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, 2012

 

or

 

¨  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

 

TRIG ACQUISITION 1, 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 x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files). Yes x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

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

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

 

As of August 20, 2012, there were 3,000,000 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
Item 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3		Quantitative and Qualitative Disclosures About Market Risk	16
Item 4		Controls and Procedures	16
PART II OTHER INFORMATION
Item 1		Legal Proceedings	17
Item 1A		Risk Factors	17
Item 2		Unregistered Sales of Equity Securities and Use of Proceeds Risk Factors	17
Item 3		Defaults Upon Senior Securities	17
Item 4		Mine Safety Disclosures	17
Item 5		Other Information	17
Item 6		Exhibits	18
Signatures			19

 

 

PART I—FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Trig Acquisition 1, Inc.

(a development stage company)

BALANCE SHEETS

 

		June 30, 2012				December 31, 2011
		(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	21,404			$	14,774
Total assets		$	21,404			$	14,774
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts Payable		$	60,289			$	3,289
Convertible notes payable, net of discount of $106,993 and $0 respectively			130,507				-
Total liabilities			190,796				3,289
STOCKHOLDERS' DEFICIT
Preferred stock, $.0001 par value, 10,000,000 shares authorized, 0 and 400,000 shares issued and outstanding, respectively			-				400
Common stock, $.001 par value, 100,000,000 shares authorized, 3,350,000 and 1,000,000 shares issued, and outstanding, respectively			3,350				1,000
Common stock to be issued			(2,000	)			-
Additional paid-in-capital			286,540				192,758
Deficit accumulated during the development stage			(457,282	)			(182,673	)
Total stockholders' deficit			(169,392	)			11,485
Total liabilities and stockholders' deficit		$	21,404			$	14,774

 

The accompanying notes to the unaudited financial statements are an integral part of these statements.

   

 

Trig Acquisition 1, Inc.

(a development stage company)

STATEMENTS OF OPERATIONS

(Unaudited)

 

																		Cumulative
																		Totals
																		From Inception
		For the six months ended								For the three months ended								(December 31, 2009)
		June 30,								June 30,								Through
		2012				2011				2012				2011				June 30, 2012
Revenue		$	-			$	-			$	-			$	-			$	-
Cost of revenue			-				-				-				-				-
Gross profit			-				-				-				-				-
Operating expenses
Stock based compensation			-				-				-				-				1,000
Professional fees			246,223				-				228,887				-				418,688
Office and administrative			25,855				-				25,855				-				35,063
Total operating expenses			272,078				-				254,742				-				454,751
Other expenses
Interest expense			2,531				-				2,531				-				2,531
Net loss		$	(274,609	)		$	-			$	(257,273	)		$	-			$	(457,282	)
Loss per share:
Basic and diluted loss per share		$	(0.13	)		$	-			$	(0.08	)		$	-
Weighted average shares outstanding - basic and diluted			2,071,823				1,000,000				3,131,868				1,000,000

 

The accompanying notes to the unaudited financial statements are an integral part of these statements.

  

 

Trig Acquisition 1, Inc.

(a development stage company)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE PERIOD FROM INCEPTION (DECEMBER 31, 2009) TO JUNE 30, 2012

(Unaudited)

 

																		Common												Total
		Preferred Stock								Common Stock								Stock to be				Additional				Accumulated				Stockholders'
		Shares				Amount				Shares				Amount				Issued				Paid-in Capital				Deficit				Equity (Deficit)
Balance, December 31, 2009 (Inception)			-			$	-				-			$	-			$	-			$	-			$	-			$	-
Common stock issued for services to founder			-				-				1,000,000				1,000				-				-				-				1,000
Net loss			-				-				-				-				-				-				(1,830	)			(1,830	)
Balance, December 31, 2009			-				-				1,000,000				1,000				-				-				(1,830	)			(830	)
Net loss			-				-				-				-				-				-				(10,658	)			(10,658	)
Balance, December 31, 2010			-				-				1,000,000				1,000				-				-				(12,488	)			(11,488	)
Contributed capital			-				-				-				-				-				-				-				-
Issuance of Preferred Stock for cash @ $0.50 per share, net of $6,842 offering cost			400,000				400												-				192,758								193,158
Net loss			-				-				-				-				-				-				(170,185	)			(170,185	)
Balance, December 31, 2011			400,000				400				1,000,000				1,000				-				192,758				(182,673	)			11,485
Conversion of preferred stock to common stock			(400,000	)			(400	)			400,000				400																-
Conversion of common stock to convertible notes payable											(50,000	)			(50	)							(24,950	)							(25,000	)
Common stock to be issued pursuant to stock purchase agreement											2,000,000				2,000				(2,000	)											-
Beneficial conversion feature recognized in connection with issuance of convertible notes payable																							118,732								118,732
Net loss			-				-				-				-								-				(274,609	)			(274,609	)
Balance, June 30, 2012			-			$	-				3,350,000			$	3,350			$	(2,000	)		$	286,540			$	(457,282	)		$	(169,392	)

