Filed Pursuant to Rule 424(b)(2)

Registration No. 333-214319

PROSPECTUS

CHANTICLEER HOLDINGS, INC.

Subscription Rights Offering

Up to an Aggregate of 1,000,000 Units Consisting of

9% Redeemable Series 1 Preferred Stock

and

Seven-Year Series 1 Warrants to Purchase Common Stock

Upon the Exercise of Subscription Rights at $13.50 per Unit

We are distributing, at no charge, to holders of our common stock, par value $0.0001 per share, and holders of our public warrants listed for trading on the Nasdaq Capital Market under the symbol “HOTRW” (our “public warrants”), non-transferable subscription rights to purchase up to an aggregate of 1,000,000 units consisting of shares of our 9% Redeemable Series 1 Preferred Stock, which we refer to in this prospectus as the Series 1 Preferred, and Series 1 Warrants. Each share of Series 1 Preferred Stock has a liquidation value of $13.50. Each Series 1 Warrant entitles the holder to purchase 10 shares of common stock at any time and from time to time on or before the seventh anniversary of the date of issuance, at an exercise price payable by the surrender of one share of Series 1 Preferred. The shares of Series 1 Preferred and Series 1 Warrants are components of the units, are not detachable and will not be separately transferable. Holders of the subscription rights will be entitled to purchase any number of units, up to the aggregate number of subscription rights held by each holder, subject to proration as described herein. The purchase price for the units is $13.50 per unit. You will receive one subscription right for every share of common stock and public warrant you own as of 5:00 p.m. Eastern time on December 5, 2016, the record date of the rights offering. The subscription rights will not entitle you to purchase any shares of our common stock, except upon the exercise of the Series 1 Warrants.

We are conducting this rights offering to raise capital. We will allocate up to $8,425,000 of the proceeds to payment of certain existing debt, including principal, unpaid accrued interest and fees. The remainder of the proceeds will be used for planned store related capital expenditures and for general working capital purposes. We cannot assure you that we will not need to seek additional financing in the future.

The rights offering commences on December 15, 2016 and the subscription rights will expire if they are not exercised by 5:00 p.m. Eastern time on December 29, 2016, unless the rights offering is extended. There is no minimum number of subscription rights that must be exercised in this rights offering, no minimum number that any subscription rights holder must exercise, and no minimum number of units that we will issue at the closing of this rights offering. We may extend the subscription period up to an additional 30 days, at our sole discretion, in which case the offering would continue on a subscriptions first-come, first-serve basis, calculated on a daily basis with the potential for pro-rata allocation of shares among participants subscribing on the last day of the subscription period or, if earlier, the last day on which the rights offering is first over-subscribed. If the rights offering is not fully subscribed following expiration of the rights offering, Source Capital Group, Inc., the dealer-manager for this rights offering, has agreed to use its commercially reasonable efforts to place any unsubscribed units of this rights offering at the subscription price for an additional period of up to 45 days. The number of units that may be sold by us during this period will depend upon the number of units that are subscribed for pursuant to the exercise of subscription rights by our rights holders.

Shares of our common stock are traded on the Nasdaq Capital Market under the symbol “HOTR”. On December 8, 2016, the closing sales price for our common stock was $0.53 per share. The shares of common stock issuable upon exercise of the Series 1 Warrants will also be traded on the Nasdaq Capital Market under the same symbol. The subscription rights are non-transferable and will not be listed for trading on the Nasdaq Capital Market or any stock exchange or market. We intend to apply to have the units listed on a stock exchange or quoted on the OTC marketplace. There is no assurance that the units will be listed on a stock exchange or quoted on the OTC marketplace.

Our board of directors may cancel the rights offering at any time prior to the expiration of the rights offering for any reason. In the event the rights offering is cancelled, all subscription payments received by the subscription agent will be returned, without interest, as soon as practicable.

We have engaged Source Capital Group, Inc. as the dealer-manager for the rights offering. See “Plan of Distribution”.

(1)       In connection with this rights offering, we have agreed to pay Source Capital Group, Inc. “Source Capital Group” as the dealer-manager a fee of 6.0% of the proceeds of the rights offering, plus a 1.8% non-accountable expense fee and an out-of-pocket accountable expense allowance of 0.2% of the proceeds of the offering. See “Plan of Distribution”. For any unsubscribed units placed by Source Capital Group after the expiration of the rights offering and extension, we have agreed to pay Source Capital Group a placement fee equal to 6%, in lieu of the dealer-manager fee, along with a continuing 1.8% non-accountable expense fee and an out-of-pocket accountable expense allowance of 0.2% of the proceeds of the offering, with such placement fee and expenses to be calculated in respect of the total gross proceeds paid to and received by us for subscriptions accepted by us from investors in connection with such placement and such placement fee and expenses not to exceed the aggregate amounts that would have been otherwise received by Source Capital Group if the rights offering were to have been fully subscribed. Neither the placement fee nor the expense allowance in connection with the placement will be payable with respect to any units purchased as result of the exercise of any basic subscription privilege or over-subscription privilege in the rights offering.

(2)       Assumes that the rights offering is fully subscribed, but excludes proceeds from the exercise of the Series 1 Warrants included within the units.

The exercise of your subscription rights involves material risks. See “Risk Factors” beginning on page 24 of this prospectus, as well as the risk factors and other information in any documents we incorporate by reference into this prospectus to read about important factors you should consider before exercising your subscription rights.

Our board of directors is making no recommendation regarding your exercise of the subscription rights. You should carefully consider whether to exercise your subscription rights before the expiration date. You may not revoke or revise any exercises of subscription rights once made.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

If you have any questions or need further information about this rights offering, please contact Issuer Direct, the information agent for the rights offering, at (919) 744-2722 or by email at chanticleer@issuerdirect.com.

Dealer-Manager

The date of this prospectus is December 15, 2016

TABLE OF CONTENTS

PROSPECTUS SUMMARY

This summary highlights selected information from this prospectus. This summary may not contain all of the information that you should consider before deciding whether or not you should exercise your subscription rights. You should carefully read this prospectus, including the documents incorporated by reference, which are described under the heading “Incorporation by Reference” in this prospectus. We encourage you to carefully read this entire prospectus and the documents to which we refer you. Unless the context otherwise requires, when we use the words “Chanticleer,” “the Company,” “we,” “us” or “our Company” in this prospectus, we are referring to Chanticleer Holdings, Inc., a Delaware corporation and its subsidiaries.

Our Company

We are in the business of owning, operating and franchising fast casual and full service dining concepts in the United States and internationally.

We own, operate and franchise a system-wide total of thirty-eight fast casual restaurants specializing the ‘Better Burger’ category of which twenty-seven are company-owned and eleven are operated by franchisees under franchise agreements. American Burger Company (“ABC”) is a fast casual dining chain consisting of nine locations in New York and the Carolinas, known for its diverse menu featuring, customized burgers, milk shakes, sandwiches, fresh salads and beer and wine. BGR: The Burger Joint (“BGR”), consists of ten company-owned locations in the United States and eleven franchisee-operated locations in the United States and the Middle East. Little Big Burger (“LBB”) consists of eight locations in Oregon.

We own and operate Just Fresh, our healthier eating fast casual concept with eight company owned locations in Charlotte, North Carolina. Just Fresh offers fresh-squeezed juices, gourmet coffee, fresh-baked goods and premium-quality, made-to-order sandwiches, salads and soups.

We own and operate nine Hooters full service restaurants in the United States, South Africa and the United Kingdom. In addition, there are six Hooters restaurants in Australia and Hungary, which are being discontinued. Accordingly, the operating results and store counts of those regions are excluded from Managements Analysis of the Business. Hooters restaurants are casual beach-themed establishments featuring music, sports on large flat screens, and a menu that includes seafood, sandwiches, burgers, salads, and of course, Hooters original chicken wings and the ‘nearly world famous’ Hooters Girls.

As of November 17, 2016, our system-wide store count totaled 55 locations, consisting of 44 company-owned locations and 11 franchisee-operated locations.

Nasdaq Listing Requirements- Reverse Stock Split

The Nasdaq Listing Qualifications Department notified us on February 18, 2016 that our common stock no longer met the minimum $1 bid price per share requirement. We have until February 13, 2017 for the closing bid price of our common stock to equal or exceed $1 per share for a minimum of 10 consecutive business days to regain compliance. In the event that we do not regain compliance in the required timeframe, management intends to proceed with seeking shareholder approval and a reverse common stock split in order to regain compliance with Nasdaq’s bid price rule.

Investing in our securities involves a high degree of risk. As an investor, you should be able to bear a complete loss of your investment. You should carefully consider the information set forth in the section titled “Risk Factors” following this prospectus summary.

Corporate Information

Our principal executive offices are located at 7621 Little Avenue, Suite 414, Charlotte, North Carolina 28226. Our telephone number is (704) 366-5122. Our corporate website is www.chanticleerholdings.com. Information contained in or accessible through our website is not part of this prospectus. Our transfer agent is Securities Transfer Corp., telephone (469) 633-0101.

THE RIGHTS OFFERING

The summary below describes the principal terms of the subscription rights, the units, the Series 1 Preferred and the Series 1 Warrants. Certain of the terms and conditions described below are subject to important limitations and exceptions. Subscription rights holders should read this prospectus in its entirety, as well as all documents incorporated by reference in it, before making any decision to exercise their subscription rights. As used in this section, the terms “we”, “us”, “Chanticleer”, “our”, “our company” and “the company” refer to Chanticleer Holdings, Inc. and not any of its subsidiaries.

Risk Factors

Before you invest in the offering, you should be aware that there are risks associated with your investment, including the risks described in the section entitled “Risk Factors” beginning on page 24 of this prospectus and the risks set forth in our Annual Report on Form 10-K for our fiscal year ended December 31, 2015, including, without limitation, the risks related to our growth strategy, risks related to our business and risks related to the food service industry. You should carefully read and consider the risk factors contained in our Annual Report on Form 10-K and in this prospectus, together with all of the other information included in or incorporated by reference into this prospectus, before you decide to exercise your subscription rights to purchase units of our securities.

QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING

The following questions and answers are intended to help you locate answers to questions you may have about this offering and related matters, but they do not purport to be complete. The following questions and answers are subject to, and qualified in their entirety by, the more detailed information set forth elsewhere in this prospectus or incorporated herein by reference. See “Risk Factors,” “Description of Capital Stock —Series 1 Preferred,” “Description of Capital Stock —Series 1 Warrants,” “The Rights and the Rights Offering,” and the other information in this prospectus and the information incorporated herein by reference.

What is the rights offering?

We are distributing to holders of our common stock and public warrants, at no charge, non-transferable subscription rights to subscribe for units consisting of one share of our Series 1 Preferred and one seven year Series 1 Warrant to purchase 10 shares of our common stock. You will receive one subscription right for every share of our common stock and each public warrant held of record by you as of 5:00 p.m. Eastern time on December 5, 2016, the record date.

The subscription rights will be evidenced by subscription documents. Each subscription right will entitle the holder to a basic subscription privilege and an over-subscription privilege for all basic subscription privileges that remain unsubscribed, in each case subject to proration and as described below. The shares of Series 1 Preferred and Series 1 Warrants to be issued as components of the units in the rights offering are not detachable and will not be separately transferable following the closing. We intend to apply to have the units listed on a stock exchange or quoted on the OTC marketplace. There is no assurance that the units will be listed on a stock exchange or quoted on the OTC marketplace. There will be no holders of units to help establish a trading market other than purchasers in this rights offering. Further, we do not expect to issue any additional units. Consequently, trading of the units may be very limited and possibly non-existent.

To subscribe for the units, you must follow the process described in the subscription documents sent to you and also available from the information agent. For assistance or copies of the documents you may contact Issuer Direct, the information agent for the rights offering, at (919) 744-2722 or by email at chanticleer@issuerdirect.com.

Where can I find the number of subscription rights I hold?

The number of subscription rights you hold will be shown on the subscription documents. The number shown is the total number of your subscription rights. You may exercise any or all of them for the units, but the number you exercise cannot exceed the number shown.

If you want to increase the number of subscription rights that you will be entitled to receive, you will need to purchase additional shares of common stock or public warrants at least four trading days prior to the record date, so that you or your nominee will be the record holder of those additional shares on the record date. Neither our board of directors nor the dealer-manager recommends that you do so.

What are the Series 1 Preferred Shares?

The Series 1 Preferred shares are traditional shares of preferred stock and may be held as registered book-entry shares or held in a traditional brokerage account, at the holder’s election.

Do the Series 1 Preferred have a liquidation preference over the common stock?

Yes, the Series 1 Preferred will rank senior to the common stock if our company is liquidated. In the event of any liquidation, dissolution or winding up of our company, any amounts remaining available for distribution to stockholders after payment of all of our liabilities will be distributed first among the holders of Series 1 Preferred and then to the holders of common stock.

What is the basic subscription privilege?

The basic subscription privilege of each subscription right gives our stockholders of record and holders of our public warrants of record the opportunity to purchase one unit at a subscription price of $13.50 per unit. We have granted to you, as a holder of record as of 5:00 p.m. Eastern time on the record date, one subscription right for every share of our common stock or public warrant you owned at that time. For example, if you owned 1,000 shares of our common stock and 50 public warrants as of 5:00 p.m. Eastern time on the record date, you would receive 1,050 subscription rights and would have the right, subject to proration, to purchase up to 1,050 units for $13.50 per unit with your basic subscription privilege. If you fully exercise your basic subscription privilege, you would also be entitled to an unlimited over-subscription privilege, in each case subject to proration as described herein. You may exercise the basic subscription privilege of any number of your subscription rights, or you may choose not to exercise any subscription rights. If you exercise your basic subscription privilege, you may elect to purchase units up to the number of subscription rights you hold. However, all subscriptions, including those pursuant to the basic subscription privilege, are subject to proration.

If you hold your shares in the name of a broker, custodian bank, dealer or other nominee who uses the services of the Depository Trust Company (the “DTC”), DTC will issue one subscription right to the nominee for every share of our common stock and each public warrant you own at the record date. The basic subscription privilege of each subscription right can then be used, subject to proration, to purchase one unit at a subscription price of $13.50 per unit. If you fully exercise your basic subscription privilege, you would also be entitled to an unlimited over-subscription privilege, subject to proration as described herein.

There is no minimum number of units you must purchase. You may exercise all or a portion of your basic subscription privilege, or you may choose not to exercise any subscription rights at all. However, if you exercise less than your full basic subscription privilege, you will not be entitled to purchase shares under your over-subscription privilege.

Any excess subscription payments received by the subscription rights agent will be promptly returned, without interest.

What is proration?

