UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 
 WASHINGTON,
DC  20549
 
 FORM
10-Q
 
 Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For
Quarter
Ended:              June 30, 2009
 
 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)
 
 4201 Congress Street, Suite
145, Charlotte, NC  28209
 (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 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 x
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes  ̈ No x.
 
 The
number of shares outstanding of registrant’s common stock, par value $.0001 per
share, as of July 31, 2009, was 971,376 shares.
  
  Chanticleer
Holdings, Inc. and Subsidiaries
 
 INDEX
 
 PageNo.Part
      I
                    Financial
      Information (unaudited)
                    3Item
      1:
                    Condensed
      Consolidated Financial Statements
                    3Balance
      Sheets as of June 30, 2009 and December 31, 2008
                    3Statements
      of Operations – For the Three Months Ended June 30, 2009 and
      2008
                    4Statements
      of Operations – For the Six Months Ended June 30, 2009 and
      2008
                    5Statements
      of Cash Flows – For the Six Months Ended June 30, 2009 and
      2008
                    6Notes
      to Financial Statements
                    7Item
      2:
                    Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                    16Item
      3:
                    Quantitative
      and Qualitative Disclosure about Market Risk
                    19Item
      4:
                    Controls
      and Procedures
                    19Part
      II
                    Other
      Information
                    20Item
      1:
                    Legal
      Proceedings
                    20Item
      1A:
                    Risk
      Factors
                    20Item
      2:
                    Unregistered
      Sales of Equity Securities and Use of Proceeds
                    20Item
      3:
                    Defaults
      Upon Senior Securities
                    20Item
      4:
                    Submission
      of Matters to a Vote of Security Holders
                    20Item
      5:
                    Other
      Information
                    20Item
      6:
                    Exhibits
                    20
  2
  PART 1:  FINANCIAL
INFORMATION
 ITEM 1:  CONDENSED FINANCIAL
STATEMENTS
 
 Chanticleer Holdings, Inc. and
Subsidiaries
 Consolidated Balance
Sheets
 June 30, 2009 (Unaudited) and December
31, 2008
 
 2009
                                                
                                                
                                                2008ASSETSCurrent
    assets:Cash and cash
      equivalents
                                                
                                                $
                                                284,055
                                                
                                                
                                                $
                                                14,151Accounts
      receivable
                                                
                                                
                                                12,157
                                                
                                                
                                                
                                                -Marketable
      securities
                                                
                                                
                                                483,000
                                                
                                                
                                                
                                                -Due from
      affiliate
                                                
                                                
                                                192,650
                                                
                                                
                                                
                                                5,150Prepaid
      expenses
                                                
                                                
                                                -
                                                
                                                
                                                
                                                4,255Total current
      assets
                                                
                                                
                                                971,862
                                                
                                                
                                                
                                                23,556Property and equipment,
      net
                                                
                                                
                                                31,010
                                                
                                                
                                                
                                                36,161Deferred acquisition
      costs
                                                
                                                
                                                -
                                                
                                                
                                                
                                                279,050Investments at fair
      value
                                                
                                                
                                                44,263
                                                
                                                
                                                
                                                108,545Other investments, principally
      accounted for under the equity method
                                                
                                                
                                                1,449,098
                                                
                                                
                                                
                                                1,773,969Deposits
                                                
                                                
                                                28,980
                                                
                                                
                                                
                                                3,980Total
assets
                                                
                                                $
                                                2,525,213
                                                
                                                
                                                $
                                                2,225,261LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      liabilities:Accounts
      payable
                                                
                                                $
                                                171,866
                                                
                                                
                                                $
                                                178,325Accrued
      expenses
                                                
                                                
                                                500
                                                
                                                
                                                
                                                500Notes
    payable
                                                
                                                
                                                600,000
                                                
                                                
                                                
                                                500,000Deferred
      revenue
                                                
                                                
                                                208,333
                                                
                                                
                                                
                                                -Due to related
      party
                                                
                                                
                                                79,611
                                                
                                                
                                                
                                                7,300Total current
      liabilities
                                                
                                                
                                                1,060,310
                                                
                                                
                                                
                                                686,125Commitments and
      contingenciesStockholders'
      equity:Common stock, $.0001 par
      value.  Authorized 200,000,000 shares;issued and outstanding 946,376
      shares at June 30, 2009 and at December 31, 2008
                                                
                                                
                                                946
                                                
                                                
                                                
                                                946Additional paid in
      capital
                                                
                                                
                                                4,642,347
                                                
                                                
                                                
                                                4,642,347Accumulated
      deficit
                                                
                                                
                                                (3,178,390
                                                )
                                                
                                                
                                                (3,104,157
                                                )Total stockholders'
      equity
                                                
                                                
                                                1,464,903
                                                
                                                
                                                
                                                1,539,136Total liabilities and
      stockholders' equity
                                                
                                                $
                                                2,525,213
                                                
                                                
                                                $
                                                2,225,261
 
 See accompanying notes to condensed
consolidated financial statements.
  3
 
 Chanticleer Holdings, Inc. and
Subsidiaries
 Consolidated Statements of
Operations
 For the Three Months Ended June 30, 2009
and 2008
 (Unaudited)
 
 2009
                                                                                  
                                                                                  
                                                                                  2008Management and consulting
      revenueAffiliate
                                                                                  
                                                                                  $
                                                                                  25,000
                                                                                  
                                                                                  
                                                                                  $
                                                                                  25,000Other
                                                                                  
                                                                                  
                                                                                  109,750
                                                                                  
                                                                                  
                                                                                  
                                                                                  -134,750
                                                                                  
                                                                                  
                                                                                  
                                                                                  25,000Expenses:General and administrative
      expense
                                                                                  
                                                                                  
                                                                                  189,237
                                                                                  
                                                                                  
                                                                                  
