10-Q 1 v353024_10q.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2013

¨ 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.)

641 Lexington Avenue

Suite 1526

New York, New York 10022

(Address of principal executive offices) (Zip Code)

(212) 521-4406

(Registrant’s telephone number, including area code)

N/A

(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 ¨ No x

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 ¨ No x

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 o No x

As of August 13, 2013, there were 10,882,833 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	3
	Condensed Consolidated Balance Sheets as of June 30, 2013 (unaudited) and December 31, 2012	3
	Condensed Consolidated Statement of Operations for the Three and Six Months ended June 30, 2013 and 2012 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012 (unaudited)	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4	Controls and Procedures	27
PART II OTHER INFORMATION
Item 1	Legal Proceedings	27
Item 1A	Risk Factors	27
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds Risk Factors	27
Item 3	Defaults Upon Senior Securities	28
Item 4	Mine Safety Disclosures	28
Item 5	Other Information	29
Item 6	Exhibits	29
Signatures		30

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements

THE GRILLED CHEESE TRUCK, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2013			2012
	(Unaudited)
ASSETS
Current Assets:
Cash and equivalents	$	428,858		$	78,034
Accounts receivable, net of allowance for doubtful accounts of $nil and $9,931 as of June 30, 2013 and December 31, 2012, respectively		16,692			2,728
Notes receivable		20,000			-
Prepaid expenses and other current assets		38,800			31,053
Total Current Assets		504,350			111,815

Property and equipment, net of accumulated depreciation		52,959			41,093
Deferred finance costs, net		288,408			145,358
Other assets		58,060			11,900
Total Assets	$	903,777		$	310,166

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses	$	334,411		$	309,332
Accounts payable - related parties		242,480			164,893
Accrued compensation		4,387			9,887
Accrued interest		152,210			58,074
Accrued interest - related parties		736			458
Promissory notes		37,500			37,500
Promissory notes - related party		12,500			12,500
Notes payable		3,821			12,506
Advances from stockholders’		311			2,737
Convertible notes payable, net of debt discount		-			339,579
Customer deposits		-			3,341
Total Current Liabilities		788,356			950,807

Long-term convertible notes payable, net of debt discount		3,375,667			1,575,589
Total Liabilities		4,164,023			2,526,396

Stockholders' Deficit
Preferred stock, $0.001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2013 and December 31, 2012		-			-
Common stock, $0.001 par value, 100,000,000 shares authorized; 10,882,833 and 8,442,500 shares issued and outstanding as of June 30, 2013 and December 31, 2012, respectively		10,883			8,443
Additional paid in capital		1,638,211			79,186
Accumulated deficit		(4,909,340	)		(2,303,859	)
Total Stockholders' Deficit		(3,260,246	)		(2,216,230	)
Total Liabilities and Stockholders' Deficit	$	903,777		$	310,166

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

THE GRILLED CHEESE TRUCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2013			2012			2013			2012
Revenue:
Food truck sales	$	405,810		$	239,686		$	694,257		$	492,277
Catering and special events		88,564			90,955			154,216			133,135
Licensed truck		50,847			-			79,117			-
Total revenue		545,221			330,641			927,590			625,412

Cost of Sales:
Food and beverage		148,397			83,101			278,304			171,266
Food truck expenses		199,844			119,004			349,138			243,006
Commissary and kitchen expenses		126,451			48,168			218,753			86,355
Total cost of sales		474,692			250,273			846,195			500,627

Gross Profit		70,529			80,368			81,395			124,785

Operating Expenses:
General and administrative		773,059			60,002			1,153,231			111,365
Selling costs		105,083			18,338			164,230			33,574
Consulting expense - related parties		835,302			-			985,677			-
Depreciation		2,128			1,517			4,257			3,033
Total operating expenses		1,715,572			79,857			2,307,395			147,972

(Loss) Income From Operations		(1,645,043	)		511			(2,226,000	)		(23,187	)

Other Expenses:
Interest expense		84,518			388			151,658			737
Interest expense - related party		354			-			711			-
Amortization of debt discount		25,885			-			192,788			-
Amortization of deferred finance costs		18,644			-			34,050			-
Loss on sale of fixed asset		-			-			-			1,440
(Loss) Income before provision for income tax		(1,774,444	)		123			(2,605,207	)		(25,364	)

Provision for income tax expense (benefit)		-			-			274			(100	)
Net loss	$	(1,774,444	)	$	123		$	(2,605,481	)	$	(25,264	)

Loss per share - basic and diluted	$	(0.18	)	$	(0.00	)	$	(0.29	)	$	(0.00	)

Weighted average shares outstanding - basic and diluted		9,784,795			8,442,500			9,117,355			8,442,500

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

THE GRILLED CHEESE TRUCK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

	For the Six Months Ended June 30,
	2013			2012
Cash Flow From Operating Activities:
Net loss	$	(2,605,481	)	$	(25,264	)
Reconciliation of net loss to net cash used in operating activities:
Depreciation		4,257			3,033
Amortization of debt discount		192,788			-
Amortization of deferred financing costs		34,050			-
Common stock issued for services		743,500			-
Loss on sale of property and equipment		-			1,440
Warrants issued for services		163,177			-
Changes in operating assets and liabilities:
Accounts receivable		(13,964	)		(11,252	)
Notes receivable		(20,000	)		-
Prepaid expenses and other current assets		(7,747	)		10,354
Deferred financing costs		(177,100	)		-
Other assets		(46,160	)		-
Accounts payable		25,078			2,924
Accounts payable, related party		77,587			-
Accrued compensation		(5,500	)		(17,232	)
Accrued interest		146,681			-
Accrued interest, related party		278			-
Customer deposits		(3,341	)		12,317
Net cash used in operating activities		(1,491,897	)		(23,680	)

Cash Flows From Investing Activities:
Proceeds from sale of fixed assets		-			1,199
Purchases of fixed assets		(16,123	)		-
Net cash (used in) provided by investing activities		(16,123	)		1,199

Cash Flows From Financing Activities:
Proceeds from long term convertible notes		1,869,955			-
Repayment for advance from shareholder		(28,626	)		(2,453	)
Repayment of note payable		(8,685	)		(7,448	)
Advance from shareholders		26,200			-
Net cash provided by (used in) financing activities		1,858,844			(9,901	)
Net increase (decrease) in cash		350,824			(32,382	)

Cash at beginning of period		78,034			67,777
Cash at end of period	$	428,858		$	35,395

Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest	$	5,436		$	-
Income taxes	$	-		$	-
Non-cash investing and financing activity:
Common stock issued as a result of convertible debt conversion	$	512,500		$	-
Common stock issued in lieu of accrued interest	$	52,545		$	-
Beneficial conversion feature on warrants issued concurrent with notes	$	89,743		$	-

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

THE GRILLED CHEESE TRUCK, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013

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 has 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 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 commissary which supports streamlined operations within the truck by limiting assembly and grilling, allowing the truck to achieve maximum revenues per hour by delivering 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.

Liquidity, Management’s Plan and Going Concern

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 $428,858 and negative net working capital of $284,006 at June 30, 2013. The Company’s cash and working capital amounts were derived from the proceeds of financing transactions in which it raised proceeds of $1,650,000 in 2012 and $1,869,955 in 2013 through the issuance of notes, convertible notes and common stock purchase warrants. The Company’s net loss for the six months ended June 30, 2013 was $2,605,481 and the deficit accumulated by the Company amounts to $4,909,340 as of June 30, 2013.

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 anytime within the next twelve months or thereafter will not increase the need for the Company to raise additional capital on an immediate basis. 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.

Interim Financial Statements

These unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2013 and 2012 reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.

These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the years ended December 31, 2012 and 2011 included in the Company’s Form 10-K filed with the United States Securities and Exchange Commission on July 3, 2013. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the three and six month periods ended June 30, 2013 are not necessarily indicative of results for the entire year ending December 31, 2013.

Summary of Significant Accounting Policies

Basis of Consolidation

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

Basis of Accounting

These unaudited condensed consolidated financial statements have been prepared using the basis of accounting generally accepted in the United States of America for annual financial statements and with Form 10-Q and article 8-03 of the Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Under this basis of accounting, revenues are recorded as earned and expenses are recorded at the time liabilities are incurred.

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.

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 could differ from those estimates.

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. Based on this assessment there was no impairment at June 30, 2013 and December 31, 2012.

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 services are provided.

For licensed truck sales, revenue is based on 37% 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. The Company has a non-binding agreement with the licensee which was entered into in the ordinary course of business. This agreement is subject to change.

