Chanticleer Holdings, Inc., (NASDAQ: HOTR) Initiation of Coverage. Serving Up A Unique Fast Casual Growth Opportunity

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1 , (NASDAQ: HOTR) Initiation of Coverage Serving Up A Unique Fast Casual Growth Opportunity We initiate coverage on, (NASDAQ: HOTR) with a price target of $6.00. Chanticleer is a unique speculative growth investment in the fast casual restaurants sector. Investment Highlights Buying this story It is our opinion that investors in the coming years will see Chanticleer transition into a profitable cash flow generative franchisee/operator. With its aggressive expansion utilizing both organic growth and acquisitions, the Company could reach 100 or more locations in the next 4 years, shareholders should be handsomely rewarded. Chanticleer s three main drivers are its growth as a Hooters franchisee, its Just Fresh chain, The Burger Joint and its American Roadside Burger concept. Unlike many of its larger well known peers, the Hooters brand is still experiencing international market expansion and Chanticleer s plan to expand the Just Fresh and either The Burger Joint or American Roadside domestically and internationally offers investors an exposure to this growth potential. Leveraging on experience Chanticleer seems to have a firm grasp on the fast casual market which remains one of the hottest in the restaurant industry. Through acquisitions, the company has created a portfolio of brands centered on healthy fresh food and better burgers, giving it diversification across the restaurant sector. Strong acceptance from international markets should carry the Hooters brand and also provide an eventual gateway to international franchising of other concepts and brands. Chanticleer stake in Hooters of America (HOA) HOTR is the only way to publicly invest in HOA. HOTR controls a 3% ownership in HOA and we estimate Chanticleer s capital interest at 1.06% ownership interest. HOA is the Atlanta-based operator and franchiser of over 430 Hooters restaurants in 28 countries, which generate over $1bn of system-wide revenues annually. As reported in the press recently, HOA is currently up for sale and we assume a sale multiple of 7.5x 8.5x EBITDA, implying a sale price of c. $500mn. We currently value HOTR s stake at $5mn which alone is more than 36% of its current market cap. We believe that the embedded value of Chanticleer s interest in HOA is not reflected in Chanticleer s share price and provides additional upside for investors. Q3 results, a reflection of things to come 1 Stock Details (Feb 6, 2015) Exchange Ticker Sector/Industry NASDAQ HOTR Stock Price $1.89 Services/Restaurants 52 wk. range $ $5.23 Shares o/s(mn) 7.24 Market Cap(mn) $13.68 Price Target $6.00 Key Metrics (in $mn) 2013A 2014E 2015E Revenue 8,247 31,347 41,240 EBITDA (3,984) (2,548) 1,031 Net Debt ,908 19,777 Current Ratio 0.3x 0.2x 0.1x Debt/Equity 0.1x 0.7x 1.6x Leverage 1.8x 2.2x 3.5x EPS ($0.72) ($0.67) ($0.87) Restaurant revenue was $9.1mn, an increase of 473.5% y-o-y; Restaurant EBITDA stood at $0.9mn, an increase of % y-o-y. The Company saw positive adjusted EDBITA of $0.5mn in Q3 from a loss of