 

The accompanying notes to the unaudited financial statements are an integral part of these statements.

 

 

 

Trig Acquisition 1, Inc.

(a development stage company)

STATEMENTS OF CASH FLOWS

(Unaudited)

 

		For the six months ended June 30,								Cumulative Totals From Inception  (December 31, 2009) Through June 30,
		2012				2011				2012
Cash flows from operating activities:
Net loss		$	(274,609	)			-			$	(457,282	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of discount related to debt			11,739				-				11,739
Common stock issued for services			-				-				1,000
Change in operating assets and liabilities:
Accounts payable and accrued expenses			56,700				-				59,990
Net cash used in operating activities			(206,170	)			-				(384,553	)
Cash flows from financing activities:
Proceeds from notes payable			212,500				-				212,500
Proceeds from sale of common stock			-				-				193,158
Net cash provided by financing activities			212,500				-				405,658
Net increase (decrease) in cash and cash equivalents			6,630				-				21,105
Cash and cash equivalents - beginning of period			14,774				-				-
Cash and cash equivalents - end of period		$	21,404			$	-			$	21,105
Supplemental disclosures of cash flow information:
Cash paid for income taxes		$	-			$	-			$	-
Cash paid for interest		$	-			$	-			$	-
Supplemental schedules of noncash investing and financing activities:
Beneficial conversion feature in connection with issuance of convertible notes payable		$	118,732			$	-			$	-
Conversion of common stock to convertible notes payable		$	25,000			$	-			$	-
Common stock to be issued		$	2,000			$	-			$	-

  

The accompanying notes to the unaudited financial statements are an integral part of these statements.

  

 

TRIG ACQUISITION 1, INC.

(A Development Stage Company)

 

NOTES TO UNAUDITED FINANCIAL STATEMENTS

JUNE 30, 2012

 

NOTE 1 – ORGANIZATION, 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.

 

Acquisition Agreement

 

On April 3, 2012, the Company entered into a definitive memorandum of understanding (“MOU”) with Grilled Cheese, Inc. (“Grilled Cheese”), a privately held California corporation. Both the Company and Grilled Cheese agreed to negotiate, in good faith, and enter into a definitive merger. Pursuant to the terms of the MOU, the Company will acquire Grilled Cheese (the “Acquisition”) upon the successful completion by the Company of a financing of at least $2,000,000 (the “Financing”). Among other conditions to the merger are the completion of due diligence, certified audits by a Public Company Accounting Board certified auditor, and the purchase by Grilled Cheese of the minority shareholder’s shares in Grilled Cheese.

 

Basis of Presentation

The interim financial statements of the Company are unaudited and contain all adjustments (consisting primarily of normal recurring accruals) necessary for a fair statement of the results for the interim periods presented. Results for interim periods are not necessarily indicative of results to be expected for a full year or for previously reported periods due in part, but not limited to, availability of capital resources, the timing of acquisitions, and the sensitivity of our business to economic conditions.

 

The accompanying unaudited financial statements have been prepared, in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). You should read these interim financial statements in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011.

 

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 June 30, 2012 and 2011, 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.

 

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 June 30, 2012.

 

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at June 30, 2012 and December 31, 2011 consisted primarily of accrued professional fees.

 

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, 2012, with the exception of its convertible notes payable. The carrying amounts of these liabilities at June 30, 2012 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, 2012 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.