Advertising Costs

Advertising costs, which are included in general and administrative expenses in the accompanying Statements of Operations, 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, 2013 and 2012 were $13,256 and $3,012, respectively and for the three months ended June 30, 2013 and 2012 were $668 and $2,546, respectively.

Earnings (loss) per common share

The Company utilizes the guidance per FASB Codification “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, 2013 have been excluded from the per share computations:

	For the Six Months Ended
	June 30,
	2013		2012
Convertible notes issued (Post-Reverse Merger)		3,519,955		-
Warrants for services		2,252,000		-
Warrants issued in connection with convertible debt		1,759,978		-
		7,531,933		-

Income Taxes

The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“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.

Sales Taxes

The Company's revenues in the statements of income are net of sales taxes.

Fair Value of Financial Instruments

Effective January 1, 2008, the Company adopted FASB ASC 820-Fair Value Measurements and Disclosures, or 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, 2013, with the exception of its convertible notes payable. The carrying amounts of these liabilities at June 30, 2013 approximate their respective fair value based on the Company’s incremental borrowing rate.

Cash is considered to be highly liquid and easily tradable as of June 30, 2013 and therefore classified as Level 1 within our fair value hierarchy.

In addition, FASB ASC 825-10-25 Fair Value Option, or 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”.

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.

Recently Issued Accounting Standards

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.

Reclassifications

Certain reclassifications have been made to conform the prior period data to the current presentations. These reclassifications had no effect on the reported results.

4. Note Receivable

On March 18, 2013, the Company agreed to lend an affiliate up to $40,000 in the form of a promissory note relating to business expansion. The note will accrue interest at 3.25% and is due on October 18, 2013. On June 18, 2013, the Company issued the affiliate an initial $20,000 and as of June 30, 2013, the Company has recorded interest income of $22 which has been recorded in other assets.

5. Plant, Property and Equipment

Property and equipment consists of the following:

	June 30,			December 31,
	2013			2012
	(Unaudited)
POS systems	$	17,209		$	17,209
Food service equipment		29,671			19,671
Automobiles		8,846			3,500
Leasehold improvements		10,703			10,703
Computers		2,566			1,789
Furniture and fixtures		3,064			3,064
Total Cost		72,059			55,936
Accumulated depreciation		(19,100	)		(14,843	)
Total	$	52,959		$	41,093

Depreciation expense for the six months ended June 30, 2013 and 2012 was $4,257 and $3,033, respectively and for the three months ended June 30, 2013 and 2012 was $2,128 and $1,517, respectively. During the six months ended June 30, 2012, the Company sold a vehicle worth $2,640 net of accumulated depreciation of $960 and for cash of $1,199 and recorded a loss on sale of the vehicle of $1,440. There was no such loss recorded during the six months ended June 30, 2013.

6. Convertible Notes

Pre-Reverse Merger Convertible Debt

At June 30, 2013 and December 31, 2012 pre-reverse merger convertible debentures consisted of the following:

	June 30,		December 31,
	2013		2012
	(Unaudited)
Convertible notes payable	$	-	$	512,500
Unamortized debt discount		-		(172,921	)
Total	$	-	$	339,579

Prior to reverse merger and closing of the private placement as discussed below, the Company entered into convertible loans with third party non-affiliates in which $312,500 was received in cash and 400,000 common shares were converted into convertible notes payable valued at $200,000. These loans were convertible at a rate of 33 1/3% of the private placement share price. As a result, the Company recorded $512,500 in debt discount related to the beneficial conversion feature. In connection with these debentures, the Company has recorded amortization expense amounting to $177,244 (pre reverse merger) and $335,256 (post reverse merger) with $0 net of discount balance remaining. During the three and six months ended June 30, 2013, the Company charged to operations amortization of debt discount of $14,116 and $172,921, respectively. In May 2013, the Company issued 1,696,833 shares of its Common Stock valued at $0.333 per share as a result of converting $512,500 of principal and $52,545 of interest of its pre reverse merger convertible note holders

Interest expense recorded on the notes for the six months ended June 30, 2013 and 2012 amounted to $32,040 and $0, respectively and for the three months ended June 30, 2013 and 2012 amounted to $15,540 and $0, respectively.

Post-Reverse Merger Convertible Debt

At June 30, 2013 and December 31, 2012 post-reverse merger convertible debentures consisted of the following:

	June 30,			December 31,
	2013			2012
	(Unaudited)
Convertible notes payable	$	3,519,955		$	1,650,000
Unamortized debt discount		(144,288	)		(74,411	)
Total	$	3,375,667		$	1,575,589

Notes

On October 18, 2012, the Company completed an initial closing (the “Initial Closing”) of a “best efforts” private offering of up to $5,000,000 (the “2012 Private Placement Offering”) of Units (as defined below) with a group of accredited investors (the “Purchasers”) for total gross proceeds to us of $1,050,000. During November 2012 and December 2012, the Company raised additional proceeds of $600,000. During 2013, the Company raised additional proceeds of $1,224,955. On April 18, 2013, the Company completed the final closing of the 2012 Private Placement Offering. In the aggregate, the Company sold 115 Units, for aggregate gross proceeds of $2,874,955. Pursuant to a subscription agreement with the Purchasers (the “Subscription Agreement”), the Company issued to the Purchasers units consisting of (i) 10% Convertible Senior Secured Notes (the “Notes”) and (ii) warrants (the “Warrants”) to purchase shares (the “Warrants” and together with the Notes and the Warrants, the “Securities”) of our Common Stock at an exercise price of $2.00 per share. Each Unit consists of a Note, in the principal face amount of $25,000, and Warrants to purchase 12,500 Shares (the “Units”).

The Notes accrue interest at a rate of 10% on the aggregate principal amount, payable on the third anniversary of the issue date (the “Maturity Date”) if not converted prior to the maturity date. The Notes are subject to (i) an optional conversion into shares of the Company’s Common Stock at the note holder’s (the “Holder”) election following the date upon which the Company’s Registration Statement (hereinafter defined) is declared effective with the Securities and Exchange Commission (the “SEC”) or (ii) a mandatory conversion thirty-six (36) months from the date of issuance. The shares of Common Stock issuable upon conversion of the Notes shall equal: (i) the principal amount of the Note and the accrued interest thereon (assuming the Company elects to pay the interest in shares of Common Stock) divided by (ii) $1.00.

On June 21, 2013, the Company completed its final closing of a “best efforts” private offering of up to $2,000,000 (the “2013 Private Placement Offering”) of Private Placement Units with a group of accredited investors (the “2013 Private Placement Purchasers”) for total aggregate gross proceeds of $645,000. Pursuant to a subscription agreement with the 2013 Private Placement Purchasers (the “2013 Private Placement Subscription Agreement”), the Company issued to the 2013 Private Placement Purchasers units consisting of (i) 10% Convertible Senior Secured Notes (these notes mirror the Private Placement Notes) and (ii) warrants (these warrants mirror the Private Placement Warrants) to purchase shares (the “Private Placement Warrant Shares” and together with the Private Placement Notes and the Private Placement Warrants, the “Private Placement Securities”) of Common Stock at an exercise price of $2.00 per share. The Private Placement Units each consisted of a Private Placement Note, in the principal face amount of $25,000, and Private Placement Warrants to purchase 12,500 shares of Common Stock (the “Private Placement Units”).

Warrants

The Warrants from both offerings are exercisable for an aggregate of 1,759,978 shares of the Company’s Common Stock as of June 30, 2013. The Warrants are exercisable for a period of three years from the original issue date. The exercise price with respect to the Warrants is $2.00 per share.

The Company accounts for the warrant valuation in accordance with FASB 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 Company recorded to additional paid in capital and discount against notes $89,743 for the calculated fair value of the warrants, in conjunction with the notes issued for the six months ended June 30, 2013. Amortization expense for the six months ended June 30, 2013 and 2012 amounted to $19,867 and $0, respectively and for the three months ended June 30, 2013 and 2012 amounted to $11,769 and $0, respectively.

7. Promissory Notes Payable

On September 21, 2012, September 24, 2012 and October 1, 2012, the Company entered into three secured promissory notes totaling $37,500 due on December 6, 2012 and bearing interest at 12% per annum. In March 2013, the note holders agreed to extend the maturity date of the notes to September 30, 2013.

Promissory Notes Payable – Related Party

On September 12, 2012, the Company entered into a secured promissory note (the “Chord Note”) with Chord Advisors, LLC. The Chord Note totaling $12,500 is due on December 6, 2012 and bears interest at 12% per annum. In March 2013, the note holders agreed to extend the maturity date of the notes to September 30, 2013. The Company’s former Chief Financial Officer, David Horin, is the President of Chord Advisors, LLC.

