Sonnet BioTherapeutics Holdings, Inc. - Quarter Report: 2009 March (Form 10-Q)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

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

For Quarter Ended: March 31, 2009

Commission File Number: 000-29507

CHANTICLEER HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

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

4201 Congress Street, Suite 145, Charlotte, NC 28209

(Address of principal executive office) (zip code)

(704) 366-5122

(Issuer’s telephone number)

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

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

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x

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

The number of shares outstanding of registrant’s common stock, par value $.0001 per share, as of April 23, 2009, was 946,376 shares.

Chanticleer Holdings, Inc. and Subsidiaries

INDEX

			Page
			No.

Part I		Financial Information (unaudited)

	Item 1:	Condensed Consolidated Financial Statements	3

		Balance Sheets as of March 31, 2009 and December 31, 2008	3
		Statements of Operations – For the Three Months Ended March 31, 2009 and 2008	4
		Statements of Cash Flows – For the Three Months Ended March 31, 2009 and 2008	5
		Notes to Financial Statements	6
	Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
	Item 3:	Quantitative and Qualitative Disclosure about Market Risk	15
	Item 4:	Controls and Procedures	15

Part II		Other Information	16

	Item 1:	Legal Proceedings	16
	Item 1A:	Risk Factors	16
	Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	16
	Item 3:	Defaults Upon Senior Securities	16
	Item 4:	Submission of Matters to a Vote of Security Holders	16
	Item 5:	Other Information	16
	Item 6:	Exhibits	16

PART 1: FINANCIAL INFORMATION
ITEM 1: CONDENSED FINANCIAL STATEMENTS

Chanticleer Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, 2009 (Unaudited) and December 31, 2008

	2009			2008
ASSETS
Current assets:
Cash and cash equivalents	$	27,819		$	14,151
Due from affiliate		6,807			5,150
Prepaid expenses		-			4,255
Total current assets		34,626			23,556
Property and equipment, net		34,010			36,161
Deferred acquisition costs		279,050			279,050
Investments at fair value		69,976			108,545
Other investments, principally accounted for under the equity method		2,037,598			1,773,969
Deposits		3,980			3,980

Total assets	$	2,459,240		$	2,225,261

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	194,493		$	178,325
Accrued expenses		500			500
Notes payable		500,000			500,000
Deferred revenue		302,083			-
Due to related party		55,550			7,300

Total current liabilities		1,052,626			686,125

Commitments and contingencies

Stockholders' equity:
Common stock, $.0001 par value. Authorized 200,000,000 shares;
issued and outstanding 946,376 shares at March 31, 2009 and
at December 31, 2008		946			946
Additional paid in capital		4,642,347			4,642,347
Accumulated other comprehensive loss		(1,188,594	)		(1,150,025	)
Accumulated deficit		(2,048,085	)		(1,954,132	)

Total stockholders' equity		1,406,614			1,539,136

Total liabilities and stockholders' equity	$	2,459,240		$	2,225,261

See accompanying notes to condensed consolidated financial statements.

Chanticleer Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
For the Three Months Ended March 31, 2009 and 2008
(Unaudited)

	2009			2008
Revenue
Management fee income from affiliate	$	25,000		$	25,000
Consulting income		78,417			128,555

		103,417			153,555
Expenses:
General and administrative expense		205,004			298,641

		205,004			298,641
Loss from operations before income taxes		(101,587	)		(145,086	)
Income taxes		-			-

Loss from operations		(101,587	)		(145,086	)

Other income (expense)
Unrealized loss from marketable equity securities		-			(17,500	)
Equity in earnings of investments		11,500			3,348
Interest expense		(3,866	)		(2,047	)
Total other income (expense)		7,634			(16,199	)
Net loss		(93,953	)		(161,285	)
Other comprehensive loss:
Unrealized loss on available-for-sale securities		(38,569	)		(20,938	)
Net comprehensive loss	$	(132,522	)	$	(182,223	)

Net loss per share, basic and diluted	$	(0.10	)	$	(0.19	)

Weighted average shares outstanding		946,376			859,292

See accompanying notes to condensed consolidated financial statements.

