The Grilled Cheese Truck raising up to $5M in general-solicitation offering - The Deal Pipeline (SAMPLE CONTENT: NEED AN ID?)
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The Grilled Cheese Truck raising up to $5M in general-solicitation offering

by Bill Meagher  |  Published March 18, 2014 at 10:19 AM
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The Grilled Cheese Truck Inc., which plans to franchise gourmet food trucks across the country, is trying to raise up to $5 million in an unregistered offering of stock and warrants.

The Fort Lauderdale, Fla.-based company said in a Friday, March 14, filing with the Securities and Exchange Commission that is selling up to 4 million units that will each consist of one share and one stock-purchase warrant. The units are priced at $1.25 each and the warrants will be exercisable at $2.50 until Oct. 31, 2016.

The Grilled Cheese Truck, formerly known as Grilled Cheese Inc., merged with a registered shell company in 2012 but its stock has not yet traded publicly.

The offering is being made under Rule 506 (c) of Regulation D of the Securities Act, which allows for general solicitation and advertising. The provision was created under the Jumpstart Our Business Startups Act. Prior to the JOBS Act's passage in 2012, private placement financings could not be advertised to the general public.

The marketing of the offering has included a YouTube video featuring The Grilled Cheese Truck's vice chairman, retired general and presidential candidate Wesley K. Clark.

The offering began in October and has so far raised $815,000 with 652,000 units to 28 accredited investors, the company said in the March 14 SEC filing.

I-Bankers Securities Inc. is acting as placement agent. It will receive a fee equal to 10% of the gross proceeds raised in the offering, a $10,000 retainer and four-year warrants for up to 10% of the shares sold.

Gen. Clark is leading efforts by The Grilled Cheese Truck to recruit U.S. veterans of the wars in Iraq and Afghanistan as franchisees.

The company is paying Clark's Little Rock, Ark-based consulting firm Wesley K. Clark & Associates LLC $240,000 a year and has granted it warrants to buy up to 500,000 shares for $1 each, based on the achievement of milestones. The first 100,000 shares may be bought after the first 25 veteran franchise agreements are executed, another 100,000 shares may be bought after the next 25 veteran franchise agreements, and another 100,000 shares after the next 25 agreements. The final 200,000 shares may be bought following the next 25 veteran franchise agreements, The Grilled Cheese Truck has disclosed in SEC filings.

Clark's son, Wesley Clark Jr., was named director of veteran operations for the company.

Gen. Clark is also the former chairman of Rodman & Renshaw Capital Group Inc., the parent company of the now defunct boutique investment bank Rodman & Renshaw. The firm was the most active provider of private placement financing and a frequent adviser to companies that went public through reverse mergers. The investment bank went out of business last year.

The Grilled Cheese Truck has other ties to Rodman's former management. Former Rodman CFO David Horin was named as The Grilled Cheese Truck's CFO after its reverse merger. He resigned from the company last year.

The company operates two food trucks in Los Angeles and one in Phoenix.

David Danhi, a former executive chef at Los Angeles restaurants Water Grill and Roxbury Supper Club, is chief creative officer of The Grilled Cheese Truck. He was CEO until last September.

The current interim CEO and chairman is Robert Lee. He was previously the founder and CEO of U.S. Dry Cleaning Services Corp., the nation's largest dry-cleaning chain before its bankruptcy filing in 2010.

The Grilled Cheese Truck lost $3.95 million on $1.35 million in revenue in the first nine months of last year. The company had $63,306 in cash and cash equivalents as of Sept. 30.

The loss through the first three quarters of 2013 included $1.31 million in consulting fees paid to related parties. Along with the fees paid to Clark, that included $7,000 a month paid to Trig Capital Group LLC for marketing services, business development and assistance with establishing franchising operations. Trig Capital was also granted a warrant to buy 1.8 million shares for $2 each and a right to receive 10% of the purchase price of any franchise bought in the next five years.

Trig Capital is a joint venture between Grandview Capital Partners Inc., where Peter Goldstein is president, and Trilogy Capital Partners Inc., where A.J. Cervantes is CEO. Goldstein and Cervantes supplied the shell company for the reverse merger that brought The Grilled Cheese Truck public.

The company is paying Trilogy $10,000 a month for investor relations services. Grandview receives $10,000 a month for consulting services. Goldstein has been president and CFO of The Grilled Cheese Truck since September.

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Tags: A.J. Cervantes | David Danhi | David Horin | Grandview Capital Partners Inc. | I-Bankers Securities Inc. | JOBS Act | Peter Goldstein | Robert Lee | Rodman & Renshaw Capital Group Inc. | The Grilled Cheese Truck Inc. | Trilogy Capital Partners Inc. | U.S. Dry Cleaning Services Corp. | Wesley Clark Jr. | Wesley K. Clark | Wesley K. Clark & Associates LLC | YouTube

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Bill Meagher

Associate Editor, Small Cap Equity Finance



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