 at June 30, 2014   652    306    (306)  (d)   652 
Additional paid in capital   31,159,996    -    515,600   (c)   31,675,596 
Other comprehensive (loss) income   (30,339)   122,776    (122,776)  (d)   (30,339)
Advances from/to stockholders   -    429,514    (429,514)      - 
Accumulated (deficit) earnings   (17,334,191)   157,112   288,512   (d), (e)   (17,215,306)
Non-controlling interest   1,764,184    -    3,677,067   (c)   5,441,251 
TOTAL STOCKHOLDERS' EQUITY   15,560,302    395,484    3,928,583       19,871,854 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $29,169,134   $1,892,020   $8,797,183      $39,845,822 

  

See accompanying notes to unaudited condensed consolidating financial statements

* A final valuation of the assets and liabilities and purchase price allocation of the Australian entities has not been completed as of this reporting period. Consequently, the purchase price was preliminarily allocated based upon the asset and liability amounts in the Australian entities accounting records with the excess classified as intangibles assets. These amounts are subject to revision upon the completion of formal studies and valuations which will occur during the quarter of 2014.

  

 
 

 

Chanticleer Holdings, Inc. and Subsidiaries

Pro Forma Condensed Consolidated Statements of Operations

(Unaudited)

For the Year Ended December 31, 2013

 

   Chanticleer (a)   Hooters
Australia (b)
   Pro forma Adj     Pro Forma Total 
Revenue:                  
     Restaurant sales, net  $8,144,035   $6,143,129          $14,287,164 
     Gaming income, net             304,101  (c)   304,101 
     Management fee income - non-affiliates   103,452    -           103,452 
          Total revenue   8,247,487    6,143,129    -      14,694,717 
Expenses:                      
  Restaurant cost of sales   3,031,457    1,496,673           4,528,130 
  Restaurant operating expenses   4,909,580    2,986,500           7,896,080 
  Restaurant pre-opening expenses   56,902    -           56,902 
  General and administrative expenses   4,233,629    1,239,306           5,472,935 
  Depreciation and amortization   622,274    189,771           812,045 
     Total expenses   12,853,842    5,912,250    -      18,766,092 
(Loss) profit from operations   (4,606,355)   230,879    -      (4,071,375)
Other income (expense)                      
  Equity in losses of investments   (125,017)   -           (125,017)
  Interest and other income   82,411    -           82,411 
  Interest expense   (757,733)   -           (757,733)
  Change in fair value of derivative liabilities   119,600    -           119,600 
     Total other expense   (680,739)   -    -      (680,739)
(Loss) profit from continuing operations before income taxes   (5,287,094)   230,879    -      (4,752,114)
     Provision for income taxes   40,935    (69,264)          (28,329)
Loss from continuing operations   (5,328,029)   161,615    -      (4,723,785)
     Loss from discontinued operations, net of taxes   (25,215)   -           (25,215)
Consolidated net (loss) income   (5,353,244)   161,615    -      (4,749,000)
     Less: Net loss attributable to non-controlling interest   139,125         64,646  (d)   203,771 
Net (loss) income attributable to Chanticleer Holdings, Inc.  $(5,214,119)  $161,615   $-     $(4,545,229)
                       
Net (loss) income attributable to Chanticleer Holdings, Inc.:                      
    (Loss) income from continuing operations  $(5,188,904)  $161,615   $-     $(5,027,289)
    Loss from discontinued operations   (25,215)   -           (25,215)
   $(5,214,119)  $161,615   $-     $(5,052,504)
Other comprehensive loss:                      
     Unrealized loss on available-for-sale securities (none applies to                      
         non-controlling interest)  $3,984   $-   $-      (261,404)
     Foreign translation income   90,384    523    -      90,907 
          Other comprehensive loss  $(5,119,751)  $162,138   $-     $(5,223,001)
Net loss per attributable to Chanticleer Holdings, Inc. per common share, basic and diluted:                      
 Continuing operations attributable to common shareholders, basic and diluted  $(1.20)              $(1.16)
 Discontinued operations attributable to common shareholders, basic and diluted  $(0.01)        -     $(0.01)
   $(1.19)  $-   $-     $(1.16)
Weighted average shares outstanding, basic and diluted   4,365,468                4,365,468 

  

See accompanying notes to Pro Forma unaudited condensed consolidated financial statements.

