1.

Nature of Business

ORGANIZATION

Chanticleer Holdings, Inc. (the “Company”) is in the business of owning, operating and franchising fast casual dining concepts domestically and internationally. The Company was organized October 21, 1999, under its original name, Tulvine Systems, Inc., under the laws of the State of Delaware. On April 25, 2005, Tulvine Systems, Inc. formed a wholly owned subsidiary, Chanticleer Holdings, Inc., and on May 2, 2005, Tulvine Systems, Inc. merged with and changed its name to Chanticleer Holdings, Inc.

The consolidated financial statements include the accounts of Chanticleer Holdings, Inc. and its subsidiaries presented below (collectively referred to as the “Company”):

* Denotes inactive subsidiaries

All significant inter-company balances and transactions have been eliminated in consolidation.

The Company operates on a calendar year-end. The accounts of two subsidiaries, Just Fresh and Hooters Nottingham (“WEW”), are consolidated based on either a 52- or 53-week period ending on the Sunday closest to each December 31. No events occurred related to the difference between the Company’s reporting calendar quarter end and the Company’s two subsidiaries quarter ends that materially affected the company’s financial position, results of operations, or cash flows.

GENERAL

The accompanying condensed consolidated financial statements included in this report have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting and include all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation. These condensed consolidated financial statements have not been audited. The results of operations for the six months ended June 30, 2015 are not necessarily indicative of the operating results for the full year.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations for interim reporting. The Company believes that the disclosures contained herein are adequate to make the information presented not misleading. However, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on April 15, 2015 and amended on April 30, 2015. Certain amounts for the prior year have been reclassified to conform to the current year presentation.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2015, our cash balance was $2,808,181. The level of additional cash needed to fund operations and our ability to conduct business for the next twelve months will be influenced primarily by the following factors:

● the pace of growth in our restaurant businesses and related investments in opening new stores;

● the level of investment in acquisition of new restaurant businesses and entering new markets;

● our ability to manage our operating expenses and maintain gross margins as we grow:

● our ability to access the capital and debt markets;

● popularity of and demand for our fast casual dining concepts; and

● general economic conditions and changes in consumer discretionary income.

We have typically funded our operating costs, acquisition activities, working capital investments and capital expenditures with proceeds from the issuances of our common stock and other financing arrangements, including convertible debt, lines of credit, notes payable and capital leases.

Our operating plans for 2015 contemplate moderate organic growth, opening 3-4 new stores within our current markets and restaurant concepts, as well as growing through the acquisition of additional restaurant businesses to expand our market scale. We completed a rights offering raising net proceeds of approximately $7.1 million and issued $2.2 million in convertible debt to fund the acquisition of The Burger Joint and for general corporate purposes in the first quarter of 2015. During the second quarter, we completed an equity transaction raising net proceeds of approximately $1.9 million. In the third quarter, we expect to raise additional capital through the issuance of common stock to fund the acquisition of Little Big Burger, investments in Australia and general corporate purposes and extend principal payment terms on our $5 million note. As discussed in Note 16, Subsequent Events, we have entered into an agreement to acquire 50% of the assets of the Margaritaville in Sydney, Australia and 100% of the gaming machines and licenses in this location, and 80% of the assets of Hooters locations in Australia. As of the date of this filing, the Company has executed business sale agreements for the purchase of the assets of Margaritaville and four of the Hooters Australia properties. The Company expects to complete the agreement for the fifth and final Hooters Australia property imminently. The closings are contingent upon the assumption of leases, franchise agreements and, other closing conditions. We have agreed to indemnify the administrators and sellers against any losses or claims resulting from non-performance by the Company. In the event we are unable to complete the acquisitions, we could incur additional costs which could have an adverse impact on our liquidity and financial condition. The funds required to complete these acquisitions are approximately $1.4 million and $0.8 million for the Margaritaville and Hooters acquisitions, respectively.

As we execute our growth plans throughout the balance of 2015, we intend to carefully monitor the impact of growth on our working capital needs and cash balances relative to the availability of cost-effective debt and equity financing. We believe the capital resources available to us will be sufficient to fund our ongoing operations and to support our operating plans through December 31, 2015. We may raise additional capital from the issuance of new debt and equity during 2015 to continue to execute our growth plans, although there can be no assurance that we will be able to do so. In the event that such capital is not available, we may have 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.