2 $0.4mn in the comparable period in The Company received a cash dividend related to Chanticleer s share of its investment in HOA of approx. $0.5mn. Financial Summary Income Statement in USD 000 s 2013A 2014E 2015E 2016E 2017E 2018E 2019E 2020E Revenue 8,247 31,347 41,240 62,579 94, , , ,728 EBITDA (3,984) (2,548) 1,031 4,756 11,518 20,321 26,691 37,848 EBIT (4,606) (4,312) (1,548) 1,310 6,998 14,531 19,517 29,179 Net Income / (Loss) (5,214) (4,831) (6,327) (5,461) (1,126) 5,759 11,568 19,350 in USD 000 s 2013A 2014E 2015E Balance 2016E Sheet 2017E 2018E 2019E 2020E Cash 443 1,000 1,000 1,000 1,000 1,000 10,305 33,328 Current Assets 1,713 2,526 2,619 3,336 4,046 4,749 14,651 38,147 Non-Current Assets 18,374 39,493 42,688 46,126 50,103 53,721 56,634 58,989 Current Liabilities 5,532 13,591 23,915 34,552 31,180 30,444 31,942 36,099 Non-Current Liabilities 3,317 9,367 8,550 7,421 16,499 15,689 14,960 14,960 Total Debt 1,044 12,908 20,777 24,556 24,462 17,411 12,588 11,859 Shareholders Equity 11,239 19,062 12,842 7,488 6,469 12,336 24,382 46,077 in USD 000 s 2013A 2014E 2015E 2016E 2017E 2018E 2019E 2020E EBITDA Margin (48.3%) (8.1%) 2.5% 7.6% 12.2% 16.2% 17.2% 20.6% Key Metrics EBIT Margin (55.9%) (13.8%) (3.8%) 2.1% 7.4% 11.6% 12.6% 15.9% Capex Margin 49.3% 16.0% 14.0% 11.0% 9.0% 7.5% 6.5% 6.0% EPS ($0.72) ($0.67) ($0.87) ($0.75) ($0.16) $0.80 $1.60 $2.67 Net Debt ,908 19,777 23,556 23,462 16,411 2,283 (21,469) Current Ratio 0.3x 0.2x 0.1x 0.1x 0.1x 0.2x 0.5x 1.1x P / E (8.8x) (9.5x) (7.2x) (8.4x) (40.7x) 8.0x 4.0x 2.4x Debt / Equity 0.1x 0.7x 1.6x 3.3x 3.8x 1.4x 0.5x 0.3x Leverage 1.8x 2.2x 3.5x 6.6x 8.4x 4.7x 2.9x 2.1x Interest Coverage Ratio Balance Sheet Key Metrics (6.1x) (2.1x) (0.3x) (0.2x) 0.8x 1.9x 3.6x 5.9x Debt Coverage Ratio (3.0x) n.a (0.3x) 0.2x 0.7x 1.7x 3.1x 5.2x ROCE (37.5%) (13.5%) (4.6%) 4.1% 22.6% 48.8% 52.8% 50.4% ROE (42.5%) (15.1%) (18.8%) (17.0%) (3.6%) 19.4% 31.3% 33.4% 2

3 Investment Thesis Unique Portfolio of strong brands We view Chanticleer Holdings, Inc ( Company, Chanticleer or HOTR) as a unique speculative growth investment in the restaurants sector. Chanticleer owns and operates multiple restaurant brands both domestically and internationally including the iconic Hooters, American Roadside Burger (ARB), The Burger Joint and Just Fresh. Beginning with a focus on the Hooters brand, Chanticleer s management has charted a compelling growth story for the Company that is focused on bringing the taste of America abroad. The Company is in a high growth phase and if it continues to have access to funding, either through debt or equity, then we anticipate the Company to turn EBITDA positive and generate healthy cash flows in the future. Hooters At the end of Q3 2014, Chanticleer had 26 locations in operation of which 13 were Hooters franchises. Chanticleer currently owns, in whole or part, the exclusive franchise rights to develop and operate Hooters restaurants in South Africa, Hungary, Poland, Brazil, and the United Kingdom and has joint ventured with the current Hooters franchisee in Australia, while evaluating several additional international opportunities. Hooters is a casual beach-themed restaurant, with sports on television, jukebox music, and the extremely popular Hooters Girls. The menu consists of spicy chicken wings, seafood, sandwiches and salads. Hooters began in 1983 with its first restaurant in Clearwater, Florida. Currently, Hooters operates in 28 countries through more than 450 locations, generating close to $1bn revenues. The Company primarily operates Hooters in areas which house trendy bars, restaurants and local businesses with up market residential complexes surrounding the shopping district, creating an attractive mix of both business and residential guests. HOTR is the only way to publicly invest in HOA. HOTR controls a 3% ownership in HOA and we estimate Chanticleer s capital interest at 1.06% ownership interest. HOTR s CEO and President, Michael Pruitt, is a member of the HOA Board of Directors. In 2014, Hooters of America completed a refinancing, and the Company received a cash distribution of $526,106 as a result of its ownership interest in HOA. We believe Chanticleer could support 76 Hooters locations in its international territories. Additionally, the Company sees significant opportunity to expand the Hooters brand domestically through additional store openings in its franchise areas of Oregon and Washington. The combination of international and domestic growth will provide diversification with strong revenue and unit growth in the coming years. American Roadside Burgers In September 2013 Chanticleer acquired American Roadside Burgers ( ARB ) based in Charlotte, N.C. At the end of Q3 2014, there were 6 units operational including 1 in Smithtown, New York, 3 in Charlotte, North Carolina and 2 in South Carolina. 3