We do not intend to sell more than 1,000,000 units, in total, in this rights offering. If an insufficient number of shares is available to fully satisfy all basic subscription privilege requests, we will allocate the available units pro-rata among those rights holders exercising their basic subscription privilege in proportion to the product (rounded down to the nearest whole number so that the aggregate number of units does not exceed the aggregate number offered) obtained by multiplying the number of units such rights holder subscribed for under the basic subscription privilege by a fraction (A) the numerator of which is 1,000,000 and (B) the denominator of which is the total number of units sought to be subscribed for under the basic subscription privilege by all holders exercising their basic subscription privilege. This is called proration. If any proration is necessary, subscriptions for the units will be prorated.

The subscription rights agent will notify rights holders of the number of units allocated to each holder promptly after completion of the allocation process. Any excess subscription payments received by the subscription rights agent will be returned promptly, without interest.

What is the over-subscription privilege?

We do not expect all of our rights holders to exercise all of their basic subscription privileges. The over-subscription privilege provides rights holders that do exercise all of their basic subscription privileges the opportunity to purchase the units that are not purchased by other rights holders. If you fully exercise your basic subscription privilege, the over-subscription privilege entitles you to subscribe for additional units unclaimed by other holders of subscription rights in this offering at the same purchase price per unit. If an insufficient number of units is available to fully satisfy all over-subscription privilege requests, we will allocate the available units pro-rata among those rights holders exercising their over-subscription privilege in proportion to the product (rounded down to the nearest whole number so that the aggregate number of units does not exceed the aggregate number offered) obtained by multiplying the number of units such rights holder subscribed for pursuant to the over-subscription privilege by a fraction (A) the numerator of which is the number of unsubscribed units and (B) the denominator of which is the total number of units sought to be subscribed for pursuant to the over-subscription privilege by all holders participating in such over-subscription.

To properly exercise your over-subscription privilege, you must deliver the subscription payment related to your over-subscription privilege prior to the expiration of the rights offering or such earlier date as may be specified in the subscription documents you receive from the subscription rights agent (or via the web portal established by the subscription rights agent). Because we will not know the total number of unsubscribed units prior to the expiration of the rights offering, you will need to deliver payment in an amount equal to the aggregate purchase price for the maximum number of units that you desire to purchase. See “The Rights Offering—The Subscription Rights—Over-Subscription Privilege”.

Any excess subscription payments received by the subscription rights agent will be promptly returned, without interest.

We do not intend to extend the subscription period for the rights offering. If the rights offering subscription period is extended (the “extension period”), (i) all basic subscription privileges exercised prior to the beginning of the extension period will be honored first, (ii) all over-subscription privileges exercised prior to the beginning of the extension period will be honored second, and all basic and over-subscription privileges exercised during the extension period will be filled daily on a first-come, first-serve basis. If your subscription arrives during the first-come, first-serve extension period and the rights offering is over-subscribed, then the subscriptions received on or after the day on which the offering is first over-subscribed will be prorated as described above. Any subscriptions received during the extension period, but after the date on which the rights offering is fully subscribed, will not be allocated any units. The subscription rights agent will notify rights holders of the number of units, if any, allocated to each, promptly after completion of the allocation process.

What are the limitations on the exercise of the basic subscription privilege and over-subscription privilege?

Subject to your ability to exercise the over-subscription privilege, you may only purchase the number of units purchasable upon exercise of the basic subscription privilege included in the subscription rights distributed to you in the rights offering, and even then you will be subject to proration. Accordingly, the number of units that you may purchase in the rights offering is limited both by the number of shares of our common stock and public warrants that you hold on the record date and by the potential proration provisions of this offering. Although rights holders that fully and properly exercise their basic subscription privilege have the right to exercise the over-subscription privilege, there can be no assurances of the number of units that a holder will be able to acquire through the exercise of the over-subscription privilege, if any. We reserve the right to reject any or all subscriptions not properly submitted or the acceptance of which would, in the opinion of our counsel, be unlawful or which, for any other reason, we deem inconsistent with the requirements of the offering as described herein.

All subscriptions, including subscriptions pursuant to the basic subscription privilege, will be subject to proration.

In addition, if the exercise by a rights holder of the basic subscription privilege or the over-subscription privilege could, as determined by us in our sole discretion, potentially result in a limitation on our company’s ability to use the Tax Attributes, under the Code, and rules promulgated by the Internal Revenue Service, we may, but are under no obligation to, reduce the exercise by such holder of the basic subscription privilege or the over-subscription privilege to such number of units as we in our sole discretion shall determine to be advisable in order to preserve our ability to use the Tax Attributes.

Why is Chanticleer conducting this rights offering?

We are conducting this rights offering to raise capital. We will allocate up to $8,425,000, of the proceeds to payment of certain existing debt, including principal, unpaid accrued interest and fees. The remainder of the proceeds will be used for planned store related capital expenditures and for general working capital purposes. We cannot assure you that we will not need to seek additional financing in the future.

How were the $13.50 per unit purchase price and the exercise price of the Series 1 Warrants determined?

The purchase price of the units and exercise price of the Series 1 Warrants offered in this rights offering were determined by our board of directors, taking into account the advice of the dealer-manager, Source Capital Group, Inc., based on a number of factors, including but not limited to: our need for capital, the likely cost of capital from other sources, the price at which our principal stockholders would be willing to purchase our securities, our business prospects, the need to offer securities at a price that would be attractive to our investors and encourage them to participate in the rights offering, the historic and current market price of our common stock, general conditions in the securities market and the difficult market conditions prevailing for the raising of equity capital, our operating history and the liquidity of our common stock. We have established the number of shares underlying the Series 1 Warrants by ourselves with the advice of the dealer-manager. The number is not the result of any negotiation between any person and us. The board of directors established the exercise price for 10 shares of common stock to be the surrender of one share of Series 1 Preferred with a liquidation value of $13.50. The purchase price of the units is not necessarily related to our book value, net worth or any other established criteria of value and may or may not be considered the fair value of the units offered in the rights offering. You should not consider the subscription price of the units or the exercise price of the Series 1 Warrants as any indications of the fair value of our common stock or the securities to be offered in this rights offering. After the date of this prospectus, our common stock may trade at prices above or below these prices. Subscription rights holders should consider the potential lack of liquidity carefully before making a decision to exercise their subscription rights for the units.

Will there be an active trading market for the units?

We intend to apply to have the units listed on a stock exchange or quoted on the OTC marketplace. There is no assurance that the units will be listed on a stock exchange or quoted on the OTC marketplace. There will be no holders of units to help establish a trading market other than purchasers in this rights offering. Further, we do not expect to issue any additional units. Consequently, trading of the units may be very limited and possibly non-existent.

Am I required to exercise any or all of the subscription rights I receive in the rights offering?

No. You may exercise any number of your subscription rights, or you may choose not to exercise any subscription rights at all. Exercising or not exercising your subscription rights will not affect the number of shares of our common stock you own (or have the right to own upon exercise or conversion of other securities). However, if you choose not to exercise your subscription rights, your ownership interest in the company and your voting and other rights may be diluted by other rights holder purchases and subsequent exercise of Series 1 Warrants by participants (to the extent we receive any subscriptions in this rights offering).

How soon must I act to exercise my subscription rights?

The subscription rights may be exercised at any time beginning on December 15, 2016 and prior to the expiration of the subscription period, which is on December 29, 2016, at 5:00 p.m. Eastern time unless the subscription period is extended. If you elect to exercise any rights, the subscription rights agent must actually receive all required documents and payments from you prior to the expiration of the subscription period or such earlier date as may be specified in the subscription documents. Although we have the option of extending the subscription period for a period not to exceed 30 days, we do not intend to do so.

How do I exercise my subscription rights?

To exercise your subscription rights, you must follow the process described in the subscription documents sent to you and also available from the information agent. For assistance, you may contact the Issuer Direct, the information agent for the rights offering, at (919) 744-2722 or by email at chanticleer@issuerdirect.com.

If I want to exercise my subscription rights but my shares are held in the name of my broker, dealer, custodian bank or other nominee, what should I do?

You should contact Issuer Direct, the information agent for the rights offering, at (919) 744-2722 or by email at chanticleer@issuerdirect.com.

What if I attempt to exercise my subscription rights for the units, but I am not a U.S. citizen, or for any other reason the subscription rights agent determines that I am not allowed to subscribe for the units?

If for any reason the subscription rights agent determines that you cannot subscribe for the units, the subscription rights agent will return your subscription funds to you. You may contact Issuer Direct, the information agent for the rights offering, at (919) 744-2722 or by email at chanticleer@issuerdirect.com.

Who is the subscription rights agent for this offering?

Securities Transfer Corp.

Who is the transfer agent for our Series 1 Preferred, Series 1 Warrants and common stock?

Securities Transfer Corp.

Who is the information agent for this offering?

Issuer Direct.

Who is the dealer-manager and/ or placement agent for this offering?

Source Capital Group, Inc.

May I transfer my subscription rights?

No. You may not sell or transfer your subscription rights to anyone.

Are we requiring a minimum subscription to complete the rights offering?

No, we may complete the rights offering regardless of the number of subscription rights that may be exercised.

Are there any conditions to completing the rights offering?

No, but we have the right to cancel or modify the terms of the offering in our sole discretion.

Can our company’s board of directors extend, cancel or amend the rights offering?

Yes. We have the option to extend the rights offering and the period for exercising your subscription rights for a period not to exceed 30 days, at our sole discretion, in which case the offering would continue on a subscriptions first-come, first-serve basis, calculated on a daily basis with the potential for pro-rata allocation of units among participants subscribing on the day, if any, on which the offering becomes oversubscribed. We do not presently intend to extend the rights offering. If we elect to extend the expiration of the rights offering, we will issue a press release announcing such extension no later than 9:00 a.m. Eastern time on the next business day after the most recently announced expiration time of the rights offering. We will extend the duration of the rights offering as required by applicable law or regulation and may choose to extend it if we decide to give investors more time to exercise their subscription rights in the rights offering. If we elect to extend the rights offering for a period of more than 30 days, holders who have subscribed for rights may cancel their subscriptions and receive a refund of all money advanced. Our board of directors may cancel the rights offering at any time in its sole discretion. If the rights offering is cancelled, we will issue a press release notifying rights holders of the cancellation and all subscription payments received by the subscription rights agent will be returned promptly, without interest or penalty.

Our board of directors also has the right to amend or modify the terms of the rights offering in its sole discretion. If we make any fundamental change to the terms of the rights offering set forth in this prospectus, we will offer persons who have exercised their subscription rights the opportunity to cancel their purchases and the subscription rights agent will refund the funds advanced by each such person and recirculate an updated prospectus. In addition, upon such event, we may extend the expiration date of the rights offering to allow holders of subscription rights ample time to make new investment decisions and for us to recirculate updated documentation. Promptly following any such occurrence, we will issue a press release announcing any changes with respect to the rights offering and the new expiration date. The terms of the rights offering cannot be modified or amended after the expiration date of the rights offering. Although we do not presently intend to do so, we may choose to amend or modify the terms of the rights offering for any reason, including, without limitation, in order to increase participation in the rights offering. Such amendments or modifications may include a change in the purchase price, although we do not currently anticipate any such change.

Has our company’s board of directors made any recommendation to rights holders regarding the rights offering?

No. Neither we nor our board nor the dealer-manager are making any recommendation to rights holders regarding the exercise of subscription rights in the rights offering. You should make an independent investment decision about whether or not to exercise your rights. Rights holders who exercise subscription rights risk the loss of the amount invested. There is currently no public market for our shares of Series 1 Preferred or Series 1 Warrants. Further, although we intend to apply to have the units listed on a stock exchange or quoted on the OTC marketplace, there may not be a liquid market or even any purchasers at any price for the units you may purchase in this offering. Please see “Risk Factors” for a discussion of material risks involved in investing in the units.

What will happen if I choose not to exercise my subscription rights?

Whether or not you exercise your subscription rights, the number of shares of our common stock you own (or have the right to own upon exercise or conversion of other securities) will not change. However, if you choose not to exercise your subscription rights, your ownership interest in the company and your voting and other rights may be diluted by other rights holder purchases and subsequent exercises of the Series 1 Warrants (to the extent we receive any subscriptions in this rights offering).

I am not a U.S. citizen or resident. May I exercise my subscription rights in this rights offering?

Persons who are not U.S. citizens or residents may exercise their subscription rights in this rights offering.

Will I receive a certificate representing my new Series 1 Preferred if I purchase units?

You will have the choice to receive a certificate or to hold your Series 1 Preferred in a brokerage account of your choice.

Will there be a CUSIP number for the units, Series 1 Preferred and Series 1 Warrants?

Yes.

If I exercise some or all of my subscription rights, may I cancel my exercise before the rights offering closes?

No. All exercises of subscription rights are irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your subscription rights and even if our board of directors extends the rights offering for a period of up to 30 days. However, if we amend the rights offering to allow for an extension of the rights offering for a period of more than 30 days or make a fundamental change to the terms of the rights offering set forth in this prospectus, you may cancel your purchase and receive a refund of any money you have advanced. You should not exercise your subscription rights unless you are certain that you wish to purchase units at the purchase price of $13.50 per unit.

How many shares of the company’s common stock and how many shares of the Series 1 Preferred and Series 1 Warrants will be outstanding after the rights offering?

At the record date, 21,957,147 shares of our common stock were outstanding, 2,444,450 public warrants and no shares of our Series 1 Preferred or Series 1 Warrants were outstanding. The offering of the Series 1 Preferred and Series 1 Warrants in this offering will have no effect at all initially on the number of shares of our common stock outstanding. The number of shares of our Series 1 Preferred and the Series 1 Warrants that we will issue in this rights offering through the exercise of subscription rights will depend on the number of units that are subscribed for in the rights offering. If the rights offering is fully subscribed, we will issue a total of 1,000,000 units consisting of 1,000,000 shares of Series 1 Preferred and Series 1 Warrants to purchase 10,000,000 shares of our common stock. We do not expect to issue any additional shares of Series 1 Preferred or Series 1 Warrants after this rights offering. Consequently, we expect trading of the units to be limited to what we issue in this offering.

How much will the company receive from the rights offering?

If the offering is fully subscribed for 1,000,000 units, the proceeds of the offering, net of estimated expenses, including dealer-manager fees, will be approximately $12,232,000. Please see “Use of Proceeds”.

Are there material risks in exercising my subscription rights?

Yes, the exercise of your subscription rights involves material risks. Among other things, you should carefully consider each of the risks described under the heading “Risk Factors” in this prospectus and the documents incorporated by reference.

If the rights offering is not completed, will my subscription payment be refunded to me?

Yes, the subscription rights agent will hold all funds it receives in a segregated bank account until completion of the rights offering. If the rights offering is not completed, all subscription payments received by the subscription rights agent will be promptly returned, without interest. If you own your common stock in a brokerage account, it may take longer for you to receive the return of your payment because the subscription rights agent will return your payment through the record holder of your shares of common stock.

