10-Q 1 s101725_10q.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to_________

Commission File Number: 000-54070

THE GRILLED CHEESE TRUCK, INC.

(Exact name of registrant as specified in its charter)

NEVADA		27-3120288
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

151 North Nob Hill Road, Suite 321

Fort Lauderdale, FL 33324

(Address of principal executive offices) (Zip Code)

(949) 478-2571

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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 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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files). 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ¨				Accelerated Filer ¨
Non-Accelerated Filer ¨		(Do not check if a smaller reporting company)		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

As of August 19, 2015, there were 19,873,679 outstanding shares of common stock, par value $0.001 per share, of the issuer.

Form 10-Q Quarterly Report

INDEX

PART I FINANCIAL INFORMATION
Item 1	Financial Statements	F-1
	Condensed Consolidated Balance Sheets as of June 30, 2015 (unaudited) and December 31, 2014	F-1
	Condensed Consolidated Statements of Operations for the Three and Six Months ended June 30, 2015 and 2014 (unaudited)	F-2
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014 (unaudited)	F-3
	Notes to Condensed Consolidated Financial Statements (unaudited)	F-4
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Item 3	Quantitative and Qualitative Disclosures About Market Risk	8
Item 4	Controls and Procedures	8
PART II OTHER INFORMATION
Item 1	Legal Proceedings	10
Item 1A	Risk Factors	10
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds Risk Factors	10
Item 3	Defaults Upon Senior Securities	11
Item 4	Mine Safety Disclosures	11
Item 5	Other Information	11
Item 6	Exhibits	11
Signatures		12

The Grilled Cheese Truck, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30,			December 31,
	2015			2014
	(Unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	86,247		$	348,099
Accounts receivable, net		53,781			7,966
Notes receivable		42,780			54,780
Prepaid expenses and other current assets		201,784			14,041
Total Current Assets		384,592			424,886

Property and equipment, net		234,000			240,652
Deferred finance costs, net		37,233			103
Other assets		93,306			87,755
TOTAL ASSETS	$	749,131		$	753,396

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	761,121		$	953,023
Accounts payable - related parties		329,809			213,432
Payroll tax liabilities and accrued compensation		924,718			903,793
Accrued interest		102,977			56,915
Promissory notes		220,000			25,000
Convertible notes payable, net of debt discount		1,427,626			246,062
Total Current Liabilities		3,766,251			2,398,225

Long term portion of convertible notes payable, net		—			523,124
TOTAL LIABILITIES		3,766,251			2,921,349

Commitments and contingencies		—			—

STOCKHOLDERS’ DEFICIT:
Preferred stock, $0.001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2015 and December 31, 2014		—			—
Common stock, $0.001 par value, 100,000,000 shares authorized; 19,873,678 and 19,591,288 shares issued and outstanding, respectively		19,873			19,591
Additional paid-in capital		14,429,813			13,441,442
Accumulated deficit		(17,466,806	)		(15,628,986	)
TOTAL STOCKHOLDERS’ DEFICIT		(3,017,120	)		(2,167,953	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	749,131		$	753,396

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F-1

The Grilled Cheese Truck, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


	For the Three Months Ended						For the Six Months Ended
	June 30						June 30,
	2015			2014			2015			2014

NET REVENUES:
Food truck sales	$	746,092		$	749,696		$	1,116,888		$	1,262,993
Catering and special events		210,796			186,452			403,055			296,113
Licensing		3,464			8,786			9,514			19,891
TOTAL REVENUES		960,352			944,934			1,529,457			1,578,997

COST OF SALES:
Food and beverage		188,121			293,836			303,385			473,899
Food truck expenses		212,932			570,917			399,097			960,426
Commissary and kitchen expenses		64,652			105,552			88,370			252,030
TOTAL COST OF SALES		465,705			970,305			790,852			1,686,355

Gross Profit (Loss)		494,647			(25,371	)		738,605			(107,358	)

OPERATING EXPENSES:
General and administrative expenses		887,638			1,696,585			1,916,683			2,496,265
Selling costs		49,019			61,488			116,681			97,896
Consulting expense - related parties		137,601			65,625			286,795			131,250
Depreciation		17,826			17,776			35,652			39,536
Bad debts		—			—			3,386			—
TOTAL OPERATING EXPENSES		1,092,084			1,841,474			2,359,197			2,764,947

LOSS FROM OPERATIONS		(597,437	)		(1,866,845	)		(1,620,592	)		(2,872,305	)

Other Income (Expense)
Interest expense		(43,241	)		(366,902	)		(61,202	)		(552,909	)
Interest expense, related party		—			—			—			(17,248	)
Loss on disposition of equipment		—			(38,000	)		—			(38,000	)
Interest income		—			4,800			—			11,018
Amortization of debt discount		(60,162	)		—			(95,944	)		—
Amortization of deferred financing costs		(11,446	)		—			(22,870	)		—
Loss on settlement of debt		(37,212	)		—			(37,212	)		—
TOTAL OTHER INCOME (EXPENSE)		(152,061	)		(400,102	)		(217,228	)		(597,139	)
LOSS BEFORE PROVISION FOR INCOME TAX		(749,498	)		(2,266,947	)		(1,837,820	)		(3,469,444	)
Provision for income tax (expense) benefit		—			—			—			—

NET LOSS	$	(749,498	)	$	(2,266,947	)	$	(1,837,820	)	$	(3,469,444	)

NET LOSS PER SHARE - BASIC AND DILUTED	$	(0.04	)	$	(0.17	)	$	(0.09	)	$	(0.27	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic and diluted		19,842,458			13,277,250			19,745,533			12,751,007

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F-2

The Grilled Cheese Truck, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


	For the Six Months Ended
	June 30,
	2015			2014

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,837,820	)	$	(3,469,444	)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation		35,652			39,536
Amortization of debt discount		95,944			108,437
Amortization of deferred financing costs		22,870			217,165
Fair value of shares of common stock and warrants exceeding liability satisfied		—			73,423
Fair value of options and warrants issued for services		275,697			398,039
Fair value of shares of common stock issued for services		37,500			277,188
Loss on disposition of equipment		—			38,000
Bad debt expense		3,386			—
Loss on settlement of debt		37,212			—
Changes in operating assets and liabilities:
Accounts receivable		(49,201	)		(15,380	)
Notes receivable		12,000			—
Prepaid expenses and other current assets		(71,743	)		(21,949	)
Other assets		(5,551	)		—
Accounts payable and payroll tax liabilities and accrued compensation		(32,877	)		746,515
Accounts payable - related party		116,377			61,998
Accrued interest		58,702			176,410
NET CASH USED IN OPERATING ACTIVITIES		(1,301,852	)		(1,370,062	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposition of equipment		—			20,000
Purchases of fixed assets		(29,000	)		(911	)
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		(29,000	)		19,089

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from convertible notes payable		834,000			125,000
Proceeds from promissory note		220,000			55,000
Payment of promissory note		(25,000	)		—
Payment of note payable		—			(99,000	)
Payment of financing costs		(60,000	)		(10,000	)
Proceeds from issuances of shares of common stock		100,000			2,280,625
NET CASH PROVIDED BY FINANCING ACTIVITIES		1,069,000			2,351,625

Net (decrease) increase in cash and cash equivalents		(261,852	)		1,000,652
Cash and cash equivalents, beginning of period		348,099			42,359
Cash and cash equivalents, end of period	$	86,247		$	1,043,011

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	2,500		$	6,000
Cash paid for income taxes	$	—		$	—

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued to satisfy promissory note and accrued interest related party	$	—		$	14,002
Common stock issued to satisfy promissory note and accrued interest	$	—		$	42,852
Common stock issued pursuant to conversion of convertible notes and accrued interest	$	62,640		$	3,591,328
Common stock issued for payment of accounts payable, accrued compensation and accounts payable- related party	$	175,312		$	598,706
Beneficial conversion feature	$	337,504		$	62,500
Vehicle sold and assignment of note payable	$	—		$	53,390
Note receivable on sale of vehicle	$	—		$	51,000
Receivable from issuance of convertible notes payable	$	116,000		$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F-3

The Grilled Cheese Truck, Inc. and Subsidiaries

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL
STATEMENTS

JUNE 30, 2015

1.	Nature of Business

TRIG Acquisition 1, Inc. (the “Company”) was incorporated in the State of Nevada on December 31, 2009 as GSP-1, Inc. The Company was formed as a vehicle to pursue a business combination. On July 6, 2011, the Company filed a Certificate of Amendment to its Articles of Incorporation to change its name from “GSP-1, Inc.” to “TRIG Acquisition 1, Inc.”

On October 18, 2012, the Company entered into a share exchange agreement (the “Exchange Agreement”) by and among (i) the Company, (ii) Grilled Cheese, Inc., a California corporation, (“Grilled Cheese”), (iii) GCT, Inc., a Nevada corporation and wholly-owned subsidiary of the Company (“GCT Sub”); (iv) David Danhi, the majority shareholder of Grilled Cheese (“Majority Shareholder”) and (v) Michelle Grant, the minority shareholder of Grilled Cheese (“Minority Shareholder”, together with the Majority Shareholder, the “Grilled Cheese Shareholders”). Pursuant to the terms of the Exchange Agreement: (1) the Majority Shareholder transferred to GCT Sub all of the shares of Grilled Cheese held by such shareholder in exchange for the issuance of 4,275,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”); and (2) the Minority Shareholder transferred all of the shares of Grilled Cheese held by the Minority Shareholder in exchange for $500,000 and 845,000 shares of Common Stock (the “Share Exchange Transaction”).

The Share Exchange Transaction has been accounted for as a reverse acquisition of the Company, by Grilled Cheese but in substance as a capital transaction, rather than a business combination since the Company had nominal operations and assets prior to and as of the closing of the Share Exchange Transaction. The former stockholders of Grilled Cheese represent a significant constituency of the Company’s voting power immediately following the Share Exchange Transaction and Grilled Cheese’s management assumed operational, financial and governance control. The transaction is deemed a reverse recapitalization and the accounting is similar to that resulting from a reverse acquisition. For accounting purposes, Grilled Cheese is treated as the surviving entity and accounting acquirer in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations although the Company was the legal acquirer. Accordingly, the Company’s historical financial statements are those of Grilled Cheese. The accumulated losses of Grilled Cheese were carried forward after the completion of the Share Exchange Transaction.