4 Each restaurant features a nostalgic "made in America" theme and focuses on premium burgers, milk shakes, and beer. The recent purchase of The Burger Co., a flex casual burger joint, will fit well with the rebranding of American Roadside Burgers to The American Burger Company ( ABC ). This acquisition is an integral step in the strategic growth plans to take the better-burger category into international markets. The unique format of these restaurants promotes franchising opportunities both domestic and internationally. We expect the better burger units owned by Chanticleer to grow into the double digits over the next two to three years as it refines its branding and growth strategy. Additional acquisitions are likely which will accelerate the overall growth. Just Fresh Rapid Expansionary Strategy The Just Fresh concept appeals to the growing demands of today's time-pressed consumers who are looking for quality, freshly prepared meals and meals on-the-go, and the Company is well poised to benefit from the success of this concept. The Just Fresh menu differs dramatically from the burgers-and-fries establishment. As the name suggests, Just Fresh focuses more on nutritional offerings such as freshly squeezed juices, gourmet coffee, fresh-baked goods and premium-quality sandwiches, salads and soups. As of Q3 2014, the Company operates from 6 locations in Charlotte, North Carolina and we expect the Company to have 13 units by the end of The acquisition of brands centered on healthy fresh food and gourmet burgers has enabled the Company to diversify across the restaurant sector. The Company intends to develop these concepts and franchise the brands both domestically and internationally. Chanticleer's unique opportunity lies in international expansion of the Hooters brand and the domestic and international growth and expansion of the Just Fresh and Burger Source: Investor Presentation (HOTR, December, 2014) concept. The international market, though relatively untapped, has proven to be lucrative to other U.S. fast casual establishments. Chanticleer currently has rights to develop and operate Hooters restaurants in the United Kingdom, Brazil, South Africa, Australia, and Hungary. With infrastructure already in place in these key international markets, the Company is uniquely positioned to take other American concepts abroad. Chanticleer s exclusive focus on acquiring specific international franchise rights for the Hooters chain represents an interesting strategy. The Company acquired exclusive rights to Brazil. Capitalizing on the success of its Nottingham location, Chanticleer plans on opening 2 additional units in the United Kingdom over the next 2 years. Of particular note is the fact that the Nottingham location is the fourth largest Hooters store outside the United States and the 15th largest Hooters store overall measured by sales. Chanticleer management believes there is an opportunity for up to 15 Hooters locations in the United Kingdom, and we anticipate UK expansion in the near term in London, Newcastle or possibly Manchester. 4