                                                                                  392,367Asset
      impairment
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  137,730189,237
                                                                                  
                                                                                  
                                                                                  
                                                                                  530,097Loss from operations before income
      taxes
                                                                                  
                                                                                  
                                                                                  (54,487
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (505,097
                                                                                  )Income
taxes
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  -Loss from
      operations
                                                                                  
                                                                                  
                                                                                  (54,487
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (505,097
                                                                                  )Other income
      (expense)Unrealized gain from marketable
      equity securities
                                                                                  
                                                                                  
                                                                                  357,000
                                                                                  
                                                                                  
                                                                                  
                                                                                  22,500Realized gain from sales of
      investments
                                                                                  
                                                                                  
                                                                                  50,000
                                                                                  
                                                                                  
                                                                                  
                                                                                  -Equity in earnings of
      investments
                                                                                  
                                                                                  
                                                                                  11,500
                                                                                  
                                                                                  
                                                                                  
                                                                                  (3,100
                                                                                  )Interest
      expense
                                                                                  
                                                                                  
                                                                                  (1,521
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (5,947
                                                                                  )Total other income
      (expense)
                                                                                  
                                                                                  
                                                                                  416,979
                                                                                  
                                                                                  
                                                                                  
                                                                                  13,453Net loss
                                                                                  
                                                                                  
                                                                                  362,492
                                                                                  
                                                                                  
                                                                                  
                                                                                  (491,644
                                                                                  )Other comprehensive
      loss:Unrealized loss on
      available-for-sale securities
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  (449,970
                                                                                  )Net comprehensive
      loss
                                                                                  
                                                                                  $
                                                                                  362,492
                                                                                  
                                                                                  
                                                                                  $
                                                                                  (941,614
                                                                                  )Net loss per share, basic and
      diluted
                                                                                  
                                                                                  $
                                                                                  0.38
                                                                                  
                                                                                  
                                                                                  $
                                                                                  (0.55
                                                                                  )Weighted average shares
      outstanding
                                                                                  
                                                                                  
                                                                                  946,376
                                                                                  
                                                                                  
                                                                                  
                                                                                  893,312
 
 See accompanying notes to condensed
consolidated financial statements.
  4
  
 Chanticleer Holdings, Inc. and
Subsidiaries
 Consolidated Statements of
Operations
 For the Six Months Ended June 30, 2009
and 2008
 (Unaudited)
 
 2009
                                                                            
                                                                            
                                                                            2008Management and consulting
      revenueAffiliate
                                                                            
                                                                            $
                                                                            50,000
                                                                            
                                                                            
                                                                            $
                                                                            50,000Other
                                                                            
                                                                            
                                                                            188,728
                                                                            
                                                                            
                                                                            
                                                                            128,555238,728
                                                                            
                                                                            
                                                                            
                                                                            178,555Expenses:General and administrative
      expense
                                                                            
                                                                            
                                                                            394,241
                                                                            
                                                                            
                                                                            
                                                                            691,010Asset
      impairment
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            137,730394,241
                                                                            
                                                                            
                                                                            
                                                                            828,740Loss from operations before income
      taxes
                                                                            
                                                                            
                                                                            (155,513
                                                                            )
                                                                            
                                                                            
                                                                            (650,185
                                                                            )Income
taxes
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -Loss from
      operations
                                                                            
                                                                            
                                                                            (155,513
                                                                            )
                                                                            
                                                                            
                                                                            (650,185
                                                                            )Other income
      (expense)Unrealized gain from marketable
      equity securities
                                                                            
                                                                            
                                                                            357,000
                                                                            
                                                                            
                                                                            
                                                                            5,000Realized loss from sale of
      investments
                                                                            
                                                                            
                                                                            (14,282
                                                                            )
                                                                            
                                                                            
                                                                            -Equity in earnings of
      investments
                                                                            
                                                                            
                                                                            23,000
                                                                            
                                                                            
                                                                            
                                                                            248Interest
      expense
                                                                            
                                                                            
                                                                            (5,388
                                                                            )
                                                                            
                                                                            
                                                                            (7,994
                                                                            )Total other income
      (expense)
                                                                            
                                                                            
                                                                            360,330
                                                                            
                                                                            
                                                                            
                                                                            (2,746
                                                                            )Net earnings (loss) before
      cumulative effect of change in accounting principle
                                                                            
                                                                            
                                                                            204,817
                                                                            
                                                                            
                                                                            
                                                                            (652,931
                                                                            )Cumulative effect of change in
      accounting principle
                                                                            
                                                                            
                                                                            279,050
                                                                            
                                                                            
                                                                            
                                                                            -Net loss
                                                                            
                                                                            
                                                                            (74,233
                                                                            )
                                                                            
                                                                            
                                                                            (652,931
                                                                            )Other comprehensive
      loss:Unrealized loss on
      available-for-sale securities
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            (470,908
                                                                            )Net comprehensive
      loss
                                                                            
                                                                            $
                                                                            (74,233
                                                                            )
                                                                            
                                                                            $
                                                                            (1,123,839
                                                                            )Net loss per share, basic and
      diluted
                                                                            
                                                                            $
                                                                            (0.08
                                                                            )
                                                                            
                                                                            $
                                                                            (0.75
                                                                            )Weighted average shares
      outstanding
                                                                            
                                                                            
                                                                            946,376
                                                                            
                                                                            
                                                                            
                                                                            876,247
 
 See accompanying notes to condensed
consolidated financial statements.
  5
 
 Chanticleer Holdings, Inc. and
Subsidiaries
 Consolidated Statements of Cash
Flows
 For the Six Months Ended June 30, 2009
and 2008
 (Unaudited)
 