Interest expense recorded on notes payable for the six months ended June 30, 2013 and 2012 amounted to $3,017 and $0, respectively and for the three months ended June 30, 2013 and 2012 amounted to $1,517 and $0, respectively.

8. Notes Payable

Notes payable at June 30, 2013 and December 31, 2012 consists of the following:

	June 30,			December 31,
	2013			2012
	(Unaudited)
Notes payable	$	12,506		$	12,506
Less payments		(8,685	)		-
Total	$	3,821		$	12,506

9. Warrants

The following table summarizes the changes in warrants outstanding and related prices for the shares of the Company’s Common Stock issued to shareholders at June 30, 2013:

Exercise Price		Number Outstanding		Warrants Outstanding Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise price		Number Exercisable		Warrants Exercisable Weighted Average Exercise Price
$	2.00-2.40		4,011,978		3.43	$	2.04		4,011,978	$	2.04

Transactions involving the Company’s warrant issuance are summarized as follows:

	Number of Shares		Weighted Average Price Per Share
Outstanding at December 31, 2011		-	$	-
Issued – Pre Reverse Merger		1,900,000		2.00
Issued – Post Reverse Merger		825,000		2.00
Exercised		-		-
Expired		-		-
Outstanding at December 31, 2012		2,725,000		2.00
Issued		1,286,978		2.11
Exercised		-		-
Expired		-		-
Outstanding at June 30, 2013		4,011,978	$	2.04

Warrants issued for services (pre-merger warrants):

On July 16, 2012, the Company issued warrants to purchase 1,800,000 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire five years from the date of grant.

On September 1, 2012, the Company issued warrants to purchase 100,000 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire three years from the date of grant.

Warrants issued concurrent with convertible notes (post-merger warrants):

On October 18, 2012, the Company issued warrants to purchase 525,000 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire three years from the date of issuance. The Company valued the warrants at $50,391 using the Black-Scholes option pricing model and amortizes it over the term of the note.

On November 8, 2012, the Company issued warrants to purchase 275,000 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire three years from the date of issuance. The Company valued the warrants at $26,395 using the Black-Scholes option pricing model and amortizes it over the term of the note.

On December 19, 2012, the Company issued warrants to purchase 25,000 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire three years from the date of issuance. The Company valued the warrants at $2,400 using the Black-Scholes option pricing model and amortizes it over the term of the note.

On January 10, 2013, the Company issued warrants to purchase 37,488 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire three years from the date of issuance. The Company valued the warrants at $3,598 using the Black-Scholes option pricing model and amortizes it over the term of the note.

On January 15, 2013, the Company issued warrants to purchase 25,013 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire three years from the date of issuance. The Company valued the warrants at $2,401 using the Black-Scholes option pricing model and amortizes it over the term of the note.

On January 28, 2013, the Company issued warrants to purchase 62,500 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire three years from the date of issuance. The Company valued the warrants at $5,999 using the Black-Scholes option pricing model and amortizes it over the term of the note.

On February 15, 2013, the Company issued warrants to purchase 18,738 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire three years from the date of issuance. The Company valued the warrants at $1,798 using the Black-Scholes option pricing model and amortizes it over the term of the note.

On March 4, 2013, the Company issued warrants to purchase 18,740 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire three years from the date of issuance. The Company valued the warrants at $1,799 using the Black-Scholes option pricing model and amortizes it over the term of the note.

On March 22, 2013, the Company issued warrants to purchase 18,750 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire three years from the date of issuance. The Company valued the warrants at $1,800 using the Black-Scholes option pricing model and amortizes it over the term of the note.

On March 28, 2013, the Company issued warrants to purchase 6,250 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire three years from the date of issuance. The Company valued the warrants at $600 using the Black-Scholes option pricing model and amortizes it over the term of the note.

On April 4, 2013, the Company issued warrants to purchase 50,000 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire three years from the date of issuance. The Company valued the warrants at $4,799 using the Black-Scholes option pricing model and amortizes it over the term of the note.

On April 17, 2013, the Company issued warrants to purchase 125,000 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire three years from the date of issuance. The Company valued the warrants at $11,998 using the Black-Scholes option pricing model and amortizes it over the term of the note.

On April 18, 2013, the Company issued warrants to purchase 250,000 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire three years from the date of issuance. The Company valued the warrants at $23,996 using the Black-Scholes option pricing model and amortizes it over the term of the note.

On April 18, 2013, the Company issued warrants to purchase 287,500 shares of Common Stock to private placement agent at an exercise price of $2.40 per share. The warrants expire five years from the date of issuance. The Company valued the warrants at $133,277 using the Black-Scholes option pricing model and charged to operations fair value during the six months ended June 30, 2013.

On June 21, 2013, the Company issued warrants to purchase 64,500 shares of Common Stock to private placement agent at an exercise price of $2.40 per share. The warrants expire five years from the date of issuance. The Company valued the warrants at $29,900 using the Black-Scholes option pricing model and charged to operations fair value during the six months ended June 30, 2013.

On June 25, 2013, the Company issued warrants to purchase 322,500 shares of Common Stock at an exercise price of $2.00 per share. The warrants expire three years from the date of issuance. The Company valued the warrants at $30,955 using the Black-Scholes option pricing model and amortizes it over the term of the note.

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

Significant assumptions:
Risk-free interest rate at grant date	0.60%-0.85	%
Expected stock price volatility	80.00	%
Expected dividend payout	—
Expected option life-years	(a)

(a)

All warrants issued expire in 3-5 years. The remaining life of the warrants is 3.43 years.

10. Commitments and Contingencies

Operating Leases

On July 1, 2010 the Company leased a facility (“commissary kitchen”) in Los Angeles, California under an informal lease letter agreement directly with the Landlord. The rental terms of the lease are on a month to month basis.

On October 21, 2009 the Company executed a Vehicle and Maintenance Agreement with a Los Angeles based mobile food truck vendor. The agreement provides for rental of one or more mobile food trucks on a month to month basis after an initial six minimum month term per truck where rent is payable daily upon return of the truck to the vendor's service and parking facility. Combined rental expense for kitchen facilities and food truck rental for the six months ended June 30, 2013 and 2012 were $92,008 and $43,944, respectively and for the three months ended June 30, 2013 and 2012 were $52,028 and $21,947, respectively.

Consulting Agreements

TRIG Capital Advisory Agreement

On July 16, 2012, the Company entered into an advisory agreement (the “TRIG Capital Advisory Agreement”) with TRIG Capital Group, LLC (“TRIG Capital”). The term of the agreement shall begin on the effective date and continue until such agreement is terminated by the parties. Pursuant to the TRIG Capital Advisory Agreement, TRIG Capital will provide us with domestic marketing services, management advice and support regarding operations, administrative services, finance 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 TRIG Capital 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 a warrant to purchase 1,800,000 shares of Common Stock (the “TRIG Warrant”). The TRIG Warrant is exercisable until July 16, 2017, with an exercise price of $2.00 per share, or may be exercised on a cashless basis. 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 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.

Trilogy IR Agreement

On July 16, 2012, the Company entered into an investor relations agreement (the “Investor Relations Agreement”) with Trilogy Capital Partners, Inc. (“Trilogy”). The parties agreed to an eighteen (18) month contract, whereby Trilogy will provide the services to develop and implement a proactive financial communications program designed to increase the investor awareness of the Company in the investment community. In addition, Trilogy will assist in preparing and disseminating investor relations documents, materials, and our presentations, including press releases, online communications, and Company’s website.

Grandview Capital Advisory Agreement

On July 16, 2012, the Company entered into an advisory agreement (the “Grandview Advisory Agreement”) with Grandview Capital Partners, Inc. (“Grandview”). Pursuant to the Grandview Advisory Agreement, Grandview will provide primarily assistance and advice in seeking out a potential additional merger or acquisition partners or targets.

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 our 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 paid an additional cash success fee of $40,000 at the final closing of the 2012 Private Placement Offering.

Clark Group Agreement

On August 15, 2012, the Company entered into an agreement (the “Clark Group Agreement”) with Wesley K. Clark & Associates, LLC (the “Clark Group”). The agreement commenced (the “Commencement Date”) upon the completion of the Share Exchange and will continue for a period of two years.