 

 
 

 

Chanticleer Holdings, Inc. and Subsidiaries

Pro Forma Condensed Consolidated Statements of Operations

(Unaudited)

For the Six Months Ended June 30, 2014

 

    Chanticleer (a)     Hooters
Australia (b)
    Pro forma
Adjusts
      Pro Forma Total  
Revenue:                          
     Restaurant sales, net   $12,365,870     $2,807,547             $15,173,417  
     Gaming income, net     131,235               131,400   (c)     262,635  
     Management fee income - non-affiliates     50,151       -                 50,151  
          Total revenue     12,547,256       2,807,547       131,400         15,486,203  
Expenses:                                  
  Restaurant cost of sales     4,437,907       698,368                 5,136,275  
  Restaurant operating expenses     7,294,226       1,407,644                 8,701,870  
  Restaurant pre-opening expenses     260,981       -                 260,981  
  General and administrative expenses     2,860,453       503,164                 3,363,617  
  Depreciation and amortization     777,375       94,886                 872,261  
     Total expenses     15,630,942       2,704,062       -         18,335,004  
(Loss) income from operations     (3,083,686 )     103,485       131,400         (2,848,801 )
Other income (expense)                                  
  Equity in losses of investments     (40,694 )     -                 (40,694 )
  Realized gains     101,472       -                 101,472  
  Miscellaneous income     7,838       -                 7,838  
  Change in fair value of derivative liability     704,200       -                 704,200  
  Interest expense     (687,541 )     -                 (687,541 )
     Total other expense     85,275       -       -         85,275  
(Loss) income from operations before income taxes     (2,998,411 )     103,485       131,400         (2,763,526 )
     (Provision) expense for income taxes     (7,509 )     31,046                 23,537  
Consolidated net (loss) income     (2,990,902 )     72,439       131,400         (2,787,063 )
     Less: Net loss (income) attributable to     129,528       (28,976 )     (8,573 ) (d)     91,979  
        non-controlling interest                                  
Net (loss) income attributable to Chanticleer Holdings, Inc.   $ (2,861,374 )   $ 43,463     $ 122,827       $ (2,695,084 )
                                   
Other comprehensive income (loss):                                  
     Unrealized loss on available-for-sale securities                                  
         (none applies to non-controlling interest)   $ (15,527 )   $ -     $ -       $ (15,527 )
     Foreign translation income (loss)     51,165       (40,866 )     -         10,299  
          Other comprehensive (loss) income   $ 35,638     $ (40,866 )   $ -       $ (5,228 )
                                   
Net loss attributable to Chanticleer Holdings, Inc. per                                  
    common share, basic and diluted:   $ (0.47 )                     $ (0.44 )
                                   
Weighted average shares outstanding, basic and diluted     6,152,931       -       -         6,152,931  

   

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

 

 
 

 

CHANTICLEER HOLDINGS, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 - ACQUISITION

 

On July 3, 2014, Chanticleer Holdings, Inc., a Delaware corporation (“Chanticleer” or “the Company”), filed a Form 8-K to report its acquisition of a sixty percent (60%) ownership interest in Hoot Parramatta Pty Ltd, Hoot Australia Pty Ltd, Hoot Penrith Pty Ltd, and TMIX Management Australia Pty Ltd (collectively, the “Australian Entities”), which own, operate, and manage Hooters restaurant locations and gaming operations in Australia. The ownership interest in the Australian Entities was purchased from the respective entities in exchange for a debt assumption, whereby the Company agreed to assume a five million dollar ($5,000,000) debt and issued two hundred fifty thousand (250,000) warrants to purchase shares of the Company’s Common Stock. The debt is collateralized by Chanticleer’s assets including all accounts, documents, instruments, general intangibles, chattel paper, equipment, inventory, personal property, intellectual property and all other business assets of Chanticleer. The 5,000,000 debt is to be repaid in three installments as follows: $2,000,000 on or before December 31, 2014, $2,000,000 on or before June 30, 2015, $1,000,000 plus interest and all other fees on or before December 31, 2015. Warrants were fair valued at $515,600 using a Black Scholes valuation model. The acquisition was accounted for using the purchase method in accordance with ASC 805, “Business Combinations”.