 2009
                                  
                                  
                                  2008Cash flows from operating
      activitiesNet loss
                                  
                                  $
                                  (74,233
                                  )
                                  
                                  $
                                  (652,931
                                  )Adjustments to reconcile net loss
      to net cash used in operating activities:Change in unrealized (gain) loss
      of marketable securities
                                  
                                  
                                  (357,000
                                  )
                                  
                                  
                                  (5,000
                                  )Depreciation
                                  
                                  
                                  6,001
                                  
                                  
                                  
                                  5,859Equity in (earnings) loss of
      investments
                                  
                                  
                                  (23,000
                                  )
                                  
                                  
                                  (248
                                  )Common stock issued for
      services
                                  
                                  
                                  -
                                  
                                  
                                  
                                  7,993Realized
    losses
                                  
                                  
                                  14,282
                                  
                                  
                                  
                                  -Change in accounting
      method
                                  
                                  
                                  279,050
                                  
                                  
                                  
                                  -Asset
      impairment
                                  
                                  
                                  -
                                  
                                  
                                  
                                  137,730Change in other assets and
      liabilities:(Increase) decrease in accounts
      receivable
                                  
                                  
                                  (12,157
                                  )
                                  
                                  
                                  -(Increase) decrease in prepaid
      expenses and other assets
                                  
                                  
                                  (20,745
                                  )
                                  
                                  
                                  9,500Increase (decrease) in accounts
      payable and accrued expenses
                                  
                                  
                                  (6,459
                                  )
                                  
                                  
                                  107,434Loan from related
      party
                                  
                                  
                                  72,311
                                  
                                  
                                  
                                  -Increase (decrease) in deferred
      revenue
                                  
                                  
                                  (166,667
                                  )
                                  
                                  
                                  (128,555
                                  )Net cash used in operating
      activities
                                  
                                  
                                  (288,617
                                  )
                                  
                                  
                                  (518,218
                                  )Cash flows from investing
      activitiesPurchase of fixed
      assets
                                  
                                  
                                  (850
                                  )
                                  
                                  
                                  (1,822
                                  )Purchase of
      investments
                                  
                                  
                                  (62,500
                                  )
                                  
                                  
                                  (120,000
                                  )Distributions from equity
      investments
                                  
                                  
                                  64,371
                                  
                                  
                                  
                                  23,000Advance to Chanticleer Investors
      LLC
                                  
                                  
                                  (187,500
                                  )
                                  
                                  
                                  -Deferred acquisition
      costs
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (233,050
                                  )Proceeds from sale of
      investments
                                  
                                  
                                  645,000
                                  
                                  
                                  
                                  -Net cash provided by (used in)
      operating activities
                                  
                                  
                                  458,521
                                  
                                  
                                  
                                  (331,872
                                  )Cash flows from financing
      activitiesProceeds from sale of common
      stock
                                  
                                  
                                  -
                                  
                                  
                                  
                                  752,208Cash
    overdraft
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (25,736
                                  )Loan
    proceeds
                                  
                                  
                                  100,000
                                  
                                  
                                  
                                  293,228Net cash provided by financing
      activities
                                  
                                  
                                  100,000
                                  
                                  
                                  
                                  1,019,700Net increase in cash and cash
      equivalents
                                  
                                  
                                  269,904
                                  
                                  
                                  
                                  169,610Cash and cash equivalents,
      beginning of period
                                  
                                  
                                  14,151
                                  
                                  
                                  
                                  183Cash and cash equivalents, end of
      period
                                  
                                  $
                                  284,055
                                  
                                  
                                  $
                                  169,793Supplemental cash flow
      informationCash paid for interest and income
      taxes:Interest
                                  
                                  $
                                  3,866
                                  
                                  
                                  $
                                  2,047Income
taxes
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Non-cash investing and financing
      activities:Exchange of investment in oil and
      gas properties for marketable equity securities
                                  
                                  
                                  126,000
                                  
                                  
                                  
                                  -
 
 See accompanying notes to condensed
consolidated financial statements.
  6
 
 Chanticleer
Holdings, Inc. and Subsidiaries
 Notes
to Consolidated Financial Statements
 (Unaudited)
 
 NOTE
      1:
              NATURE
      OF BUSINESS
 
 (1)
              Organization – The
      consolidated financial statements include the accounts of Chanticleer
      Holdings, Inc. (“Holdings”) and its wholly owned subsidiaries Chanticleer
      Advisors LLC (“Advisors”), Avenel Ventures LLC ("Ventures") and Avenel
      Financial Services LLC ("Financial") (collectively the “Company”,
      "Companies," “we”, or “us”).  All significant intercompany
      balances and transactions have been eliminated in
      consolidation.  Holdings was organized October 21, 1999, under
      the laws of the State of Delaware.  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.  Ventures has
      entered into consulting agreements with two clients and has received
      common stock from the clients for its business management and consulting
      services.  Financial was organized to provide unique financial
      services to the restaurant, real estate development, investment
      advisor/asset management and philanthropic
      organizations.  Initial services have not yet commenced and are
      expected to include captive insurance, CHIRA and trust
      services.
 
 The
Company formed Chanticleer Holdings, Ltd.,("CHL") a Jersey corporation, during
the first quarter of 2009.  The Company plans to transfer the
franchise rights for South Africa to this company and raise funds in Germany to
fund initial development of four planned Hooters restaurant
locations.  The Company is in a 50/50 joint venture with another
company which will fund one-half of the costs.  CHL is not active at
June 30, 2009.
 
 On July
31, 2006, the Company formed Chanticleer Investors II, LLC (“Investors
II”).  Investors II began raising funds in January 2007 for the
purpose of investing in publicly traded value securities and is managed by
Advisors.
 