5 Acquisitions Bearing Fruits As discussed Chanticleer's growth opportunity is not just about the expansion of the Hooters brand. In September of 2013, the Company announced its acquisition of American Roadside Burgers (ARB), which currently has 5 locations in New York, North Carolina and South Carolina. In September, 2014, the Company acquired The Burger Company, an award winning casual burger joint based in Charlotte, North Carolina. It is anticipated that The American Burger Company will be the brand that will provide the foundation for Chanticleer s expansion and penetration into the fast growing Gourmet Burger market. The better burger category is the fastest growing section of the $75bn domestic burger market which includes Habit Restaurants, Shake Shack and Red Robin. In addition, Chanticleer acquired a 56% majority interest in the Just Fresh restaurant chain in December Just fresh is a health-focused, fast casual dining chain. As on acquisition, Just Fresh has five locations throughout North Carolina. On January 15, 2013, Chanticleer announced it had executed an agreement to acquire Spoon Bar & Kitchen, a seafood restaurant in Dallas, Texas. However this was disposed in late 2014 so that Chanticleer could retain focus on Just Fresh and its gourmet burger concepts. Franchising The American Burger and Just Fresh concepts in both domestic and international markets along with strategic/accretive acquisitions will play a significant part of the Company's growth. At the end of Q3 2013, Chanticleer Holdings owned an interest in six restaurants that generated $1.6mn in quarterly revenue. Since then, the Company has made a dramatic push to grow the Hooters brand internationally along with other brands in its portfolio. The Company has undertaken an aggressive pace of acquiring, building, and expanding both internationally and domestically. Investments made in the last two years, in both talent and platform, are now starting to bear fruit. Improved operating performance coupled with new acquisitions helped Chanticleer report a restaurant-level EBITDA of $0.9mn and an adjusted EBITDA of $0.5mn in Q Chanticleer has made significant progress in building its presence in Australia this year under the Hooter s brand. During Q Chanticleer acquired 60% ownership of the Hooters franchisee's management company in Australia, as well as 60% ownership of two existing Australia Hooters restaurants in Penrith and Parramatta. The company also opened Australia's fourth Hooters location in Surfers Paradise, an iconic destination area on Australia's east coast. As a result of these moves, Australia now represents a significant portion of the Company s revenue. The purchase price was the assumption of $5mn in debt. As part of the transaction, the Company will receive 100% of all gaming revenue until the debt is repaid, and thereafter the Company will receive 60% of such revenue for the remainder of the lifetime of the gaming machines. Obtaining gaming licenses is difficult and requires adherence to strict guidelines. 5

6 The Company has 25 gaming licenses, of which 15 machines are currently in operation and generating positive cash flow. Hooters brand continues to gain popularity in Australia and the Company believes this as the opportune time to increase ownership in the Hooters franchise in Australia and to continue building on long-term relationship with Morney Schlebusch, CEO of TMIX and his team. Opportunities in Fast Casual and Quick Service Concepts The Company's plans for rapid growth, market penetration, and the trending demand for healthier alternatives in the "Fast Casual" restaurant segments could provide vast opportunities. The fast casual segment, which is a subset of the limited service segment of the restaurant industry and generally consists of establishments where customers pay at the counter for food items that generally cost between $3.00 and $12.00 that are later consumed on-premises, taken-out or delivered. According to Technomic, restaurants operating within the limited service segment generated $231bn of total sales in The limited service segment is comprised of two subsets: traditional quick service and fast casual. Quick service restaurants include traditional fast food restaurants, generally with check averages between $3.00 and $8.00, whereas fast casual restaurants more commonly utilize a limited service format and are differentiated by food prepared to order, fresh ingredients, innovative menu choices and upscale, highly developed interior design, generally with check averages between $8.00 and $12.00, making Chanticleers check average of $7.44 more appealing to its customers when they are choosing among fast casual restaurants. The sector generated $34.5bn of sales in According to Mintel, a market research firm, the combined sales of American fast casual outlets rose by 10.5% last year, compared with 6.1% for fast-food chains. Fast casual concepts, Hooters, Just Fresh and The Burger Joint, attract customers from other restaurant segments, and accordingly, are taking market share from other segments and generating growth that exceeds the growth of the overall restaurant industry. Technomic projects the fast casual segment to outpace the growth of the broader limited service segment and exceed $50bn in sales by We believe that the steady growth and expansion of the fast casual segment will continue to capture market share from many of the largest restaurant segments, including the approximately $196.5bn quick service segment and the approximately $49.9bn varied menu full service segment which includes restaurants typically featuring a broad menu inspired by a variety of cuisines and American fare. We believe the fast casual segment delivers customers the winning combination of quality, convenience, experience and value that is not adequately provided by traditional fast food or varied menu full service restaurants. Accordingly, we believe that Chanticleers position in the fast casual segment allows the Company to attract customers across multiple segments within the restaurant industry and gives it a significant and continuing opportunity for growth. Utilizing its great name, successful fresh food approach and growing market appeal, Just Fresh plans to expand in this fast growing market segment, reaching out to thousands of customers in new markets throughout the U.S. and internationally. As people continue to become more educated about the benefits of healthy eating and nutrition, we believe the popularity of this restaurant chain will continue to grow. 6

