UNITED STATES SECURITIES AND EXCHANGE
COMMISSION



WASHINGTON, DC 20549



FORM 10-Q/A



Quarterly Report Pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934



|For Quarter Ended:      | June 30, 2012
|----------------------- | -------------
|                        |              
|Commission File Number: | 000-29507    



CHANTICLEER HOLDINGS, INC.

(Exact name of registrant as specified
in its charter)



|Delaware                       | 20-2932652          
|------------------------------ | --------------------
|(State or Jurisdiction of      | (IRS Employer ID No)
|Incorporation or Organization) |                     



11220 Elm Lane, Suite 203, Charlotte,
NC 28277

(Address of principal
executive office) (zip code)



(704) 366-5122

(Issuer’s
telephone number)



Indicate by check
mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter periods as the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes x No  ̈.



Indicate by check
mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes x No  ̈.



Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer,” accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer £Accelerated filer £ Non-accelerated filer £Smaller reporting company S



Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £No S.



The number of
shares outstanding of registrant’s common stock, par value $.0001 per share, as of July 30, 2012, was 3,698,896 shares.











EXPLANATORY NOTE



We filed our Quarterly
Report on Form 10-Q for the quarter ended June 30, 2012 on August 13, 2012 (the “Original Report”). We are filing
this Amendment No. 1 on Form 10-Q/A (this “Amendment”) to make the following changes:

| | · | To
                                                                                                              add Note 16 for
                                                                                                              the restatement;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | To
                                                                                                              update management
                                                                                                              discussion and analysis
                                                                                                              in Item 2;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | To
                                                                                                              restate financial
                                                                                                              statements as required;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | To
                                                                                                              add restated reference
                                                                                                              in the financial
                                                                                                              statements;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | To
                                                                                                              amend disclosure
                                                                                                              of Controls and
                                                                                                              Procedures in Item
                                                                                                              4; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Provide
                                                                                                              currently dated
                                                                                                              Exhibit Nos. 31-1
                                                                                                              and 32-1.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



No other changes
have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q,
does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way
disclosures made in the original Form 10-Q.



On September 7, 2012,
the audit committee of the Company, upon recommendation of the Company’s management determined that the Company’s
Consolidated Financial Statements for its fiscal year ended December 31, 2011 as originally filed in the Form 10-K could no longer
be relied on. The Company determined that the financial statements of Kiarabrite (Pty) Ltd., Dimaflo (Pty) Ltd., Tundraspex (Pty)
Ltd., Civisign (Pty) Ltd., Dimalogix (Pty) Ltd., and Chanticleer & Shaw Foods (Pty) Ltd. (collectively referred to as the
“South African Operations”) which are the South African management company and the four entities organized for the
stores we operate in South Africa, and the company that owns the HOA franchise rights for the territory of South Africa, were
not audited as the Company was led to believe. Accordingly, this Amendment is being filed to include the changes to the financial
statements of the South African Operations and its impact on the consolidated financial statements of the Company for the period
ended June 30, 2012, as a result of the audit of the South African Operations for the three months ended December 31, 2011 and
the subsequent review of the operations for the three and six months ended June 30, 2012. We have made no attempt in this Amendment
to modify or update the disclosures presented in the Original Report other than as noted in the previous paragraph. Also, this
Amendment does not reflect events occurring after the filing of the Original Report. Accordingly, this Amendment should be read
in conjunction with the Original Report and our other filings with the SEC subsequent to the filing of the Original Report.



2







Chanticleer Holdings, Inc. and Subsidiaries



INDEX



|        |                                   |                                                                                                 |    | Page
|------- | --------------------------------- | ----------------------------------------------------------------------------------------------- | -- | ----
|        |                                   |                                                                                                 |    | No. 
|        |                                   |                                                                                                 |    |     
|Part I  | Financial Information (unaudited) |                                                                                                 |   
|        |                                   |                                                                                                 |    |     
|        | Item 1:                           | Condensed Consolidated Financial Statements                                                     |    | 4   
|        |                                   |                                                                                                 |    |     
|        |                                   | Restated Balance Sheets as of June 30, 2012 and December 31, 2011                               |    | 4   
|        |                                   | Statements of Operations – For the Three and Six Months Ended June 30, 2012 (Restated) and 2011 |    | 5   
|        |                                   | Statement of Stockholders’ Equity – For the Six Months Ended June 30, 2012 (Restated)           |    | 7   
|        |                                   | Statements of Cash Flows – For the Six Months Ended June 30, 2012 (Restated) and 2011           |    | 8   
|        |                                   | Notes to Financial Statements                                                                   |    | 10  
|        | Item 2:                           | Management’s Discussion and Analysis of Financial Condition and Results of Operations           |    | 35  
|        | Item 3:                           | Quantitative and Qualitative Disclosure about Market Risk                                       |    | 43  
|        | Item 4:                           | Controls and Procedures                                                                         |    | 43  
|        |                                   |                                                                                                 |    |     
|Part II | Other Information                 |                                                                                                 | 44
|        |                                   |                                                                                                 |    |     
|        | Item 1:                           | Legal Proceedings                                                                               |    | 44  
|        | Item 1A:                          | Risk Factors                                                                                    |    | 44  
|        | Item 2:                           | Unregistered Sales of Equity Securities and Use of Proceeds                                     |    | 44  
|        | Item 3:                           | Defaults Upon Senior Securities                                                                 |    | 44  
|        | Item 4:                           | Submission of Matters to a Vote of Security Holders                                             |    | 44  
|        | Item 5:                           | Other Information                                                                               |    | 44  
|        | Item 6:                           | Exhibits                                                                                        |    | 44  



3







PART I: FINANCIAL INFORMATION

ITEM 1: CONDENSED FINANCIAL STATEMENTS

Chanticleer Holdings, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets
(Restated Note 16)

June 30, 2012 (Unaudited) and December
31, 2011



|                                                                                                                                                                                                                    |  | 2012 |            |   | 2011 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|ASSETS                                                                                                                                                                                                              |  |      |            |   |      |  
|Current assets:                                                                                                                                                                                                     |  |      |            |   |      |  
|Cash and cash equivalents                                                                                                                                                                                           |  | $    | 3,568,416  |   |      | $
|Accounts receivable                                                                                                                                                                                                 |  |      | 78,096     |   |      |  
|Other receivable                                                                                                                                                                                                    |  |      | 96,737     |   |      |  
|Inventory                                                                                                                                                                                                           |  |      | 140,007    |   |      |  
|Due from related parties                                                                                                                                                                                            |  |      | 110,676    |   |      |  
|Prepaid expenses                                                                                                                                                                                                    |  |      | 102,606    |   |      |  
|TOTAL CURRENT ASSETS                                                                                                                                                                                                |  |      | 4,096,538  |   |      |  
|Property and equipment, net                                                                                                                                                                                         |  |      | 2,042,963  |   |      |  
|Intangible assets, net                                                                                                                                                                                              |  |      | 968,318    |   |      |  
|Investments at fair value                                                                                                                                                                                           |  |      | 80,713     |   |      |  
|Other investments                                                                                                                                                                                                   |  |      | 1,804,707  |   |      |  
|Deposits and other assets                                                                                                                                                                                           |  |      | 100,491    |   |      |  
|TOTAL ASSETS                                                                                                                                                                                                        |  | $    | 9,093,730  |   |      | $
|                                                                                                                                                                                                                    |  |      |            |   |      |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                |  |      |            |   |      |  
|Current liabilities:                                                                                                                                                                                                |  |      |            |   |      |  
|Current maturities of long-term debt and notes payable                                                                                                                                                              |  | $    | 7,722      |   |      | $
|Convertible notes payable                                                                                                                                                                                           |  |      | -          |   |      |  
|Accounts payable and accrued expenses                                                                                                                                                                               |  |      | 922,918    |   |      |  
|Other current liabilities                                                                                                                                                                                           |  |      | 352,398    |   |      |  
|Current maturities of capital leases payable                                                                                                                                                                        |  |      | 39,054     |   |      |  
|Deferred rent                                                                                                                                                                                                       |  |      | 5,573      |   |      |  
|Due to related parties                                                                                                                                                                                              |  |      | 27,485     |   |      |  
|TOTAL CURRENT LIABILITIES                                                                                                                                                                                           |  |      | 1,355,150  |   |      |  
|Long-term debt, less current maturities                                                                                                                                                                             |  |      | 231,519    |   |      |  
|Capital leases payable, less current maturities                                                                                                                                                                     |  |      | 74,397     |   |      |  
|Deferred rent                                                                                                                                                                                                       |  |      | 76,098     |   |      |  
|Other liabilities                                                                                                                                                                                                   |  |      | 216,518    |   |      |  
|TOTAL LIABILITIES                                                                                                                                                                                                   |  |      | 1,953,682  |   |      |  
|Commitments and contingencies (Note 13)                                                                                                                                                                             |  |      |            |   |      |  
|                                                                                                                                                                                                                    |  |      |            |   |      |  
|Stockholders' equity:                                                                                                                                                                                               |  |      |            |   |      |  
|Common stock:  $0.0001 par value; authorized
    200,000,000 shares; issued 3,955,511 and 1,506,061 shares; and outstanding 3,698,896 and 1,249,446 shares at June 30, 2012
    and December 31, 2011, respectively |  |      | 396        |   |      |  
|Additional paid in capital                                                                                                                                                                                          |  |      | 15,327,680 |   |      |  
|Other comprehensive income (loss)                                                                                                                                                                                   |  |      | (188,037   | ) |      |  
|Non-controlling interest                                                                                                                                                                                            |  |      | 165,962    |   |      |  
|Accumulated deficit                                                                                                                                                                                                 |  |      | (7,639,533 | ) |      |  
|Less treasury stock, 513,230 shares at June 30,
    2012 and December 31, 2011                                                                                                                                      |  |      | (526,420   | ) |      |  
|Total stockholders' equity                                                                                                                                                                                          |  |      | 7,140,048  |   |      |  
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                          |  | $    | 9,093,730  |   |      | $



See accompanying notes to condensed consolidated financial
statements.



4







Chanticleer Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of
Operations

For the three months ended June 30,
2012 (Restated Note 16) and June 30, 2011

(Unaudited)



|                                                                                                       |  | 2012               |           |   |      |  
|------------------------------------------------------------------------------------------------------ |  | ------------------ | --------- | - | ---- | -
|                                                                                                       |  | (Restated Note 16) |           |   | 2011 |  
|Revenue:                                                                                               |  |                    |           |   |      |  
|Restaurant sales, net                                                                                  |  | $                  | 1,696,123 |   |      | $
|Management fee income - non-affiliates                                                                 |  |                    | 25,000    |   |      |  
|Management fee income - affiliates                                                                     |  |                    | 6,698     |   |      |  
|Total revenue                                                                                          |  |                    | 1,727,821 |   |      |  
|Expenses:                                                                                              |  |                    |           |   |      |  
|Restaurant cost of sales                                                                               |  |                    | 709,612   |   |      |  
|Restaurant operating expenses                                                                          |  |                    | 923,290   |   |      |  
|Restaurant pre-opening expenses                                                                        |  |                    | 23,499    |   |      |  
|General and administrative expense                                                                     |  |                    | 656,112   |   |      |  
|Depreciation and amortization                                                                          |  |                    | 87,161    |   |      |  
|Total expenses                                                                                         |  |                    | 2,399,674 |   |      |  
|Earnings (loss) from operations                                                                        |  |                    | (671,853  | ) |      |  
|Other income (expense)                                                                                 |  |                    |           |   |      |  
|Equity in earnings (losses) of investments                                                             |  |                    | (33,348   | ) |      |  
|Realized gains from sales of investments                                                               |  |                    | -         |   |      |  
|Interest expense                                                                                       |  |                    | (208,102  | ) |      |  
|Total other income (expense)                                                                           |  |                    | (241,450  | ) |      |  
|Net earnings (loss) before income taxes                                                                |  |                    | (913,303  | ) |      |  
|Provision for income taxes                                                                             |  |                    | -         |   |      |  
|Net earnings (loss) before non-controlling interest                                                    |  |                    | (913,303  | ) |      |  
|Non-controlling interest                                                                               |  |                    | 69,687    |   |      |  
|Net earnings (loss)                                                                                    |  |                    | (843,616  | ) |      |  
|Other comprehensive income (loss):                                                                     |  |                    |           |   |      |  
|Unrealized gain (loss) on available-for-sale
    securities (none applies to non-controlling interest) |  |                    | (132,021  | ) |      |  
|Foreign translation income (loss)                                                                      |  |                    | 7,666     |   |      |  
|Other comprehensive income (loss)                                                                      |  | $                  | (967,971  | ) |      | $
|                                                                                                       |  |                    |           |   |      |  
|Net earnings (loss) per share, basic and diluted                                                       |  | $                  | (0.56     | ) |      | $
|Weighted average shares outstanding                                                                    |  |                    | 1,502,418 |   |      |  



See accompanying notes to condensed consolidated financial
statements.



5







Chanticleer Holdings, Inc. and Subsidiaries

Consolidated Statements of Operations

For the Six Months Ended June 30, 2012
(Restated Note 16) and June 30, 2011

(Unaudited)



|                                                                                                       |  | 2012               |            |   |      |  
|------------------------------------------------------------------------------------------------------ |  | ------------------ | ---------- | - | ---- | -
|                                                                                                       |  | (Restated Note 16) |            |   | 2011 |  
|Revenue:                                                                                               |  |                    |            |   |      |  
|Restaurant sales, net                                                                                  |  | $                  | 3,083,618  |   |      | $
|Management fee income - non-affiliates                                                                 |  |                    | 50,000     |   |      |  
|Management fee income - affiliates                                                                     |  |                    | 6,698      |   |      |  
|Total revenue                                                                                          |  |                    | 3,140,316  |   |      |  
|Expenses:                                                                                              |  |                    |            |   |      |  
|Restaurant cost of sales                                                                               |  |                    | 1,291,163  |   |      |  
|Restaurant operating expenses                                                                          |  |                    | 1,692,622  |   |      |  
|Restaurant pre-opening expenses                                                                        |  |                    | 64,220     |   |      |  
|General and administrative expense                                                                     |  |                    | 1,167,633  |   |      |  
|Depreciation and amortization                                                                          |  |                    | 167,185    |   |      |  
|Total expenses                                                                                         |  |                    | 4,382,823  |   |      |  
|Earnings (loss) from operations                                                                        |  |                    | (1,242,507 | ) |      |  
|Other income (expense)                                                                                 |  |                    |            |   |      |  
|Equity in earnings (losses) of investments                                                             |  |                    | (43,886    | ) |      |  
|Realized gains from sales of investments                                                               |  |                    | -          |   |      |  
|Interest income                                                                                        |  |                    | -          |   |      |  
|Miscellaneous income                                                                                   |  |                    | -          |   |      |  
|Interest expense                                                                                       |  |                    | (393,212   | ) |      |  
|Total other income (expense)                                                                           |  |                    | (437,098   | ) |      |  
|Net earnings (loss) before income taxes                                                                |  |                    | (1,679,605 | ) |      |  
|Provision for income taxes                                                                             |  |                    | -          |   |      |  
|Net earnings (loss) before non-controlling interest                                                    |  |                    | (1,679,605 | ) |      |  
|Non-controlling interest                                                                               |  |                    | 132,204    |   |      |  
|Net earnings (loss)                                                                                    |  |                    | (1,547,401 | ) |      |  
|Other comprehensive income (loss):                                                                     |  |                    |            |   |      |  
|Unrealized gain (loss) on available-for-sale
    securities (none applies to non-controlling interest) |  |                    | (237,639   | ) |      |  
|Foreign translation income (loss)                                                                      |  |                    | (1,048     | ) |      |  
|Other comprehensive income (loss)                                                                      |  | $                  | (1,786,088 | ) |      | $
|                                                                                                       |  |                    |            |   |      |  
|Net earnings (loss) per share, basic and diluted                                                       |  | $                  | (0.62      | ) |      | $
|Weighted average shares outstanding                                                                    |  |                    | 2,498,882  |   |      |  



See accompanying notes to condensed consolidated financial
statements.