 (2)
              Shareholder Actions –
      The holders of a majority of the Company’s issued and outstanding common
      stock, pursuant to a written consent in lieu of a meeting, in accordance
      with the Company’s certificate of incorporation and Delaware General
      Corporation Law Section 228, have approved: (i) the withdrawal of the
      Company’s election to be treated as a BDC under the 1940 Act and (ii) the
      reverse split of the Company’s issued and outstanding common stock at a
      ratio of 1:10.
 
 Withdrawal
of the Company’s election to be treated as a BDC under the 1940 Act became
effective on July 21, 2008, when the Company filed Form N-54c with the U.S.
Securities and Exchange Commission (“SEC”).
  7
 
 The 1:10
reverse split of the Company’s issued and outstanding common stock was effective
on July 17, 2008, at which time the Company began trading under a new symbol on
the OTC Bulletin Board (CCLR).  All share amounts and transactions
have been restated to give effect to the reverse split as if it happened at the
beginning of the earliest period presented.
 
 (3)
              General - The 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 financial
      statements have not been audited.
 
 Certain
information and footnote disclosures normally included in 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 financial statements and notes thereto included in the
Company’s Annual Report for the period ended December 31, 2008, which is
included in the Company’s Form 10-K.
 
 In
preparing the accompanying unaudited condensed consolidated financial
statements, the Company has reviewed, as determined necessary by the Company's
management, events that have occurred after June 30, 2009, up until the issuance
of the financial statements, which occurred on August 10, 2009.
  (4)
              New accounting
      pronouncements
  On April
9, 2009, the Financial Accounting Standards Board ("FASB") issued Staff Position
SFAS 107-1 and Accounting Principles Board ("APB") Opinion No. 28-1, "Interim
Disclosures about Fair Value of Financial Instruments," to require disclosures
about fair value of financial instruments in interim financial statements as
well as in annual financial statements.  APB 28-1 amends APB Opinion
No. 28, "Interim Financial Reporting," to require those disclosures in all
interim financial statements.  FSP 107-1 and APB 28-1 are effective
for interim periods ending after June 15, 2009 and the Company has adopted them
in the second quarter of 2009.
 
 On April
9, 2009, the FASB issued Staff Position SFAS 157-4, "Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly" ("FSP
157-4").  FSP 157-4 provides additional guidance in estimating fair
value under Statement No. 157, "Fair Value Measurements" ("SFAS 157"), when the
volume and level of transaction activity for an asset or liability have
significantly decreased in relation to normal market activity for the asset or
liability.  FSP 157-4 also provides additional guidance on
circumstances that may indicate a transaction is not orderly.  FSP
157-4 is effective for interim periods ending after June 15,
2009.  FSP 157-4 did not have a significant impact on the Company's
financial position, results of operations, cash flows, or disclosures for second
quarter 2009.
  8
 
 On April
9, 2009, the FASB issued Staff Position SFAS 115-2 and SFAS 124-2 "Recognition
and Presentation of Other Than-Temporary Impairments" ("FSP
115-2").  FSP 115-2 provides guidance in determining whether
impairments in debt securities are other than temporary, and modifies the
presentation and disclosures surrounding such instruments.  FSP 115-2
is effective for interim periods ending after June 15, 2009, and the Company has
adopted its provisions for second quarter 2009.  FSP 115-2 did not
have a significant impact on the Company's financial position, results of
operations, cash flows, or disclosures for the second quarter of
2009.
 
 In May
2009, the FASB issued Statement No. 165, "Subsequent Events" ("SFAS
165").  SFAS 165 modifies the definition of what qualifies as a
subsequent event - those events or transactions that occur following the balance
sheet date, but before the financial statements are issued, or are available to
be issued - and requires companies to disclose the date through which it has
evaluated subsequent events and the basis for determining that
date.  The Company adopted the provisions of SFAS 165 for the second
quarter of 2009, in accordance with the effective date.  See (3)
above.
 
 In June
2009, the FASB issued Statement No. 167, "Amendments to FASB Interpretation No.
46(R)" ("SFAS 167").  Among other items SFAS 167 responds to concerns
about the application of certain key provisions of FIN 46(R), including those
regarding the transparency of the involvement with variable interest
entities.  SFAS 167 is effective for calendar year companies beginning
on January 1, 2010.  The Company has not yet determined the impact
that adoption of SFAS 167 will have on its financial position, results of
operations, cash flows, or disclosures.
  NOTE 2:
              CHANGE
      IN REPORTING ENTITY
 
 From May
23, 2005 until July 21, 2008, the Company operated as a business development
company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940
Act”).  As such, the Company was subject to different reporting
requirements and methods of accounting for its investments.  With the
change back to being an operating company, the Company is no longer subject to
the requirements of a BDC and the Company was required pursuant to SFAS No. 154,
“Accounting Changes and Error Corrections” (“SFAS 154”) to retroactively modify
its financial statements as if it were not subject to the requirements of a BDC
during all periods presented.
 