 

The audited consolidated financial statements of Chanticleer included herein are for the year ended December 31, 2013. The audited combined financial statements of TMIX Management Australia PTY. LTD., Hoot Parramatta PTY. LTD., and Hoot Penrith PTY. LTD. are for the year ended June 30, 2014.

 

NOTE 2 - PRO FORMA ADJUSTMENTS

 

The pro forma adjustments to the condensed combined balance sheet give effect to the acquisition of the Australian Entities as if the transactions had occurred on June 30, 2014. The pro forma adjustments to the condensed consolidated statements of operations for the year ended December 31, 2013 and for the six months ended June 30, 2014 give effect to the acquisition of the Australian Entities as if the transactions had occurred at the beginning for each period.

 

Balance Sheet - June 30, 2014

 

a. Derived from the unaudited balance sheet of Chanticleer as of June 30, 2014.
b.

Derived from the audited combined balance sheet of TMIX Management Australia PTY. LTD., Hoot Parramatta PTY. LTD., and Hoot Penrith PTY. LTD. as of the year ended June 30, 2014.

c.

Reflects the acquisition of TMIX Management Australia PTY. LTD., Hoot Parramatta PTY. LTD., and Hoot Penrith PTY. LTD. for assumption of $5,000,000 debt and issuance of 250,000 warrants.

d. To eliminate equity of   TMIX Management Australia PTY. LTD., Hoot Parramatta PTY. LTD., and Hoot Penrith PTY. LTD in consolidation with Chanticleer Holdings, Inc.
e.

Gaming revenue cash received to be offset against assumed loan payable per debt assumption agreement.

 

 
 

 

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed.

 

 

Purchase Consideration (60% Value):  $5,515,600 
      
Assets acquired and liabilities assumed:     
Property and equipment  $1,603,557 
Intangible assets   220,500 
Inventory   47,777 
Non-controlling interest (at fair value)   (3,677,067)
Other assets   20,186 
Liabilities acquired   (1,496,536)
Goodwill   8,797,183 
Net assets acquired  $5,515,600 

 

 

The cost of the transaction was allocated to the tangible and intangible assets and liabilities assumed based on estimates of their respective fair values at the date of acquisition with the remaining unallocated purchase price recorded as goodwill. Management is responsible for the valuation of net assets and considered a number of factors when estimating the fair values and estimated useful lives of acquired assets and liabilities.

 

Statement of Operations - For the Year Ended December 31, 2013

 

a) Derived from the audited statement of operations of Chanticleer for the year ended December 31, 2013.
b) Derived from the combined unaudited statement of operations of TMIX Management Australia PTY. LTD., Hoot Parramatta PTY. LTD., and Hoot Penrith PTY. LTD for the year ended December 31, 2013.
c) To record gaming revenue in connection with purchase agreement.
d) To allocate 40% of income after provision of income taxes to non-controlling interest.

 

Statement of Operations - For the Six Months Ended June 30, 2014

 

a) Derived from the unaudited statement of operations of Chanticleer for the six months ended June 30, 2014.
b) Derived from the combined unaudited statement of operations of TMIX Management Australia PTY. LTD., Hoot Parramatta PTY. LTD., and Hoot Penrith PTY. LTD for the year ended June 30, 2013.
c) To record gaming revenue in connection with purchase agreement.
d) To allocate 40% of income after provision of income taxes to non-controlling interest.