All reference to Common Stock and per share amounts have been restated to effect the Share Exchange Transaction which occurred on October 18, 2012.

On February 19, 2013, following the Share Exchange Transaction, the Company changed its corporate name from “TRIG Acquisition 1, Inc.” to “The Grilled Cheese Truck, Inc.”

The Company is a food truck operation that sells various types of gourmet grilled cheese and other comfort foods in the Southern California and Phoenix, Arizona areas. The Company’s food trucks currently make multiple stops per week at prearranged locations. The food preparation occurs at a kitchen which supports streamlined operations within the truck by limiting assembly and grilling, allowing the truck to achieve maximum revenues per hour by delivering our food items including melts, tots, soups and sides efficiently to customers. The Company’s business model includes the use of social media and location booking to attract customers to the truck’s various locations.

In May 2015, the Company formed a wholly-owned subsidiary, Grilled Cheese Military, Inc. (“Military Subsidiary”), a Nevada corporation. The purpose of the Military Subsidiary is the performance of Company operations on military bases. In May 2015, the Company entered into a subscription agreement with the Military Subsidiary pursuant to which the Company purchased 100 shares of common stock, par value of $0.001, of the Military Subsidiary for $1.00 per share for an aggregate total of $100. The Company consolidates the Military Subsidiary into the condensed consolidated financial statements.

F-4

2.	Going Concern and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business. The business will require significant amounts of capital to sustain operations and make the investments it needs to execute its longer term business plan. The Company has cash of $86,247 and working capital deficiency of $3,381,659, at June 30, 2015. The Company has historically relied on proceeds from the issuance of debt and shares of its Common Stock to finance its operations. The Company’s net loss for the six-month period ended June 30, 2015 was $1,837,820 and the deficit accumulated by the Company amounts to $17,466,806 as of June 30, 2015. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

In order to continue as a going concern and achieve a profitable level of operations, the Company will need, among other things, additional capital resources. Management’s plan to continue as a going concern includes raising capital through increased sales and conducting additional financings through debt and equity transactions. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon the management’s ability to successfully implement the plans described above, including securing additional sources of financing and attain profitable operations. Management also cannot provide any assurance that unforeseen circumstances that could occur at any time within the next twelve months or thereafter will not increase the need for the Company to raise additional capital on an immediate basis. The Company is actively targeting sources of additional financing through debt and equity transactions and other transactions. There can be no assurance that we will be able to continue to raise funds in which case the Company may be unable to meet its obligations.

3.	Summary of Significant Accounting Policies

Basis of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant inter-company transactions are eliminated.

Basis of Accounting

The balance sheet presented as of December 31, 2014 has been derived from the Company’s audited consolidated financial statements. The unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of article 8 of the Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), have been omitted pursuant to those rules and regulations, but we believe that the disclosures are adequate to make the information presented not misleading. The unaudited consolidated financial statements and notes included herein should be read in conjunction with the annual consolidated financial statements and notes for the year ended December 31, 2014 included in our Annual Report on Form 10-K filed with the SEC on April 14, 2015. In the opinion of management, all adjustments, consisting of normal, recurring adjustments and disclosures necessary for a fair presentation of these interim statements have been included. The results of operations for the three and six-month period ended June 30, 2015 are not necessarily indicative of the results for the year ending December 31, 2015.

Cash and Cash Equivalents

Cash primarily consists of cash on hand and bank deposits. The Company currently has no cash equivalents which would consist of money market accounts and other highly liquid investments with an original maturity of three months or less when purchased.

F-5

Use of Estimates in Preparation of Financial Statements

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results will differ from those estimates. Included in these estimates are assumptions about collection of accounts and notes receivable, useful life of fixed assets, and assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate, and expected dividend rate.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed on the straight-line method. The depreciation and amortization methods are designed to amortize the cost of the assets over their estimated useful lives, in years, of the respective assets as follows:

Computers	4 Years
Vehicles	4 Years
Office Equipment	7 Years
Food Service Equipment	7 Years
Furniture and Fixtures	7 Years
Leasehold Improvements	7 Years

Amortization of leasehold improvements is computed using the straight-line method over the shorter of the life of the lease or the estimated useful life of the assets. Maintenance and repairs are charged to expense as incurred. Improvements of a major nature are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any gains or losses are reflected in income.

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition, and other economic factors.

Accounts Receivable

Accounts receivable are generally unsecured. The majority of the Company’s sales are in cash from truck stop sales. Receivables relate to catering and special event sales. The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management’s evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for doubtful accounts.

Revenue Recognition

The Company’s revenue is derived from three sources. The primary source is from truck stop sales and lesser portions are from catering and event services and licensed truck sales. Truck stop sales are primarily received in cash and revenue for these sales, net of sales tax, is reported at that time.

For catering and special event services, customers must sign and deliver the Company’s standard catering agreement with a minimum payment of 50% of the agreed upon price of the event. The remaining balance is due by credit card payment within 2 days of the event or cash on the day of the event. The initial 50% deposit is fully refundable until 14 days prior to the event, between 4 and 13 days prior to the event, the deposit is non-refundable and if the customer cancels within 3 days of the event, 100% of the agreed-upon price of the event is due. Revenue is recognized, net of sales tax, at the time goods and services are provided.

F-6

For recurring licensing revenue, which is based on 6% of gross revenue from truck stop sales collected by the licensee, revenue is recognized at the end of each month when the licensee is invoiced and the revenue is booked as a receivable.

For area licensing revenue, which is generally a fixed amount, the revenue is recognized when the Company has no remaining obligations or intent, either by agreement, trade practice, or law, to the extent it is collectible.

Any amount receivable or received pursuant to licensing revenues, but unrecognized for revenue recognition purpose is recorded as deferred revenues.

Advertising Costs

Advertising costs are expensed when incurred. These costs consist primarily of printing for signs, menus, and promotional items. Also included are costs of web based advertising. Total advertising expenses for the six months ended June 30, 2015 and 2014 amounted to $44,281 and $12,886, respectively.

Earnings (loss) per common share

The Company utilizes the guidance per ASC 260 “Earnings per Share”. Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are computed using the weighted average number of common shares and dilutive common share equivalents outstanding during the period. Dilutive common share equivalents consist of shares issuable upon the conversion of convertible notes and the exercise of stock options and warrants (calculated using the modified-treasury stock method). Such securities, shown below, presented on a common share equivalent basis and outstanding as of June 30, 2015 and 2014 have been excluded from the per share computations:

	As of
	June 30,
	2015		2014

Convertible notes		1,348,778		561,667
Options issued to employee		1,000,000		1,000,000
Warrants		10,690,116		7,803,951
		13,038,894		9,365,618

Income Taxes

The Company accounts for income taxes under ASC 740 “Income taxes” (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Penalties and interest on underpayment of income taxes are reflected in the Company’s effective tax rate.

Sales Taxes

The Company’s revenues in the statements of operations are net of sales taxes.

F-7

Fair Value of Financial Instruments

The Company adopted ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results, but did expand certain disclosures.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1:

Observable inputs such as quoted market prices in active markets for identical assets or liabilities

Level 2:

Observable market-based inputs or unobservable inputs that are corroborated by market data

Level 3:

Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

The Company did not have any Level 2 or Level 3 assets or liabilities as of June 30, 2015 and December 31, 2014, with the exception of its convertible notes payable. The carrying amounts of these liabilities at June 30, 2015 and December 31, 2014 approximate their respective fair value based on the Company’s incremental borrowing rate.

Additional Disclosures Regarding Fair Value Measurements

The carrying value of cash and cash equivalents, accounts receivable, notes receivable, other receivable, accounts payable and accrued expenses, notes payable and promissory notes- including related parties liabilities- approximate their fair value due to the short term maturity of these items.

In addition, ASC 825-10-25 “Fair Value Option” (“ASC 825-10-25”), was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities.”

Professional standards generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of “Conventional Convertible Debt Instrument.”

F-8

The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying Common Stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying Common Stock at the commitment date of the note transaction and the effective conversion price embedded in the note.

ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.

Deferred Financing Costs

Costs incurred with obtaining and executing debt arrangements are capitalized and amortized over the term of the related debt using the effective interest method.

Stock-Based Compensation

The Company adopted the provisions of ASC 718 “Compensation- Stock Compensation” (“ASC 718”). The Company estimates the fair value of stock options using a binomial model, consistent with the provisions of ASC 718 and SEC Staff Accounting Bulletin No. 107, Share-Based Payment. Option-pricing models require the input of highly subjective assumptions, including the price volatility of the underlying stock. The Company determined that the use of implied volatility is expected to be more reflective of market conditions and, therefore, could reasonably be expected to be a better indicator of our expected volatility than historical volatility. The expected term assumption used in calculating the estimated fair value of our stock-based compensation awards using the binomial model is based on detailed historical data about employees’ exercise behavior, vesting schedules, and death and disability probabilities. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. The Company estimates the forfeiture rate based on historical experience of the Company’s stock-based awards that are granted, exercised and cancelled. The Company believes the resulting binomial calculation provides a more refined estimate of the fair value of the Company’s employee stock options. For the Company’s employee stock purchase plan, the Company decided to continue to use the Black-Scholes model to calculate the estimated fair value.

Recently Issued Accounting Standards

ASU 2015-03

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments are effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The amendments are to be applied on a retrospective basis, wherein the balance sheet of each individual period presented is adjusted to reflect the period-specific effects of applying the new guidance. We do not expect the adoption of ASU 2015-03 to have a material effect on our financial position, results of operations or cash flows.

F-9

ASU 2015-02

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The ASU focuses on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards Codification and improves current U.S. GAAP by placing more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (“VIE”), and changing consolidation conclusions for companies in several industries that typically make use of limited partnerships or VIEs. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. We do not expect the adoption of ASU 2015-02 to have a material effect on our financial position, results of operations or cash flows.

ASU 2015-01

In January 2015, the FASB issued ASU No. 2015-01, “Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” This ASU eliminates from U.S. GAAP the concept of extraordinary items. ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. We do not expect the adoption of ASU 2015-01 to have a material effect on our financial position, results of operations or cash flows.

ASU 2014-17

In November 2014, the FASB issued ASU No. 2014-17, “Business Combinations (Topic 805): Pushdown Accounting.” This ASU provides an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. An acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in-control event occurs. If pushdown accounting is applied to an individual change-in-control event, that election is irrevocable. ASU 2014-17 was effective on November 18, 2014. The adoption of ASU 2014-17 did not have any effect on our financial position, results of operations or cash flows.

