**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-K/A**





**ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF**


**THE
      SECURITIES AND EXCHANGE ACT OF 1934**





**For
      the Fiscal Year Ended December 31, 2007**





Commission
      File Number **814-00709**





**CHANTICLEER
      HOLDINGS, INC.**


(Exact
      name of registrant as specified in the charter)





**Delaware**
            
            **20-2932652**(State
                or other jurisdiction of
            
            (I.R.S.
                Employerincorporation
                or organization)
            
            Identification
                Number)





**The
      Rotunda, 4201 Congress Street, Suite 145, Charlotte, NC
      28209**


(Address
      of principal executive offices, including zip code)





Registrant's
      telephone number, including area code:  ( **704)
      366-5122**





Securities
      registered pursuant to Section 12(g) of the Act:





**Common
      Stock, $0.0001 par value**


(Title
      of
      Class)




Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act. o Yes x
      No.





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act. o Yes x
      No.




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
      past 12 months (or for such shorter period that 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 o.




Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      Form 10-K. o








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
      definition of “large accelerated filer,” “accelerated filer,” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large
      accelerate filer o Accelerated
      filer o


Non-accelerated
      filer x
      Smaller reporting company o





(Do
      not
      check if a smaller reporting company)





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





State
      the
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      last sold, or the average bid and asked price of such common equity, as of
      the
      last business day of the registrant’s most recently completed second fiscal
      quarter ($0.80 per share)(2,106,943 of 8,046,604 shares): $1,685,534 as of
      June
      30, 2007.





Indicate
      the number of shares outstanding of each of the registrant’s classes of common
      stock, as of the latest practicable date. There were 8,618,032 shares of common
      stock outstanding as of February 29, 2008.





DOCUMENTS
      INCORPORATED BY REFERENCE: No documents are incorporated by reference into
      this
      Report except those Exhibits so incorporated as set forth in the Exhibit
      index.




2


Chanticleer
      Holdings, Inc.


Form
      10-K
      Index





PagePart
                IItem
                1:
            
            Business
            
            4Item
                1A:
            
            Risk
                Factors
            
            8Item
                2:
            
            Properties
            
            23Item
                3:
            
            Legal
                proceedings
            
            23Item
                4:
            
            Submission
                of Matters to a Vote of Security Holders
            
            23Part
                IIItem
                5:
            
            Market
                for Registrant’s Common Equity, Related Stockholder Matters and Issuer
                Purchases of Equity Securities
            
            24Item
                6:
            
            Selected
                Financial Data
            
            25Item
                7:
            
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            
            25Item
                7A:
            
            Quantitative
                and Qualitative Disclosures about Market Risk
            
            38Item
                8:
            
            Financial
                Statements and Supplementary Data
            
            39Item
                9:
            
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            
            65Item
                9A(T):
            
            Controls
                and Procedures
            
            65Item
                9B:
            
            Other
                Information
            
            66Part
                IIIItem
                10:
            
            Directors,
                Executive Officers and Corporate Governance
            
            67Item
                11:
            
            Executive
                Compensation
            
            70Item
                12:
            
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            
            72Item
                13:
            
            Certain
                Relationships and Related Transactions and Director
                Independence
            
            74Item
                14:
            
            Principal
                Accountant Fees and Services
            
            74Part
                IVItem
                15:
            
            Exhibits
                and Financial Statement Schedules
            
            75Signatures
            
            
            
            76


3


**PART
      I**





**FORWARD
      LOOKING STATEMENTS**





This
      Annual Report contains forward-looking statements within the meaning of the
      federal securities laws that involve a number of risks and uncertainties. Our
      future results may differ materially from our historical results and actual
      results could differ materially from those projected in the forward-looking
      statements as a result of certain risk factors. These factors are described
      in
      the “Risk Factors” section below. Among the factors that could cause actual
      results to differ materially from those expected are the following: business
      conditions and general economic conditions; competitive factors, such as pricing
      and marketing efforts; and the pace and success of product research and
      development. These and other factors may cause expectations to differ.




**ITEM
      1:**  **BUSINESS**





Chanticleer
      Holdings, Inc. (the “Company,” “we,” “us” or “Chanticleer”) filed an election to
      be treated as a business development company under the Investment Company Act
      of
      1940 (the “1940 Act”) on May 23, 2005. In connection with this election, we have
      adopted corporate resolutions and are operating as a closed-end, non-diversified
      management investment company and as a business development company (a
“BDC”).





On
      April
      18, 2006, we formed Chanticleer Investors LLC (“Investors LLC”) and sold units
      for $5,000,000, of which we own $1,150,000 (23%) as of December 31, 2007.
      Investors LLC’s principal asset is a 6%, convertible note in the amount of
      $5,000,000 with Hooters of America, Inc. (“Hooters”), collateralized by and
      convertible into 2% of Hooters common stock. One-third of the interest is paid
      to us as a management fee and we share pro-rata with the other investors in
      the
      remaining 4% interest, which is distributed to the investors
      quarterly.





On
      July
      31, 2006, we 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.





In
      January 2007, we formed Chanticleer Advisors, LLC (“Advisors”), as a wholly
      owned subsidiary to manage Investors II, as well as, other
      investments.





As
      a BDC,
      we are required to invest at least 70% of our total assets in qualifying assets,
      which, generally, will be privately held companies or companies with thinly
      traded public securities at the time we invest in them. Qualifying assets may
      also include cash, cash equivalents, U.S. Government securities or high-quality
      debt investments maturing in one year or less from the date of investment.
      We
      may invest a portion of the remaining 30% of our total assets in debt and/or
      equity securities of companies that may be larger or more stable than target
      portfolio companies.




4


**The
      Characteristics of Desirable Investments**





When
      we
      begin to look at companies, we have the option of investing in public or private
      companies. We look to buy businesses with the best value proposition. We conduct
      what is typically referred to as fundamental analysis. We believe that while
      technical analysis, or the examination of historical trends and demand/supply
      complexes, may have some merit in the short-term, fundamental characteristics
      in
      the long-term make the difference.





We
      look
      for five core characteristics in our investments:





§
            Profitability


§
            Predictable
                and Sustainable Returns


§
            Margin
                of Safety


§
            Strong
                Future Prospects


§
            Reputable
                Management





We
      look
      at these characteristics in a historical context and then assess what those
      characteristics will look like in the future. We believe that the best
      indication of what a company will do in the future is its past behavior. The
      metrics that we examine are a blend of quantitative factors, like return on
      equity and profit margin, and qualitative factors, like management ownership
      and
      a company’s competitive advantage. By remaining disciplined with respect to
      these metrics, we can be assured that we have attempted to minimize the
      potential for a loss.





**Portfolio
      and Firm Management**





The
      investment portfolio of Chanticleer has several distinguishing characteristics.
      First and foremost is the portion of our assets that we are willing to commit
      to
      an idea. At the end of our search for outstanding companies we must be willing
      to commit a meaningful percentage of our assets to our best investment
      opportunities. Additionally, it is very likely that the number of our holdings
      will be relatively small. There are a limited number of companies that have
      stood the test of our scrutiny, so we must put a relatively significant amount
      of money in those few ideas. We attempt to select portfolio companies that
      are
      focused on the best possible ideas.





We
      also
      make decisions within the context of our portfolio in such a way as to minimize
      its turnover. When we find good companies we will not rush to make a change
      at
      the first indication of short-term weakness. In fact such a time might be cause
      for additional investment. Understanding that there will be occasions for
      change, buying and selling has the unintended consequence of interrupting the
      compounding effect and any resulting superior returns.





Chanticleer,
      though structured as a BDC, is managed much like a partnership. We manage the
      business to maximize the long-term return to our shareholders and make every
      effort to allow our shareholders to share that return. We are candid in our
      comments about the businesses in which we invest and treat our shareholders
      the
      way we would choose to be treated if the roles were reversed. As such, we report
      all the information we believe shareholders will need to make an assessment
      of
      our companies and our management capabilities. We will not, however, discuss
      matters which may compromise future investments.





5


Over
      the
      long-term it is our goal to provide a return superior to the return an investor
      could obtain by simply investing in low-cost index funds. We believe the
      philosophy presented here will, over the long-term, create wealth for our
      shareholders, without significant risk exposure.





**Ongoing
      Relationships with Portfolio Companies**





*Monitoring*





We
      continuously monitor our portfolio companies in order to determine whether
      they
      are meeting our investment criteria and achieving our business expectations.
      We
      monitor the progress of each portfolio company to assess the appropriate course
      of action for each company and to evaluate overall portfolio quality.





*Managerial
      Assistance*





As
      a BDC,
      we are required to offer, and in some cases may provide, significant managerial
      assistance to portfolio companies. This assistance typically involves monitoring
      the operations of portfolio companies, participating in their board and
      management meetings, consulting with and advising their officers and providing
      other organizational and financial guidance.





**Other
      Income**





In
      addition to our investment objectives, we seek to earn interest on our loans
      to
      portfolio companies and in some cases may have management fee agreements with
      the portfolio companies.





Frequently,
      to minimize the cash requirements of our portfolio companies, we may receive
      stock in payment of our management fees and the interest owed us on our loans
      to
      our portfolio companies. Our investment committee will value the stock, which
      will become the basis for a portion of our revenue.






**Investment
      Personnel**





The
      investment personnel of Chanticleer Holdings, Inc. currently consists of its
      executive officer, Michael D. Pruitt, and two additional investment analysts
      that assist in researching and valuing potential and additional investments.
      The
      following information relates to the personnel involved in making investment
      and
      valuation decisions.





***Michael
      D. Pruitt***


Michael
      Pruitt, a long-time entrepreneur with a proven track record, possesses the
      expertise to evaluate potential investments, form key relationships and
      recognize a strong management team.  Mr. Pruitt founded Avenel Financial
      Group, a boutique financial services firm concentrating on emerging technology
      company investments.  The business succeeded immediately, and in order to
      grow Avenel Financial Group to its full potential and better represent the
      company's ongoing business model, he formed Avenel Ventures, an innovative
      technology investment and business development company.  In the late 1980s,
      Mr. Pruitt owned Southern Cartridge, Inc., which he eventually sold to
      MicroMagnetic, Inc., where he continued working as Executive Vice President
      and
      a Board member until Southern Cartridge was sold to Carolina Ribbon in
      1992.  From 1992 to 1996, Mr. Pruitt worked in a trucking firm where he was
      instrumental in increasing revenues from $6 million to $30 million.  The
      firm was sold in 1996 to Priority Freight Systems.  Between 1997 and 2000,
      Mr. Pruitt assisted several public and private companies in raising capital,
      recruiting management and preparing companies to go public or be
      sold.  He was the CEO, President and Chairman of the Board of
      Onetravel Holdings, Inc. (formerly RCG Companies), a publicly traded holding
      company formerly listed on the AMEX. Mr. Pruitt received a Bachelor of Arts
      degree from Coastal Carolina University in Conway, South Carolina, where he
      sits
      on the Board of Visitors of the Wall School of Business.  He is also
      Managing Director of Cain Capital Advisors; a Director of HealthSport, Inc.
      (HSPO); and CEO and a Director of Syzygy Entertainment, Ltd.
      (SYZG).





6


***Matthew
      S. Miller***


Matthew
      Miller joined Chanticleer Holdings in June of 2005.  He graduated Summa Cum
      Laude from Coastal Carolina University earning a Bachelor degree in Business
      Administration with a concentration in Finance.  At Coastal, he graduated
      from the honors program and was a member of the distinguished Wall Fellows
      Program.  In 2004, Mr. Miller was named a Financial Executives
      International Scholar and has presented on several research topics,
      including capital structure, insider trading, and the Warren Buffett
      methodology.  Most recently, he worked with Wachovia Securities, LLC in
      Myrtle Beach, South Carolina where he coordinated prospecting efforts for
      the Pyle/Cunningham Investment Consulting Group.  Mr. Miller has also
      worked for Hennecke GmbH in Sankt Augustin, Germany.  There he worked to
      develop a better means of recording synergies between the company and its
      parent, Bayer AG.





***Joseph
      T. Koster***


Joseph
      Koster joined Chanticleer Holdings in June of 2005. He is a Magna Cum Laude
      graduate of Coastal Carolina University. Mr. Koster graduated with
      a Bachelor degree in Business Administration with a concentration in
      Finance. He was a member of the Beta Gamma Sigma International Honor Society
      and
      the distinguished Wall Fellows Program at CCU. Mr. Koster worked part-time
      for a
      financial advisor in Myrtle Beach during his final academic year and also spent
      the previous summer working in the executive offices of Kemin
      Europa, a global chemical company with headquarters in Herentals,
      Belgium.






**Further
      Regulation as a Business Development Company**





We
      are a BDC under the 1940 Act. The 1940 Act contains prohibitions and
      restrictions relating to transactions between BDCs and their affiliates,
      including any investment advisers or sub-advisers, principal underwriters and
      affiliates of those affiliates or underwriters and requires that a majority
      of
      the directors be persons other than interested persons, as that term is defined
      in the 1940 Act. In addition, the 1940 Act provides that we may not change
      the
      nature of our business so as to cease to be, or to withdraw our election as,
      a
      BDC unless approved by a majority of our outstanding common shareholders.





7


We
      are permitted, under specified conditions, to issue multiple classes of
      indebtedness and one class of stock senior to our common stock if our asset
      coverage, as defined in the 1940 Act, is at least equal to 200% immediately
      after each such issuance. In addition, while any senior securities remain
      outstanding, we must make provisions to prohibit any distribution to our
      stockholders or the repurchase of such securities or shares unless we meet
      the
      applicable asset coverage ratios at the time of the distribution or repurchase.
      We may also borrow amounts up to 5% of the value of our total assets for
      temporary or emergency purposes. Regulations governing our operation as a BDC
      will affect our ability to, and the way in which we raise additional capital,
      which may expose us to risks, including the typical risks associated with
      leverage.





**Code
      of Ethics**





We
      have adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act that
      establishes procedures for personal investments and restricts certain personal
      securities transactions. Personnel subject to each code may invest in securities
      for their personal investment accounts, including securities that may be
      purchased or held by us, so long as such investments are made in accordance
      with
      the code’s requirements.






**ITEM
      1A:**  **RISK
      FACTORS**





In
      the normal course of business, and in an effort to keep our shareholders and
      the
      public informed about our operations and portfolio of investments, we may from
      time-to-time issue certain statements, either in writing or orally, that contain
      or may contain forward-looking information. Generally, these statements relate
      to our business plans or strategies or portfolio companies, projected or
      anticipated benefits or consequences of such plans or strategies, projected
      or
      anticipated benefits of new or follow-on investments made by or to be made
      by
      us, or projections involving anticipated purchases or sales of securities or
      other aspects of our operating results. Forward-looking statements are not
      guarantees of future performance and are subject to risks and uncertainties
      that
      could cause actual results to differ materially. As noted elsewhere in this
      report, our operations and portfolio of investments are subject to a number
      of
      uncertainties, risks, and other influences, many of which are outside our
      control, and any one of which, or a combination of which, could materially
      affect the results of our operations, or our net asset value (“NAV”), the market
      price of our common stock, and whether any forward-looking statements made
      by us
      ultimately prove to be accurate.





Investing
      in Chanticleer involves a number of significant risks relating to our business
      and investment objective. As a result, there can be no assurance that we will
      achieve our investment objective. In addition, the following risk factors are
      applicable to an investment in our common stock.




8


**GENERAL
      RISK FACTORS**





**We
      are a recently organized company with limited resources and sources of revenues.**





We
      made
      our election to become a BDC in 2005 and have entered into a number of financing
      transactions with portfolio companies as described in the notes to the financial
      statements. We have limited experience relating to the identification,
      evaluation and acquisition of target businesses and, accordingly, there is
      only
      a limited basis upon which to evaluate our prospects for achieving our intended
      business objectives. To date, our efforts have been limited primarily to
      organizational activities and acquisition of the investments described in the
      notes to the financial statements. We have raised $3,123,462 from sales of
      our
      common stock and have a cost basis in our investments of $3,292,229 at December
      31, 2007. We have realized only limited revenues to date. We are wholly
      dependent for the selection, structuring, closing and monitoring of all of
      our
      investments on the diligence and skill of its management, acting under the
      supervision of our Board of Directors. None of these individuals has substantial
      experience, within the BDC business format, in acquiring and investing in growth
      stage companies, the negotiation of the terms of such investments and the
      monitoring of such investments after they are made. We cannot assure you that
      we
      will attain our investment objective.





**We
      filed our notice of intent to become a BDC which requires us to comply with
      significant regulatory requirements.**





On
      May
      23, 2005, we filed a notice with the Securities and Exchange Commission of
      our
      intent to be regulated as a BDC under the 1940 Act and be subject to Sections
      54
      through 65 of said Act. Being subject to the BDC provisions requires us to
      meet
      significant numbers of regulatory and financial requirements. Compliance with
      these regulations is expensive and may create financial obstacles for us in
      the
      future. These laws and regulations, as well as their interpretation, may be
      changed from time to time. Accordingly, any change in these laws or regulations
      could have a material adverse effect on our business.





The
      increased costs associated with compliance with the 1940 Act as a result of
      our
      election to become a BDC include costs associated with the increased demand
      for
      compliance including oversight by our Chief Compliance Officer and counsel
      to
      the Company as well as increased costs due to accounting methodology and
      valuations which increase the time and work required of both our accounting
      service providers and independent auditors. These costs require us to expend
      capital and resources that might otherwise be used to meet the needs or
      opportunities relating to investments and/or our portfolio companies or other
      income-producing assets.





If
      we do
      not remain a BDC, we may continue to be regulated as a closed-end investment
      company under the 1940 Act, which would decrease our operating flexibility.
      We
      cannot assure you that we will successfully retain our BDC status.





9


**There
      are risks which result from the inherent concentration of investments prior
      to
      diversification** .





While
      we
      intend to allocate our investments among different portfolio companies, it
      is
      possible that, prior to our achieving diversification, a significant amount
      or
      all of our NAV at any one time could be invested in the securities of just
      a few
      portfolio companies. Thus, our success and its NAV would be dependent on the
      success of just a few portfolio companies. All of the risks associated with
      ownership of such portfolio companies including success dependent on management,
      market conditions within the industry or field of such portfolio companies,
      achieving the business objectives of such portfolio companies and economic
      conditions and other conditions relative to the operation of such portfolio
      companies, would become risks borne by us.





**Limitation
      of liability and indemnification of management** .





While
      limitations of liability and indemnification are themselves limited, we have
      instituted provisions in our by-laws indemnifying against and not making
      management liable for, any loss or liability incurred in connection with our
      affairs, so long as such loss or liability arose from acts performed in good
      faith and not involving any fraud, gross negligence or willful misconduct.
      Therefore, to the extent that these provisions provide any protection to
      management, that protection may limit the right of a shareholder to collect
      damages from members of management. Management is accountable to the shareholder
      as a fiduciary and, consequently, members of management are required to exercise
      good faith and integrity in handling our affairs.





**Our
      business may become subject to extensive regulation at the federal and state
      levels** .





Our
      operations are and will be affected by current and future legislation and by
      the
      policies established from time to time by various federal and state regulatory
      authorities. It is not possible to predict what changes, if any, will be made
      to
      existing federal and state legislation and regulations or the effect that such
      changes may have on our future business and earnings prospects.





**Our
      investments may require us to raise additional capital on different
      terms.**





In
      the
      future we may require additional capital. For additional requirements, we may
      raise capital by issuing equity or convertible debt securities, and if we do,
      the percentage ownership of our existing stockholders would be diluted. In
      addition, any new securities we issue could have rights, preferences and
      privileges senior to our existing equity.





Our
      ability to raise capital as a BDC is limited by the requirement that we not
      sell
      shares below the net asset value per share (“NAV/S”) without approval of a
      majority of our shareholders. While we do not anticipate that the NAV/S
      calculation will ever result in a negative number or a nominally positive
      number, the Company would be severely limited in its ability to sell shares
      if
      such number was negative or nominally positive.





**We
      cannot guarantee paying dividends to our stockholders** .





We
      are
      allowed by our articles of incorporation and by-laws to pay dividends to our
      stockholders. However, there can be no guarantee we will have sufficient
      revenues to pay dividends. Consequently, there is no assurance that the Company
      will pay any dividends during any period. Investors in need of liquidity through
      the payment of dividends should refrain from investing in our common stock.





10





**GENERAL
      RISKS ASSOCIATED WITH BUSINESS DEVELOPMENT COMPANIES**






**BDCs
      generally require substantial amounts of time to realize the benefits from
      investments** .





We
      have
      obtained funding and completed the initial selection of portfolio companies
      for
      our first round of equity investments. Venture capital investments typically
      take from four to eight years from the date of initial investment to reach
      a
      state of maturity at which liquidation can be considered practical. In light
      of
      the foregoing, it is unlikely that any significant distributions of the proceeds
      from the liquidation of equity investments will be made for several years after
      inception, if at all.





