ITEM 1. BUSINESS
(a) Business Development
TRIG Acquisition 1, Inc. (“we”, “us”, “our”, or the “Company”) was incorporated in the State of Nevada on December 31, 2009. The Company was formed as a vehicle to pursue a business combination and has made no efforts to identify a possible business combination. As a result, the Company has not conducted negotiations or entered into a letter of intent concerning any target business. The business purpose of the Company is to seek the acquisition of or merger with, an existing company. The Company selected December 31 as its fiscal year end. Our accountant has issued a going concern opinion regarding our business operations. 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.”
(b) Business of Issuer
The Company, based on proposed business activities, is a “blank check” company. The U.S. Securities and Exchange Commission (the “SEC”) defines those companies as “any development stage company that is issuing a penny stock, within the meaning of Section 3(a)(51) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies.” Under SEC Rule 12b-2 under the Exchange Act, the Company also qualifies as a “shell company,” because it has no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of “blank check” companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination. There is no assurance that we will be able to successfully conclude a business combination. The Company intends to comply with the periodic reporting requirements of the Exchange Act for so long as it is subject to those requirements.
The Company was organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. The Company’s principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. The Company will not restrict its potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.
The analysis of new business opportunities will be undertaken by or under the supervision of A.J. Cervantes, the Chief Executive Officer and director of the Company. As of the date of this report, the Company has not entered into any definitive agreement with any party, nor have there been any specific discussions with any potential business combination candidate regarding business opportunities for the Company. The Company has unrestricted flexibility in seeking, analyzing and participating in potential business opportunities. In its efforts to analyze potential acquisition targets, the Company will consider the following kinds of factors:
(i) Potential for growth, indicated by new technology, anticipated market expansion or new products;
(ii) Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;
(iii) Strength and diversity of management, either in place or scheduled for recruitment;
(iv) Capital requirements and anticipated availability of required funds, to be provided by the Company or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;
(v) The cost of participation by the Company as compared to the perceived tangible and intangible values and potentials;
(vi) The extent to which the business opportunity can be advanced;
(vii) The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and
(viii) Other relevant factors.
In applying the foregoing criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to out limited capital available for investigation, we may not discover or adequately evaluate adverse facts about the opportunity to be acquired.
FORM OF ACQUISITION
The manner in which the Company participates in an opportunity will depend upon the nature of the opportunity, the respective needs and desires of the Company and the promoters of the opportunity, and the relative negotiating strength of the Company and such promoters. There may be inherent conflicts of interest between entities in which Mr. Cervantes is involved. A conflict of interest may arise due to our Chief Executive and director being a shareholder of blank check companies which are seeking an acquisition target at the same time as Trig Acquisition 1, Inc. We do not intend to consummate a business combination or transaction involving any related parties.
It is likely that the Company will acquire its participation in a business opportunity through the issuance of common stock or other securities of the Company. Although the terms of any such transaction cannot be predicted, it should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called “tax free” reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the “Code”) depends upon whether the owners of the acquired business own 80% or more of the voting stock of the surviving entity. If a transaction were structured to take advantage of these provisions rather than other “tax free” provisions provided under the Code, all prior stockholders would in such circumstances retain 20% or less of the total issued and outstanding shares of the surviving entity. Under other circumstances, depending upon the relative negotiating strength of the parties, prior stockholders may retain substantially less than 20% of the total issued and outstanding shares of the surviving entity. This could result in substantial additional dilution to the equity of those who were stockholders of the Company prior to such reorganization.
Our present stockholders will likely not have control of a majority of the voting securities of the Company following a reorganization transaction. As part of such a transaction, all, or a majority of, our directors may resign and one or more new directors may be appointed without any vote by stockholders.
It is anticipated that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial cost for accountants, attorneys and others. If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the related investigation might not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific business opportunity, the failure to consummate that transaction may result in the loss to the Company of the related costs incurred.
We presently have no employees, other than our management. Our Chief Executive Officer and director is engaged in outside business activities and anticipates that he will devote to our business approximately five (5) hours per week until the acquisition of a successful business opportunity has been identified. We expect no significant changes in the number of our employees other than such changes, if any, incident to a business combination.
(c) Reports to security holders.
(1) The Company is not required to deliver an annual report to security holders and at this time does not anticipate the distribution of such a report.