ASU 2014-16

In November 2014, the FASB issued ASU 2014-16, “Derivatives and Hedging (Topic 815).” ASU 2014-16 addresses whether the host contract in a hybrid financial instrument issued in the form of a share should be accounted for as debt or equity. ASU 2014-16 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. We do not currently have issued, nor are we investors in, hybrid financial instruments. Accordingly, we do not expect the adoption of ASU 2014-16 to have any effect on our financial position, results of operations or cash flows.

ASU 2014-15

In August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40)”. ASU 2014-15 provides guidance related to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosure. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and for interim and annual periods thereafter. Early application is permitted. We do not expect the adoption of ASU 2014-15 to have a material effect on our financial position, results of operations or cash flows.

ASU 2014-12

In June 2014, the FASB issued ASU No. 2014-12, “Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. ASU 2014-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. We do not expect the adoption of ASU 2014-12 to have a material effect on our financial position, results of operations or cash flows.

F-10

ASU 2014-09

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU 2014-09 affects any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). ASU 2014-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. We are still evaluating the effect of the adoption of ASU 2014-09. On April 1, 2015, the FASB voted to propose to defer the effective date of the new revenue recognition standard by one year.

ASU 2014-08

In April 2014, the FASB issued ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) and Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” ASU 2014-08 amends the definition for what types of asset disposals are to be considered discontinued operations, as well as amending the required disclosures for discontinued operations and assets held for sale. ASU 2014-08 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2014. The adoption of ASU 2014-08 did not have any effect on our financial position, results of operations or cash flows.

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flows.

4.	Notes Receivable

The Company had promissory notes from licensees aggregating $42,780 and $54,780 outstanding at June 30, 2015 and December 31, 2014, respectively. The notes receivable bear interest ranging between 0% and 3.25%. The principal amount on the notes receivable are generally due within 12 months from issuance or payable upon demand. The Company recognized $0 and $0 of interest income in connection with such notes during the three and six-month period ended June 30, 2015, respectively.

5.	Property and Equipment and Vehicles Held for Sale

Property and equipment consists of the following:

	June 30,			December 31,
	2015			2014
	(Unaudited)
POS systems	$	21,358		$	21,358
Food service equipment		39,681			39,681
Truck equipment		5,346			5,346
Vehicles		277,926			248,926
Leasehold improvements		10,703			10,703
Computers		5,334			5,334
Furniture and fixtures		8,924			8,924
Total		369,272			340,272
Accumulated depreciation		(135,272	)		(99,620	)
Total	$	234,000		$	240,652

Depreciation expense for the six-month period ended June 30, 2015 and 2014 amounted to $35,652 and $39,536, respectively and for the three-month period ended June 30, 2015 and 2014 amounted to $17,826 and $17,776, respectively.

F-11

6.	Convertible Notes

The Company’s convertible promissory notes at June 30, 2015 and December 31, 2014 are as follows:

	June 30,			December 31,
	2015			2014

Convertible notes payable, bearing interest at 10%, maturing between October 2015 and June 2016, principal and accrued interest convertible at the holder’s option following the effectiveness of the Company’s registration statement or mandatory conversion at their maturity date, at a price of $1.00 per share	$	320,000		$	370,000
Convertible note payable, bearing interest at 10%, maturing June 18, 2015, principal and accrued interest convertible at the holder’s option at a price of $0.75 per share		125,000			125,000
Convertible note payable, bearing interest at 10%, maturing June 30, 2016, principal and accrued interest convertible at the holder’s option at a price of $2.00 per share		1,050,000			350,000
Convertible note payable, bearing interest at 12%, maturing December 31, 2015, principal and accrued interest convertible at the holder’s option at a price of $1.00 per share		250,000			—

Unamortized debt discount		(317,374	)		(75,814	)
Total		1,427,626			769,186
Less: Current portion		(1,427,626	)		(246,062	)
Long-term portion	$	—		$	523,124

The Company generated proceeds of $950,000 and $125,000 from the issuance of convertible promissory notes during the six-month period ended June 30, 2015 and 2014, respectively.

The Company issued 62,640 and 3,591,331 shares of its common stock to satisfy its obligations pursuant to convertible notes during the six months ended June 30, 2015 and 2014, respectively. The aggregate amount of principal and accrued interest satisfied by the issuance of shares of common stock amounted to $62,640 and $3,591,328 during the six months ended June 30, 2015 and 2014, respectively.

In connection with the issuance of the convertible notes payable issued during the six-month period ended June 30, 2015, the Company granted 516,665 non-detachable warrants to the noteholder, issuable upon conversion of such note. The warrants are exercisable at a price range between $1.50 and $4.00 per share and will mature within 3 years from their issuance date.

The beneficial conversion feature of the convertible notes and related warrants issued to the noteholders amounted to $297,421 and $0 during the six-month periods ended June 30, 2015 and 2014, respectively, and was recorded as debt discount of the corresponding debt.

The Company recognized interest expense of $180,016 and $552,909, including amortization of debt discount of $86,681 and $108,437 and amortization of deferred financing costs of $22,870 and $217,165, during the six-month periods ended June 30, 2015 and 2014, respectively.

The Company recognized interest expense of $114,849 and $366,902, including amortization of debt discount of $50,899 and $94,104 and amortization of deferred financing costs of $11,446 and $189,690, during the three-month periods ended June 30, 2015 and 2014, respectively.

F-12

7.	Promissory Notes Payable

On December 10, 2014, the Company issued an unsecured promissory note payable of $25,000 with an interest rate of 10% and maturing upon the next closing of the Company’s financing. During the six months ended June 30, 2015, the Company recognized interest expense of $1,307 and is included in the accompanying unaudited consolidated statements of operations. During the six months ended June 30, 2015, the Company repaid the entire principal balance and related interest.

On May 1, 2015, the Company entered into a Settlement Agreement with a third party to settle past due royalties and intellectual property licenses. In connection with the Settlement Agreement, the Company issued a $125,000 promissory note payable with interest of 12% per annum maturing on December 31, 2015. Additionally, the Company issued warrants for 100% coverage of the note principal at an exercise price of $4.00 per share and a three year term from the date of the note.

On May 21, 2015, the Company issued a $45,000 promissory note payable with interest of 12% per annum maturing on December 31, 2015. Additionally, the Company issued warrants for 100% coverage of the note principal at an exercise price of $4.00 per share and a three year term from the date of the note.

On June 4, 2015, the Company issued a $50,000 promissory note payable with interest of 12% per annum maturing on December 31, 2015.

In connection with the issuance of the promissory notes payable issued during the six-month period ended June 30, 2015, the Company granted 170,000 non-detachable warrants to the noteholder, issuable upon conversion of such note. The warrants are exercisable at a price range of $4.00 per share and will mature within 3 years from their issuance date.

The beneficial conversion feature of the convertible notes and related warrants issued to the noteholders amounted to $40,083 and $0 during the six-month periods ended June 30, 2015 and 2014, respectively, and was recorded as debt discount of the corresponding debt.

The Company recognized amortization of debt discount of $9,263 and $0, during the six-month periods ended June 30, 2015 and 2014, respectively.

The Company recognized amortization of debt discount of $9,263 and $0, during the three-month periods ended June 30, 2015 and 2014, respectively.

8.	Warrants

The fair value of the warrants issued and the significant assumptions used to determine those fair values, using a Black-Scholes option-pricing model are as follows:

Significant assumptions :	2015			2014
Risk-free interest rate at grant date		0.76%-1.10	%		0.76%-1.10	%
Expected stock price volatility		80	%		80	%
Expected dividend payout		—			—
Expected option life-years		(a)			(a)

(a) All warrants issued expire in 3-5 years.

Warrants issued pursuant to private placement

There were no warrants issued pursuant to private placement during the six months ended June 30, 2015. The Company issued 1,824,500 warrants in connection with a private placement consisting of shares of common stock during the six months ended June 30, 2014. The warrants expire in three years from their issuance date and are exercisable at price of $2.50 per share.

Warrants issued concurrent with convertible and other notes

In connection with the issuance of its convertible notes, the Company issued 686,665 and 0 warrants to the noteholders during the six-month period ended June 30, 2015 and 2014, respectively. The Company accounts for the warrant valuation in accordance with ASC 470-20 “Debt with Conversion and Other Options”. The Company records the fair value of warrants issued in connection with those instruments. The discount recorded in connection with the warrant valuation is recognized as non-cash interest expense and is amortized over the term of the convertible note. The fair value of the warrants, which amounted to $337,504 and $62,500 during the six-month period ended June 30, 2015 and 2014, respectively, has been recognized as beneficial conversion feature and debt discount.

F-13

Warrants issued pursuant to settlement of promissory notes

There were no warrants issued pursuant to the settlement of promissory notes during the six months ended June 30, 2015. The Company issued 9,375 and 3,125 warrants in the settlement of certain promissory notes and promissory notes-related party in January 2014. The warrants expire in January 2017 and are exercisable at a price of $2.00 per share.

Warrants issued for services

During the six months ended June 30, 2015, the Company issued 342,000 warrants valued at $168,408 for services rendered. 100,000 of the warrants issued have a 5 year term and expire in March 2020. These warrants are exercisable at a price of $3.00 per share. The remaining 242,000 of the warrants issued have a 3 year term and expire between December 2017 and December 2018. These warrants are exercisable at prices ranging between $1.25 and $3.00 per share.

The fair value of the detachable warrants issued for services and in connection with the issuance of convertible notes payable and the significant assumptions used to determine those fair values, using a Black-Scholes option-pricing model are as follows:

	June 30, 2015			December 31, 2014
Significant assumptions
Exercise Price		$1.00-$3.00			$1.00-$3.00
Market Price	$	1.25		$	1.25
Expected stock volatility		80	%		80	%
Expected dividend payout		0	%		0	%
Risk-free interest rate		0.8-1.09	%		0.76-1.10	%
Terms (years)		3-5			3-5

9.	Commitments and Contingencies

Litigation

In the normal course of our business, we may periodically become subject to various lawsuits. Action was instituted March 11, 2015 by Chloe Kudler, by and through her guardian ad litem Lisa Kudler vs. The Grilled Truck, Inc., a Nevada corporation, The Brill Group, LLC, a California limited liability company, Justin Brill, et al. in the Ventura County Superior Court Case Number 56-2014-00459915-CU-PO-VTA.