**We
      may change our investment policies without further shareholder
      approval.**





Although
      we are limited by the 1940 Act with respect to the percentage of our assets
      that
      must be invested in qualified portfolio companies, we are not limited with
      respect to the minimum standard that any investment company must meet, nor
      the
      industries in which those investment companies must operate. We may make
      investments without shareholder approval and such investments may deviate
      significantly from our historic operations. Any change in our investment policy
      or selection of investments could adversely affect our stock price, liquidity,
      and the ability of our shareholders to sell their stock.





**Our
      investments may not generate sufficient income to cover our
      operations.**





We
      intend
      to make investments into qualified companies that will provide the greatest
      overall return on our investment. This is in conformity with the Small Business
      Investment Incentive Act of 1980 which amended the 1940 Act and created BDC’s.
      However, certain of those investments may fail, in which case we will not
      receive any return on our investment. In addition, our investments may not
      generate income, either in the immediate future, or at all. As a result, we
      may
      have to sell additional stock, or borrow money, to cover our operating expenses.
      The effect of such actions could cause our stock price to decline or, if we
      are
      not successful in raising additional capital, we could cease to continue as
      a
      going concern. It should be noted that our operational costs are higher as
      a
      result of our having elected to be governed as a BDC.


11


**RISKS
      ASSOCIATED WITH INVESTMENTS AND PORTFOLIO COMPANIES**






**There
      are costs associated with the purchase and sale of
      securities** .





Some
      of
      our strategies may include purchases of different classes of securities or
      frequent trading to maximize profits and, as a consequence, risks related to
      turnover and costs such as brokerage commissions may be greater than an
      investment in a single entity for a single class of security held for a longer
      period of time. Our operating expenses, including, but not limited to, fees
      paid
      to accountants, attorneys, fees to execute trades and manage investments and
      fees paid to any investment advisor may, in the aggregate, constitute a high
      percentage relative to the expenses and fees than for an investment in a single
      entity for a single class of security held for a longer period of
      time.





**There
      are numerous risks arising from investing in securities** .




The
      securities industry is generally competitive and methods of investment strategy
      each involve a degree of risk. We will compete with firms, including many of
      the
      larger securities and investment banking firms, which have substantially greater
      financial resources and research staffs. Where we purchase securities in
      portfolio companies for appreciation, our profitability substantially depends
      upon our ability to correctly assess the future price movements of stocks.
      There
      can be no assurance that we will be able to accurately predict price movements
      of securities purchased.





Security
      investments generally involve a high degree of risk. The performance of
      securities in which we may invest are subject to numerous factors which are
      neither within the control of nor predictable by us. Such factors can include
      a
      wide range of economic, political, competitive and other conditions which may
      affect investments in general or specific industries or companies. In recent
      years, the securities markets have become increasingly volatile and this
      volatility has increased the degree of risk.





**Investing
      in small and growth stage companies is inherently risky** .





Investments
      in growth stage companies offer the opportunity for significant gains. However,
      each investment involves a high degree of business and financial risk that
      can
      result in substantial losses. Among these are the risks associated with:





·
            Investing
                in companies in an early-stage of development or with little or no
                operating history;


·
            Companies
                operating at a loss or with substantial variations in operating results
                from period to period; and


·
            Companies
                with the need for substantial additional capital to support expansion
                or
                to achieve or maintain a competitive position.





12


These
      companies may face intense competition, including competition from companies
      with:





·
            Greater
                financial resources;


·
            More
                extensive development, manufacturing, marketing, and service capabilities;
                and


·
            A
                larger number of qualified managerial and technical personnel.





Although
      we intend to mitigate our risk exposure by limiting our investments in early
      stage companies, we cannot assure you that the portfolio companies in which
      we
      choose to place a majority of our investment capital are not facing the same
      risks of companies that are inherent in start-up companies. In addition, growth
      stage companies are likely to have a very limited operating history and thus
      evaluating their worthiness for investment will be more subjective on their
      future potential for growth and cannot be predicated on operating successes.
      We
      are dependent on the quality and actions of management of portfolio
      companies.





**Our
      success will depend upon the success of the portfolio companies and, in great
      part, upon the abilities of their management** .





Although
      our management expects to provide portfolio companies with assistance
      (particularly with regard to capital formation, major personnel decisions,
      and
      strategic planning), the day-to-day operations will be controlled by the
      management of the portfolio companies. Investors must rely upon our management
      to select portfolio companies that have, or can obtain, the necessary management
      resources. Problems may arise at portfolio companies that local management
      does
      not recognize or cannot resolve. In addition, the management of portfolio
      companies may conceal the existence of problems from us.





**The
      value of securities we own may be adversely impacted by subsequent regulatory
      changes.**





Our
      current investment strategy includes purchase of unregistered securities in
      both
      private companies and private placements offered by public companies. We are
      able to purchase securities pursuant to exemptions to the registration
      requirements of United States Federal securities laws. Changes in such laws
      or
      their interpretation could adversely impact our ability to resell such
      securities which would have a negative effect on the value of such securities
      as
      well as impact our overall investment strategy and the liquidity of our
      investments. In such an event, we may need to reformulate our investment
      strategy or we may choose to liquidate.





**Limitations
      on availability of investment capital may adversely affect other
      investments** .





We
      may be
      reliant on the availability of capital to generate profits under its investment
      strategy and such availability will depend, in part, on our ability to timely
      liquidate existing positions in order to reinvest the proceeds thereof. To
      the
      extent that we own securities which are not subject to a valid registration
      statement or otherwise available for trading under applicable securities laws,
      our ability to liquidate our position in such securities may be limited. We
      intend to require some of our portfolio companies to use their best efforts
      to
      cause a registration statement covering the resale of the securities we purchase
      to be filed and declared effective by the SEC or become otherwise freely
      tradeable. However, there can be no guarantee that the SEC or other regulating
      body will declare such a registration statement effective or permit such
      security to become free of restrictions within such period and, until such
      securities become freely tradable, we will likely be unable to freely liquidate
      such interests in restricted securities in the manner and at the prices desired.
      This resulting lack of liquidity could impair our ability to generate the cash
      flow from these positions to timely pay our liabilities or obtain funds for
      the
      purpose of reinvestment. Although we intend to maintain adequate liquidity
      to
      achieve our future investment objectives, there can be no assurance this can
      be
      accomplished in all circumstances.





13


**Portfolio
      companies are likely to need additional funding** .





We
      expect
      that many portfolio companies will require additional financing to satisfy
      their
      working capital requirements. The amount of additional financing needed will
      depend upon the maturity and objectives of the particular company. Each round
      of
      venture financing, whether from us or other investors is typically intended
      to
      provide a portfolio company with enough capital to reach the next major
      valuation milestone. If the funds provided are not sufficient, a portfolio
      company may have to raise additional capital at a price unfavorable to the
      existing investors, including us. The availability of capital is generally
      a
      function of capital market conditions that are beyond our control or beyond
      any
      portfolio company’s control. We cannot assure you that our management or the
      management of portfolio companies will be able to predict accurately the future
      capital requirements necessary for success or that additional funds will be
      available to portfolio companies from any source. If funding is not available,
      some portfolio companies may be forced to cease operations.





**BDC
      investments are generally illiquid** .





We
      anticipate that most of our holdings in portfolio companies will be securities
      that are subject to restrictions on resale. Generally, unless the securities
      are
      subsequently registered under the 1933 Act, we will not be able to sell these
      securities unless we meet all of the conditions of Rule 144 or another rule
      under the 1933 Act that permits limited sales under specified conditions. When
      restricted securities are sold to the public, we may be deemed an underwriter,
      or possibly a controlling person, with respect thereto for the purpose of the
      Securities Act and may be subject to liability as such under the 1933 Act.
      These
      restrictions could require us to hold securities or refrain from sale and be
      unable to liquidate a position even at a loss.





Even
      if
      we meet all of the conditions of the 1933 Act, there may be no market for the
      securities that we hold. These limitations on liquidity of a BDC's investments
      could prevent a successful sale thereof, result in delay of any sale, or
      substantially reduce the amount of proceeds that might otherwise be realized.
      It
      is possible that one or more of the portfolio companies may not be able to
      register its shares. In such event, we would own "restricted" securities subject
      to resale under Rule 144.





**Lack
      of diversity of investments by a BDC presents risks associated with specific
      industries** .





We
      anticipate that we will not be able to diversify our investments in the early
      years of our operation and, as a result, not gain the benefit of diversification
      which is the balancing of adverse economic conditions over our holdings in
      portfolio companies.




14


**There
      are risks associated with investments in companies with small
      capitalization** .





The
      portfolio companies that we expect to invest in are thinly capitalized and
      generally have a market capitalization below $100 million (and frequently much
      smaller). These companies generally do not have experience, market awareness,
      tracking by analysts, institutional investors and other benefits of larger
      companies that result in more marketability and stability of their securities.
      This impacts the liquidity of securities issued by those portfolio companies.
      It
      is expected that the securities of a significant number of the portfolio
      companies will be thinly traded. This could present a problem when we determine
      to liquidate our position. We may not be able to sell the securities in the
      time
      frame and at the price we would prefer. Furthermore, in certain situations,
      as a
      result of a security being thinly traded, we could experience a significant
      loss
      in value should we be forced to liquidate our investment as a result of rapidly
      changing market conditions or other factors.






**There
      are risks associated with investments in companies with not readily marketable
      securities.**





We
      may
      invest in securities that are initially, or that later become, not readily
      marketable. For example, we may acquire restricted securities of an issuer
      in a
      private placement pursuant to an arrangement whereby the issuer agrees to
      register the resale of those securities, or, in the case of an investment in
      convertible or exchangeable securities, the securities underlying such
      securities, within a certain period of time. Such registration requires
      compliance with United States Federal and state securities laws and the approval
      of the SEC. Unless and until such registration or compliance with applicable
      regulation occurs, there is likely to be no market for the restricted
      securities. No assurance can be given that issuers will not breach their
      obligation to obtain or meet such registration or other compliance obligation.
      Similarly, securities that are at one time marketable may become unmarketable
      (or more difficult to market) for a number of reasons. For example, securities
      traded on a securities exchange or quotation system may become unmarketable
      if
      delisted from such exchange or quotation system for among other reasons, failing
      to satisfy the requirements for continued listing, which may include minimum
      price requirements. In addition, we may acquire restricted securities, for
      which
      no market exists, which are convertible or exchangeable into common stock of
      the
      issuer. No assurances can be given that a portfolio company which has sold
      a
      convertible security requiring exchange or conversion will not breach its
      obligation to convert or exchange such securities upon demand, in which case
      our
      liquidity may be adversely affected. In general, the stability and liquidity
      of
      the securities in which we invest will depend in large part on the
      creditworthiness of the issuers. Issuers' creditworthiness will be monitored
      on
      an ongoing basis by us. If there is a default by the issuer, we may have
      contractual remedies under the applicable transaction documents. However,
      exercising such contractual rights may involve delays in liquidating our
      position and the incurrence of additional costs.





Portfolio
      companies in which investments are made may have publicly-traded securities
      but
      those companies or their securities may become subject to restrictions due
      to
      non-compliance. Our ability to generate profits from our investment activities
      may be adversely affected by a failure of portfolio companies to comply with
      registration, conversion, exchange or other obligations under the agreements
      pursuant to which such securities have been sold to us. The failure of an issuer
      to register the resale of its securities sold to us may decrease the amount
      of
      available capital with which we may pursue other investment opportunities or
      meet current liabilities. We may invest in securities that are convertible
      into
      or exchangeable for common stock of the issuer, the resale of which by us is
      (or
      is to be) registered. If an issuer refuses, is unable to, or delays in timely
      honoring its obligation to issue registered securities, our ability to liquidate
      our position and our profits may be adversely affected.





15





**RISKS
      OF THE COMPANY AT ITS PRESENT STAGE**





**We
      have obtained only limited funding at this time** .





Through
      December 31, 2007, we raised $3,123,462 from sales of our common stock. We
      intend to raise more capital through the sales of shares of our common stock.
      The offer and sale of the shares will not be registered under the 1933 Act
      since
      their issuance and sale is exempt from such registration requirements pursuant
      to Regulation E of the 1933 Act. Because the first $5,000,000 raised, each
      year,
      will be from shares that will be acquired by investors in transactions involving
      an exempt private offering pursuant to Regulation E, they will be unrestricted
      or free-trading securities and may be freely traded, transferred, assigned,
      pledged or otherwise disposed of at the time of issuance.






**We
      cannot assure you that we will be successful in selling the common shares or,
      if
      sold, at what price.**





We
      have
      identified and made investments in a limited number of portfolio companies.
      Investors will have a limited opportunity to evaluate the portfolio companies
      that we invested in. We cannot assure you that we will locate or successfully
      negotiate additional transactions with portfolio companies. We are likely to
      incur substantial losses in the first years of operations.





If
      additional funding is obtained, it is anticipated that most of such funding,
      except for operating cash reserves and funds set aside for follow-on investments
      in then-existing portfolio companies, will be expended or committed within
      two
      years, which is expected to be prior to us receiving any substantial realized
      gains. Our management anticipates that we and a number of the portfolio
      companies will sustain substantial losses in the initial years of operation.
      It
      is possible that these losses may never be recovered. We cannot assure you
      that
      we will ever be profitable.





**We
      are totally reliant on management.**





We
      are
      wholly dependent for the selection, structuring, closing and monitoring of
      all
      of our investments on the diligence and skill of our management, acting under
      the supervision of our Board of Directors. None of these individuals (currently
      four people) has substantial experience in acquiring and investing in growth
      stage companies, the negotiation of the terms of such investments and the
      monitoring of such investments after they are made.





16


In
      addition, we will engage outside consultants and professionals known to
      management to assist in evaluating and monitoring portfolio companies and
      maintaining regulatory compliance.





**We
      cannot assure you that we will attain our investment
      objective** .





**We
      have broad discretionary use of the proceeds from any funding that we
      obtain** .





Our
      management has broad discretion with respect to the specific application of
      the
      net proceeds of any funding that we obtain, although substantially all of the
      net proceeds from any offering is intended to be applied for investments in
      eligible portfolio companies which satisfy our investment criteria. While our
      corporate governance resolutions require the Board of Directors and Investment
      Committee to adhere to certain standards, even acting in compliance with those
      guidelines, our Board of Directors and Investment Committee have discretion.
      We
      do not permit our Board of Directors and Investment Committee to use proceeds
      in
      a manner inconsistent with the operation of a BDC.





**We
      will be confronted by competition from entities having substantially greater
      resources and experience** .





Other
      entities and individuals compete for investments similar to those we propose
      to
      make, many of whom will have greater financial and management resources than
      we
      do. Furthermore, we must comply with provisions of the 1940 Act pertaining
      to
      BDCs and, if we qualify as a Registered Investment Company (“RIC”), provisions
      of the Internal Revenue Code pertaining to RICs might restrict our flexibility
      as compared with our competitors. The need to compete for investment
      opportunities may make it necessary for us to offer portfolio companies more
      attractive transaction terms than otherwise might be the case. These factors
      may
      prevent us from ever becoming profitable.





**We
      are unlikely to qualify for the income tax benefits offered to
      RICs.**





We
      will
      be classified as a non-diversified investment company under the 1940 Act. We
      are
      not subject to the diversification requirements applicable to RICs under the
      Internal Revenue Code. Therefore, we will not receive favorable pass through
      tax
      treatment on distributions to our shareholders. This means that we will be
      taxed
      as an ordinary corporation on our taxable income even if that income is
      distributed to shareholders, and all distributions out of our earnings and
      profits will be taxable to shareholders as dividends. Thus, this income will
      be
      subject to a double layer of tax.





**Distributions
      to shareholders may never equal the amount invested by the
      shareholders** .





We
      cannot
      assure you that we will make any distributions to shareholders or that aggregate
      distributions, if any, will equal or exceed the shareholders' investment. Sales
      of portfolio company securities will be the principal source of distributable
      cash to shareholders. The directors have absolute discretion in the timing
      of
      distributions to shareholders. Securities we acquire through equity investments
      will be held by us and will be sold or distributed at the sole discretion of
      the
      Board of Directors.





17


**We
      indemnify officers and directors to the maximum extent permitted by Delaware
      law** .





Our
      articles of incorporation provide for indemnification of directors, officers,
      employees and our agents to the full extent permitted by Delaware law and the
      1940 Act.





**There
      are significant potential conflicts of interest, which could impact our
      investment returns**





Our
      executive officer(s) and director(s) serve or may serve as officers and
      directors of entities which operate in the same or related line of business
      as
      we do. Accordingly, they may have obligations to investors in those entities,
      the fulfillment of which might not be in the best interests of us or our
      stockholders. In addition, they may not be available to us if there are time
      conflicts involving other entities.





**Our
      common stock has a limited trading history, and we cannot assure you that any
      trading market will develop** .





Our
      common stock is currently listed on the electronic quotation and reporting
      service maintained by the National Association of Securities Dealers (“NASD”)
      and known as the “OTC Bulletin Board” or “OTCBB” system and trades under the
      symbol "CEEH".





Our
      common stock is unlikely to be followed by any market analysts, and there may
      be
      few institutions acting as market makers for the common stock. Either of these
      factors could adversely affect the liquidity and trading price of our common
      stock. Also, the stock market in general has experienced extreme price and
      volume volatility that has affected the market prices of securities of many
      companies. At times, this volatility has been unrelated to the operating
      performance of particular companies. These broad market and industry
      fluctuations may adversely affect the trading price of our common stock,
      regardless of our actual operating performance.





**The
      market price of our common stock may fluctuate
      significantly** .





The
      market price and liquidity of the market for shares of our common stock may
      be
      significantly affected by numerous factors, which may adversely affect our
      ability to raise capital through future equity financings. These factors, many
      over which we have no control and that may not be directly related to us,
      include the following:


·
            Significant
                volatility in the market price and trading volume of securities of
                closed-end investment companies, business development companies or
                other
                companies in our sector, which are not necessarily related to the
                operating performance of these companies; ·
            Changes
                in regulatory policies or tax guidelines, particularly with respect
                to
                RICs or BDCs; ·
            A
                loss of BDC status; ·
            Changes
                in earnings or variations in operating results;


18
 
 ·
            Changes
                in the value of our portfolio of investments; ·
            Any
                shortfall in revenue or net income or any increase in losses from
                levels
                expected by investors or securities analysts; ·
            Departure
                of key personnel; ·
            Potential
                legal and regulatory matters; ·
            Operating
                performance of companies comparable to us; and ·
            General
                economic trends and other external
                factors.




**Sales
      of substantial amounts of our common stock in the public market may have an
      adverse effect on the market price of our common stock.**





If
      a
      market does develop for our shares of common stock, of which we can make no
      assurances, subsequent sales of substantial amounts of our common stock or
      the
      availability of such shares for sale, could adversely affect the prevailing
      market price for our common stock. If this occurs and continues, it could impair
      our ability to raise additional capital through the sale of equity securities
      should we desire to do so. We are authorized to issue up to 200,000,000 shares
      of common stock, par value $.0001 per share. Our Board of Directors also has
      authority, without action or vote of the shareholders, to issue all or part
      of
      the authorized but unissued shares. Any such issuance will dilute the percentage
      ownership of shareholders and may further dilute the book value of our common
      stock. These issuances may also serve to enhance existing management's ability
      to maintain control of the Company.





**Our
      common stock is subject to the "Penny Stock" rules of the SEC and the trading
      market in our securities is limited, which makes transactions in our stock
      cumbersome and may reduce the value of an investment in our
      stock.**





The
      Securities and Exchange Commission has adopted Rule 15g-9 which establishes
      the
      definition of a "penny stock," for the purposes relevant to us, as any equity
      security that has a market price of less than $5.00 per share or option to
      acquire any equity security with an exercise price of less than $5.00 per share,
      subject to certain exceptions. For any transaction involving a penny stock,
      unless exempt, the rules require:





·
            That
                a broker or dealer approve a person's account for transactions in
                penny
                stocks; and





·
            The
                broker or dealer receives from the investor a written agreement to
                the
                transaction, setting forth the identity and quantity of the penny
                stock to
                be purchased.





In
      order
      to approve a person's account for transactions in penny stocks, the broker
      or
      dealer must:





·
            Obtain
                financial information and investment experience objectives of the
                person;
                and





·
            Make
                a reasonable determination that the transactions in penny stocks
                are
                suitable for that person and the person has sufficient knowledge
                and
                experience in financial matters to be capable of evaluating the risks
                of
                transactions in penny stocks.