 The
following reports the effect of the change on net earnings (loss), other
comprehensive income and net earnings per-share for the three and six months
ended June 30, 2008:
  9
  
 3 Months
                  
                  
                  6 MonthsNet decrease in net assets from
      operations
                  
                  $
                  (970,711
                  )
                  
                  $
                  (1,138,887
                  )Fair value decrease recorded for
      available- for-sale securities now included in other comprehensive
      loss
                  
                  
                  449,970
                  
                  
                  
                  470,908Equity in loss of
      investments
                  
                  
                  47,670
                  
                  
                  
                  39,518Net loss of wholly-owned
      subsidiary not previously consolidated
                  
                  
                  (18,573
                  )
                  
                  
                  (24,469
                  )Net loss
                  
                  
                  (491,644
                  )
                  
                  
                  (652,930
                  )Other comprehensive
      loss:As originally
      reported
                  
                  
                  -
                  
                  
                  
                  -Unrealized losses on
      available-for- sale securities
                  
                  
                  (449,970
                  )
                  
                  
                  (470,908
                  )Net comprehensive
      loss
                  
                  $
                  (941,614
                  )
                  
                  $
                  (1,123,838
                  )Net loss per share, basic and
      diluted:As originally
      reported
                  
                  $
                  (1.09
                  )
                  
                  $
                  (1.30
                  )Restated
                  
                  $
                  (0.55
                  )
                  
                  $
                  (0.75
                  )
  10
 
 NOTE 3:
              INVESTMENTS
 
 Investments
are summarized as follows at June 30, 2009 and December 31, 2008:
 
 2009
                  
                  
                  2008Marketable equity
      securities:North American Energy Resources,
      Inc. at cost
                  
                  $
                  126,000
                  
                  
                  $
                  -Valuation
      adjustment
                  
                  
                  357,000
                  
                  
                  
                  -$
                  483,000
                  
                  
                  $
                  -Available for sale
      securities:Special Projects
      Group
                  
                  $
                  31,407
                  
                  
                  $
                  31,407Syzygy Entertainment,
      Ltd.
                  
                  
                  12,856
                  
                  
                  
                  77,138Cost less non-temporary
      impairment
                  
                  
                  44,263
                  
                  
                  
                  108,545Unrealized
    loss
                  
                  
                  -
                  
                  
                  
                  -Total
                  
                  $
                  44,263
                  
                  
                  $
                  108,545Other
      investments:Investments using the equity
      method:Balance, beginning of
      period
                  
                  $
                  1,241,371
                  
                  
                  $
                  1,410,482Equity in earnings
      (loss)
                  
                  
                  23,000
                  
                  
                  
                  (123,111
                  )Sale of
      investment
                  
                  
                  (575,000
                  )
                  
                  
                  -Distributions
                  
                  
                  (64,371
                  )
                  
                  
                  (46,000
                  )Balance, end of
      period
                  
                  
                  625,000
                  
                  
                  
                  1,241,371Investments at
      cost:Bouncing Brain
      Productions
                  
                  
                  250,000
                  
                  
                  
                  250,000Remodel
    Auction
                  
                  
                  125,000
                  
                  
                  
                  -Lifestyle Innovations,
      Inc.
                  
                  
                  100,000
                  
                  
                  
                  100,000BreezePlay,
      Inc.
                  
                  
                  250,000
                  
                  
                  
                  -Oil and gas
      investment
                  
                  
                  -
                  
                  
                  
                  76,000Chanticleer Investors
      II
                  
                  
                  16,598
                  
                  
                  
                  16,598Total
                  
                  
                  741,598
                  
                  
                  
                  442,598Deposits
                  
                  
                  82,500
                  
                  
                  
                  90,000Total other
      investments
                  
                  $
                  1,449,098
                  
                  
                  $
                  1,773,969
  11
  Equity
investments consist of the following at June 30, 2009 and December 31,
2008:
 
 2009
                    
                    
                    2008Carrying
    value:Chanticleer Investors, LLC (11.5%
      and 23%)
                    
                    $
                    575,000
                    
                    
                    $
                    1,150,000First Choice Mortgage (33 1/3%)
      (a)
                    
                    
                    -
                    
                    
                    
                    41,371Confluence Partners, LLC
      (50%)
                    
                    
                    50,000
                    
                    
                    
                    50,000$
                    625,000
                    
                    
                    $
                    1,241,371Equity in earnings
      (loss):Chanticleer Investors,
      LLC
                    
                    $
                    23,000
                    
                    
                    $
                    46,000First Choice
      Mortgage
                    
                    
                    -
                    
                    
                    
                    (169,111
                    )$
                    23,000
                    
                    
                    $
                    (123,111
                    )Distributions:Chanticleer Investors,
      LLC
                    
                    $
                    23,000
                    
                    
                    $
                    46,000First Choice
      Mortgage
                    
                    
                    41,371
                    
                    
                    
                    -$
                    64,371
                    
                    
                    $
                    46,000Undistributed earnings (loss)
      included in accumulated deficit
                    
                    $
                    23,000
                    
                    
                    $
                    (208,629
                    )
 
 (a) liquidated in January
2009.
 
 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.  The Company has classified the NAEY as a trading
security and recorded an unrealized gain of $357,000 at June 30, 2009, based on
the closing price of the stock on that date.  In addition, the Company
sold 1/2 of its interest in Chanticleer Investors LLC for its carrying value of
$575,000 during the second quarter.
 
 The
Company received common stock investments in two non-public companies in
exchange for providing management services for one year during the quarter ended
March 31, 2009.  The Company recorded the investments at their
estimated fair market value of $375,000 and is amortizing the related deferred
revenue over the one year period in which services are being
provided.  The investments are being accounted for using the cost
method.
 