It is claimed by Chloe Kudler that on March 20, 2014, a food product obtained from one of the trucks licensed by the Company was contaminated with Salmonella bacterium. The complaint is for product liability warranty of merchantability, negligence and negligent infliction of emotional distress.

The Brill Group has an exclusive license to operate certain licensed goods and services utilizing The Grilled Cheese Truck, Inc. intellectual property for an exclusive territory.

The Brill Group is defending the lawsuit and shall continue to defend that lawsuit.

F-14

The Company is subject to certain legal proceedings and claims, which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should not have a material adverse effect on its financial position, results of operations or liquidity.

Letter of Intent:

On January 27, 2015, The Grilled Cheese Truck, Inc. (the “Company”) entered into a letter of intent (the “Brinton LOI”) with DJ Brinton Lake, LLC, a Pennsylvania limited liability company (“Brinton”), whereby the Company intends to acquire all, or substantially all, of the related assets of Brinton (the “Brinton Assets”). Pursuant to the terms of the Brinton LOI, the parties agreed that until March 31, 2015, Brinton will not negotiate with, or agree to sell or otherwise dispose of, directly or indirectly, any of the Brinton Assets to any other third party. In addition, the Brinton LOI included a non-binding term sheet describing terms of the acquisition and that the parties agreed to further negotiate and reduce such terms to a definitive purchase agreement. The execution and delivery of the definitive purchase agreement will be subject to certain conditions contained in the definitive purchase agreement, including but not limited to, Brinton obtaining any necessary consent to sell such Brinton Assets to the Company from Brinton’s franchisor or termination of any agreement that may prohibit the sale of the Brinton Assets. On March 31, 2015, the Company entered into an amendment to the Brinton LOI (the “Brinton Amendment”) between the Company and Brinton, pursuant to which the Company intends to acquire all, or substantially all, of the related assets of Brinton (the “Brinton Assets”). Pursuant to the Brinton LOI, the parties agreed that until March 31, 2015 (the “Expiration Date”), Brinton will not enter into negotiations with any third party for the sale of the Brinton Assets. Under the Brinton Amendment, the parties agreed to extend the Expiration Date until May 31, 2015. The remaining terms and conditions of the Brinton LOI remain unchanged. On May 31, 2015, the Company entered into an amendment to a letter of intent (the “Brinton Amendment 2”) between the Company and Brinton, dated as of January 27, 2015 (as amended on March 26, 2015, the “Brinton LOI”), pursuant to which the Company intends to acquire all, or substantially all, of the related assets of Brinton (the “Brinton Assets”). Pursuant to the Brinton LOI, the parties agreed that until May 31, 2015 (the “Expiration Date”), Brinton will not enter into negotiations with any third party for the sale of the Brinton Assets. Under the Brinton Amendment, the parties agreed to extend the Expiration Date until July 31, 2015. The Company is currently conducting ongoing discussions with Brinton to extend the LOI. The remaining terms and conditions of the Brinton LOI remain unchanged.

On January 27, 2015, the Company also entered into a letter of intent (the “King LOI”) with DJR King of Prussia, Inc., a Pennsylvania corporation (“King”), whereby the Company intends to acquire all, or substantially all, of the related assets of King (the “King Assets”). Pursuant to the terms of the King LOI, the parties agreed that until March 31, 2015, King will not negotiate with, or agree to sell or otherwise dispose of, directly or indirectly, any of the King Assets to any other third party. In addition, the King LOI included a non-binding term sheet describing terms of the acquisition and that the parties agreed to further negotiate and reduce such terms to a definitive purchase agreement. The execution and delivery of the definitive purchase agreement will be subject to certain conditions contained in the definitive purchase agreement, including but not limited to, King obtaining any necessary consent to sell such King Assets to the Company from King’s franchisor or termination of any agreement that may prohibit the sale of the King Assets. On March 31, 2015, the Company also entered into an amendment to the King LOI (the “King Amendment”) between the Company and King, pursuant to which the Company intends to acquire all, or substantially all, of the related assets of King (the “King Assets”). Pursuant to the King LOI, the parties agreed that until March 31, 2015 (the “Expiration Date”), King will not enter into negotiations with any third party for the sale of the King Assets. Under the King Amendment, the parties agreed to extend the Expiration Date until May 31, 2015. The remaining terms and conditions of the King LOI remain unchanged. On May 31, 2015, the Company also entered into an amendment to a letter of intent (the “King Amendment”) between the Company and DJR King of Prussia Plaza, Inc., a Pennsylvania corporation (“King”), dated as of January 27, 2015 (as amended on March 26, 2015, the “King LOI”), pursuant to which the Company intends to acquire all, or substantially all, of the related assets of King (the “King Assets”). Pursuant to the King LOI, the parties agreed that until May 31, 2015 (the “Expiration Date”), King will not enter into negotiations with any third party for the sale of the King Assets. Under the King Amendment, the parties agreed to extend the Expiration Date until July 31, 2015. The Company is currently conducting ongoing discussions with King to extend the LOI. The remaining terms and conditions of the King LOI remain unchanged.

F-15

On January 27, 2015, the Company also entered into a letter of intent (the “Square LOI”) with DJR Suburban Square, Inc., a Pennsylvania corporation (“Square”), whereby the Company intends to acquire all, or substantially all, of the related assets of Square (the “Square Assets”). Pursuant to the terms of the Square LOI, the parties agreed that until March 31, 2015, Square will not negotiate with, or agree to sell or otherwise dispose of, directly or indirectly, any of the Square Assets to any other third party. In addition, the Square LOI included a non-binding term sheet describing terms of the acquisition and that the parties agreed to further negotiate and reduce such terms to a definitive purchase agreement. The execution and delivery of the definitive purchase agreement will be subject to certain conditions contained in the definitive purchase agreement, including but not limited to, Square obtaining any necessary consent to sell such Square Assets to the Company from Square’s franchisor or termination of any agreement that may prohibit the sale of the Square Assets. On March 31, 2015, the Company also entered into an amendment to the Square LOI (the “Square Amendment”) between the Company and Square, pursuant to which the Company intends to acquire all, or substantially all, of the related assets of Square (the “Square Assets”). Pursuant to the Square LOI, the parties agreed that until March 31, 2015 (the “Expiration Date”), Square will not enter into negotiations with any third party for the sale of the Square Assets. Under the Square Amendment, the parties agreed to extend the Expiration Date until May 31, 2015. The remaining terms and conditions of the Square LOI remain unchanged. On May 31, 2015, the Company also entered into an amendment to a letter of intent (the “Square Amendment”) between the Company and DJR Suburban Square, Inc., a Pennsylvania corporation (“Square”), dated as of January 27, 2015 (as amended on March 26, 2015, the “Square LOI”), pursuant to which the Company intends to acquire all, or substantially all, of the related assets of Square (the “Square Assets”). Pursuant to the Square LOI, the parties agreed that until May 31, 2015 (the “Expiration Date”), Square will not enter into negotiations with any third party for the sale of the Square Assets. Under the Square Amendment, the parties agreed to extend the Expiration Date until July 31, 2015. The Company is currently conducting ongoing discussions with Square to extend the LOI. The remaining terms and conditions of the Square LOI remain unchanged.

Master Franchise Agreement:

On July 31, 2015, the Company entered into a side letter agreement (the “Franchise Side Letter”) between the Company and Soupman, Inc., a Delaware corporation (“Soupman”), which Franchise Side Letter confirmed the acceptance by the parties of a Master Franchise Agreement (“Franchise Agreement”) between the Company and Kiosk Concepts, Inc., a New York corporation and the franchising subsidiary of Soupman (together with Soupman, the “Franchisor”), which Franchise Agreement was included as an exhibit to the Franchise Side Letter. Pursuant to Franchise Agreement, Franchisor granted the Company (i) the exclusive right to establish and operate an independent business that sells and services “The Original Soupman” franchises (the “Franchises”) in North America (the “Territory”) and (ii) the right and obligation to market and sell independent Franchises to qualified individuals and persons (the “Sub-Franchisees), along with a license to use the methods, procedures and products developed by Franchisor in the business of selling and servicing the Franchises. The consummation of the franchising arrangement contemplated by the Franchise Agreement is subject to various conditions, including (i) a $100,000 payment by the Company to Soupman and (ii) regulatory approval by the State of New York of the franchise arrangements contemplated therein.

Under the Franchise Agreement, the Company shall pay Franchisor a monthly royalty fee based on revenue generated by the Sub-Franchisees equal to twenty-five percent (25%) of aggregate royalty fees paid to the Company by such Sub-Franchisees in the Territory. The Company shall also pay Soupman a franchise sales royalty fee for each Franchise it sells in the Territory equal to twenty-five percent (25%) of the initial franchise fee collected from each Sub-Franchisee. In order to maintain exclusivity in the Territory, the Company is also obligated to purchase a minimum amount soup from the Franchisor in accordance with a schedule of purchase obligations set forth in the Franchise Agreement. The Company and any Sub-Franchisees shall operate the Franchises in the Territory using the assumed trade name “The Original Soupman”, “The Original Soupman of [City]” and/or any other trade name designated by Franchisor. The Franchisor retains a security interest in and to all equipment, furniture, fixtures, inventory, supplies and vehicles used in connection with the Franchises.

The Franchise Agreement has a term of ten (10) years, with the Company having the option to renew the term for four (4) additional ten (10) year terms, upon written notice given by the Company to Franchisor not less than six (6) months nor more than twelve (12) months prior to the scheduled expiration date of the term then in effect. The Company’s right to renew the term of the Franchise Agreement is subject to certain conditions set forth in the Franchise Agreement including, but not limited to, the payment of a renewal fee in the sum of $10,000. The Franchise Agreement may be terminated by Franchisor immediately and without notice upon the Company’s insolvency, bankruptcy or the appointment of a receiver or other custodian for the Company’s business or assets. The Franchise Agreement may be terminated by Franchisor immediately upon receipt by the Company of notice from the Franchisor (as further described in the Franchise Agreement), upon the occurrence of any event of default under the Franchise Agreement, including, but not limited to, the abandonment of a Franchise by the Company without Franchisor’s consent, the Company’s breach of certain covenants set forth in the Franchise Agreement and failure to make timely payments to Franchisor.

F-16

10.