Will the subscription rights be listed on a stock exchange or national market?

No, the subscription rights are non-transferable, may not be sold, transferred or assigned by rights holders and will not be listed for trading on any stock exchange or market.

How do I exercise my subscription rights if I live outside the United States?

We will mail this prospectus and the subscription documents to stockholders whose addresses are outside the United States or who have an army post office or foreign post office address. To exercise your subscription rights, you must follow the process described in the subscription documents sent to you and also available from the information agent. For assistance you may contact Issuer Direct, the information agent for the rights offering, at (919) 744-2722 or by email at chanticleer@issuerdirect.com.

What fees or charges apply if I purchase the units?

We are not charging any fee or sales commission to issue subscription rights to you or to issue the units to you if you exercise your subscription rights. If you exercise your subscription rights through the record holder of your shares, you are responsible for paying any fees your record holder may charge you.

What are the U.S. federal income tax consequences of exercising subscription rights?

For U.S. federal income tax purposes, you generally will not recognize income or loss in connection with the receipt or exercise of subscription rights unless the rights offering is treated as a distribution described in either Section 305(b) or 305(c) of the Code. We believe that the rights offering should not be treated as either such distribution, but as discussed in the section on Material U.S Federal Tax Consequences (beginning on page 49), certain aspects of that determination are unclear. Our position is not binding on the Internal Revenue Service or the courts, however. You are urged to consult your own tax advisor as to your particular tax consequences resulting from the receipt and exercise of subscription rights and the receipt, ownership and disposition of our Series 1 Preferred and Series 1 Warrants. For further information, please see “Material U.S. Federal Income Tax Consequences to U.S. Holders”.

If I hold Series 1 Preferred, how will I receive any dividends paid on the Series 1 Preferred?

The Series 1 Preferred will have a liquidation preference of $13.50 per share, equal to the purchase price, and will pay cumulative dividends at the rate of 9% of the liquidation preference per year for seven years, payable in cash or our registered common stock quarterly on the last day of March, June, September and December in each year out of legally available funds.

Who should I contact if I have other questions?

If you have other questions or need assistance, please contact Issuer Direct, the information agent for the rights offering, at (919) 744-2722 or by email at chanticleer@issuerdirect.com.

RISK FACTORS

An investment in our securities involves a high degree of risk. You should carefully consider the risks described below and the risks set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, including, without limitation, the risks described therein related to our growth strategy, our business and the food service industry, together with the other information included or incorporated by reference in this prospectus, before making a decision to invest in our securities or to exercise your subscription rights to purchase units. If any of these risks actually occur, our business, results of operations and financial condition could suffer. In that case, the market price of our securities could decline, and you may lose all or part of your investment.

RISKS RELATED TO THIS OFFERING

None of our officers, directors or significant stockholders is obligated to exercise their subscription rights and, as a result, the offering may be undersubscribed.

None of our officers, directors or significant stockholders is obligated to participate in this offering. As a result, the offering may be undersubscribed and proceeds may not be sufficient for the use of proceeds we describe in this prospectus.

If we terminate this offering, we will have no obligation other than to promptly return subscription monies.

We may decide, in our discretion and for any reason, or for no reason at all, to cancel or terminate the rights offering at any time prior to the closing date. If this offering is terminated, we will have no obligation with respect to rights that have been exercised except to promptly return, without interest or deduction, the subscription monies deposited with the subscription rights agent. If we terminate this offering, your rights will expire worthless.

There is no back-stop or standby commitment in place to purchase rights or units that are not purchased in the offering.

There is no back-stop or standby commitment in place to purchase rights or units that are not exercised in the offering. Consequently, there is no assurance that the offering will raise any amount of funds.

This is a best efforts underwriting; the dealer-manager is not purchasing the rights or units from the company as is done in a firm commitment underwriting.

Source Capital Group is not purchasing the rights or units issuable upon exercise of the basic subscription privilege or over-subscription privilege from the company as is done in a firm commitment underwriting. ..If the rights offering is not fully subscribed following expiration of the rights offering and the 30-day extension, Source Capital Group, as the dealer-manager for this rights offering, has agreed to use its commercially reasonable efforts to place any unsubscribed units of this rights offering at the subscription price for an additional period of up to 45 days. The number of units that may be sold by us during this period will depend upon the number of units that are subscribed for pursuant to the exercise of subscription rights by our rights holders. No assurance can be given that any unsubscribed units, if available, will be sold during this period. Source Capital Group’s services to us cannot be construed as any assurance that this offering will be successful. Source Capital Group does not make any recommendation with respect to whether you should exercise the basic subscription privilege or over-subscription privilege, or to otherwise invest in our company.

Your subscription privilege is subject to adjustment and reduction.

If the exercise by a rights holder of the basic subscription privilege or the over-subscription privilege could, as determined by us in our sole discretion, potentially result in a limitation on our ability to use the Tax Attributes, under the Code, and rules promulgated by the Internal Revenue Service, the Company may, but is under no obligation to, reduce the exercise by such rights holder of the basic subscription privilege or the over-subscription privilege as the company in its sole discretion shall determine to be advisable in order to preserve the company’s ability to use the Tax Attributes.

If the rights offering is over-subscribed, in which case the total number of units available in the rights offering will be allocated to participating rights holders on a pro-rata basis, as set forth more fully in this prospectus, then the number of units that each participating rights holder will be eligible to receive will depend upon the total number of subscription rights exercised. All subscriptions are subject to proration.

We do not intend to issue any additional shares of Series 1 Preferred or Series 1 Warrants after this rights offering.

We do not expect to issue any additional shares of Series 1 Preferred or Series 1 Warrants after this rights offering. Consequently, we expect trading of the units to be limited to what we issue in this rights offering.

Although there may be low or no correlations between the trading prices of the units and our common stock, decreases in the price of our common stock may cause decreases in the trading price of the units.

The trading price of the units may have only a low correlation, and may have no correlation, with the trading price of our common stock. Nevertheless, decreases in the trading price of our common stock, which could occur as the result of developments in our business or from future sales of common stock by us or by holders of the common stock or for other reasons, may cause decreases in the trading price of the units to decline. For example, in the future, we may sell shares of our common stock to raise capital. Such an event may dilute your ownership interest in the company and adversely affect the price of our common stock and, in turn, of the units. In addition, we have reserved shares of our common stock for issuance upon the exercise of stock options, warrants and convertible notes. Any of these events, and any other event that results in sales of a substantial amount of our common stock in the public market, or the perception that any such sales may occur, could reduce the market price of our common stock and, in turn, the trading price of the units. This could also impair our ability to raise additional capital through the sale of our securities. Any of the foregoing events could have a material adverse effect on holders of the units and the trading price of the units.

The Series 1 Preferred will rank senior to our common stock but junior to all of our existing and future indebtedness in the event of a liquidation, winding up or dissolution of our business.

In the event of our liquidation, winding up or dissolution, our assets would be available to make payments to holders of our Series 1 Preferred only after all of our liabilities have been paid. In the event of our bankruptcy, liquidation or winding up, there may not be sufficient assets remaining, after paying our and our subsidiaries’ liabilities, to pay any amounts to the holders of our Series 1 Preferred then outstanding.

Your subscription privilege, including your basic subscription privilege, is subject to adjustment and reduction.

If the rights offering is over-subscribed, in which case the total number of units available in the rights offering will be allocated to participating rights holders on a pro-rata basis, as set forth more fully in this prospectus, then the number of units that each participating rights holder will be eligible to receive will depend upon the number of subscription rights exercised by the rights holder and the total number of subscription rights exercised. All subscriptions, including the basic subscription privilege and over-subscription privilege, are subject to proration. If any proration is necessary, subscriptions for the units will be prorated.

In addition, if the exercise by a rights holder of the basic subscription privilege or the over-subscription privilege could, as determined by the company in its sole discretion, potentially result in a limitation on the company’s ability to use the Tax Attributes under the Code, and rules promulgated by the Internal Revenue Service, the company may, but is under no obligation to, reduce the exercise by such rights holder of the basic subscription privilege or the over-subscription privilege to such number of units as the company in its sole discretion shall determine to be advisable in order to preserve the company’s ability to use the Tax Attributes.

Your rights as a Series 1 Preferred stockholder are primarily those set forth in the terms of the Series 1 Preferred, and our board may prefer the interests of the common stockholders if they differ from those of the Series 1 Preferred stockholders.

The special contractual preferences of the Series 1 Preferred are primarily governed by the principles of contract law, rather than being fiduciary in nature. While our board of directors has fiduciary duties to the holders of the Series 1 Preferred to the extent those holders share rights with the common stockholders, if there is a divergence of interests between the holders of the Series 1 Preferred stock and common stock, it will generally be the duty of our board to prefer the interests of the common stockholders to those of the preferred stockholders.

Dividends may be paid only out of legally available funds as determined under Delaware General Corporation Law and our ability to pay dividends in the future will depend upon our financial results, liquidity and financial and financial condition.

Under Delaware corporate law, we may only pay dividends (regardless of whether it is a cash or stock dividend) to our stockholders from our “surplus”, as determined in accordance with Delaware General Corporation Law, or our net profits for the current fiscal year or the fiscal year before which the dividend is declared under certain circumstances. Therefore, our ability to pay dividends in the future will depend upon our financial results, liquidity and financial and financial condition.

Management may choose to pay dividends on the Series 1 Preferred in cash or in registered common shares. The Company’s election to pay in either cash or in common shares may or may not align with your interests at a particular dividend payment date, or the Company may be forced to use either cash or common shares at suboptimal times depending on various factors.

Payment in common shares could increase your exposure to the Company’s common equity and your ability to liquidate shares received from dividend payments may be impacted by various factors affecting our common share price and trading volume, which are inherently unpredictable. In addition, if the Company were to have insufficient authorized common shares to make dividend payments in common shares, it could be forced to utilize cash for dividend payments even at times when the Company’s interest would be served by paying in shares. Conversely, if the Company were to have insufficient cash on hand to make dividend payments in cash, it could be forced to utilize common shares for dividend payments even at times when the Company’s interest would be served by paying in cash.

Redemption price of the Series 1 Preferred may be paid only out of legally available funds as determined under Delaware General Corporation Law and our ability to redeem the Series 1 Preferred will depend upon our financial results, liquidity and financial and financial condition. 

Under Delaware corporate law, we may only redeem the Series 1 Preferred from our “surplus” provided that we have ready access to the cash necessary to effect the redemption. The form in which we hold our assets, liquid or otherwise, could greatly affect our decision to effect a redemption of the Series 1 Preferred. Therefore, our ability to redeem the Series 1 Preferred will depend upon our financial results, liquidity and financial and financial condition.

The Series 1 Warrants will be automatically exercised through the surrender of shares of Series 1 Preferred at such time our common stock trades above $3.00 per share for five consecutive trading days.

If our common stock trades above $3.00 per share for five consecutive trading days, the Series 1 Warrants will be automatically exercised through the surrender of shares of Series 1 Preferred, thereby cancelling all outstanding shares of Series 1 Preferred and terminating the rights of holders of Series 1 Preferred to accrual of dividends, liquidation preference and redemption payment. In such case, investors in this offering would hold ten (10) shares of common stock, subject to adjustment, for every unit purchased.

Because our management will have broad discretion over the use of proceeds from the rights offering reserved for working capital, you may not agree with how we use the proceeds, and we may not invest the proceeds successfully.

We will allocate up to $8,425,000 of the proceeds to payment of certain existing debt, including principal, unpaid accrued interest and fees. The remainder of the proceeds will be used for planned store related capital expenditures and for general working capital purposes. We cannot assure you that we will not need to seek additional financing in the future. We will retain broad discretion of the use of proceeds earmarked for working capital. You will be relying on the judgment of our management with regard to the use of such proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. It is possible that the proceeds will be invested in a way that does not yield a favorable, or any, return for the company.

Completion of this offering is not subject to us raising a minimum offering amount and therefore proceeds may be insufficient to meet our objectives, thereby increasing the risk to investors in this offering.

Completion of this offering is not subject to us raising a minimum offering amount. As such, proceeds from this rights offering may not be sufficient to meet the objectives we state in this prospectus or other corporate milestones that we may set. Investors should not rely on the success of this offering to address our need for funding. If we fail to raise capital by the end of December 2016, we would expect to have to significantly decrease our growth plans and operating expenses, which will curtail the progress of our business.

The subscription rights are not transferable and there is no market for the subscription rights, units, Series 1 Preferred or the Series 1 Warrants. In the absence of a trading market, you may be unable to liquidate your investment.

You may not sell, transfer or assign your subscription rights. The subscription rights are only transferable by operation of law. Because the subscription rights are non-transferable, there is no market or other means for you to directly realize any value associated with the subscription rights. You must exercise the subscription rights to realize any value that may be embedded in the subscription rights.

None of the subscription rights, the Series 1 Preferred or the Series 1 Warrants will be listed for trading on any stock exchange or market. We intend to apply to have the units listed on a stock exchange or quoted on the OTC marketplace. There is no assurance that the units will be listed on a stock exchange or quoted on the OTC marketplace. In the absence of a trading market, you may be unable to liquidate your investment.

The units may not qualify for listing on a stock exchange or for quotation on the OTC marketplace, in which case there would be no trading market for the units. In the absence of a trading market, you may be unable to liquidate your investment.

Although we intend to apply to have the units listed on a stock exchange or quoted on the OTC marketplace, we have neither filed any applications to do so nor received any indication that the units qualify for listing or quotation on any stock exchange or the OTC marketplace. In our initial conversations with Nasdaq, Nasdaq advised that due to the unique structure of the units, specifically the inability to detach the components - Series 1 Preferred Stock and Series 1 Warrant- from each other, the units may not qualify for listing on Nasdaq. We have not yet received a final determination from Nasdaq as to our ability to list the units. We may not meet the listing standards for any stock exchange. In addition, in order for our units to be quoted on the OTC marketplace, a registered broker dealer and member of the Financial Industry Regulatory Authority must agree to sponsor our securities. It is possible that such application for quotation may not be approved. Even if we are successful listing the units for trading on a stock exchange or quotation on the OTC marketplace, it is possible that a regular trading market will not develop or that if it did develops, will be sustained. In the absence of a trading market, you may be unable to liquidate your investment.

We do not intend to issue any additional units after this offering. If the units are listed on a stock exchange or quoted on the OTC marketplace, trading in the units is expected to be extremely limited.

There will be no holders of units to help establish a trading market other than purchasers in this rights offering. Further, we do not expect to issue any additional units. Consequently, trading of the units may be very limited and possibly non-existent, limiting your ability to liquidate your investment.