(2) The Company is a reporting company under the Exchange Act and files current and periodic reports as required by the Exchange Act.
(3) The public may read and copy any materials the Company files with the SEC in the SEC's Public Reference Section, Room 1580, 100 F Street N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Section by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov.
ITEM 1A.
ITEM 1A. RISK FACTORS
Not applicable because we are a smaller reporting company.
ITEM 2.
ITEM 2. PROPERTIES
The Company neither rents nor owns any properties. We utilize the office space and equipment of our management at no cost. Management estimates such amounts to be immaterial. We currently have no policy with respect to investments or interests in real estate, real estate mortgages or securities of, or interests in, persons primarily engaged in real estate activities.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
(a) Market Information.
The Company’s common stock is not traded or quoted on any stock exchange or over the counter market. The Company is not aware of any market activity in its common stock since its inception through the date of this filing.
(b) Holders.
As of April 12, 2012, there are three record holders of an aggregate of 3,000,000 shares of the Company’s common stock.
(c) Dividends.
The Registrant has not paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of the Registrant's business.
ITEM 6.
ITEM 6. SELECTED FIANANCIAL DATA
Not applicable because we are a smaller reporting company.
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-K. The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this prospectus. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.
We were organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation. Our principal business objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings. We will not restrict our potential candidate target companies to any specific business, industry or geographical location and, thus, may acquire any type of business.
We do not currently engage in any business activities that provide cash flow. The costs of investigating and analyzing business combinations for the next 12 months and beyond such time will be paid with money in our treasury or with additional amounts, as necessary, to be loaned to or invested in us by our stockholders, management or other investors.
During the next 12 months we anticipate incurring costs related to:
(i)
filing of Exchange Act reports, and
(ii)
consummating an acquisition.
We believe the cost associated with the filing of Exchange Act reports and consummating an acquisition will be approximately five thousand dollars ($5,000.00). In addition, we anticipate an approximate cost of five thousand dollars ($5,000.00) for accountants, attorneys and others, associated with investigating specific business opportunities, and the negotiation, drafting and execution of relevant agreements. We believe we will be able to meet these costs through additional amounts, as necessary, to be loaned by or invested in us by Mr.Cervantes, our Chief Executive Officer and director. We currently have no written contractual agreements in place with Mr. Cervantes to provide such funding; however, Mr. Cervantes has verbally agreed to provide such funding until we engage in business activities that provide cash flow sufficient to cover the costs of investigating and analyzing business combinations.
We are in the development stage and have negative working capital, negative stockholders’ equity and have not earned any revenues from operations to date. These conditions raise substantial doubt about our ability to continue as a going concern. We are currently devoting our efforts to locating merger candidates. Our ability to continue as a going concern is dependent upon our ability to develop additional sources of capital, locate and complete a merger with another company, and ultimately, achieve profitable operations.
We may consider a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering. We do not have any material commitments for capital expenditures relating to the next twelve (12) months.
Our officer and director has had preliminary contact or discussions with a representative of an entity regarding a business combination with us. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks. Our President and director intends to seek out an entity to conduct a business combination by networking and communicating with several attorneys, accountants and investment banking firms in the industry. Our officer and director will be the sole individual assisting us with this process.
Our management anticipates that it will likely be able to effect only one business combination, due primarily to our limited financing and the dilution of interest for present and prospective stockholders, which is likely to occur as a result of our management’s plan to offer a controlling interest to a target business in order to achieve a tax-free reorganization. This lack of diversification should be considered a substantial risk in investing in us, because it will not permit us to offset potential losses from one venture against gains from another.
We anticipate that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital which we will have and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.
Results of Operations
Because we currently do not have any business operations, we have not had any revenues during the years ended December 31, 2011 and 2010. Total expenses for the year ended December 31, 2011 were $170,185 as compared to $10,658 for the year ended December 31, 2010. These expenses were comprised of professional and filing fees. The increase in total expenses for the year ended December 31, 2011 compared to the year ended December 31, 2010 was primarily attributable to fees incurred by us in connection with merger discussion and due diligence costs, advisory fees, professional fees and the preparation of our periodic reports that we are required to file under the Exchange Act.