 Remodel
Auction Incorporated was formed to launch and operate an online listing service
for remodeling projects.  We valued our investment at 50% of the price
Remodel was receiving from third parties for its stock.
  12
 
 BreezePlayTM
LLC (“BreezePlay”), headquartered in Charlotte, NC, is an energy solutions
provider serving the needs of residents and utilities via partnership programs
with major utilities. BreezePlay offers a proprietary monitoring system called
EnviroScapeTM, which is the only residential consumer energy management product
on the market that monitors residential energy consumption 24/7 to provide
actual usage and rate data, and that enables customers the ability to
automatically adjust systems to effect consumption and automate savings.
BreezePlay field data demonstrate that energy consumption awareness will result
in a 10-25% overall energy savings to the customer. Continuous monitoring and
reporting of energy use via the EnviroScape Energy Management and Control panel,
as well as the Internet, is provided so both customers and utilities can track
how conservation efforts are saving energy and money. Energy providers can use
this panel as a gateway to educate and encourage consumer restraint during peak
load periods, thereby assisting in their Demand Response Management (DRM)
programs. Furthermore, the panel allows the participating utility to monitor and
control overall usage, in addition to certain energy-intensive systems within
the home, such as HVAC systems, water heaters, swimming pool and spa pumps, and
electric vehicle charging stations. BreezePlay has aligned with some of the
country’s largest Investor Owned Utilities (IOUs), Electrical Cooperatives, and
Municipal Power Companies, all of which have shown a strong interest to install
the BreezePlay system into their customer base as rapidly as
possible.
 
 BreezePlay’s
unique technology process and business model gives it significant advantages
over other home energy management systems, which are generally too complex, too
expensive, and/or require smart meters. Unlike many other software solutions in
the marketplace, utilities are encouraged to be strategic partners with
BreezePlay, but the business model is not reliant on their participation. There
is a pay per-unit installation price, as well as a monthly fee to BreezePlay for
ongoing monitoring. Interactive, real-time, consumer energy management using
smart grid technology has been an imperative goal of utilities for years and
many are aggressively pursuing the BreezePlay system.
 
 NOTE
4:            NOTES
PAYABLE
 
 On July
15, 2009 the Company repaid its $500,000 line of credit using $250,000 of its
cash balance and a new loan in the amount of $250,000.  The new loan
is due July 10, 2010; includes interest at Wall Street Journal Prime + 1%
(minimum of 5.5%) payable monthly; is collateralized by substantially all of the
assets of the Company; and is guaranteed by Mr. Pruitt.
 
 On April
3, 2009, the Company received loan proceeds from an individual in the amount of
$100,000 which was due June 30, 2009, together with interest at 18% per
annum.  The individual has agreed to extend the loan to December 31,
2009.  Chanticleer Holdings, Ltd is the borrower and the Company has
guaranteed the loan.
 
 NOTE
5:            RELATED
PARTY TRANSACTIONS
 
 Michael
D. Pruitt, the Company’s Chief Executive Officer, was CFO and the sole director
of Syzygy Entertainment, Ltd until he resigned effective June 1,
2009.
 
 The
Company had non-interest bearing advances in the amount of $57,611 and $7,300 at
June 30, 2009 and December 31, 2008, respectively, from a company partly owned
by Mr. Pruitt and $22,000 at June 30, 2009 from personal colleagues of Mr.
Pruitt.
  13
 
 NOTE
6:            COMMITMENTS
AND CONTINGENCIES
 
 PENDING
ACQUISITION
 Hooters,
Inc.
 
 On March
11, 2008, the Company entered into a Stock Purchase Agreement for the purchase
of Hooters, Inc., Hooters Management Corporation and their related restaurants
(collectively “HI”) from the nine current individual HI shareholders, many of
whom will continue to stay involved in the ongoing operation as shareholders of
Chanticleer.  The transaction is valued at approximately $55.1 million
and could close by the end of 2009.
 
 The
termination date for the Company’s pending acquisition of the stock of HI and
certain of its related entities has passed.  Although the sellers have
not, to date, exercised their rights to terminate the agreements and the Company
continues to seek to consummate these transactions, there is no assurance that
the Company will be able to close the pending acquisitions.
 
 In
addition, the commitment letters from certain financial institutions to provide
one or more related entities of the Company the $85,000,000 Senior Secured
Credit have expired, primarily due to the inability of the Company to raise the
necessary equity portion of the financing at acceptable terms in today’s
financial environment.  The Company continues to communicate with the
financial institutions that agreed to provide the credit facility; however,
there can be no assurance that the Company will be successful in obtaining any
financing or that the terms of any credit facility in the future will be
acceptable to the Company.
 
 Texas
Wings
 
 On July
8, 2008, the Company entered into an Asset Purchase Agreement ("APA") to acquire
substantially all of the assets of Texas Wings Incorporated and its 45 related
Hooters branded restaurants (collectively “Texas Wings”) for total consideration
of approximately $106 million, including approximately $53 million in cash,
approximately $37 million in Chanticleer common stock and convertible notes with
an aggregate principal amount of approximately $16 million (the
“Transaction”).
 
 On May
13, 2009, the Company received written notification terminating this APA,
because one or more of the conditions to closing could not be timely
satisfied.
  14
  NOTE
7:            CHANGE
IN ACCOUNTING PRINCIPLE
 
 FAS
141(R) "Business Combinations (Revised 2007)" ("FAS 141(R)") replaced FAS 141
"Business Combinations" and became effective January 1,
2009.  Paragraph 59 of FAS 141(R) defines acquisition-related costs as
costs the acquirer incurs to effect a business combination.  The
paragraph further provides that the acquirer shall account for
acquisition-related costs as expenses in the periods in which the costs are
incurred and the services received.  Pursuant to the Company's planned
acquisition of HI, the Company incurred $279,050 in acquisition-related costs
which were capitalized in 2008 pursuant to accounting guidance in effect at that
time.
 
 FAS
141(R) applies prospectively to business combination for which the acquisition
date is on or after the beginning of the first annual reporting period beginning
after December 15, 2008.  Accordingly, the Company reported a change
in accounting principle on January 1, 2009 and charged its previously
capitalized acquisition costs to expense on that date.
 
 NOTE
8:            GOING
CONCERN
 
 At June
30, 2009 and December 31, 2008, the Company had current assets of $971,862 and
$23,556; current liabilities of $1,060,310 and $686,125; and a working capital
deficit of $88,448 and $662,569, respectively.  The Company incurred a
loss of $74,233 during the six month period ended June 30, 2009.  In
addition, the Company sold 1/2 of its interest in Chanticleer Investors, LLC for
its carrying value of $575,000 during the second quarter.
 