6







Chanticleer Holdings,
Inc. and Subsidiaries

Consolidated Statements
of Stockholders' Equity

Six Months ended
June 30, 2012 (Restated Note 16)

(Unaudited)









|                                                   |  |                  |           |  |         |   |     |            |  |   | Accumulated   |   |  |             |          |   |          |   |          |       |  |   |            |  
|-------------------------------------------------- |  | ---------------- | --------- |  | ------- | - | --- | ---------- |  | - | ------------- | - |  | ----------- | -------- | - | -------- | - | -------- | ----- |  | - | ---------- | -
|                                                   |  |                  |           |  |         |   |     |            |  |   | Other         |   |  |             |          |   |          |   |          |       |  |   |            |  
|                                                   |  |                  |           |  |         |   |     | Additional |  |   | Comprehensive |   |  | Non-        |          |   |          |   |          |       |  |   |            |  
|                                                   |  | Common
    Stock |           |  | Paid-in |   |     | Income     |  |   | Controlling   |   |  | Accumulated |          |   | Treasury |   |          |       | 
|                                                   |  | Shares           |           |  | Par     |   |     | Capital    |  |   | (Loss)        |   |  | Interest    |          |   | Deficit  |   |          | Stock |  |   | Total      |  
|                                                   |  |                  |           |  |         |   |     |            |  |   |               |   |  |             |          |   |          |   |          |       |  |   |            |  
|Balance, December 31, 2011                         |  |                  | 1,506,061 |  |         | $ | 151 |            |  | $ | 6,459,656     |   |  | $           | 50,650   |   |          | $ | 593,863  |       |  | $ | (6,092,132 | )
|Common stock issued for:                           |  |                  |           |  |         |   |     |            |  |   |               |   |  |             |          |   |          |   |          |       |  |   |            |  
|Services                                           |  |                  | 5,000     |  |         |   | 1   |            |  |   | 32,399        |   |  |             | -        |   |          |   | -        |       |  |   | -          |  
|Convertible notes payable and accrued
    interest |  |                  | 423,828   |  |         |   | 42  |            |  |   | 1,907,196     |   |  |             |          |   |          |   |          |       |  |   |            |  
|Non-controlling interest                           |  |                  | 219,248   |  |         |   | 22  |            |  |   | (190,108      | ) |  |             |          |   |          |   | -        |       |  |   |            |  
|Cash, net of expenses                              |  |                  | 1,801,374 |  |         |   | 180 |            |  |   | 7,051,284     |   |  |             |          |   |          |   |          |       |  |   |            |  
|Available-for-sale securities                      |  |                  | -         |  |         |   | -   |            |  |   | -             |   |  |             | (237,639 | ) |          |   | -        |       |  |   | -          |  
|Amortize warrants                                  |  |                  | -         |  |         |   | -   |            |  |   | 72,063        |   |  |             | -        |   |          |   | -        |       |  |   | -          |  
|Foreign translation loss                           |  |                  |           |  |         |   |     |            |  |   |               |   |  |             | (1,048   | ) |          |   |          |       |  |   |            |  
|Acquistion of non-controlling interest for cash    |  |                  | -         |  |         |   | -   |            |  |   | (4,810        | ) |  |             | -        |   |          |   | (295,697 | )     |  |   | -          |  
|Net loss                                           |  |                  | -         |  |         |   | -   |            |  |   | -             |   |  |             | -        |   |          |   | (132,204 | )     |  |   | (1,547,401 | )
|Balance, June 30, 2012                             |  |                  | 3,955,511 |  |         | $ | 396 |            |  | $ | 15,327,680    |   |  | $           | (188,037 | ) |          | $ | 165,962  |       |  | $ | (7,639,533 | )





See accompanying notes to consolidated financial statements.



7







Chanticleer Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of
Cash Flows

For the Six Months Ended June 30, 2012
(Restated Note 16) and June 30, 2011

(Unaudited)



|                                                                                           |  | 2012               |            |   |      |  
|------------------------------------------------------------------------------------------ |  | ------------------ | ---------- | - | ---- | -
|                                                                                           |  | (Restated Note 16) |            |   | 2011 |  
|Cash flows from operating activities:                                                      |  |                    |            |   |      |  
|Net earnings (loss)                                                                        |  | $                  | (1,547,401 | ) |      | $
|Adjustments to reconcile net earnings (loss) to net
    cash used in operating activities: |  |                    |            |   |      |  
|Non-controlling interest                                                                   |  |                    | (132,204   | ) |      |  
|Depreciation and amortization                                                              |  |                    | 167,185    |   |      |  
|Equity in (earnings) loss of investments                                                   |  |                    | 43,886     |   |      |  
|Common stock issued for services                                                           |  |                    | 9,406      |   |      |  
|(Gain) loss on sale of investments                                                         |  |                    | -          |   |      |  
|Amortization of warrants                                                                   |  |                    | 72,063     |   |      |  
|(Increase) decrease in accounts and other receivables                                      |  |                    | (24,010    | ) |      |  
|(Increase) decrease in prepaid expenses and other assets                                   |  |                    | 84,016     |   |      |  
|(Increase) decrease inventory                                                              |  |                    | (34,934    | ) |      |  
|Increase (decrease) in accounts payable and accrued expenses                               |  |                    | 565,300    |   |      |  
|Increase (decrease) in deferred rent                                                       |  |                    | 31,284     |   |      |  
|Increase (decrease) in deferred revenue                                                    |  |                    | -          |   |      |  
|Advance from related parties for working capital                                           |  |                    | (63,202    | ) |      |  
|Net cash used by operating activities                                                      |  |                    | (828,611   | ) |      |  
|                                                                                           |  |                    |            |   |      |  
|Cash flows from investing activities:                                                      |  |                    |            |   |      |  
|Proceeds from sale of investments                                                          |  |                    | -          |   |      |  
|Proceeds from non-controlling interests                                                    |  |                    | 90,000     |   |      |  
|Investment distribution                                                                    |  |                    | -          |   |      |  
|Purchase of investments                                                                    |  |                    | (904,857   | ) |      |  
|Franchise fees incurred                                                                    |  |                    | (240,000   | ) |      |  
|Purchase of property and equipment                                                         |  |                    | (696,839   | ) |      |  
|Net cash provided (used) by investing activities                                           |  |                    | (1,751,696 | ) |      |  
|                                                                                           |  |                    |            |   |      |  
|Cash flows from financing activities:                                                      |  |                    |            |   |      |  
|Sale of common stock                                                                       |  |                    | 7,051,464  |   |      |  
|Loan proceeds, net                                                                         |  |                    | 2,915,000  |   |      |  
|Proceeds from sale of common stock warrants, net                                           |  |                    | -          |   |      |  
|Increase (decrease) in other liabilities                                                   |  |                    | (25,012    | ) |      |  
|Loan and capital lease repayment                                                           |  |                    | (3,956,813 | ) |      |  
|Net cash provided (used) by financing activities                                           |  |                    | 5,984,639  |   |      |  
|Effect of exchange rate changes on cash                                                    |  |                    | (1,045     | ) |      |  
|Net increase in cash and cash equivalents                                                  |  |                    | 3,403,287  |   |      |  
|Cash and cash equivalents, beginning of period                                             |  |                    | 165,129    |   |      |  
|Cash and cash equivalents, end of period                                                   |  | $                  | 3,568,416  |   |      | $



See accompanying notes to condensed consolidated financial
statements.



8







Chanticleer Holdings, Inc. and Subsidiaries

Condensed Consolidated Statements of
Cash Flows, continued

For the Six Months Ended June 30, 2012
(Restated Note 16) and June 30, 2011

(Unaudited)



|                                                            |  | 2012               |           |  |      |  
|----------------------------------------------------------- |  | ------------------ | --------- |  | ---- | -
|                                                            |  | (Restated Note 16) |           |  | 2011 |  
|                                                            |  |                    |           |  |      |  
|Supplemental cash flow information:                         |  |                    |           |  |      |  
|Cash paid for interest and income taxes:                    |  |                    |           |  |      |  
|Interest                                                    |  | $                  | 191,578   |  |      | $
|Income taxes                                                |  |                    | -         |  |      |  
|                                                            |  |                    |           |  |      |  
|Non-cash investing and financing activities:                |  |                    |           |  |      |  
|Due to related party exchanged for convertible note payable |  | $                  | -         |  |      | $
|Convertible notes payable exchanged for common stock        |  |                    | 1,907,238 |  |      |  
|Accrued interest exchanged for common stock                 |  |                    | -         |  |      |  
|Common stock units issued for Hoot limited partner units    |  |                    | 986,651   |  |      |  



See accompanying notes to condensed consolidated financial
statements.



9







Chanticleer Holdings, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial
Statements

(Unaudited)



| | 1. | Nature
                                                                 of Business
| | -- | -----------------------------------------------------------------------------------



Organization



Chanticleer
Holdings, Inc. (the “Company”) was organized October 21, 1999, under its original name, Tulvine Systems, Inc., under
the laws of the State of Delaware. The Company previously had limited operations and was considered a development stage company
until July 2005. On April 25, 2005, the Company formed a wholly owned subsidiary, Chanticleer Holdings, Inc. On May 2, 2005, Tulvine
Systems, Inc. merged with and changed its name to Chanticleer Holdings, Inc.



The condensed
consolidated financial statements include the accounts of Chanticleer Holdings, Inc. and its subsidiaries, Chanticleer Advisors,
LLC, (“Advisors”), Avenel Ventures, LLC ("Ventures"), Avenel Financial Services, LLC ("AFS"),
Chanticleer Holdings Limited ("CHL"), Chanticleer Holdings Australia Pty, Ltd. (“CHA”), Chanticleer Investment
Partners, LLC (“CIP”), DineOut SA Ltd. ("DineOut”), Chanticleer and Shaw Foods (Pty) Ltd. (“C&S”),
Kiarabrite (Pty) Ltd (“KPL”), Dimaflo (Pty) Ltd (“DFLO”), Tundraspex (Pty) Ltd (“TPL”), Civisign
(Pty) Ltd (“CPL”), Dimalogix (Pty) Ltd (“DLOG”) and Crown Restaurants Kft (“Crown”) (collectively
referred to as “the Company,” “we,” “us,” or “the Companies”). All significant
inter-company balances and transactions have been eliminated in consolidation.



Further
detailed information regarding the Company's subsidiaries can be found in our Annual Report on Form 10-K/A for the fiscal year
ended December 31, 2011.



Effective
May 11, 2012, the Company's common stock was reverse split, 1 share for each 2 shares issued, pursuant to a majority vote of the
Company's shareholders. All share references have been adjusted as if the split occurred prior to all periods presented.



GENERAL



The 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 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.



Certain
information and footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with
accounting principles generally accepted in the United States of America 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 for the period ended December 31, 2011, which is included in the
Company’s Form 10-K/A.



LIQUIDITY AND CAPITAL RESOURCES



At June
30, 2012 and December 31, 2011, the Company had restated current assets of $4,096,538 and $641,963; current liabilities of $1,355,150
and $3,720,486; and a working capital balance (deficit) of $2,741,388 and $(3,078,523), respectively. The Company incurred a loss
of $1,547,401 during the six months ended June 30, 2012 and had an unrealized loss from available-for-sale securities of $237,639
and a foreign currency translation loss of $1,048, resulting in a comprehensive loss of $1,786,088.





10











The Company's
corporate general and administrative expenses averaged approximately $295,000 per quarter during 2011 and has increased to $481,000
in the first quarter of 2012 and $657,000 in the current quarter as we expanded our footprint internationally. Effective October
1, 2011, the Company acquired majority control of the restaurants in South Africa and began consolidating these operations. The
Company also will share 49% of the profits in our Hooters location opened in January 2012 in Campbelltown, Australia, a suburb
of Sydney and plans to open a second Australia location under the same terms before the end of 2012.



The Company
has a note with a balance at June 30, 2012 of $239,241 owed to its bank which is due in August 2013 and a line of credit with
its bank with a balance at June 30, 2012 of $0 (total available was $2,000,000). The line matures on August 20, 2012. The Company
is currently negotiating an extension of the line of credit and the terms. All of our prior notes payable and convertible debt
were paid in either cash or common stock with the closing of our raise in June 2012 (for further details, see notes 7 and 10).
In addition, the Company may use limited partnerships, if the Company’s raise is not sufficient or if the line of credit
cannot be extended, to fund its share of costs for additional Hooters restaurants.



The Company
expects to meet its obligations in the remainder of 2012 and the first six months of 2013 with some or all of the following:



| | · | The
                                                                                                               cash proceeds received
                                                                                                               from the sale of
                                                                                                               units (consisting
                                                                                                               of common stock
                                                                                                               and warrants) in
                                                                                                               a registered offering
                                                                                                               declared effective
                                                                                                               on June 21, 2012
                                                                                                               in which the company
                                                                                                               sold $11 million
                                                                                                               of units and netted
                                                                                                               approximately $10.1
                                                                                                               million before
                                                                                                               expenses and approximately
                                                                                                               $3.6 million after
                                                                                                               payment of debt
                                                                                                               and accrued interest,
                                                                                                               Hoot SA non-controlling
                                                                                                               interest, and expenses;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Received
                                                                                                               $100,000 as an
                                                                                                               annual fee for
                                                                                                               its CEO sitting
                                                                                                               on the Board of
                                                                                                               Hooters of America
                                                                                                               and expect to continue
                                                                                                               to receive this
                                                                                                               annual fee for
                                                                                                               the next three
                                                                                                               years based on
                                                                                                               the current agreement;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Borrow,
                                                                                                               if and to the extent
                                                                                                               available, additional
                                                                                                               funds on its existing
                                                                                                               line of credit;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Positive
                                                                                                               cash flow from
                                                                                                               our South African
                                                                                                               restaurant operations.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | SIGNIFICANT
                                                                                     ACCOUNTING POLICIES
| | -- | --------------------------------------------------------------------------------------------------------------------



There have
been no material changes to the significant accounting policies previously disclosed in our Annual Report on Form 10-K/A for the
fiscal year ended December 31, 2011 except for the following:



RESTAURANT
PRE-OPENING EXPENSES



Restaurant
pre-opening expenses, which are expensed as incurred, consist of the costs of hiring and training the initial hourly work force
for each new restaurant, travel, the cost of food and supplies used in training, grand opening promotional costs, the cost of
the initial stocking of operating supplies and other direct costs related to the opening of a restaurant, including rent during
the construction and in-restaurant training period.



Recent
Accounting Pronouncements



There are
several new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet
effective. Each of these pronouncements, as applicable, has been or will be adopted by the Company. At July 31, 2012, none of
these pronouncements are expected to have a material effect on the financial position, results of operations or cash flows of
the Company.