Chanticleer Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2009 and 2008
(Unaudited)

	2009			2008
Cash flows from operating activities
Net loss	$	(93,953	)	$	(161,287	)
Adjustments to reconcile net loss to net cash used in
operating activities:
Change in unrealized (gain) loss of marketable securities		-			17,500
Depreciation		3,000			2,930
Equity in (earnings) loss of investments		(11,500	)		(3,348	)
Change in other assets and liabilities:
(Increase) decrease in accounts receivable		(1,657	)		-
(Increase) decrease in prepaid expenses and other assets		4,255			(15,250	)
Increase (decrease) in accounts payable and accrued expenses		16,169			11,152
Increase (decrease) in deferred revenue		(72,917	)		(128,555	)
Net cash used in operating activities		(156,603	)		(276,858	)
Cash flows from investing activities
Purchase of fixed assets		(850	)		(1,822	)
Purchase of investments		-			(120,000	)
Distributions from equity investments		11,500			11,500
Proceeds from sale of investments		111,371			-
Net cash provided by (used in) operating activities		122,021			(110,322	)
Cash flows from financing activities
Proceeds from sale of common stock		-			200,000
Cash overdraft		-			(25,736	)
Loan from related party		48,250
Loan proceeds		-			214,228
Net cash provided by financing activities		48,250			388,492
Net increase in cash and cash equivalents		13,668			1,312
Cash and cash equivalents, beginning of period		14,151			183
Cash and cash equivalents, end of period	$	27,819		$	1,495

Supplemental cash flow information
Cash paid for interest and income taxes:
Interest	$	3,866		$	2,047
Income taxes		-			-

See accompanying notes to condensed consolidated financial statements.

Chanticleer Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1:

NATURE OF BUSINESS

(1)

Organization – The consolidated financial statements include the accounts of Chanticleer Holdings, Inc. (“Holdings”) and its wholly owned subsidiaries Chanticleer Advisors LLC (“Advisors”), Avenel Ventures LLC ("Ventures") and Avenel Financial Services LLC ("Financial") (collectively the “Company”, "Companies," “we”, or “us”). All significant intercompany balances and transactions have been eliminated in consolidation. Holdings was organized October 21, 1999, under the laws of the State of Delaware. On April 25, 2005, the Company formed a wholly owned subsidiary, Chanticleer Holdings, Inc. On May 2, 2005, Tulvine Systems, Inc. merged with and changed its name to Chanticleer Holdings, Inc. Ventures has entered into consulting agreements with two clients and has received common stock from the clients for its business management and consulting services. Financial was organized to provide unique financial services to the restaurant, real estate development, investment advisor/asset management and philanthropic organizations. Initial services have not yet commenced and are expected to include captive insurance, CHIRA and trust services.

(2)

Shareholder Actions – The holders of a majority of the Company’s issued and outstanding common stock, pursuant to a written consent in lieu of a meeting, in accordance with the Company’s certificate of incorporation and Delaware General Corporation Law Section 228, have approved: (i) the withdrawal of the Company’s election to be treated as a BDC under the 1940 Act and (ii) the reverse split of the Company’s issued and outstanding common stock at a ratio of 1:10.

Withdrawal of the Company’s election to be treated as a BDC under the 1940 Act became effective on July 21, 2008, when the Company filed Form N-54c with the U.S. Securities and Exchange Commission (“SEC”).

The 1:10 reverse split of the Company’s issued and outstanding common stock was effective on July 17, 2008, at which time the Company began trading under a new symbol on the OTC Bulletin Board (CCLR). All share amounts and transactions have been restated to give effect to the reverse split as if it happened at the beginning of the earliest period presented.

(3)

General - The financial statements included in this report have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and include all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation. These financial statements have not been audited.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations for interim reporting. The Company believes that the disclosures contained herein are adequate to make the information presented not misleading. However, these financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report for the period ended December 31, 2008, which is included in the Company’s Form 10-K.

NOTE 2:

CHANGE IN REPORTING ENTITY

From May 23, 2005 until July 21, 2008, the Company operated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). As such, the Company was subject to different reporting requirements and methods of accounting for its investments. With the change back to being an operating company, the Company is no longer subject to the requirements of a BDC and the Company was required pursuant to SFAS No. 154, “Accounting Changes and Error Corrections” (“SFAS 154”) to retroactively modify its financial statements as if it were not subject to the requirements of a BDC during all periods presented.