7 Industry Overview Restaurants Industry Restaurants in the U.S are classified into quick service restaurants (QSR), fast-casual dining, fast food joints and online food delivery services. The industry is expected to grow at 3.3% in Fast Casual Restaurants have grown at a much faster pace than any other restaurant segment in the industry. This segment can be best described by concepts that are not such names as McDonald's, KFC and Burger King. Fast casual brands in the UK would include Byron Burger, Nandos and Gourmet Burger Kitchen. The fast casual restaurant is a relatively fresh and rapidly growing concept, which provides counter service and offers more customized freshly prepared and high quality food than traditional QSRs, all in an upscale and inviting ambiance. Revenue from fast casual chains increased 11% in 2013 and store count by 8%. Brands such as Chipotle Mexican Grill, Panera Bread, Qdoba Mexican Grill and Baja Fresh are considered the top restaurants in this category. Chipotle generated $3.2bn in revenues in 2013, at a revenue growth of 20% for the last 5 years which demonstrates the growth potential in this industry segment. The fast food industry witnessed both sales growth and profitability in 2012 and The 3% growth in outlets in 2013 was encouraging, especially given the added difficulty in both financing and operating additional locations since the recession. The 11% growth for fast casual dining and 3% growth for the fast food industry in 2013 are signs of growing potential within the food chain categories. According to Technomics, the company-operated joints are expected to see less traction in the same store sales & overall sales, and it is estimated that the franchisee - model joints sales might grow considering the increase in fast food restaurants. In the last 3-5 years, franchised restaurants generated lower revenues (per restaurant) compared to company-operated restaurants and this trend is expected to remain over the next 2-3 years, but these restaurants are expected to enjoy higher margins. Source: Technomics Research, Forbes, The Economist 7

8 Burger Industry Given the American food tradition and timelessness, hamburgers stand as one of the few recession-proof food industries in the U.S. Even though the affordability of the burger is variant across brands, high-quality ingredients are still key in producing a successful burger franchise statistics show that nearly 52% of consumers purchase burgers from fast food restaurants at least once every three weeks, and approx. 21% eat at a fast casual chain at least once a month. One of the strongest reasons for the hamburger s longevity is its wide-spread appeal. The burger is affordable, portable, and customizable; it can be served gourmet-style or as a rustic yet classic to-go food. With this type of versatility, hamburger franchises can easily adapt the hamburger / gourmet style burgers concept to current economic settings. In 2013, the burger menu restaurants generated annual sales of approx. $73bn from 49,000 locations, which translates into roughly 1.6 burger restaurants for every 10,000 Americans. The market consists of about 14% independent operators and 86% chain operators. Burger restaurants account for 7.4% of all U.S. restaurants. Looking at the total number of burger restaurants by state, California tops the list followed by Texas, Florida, Ohio and Illinois. The rising demand for fast-food, increase in fast-casual dining restaurants and improving economic conditions are revitalizing the fast food industry, and the hamburger franchises are expected to be at the forefront of this growth. Market Share by Revenue (2013) 21.7% 53.9% 8.1% 6.7% 5.5% 4.1% MCDonald's Corp Yum! Brands Inc Doctor's Associates Inc Wendy's International Inc Burger King Corp Others Source: Technomics Research, Forbes 8