11







| | 3. | ACQUISITION
                                                                                     OF MAJORITY OWNED HOOTERS RESTAURANTS (RESTATED
                                                                                     NOTE 16)
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Effective
October 1, 2011, the Company acquired majority ownership of a management company, a company that owns the HOA franchise rights
for the territory of South Africa, and four Hooters restaurants in South Africa. Previously, the Company owned 50% of the restaurants
but was not in control and these operations were accounted for using the equity method of accounting. New entities were formed
for the operations and the Company’s ownership at June 30, 2012, after the buyout of the Hoot partnerships is as follows:
KPL 80%, DFLO 82%, TPL 88%, CPL 90% and DLOG 97%. The restaurant owned by DFLO in Durban opened in January 2010, the restaurant
owned by TPL in Johannesburg opened in June 2010, the restaurant owned by CPL in Cape Town opened in June 2011and the restaurant
owned by DLOG opened in February 2012.





The acquisition
was accounted for using the purchase method of accounting and, accordingly, the consolidated statements of operations include
the results of the South African operations beginning October 1, 2011. The assets acquired and the liabilities assumed were recorded
at estimated fair values as determined by the Company’s management based on information currently available and on current
assumptions as to future operations. A summary of the estimated fair value of assets acquired and liabilities assumed in the acquisition
follows:



|Current assets, excluding cash and cash equivalents |  | $ | 138,801   | 
|--------------------------------------------------- |  | - | --------- | 
|Property and equipment and intangible assets        |  |   | 1,985,799 | 
|Total assets excluding cash and cash equivalents    |  | $ | 2,124,600 | 
|Liabilities assumed                                 |  |   | 953,917   | 
|Non-controlling interest                            |  |   | 645,436   | 
|Prior investment of the Company                     |  |   | 320,247   | 
|Purchase price (net assets acquired)                |  | $ | 205,000   | 
|Cash paid                                           |  | $ | 205,000   | 



Liabilities
assumed includes $568,916 and $593,928 at June 30, 2012 and December 31, 2011, respectively, in bank debt of the prior entities
which the Company has agreed to repay without interest upon completion of its financing, subject to certain releases the Company
has requested from the bank. These amounts are included in other liabilities at June 30, 2012 and December 31, 2011.



Unaudited
pro forma results of operations for the three and six months ended June 30, 2011, as if the Company had acquired majority ownership
of the South African Hooters restaurants on January 1, 2011 is as follows. The pro forma results include estimates and assumptions
which management believes are reasonable. However, pro forma results are not necessarily indicative of the results that would
have occurred if the business combination had been in effect on the dates indicated, or which may result in the future.



|                                                 |  | Three Months Ended |           |   | Six Months Ended |  
|------------------------------------------------ |  | ------------------ | --------- | - | ---------------- | -
|                                                 |  | June 30, 2011      |           |   | June 30, 2011    |  
|                                                 |  |                    |           |   |                  |  
|Net revenues                                     |  | $                  | 1,093,134 |   |                  | $
|Net earnings (loss)                              |  | $                  | (163,757  | ) |                  | $
|Net earnings (loss) per share, basic and diluted |  | $                  | (0.13     | ) |                  | $



12







| | 4. | INVESTMENTS
| | -- | -----------



INVESTMENTS AT FAIR VALUE CONSIST OF
THE FOLLOWING AT JUNE 30, 2012 AND DECEMBER 31, 2011.



|                                             |  | 2012 |        |  | 2011 |  
|-------------------------------------------- |  | ---- | ------ |  | ---- | -
|                                             |  |      |        |  |      |  
|Available-for-sale investments at fair value |  | $    | 80,713 |  |      | $
|Trading securities                           |  |      | -      |  |      |  
|Total                                        |  | $    | 80,713 |  |      | $



AVAILABLE-FOR-SALE
SECURITIES



Activity in our available-for-sale
securities may be summarized as follows:



|                                                           |  | 2012 |          |   | 2011 |  
|---------------------------------------------------------- |  | ---- | -------- | - | ---- | -
|                                                           |  |      |          |   |      |  
|Cost at beginning of year                                  |  | $    | 263,331  |   |      | $
|Contributed to the Company by it's CEO                     |  |      | -        |   |      |  
|Received as management fees                                |  |      | -        |   |      |  
|Other than temporary loss in available-for-sale securities |  |      | -        |   |      |  
|Cost at end of period                                      |  |      | 263,331  |   |      |  
|Unrealized gain (loss)                                     |  |      | (182,618 | ) |      |  
|Total                                                      |  | $    | 80,713   |   |      | $



Our available-for-sale securities consist of the following:



|                                                            |  |      |         |  | Unrecognized   |   |          |       |  |   | Realized |  |  | Loss |         
|----------------------------------------------------------- |  | ---- | ------- |  | -------------- | - | -------- | ----- |  | - | -------- |  |  | ---- | --------
|                                                            |  |      |         |  | Holding        |   |          | Fair  |  |   | Holding  |  |  | on   |         
|                                                            |  | Cost |         |  | Gains (Losses) |   |          | Value |  |   | Loss     |  |  | Sale |         
|June 30, 2012                                               |  |      |         |  |                |   |          |       |  |   |          |  |  |      |         
|North Carolina Natural Energy *                             |  | $    | 1,500   |  |                | $ | -        |       |  | $ | 1,500    |  |  | $    | -       
|North American Energy                                       |  |      | 126,000 |  |                |   | (105,000 | )     |  |   | 21,000   |  |  |      | -       
|North American Energy *                                     |  |      | 10,500  |  |                |   | (6,000   | )     |  |   | 4,500    |  |  |      | -       
|North American Energy                                       |  |      | 125,331 |  |                |   | (71,618  | )     |  |   | 53,713   |  |  |      | -       
|                                                            |  | $    | 263,331 |  |                | $ | (182,618 | )     |  | $ | 80,713   |  |  | $    | -       
|                                                            |  |      |         |  |                |   |          |       |  |   |          |  |  |      |         
|December 31, 2011                                           |  |      |         |  |                |   |          |       |  |   |          |  |  |      |         
|Remodel Auction *                                           |  | $    | -       |  |                | $ | -        |       |  | $ | -        |  |  | $    | (900    
|North Carolina Natural Energy *                             |  |      | 1,500   |  |                |   | -        |       |  |   | 1,500    |  |  |      | -       
|North American Energy                                       |  |      | 126,000 |  |                |   | (42,000  | )     |  |   | 84,000   |  |  |      | -       
|North American Energy *                                     |  |      | 10,500  |  |                |   | 7,500    |       |  |   | 18,000   |  |  |      | -       
|North American Energy                                       |  |      | 125,331 |  |                |   | 89,522   |       |  |   | 214,853  |  |  |      | -       
|Efftec International, Inc. *                                |  |      | -       |  |                |   | -        |       |  |   | -        |  |  |      | (22,500 
|HiTech Stages                                               |  |      | -       |  |                |   | -        |       |  |   | -        |  |  |      | (124,573
|                                                            |  | $    | 263,331 |  |                | $ | 55,022   |       |  | $ | 318,353  |  |  | $    | (147,973
|                                                            |  |      |         |  |                |   |          |       |  |   |          |  |  |      |         
|* Investments acquired in exchange for management services. |  |      |         |  |                |   |          |       | 



Remodel Auction
Incorporated (“REMC”) –During 2009, the Company acquired 334 shares of REMC for management services with
an initial cost of $275,000 which has now been fully impaired.





13







North Carolina
Natural Energy, Inc. (“NCNE”) – NCNE is a successor to REMC whose business was discontinued. NCNE has plans
to become involved in some form of natural energy. The Company received 100,000,000 shares of NCNE (less than 1% on a fully diluted
basis) for management services during 2011. The shares were valued at $1,500 based on NCNE’s valuation as a shell.



North American
Energy Resources, Inc. - During the quarter ended June 30, 2009, the Company exchanged its oil & gas property investments
for 700,000 shares of North American Energy Resources, Inc. ("NAEY") which were valued at $126,000 based on the closing
price of NAEY on the date of the trade. At June 30, 2012 and December 31, 2011, the shares were valued at $21,000 and $84,000.



During the first
quarter of 2010, the Company received an additional 150,000 shares of NAEY in exchange for management services. The shares were
initially valued at $10,500, based on the trading price at the time. At June 30, 2012 and December 31, 2011, the shares were valued
at $4,500 and $18,000.



During June 2011,
the Company’s CEO contributed 1,790,440 shares of NAEY to the Company which was valued at $125,331 based on the trading
price at the time. Mr. Pruitt did not receive additional compensation as a result of the transfer. At June 30, 2012 and December
31, 2011, the shares had a market value of $53,713 and $214,853, respectively.



NAEY appointed a
new management team in December 2010 and they are seeking acquisition opportunities for onshore and offshore oil and gas properties.
Accordingly, the Company determined that any decline was temporary.



EffTec International,
Inc. -Effective April 1, 2010, the Company's CEO became a director and the CEO of EffTec International, Inc. The Company
received 150,000 shares of EffTec and an option to acquire an additional 150,000 shares at $0.15 per share in exchange for the
management services to be provided. The shares were valued at $22,500 based on the trading price of EffTec at the date of the
transaction. At September 30, 2011, the market value of the Efftec stock dropped to less than $0.01 per share and the Company
determined the reduction was other than temporary and impaired its investment to zero.



EffTec developed
an Internet-based chiller tool called EffTrackTM that: collects, stores and analyzes chiller operating data, calculates and
trends chiller performance, diagnoses the cause of chiller inefficiencies, notifies plant contacts when problems occur, recommends
corrective actions, measures the results of corrective actions and provides cost analysis of operational improvements.



HiTech Stages,
Ltd. (“HiTech”) – The Company originally acquired 275,000 shares of HiTech in exchange for 150,450
shares of DineOut during the June 2010 quarter. HiTech was unable to raise sufficient capital to fund its business plan and the
stock price dropped to near zero at September 30, 2011. The Company determined the decline was other than temporary and fully
impaired its investment on September 30, 2011.



OTHER INVESTMENTS ARE SUMMARIZED AS
FOLLOWS AT JUNE 30, 2012 AND DECEMBER 31, 2011.



|                                                  |  | 2012 |           |  | 2011 |  
|------------------------------------------------- |  | ---- | --------- |  | ---- | -
|                                                  |  |      |           |  |      |  
|Investments accounted for under the equity method |  | $    | 1,038,109 |  |      | $
|Investments accounted for under the cost method   |  |      | 766,598   |  |      |  
|Total                                             |  | $    | 1,804,707 |  |      | $





14







INVESTMENTS ACCOUNTED FOR USING THE
EQUITY METHOD



Activity in investments
accounted for using the equity method is summarized as follows.



|                                                |  | 2012 |           |   | 2011 |  
|----------------------------------------------- |  | ---- | --------- | - | ---- | -
|                                                |  |      |           |   |      |  
|Balance, beginning of year                      |  | $    | 815,550   |   |      | $
|Equity in earnings (loss)                       |  |      | (43,886   | ) |      |  
|Equity investment consolidated at June 30, 2012 |  |      | (143,274  | ) |      |  
|New investments                                 |  |      | 409,719   |   |      |  
|Distributions received                          |  |      | -         |   |      |  
|Balance, end of year                            |  | $    | 1,038,109 |   |      | $



Equity investments consist of the following
at June 30, 2012 and December 31, 2011:



|                                                  |  | 2012 |           |  | 2011 |  
|------------------------------------------------- |  | ---- | --------- |  | ---- | -
|                                                  |  |      |           |  |      |  
|Carrying value:                                   |  |      |           |  |      |  
|Hoot SA I, II, III - South Africa                 |  | $    | -         |  |      | $
|Hoot Campbelltown Pty. Ltd. (49%) - Australia     |  |      | 526,248   |  |      |  
|Hoot Surfers Paradise Pty. Ltd. (49%) - Australia |  |      | 511,584   |  |      |  
|Brazil                                            |  |      | 277       |  |      |  
|                                                  |  | $    | 1,038,109 |  |      | $





Equity in earnings
(loss) and distributions from equity investments during the three and six months ended June 30, 2012 and 2011 follows. The activity
from the South African restaurants is through September 30, 2011 at which time the Company acquired majority ownership and began
consolidating these operations.



|                                        |  | Three Months ended June 30, |         |   | Six Months ended June 30, |  
|--------------------------------------- |  | --------------------------- | ------- | - | ------------------------- | -
|                                        |  | 2012                        |         |   | 2011                      |  
|Equity in earnings (loss):              |  |                             |         |   |                           |  
|Hoot S.A. I, II, III (opened June 2011) |  |                             | -       |   |                           |  
|Hoot Campbelltown (49%)                 |  |                             | (33,348 | ) |                           |  
|                                        |  | $                           | (33,348 | ) |                           | $
|Distributions:                          |  |                             |         |   |                           |  
|Hoot S.A. I, LLC (20%)                  |  |                             | -       |   |                           |  
|Hoot S.A. II, LLC (20%)                 |  |                             | -       |   |                           |  
|                                        |  | $                           | -       |   |                           | $



In June 2012, the Company issued 219,248
shares of its common stock and cash in the amount of $480,929 to acquire 75% of the interest held by the limited partners of the
four Hoot limited partnerships. The Company’s interest in the four restaurants increased to the amounts in Note 3.





15







The summarized financial
data below includes the South African operations, of which we owned 20% at June 30, 2011 and the Hoot Campbelltown location in
Australia, which we owned 49% of at June 30, 2012. The Company acquired majority ownership of the South African operations effective
September 30, 2011.



|                                         |  | Three Months ended June 30, |         |   | Six Months ended June 30, |  
|---------------------------------------- |  | --------------------------- | ------- | - | ------------------------- | -
|                                         |  | 2012 (1)                    |         |   | 2011 (2)                  |  
|Revenue                                  |  | $                           | 767,721 |   |                           | $
|Gross profit                             |  |                             | 545,896 |   |                           |  
|Recurring expenses                       |  |                             | 613,952 |   |                           |  
|Pre-opening costs                        |  |                             | -       |   |                           |  
|Income (loss) from continuing operations |  |                             | (68,056 | ) |                           |  
|Net income (loss)                        |  |                             | (68,056 | ) |                           |  



| | (1) | Represents the Hoot Campbelltown location in Australia.
| | --- | -------------------------------------------------------

| | (2) | Represents the South African restaurants prior to acquiring
                                                                 majority interest.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------



The summarized balance
sheets for the two locations in Australia of which we owned 49% at June 30, 2012 and December 31, 2011 follows :



|                                       |  | 2012 |           |  | 2011 |  
|-------------------------------------- |  | ---- | --------- |  | ---- | -
|ASSETS                                 |  |      |           |  |      |  
|Current assets                         |  | $    | 119,656   |  |      | $
|Non-current assets                     |  |      | 2,573,883 |  |      |  
|TOTAL ASSETS                           |  | $    | 2,693,539 |  |      | $
|LIABILITIES                            |  |      |           |  |      |  
|Current liabilities                    |  | $    | 522,065   |  |      | $
|PARTNER'S EQUITY                       |  |      | 2,171,474 |  |      |  
|TOTAL LIABILITIES AND PARTNERS' EQUITY |  | $    | 2,693,539 |  |      | $



Hooters S.A.,
GP -The Company formed CHL to own the Company's 50% general partner interest in Hooters S.A., GP, the general partner of
the Hooters' restaurant franchises in South Africa. The initial restaurant opened in December 2009 in Durban, South Africa and
operations commenced in January 2010. In the initial restaurant CHL had a 10% interest in restaurant cash flows until the limited
partners received payout and a 40% interest in restaurant cash flows after limited partner payout. The second location opened
in Johannesburg in June 2010 and a third location opened in Cape Town in June of 2011 with similar structures. Effective September
30, 2011, the Company acquired majority control of the South African operations and began consolidating its operations on October
1, 2011.