The following reports the effect of the change on net earnings (loss), other comprehensive income and net earnings per-share for the three months ended March 31, 2009 and 2008:

	2009			2008

Net decrease in net assets from operations	$	-		$	(168,176	)
Fair value decrease recorded for available-
for-sale securities now included in other
comprehensive loss		-			20,938
Equity in loss of investments		-			(8,152	)
Net loss of wholly-owned subsidiary not
previously consolidated		-			(5,895	)
Net loss		(93,953	)		(161,285	)
Other comprehensive loss:
As originally reported		-			-
Unrealized losses on available-for-
sale securities		(38,569	)		(20,938	)
Net comprehensive loss	$	(132,522	)	$	(182,223	)

Net loss per share, basic and diluted:
As originally reported		N/A		$	(0.20	)
Restated	$	(0.10	)	$	(0.19	)

NOTE 3:

INVESTMENTS

Investments are summarized as follows at March 31, 2009 and December 31, 2008:

	2009			2008
Available for sale securities:
Cost	$	1,258,571		$	1,258,571
Unrealized loss		(1,188,595	)		(1,150,026	)
Total	$	69,976		$	108,545

Other investments:
Investments using the equity method:
Balance, beginning of period	$	1,241,371		$	1,410,482
Equity in earnings (loss)		11,500			(123,111	)
Distributions from investments		(52,871	)		(46,000	)
Balance, end of period		1,200,000			1,241,371
Investments at cost		817,598			442,598
Investment deposits		20,000			90,000
	$	2,037,598		$	1,773,969

Equity investments consist of the following at March 31, 2009 and December 31, 2008:

	2009		2008
Carrying value:
Chanticleer Investors, LLC (23%)	$	1,150,000	$	1,150,000
First Choice Mortgage (33 1/3%) (a)		-		41,371
Confluence Partners, LLC (50%)		50,000		50,000
	$	1,200,000	$	1,241,371
Equity in earnings (loss):
Chanticleer Investors, LLC	$	11,500	$	46,000
First Choice Mortgage		-		(169,111	)
	$	11,500	$	(123,111	)
Distributions:
Chanticleer Investors, LLC	$	52,871	$	46,000

Undistributed earnings (loss) included in accumulated deficit	$	11,500	$	(208,629	)

(a) liquidated in January 2009.

The Company received investments in two companies in exchange for providing management services for one year. The Company recorded the investments at their estimated fair market value and is amortizing the related deferred revenue over the one year period in which services are being provided.

NOTE 4:

RELATED PARTY TRANSACTIONS

Michael D. Pruitt, the Company’s Chief Executive Officer, is also CFO and the sole director of Syzygy Entertainment, Ltd.

The Company had non-interest bearing advances in the amount of $55,550 and $7,300 at March 31, 2009 and December 31, 2008, respectively, from a company partly owned by Mr. Pruitt.

On July 31, 2006, the Company formed Chanticleer Investors II, LLC (“Investors II”). Investors II began raising funds in January 2007 for the purpose of investing in publicly traded value securities and is managed by Advisors.

The Company’s CEO contributed 300,000 shares of SYZG to the Company in 2007. The shares were valued at $600,000 based upon a liquidity discount to the price at which SYZG was trading at the time.

NOTE 5:

COMMITMENTS AND CONTINGENCIES

PENDING ACQUISITIONS

Hooters, Inc.

On March 11, 2008, the Company entered into a Stock Purchase Agreement for the purchase of Hooters, Inc., Hooters Management Corporation and their related restaurants (collectively “HI”) from the nine current individual HI shareholders, many of whom will continue to stay involved in the ongoing operation as shareholders of Chanticleer. The transaction is valued at approximately $55.1 million and could close in the second quarter of 2009.

The closing of the transaction is subject to Chanticleer raising the necessary debt and equity financing to complete the acquisition. Chanticleer has retained an investment banking firm to assist in securing the equity capital necessary to close the proposed transaction. Chanticleer has completed all other conditions and is in process of raising the necessary debt and equity financing to complete the transaction. (See current status below.)

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 the Estate of 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 25th anniversary with events on the 25th of each month and a grand pageant in Miami on July 23, 2008.

HI 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.

Through March 31, 2009, the Company has recorded $279,050 in deferred acquisition costs related to the planned acquisition of HI.

Texas Wings

On July 8, 2008, the Company entered into an Asset Purchase Agreement to acquire substantially all of the assets of Texas Wings Incorporated and its 45 related Hooters branded restaurants (collectively “Texas Wings”) for total consideration of approximately $106 million, including approximately $53 million in cash, approximately $37 million in Chanticleer common stock and convertible notes with an aggregate principal amount of approximately $16 million (the “Transaction”).

The Company will create an operating company and combine Texas Wings with HI and its 22 Hooters restaurants, which the Company agreed to acquire in March 2008.