19


The
      broker or dealer must also deliver, prior to any transaction in a penny stock,
      a
      disclosure schedule prescribed by the Commission relating to the penny stock
      market, which, in highlight form:





·
            Sets
                forth the basis on which the broker or dealer made the suitability
                determination; and





·
            Stipulates
                that the broker or dealer receives a signed, written agreement from
                the
                investor prior to the transaction.





Generally,
      brokers may be less willing to execute transactions in securities subject to
      the
      "penny stock" rules. This may make it more difficult for investors to dispose
      of
      our common stock and cause a decline in the market value of our
      stock.





Disclosure
      also has to be made about the risks of investing in penny stocks in both public
      offerings and in secondary trading and about the commissions payable to both
      the
      broker-dealer and the registered representative, current quotations for the
      securities and the rights and remedies available to an investor in cases of
      fraud in penny stock transactions. Finally, monthly statements have to be sent
      disclosing recent price information for the penny stock held in the account
      and
      information on the limited market in penny stocks.






**We
      have limited operating history upon which to base your investment
      decision** .





While
      we
      have commenced operations, we have a limited operating history available to
      evaluate the likelihood of the success of our business. Our prospects should
      be
      considered in light of the risks, expenses and uncertainties that may be
      encountered by development stage companies. Among other things, we must build
      our customer base, respond to competitive developments, attract, retain and
      motivate qualified employees and establish and maintain our technologies,
      products, and services on an ongoing basis. There can be no assurance that
      we
      will be successful in addressing such risks and implementing our business
      strategy.





As
      a
      result of our lack of operating history, and the other risks described herein,
      we are unable to accurately forecast our revenues. Our future expense levels
      are
      based predominately on our operating plans and estimates of future revenues,
      and
      to a large extent are fixed. We may be unable to adjust spending in a timely
      manner to compensate for revenues that do not materialize. Accordingly, any
      significant shortfall in revenues or lack of revenue would likely have an
      immediate material adverse effect on our business, operating results and
      financial condition.





Our
      ability to generate revenues will depend upon many factors. We will be required
      to build our business by implementing operational systems, hiring additional
      employees, developing and implementing a marketing and sales strategy and
      implementing our technology applications. Our expenses will initially exceed
      our
      revenues and no assurances can be made that we will become profitable or provide
      positive cash flows.





20


**Our
      management has limited experience with BDC’s.**





While
      we
      believe that our management possesses certain fundamental business skills that
      will increase our likelihood to succeed, our management team has never operated
      a BDC and must be considered as inexperienced when it comes to both the day
      to
      day operations of an investment company and the management of investments.
      We
      intend to rely on the general skills and business acumen of our management
      team
      as well as engaging other professionals and consultants from time to time to
      insure that our management gains the expertise to manage a BDC.





**The
      businesses in which we intend to invest are subject to macro, micro and global
      trends in business, finance, politics, and law** .





Our
      potential portfolio investments are located nationwide. Future unfavorable
      economic conditions, including those resulting from further or protracted
      economic instability or down turns cannot be estimated at this time due to
      the
      uncertainties associated with such economic conditions, and the extent to which
      the sale of portfolio company products will be affected thereby.





**The
      businesses in which we plan to invest are materially affected by
      competition** .





Our
      portfolio companies will face competition on a nationwide basis. Competition
      for
      their products will come from companies that may be larger, have more
      experienced management and be better financed that our portfolio
      companies.





**We
      may sustain substantial losses from fraud.**





The
      risk
      of fraud losses varies with, among other things, general economic conditions,
      and the effectiveness of security procedures utilized. However, although
      management believes that any loss due to fraud will be immaterial, there can
      be
      no assurance that fraud loss experience will not become material in amount.
      It
      must be noted that BDC’s are required to have in place certain safeguards which
      may render these risks from fraud to be nominal but these risks do exist and
      even requirements such as holding physical certificates of shares in portfolio
      companies in a safe do not, in and of themselves, eliminate the possibility
      of
      fraud.





**Restrictions
      imposed upon the resale of our capital stock may require you to hold your common
      stock for an indefinite period of time** .





None
      of
      the securities we have issued or will issue in the future, based upon current
      plans, will be registered under the Securities Act. The common stock we have
      sold is intended to be exempt from registration pursuant to Regulation E, which
      permits in conformity therewith, issuance of shares without restriction on
      further transfer. While we do not anticipate such an adverse decision or
      determination on the part of the Securities and Exchange Commission, you might
      be required to hold your common stock, either until our stock is registered
      under the Securities Act, or an exemption from the registration requirements
      of
      the Securities Act, and an exemption from the registration requirements of
      the
      blue-sky laws of your state, is available to you. Unless the certificates are
      sold pursuant to exemption, they will bear legends restricting subsequent
      transfers pursuant to the restrictions listed above as well as additional
      restrictions contained in our by-laws. As a result, you may not be able to
      liquidate your investment readily.





21


**You
      will suffer immediate and substantial dilution in the value of your investment,
      and it may be further diluted in the future** .





**The
      purchasers of our common stock will suffer an immediate and substantial dilution
      in the book value of their investment. We may sell additional equity in the
      future that may further dilute the value of your investment** .





Senior
      management may be granted the right, and other employees and consultants may
      have the right, under certain circumstances, to acquire additional shares of
      our
      common stock. If such a grant of a right occurred at a time where the price
      of
      the stock had fallen relative to the current market value and fell below the
      price paid by you, management might be given the right to purchase stock at
      a
      price below your cost. Additionally, reductions in the price of our stock
      resulting from the performance of our portfolio or other market conditions
      might
      result in stock being sold to investors, including management, at prices below
      the price paid by you. In either of these cases, the value of your investment
      would be further diluted.





**Your
      influence in matters requiring shareholder action will be
      limited** .





The
      officers and directors own less than a majority of the issued and outstanding
      shares of our voting securities (20.19% at February 5, 2008). While the number
      of shares controlled by the officers and directors is less than a majority,
      their position of control is material and significant.





**Pursuant
      to the Company’s Articles of Incorporation, the Company’s Board of Directors has
      the authority to issue shares of stock without any further vote or action by
      the
      stockholders. The issuance of stock under certain circumstances could have
      the
      effect of delaying or preventing a change in control of the
      Company** .




**We
      will have broad discretion in using the proceeds from sales of our common
      stock.**





Although
      we have identified generally the manner in which we expect to utilize the
      proceeds from sales of our common stock, we will have broad discretion in
      determining the specific uses of the proceeds. You will not have an opportunity
      to evaluate the basis for our decisions on the use of the proceeds, and will
      not
      be able to participate in such decisions. As discussed above, the use of
      proceeds may not be inconsistent with our goals and objectives of our operation
      as a BDC. However, we have not yet signed any contracts with any professionals
      or consultants; including those whose help or assistance is contemplated.
      Therefore, we can not accurately predict costs associated with such
      professionals and consultants. For that reason, the use of proceeds can not
      be
      determined with absolute certainty.




22


**ITEM
      2:**  **PROPERTIES**





On
      February 22, 2007, we entered into a lease agreement jointly with Five Oaks
      Capital Partners, LLC to lease a total of 5,041 square feet, commencing March
      26, 2007 through December 31, 2008. Our allocated share of the space is 2,000
      square feet and our monthly base rent is $3,980 in 2008.





Our
      office facilities are suitable and adequate for our business as it is presently
      conducted.





**ITEM
      3:**  **LEGAL
      PROCEEDINGS**





We
      are not currently subject to any legal proceedings, nor, to our knowledge,
      is
      any legal proceeding threatened against us. From time to time, we may be a
      party
      to certain legal proceedings in the ordinary course of business, including
      proceedings relating to the enforcement of our rights under contracts with
      our
      portfolio companies.





**ITEM
      4:**  **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**





There
      were no matters submitted to a vote of security holders during the fourth
      quarter.




23


**Part
      II**





**ITEM
      5:**  **MARKET
      FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**





Our
      common stock is currently listed on the electronic quotation and reporting
      service maintained by the National Association of Securities Dealers (“NASD”)
      and known as the “OTC Bulletin Board” or “OTCBB” system and trades under the
      symbol "CEEH".





The
      market closing, high and low prices during each quarter for the two years ended
      December 31, 2007, are as follows:




QUARTER
                  ENDED
              CLOSING
              HIGH
              LOWMarch
                  31,2007
              1.00
              1.10
              0.85June
                  30, 2007
              0.80
              1.00
              0.80September
                  30, 2007
              0.99
              1.00
              0.90December31,
                  2007
              0.52
              0.75
              0.51March
                  31,2006
              1.25
              1.25
              0.90June
                  30, 2006
              1.25
              1.25
              1.25September
                  30, 2006
              0.90
              1.25
              0.90December31,
                  2006
              1.10
              1.25
              0.50


**Number
      of Shareholders and Total Outstanding Shares**





As
      of
      February 29, 2008, there were 8,618,032 shares of common stock issued and
      outstanding, held by approximately 49 shareholders of record.





**Dividends
      on Common Stock**





We
      have
      not previously declared a cash dividend on our common stock and we do not
      anticipate the payment of dividends in the near future.





**Options**





None.





**Securities
      Authorized for Issuance under Equity Compensation Plans**





None.





**Recent
      Sales of Unregistered Securities**





Sales
      during the first three quarters of the fiscal year were reported in Item 2
      of
      Part II of the Form 10-Q filed for each quarter. There were no sales during
      the
      fourth quarter of 2007.




24


**ITEM
      6:**  **SELECTED
      FINANCIAL DATA**





The
      following table represents our selected financial and other data and has been
      derived from our audited financial statements for the years ended December
      31,
      2007, 2006, 2005 and 2004. The information below should be read in conjunction
      with Item 7: Management’s Discussion and Analysis of Financial Condition and
      Results of Operations” and our financial statements and the notes thereto
      included in Item 8 herein.




**2007**
              
              **2006**
              
              **2005**
              
              **2004****Statements
                  of Operations Data:**Income
                  from operations
              
              $
              574,675
              
              $
              127,243
              
              $
              4,798
              
              $
              -Expenses
              
              
              823,440
              
              
              532,186
              
              
              158,658
              
              
              18,818Net
                  loss from operations before taxes
              
              
              (248,765
              )
              
              (404,943
              )
              
              (153,860
              )
              
              (18,818
              )Income
                  tax benefit
              
              
              -
              
              
              -
              
              
              -
              
              
              -Net
                  loss from operations
              
              
              (248,765
              )
              
              (404,943
              )
              
              (153,860
              )
              
              (18,818
              )Net
                  realized and unrealized gains (losses)
              
              
              260,652
              
              
              205,730
              
              
              (18,319
              )
              
              3,500Net
                  increase (decrease) in net assetsfrom
                  operations
              
              $
              11,887
              
              $
              (199,213
              )
              $
              (172,179
              )
              $
              (15,318
              )Net
                  increase (decrease) in net assets fromoperations
                  per share, basic and diluted
              
              $
              0.0015
              
              $
              (0.0259
              )
              $
              (0.0328
              )
              $
              (0.0049
              )Weighted
                  average shares, basic and diluted
              
              
              7,995,528
              
              
              7,686,657
              
              
              5,245,319
              
              
              3,109,290Statements
                  of Net Assets Data:Investments
                  at fair value
              
              $
              3,736,566
              
              $
              2,345,470
              
              $
              257,000
              
              $
              128,500Investments
                  at cost
              
              
              3,292,229
              
              
              2,137,089
              
              
              222,819
              
              
              125,000Cash
                  and cash equivalents
              
              
              -
              
              
              124,311
              
              
              2,217,525
              
              
              500Total
                  assets
              
              
              3,824,543
              
              
              2,577,048
              
              
              2,537,036
              
              
              129,000Total
                  liabilities
              
              
              349,267
              
              
              163,659
              
              
              7,684
              
              
              15,698Net
                  assets
              
              $
              3,475,276
              
              $
              2,413,389
              
              $
              2,529,352
              
              $
              113,302Net
                  asset value per share
              
              $
              0.4171
              
              $
              0.3139
              
              $
              0.2939
              
              $
              0.0283Common
                  stock outstanding at year end
              
              
              8,332,318
              
              
              7,689,461
              
              
              8,606,211
              
              
              4,000,000





**ITEM
      7:**  **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.





25


**The
      Company**


Chanticleer
      filed an election to be treated as a BDC under the 1940 Act on May 23, 2005.
      In
      connection with this election, we have adopted corporate resolutions and are
      operating as a closed-end, non-diversified management investment company and
      as
      a BDC.





On
      April
      18, 2006, we formed Investors LLC and sold units for $5,000,000, of which we
      own
      $1,150,000 (23%) as of December 31, 2007. Investors LLC’s principal asset is a
      6%, convertible note in the amount of $5,000,000 with Hooters collateralized
      by
      and convertible into 2% of Hooters common stock. One-third of the interest
      is
      paid to us as a management fee and we share pro-rata with the other investors
      in
      the remaining 4% interest, which is distributed to the investors
      quarterly.





On
      July
      31, 2006, we formed Investors II. Investors II began raising funds in January
      2007 for the purpose of investing in publicly traded value securities.





In
      January 2007, we formed Advisors, as a wholly owned subsidiary to manage
      Investors II, as well as, other investments.





**Management’s
      Analysis of Business**


We
      have
      significant relative flexibility in selecting and structuring our investments.
      We are not subject to many of the regulatory limitations that govern traditional
      lending institutions such as banks. We seek to structure our investments so
      as
      to take into account the uncertain and potentially variable financial
      performance of our portfolio companies. This should enable our portfolio
      companies to retain access to committed capital at different stages in their
      development and eliminate some of the uncertainty surrounding their capital
      allocation decisions. We calculate rates of return on invested capital based
      on
      a combination of up-front commitment fees, current and deferred interest rates
      and residual values, which may take the form of common stock, warrants, equity
      appreciation rights or future contract payments. We believe that this flexible
      approach to structuring investments will facilitate positive, long-term
      relationships with our portfolio companies and enable us to become a preferred
      source of capital to them. We also believe our approach should enable debt
      financing to develop into a viable alternative capital source for funding the
      growth of target companies that wish to avoid the dilutive effects of equity
      financings for existing equity holders.





Longer
      Investment Horizon - We are not subject to periodic capital return requirements.
      These requirements, which are standard for most private equity and venture
      capital funds, typically require that these funds return to investors the
      initial capital investment after a pre-agreed time, together with any capital
      gains on such capital investment. These provisions often force such funds to
      seek the return of their investments in portfolio companies through mergers,
      public equity offerings or other liquidity events more quickly than they
      otherwise might, which can result in a lower overall return to investors and
      adversely affect the ultimate viability of the affected portfolio companies.
      Because we may invest in the same portfolio companies as these funds, we are
      subject to these risks if these funds demand a return on their investments
      in
      the portfolio companies. We believe that our flexibility to take a longer-term
      view should help us to maximize returns on our invested capital while still
      meeting the needs of our portfolio companies.





26


Established
      Deal Sourcing Network - We believe that, through our management and directors,
      we have solid contacts and sources from which to generate investment
      opportunities. These contacts and sources include:





·
            public
                and private companies,


·
            investment
                bankers,


·
            attorneys,


·
            accountants,


·
            consultants,
                and


·
            commercial
                bankers.





However,
      we cannot assure you that such relationships will lead to the origination of
      debt or other investments.





**Investment
      Criteria**





As
      a
      matter of policy, we will not purchase or sell real estate or interests in
      real
      estate or real estate investment trusts except that we may:





·
            purchase
                and sell real estate or interests in real estate in connection with
                the
                orderly liquidation of investments, or in connection with foreclosure
                on
                collateral;


·
            own
                the securities of companies that are in the business of buying, selling
                or
                developing real estate; or


·
            finance
                the purchase of real estate by our portfolio
                companies.





We
      limit
      our investments in more traditional securities (stock and debt instruments)
      and
      will not, as a matter of policy:




·
            sell
                securities short except with regard to managing the risks associated
                with
                publicly-traded securities issued by our portfolio
                companies;


·
            purchase
                securities on margin (except to the extent that we may purchase securities
                with borrowed money); or


·
            engage
                in the purchase or sale of commodities or commodity contracts, including
                futures contracts except where necessary in working out distressed
                loans.





Prospective
      Portfolio Company Characteristics - We have identified several criteria that
      we
      believe prove important in seeking our investment objective with respect to
      target companies. These criteria provide general guidelines for our investment
      decisions; however, we caution readers that not all of these criteria are
      satisfied by each prospective portfolio company in which we choose to invest.





27


Experienced
      Management - We generally require that our portfolio companies have an
      experienced president or management team. We also require the portfolio
      companies to have in place proper incentives to induce management to succeed
      and
      to act in concert with our interests as investors, including having significant
      equity interests. We provide assistance in this area by either consulting with
      management or by providing management for our portfolio companies.




Products
      or Services - We seek companies that are involved in products or services that
      do not require significant additional capital or research expenditures. In
      general, we seek target companies that make innovative use of proven
      technologies or methods.





Proprietary
      Advantage - We favor companies that can demonstrate some kind of proprietary
      sustainable advantage with respect to their competition. Proprietary advantages
      include, but are not limited to:





·
            patents
                or trade secrets with respect to owning or manufacturing its products,
                and


·
            a
                demonstrable and sustainable marketing advantage over its
                competition.





Marketing
      strategies impose unusual burdens on management to be continuously ahead of
      its
      competition, either through some kind of technological advantage or by being
      continuously more creative than its competition.





Profitable
      or Nearly Profitable Operations Based on Cash Flow from Operations - We focus
      on
      target companies that are profitable or nearly profitable on an operating cash
      flow basis. Typically, we would not expect to invest in start-up companies
      unless there is a clear exit strategy in place.





Potential
      for Future Growth - We generally require that a prospective target company,
      in
      addition to generating sufficient cash flow to cover its operating costs and
      service its debt, demonstrate an ability to increase its revenues and operating
      cash flow over time. The anticipated growth rate of a prospective target company
      will be a key factor in determining the value that we ascribe to any warrants
      or
      other equity securities that we may acquire in connection with an investment
      in
      debt securities.





Exit
      Strategy - Prior to making an investment in a portfolio company, we analyze
      the
      potential for that company to increase the liquidity of its common equity
      through a future event that would enable us to realize appreciation, if any,
      in
      the value of our equity interest. Liquidity events may include:





·
            an
                initial public offering,


·
            a
                private sale of our equity interest to a third party,


·
            a
                merger or an acquisition of the portfolio company, or


·
            a
                purchase of our equity position by the portfolio company or one of
                its
                stockholders.




28


We
      may
      acquire warrants to purchase equity securities and/or convertible preferred
      stock of the eligible portfolio companies in connection with providing
      financing. The terms of the warrants, including the expiration date, exercise
      price and terms of the equity security for which the warrant may be exercised,
      will be negotiated individually with each eligible portfolio company, and will
      likely be affected by the price and terms of securities issued by the eligible
      portfolio company to other venture capitalists and other holders. We anticipate
      that most warrants will be for a term of five to ten years, and will have an
      exercise price based upon the price at which the eligible portfolio company
      most
      recently issued equity securities or, if a new equity offering is imminent,
      equity securities. The equity securities for which the warrant will be exercised
      generally will be common stock of which there may be one or more classes of
      convertible preferred stock. Substantially all the warrants and underlying
      equity securities will be restricted securities under the 1933 Act at the time
      of the issuance. We will generally negotiate for registration rights with the
      issuer that may provide:





·
            “piggyback"
                registration rights, which will permit us under certain circumstances,
                to
                include some or all of the securities owned by us in a registration
                statement filed by the eligible portfolio company, or


·
            in
                some circumstances, "demand" registration rights permitting us under
                certain circumstances, to require the eligible portfolio company
                to
                register the securities under the 1933 Act, in some cases at our
                expense.
                We will generally negotiate net issuance provisions in the warrants,
                which
                will allow us to receive upon exercise of the warrants without payment
                of
                any cash a net amount of shares determined by the increase in the
                value of
                the issuer's stock above the exercise price stated in the warrant.





Liquidation
      Value of Assets - Although we do not intend to operate as an asset-based lender,
      the prospective liquidation value of the assets, if any, collateralizing any
      debt securities that we hold will be an important factor in our credit analysis.
      We will emphasize both tangible assets, such as:





·
            accounts
                receivable,


·
            inventory,
                and


·
            equipment,





and
      intangible assets, such as:





·
            intellectual
                property,


·
            customer
                lists,


·
            networks,
                and


·
            databases.




