Quarterly report pursuant to Section 13 or 15(d)

ACQUISITION OF AMERICAN ROADSIDE BURGERS, INC.

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ACQUISITION OF AMERICAN ROADSIDE BURGERS, INC.
 9 Months Ended
Sep. 30, 2013
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]
3.
ACQUISITION OF AMERICAN ROADSIDE BURGERS, INC.
 
On September 30, 2013, the Company acquired American Roadside Burgers, Inc. (“ARB”) and entered into an agreement and plan of merger with ARB, whereby the Company acquired 100% of the outstanding shares of ARB. In exchange, the Company issued 740,000 shares of its common stock and warrants to acquire 740,000 shares of common stock for $5 per share. The warrants are exercisable beginning October 1, 2014 until September 30, 2018. The merger agreement provides that Chanticleer Roadside Burgers International, LLC (a single-member LLC, of which the Company is the sole member) shall merge with and into ARB, with ARB continuing as the surviving entity and subsidiary of the Company. In connection with this acquisition and the related management team, the Company acquired a strategic opportunity to participate in a high-growth space with an already established brand. The Company’s plan is to continue to expand the American Roadside chain as future opportunities occur, which has the potential to bring additional revenue and profits to the Company in the future. Additionally, the opportunity to work with one of the better restaurant executives in the country is an extremely important step in the Company’s transformation.
 
The acquisition was accounted for using the purchase method in accordance with ASC 805 “Business Combinations”. The consolidated statements of operations will include the results of the ARB operations beginning October 1, 2013. The assets acquired and the liabilities assumed were recorded at September 30, 2013 at estimated fair values as determined by an independent appraisal. A summary of the estimated fair value of assets acquired and liabilities assumed in the acquisition follows: 
 
Consideration Paid:
 
 
 
 
740,000 shares of common stock
 
$
3,611,126
 
Five year warrants to purchase 740,000 shares of common stock
 
 
1,710,077
 
Total Consideration paid
 
 
5,321,203
 
 
 
 
 
 
Current assets, excluding cash
 
$
274,211
 
Cash
 
 
53,684
 
Property and equipment
 
 
2,948,102
 
Goodwill
 
 
1,653,016
 
Trade name/trademark
 
 
1,784,443
 
Deposits and other assets
 
 
98,035
 
Total assets acquired
 
 
6,811,491
 
Liabilities assumed
 
 
(1,490,288)
 
Net assets acquired
 
$
5,321,203
 
 
The acquired Trade name/ trademark has been assigned definite lives and are subject to amortization over an estimated 10-year useful life.
 
The following unaudited pro forma results of operations for the three and nine months ended September 30, 2013 and 2012 assumes that the above acquisition of ARB was made at the beginning of the year prior to the acquisition. The unaudited pro forma information does not purport to be indicative of the results that would have been obtained if the acquisitions had actually occurred at the beginning of the year prior to acquisition, nor of the results that may be reported in the future. 
 
 
 
Three months ended
 
Nine months ended
 
 
 
September 30,
 
September 30,
 
 
 
2013
 
2012
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
 
$
2,350,690
 
$
2,378,324
 
$
7,135,266
 
$
6,406,789
 
Loss from continuing operations
 
 
(1,780,355)
 
 
(873,222)
 
 
(3,791,551)
 
 
(2,695,967)
 
Loss from discontinued operations
 
 
(4,403)
 
 
(18,913)
 
 
(19,513)
 
 
(124,872)
 
Loss attributable to non-controlling interest
 
 
(31,355)
 
 
(53,509)
 
 
(84,114)
 
 
(185,711)
 
Net loss
 
$
(1,816,113)
 
$
(945,644)
 
$
(3,895,178)
 
$
(3,006,550)
 
Net loss per share, basic and diluted
 
$
(0.49)
 
$
(0.26)
 
$
(1.05)
 
$
(1.40)
 
Weighted average shares outstanding, basic and diluted
 
 
3,704,526
 
 
3,698,896
 
 
3,701,804
 
 
2,153,148