The Transaction is subject to a number of customary closing conditions and could close during the second quarter of 2009, concurrently with the closing of the HI acquisition. (See current status below.)

Current Status

The termination date for the Company’s pending acquisition of the stock of HI and certain of its related entities followed immediately by the subsequent acquisition of Texas Wings and certain of its related entities has passed. Although the sellers have not, to date, exercised their rights to terminate the agreements and the Company continues to seek to consummate these transactions, there is no assurance that the Company will be able to close the pending acquisitions.

In addition, the commitment letters from certain financial institutions to provide one or more related entities of the Company the $85,000,000 Senior Secured Credit have expired, primarily due to the inability of the Company to raise the necessary equity portion of the financing at acceptable terms in today’s financial environment. The Company continues to communicate with the financial institutions that agreed to provide the credit facility; however, there can be no assurance that the Company will be successful in obtaining any financing or that the terms of any credit facility in the future will be acceptable to the Company.

NOTE 6:

GOING CONCERN

At March 31, 2009 and December 31, 2008, the Company had current assets of $34,626 and $23,556; current liabilities of $1,052,626 and $686,125; and negative working capital of $1,018,000 and $662,569, respectively. The Company incurred a loss of $93,953 during the three month period ended March 31, 2009. The Company receives quarterly cash inflow of $25,000 from management fees and $11,500 from investment distributions, but expects quarterly cash requirements of approximately $130,000 per quarter commencing in the second quarter of 2009, assuming the acquisitions discussed above are not completed.

The Company expects to have sufficient funding available from related party loans, private placements of its common stock and sales of a portion of its investments until the possible second quarter of 2009 close of the acquisitions of HI and Texas Wings. Subsequent to the close, the overhead requirements will be covered by distributions from the operations of HI and Texas Wings.

In the event the acquisitions do not close, the Company expects to fund its reduced overhead of approximately $130,000 per quarter from management income, distributions from its investments and a short-term loan of no more than $100,000 until May 2009, when the Company is scheduled to receive a distribution from an investment in the amount of approximately $1,275,000. At that time, the Company plans to repay the line of credit, any other short-term borrowings and have sufficient cash to cover all overhead requirements for at least another year while increasing the funds which Advisors manages.

The Company formed Chanticleer Holdings, Ltd., a Jersey corporation, during the first quarter of 2009. The Company plans to transfer the franchise rights for South Africa to this company and raise funds in Germany to develop up to four restaurant locations. The Company has a partner for half of the development costs.

If the above events do not occur or if the Company does not raise sufficient capital, substantial doubt about the Company’s ability to continue as a going concern exists. These consolidated financial statements do not reflect any adjustments that might result from the outcome of these uncertainties.

ITEM 2:

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our financial statements and notes thereto included elsewhere in this Form 10-Q. This Form 10-Q contains forward-looking statements regarding the plans and objectives of management for future operations. This information may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and we cannot assure you that the projections included in these forward-looking statements will come to pass. Our actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors.

We registered our common stock on a Form 10-SB registration statement filed pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 12(g) thereof. We filed with the Securities and Exchange Commission periodic and episodic reports under Rule 13(a) of the Exchange Act, including quarterly reports on Form 10-QSB and annual reports on Form 10-KSB until we became a BDC when we began filing reports on Form 10-Q and Form 10-K.

On June 1, 2005, we filed a notification on Form N54a with the U.S. Securities and Exchange Commission, (the “SEC”) indicating our election to be regulated as a business development company (a “BDC”) under the Investment Company Act of 1940 (the “1940 Act”). Under this election, we adopted corporate resolutions to operate as a closed-end management investment company as a BDC. We operated as a non-diversified company as that term is defined in Section 5(b)(2) of the 1940 Act and at all times conducted our business so as to retain our status as a BDC. We could not change the nature of our business so as to cease to be, or withdraw our election as, a BDC without the approval of the holders of a majority of our outstanding voting stock as defined under the 1940 Act.

Withdrawal of the Company’s election to be treated as a BDC under the 1940 Act became effective on July 21, 2008, when the Company filed Form N-54c with the SEC, following approval by a majority of the Company’s shareholders.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Critical accounting policies are those that are both important to the presentation of our financial condition and results of operations and require management’s most difficult, complex, or subjective judgments. Our most critical accounting policy relates to the valuation of our investments.

Liquidity and capital resources

At March 31, 2009, we had a working capital deficit of $1,018,000 as compared to $662,569 at December 31, 2008. Our working capital declined $355,431. The decline consisted primarily of the increase in deferred revenue of $302,083 and the net loss for the period of $93,953.