9 Financial Overview Revenue Restaurant revenue for Q increased to $7.5mn, a growth of 473.5% y-o-y. The acquisition of 60% ownership of the Hooters franchisee s management company in Australia, as well as 60% ownership of two existing Australia Hooters restaurants in Penrith and Parramatta, and opening of Australia s fourth Hooters location in Surfers Paradise added to the Company s revenue in Q Topline revenue increased from $6.8mn in 2012 to $8.2mn in The purchase of ARB in Sep 2013, Nottingham Hooters in Nov 2013, and the opening of fifth South African Hooters location in Dec 2013 increased restaurant revenues by $1.4mn. Our model assumed revenue/unit/quarter of $348,759, for a store operating at full capacity. We factored seasonality into the model to accommodate higher sales in Q4 because of summer in Australia and South Africa. Hooters Units by Geography The Company owns and operates stores both internationally and domestically in the Northwest. It intends to facilitate growth by expanding in new markets E 2016E 2017E 2018E 2019E 2020E South Africa United Kingdom Australia Brazil Hungary Domestic Source: Company Presentation 9

10 Units by Brands We expect the company to expand American Roadside Burgers, Just Fresh and The Burger Joint both in US and Internationally. These additional units along with gaming revenues from Australia operations and management fees from both affiliated companies & non-affiliated companies will contribute to the growth story. We believe the Company will have 87 units by 2017 and reach 146 units by 2020 (Hooters - 84, ARB - 38, Just Fresh - 24) generating restaurant revenues of $183mn E 2016E 2017E 2018E 2019E 2020E Just Fresh ARB Hooters Source: Company Presentation EBITDA Margin The Company is expected to have a negative EBITDA of ($2.5mn) in 2014 as restaurant cost of sales, opex and pre-opening expenses hampered operational performance of the Company. Going forward, we believe that as Chanticleer continues to grow, it will be in a better bargaining position with suppliers and achieve better economies of scale resulting in higher margins. We expect the Company to turn EBITDA positive in Q and margins will trend closer towards peers. By 2020, we expect EBITDA to be $37.9mn and margins to come in at approx. 21%. 10

11 EBITDA Margin 2013A 2014E 2015E 2016E Good Times Restaurant, Inc. 1.3% 1.6% 7.7% 9.7% Papa Murphy's Holdings, Inc. n.a 27.6% 27.5% 27.2% Famous Dave's of America, Inc. n.a 11.5% 11.6% n.a Noodles and Company 13.5% 11.5% 11.8% 12.5% Red Robin Gourmet Burgers, Inc. 10.3% 10.4% 10.6% 10.9% BJ's Restaurants, Inc. 10.0% 10.7% 11.3% 12.3% DineEquity, Inc. 39.9% 41.7% 41.3% 42.8% Average 15.0% 16.4% 17.4% 19.2% HOTR (48.3%) (8.1%) 2.5% 7.6% Liquidity At Q3 2014, the Company has a current ratio of 0.2x. With current assets of $2.5mn and current liabilities of $13.5mn, the Company is expected to have a negative working capital of ($11.0mn) at the end of Chanticleer has accumulated losses and has depended on additional capital to finance its growth. In 2013, the Company used short-term financing for expansion, principally in South Africa, Europe and Australia. At Q3 2014, the Company had a debt/equity ratio of 0.5x which shows that the Company is in some financial stress. Whilst this is likely to remain in the near future, we expect liquidity pressures to ease over the coming months as the Company s growth story starts to unfold. We are encouraged by restaurant level EBITDA turning positive in Q