29


**Investment
      Process**





Due
      Diligence - If a target company generally meets the characteristics described
      above, we will perform initial due diligence, including:





·
            company
                and technology assessments,


·
            existing
                management team,


·
            market
                analysis,


·
            competitive
                analysis,


·
            evaluation
                of management, risk analysis and transaction size,


·
            pricing,
                and


·
            structure
                analysis.





Much
      of
      this work will be done by management and professionals who are well known by
      management. The criteria delineated above provide general parameters for our
      investment decisions. We intend to pursue an investment strategy by further
      imposing such criteria and reviews that best insures the value of our
      investments. As unique circumstances may arise or be uncovered, not all of
      such
      criteria will be satisfied in each instance but the process provides a guideline
      by which investments can be prudently made and managed. Upon successful
      completion of the preliminary evaluation, we will decide whether to deliver
      a
      non-binding letter of intent and move forward towards the completion of a
      transaction.





In
      our
      review of the management team, we look at the following:





·
            Interviews
                with management and significant shareholders, including any financial
                or
                strategic sponsor;


·
            Review
                of financing history;


·
            Review
                of management's track record with respect
                to:


o
            product
                development and marketing,


o
            mergers
                and acquisitions,


o
            alliances,


o
            collaborations,
                and


o
            research
                and development outsourcing and other strategic activities;


·
            Assessment
                of competition; and


·
            Review
                of exit strategies.





In
      our
      review of the financial conditions, we look at the following:





·
            Evaluation
                of future financing needs and plans;


·
            Detailed
                analysis of financial performance;


·
            Development
                of pro forma financial projections; and


·
            Review
                of assets and liabilities, including contingent liabilities, if any,
                and
                legal and regulatory risks.





In
      our
      review of the products and services of the portfolio company, we look at the
      following:


·
            Evaluation
                of intellectual property position; ·
            Review
                of existing customer or similar agreements and arrangements; ·
            Analysis
                of core technology; ·
            Assessment
                of collaborations;  30
 
 ·
            Review
                of sales and marketing procedures; and ·
            Assessment
                of market and growth potential.




Upon
      completion of these analyses, we will conduct on-site visits with the target
      company's management team. Also, in cases in which a target company is at a
      mature stage of development and if other matters warrant such an evaluation,
      we
      will obtain an independent appraisal of the target company.





**Ongoing
      Relationships with Portfolio Companies**





Monitoring
      - We continuously monitor our portfolio companies in order to determine whether
      they are meeting our financing criteria and their respective business plans.
      We
      may decline to make additional investments in portfolio companies that do not
      continue to meet our financing criteria. However, we may choose to make
      additional investments in portfolio companies that do not do so, if we believe
      they will perform well in the future.





We
      monitor the financial trends of each portfolio company to assess the appropriate
      course of action for each company and to evaluate overall portfolio quality.
      Our
      management team and consulting professionals closely monitor the status and
      performance of each individual company on at least a quarterly and, in some
      cases, a monthly basis.





We
      use
      several methods of evaluating and monitoring the performance and fair value
      of
      our debt and equity positions, including but not limited to the following:





·
            Assessment
                of business development success, including product development,
                financings, profitability and the portfolio company's overall adherence
                to
                its business plan;


·
            Periodic
                and regular contact with portfolio company management to discuss
                financial
                position, requirements and
                accomplishments;


·
            Periodic
                and regular formal update interviews with portfolio company management
                and, if appropriate, the financial or strategic sponsor;


·
            Attendance
                at and participation in board meetings;
                and


·
            Review
                of monthly and quarterly financial statements and financial projections
                for portfolio companies.





Managerial
      Assistance - As a business development company, we offer, and in many cases
      provide, significant managerial assistance to our portfolio companies. This
      assistance will typically involve:





·
            monitoring
                the operations of our portfolio companies,


·
            participating
                in their board and management meetings,


·
            consulting
                with and advising their officers, and


·
            providing
                other organizational and financial guidance.




31


**Investment
      Amounts**





The
      amount of funds committed to a portfolio company and the ownership percentage
      received will vary depending on the maturity of the portfolio company, the
      quality and completeness of the portfolio company's management team, the
      perceived business opportunity, the capital required compared to existing
      capital, and the potential return. Although investment amounts will vary
      considerably, we expect that the average investment, including follow-on
      investments, will be between $25,000 and $1,000,000.





**Competition**





Our
      primary competitors that provide financing to target companies include private
      equity and venture capital funds, other equity and non-equity based investment
      funds and investment banks and other sources of financing, including traditional
      financial services companies such as commercial banks and specialty finance
      companies. Many of these entities have substantially greater financial and
      managerial resources than we have. We believe that our competitive advantage
      with regard to quality target companies relates to our ability to negotiate
      flexible terms and to complete our review process on a timely basis. We cannot
      assure you that we will be successful in implementing our
      strategies.






**LIQUIDITY
      AND CAPITAL RESOURCES**





At
      December 31, 2007, we had a bank overdraft of $25,736, notes payable of
      $165,272, accounts payable and accrued expenses of $29,704 and accounts
      receivable of $18,900 for a net short-term liability of $201,812. In January
      2008, we sold 285,714 shares of our common stock pursuant to our 1-E for
      $200,000.





Our
      expenses have averaged approximately $200,000 per quarter, excluding
      depreciation. They were $284,000 during the fourth quarter. Accordingly, our
      projected expenses should be between $800,000 and $1,100,000 for 2008. Our
      cash
      revenue from existing investments is projected to be $150,000 and we sold
      $200,000 in common stock pursuant to our 1-E in January 2008, which leaves
      a
      shortage of $450,000 to $750,000.





We
      expect
      to need $325,000 for additional investments with HOA, which would increase
      our
      remaining requirement to from $775,000 to $1,075,000. We are completing a new
      1-E which should be filed before the end of March 2008. We expect to raise
      approximately $1,000,000 from the 1-E, which, together with our line-of-credit
      should provide sufficient capital to meet 2008 requirements.





Most
      of
      our investments are long-term and are not liquid. In order to meet our projected
      cash requirements we will need to obtain other income sources, continue to
      make
      sales of our common stock pursuant to a 1-E, use our $250,000 line of credit
      to
      meet short-term requirements and possibly liquidate some investments. There
      can
      be no assurance that our efforts will be adequate to meet projected
      requirements.





32





**SUBSEQUENT
      EVENT**





On
      March
      11, 2008, the Company announced it has 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 is anticipated to close on or before July 31,
      2008. The final purchase price will be determined after the completion of the
      2007 fiscal year audit.





The
      closing of the transaction is subject to Chanticleer raising the necessary
      debt
      and equity financing to complete the acquisition. In addition, Chanticleer
      will
      have to convert from its current SEC status as a BDC to an operating company
      prior to closing the transaction. Chanticleer has retained an investment banking
      firm to assist in securing the equity capital necessary to close the proposed
      transaction.





HI
      was
      founded in 1983 and was the creator of the Hooters brand and concept. In 1984,
      HI licensed Neighborhood Restaurants of America, n/k/a Hooters of America,
      Inc.
      (“HOA”), owned by a separate group of shareholders, to be its exclusive licensee
      in the development and expansion of its restaurant business. In 2001 HI went
      on
      to sell the Hooters trademarks and other related proprietary rights to HOA.
      HI
      retained and continues to own certain rights including a perpetual irrevocable
      license agreement with greatly reduced royalties, to operate its restaurants
      in
      its retained territories and, most importantly, to acquire franchisees within
      the Hooters system. These rights will be acquired by Chanticleer as a part
      of
      the transaction.





Chanticleer
      has an existing relationship with HOA through its position as the lead investor
      in a $5 million, 6% convertible three-year promissory note from Robert Brooks,
      the former Chairman of HOA. This note is secured by and contains conversion
      options into 2% of Hooters of America outstanding stock. Chanticleer was also
      granted a right of first refusal and a right to match any equity financing
      proposed to, or sought by, HOA. Additionally, Chanticleer currently holds an
      Option Agreement with HOA to open Hooters franchises in the Republic of South
      Africa which is under development. The entire Hooters system, consisting of
      433
      restaurants in 28 countries, is currently celebrating its 25 th anniversary with events on the 25 th of each
      month and a grand pageant in Miami on July 23, 2008.





HI
      was
      the creator of the Hooters brand and concept and currently owns and operates
      22
      restaurants, which comprise the highest average unit gross sales within the
      Hooters system, and includes locations in and around Tampa, Florida, Chicago,
      Illinois and the Manhattan regions, including the original Hooters restaurant
      located in Clearwater, Florida. These are the operations of HI being acquired
      by
      Chanticleer.




33


**RESULTS
      OF OPERATIONS**





Income
      from operations


Our
      income from operations was $574,675 in 2007, $127,243 in 2006 and $4,798 in
      2005. We only had nominal revenue in 2005 since the funding from our initial
      1-E
      offering did not commence until late in 2005. In 2006, we made our investment
      in
      Chanticleer Investors, LLC which earned $99,400 (78% of total revenue) during
      the approximately 8 months the investment was held. In 2007, this investment
      generated $146,000 in cash revenues. We had non-cash revenues of $425,046,
      which
      included 196,900 shares of Special Projects for management services performed
      which were valued at $39,380 based upon the value established by the Investment
      Committee and 342,814 shares of Syzygy Entertainment, Ltd. for management
      services to be performed between April 1, 2007 and March 31, 2008 by our CEO.
      The shares were valued at $514,221 by our Investment Committee and the related
      revenue has been deferred and is being amortized to income over the period
      earned. As of December 31, 2007, $385,666 has been included in income and
      $128,555 is in deferred revenue.





Expenses


Expenses
      amounted to $823,440 in 2007, $532,186 in 2006 and $158,658 in 2005. The 2005
      period only represented approximately one-have of a year with costs associated
      with the initial 1-E filing and raising money at the end of the period. During
      2006, we increased staff by March 2006 and began focusing our efforts on our
      business operation as a BDC. Professional fees and travel costs increased as
      we
      monitored our investments and continued to seek additional opportunities. In
      2007, our professional fees increased $203,426. This includes an increase of
      $165,411 in consulting and legal fees and $43,950 in accounting and auditing
      fees. The consulting and legal fees increase is primarily related to deal
      analysis and structure, a good portion of which should be returned in the form
      of management fees in 2008. The increase in accounting and auditing includes
      an
      increase of $12,000 related to accounting and other BDC related issues and
      the
      remainder is related to increases in audit costs.






**NET
      REALIZED AND UNREALIZED GAINS (LOSSES) IN NON-CONTROLLED, NON-AFFILIATED
      INVESTMENTS**





As
      an
      investment company under the Investment Company Act of 1940, all of our
      investments must be carried at market value or fair value as determined by
      management for investments which do not have readily determinable market values.
      Prior to this conversion, only marketable debt and equity securities and certain
      derivative securities were required to be carried at market value.





Beginning
      May 23, 2005, portfolio assets for which market prices are available are valued
      at those prices. Securities that are traded in the over-the-counter market
      or on
      a stock exchange generally will be valued at the prevailing bid price on the
      valuation date. However, some of our current investments were acquired in
      privately negotiated transactions and may have no readily determinable market
      values. These securities are carried at fair value as determined by management
      and outside professionals as necessary under our valuation policy. Currently,
      the valuation policy provides for management’s review of the management team,
      financial conditions, and products and services of the portfolio company. In
      situations that warrant such an evaluation, an independent business valuation
      may be obtained.





34


Value,
      as
      defined in Section 2(a)(41) of the 1940 Act, is (i) the market price for those
      securities for which a market quotation is readily available and (ii) for all
      other securities and assets, fair value as determined in good faith by
      management. There is no single standard for determining fair value in good
      faith. As a result, determining fair value requires that judgment be applied
      to
      the specific facts and circumstances of each portfolio investment. We must
      determine the fair value of each individual investment on a quarterly basis.
      We
      will record unrealized depreciation on investments when we believe that an
      investment has become impaired, including where realization of an equity
      security is doubtful. Conversely, we will record unrealized appreciation if
      we
      believe that the underlying portfolio company has appreciated in value and,
      therefore, its investment has also appreciated in value, where
      appropriate.





As
      an
      investment company, we invest primarily in illiquid securities including equity
      securities of private companies. The structure of each equity security is
      specifically negotiated to enable us to protect our investment and maximize
      our
      returns. We generally include many terms governing ownership parameters,
      dilution parameters, liquidation preferences, voting rights, and put or call
      rights. Our investments are generally subject to some restrictions on resale
      and
      generally have no established trading market. Because of the type of investments
      that we make and the nature of our business, our valuation process requires
      an
      analysis of various factors. Our fair value methodology includes the examination
      of, among other things, the underlying investment performance, financial
      condition and market changing events that impact valuation.





Investment
      activity during the past two years may be summarized as follows:




**2007**
            
            **2006**Balance
                at cost, beginning of year
            
            $
            2,137,089
            
            $
            222,819Acquisition
                of investments:For
                cash
            
            
            68,010
            
            
            2,327,732For
                a note
            
            
            70,000
            
            
            -Contributed
                by the CEO
            
            
            600,000
            
            
            -Form
                consulting and other services rendered
            
            
            553,600
            
            
            -Deposit
                reclassified as an investment
            
            
            20,000
            
            
            -Cost
                of investments sold:For
                cash
            
            
            (156,470
            )
            
            (413,462
            )Balance
                at cost, end of year
            
            
            3,292,229
            
            
            2,137,089Unrealized
                appreciation
            
            
            444,337
            
            
            208,381Market
                value, end of year
            
            $
            3,736,566
            
            $
            2,345,470




Our
      valuation process and the results of our individual investments are included
      in
      note 3 to the financial statements. In addition to the unrealized gain from
      our
      investments at the end of 2007 and 2006, we had a realized gain on sale of
      investments of $24,696 in 2007 and a realized gain on sale of investments of
      $31,530 in 2006.





35





**NET
      ASSET VALUE**





As
      a BDC, certain of our activities and disclosures are made in reference to NAV
      which is the value of our portfolio assets less debt and preferred stock. This
      may be viewed, simply and generalized, as the value of our assets to our common
      shareholders. As of the date of the financial information in this report, the
      value of our portfolio of assets including investments in equity securities
      and
      cash is $3,824,543 and from this, are subtracted liabilities and debts of
      $349,267. There are no shares of preferred stock outstanding but the rights
      of
      preferred stockholders would be included as a deduction if there were. The
      NAV
      is therefore $3,475,276. The NAV/S is $0.4171.






**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.
      Management does not believe any of these accounting pronouncements has had
      or
      will have a material impact on the Company’s financial position or operating
      results.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measures”. This
      Statement defines fair value, establishes a framework for measuring fair value
      in generally accepted accounting principles, expands disclosures about fair
      value measurements, and applies under other accounting pronouncements that
      require or permit fair value measurements. SFAS No. 157 does not require any
      new
      fair value measurements. However, the FASB anticipates that for some entities,
      the application of SFAS No. 157 will change current practice. SFAS No. 157
      is
      effective for fiscal years beginning after November 15, 2007, which for the
      Company would be its fiscal year beginning January 1, 2008. The Company is
      currently evaluating the impact of SFAS No. 157 but does not expect that it
      will
      have a material impact on its financial statements.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities.” This statement permits entities to
      choose to measure many financial instruments and certain other items at fair
      value that are not currently required to be measured at fair value. SFAS No.
      159
      is effective for fiscal years beginning after November 15, 2007, which for
      the
      Company would be its fiscal year beginning January 1, 2008. The Company is
      currently evaluating the impact of SFAS No. 159, but does not expect that it
      will have a material impact on its financial statements.






**CRITICAL
      ACCOUNTING POLICIES**




The
      SEC
      issued Financial Reporting Release No. 60, “Cautionary Advice Regarding
      Disclosure about Critical Accounting Policies” (“FRR 60”), suggesting companies
      provide additional disclosure and commentary on their most critical accounting
      policies. In FRR 60, the SEC defined the most critical accounting policies
      as
      the ones that are most important to the portrayal of a company’s financial
      condition and operating results, and require management to make its most
      difficult and subjective judgments, often as a result of the need to make
      estimates of matters that are inherently uncertain. Based on this definition
      our
      most critical accounting policy is the valuation of our investments. The
      methods, estimates and judgments we use in applying this accounting policy
      has a
      significant impact on the results we report in our financial
      statements.





36


Pursuant
      to the requirements of the 1940 Act, our Board of Directors is responsible
      for
      determining in good faith the fair value of our investments for which market
      quotations are not readily available.





We
      determine fair value to be the amount for which an investment could be exchanged
      in an orderly disposition over a reasonable period of time between willing
      parties other than in a forced or liquidation sale. Our valuation process is
      intended to provide a consistent basis for determining the fair value of the
      portfolio. We will record unrealized depreciation on investments when we believe
      that an investment has become impaired, including where realization of an equity
      security is doubtful. We will record unrealized appreciation if we believe
      that
      the underlying portfolio company has appreciated in value and, therefore, our
      equity security has also appreciated in value.





Our
      equity interest in portfolio companies for which there is no liquid public
      market are valued using industry valuation benchmarks, and then the value is
      assigned a discount reflecting the illiquid nature of the investment as well
      as
      our minority, non-control position. When an external event such as a purchase
      transaction, public offering, or subsequent equity sale occurs, the pricing
      indicated by the external event is used to corroborate our valuation. The
      determined values are generally discounted to account for restrictions on resale
      and minority ownership positions, if applicable.





**OFF-BALANCE
      SHEET ARRANGEMENTS**





Our
      only
      off-balance sheet arrangement is the operating lease for our office. On
      February 22, 2007, we entered into a lease agreement jointly with Five Oaks
      Capital Partners, LLC to lease a total of 5,041 square feet, commencing March
      26, 2007 through December 31, 2008. Our allocated share of the space is 2,000
      square feet and our monthly base rent is $3,980 in 2008.





**TABULAR
      DISCLOSURE OF CONTRACTUAL OBLIGATIONS**




**Payments
                  due by period****Total**
              
              **Year
                  1**
              
              **Years
                  2-3**
              
              **Years
                  4-5**
              
              **Over
                  5**Operating
                  lease for corporateoffice
              
              $
              47,760
              
              $
              47,760
              
              $
              -
              
              $
              -
              
              $
              -


37




**ITEM
      7A:**  **QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**






Market
      risk is the risk of loss arising from adverse changes in market rates and
      prices. We are primarily exposed to equity price risk. The following is a
      discussion of our equity price risk.





Equity
      price risk arises from exposure to securities that represent an ownership
      interest in our portfolio companies. The value of our equity securities and
      our
      other investments are based on quoted market prices or our Board of Directors’
good faith determination of their fair value (which may be based, in part,
      on
      quoted market prices). Market prices of common equity securities, in general,
      are subject to fluctuations, which could cause the amount to be realized upon
      sale or exercise of the instruments to differ significantly from the current
      reported value. The fluctuations may result from perceived changes in the
      underlying economic characteristics of our portfolio companies, the relative
      price of alternative investments, general market conditions and supply and
      demand imbalances for a particular security.




38


**ITEM
      8:**  **FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA**






CHANTICLEER
      HOLDINGS, INC.


INDEX
      TO
      FINANCIAL STATEMENTS AND SCHEDULES






PageReport
                  of Independent Registered Public Accounting Firm
              40Statements
                  of Net Assets at December 31, 2007 and 2006
              41Statements
                  of Operations for the Years Ended December 31, 2007, 2006 and
                  2005
              42Statements
                  of Cash Flows for the Years Ended December 31, 2007, 2006 and
                  2005
              43Statements
                  of Changes in Net Assets for the Years Ended December 31, 2007,
                  2006 and
                  2005
              45Schedules
                  of Investments at December 31, 2007 and 2006
              46Notes
                  to Financial Statements
              49Financial
                  Highlights for the Years Ended December 31, 2007, 2006 and
                  2005
              65


39


**CREASON
      & ASSOCIATES, P.L.L.C.**


**7170
      S. Braden Ave., Suite 100**


**Tulsa,
      Oklahoma 74136**





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACOUNTING FIRM**





To
      the
      Board of Directors and Stockholders


Chanticleer
      Holdings, Inc.:





We
      have
      audited the accompanying statements of net assets, of Chanticleer Holdings,
      Inc.
      (the "Company"),
      including the schedules of investments, as of December 31, 2007 and 2006,
      and the related statements of operations, cash
      flows andchanges in net assets,
      and the
      financial highlightsfor the years ended December 31, 2007, 2006 and
      2005. These financial statements andfinancial highlightsare the responsibility of the Company's management.
      Our responsibility is to express an opinion on these financial statements and
      financial
      highlightsbased on our audits.