As discussed in more detail in Note 5 to the condensed consolidated financial statements, on March 11, 2008, the Company entered into a Stock Purchase Agreement for the purchase of Hooters, Inc., Hooters Management Corporation and their related restaurants (collectively “HI”) from the nine current individual HI shareholders, many of whom will continue to stay involved in the ongoing operation as shareholders of Chanticleer. The transaction is valued at approximately $55.1 million and could close in the second quarter of 2009.

The Company will create one operating company and combine Texas Wings with HI and its 22 Hooters restaurants, which the Company agreed to acquire in March 2008. Texas Wings is one of the strongest franchises in the Hooters restaurant system and when combined with HI, which was the original creator of the Hooters concept, are expected to become the standard bearer for the Hooters brand.

The closing of the transactions are subject to Chanticleer raising the necessary debt and equity financing to complete the acquisition and other customary closing conditions. Chanticleer has retained an investment banking firm to assist in securing the equity capital necessary to close the proposed transaction.

When HI sold the Hooters brand to Hooters of America, HI retained unique acquisition and operational rights, which will benefit the Company going forward. HI has the right to acquire existing Hooters franchisees without the consent of the franchisor, and HI has significant flexibility in the manner in which it operates its restaurants, rights that will benefit the Texas Wings business upon the closing of the Transaction.

On April 1, 2008, the Company advanced $120,000 to Tyler NV, Inc. for the initial required deposit to Hooters of America for development rights within the state of Nevada for Hooters restaurants. The Company had $50,000 of this amount returned in December 2008 and received the balance of $70,000 in the first quarter of 2009.

On April 12, 2007, the Company filed an Offering Circular under Regulation E promulgated under the Securities Act of 1933 to raise up to $5,000,000 by selling between 400,000 and 714,286 shares of its common stock at prices ranging between $7.00 and $12.50 per share. The offering was closed on February 11, 2008 with $650,000 received for 92,859 shares of common stock during the offering period.

On March 27, 2008, the Company filed a new Offering Circular under Regulation E to raise up to $4,500,000 by selling between 500,000 and 1,000,000 shares of its common stock at prices ranging between $4.50 and $9.00 per share. The Company sold 83,532 shares for $584,700 pursuant to this 1-E, which was closed on July 18, 2008.

Comparison of three months ended March 31, 2009 and 2008

Revenues amounted to $103,417 in the three months ended March 31, 2009, as compared to $153,555 in the year earlier period. In both periods, the Company received equity investments for its management services and cash management fees of $25,000 in each period from an affiliated partnership it manages.

General and administrative expense amounted to $205,004 in the 2009 quarter as compared to $298,641 in the 2008 quarter. The principal decreases were professional fees of $69,705, printing and reproduction of $14,315 and travel and entertainment of $10,732. The professional fees in 2008 were higher due to the initial work being done to raise capital for the pending acquisitions.

Other income (expense) amounted to $7,634 in 2009 and ($16,199) in 2008. The Company recorded an unrealized loss in 2008 from marketable equity securities in the amount of $17,500. All marketable equity securities were sold by the end of 2008.

ITEM 3:

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. 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 is 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.

ITEM 4:

CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer has reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 240.13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934) as of March 31, 2009. Based on that review and evaluation, which included inquiries made to certain other employees of the Company, the CEO concluded that the Company’s current disclosure controls and procedures, as designed and implemented, are effective in ensuring that information relating to the Company required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including insuring that such information is accumulated and communicated to the Company’s management, including the CEO, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Controls

There have been no significant changes in internal controls or in other factors that could significantly affect these controls during the quarter ended March 31, 2009, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II – OTHER INFORMATION

ITEM 1:

LEGAL PROCEEDINGS

Not applicable.

ITEM 1A:

RISK FACTORS

Not applicable.

ITEM 2:

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3:

DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4:

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5:

OTHER INFORMATION

Although the Company does not currently employ a Chief Financial Officer, Michael D. Pruitt, President and Chief Executive Officer, is also the principal accounting officer.

ITEM6:

EXHIBITS

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

Exhibit 31

Certification pursuant to 18 U.S.C. Section 1350 Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32

Certification pursuant to 18 U.S.C. Section 1350 Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURE

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

		CHANTICLEER HOLDINGS, INC.



Date: May 1, 2009	By:	/s/ Michael D. Pruitt
		Michael D. Pruitt,
		Chief Executive Officer and
		Chief Financial Officer