CHA (Hoot Campbelltown
Pty. Ltd and Hoot Surfers Paradise Pty. Ltd.) – CHA entered into a partnership with the current local Hooters franchisee
in Australia in which CHA will own 49% and its partner own 51%. The local partner will also manage the restaurants. The first
location, Hoot Campbelltown Pty. Ltd. opened in Campbelltown, a suburb of Sydney, in January 2012. A second location, Hoot Surfers
Paradise Pty. Ltd., is underway with plans to open prior to the end of 2012.



16







INVESTMENTS ACCOUNTED FOR USING THE COST METHOD



Investments at cost consist of the following
at June 30, 2012 and December 31, 2011:



|Chanticleer Investors, LLC                         |  | $ | 500,000 |  |  | $ | 500,000 | 
|-------------------------------------------------- |  | - | ------- |  |  | - | ------- | 
|Edison Nation LLC (FKA Bouncing Brain Productions) |  |   | 250,000 |  |  |   | 250,000 | 
|Chanticleer Investors II                           |  |   | 16,598  |  |  |   | 16,598  | 
|                                                   |  | $ | 766,598 |  |  | $ | 766,598 | 



Chanticleer Investors
LLC -The Company sold 1/2 of its investment in Investors LLC in May 2009 for its cost of $575,000, which reduced its ownership
from 23% to 11.5%. Accordingly, in May 2009, the Company discontinued accounting for this investment using the equity method and
began to account for the investment using the cost method. In December 2010, the Company sold an additional $75,000 of its investment
at cost.



On April 18, 2006,
the Company formed Investors LLC and sold units for $5,000,000. Investors LLC’s principal asset was a convertible note in
the amount of $5,000,000 with Hooters of America, Inc. (“HOA”), collateralized by and convertible into 2% of Hooters
common stock. The original note included interest at 6% and was due May 24, 2009. The note was extended until November 24, 2010
and included an increase in the interest rate to 8%.



On January 24, 2011,
Investors LLC and its three partners combined to form HOA Holdings, LLC ("HOA LLC") and completed the acquisition of
Hooters of America, Inc. ("HOA") and Texas Wings, Inc. ("TW"). Together HOA LLC has created an operating company
with 161 company-owned locations across sixteen states, or nearly half of all domestic Hooters restaurants and over one-third
of the locations worldwide.



Investors, LLC had
a note receivable in the amount of $5,000,000 from HOA that was repaid at closing. Investors LLC then invested $3,550,000 in HOA
LLC (approximately 3%) ($500,000 of which is the Company's share). One of the investors in Investors LLC that owned a $1,750,000
share is a direct investor in HOA LLC and will now carry its ownership in HOA LLC directly. The Company owned approximately 14%
of Investors LLC at June 30, 2012. In July 2012, the Company acquired an additional interest of $300,000, at cost, from one of
the partners for cash, which increases our ownership to approximately 22.5% of Investors LLC.



Based on the current
status of this investment, the Company does not consider the investment to be impaired.



EE Investors,
LLC -On January 26, 2006, we acquired an investment in EE Investors, LLC with cash in the amount of $250,000. We acquired
1,205 units (3.378%) in EE Investors, LLC, whose sole asset is 40% of Edison Nation, LLC (formerly Bouncing Brain Productions,
LLC). Edison Nation was formed to provide equity capital for new inventions and help bring them to market. The initial business
plan included developing the products and working with manufacturers and marketing organizations to sell the products. This has
evolved into a less hands-on program which involves selling products with patents to other larger companies and retaining royalties.
Edison Nation has now reached cash flow break-even, and in addition has been retained by a number of companies for which they
do product searches to supplement its business. Edison Nation plans to repay the majority of its debt in 2012 and expects to subsequently
begin making distributions to its owners. Based on the current status of this investment, the Company does not consider the investment
to be impaired.



Chanticleer Investors
II -The Company paid $16,598 in professional services to form this partnership. Chanticleer Advisors, LLC acts as the managing
general partner and receives a management fee based on a percentage of profits.



17







| | 5. | PROPERTY
                                                                                     AND EQUIPMENT (RESTATED NOTE 16)
| | -- | ------------------------------------------------------------------------------------------------------------------------------



Property and equipment
consists of the following at June 30, 2012 and December 31, 2011:



|                                                                        |  | 2012 |           |   | 2011 |  
|----------------------------------------------------------------------- |  | ---- | --------- | - | ---- | -
|                                                                        |  |      |           |   |      |  
|Office and computer equipment                                           |  | $    | 33,525    |   |      | $
|Furniture and fixtures                                                  |  |      | 47,686    |   |      |  
|Construction in progress                                                |  |      | 375,000   |   |      |  
|Restaurant furnishings and equipment                                    |  |      | 1,871,419 |   |      |  
|                                                                        |  |      | 2,327,630 |   |      |  
|Accumulated depreciation                                                |  |      | (284,667  | ) |      |  
|                                                                        |  | $    | 2,042,963 |   |      | $
|                                                                        |  |      |           |   |      |  
|Depreciation expense for the three months ended June 30, 2012 and 2011: |  |     
|                                                                        |  |      |           |   |      |  
|Restaurants                                                             |  | $    | 80,334    |   |      | $
|Other                                                                   |  |      | 2,335     |   |      |  
|Total                                                                   |  | $    | 82,669    |   |      | $
|                                                                        |  |      |           |   |      |  
|Depreciation expense for the six months ended June 30, 2012 and 2011:   |  |      |          
|                                                                        |  |      |           |   |      |  
|Restaurants                                                             |  | $    | 154,409   |   |      | $
|Other                                                                   |  |      | 4,525     |   |      |  
|Total                                                                   |  | $    | 158,934   |   |      | $



Restaurant furnishings
and equipment consists of leasehold improvements, and bar, kitchen and restaurant equipment used in our four locations opened
as of March 31, 2012. Construction in progress consisted of costs incurred as of June 30, 2012 for our Budapest, Hungary location
which we expect to open in late August 2012 and as of December 31, 2011 for our Emperor’s Palace location in Johannesburg,
South Africa, which opened in February 2012 and its assets are currently in the restaurant furnishings and equipment line above.



Restaurant furnishings
and equipment includes capital lease assets of $141,416 with a net book value of $114,706 at June 30, 2012 and capital lease assets
of $141,416 with a net book value of $131,544 at December 31, 2011.





18







| | 6. | INTANGIBLE
                                                                                     ASSETS, NET (RESTATED NOTE 16)
| | -- | ------------------------------------------------------------------------------------------------------------------------------



GOODWILL

Goodwill arose from
the excess paid over the fair value of the net assets acquired for the three operating restaurants effective October 1, 2011 and
amounted to $396,487. An evaluation was completed effective December 31, 2011 at which time the Company determined that no impairment
was necessary. No change has occurred as of June 30, 2012 which would cause the Company to revise their evaluation.



FRANCHISE COST

Franchise cost for
the Company’s Hooters restaurants consists of the following at June 30, 2012 and December 31, 2011. The Company is amortizing
these costs from the opening of each restaurant for the 20 year term of the franchise agreement with HOA.



|                                           |  | 2012 |         |   | 2011 |  
|------------------------------------------ |  | ---- | ------- | - | ---- | -
|                                           |  |      |         |   |      |  
|Goodwill                                   |  | $    | 396,487 |   |      | $
|                                           |  |      |         |   |      |  
|Franchise cost:                            |  |      |         |   |      |  
|                                           |  |      |         |   |      |  
|South Africa                               |  | $    | 345,386 |   |      | $
|Brazil                                     |  |      | 135,000 |   |      |  
|Hungary                                    |  |      | 105,000 |   |      |  
|                                           |  |      | 585,386 |   |      |  
|Accumulated amortization                   |  |      | (13,555 | ) |      |  
|                                           |  |      | 571,831 |   |      |  
|Intangible assets, net                     |  | $    | 968,318 |   |      | $
|                                           |  |      |         |   |      |  
|Three months ended June 30, 2012 and 2011: |  |      |         |   |      |  
|                                           |  |      |         |   |      |  
|Amortization expense                       |  | $    | 4,492   |   |      | $
|                                           |  |      |         |   |      |  
|Six months ended June 30, 2012 and 2011:   |  |      |         |   |      |  
|                                           |  |      |         |   |      |  
|Amortization expense                       |  | $    | 8,251   |   |      | $



19







| | 7. | LONG-TERM
                                                                                     DEBT AND NOTES PAYABLE
| | -- | ---------------------------------------------------------------------------------------------------------------------



Long-term debt and
notes payable are summarized as follows.



|                                                                                                                                                                                                                                                                                                                                                                                                                           |  | June 30, |         |  | December 31, |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | ------- |  | ------------ | -
|                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 2012     |         |  | 2011         |  
|                                                                                                                                                                                                                                                                                                                                                                                                                           |  |          |         |  |              |  
|$2,000,000 line of credit with a bank, interest at Wall Street Journal Prime +0.5%
    (minimum of 4.5%) payable monthly; due August 20, 2012; collateralized by a certificate of deposit owned by a shareholder;
    collateralized by substantially all of the Company's assets and guaranteed by Mr. Pruitt                                                                                                             |  | $        | -       |  |              | $
|                                                                                                                                                                                                                                                                                                                                                                                                                           |  |          |         |  |              |  
|Note payable to a bank due in monthly installments of $1,739 including interest at Wall Street
    Journal Prime + 1% (minimum of 5.5%); remaining balance due August 10, 2013; collateralized by substantially all of the Company's
    assets and guaranteed by Mr. Pruitt                                                                                                                                               |  |          | 239,241 |  |              |  
|                                                                                                                                                                                                                                                                                                                                                                                                                           |  |          |         |  |              |  
|18% convertible notes payable; interest payable quarterly; due on the six-month
    anniversary of the date issued which range from January 22-June 26, 2012; convertible under the same terms as the subsequent
    capital raised in connection with a public offering of the Company's securities (all notes and accrued interest were paid
    off with closing of raise in June 2012, either in cash or common stock) |  |          | -       |  |              |  
|                                                                                                                                                                                                                                                                                                                                                                                                                           |  |          | 239,241 |  |              |  
|Notes payable and current portion of long-term debt                                                                                                                                                                                                                                                                                                                                                                        |  |          | 7,722   |  |              |  
|                                                                                                                                                                                                                                                                                                                                                                                                                           |  |          |         |  |              |  
|Long-term debt, less current portion                                                                                                                                                                                                                                                                                                                                                                                       |  | $        | 231,519 |  |              | $



The Company pays
the shareholder whose certificate of deposit is used as collateral on the $2,000,000 line of credit 1% of the outstanding balance
on the line of credit monthly. In addition, the Company issued warrants to the shareholder, as described in Note 10.







20











| | 8. | bank
                                                                                                                                    overdraft
                                                                                                                                    and
                                                                                                                                    term
                                                                                                                                    facilities
                                                                                                                                    (restated
                                                                                                                                    note
                                                                                                                                    16)
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Bank overdraft and term facilities at
June 30, 2012 and December 31, 2011 are associated with the South African Operations and consist of the following:





|                              |  | June 30, |         |  | December 31, |  
|----------------------------- |  | -------- | ------- |  | ------------ | -
|                              |  | 2012     |         |  | 2011         |  
|                              |  |          |         |  |              |  
|Bank overdraft facilities (1) |  | $        | 251,046 |  |              | $
|                              |  |          |         |  |              |  
|Term facility (2)             |  |          | 112,950 |  |              |  
|                              |  |          |         |  |              |  
|Term facility (3)             |  |          | 204,920 |  |              |  
|                              |  |          | 568,916 |  |              |  
|Other current liabilities     |  |          | 352,398 |  |              |  
|Other liabilities             |  | $        | 216,518 |  |              | $





| | (1) | Bank overdraft facilities are unsecured and have a total maximum
                                                              facility of approximately $260,000. The interest rate as of June
                                                              30, 2012 and December 31, 2011 was 11%. The facilities are reviewed
                                                              annually and are payable on demand.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Term facility is payable on demand and the facility is secured
                                                              by certain assets of one of the Company’s shareholders.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | The monthly payments of principal and interest of the term facility
                                                              total approximately $5,300 and have been made currently since October
                                                              1, 2011. The interest rate at June 30, 2012 and December 31, 2011
                                                              was 10.3%.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 9. | capital
                                                                                                                                    lease
                                                                                                                                    payable
                                                                                                                                    (restated
                                                                                                                                    note
                                                                                                                                    16)
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Capital leases payable at June 30, 2012
and December 31, 2011 is associated with the South African Operations and consists of the following.





|                                                                                                                      |  | June 30, |         |  | December 31, |  
|--------------------------------------------------------------------------------------------------------------------- |  | -------- | ------- |  | ------------ | -
|                                                                                                                      |  | 2012     |         |  | 2011         |  
|                                                                                                                      |  |          |         |  |              |  
|Capital lease payable, due in 49 monthly installments of $1,081, including interest
    at 10%, through April 2016    |  | $        | 44,747  |  |              | $
|                                                                                                                      |  |          |         |  |              |  
|Capital lease payable, due in 32 monthly insallments of $800 including interest at 10%, through
    November 2014     |  |          | 21,151  |  |              |  
|                                                                                                                      |  |          |         |  |              |  
|Capital lease payable, due in 14 monthly installments of $1,470, including interest at 10%, through
    May 2013      |  |          | 15,861  |  |              |  
|                                                                                                                      |  |          |         |  |              |  
|Capital lease payable, due in 36 monthly installments of $1,022, including
    interest at 10%, through February 2015 |  |          | 31,692  |  |              |  
|Total capital leases payable                                                                                          |  |          | 113,451 |  |              |  
|Current maturities                                                                                                    |  |          | 39,054  |  |              |  
|Capital leases payable, less current maturities                                                                       |  | $        | 74,397  |  |              | $





The capital leases cover point of sale
and other equipment for three of the four restaurants operating at June 30, 2012.



21









| | 10. | Stockholders’
                                                                                                                                     Equity
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



The Company has 20,000,000
shares of its $0.0001 par value common stock authorized, 3,955,511 shares issued and 3,698,896 shares outstanding at June 30,
2012 and had 200,000,000 shares of its $0.0001 par value common stock authorized, 1,506,061 shares issued and 1,249,446 shares
outstanding at December 31, 2011.



Effective May 11,
2012, the Company's common stock was reverse split, 1 share for each 2 shares issued, pursuant to approval of a majority of the
Company's shareholders. All share references have been adjusted as if the split occurred prior to all periods presented.



2012 Transactions



On May 8, 2012, the
Company issued 5,000 shares of its common stock in exchange for services to be performed over a six month period and valued at
$32,400. This is being amortized over six months and in the period ending June 30, 2012, $9,406 has been expensed.



EQUITY RAISE



The Company filed
a Form S-1 Registration Statement under the Securities Act of 1933 which was declared effective on June 21, 2012. The Company
issued 2,444,450 units at $4.50 per unit, consisting of one share of Common Stock and one five year redeemable warrant exercisable
at $5.00 per share for an issuance value of $11 million (net $7.2 million). The issuance of shares included shares issued upon
the conversion of notes payable and accrued interest of approximately $1.9 million and shares issued for the purchase of a percentage
of the Hoot SA non-controlling interest of approximately $1.0 million.



2011 Transactions



On March 30, 2011,
the Company issued 412,286 shares of its common stock in exchange for convertible notes payable with a balance of $711,500 and
accrued interest of $19,588.



On July 28, 2011,
the Company issued 10,000 shares of its common stock in exchange for consulting services valued at $21,500.



On September 23,
2011, the Company issued 15,000 shares of its common stock in exchange for consulting services to be performed valued at $44,850.



On September 23,
2011, the Company issued 2,750 shares of its common stock in exchange for services performed and valued at $8,223.



On October 19, 2011,
the Company issued 167 shares of its common stock in exchange for cash in the amount of $500.



