In this Annual Report on Form 10-K (this
“Form 10-K”), references to “Trio” and to “we,” “us” and “our” refer
to Trio Merger Corp.
Introduction
Formation
Trio was incorporated on February 2, 2011
for the purpose of effecting a merger, capital stock exchange, asset acquisition or other similar business combination with one
or more businesses or entities. In connection with its formation, Trio issued an aggregate of 1,437,500 shares of common stock
for $25,000 in cash, at a purchase price of approximately $0.02 per share. On June 21, 2011, we effected a stock dividend of 0.2
shares for each outstanding share of common stock, resulting in 1,725,000 shares outstanding immediately prior to our initial public
offering. We sometimes refer to these shares as our “initial shares” and the holders of these shares immediately prior
to our initial public offering as our “initial stockholders.”
Initial Public Offering
On June 24, 2011, we closed our initial
public offering of 6,000,000 units, with each unit consisting of one share of our common stock, and one warrant, each to purchase
one share of our common stock at an exercise price of $7.50 per share. Each warrant will become exercisable upon the completion
of an initial business combination and will expire three years after the completion of an initial business combination, or earlier
upon redemption. On June 27, 2011, we consummated the sale of an additional 900,000 units which were subject to an over-allotment
option granted to the underwriters of our initial public offering. The units from the initial public offering (including the units
subject to the over-allotment option) were sold at an offering price of $10.00 per unit, generating total gross proceeds of $69,000,000.
EarlyBirdCapital, Inc. acted as the representative of the underwriters for the initial public offering. The shares of common stock
and warrants comprising the units commenced separate trading on August 2, 2011. We sometimes refer to the shares and warrants sold
in our initial public offering as the “public shares” and the “public warrants,” and to the holders thereof
as the “public stockholders” and “public warrantholders.”
Simultaneously with the consummation of
our initial public offering, we consummated the private sale of 6,500,000 warrants to our initial stockholders and 600,000 warrants
to EarlyBirdCapital, Inc. and its designees, in each case at $0.50 per warrant for an aggregate purchase price of $3,550,000. We
sometimes refer to the warrants issued to our initial stockholders as the “insider warrants” and the warrants issued
to EarlyBirdCapital, Inc. as the “EBC warrants.” The insider warrants and the EBC warrants are identical to the warrants
sold in our initial public offering, except that they are exercisable for cash or on a cashless basis, at the holders’ option,
and are not redeemable by us, in each case so long as such warrants are held by the initial purchasers or their affiliates. The
purchasers have agreed that these warrants will not be sold or transferred by them (except to certain permitted transferees) until
after we have completed an initial business combination.
Offering Proceeds Held
in Trust
Of the net proceeds from our initial public
offering, $65,660,000, plus the $3,550,000 we received from the sale of the insider warrants and EBC warrants, for an aggregate
of $69,210,000, was placed in a trust account at UBS Financial Services Inc. and JPMorgan Chase Bank, N.A., and maintained by Continental
Stock Transfer & Trust Company, acting as trustee. Except as described below, in the prospectus for our initial public offering
and in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”
these proceeds will not be released until the earlier of the completion of an initial business combination and our redemption of
100% of the outstanding public shares upon our failure to consummate a business combination by June 24, 2013.
As provided in the prospectus for our initial
public offering, in accordance with our 10b5-1 share repurchase plan which was in effect until March 14, 2012, Trio released $7,539,736
from the trust account in order to repurchase 783,145 public shares. On March 14, 2012, Trio’s board elected to terminate
the 10b5-1 share repurchase plan in order to pursue a national securities exchange listing.
Nasdaq Listing
Commencing after our initial public offering,
our common stock, warrants and units were traded on the OTCBB. Effective March 26, 2012, our common stock was listed on the NASDAQ
Capital Market. As a condition to listing, our units ceased public trading and were mandatorily separated into their component
parts (one share of common stock and one warrant to purchase one share of common stock). Our warrants continue to trade on the
OTCBB.