An active trading market may not develop for the units, and the subscription price may not be the fair value of the units. Your ability to sell the units may be very limited.

The units are a new issue of securities, and there is no established trading market for the units. We intend to apply to have the units listed on a stock exchange or quoted on the OTC marketplace. There is no assurance that the units will be listed on a stock exchange or quoted on the OTC marketplace. Even if the units are listed on a stock exchange or quoted on the OTC marketplace, the depth and liquidity of trading and the ability of the holders to sell units may nevertheless be very limited, which may have a material adverse effect on holders of the units.

The purchase price was determined by our board of directors, taking into account the advice of the dealer-manager, Source Capital Group, as well as historical and recent trading prices of our common stock. The purchase price is not the result of any negotiation between any person and us. The board of directors established the purchase price at $13.50 per unit and the Series 1 Warrant exercise price to equal surrender of one share of Series 1 Preferred with a liquidation value of $13.50 for 10 shares of common stock. The purchase price is not necessarily related to our book value, net worth or any other established criteria of value and may or may not be considered the fair value of the units offered in the rights offering. Subscription rights holders should consider the potential lack of liquidity carefully before making a decision to exercise their subscription rights for the units. 

If you do not act on a timely basis and follow subscription instructions, your exercise of rights may be rejected.

Holders of shares of common stock who desire to purchase shares of our common stock in this offering must act on a timely basis to ensure that all required forms and payments are actually received by the subscription agent prior to 5:00 p.m. Eastern time on the expiration date, unless extended. If you are a beneficial owner of shares of common stock and you wish to exercise your rights, you must act promptly to ensure that your broker, dealer, custodian bank, trustee or other nominee acts for you and that all required forms and payments are actually received by your broker, dealer, custodian bank, trustee or other nominee in sufficient time to deliver such forms and payments to the subscription agent to exercise the rights granted in this offering that you beneficially own prior to 5:00 p.m. Eastern time on the expiration date, as may be extended. We will not be responsible if your broker, dealer, custodian bank, trustee or other nominee fails to ensure that all required forms and payments are actually received by the subscription agent prior to 5:00 p.m. Eastern time on the expiration date, as may be extended.

If you fail to complete and sign the required subscription forms, send an incorrect payment amount, or otherwise fail to follow the subscription procedures that apply to your exercise in this offering, the subscription agent may, depending on the circumstances, reject your subscription or accept it only to the extent of the payment received. Neither we nor the subscription agent undertakes to contact you concerning an incomplete or incorrect subscription form or payment, nor are we under any obligation to correct such forms or payment. We have the sole discretion to determine whether a subscription exercise properly follows the subscription procedures.

If you make payment of the subscription price by uncertified check, your check may not clear in sufficient time to enable you to purchase units in this rights offering.

Any uncertified check used to pay for units to be issued in this rights offering must clear prior to the expiration date of this rights offering, and the clearing process may require five or more business days. If you choose to exercise your subscription rights, in whole or in part, and to pay for units by uncertified check and your check has not cleared prior to the expiration date of this rights offering, you will not have satisfied the conditions to exercise your subscription rights and will not receive the units you wish to purchase.

The tax treatment of the rights offering is somewhat uncertain and it may be treated as a taxable event to our rights holders.

If the rights offering is deemed to be part of a “disproportionate distribution” under section 305 of the Internal Revenue Code, our rights holders may be required to recognize taxable income for U.S. federal income tax purposes in connection with the receipt of subscription rights in the rights offering depending on our current and accumulated earnings and profits and our stockholders’ tax basis in our common stock. A “disproportionate distribution” is a distribution or a series of distributions, including deemed distributions, that has the effect of the receipt of cash or other property by some stockholders or holders of debt instruments convertible into stock and an increase in the proportionate interest of other stockholders in a company’s assets or earnings and profits. Please see “Material U.S. Federal Income Tax Consequences” for further information on the treatment of the rights offering.

The rights offering could impair or limit our net operating loss carry forwards.

As of December 31, 2015, we had net operating loss carryovers (which we refer to as “NOLs”) of approximately $29,635,000 for U.S. federal income tax purposes, which will expire at various dates beginning in 2031 through 2036, if not utilized. Under the Internal Revenue Code, an “ownership change” with respect to a corporation can significantly limit the amount of pre-ownership change NOLs and certain other tax assets that the corporation may utilize after the ownership change to offset future taxable income, possibly reducing the amount of cash available to the corporation to satisfy its obligations. An ownership change generally should occur if the aggregate stock ownership of holders of at least 5% of our stock increases by more than 50 percentage points over the preceding three-year period. The purchase of units pursuant to the rights offering may trigger an ownership change with respect to our stock.

We may amend or modify the terms of the rights offering at any time prior to the expiration of the rights offering in our sole discretion.

Our board of directors reserves the right to amend or modify the terms of the rights offering in its sole discretion. Although we do not presently intend to do so, we may choose to amend or modify the terms of the rights offering for any reason, including, without limitation, in order to increase participation in the rights offering. Such amendments or modifications may include a change in the subscription price, although no such change is presently contemplated. If we should make any fundamental changes to the terms of the rights offering set forth in this prospectus, we will file a post-effective amendment to the registration statement in which this prospectus is included, offer potential purchasers who have subscribed for rights the opportunity to cancel such subscriptions and issue a refund of any subscription payments advanced by such rights holder and recirculate an updated prospectus after the post-effective amendment is declared effective by the SEC. In addition, upon such event, we may extend the expiration date of the rights offering to allow holders of rights ample time to make new investment decisions and for us to recirculate updated documentation. Promptly following any such occurrence, we will issue a press release announcing any changes with respect to the rights offering and the new expiration date. The terms of the rights offering cannot be modified or amended after the expiration date of the rights offering.

RISKS RELATED TO OUR BUSINESS

We are in default under notes payable in the amount of $5,856,073 due to the appointment of an administrator over the Australia Hooters entities in the third quarter of 2015.

We are in default under notes payable in the amount of $5,856,073 due to the appointment of an administrator over the Australia Hooters entities in the third quarter of 2015. These notes are deemed accelerated until such time as we are able to renegotiate the terms or obtain a waiver of the default. To date the note holders have given no indication that they intend to enforce acceleration of the various notes. However, our inability to renegotiate the terms of these notes or obtain a waiver and action by the note holders to collect on the accelerated notes could adversely affect our growth and our operating results.

We have $9.6 million in notes and convertible debt obligations, which could potentially be called for payment within the next twelve months. Our current operations are contingent upon successfully obtaining additional financing in the near future, and failure to obtain financing will adversely affect our growth and operating results

If capital is not available, we may then need to scale back or freeze our organic growth plans, reduce general and administrative expenses, and/or curtail future acquisition plans to manage our liquidity and capital resources. We may also not be able refinance or otherwise extend or repay our current obligations of $9.6 million, or continue to operate as a going concern.

We have not been profitable to date and expect our operating losses to continue for the foreseeable future; we may never be profitable.

We have incurred operating losses and generated negative cash flows since our inception and have financed our operations principally through equity investments and borrowings. At this time, our ability to generate sufficient revenues to fund operations is uncertain. For the fiscal year ended December 31, 2015, we had net revenue of $42.4 million and incurred a net loss of $14.5 million. Our total accumulated deficit through December 31, 2015 was $33 million. In addition, we incurred a loss from continuing operations of $2.4 million during the nine months ended September 30, 2016.

As a result of our brief operating history, revenue is difficult to predict with certainty. Current and projected expense levels are based largely on estimates of future revenue. We expect expenses to increase in the future as we expand our activities. We cannot assure you that we will be profitable in the future. Accordingly, the extent of our future losses and the time required to achieve profitability, if ever, is uncertain. Failure to achieve profitability could materially and adversely affect the value of our Company and our ability to effect additional financings. The success of the business depends on our ability to increase revenues to offset expenses. If our revenues fall short of projections, our business, financial condition and operating results will be materially adversely affected.

Our financial statements have been prepared assuming a going concern.

Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern. Our financial statements as of December 31, 2015, were prepared under the assumption that we will continue as a going concern for the next twelve months. Our independent registered public accounting firm has issued a report that includes an explanatory paragraph referring to our losses from operations and expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. Our ability to continue as a going concern is dependent upon our ability to obtain additional financing, obtain further operating efficiencies, reduce expenditures and ultimately, create profitable operations. Such financings may not be available or may not be available on reasonable terms. Our financial statements do not include adjustments that result from the outcome of this uncertainty.

There may be future sales or other dilution of our equity, which may adversely affect the market price of our common stock.

We are not restricted from issuing additional shares of common stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, shares of common stock, as well as any shares of common stock that may be issued pursuant to our shareholder rights plan. The market price of our common stock could decline as a result of sales of our common stock made after this offering or the perception that such sales could occur.

We may issue and sell additional shares of our common stock in private placements or registered offerings in the future. We also may conduct additional rights offerings in the future pursuant to which we may issue shares of our common stock.

Provisions in our certificate of incorporation, our bylaws and Delaware law could make it more difficult for a third party to acquire us, discourage a takeover and adversely affect existing stockholders.

Our certificate of incorporation, our bylaws, and the Delaware General Corporation Law contain provisions that may have the effect of making more difficult, delaying, or deterring attempts by others to obtain control of our company, even when these attempts may be in the best interests of stockholders. These include provisions on our maintaining a classified board of directors and limiting the stockholders’ powers to remove directors or take action by written consent instead of at a stockholders’ meeting. Our certificate of incorporation also authorizes our board of directors, without stockholder approval, to issue one or more series of preferred stock, which could have voting and conversion rights that adversely affect or dilute the voting power of the holders of our common stock. Delaware law also imposes conditions on certain business combination transactions with “interested stockholders”.

These provisions and others that could be adopted in the future could deter unsolicited takeovers or delay or prevent changes in our control or management, including transactions in which stockholders might otherwise receive a premium for their shares over then-current market prices. These provisions may also limit the ability of stockholders to approve transactions that they may deem to be in their best interests.

We are not in compliance with the Nasdaq Capital Market’s bid price rule and may be required to complete a reverse stock split in order to regain compliance or face delisting.

The Nasdaq Listing Qualifications Department notified us on February 18, 2016 that, based on the previous 30 consecutive business days, our common stock no longer met the minimum $1 bid price per share requirement. Therefore, in accordance with the Nasdaq Stock Market’s Listing Rules, we were provided 180 calendar days, or until August 16, 2016, to regain compliance. We did not regain compliance with the Nasdaq Capital Market’s bid price rule within the specified period. Since Chanticleer meets all of the other applicable standards for initial listing on the Nasdaq Capital Market and has provided the Nasdaq Listing Qualifications Department with a representation that, if necessary, we intend to cure the defect by effecting a reverse stock split during the compliance period, we has been granted an additional 180 calendar days through February 13, 2017 to regain compliance with the bid price rule. If at any time during this additional time period the closing bid price of our common stock is at least $1 per share for a minimum of 10 consecutive business days, or if we complete a reverse split no later than 10 days prior to the expiration date of February 13, 2017, we will have regained compliance.

If we effect a reverse stock split of our common stock, the number of shares underlying the Series 1 Warrants will be proportionately reduced.

If we effect a reverse split, the number of shares of common stock outstanding as well as the number of shares of common stock issuable upon exercise of the Series 1 Warrants would both be reduced proportionately. For example, if the Company were to effect a 2:1 reverse stock split, the total number of shares of common stock outstanding would be reduced from approximately 22 million to 11 million and the Series 1 Warrants will be exercisable for five shares of our common stock, instead of 10 shares, in exchange for the surrender of one share of Series 1 Preferred.

The uncertainty surrounding the implementation and effect of Brexit may impact our UK operations.

The uncertainty surrounding the implementation and effect of Brexit, including the commencement of the exit negotiation period, the terms and conditions of such exit, the uncertainty in relation to the legal and regulatory framework that would apply to the UK and its relationship with the remaining members of the EU (including, in relation to trade) during a withdrawal process and after any Brexit is effected, has caused and is likely to cause increased economic volatility and market uncertainty globally. It is too early to ascertain the long term effects. To date, the only measurable impact is attributable to the decline in the pound sterling as measured against the U.S. dollar.

Negative publicity could reduce sales at some or all of our restaurants.

We may, from time to time, be faced with negative publicity relating to food quality and integrity, the safety, sanitation and welfare of our restaurant facilities, customer complaints or litigation alleging illness or injury, health inspection scores, integrity of our or our suppliers’ food processing and other policies, practices and procedures, employee relationships and welfare or other matters at one or more of our restaurants. Negative publicity may adversely affect us, regardless of whether the allegations are valid or whether we are held to be responsible. The risk of negative publicity is particularly great with respect to our franchised restaurants because we are limited in the manner in which we can regulate them, especially on a real-time basis and negative publicity from our franchised restaurants may also significantly impact company-operated restaurants. A similar risk exists with respect to food service businesses unrelated to us, if customers mistakenly associate such unrelated businesses with our operations. Employee claims against us based on, among other things, wage and hour violations, discrimination, harassment or wrongful termination may also create not only legal and financial liability but negative publicity that could adversely affect us and divert our financial and management resources that would otherwise be used to benefit the future performance of our operations. These types of employee claims could also be asserted against us, on a co-employer theory, by employees of our franchisees. A significant increase in the number of these claims or an increase in the number of successful claims could materially adversely affect our business, financial condition, results of operations and cash flows.

The interests of our franchisees may conflict with ours or yours in the future and we could face liability from our franchisees or related to our relationship with our franchisees.

Franchisees, as independent business operators, may from time to time disagree with us and our strategies regarding the business or our interpretation of our respective rights and obligations under the franchise agreement and the terms and conditions of the franchisee/franchisor relationship or have interests adverse to ours. This may lead to disputes with our franchisees and we expect such disputes to occur from time to time in the future as we continue to offer franchises. Such disputes may result in legal action against us. To the extent we have such disputes, the attention, time and financial resources of our management and our franchisees will be diverted from our restaurants, which could have a material adverse effect on our business, financial condition, results of operations and cash flows even if we have a successful outcome in the dispute.

In addition, various state and federal laws govern our relationship with our franchisees and our potential sale of a franchise. A franchisee and/or a government agency may bring legal action against us based on the franchisee/franchisor relationships that could result in the award of damages to franchisees and/or the imposition of fines or other penalties against us.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, within the meaning of the Federal securities laws, which involve substantial risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “outlook,” “believes,” “plans,” “intends,” “expects,” “goals,” “potential,” “continues,” “may,” “should,” “seeks,” “will,” “would,” “approximately,” “predicts,” “estimates,” “anticipates” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There will be events in the future, however, that we are not able to predict accurately or control. The factors listed under “Risk Factors” in this prospectus and in any documents incorporated by reference into this prospectus as well as any cautionary language in this prospectus, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Such risks and uncertainties include, among other things, risks and uncertainties related to:

Before you invest in our securities, you should be aware that the occurrence of the events described in these risk factors and elsewhere in this prospectus under the heading “Risk Factors” and in any documents incorporated by reference into this prospectus could have a material adverse effect on our business, results of operations and financial position. Any forward-looking statement made by us in this prospectus speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ will emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. You are advised to consult any further disclosures we make on related subjects in the reports we file with the SEC pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as amended (or the “Exchange Act”).