Warrants



On January 6, 2011,
the Company filed a Form S-1 Registration Statement under the Securities Act of 1933. The Registration Statement was declared
effective on July 14, 2011 and registers one Class A Warrant and one Class B Warrant for each common share of the Company issued
and outstanding. The warrants have a subscription price of $0.08 which entitles our shareholders to acquire one Class A Warrant
which would entitle the holder to acquire one share of our common stock for $5.50 and one Class B Warrant which would entitle
the holder to acquire one share of our common stock for $7.00. The warrants have a five year life. At June 30, 2012 and December
31, 2011, the Company had issued 1,097,254 Class A and Class B warrants. Net proceeds from the offering are included in additional
paid in capital and are summarized as follows.



22







|Proceeds from sales of Class A and Class B warrants |  | $ | 87,780  |  
|--------------------------------------------------- |  | - | ------- | -
|Legal and professional fees incurred for offering   |  |   | (67,172 | )
|                                                    |  | $ | 20,608  |  



On August 10, 2011,
the Company issued two warrants to the shareholder who collateralized the Company's $2,000,000 line of credit discussed in Note
7. The Class A Warrant is for 100,000 shares exercisable at $5.50 per share for 10 years and the Class B Warrant is for 112,500
shares exercisable at $7.00 per share for 10 years. The warrants were valued using Black-Scholes at $906,351. This amount will
be amortized to interest expense over the ten year life of the warrants. At June 30, 2012 and December 31, 2011, additional paid-in
capital includes $80,565 and $35,247, respectively, in amortization. Interest expense included $35,247 in the last six months
of 2011 and $22,659 and $45,318 for the three and six months ended June 30, 2012, respectively.



On November 1, 2011,
the Company entered into an investor relations consulting agreement. In addition to cash compensation, the consultant is entitled
to receive warrants for certain performance goals. These warrants will be accounted for when the goals are accomplished.



On March 28, 2012,
the Company issued 125,000 and 25,000 five year warrants at $6.50 and $8.00, respectively for consulting services related to the
Company’s expansion into Europe. The warrants were valued using Black-Scholes at $518,599. This amount will be amortized
to consulting fees (in G&A on consolidated statements of operations) over the five year life of the warrants. At June 30,
2012, additional paid-in capital and consulting expense include $26,745 in amortization for the period since the warrants were
issued.



On June 21, 2012,
the Company issued 2,444,450 five-year redeemable warrants as noted above in the “Equity Raise” section.



| | 11. | RELATED
                                                                                                                                     PARTY
                                                                                                                                     TRANSACTIONS
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Due to related parties



The Company has received
non-interest bearing loans and advances from related parties. The amounts owed by the Company as of June 30, 2012 and December
31, 2011 are as follows:



|                             |  | 2012 |        |  | 2011 |  
|---------------------------- |  | ---- | ------ |  | ---- | -
|                             |  |      |        |  |      |  
|Hoot SA I, LLC               |  | $    | 12,690 |  |      | $
|Chanticleer Foundation, Inc. |  |      | 10,750 |  |      |  
|Chanticleer Investors, LLC   |  |      | 4,045  |  |      |  
|                             |  | $    | 27,485 |  |      | $



Due from related parties



The Company has earned
income from and made advances to related parties. The amounts owed to the Company as of June 30, 2012 and December 31, 2011 are
as follows:



|                                |  | 2012 |         |  | 2011 |  
|------------------------------- |  | ---- | ------- |  | ---- | -
|                                |  |      |         |  |      |  
|Chanticleer Investors II, LLC   |  | $    | 3,200   |  |      | $
|Chanticleer Dividend Fund, Inc. |  |      | 74,281  |  |      |  
|Hoot SA II, III and IV, LLC's   |  |      | 33,195  |  |      |  
|                                |  | $    | 110,676 |  |      | $



23







Management income from affiliates



The Company had management income from
its affiliates in the three and six months ended June 30, 2012 and 2011, as follows:



|                                      |  | Three Months ended June 30, |       |  | Six Months ended June 30, |  
|------------------------------------- |  | --------------------------- | ----- |  | ------------------------- | -
|                                      |  | 2012                        |       |  | 2011                      |  
|Chanticleer Investors II, LLC         |  |                             | 6,698 |  |                           |  
|North American Energy Resources, Inc. |  |                             | -     |  |                           |  
|                                      |  | $                           | 6,698 |  |                           | $



Chanticleer Investors LLC



Investors LLC loaned
the Company $4,045 at June 30, 2012 and December 31, 2011.



Chanticleer Investors II LLC



The Company manages
Investors II and earned management income of $6,698 and $30,726 in the six months ended June 30, 2012 and 2011, respectively.



Chanticleer Dividend Fund, Inc. ("CDF")



On November 10, 2010
the Company formed CDF under the general corporation laws of the State of Maryland. CDF filed a registration statement under Form
N-2 to register as a non-diversified, closed-end investment company in January 2011. The Company, through Advisors, will have
a role in management of CDF when its registration statement becomes effective.



Hoot SA, LLC; Hoot SA II, LLC; Hoot
SA III, LLC; and Hoot SA IV, LLC



The Hoot partnerships
were formed to help finance the first four Hooters restaurants in South Africa.



Efftec International, Inc. ("Efftec")



The Company's CEO
became CEO and the sole director of Efftec during 2010 and the Company received 150,000 common shares and an option to acquire
150,000 shares for management services. The shares and option were initially valued at $22,500, based on the trading price of
Efftec at the time.



North American Energy Resources, Inc.
("NAEY")



The Company's CEO
became CEO and a director of NAEY during 2010 and the Company received 150,000 common shares for management services. The shares
were valued at $10,500, based on the trading price of NAEY at the time. The Company's CEO resigned as CEO of NAEY in December
2010 and remains a director. During June 2011, the Company’s CEO contributed 1,790,440 shares of NAEY to the Company which
was valued at $125,331 based on the trading price at the time. Mr. Pruitt did not receive additional compensation as a result
of the transfer.



Chanticleer Foundation, Inc.



Chanticleer Foundation,
Inc. is a Donor-Advised Fund whose governing body consists of Mr. Pruitt, a director of the Company and an employee of the Company.
The Foundation loaned the Company $10,750 during 2011.



24







Avenel Financial Group, Inc.



Avenel Financial Group,
Inc. is a company owned by Mr. Pruitt. Advances previously made to the Company were repaid during 2011. Avenel Financial Group,
Inc. invested as a limited partner in the South African Hooters locations. Avenel Financial Group, Inc. invested $14,000, $12,500,
and $25,000 in the Durban, Johannesburg, and Cape Town locations, respectively, and is entitled to receive approximately 2.0%,
1.5%, and 2.9%, respectively, of the net profits after taxation (“SA Profits”) of each of the locations. As of June
30, 2012, Avenel Financial Group, Inc. has received an aggregate of $6,441 in SA Profits and $49,816 in return of investment under
the same terms as the other limited partners.



| | 12. | SEGMENTS
                                                                                                                                     OF
                                                                                                                                     BUSINESS
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company is organized into two segments.



Management and consulting services
("Management")

The Company provides
management and consulting services for small companies which are generally seeking to become publicly traded. The Company also
provides management and investment services for Investors LLC, Investors II and other unaffiliated companies.



Operation of restaurants ("Restaurants")

At June 30, 2012,
the Company has majority ownership of four restaurants and a management company in South Africa. Three of the restaurants and
the management company were operating for the entire first quarter of 2012 and the fourth restaurant opened in February 2012.
Majority ownership was acquired effective September 30, 2011 and these operations are consolidated with the Company’s other
operations since that date. At June 30, 2012, the Company has 49% ownership of two restaurants in Australia, one of which opened
in January 2012 and the second is under construction and expected to open by the end of 2012. The operations in Australia will
be accounted for using the equity method. The Company has also started activity in Hungary, Brazil and Europe, but operations
have not yet commenced.





Financial information
regarding the Company's segments is as follows for the three and six months ended June 30, 2012 and 2011.



Three months ended
June 30, 2012 (Restated Note 16)



|                              |  | Management |          |   | Restaurants |   |           | Total | 
|----------------------------- |  | ---------- | -------- | - | ----------- | - | --------- | ----- | 
|                              |  |            |          |   |             |   |           |       | 
|Revenues                      |  | $          | 31,698   |   |             | $ | 1,696,123 |       | 
|                              |  |            |          |   |             |   |           |       | 
|Interest expense              |  | $          | 64,918   |   |             | $ | 143,184   |       | 
|                              |  |            |          |   |             |   |           |       | 
|Depreciation and amortization |  | $          | 2,335    |   |             | $ | 84,826    |       | 
|                              |  |            |          |   |             |   |           |       | 
|Profit (loss)                 |  | $          | (577,135 | ) |             | $ | (336,168  | )     | 
|Investments and other         |  |            |          |   |             |   |           |       | 
|Non-controlling interest      |  |            |          |   |             |   |           |       | 
|                              |  |            |          |   |             |   |           |       | 



25







Three months ended June 30, 2011



|                              |  | Management |          |   | Restaurants |   |       | Total | 
|----------------------------- |  | ---------- | -------- | - | ----------- | - | ----- | ----- | 
|                              |  |            |          |   |             |   |       |       | 
|Revenues                      |  | $          | 32,830   |   |             | $ | -     |       | 
|                              |  |            |          |   |             |   |       |       | 
|Interest expense              |  | $          | 3,927    |   |             | $ | -     |       | 
|                              |  |            |          |   |             |   |       |       | 
|Depreciation and amortization |  | $          | 2,512    |   |             | $ | -     |       | 
|                              |  |            |          |   |             |   |       |       | 
|Profit (loss)                 |  | $          | (233,375 | ) |             | $ | 6,461 |       | 
|Investments and other         |  |            |          |   |             |   |       |       | 
|Non-controlling interest      |  |            |          |   |             |   |       |       | 
|                              |  |            |          |   |             |   |       |       | 



26







Six months ended
June 30, 2012 (Restated Note 16)



|                                    |  | Management |            |   | Restaurants |   |           | Total | 
|----------------------------------- |  | ---------- | ---------- | - | ----------- | - | --------- | ----- | 
|                                    |  |            |            |   |             |   |           |       | 
|Revenues                            |  | $          | 56,698     |   |             | $ | 3,083,618 |       | 
|                                    |  |            |            |   |             |   |           |       | 
|Interest expense                    |  | $          | 137,504    |   |             | $ | 255,708   |       | 
|                                    |  |            |            |   |             |   |           |       | 
|Depreciation and amortization       |  | $          | 4,525      |   |             | $ | 162,660   |       | 
|                                    |  |            |            |   |             |   |           |       | 
|Profit (loss)                       |  | $          | (1,024,469 | ) |             | $ | (655,136  | )     | 
|Investments and other               |  |            |            |   |             |   |           |       | 
|Non-controlling interest            |  |            |            |   |             |   |           |       | 
|                                    |  |            |            |   |             |   |           |       | 
|                                    |  |            |            |   |             |   |           |       | 
|Assets                              |  | $          | 55,155     |   |             | $ | 3,584,739 |       | 
|Cash and cash equivalents           |  |            |            |   |             |   |           |       | 
|Investments                         |  |            |            |   |             |   |           |       | 
|                                    |  |            |            |   |             |   |           |       | 
|                                    |  |            |            |   |             |   |           |       | 
|Liabilities                         |  | $          | 619,553    |   |             | $ | 1,334,129 |       | 
|                                    |  |            |            |   |             |   |           |       | 
|Expenditures for non-current assets |  | $          | 1,346      |   |             | $ | 935,493   |       | 



Six months ended
June 30, 2011



|                                    |  | Management |         |   | Restaurants |   |        | Total | 
|----------------------------------- |  | ---------- | ------- | - | ----------- | - | ------ | ----- | 
|                                    |  |            |         |   |             |   |        |       | 
|Revenues                            |  | $          | 474,143 |   |             | $ | -      |       | 
|                                    |  |            |         |   |             |   |        |       | 
|Interest expense                    |  | $          | 22,686  |   |             | $ | -      |       | 
|                                    |  |            |         |   |             |   |        |       | 
|Depreciation and amortization       |  | $          | 5,061   |   |             | $ | -      |       | 
|                                    |  |            |         |   |             |   |        |       | 
|Profit (loss)                       |  | $          | (32,811 | ) |             | $ | 11,564 |       | 
|Investments and other               |  |            |         |   |             |   |        |       | 
|Non-controlling interest            |  |            |         |   |             |   |        |       | 
|                                    |  |            |         |   |             |   |        |       | 
|                                    |  |            |         |   |             |   |        |       | 
|Assets                              |  | $          | 269,154 |   |             | $ | 92,536 |       | 
|Cash and cash equivalents           |  |            |         |   |             |   |        |       | 
|Investments                         |  |            |         |   |             |   |        |       | 
|                                    |  |            |         |   |             |   |        |       | 
|                                    |  |            |         |   |             |   |        |       | 
|Liabilities                         |  | $          | 638,374 |   |             | $ | -      |       | 
|                                    |  |            |         |   |             |   |        |       | 
|Expenditures for non-current assets |  | $          | -       |   |             | $ | -      |       | 
|                                    |  |            |         |   |             |   |        |       | 



| | 13. | COMMITMENTS
                                                                                                                                     AND
                                                                                                                                     CONTINGENCIES
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Effective August
1, 2010, the Company extended its office lease agreement for its office for a term of one year with monthly lease payments of
$2,100. Since August 1, 2011, the office lease continues at the same rate on a month-to-month basis.



TheCompany leases the land and buildings for its four restaurants in South Africa through its subsidiaries. The leases are
for five year terms and include options to extend the terms. We lease our restaurant facilities under “triple net”
leases that require us to pay minimum rent, real estate taxes, maintenance costs and insurance premiums and, in some instances,
percentage rent based on sales in excess of specified amounts. On May 7, 2012, the Company, through its subsidiary, signed a lease
for the Budapest, Hungary location under similar terms to our South Africa restaurants, except the term is for 10 years. On July
1, 2012, the Company signed an office lease agreement for a satellite office in Florida for one year at a monthly rate of $600.
Rent obligations at current foreign currency exchange rates for our five restaurants and the Florida satellite office as of June
30 are presented below:



27







|2013       |  | $ | 676,963   | 
|---------- |  | - | --------- | 
|2014       |  |   | 725,200   | 
|2015       |  |   | 785,335   | 
|2016       |  |   | 853,933   | 
|thereafter |  |   | 1,435,978 | 
|Totals     |  | $ | 4,477,409 | 



Rent expense for
the three months ended June 30, 2012 and June 30, 2011 was $149,146 and $6,300, respectively. Rent expense for the three months
ended June 30, 2012 for the South African restaurants was $142,621, and is included in the “Restaurant operating expenses”
of the Consolidated Statement of Operations. Rent expense for the three months ended June 30, 2012 for the management segment
was $6,525, and is included in the “General and administrative expense” of the Consolidated Statement of Operations.
Rent expense for the three months ended June 30, 2011 was all for the management segment. Rent expense for the six months ended
June 30, 2012 and June 30, 2011 was $286,937 and $12,600, respectively. Rent expense for the six months ended June 30, 2012 for
the South African restaurants was $273,887, and is included in the “Restaurant operating expenses” of the Consolidated
Statement of Operations. Rent expense for the six months ended June 30, 2012 for the management segment was $13,050, and is included
in the “General and administrative expense” of the Consolidated Statement of Operations. Rent expense for the six
months ended June 30, 2011 was all for the management segment.



| | 14. | DISCLOSURES
                                                                                      ABOUT FAIR VALUE
| | --- | ------------------------------------------------------------------------------------------------------------------



Assets and liabilities measured at fair
value on a recurring basis are summarized in the following tables according to FASB ASC 820 pricing levels.



|                              |  | Fair Value Measurement
    Using |        
|----------------------------- |  | -------------------------------- | -------
|                              |  |                                  |        
|                              |  |                                  |        
|                              |  |                                  |        
|                              |  |                                  |        
|                              |  | Recorded                         |        
|                              |  | value                            |        
|                              |  |                                  |        
|June 30, 2012                 |  |                                  |        
|Assets:                       |  |                                  |        
|Available-for-sale securities |  | $                                | 80,713 
|                              |  |                                  |        
|December 31, 2011             |  |                                  |        
|Assets:                       |  |                                  |        
|Available-for-sale securities |  | $                                | 318,353



At June 30, 2012
and December 31, 2011, the Company's available-for-sale equity securities were valued using Level 1 and Level 2 inputs as summarized
above. Level 1 inputs are based on unadjusted prices for identical assets in active markets that the Company can access. Level
2 inputs are based on quoted prices for similar assets other than quoted prices in Level 1, quoted prices in markets that are
not yet active, or other inputs that are observable or can be derived principally from or corroborated by observable market data
for substantially the full term of the assets.



