Muscle Maker Grill on Friday said that its CEO, Robert Morgan, has resigned for “personal reasons.”
The company named Kevin Mohan its interim president.
“We are currently in discussions with several potential CEO candidates with extensive industry experience,” said Mohan, who has been vice president of capital markets for American Restaurant Holdings.
The move comes after the Houston-based chain of healthy fast-casual restaurants decided to terminate a so-called mini IPO in late March in favor of registering the company as an over-the-counter stock.
Muscle Maker had planned to raise as much as $20 million through a Regulation A+ offering, which enables small companies to market stock sales to customers and others.
But the company, whose IPO was qualified in December, sold just 44,153 shares at $3.25 per share, raising $143,497.
The company in a release said it hopes the listing as an over-the-counter stock, in which stock can only be sold by appointment, would make the company “more attractive to the investment community.”
Muscle Maker’s offering had elicited concern largely because of its financial condition. The company had a working capital deficit of $3.9 million through June 30, 2017, and generated $3.9 million in revenue in the first six months of the year.
The company’s top “risk factor” included a going-concern warning, meaning its auditors felt the company was at risk of going out of business.
“If our ability to generate cash flow from operations is delayed or reduced and we are unable to raise additional funding from other sources, we may be unable to continue in business even if this offering is successful,” the company said in an SEC filing.
Muscle Maker said it is closing seven of its company stores to focus on building locations on military bases. Muscle Maker operated 53 locations earlier this year.
“Within the next 12 months, we will be strategically streamlining our operations, which has included closing seven of our nonmilitary corporate stores so that we can focus exclusively on our military buildout,” Mohan said. “This calculated shift should have a significant cost savings impact on our company going forward as we focus on achieving profitability.”
The company said it has 10 military locations in its pipeline and “ongoing discussions with additional military sites, including food trucks.” The company also said it has nine franchise agreements that have been signed in the past 90 days.
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