We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audits to obtain reasonable assurance about whether the
      consolidated financial statements are free of material misstatement. The Company
      is not required to have, nor were we engaged to perform, an audit of its
      internal control over financial reporting. Our audits included consideration
      of
      internal control over financial reporting as a basis for designing audit
      procedures that are appropriate in the circumstances, but not for the purpose
      of
      expressing an opinion on the effectiveness of the Company’s internal control
      over financial reporting. Accordingly, we express no such opinion. An audit
      also
      includes examining, on a test basis, evidence supporting the amounts and
      disclosures in the consolidated financial statements, assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall consolidated financial statement presentation. We believe
      that our audits provide a reasonable basis for our opinion.




In
        our
        opinion, the financial statements and financial highlights referred to above
        present fairly, in all material respects, the financial position of Chanticleer
        Holdings, Inc. as of December 31, 2007 and 2006, and the results of its
        operations, its cash flows, changes in its net assets, and its financial
        highlights for the years ended December 31, 2007, 2006 and 2005, in conformity
        with accounting principles generally accepted in the United States of America.


/s/Creason
      & Associates, P.L.L.C.


Tulsa,
      Oklahoma


March
      27,
      2008


40


**Chanticleer
                  Holdings, Inc.****Statements
                  of Net Assets****As
                  of December 31, 2007 and 2006****2007**
              
              **2006****ASSETS**Investments:Non-affiliates
                  (cost: 2007 - $942,565; 2006 - $987,089)
              
              $
              992,345
              
              $
              1,195,470Affiliates:Uncontrolled
                  (cost: 2007 - $1,114,221)
              
              
              964,221
              
              
              -Contolled
                  (cost: 2007 - $1,235,443; 2006 - $1,150,000)
              
              
              1,780,000
              
              
              1,150,000Total
                  investments
              
              
              3,736,566
              
              
              2,345,470Cash
                  and cash equivalents
              
              
              -
              
              
              124,311Accounts
                  receivable, controlled affiliate investment
              
              
              18,900
              
              
              31,481Prepaid
                  expenses and other assets
              
              
              19,560
              
              
              19,996Fixed
                  assets, net
              
              
              45,537
              
              
              33,290Deposits
              
              
              3,980
              
              
              22,500TOTAL
                  ASSETS
              
              
              3,824,543
              
              
              2,577,048**LIABILITIES**Notes
                  payable
              
              
              165,272
              
              
              150,704Accounts
                  payable
              
              
              25,554
              
              
              12,614Accrued
                  expenses
              
              
              4,150
              
              
              341Deferred
                  revenue
              
              
              128,555
              
              
              -Bank
                  overdraft
              
              
              25,736
              
              
              -TOTAL
                  LIABILITIES
              
              
              349,267
              
              
              163,659**NET
                  ASSETS**
              
              $
              3,475,276
              
              $
              2,413,389Commitments
                  and contingencies**COMPOSITION
                  OF NET ASSETS**Common
                    stock: $0.0001 par value; authorized 200,000,000 shares; issued
                    and
                    outstanding 8,332,318 shares and 7,689,461 shares at December
                    31, 2007 and
                    2006, respectively
              
              $
              833
              
              $
              769Additional
                  paid in capital
              
              
              3,849,767
              
              
              2,799,831Retained
                  earnings (deficit):Accumulated
                  net operating loss
              
              
              (826,887
              )
              
              (578,122
              )Net
                  realized gain (loss) on investments
              
              
              7,226
              
              
              (17,470
              )Net
                  unrealized appreciation of investments
              
              
              444,337
              
              
              208,381**NET
                  ASSETS**
              
              $
              3,475,276
              
              $
              2,413,389**NET
                  ASSET VALUE PER SHARE**
              
              $
              0.4171
              
              $
              0.3139
  See
                  accompanying notes to financial statements.
  41


**Chanticleer
                  Holdings, Inc.****Statements
                  of Operations****For
                  the Years Ended December 31, 2007, 2006 and
                  2005**
  **2007**
              
              **2006**
              
              **2005****Income
                  from operations:**Interest
                  and dividend incomeNon-affiliates
              
              $
              3,629
              
              $
              27,843
              
              $
              4,798Affiliates
              
              
              46,000
              
              
              35,233
              
              
              -Management
                  fee incomeNon-affiliates
              
              
              39,380
              
              
              -
              
              
              -Affiliates
              
              
              485,666
              
              
              64,167
              
              
              -574,675
              
              
              127,243
              
              
              4,798**Expenses:**Salaries
                  and wages
              
              
              238,877
              
              
              200,942
              
              
              72,842Professional
                  fees
              
              
              268,199
              
              
              64,773
              
              
              34,858Insurance
              
              
              23,245
              
              
              32,285
              
              
              7,861Rent
              
              
              46,083
              
              
              31,198
              
              
              6,449Travel
                  and entertainment
              
              
              112,911
              
              
              60,858
              
              
              4,112Interest
                  expense
              
              
              10,757
              
              
              8,132
              
              
              810Loss
                  on sale of assets
              
              
              713
              
              
              -
              
              
              -Other
                  selling, general and administrative expense
              
              
              122,655
              
              
              133,998
              
              
              31,726823,440
              
              
              532,186
              
              
              158,658**Loss
                  before income taxes**
              
              
              (248,765
              )
              
              (404,943
              )
              
              (153,860
              )**Income
                  tax benefit**
              
              
              -
              
              
              -
              
              
              -**Net
                  loss from operations**
              
              
              (248,765
              )
              
              (404,943
              )
              
              (153,860
              )**Net
                  realized and unrealized gains (losses) in****investments:**Net
                    realized gain (loss) on investment, net of provision for income
                    tax of $0
                    in 2007, 2006 and 2005
              
              
              24,696
              
              
              31,530
              
              
              (49,000
              )Change
                    in unrealized appreciation of investments, net of deferred tax
                    expense of
                    $0 in 2007, 2006 and 2005
              
              
              235,956
              
              
              174,200
              
              
              30,681**Net
                  increase (decrease) in net assets from operations**
              
              $
              11,887
              
              $
              (199,213
              )
              $
              (172,179
              )**Net
                    increase (decrease) in net assets from operations**per
                    share, basic and diluted
              
              $
              0.0015
              
              $
              (0.0259
              )
              $
              (0.0328
              )**Weighted
                  average shares outstanding**
              
              
              7,995,528
              
              
              7,686,657
              
              
              5,245,319
  See
                  accompanying notes to financial statements.
  42


**Chanticleer
                  Holdings, Inc.****Statements
                  of Cash Flows****For
                  the Years Ended December 31, 2007, 2006 and
                  2005**
  **2007**
              
              **2006**
              
              **2005****Cash
                  flows from operating activities:**Net
                  increase (decrease) in net assets from operations
              
              $
              11,887
              
              $
              (199,213
              )
              $
              (172,179
              )Adjustments
                    to reconcile net increase (decrease) in net assetsfrom operations
                    to net cash used in operating activities:Change
                  in unrealized appreciation of investments
              
              
              (235,956
              )
              
              (174,200
              )
              
              (30,681
              )Consulting
                    and other services rendered in exchange forinvestment
                    securities
              
              
              (553,600
              )
              
              -
              
              
              -Depreciation
              
              
              8,860
              
              
              7,973
              
              
              1,394(Gain)
                  loss on sale of investments
              
              
              (24,696
              )
              
              (31,530
              )
              
              49,000Loss
                  on sale of fixed assets
              
              
              713
              
              
              -
              
              
              -(Increase)
                  decrease in accounts receivable
              
              
              12,581
              
              
              (30,433
              )
              
              -Increase
                  in prepaid expenses and other assets
              
              
              (1,043
              )
              
              (16,097
              )
              
              (27,446
              )Increase
                  in accounts payable and accrued expenses
              
              
              16,749
              
              
              5,270
              
              
              40,003Increase
                  in deferred revenue
              
              
              128,555
              
              
              -
              
              
              -Net
                  cash used in operating activities
              
              
              (635,950
              )
              
              (438,230
              )
              
              (139,909
              )**Cash
                  flows from investing activities:**Purchase
                  of investments
              
              
              (68,010
              )
              
              (2,327,732
              )
              
              (196,819
              )Proceeds
                  from sale of investments
              
              
              181,166
              
              
              444,992
              
              
              -Proceeds
                  from sale of fixed assets
              
              
              270
              
              
              -
              
              
              -Purchase
                  of fixed assets
              
              
              (22,091
              )
              
              (6,198
              )
              
              (36,459
              )Net
                  cash provided (used) by investing activities
              
              
              91,335
              
              
              (1,888,938
              )
              
              (233,278
              )**Cash
                  flows from financing activities:**Proceeds
                  from sale of common stock
              
              
              450,000
              
              
              83,250
              
              
              2,535,212Loan
                  proceeds
              
              
              95,272
              
              
              150,704
              
              
              -Loan
                  repayment
              
              
              (150,704
              )
              
              -
              
              
              -Bank
                  overdraft
              
              
              25,736
              
              
              -
              
              
              -Loan
                  from shareholder
              
              
              -
              
              
              -
              
              
              55,000Net
                  cash provided by financing activities
              
              
              420,304
              
              
              233,954
              
              
              2,590,212**Net
                  increase (decrease) in cash and cash equivalents**
              
              
              (124,311
              )
              
              (2,093,214
              )
              
              2,217,025**Cash
                  and cash equivalents, beginning of year**
              
              
              124,311
              
              
              2,217,525
              
              
              500**Cash
                  and cash equivalents, end of year**
              
              $
              -
              
              $
              124,311
              
              $
              2,217,525(Continued)
  See
                  accompanying notes to financial statements.




43


**Chanticleer
                  Holdings, Inc.****Statements
                  of Cash Flows, continued****For
                  the Years Ended December 31, 2007, 2006 and
                  2005**
  **2007**
              
              **2006**
              
              **2005****Supplemental
                  cash flow information:**Cash
                  paid for interest and income taxes:Interest
              
              $
              10,233
              
              $
              7,791
              
              $
              810Income
                  taxes
              
              
              -
              
              
              -
              
              
              -**Non-cash
                  investing and financing activities:**Investment
                  contributed by shareholder
              
              
              600,000
              
              
              -
              
              
              -Exchange
                  of note payable for investment
              
              
              70,000
              
              
              -
              
              
              -Reclassification
                  of deposit as investment
              
              
              20,000
              
              
              -
              
              
              -Exchange
                  of investment for common stock which was retired
              
              
              -
              
              
              -
              
              
              56,000Issued
                  common stock in exchange for:Assumption
                  of accounts payable
              
              
              -
              
              
              -
              
              
              48,017Acquisition
                  of investments
              
              
              -
              
              
              -
              
              
              6,000Repayment
                  of loan from shareholder
              
              
              -
              
              
              -
              
              
              55,000Stock
                  subscription receivable
              
              
              -
              
              
              -
              
              
              1,000,000Cancel
                  stock subscription receivable and retire common stock
              
              
              -
              
              
              1,000,000
              
              
              -
  See
                  accompanying notes to financial statements.
  44


**Chanticleer
                  Holdings, Inc.****Statements
                  of Changes in Net Assets****For
                  the Years Ended December 31, 2007, 2006 and
                  2005**
  **2007**
              
              **2006**
              
              **2005****Changes
                  in net assets from operations:**Net
                  loss from operations
              
              $
              (248,765
              )
              $
              (404,943
              )
              $
              (153,860
              )Net
                  realized gain (loss) on sale of investments, net
              
              
              24,696
              
              
              31,530
              
              
              (49,000
              )Change
                    in net unrealized appreciationof investments, net
              
              
              235,956
              
              
              174,200
              
              
              30,681Net
                  increase (decrease) in net assets from operations
              
              
              11,887
              
              
              (199,213
              )
              
              (172,179
              )**Capital
                  stock transactions**Common
                  stock issued for cash
              
              
              450,000
              
              
              83,250
              
              
              2,535,212Investment
                  contributed by shareholder
              
              
              600,000
              
              
              -
              
              
              -Common
                  stock issued for loan from stockholder
              
              
              -
              
              
              -
              
              
              55,000Common
                  stock issued for accounts payable
              
              
              -
              
              
              -
              
              
              48,017Common
                  stock issued in acquisition of investments
              
              
              -
              
              
              -
              
              
              6,000Common
                  stock retired in disposition of investment
              
              
              -
              
              
              -
              
              
              (56,000
              )Net
                  increase in net assets from stock transactions
              
              
              1,050,000
              
              
              83,250
              
              
              2,588,229**Net
                  increase (decrease) in net assets**
              
              
              1,061,887
              
              
              (115,963
              )
              
              2,416,050**Net
                  assets at beginning of year**
              
              
              2,413,389
              
              
              2,529,352
              
              
              113,302**Net
                  assets at end of year**
              
              $
              3,475,276
              
              $
              2,413,389
              
              $
              2,529,352
  See
                  accompanying notes to financial statements.
  45


**Chanticleer
                  Holdings, Inc.****Schedule
                  of Investments****As
                  of December 31, 2007**
  **Percent****Shares/**
              **Quarter**
              
              
              **Original**
              
              **Fair**
              
              **Net****Interest**
              **Acquired**
              
              
              **Cost**
              
              **Value**
              
              **Assets****NON-AFFILIATE
                  INVESTMENTS****NON-INCOME
                  PRODUCING INVESTMENTS**1,046,900
              Sep-05
              
              Special
                  Projects Group (Pink Sheets:SPLJ)
              144,349
              
              52,345
              
              2%Sep-07
              
              distributor
                  and marketer of security andDec-07
              
              defense
                  products and training manuals33.3%
              Mar-06
              
              LFM
                  Management, LLC, dba 1st Choice Mortgage
              250,000
              
              250,000
              
              7%(Privately
                  held); Direct to consumer brokeragecompany5%
              Mar-06
              
              EE
                  Investors, LLC, whose sole asset is a 33.3% interest
              250,000
              
              350,000
              
              10%in
                  Bouncing Brain Productions, LLC (Privately held);Inventor
                  promotion company125,000
              Sep-07
              
              HealthSport,
                  Inc. (OTCBB:HSPO); fully integrated
              70,000
              
              65,000
              
              2%developer,
                  manufacturer and marketer of unique andproprietary
                  branded and private label edible film stripnutritional
                  supplements and over-the-counter drugs714,349
              
              717,345
              
              21%**LOAN
                  INVESTMENT**Loan
              Jun-06
              
              Lifestyle
                  Innovations, Inc. (OTCBB:LFSI); note and
              100,000
              
              125,000
              
              4%accounts
                  receivable investment of approximately$1,200,000,
                  non-interest bearing**OIL
                  AND GAS PROPERTY INVESTMENTS**37.5%
              Mar-06
              
              Signature
                  Energy, Inc; working interest in two
              128,216
              
              150,000
              
              4%oil
                  and gas properties in Washington County, OKTotal
                  non-affiliate investments
              942,565
              
              992,345
              
              29%
  (Continued)See
                  accompanying notes to financial statements.
  46


**Chanticleer
                  Holdings, Inc.****Schedule
                  of Investments, continued****As
                  of December 31, 2007**
  **Percent****Shares/**
              
              **Quarter**
              
              
              
              
              **Original**
              
              
              **Fair**
              
              
              **Net****Interest**
              
              **Acquired**
              
              
              
              
              **Cost**
              
              
              **Value**
              
              
              **Assets****AFFILIATE
                  INVESTMENTS****UNCONTROLLED
                  AFFILIATES**642,814
              
              Jun-07
              
              SYZYGY
                  Entertainment, Ltd. (SYZG); owner/operator
              
              $
              1,114,221
              
              $
              964,221
              
              
              28%Sep-07
              
              of
                  casino in Turks and Caicos IslandsDec-07**CONTROLLED
                  AFFILIATES**23%
              
              Mar-06
              
              Chanticleer
                  Investors LLC (Privately held);
              
              
              1,150,000
              
              
              1,610,000
              
              
              46%Jun-06
              
              Investment
                  LLC with note receivable from HootersDec-06
              
              of
                  America, Inc. in the amount of $5,000,00050%
              
              Dec-07
              
              Confluence
                  Partners, LLC, whose sole asset is an
              
              
              50,000
              
              
              50,000
              
              
              1%investment
                  in Lank Acquisition, LLC which was formedto
                  facilitate the creation of Lank Acquisition Corp-oration
                  which is formed to raise equity capital throughan
                  IPO to acquire or merge with an operating business100%
              
              Mar-07
              
              Chanticleer
                  Advisors LLC; wholly owned subsidiary;
              
              
              15,443
              
              
              100,000
              
              
              3%provides
                  management services for ChanticleerInvestors
                  II, LLC100%
              
              Dec-06
              
              Option
                  agreement with Hooters of America, Inc. topurchase
                  the right to open and operate Hootersrestaurants
                  in the Republic of South Africa
              
              
              20,000
              
              
              20,000
              
              
              1%Total
                  controlled affiliate investments
              
              
              1,235,443
              
              
              1,780,000
              
              
              51%Total
                  affiliate investments
              
              
              2,349,664
              
              
              2,744,221
              
              
              79%Total
                  investments at December 31, 2007
              
              $
              3,292,229
              
              
              3,736,566
              
              
              108%Cash
                  and other assets, less liabilities
              
              
              
              
              
              (261,290)
              
              
              -8%Net
                  assets at December 31, 2007
              
              
              
              
              $
              3,475,276
              
              
              100%
  See
                    accompanying notes to financial statements.


47


**Chanticleer
                  Holdings, Inc.****Schedule
                  of Investments****As
                  of December 31, 2006**
  **Percent****Shares/**
              
              **Quarter**
              
              
              
              
              **Original**
              
              
              **Fair**
              
              **Net****Interest**
              
              **Acquired**
              
              
              
              
              **Cost**
              
              
              **Value**
              
              **Assets****NON-AFFILIATE
                  INVESTMENTS****NON-INCOME
                  PRODUCING INVESTMENTS**11,000
              
              Sep-05
              
              Tandy
                  Leather Factory, Inc. (AMEX:TLF); specialty
              
              $
              52,011
              
              $
              88,770
              
              4%Dec-05
              
              retailer
                  and wholesale distributor of leather products,tools
                  and leather finishes and kits800,000
              
              Sep-05
              
              Special
                  Projects Group (Pink Sheets:SPLJ)
              
              
              102,403
              
              
              176,000
              
              8%distributor
                  and marketer of security anddefense
                  products and training manuals6,000
              
              Jun-06
              
              SM&A
                  (NASDAQ:WINS); A leading provider of
              
              
              35,669
              
              
              34,800
              
              1%business
                  strategy, proposal development andprogram
                  services for winning and deliveringcompetitive
                  procurements.800
              
              Jun-06
              
              Professionals
                  Direct, Inc. (OTCBB:PFLD); provides
              
              
              18,790
              
              
              20,900
              
              1%lawyer
                  liability insurance and underwriting and otherservices
                  to insurance companies33.3%
              
              Mar-06
              
              LFM
                  Management, LLC, dba 1st Choice Mortgage
              
              
              250,000
              
              
              250,000
              
              10%(Privately
                  held); Direct to consumer brokeragecompany10.27%
              
              Mar-06
              
              EE
                  Investors, LLC, whose sole asset is a 16.2% interest
              
              
              250,000
              
              
              250,000
              
              10%in
                  Bouncing Brain Productions, LLC (Privately held);Inventor
                  promotion company708,873
              
              
              820,470
              
              34%**LOAN
                  INVESTMENTS**Loan
              
              Jun-06
              
              Lifestyle
                  Innovations, Inc. (OTCBB:LFSI); note and
              
              
              100,000
              
              
              100,000
              
              4%accounts
                  receivable investment of approximately$1,200,000,
                  non-interest bearingLoan
              
              Sep-06
              
              Special
                  Projects Group (Pink Sheets:SPLJ)
              
              
              50,000
              
              
              50,000
              
              2%distributor
                  and marketer of security and defenseproducts
                  and training manuals; 12% note due 7/07150,000
              
              
              150,000
              
              6%**OIL
                  AND GAS PROPERTY INVESTMENTS**37.5%
              
              Mar-06
              
              Signature
                  Energy, Inc; working interest in two
              
              
              128,216
              
              
              225,000
              
              9%oil
                  and gas properties in Washington County, OKTotal
                  non-affiliate investments
              
              
              987,089
              
              
              1,195,470
              
              49%**AFFILIATE
                  INVESTMENT**23%
              
              Mar-06
              
              Chanticleer
                  Investors LLC (Privately held);
              
              
              1,150,000
              
              
              1,150,000
              
              48%Jun-06
              
              Investment
                  LLC with note receivable from HootersDec-06
              
              of
                  America, Inc. in the amount of $5,000,000Total
                  investments at December 31, 2006
              
              $
              2,137,089
              
              
              2,345,470
              
              97%Cash
                  and other assets, less liabilities
              
              
              
              
              
              67,919
              
              3%Net
                  assets at December 31, 2006
              
              
              
              
              $
              2,413,389
              
              100%
  See
                  accompanying notes to financial statements.