Merger Agreement
On December 10, 2012, Trio entered into
an Agreement and Plan of Reorganization (the “Merger Agreement”) with Trio Merger Sub, Inc., a wholly-owned subsidiary
of Trio (“Merger Sub”), SAExploration Holdings, Inc. (“SAE”) and CLCH, LLC, the holder of a majority of
SAE’s outstanding common stock and all of SAE’s outstanding Series A Preferred Stock (“CLCH”). Upon the
consummation of the transactions contemplated by the Merger Agreement, SAE will be merged with and into Merger Sub, with Merger
Sub surviving the merger and remaining a wholly-owned subsidiary of Trio. Upon the consummation of the merger contemplated by the
Merger Agreement, Trio will change its name to “SAExploration Holdings, Inc.”
SAE is a geophysical services company offering
seismic data acquisition services to the oil and gas industry in North America, South America, and Southeast Asia. SAE provides
a full range of services related to the acquisition of 2D, 3D and 3C (Multi-Component) seismic data projects on land, in transition
zones between land and water and in shallow water.
The merger is expected to be consummated
in the second quarter of 2013, after the required approval by the stockholders of Trio and the fulfillment of certain other conditions,
as described in our Current Report on Form 8-K filed on December 11, 2012 (the “Merger Form 8-K”) and in the Merger
Agreement.
The description of the Merger Agreement
and the transactions contemplated thereby contained in the Merger Form 8-K is incorporated herein by reference.
Warrant Exchange
As a condition to entering into the Merger
Agreement, SAE required that we effectuate certain changes with respect to our outstanding warrants. Accordingly, to accommodate
such requirement and induce SAE to enter into the Merger Agreement, we obtained the written consent from registered holders of
a majority of our outstanding warrants to increase the exercise price of such warrants to $12.00 per share and increase the redemption
price of such warrants to $15.00 per share. Such amendments will become effective upon consummation of the merger with SAE. Additionally,
Trio has agreed to offer holders of Trio’s warrants the right to exchange their warrants for shares of Trio common stock,
at the rate of ten warrants for one share of Trio common stock. We sometimes refer to this exchange offer as the “warrant
exchange.” The parties will seek to commence the warrant exchange as soon as practicable after the closing of the merger.
The warrantholders who consented to the amendment to the warrants also have agreed to participate in the warrant exchange with
respect to the warrants held by them. Any warrants remaining outstanding after the consummation of the warrant exchange will continue
to have the same terms as currently set forth in such warrants except as modified by the amendments to the exercise and redemption
prices described above. Additionally, the holders of the unit purchase options to purchase 600,000 units (each consisting of one
share of our common stock and one warrant) at $11.00 per unit, which were issued to the underwriters at the closing of our initial
public offering, have agreed to exchange their purchase options for an aggregate of 100,000 shares at the closing of the merger
with SAE.
Effecting a Business Combination
Fair Market Value of Target Business
The target business or businesses that we
acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account at the
time of the execution of a definitive agreement for our initial business combination, although we may acquire a target business
whose fair market value significantly exceeds 80% of the trust account balance. Trio’s board of directors determined that
this test was met in connection with its business combination with SAE.
Approval of Business Combination
Under our amended and restated certificate
of incorporation, in connection with any proposed business combination, we may either (i) seek stockholder approval of an initial
business combination at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of
whether they vote for or against the proposed business combination, or (ii) provide our stockholders with the opportunity to sell
their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote), in each case subject to the
limitations described in the prospectus for our initial public offering. Trio’s board of directors has determined to seek
stockholder approval of its business combination with SAE. Accordingly, in connection with the business combination with SAE, stockholders
may seek to convert their shares at the stockholder meeting to be called to approve the business combination. Trio will not provide
stockholders the opportunity to sell their shares to it by means of a tender offer.
Voting Restrictions in Connection with Stockholder
Meeting
In connection with the vote for the proposed
business combination with SAE, all of our initial stockholders, as well as all of our officers and directors, have agreed to vote
the initial shares as well as any shares of common stock acquired in the aftermarket in favor of such proposed business combination.