USE OF PROCEEDS

Assuming full participation in the rights offering, we estimate that the net proceeds from the rights offering will be approximately $12,232,000 after deducting expenses related to this offering payable by us estimated at approximately $1,268,000, including dealer-manager fees.

Repayment of Debt Obligations

We will allocate up to $8,425,000, of the proceeds of this offering to payment of certain existing debt, including principal, unpaid accrued interest and fees.

Florida Mezzanine Fund, LLP Obligation

Of the allocated financing proceeds, up to $5,275,000 will be paid to Florida Mezzanine Fund, LLP (“Florida Mezz”) to be applied toward principal, unpaid accrued interest and fees. The obligation to Florida Mezz bears interest at a rate of 12% per annum and matures on January 31, 2017. On October 24, 2016, we entered into the Second Amendment to Assumption and Assignment Agreement with Florida Mezz. Pursuant to this amendment, we agreed to allocate up to $5,000,000 of the proceeds of the rights offering to Florida Mezz to be applied toward the Company’s obligation. If payment is remitted on or prior to December 31, 2016, Florida Mezz will extend the maturity date of the note from January 31, 2017 to July 31, 2018. Only in the event the Florida Mezz obligation is not repaid in full by December 31, 2016, we will pay a modification fee equal to five percent (5%) of the outstanding principal balance of the balance of the obligation after the application of the financing proceeds. Also only in the event that the Florida Mezz obligation is not repaid in full, we agreed to allocate 62.5% of the proceeds from the sale of any asset prior to July 31, 2018 to Florida Mezz. Provided that we continue to make timely interest only payments to Florida Mezz, a subsequent payment default does not occur, and we continue to comply with the terms of the amendment, any existing event of default was waived together with waiver of the financial covenants until July 31, 2018.

6% Secured Subordinate Convertible Notes

Of the allocated proceeds, up to $3,150,000 will be paid to the holders of our 6% Secured Subordinate Convertible Notes to be applied to principal, unpaid accrued interest and fees. The notes matured on August 2, 2016 and are in default. The interest rate on the notes has increased from 6% simple interest per annum to 21% simple interest per annum as a result of the default. The notes holders have a priority security interest in the Company’s Hooter’s store in Nottingham, England as well as a subordinated security interest in all of the Company’s other assets.

Other Uses

The remainder of the proceeds will be used for planned store related capital expenditures and for general working capital purposes.

We will retain broad discretion of the use of proceeds reserved for working capital. You will be relying on the judgment of our management with regard to the use of such proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. It is possible that the proceeds will be invested in a way that does not yield a favorable, or any, return for the company.

If we fail to raise capital by the end of December 2016, we would expect to have to significantly decrease our growth plans and operating expenses, which will curtail the progress of our business.

The table below sets forth the breakdown of the use of proceeds from the rights offering, in order of priority and assuming full participation in the rights offering:

CAPITALIZATION

The following table sets forth our short-term debt and consolidated capitalization as of September 30, 2016 and our consolidated capitalization as adjusted to give effect to:

You should read this table in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2016, which is incorporated herein by reference and our historical financial statements and notes to those financial statements that are incorporated by reference in this prospectus.

We are unable to predict the actual level of participation in the offerings.

THE RIGHTS OFFERING

The Subscription Rights

We are distributing, at no charge, to holders of our common stock and our public warrants, non-transferable subscription rights to purchase up to an aggregate of 1,000,000 units consisting of shares of our Series 1 Preferred Stock, liquidation value $13.50 per share, and Series 1 Warrants to purchase shares of our common stock, par value $0.0001 per share. Each subscription right will entitle you, subject to proration as described herein, to purchase one unit consisting of one share of our Series 1 Preferred and a warrant to purchase 10 shares of our common stock, at a subscription price of $13.50 per unit.

Each holder of record of our common stock as of the record date for the rights offering will receive one subscription right for every share of our common stock and public warrant owned by such holder as of 5:00 p.m. Eastern time on the record date.

Each subscription right will entitle the holder to a basic subscription privilege and an over-subscription privilege, which are described below. The basic subscription privilege and the over-subscription privilege are both subject to proration. If all the rights were exercised, all subscription rights holders would be subject to proration of their basic subscription privilege, and each subscription rights holder would be entitled to purchase a total number of units of approximately 4.5% of the number of subscription rights held by such subscription rights holder. If any proration is necessary, subscriptions for the units will be prorated.

Basic Subscription Privilege

The basic subscription privilege of each subscription right gives our rights holders of record as of the record date the opportunity to purchase one unit consisting of one share of our Series 1 Preferred and a Series 1 Warrant to purchase 10 shares of our common stock, from the date of issuance through its expiration seven years from the date of issuance, at a subscription price of $13.50 per unit, subject to proration. We have granted to each rights holder of record as of 5:00 p.m. Eastern time on the record date, one subscription right for every share of our common stock and every public warrant owned by such rights holder at that time. For example, if you owned 1,000 shares of our common stock as of 5:00 p.m. Eastern time on the record date and 50 public warrants, you would receive 1,050 subscription rights and would have the right to purchase 1,050 units, for $13.50 per unit, with your basic subscription privilege plus an unlimited over-subscription privilege, in each case subject to proration as described herein. You may exercise the basic subscription privilege of any number of your subscription rights, or you may choose not to exercise any subscription rights. If you do not exercise your basic subscription privilege in full, you will not be entitled to purchase any units under your over-subscription privilege.

If you hold your shares or public warrants in the name of a broker, custodian bank, dealer or other nominee who uses the services of the Depository Trust Company, or DTC, DTC will issue one subscription right to the nominee for every shares of our common stock and public warrant you own at the record date. The basic subscription privilege of each subscription right can then be used to purchase one unit for $13.50 per unit, subject to proration.

If an insufficient number of units is available to fully satisfy all basic subscription privilege requests, we will allocate the available units pro-rata among those rights holders exercising their basic subscription privilege in proportion to the product (rounded down to the nearest whole number so that the aggregate number of units does not exceed the aggregate number offered) obtained by multiplying the number of units such rights holder subscribed for under the basic subscription privilege by a fraction (A) the numerator of which is 1,000,000 and (B) the denominator of which is the total number of units sought to be subscribed for under the basic subscription privilege by all holders exercising their basic subscription privilege. All subscriptions, including subscriptions pursuant to the basic subscription privilege, will be subject to proration. The subscription rights agent will notify subscription rights holders of the number of units allocated to each holder exercising the basic subscription privilege as promptly as may be practicable after the allocations are completed.

Any excess subscription payments received by the subscription rights agent will be promptly returned, without interest.

Over-Subscription Privilege

The over-subscription privilege provides each rights holder that fully exercises all of such holder’s basic subscription privilege the opportunity to purchase the units that are not purchased by other rights holders. If you fully exercise your basic subscription privilege, the over-subscription privilege entitles you to subscribe for additional units unclaimed by other holders of subscription rights in this offering at the same subscription price per unit. If an insufficient number of units is available to fully satisfy all over-subscription privilege requests, we will allocate the available units, pro-rata among those rights holders exercising their over-subscription privilege in proportion to the product (rounded down to the nearest whole number so that the subscription price multiplied by the aggregate number of units does not exceed the aggregate offering amount) obtained by multiplying the number of units such rights holder subscribed for pursuant to the over-subscription privilege by a fraction (A) the numerator of which is the number of unsubscribed units and (B) the denominator of which is the total number of units sought to be subscribed for pursuant to the over-subscription privilege by all holders participating in such over-subscription. The subscription rights agent will notify subscription rights holders of the number of units, if any, allocated to each holder exercising the over-subscription privilege as promptly as may be practicable after the allocations are completed.

To properly exercise your over-subscription privilege, you must deliver the subscription payment related to your over-subscription privilege prior to the expiration of the subscription period. Because we will not know the total number of unsubscribed units prior to the expiration of the rights offering, if you wish to maximize the number of units you purchase pursuant to your over-subscription privilege, you will need to deliver payment in an amount equal to the aggregate subscription price for the maximum number of units available to you, assuming that no stockholder other than you has purchased any units pursuant to its basic subscription privilege and over-subscription privilege.

There may not be sufficient units available to purchase the number of units issuable upon the exercise of your basic subscription privilege or your over-subscription privilege. We will only honor over-subscription privileges to the extent sufficient unsubscribed units are available following the exercise of subscription rights under the basic subscription privilege. We will not issue more than 1,000,000 units, consisting in the aggregate of 1,000,000 shares of Series 1 Preferred and Series 1 Warrants to purchase up to 10,000,000 shares of common stock.

To the extent the aggregate subscription available to you pursuant to the subscription privileges is less than the amount you actually paid in connection with the exercise of the subscription privileges, you will be allocated only the number of unsubscribed units available to you promptly after the expiration of the rights offering.

To the extent the amount you actually paid in connection with the exercise of the subscription privileges is less than the aggregate subscription price of the maximum number of units available to you, you will be allocated the number of units for which you actually paid in connection with the privileges.

Any excess subscription payments received by the subscription rights agent will be promptly returned, without interest.

Limitation on Exercise of Basic Subscription Privilege and Over-Subscription Privilege

If the rights offering is over-subscribed, in which case the total number of units available in the rights offering will be allocated to participating rights holders on a pro-rata basis, as set forth more fully in this prospectus, then the number of units that each participating rights holder will be eligible to receive will depend upon the number of subscription rights exercised by the rights holder and the total number of subscription rights exercised. All subscriptions, including the basic subscription privilege, are subject to proration. If any proration is necessary, subscriptions for units will be prorated.

If the exercise by a rights holder of the basic subscription privilege or the over-subscription privilege could, as determined by us in our sole discretion, potentially result in a limitation on our company’s ability to use the Tax Attributes, under the Code and rules promulgated by the Internal Revenue Service, we may, but are under no obligation to, reduce the exercise by such rights holder of the basic subscription privilege or the over-subscription privilege to such number of units as we in our sole discretion shall determine to be advisable in order to preserve our company’s ability to use the Tax Attributes.

Allocations

The subscription rights agent will perform the allocations of the units in this offering. The subscription rights agent will notify rights holders who validly exercise their subscription rights the number of units allocated to each as promptly as may be practicable after completion of the allocation process.

Reasons for the Rights Offering

We are conducting this rights offering to raise capital. We will allocate up to $8,425,000 of the proceeds to payment of certain existing debt, including principal, unpaid accrued interest and fees. The remainder of the proceeds will be used for planned store related capital expenditures and for general working capital purposes. We cannot assure you that we will not need to seek additional financing in the future.

Method of Exercising Subscription Rights

To exercise your subscription rights, you must follow the process described in the subscription documents sent to you and also available from the information agent. For assistance you may contact Issuer Direct, the information agent for the rights offering, at (919) 744-2722 or by email at chanticleer@issuerdirect.com.

The exercise of subscription rights will be irrevocable and may not be cancelled or modified, even if the rights offering is extended by our board of directors, unless we amend the subscription period to extend it by more than 30 days or make a fundamental change to the terms of the rights offering set forth in this prospectus. In any such case, you may cancel your subscription and receive a refund of any money you have advanced. You may exercise your subscription rights as follows:

Subscription By Registered Holder with U.S. or Canadian Address

To exercise your subscription right to buy units, you must (a) properly complete the subscription process as set forth in the subscription documents and (b) submit payment for all the subscription rights you elect to exercise under the basic subscription privilege and over-subscription privilege, to the subscription rights agent, Securities Transfer Corp., at the address set forth on the subscription documents prior to 5:00 p.m. Eastern time on December 29, 2016, the expiration date of the rights offering. If the mail is used to forward subscription documents and/or a certified or bank check, it is recommended that insured, registered mail be used. Once you exercise your subscription rights, you cannot revoke your exercise. In addition, since we may terminate or withdraw the rights offering at our discretion, your participation in the rights offering is not assured.

Subscription By DTC Participants

Banks, trust companies, securities dealers and brokers that hold our equity securities or warrants therefor as nominee for more than one beneficial owner may, upon proper showing to the subscription rights agent, exercise their subscription privileges on the same basis as if the beneficial owners were record holders on the record date through the Depository Trust Company (the “DTC”). The DTC will issue one basic subscription privilege to purchase one unit to you for every share of our common stock and each public warrant that is held by you or is issuable to you as of the record date. Each basic subscription privilege can then be used to purchase one unit for $13.50 per unit. You may exercise these subscription privileges through DTC’s PSOP Function and instructing DTC to charge your applicable DTC account for the subscription payment for the units and deliver such amount to the subscription rights agent. DTC must receive the subscription instructions and payment for the units by the expiration date of the rights offering.

Subscription by Beneficial Owners

If you are a beneficial owner of our common stock or public warrants therefor that are registered in the name of a broker, custodian bank or other nominee, or if you hold certificates and would prefer to have an institution conduct the transaction relating to the subscription rights on your behalf, you should instruct your broker, custodian bank or other nominee or institution to exercise your subscription rights and deliver all documents and payment on your behalf prior to 5:00 p.m. Eastern time on the expiration date of this rights offering. Your subscription rights will not be considered exercised unless the subscription rights agent receives from you, your broker, custodian, nominee or institution, as the case may be, all of the required documents and your full subscription price payment prior to 5:00 p.m. Eastern time on the expiration date of the rights offering.

Payment Method

Payments must be made in full in U.S. currency by personal check, certified check or bank draft, or by wire transfer. You must timely pay the full subscription payment, including payment for the over-subscription privilege, if applicable, for the full number of units you wish to acquire pursuant to the exercise of subscription rights by delivering a:

Any personal check used to pay for units must clear the appropriate financial institutions prior to the expiration date of the rights offering. The clearinghouse may require five or more business days. Accordingly, rights holders who wish to pay the subscription price by means of an uncertified personal check are urged to make payment sufficiently in advance of the expiration date to ensure such payment is received and clears by such date. Subscription documents received after that time will not be honored, and we will return your payment to you, without interest or deduction.

The subscription rights agent will be deemed to receive payment upon:

You should read the instruction letter accompanying the subscription documents carefully and strictly follow it. DO NOT SEND SUBSCRIPTION DOCUMENTS OR PAYMENTS TO US. We will not consider your subscription received until the subscription rights agent has received delivery of a properly completed and duly executed subscription documents and payment of the full subscription amount. The risk of delivery of all documents and payments is on you or your nominee, not us or the subscription agent.