Stockholders’ Deficit

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock consisting of 1,000,000 shares of Series A Convertible Preferred Stock $0.001 par value per share (“Series A Preferred Stock”), and 9,000,000 shares of blank check preferred stock, $0.001 par value per share.

Outstanding shares of Series A Preferred Stock, if any, shall automatically be converted into shares of Common Stock upon the earlier of (i) one year from the date of initial issuance of any shares of the Series A Preferred Stock at a conversion rate equal to $0.50 per share of Common Stock or (ii) the effectiveness of a registration statement filed with the SEC covering the resale of Common Stock issued by the Company in its next PIPE transaction (the “PIPE”).

As of June 30, 2015 and December 31, 2014, no preferred stock was issued and outstanding.

Common Stock

The Company is authorized to issue 100,000,000 shares of Common Stock.

Shares issued pursuant to Exercise of Warrants

During the six-month period ended June 30, 2015, warrants for 49,500 shares of the Company’s Common Stock were exercised for an average of $2.02 per share, resulting in gross proceeds to the Company of $100,000.

Shares issued for Services

The Company issued to certain consultants 30,000 and 190,000 shares of its Common Stock in consideration for services rendered during the six-month period ended June 30, 2015 and 2014, respectively. The fair value of the shares amounted to $37,500 and $237,500 during the six-month period ended June 30, 2015 and 2014, respectively. The fair value of the price per share for the aforementioned transactions was based on the price per share of its last private placement.

Shares issued pursuant to Conversion of Convertible Note Payable

The Company issued 62,640 shares of its common stock upon conversion of convertible notes payable of $50,000 in principal and accrued interest of $12,640 during the six months ended June 30, 2015.

Shares issued pursuant to Satisfaction of Accounts Payable and Accrued Compensation

The Company issued to a consultant 140,250 shares of its Common Stock valued at $1.25 per share for a total of $175,312 in satisfaction of accounts payable totaling $138,100 resulting in a loss on settlement of debt of $37,212. The fair value of the price per share for the aforementioned transactions was based on the price per share of its last private placement.

Stock Compensation Plan

During September 2013, the Company adopted the 2013 Equity Plan (“2013 Plan”). An aggregate of 4,000,000 shares of our Common Stock are reserved for issuance under the 2013 Plan. The 2013 Plan may be administered, interpreted and constructed by the Board or a committee designated by the Board (the “Designee”). The 2013 Plan allows the Designee to grant stock options to employees, directors, senior management and consultants (under certain circumstances described in the 2013 Plan).

F-17

The Company recorded share-based payment expenses amounting to $53,941 and $107,289 during the three and six months ended June 30, 2015 in connection with all options outstanding respectively. The amortization of share-based payment was recorded in general and administrative expenses.

The Company granted 1,000,000 options in September 2013, as follows: (i) 250,000 options with an exercise price of $2.00 per share (ii) 250,000 options with an exercise price of $3.00 per share (iii) 250,000 options with an exercise price of $4.00 per share, and (iv) 250,000 options with an exercise price of $5.00 per share. Each of the options are exercisable for a term of 10 years. These were the only options granted and outstanding at June 30, 2015 and December 31, 2014, respectively. Each of the options are exercisable for a term of 10 years.

The total compensation cost related to options not yet recognized amounted to $243,030 at June 30, 2015, and the Company expects that it will be recognized over the remaining period of 14 months.

11.

Related Party Transactions

The related party transactions for the six month periods ended June 30, 2015 and 2014 and as of June 30, 2015 and December 31, 2014 are summarized below:

TRIG Capital Advisory Agreement

On July 16, 2012, the Company entered into a advisory agreement with TRIG Capital Group, LLC whose members are Alfonso J. Cervantes, a shareholder and the Company’s former President, Secretary and a director of the Company, Robert Lee, the Executive Chairman, Principal Financial Officer and a director of the Company and Peter Goldstein, a shareholder and financial advisor to the Company, at that time. The term of the agreement shall begin on the effective date and continue until such agreement is terminated by the parties. Pursuant to the advisory agreement, TRIG Capital will provide the Company with foreign and domestic marketing services, management advice and support regarding operations, administrative services, and assist with business development as required by the Company. In addition, TRIG Capital will assist management in establishing its franchising operations and assisting in the sale of these franchises. Under the advisory agreement, TRIG Capital may engage third parties reasonably acceptable to the Company to assist in its efforts to satisfy the terms of the Agreement, but TRIG Capital shall be liable for any such payments made to third parties engaged by TRIG Capital.

As compensation for such services, the Company granted TRIG Capital the TRIG Warrant to purchase 1,800,000 shares of Common Stock. The TRIG Warrant is exercisable until July 16, 2017. The TRIG Warrant is exercisable at $2.00 or on a cashless basis if the market price of the Company’s Common Stock is less than the exercise price or $2.00. The 1,800,000 warrants were subsequently transferred to Mr. Cervantes, Mr. Goldstein and Mr. Lee, equally. In addition to the warrant, the Company will pay TRIG Capital a cash bonus of ten (10%) percent of the purchase price of any franchises that TRIG Capital may sell on behalf of the Company after completion of the Share Exchange Transaction for a period of five (5) years. Additionally, TRIG Capital will receive a monthly fee of $7,000 on the last day of each month for a period of no less than 18 months. During the six months ended June 30, 2015 and 2014, the Company incurred fees of $0 and $0, respectively. The Company has an accounts payable balance of $58,451 as of June 30, 2015 and December 31, 2014. This agreement lapsed in January 2014.

Grandview Capital Advisory Agreement

On July 16, 2012, the Company entered into the Grandview Advisory Agreement with Grandview Capital Partners, Inc. (‘Grandview”) whose majority shareholder is Peter Goldstein, a shareholder and financial advisor to the Company at that time. Pursuant to the Grandview Advisory Agreement, Grandview will provide the Company primarily with assistance and advice in seeking out a potential merger or acquisition partner or target.

F-18

The Company will pay Grandview $10,000 per month for a period of 18 months. In the event that the Company enters into any transaction involving a sale of the Company or the sale of any substantial or material assets within 36 months of the date of the Grandview Advisory Agreement, Grandview will receive a fee between two (2%) and ten (10%) percent of the total transaction, depending on the transaction value, as defined in the Grandview Advisory Agreement. Additionally, the Company paid Grandview a cash success fee of $40,000 upon the consummation of the initial closing of the 2012 private placement offering and an additional cash success fee of $40,000 upon the final closing of the 2012 private placement offering. During the year ended December 31, 2013, the Company incurred fees of $90,000 and has an accounts payable balance of $53,912 and $106,789 as of December 31, 2014 and 2013, respectively. Additionally, the Company issued 330,000 warrants to Grandview as one of the private placement agents during the year ended December 31, 2013. The fair value of the warrants amounted to $152,978. As of June 30, 2015, the balance in accounts payable was $21,785.

On September 6, 2013, the Company entered into the Termination Agreement, whereby the company terminated the Grandview Advisory Agreement with Grandview. The Grandview Advisory Agreement was mutually terminated by the parties because Mr. Goldstein’s relationship with the Company changed. As provided in the Grandview Advisory Agreement and the Termination Agreement, the Company agreed that the provisions relating to the payment of fees (including but not limited to the tail fees specified in the Grandview Advisory Agreement relating to any entities or individuals Grandview introduced to the Company prior to the execution of the Termination Agreement), reimbursement of expenses, indemnification and contribution, independent contractor, conflicts, confidentiality and waiver of the right to trial by jury survive such termination. Peter Goldstein, the recently appointed President, interim Chief Financial Officer, Secretary and Director of the Company, is the founder, chairman, chief executive officer and registered principal of Grandview. Mr. Goldstein was also the Company’s founder and served as President and Director of the Company from December 31, 2009 to April 12, 2012. Mr. Goldstein did not hold any officer or director positions with the Company when the Grandview Advisory Agreement was consummated and through the Company’s 2013 private placement offering related to its debentures.

Peter Goldstein Agreement

On November 18, 2014, the Company entered into Amendment No. 1 to its employment agreement with Peter Goldstein (the “Amended Goldstein Agreement”), which amends Mr. Goldstein’s employment agreement dated September 6, 2013. The Amended Goldstein Agreement provides that Mr. Goldstein will serve as Treasurer of the Company in addition to his roles as President, Interim Chief Financial Officer and Secretary of the Company. The Amended Goldstein Agreement has a term ending December 31, 2015 and provides that in the event that the Company completes a private placement offering commencing in May 2013, Mr. Goldstein shall receive a cash payment of $100,000 if the Company raises a minimum of $5,000,000 in that offering. Also, pursuant to the Amended Goldstein Agreement, the Company shall pay Mr. Goldstein a success fee, if the Company closes on an acquisition, merger or joint venture or similar transaction, payable in the same form of consideration paid by the Company, in the amount of (i) 2.5% of the first $5,000,000 of total consideration paid, or any part; (ii) plus, 2% of the second $5,000,000 of total consideration paid, or any part; (iii) plus, 1.5% of the third $5,000,000 of total consideration, or any part; (iv) plus, 1% of the next $5,000,000 of total consideration, or any part; (v) plus, 0.5% of the balance of total consideration paid. No other material amendments were made to Mr. Goldstein’s employment agreement.

Clark Group Agreement

On August 15, 2012, the Company entered into the Clark Group Agreement with Wesley K. Clark & Associates, LLC (the “Clark Group”). General Wesley K. Clark currently serves as Chairman and CEO of the Clark Group and as one of the Company’s directors. The agreement commenced upon the completion of the Share Exchange Transaction and will continue for a period of two years. This agreement was amended on September 6, 2013.

On November 18, 2014, the Company entered into Amendment No. 2 to the term sheet (the “Second Amended Clark Agreement”) with the Clark Group, which amends the term sheet with the Clark Group originally dated August 15, 2012 (the “Clark Agreement”), as amended by Amendment No. 1 dated September 6, 2013 (the “Amended Clark Agreement”). The Second Amended Clark Agreement provides that as of the date thereof, the Company shall issue to the Clark Group 500,000 warrants to purchase Common Stock, such warrants exercisable through December 31, 2016 at a price of $1.00 per share and without the condition that a certain number of veteran franchise agreements be executed (as set forth in the Clark Agreement). The Second Amended Clark Agreement has a term that continues through December 31, 2015. No other material amendments were made to Clark Group’s agreement with the Company.