Pursuant to the Clark Group Agreement, General Wesley K. Clark will serve as Vice Chairman and Senior Veterans Advisor of the company. Prior to the Commencement Date, the Company paid the Clark Group a $10,000 monthly consultation fee. Following the Commencement Date, the Company will pay the Clark Group $200,000 per year for a period of 24 months. The Company also executed a warrant agreement providing Clark Group with the right to purchase up to 500,000 shares of the Company’s Common Stock (the “Clark Warrants”) at an exercise price of $1.00 per share. The Clark Warrants are exercisable on the following basis: (i) 100,000 Clark Warrants following the execution of the first 25 veteran franchise agreements; (ii) 100,000 Clark Warrants following the execution of the next 25 veteran franchise agreements; (iii) 100,000 Clark Warrants following the execution of the next 25 veteran franchise agreements; and (iv) 200,000 Clark Warrants following the execution of the next 25 veteran franchise agreements. General Clark will supervise the development and implementation of recruitment and “vetting” for prospective veteran franchisees.

Employment Agreements

Robert Y. Lee

On July 16, 2012, the Company entered into an employment agreement (the “Lee Employment Agreement”) with Robert Y. Lee to serve as the Executive Chairman of the Company. The agreement stipulates that Mr. Lee will work no fewer than twenty (20) hours per week. In addition, the parties agreed that Mr. Lee shall not engage or participate in any business that is in competition in any manner whatsoever with the business of the Company, or any business which the Company contemplates conducting or intends to conducts.

Pursuant to the terms of the Lee Employment Agreement, the Company will pay Mr. Lee $120,000 annually. In addition, Mr. Lee will receive reimbursement for all reasonable expenses which Lee incurs during the course of performance under the Employment Agreement. In addition to his annual compensation, the Company paid Mr. Lee a signing bonus of $80,000, of which $40,000 has already been paid. The term of the Lee Employment Agreement is for eighteen months. Mr. Lee can terminate the Employment Agreement after four months with 30 days notice. The Company can terminate the Employment Agreement upon notice to Mr. Lee.

David Danhi

On October 18, 2012, the Company entered into an employment agreement (the “Danhi Employment Agreement”) with David Danhi. The agreement stipulates that Mr. Danhi will work no fewer than (40) hours per week. Pursuant to the terms of the Danhi Employment Agreement, the Company will pay Mr. Danhi $150,000 annually. In addition, Mr. Danhi will receive reimbursement for all reasonable expenses which Danhi incurs during the course of performance under the Danhi Employment Agreement. The term of the Danhi Employment Agreement is for three years. Mr. Danhi can terminate the Employment Agreement after four months with 30 days notice. The Company can terminate the Danhi Employment Agreement upon notice to Mr. Danhi.

Contingencies

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.

11. Share Exchange

On October 18, 2012, the Company entered into the Exchange Agreement by and among (i) the Company, (ii) Grilled Cheese, (iii) GCT Sub; (iv) the Majority Shareholder and (v) the Minority Shareholder. 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 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 issuance of the Company’s Common Stock to the Majority Shareholder and Minority Shareholder as well as the payment of $500,000 to the Minority Shareholder was accounted for as a recapitalization rather than a business combination. The $500,000 cash payment was recorded as a reduction of additional paid-in-capital during the 4th quarter of 2012.

Grant Registration Rights Agreement

In conjunction with the Share Exchange, the Company and the Minority Shareholder entered into a registration rights agreement (“Grant Registration Rights Agreement”). Pursuant to the Grant Registration Rights Agreement, the Company will register the 845,000 shares issued to the Minority Shareholder in the Share Exchange on any registration statement that the Company files in conjunction with the Private Placement Offering, as further discussed below. On November 19, 2012 Michele Grant sold and assigned her rights and interest to the 845,000 shares issued pursuant to the Grant Registration Agreement, to a third party.

12. Equity

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.

All the outstanding Series A Preferred Stock at that time 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 Securities and Exchange Commission covering the resale of Common Stock issued by the Company in its next PIPE transaction (the "PIPE").

As of June 30, 2013 and December 31, 2012, no preferred stock was issued and outstanding.

Common Stock

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

As noted earlier in note 1, the Company consummated the transactions contemplated by the Share Exchange Agreement that resulted in a reverse merger and a change in control of the Company. The 3,322,500 shares of the Company outstanding prior to the closing of the merger and issued an additional 5,120,000 shares issued in connection with the merger are treated as having been issued as of the merger date on October 18, 2012.

Prior to the closing of the Share Exchange, the Company had 3,322,500 shares of Common Stock issued and outstanding which were treated as having been issued as of the date of the Share Exchange.

In October 2012, in connection with the Share Exchange, the Company issued an aggregate of 5,120,000 shares of its Common Stock in exchange for existing shares of Grilled Cheese, which are treated as having been issued as of the date of the Share Exchange.

Pursuant to the final closing of the 2012 Private Placement Offering on April 18, 2013, 270,500 common shares were issued to a number of consultants based on the share price of $1.00 as established by the private offering. The Company also issued warrants to purchase up to an aggregate of 287,500 shares of Common Stock to the Placement Agents. The warrants have an exercise price of $2.40 per share and are exercisable for a term of five (5) years from the closing of the 2012 Private Placement Offering.

Pursuant to the final closing of the 2013 Private Placement Offering on June 21, 2013, the Company also issued warrants to purchase up to an aggregate of 64,500 shares of Common Stock to the Placement Agents. The warrants have an exercise price of $2.40 per share and are exercisable for a term of five (5) years from the closing of the 2013 Private Placement Offering.

In April 2013, the Company issued to a consultant 473,000 shares of Common Stock valued at $1.00 per share for services rendered.

In May 2013, the Company issued 1,696,833 shares of its Common Stock as a result of converting $512,500 of principal and $52,545 of interest of its pre reverse merger convertible note holders (see note 5a.).

As of June 30, 2013 and December 31, 2012, there were 10,882,833 and 8,442,500 shares of Common Stock issued and outstanding, respectively.

13. Related Party Transactions

Stockholders advance loans to the Company from time to time to provide financing for operations.

	June 30,		December 31,
	2013		2012
	(Unaudited)
Advances from stockholders	$	311	$	2,737

Advances from stockholders carry no interest, have no terms of repayment or maturity, and are payable on demand. During the six months ended June 30, 2013, the Company received $26,200 from stockholders and repaid $28,626.

The Company entered into a number of related party agreements, as described below, all of which continued after the Share Exchange with Grilled Cheese. The Company recognized consulting expenses over the requisite service period pursuant to the provisions of each specific agreement.

Trilogy Capital Stock Purchase Agreement

On April 12, 2012, the Company executed a stock purchase agreement with Trilogy and Robert Lee, one of our Directors and Principal Financial Officer. Pursuant to the stock purchase agreement, the Company sold (i) 1,000,000 shares of its Common Stock at a price of $0.001 per share to Trilogy and (ii) 1,000,000 shares of its Common Stock, at a price of $0.001 per share to Robert Lee. The Company received proceeds of $2,000 and will use the net proceeds for general corporate purposes. Our former President, Treasurer, Secretary and director, Alfonso J. Cervantes, owns a 100% equity interest in Trilogy.

Cohen Advisory Agreement

On June 15, 2012, the Company entered into an advisory agreement with Richard M. Cohen Consultants, Inc. (the “Advisor”). The parties agreed that from June 15, 2012 until June 14, 2013, the Advisor would perform advisory and consulting services for the Company. The Company will pay the Advisor $120,000, consisting of: (i) $60,000 of shares of the Company’s Common Stock to be based on the per share price of the Common Stock sold in the 2012 Private Placement Offering, and (ii) $60,000 of cash to be paid in monthly payments of $5,000 pursuant to the terms of the agreement. The agreement may be terminated by the Company for cause, as defined in the agreement. Richard M. Cohen is also the Chairman of Chord Advisors LLC (“Chord”) and David Horin, our former Chief Financial officer, is the President of Chord. The Cohen Advisory Agreement contains a share provision, whereby the Company will issue 60,000 shares over the requisite service period based upon a $1.00 per share price of Common Stock sold in our 2012 Private Placement Offering. For the six months ended June 30, 2013, the Company incurred fees of $15,000, issued 60,000 shares of common stock valued at $1.00 per share and has an accounts payable balance of $50,000 as of June 30, 2013. This agreement expired on June 14, 2013 and was not renewed.

TRIG Capital Advisory Agreement

On July 16, 2012, the Company entered into the TRIG Capital 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. The term of the agreement shall begin on the effective date and continue until such agreement is terminated by the parties. Pursuant to the TRIG Capital 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 TRIG Capital 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, with an exercise price of $2.00 per share, or may be exercised on a cashless basis. 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 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. For the six months ended June 30, 2013, the Company incurred fees of $42,000 and has an accounts payable balance of $28,687 as of June 30, 2013.