12 Valuation We compared Chanticleer with restaurant industry peers including Good Times Restaurant, Inc., Papa Murphy's Holdings, Inc., Famous Dave's of America, Inc., Habit Restaurants Inc., Noodles and Company, Red Robin Gourmet Burgers, Inc., BJ's Restaurants, Inc., Dine Equity, Inc. and Alsea. Trading Comparables In $mn EV/Revenue EV/EBITDA Company Name Market Cap EV 2014E 2015E 2016E 2014E 2015E 2016E Good Times Restaurant, Inc x 1.5x n.a n.m 18.3x n.a Papa Murphy's Holdings, Inc x 3.0x 2.7x 11.5x 10.8x 10.0x Famous Dave's of America, Inc x 1.3x n.a 11.7x 11.4x n.a Habit Restaurants Inc x 1.3x n.a 15.1x 12.9x n.a Noodles and Company x 1.6x 1.4x 16.3x 13.5x 11.1x Red Robin Gourmet Burgers, Inc. 1,091 1, x 1.0x 0.9x 10.3x 9.0x 8.1x BJ's Restaurants, Inc. 1,291 1, x 1.4x 1.3x 14.9x 12.7x 10.5x Dine Equity, Inc. 2,016 3, x 4.9x 4.9x 12.1x 11.9x 11.4x Alsea 2,347 2, x 1.1x 1.0x 11.9x 8.4x 7.4x Average 2.1x 1.9x 2.0x 13.0x 12.1x 9.7x Small Cap Average 1.8x 1.5x 1.4x 14.0x 14.1x 11.1x 12

13 Valuation Range We have arrived at a valuation of $6.33 for Chanticleer based on a mean EV/ Revenue multiple of 1.6x (which is mean for small cap peers). In addition, HOTR controls a 3% ownership in HOA and we estimate Chanticleer s capital interest at 1.06% ownership interest. HOA is the Atlanta-based operator and franchiser of over 430 Hooters restaurants in 28 countries, which generate over $1bn of system-wide revenues annually. A recent re-financing of bonds valued HOA at over $600mn. We currently value HOTR s stake at $7.4mn which alone is more than 52% of its current market cap. We believe that the embedded value of Chanticleer s interest in HOA is not reflected in Chanticleer s share price and provides additional upside for investors. Small Cap E Revenue Low Mean High EV / Revenue 1.3x 1.6x 1.9x Revenue 31,346,927 31,346,927 31,346,927 EV 42,049,787 50,324,557 58,599,326 Net Debt 11,908,341 11,908,341 11,908,341 Affiliates (1.06% stake in HOA) 5,000,000 5,000,000 5,000,000 Equity Value 35,141,446 43,416,216 51,690,985 Shares Outstanding 7,240,000 7,240,000 7,240,000 Implied Share Price ($)

14 Risks Going Concern Marcum LLP, the Company s independent registered public accounting firm, expressed doubt in HOTR s ability to continue as a going concern. Since inception, the Company has incurred operating losses and generated negative cash flows. To sustain operations and meet its obligations, the Company has historically raised capital through equity investments and borrowings. Such financings may not be available or may not be available on reasonable terms in the future. These conditions raise substantial doubt about the Company s ability to continue as a going concern. Our report assumes that the Company can still raise additional funds through public or private equity offerings, debt financings, etc. Acquisition Risk As part of its growth strategy, the Company acquired a 100% ownership interest in ARB, 100% of Hooters Nottingham, a 56% ownership interest in entities owning Just Fresh, a 100% ownership interest in entities owning Spoon Bar & Kitchen and Hooters restaurants in Washington and Oregon. These acquisitions might fail to realize the intended benefits, deteriorating the business and financial condition of the Company. Litigation Risk Customer complaints concerning food safety, service, and/or other operational factors; employee lawsuits regarding injury, discrimination, wage and hour, and other employment issues; business lawsuits regarding non-compliance with franchise, development, support service, or other agreements; punitive damages resulting from dram shop statutes could impact the operations of the Company. Competition The restaurant industry, constituted by national and regional chains, is highly competitive in terms of taste, price, quality, service, location and ambiance of each restaurant. Many of these competitors are well established and thus have greater operational and financial capabilities. Chanticleer s three dining concepts competes primarily with local and regional sports bars and national casual dining and quick casual establishments and to a lesser extent with quick service restaurants in general. Franchise Agreements Non - renewal of existing franchise agreements, non - compliance with Hooters high quality standards and a fall in the brand appeal of Hooters could impact the business of Chanticleer Holdings. The Company does not have full operational control over the businesses of Hooters or Just Fresh franchise partners; hence failure on its part to comply with quality, service and cleanliness standards will hamper operations. 14