48


**Chanticleer
      Holdings, Inc.**


**Notes
      to Financial Statements**





**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 in accordance with Statement
      of Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting by
      Development Stage Enterprises” was considered a development stage company until
      July 2005. The Company was formed to serve as a vehicle to effect a merger,
      exchange of capital stock, asset acquisition or other business combination
      with
      a domestic or foreign private business. 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.







On
      April
      18, 2006, the Company formed Chanticleer Investors LLC (“Investors LLC”) and
      sold units for $5,000,000, of which the Company owns $1,150,000 (23%) as of
      December 31, 2007. Investors LLC’s principal asset is a 6%, convertible note in
      the amount of $5,000,000 with Hooters of America, Inc. (“Hooters”),
      collateralized by and convertible into 2% of Hooters common stock. One-third
      of
      the interest is paid to the Company as a management fee and the Company shares
      pro-rata with the other investors in the remaining 4% interest, which is
      distributed to the investors quarterly.





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.





In
      January 2007, the Company formed Chanticleer Advisors, LLC (“Advisors”), as a
      wholly owned subsidiary to manage Investors II, as well as, the Company’s other
      investments.




**INVESTMENT
      COMPANY**





On
      May
      23, 2005, the Company filed a notification on Form N54a with the U.S. Securities
      and Exchange Commission (the “SEC”) indicating its election to be regulated as a
      business development company under the Investment Company Act of 1940 (the
“1940
      Act”). In connection with this election, the Company has adopted corporate
      resolutions and currently operates as a closed-end management investment company
      as a business development company (a “BDC”). Under this recent election, the
      Company has been organized to provide investors with an opportunity to
      participate, with a modest amount in venture capital, in investments that are
      generally not available to the public and that typically require substantially
      larger financial commitments. In addition, the Company will provide professional
      management and administration that might otherwise be unavailable to investors
      if they were to engage directly in venture capital investing. The Company has
      decided to be regulated as a business development company under the 1940 Act,
      and currently operates as a non-diversified company as that term is defined
      in
      Section 5(b)(2) of the 1940 Act. The Company will at all times conduct its
      business so as to retain its status as a BDC. The Company may not change the
      nature of its business so as to cease to be, or withdraw its election as, a
      BDC
      without the approval of the holders of a majority of its outstanding voting
      stock as defined under the 1940 Act.





49


As
      a BDC,
      the Company is required to invest at least 70% of its total assets in qualifying
      assets, which generally, are securities of private companies or securities
      of
      public companies whose securities are not eligible for purchase on margin (which
      includes many companies with thinly traded securities that are quoted in the
      pink sheets or the NASD Electronic Quotation Service.) The Company must also
      offer to provide significant managerial assistance to these portfolio companies.
      Qualifying assets may also include:


**·**
            Cash;


**·**
            Cash
                equivalents;


**·**
            U.S.
                Government securities; or


**·**
            High-quality
                debt investments maturing in one year or less from the date of
                investment.





An
      eligible portfolio company generally is a United States company that is not
      an
      investment company and that:


·
            Does
                not have a class of securities registered on an exchange or included
                in
                the Federal Reserve Board’s over-the-counter margin
                list;


·
            Is
                actively controlled by a BDC and has an affiliate of a BDC on its
                board of
                directors; or


·
            Meets
                such other criteria as may be established by the
                SEC.





The
      Company may invest a portion of the remaining 30% of its total assets in debt
      and/or equity securities of companies that may be larger or more stable than
      our
      targeted portfolio companies.





BDC’s
      are
      required to implement certain accounting provisions that are different from
      those to which other reporting companies are required to comply. These
      requirements may result in presentation of financial information in a manner
      that is more or less favorable than the manner permitted by other reporting
      companies. In connection with the implementation of accounting changes to comply
      with the required reporting of financial information, we must also comply with
      SFAS No. 154, “Accounting Changes and Error Corrections” (“SFAS
      154”).





Prior
      to
      May 23, 2005, the date the Company began operating as a BDC, the Company’s only
      operations included ownership of marketable investment securities. The Company
      followed Financial Accounting Standard No. 115, “Accounting for Certain
      Investments in Debt and Equity Securities” (“FAS 115”) for its marketable
      investment securities. The Company classified its marketable investment
      securities as trading securities, for which FAS 115 provides that unrealized
      holding gains and losses for trading securities shall be included in earnings.
      Since this method of accounting for investments is the same as the valuation
      method required when operating as a BDC, there is no cumulative effect
      recognition in the accompanying financial statements upon becoming an investment
      company. The Company has prepared its financial statements as if it had been
      a
      BDC from inception.





50


BDC’s,
      as
      governed under the 1940 Act may not avail themselves of any of the provisions
      of
      Regulation S-B, including any of the streamlined reporting permitted thereunder.





**2.** **SIGNIFICANT
      ACCOUNTING POLICIES**





**USE
      OF ESTIMATES**




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the amounts reported in the financial
      statements and accompanying notes. Significant estimates include the valuation
      of the investments in portfolio companies and deferred tax asset valuation
      allowances. Actual results could differ from those estimates.




**VALUATION
      OF INVESTMENTS (AS AN INVESTMENT COMPANY)**




As
      an
      investment company under the Investment Company Act of 1940, all of the
      Company’s investments must be carried at market value or fair value as
      determined by management for investments which do not have readily determinable
      market values. Prior to this conversion, only marketable debt and equity
      securities and certain derivative securities were required to be carried at
      market value.





Beginning
      May 23, 2005, portfolio assets for which market prices are available are valued
      at those prices. Securities that are traded in the over-the-counter market
      or on
      a stock exchange generally will be valued at the prevailing bid price on the
      valuation date. However, some of the Company’s current investments were acquired
      in privately negotiated transactions and have no readily determinable market
      values. These securities are carried at fair value as determined by management
      and outside professionals as necessary under the Company’s valuation policy.
      Currently, the valuation policy provides for management’s review of the
      management team, financial conditions, and products and services of the
      portfolio company. In situations that warrant such an evaluation, an independent
      business valuation may be obtained.





Value,
      as
      defined in Section 2(a)(41) of 1940 Act, is (i) the market price for those
      securities for which a market quotation is readily available and (ii) for all
      other securities and assets, fair value is as determined in good faith by
      management. There is no single standard for determining fair value in good
      faith. As a result, determining fair value requires that judgment be applied
      to
      the specific facts and circumstances of each portfolio investment. The Company
      must determine the fair value of each individual investment on a quarterly
      basis. The Company records unrealized depreciation on investments when it
      believes that an investment has become impaired, including where realization
      of
      an equity security is doubtful. Conversely, the Company records unrealized
      appreciation if the Company believes that the underlying portfolio company
      has
      appreciated in value and, therefore, its investment has also appreciated in
      value, where appropriate.





51


As
      an
      investment company, the Company invests primarily in illiquid securities
      including equity securities of private companies. The structure of each equity
      security is specifically negotiated to enable the Company to protect its
      investment and maximize its returns. The Company generally includes many terms
      governing ownership parameters, dilution parameters, liquidation preferences,
      voting rights, and put or call rights. The Company’s investments are generally
      subject to some restrictions on resale and generally have no established trading
      market. Because of the type of investments that the Company makes and the nature
      of its business, the Company’s valuation process requires an analysis of various
      factors. The Company’s fair value methodology includes the examination of, among
      other things, the underlying investment performance, financial condition and
      market changing events that impact valuation.





**CASH
      AND CASH EQUIVALENTS**




For
      purposes of the statements of cash flows, the Company considers all highly
      liquid investments purchased with an original maturity of three months or less
      to be cash equivalents.





**REVENUE
      RECOGNITION**




The
      Company’s current sources of revenue include management fees and interest and
      dividend income earned from investments and loans, payment of which is made
      in
      cash. The Company also earns additional revenue for management and other
      technical services provided to its portfolio investment companies. Payment
      for
      these services may be in the form of unregistered shares of common stock of
      the
      portfolio company, which are recorded based on the fair value determination
      of
      our Board of Directors.





**FAIR
      VALUE OF FINANCIAL INSTRUMENTS**




SFAS
      107,
“Disclosures About Fair Value of Financial Instruments,” requires disclosure of
      fair value information about financial instruments when it is practicable to
      estimate that value. The carrying amounts of the Company’s cash, accounts
      receivable, accounts payable and notes payable approximate their estimated
      fair
      value due to the short-term maturities of these financial instruments and
      because related interest rates offered to the Company approximate current
      rates.




52


**FIXED
      ASSETS**




Fixed
      assets are stated at cost, less accumulated depreciation. Depreciation is
      recorded using the straight-line method over the estimated useful lives of
      the
      respective assets (generally five and seven years). The carrying amount of
      all
      long-lived assets is evaluated periodically to determine if adjustment to the
      depreciation and amortization period or the unamortized balance is warranted.
      Based upon its most recent analysis, the Company believes that no impairment
      of
      property and equipment exists at December 31, 2007. Maintenance and repairs
      are
      charged to operations when incurred. Betterments and renewals are capitalized.
      When property and equipment are sold or otherwise disposed of, the asset account
      and related accumulated depreciation account are relieved, and any gain or
      loss
      is included in operations.





**INCOME
      TAXES**




The
      Company has not elected to be a regulated investment company under Subchapter
      M
      of the Internal Revenue Code of 1986, as amended. Accordingly, the Company
      will
      be subject to U.S. federal income taxes on sales of investments for which the
      sales proceeds exceed their tax basis.







The
      Company accounts for income taxes under SFAS 109, “Accounting for Income Taxes.”
Under the asset and liability method of SFAS 109, deferred income taxes are
      provided on the liability method whereby deferred tax assets are recognized
      for
      deductible temporary differences and operating loss and tax credit carryforwards
      and deferred tax liabilities are recognized for taxable temporary differences.
      Temporary differences are the differences between the reported amounts of assets
      and liabilities and their tax basis. Deferred tax assets are reduced by a
      valuation allowance when, in the opinion of management, it is more likely than
      not that some portion or all of the deferred tax assets will not be realized.
      Deferred tax assets and liabilities are adjusted for the effects of changes
      in
      tax laws and rates on the date of enactment. Due to its limited operations,
      the
      Company has provided a valuation allowance for the full amount of the deferred
      tax assets.




**STOCK-BASED
      COMPENSATION**




Until
      December 31, 2005, the Company accounted for stock-based employee compensation
      arrangements in accordance with the provisions of Accounting Principles Board
      ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees" and complied
      with the disclosure provisions of SFAS No.123, "Accounting for Stock-Based
      Compensation." Under APB No. 25, employee compensation cost is recognized over
      the vesting period based on the excess, if any, on the date of grant of the
      fair
      value of the Company's shares over the employee's exercise price. When the
      exercise price of the employee share options is less than the fair value price
      of the underlying shares on the grant date, deferred stock compensation is
      recognized and amortized to expense in accordance with Financial Accounting
      Standards Board (“FASB”) Interpretation No. 44 over the vesting period of the
      individual options. Accordingly, if the exercise price of the Company's employee
      options equals or exceeds the market price of the underlying shares on the
      date
      of grant, no compensation expense is recognized. Options or shares awards issued
      to non-employees are valued using the fair value method and expensed over the
      period services are provided.





53


In
      December 2004, the FASB issued SFAS 123-R, “Share-Based Payment,” which requires
      that the compensation cost relating to share-based payment transactions
      (including the cost of all employee stock options) be recognized in the
      financial statements. That cost will be measured based on the estimated fair
      value of the equity or liability instruments issued. SFAS 123-R covers a wide
      range of share-based compensation arrangements including share options,
      restricted share plans, performance-based awards, share appreciation rights
      and
      employee share purchase plans. SFAS 123-R replaces SFAS 123, “Accounting for
      Stock-Based Compensation,” and supersedes APB Opinion No. 25, “Accounting for
      Stock Issued to Employees.” As originally issued, SFAS 123 established as
      preferable a fair-value-based method of accounting for share-based payment
      transactions with employees. However, that pronouncement permitted entities
      to
      continue applying the intrinsic-value model of APB Opinion 25, provided that
      the
      financial statements disclosed the pro forma net income or loss based on the
      preferable fair-value method. The Company adopted SFAS 123-R in the 1st quarter
      of 2006. Thus, the Company’s financial statements would reflect an expense for
      (a) all share-based compensation arrangements granted on or after January 1,
      2006 and for any such arrangements that are modified, cancelled or repurchased
      after that date, and (b) the portion of previous share-based awards for which
      the requisite service has not been rendered as of that date, based on the
      grant-date estimated fair value. The Company may have stock-based payment
      transactions in the future which would require accounting as discussed
      above.





As
      of
      December 31, 2007 and 2006, there were no options outstanding.




**NET
      INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS PER
      SHARE**




Basic
      net
      increase (decrease) in net assets from operations per share is computed by
      dividing the net income (loss) amount adjusted for cumulative dividends on
      preferred stock (numerator) by the weighted average number of common shares
      outstanding during the period (denominator). Diluted net increase (decrease)
      in
      net assets from operations per share amounts reflect the maximum dilution that
      would have resulted from the assumed exercise of stock options, if any, and
      from
      the assumed conversion of convertible securities, if any. Diluted net increase
      (decrease) in net assets from operations per share is computed by dividing
      the
      net income (loss) amount adjusted for cumulative dividends on preferred stock
      by
      the weighted average number of common and potentially dilutive securities
      outstanding during the period. For all periods presented there are no
      potentially dilutive securities so basic and diluted net increase (decrease)
      in
      net asset from operation per share is the same.




54




**COMPREHENSIVE
      INCOME**




SFAS
      No.
      130, *Reporting
      Comprehensive Income* ,
      establishes standards for reporting and displaying comprehensive income and
      its
      components (revenues, expenses, gains and losses) in a full set of
      general-purpose financial statements. It requires that all items that are
      required to be recognized under accounting standards as components of
      comprehensive income be reported in a financial statement that is displayed
      with
      the same prominence as other financial statements. SFAS No. 130 requires that
      an
      enterprise (a) classify items of other comprehensive income by their nature
      in
      financial statements, and (b) display the accumulated balance of other
      comprehensive income separately in the equity section of the balance sheet
      for
      all periods presented. The Company’s comprehensive income (loss) does not differ
      from its reported net income (loss).




As
      an
      investment company, the Company must report changes in the fair value of its
      investments outside of its operating income on its statement of operations
      and
      reflect the accumulated appreciation or depreciation in the fair value of its
      investments as a separate component of its stockholders’ deficit. This treatment
      is similar to the treatment required by SFAS No. 130.




**CONCENTRATION
      OF CREDIT RISK**




Cash
      is
      maintained at financial institutions. The Federal Deposit Insurance Corporation
      (“FDIC”) insures accounts at each institution for up to $100,000. At times, cash
      balances may exceed the FDIC insurance limit of $100,000.




**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.
      Management does not believe any of these accounting pronouncements has had
      or
      will have a material impact on the Company’s financial position or operating
      results.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measures”. This
      Statement defines fair value, establishes a framework for measuring fair value
      in generally accepted accounting principles, expands disclosures about fair
      value measurements, and applies under other accounting pronouncements that
      require or permit fair value measurements. SFAS No. 157 does not require any
      new
      fair value measurements. However, the FASB anticipates that for some entities,
      the application of SFAS No. 157 will change current practice. SFAS No. 157
      is
      effective for fiscal years beginning after November 15, 2007, which for the
      Company would be its fiscal year beginning January 1, 2008. The Company is
      currently evaluating the impact of SFAS No. 157 but does not expect that it
      will
      have a material impact on its financial statements.





55


In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities.” This statement permits entities to
      choose to measure many financial instruments and certain other items at fair
      value that are not currently required to be measured at fair value. SFAS No.
      159
      is effective for fiscal years beginning after November 15, 2007, which for
      the
      Company would be its fiscal year beginning January 1, 2008. The Company is
      currently evaluating the impact of SFAS No. 159, but does not expect that it
      will have a material impact on its financial statements.





**3.** **INVESTMENTS**





**VALUATION
      OF INVESTMENTS**





As
      required by the SEC's Accounting Series Release ("ASR") 118, the investment
      committee of the Company is required to assign a fair value to all investments.
      To comply with Section 2(a) (41) and Rule 2a-4 under the Investment Company
      Act
      of 1940 (the “1940 Act”), it is incumbent upon the Board of Directors to satisfy
      themselves that all appropriate factors relevant to the value of securities
      for
      which market quotations are not readily available have been considered and
      to
      determine the method of arriving at the fair value of each such security. To
      the
      extent considered necessary, the Board of Directors may appoint persons to
      assist them in the determination of such value and to make the actual
      calculations pursuant to the Board of Directors’ direction. The Board of
      Directors must also, consistent with this responsibility, continuously review
      the appropriateness of the method used in valuing each issue of security in
      the
      Company's portfolio. The Directors must recognize their responsibilities in
      this
      matter and whenever technical assistance is requested from individuals who
      are
      not Directors, the findings of such individuals must be carefully reviewed
      by
      the Directors in order to satisfy themselves that the resulting valuations
      are
      fair.





No
      single
      standard for determining "fair value in good faith" can be established, since
      fair value depends upon the circumstances of each individual case. As a general
      principle, the current "fair value" of an issue of securities being valued
      by
      the Board of Directors would appear to be the amount that the owner might
      reasonably expect to receive for them upon their current sale. Methods that
      use
      this principle may, for example, be based on a multiple of earnings, or a
      discount from market of a similar freely traded security, or yield to maturity
      with respect to debt issues, or a combination of these and other methods. Some
      of the general factors that the Board of Directors should consider in
      determining a valuation method for an individual issue of securities include:
      1)
      the fundamental analytical data relating to the investment, 2) the nature and
      duration of restrictions on disposition of the securities, and 3) an evaluation
      of the forces which influence the market in which these securities are purchased
      and sold. Among the more specific factors which are to be considered are: type
      of security, financial statements, cost at date of purchase, size of holding,
      discount from market value of unrestricted securities of the same class at
      time
      of purchase, special reports prepared by analysts, information as to any
      transactions or offers with respect to the security, existence of merger
      proposals or tender offers affecting the securities, price and extent of public
      trading in similar securities of the issuer or comparable companies and other
      relevant matters.





56
 
  Certain
          of the portfolio companies are listed with listing services such as Pink
          Sheets,
          LLC and the Over-the-Counter Bulletin Board maintained by FINRA but, the
          Board
          of Directors, in conformity with the provisos under Section 2(41) of the
          Investment Company Act of 1940, has undertaken to determine the fair market
          value which may not, in accordance with Section 2(41) be in excess of the
          listed
          stock prices. Rather, the Board of Directors may depart downward from the
          listed
          price of the shares to determine what it believes, acting in good faith,
          to be
          the true value where the market is somewhat illiquid or other factors which
          would tend to show that the amount of proceeds which may be realized from
          an
          immediate sale would not equal the listed price multiplied by the number
          of
          shares. Where the Company has determined that the value of the portfolio
          companies is not equal to the listed price per share, it has notated such
          determination on its valuation and the reason for such departure from the
          listed
          price per share.


The
      Board
      of Directors has arrived at the following valuation method for its investments.
      Where there is not a readily available source for determining the market value
      of any investment, either because the investment is not publicly traded or
      is
      thinly traded and in absence of a recent appraisal, the value of the investment
      shall be based on the following criteria:





·
            Total
                amount of the Company's actual investment. This amount shall include
                all
                loans, purchase price of securities and fair value of securities
                given at
                the time of exchange;


·
            Total
                revenues for the preceding twelve months;


·
            Earnings
                before interest, taxes and depreciation, as adjusted for non-recurring
                items;


·
            Estimate
                of likely sale price of investment;


·
            Net
                assets of investment; and


·
            Likelihood
                of investment generating positive returns (going concern).





The
      estimated value of each investment shall be determined as follows:





·
            Where
                no or limited revenues or earnings are present, then the value shall
                be
                the greater of net assets, estimated sales price, or total cost for
                each
                investment;


·
            Where
                revenues and/or earnings are present, then the value shall be the
                greater
                of one-times (1x) revenues or three-times (3x) earnings, plus the
                greater
                of the net assets of the investment or the total amount of the actual
                investment; or


·
            Under
                both scenarios, the value of the investment shall be adjusted down
                if
                there is a reasonable expectation that the Company will not be able
                to
                recoup the investment or if there is reasonable doubt about the
                investment’s ability to continue as a going concern.