Trilogy IR Agreement

On July 16, 2012 the Company entered into the Investor Relations Agreement with Trilogy. The parties agreed to an eighteen (18) month contract, whereby Trilogy will provide the Company with the services to develop and implement a proactive financial communications program designed to increase the investor awareness of the Company in the investment community. In addition, Trilogy will assist the Company in preparing and disseminating investor relations documents, materials, and Company presentations, including press releases, online communications, and the Company’s website.

The Company will pay Trilogy $10,000 per month for these services. In addition, the Company paid Trilogy $25,000 as an engagement fee. Additionally, the Company paid Trilogy $40,000 upon the consummation of the Initial Closing of the 2012 Private Placement Offering and an additional $40,000 upon the final closing of the 2012 Private Placement Offering. For the six months ended June 30, 2013, the Company incurred fees of $60,000 and has an accounts payable balance of $0 as of June 30, 2013. Our former President, Treasurer, Secretary and director and current shareholder, Alfonso J. Cervantes, owns a 100% equity interest in Trilogy.

Villard Advisory Agreement

On July 16, 2012, the Company entered into an advisory agreement (the “Villard Advisory Agreement”) with Dimitri Villard (the “Advisor”). The parties agreed that from July 1, 2012 until June 30, 2013, the Advisor would perform advisory services for the Company, as well as serving as member of the Company’s board of directors (the “Board”). The Advisor will devote, on a non-exclusive basis, the necessary time, energy and efforts to the business of the Company and to use his best efforts and abilities to faithfully and diligently promote the Company’s business interests. The Company will pay the Advisor $45,000, consisting of: (i) $22,500 of shares of the Company’s Common Stock to be issued equally on a monthly basis pursuant to the terms of the Villard Advisory Agreement, and (ii) $22,500 of cash to be paid in monthly payments of $1,875 pursuant to the terms of the Villard Advisory Agreement. The Villard Advisory Agreement contains a share provision, whereby the Company will issue 22,500 shares over the requisite service period based upon a $1.00 per share price of Common Stock sold in the 2012 Private Placement Offering. For the six months ended June 30, 2013, the Company incurred fees of $11,250, issued 22,500 shares of common stock valued at $1.00 per share and has an accounts payable balance of $20,625 as of June 30, 2013. This agreement has expired but will continue on a month to month basis until further notice.

Grandview Capital Advisory Agreement

On July 16, 2012, the Company entered into the Grandview Advisory Agreement with Grandview whose majority shareholder is Peter Goldstein, a shareholder and Financial Advisor to the Company. 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.

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. For the six months ended June 30, 2013, the Company incurred fees of $60,000 and has an accounts payable balance of $43,347 as of June 30, 2013. In addition, Grandview Capital Partners, Inc., acting as one of the placement agents for the 2012 and 2013 private placement offerings, was issued 330,000 warrants. The warrants were charged to operations at a fair value of $152,978.

Clark Group Agreement

On August 15, 2012, we entered into the Clark Group Agreement with the Clark Group. General Wesley K. Clark currently serves as Chairman and CEO of the Clark Group. The agreement commenced upon the completion of the Share Exchange and will continue for a period of two years.

Pursuant to the Clark Group Agreement, General Wesley K. Clark will serve as Vice Chairman and Senior Veterans Advisor of our company. Prior to the Commencement Date, we paid the Clark Group a $10,000 monthly consultation fee. Following the Commencement Date, we will pay the Clark Group $200,000 per year. We will also execute a warrant agreement providing Clark Group with the right to purchase up to 500,000 shares of the Company’s Common Stock (the “Clark Warrants”) at an exercise price anticipated to be $1.00 per share. The Clark Warrants will be exercisable on the following basis: (i) 100,000 Clark Warrants following the execution of the first 25 veteran franchise agreements; (ii) 100,000 Clark Warrants following the execution of the next 25 veteran franchise agreements; (iii) 100,000 Clark Warrants following the execution of the next 25 veteran franchise agreements; and (iv) 200,000 Clark Warrants following the execution of the next 25 veteran franchise agreements. General Clark will supervise the development and implementation of recruitment and “vetting” for prospective veteran franchisees.

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.

Chord Advisors Agreement

On August 15, 2012, the Company entered into an agreement (the “Chord Agreement”) with Chord. Pursuant to the Chord Agreement, Chord will provide the Company with comprehensive outsourced accounting solutions. The Company will pay Chord $6,250 per month for a period of 12 months. In addition, on September 1, 2012, the Company granted Chord 100,000 warrants with a term of three (3) years and an exercise price of $2.00. Our former Chief Financial Officer, David Horin, is the President of Chord. For the six months ended June 30, 2013, the Company incurred fees of $18,750 and has an accounts payable balance of $12,500 as of June 30, 2013. As of June 30, 2013 this agreement has been terminated.

14. 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 years ended June 30, 2013 and 2012.

Suppliers		Six Months Ended June 30, 2013			Six Months Ended June 30, 2012
	A		16	%		23	%
	B		7	%		12	%

For the six months ended June 30, 2013 the Company had two suppliers who accounted for approximately $193,000 of their purchases used for production or approximately 23% of total purchases for the six months then ended. The amounts payable to suppliers A and B at June 30, 2013 were $11,804 and $2,276, respectively. For the six months ended June 30, 2012 the Company had two main suppliers who accounted for approximately $175,000 of their purchases used for production or approximately 35% of total purchases for the six months then ended. The amounts payable to suppliers A and B at June 30, 2012 were $4,077 and $1,960, respectively.

15. Subsequent Events

The Company evaluated subsequent events through the date the unaudited condensed consolidated financial statements were available to be issued as follows:

Asset Purchase Agreement

On August 8, 2013, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”), by and among Hook & Ladder Draught House, LLC, a Texas limited liability company (“HL”), KOW Leasing Co., LLC, a Texas limited liability company (“KOW”), Deepak Devaraj, as sole member of HL and KOW, respectively (“Devaraj” and together with HL and KOW, the “Sellers”)), the Company and GCT Texas Master, LLC, a Nevada limited liability company and an affiliate of the Company (“GCT-TX”, together with the Company, the “Buyer”). HL is a mobile food service business that provides food and alcohol out of renovated fire engines. Pursuant to the Asset Purchase Agreement, the Company agreed to purchase substantially all of the Seller’s rights, title and interests in and to certain assets, properties and rights of every kind, nature and description, tangible and intangible, real, personal or mixed, accrued and contingent, which are owned or leased by Sellers and used in the Seller’s business, including but not limited to all equipment, customer contracts, property leases, intellectual property, vehicles, books and records, licenses and corporate and trade names.

As consideration for the Seller to enter into the Asset Purchase Agreement, the Company agreed to: (i) issue to Sellers 500,000 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), and (ii) issue a warrant to Sellers to purchase up to 250,000 shares of Common Stock (the “HL Warrant”). The HL Warrant is exercisable at a price of $1.00 per share, contain customary piggyback registration rights and shall be exercisable for a period of three (3) years. The 500,000 shares of Common Stock issued to Seller under the Asset Purchase Agreement are subject to customary piggy-back registration rights. The Company also agreed to eventually appoint Devaraj to the Company’s Board of Directors (the “Board”), and, for so long as Devaraj holds any shares of Common Stock, the Board shall take all reasonable actions such that Devaraj shall be nominated to serve as a member of the Board. Additionally, the Company entered into an employment agreement with Devaraj, whereby Devaraj will be employed by the Company as the Director of Business Development for a period of three (3) years

On August 8, 2013, Hook & Ladder Draught House, LLC and KOW Leasing Co., LLC, (assignors) and the Company (assignee) entered into assignment agreement to ensure that all the intellectual property subject of the Asset Purchase Agreement is properly transferred to assignee.

On August 8, 2013, Hook & Ladder Draught House, LLC (assignor) and the Company (assignee) entered into assignment and assumption of sublease agreement to assign and transfer to assignee all of right, title and interest in tenant under sublease. Assignor is the holder of tenant’s interest in that certain sublease dated as of March 1, 2013 between KOW Leasing Co., LLC as landlord and assignor as a tenant.

On August 8, 2013, KOW Leasing Co., LLC (assignor) and the Company (assignee) entered into assignment and assumption of lease agreement to assign and transfer to assignee all of right, title and interest as tenant in lease and desires to succeed to the interest of assignor under the lease and to assume the obligation of assignor. Assignor is the holder of tenant’s interest in that certain lease dated as of May 17, 2012 between Southern Methodist University as landlord and assignor as a tenant.