Liquidity and Capital Resources
On February 1, 2011, the Company held the initial closing of a private placement (“Offering”) of an aggregate of 250,000 shares of Series A Convertible Preferred Stock, par value 0.001 per share, (“Series A Preferred Stock”) in the aggregate amount of $125,000 with certain accredited investors pursuant to certain subscription agreements. On February 15, 2011, the Company held the final closing of an aggregate of 150,000 shares of Series A Preferred Stock in an aggregate amount of $75,000 as part of the Offering.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).
Critical Accounting Policies
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.
ITEM 7A.
ITEM 7A. QUANTITIATIVE AND QUALITATIVE DISCLOUSURES ABOUT MARKET RISK
Not applicable because we are a smaller reporting company.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
1900 NW Corporate Blvd., East Suite 210
Boca Raton, Florida 33431
Tel.561-886-4200
Fax.561-886-3330
e-mail:info@sherbcpa.com
Offices in New York and Florida
Certified Public Accountants
INDEPENDENT AUDITORS’ REPORT
To the Board of Directors
TRIG Acquisition 1, Inc.
650 Sweet Bay Avenue
Plantation, FL 33324
We have audited the accompanying consolidated balance sheets of TRIG Acquisition 1, Inc. (a developmental stage company) of December 31, 2011 and December 31, 2010, the related consolidated statements of operations, changes in shareholders' equity and cash flows for the years ended December 31, 2011 and December 31, 2010 and for the period from December 31, 2009 (Inception) to December 31, 2011.. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of TRIG Acquisition 1, Inc. (a development stage company) as of December 31, 2011 and December 31, 2010, and the results of their operations and their cash flows for the years ended December 31, 2011 and December 31, 2010, and for the period from December 31, 2009 (Inception) to December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.
The financial statements have been prepared assuming that the company will continue as a going concern. The company has incurred significant losses and has a working capital and stockholders' deficit. As more fully described in Note 3, these issues raise substantial doubt about the company's ability to continue as a going concern. Management's plan in regard to these matters are also described in Note 3. The financials do not include any adjustments that might result from the outcome of this uncertainty.
Boca Raton, Florida
April 4, 2012
TRIG ACQUISITION 1, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
TRIG ACQUISITION 1, INC. F/K/A GSP-1, Inc. (a development stage company) (the "Company") was incorporated under the laws of the State of Nevada on December 31, 2009. The Company was organized to provide business services and financing to emerging growth entities. The Company was formed to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. It has been in the developmental stage since inception and has no operations to date. It will attempt to locate and negotiate with a business entity for the combination of that target company with us. The combination will normally take the form of a merger, stock- for-stock exchange or stock-for-assets exchange. In most instances, the target company will wish to structure the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal Revenue Code of 1986, as amended. No assurances can be given that it will be successful in locating or negotiating with any target company.
Activities during the development stage include developing the business plan and raising capital.
Basis of Presentation
The accompanying financial statements which present the results of operations of Trig Acquisition 1, Inc. for the years ended December 31, 2011 and 2010, have been prepared using accounting principles generally accepted in the United States of America. The Company’s fiscal year end is December 31.
Development Stage
In accordance with Financial Accounting Standards Board (“FASB”) ASC 915 Development Stage Entities, the Company considers itself to be in the development stage. The Company’s primary purpose for the time being is to acquire an operating business. The Company spends most of its time in assessing acquisition targets.
Use of Estimates
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 and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Earnings (loss) per common share
Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by FASB Accounting Standards Codification Topic 260, “Earnings Per Share.” As of December 31, 2011 and 2010, there were no common share equivalents outstanding.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments and other short-term investments with a maturity of three months or less, when purchased, to be cash equivalents.
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.
TRIG ACQUISITION 1, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
Basic and Diluted Earnings per Common Share
Basic earnings per common 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 outstanding plus the dilutive effects of outstanding options and warrants to acquire common shares during the period. In loss periods, dilutive common equivalent shares are excluded because the effect would be anti-dilutive. The Company had not issued any dilutive common share equivalents at December 31, 2011.
Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses at December 31, 2011 and 2010 consisted primarily of accrued professional fees.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheets for accounts payable approximate fair value based on the short-term maturity of these instruments.
Recent Accounting Pronouncements
A variety of accounting standards have been issued or proposed by FASB that do not require adoption until a future date. The Company does not expect the adoption of any of these standards to have a material impact once adopted.