Utilizing
      the foregoing method, the Company has valued its investments as
      follows:





**NON-AFFILIATE
      INVESTMENTS**





**NON-INCOME
      PRODUCING INVESTMENTS**


Special
      Projects Group (Pink Sheets:SPLJ) is a
      distributor and marketer of security and defense products and training manuals.
      As of December 31, 2007, the Company has an investment of 1,046,900 shares
      with
      a total cost of $144,349. The company received 196,900 shares of Special
      Projects for management consulting services previously provided and purchased
      50,000 shares in December 2007 for cash. Based on the closing price on December
      31, 2007, the Investment Committee of the Board of Directors has valued the
      investment at $52,345. In addition, the Company made a loan to Special Projects
      in the amount of $50,000 in July 2006, which was repaid with interest in July
      2007.





LFM
      Management, LLC, dba 1 st Choice Mortgage (Privately held) ;
      direct
      to consumer brokerage company. The Company owns 33.3% of 1 st Choice
      with an investment of $250,000 made in March 2006. Based on the current
      performance of LFM and its prospects, the Investment Committee of the Board
      of
      Directors has valued the investment at the original cost of
      $250,000.





57


EE
      Investors, LLC - Bouncing Brain Productions, LLC (Privately
      held) ;
      Bouncing Brain is an inventor promotion company. At December 31, 2007, the
      Company owns 5% of EE Investors, LLC, which owns 33.3% of Bouncing Brain. The
      cost of $250,000 is from an investment made in March 2006. Based on the current
      performance of Bouncing Brain and its prospects, the Investment Committee of
      the
      Board of Directors has valued the investment at $350,000.





HealthSport,
      Inc. (OTCBB:HSPO) ;
      is a
      fully integrated developer, manufacturer and marketer of unique and proprietary
      branded and private label edible film strip nutritional supplements and
      over-the-counter drugs. The Company’s CEO is a director of HealthSport. The
      Company acquired 125,000 shares of HealthSport in September 2007 for a note
      in
      the amount of $70,000. Based on the closing price on December 31, 2007, the
      Investment Committee of the Board of Directors has valued the investment at
      $65,000.




**LOAN
      INVESTMENT**


Lifestyle
      Innovations, Inc. (OTCBB:LFSI) ;
      non-interest bearing note and accounts receivable investment of approximately
      $1,200,000 face value with a cost of $100,000 in June 2006. This is a
      speculative investment in a public company with plans to acquire another
      operating business. The Investment Committee of the Board of Directors has
      valued the investment at $125,000, based on an estimated value for the public
      shell.





**OIL
      AND GAS INVESTMENT**


Signature
      Energy, Inc. is the
      operator of the Company’s 37.5% working interest in 2 oil and gas properties in
      Washington County, Oklahoma. The Company’s original cost was $128,216 and the
      valuation of $150,000 is based on the sale of similar properties in the
      area.





**AFFILIATE
      INVESTMENTS**





**UNCONTROLLED**


SYZYGY
      Entertainment, Ltd. (SYZG) ;
      is the
      owner/operator of casino operations in the Turk and Caicos Islands. The
      Company’s CEO also serves as SYZG’s CEO and is its sole director. The Company
      received 342,814 shares of SYZG which were valued at $514,221 by the Investment
      Committee of the Board of Directors in exchange for our CEO’s services for the
      period from April 1, 2007 through March 31, 2008. The Company deferred the
      income and is amortizing it to income over the one year period. $128,555 remains
      deferred at December 31, 2007. In September 2007 our CEO contributed an
      additional 200,000 shares of SYZG to the Company and in December 2007, our
      CEO
      contributed his remaining 100,000 shares of SYZG to the Company. At
      December 31, 2007, SYZG had experienced very limited trading; therefore, the
      board of directors discounted the $3.00 closing price to $1.50 per share to
      determine the value of $964,221. The stock of this portfolio company is
      presently listed on a national listing service (but not a national exchange)
      with limited liquidity. The Board of Directors has determined, in consultation
      with its investment committee and its audit committee, that the investment
      would
      not likely realize the value on a per share basis as a result of this lack
      of
      liquidity and therefore, in the interest of determining the true value of its
      investment, has chosen a value below that which might be suggested by the most
      recent trading price.




58


**CONTROLLED**


Chanticleer
      Investors LLC (Privately held) ;
      only
      asset is a 6%, convertible, $5,000,000 loan to Hooters of America, Inc. Interest
      only is payable quarterly and accrued interest and principal is due May 24,
      2009. The Company owns 23% of Chanticleer Investors and receives a management
      fee equal to 2% of the interest being paid on the loan. The remaining 4% of
      the
      interest is distributed to the investors quarterly. The Investment Committee
      of
      the Board of Directors has valued the interest in Chanticleer Investors at
      $1,610,000 based on a valuation of Hooters of America, Inc.





Confluence
      Partners, LLC (Privately held); the
      Company formed and currently owns 50% of Confluence Partners, LLC, whose sole
      asset is an investment in Lank Acquisition, LLC. Lank Acquisition, LLC was
      formed to facilitate the formation of Lank Acquisition Corporation as a Special
      Purpose Acquisition Corporation (“SPAC”), with plans to raise $125,000,000
      through an IPO and invest in an as yet undetermined business. Confluence
      ultimately plans to invest a total of $1,250,000 and the Company plans to sell
      off all of its remaining commitment of $575,000. For its investment, Confluence
      would receive 1,250,000 warrants to acquire common stock with an exercise price
      of $7.50 and 200,000 shares of common stock, which will be priced at $10 per
      share in the IPO. The Company’s funding began in December 2007. Accordingly, the
      Investment Committee of the Board of Directors has valued this investment at
      its
      current cost of $50,000.





Chanticleer
      Advisors, LLC is
      a
      wholly owned subsidiary of the Company which provides management services for
      Chanticleer Investors II, LLC. The Investment Committee of the Board of
      Directors has valued this investment at $100,000 based on the value of the
      management contract.





Hooters
      of America, Inc. Option Agreement ;
      the
      Company has an option agreement with Hooters of America, Inc. to open and
      operate Hooters restaurants in the Republic of South Africa. The Investment
      Committee of the Board of Directors valued this option at the amount of the
      Company’s deposit of $20,000.





**4.** **NOTES
      PAYABLE**





The
                  Company has a one-year line-of-credit with a bank in the amount
                  of
                  $250,000 which matures on December 3, 2008. The loan is guaranteed
                  by the
                  Chief Executive Officer of the Company and is collateralized by
                  all
                  inventory, chattel paper, accounts, equipment and general intangibles
                  of
                  the Company. The loan bears interest at 7.5% per annum.
              
              $
              95,272The
                  Company has a one-year note with a company in the amount of $70,000
                  which
                  will mature on September 15, 2008, and bears interest at 4%. The
                  loan was
                  used to acquire an investment in 125,000 shares of HealthSport,
                  Inc.
                  common stock.
              
              
              70,000Total
                  notes payable
              
              $
              165,272


59


**5.** INCOME
      TAXES


During
      the years ended December 31, 2007, 2006 and 2005, the provision for income
      taxes
      (all deferred) differs from the amounts computed by applying the U.S. Federal
      income tax rate of 34% to income before provision for income taxes as a result
      of the following:




**2007**
              
              **2006**
              
              **2005**Computed
                  "expected" income tax expense(benefit)
              
              $
              4,000
              
              $
              (67,700
              )
              $
              (58,500
              )State
                  income taxes, net of federal benefit
              
              
              500
              
              
              (8,000
              )
              
              (6,900
              )Travel,
                  entertainment and other
              
              
              9,900
              
              
              4,200
              
              
              200Valuation
                  allowance
              
              
              (14,400
              )
              
              71,500
              
              
              65,200Income
                  tax expense (benefit)
              
              $
              -
              
              $
              -
              
              $
              -





Significant
      components of net deferred income tax assets are as follows:




**2007**
              
              **2006**
              
              **2005**Investments
              
              $
              266,200
              
              $
              79,200
              
              $
              13,000Net
                  operating loss carryforwards
              
              
              (375,700
              )
              
              (203,100
              )
              
              (65,400
              )Capital
                  loss carryforwards
              
              
              (18,600
              )
              
              (18,600
              )
              
              (18,600
              )Total
                  deferred tax assets
              
              
              (128,100
              )
              
              (142,500
              )
              
              (71,000
              )Valuation
                  allowance
              
              
              128,100
              
              
              142,500
              
              
              71,000Net
                  deferred tax assets
              
              $
              -
              
              $
              -
              
              $
              -




The
      Company has a net operating loss carryforward of approximately $989,000, which
      will expire at various dates beginning in 2024 through 2027, if not utilized.
      The Company has a capital loss carryforward of $49,000 which expires in 2010
      if
      not utilized. The book cost of investments exceeds their tax basis by
      approximately $256,000.




60


6. COMPOSITION
      OF NET ASSETS (STOCKHOLDERS’ EQUITY)


The
      Company has 200,000,000 shares of its $0.0001 par value common stock authorized
      and 8,332,318 shares issued and outstanding at December 31, 2007. There are
      no
      warrants or options outstanding.





**2007
      Transactions**





During
      the year ended December 31, 2007, the Company sold 642,857 shares of its common
      stock pursuant to its Offering Circular under Regulation E promulgated under
      the
      Securities Act of 1933 for proceeds in the amount of $450,000.





**2006
      Transactions**





During
      the year ended December 31, 2006, the Company sold 83,250 shares of its common
      stock pursuant to its Offering Circular under Regulation E promulgated under
      the
      Securities Act of 1933 for proceeds of $83,250. In addition, during the first
      quarter of 2006, the Company determined they were not going to be paid on the
      stock subscription receivable of $1,000,000 and the related 1,000,000 shares
      have been returned to counsel to be cancelled.




7. RELATED
      PARTY TRANSACTIONS




Michael
      D. Pruitt, the Company’s Chief Executive Officer, is also CEO and a Director of
      Syzygy Entertainment, Ltd. (SYZG) and a Director of HealthSport, Inc.
      (HSPO).





During
      2007, Mr. Pruitt contributed 300,000 shares of Syzygy Entertainment, Ltd. to
      the
      Company, which was valued by the investment committee at $600,000 on the dates
      contributed. Mr. Pruitt will not receive additional compensation as a result
      of
      the transfers.





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.





In
      January 2007, the Company formed Advisors as a wholly-owned subsidiary to manage
      Investors II, as well as other designated projects. Pursuant to Regulation
      S-X
      Rule 6, Advisors will not be consolidated with the Company. The Company has
      advanced $15,443 to Advisors for legal expenses and has included this amount
      as
      the investment cost of this entity.





During
      the three months ended March 31, 2007, the Company sold its investment in two
      securities to Investors II for $21,775, which approximated market value on
      the
      transaction dates. The Company realized a profit of $127 on the
      transactions.





On
      December 13, 2006, the Company completed the acquisition of a $50,000 investment
      in Chanticleer Investors LLC from Michael D. Pruitt, CEO, at its original cost
      and at the estimated market value at the time. This increased the Company’s
      interest in Chanticleer Investors LLC from $1,100,000 (22%) to $1,150,000 (23%)
      at December 31, 2007 and 2006.




61




**8.** **COMMITMENTS
      AND CONTINGENCIES**





On
      February 22, 2007, the Company entered into a lease agreement jointly with
      Five
      Oaks Capital Partners, LLC to lease a total of 5,041 square feet, commencing
      March 26, 2007 through December 31, 2008. The Company’s allocated share of the
      space is 2,000 square feet and its monthly base rent is $3,980 in 2008. Five
      Oaks Capital Partners, LLC is the managing member of EE Investors, LLC, in
      which
      the Company is currently a 5% investor.





On
      November 21, 2006, the Company entered into a 120 day option agreement with
      Hooters of America, Inc. to purchase the right to open and operate Hooters
      restaurants in the Republic of South Africa. Negotiations are underway regarding
      a proposed development plan.




**9.** **SUBSEQUENT
        EVENT**





On
      March
      11, 2008, the Company announced it has 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 is anticipated to close on or before July 31,
      2008. The final purchase price will be determined after the completion of the
      2007 fiscal year audit.





The
      closing of the transaction is subject to Chanticleer raising the necessary
      debt
      and equity financing to complete the acquisition. In addition, Chanticleer
      will
      have to convert from its current SEC status as a BDC to an operating company
      prior to closing the transaction. Chanticleer has retained an investment banking
      firm to assist in securing the equity capital necessary to close the proposed
      transaction.





HI
      was
      founded in 1983 and was the creator of the Hooters brand and concept. In 1984,
      HI licensed Neighborhood Restaurants of America, n/k/a Hooters of America,
      Inc.
      (“HOA”), owned by a separate group of shareholders, to be its exclusive licensee
      in the development and expansion of its restaurant business. In 2001 HI went
      on
      to sell the Hooters trademarks and other related proprietary rights to HOA.
      HI
      retained and continues to own certain rights including a perpetual irrevocable
      license agreement with greatly reduced royalties, to operate its restaurants
      in
      its retained territories and, most importantly, to acquire franchisees within
      the Hooters system. These rights will be acquired by Chanticleer as a part
      of
      the transaction.





Chanticleer
      has an existing relationship with HOA through its position as the lead investor
      in a $5 million, 6% convertible three-year promissory note from Robert Brooks,
      the former Chairman of HOA. This note is secured by and contains conversion
      options into 2% of Hooters of America outstanding stock. Chanticleer was also
      granted a right of first refusal and a right to match any equity financing
      proposed to, or sought by, HOA. Additionally, Chanticleer currently holds an
      Option Agreement with HOA to open Hooters franchises in the Republic of South
      Africa which is under development. The entire Hooters system, consisting of
      433
      restaurants in 28 countries, is currently celebrating its 25 th anniversary with events on the 25 th of each
      month and a grand pageant in Miami on July 23, 2008.





62


HI
      was
      the creator of the Hooters brand and concept and currently owns and operates
      22
      restaurants, which comprise the highest average unit gross sales within the
      Hooters system, and includes locations in and around Tampa, Florida, Chicago,
      Illinois and the Manhattan regions, including the original Hooters restaurant
      located in Clearwater, Florida. These are the operations of HI being acquired
      by
      Chanticleer.




**10.   ADJUSTMENT
      AFFECTING QUARTER ENDED SEPTEMBER 30, 2007**




At
      September 30, 2007, the Company had calculated unrealized appreciation of
      $1,880,259 on its investments, had a net operating loss carryforward of
      $785,424, a current year loss from operations of $94,969 and book basis in
      excess of tax basis in investments of $256,258. The Company obtained tax advice
      which indicated it could elect to be treated as a regulated investment company
      under Subchapter M of the Internal Revenue Code of 1986, as amended, in the
      event the unrealized appreciation should be realized.





Accordingly,
      the Company did not provide deferred taxes on the unrealized appreciation as
      it
      had been advised the gain could be distributed to its shareholders and taxed
      at
      that level if the unrealized appreciation should ever be realized.





The
      Company has since determined it could not automatically elect to be treated
      as a
      regulated investment company under Subchapter M and should have accrued a
      deferred income tax liability pursuant to its method of accounting for income
      taxes at September 30, 2007 of approximately $480,000.





The
      unrealized appreciation at December 31, 2007 had been reduced to $444,337.
      Accordingly, there was no deferred tax liability at December 31,
      2007.





If
      the
      deferred taxes were recorded at September 30, 2007, the results of operations
      for the three and nine months ended September 30, 2007 would have been $480,000
      lower. However, as a result of the decrease in unrealized appreciation at
      December 31, 2007, the results of operations for the three months ended December
      31, 2007 would have been $480,000 higher.





In
      summary, the tax expense of $480,000 in the third quarter would have been offset
      by a tax benefit of $480,000 in the fourth quarter with no net tax expense
      for
      the year ended December 31, 2007.





**11.   AMENDED
      REPORT**





The
      Company amended its annual report as of December 31, 2007 to make the following
      changes:


·
              The
                  Company changed its cash flow statements to include the purchase
                  of
                  investments and the proceeds from sale of investments as operating
                  activities rather than investing activities, which had the effect
                  of
                  decreasing the cash used in operating activities in 2007 by $113,156
                  and
                  increasing the cash used in operating activities in 2006 by $1,882,740
                  and
                  in 2005 by $196,819, with an equal by opposite effect on cash flow
                  provided (used) in investing
                  activities;
 ·
              The
                  Company also expanded its disclosure regarding an investment which
                  was
                  valued at an amount below the most recent trading price, based
                  on limited
                  trading activity.


63




**Chanticleer
                  Holdings, Inc.****Financial
                  Highlights****For
                  the Years Ended December 31, 2007, 2006 and
                  2005**
  **2007**
              
              **2006**
              
              **2005****PER
                  SHARE INFORMATION**Net
                  asset value, beginning of year
              
              $
              0.3139
              
              $
              0.2939
              
              $
              0.0283Net
                  decrease from operations
              
              
              (0.0311
              )
              
              (0.0527
              )
              
              (0.0293
              )Net
                    change in realized gain (loss) and unrealizedappreciation
                    (depreciation) of investments, net
              
              
              0.0326
              
              
              0.0268
              
              
              (0.0035
              )Net
                  increase from stock transactions
              
              
              0.1017
              
              
              0.0459
              
              
              0.2984Net
                  asset value, end of year
              
              $
              0.4171
              
              $
              0.3139
              
              $
              0.2939Per
                  share market value:Beginning
                  of period
              
              $
              1.1000
              
              $
              1.3000
              
              $
              0.0001End
                  of period
              
              
              0.5200
              
              
              1.1000
              
              
              1.3000Investment
                    return, based on market pricesat end of period
              
              
              -53
              %
              
              -15
              %
              
              (a
              )**RATIOS/SUPPLEMENTAL
                  DATA**Net
                  assets, end of year
              
              
              3,475,276
              
              
              2,413,389
              
              
              2,529,352Average
                  net assets
              
              
              3,073,782
              
              
              2,533,311
              
              
              358,949Annualized
                  ratio of expenses to average net assets
              
              
              27.0
              %
              
              21.0
              %
              
              44.0
              %Annualized
                  ratio of net increase (decrease) in netassets
                  from operations to average net assets
              
              
              0.4
              %
              
              -7.9
              %
              
              -48.0
              %Common
                  stock outstanding at end of year
              
              
              8,332,318
              
              
              7,689,461
              
              
              8,606,211Weighted
                  average shares outstanding during year
              
              
              7,995,528
              
              
              7,686,657
              
              
              5,245,319
  (a)
                  The Company began trading on July 27, 2005. Prior to that time,
                  the
                  Company's stock did not trade accordingly,
                  the market value was assumed to be $.0001, the par value of the
                  common
                  stock at the beginning
                  of 2005.


64


**ITEM
                  9:**
              **CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE**





None.


**ITEM
                  9A(T):**
              **CONTROLS
                  AND PROCEDURES**




Management’s
      Annual Report on Internal Control Over Financial Reporting





The
      management of the Company is responsible for establishing and maintaining
      adequate internal control over financial reporting and for the assessment of
      the
      effectiveness of internal control over financial reporting. As defined by the
      SEC, internal control over financial reporting is defined in Rule 13a-15(f)
      or
      15d-15(f) promulgated under the Exchange Act as a process designed by, or under
      the supervision of, the Company’s principal executive and principal financial
      officers and effected by the Company’s board of directors, management and other
      personnel, to provide reasonable assurance regarding the reliability of
      financial reporting and the preparation of financial statements for external
      purposes in accordance with generally accepted accounting principles. The
      Company’s internal control over financial reporting is supported by written
      policies and procedures that: (1) pertain to the maintenance of records that,
      in
      reasonable detail, accurately and fairly reflect the transactions and
      dispositions of the Company’s assets; (2) provide reasonable assurance that
      transactions are recorded as necessary to permit preparation of financial
      statements in accordance with generally accepted accounting principles and
      that
      receipts and expenditures of the Company are being made only in accordance
      with
      authorizations of the Company’s management and directors; and (3) provide
      reasonable assurance regarding prevention or timely detection of unauthorized
      acquisition, use or disposition of the Company’s assets that could have a
      material effect on the financial statements.





The
      Company’s internal control system was designed to provide reasonable assurance
      to the Company’s management and board of directors regarding the preparation and
      fair presentation of published financial statements. All internal control
      systems, no matter how well designed, have inherent limitations which may not
      prevent or detect misstatements. Therefore, even those systems determined to
      be
      effective can provide only reasonable assurance with respect to financial
      statement preparation and presentation. Projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with the policies or procedures may deteriorate.