Employment Agreement

In connection with the Asset Purchase Agreement, on August 8, 2013, the Company entered into an employment agreement (the “Devaraj Employment Agreement”) with Devaraj. Pursuant to the Devaraj Employment Agreement, Devaraj was appointed as Director of Business Development and appointed to the Board. The term of employment is for a period of three (3) years, subject to an additional 3 year extension based upon the mutual agreement of the Company and Devaraj. The Devaraj Employment Agreement stipulates that Devaraj devote substantially all of his time to the Company. Devaraj will be entitled to certain benefits, including reimbursement for certain expenses and vacation days. The Devaraj Employment Agreement may be terminated by the Company upon death, Devaraj’s inability to continue performing his duties under the agreement, a material breach of the provisions of the agreement or for cause (as such term is defined in the Devaraj Employment Agreement).

In consideration for entering into the Devaraj Employment Agreement, Devaraj will receive the following fully vested options to purchase shares of Common Stock: (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. Devaraj will not be entitled to a base salary, but will receive compensation, on a case-by-case basis and on terms to be negotiated separately from the Devaraj Employment Agreement and evidenced in a separate agreement, for Devaraj’s role with respect to any business development or any management support activities as may be requested or desired by the Company. Further, in the event Devaraj introduces the Company to a prospective party that results in the Company entering into a licensing agreement or franchise agreement, Devaraj shall receive a (a) 5% commission on the first year of the license or franchise fee paid to the Company, (b) 4.5% commission on the second year of the license or franchise fee paid to the Company, (c) 4% commission on the third year of the license or franchise fee paid to the Company, (d) 3.5% commission on the fourth year of the license or franchise fee paid to the Company, (e) 3% commission on the fifth year of the license or franchise fee paid to the Company, and (f) 2.5% commission for the remainder of the term of the license or franchise agreement.

Resignations and Appointments of Officers and Directors:

On July 12, 2013, Alfonso J. Cervantes submitted his resignation as the Company’s President, Secretary and a Director. The resignation of Mr. Cervantes was not in connection with any known disagreement with the Company on any matter. As a result of Mr. Cervantes resignation, on July 12, 2013, General Wesley Clark was appointed as a Director of the Company to fill the vacancy.

Other:

The Company recently entered into a lease in Gardena, California to lease an approximately four thousand square foot warehouse facility. The warehouse facility will be used by the Company to store ingredients to be cooked on our trucks and to prepare certain of our products prior to being placed on our trucks. The lease begins on July 1, 2013 and runs through June 30, 2018 with a base rent beginning at $5,310 per month. David Danhi, our Chief Executive Officer, has guaranteed the lease and has received indemnification from the Company for any defaults under the lease.

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 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.

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. 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, we solely existed as a vehicle to pursue a business combination. As a result of the Share Exchange, we ceased our prior operations and, through our wholly-owned subsidiary, Grilled Cheese, now operate as a food truck franchisor, specializing in 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, David Danhi and Michelle Grant were the shareholders of Grilled Cheese. Grilled Cheese’s operations to date have consisted of sales of grilled cheese and food related items in their operating food truck, business formation, strategic development, marketing, website development, negotiations with potential franchisees and capital raising activities.

The Grilled Cheese Truck is a 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. The food preparation occurs at our kitchens which support streamlined operations within the truck itself by limiting assembly and grilling, allowing the truck to achieve maximum revenues per hour and delivering melts, Tater Tots™, soups and sides efficiently to its customers. Our business model is effective in the use of social media and 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 its established food service operations and unique social media strategy. Driving our growth, we have received national media visibility and a robust fan base of just over 113,000 followers on Twitter and Facebook. We have established significant brand presence, but have sustained losses to date. Our co-founder is David Danhi, a successful chef and food industry entrepreneur.

We currently generate revenue from retail sales through five company-owned food trucks, and intend to expand and generate revenue from franchise revenues, consisting primarily of royalties based on a percentage of sales reported by franchise restaurants and franchise fees paid by franchisees as well as property income we derive from properties we lease or sublease to our franchisees.

The immediate operating objectives for the Company include the implementation of more efficient systems and equipment. Management recognizes the importance of efficient cash and accounting management systems and will implement an advanced point-of-sales (POS) platform that will work for both company and franchised outlets. In addition to quicker customer order process, this system will also streamline the financial reporting, cost of goods, performance metrics and finance processes. It will also track franchised operations and remotely calculate and collect royalties, all in real time and on a daily basis. We have implemented the new POS system during the second quarter of 2013.

Six Months Ended June 30, 2013 Compared with Six Months Ended June 30, 2012

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:

	Six Months Ended June 30, 2013			% of Revenue			Six Months Ended June 30, 2012			% of Revenue
Revenue:
Truck stops	$	694,257			75	%	$	492,277			79	%
Catering and special events		154,216			17	%		133,135			21	%
Licensed truck		79,117			9	%		-			-
Total revenue	$	927,590			100	%		625,412			100	%

Cost of Sales
Food and beverage		278,304			30	%		171,266			27	%
Food truck expenses		349,138			38	%		243,006			39	%
Commissary and kitchen		218,753			24	%		86,355			14	%
Total cost of sales		846,195			91	%		500,627			80	%

Gross Profit		81,395			9	%		124,785			20	%

Operating Expenses
General and administrative		1,153,231			124	%		111,365			18	%
Selling costs		164,230			18	%		33,574			5	%
Consulting expense-related parties		985,677			106	%		-			0	%
Depreciation		4,257			0	%		3,033			0	%
Total operating expenses		2,307,395			249	%		147,972			23	%

Loss from operations		(2,226,000	)		(240	)%		(23,187	)		(4	)%

Other Expenses
Interest expense		151,658			16	%		737			0	%
Interest expense – related party		711			0	%		-			0	%
Amortization of debt discount		192,788			21	%		-			0	%
Amortization of deferred finance costs		34,050			4	%		-			0	%
Loss on sale of fixed asset		-			0	%		1,440			0	%
Loss before provision for income taxes		(2,605,207	)		(281	)%		(25,364	)		(4	)%
Provision for income taxes expense (benefit)		274			0	%		(100	)		0	%
Net loss	$	(2,605,481	)		(281	)%	$	(25,264	)		(4	)%

Selected operating data:
Number of food trucks in operation
Beginning of the period		4						1
Food truck opening		1						1
End of the period		5						2

Revenue. Sales generated from food trucks, catering and special events and licensed truck sales totaled $927,590 for the six months ended June 30, 2013, as compared to $625,412 for the same period in 2012. The 48% increase in sales is primarily related to the increased popularity of the Company’s truck sales and catered events as well as the additional source of revenue generated from our licensed truck sales. During 2012, the Company entered in to a non-binding agreement with a licensee such that the licensee was granted a license to operate a food truck. The Company began generating revenue from this source in January 2013. Revenue is recognized at the end of each month when the licensee is invoiced and the revenue is booked as a receivable. This agreement is subject to change.

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.

Food and beverage expenses consist of cheese, poultry, seafood, containers and other types of foods and various types of beverages. Food and beverage cost of sales totaled $278,304 for the six months ended June 30, 2013 as compared to $171,266 for the six months ended June 30, 2012. The 62% increase in food and beverage cost of sales is primarily related to the increase in sales as well as the expansion of the Company’s operation in Phoenix. As a percentage of food sales revenue, food and beverage cost of sales were 30% for 2013, compared to 27% for 2012.

Food truck expenses consist of truck staff payroll, truck insurance, gas, repairs and maintenance and other truck related expenses. Food truck cost of sales totaled $349,138 for the six months ended June 30, 2013, as compared to $243,006 for the six months ended June 30, 2012. The 44% increase in food truck cost of sales is primarily related to the expansion of the Company’s operations in Phoenix. As a percentage of food sales revenue, food truck cost of sales was 38% for 2013 and 39% for 2012.

Commissary and kitchen expenses consist of occupancy, equipment and commissary employee compensation. Commissary kitchen expenses totaled $218,753 for the six months ended June 30, 2013, as compared to $86,355 for the six months ended June 30, 2012. The 153% increase in commissary kitchen expenses is primarily related to the increase in staff wages, the related payroll taxes, an increase in rent and costs associated with setting up our Phoenix location. As a percentage of food sales revenue, commissary and kitchen expenses increased to 24% for 2013, compared to 14% for 2012 for the reasons set forth above.

Gross profit. Gross profit for the six months ended June 30, 2013 decreased by $43,390, or 35%, to $81,395 from $124,785 for the same period in 2012. The gross profit margin decreased from 20% for the six months ended June30, 2012 to 9% for the same period in 2013. The change in gross profit relates to the increase in commissary and kitchen expenses as a percentage of sales of 10%.