 At June
30, 2009, the Company had $284,055 in cash and in July 2009, the advance to
Investors in the amount of $187,500 was returned, giving the Company $471,555 in
cash.  In July 2009, the Company also paid off its $500,000 line of
credit; borrowed $250,000 for one year; and sold common stock for approximately
$62,000 pursuant to a Reg S offering leaving net cash of $283,555 before any
third quarter overhead.
 
 Cash
administrative expenses were approximately $189,000 in the second quarter and
are expected to be approximately $175,000 in the third and fourth quarter of
2009 and the first and second quarter of 2010, assuming no other
changes.  This total estimated future cash requirement of $700,000 is
expected to be met with a combination of existing cash, sales of common stock
and management fees and distributions from investments.
 
 The
Company formed Chanticleer Holdings, Ltd.,("CHL") a Jersey corporation, during
the first quarter of 2009.  The Company plans to transfer the
franchise rights for South Africa to this company and raise funds in Germany to
fund initial development of four planned Hooters restaurant
locations.  The Company is in a 50/50 joint venture with another
company which will fund one-half of the costs.  CHL is not active at
June 30, 2009.
 
 If the
above events do not occur or if the Company does not raise sufficient capital,
substantial doubt about the Company's ability to continue as a going concern
exists.  These consolidated financial statements do not reflect any
adjustments that might result from the outcome of these
uncertainties.
  15
  ITEM
      2:
              MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
 
 The
following discussion should be read in conjunction with our financial statements
and notes thereto included elsewhere in this Form 10-Q.  This Form
10-Q contains forward-looking statements regarding the plans and objectives of
management for future operations.  This information may involve known
and unknown risks, uncertainties and other factors which may cause our actual
results, performance or achievements to be materially different from future
results, performance or achievements expressed or implied by any forward-looking
statements.  Forward-looking statements, which involve assumptions and
describe our future plans, strategies and expectations, are generally
identifiable by use of the words “may,” “will,” “should,” “expect,”
“anticipate,” “estimate,” “believe,” “intend,” “project” or the negative of
these words or other variations on these words or comparable
terminology.  These forward-looking statements are based on
assumptions that may be incorrect, and we cannot assure you that the projections
included in these forward-looking statements will come to pass.  Our
actual results could differ materially from those expressed or implied by the
forward-looking statements as a result of various factors.
 
 On June
1, 2005, we filed a notification on Form N54a with the U.S. Securities and
Exchange Commission, (the “SEC”) indicating our election to be regulated as a
business development company (a “BDC”) under the Investment Company Act of 1940
(the “1940 Act”).  Under this election, we adopted corporate
resolutions to operate as a closed-end management investment company as a
BDC.  We operated as a non-diversified company as that term is defined
in Section 5(b)(2) of the 1940 Act and at all times conducted our business so as
to retain our status as a BDC.  We could not change the nature of our
business so as to cease to be, or withdraw our election as, a BDC without the
approval of the holders of a majority of our outstanding voting stock as defined
under the 1940 Act.
 
 Withdrawal
of the Company’s election to be treated as a BDC under the 1940 Act became
effective on July 21, 2008, when the Company filed Form N-54c with the SEC,
following approval by a majority of the Company’s shareholders.
 
 Critical
Accounting Policies and Estimates
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements.  Critical accounting policies are those that are both
important to the presentation of our financial condition and results of
operations and require management’s most difficult, complex, or subjective
judgments.  Our most critical accounting policy relates to the
valuation of our investments.
 
 16
  Liquidity
and capital resources
 
 At June
30, 2009 and December 31, 2008, the Company had current assets of $971,862 and
$23,556; current liabilities of $1,060,310 and $686,125; and a working capital
deficit of $88,448 and $662,569, respectively.  The Company incurred a
loss of $74,233 during the six month period ended June 30, 2009.  In
addition, the Company sold 1⁄2 of its interest in Chanticleer Investors, LLC for
its carrying value of $575,000 during the second quarter.
 
 At June
30, 2009, the Company had $284,055 in cash and in July 2009, the advance to
Investors in the amount of $187,500 was returned, giving the Company $471,555 in
cash.  In July 2009, the Company also paid off its $500,000 line of
credit; borrowed $250,000 for one year; and sold common stock for approximately
$62,000 pursuant to a Reg S offering leaving net cash of $283,555 before any
third quarter overhead.
 
 Cash
administrative expenses were approximately $189,000 in the second quarter and
are expected to be approximately $175,000 in the third and fourth quarter of
2009 and the first and second quarter of 2010, assuming no other
changes.  This total estimated cash requirement of $700,000 is
expected to be met with a combination of existing cash, sales of common stock
and management fees and distributions from investments.
 
 The
Company formed Chanticleer Holdings, Ltd., a Jersey corporation, during the
first quarter of 2009.  The Company plans to transfer the franchise
rights for South Africa to this company and raise funds in Germany to fund
initial development of four planned Hooters restaurant locations.  The
Company is in a 50/50 joint venture with another company which will fund
one-half of the costs.
 
 If the
above events do not occur or if the Company does not raise sufficient capital,
substantial doubt about the Company's ability to continue as a going concern
exists.  These consolidated financial statements do not reflect any
adjustments that might result from the outcome of these
uncertainties.
 
 Comparison
of three months ended June 30, 2009 and 2008
 
 Revenues
amounted to $134,750 ($25,000 from Investors LLC) in the three months ended June
30, 2009, as compared to the $25,000 from Investors LLC in the year earlier
period.  The Company received cash from Investors LLC and was
compensated with shares of common stock for the other revenue earned from
unaffiliated companies.
 