F-19

General Clark will supervise the development and implementation of recruitment and “vetting” for prospective veteran franchisees. Wesley Clark, Jr.’s responsibilities will be the supervision and administration of the selection process for prospective veteran franchisees, working directly with, and reporting to, Wesley Clark, Sr. in the execution of that process. During the six-month period ended June 30, 2015 and 2014, the Company incurred fees of $120,000 and had an accounts payable balance of $170,734 and $90,734 as of June 30, 2015 and December 31, 2014, respectively.

Robert Y. Lee Agreement

On November 18, 2014, the Company entered into Amendment No. 2 to its employment agreement with Robert Y. Lee (the “Second Amended Lee Agreement”), which amends Mr. Lee’s employment agreement originally dated July 16, 2013, as amended by Amendment No. 1 dated September 6, 2013. The Second Amended Lee Agreement has a term ending December 31, 2015 and provides that in the event that the Company completes a private placement offering commencing in May 2013, Mr. Lee shall receive a cash payment of $100,000 if the Company raises a minimum of $5,000,000 in that offering. Also, the Company shall pay Mr. Lee a success fee, if it closes on an acquisition, merger or joint venture or similar transaction, payable in the same form of consideration paid by the Company in the amount of (i) 2.5% of the first $5,000,000 of total consideration paid, or any part; (ii) plus, 2% of the second $5,000,000 of total consideration paid, or any part; (iii) plus, 1.5% of the third $5,000,000 of total consideration paid, or any part; (iv) plus, 1% of the next $5,000,000 of total consideration paid, or any part; (v) plus, 0.5% of the balance of total consideration paid. No other material amendments were made to Mr. Lee’s employment agreement.

David Danhi Agreement

On November 18, 2014, the Company entered into Amendment No. 1 to its employment agreement with David Danhi (the “Amended Danhi Agreement”), which amends Mr. Danhi’s employment agreement dated October 18, 2012. The Amended Danhi Agreement provides that if Mr. Danhi and the Company enter into a services agreement with a third party, pursuant to which Mr. Danhi provides services to a third party for which the Company receives a fee, the Company shall pay a bonus to Mr. Danhi equal to 100% of such fee, in cash or shares of Common Stock, provided that such bonus shall not be greater than $25,000. In addition, Mr. Danhi shall receive a cash payment of $160,000 if the Company raises a minimum of $5,000,000 in a private placement financing. No other material amendments were made to Mr. Danhi’s employment agreement.

PBNJ Advisory Agreement

On November 18, 2014, the Company entered into Amendment No. 1 to its advisory agreement (the “Amended PBNJ Agreement”) with PBNJ Advisors, Inc. (“PBNJ”), which amends PBNJ’s advisory agreement dated April 14, 2014. The Amended PBNJ Agreement has a term that continues through December 31, 2015 and provides for compensation to PBNJ in the amount of 75,000 shares of Common Stock and 75,000 warrants to purchase Common Stock, such warrants exercisable for a period of 3 years at price of $2.00 per share. The Amended PBNJ Agreement also provides that both parties may terminate the agreement upon 30 days written notice. No other material amendments were made to PBNJ’s advisory agreement. On December 31, 2014, the Company entered into Amendment No. 2 to its advisory agreement (the “Amended #2 PBNJ Agreement”) with PBNJ, which amends PBNJ’s advisory agreement dated April 14, 2014. The Amended #2 PBNJ Agreement provides for compensation to PBNJ in the amount of 20,000 shares of Common Stock.

Algie Hodges Employment Agreement

On January 26, 2015, the Company entered into an employment agreement (the “Hodges Employment Agreement”) with Algie Hodges. Pursuant to the Hodges Employment Agreement, Mr. Hodges will serve as the Chief Executive Officer of the Company. Mr. Hodges will be paid a salary of $300,000 per annum, plus other benefits including reimbursement for reasonable expenses, a car allowance and certain insurance coverage in accordance with the Company’s policies, for his role with the Company.

F-20

Effective upon satisfactory completion of services for the first ninety (90) days of employment, and based upon certain goals and objectives agreed to with the Board of Directors, Mr. Hodges will also be entitled to an annual bonus of up to 100% of his annual base salary based on the Company. Further, upon completion of services for the first ninety (90) days of employment, the Company shall grant to Mr. Hodges 1,000,000 stock options to be issued under the Company’s 2013 Equity Plan. Such stock options shall vest over a period of three (3) years at a rate of 333,333 after completion of the first year of employment, 333,333 after completion of the second year of employment and 333,334 after the third year of employment. Each stock option shall be exercisable until the fifth (5^th) anniversary of the date of grant at a price of $3.00 per share.

The Hodges Employment Agreement has a term of three years and will automatically renew for successive one (1) year periods thereafter unless 3 months written notice is provided by either party. The Hodges Employment Agreement may be terminated by us upon death, disability, or for cause (as such term is defined in the Hodges Employment Agreement). In the event the Company terminates Mr. Hodges’ employment before the end of initial term without cause, or if Mr. Hodges terminates his employment before the initial term for good reason (as such term is defined in the Hodges Employment Agreement), the Company shall pay Mr. Hodges the greater of six month’s salary or the amount of salary that remains to be paid for the rest of the unexpired initial term, and shall provide Mr. Hodges an annual bonus pro-rated on the basis of the number of whole months Mr. Hodges has worked in the year of the termination of employment. In the event the Company terminates Mr. Hodges’ employment before the end of the initial term for cause, or Mr. Hodges resigns without good reason, Mr. Hodges will be entitled to the salary and benefits he has accrued up until the date of termination.

12.

Concentrations

The following table sets forth information as to each supplier that accounted for 10% or more of the Company’s cost of goods sold for the six months ended June 30, 2015 and 2014, respectively.

Suppliers		Six-month period ended June 30, 2015			Six-month period ended June 30, 2014
	A		25	%		19	%
	B		10	%		—

For the six-month period ended June 30, 2015, the Company had two suppliers who accounted for approximately $106,000 of their purchases used for production or approximately 13% of total cost of sales for the period then ended. The amount payable to supplier A at June 30, 2015 amounted to $20,026 and amount payable to supplier B at June 30, 2015 amounted to $28,330.

For the six-month period ended June 30, 2014, the Company had one supplier who accounted for approximately $192,000 of their purchases used for production or approximately 11% of total cost of sales for the period then ended. The amount payable to Supplier A at June 30, 2014 amounted to $28,000.

13.

Subsequent Events

Issuance of promissory notes payable and shares:

On July 30, 2015, the Company issued a $25,000 promissory note payable with interest of 12% per annum maturing on September 30, 2015. Additionally, the Company issued warrants for 100% coverage of the note principal at an exercise price of $2.00 per share exercisable for a three year term from the date of the note. If prior to maturity, the Company closes an equity financing raise of a minimum of $5,000,000, the principal and accrued interest is convertible into shares of common stock of the Company at the holder’s election at a price of $1.25 per share.

On August 6, 2015, the Company issued a $100,000 promissory note payable with interest of 12% per annum maturing on October 6, 2015. Additionally, the Company issued warrants for 100% coverage of the note principal at an exercise price of $2.00 per share exercisable for a three year term from the date of the note. If prior to maturity, the Company closes an equity financing raise of a minimum of $5,000,000, the principal and accrued interest is convertible into shares of common stock of the Company at the holder’s election at a price of $1.25 per share.

F-21

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our unaudited consolidated financial statements and related notes appearing elsewhere in this report on Form 10-Q (this “Report”). This discussion and analysis contains forward looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forwarding looking statements as a result of certain factors, including but not limited to, those which are not within our control.

Although we qualify as an “emerging growth company” as defined in the JOBS Act, we have elected not to take advantage of certain exemptions from various reporting requirements that are available to “emerging growth companies.”

Overview

TRIG Acquisition 1, Inc. was incorporated in the State of Nevada on December 31, 2009 as GSP-1, Inc. The Company was formed as a vehicle to pursue a business combination. On October 18, 2012 (the “Closing Date”), Trig Acquisition 1, Inc. (the “Company”) entered into a share exchange agreement (the “Exchange Agreement”) by and among (i) the Company, (ii) Grilled Cheese, Inc., a California corporation, (“Grilled Cheese”), (iii) GCT, Inc., a Nevada corporation and wholly-owned subsidiary of the Company (“GCT”). The Company selected December 31 as its fiscal year end. On July 6, 2011, the Company filed a Certificate of Amendment to its Articles of Incorporation to change its name from “GSP-1, Inc.” to “TRIG Acquisition 1, Inc.” On February 19, 2013, following the Share Exchange Transaction, the Company changed its corporate name from “TRIG Acquisition 1, Inc.” to “The Grilled Cheese Truck, Inc.”

From inception until the closing of the Share Exchange Transaction, we solely existed as a vehicle to pursue a business combination. As a result of the Share Exchange Transaction, we ceased our prior operations on October 18, 2012 and, through our wholly-owned subsidiary, Grilled Cheese, now operate as a gourmet food truck Company, specializing in gourmet grilled cheese.

Grilled Cheese, Inc. was a privately held California S corporation, incorporated on September 18, 2009. Immediately prior to the closing of the Share Exchange Transaction, David Danhi was the majority shareholder of Grilled Cheese. Grilled Cheese’s operations to date have consisted of sales of grilled cheese and food related items in their food trucks, business formation, strategic development, marketing, website development, negotiations with prospective licensees and franchisees and capital raising activities.

The Grilled Cheese Truck is a gourmet food truck that sells various types of gourmet grilled cheese and other comfort foods principally in the Los Angeles, California area and in Phoenix, Arizona. Each of our trucks currently makes approximately ten stops per week (lunch and dinner five days a week) at prearranged locations. We are a hub and spoke operator, whereby all the food preparation occurs at our kitchens which support streamlined operations within the truck by limiting truck activity to assembly and grilling to focus on customer service, allowing the truck to achieve maximum revenues per hour and delivering melts, Tater Tots, soups and sides efficiently and consistently to its customers. Our business model implements the use of social media and advance location booking to secure high sales per stop. Our website, www.thegrilledcheesetruck.com lists the weekly schedule where the trucks will be stopping.

We are capitalizing on the burgeoning food truck industry through our established food service operations and social media strategy. Driving our growth, we have received national media visibility and as of the date of this report, have accumulated over 150,000 followers through a variety of social media platforms, including Facebook and Twitter. The gourmet food truck industry is in an early stage of development and is highly fragmented and is expected to grow year over year for the foreseeable future.