General and administrative expenses. General and administrative expenses (consisting of general corporate expenses, including but not limited to advertising, insurance, professional costs, clerical and administrative overhead) totaled $1,153,231 for the six months ended June 30, 2013, as compared to $111,365 for the same period in 2012. The 936% increase in general and administrative expenses is primarily related to the expenses associated with the increased consulting fees and executive compensation which are needed to expand the business.

Selling costs. Selling costs include, but are not limited to, marketing and promotion, advertising, printing, processing fees and utility vehicle rental which is used to transport employees to and from the food trucks, totaled $164,230 for the six months ended June 30, 2013, as compared to $33,574 for the same period in 2012. The 389% increase in selling costs relates to marketing wages, sponsorship of an event in Phoenix, the purchase of a van to transport crew to truck stops rather than renting vans and upgrades related to the Company’s website.

Consulting expense – related party. Consulting expenses – related party totaled $985,677 for the six months ended June 30, 2013, as compared to $0 for the same period in 2012. The increase relates to the addition of consulting expenses from TRIG which includes $555,500 in stock compensation issued to consultants and $163,177 issued in warrants.

Depreciation. Depreciation expense totaled $4,257 for the six months ended June 30, 2013, as compared to $3,033 for 2012. The increase relates to the addition of fixed assets late in 2012 and the second quarter of 2013.

Other Expenses. Other expenses include interest and amortization expense. For the six months ended June 30, 2013 other expenses, totaled $379,207 as compared to $2,177 for the same period in 2012. The increase in other expenses relates to interest and amortization related to the issuance of notes payable.

Net loss. Net loss for the six months ended June 30, 2013 increased by $2,580,217 to a loss of $2,605,481 from $25,264 for the same period in 2012. The increase in net loss relates to the increase in 2013 of professional fees, general and administrative expenses, interest expense and amortization of debt discount.

Three Months Ended June 30, 2013 Compared with Three Months Ended June 30, 2012

	Three Months Ended June 30, 2013			% of Revenue			Three Months Ended June 30, 2012		% of Revenue
Revenue:
Truck stops	$	405,810			74	%	$	239,686		72	%
Catering and special events		88,564			16	%		90,955		28	%
Licensed truck		50,847			9	%		-		-
Total revenue	$	545,221			100	%		330,641		100	%

Cost of Sales
Food and beverage		148,397			27	%		83,101		25	%
Food truck expenses		199,844			37	%		119,004		36	%
Commissary and kitchen		126,451			23	%		48,168		15	%
Total cost of sales		474,692			87	%		250,273		76	%

Gross Profit		70,529			13	%		80,368		24	%

Operating Expenses
General and administrative		773,059			142	%		60,002		18	%
Selling costs		105,083			19	%		18,338		6	%
Consulting expense-related parties		835,302			153	%		-		0	%
Depreciation		2,128			0	%		1,517		0	%
Total operating expenses		1,715,572			315	%		79,857		24	%

(Loss) income from operations		(1,645,043	)		(302	)%		511		0	%

Other Expenses
Interest expense		84,518			16	%		388		0	%
Interest expense – related party		354			0	%		-		0	%
Amortization of debt discount		25,885			5	%		-		0	%
Amortization of deferred finance costs		18,644			3	%		-		0	%
Loss on sale of fixed asset		-			0	%		-		0	%
Loss before provision for income taxes		(1,774,444	)		(325	)%		123		0	%
Provision for income taxes expense (benefit)		-			0	%		-		0	%
Net (loss) income	$	(1,774,444	)		(325	)%	$	123		0	%

Selected operating data:
Number of food trucks in operation
Beginning of the period		4						1
Food truck opening		1						1
End of the period		5						2

Revenue. Sales generated from food trucks, catering and special events and licensed truck sales totaled $545,221 for the three months ended June 30, 2013, as compared to $330,641 for the same period in 2012. The 65% increase in sales is primarily related to the increased popularity of the Company’s truck sales and catered events as well as the additional source of revenue generated from our licensed truck sales. During 2012, the Company entered in to a non-binding agreement with a licensee such that the licensee was granted a license to operate a food truck. The Company began generating revenue from this source in January 2013. Revenue is recognized at the end of each month when the licensee is invoiced and the revenue is booked as a receivable. This agreement is subject to change.

Food and beverage expenses consist of cheese, poultry, seafood, containers and other types of foods and various types of beverages. Food and beverage cost of sales totaled $148,397 for the three months ended June 30, 2013 as compared to $83,101 for the three months ended June 30, 2012. The 79% increase in food and beverage cost of sales is primarily related to the increase in sales as well as the expansion of the Company’s operation in Phoenix. As a percentage of food sales revenue, food and beverage cost of sales were 27% for 2013, compared to 25% for 2012.

Food truck expenses consist of truck staff payroll, truck insurance, gas, repairs and maintenance and other truck related expenses. Food truck cost of sales totaled $199,844 for the three months ended June 30, 2013, as compared to $119,004 for the three months ended June 30, 2012. The 68% increase in food truck cost of sales is primarily related to the expansion of the Company’s operations in Phoenix. As a percentage of food sales revenue, food truck cost of sales was 37% for 2013 and 36% for 2012.

Commissary and kitchen expenses consist of occupancy, equipment and commissary employee compensation. Commissary kitchen expenses totaled $126,451 for the three months ended June 30, 2013, as compared to $48,168 for the three months ended June 30, 2012. The 163% increase in commissary kitchen expenses is primarily related to the increase in staff wages, the related payroll taxes, an increase in rent and costs associated with setting up our Phoenix location. As a percentage of food sales revenue, commissary and kitchen expenses increased to 23% for 2013, compared to 15% for 2012 for the reasons set forth above.

Gross profit. Gross profit for the three months ended June 30, 2013 decreased by $9,839, or 12%, to $70,529 from $80,368 for the same period in 2012. The gross profit margin decreased from 24% for the three months ended June 30, 2012 to 13% for the same period in 2013. The change in gross profit relates to the increase in commissary and kitchen expenses as a percentage of sales of 8%.

General and administrative expenses. General and administrative expenses (consisting of general corporate expenses, including but not limited to advertising, insurance, professional costs, clerical and administrative overhead) totaled $773,059 for the three months ended June 30, 2013, as compared to $60,002 for the same period in 2012. The 1,188% increase in general and administrative expenses is primarily related to the expenses associated with the increased consulting fees and executive compensation which are needed to expand the business.

Selling costs. Selling costs include, but are not limited to, marketing and promotion, advertising, printing, processing fees and utility vehicle rental which is used to transport employees to and from the food trucks, totaled $105,083 for the three months ended June 30, 2013, as compared to $18,338 for the same period in 2012. The 473% increase in selling costs relates to marketing wages, sponsorship of an event in Phoenix, the purchase of a van to transport crew to truck stops rather than renting vans and upgrades related to the Company’s website.

Consulting expense – related party. Consulting expenses – related party totaled $835,302 for the three months ended June 30, 2013, as compared to $0 for the same period in 2012. The increase relates to the addition of consulting expenses as well as the value of shares issued to consultants from TRIG which includes $555,500 in stock compensation issued to consultants and $163,177 issued in warrants.

Depreciation. Depreciation expense totaled $2,128 for the three months ended June 30, 2013, as compared to $1,517 for 2012. The increase relates to the addition of fixed assets late in 2012 and the second quarter of 2013.

Other Expenses. Other expenses include interest and amortization expense. For the three months ended June 30, 2013 other expenses, totaled $129,401 as compared to $388 for the same period in 2012. The increase in other expenses relates to interest and amortization related to the issuance of notes payable.

Net loss. Net loss for the three months ended June 30, 2013 increased by $1,774,567to a net loss of $1,774,444 from net income of $123 for the same period in 2012. The increase in net loss relates to the increase in 2013 of professional fees, general and administrative expenses, interest expense and amortization of debt discount.

Liquidity and Capital Resources

The unaudited condensed consolidated financial statements have been prepared on a going concern basis which assumes our Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. We have a working capital deficit, and have incurred losses since inception, and further losses are anticipated raising substantial doubt about our company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon our company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and private placement of securities.