 

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 – CONVERTIBLE NOTES PAYABLE

 

During the six months ended June 30, 2012, the Company entered into secured convertible loans with third party non-affiliates in which $212,500 was received in cash and 50,000 common shares were converted into convertible notes payable valued at $25,000. These loans bear interest at 12% and mature on April 8, 2013. They are convertible at a discount rate of 33 1/3% to market as stated in the private placement memorandum. As a result, the Company recorded $118,732 in debt discount related to the beneficial conversion feature. In connection with these debentures, the Company has recorded amortization expense amounting to $11,739 for the six months ended June 30, 2012 with $106,993 net discount balance remaining.

 

NOTE 3 – 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).

 

On April 14, 2012, the Company issued 2,000,000 shares related to a stock purchase agreement for $2,000. The funds will be collected in subsequent periods and has been recorded as common stock to be issued.

 

Conversion of Series A Preferred Stock

The Series A Preferred Stock provides that one year from the date of initial issuance of any shares of the Series A Preferred Stock, all the outstanding Series A Preferred Stock at that time shall automatically be converted into shares of Common Stock. On February 1, 2012, the mandatory conversion feature was triggered and 400,000 shares of Series A Preferred Stock valued at $200,000 converted at a conversion rate equal to $0.50 per share of common shares for a total of 400,000 common shares.

 

Conversion of Common Stock

In June and July 2012, the Company entered into conversion agreements with three shareholders to convert an aggregate of 400,000 shares of its Common Stock. Pursuant to the terms of the agreements, the shareholders entered into Note Purchase Agreements at an aggregate principal amount of $200,000, in exchange for their shares of the Company’s Common Stock. In June 2012, a shareholder converted 50,000 shares of common stock for a $25,000 note payable. In July 2012 the remaining 350,000 shares of common stock were converted into two notes payable totaling $175,000.

 

 

NOTE 4 – 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 $457,282 from inception and used cash in operations from inception of $384,553. 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.

 

NOTE 5 – SUBSEQUENT EVENTS

 

On July 9, 2012, the Company completed a private offering (the “Offering”) of convertible promissory notes (the “Notes”) for an aggregate principal amount of $512,500 to seventeen (17) purchasers (the “Purchasers”). The Notes were sold pursuant to note purchase agreements, entered into between the Company and each Purchaser, dated as of the initial issuance date of the Note (the “Note Purchase Agreement”). The Notes have a maturity date of April 8, 2013 (the “Maturity Date”) and bear interest at twelve percent (12%) per annum, payable on the last day of every fiscal quarter commencing June 30, 2012 and continuing through the Maturity Date. If prior to the Maturity Date, the Company completes the proposed Financing and Acquisition, as described in the Note Purchase Agreement, then the Notes will be automatically converted into shares of the Company’s common stock, par value $0.001 (the “Common Stock”) at a price equal to a third of the price per share of the Common Stock sold in the Financing. The Company does not have a prepayment right on the Notes.

 

On July 16, 2012, the Company entered into an advisory agreement (the “TRIG Capital Advisory Agreement”) with TRIG Capital Group, LLC (“TRIG Capital”). 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 a warrant to purchase 1,800,000 shares of Common Stock of the Company.  The terms of the warrant are discussed more fully in the section titled TRIG Warrant below.  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 the Acquisition for a period of five (5) years.

 

On July 16, 2012, the Company issued warrants (the “Trig Warrant”) to Trig Capital in a private placement, to purchase an aggregate of 1,800,000 shares of the Company’s common stock as compensation for an advisory agreement between the Company and Trig Capital. 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. The exercise price is subject to adjustment upon certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate change and dilutive issuances.

 

 

On July 16, 2012 the Company entered into an investor relations agreement with Trilogy Capital Partners, Inc. (“Trilogy”). The parties agreed to a twelve month contract, whereby Trilogy would 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 will pay Trilogy $80,000 upon a successful completion of the Financing.

 

On July 16, 2012, the Company entered into an advisory agreement (the “Villard Advisor 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 being a 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 throughout the terms of the agreement, and (ii) $22,500 of cash to be paid in monthly payments of $1,875 throughout the terms of the agreement.

 

On July 16, 2012, the Company entered into an employment agreement (the “Employment Agreement”) with Robert Y. Lee, currently a director of the Company, 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 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 will pay Mr. Lee a signing bonus of $80,000 to be paid when the Company has available funds, but no later than the completion of the Acquisition. The term of the 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.