NOTE 2 - SHAREHOLDERS’ DEFICIT
Stock Issued for Services
On December 31, 2009, the Company issued 1,000,000 shares of common stock to its founder having a fair value of $1,000 ($0.001/share) in exchange for services provided.
Stock Issued for Cash
On February 1, 2011, the Company sold 250,000 shares of Series A Convertible Preferred Stock, par value of $0.001 per share, for $125,000 cash ($0.50/share sales price) and paid offering cost of $6,842. On February 15, 2011, the Company sold 150,000 shares of Series A Convertible Preferred Stock, par value of $0.001 per share, for $75,000 cash ($0.50/shares sales price).
NOTE 3 - GOING CONCERN
As reflected in the accompanying unaudited financial statements, the Company is in the development stage with limited operations. The Company has a net loss of $182,673 from inception and used cash in operations from inception of $178,384. This raises substantial doubt about its ability to continue as a going concern due to the Company’s recurring expenses coupled with no revenue generation. The ability of the Company to continue as a going concern is dependent on the Company’s ability to implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management believes that actions presently being taken to obtain additional capital and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
TRIG ACQUISITION 1, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
NOTE 4 - INCOME TAXES
We adopted the FASB interpretation on accounting for uncertainty in income taxes. This guidance clarifies the accounting for uncertain tax positions that may have been taken by an entity. Specifically, it prescribes a more-likely-than-not recognition threshold to measure a tax position taken or expected to be taken in a tax return through a two-step process: (1) determining whether it is more likely than not that a tax position will be sustained upon examination by taxing authorities, after all appeals, based upon the technical merits of the position; and (2) measuring to determine the amount of benefit/expense to recognize in the financial statements, assuming taxing authorities have all relevant information concerning the issue. The tax position is measured at the largest amount of benefit/expense that is greater than 50 percent likely of being realized upon ultimate settlement. This pronouncement also specifies how to present a liability for unrecognized tax benefits in a classified balance sheet, but does not change the classification requirements for deferred taxes. Under this guidance, if a tax position previously failed the more-likely-than-not recognition threshold, it should be recognized in the first subsequent financial reporting period in which the threshold is met. Similarly, a position that no longer meets this recognition threshold should no longer be recognized in the first financial reporting period in which the threshold is no longer met.
The FASB issued additional guidance on how an entity is to determine whether a tax position has effectively settled for purposes of recognizing previously unrecognized tax benefits. Specifically, this guidance states that an entity would recognize a benefit when a tax position is effectively settled using the following criteria: (1) the taxing authority has completed its examination including all appeals and administrative reviews; (2) the entity does not plan to appeal or litigate any aspect of the tax position; and (3) it is remote that the taxing authority would examine or reexamine any aspect of the tax position, assuming the taxing authority has full knowledge of all relevant information relative to making their assessment on the position.
We performed an examination of our tax positions and calculated the cumulative amount of our estimated exposure by evaluating each issue to determine whether the impact exceeded the 50 percent threshold of being realized upon ultimate settlement with the taxing authorities. Based upon this examination, we determined that the aggregate exposure did not have a material impact on our financial statements during the years ended December 31, 2011 and 2010. Therefore, we have not recorded an adjustment to our financial statements related to this interpretation. We will continue to evaluate our tax positions, and recognize any future impact as a charge to income in the applicable period in accordance with the standard. Our tax filings for tax years 2009 to 2011 remain open for examination by taxing authorities. We do not anticipate any significant changes in our uncertain tax positions during the next twelve months.
Our accounting policy related to income tax penalties and interest assessments is to accrue for these costs and record a charge to selling, general and administrative expense for tax penalties and a charge to interest expense for interest assessments during the period that we take an uncertain tax position through resolution with the taxing authorities or the expiration of the applicable statute of limitations. We did not record any significant amounts related to penalties and interest during the years ended December 31, 2011 and 2010.
The following is a reconciliation of income taxes computed using the statutory Federal rate (35%) to the income tax expense in the financial statements for December 31, 2011 and December 31, 2010:
As of December 31, 2011, the Company has net operating losses for Federal income tax purposes totaling $182,600, expiring in 2031.