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, by the sale of common and preferred stock and through a private placement offering. Cash and cash equivalents as of June 30, 2013 was $428,858, a $350,824 increase as compared to December 31, 2012. As of June 30, 2013, working capital deficit (current assets less current liabilities) decreased to $(284,006) from $(838,992), as of December 31, 2012. Cash used in operations of $1,491,897 in 2013 was primarily attributable to the net loss of $2,605,481 offset by adjustments totaling $1,113,584, which primarily relates to increase in accounts receivable of $13,964, increase in prepaid expenses and other current assets of $7,747, net increase in accounts payable – related parties and accounts payable of $102,665, an increase in deferred finance costs of $177,100, an increase in accrued interest of $146,681, decrease in accrued compensation of $5,500, common stock and warrants issued for services of $906,667 and $231,095 of depreciation and amortization. Cash used in operations of $23,681 for the same period in 2012 was primarily attributable to the net loss of $25,264 offset by adjustments totaling $1,583, which primarily relates to a decrease in accounts receivable of $11,252, increase in prepaid expenses and other current assets of $10,354, increase in accounts payable and accrued expenses of $20,156, an increase in customer deposits of $12,317, loss on sale of property and equipment of $1,440 and $3,033 of depreciation.

Net cash (used in) provided by investing activities was $(16,123) for the six month period in 2013 and $1,199 in the same period in 2012. The Company purchased computer equipment, food service equipment and equipment for the Company’s trucks during the six months ended June 30, 2013. During the same period in 2012 we sold equipment totaling $1,199.

Net cash provided by (used in) financing activities was $1,858,844 for the six month period in 2013 and $(9,901) for the same period in 2012. In 2013, we had proceeds of $1,896,155 from convertible notes and shareholder advances and we had payments totaling $37,311 which were payments made for notes payable and a repayment of a loan from a shareholder. During the same period in 2012, we repaid $9,901 to a note holder and a shareholder.

Financial Position

The Company's liquidity and capital needs relate primarily to working capital and other general corporate requirements. As of June 30, 2013, the company raised approximately $3,520,000 in senior secured notes. Management plans to continue raising capital through increased sales and by engaging in additional debt and equity financing transactions The Company will use the proceeds for operating and working capital, expenses, professional fees, advisory fees and future business.

Total assets increased by $593,611, or 191%, to $903,777 as of June 30, 2013 from $310,166 as of December 31, 2012. This increase was primarily attributable to the increase in cash and equivalents related to proceeds from financing and prepaid expenses, increase in accounts receivable and notes receivable as well as an increase in deferred financing costs and other assets.

Total liabilities increased by $1,637,627, or 65%, to $4,164,023 as of June30, 2013 from $2,526,396 as of December 31, 2012. This increase was primarily attributable to an increase in accounts payable and accrued expenses totaling $244,124 as well as the issuance of convertible notes payable (short term and long term) totaling $1,896,155.

Total stockholders’ deficit increased by $1,044,016 during 2013. This increase was attributable to the net loss totaling $2,605,481 off-set with the increase in additional paid in capital of $1,559,025 and increase in common stock of $2,440.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of June 30, 2013 and December 31, 2012.

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

There are no recently issued accounting pronouncements that are expected to have a material impact on the unaudited condensed consolidated financial statements or notes thereto.

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 we had material weaknesses in our control environment and financial reporting process consisting of the following as of the Evaluation Date:

	1)	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;
	2)	inadequate segregation of duties consistent with control objectives;
	3)	ineffective controls over period end financial disclosure and reporting processes; and
	4)	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

From time to time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on the Company.

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.

During the period of this Quarterly Report and for the two years prior to this report, all unregistered sales of our securities were previously disclosed in a Current Report on Form 8-K.

2012 Private Placement Offering

On April 18, 2013, we completed our final closing of the “best efforts” 2012 Private Placement Offering of up to $5,000,000 of Private Placement Units with the Private Placement Purchasers for total aggregate gross proceeds to us of $2,874,955. Pursuant to the Private Placement Subscription Agreement, we issued to the Private Placement Purchasers Private Placement Units consisting of (i) Private Placement Notes and (ii) Private Placement Warrants to purchase shares of our Common Stock at an exercise price of $2.00 per share. The Private Placement Units each consisted of a Private Placement Note, in the principal face amount of $25,000, and Private Placement Warrants to purchase 12,500 shares of our Common Stock.

Private Placement Notes

The Private Placement Notes issued in the 2012 Private Placement Offering accrue interest at a rate of 10% on the aggregate principal amount, payable on the third anniversary of the issue date if not converted prior to the maturity date. The Notes are subject to (i) an optional conversion into shares of the Company’s Common Stock at the note holder’s election following the date upon which the Company has a registration statement declared effective with the Securities and Exchange Commission (the “SEC”) or (ii) a mandatory conversion thirty-six (36) months from the date of issuance. The shares of Common Stock issuable upon conversion of the Private Placement Notes shall equal: (i) the principal amount of the Private Placement Note and the accrued interest thereon through the date of conversion, divided by (ii) $1.00.

Private Placement Warrants

The Private Placement Warrants issued in the 2012 Private Placement Offering are exercisable for an aggregate of 1,437,500 shares of the Company’s Common Stock. The Private Placement Warrants are exercisable for a period of three years from the original issue date. The exercise price with respect to the Private Placement Warrants is $2.00 per share. The exercise price for the Private Placement Warrants is subject to adjustment upon certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate change and dilutive issuances.

2013 Private Placement Offering

On June 21, 2013, we completed our final closing of a “best efforts” private offering of up to $2,000,000 (the “2013 Private Placement Offering”) of Private Placement Units with a group of accredited investors (the “2013 Private Placement Purchasers”) for total aggregate gross proceeds to us of $645,000. Pursuant to a subscription agreement with the 2013 Private Placement Purchasers (the “2013 Private Placement Subscription Agreement”), we issued to the 2013 Private Placement Purchasers units consisting of (i) 10% Convertible Senior Secured Notes (these notes mirror the Private Placement Notes) and (ii) warrants (these warrants mirror the Private Placement Warrants) to purchase shares (the “Private Placement Warrant Shares” and together with the Private Placement Notes and the Private Placement Warrants, the “Private Placement Securities”) of our Common Stock at an exercise price of $2.00 per share. The Private Placement Units each consisted of a Private Placement Note, in the principal face amount of $25,000, and Private Placement Warrants to purchase 12,500 shares of our Common Stock (the “Private Placement Units”). For a description of the Private Placement Notes and Private Placement Warrants, see the section entitled “2012 Private Placement Offering—Private Placement Notes” and “2012 Private Placement Offering—Private Placement Warrants” respectively.

Grandview Capital Partners, Inc., a Florida corporation operating as an office of supervisory jurisdiction at c/o Grandview Capital Partners, Inc., 300 South Pine Island Road, Suite 240 Plantation, FL 33324, registered under the name Blackwall Capital Markets, Inc., a broker dealer that is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the Securities Investor Protection Corporation and registered with the Securities and Exchange Commission acted as placement agent in connection with the 2012 Private Placement Offering and the 2013 Private Placement Offering (collectively, the “Offerings”). As consideration for acting as the placement agent, at the closing of the Offerings, the Company paid to the Placement Agent (i) in cash, a fee equal to $128,500 for the 2012 Private Placement Offering and a fee equal to $32,100 for the 2013 Private Placement Offering and (ii) issued warrants to purchase up to an aggregate of 287,500 shares of our Common Stock in the 2012 Private Placement Offering and warrants to purchase up to an aggregate of 64,500 shares of our Common Stock in the 2013 Private Placement Offering. The Placement Agent warrants have an exercise price of $2.40 per share, exercisable for a term of five (5) years from the closing of each of the Offerings, respectively, and contain equitable adjustment for stock splits, stock dividends and similar events, as well as full ratchet anti-dilution provisions. Peter Goldstein, a shareholder and Financial Advisor of the Company, is the founder, chairman, chief executive officer and registered principal of Grandview Capital Partners, Inc. Mr. Goldstein did not hold any officer or director positions with the Company during 2012 Private Placement Offering or 2013 Private Placement Offering.

The Private Placement Notes and Private Placement Warrants issued in both the 2012 Private Placement Offering and the 2013 Private Placement Offering were offered and sold to the Private Placement Purchasers and 2013 Private Placement Purchasers (each of the Private Placement Purchasers and 2013 Private Placement Purchasers, for the purposes of this paragraph only, “the “Private Placement Purchasers”) in a private transaction in reliance upon exemptions from registration pursuant to Rule 506 of Regulation D.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

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

† In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are furnished and not filed.

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, 2013	THE GRILLED CHEESE TRUCK, INC.

	By:	/s/ David Danhi
		David Danhi
		Chief Executive Officer
		(Duly Authorized Officer and Principal Executive Officer)

Date: August 19, 2013	THE GRILLED CHEESE TRUCK, INC.

	By:	/s/ Robert Y. Lee
		Robert Y. Lee
		Principal Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)