Unless a subscription document provides that the units are to be delivered to the record holder of such subscription rights or such document is submitted for the account of a bank or a broker, signatures on such subscription document must be guaranteed by an “Eligible Guarantor Institution,” as such term is defined in Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended, subject to any standards and procedures adopted by the subscription rights agent.

Calculation of Subscription Rights Exercised

If you do not indicate the number of subscription rights being exercised, or do not forward full payment of the total subscription price payment for the number of subscription rights that you indicate are being exercised, then you will be deemed to have exercised your basic subscription privilege and over subscription privilege with respect to the maximum number of subscription rights that may be exercised with the aggregate subscription price payment you delivered to the subscription rights agent. If we do not apply your full subscription price payment to your purchase of units, we or the subscription rights agent will promptly return the excess amount to you by mail, without interest or deduction after the expiration date of this rights offering.

Expiration Date and Amendments

The subscription period during which you may exercise your subscription rights expires at 5:00 p.m. Eastern time on December 29, 2016. If you do not exercise your subscription rights prior to that time, your subscription rights will expire and will no longer be exercisable. We will not be required to issue units to you if the subscription rights agent receives your subscription documents or your subscription payment after that time, regardless of when the subscription documents and subscription payment were sent. We may extend the offering up to an additional 30 days, at our sole discretion. We do not presently intend to extend the rights offering. If we elect to extend the rights offering, we will issue a press release announcing such extension no later than 9:00 a.m. Eastern time on the next business day after the most recently announced expiration time of the rights offering. We will extend the rights offering as required by applicable law or regulation and may choose to extend it if we decide to give investors more time to exercise their subscription rights in the rights offering. If we elect to extend the rights offering for a period of more than 30 days, then holders who have subscribed for rights may cancel their subscriptions and receive a refund of all subscription payments advanced.

If the rights offering is not fully subscribed following expiration of the rights offering, Source Capital Group, Inc. has agreed to use its commercially reasonable efforts to place any unsubscribed units of this rights offering at the subscription price for an additional period of up to 45 days. The number of units that may be sold by us during this period will depend upon the number of units that are subscribed for pursuant to the exercise of subscription rights by our rights holders. No assurance can be given that any unsubscribed units, if available, will be sold during this period.

Our board of directors also reserves the right to amend or modify the terms of the rights offering. If we make any fundamental changes to the terms of the rights offering set forth in this prospectus, we will offer potential purchasers who have exercised their rights the opportunity to cancel their subscriptions and issue a refund of any subscription payments advanced by such rights holder and recirculate an updated prospectus. In addition, upon such event, we may extend the expiration date of the rights offering to allow holders of subscription rights ample time to make new investment decisions and for us to recirculate updated documentation. Promptly following any such occurrence, we will issue a press release announcing any changes with respect to the rights offering and the new expiration date. The terms of the rights offering cannot be modified or amended after the closing of the rights offering. Although we do not presently intend to do so, we may choose to amend or modify the terms of the rights offering for any reason, including, without limitation, in order to increase participation in the rights offering. Such amendments or modifications may include a change in the subscription price, although no such change is presently contemplated.

Subscription Price

The purchase price was determined by our board of directors, taking into account the advice of the dealer-manager, Source Capital Group, as well as historical and recent trading prices of our common stock. The purchase price is not the result of any negotiation between any person and us. The board of directors established the purchase price at $13.50 per unit and the Series 1 Warrant exercise price to equal surrender of one share of Series 1 Preferred with a liquidation value of $13.50 for 10 shares of common stock. The purchase price is not necessarily related to our book value, net worth or any other established criteria of value and may or may not be considered the fair value of the units offered in the rights offering. Subscription rights holders should consider the potential lack of liquidity carefully before making a decision to exercise their subscription rights for the units. See “Risk Factors”.

Conditions, Withdrawal and Termination

We reserve the right to withdraw the rights offering prior to the expiration of the rights offering for any reason. We may terminate the rights offering, in whole or in part, if at any time before completion of the rights offering there is any judgment, order, decree, injunction, statute, law or regulation entered, enacted, amended or held to be applicable to the rights offering that in the sole judgment of our board of directors would or might make the rights offering or its completion, whether in whole or in part, illegal or otherwise restrict or prohibit completion of the rights offering. We may choose to proceed with the rights offering even if one or more of these events occur. If we terminate, cancel or withdraw the rights offering, in whole or in part, we will issue a press release notifying the rights holders of such event, all affected subscription rights will expire without value, and all subscription payments received by the subscription rights agent will be promptly returned, without interest, following such termination, cancellation or withdrawal.

Cancellation Rights

Our board of directors may cancel the rights offering at any time prior to the time the rights offering is completed for any reason. If we cancel the rights offering, we will issue a press release notifying rights holders of the cancellation and all subscription payments received by the subscription rights agent will be promptly returned, without interest.

Subscription Rights Agent

The subscription rights agent for this offering is Securities Transfer Corp. To exercise your subscription rights for the units, you must follow the process described in the subscription documents sent to you and also available from the information agent. For assistance or copies of the documents you may contact Issuer Direct, the information agent for the rights offering, at (919) 744-2722 or by email at chanticleer@issuerdirect.com. To exercise your subscription rights for the units you will need to use the traditional paper documentation.

You should direct any questions or requests for assistance concerning the method of subscribing for the units, or for additional copies of this prospectus and subscription documents to Issuer Direct, the information agent for the rights offering, at (919) 744-2722 or by email at chanticleer@issuerdirect.com.

Fees and Expenses

We will pay all fees related to the offering, including legal and accounting fees and fees charged by each of the transfer agent, the subscription rights agent and the information agent in connection with the rights offering. We have agreed to pay Source Capital Group as the dealer-manager a fee of 6.0% of the proceeds of the rights offering, plus a 1.8% non-accountable expense fee and an out-of-pocket accountable expense allowance of 0.2% of the proceeds of the offering. For any unsubscribed units placed by Source Capital Group after the expiration of the rights offering and extension, we have agreed to pay Source Capital Group a placement fee equal to 6%, in lieu of the dealer-manager fee, along with a continuing 1.8% non-accountable expense fee and an out-of-pocket accountable expense allowance of 0.2% of the proceeds of the offering, with such placement fee and expenses to be calculated in respect of the total gross proceeds paid to and received by us for subscriptions accepted by us from investors in connection with such placement and such placement fee and expenses not to exceed the aggregate amounts that would have been otherwise received by Source Capital Group if the rights offering were to have been fully subscribed. Neither the placement fee nor the expense allowance in connection with the placement will be payable with respect to any units purchased as result of the exercise of any basic subscription privilege or over-subscription privilege in the rights offering. Source Capital Group has informed us that it will re-allow 4.0% of its dealer-manager fee with respect to any such sale to each broker-dealer whose clients purchase units in this offering pursuant to the exercise some or all of their subscription rights. See “Plan of Distribution”. You are responsible for paying any other commissions, fees, taxes or other expenses incurred in connection with the exercise of the subscription rights.

Transferability of Subscription Rights

The subscription rights granted to you are non-transferable and, therefore, you may not sell, transfer or assign your subscription rights to anyone. The subscription rights will not be listed for trading on any stock exchange or market.

Validity of Subscriptions

We will resolve all questions regarding the validity and form of the exercise of your subscription rights, including time of receipt and eligibility to participate in the rights offering. In resolving all such questions, we will review the relevant facts, consult with our legal advisors to the extent we deem necessary, and we may request input from the relevant parties. Our determination will be final and binding. Once made, subscriptions and directions are irrevocable, and even if the rights offering is extended by our board of directors, and we will not accept any alternative, conditional or contingent subscriptions or directions. However, if we amend the rights offering to allow for an extension of the rights offering for a period of more than 30 days or make a fundamental change to the terms of the rights offering set forth in this prospectus, you may cancel your subscription and receive a refund of any money you have advanced. We reserve the absolute right to reject any subscriptions or directions not properly submitted or the acceptance of which would be unlawful. You must resolve any irregularities in connection with your subscriptions before the subscription period expires, unless waived by us in our sole discretion. Neither we nor the subscription rights agent has any duty to notify you or your representative of defects in your subscriptions. A subscription will be considered accepted, subject to our right to withdraw or terminate the rights offering, only when the subscription rights agent has received a properly completed and duly executed subscription documents and any other required documents and the full subscription payment. Our interpretations of the terms and conditions of the rights offering will be final and binding.

Return of Funds

The subscription rights agent will hold funds received in payment for the units in a segregated account pending completion of the rights offering. The subscription rights agent will hold this money until the rights offering is completed or is withdrawn and canceled. If the rights offering is canceled for any reason, all subscription payments received by the subscription rights agent will be promptly returned, without interest. In addition, all subscription payments received by the subscription rights agent will be promptly returned, without interest, if subscription rights holders decide to cancel their subscription rights in the event that we extend the rights offering for a period of more than 30 days after the expiration date or if there is a fundamental change to the terms of the rights offering.

Foreign Rights Holders

Non-U.S. citizens or residents are permitted to purchase the units to the extent such purchases do not violate any law, rule, regulation or other requirement or prohibition of any non-U.S. governmental authority and do not require any registration or qualification or other action by or on behalf of the company or any other entity involved in the offering. To exercise subscription rights, our foreign rights holders must notify the subscription rights agent prior to 11:00 a.m. Eastern time at least three business days prior to the expiration of the rights offering.

No Revocation or Change

Once you submit the subscription documents to exercise any subscription rights, you have no right to revoke or change the exercise or request a refund of funds paid. All exercises of subscription rights are irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your subscription rights and even if the rights offering is extended by our board of directors, unless we amend the rights offering to allow for an extension of the rights offering for a period of more than 30 days or make a fundamental change to the terms of the rights offering set forth in this prospectus, in which case you may cancel your subscription and receive a refund of any money you have advanced. You should not exercise your subscription rights unless you are certain that you wish to purchase units at the purchase price.

Regulatory Limitations

We will not be required to issue to you any units in this rights offering if, in our opinion, you are or may be required to obtain prior clearance or approval from any state or federal regulatory authorities to purchase, own or control such units and if, at the time the subscription period expires, you have not obtained such clearance or approval. We also will not be required to issue to you any units in this rights offering if, in our opinion, any such issuance may violate any law, rule or regulation or other requirement or prohibition of any non-U.S. governmental authority or may require any registration or qualification or other action by or on behalf of the company or any other entity involved in the offering.

U.S. Federal Income Tax Treatment of Subscription Rights Distribution

We believe that our distribution and any rights holder’s receipt and exercise of the rights to purchase the units should not be taxable to our rights holders for the reasons described below in “Material U.S. Federal Income Tax Consequences to U.S. Holders”.

No Recommendation to Subscription Rights Holders

Our board of directors is making no recommendation regarding your exercise of the subscription rights. You are urged to make your decision based on your own assessment of our business and the rights offering. Please see “Risk Factors” for a discussion of unique and material risks involved in investing in the units.

No Standby Commitment

We have not entered into any standby purchase arrangement in connection with this offering.

Listing

None of the subscription rights, the Series 1 Preferred or the Series 1 Warrants will be listed for trading on any stock exchange or market. The subscription rights are completely non-transferrable. We intend to apply to have the units listed on a stock exchange or quoted on the OTC marketplace. There is no assurance that the units will be listed on a stock exchange or quoted on the OTC marketplace.There will be no holders of units to help establish a trading market other than purchasers in this rights offering. Further, we do not expect to issue any additional units. Consequently, trading of the units may be very limited and possibly non-existent.

Other Matters

We are not making the rights offering in any state or other jurisdiction in which it would be unlawful to do so, nor are we distributing or accepting any offers to purchase any units from subscription rights holders who are residents of any such states or other jurisdictions or who are otherwise prohibited by federal or state laws or regulations from accepting or exercising the subscription rights or holding units.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of the material U.S. federal income tax consequences of the ownership and disposition of the units. Unless otherwise noted below, the following discussion is the opinion of Cherry Bekaert LLP, our U.S. tax advisors, insofar as such discussion relates to matters of U.S. federal income tax law and conclusions with respect to those matters. This discussion does not describe all of the tax considerations that may be relevant to a particular holder’s ownership of the units. This discussion applies only to U.S. Holders that hold the units as a capital asset for tax purposes and does not address all of the tax consequences that may be relevant to holders subject to special rules, such as: regulated investment companies, real estate investment trusts, certain financial institutions, dealers and certain traders in securities or foreign currencies, insurance companies, persons holding the units as part of a hedge, straddle, conversion transaction or integrated transaction, persons whose “functional currency” is not the U.S. dollar, persons liable for the alternative minimum tax, tax-exempt organizations, and persons holding the units that own or are deemed to own 10% or more of our voting shares.

This discussion is based upon the tax laws of the United States including the Internal Revenue Code of 1986, as amended to the date hereof (the “Code”), administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations, as of the date hereof. These laws are subject to change, possibly with retroactive effect. The discussion does not address any state, local or non-U.S. tax consequences.

This discussion does not address all aspects of U.S. federal income taxation that may be applicable to holders in light of their particular circumstances or to holders subject to special treatment under the U.S. federal income tax laws, including, but not limited to, financial institutions, brokers and dealers in securities or currencies, insurance companies, regulated investment companies, real estate investment trusts, tax-exempt organizations, persons who hold their shares as part of a straddle, hedge, conversion or other risk-reduction transaction, persons liable for the alternative minimum tax, persons who have received their common stock pursuant to which the subscription rights in this rights offering have been granted through the exercise of employee stock options or otherwise as compensation for services, partnerships or other entities treated as partnerships for U.S. federal income tax purposes, U.S. expatriates, and persons whose functional currency is not the U.S. dollar and foreign taxpayers. This discussion does not describe any tax consequences arising out of the tax laws of any state, local or foreign jurisdiction, or any U.S. federal tax considerations other than income taxation (such as estate or gift taxation). This discussion is limited to U.S. holders which hold our shares as capital assets and does not address U.S. holders which beneficially hold our shares through either a “foreign financial institution” (as such term is defined in Section 1471(d)(4) of the Code) or certain other non-U.S. entities specified in Section 1472 of the Code. For purposes of this discussion, a “U.S. holder” is a holder that is, for U.S. federal income tax purposes:

If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) receives the subscription rights or holds the units received upon exercise of the subscription rights or the over-subscription privilege, the tax treatment of a partner in a partnership generally will depend upon the status of the partner and the activities of the partnership. Such a partner or partnership should consult its own tax advisor as to the U.S. federal income tax consequences of the receipt and ownership of the subscription rights or the ownership of the units received upon exercise of the subscription rights or, if applicable, upon exercise of the over-subscription privilege.