The Company does
not have any investments that are measured on a recurring basis using Level 3 inputs.



28







Certain assets are
not carried at fair value on a recurring basis, including investments accounted for under the equity and cost methods. Accordingly,
such investments are only included in the fair value hierarchy disclosure when the investment is subject to re-measurement at
fair value after initial recognition and the resulting re-measurement is reflected in the consolidated financial statements.



See Note 4 for further
details of the Company's investments.



| | 15. | SUBSEQUENT
                                                                                      EVENTS
| | --- | -------------------------------------------------------------------------------------------------------



INCREASE IN INVESTMENT IN CHANTICLEER INVESTORS, LLC



On July 12, 2012,
the Company purchased one of Chanticleer Investors, LLC partners’ interest of $300,000, at cost, which represented 8.45%
of Chanticleer Investors, LLC total investment in HOA of $3,550,000, which represents approximately 3% of HOA. This transaction
increased our ownership percentage in Investors LLCfrom 14.1% to 22.5%.





| | 16. | RESTATEMENT
                                                                                      OF 2011 AND 2012 FINANCIAL INFORMATION
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------



These condensed consolidated
financial statements restate certain items previously reported by the Company for the three and six months ended June 30, 2012
and revise certain items previously reported by the Company in the notes to the consolidated financial statements due to the events
described below. For information regarding the restatement of the 2011 year see the Company’s Amended Form 10-K/A filed
with the SEC on December 4, 2012.



Restated balances
for 2012 and 2011 financial information items have been identified with the notation “Restated” where appropriate
and applicable.



Other than the revising
of the previously filed condensed consolidated financial statements relating to the restatement, these notes to the condensed
consolidated financial statements speak as of the filing date of the Company’s original Form 10-Q for the six months ended
June 30, 2012, filed on August 13, 2012, and these notes to the condensed consolidated financial statements have not been updated
to reflect other events occurring subsequent to the original filing date. These notes to the condensed consolidated financial
statements should be read in their historical context, except to the extent revised as a result of this restatement.



On September 7, 2012,
the audit committee of the Company, upon recommendation of the Company’s management determined that the Company’s
Consolidated Financial Statements for its fiscal year ended December 31, 2011 as originally filed in the Form 10-K could no longer
be relied on. The Company determined that the financial statements of Kiarabrite (Pty) Ltd., Dimaflo (Pty) Ltd., Tundraspex (Pty)
Ltd., Civisign (Pty) Ltd., Dimalogix (Pty) Ltd., and Chanticleer & Shaw Foods (Pty) Ltd. (collectively referred to as the
“South African Operations”) which are the South African management company and the four entities organized for the
stores we operate in South Africa, and the company that owns the HOA franchise rights for the territory of South Africa, were
not audited as the Company was led to believe. Accordingly, this Amendment is being filed to include the changes to the financial
statements of the South African Operations and its impact on the condensed consolidated financial statements of the Company for
the period ended June 30, 2012, as a result of the audit of the South African Operations for the three months ended December 31,
2011 and the subsequent review of the operations for the three and six months ended June 30, 2012.



On September 7, 2012,
the Company’s South African Chief Financial Officer (“SA CFO”) resigned. It was determined that the SA CFO had
committed certain illegal acts, fraud and certain misrepresentations of facts. Due to the SA CFO’s actions, certain taxes
were not paid. In addition, the applicable tax forms were not filed during the proper periods. The Company has engaged tax experts
to assist in the tax process. The Company also discovered a balance of approximately $96,737 and $42,109 of cash that was misappropriated
by the SA CFO as of the end of the second quarter of 2012 and the fourth quarter of 2011 (presented as “other receivable”
on the Company’s condensed consolidated balance sheet as of June 30, 2012 and December 31, 2011), and approximately $128,000
in total for the period from October 2011 through September 2012. As of December 10, 2012, approximately $41,000 has been recovered
by the Company and payment plans are in place for the remainder.



29







The Company engaged
outside South African tax experts in September 2012 to assist with compliance with Value Added Tax (VAT), payroll taxes, and income
taxes n South Africa. A voluntary disclosure agreement has been submitted and the Company is awaiting contract from the South
African governmental agency.



In connection with
the acquisition of assets as described in Note 3, the Company believes the purchase and sale with the seller was accomplished
in accordance with the laws and regulations of the taxing authorities in South Africa. However, there can be no absolute assurance
that the seller has fulfilled its tax and regulatory filing requirements, and whether or not the local authorities could seek
to recover any unpaid taxes or other amounts from the Company, its shareholders or others. The Company is not aware of any known
obligations for which the Company may be required to settle.



The following tables
include the condensed consolidated balance sheet as of June 30, 2012, condensed consolidated statement of operations for the three
months ended June 30, 2012 and condensed consolidated statements of operations and cash flows for the six months ended June 30,
2012 and include the consolidated amounts previously reported, adjustments reflected in this amended filing, and the restated
amounts for 2012.



30







Condensed Consolidated Balance Sheet



|                                                           |  | June 30, 2012 |           
|---------------------------------------------------------- |  | ------------- | ----------
|                                                           |  | As Previously |           
|                                                           |  | Reported      |           
|ASSETS                                                     |  |               |           
|Current assets:                                            |  |               |           
|Cash and cash equivalents                                  |  | $             | 3,673,005 
|Accounts receivable                                        |  |               | 41,667    
|Other receivable                                           |  |               |           
|Inventory                                                  |  |               | 122,499   
|Due from related parties                                   |  |               | 110,676   
|Prepaid expenses                                           |  |               | 125,056   
|TOTAL CURRENT ASSETS                                       |  |               | 4,072,903 
|Property and equipment, net                                |  |               | 3,102,917 
|Intangible assets, net                                     |  |               | 769,386   
|Investments at fair value                                  |  |               | 80,713    
|Other investments                                          |  |               | 2,077,176 
|Deposits and other assets                                  |  |               | 3,980     
|TOTAL ASSETS                                               |  | $             | 10,107,075
|                                                           |  |               |           
|LIABILITIES AND STOCKHOLDERS' EQUITY                       |  |               |           
|Current liabilities:                                       |  |               |           
|Current maturities of long-term debt and notes payable     |  | $             | 7,722     
|Accounts payable anc accrued expenses                      |  |               | 592,963   
|Other current liabilities                                  |  |               | 332,340   
|Deferred rent                                              |  |               | -         
|Current maturities of capital leases payable               |  |               | -         
|Income taxes payable                                       |  |               | 62,555    
|Due to related parties                                     |  |               | 27,485    
|TOTAL CURRENT LIABILITIES                                  |  |               | 1,023,065 
|Deferred rent                                              |  |               | -         
|Other liabilities                                          |  |               | -         
|Long-term debt and capital leases, less current maturities |  |               | 231,519   
|TOTAL LIABILITIES                                          |  |               | 1,254,584 
|Commitments and contingencies (Note 13)                    |  |               |           
|                                                           |  |               |           
|Stockholders' equity:                                      |  |               |           
|Common stock                                               |  |               | 396       
|Additional paid in capital                                 |  |               | 16,509,226
|Other comprehensive income (loss)                          |  |               | (194,446  
|Non-controlling interest                                   |  |               | 398,037   
|Accumulated deficit                                        |  |               | (7,334,302
|Less treasury stock                                        |  |               | (526,420  
|                                                           |  |               | 8,852,491 
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 |  | $             | 10,107,075



31









|Condensed Consolidated Statement of Operations          |  |                                  |           |   |             |  
|------------------------------------------------------- |  | -------------------------------- | --------- | - | ----------- | -
|                                                        |  |                                  |           |   |             |  
|                                                        |  | Three Months Ended June 30, 2012 |          
|                                                        |  | As Previously                    |           |   |             |  
|                                                        |  | Reported                         |           |   | Adjustments |  
|Revenue:                                                |  |                                  |           |   |             |  
|Restaurant sales, net                                   |  | $                                | 1,654,829 |   |             | $
|Management fee income - non-affiliates                  |  |                                  | 25,000    |   |             |  
|Management fee income - affiliates                      |  |                                  | 6,698     |   |             |  
|Total revenue                                           |  |                                  | 1,686,527 |   |             |  
|Expenses:                                               |  |                                  |           |   |             |  
|Restaurant cost of sales                                |  |                                  | 606,221   |   |             |  
|Restaurant operating expenses                           |  |                                  | 711,808   |   |             |  
|Restaurant pre-opening expenses                         |  |                                  | 25,000    |   |             |  
|General and administrative expense                      |  |                                  | 656,596   |   |             |  
|Depreciation and amortization                           |  |                                  | 127,087   |   |             |  
|Total expenses                                          |  |                                  | 2,126,712 |   |             |  
|Loss from operations                                    |  |                                  | (440,185  | ) |             |  
|Other income (expense)                                  |  |                                  |           |   |             |  
|Equity in earnings (losses) of investments              |  |                                  | (33,348   | ) |             |  
|Interest expense                                        |  |                                  | (201,550  | ) |             |  
|Total other income (expense)                            |  |                                  | (234,898  | ) |             |  
|Net loss before income taxes                            |  |                                  | (675,083  | ) |             |  
|Provision for income taxes                              |  |                                  | 47,327    |   |             |  
|Net loss before non-controlling interest                |  |                                  | (722,410  | ) |             |  
|Non-controlling interest                                |  |                                  | (10,971   | ) |             |  
|Net loss                                                |  |                                  | (733,381  | ) |             |  
|Other comprehensive income (loss):                      |  |                                  |           |   |             |  
|Unrealized gain (loss) on available-for-sale securities |  |                                  | (132,021  | ) |             |  
|(none applies to non-controlling interest)              |  |                                  |           |   |             |  
|Foreign translation losses                              |  |                                  | (4,193    | ) |             |  
|Other comprehensive loss                                |  | $                                | (869,595  | ) |             | $
|                                                        |  |                                  |           |   |             |  
|Net earnings (loss) per share, basic and diluted        |  | $                                | (0.49     | ) |             | $
|Weighted average shares outstanding                     |  |                                  | 1,502,418 |   |             |  





32









Condensed Consolidated Statement of Operations





|                                                        |  | Six Months Ended June 30, 2012 |           
|------------------------------------------------------- |  | ------------------------------ | ----------
|                                                        |  | As Previously                  |           
|                                                        |  | Reported                       |           
|Revenue:                                                |  |                                |           
|Restaurant sales, net                                   |  | $                              | 3,003,816 
|Management fee income - non-affiliates                  |  |                                | 50,000    
|Management fee income - affiliates                      |  |                                | 6,698     
|Total revenue                                           |  |                                | 3,060,514 
|Expenses:                                               |  |                                |           
|Restaurant cost of sales                                |  |                                | 1,102,770 
|Restaurant operating expenses                           |  |                                | 1,327,578 
|Restaurant pre-opening expenses                         |  |                                | 91,120    
|General and administrative expense                      |  |                                | 1,137,868 
|Depreciation and amortization                           |  |                                | 235,699   
|Total expenses                                          |  |                                | 3,895,035 
|Loss from operations                                    |  |                                | (834,521  
|Other income (expense)                                  |  |                                |           
|Equity in earnings (losses) of investments              |  |                                | (43,886   
|Interest expense                                        |  |                                | (378,768  
|Total other income (expense)                            |  |                                | (422,654  
|Net loss before income taxes                            |  |                                | (1,257,175
|Provision for income taxes                              |  |                                | 51,143    
|Net loss before non-controlling interest                |  |                                | (1,308,318
|Non-controlling interest                                |  |                                | 6,824     
|Net loss                                                |  |                                | (1,301,494
|Other comprehensive income (loss):                      |  |                                |           
|Unrealized gain (loss) on available-for-sale securities |  |                                |           
|(none applies to non-controlling interest)              |  |                                | (237,639  
|Foreign translation losses                              |  |                                | (5,472    
|Other comprehensive loss                                |  | $                              | (1,544,605
|                                                        |  |                                |           
|Net earnings (loss) per share, basic and diluted        |  | $                              | (0.52     
|Weighted average shares outstanding                     |  |                                | 2,498,882 



33







Condensed Consolidated Statement of Cash Flows



|                                                                            |  | Six Months Ended June 30, 2012 |           
|--------------------------------------------------------------------------- |  | ------------------------------ | ----------
|                                                                            |  | As Previously                  |           
|                                                                            |  | Reported                       |           
|Cash flows from operating activities:                                       |  |                                |           
|Net loss                                                                    |  | $                              | (1,301,494
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                                |           
|Non-controlling interest                                                    |  |                                | (6,824    
|Services rendered in exchange for investment securities                     |  |                                | 9,406     
|Depreciation and amortization                                               |  |                                | 235,699   
|Equity in (earnings) loss of investments                                    |  |                                | 43,886    
|Amortization of warrants                                                    |  |                                | 72,063    
|Bad debt expense                                                            |  |                                | 12,315    
|(Increase) decrease in accounts and other receivables                       |  |                                | 50,000    
|(Increase) decrease in prepaid expenses and other
    assets                |  |                                | 170,374   
|(Increase) decrease inventory                                               |  |                                | (63,233   
|Increase (decrease) in accounts payable and accrued
    expenses            |  |                                | 424,261   
|Increase (decrease) in income taxes payable                                 |  |                                | 47,947    
|Advance from related party for working capital                              |  |                                | (63,202   
|Increase (decrease) in deferred revenue and other
    liabilities           |  |                                | (70,802   
|Increase (decrease) in deferred rent                                        |  |                                | -         
|Net cash used by operating activities                                       |  |                                | (439,604  
|                                                                            |  |                                |           
|Cash flows from investing activities:                                       |  |                                |           
|Proceeds from non-controlling interest                                      |  |                                | -         
|Purchase of investments                                                     |  |                                | (933,948  
|Franchise fees incurred                                                     |  |                                | (312,674  
|Purchase of property and equipment                                          |  |                                | (816,341  
|Net cash provided (used) by investing activities                            |  |                                | (2,062,963
|                                                                            |  |                                |           
|Cash flows from financing activities:                                       |  |                                |           
|Proceeds from sale of common stock                                          |  |                                | 7,051,464 
|Loan proceeds                                                               |  |                                | 2,915,000 
|Other liabilities                                                           |  |                                | -         
|Loan and capital lease repayment                                            |  |                                | (3,942,820
|Net cash provided by financing activities                                   |  |                                | 6,023,644 
|Effect of exchange rate changes on cash                                     |  |                                | -         
|Net increase in cash and cash equivalents                                   |  |                                | 3,521,077 
|Cash and cash equivalents, beginning of year                                |  |                                | 151,928   
|Cash and cash equivalents, end of year                                      |  | $                              | 3,673,005 



34









ITEM 2:Management’s
Discussion and Analysis of Financial Condition and Results of Operations



FORWARD-LOOKING STATEMENTS



Certain statements
contained in this report that are not historical fact are "forward-looking statements" as that term is defined in the
Private Securities Litigation Reform Act of 1995. The words or phrases "will likely result," "are expected to,"
"will continue," "is anticipated," "believes," "estimates," "projects" or similar
expressions are intended to identify these forward-looking statements. These statements are subject to risks and uncertainties
beyond our reasonable control that could cause our actual business and results of operations to differ materially from those reflected
in our forward-looking statements. The safe harbor provisions provided in the Securities Litigation Reform Act do not apply to
forward-looking statements we make in this report. Forward-looking statements are not guarantees of future performance. Our forward-looking
statements are based on trends which we anticipate in our industry and our good faith estimate of the effect on these trends of
such factors as industry capacity, product demand and product pricing. The inclusion of projections and other forward-looking
statements should not be regarded a representation by us or any other person that we will realize our projections or that any
of the forward-looking statements contained in this prospectus will prove to be accurate.