15 Management Team Economic Impacts Economic conditions influence consumer preferences and discretionary spending. Lower disposable incomes, higher fuel prices & commodity prices, fluctuating exchange rates have significant ramifications on consumers and companies. These negative trends along with higher operational costs could have a material adverse effect on the sales of the Company. Michael Pruitt (Chairman, CEO & President) 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 the company was sold to Carolina Ribbon in From 1992 to 1996, Mr. Pruitt worked in a trucking firm where he was instrumental in increasing revenues from $6mn to $30mn. 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 and President of RCG Companies, Inc. (later changed to One Travel), a publicly traded holding company 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, the Coastal Education Foundation Board and the Athletic Committee of the Board of Trustees. He also sits on the Board of Paul I. Moskowitz A Phi Beta Kappa of Vassar College and Cardozo Law School, Paul was a co-founder and partner of a successful New York law firm specializing in corporate and real estate law. Paul became affiliated with The World Travel Specialist Group/The Lawyers' Travel Service ("WTSG/LTS") in He 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, his primary responsibilities included day-to-day operations which encompassed "WTSG's" airline relationships. 15

16 Paul 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. Paul is currently engaged as a "consultant" for another travel organization - a former friendly competitor. Mike Caroll Owns and operates a sales and training consulting firm based in Richmond, Virginia. Mr. Carroll has also served as a director for RCG Companies Incorporated since January of Mr. Carroll previously spent 22 years in the distribution business, 19 of which were in computer products distribution. From 1997 to 1999, he was a division president at Corporate Express, a publicly traded business-to-business office products and service provider. In 1978, Mr. Carroll founded MicroMagnetic, Inc., a computer supply distribution company that he sold to Corporate Express in Mr. Carroll 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. Keith Johnson A highly accomplished senior executive and corporate officer with extensive experience in business and technology management, accounting systems, financial controls, business development and management intelligence. Previously, Mr. Johnson served as Executive Vice President and Chief Financial Officer of The Telemetry Company in Dallas, Texas ( ). He had previously been at Brinks Home Security from where he was a member of the start-up team and the original Chief Financial Officer responsible for creating the business model and servicing operations infrastructure. From , Mr. Johnson was the Chief Financial Officer of BAX Global in London, England. BAX was an ex-patriot assignment in which Mr. Johnson was responsible for Europe, Africa and Middle East business development, financial planning and accounting functions with a global staff of 75 professionals. Russell Page A thirty-five year investor relations executive and currently the founder and principal of Rusty Page & Company, a unique equity marketing/investor relations consulting firm engaging with small, mid-cap, and large cap companies. Mr. Page formerly sat on the Board of Directors of The Diamond Hill Financial Trends Fund. Previously, Mr. Page served as Senior Managing Director of The NASDAQ Stock Market. He also served for 17 years as Senior Vice President and Equity Marketing Executive for NationsBank Corporation, the predecessor of Bank of America, where Mr. Page was responsible for investor relations and all equity related capital markets functions for that $1tn plus asset financial services company. During that time, NationsBank raised $10bn in equity capital and became the most widely followed public company in America. 16

17 Team coverage by: 1 Knightsbridge Green London SW1X 7QA Tel: info@prosdocimi.com This document is for information purposes only. Prosdocimi Limited is authorised and regulated by the Financial Conduct Authority ( FCA ) under firm reference number This document is deemed to be a marketing communication in accordance with FCA rules. Any investment research or recommendations in this document (to buy, sell or hold an investment instrument) have not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. 17