We believe that the use of social media allows us to communicate with a large group of an interested customers and our fan base in real time, letting them know exactly where and when our food trucks will be located. We believe that providing potential customers with up-to-date information regarding the time and location of our trucks helps promote and drive additional customers to our trucks, therefore increasing our sales at each prospective location. We believe we have established brand presence in certain locations, such as Southern California and Phoenix, Arizona, but have sustained losses to date.

We are currently an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (which we refer to herein as the JOBS Act), which permits us to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to:

not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;

taking advantage of an extension of time to comply with new or revised financial accounting standards;

reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and

exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Although we qualify as an emerging growth company under the JOBS Act, we have elected not to take advantage of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act and such election not use such transition period is irrevocable.

Results of Operations:

Three month and six month period ended June 30, 2015 and 2014

The following table summarizes changes in selected operating indicators, illustrating the relationship of various income and expense items to food and beverage sales for the respective periods presented:


	Three-month						Three-month						Increase/			Increase/			Six-month						Six-month						Increase/			Increase/
	period ended			As a % of			period ended			As a % of			Decrease in $			Decrease in %			period ended			As a % of			period ended			As a % of			Decrease in $			Decrease in %
	June 30, 2015			Revenues			June 30, 2014			Revenues			2015 vs 2014			2015 vs 2014			June 30, 2015			Revenues			June 30, 2014			Revenues			2015 vs 2014			2015 vs 2014

NET REVENUES:
Food truck sales	$	746,092			78	%	$	749,696			79	%	$	(3,604	)		0	%	$	1,116,888			73	%	$	1,262,993			80	%	$	(146,105	)		-12	%
Catering and special events		210,796			22	%		186,452			20	%		24,344			13	%		403,055			26	%		296,113			19	%		106,942			36	%
Licensing		3,464			0	%		8,786			1	%		(5,322	)		-61	%		9,514			1	%		19,891			1	%		(10,377	)		-52	%
TOTAL REVENUES		960,352			100	%		944,934			100	%		15,418			2	%		1,529,457			100	%		1,578,997			100	%		(49,540	)		-3	%

COST OF SALES:
Food and beverage		188,121			20	%		293,836			31	%		(105,715	)		-36	%		303,385			20	%		473,899			30	%		(170,514	)		-36	%
Food truck expenses		212,932			22	%		570,917			60	%		(357,985	)		-63	%		399,097			26	%		960,426			61	%		(561,329	)		-58	%
Commissary and kitchen expenses		64,652			7	%		105,552			11	%		(40,900	)		-39	%		88,370			6	%		252,030			16	%		(163,660	)		-65	%
TOTAL COST OF SALES		465,705			48	%		970,305			103	%		(504,600	)		-52	%		790,852			52	%		1,686,355			107	%		(895,503	)		-53	%

Gross Profit (Loss)		494,647			52	%		(25,371	)		-3	%		520,018			-2050	%		738,605			48	%		(107,358	)		-7	%		845,963			-788	%

OPERATING EXPENSES:
General and administrative expenses		887,638			92	%		1,696,585			180	%		(808,947	)		-48	%		1,916,683			125	%		2,496,265			158	%		(579,582	)		-23	%
Selling costs		49,019			5	%		61,488			7	%		(12,469	)		-20	%		116,681			8	%		97,896			6	%		18,785			19	%
Consulting expense - related parties		137,601			14	%		65,625			7	%		71,976			110	%		286,795			19	%		131,250			8	%		155,545			119	%
Depreciation		17,826			2	%		17,776			2	%		50			0	%		35,652			2	%		39,536			3	%		(3,884	)		-10	%
Bad debts		—			0	%		—			0	%		—			0	%		3,386			0	%		—			0	%		3,386			-100	%
TOTAL OPERATING EXPENSES		1,092,084			114	%		1,841,474			195	%		(749,390	)		-41	%		2,359,197			154	%		2,764,947			175	%		(405,750	)		-15	%

LOSS FROM OPERATIONS		(597,437	)		-62	%		(1,866,845	)		-198	%		1,269,408			-68	%		(1,620,592	)		-106	%		(2,872,305	)		-182	%		1,251,713			-44	%

Other Income (Expense)
Interest expense		(43,241	)		-5	%		(366,902	)		-39	%		323,661			-88	%		(61,202	)		-4	%		(552,909	)		-35	%		491,707			-89	%
Interest expense, related party		—			0	%		—			0	%		—			0	%		—			0	%		(17,248	)		-1	%		17,248			-100	%
Interest income		—			0	%		(38,000	)		-4	%		38,000			-100	%		—			0	%		(38,000	)		-2	%		38,000			-100	%
Amortization of debt discount		(60,162	)		-6	%		—			0	%		(60,162	)		100	%		(95,944	)		-6	%		—			0	%		(95,944	)		100	%
Amortization of deferred financing costs		(11,446	)		-1	%		—			0	%		(11,446	)		100	%		(22,870	)		-1	%		—			0	%		(22,870	)		100	%
Loss on settlement of debt		(37,212	)		-4	%		—			0	%		(37,212	)		100	%		(37,212	)		-2	%		—			0	%		(37,212	)		100	%
TOTAL OTHER INCOME (EXPENSE)		(152,061	)		-16	%		(400,102	)		-42	%		248,041			-62	%		(217,228	)		-14	%		(597,139	)		-38	%		379,911			-64	%
LOSS BEFORE PROVISION FOR INCOME TAX		(749,498	)		-78	%		(2,266,947	)		-240	%								(1,837,820	)		-120	%		(3,469,444	)		-220	%
Provision for income tax (expense) benefit		—						—						—						—						—						—

NET LOSS	$	(749,498	)		-78	%	$	(2,266,947	)		-240	%	$	1,517,449			-67	%	$	(1,837,820	)		-120	%	$	(3,469,444	)		-220	%	$	1,631,624			-47	%

Revenue. The slight decrease in food truck sales during the three and six month periods ended June 30, 2015, when compared to the comparable prior year period, is primarily due to a decrease in the number of trucks. Catering and special events increased due to an increase in special events. During the three and six month periods ended June 30, 2015, we operated with fewer vehicles at higher level of per truck revenue due to focusing our sales on better locations, more venues, larger scale events, and in turn reduced stops that were less profitable. The number of food trucks in operations was 5 during the six month period ended June 30, 2015, when compared to 8 during the comparable prior year period.

We believe our revenues for the remainder 2015 will increase as we expand into new markets and increase the number of trucks in operation.

Cost of sales. Cost of sales is mainly comprised of food and beverage products used to make grilled cheese sandwiches, other food products, beverages and paper products and the operating costs related to the food truck, including food truck employee compensation and benefits, commissary kitchen costs, maintenance and fuel. The decrease in cost of sales is related to the decrease in the number of trucks in the three and six month periods ended June 30, 2015, and the reduction of food and beverage costs, food truck expenses and commissary and kitchen expenses.

Food and beverage expenses consist primarily of bread, cheese, meats, seafood and other types of foods and various types of beverages. The decrease in food and beverage cost of sales and as a percentage of sales during the three and six month periods ended June 30, 2015, when compared to the comparable prior year period, is primarily related to a more efficient procurement and management of food costs and better purchasing and inventory management practices as we gain experience in the management of our food and beverage related products.

Food truck expenses consist of truck staff payroll, truck insurance, gas, repairs and maintenance and other truck related expenses. The decrease in food truck cost of sales was primarily reduction in the number of trucks utilized in the Company’s operations in Phoenix and Los Angeles. This decrease in food truck expenses was related to reducing the truck related expenses and truck staff personnel required to operate fewer trucks during the three and six month periods ended June 30, 2015. Food truck labor has been greatly reduced due to our management team restructuring and reorganizing the operating departments. We have reduced hourly & salaried staff down by an average of 35% and schedule management resulting in less overtime pay which has improved productivity in all employees and it breeds a sense of ownership & accountability.

Kitchen expenses consist of occupancy, equipment and commissary employee compensation. The kitchen expenses decreased during the three and six month periods ended June 30, 2015 when compared to the comparable prior year period reducing the number of trucks in operations results in lower commissary and kitchen employees and due to better purchasing practices.

Gross profit. The increase in gross profit relates to the decrease in the food and beverage costs as well as food truck expenses and kitchen expenses.

General and administrative expenses. General and administrative expenses consists of general corporate expenses, including but not limited to market development, insurance, professional costs, clerical and administrative overhead. The decrease in general and administrative expenses during the three and six month periods ended June 30, 2015 is primarily related to the expenses associated with the increased general and administrative expenses, consulting fees, professional fees and executive compensation, which were needed to expand the business and support its growing operations and prepare the Company for public trading, which were mostly incurred during the six month period ended June 30, 2014.

Selling costs. Selling costs include, but are not limited to, marketing and promotion, printing, processing fees and utility vehicle rental which is used to transport employees to and from the food trucks. The increase in selling costs during the six month period ended June 30, 2015, when compared to the comparable prior year period, while there was a decrease in selling costs during the three month period ended June 30, 2015, when compared to the comparable prior year period, relates to a higher number of marketing events held in Los Angeles, San Diego and Phoenix, which occurred primarily in the first quarter of 2015.

Consulting expense, related party. The increase in consulting expenses-related parties is primarily due in order to expand the business and support operations and capital market activities of the Company.

Depreciation. The decrease in depreciation relates to a decrease in property and equipment during the six months ended June 30, 2015 as compared the same period in 2014.

Bad debts. During the six month period ended June 30, 2015, we reserved an allowance for doubtful accounts receivable of $3,386, as compared to $0 during the same period in 2014.

Other Income (Expenses). Other income (expenses) includes recognition of interest, amortization of debt discount and amortization of deferred financing costs. The changes in other income (expenses) are primarily due to a decrease in interest expense primarily attributable to the decrease in convertible note payable outstanding during the three and six month periods ended June 30, 2015 as compared to the three and six month periods ended June 30, 2014.

Net loss. Net loss for the six-month period ended June 30, 2015 decreased by $1,631,624 to a loss of $1,837,820 from a loss of $3,469,444 for the same period in 2014.