Management’s Analysis of Business



We have changed our
focus recently from managing investments to owning and operating Hooters franchises internationally.  Hooters restaurants
are casual beach-themed establishments with sports on television, jukebox music, and the “nearly world famous” Hooters
Girls.  The menu consists of spicy chicken wings, seafood, sandwiches and salads.  Each locations menu can
vary with the tastes of the locality it is in.  Hooters began in 1983 with its first restaurant in Clearwater, Florida.
From the original restaurant and licensee Mr. Robert Brooks, Hooters has become a global brand, with locations in 44 states domestically
and over 430 Hooters restaurants worldwide. Besides restaurants, Hooters has also branched out to other areas, including licensing
its name to a golf tour and the sale of packaged food in supermarkets.



We expect to either
own 100% of the Hooters franchise or partner with a local franchisee in the countries we target.   We based this
decision on what we believe to be the successful launch of our South African Hooters venture and believe we have aligned partners
and operators in various international markets. We are focused on expanding our Hooters operations, and expect to use substantially
all the net proceeds from the upcoming offering, in South Africa, Brazil, Hungary, Australia and Europe.



Accordingly, we operate
in two business segments; Hooters franchise restaurants and our legacy investment management and consulting services businesses.



RESTAURANT OPERATIONS



The following is
a condensed unaudited statement of operations for our restaurant operations for the three and six months ended June 30, 2012,
which currently consists of four Hooters locations in South Africa.



35







Three months ended
June 30, 2012 (Restated Note 16):



|                                                                          |  |   | (1)     |   |  |   | (2)          |   |  |   | (3)      |   |  |   | (4)                                                                                                                   |   |  |   |                                                                                                                         |  
|------------------------------------------------------------------------- |  | - | ------- | - |  | - | ------------ | - |  | - | -------- | - |  | - | --------------------------------------------------------------------------------------------------------------------- | - |  | - | ----------------------------------------------------------------------------------------------------------------------- | -
|                                                                          |  |   | Durban  |   |  |   | Johannesburg |   |  |   | CapeTown |   |  |   | Emperors
                                                                                                      Palace |   |  |   | Total
                                                                                                      Restaurants |  
|Revenues                                                                  |  | $ | 301,911 |   |  | $ | 543,506      |   |  | $ | 174,202  |   |  | $ | 676,504                                                                                                               |   |  | $ | 1,696,123                                                                                                               |  
|Cost of Sales                                                             |  |   | 125,888 |   |  |   | 210,832      |   |  |   | 108,448  |   |  |   | 264,444                                                                                                               |   |  |   | 709,612                                                                                                                 |  
|Gross Profit                                                              |  |   | 176,023 |   |  |   | 332,674      |   |  |   | 65,754   |   |  |   | 412,060                                                                                                               |   |  |   | 986,511                                                                                                                 |  
|                                                                          |  |   |         |   |  |   |              |   |  |   |          |   |  |   |                                                                                                                       |   |  |   |                                                                                                                         |  
|Recurring expenses:                                                       |  |   |         |   |  |   |              |   |  |   |          |   |  |   |                                                                                                                       |   |  |   |                                                                                                                         |  
|Operating expenses, including management fees eliminated in consolidation |  |   | 182,802 |   |  |   | 338,104      |   |  |   | 140,961  |   |  |   | 344,500                                                                                                               |   |  |   | 1,006,367                                                                                                               |  
|Interest expense                                                          |  |   | 1,591   |   |  |   | 2,445        |   |  |   | 8,235    |   |  |   | -                                                                                                                     |   |  |   | 12,271                                                                                                                  |  
|Depreciation and amortization                                             |  |   | 12,803  |   |  |   | 30,739       |   |  |   | 22,449   |   |  |   | 18,834                                                                                                                |   |  |   | 84,825                                                                                                                  |  
|Income taxes                                                              |  |   | -       |   |  |   | -            |   |  |   | -        |   |  |   | -                                                                                                                     |   |  |   | -                                                                                                                       |  
|                                                                          |  |   | 197,196 |   |  |   | 371,288      |   |  |   | 171,645  |   |  |   | 363,334                                                                                                               |   |  |   | 1,103,463                                                                                                               |  
|Net income (loss) before non-recurring expenses                           |  |   | (21,173 | ) |  |   | (38,614      | ) |  |   | (105,891 | ) |  |   | 48,726                                                                                                                |   |  |   | (116,952                                                                                                                | )
|Pre-opening costs                                                         |  |   | -       |   |  |   | -            |   |  |   | -        |   |  |   | (1,502                                                                                                                | ) |  |   | (1,502                                                                                                                  | )
|Net income (loss)                                                         |  | $ | (21,173 | ) |  | $ | (38,614      | ) |  | $ | (105,891 | ) |  | $ | 50,228                                                                                                                |   |  |   | (115,450                                                                                                                | )
|                                                                          |  |   |         |   |  |   |              |   |  |   |          |   |  |   |                                                                                                                       |   |  |   |                                                                                                                         |  
|Loss from management company not absorbed above                           |  |   |         |   |  |   |              |   |  |   |          |   |  |   |                                                                                                                       |   |  |   | (8,836                                                                                                                  | )
|Total South Africa restaurants                                            |  |   |         |   |  |   |              |   |  |   |          |   |  |   |                                                                                                                       |   |  | $ | (124,286                                                                                                                | )





(1) Durban location
opened in December 2009.

(2) Johannesburg location
opened in June 2010.

(3) CapeTown location
opened in June 2011.

(4) Emperors Palace
location opened mid-February 2012.





Six months ended June 30, 2012 (Restated Note 16):



|                                                                          |  |   | (1)     |   |  |   | (2)          |   |  |   | (3)      |   |  |   | (4)                                                                                                                   |   |  |   |                                                                                                                         |  
|------------------------------------------------------------------------- |  | - | ------- | - |  | - | ------------ | - |  | - | -------- | - |  | - | --------------------------------------------------------------------------------------------------------------------- | - |  | - | ----------------------------------------------------------------------------------------------------------------------- | -
|                                                                          |  |   | Durban  |   |  |   | Johannesburg |   |  |   | CapeTown |   |  |   | Emperors
                                                                                                      Palace |   |  |   | Total
                                                                                                      Restaurants |  
|Revenues                                                                  |  | $ | 571,572 |   |  | $ | 1,058,612    |   |  | $ | 339,874  |   |  | $ | 1,113,560                                                                                                             |   |  | $ | 3,083,618                                                                                                               |  
|Cost of Sales                                                             |  |   | 251,461 |   |  |   | 413,599      |   |  |   | 154,509  |   |  |   | 471,594                                                                                                               |   |  |   | 1,291,163                                                                                                               |  
|Gross Profit                                                              |  |   | 320,111 |   |  |   | 645,013      |   |  |   | 185,365  |   |  |   | 641,966                                                                                                               |   |  |   | 1,792,455                                                                                                               |  
|                                                                          |  |   |         |   |  |   |              |   |  |   |          |   |  |   |                                                                                                                       |   |  |   |                                                                                                                         |  
|Recurring expenses:                                                       |  |   |         |   |  |   |              |   |  |   |          |   |  |   |                                                                                                                       |   |  |   |                                                                                                                         |  
|Operating expenses, including management fees eliminated in consolidation |  |   | 362,480 |   |  |   | 624,826      |   |  |   | 277,961  |   |  |   | 577,447                                                                                                               |   |  |   | 1,842,714                                                                                                               |  
|Interest expense                                                          |  |   | 3,448   |   |  |   | 5,300        |   |  |   | 17,281   |   |  |   | -                                                                                                                     |   |  |   | 26,029                                                                                                                  |  
|Depreciation and amortization                                             |  |   | 25,606  |   |  |   | 61,328       |   |  |   | 44,697   |   |  |   | 31,030                                                                                                                |   |  |   | 162,661                                                                                                                 |  
|Income taxes                                                              |  |   | -       |   |  |   | -            |   |  |   | -        |   |  |   | -                                                                                                                     |   |  |   | -                                                                                                                       |  
|                                                                          |  |   | 391,534 |   |  |   | 691,454      |   |  |   | 339,939  |   |  |   | 608,477                                                                                                               |   |  |   | 2,031,404                                                                                                               |  
|Net income (loss) before non-recurring expenses                           |  |   | (71,423 | ) |  |   | (46,441      | ) |  |   | (154,574 | ) |  |   | 33,489                                                                                                                |   |  |   | (238,949                                                                                                                | )
|Pre-opening costs                                                         |  |   | -       |   |  |   | -            |   |  |   | -        |   |  |   | 39,220                                                                                                                |   |  |   | 39,220                                                                                                                  |  
|Net income (loss)                                                         |  | $ | (71,423 | ) |  | $ | (46,441      | ) |  | $ | (154,574 | ) |  | $ | (5,731                                                                                                                | ) |  |   | (278,169                                                                                                                | )
|                                                                          |  |   |         |   |  |   |              |   |  |   |          |   |  |   |                                                                                                                       |   |  |   |                                                                                                                         |  
|Loss from management company not absorbed above                           |  |   |         |   |  |   |              |   |  |   |          |   |  |   |                                                                                                                       |   |  |   | (55,785                                                                                                                 | )
|Total South Africa restaurants                                            |  |   |         |   |  |   |              |   |  |   |          |   |  |   |                                                                                                                       |   |  | $ | (333,954                                                                                                                | )





(1) Durban location
opened in December 2009.

(2) Johannesburg location
opened in June 2010.

(3) CapeTown location
opened in June 2011.

(4) Emperors Palace
location opened mid-February 2012





We expect net income
for the four stores for the remainder of 2012 to continue to improve. The Emperor’s Palace location was our first location
opened since we took over operational control, and we expect this location to continue and at its current pace.



36







LIQUIDITY AND CAPITAL RESOURCES



Historical information:



At June 30, 2012
and December 31, 2011, the Company had current assets of $4,096,538 and $641,963; current liabilities of $1,355,150 and $3,720,486;
and a working capital balance (deficit) of $2,741,388 and $(3,078,523), respectively. The Company incurred a loss of $1,547,401
during the six months ended June 30, 2012 and had an unrealized loss from available-for-sale securities of $237,639 and a foreign
currency translation loss of $1,048, resulting in a comprehensive loss of $1,786,088.



The Company's corporate
general and administrative expense averaged approximately $295,000 per quarter during 2011 and has increased to $481,000 in the
first quarter of 2012 and $657,000 in the current quarter as we expanded our footprint internationally. Effective October 1, 2011,
the Company acquired majority control of the restaurants in South Africa and began consolidating these operations. The Company
also will share 49% of the profits in our Hooters location opened in January 2012 in Campbelltown, Australia, a suburb of Sydney
and plans to open a second Australia location under the same terms before the end of 2012.



The Company has a
note with a balance at June 30, 2012 of $239,241 owed to its bank which is due in August 2013 and a line of credit with its bank
with a balance at June 30, 2012 of $0 (total available was $2,000,000). The line matures on August 20, 2012. The Company is currently
negotiating an extension of the line of credit and terms. All of our prior notes payable and convertible debt were paid in either
cash or common stock with the closing of our raise in June 2012.



The Company expects
to meet its obligations in the remainder of 2012 and the first six months of 2013 with some or all of the following:



| | · | The
                                                                                                               cash proceeds received
                                                                                                               from the sale of
                                                                                                               units (consisting
                                                                                                               of common stock
                                                                                                               and warrants) in
                                                                                                               a registered offering
                                                                                                               declared effective
                                                                                                               on June 21, 2012
                                                                                                               in which the company
                                                                                                               sold $11 million
                                                                                                               of units and netted
                                                                                                               approximately $10.1
                                                                                                               million before
                                                                                                               expenses and approximately
                                                                                                               $3.6 million after
                                                                                                               conversion and
                                                                                                               payment of debt
                                                                                                               and accrued interest,
                                                                                                               Hoot SA non-controlling
                                                                                                               interest, and expenses;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Received
                                                                                                               $100,000 as an
                                                                                                               annual fee for
                                                                                                               its CEO sitting
                                                                                                               on the Board of
                                                                                                               Hooters of America
                                                                                                               and expect to continue
                                                                                                               to receive this
                                                                                                               annual fee for
                                                                                                               the next three
                                                                                                               years based on
                                                                                                               the current agreement;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Borrow,
                                                                                                               if and to the extent
                                                                                                               available, additional
                                                                                                               funds on its existing
                                                                                                               line of credit;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Positive
                                                                                                               cash flow from
                                                                                                               our South African
                                                                                                               restaurant operations.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Evaluation of the amounts and certainty of cash flows:



The Company plans
to use the funding from the S-1 Registration to partially complete its expansion plans in South Africa, Brazil, Australia, Hungary
and Europe. The Company has used short-term financing to meet the preliminary requirements of its planned expansion, principally
in South Africa and Australia. The Company obtained less than originally contemplated from our offering, which may require the
Company to limit its expansion plans. We would use limited partner funding and other sources of capital to the extent necessary
to attempt to fund as much of the planned expansion as possible. There can be no assurance that any of this funding will be available
when needed.



Cash requirements and capital expenditures:



In 2012, we expect to open one restaurant
in each of the following countries – Australia (in addition to the one already opened in January 2012) and Budapest, Hungary;
and plans to secure locations in South Africa and Brazil. The Company expects the total cash requirements for these restaurants
to be approximately $3.3 million, of which approximately $1.3 million has been paid as of June 30, 2012.



37







In addition, we expect general and administrative
expenses to be approximately $2.0-$2.3 million for 2012.



Discussion and analysis of known trends and uncertainties:



The world economy has been in a state
of flux for some time with the debt problems of a number of countries in Europe, the recent recession in the United States, the
significant increase to debt in the United States compounded by continuing to give away more than can reasonably be collected,
the slowing economy in China and other factors. It is impossible to forecast what this will mean to our expansion plans in South
Africa, Brazil, Australia, Europe and Hungary. We feel that we minimize our risks through investment in different geographical
areas.



Expected changes in the mix and relative cost of capital resources:



Since the middle of 2010, the Company
has utilized high cost capital to finance its international growth. The Company has eliminated the majority of this debt with
new equity in June 2012 and further, to use this equity and possible additional financing as necessary to complete its expansion
plans over the next two years.