 

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 Capital 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 Capital $10,000 per month for a period of 18 months. In the event that Grandview Capital 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 Capital will receive a fee between two (2) to ten (10) percent of the total transaction, depending on the transaction value, as defined in the Grandview Advisory Agreement. Additionally, the Company will pay Grandview Capital a cash success fee of $80,000 upon a consummation of the Financing.

 

 

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

 

Overview

 

The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto contained elsewhere in this Report. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements.

 

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.   On July 6, 2011, the Company filed a Certificate of Amendment to its Articles of Incorporation (the “Amendment”) to change its name from “GSP-1, Inc.” to “Trig Acquisition 1, Inc.”

 

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 twenty five thousand dollars ($25,000.00). 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 are in the development stage and used cash in operations 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 officers and directors have 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 officers and directors intend 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 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.

 

Acquisition Agreement

 

On April 3, 2012, the Company entered into a definitive memorandum of understanding (“MOU”) with Grilled Cheese, Inc. (“Grilled Cheese”), a privately held California corporation. Both the Company and Grilled Cheese agreed to negotiate, in good faith, and enter into a definitive merger. Pursuant to the terms of the MOU, the Company will acquire Grilled Cheese (the “Acquisition”) upon the successful completion by the Company of a financing of at least $2,000,000 (the “Financing”). Among other conditions to the merger are the completion of due diligence, certified audits by a Public Company Accounting Board certified auditor, and the purchase by Grilled Cheese of the minority shareholder’s shares in Grilled Cheese.

 

Cohen Advisory Agreement

 

On June 15, 2012, the Company entered into an advisory agreement (the “Cohen Advisor 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 based on the per share price of the common stock sold in the Financing, and (ii) $60,000 of cash to be paid in monthly payments of $5,000 throughout the terms of the agreement. The agreement can be terminated by the Company for cause, as defined in agreement.

 

Repurchase of Common Stock

 

From June 2012 until July 2012, the Company entered into repurchase agreements (the “Repurchase Agreements”) with three shareholders (the “Sellers”) to repurchase an aggregate of 400,000 shares of its Common Stock (the “Repurchase”). Pursuant to the terms of the Repurchase Agreements, the Sellers entered into Note Purchase Agreements to purchase an aggregate principal amount of $200,000 of the Notes, as described above, in exchange for the sale of their shares of the Company’s Common Stock back to the Company.

 

Subsequent Events

 

Bridge Financing

 

On July 9, 2012, the Company completed a private offering (the “Offering”) of convertible promissory notes (the “Notes”) for an aggregate principal amount of $512,500 to seventeen (17) purchasers (the “Purchasers”). The Notes were sold pursuant to note purchase agreements, entered into between the Company and each Purchaser, dated as of the initial issuance date of the Note (the “Note Purchase Agreement”). The Notes have a maturity date of April 8, 2013 (the “Maturity Date”) and bear interest at twelve percent (12%) per annum, payable on the last day of every fiscal quarter commencing June 30, 2012 and continuing through the Maturity Date. If prior to the Maturity Date, the Company completes the proposed Financing and Acquisition, as described in the Note Purchase Agreement, then the Notes will be automatically converted into shares of the Company’s common stock, par value $0.001 (the “Common Stock”) at a price equal to a third of the price per share of the Common Stock sold in the Financing. The Company does not have a prepayment right on the Notes.

 

 

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”). 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 a warrant to purchase 1,800,000 shares of Common Stock of the Company.  The terms of the warrant are discussed more fully in the section titled TRIG Warrant below.  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 the Acquisition for a period of five (5) years.

 

TRIG Warrant

 

On July 16, 2012, the Company issued warrants (the “Trig Warrant”) to Trig Capital in a private placement, to purchase an aggregate of 1,800,000 shares of the Company’s common stock as compensation for an advisory agreement between the Company and Trig Capital. 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. The exercise price is subject to adjustment upon certain events, such as stock splits, combinations, dividends, distributions, reclassifications, mergers or other corporate change and dilutive issuances.

 

Trilogy IR Agreement

 

On July 16, 2012 the Company entered into an investor relations agreement with Trilogy Capital Partners, Inc. (“Trilogy”). The parties agreed to a twelve month contract, whereby Trilogy would 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 will pay Trilogy $80,000 upon a successful completion of the Financing.