 General
and administrative expense amounted to $189,237 in the 2009 quarter as compared
to $392,367 in the 2008 quarter.  The principal decreases were
professional fees of $75,268, printing and reproduction of $14,315 and travel
and entertainment of $10,732.  The professional fees in 2008 were
higher due to the initial work being done to raise capital for the pending
acquisitions.
 
 Other
income (expense) consists of the following for the three months ended June 30,
2009 and 2008.
 
 17
 
 2009
                    
                    
                    2008Unrealized
      gain from marketable securities
                    
                    $
                    357,000
                    
                    
                    $
                    22,500Realized
      gain from sale of investments
                    
                    
                    50,000
                    
                    
                    
                    -Equity
      in earnings of investments
                    
                    
                    11,500
                    
                    
                    
                    (3,100
                    )Interest
      expense
                    
                    
                    (1,521
                    )
                    
                    
                    (5,947
                    )$
                    416,979
                    
                    
                    $
                    13,453
 
 The
Company recorded an unrealized gain from its investment in marketable equity
securities during the June 2009 quarter, which had significant appreciation
after being acquired.  The Company realized a gain of $50,000 upon
exchange of its investment in oil and gas properties for marketable securities,
based on the closing price of the securities on the date of the
transaction.
 
 Comparison
of six months ended June 30, 2009 and 2008
 
 Revenues
amounted to $238,728 ($50,000 from Investors LLC) in the six months ended June
30, 2009, as compared to the $178,555 ($50,000 from Investors LLC) in the year
earlier period.  The Company received cash from Investors LLC and was
compensated with shares of common stock for most of the other revenue earned
from unaffiliated companies.
 
 General
and administrative expense amounted to $394,241 in the six months ended June 30,
2009 as compared to $691,010 in the 2008 period.  The principal
decreases were professional fees of $176,032, printing and reproduction of
$18,431 and travel and entertainment of $42,454.  The professional
fees in 2008 were higher due to the initial work being done to raise capital for
the pending acquisitions.
 
 Other
income (expense) consists of the following for the six months ended June 30,
2009 and 2008.
 
 2009
                    
                    
                    2008Unrealized
      gain from marketable securities
                    
                    $
                    357,000
                    
                    
                    $
                    5,000Realized
      loss from sale of investments
                    
                    
                    (14,282
                    )
                    
                    
                    -Equity
      in earnings of investments
                    
                    
                    23,000
                    
                    
                    
                    248Interest
      expense
                    
                    
                    (5,388
                    )
                    
                    
                    (7,994
                    )$
                    360,330
                    
                    
                    $
                    (2,746
                    )
  As noted
above, the Company recorded an unrealized gain from appreciation of its
investment in marketable equity securities during the 2009
period.  The realized loss of $14,282 consists of a other than
temporary decline in value of available-for-sale securities in the amount of
$64,282 in the first quarter of 2009 and a gain from the exchange of our oil and
gas property investments for marketable equity securities of $50,000 in the
second quarter of 2009.  The equity in earnings of investments is from
our investment in Investors LLC of $23,000 in both years, with a loss of $22,752
in 2008 from another investment which was liquidated in January
2009.
  18
  ITEM
      3:
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 Not
applicable.
  ITEM
4: CONTROLS
AND PROCEDURES
 
 (a) Evaluation of Disclosure
Controls and Procedures
 
 The
Company’s Chief Executive Officer has reviewed and evaluated the effectiveness
of the Company’s disclosure controls and procedures (as defined in Rules
240.13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of
1934) as of June 30, 2009.  Based on that review and evaluation, which
included inquiries made to certain other employees of the Company, the CEO
concluded that the Company’s current disclosure controls and procedures, as
designed and implemented, are effective in ensuring that information relating to
the Company required to be disclosed in the reports the Company files or submits
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms, including insuring that such information is
accumulated and communicated to the Company’s management, including the CEO, as
appropriate to allow timely decisions regarding required
disclosure.
 
 (b)  Changes in
Internal Controls
 
 There
have been no significant changes in internal controls over financial reporting
or in other factors that could significantly affect these controls during the
quarter ended June 30, 2009, including any corrective actions with regard to
significant deficiencies and material weaknesses.
 
 Management
believes that lack of segregation of duties noted at December 31, 2008 continues
to be a material weakness.  However, management also believes that
this material weakness did not have an effect on our financial results due
primarily to the Company hiring an internal accountant in 2008 to improve the
segregation of duties and continuing to use a third-party to review its
financial information and prepare its financial statements, which are reviewed
by its auditor.
  19
  PART II – OTHER
INFORMATION
  ITEM
      1:
              LEGAL
      PROCEEDINGS
  Not
applicable.
 
 ITEM
      1A:
              RISK
      FACTORS
 
 Not
applicable.
  ITEM
      2:
              UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
  Not
applicable.
  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
  Although
the Company does not currently employ a Chief Financial Officer, Michael D.
Pruitt, President and Chief Executive Officer, is also the principal accounting
officer.
  ITEM
      6:
              EXHIBITS
  The
following exhibits are filed with this report on Form 10-Q.
  Exhibit
      31
              Certification
      pursuant to 18 U.S.C. Section 1350Section 302 of the Sarbanes-Oxley Act of
      2002
 
 Exhibit
      32
              Certification
      pursuant to 18 U.S.C. Section 1350Section 906 of the Sarbanes-Oxley Act of
      2002
 
 20
 
 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:
      August 10, 2009
                      By:
                      /s/ Michael D. PruittMichael
      D. Pruitt,Chief
      Executive Officer andChief
      Financial
Officer


21