The following is a tax table of deferred tax assets at December 31, 2011 and December 31, 2010:
NOTE 5 - SUBSEQUENT EVENTS
Management has evaluated the effects of all events subsequent to December 31, 2011 through the date which the financial statements were available to be issued and has concluded that all events requiring adjustment to or disclosure in the financial statements have been made.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On June 30, 2011, the Company dismissed Webb & Company, P.A. (“Webb”) as the Company’s independent registered public accounting firm. The Company engaged Sherb & Co., LLP (“Sherb”) as its registered public accounting firm, effective June 30, 2011. The decision to change registered public accounting firms and the appointment of the new registered public accounting firm was made by the Company’s Board of Directors.
The reports of Webb on the financial statements of the Company as of and for the two most recent fiscal years did not contain any adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.
During the Company’s two most recent fiscal years and through June 30, 2011, there were no disagreements with Webb on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Webb, would have caused them to make reference thereto in their reports on the financial statements for such years. During the two most recent fiscal years and through June 30, 2011, there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.
During the Company’s two most recent fiscal years and through the June 30, 2011, the Company did not consult with Sherb with respect to any of (i) the application of accounting principles to a specified transaction, either completed or proposed; (ii) the type of audit opinion that might be rendered on the Company’s financial statements; or (iii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K) or an event of the type described in Item 304(a)(1)(v) of Regulation S-K.
The Company provided Webb a copy of the foregoing disclosures and requested Webb to furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the statements made therein. A copy of that letter dated July 5, 2011, furnished by Webb was filed as Exhibit 16.1 to the Current Report on Form 8-K filed with the SEC on July 6, 2011.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits 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 the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Management's Annual Report on Internal Control Over Financial Reporting.
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2011. The framework used by management in making that assessment was the criteria set forth in the document entitled “ Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of December 31, 2011, the Company’s internal control over financial reporting was effective for the purposes for which it is intended.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.
Changes in Internal Control over Financial Reporting
No change in our system of internal control over financial reporting occurred during the period covered by this report, fourth quarter of the fiscal year ended December 31, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
Item 1.01 Entry into a Material Definitive Agreement.
On April 12, 2012, the Company executed a Stock Purchase Agreement with Trig Capital Partners, Inc. (“Trig Capital”) and Robert Lee, our Director. Pursuant to the Stock Purchase Agreement, the Company sold (i) 1,000,000 shares of its common stock, $0.001 par value per share, at a price of $0.001 per share to Trig Capital, 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 Chief Executive Officer and Director, A.J. Cervantes, owns a 50% equity interest in Trig Capital.
The foregoing description of the Stock Purchase Agreement is qualified in their entirety by reference to the full text of the common stock purchase agreement, a copy of each of which is attached hereto as Exhibit 10.2, and is incorporated herein in its entirety by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information contained above in Item 1.01 is hereby incorporated by reference into this Item 3.02.
The Shares were issued in reliance on exemptions from registration under Section 4(2) of the Securities Act of 1933, as amended (the “Act”), and Rule 506 of Regulation D promulgated under the Act. These transactions qualified for exemption from registration because among other things, the transactions did not involve a public offering, each investor was an accredited investor and/or qualified institutional buyer, each investor had access to information about the Company and their investment, each investor took the securities for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers.
(a) Resignation of Director and Officer
On December 13, 2011, Norman A. Kunin resigned from the position of Chief Executive Officer of the Company. Mr. Kunin’s resignation was not in connection with any known disagreement with us on any matter.
On April 10, 2012, Peter Goldstein resigned from the positions of President and Director of the Company. Mr. Goldstein’s resignation was not in connection with any known disagreement with us on any matter. Upon the resignation of Mr. Goldstein, Mr. Cervantes remained as the sole director of the Company.
(b) Appointment of Directors and Officers
On April 12, 2012 our Board of Directors increased its size from one to two members, appointing Robert Lee as a new director and Chairman of the Board of the Company. Mr. Cervantes remains as a director of the Company.