 

Villard Advisory Agreement

 

On July 16, 2012, the Company entered into an advisory agreement (the “Villard Advisor Agreement”) with Dmitri 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 being a member of the Company’s board of directors (the “Board”), if elected.  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 throughout the terms of the agreement, and (ii) $22,500 of cash to be paid in monthly payments of $1,875 throughout the terms of the agreement.

 

 

Lee Employment Agreement

 

On July 16, 2012, the Company entered into an employment agreement (the “Employment Agreement”) with Robert Y. Lee, currently a director of the Company, 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 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 will pay Mr. Lee a signing bonus of $80,000 to be paid when the Company has available funds, but no later than the completion of the Acquisition. The term of the 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.

 

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 Capital 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 Capital $10,000 per month for a period of 18 months. In the event that Grandview Capital 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 Capital will receive a fee between two (2) to ten (10) percent of the total transaction, depending on the transaction value, as defined in the Grandview Advisory Agreement. Additionally, the Company will pay Grandview Capital a cash success fee of $80,000 upon a consummation of the Financing.

 

Results of Operations

 

For the three months ended June 30, 2012

 

Because we currently do not have any business operations, we have not had any revenues during the three months ended June 30, 2012 or during the three months ended June 30, 2011. Total expenses for the three months ended June 30, 2012 were $257,273 as compared to $0 for the three months ended June 30, 2011.  These expenses were comprised of professional fees of $228,887, amortization of discount related to debt expense of $11,739, interest expense of $2,531 and $14,116 of general and administrative expenses.  The increase in total expenses for the three months ended June 30, 2012 compared to the three months ended June 30, 2011 was primarily attributable to the lack of activity by the Company in 2011.

 

For the six months ended June 30, 2012

 

Because we currently do not have any business operations, we have not had any revenues during the six months ended June 30, 2012 or during the six months ended June 30, 2011. Total expenses for the six months ended June 30, 2012 were $274,609 as compared to $0 for the six months ended June 30, 2011.  These expenses were comprised of professional fees of $246,223, amortization of discount related to debt expense of $11,739, interest expense of $2,531 and $14,116 of general and administrative expenses.  The increase in total expenses for the six months ended June 30, 2012 compared to the six months ended June 30, 2011 was primarily attributable to the lack of activity by the Company in 2011.

 

 

Liquidity and Capital Resources

 

As of June 30, 2012, we had $21,404 in cash available and net liabilities of $190,796. The Company is actively pursuing merger opportunities as described above and believes that its current available cash will be sufficient for its operations until a merger candidate is selected, but may seek additional financing in connection with a potential business combination or if it otherwise requires additional funds.

 

Off-Balance Sheet Arrangements

 

We do not currently have any relationships with unconsolidated entities or financial partnerships, such as entities referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet or other contractually narrow or limited purposes.

 

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.

 

None.

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

EXPLANATORY NOTE

 

On April 16, 2012, the Company inadvertently reported in its Form 10-K for the fiscal year ended December 31, 2012 (the “Form 10-K”) that it entered into a Stock Purchase Agreement with Trig Capital Partners, Inc. and Robert Lee.  The correct name of Trig Capital Partners, Inc. is “Trilogy Capital Partners, Inc.”  The disclosure under “Item 101 Entry into a Material Definitive Agreement” in “Item 9B Other Information” of the Form 10-K is amended to read as follows:

 

On April 12, 2012, the Company executed a Stock Purchase Agreement with Trilogy Capital Partners, Inc. (“Trilogy 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 Trilogy 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 Trilogy Capital.

 

The foregoing description of the Stock Purchase Agreement is qualified in its entirety by reference to the full text of the common stock purchase agreement, a copy of each of which is attached as Exhibit 10.2 to the Form 10-K filed with the SEC on April 16, 2012, and is incorporated herein in its entirety by reference.

 

 

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
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
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

 

* To be filed by amendment.

+ In accordance with SEC Release 33-8238, Exhibits 32.1 is 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 20, 2012	Trig Acquisition 1, Inc.
	By:	/s/ AJ Cervantes
		AJ Cervantes
		Chief Executive Officer
		(Duly Authorized Officer, Principal
		Executive Officer and Principal Financial
		Officer)