None of our officers, directors, initial
stockholders or their affiliates has purchased any shares of common stock in the open market or in private transactions. However,
at any time prior to the meeting, during a period when they are not then aware of any material nonpublic information regarding
Trio or its securities, Trio, the Trio initial stockholders, SAE or SAE’s stockholders and/or their respective affiliates
may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the business combination
with SAE, or execute agreements to purchase such shares from them in the future, or they may enter into transactions with such
persons and others to provide them with incentives to acquire shares of Trio’s common stock or vote their shares in favor
of the business combination with SAE. Trio may use the funds disbursed from the trust account upon the closing of the merger to
fund such agreements and transactions.
The purpose of such share purchases and
other transactions would be to increase the likelihood of satisfaction of the requirements that the holders of a majority of the
public shares present and entitled to vote at the meeting to be called to approve the business combination with SAE vote in its
favor and that holders of 5,620,923 or fewer of the public shares demand conversion of their public shares into cash, where it
appears that such requirements would otherwise not be met. All shares repurchased by us or our affiliates pursuant to such arrangements
would be voted in favor of the proposed business combination. As of the date of this Form 10-K, there have been no such discussions
and no agreements to such effect have been entered into with any such investor or holder.
Conversion Rights
Under our amended and restated certificate
of incorporation and in connection with the business combination with SAE, public stockholders may seek to convert their shares,
regardless of whether they vote for or against the proposed business combination, for a portion of the funds in the trust account.
Any stockholder holding public shares as
of the record date of the meeting to be called to approve such business combination who affirmatively votes against the business
combination may demand that we convert such shares into $10.00 in cash. Any stockholder holding public shares as of the record
date of such meeting who votes in favor of the business combination may demand that we convert such shares into a full pro rata
portion of the trust account (which was approximately $10.08 per share as of December 31, 2012), calculated as of two business
days prior to the anticipated consummation of the business combination. In this way, we provide a financial incentive to public
stockholders to vote in favor of the business combination with SAE, thereby making it more likely that the business combination
will be approved and consummated. If a holder properly seeks conversion as described in this section and the business combination
is consummated, we will convert these shares into $10.00 in cash or a pro rata portion of funds deposited in the trust account,
as applicable.
Notwithstanding the foregoing, a public
stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group”
(as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking conversion rights with respect to more than
12.5% of the public shares. Accordingly, all public shares in excess of 12.5% held by a public stockholder will not be converted
to cash.
Our initial stockholders will not have conversion
rights with respect to any shares of common stock owned by them, directly or indirectly, whether initial shares or shares purchased
by them in the aftermarket.
We may also require public stockholders,
whether they are a record holder or hold their shares in “street name,” to either tender their certificates to our
transfer agent at any time through the vote on the business combination or to deliver their shares to the transfer agent electronically
using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. There is a
nominal cost associated with this tendering process and the act of certificating the shares or delivering them through the DWAC
system. The transfer agent will typically charge the tendering broker $45 and it would be up to the broker whether or not to pass
this cost on to the converting stockholder. In the event the proposed business combination is not consummated this may result in
an increased cost to stockholders.
Any request to convert such shares once
made, may be withdrawn at any time up to the vote on the proposed business combination. Furthermore, if a holder of a public share
delivered his certificate in connection with an election of their conversion and subsequently decides prior to the applicable date
not to elect to exercise such rights, he may simply request that the transfer agent return the certificate (physically or electronically).
If the initial business combination is not
approved or completed for any reason, then our public stockholders who elected to exercise their conversion rights will not be
entitled to convert their shares into $10.00 or a full pro rata portion of the trust account, as applicable, in connection with
the initial business combination. In such case, we will promptly return any shares delivered by public holders.
Liquidation if No Business Combination
Under our amended and restated certificate
of incorporation, if we do not complete the business combination with SAE or another initial business combination by June 24, 2013,
we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than
five business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to an
amount described below, which redemption will completely extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve
and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law.
If the merger with SAE or another proposed
business combination that Trio presents to its stockholders for approval ultimately is not completed, the public stockholders that
either voted against the last proposed business combination before redemption or did not vote on such business combination or sought
to sell their shares to us in any tender offer commenced in connection with such proposed business combination shall be entitled
to receive only $10.00 per share, and those public stockholders who either voted for the proposed business combination or did not
seek to sell their shares to us in any tender offer and continued to hold their shares until redemption shall be entitled to receive
a pro rata share of the trust account (which is approximately $10.08 per share as of December 31, 2012) plus any additional pro
rata interest earned on the funds held in the trust account and not released to us for our working capital requirements or necessary
to pay our taxes.