YOU SHOULD CONSULT YOUR TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO YOU OF YOUR RECEIPT, OWNERSHIP, AND EXERCISE OF THE SUBSCRIPTION RIGHTS, THE OWNERSHIP AND DISPOSITION OF SERIES 1 PREFERRED AND THE SERIES 1 WARRANTS, AND THE OWNERSHIP AND DISPOSITION OF COMMON STOCK RECEIVED UPON THE EXERCISE OF THE SERIES 1 WARRANTS TO PURCHASE OUR COMMON STOCK, INCLUDING THE APPLICABILITY OF ANY FEDERAL ESTATE OR GIFT TAX LAWS OR ANY STATE, LOCAL OR FOREIGN TAX LAWS.

Receipt of the Subscription Rights

Each subscription right entitles an eligible rights holder the right to purchase one unit consisting of one share of our Series 1 Preferred and Series 1 Warrants to purchase 10 shares of our common stock, from the date of issuance through its expiration seven years from the date of issuance, at a subscription price of $13.50 per unit. Generally, the distribution of stock by a corporation to its stockholders with respect their stock is not taxable to such stockholders pursuant to Section 305(a) of the Code. For such purpose, a distribution of rights to acquire stock of the distributing corporation constitutes a distribution of stock. However, if a distribution of stock or rights to acquire stock falls within one of several exceptions set forth in Section 305(b) to the general rule of Section 305(a) of the Code, the distribution may be taxable to the stockholders of the distributing corporation as described below.

Many of the exceptions to the general rule of Section 305(a) set forth in Section 305(b) involve preferred stock, such as the distribution of preferred stock in certain circumstances pursuant to Section 305(b)(5). Treasury regulation Section 1.305-5(a) defines preferred stock not for its preferred rights and privileges, but its inability to participate in corporate growth to any significant extent. The Series 1 Preferred does not in and of itself participate in the corporate growth. This would normally cause the distribution of the Series 1 Preferred stock to not qualify as a tax free distribution under Section 305(a). However, the Series 1 Preferred also is part of a unit that contains warrants for common stock. The common stock warrants alone would ordinarily qualify as a nontaxable distribution under Section 305(a). In this case, the common stock warrants are only exercisable by the surrender of the Series 1 preferred share. The Series 1 Preferred and the warrants, together function very much like convertible preferred stock due to the fact that they are bundled together as a unit and they cannot be separately traded or transferred. The unit as a whole participates in corporate growth since the holders of such stock have a right to exchange this stock for shares of the company’s common stock by exercising their warrants. It is not clear how the Internal Revenue Service will view the bundled units in this regard.

Distribution of convertible preferred stock is one of the exceptions to the general rule of Section 305(a). Section 305(b)(5) provides that a distribution of convertible preferred stock will be subject to tax unless it is established to the satisfaction of the Secretary of the Treasury that the distribution will not result in a disproportionate distribution as described in Section 305(b)(2), which will be addressed next.

Section 305(b)(2) is an exception to the general rule of Section 305(a) that applies to a “disproportionate distribution”. Pursuant to Section 305(b)(2), a distribution (or a series of distributions of which such a distribution is one) constitutes a “disproportionate distribution,” and is therefore taxable, if the distribution results in (i) the receipt of property by some stockholders, and (ii) an increase in the proportionate interest of other stockholders in the assets or earnings and profits of the distributing corporation. For this purpose, the term “property” means money, securities and any other property, except that such term does not include stock in the corporation making the distribution or rights to acquire such stock. A “series of distributions” encompasses all distributions of stock made or deemed made by a corporation which have the result of receipt of cash or property by some stockholders and an increase in the proportionate interests of other stockholders. It is not necessary for a distribution of stock to be considered as one of a series of distributions that such distribution be pursuant to a plan to distribute cash and property to some stockholders and to increase the proportionate interests of the other stockholders, rather it is sufficient if there is a distribution (or a deemed distribution) having such effect. In addition, there is no requirement that both elements of Section 305(b)(2) of the Code occur in the form of a distribution or series of distributions as long as the result is that some stockholders receive cash and property and other stockholders’ proportionate interests increase.

Under Treasury Regulation 1.305-3(b)(4), where the receipt of cash or property occurs more than 36 months following a distribution or series of distributions of stock, or where a distribution is made more than 36 months following the receipt of cash or property, such distribution or distributions will be presumed not to result in the receipt of cash or property by some stockholders and an increase in the proportionate interest of other stockholders, unless the receipt of cash or property by some stockholders and the distribution or series of distributions are made pursuant to a plan. Treasury Regulation 1.305-6 provides guidance on distributions of convertible preferred stock and rights. The examples under subsection (b) of this Regulation state that where the preferred stock is convertible into common stock no later than 4 months from the date of distribution, such a distribution will be treated as a dividend distribution, whereas in a situation where the preferred stock is convertible for a period of 20 years, there is no basis for predicting the extent the preferred stock will be converted and therefore the distribution of the preferred stock would not be treated as a dividend distribution. In the instant case, the conversion period is 7 years, which we believe provides sufficient doubt as to extent the preferred shares will be converted and therefore we believe the bundled units should not be treated as a dividend distribution.

The distribution of subscription rights in the rights offering should not constitute an increase in the proportionate interest of some stockholders in the assets or earnings and profits of the company for the purpose of Section 305(b)(2) based on the fact that all of our stockholders will receive rights in the rights offering based upon their respective ownership of our common stock. See Regulation Section 1.305-3(e) Ex.6. This opinion is not binding on the IRS or any court and there can be no assurance that the IRS or a court will agree with this opinion. The remainder of this discussion assumes that Section 305(b)(2) does not apply to the subscription rights offering.

Subject to the foregoing, you should not be required to recognize taxable income for U.S. federal income tax purposes in connection with the receipt of the subscription rights in the rights offering and the remainder of this discussion so assumes. However, in the event the IRS successfully asserts or a court determines that your receipt of subscription rights is currently taxable pursuant to Section 305(b)(2) of the Code, the discussion below under the heading “Alternative Treatment of Subscription Rights” describes the tax consequences that will result from such a determination.

Tax Basis and Holding Period of the Subscription Rights

Generally, if a shareholder receives stock or stock rights to acquire shares in the corporation, the shareholder is required to allocate a portion of the basis of the shareholder’s existing shares to the new stock or rights received (Section 307(a)). However, under Section 307(b) your tax basis of the subscription rights for U.S. federal income tax purposes will depend on the fair market value of the subscription rights you receive and the fair market value of your existing shares of common stock on the date you receive the subscription rights. The tax basis of the subscription rights received by you in the subscription rights offering will be zero unless either (i) the fair market value of the subscription rights on the date such subscription rights are distributed is equal to at least 15% of the fair market value of such common stock on the date of distribution or (ii) you elect to allocate part of the tax basis of such shares to the subscription rights. If either (i) or (ii) is applicable, then, if you exercise the subscription rights, the tax basis in your shares of common stock will be allocated between the subscription rights and the shares of common stock with respect to which the subscription rights were received in proportion to their respective fair market values on the date the subscription rights are distributed.

We have not obtained an independent appraisal of the valuation of the subscription rights and, therefore, you should consult with your tax advisor to determine the proper allocation of basis between the subscription rights and the shares of common stock with respect to which the subscription rights are received.

Your holding period for the subscription rights will include your holding period for the shares of common stock with respect to which the subscription rights were received; but see below for information on common stock acquired upon exercise of your warrants.

Expiration of the Subscription Rights

If you allow subscription rights received in the subscription rights offering to expire, you will not recognize any gain or loss. If you have tax basis in the subscription rights, the tax basis of the shares of common stock owned by you with respect to which such subscription rights were distributed will be restored to the tax basis of such shares immediately prior to the receipt of the subscription rights in the offering.

Alternative Treatment of Subscription Rights

Receipt. If the IRS were to successfully assert that the distribution of the subscription rights in the rights offering resulted in a “disproportionate” distribution or is otherwise taxable pursuant to Section 305(b) each holder would be considered to have received a distribution with respect to such holder’s stock in an amount equal to the fair market value of the subscription rights received by such holder on the date of the distribution. This distribution generally would be taxed as a dividend distribution to the extent of your ratable share of our current and accumulated earnings and profits. The amount of any distribution in excess of our earnings and profits will be applied to reduce, but not below zero, your tax basis in your stock, and any excess generally will be taxable to you as capital gain (long-term, if your holding period with respect to your capital stock is more than one year as of the date of distribution, and otherwise short-term). Your tax basis in the subscription rights received pursuant to the rights offering would be equal to their fair market value on the date of distribution and the holding period for the subscription rights would begin upon receipt.

Expiration. In the event that you allow your subscription rights to expire without exercising them, the tax basis in your shares of common stock with respect to which the subscription rights were received will be equal to their tax basis immediately before your receipt of the subscription rights (and, accordingly, the tax basis in your subscription rights will be deemed to be zero) and, therefore, you will not recognize any loss upon the expiration of the subscription rights. If the subscription rights expire without exercise after you have disposed of all or a portion of your shares of common stock, you should consult your own tax advisor regarding the ability to recognize a loss (if any) on the expiration of the subscription rights.

Exercise of the Subscription Rights; Tax Basis and Holding Period of the Shares

As discussed above, the exercise of the subscription rights by you or on your behalf will not be a taxable transaction for U.S. federal income tax purposes. Accordingly, your tax basis in the units acquired upon exercise of the subscription rights will equal the sum of the price paid for the units and your tax basis (as determined above), if any, in the subscription rights you exercised. The holding period of the units will begin on the day the subscription rights are exercised.

The holding period for the Series 1 Preferred and Series 1 Warrants acquired through exercise of the subscription rights will begin on the date the subscription rights are exercised.

Exercise of Warrants

You generally will not recognize gain or loss upon exercise of a Series 1 Warrant to acquire common stock.

Your holding period of common stock received upon exercise of a Series 1 Warrant will begin on the date the Series 1 Warrant is exercised.

In the event a Series 1 Warrant lapses unexercised, you will recognize a capital loss in an amount equal to the tax basis of the Series 1 Warrant. Such capital loss will be long-term if your holding period of such Series 1 Warrant was more than one year at the time of lapse. The deductibility of capital losses is subject to limitations.

Taxation of Series 1 Preferred

Distributions. Generally, any distribution with respect to the Series 1 Preferred that is paid out of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes, will constitute a dividend and will be includible in gross income by you when paid. Distributions with respect to the Series 1 Preferred in excess of our current or accumulated earnings and profits would be treated first as a non-taxable return of capital to the extent of your basis in the Series 1 Preferred (thus reducing such tax basis dollar-for-dollar), and thereafter as capital gain, which will be long-term capital gain if the your holding period for such stock at the time of distribution exceeds one year.

Taxation of Common Stock

Distributions. Distributions received with respect to our common stock will be treated as described above under “— Taxation of Series 1 Preferred — Distributions”.

Sale, Exchange or Other Disposition. Upon a sale, exchange or other disposition of our common stock, you generally will recognize capital gain or loss in the manner described above under “— Taxation of Series 1 Preferred— Sale, Exchange or Other Disposition”.

Additional Medicare Tax on Net Investment Income

An additional 3.8% tax will be imposed on the “net investment income” of certain U.S. citizens and resident aliens, and on the undistributed “net investment income” of certain estates and trusts with Modified Adjusted Gross Income in excess of certain threshold amounts. Among other items, “net investment income” generally includes gross income from dividends and net gain from the disposition of property, such as our capital stock, less certain deductions. You should consult your tax advisor with respect to this additional tax.

Information Reporting and Backup Withholding

In general, payments made to you of proceeds from the sale or other disposition of Series 1 Warrants, Series 1 Preferred, or our common stock may be subject to information reporting to the IRS and possible U.S. federal backup withholding at the then applicable backup withholding rate. Backup withholding will not apply if you furnish a correct taxpayer identification number (certified on the IRS Form W-9 or valid substitute Form W-9) or otherwise establish that you are exempt from backup withholding. Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability. You may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information.

You should consult your own tax advisor regarding your qualification for an exemption from backup withholding and the procedures for obtaining such an exemption, if applicable.

MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Our common stock trades on the Nasdaq Capital Market under the trading symbol “HOTR”. On November 14, 2016, there were approximately 185 record holders of our common stock. This number does not include the number of persons or entities that hold stock in nominee or street name through various brokerage firms, banks and other nominees. On December 2, 2016, the last closing sale price reported on the Nasdaq Capital Market for our common stock was $0.53 per share. Past price performance is not indicative of future price performance.

The following table sets forth the high and low sale prices of our common stock on Nasdaq for the periods indicated:

DIVIDEND POLICY

We have never declared or paid dividends on our common stock. We currently intend to retain future earnings, if any, for use in our business, and, therefore, we do not anticipate declaring or paying any dividends on our common stock in the foreseeable future. Payments of future dividends on our common stock, if any, will be at the discretion of our board of directors after taking into account various factors, including the terms of our credit facility and our financial condition, operating results, current and anticipated cash needs and plans for expansion.

The Series 1 Preferred will have a liquidation preference of $13.50 per share, equal to the purchase price, and is entitled to cumulative dividends at the rate of 9% of the liquidation preference per year for seven years, payable in cash or our registered common stock quarterly on the last day of March, June, September and December in each year.

DESCRIPTION OF CAPITAL STOCK

The following is a summary of the material terms of our capital stock. This summary does not purport to be exhaustive and is qualified in its entirety by reference to our amended and restated certificate of incorporation, amended and restated bylaws and to the applicable provisions of Delaware law.

Common Stock

We are authorized to issue 45,000,000 shares of common stock. Holders of common stock are each entitled to cast one vote for each share held of record on all matters presented to shareholders. Cumulative voting is not allowed; the holders of a majority of our outstanding shares of common stock may elect all directors. Holders of common stock are entitled to receive such dividends as may be declared by our board out of funds legally available and, in the event of liquidation, to share pro rata in any distribution of our assets after payment of liabilities. Our directors are not obligated to declare a dividend. It is not anticipated that dividends will be paid in the foreseeable future. Holders of common stock do not have preemptive rights to subscribe to any additional shares we may issue in the future. There are no conversion, redemption, sinking fund or similar provisions regarding the common stock. All outstanding shares of common stock are fully paid and nonassessable.

Anti-Takeover Effects of Certain Provisions of Delaware Law and Our Certificate of Incorporation and Bylaws

We are subject to the provisions of Section 203 of the Delaware General Corporation Law, an anti-takeover law. Subject to certain exceptions, the statute prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after ‘the date of the transaction in which the person became an interested stockholder unless:

For purposes of Section 203, a “business combination” includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, and an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years prior to the date of determination whether the person is an “Interested Stockholder” did own, 15% or more of the corporation’s voting stock.