Other prospective sources for and uses of cash:



The Company is seeking to renew its $2,000,000
line of credit which as been repaid as of June 30, 2012 and matures in August 2012. As discussed elsewhere in this Form 10-Q,
effective October 1, 2011, the Company acquired majority control of the restaurants in South Africa and began consolidating these
operations. Previously all restaurant operations were accounted for using the equity method.



Comparison of three months ended June
30, 2012 and 2011



Revenue



Revenue amounted
to $1,727,821 in the three months ended June 30, 2012 and $32,830 in the year earlier period.



Restaurant sales,
net amounted to $1,696,123 for our four locations in South Africa, one of which opened to the public on February 17, 2012.



Revenues for the
management business for the three months ended June 30, 2012 amounted to $31,698 and $32,830 in the year earlier period. In the
three months ended June 30, 2012 and in the year earlier period, the revenue from non-affiliates of $25,000 represents three months
of the Company’s annual payment from HOA of $100,000, which is due in January each year while Mr. Pruitt serves on its board.  In
the three months ended June 30, 2012 and in the year earlier period, an accrual of $$6,698 and $7,830, respectively, was recorded
for management fees from Investors II.



Restaurant cost of sales



Restaurant cost of sales amounted to $709,612,
or 41.8% of restaurant net sales. We expect the percentage to remain approximately the same in 2012 as we expand our business
in South Africa and other countries.



Restaurant operating expenses



Restaurant operating expenses amounted
to $923,290, or 54.4% of restaurant net sales. We expect the percentage of operating expenses to restaurant net sales to decline
as we open more Hooters locations, however we have a limited history to be able to forecast a range.



38







Restaurant pre-opening expenses



Restaurant pre-opening expenses amounted
to $23,499 incurred for the opening of our Hooters location in Budapest, Hungary expected in the third quarter of 2012.



General and Administrative Expense (“G&A”)



G&A amounted
to $656,112 in the three months ended June 30, 2012 and $259,766 in the year earlier period. The more significant components of
G&A are summarized as follows:



|                                      |  | 2012 |         |  | 2011 |  
|------------------------------------- |  | ---- | ------- |  | ---- | -
|                                      |  |      |         |  |      |  
|Professional fees                     |  | $    | 54,486  |  |      | $
|Payroll and benefits                  |  |      | 202,340 |  |      |  
|Consulting and investor relation fees |  |      | 153,046 |  |      |  
|Travel and entertainment              |  |      | 78,775  |  |      |  
|Accounting and auditing               |  |      | 3,900   |  |      |  
|Other G&A                             |  |      | 163,565 |  |      |  
|                                      |  | $    | 656,112 |  |      | $



G&A costs are
expected to range from $550-$650,000 per quarter for the remainder of 2012, with the costs associated with the activities of the
restaurant business continuing to grow. Revenue from the restaurants is expected to exceed this increase in expense.



Payroll and benefits
increased $58,981 in 2012 from 2011 primarily from the addition of restaurant management personnel beginning in the fourth quarter
of 2011 and the addition of corporate personnel in the second quarter of 2012.



Consulting and investor
relations fees increased $129,340 in 2012 from 2011 as the Company engaged experienced personnel to startup our European subsidiary
and Brazil operations and to increase the Company’s recognition in the investment arena. Non-cash fees for services were
$9,406 and $0 in 2012 and 2011, respectively. Non-cash amortization of warrant expense for services were $25,910 and $0 in 2012
and 2011, respectively.



Travel and entertainment
increased $61,391 as Company personnel, primarily the CEO and investor relations personnel, traveled to increase our company awareness
and lockdown financing and partners for the restaurant locales.



Other G&A expense
increased $137,997 in 2012 from 2011 primarily related to indirect costs of the capital raise which was completed in June 2012.



Depreciation and amortization



Depreciation expense
for the three months ended June 30, 2012 and 2011 amounted to $82,669 and $2,512, respectively. The restaurant segment for the
three months ended June 30, 2012 and 2011 amounted to $80,334 and $0, respectively, and the management business amounted to $2,335
and $2,512, respectively.



Amortization expense
for the three months ended June 30, 2012 for the restaurant businesses related to franchise fees was $4,492. There was no amortization
expense in 2011.



39







OTHER INCOME (EXPENSE)



Other income (expense)
consisted of the following for the three months ended June 30, 2012 and 2011:



|                                           |  | 2012 |          |   | 2011 |  
|------------------------------------------ |  | ---- | -------- | - | ---- | -
|Other income (expense):                    |  |      |          |   |      |  
|Equity in earnings (losses) of investments |  | $    | (33,348  | ) |      | $
|Realized gains from sale of investments    |  |      | -        |   |      |  
|Interest expense                           |  |      | (208,102 | ) |      |  
|                                           |  | $    | (241,450 | ) |      | $



Equity in Earnings of Investments



Equity in earnings
of investments includes our share of earnings from investments in which we own at least 20% and are being accounted for using
the equity method. This included losses from the Hoot Campbelltown partnership in 2012 of $33,348, and income from the Hoot SA
partnerships in 2011 of $6,461.



Interest Expense



Interest expense
increased by $204,175 in 2012 from 2011 primarily due to the addition in 2011 of a line of credit and convertible notes payable,
all of which were paid off at the end of June 2012 with the closing of the Company’s raise. Non-cash amortization of warrant
expense for interest amounted to $22,659 and $0 in 2012 and 2011, respectively.



Comparison of six months ended June
30, 2012 and 2011



Revenue



Revenue amounted
to $3,140,316 in the six months ended June 30, 2012 and $474,143 in the year earlier period.



Restaurant sales,
net amounted to $3,083,618 for our four locations in South Africa, one of which opened to the public on February 17, 2012.



Revenues for the
management business for the six months ended June 30, 2012 amounted to $56,698 and $474,143 in the year earlier period. The cash
revenues for the management business in 2011was from a fee of $400,000 received in January 2011 for our services in facilitating
the acquisition of HOA and TW plus the accrual of $41,667 for the annual $100,000 fee received in January 2012. In the six months
ended June 30, 2012 the cash revenue of $50,000 represents six months of the Company’s annual payment from HOA of $100,000,
which is due in January each year while Mr. Pruitt serves on its board.  The Company also recorded an accrual of $30,726
for management fees from Investors II in 2011. Non-cash revenues in the six months ended June 30, 2011 of $1,750 was recognized
from the receipt of securities for our services.



The fair value of
the equity instruments for management fees received was determined based upon the stock prices as of the date we reached an agreement
with the third party. The terms of the securities are not subject to adjustment after the measurement date. See Note 4 of the
consolidated financial statements for details.



Restaurant cost of sales



Restaurant cost of
sales amounted to $1,291,163, or 41.9% of restaurant net sales. We expect the percentage to remain approximately the same in 2012
as we expand our business in South Africa and other countries.



40







Restaurant operating expenses



Restaurant operating
expenses amounted to $1,692,622, or 54.9% of restaurant net sales. We expect the percentage of operating expenses to restaurant
net sales to decline as we open more Hooters locations, however we have a limited history to be able to forecast a range.



Restaurant pre-opening expenses



Restaurant pre-opening
expenses amounted to $64,220 incurred for the opening of our location at the Emperor’s Palace Casino in Johannesburg, South
Africa in February 2012 and the expected opening of our Budapest, Hungary location in the third quarter of 2012.



General and Administrative Expense (“G&A”)



G&A amounted
to $1,167,633 in the six months ended June 30, 2012 and $484,224 in the year earlier period. The more significant components of
G&A are summarized as follows:



|                                      |  | 2012 |           |  | 2011 |  
|------------------------------------- |  | ---- | --------- |  | ---- | -
|                                      |  |      |           |  |      |  
|Professional fees                     |  | $    | 114,396   |  |      | $
|Payroll and benefits                  |  |      | 403,606   |  |      |  
|Consulting and investor relation fees |  |      | 271,643   |  |      |  
|Travel and entertainment              |  |      | 121,741   |  |      |  
|Accounting and auditing               |  |      | 46,600    |  |      |  
|Other G&A                             |  |      | 209,647   |  |      |  
|                                      |  | $    | 1,167,633 |  |      | $



G&A costs are
expected to range from $550-$650,000 per quarter for the remainder of 2012, with the costs associated with the activities of the
restaurant business continuing to grow. Revenue from the restaurants is expected to exceed this increase in expense.



Payroll and benefits
increased $141,498 in 2012 from 2011 primarily from the addition of restaurant management personnel beginning in the fourth quarter
of 2011 and the addition of corporate personnel in the second quarter of 2012.



Consulting and investor
relations fees increased $231,293 in 2012 from 2011 as the Company engaged experienced personnel to startup our European subsidiary
and Brazil operations and to increase the Company’s recognition in the investment arena. Non-cash fees for services were
$9,406 and $0 in 2012 and 2011, respectively. Non-cash amortization of warrant expense for services were $26,745 and $0 in 2012
and 2011, respectively.



Travel and entertainment
increased $91,171 as Company personnel, primarily the CEO, traveled to increase our company awareness and lockdown financing and
partners for the restaurant locales.



Other G&A expense
increased $148,044 in 2012 from 2011 primarily related to indirect costs of the capital raise which was completed in June 2012.



Depreciation and amortization



Depreciation expense
for the six months ended June 30, 2012 and 2011 amounted to $158,934 and $5,061, respectively. The restaurant segment for the
six months ended June 30, 2012 and 2011 amounted to $154,409 and $0, respectively, and the management business amounted to $4,525
and $5,061, respectively.



41







Amortization expense
for the six months ended June 30, 2012 for the restaurant businesses related to franchise fees was $8,251. There was no amortization
expense in 2011.



OTHER INCOME (EXPENSE)



Other income (expense)
consisted of the following for the six months ended June 30, 2012 and 2011:



|                                           |  | 2012 |          |   | 2011 |  
|------------------------------------------ |  | ---- | -------- | - | ---- | -
|Other income (expense):                    |  |      |          |   |      |  
|Equity in earnings (losses) of investments |  | $    | (43,886  | ) |      | $
|Realized gains from sale of investments    |  |      | -        |   |      |  
|Interest expense                           |  |      | (393,212 | ) |      |  
|Interest income                            |  |      | -        |   |      |  
|Miscellaneous income                       |  |      | -        |   |      |  
|                                           |  | $    | (437,098 | ) |      | $



Equity in Earnings of Investments



Equity in earnings
of investments includes our share of earnings from investments in which we own at least 20% and are being accounted for using
the equity method. This included losses from the Hoot Campbelltown partnership in 2012 of $43,886, and income from the Hoot SA
partnerships in 2011 of $11,564.



Realized Gains from Sale of Investments



Realized gains are
recorded when investments are sold and include transactions in 2011 from a gain on sales of DineOut.



Interest Expense



Interest expense
increased by $370,526 in 2012 from 2011 primarily due to the addition in 2011 of a line of credit and convertible notes payable,
all of which were paid in full in June 2012 with the closing of the Company’s raise. Non-cash amortization of warrant expense
for interest amounted to $45,318 and $0 in 2012 and 2011, respectively.



Interest Income



Interest income in
2012 decreased $4,540 as 2011 includes earnings from Investors for one month, compared to 2012 which had none.



42







| | Item 3: | QUANTITATIVE
                                                                                                                                       and
                                                                                                                                       QUALITATIVE
                                                                                                                                       DISCLOSURES
                                                                                                                                       ABOUT
                                                                                                                                       MARKET
                                                                                                                                       RISK
| | ------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Not applicable.



| | Item 4: | Controls
                                                                                                                                       and
                                                                                                                                       Procedures
| | ------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Evaluation of disclosure controls and procedures



Under the PCAOB standards,
a control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course
of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a deficiency,
or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet
important enough to merit the attention by those responsible for oversight of the company's financial reporting. A material weakness
is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected
on a timely basis.



Under the supervision
and with the participation of our management, including our principal executive officer and principal financial officer, we conducted
an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated
under the Securities Exchange Act of 1934, as amended (Exchange Act), as of June 30, 2012. Our management has determined that,
as of June 30, 2012, the Company's disclosure controls and procedures are ineffective.



In connection with
the preparation of the its quarterly report for the period ended June 30, 2012, the Company’s management evaluated the effectiveness
of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that our disclosure controls and procedures were ineffective as of June 30, 2012, as a
result of the existence of a material weakness in our internal controls over financial reporting related to the Company’s
South African subsidiaries.



Since September 2012,
the Company has made progress in improving its disclosure controls and procedures. The Company has taken, and are taking, the
following actions to remediate the remaining material weaknesses in our internal control over financial reporting that existed
at that date: (i) appointed a new South African CFO; (ii) improve segregation of duties; and (iii) adopt sufficient written policies
and procedures for accounting and financial reporting.



The Company continues
to strive to improve processes to enable them to provide complete and accurate public disclosure. Management believes they will
not be able to conclude that the Company’s disclosure controls and procedures are effective until the material weaknesses
have been fully remediated.



To address the material
weaknesses listed above, management performed analyses and post-closing procedures designed to ensure the Company’s condensed
consolidated financial statements were prepared in accordance with U.S. GAAP. These procedures included documentation and testing
of processes, data validation procedures from the systems into the general ledger, testing of systems, validation of results,
disclosure review, and other analytics. As a result, management believes the condensed consolidated financial statements included
in this report fairly present, in all material respects, our financial position, results of operations and cash flows for the
period ended June 30, 2012.



Changes in internal control over
financial reporting



There have been no
significant changes in internal controls or in other factors that could significantly affect these controls during the quarter
ended June 30, 2012, including any corrective actions with regard to significant deficiencies and material weaknesses.



43







PART II – OTHER INFORMATION



| | ITEM 1: | LEGAL PROCEEDINGS
| | ------- | -----------------



Notapplicable.



| | ITEM 1A: | RISK
                                                                                         FACTORS
| | -------- | -----------------------------------------------------------------------------------------------------



Not applicable.



| | ITEM 2: | UNREGISTERED
                                                                                 SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
| | ------- | --------------------------------------------------------------------------------------------------------------------------------------------



The Company issued
5,000 unregistered common stock shares on May 8, 2012 for services. The shares were sold pursuant to an exemption from registration
under Section 4(2) promulgated under the Securities Act of 1933, as amended.



| | ITEM 3: | DEFAULTS UPON
                                                                                 SENIOR SECURITIES
| | ------- | ----------------------------------------------------------------------------------------------------------------



Not
applicable.



| | ITEM 4: | SUBMISSION OF
                                                                                 MATTERS TO A VOTE OF SECURITY HOLDERS
| | ------- | ------------------------------------------------------------------------------------------------------------------------------------



Not
applicable.



| | ITEM 5: | OTHER INFORMATION
| | ------- | -----------------



None.



| | ITEM 6: | EXHIBITS
| | ------- | --------



The following exhibits
are filed with this report on Form 10-Q/A.



|Exhibit 31.1 | Certification pursuant to 18 U.S.C. Section 1350
|------------ | ------------------------------------------------
|             | Section 302 of the Sarbanes-Oxley Act of 2002   
|             |                                                 
|Exhibit 32.1 | Certification pursuant to 18 U.S.C. Section 1350
|             | Section 906 of the Sarbanes-Oxley Act of 2002   



44







SIGNATURE



Pursuant to the requirements
of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.



|      |                   | CHANTICLEER HOLDINGS, INC.
|----- | ----------------- | --------------------------
|      |                   |                           
|Date: | December 19, 2012 | By:                       
|      |                   | Michael D. Pruitt,        
|      |                   | Chief Executive Officer   
|      |                   |                           
|Date: | December 19, 2012 | By:                       
|      |                   | Eric S. Lederer,          
|      |                   | Chief Financial Officer   



45