Liquidity and Capital Resources

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business. The business will require significant amounts of capital to sustain operations and make the investments it needs to execute its longer term business plan. The Company had cash of $86,247 and working capital deficiency of approximately $3.4 million at June 30, 2015. The Company’s cash and working capital amounts were derived from the proceeds of financing transactions through the issuance of notes, convertible notes and Common Stock purchase warrants and shares of our Common Stock. The Company’s net loss for the six-month period ended June 30, 2015 was approximately $1.8 million and our accumulated deficit amounts to $17.5 million as of June 30, 2015. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

In order to continue as a going concern and achieve a profitable level of operations, the Company will need, among other things, additional capital resources. Management’s plan to continue operating as a going concern includes raising capital, which could further dilute our existing Shareholders, and to implement the execution of its business plan to become cash flow positive from the completion of its offering and equity financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon the management’s ability to successfully implement the plans described above, including securing additional sources of financing and attain profitable operations. Management also cannot provide any assurance that unforeseen circumstances that could occur at any time within the next twelve months or thereafter will not increase the need for the Company to raise additional capital on an immediate basis. There can be no assurance that we will be able to continue to raise funds in which case the Company may be unable to meet its obligations.

The Company’s liquidity and capital needs relate primarily to working capital and other general corporate requirements. To date, the Company has funded its operations with convertible loans and by the sale of Common Stock and through private placement offerings.

Six-month period ended June 30, 2015

Cash used in operations of $1,301,852 during the six-month period ended June 30, 2015 consists primarily of our net loss of approximately $1,838,000, adjusted by depreciation and amortization of approximately $155,000, and the fair value of options, warrants, and shares of our Common Stock of approximately $313,000. Additionally, our accounts payable and payroll related liabilities and accrued compensation, including payables to related parties, and accrued interest increased by approximately $142,000 during the six-month period ended June 30, 2015.

Cash used in investing activities of $29,000 during the six-month period ended June 30, 2015 consists primarily of our purchase of a truck to be used by our Military Subsidiary.

Cash provided by financing activities of $1,069,000 during the six-month period ended June 30, 2015 consists primarily of proceeds generated from the issuance of shares of our Common Stock, convertible notes and promissory notes, which amounted to $1,054,000, offset by principal repayments of notes payable aggregating $25,000 and financing cost of $60,000. Additionally, the Company issued shares of its Common Stock to satisfy obligations under convertible promissory notes and accrued interest aggregating approximately $100,000.

Six-month period ended June 30, 2014

Cash used in operations of $1,370,062 during the six-month period ended June 30, 2014 consists primarily of our net loss of approximately $3.5 million, adjusted by depreciation and amortization of $365,138, and the fair value of options, warrants, and shares of our Common Stock of $675,227. Additionally, our accounts payable and accrued compensation, included payables to related parties, and accrued interest increased by approximately $1.0 million during the six-month ended June 30, 2014, as we delayed cash payments with certain agreeable parties to keep a certain level of liquidity and we satisfied certain payables and accrued compensation aggregating $590,000 by issuing shares of our Common Stock.

Cash provided by financing activities of $2,351,625 during the six-month period ended June 30, 2014 consists primarily of proceeds generated from the issuance of shares of our common stock and promissory notes, which amounted to $2,460,625, offset by principal repayments of notes payable aggregating $99,000. Additionally, the Company issued shares of its Common Stock to satisfy obligations under convertible promissory notes and accrued interest aggregating $3.6 million.

Financial Position

The Company’s liquidity and capital needs relate primarily to working capital and other general corporate requirements. Since inception, the Company raised approximately $4,475,000 in senior secured notes, of which $3,200,000 was converted into shares of our Common Stock as of June 30, 2015, and approximately $3 million through the issuance of our shares of Common Stock. Management plans to continue raising capital to implement the expansion plan and become cash flow positive within twelve months. The Company expects to use the proceeds for operating and working capital, significantly expanding the number of trucks, opening stores and paying professional fees.

Total assets decreased by approximately $4,000, at June 30, 2015.

Total liabilities increased by approximately $845,000, primarily from the issuance of convertible promissory notes.

Total stockholders’ deficit increased by approximately $849,000 during the six-month period ended June 30, 2015. This increase was primarily attributable to our net loss, offset by the issuance of shares of our common stock through the exercise of warrants, fair value of options and warrants issued for services and beneficial conversion feature on convertible notes payable and warrants.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of June 30, 2015 and December 31, 2014.

Inflation

We do not believe that inflation has had a material effect on our Company’s results of operations.

Critical Accounting Policies

Our significant accounting policies are more fully described in Note 3 to our unaudited condensed consolidated financial statements. 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 reported amounts of assets, liabilities, revenues, and expenses, and the related disclosures of contingent assets and liabilities. Actual results could differ from those estimates under different assumptions or conditions.

Recently Issued Accounting Pronouncements

For Recently Issued Accounting Pronouncements, please refer to Note 3 – Summary of Significant Accounting Policies in notes to unaudited condensed consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Smaller reporting companies are not required to provide the information required by this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act that are designed to ensure that information required to be disclosed in our reports filed or submitted to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to management, including the principal executive and financial officer as appropriate, to allow timely decisions regarding required disclosures. Our principal executive officer and principal financial officer evaluated the effectiveness of disclosure controls and procedures as of the end of the period covered by this Report (the “Evaluation Date”), pursuant to Rule 13a-15(b) under the Exchange Act. Based on that evaluation, our principal executive officer and principal financial officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure, due to material weaknesses in our control environment and financial reporting process. A “material weakness” is defined under SEC rules as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls. Our management concluded that our internal controls over financial reporting were not effective and we had material weaknesses in our control environment and financial reporting process consisting of the following as of the Evaluation Date:

lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal control and procedures;

inadequate segregation of duties consistent with control objectives;

ineffective controls over period end financial disclosure and reporting processes; and

lack of accounting personnel with adequate experience and training.

As of the date of this Report, the Company does not intend to remedy the foregoing and therefore such material weaknesses in our control environment and financial reporting process will continue. A system of controls, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the system of controls are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Change in Internal Control over Financial Reporting.

No changes were made to our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II-OTHER INFORMATION

Item 1. Legal Proceedings

The Brill Group has an exclusive license to operate certain licensed goods and services utilizing The Grilled Cheese Truck, Inc, intellectual property for an exclusive territory.

The Brill Group, is defending the lawsuit and shall continue to defend that lawsuit.

Item 1A .Risk Factors.

Smaller reporting companies are not required to provide the information required by this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

In June 2015, the Company completed its closing of its best efforts private offering (the “12% Note Offering”) of up to $1,000,000 of 12% Senior Convertible Promissory Notes (the “12% Notes”), whereby the Company issued to 5 accredited investors a 12% Note in the aggregate principal amount of $250,000, pursuant to a subscription agreement with the investors.

The 12% Notes mature on December 31, 2015 (the “Maturity Date”), unless voluntarily converted by the purchaser. Prior to the Maturity Date, the 12% Notes are subject to a voluntary conversion at the election of the purchaser, whereby the purchaser may elect to convert the principal amount of the 12% Note, including all accrued but unpaid interests, into restricted shares of Common Stock at a conversion price of $1.00 per share (subject to adjustment for stock splits, stock dividends or similar events).

In addition, each purchaser of the 12% Notes shall receive a warrant (the “12% Warrants”) to purchase 33,333 shares of Common Stock for every 12% Note purchased in the principal face amount of $50,000. Such 12% Warrants shall be exercisable for a period three years from the date of issuance at an exercise price of $1.50 per share. Accordingly, the Company issued a 12% Warrant to purchase 166,665 shares of Common Stock to the investors. The issuance of the 12% Notes and 12% Warrants qualified for exemption under Rule 506(b) promulgated under Section 4(a)(2) of the Securities Act since the issuance of these securities by the Company did not involve a public offering.

On May 8, 2015, the Company completed its third closing of its best efforts private offering of up to $5,000,000 of its 10% Senior Convertible Promissory Notes (the “10% Notes”), whereby the Company issued to an accredited investor a 10% Note in the aggregate principal amount of $75,000, pursuant to a subscription agreement with the investor.

The 10% Note matures on June 30, 2016 (the “Maturity Date”), unless voluntarily converted by the purchaser. Prior to the Maturity Date, the 10% Note is subject to a voluntary conversion at the election of the purchaser, whereby the purchaser may elect to convert the principal amount of the 10% Note, including all accrued but unpaid interests, into restricted shares of Common Stock at a conversion price of $2.00 per share (subject to adjustment for stock splits, stock dividends or similar events).

In addition, each purchaser of the 10% Note shall receive a warrant (the “10% Warrants”) to purchase 50,000 shares of Common Stock for every 10% Note purchased in the principal face amount of $100,000. Such 10% Warrants shall be exercisable for a period three years from the date of issuance at an exercise price of $4.00 per share. Accordingly, the Company issued a 10% Warrant to purchase 37,500 shares of Common Stock to the investor. The issuance of the 10% Notes and 10% Warrants qualified for exemption under Rule 506(b) promulgated under Section 4(a)(2) of the Securities Act since the issuance of these securities by the Company did not involve a public offering.

In the three months ended June 30, 2015, the Company issued a total of 140,250 shares, at an average price of $1.25 per share, to satisfy accounts payable.

The issuances of the Company’s common stock to satisfy accounts payable were completed in private transactions by the Company not involving any public offering pursuant to Section 4(a)(2) and Rule 506 of Regulation D of the Securities Act. The securities may not be resold by the holders unless such shares are registered or an exemption from registration is available.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits

Exhibit No.		Description
31.1*		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of Sarbanes Oxley Act of 2002
31.2*		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of Sarbanes Oxley Act of 2002
32.1†		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002
32.2†		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Schema
101.CAL		XBRL Taxonomy Calculation Linkbase
101.DEF		XBRL Taxonomy Definition Linkbase
101.LAB		XBRL Taxonomy Label Linkbase
101.PRE		XBRL Taxonomy Presentation Linkbase

* Filed herewith.

† Furnished herewith.

SIGNATURES

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.

Date: August 19, 2015	THE GRILLED CHEESE TRUCK, INC .

	By:	/s/ Algie Hodges
		Algie Hodges
		Chief Executive Officer
		(Duly Authorized Officer and Principal Executive Officer)

Date: August 19, 2015	THE GRILLED CHEESE TRUCK, INC .

	By:	/s/ Peter Goldstein
		Peter Goldstein
		Interim Principal Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)