Management
      conducted an evaluation of the effectiveness of the Company’s internal control
      over financial reporting as of December 31, 2007. In making this assessment,
      management used the framework set forth in the report entitled “Internal
      Control-Integrated Framework” issued by the Committee of Sponsoring
      Organizations of the Treadway Commission, or COSO. The COSO framework summarizes
      each of the components of a company’s internal control system, including (i) the
      control environment, (ii) risk assessment, (iii) control activities, (iv)
      information and communication, and (v) monitoring. Based on this evaluation,
      management concluded that the Company’s internal control over financial
      reporting was not effective as of December 31, 2007, due to a lack of
      segregation of duties.





65


This
      annual report does not include an attestation report of our registered public
      accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by our registered public
      accounting firm pursuant to temporary rules of the Securities and Exchange
      Commission that permits us to provide only management’s report in this annual
      report.


**ITEM
                  9B:**
              **OTHER
                  INFORMATION**





Not
      applicable.




66


**PART
      III**


**ITEM
                  10:**
              **DIRECTORS
                  AND EXECUTIVE OFFICERS OF THE
                  REGISTRANT**





The
      following section sets forth the names, ages and current positions with the
      Company held by the Directors, Executive Officers and Significant Employees
      as
      of December 31, 2007; together with the year such positions were assumed. There
      is no immediate family relationship between or among any of the Directors,
      Executive Officers or Significant Employees, and the Company is not aware of
      any
      arrangement or understanding between any Director or Executive Officer and
      any
      other person pursuant to which he was elected to his current position. Each
      Executive Officer will serve until he or she resigns or is removed or otherwise
      disqualified to serve, or until his or her successor is elected and qualified.





Each
      Director will serve until he or she resigns or is removed or otherwise
      disqualified to serve or until his or her successor is elected. The Company
      currently has four Directors. The Board of Directors does not expect to appoint
      additional Directors until a potential acquisition is identified.




NAME
              AGE
              POSITIONMichael
                  D. Pruitt
              47
              President,
                  CEO and Director since June 2005Michael
                  Carroll
              59
              Independent
                  Director since June 2005Brian
                  Corbman
              32
              Independent
                  Director since August 2005Paul
                  I. Moskowitz
              51
              Independent
                  Director since April 2007




Michael
      D. Pruitt


Michael
      Pruitt, a long-time entrepreneur with a proven track record, possesses the
      expertise to evaluate potential investments, form key relationships and
      recognize a strong management team.  Mr. Pruitt founded Avenel Financial
      Group, a boutique financial services firm concentrating on emerging technology
      company investments.  The business succeeded immediately, and in order to
      grow Avenel Financial Group to its full potential and better represent the
      company's ongoing business model, he formed Avenel Ventures, an innovative
      technology investment and business development company.  In the late 1980s,
      Mr. Pruitt owned Southern Cartridge, Inc., which he eventually sold to
      MicroMagnetic, Inc., where he continued working as Executive Vice President
      and
      a Board member until Southern Cartridge was sold to Carolina Ribbon in
      1992.  From 1992 to 1996, Mr. Pruitt worked in a trucking firm where he was
      instrumental in increasing revenues from $6 million to $30 million.  The
      firm was sold in 1996 to Priority Freight Systems.  Between 1997 and 2000,
      Mr. Pruitt assisted several public and private companies in raising capital,
      recruiting management and preparing companies to go public or be
      sold.  He was the CEO, President and Chairman of the Board of
      Onetravel Holdings, Inc. (formerly RCG Companies), a publicly traded holding
      company formerly listed on the AMEX.  Mr. Pruitt received a Bachelor
      of Arts degree from Coastal Carolina University in Conway, South Carolina,
      where
      he sits on the Board of Visitors of the Wall School of Business.  He
      is also Managing Director of Cain Capital Advisors. Mr.
      Pruitt is currently CEO and director of Syzygy Entertainment, Ltd, (SYZG.OB)
      and
      a director of HealthSport, Inc. (HSPO.OB).





67




Michael
      Carroll


Michael
      Carroll currently owns and operates a sales and training consulting firm based
      in Richmond, Virginia. Mr. Carroll has also served as a director for OneTravel
      Holdings, Inc., formerly RCG Companies Incorporated, since January of 2004.
      He
      previously spent 22 years in the distribution business, 19 of which were in
      computer products distribution. In 1978, Mr. Carroll founded MicroMagnetic,
      Inc., a computer supply distribution company that he sold to Corporate Express
      in 1997. From 1997 to 1999, he was a division president at Corporate Express,
      a
      publicly traded business-to-business office products and service provider.
      He
      holds a Bachelor’s Degree in Business Management from The College of William
& Mary in Williamsburg, Virginia, and a Master’s Degree in Business
      Administration from Virginia Commonwealth University.





Brian
      Corbman


Brian
      Corbman is the managing director of Ardent Advisors, a consulting company he
      co-founded in 2003, that specializes in business strategy and corporate advisory
      services for emerging growth companies. Mr. Corbman is in the process of
      becoming an Officer of Supervisory Jurisdiction under the Westor Capital broker
      dealer umbrella and services buy-side institutional investors via equity
      research, institutional trading execution and investment banking activities.
      Previously, he was an institutional salesman at Fulcrum Global Partners and
      Banc
      of America Securities. Prior to that, he gained valuable corporate experience
      working for GSI Commerce, a publicly traded company, where he was the sole
      corporate development analyst. A Magna Cum Laude graduate of George Washington
      University in Washington, DC, he holds a Bachelor’s degree in Business
      Administration. Mr. Corbman has also attained the NASD general securities
      principal Series 24, Series 7 and Series 63 licenses.





Paul
      I. Moskowitz


Paul
      Moskowitz is a Phi Beta Kappa of Vassar College and Cardozo Law School. Mr.
      Moskowitz was a co-founder and partner of a successful New York law firm
      specializing in corporate and real estate law. He became affiliated with The
      World Travel Specialist Group/The Lawyers’ Travel Service (“WTSG/LTS”) in 1988
      and served as corporate counsel, representing the growing travel agency network
      in legal, real estate, and other business activities. In 1989, he joined WTSG
      full time as President and Chief Operating Officer until March 2003, with his
      primary responsibilities including day-to-day operations which encompassed
      WTSG’s airline relationships and sales and marketing. Mr. Moskowitz led the
      growth of WTSG to one of the top 20 U.S. travel management firms with more
      than
      90 offices throughout the U.S. Mr. Moskowitz is currently engaged as a
      consultant for another travel organization.





**AUDIT
      COMMITTEE**





The
      Board
      of Directors has determined that Michael Carroll meets the requirements of
      a
      financial expert and serves as Chairman of the Audit Committee. Mr. Carroll
      is
      independent as specified in Item 7 (d)(3)(iv) of Schedule 14A under the Exchange
      Act.





68




We
      have a
      separately designated standing audit committee established in accordance with
      Section 3 (a)(58)(A) of the Exchange Act, which is currently made up of Mr.
      Carroll and Mr. Corbman.





The
      primary responsibility of the Audit Committee is to oversee our financial
      reporting process on behalf of the Board of Directors and report the result
      of
      their activities to the Board. Such responsibilities shall include, but shall
      not be limited to, the selection and, if necessary, the replacement of our
      independent auditors and review and discussion with such independent auditors
      of
      (i) the overall scope and plans for the audit, (ii) the adequacy and
      effectiveness of the accounting and financial controls, including our system
      to
      monitor and manage business risks, and legal and ethical programs, and (iii)
      the
      results of the annual audit, including the financial statements to be included
      in our annual report on Form 10-K.





**COMPLIANCE
      WITH SECTION 16(A) OF THE EXCHANGE ACT**




Section
      16(a) of the Securities Exchange Act of 1934, as amended, requires our executive
      officers, directors and persons who own more than ten percent of our common
      stock to file initial reports of ownership and changes in ownership with the
      SEC. Additionally, SEC regulations require that we identify any individuals
      for
      whom one of the referenced reports was not filed on a timely basis during the
      most recent fiscal year or prior fiscal years. To the best of our knowledge,
      based solely on a review of reports furnished to us, each of the Directors
      timely filed any required Form 4’s during fiscal 2007.





**CODE
      OF ETHICS**





The
      Board
      of Directors of the Company adopted a Code of Ethics which was effective May
      23,
      2005 and is attached hereto as Exhibit 14.





The
      Code
      of Ethics in general prohibits any officer, director or advisory person
      (collectively, "Access Person") of the Company from acquiring any interest
      in
      any security which we (i) are considering a purchase or sale thereof, (ii)
      are
      being purchased or sold by us, or (iii) are being sold short by us. The Access
      Person is required to advise us in writing of his or her acquisition or sale
      of
      any such security.





**INVESTMENT
      COMMITTEE**





The
      Board
      of Directors of the Company adopted an Investment Committee Charter which was
      effective May 23, 2005.





The
      Investment Committee shall have oversight responsibility with respect to
      reviewing and overseeing our contemplated investments and portfolio companies
      and investments on behalf of the Board and shall report the results of their
      activities to the Board. Such Investment Committee shall (i) have the ultimate
      authority for and responsibility to evaluate and recommend investments, and
      (ii)
      review and discuss with management (a) the performance of portfolio companies,
      (b) the diversity and risk of our investment portfolio, and, where appropriate,
      make recommendations respecting the role or addition of portfolio investments
      and (c) all solicited and unsolicited offers to purchase portfolio companies.





69




**NOMINATING
      COMMITTEE**





We
      do not
      currently have a standing nominating committee, or a committee performing
      similar functions. The full Board of Directors currently serves this
      function.




**ITEM
                  11:**
              **EXECUTIVE
                  COMPENSATION**





The
      Compensation Committee of the Board of Directors deliberates executive
      compensation matters to the extent they are not delegated to the Chief Executive
      Officer.




**a.** **Summary
        Compensation Table**




The
      following table shows the compensation of the Company’s Chief Executive Officer
      and each executive officer whose total cash compensation exceeded $100,000
      for
      the three years ended December 31, 2007.





**ANNUAL
      COMPENSATION**


**Name
                  and Principal Position**
              
              **Year**
              
              **Salary**
              
              **Bonus**
              
              **Total**Michael
                  D. Pruitt (CEO since
              
              
              2007
              
              $
              41,917
              
              $
              -
              
              $
              41,917June
                  2005) (1)
              
              
              2006
              
              
              -
              
              
              -
              
              
              -2005
              
              
              -
              
              
              -
              
              
              -Ross
                  Silvey (CEO until
              
              
              2007
              
              
              N/A
              
              
              N/A
              
              
              N/AJune
                  2005) (2)
              
              
              2006
              
              
              N/A
              
              
              N/A
              
              
              N/A2005
              
              
              -
              
              
              -
              
              
              -




(1)
            Mr.
                Pruitt did not receive any compensation during 2005 and
                2006.


(2)
            Mr.
                Silvey did not receive any compensation during his term in office
                as
                CEO.





Required
      columns for stock awards, option awards, non-entity incentive plan compensation,
      change in pension value and nonqualified deferred compensation earnings and
      all
      other compensation are omitted from the table above as the amounts are all
      zero.





Mr.
      Pruitt did not receive compensation during our initial start-up phase as a
      BDC.
      His compensation commenced in February 2007. Our compensation for Directors
      is
      based on comparative compensation levels for similar positions and time
      requirements.




70


**EMPLOYMENT
      AGREEMENTS**





The
      Company does not have any current employment agreements with its officers and
      directors. The company intends to pay its Executives and Directors salaries,
      wages, or fees commensurate with experience and industry standards in
      relationship to the success of the company.





**b.** **Grants
        of plan-based awards table**





There
      were no grants of plan-based awards during the year for the named
      individuals.





**c.** **Outstanding
        equity awards at fiscal year-end table**





There
      were no outstanding equity awards at fiscal year-end for the named
      individuals.





**d.** **Option
        exercises and stock vested table**





There
      were no option exercises during the year and no stock vested at fiscal year-end
      for the named individuals.





**e.** **Pension
        benefits**





There
      are
      no pension plans.





**f.** **Nonqualified
        defined contribution and other nonqualified deferred compensation
        plans**





There
      are
      no nonqualified defined contribution or other nonqualified deferred compensation
      plans.





**g.** **Potential
        payments upon termination or changes-in-control**





There
      are
      no potential payments upon termination or changes-in-control for the named
      individuals.





**h.** **Compensation
        of directors**


Directors
                  FeeEarned
                  or PaidName
              
              In
                  Cash ($)Michael
                  Carroll
              
              $
              1,500William
                  Block
              
              
              -Paul
                  I. Moskowitz
              
              
              1,500




71


Directors
      are generally compensated $1,500 for each meeting during the year. Although
      there were no formal meetings during the year, Mr. Carroll and Mr. Moskowitz
      were paid $1,500 each. Mr. Pruitt and Mr. Corbman do not currently receive
      director fees.





The
      columns for stock awards, option awards, non-equity incentive plan compensation,
      change in pension value and nonqualified deferred compensation earnings and
      all
      other compensation are omitted as there was no other form of compensation for
      the directors.





**i.** **Compensation
        committee interlocks and insider participation**





The
      outside Directors serve on the compensation committee.





**j.** **Compensation
      committee report**





Based
      on
      the Compensation Discussion and Analysis required by Item 402(b) between the
      compensation committee and management, the compensation committee recommended
      to
      the Board of Directors that the Compensation Discussion and Analysis be included
      in the 10-K.




**ITEM
                  12:**
              **SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                  STOCKHOLDER MATTERS**
  **SECURITY
        OWNERSHIP OF CERTAIN BENEFICIAL OWNERS**





The
      following table indicates all persons who, as of February 5, 2008, the most
      recent practicable date, are known by us to own beneficially more than 5% of
      any
      class of our outstanding voting securities. As of February 5, 2008, there were
      8,618,032 shares of our common stock outstanding. Except as otherwise indicated
      below, to the best of our knowledge, each person named in the table has sole
      voting and investment power with respect to the securities beneficially owned
      by
      them as set forth opposite their name.




**Name
                  and Address of**
              **Amount
                  and Nature of****Title
                  of Class**
              **Beneficial
                  Owner**
              **Beneficial
                  Owner**
              **%
                  of Class**Common
              Palisades
                  Master Fund, LP
              3,548,072
              41.17
              %4500
                  Cameron Valley Parkway, # 270Charlotte,
                  NC 28211


72


**SECURITY
      OWNERSHIP OF MANAGEMENT**




The
      following table indicates the beneficial ownership of our voting securities
      of
      all Directors of the Company and all Executive Officers who are not Directors
      of
      the Company, and all officers and directors as a group, as of February 5, 2008,
      the most recent practicable date. As of February 5, 2008, there were 8,618,032
      shares of our common stock outstanding. Except as otherwise indicated below,
      to
      the best of our knowledge, each person named in the table has sole voting and
      investment power with respect to the securities beneficially owned by them
      as
      set forth opposite their name. All options are currently exercisable, unless
      otherwise indicated.


**Name
                  and Address of**
              **Amount
                  and Nature of****Title
                  of Class**
              **Beneficial
                  Owner**
              **Beneficial
                  Owner**
              **%
                  of Class**Common
              Michael
                  D. Pruitt
              1,688,511
              19.59
              %4500
                  Cameron Valley Parkway, # 270Charlotte,
                  NC 28211Common
              Michael
                  Carroll
              25,000
              *4500
                  Cameron Valley Parkway, # 270Charlotte,
                  NC 28211Common
              Paul
                  I. Moskowitz
              1,000
              *4500
                  Cameron Valley Parkway, # 270Charlotte,
                  NC 28211Common
              Brian
                  Corbman
              25,500
              *4500
                  Cameron Valley Parkway, # 270Charlotte,
                  NC 28211Common
              All
                  officers and directors as a
              1,740,011
              20.19
              %Group
                  (4 persons)





*
            Less
                than 1%.




**EQUITY
      COMPENSATION PLAN INFORMATION**





We
      do not
      currently have an equity compensation plan.




73


**ITEM
                13:**
            **CERTAIN
                RELATIONSHIPS AND RELATED
                TRANSACTIONS**




Michael
      D. Pruitt, the Company’s Chief Executive Officer, is also CEO and a Director of
      Syzygy Entertainment, Ltd. (SYZG) and a Director of HealthSport, Inc.
      (HSPO).





During
      2007, Mr. Pruitt contributed 300,000 shares of Syzygy Entertainment, Ltd. to
      the
      Company, which was valued by the investment committee at $600,000 on the dates
      contributed. Mr. Pruitt will not receive additional compensation as a result
      of
      the transfers.





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.





In
      January 2007, the Company formed Advisors as a wholly-owned subsidiary to manage
      Investors II, as well as other designated projects. Pursuant to Regulation
      S-X
      Rule 6, Advisors will not be consolidated with the Company. The Company has
      advanced $15,443 to Advisors for legal expenses and has included this amount
      as
      the investment cost of this entity.





During
      the three months ended March 31, 2007, the Company sold its investment in two
      securities to Investors II for $21,775, which approximated market value on
      the
      transaction dates. The Company realized a profit of $127 on the
      transactions.





On
      December 13, 2006, we completed acquisition of a $50,000 investment in
      Chanticleer Investors LLC from Mr. Pruitt, at its original cost and at the
      estimated market value at the time. This increased our interest in Chanticleer
      Investors LLC from $1,100,000 (22%) to $1,150,000 (23%) at December 31, 2007
      and
      2006.


**ITEM
                  14:**
              **PRINCIPAL
                  ACCOUNTANT FEES AND
                  SERVICES**





AUDIT
      FEES: For the fiscal years ended December 31, 2007 and 2006, Creason &
Associates, P.L.L.C. (“Creason”) billed the Company $33,950 and $35,700,
      respectively, for services rendered through February 29, 2008, for the audit
      of
      the Company’s financial statements included in its report on Form 10-K and the
      reviews of the financial statements included in its reports on Form 10-Q filed
      with the SEC.





AUDIT
      RELATED FEES: None.





TAX
      FEES:
      Not applicable.





OTHER
      FEES: None.




74


**PART
      IV**


**TEM
                  15:**
              **EXHIBITS
                  AND FINANCIAL STATEMENT
                  SCHEDULES**


(a)
              The
                  following documents are filed as part of this
                  report:
 1.
              Financial
                  Statements - The following financial statements of Chanticleer
                  Holdings,
                  Inc. are contained in Item 8 of this Form
                  10-K:


·
              Report
                  of Independent Registered Public
                  Accountant
 ·
              Statements
                  of Net Assets at December 31, 2007 and
                  2006
 ·
              Statements
                  of Operations - For the years ended December 31, 2007, 2006 and
                  2005
 ·
              Statements
                  of Cash Flows - For the years ended December 31, 2007, 2006 and
                  2005
 ·
              Statements
                  of Changes in Net Assets - For the years ended December 31, 2007,
                  2006 and
                  2005
 ·
              Schedule
                  of Investments - At December 31, 2007 and
                  2006
 ·
              Notes
                  to the Financial Statements
 ·
              Financial
                  Highlights - For the years ended December 31, 2007, 2006 and
                  2005


2.
              Financial
                  Statement Schedules were omitted, as they are not required or are
                  not
                  applicable, or the required information is included in the Financial
                  Statements.
 
 3.
              Exhibits
                  - The following exhibits are filed with this report or are incorporated
                  herein by reference to a prior filing, in accordance with Rule
                  12b-32
                  under the Securities Exchange Act of
                  1934.


Exhibit
              Description
 
 14
              Code
                  of Ethics
 
 31.1
              Certification
                  of the Chief Executive Officer and Chief Financial Officer pursuant
                  to
                  Rule 13a-14 of the Securities Exchange Act of
                  1934
 
 32.1
              Certification
                  of the Chief Executive Officer and Chief Financial Officer pursuant
                  to
                  Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
                  1350




75


**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) 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 on July
      1,
      2008.




**CHANTICLEER
              HOLDINGS, INC.**Date:
            By:
            /s/ Michael
              D. PruittMichael
                D. Pruitt, Chairman,
              Chief
                Executive Officer and
              Chief
                Financial Officer




Pursuant
      to the requirements of the Securities Exchange Act of 1934, this Report has
      been
      signed below by the following persons on behalf of the Registrant in the
      capacities and on the dates indicated.


Date
                
                
                Title
                    (Capacity)
                SignatureJuly
                      1, 2008
                Chairman,
                    Chief Executive Officer
                /s/
                    Michael D. Pruittand
                    Chief Financial Officer
                Michael
                    D. PruittJuly
                      1, 2008
                Director
                /s/
                    Michael CarrollMichael
                    CarrollJuly
                      1, 2008
                Director
                /s/
                    Brian CorbmanBrian
                    CorbmanJuly
                      1, 2008
                Director
                /s/
                    Paul I. MoskowitzPaul
                    I. Moskowitz  76