In addition, our authorized but unissued shares of common stock and preferred stock are available for our board to issue without stockholder approval. We may use these additional shares for a variety of corporate purposes, including future public or private offerings to raise additional capital, corporate acquisitions and employee benefit plans The existence of our authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of our company by means of a proxy contest, tender offer, merger or other transaction. Our authorized but unissued shares may be used to delay, defer or prevent a tender offer or takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders. The board of directors is also authorized to adopt, amend or repeal our bylaws, which could delay, defer or prevent a change in control.

Preferred Stock

Under our certificate of incorporation, our board of directors is authorized, without further stockholder action, to issue up to 5,000,000 shares of preferred stock in one or more series, with such powers, designations, preferences and relative, participating, optional and other rights and such qualifications, limitations and restrictions thereof as shall be set forth in the resolutions providing therefor. After issuance of the redeemable Series 1 Preferred, our board of directors will be authorized, without further stockholder action, to issue up to 4,000,000 shares of preferred stock. We have no other preferred stock outstanding and no present plans to issue any shares of preferred stock except for 1,000,000 shares of Series 1 Preferred as described in this prospectus.

Units Offered

The following description of the material terms and provisions of the 9% Redeemable Series 1 Preferred Stock and the Series 1 Warrants comprising the units being offered is qualified in its entirety by reference to the form of certificate of designation, preferences and rights of the 9% Redeemable Series 1 Preferred Stock and to the form of Series 1 Warrant, filed as exhibits to the registration statement of which this prospectus forms a part.

The 9% Redeemable Series 1 Preferred Stock (“Series 1 Preferred”) and Series 1 Warrants offered by this prospectus will be sold only together in units. Each unit consists of one share of Series 1 Preferred and a Series 1 Warrant to purchase 10 shares of our common stock. The shares of Series 1 Preferred and Series 1 Warrants are issued as components of the units, are not detachable and will not be separately transferable following the closing. We intend to apply to have the units listed on a stock exchange or quoted on the OTC marketplace. There is no assurance that the units will be listed on a stock exchange or quoted on the OTC marketplace..

Dividends

The Series 1 Preferred will have a liquidation preference of $13.50 per share, equal to the purchase price, and will pay cumulative dividends at the rate of 9% of the liquidation preference per year for seven years, payable in cash or our registered common stock quarterly on the last day of March, June, September and December in each year out of legally available funds. Shares of common stock issued as dividends will be issued at a 10% discount to the five-day volume weighted average price per share of our common stock prior to the date of issuance. Series 1 Preferred will be non-voting, except as otherwise required under applicable law. The Series 1 Preferred will not be convertible into or exchangeable for shares of our common stock. We will redeem shares of Series 1 Preferred out of legally available funds at a redemption price equal to the $13.50 per share liquidation preference plus any accrued but unpaid dividends, if any, upon the expiration of the seven year term. The Series 1 Preferred will not be listed for trading on any stock exchange or market.

Liquidation Preference

The Series 1 Preferred will have a liquidation preference of $13.50 per share, equal to its purchase price. In the event of any liquidation, dissolution or winding up of our company, any amounts remaining available for distribution to stockholders after payment of all liabilities of our company will be distributed first to the holders of Series 1 Preferred, and then to the holders of our common stock.

Voting Rights

Except as otherwise required by law, the Series 1 Preferred will be non-voting. Holders of the Series 1 Preferred will vote as a class on any amendment altering or changing the powers, preferences or special rights of the Series 1 Preferred so as to affect them adversely.

No Conversion

The Series 1 Preferred will not be convertible into or exchangeable for shares of our common stock or any other security, except through the exercise of Series 1 Warrants.

Redemption

We will redeem shares of Series 1 Preferred at a redemption price equal to the $13.50 per share liquidation preference out of legally available funds plus any accrued but unpaid dividends, if any, upon the expiration of the seven year term. The Series 1 Preferred will not be listed for trading on any stock exchange or market. listed for trading on any stock exchange or market.

Anti-dilution Adjustments

The Series 1 Preferred will not be adjusted, and no additional shares of Series 1 Preferred will be issued solely as a result of, any future change to or affecting our common stock.

Form

The Series 1 Preferred may be held in registered book-entry form or through an intermediary.

No Other Rights

The holders of the Series 1 Preferred will have no preemptive or preferential or other rights to purchase or subscribe to any stock, obligations, warrants or other securities of ours.

Series 1 Warrants

Exercise and Terms

Each Series 1 Warrant entitles will be exercisable into 10 shares of our common stock at any time and from time to time on or before the seventh anniversary of the date of issuance. The Series 1 Warrants may be exercised by surrendering one share of Series 1 Preferred in exchange for 10 shares of or common stock. No partial exercise will be permitted.

A holder will be prohibited under the terms of the Series 1 Warrants from effecting the exercise of the Series 1 Warrants to the extent that, as a result of the exercise, the holder of such shares beneficially owns more than 4.99% (or, if this limitation is waived by the holder upon no less than 61 days prior notice to us, 9.99%) in the aggregate of the outstanding shares of our common stock calculated immediately after giving effect to the issuance of shares of common stock upon such exercise.

Automatic Exercise

At such time that our common stock trades above $3.00 per share for five consecutive trading days, the Series 1 Warrants will automatically be exercised through the surrender of shares of Series 1 Preferred.

Effect of Reverse Stock Split

If the Company does not regain compliance with Nasdaq’s closing bid price rule by February 13, 2017, management intends to proceed with seeking shareholder approval and a reverse common stock split to regain compliance. If we effect a reverse split, the number of shares of common stock outstanding as well as the number of shares of common stock issuable upon exercise of the Series 1 Warrants would both be reduced proportionately. For example, if the Company were to effect a 2:1 reverse stock split, the total number of shares of common stock outstanding would be reduced from approximately 22 million to 11 million and the Series 1 Warrants will be exercisable for five shares of our common stock, instead of 10 shares, in exchange for the surrender of one share of Series 1 Preferred.

Warrant Agent

Securities Transfer Corp. will be the warrant agent for the Series 1 Warrants.

PLAN OF DISTRIBUTION

Promptly after the record date for the rights offering, we will distribute the subscription rights and subscription documents to stockholders of record and public warrant holders of record as of 5:00 p.m. Eastern time on December 5, 2016. If you wish to exercise your subscription rights, you should follow the instructions in the subscription documents sent to you and also available from the information agent. If you are unable to do so, you may call the information agent for assistance. See “The Rights Offering—Method of Exercising Subscription Rights”. If you have any questions, you should contact Issuer Direct, the information agent for the rights offering, at (919) 744-2722 or by email at chanticleer@issuerdirect.com.

Source Capital Group, Inc., which is a registered broker-dealer and member of the Financial Industry Regulatory Authority (“FINRA”), will act as the dealer-manager for this rights offering. The dealer-manager’s principal business address is 276 Post Road West, Westport, Connecticut 06880. Under the terms and subject to the conditions contained in the dealer-manager agreement between us and the dealer-manager, the dealer-manager will provide marketing assistance and advice to us in connection with this offering and will solicit the exercise of subscription rights. This rights offering is not contingent upon any number of subscription rights being exercised. The dealer-manager does not make any recommendation with respect to such rights or units, including with respect to the exercise of such rights.

Pursuant to the dealer-manager agreement, we are obligated to pay Source Capital Group as compensation a cash fee of 6% of the proceeds of the rights offering plus a 1.8% non-accountable expense fee and an out-of-pocket accountable expense allowance of 0.2% of the proceeds of the offering and to indemnify the dealer-manager for, or contribute to losses arising out of, certain liabilities, including liabilities under the Securities Act of 1933, as amended. For any unsubscribed units placed by Source Capital Group after the expiration of the rights offering, we have agreed to pay Source Capital Group a placement fee equal to 6%, in lieu of the dealer-manager fee, along with a continuing 1.8% non-accountable expense fee and an out-of-pocket accountable expense allowance of 0.2%, with such placement fee and expenses to be calculated in respect of the total gross proceeds paid to and received by us for subscriptions accepted by us from investors in connection with such placement and such placement fee and expenses not to exceed the aggregate amounts that would have been otherwise received by Source Capital Group if the rights offering were to have been fully subscribed. Neither the placement fee or expense allowance in connection with the placement will be payable with respect to any units purchased as result of the exercise of any basic subscription privilege or over-subscription privilege in the rights offering. The dealer-manager agreement also provides that the dealer-manager will not be subject to any liability to us in rendering the services contemplated by the dealer-manager agreement except for any act of bad faith or gross negligence of the dealer-manager. The dealer-manager and its affiliates have provided to us in the past and may provide to us from time to time in the future in the ordinary course of its business certain financial advisory, investment banking and other services for which it will be entitled to receive customary fees.

The dealer-manager has informed us that it has entered into or intends to enter into Selected Dealer Agreements with other broker-dealers pursuant to which (i) such other broker-dealers have agreed or will agree to use their commercially reasonable to procure subscriptions for the units, and (ii) the dealer-manager has agreed or will agree to re-allow 4% of its dealer-manager fee to each such broker-dealer whose clients purchase units in this offering pursuant to their subscription rights.

The maximum commission to be received by any independent broker-dealer or any member of FINRA will not be greater than 8% of the proceeds from the sale of units offered pursuant to this prospectus.

Other than as described herein, we do not know of any existing agreements between or among any stockholder, broker, dealer, underwriter or agent relating to the sale or distribution of the units offered hereby.

This prospectus may be made available in electronic format on websites or via email or through other online services maintained by the dealer-manager. Other than this prospectus in electronic format, the information on the dealer-manager’s websites and any information contained in any other websites maintained by the dealer-manager is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or the dealer-manager, and should not be relied upon by investors.

The foregoing does not purport to be a complete statement of the terms and conditions of the dealer-manager agreement. A copy of the dealer-manager agreement is included as an exhibit to the registration statement of which this prospectus forms a part. See “Available Information” on page 64.

The dealer-manager is an underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any fees received by it will be deemed to be underwriting discounts or commissions under the Securities Act. As an underwriter, the dealer-manager is required to comply with the requirements of the Securities Act and the Exchange Act, including, without limitation, Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of any purchases and sales of securities by the dealer-manager acting as a principal. Under these rules and regulations, the dealer-manager must not engage in any stabilization activity in connection with our securities, and must not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act.

No person has been authorized by our company to engage in any form of price stabilization in connection with this rights offering.

We expect one or more of our directors and executive officers to purchase units in the rights offering at the public offering price solely through their exercise of subscription rights, although none have any commitment to do so.

LEGAL MATTERS

The validity of the rights and the shares of common stock offered by this prospectus have been passed upon for us by Libertas Law Group, Inc., Santa Monica, California. We have filed a copy of this opinion as an exhibit to the registration statement in which this prospectus is included.

Olshan Frome Wolosky LLP, New York, New York, is acting as counsel to the dealer-manager in this offering.

EXPERTS

Certain matters regarding the material U.S. federal income tax consequences of the rights offering have been passed upon for us by Cherry Bekaert LLP, Charlotte, North Carolina. We have filed a copy of this opinion as an exhibit to the registration statement in which this prospectus is included.

The consolidated financial statements of Chanticleer Holdings, Inc. as of and for the year ended December 31, 2015 incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2015 have been audited by Cherry Bekaert LLP, an independent registered public accounting firm, as stated in its report incorporated by reference herein, and have been so incorporated in reliance upon such report and upon the authority of such firm as experts in accounting and auditing.

The consolidated financial statements of Chanticleer Holdings, Inc. as of and for the year ended December 31, 2014 incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2015 have been audited by Marcum LLP, an independent registered public accounting firm, as stated in its report incorporated by reference herein, and have been so incorporated in reliance upon such report and upon the authority of such firm as experts in accounting and auditing.

MATERIAL CHANGES

There have been no material changes in the Company’s affairs since its fiscal year ended December 31, 2015 that have not been described in its 2016 Quarterly Reports on Form 10-Q or Current Reports on Form 8-K pursuant to the Securities Exchange Act of 1934.

INCORPORATION BY REFERENCE

The SEC allows us to “incorporate by reference” into this prospectus the information we file with the SEC. This means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus.

We are incorporating by reference the following documents that we have filed with the SEC (other than any filing or portion thereof that is furnished, rather than filed, under applicable SEC rules):

All documents that we subsequently file pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of this offering shall be deemed to be incorporated by reference into this prospectus.

Our Web site address is chanticleerholdings.com and the URL where incorporated reports and other reports may be accessed is http://ir.stockpr.com/chanticleerholdings/all-sec-filings.

The reports incorporated by reference into this prospectus are available from us upon request. We will provide a copy of any and all of the reports and documents that are incorporated by reference, including exhibits to such reports and documents, in this prospectus to any person, including a beneficial owner, to whom a prospectus is delivered, without charge, upon written or oral request. Requests for such copies should be directed to the following:

Chanticleer Holdings, Inc.

Investor Relations

7621 Little Avenue, Suite 414

Charlotte, North Carolina 28226

(704) 366-5122

ir@chanticleerholdings.com

Except as expressly provided above, no other information, including none of the information on our website, is incorporated by reference into this prospectus.

AVAILABLE INFORMATION

We file periodic reports, proxy statements and other information with the SEC. Our filings are available to the public over the Internet at the SEC’s web site at http://www.sec.gov. You may also read and copy any document we file with the SEC at the SEC’s Public Reference Room, located at 100 F Street, N.E., Washington, D.C. 20549. You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of its Public Reference Room. We will also provide you with a copy of any or all of the reports or documents that have been incorporated by reference into this prospectus or the registration statement of which it is a part (i) upon written or oral request, and at no cost to you. If you would like to request any reports or documents from the company, please contact Investor Relations at Chanticleer Holdings, Inc., 7621 Little Avenue, Suite 414 Charlotte, NC 28226, (704) 366-5122 or at ir@chanticleerholdings.com.

Our Internet address is chanticleerholdings.com. We have not incorporated by reference into this prospectus the information on our website, and you should not consider it to be a part of this document. Our web address is included in this document as an inactive textual reference only.

No dealer, salesperson or any other person is authorized to give any information or make any representations in connection with this offering other than those contained in this prospectus and, if given or made, the information or representations must not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security other than the securities offered by this prospectus, or an offer to sell or a solicitation of an offer to buy any securities by anyone in any jurisdiction in which the offer or solicitation is not authorized or is unlawful.

CHANTICLEER HOLDINGS, INC.

Subscription Rights Offering

Up to an Aggregate of 1,000,000 Units Consisting of

9% Redeemable Series 1 Preferred Stock

and

Seven Year Series 1 Warrants to Purchase Common Stock

Upon the Exercise of Subscription Rights at $13.50 per Unit

PROSPECTUS

Dealer-Manager

December 15, 2016