A brief description of the background and business experience of Mr. Lee is as follows:
Robert Y. Lee
Director (Chairman of the Board), age 49
Mr. Lee has served as our Chairman since April 12, 2012. On April 2, 2012 Mr. Lee became a Principal of TRIG Capital Group, LLC, a New York-based private equity firm. Prior to TRIG Capital, Mr. Lee was the Chairman and Chief Executive Officer of U.S. Dry Cleaning, the largest operator of dry cleaning operations in the United States, before he resigned on March 16, 2012. Mr. Lee was an independent investor from 2001 through 2005 and became Chairman in 2005. Mr. Lee successfully restructured the company in 2010 and 2011 pursuant to Chapter 11 reorganization, completed numerous financings, secured new management and oversaw the development of a pipeline of accretive acquisitions. U.S. Dry Cleaning successfully emerged from Chapter 11 in September 2012. During Mr. Lee’s 30 years of retail consumer experience, he has opened, acquired, managed, and operated over 500 video retail stores from 1990 through 2001. He led the growth of Video City, Inc., a formerly California-based operator of video retail stores, from an 18 store regional chain to more than 130 video rental stores located in 12 states. As of March 2000 (following the sale of 49 stores located in Oregon and Washington to Blockbuster, Inc.), in conjunction with management of the operations of West Coast Entertainment Corporation, Video City owned or managed 307 corporate stores and an additional 80 franchised locations.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our officers and directors and additional information concerning them are as follows:
Name
Age
Position
AJ Cervantes
Chief Executive Officer and Director
Robert Lee
Director
A.J. Cervantes, Chief Executive Officer and Director, Mr. Cervantes has been our Chief Executive Officer and Director since June 2011. Mr. Cervantes has also been Chairman and Chief Executive Officer of Trilogy Capital Group, Inc., a New York-based financial services group engaged in merchant banking and strategic advisory services, since 2002. His experience includes M&A, Business Development, Reverse Mergers, and reorganization of middle-market companies. In the last several years, Mr. Cervantes has also devoted significant time to the development of opportunities in China. As both as a principal and a financial services professional, Mr. Cervantes facilitated a significant number of Reverse Mergers. Prior to his work with Trilogy, throughout the 90s, Mr. Cervantes was engaged in the reorganization and recapitalization of distressed middle market companies serving as interim CEO for a number of public and private entities, facilitating Chapter 11’s, Chapter 7’s and out-of-court reorganizations. In the 1980s, Mr. Cervantes served as Chairman and CEO of Mediacom Industries, Inc., a publicly held company engaged in the finance, production and distribution of feature film and television productions. Mr. Cervantes graduated from Webster University in St. Louis, with a BA.
Robert lee, Director (Chairman of the Board), Mr. Lee, 49, has served as our Chairman since April 12, 2012. On April 2, 2012 Mr. Lee became a Principal of TRIG Capital Group, LLC, a New York-based private equity firm. Prior to TRIG Capital, Mr. Lee was the Chairman and Chief Executive Officer of U.S. Dry Cleaning, the largest operator of dry cleaning operations in the United States, before he resigned on March 16, 2012. Mr. Lee was an independent investor from 2001 through 2005 and became Chairman in 2005. Mr. Lee successfully restructured the company in 2010 and 2011 pursuant to Chapter 11 reorganization, completed numerous financings, secured new management and oversaw the development of a pipeline of accretive acquisitions. U.S. Dry Cleaning successfully emerged from Chapter 11 in September 2012. During Mr. Lee’s 30 years of retail consumer experience, he has opened, acquired, managed, and operated over 500 video retail stores from 1990 through 2001. He led the growth of Video City, Inc., a formerly California-based operator of video retail stores, from an 18 store regional chain to more than 130 video rental stores located in 12 states. As of March 2000 (following the sale of 49 stores located in Oregon and Washington to Blockbuster, Inc.), in conjunction with management of the operations of West Coast Entertainment Corporation, Video City owned or managed 307 corporate stores and an additional 80 franchised locations.
Mr. Cervantes and Mr. Lee will not receive any salary from the Company.
Employment Agreements
As of the filing of this report, we have not entered into employment agreements with any of our executive officers and directors.
Significant Employees
None.
Family Relationships
None.
Involvement in Certain Legal Proceedings.
There have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of Registrant during the past ten years.
Board Committees
We have not formed an Audit Committee, Compensation Committee or Nominating and Corporate Governance Committee as of the filing of this Annual Report. Our Board of Directors performs the principal functions of an Audit Committee. We currently do not have an audit committee financial expert on our Board of Directors. We believe that an audit committee financial expert is not required because the cost of hiring an audit committee financial expert to act as one of our directors and to be a member of an Audit Committee outweighs the benefits of having an audit committee financial expert at this time.
Code of Ethics
We currently do not have a code of ethics that applies to our officers, employees and director, including our Chief Executive Officer, however, we are in the process of formulating a code of ethics and intend to adopt one in the near future.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The Company’s executive officers and directors have not received any cash remuneration since inception. They will not receive any cash remuneration until the consummation of an acquisition. Our prior President and director, Mr. Peter Goldstein has received one million shares of common stock in exchange for services provided to our Company. Mr. Goldstein resigned in April 2012. Our current Chief Executive Officer and director, Mr. Cervantes, intends to devote approximately five (5) hours per week to our affairs.
It is possible that, after the Company successfully consummates a business combination with an unaffiliated entity, that entity may desire to employ or retain one or a number of members of our management for the purposes of providing services to the surviving entity. However, the Company has adopted a policy whereby the offer of any post-transaction employment to members of management will not be a consideration in our decision whether to undertake any proposed transaction.
No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company for the benefit of its employees.
There are no understandings or agreements regarding compensation our management will receive after a business combination that is required to be included in this table, or otherwise.
The following table shows for the period ended December 31, 2011, the compensation awarded (earned) or paid by the Company to its named executive officers or acting in a similar capacity as that term is defined in Item 402(a)(2) of Regulation S-K. There are no understandings or agreements regarding compensation that our management will receive after a business combination that is required to be included in this table, or otherwise.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a)
Security ownership of certain beneficial owners.
The following table sets forth, as of April 12, 2012, the number of shares of common stock owned of record and beneficially by executive officers, directors and persons who beneficially own more than 5% of the outstanding shares of our common stock.
(1)
Mr. Cervantes who serves as our Chief Executive Officer and Director owns a 50% interest in Trig Capital.
(2)
Mr. Lee serves as our Director.
(3)
Peter Goldstein served as President and Director of the Company until April 10, 2012.
There are no arrangements which may at a subsequent date result in a change of control of the Company.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
On December 31, 2009, the Company issued 1,000,000 shares of common stock to its founder, Mr. Peter Goldstein, having a fair value of $1,000 ($0.001/share) in exchange for founder services in connection with setting up and forming the Corporation. Mr. Goldstein has verbally agreed to provide such funding until we engage in business activities that provide cash flow sufficient to cover the costs of investigating and analyzing business combinations.
On April 12, 2012, the Company executed a Stock Purchase Agreement with Trig Capital Partenrs, Inc. and Robert Lee, our Director. Pursuant to the Stock Purchase Agreement, the Company sold (i) 1,000,000 shares of its common stock, $0.001 par value per share, at a price of $0.001 per share to Trig Capital, and (ii) 1,000,000 shares of its common stock, at a price of $0.001 per share to Robert Lee. Mr. Cervantes who serves as our Chief Executive Officer and Director owns a 50% interest in Trig Capital.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees
For the Company’s fiscal years ended December 31, 2011 and 2010, we were billed approximately $3,000 and $3,000, respectively for professional services rendered for the audit and reviews of our financial statements.
Audit Related Fees
The Company did not incur any audit related fees, other than the fees discussed in Audit Fees, above, for services related to our audit for the fiscal years ended December 31, 2011 and 2010.
Tax Fees
For the Company’s fiscal years ended December 31, 2011 and 2010, we were not billed for professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees
The Company did not incur any other fees related to services rendered by our principal accountant for the fiscal years ended December 31, 2011 and 2010.
Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:
●
approved by our audit committee; or
●
entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.
We do not have an audit committee. Our entire board of directors pre-approves all services provided by our independent auditors. The pre-approval process has just been implemented in response to the new rules. Therefore, our board of directors does not have records of what percentage of the above fees were pre-approved. However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.
PART IV
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
a) Documents filed as part of this Annual Report
1. Financial Statements
2. Financial Statement Schedules
3. Exhibits
* Furnished herewith. XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
+ In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are furnished and not filed.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TRIG ACQUISITION 1, INC.
Dated: April 16, 2012
By:
/s/ A.J. Cervantes
Chief Executive Officer
(Duly Authorized Officer, Principal Executive Officer and Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name
Title
Date
/s/ A.J. Cervantes
Chief Executive Officer and Director
April 16, 2012
(Principal Executive Officer and Principal Financial Officer)
/s/ Robert Lee
Director
April 16, 2012