Each of our initial stockholders has agreed
to waive its rights to participate in any distribution from our trust account or other assets with respect to the initial shares.
There will be no distribution from the trust account with respect to our warrants, which will expire worthless if we are liquidated.
The proceeds deposited in the trust account
could, however, become subject to the claims of our creditors which would be prior to the claims of our public stockholders. Although
we have obtained waiver agreements from certain vendors and service providers we have engaged and owe money to, and the prospective
target businesses we have negotiated with, including SAE, whereby such parties have waived any right, title, interest or claim
of any kind they may have in or to any monies held in the trust account, and although we will seek such waivers from vendors we
engage in the future, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse
against the trust account notwithstanding such agreements. Eric S. Rosenfeld, our Chairman and Chief Executive Officer, has agreed,
pursuant to an agreement with us and EarlyBirdCapital, Inc. that he will be personally liable to ensure that the proceeds in the
trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by
us for services rendered or contracted for or products sold to us, but only if such a vendor or target business has not executed
such a waiver. We cannot assure you that he would be able to satisfy those obligations. Accordingly, the actual per-share redemption
price could be less than approximately $10.08, plus interest, due to claims of creditors. Additionally, if we are forced to file
a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust
account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of
third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account,
we cannot assure you we will be able to return to our public stockholders at least approximately $10.08 per share.
Our public stockholders shall be entitled
to receive funds from the trust account only in the event of our failure to complete a business combination within the required
time periods or if the stockholders seek to tender or have us convert their respective shares for cash upon a business combination
which is actually completed by us. In no other circumstances shall a stockholder have any right or interest of any kind to or in
the trust account.
Under the Delaware General Corporation Law,
stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them
in a dissolution. The portion of our trust account distributed to our public stockholders upon the redemption of 100% of our outstanding
public shares in the event we do not complete our initial business combination by June 24, 2013 may be considered a liquidation
distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the Delaware General
Corporation Law intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period
during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject
any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any
liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata
share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the
third anniversary of the dissolution.
Furthermore, if the portion of our trust
account distributed to our public stockholders upon the redemption of 100% of our public shares in the event we do not complete
our initial business combination by June 24, 2013 is not considered a liquidation distribution under Delaware law and such redemption
distribution is deemed to be unlawful, then pursuant to Section 174 of the Delaware General Corporation Law, the statute of limitations
for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case
of a liquidation distribution. If we are unable to complete a business combination within the prescribed time frame, we will (i)
cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than five business
days thereafter, redeem 100% of the outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and
(iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our
board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law
to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our
public shares as soon as reasonably possible following the expiration of the time periods described above and, therefore, we do
not intend to comply with the procedures required by Section 280 of the Delaware General Corporation Law. As such, our stockholders
could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our
stockholders may extend well beyond the third anniversary of such date.
Because we will not be complying with Section
280 of the Delaware General Corporation Law, Section 281(b) of the Delaware General Corporation Law requires us to adopt a plan,
based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may
be potentially brought against us within the subsequent 10 years. However, because we are a blank check company, rather than an
operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely
claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses.
We will pay the costs of any subsequent
liquidation from our remaining assets outside of the trust account. If such funds are insufficient, Mr. Rosenfeld has agreed to
pay the funds necessary to complete such liquidation (currently anticipated to be no more than approximately $15,000) and has agreed
not to seek repayment for such expenses.
Competition
If we succeed in effecting a business combination
with SAE, there will be, in all likelihood, intense competition from its competitors. We cannot assure you that, subsequent to
a business combination, we will have the resources or ability to compete effectively. Information regarding SAE’s competition
will be set forth in the proxy statement for the meeting to be called to approve the business combination and in other future filings.
Prior to a business combination, we may
encounter intense competition from other entities having a business objective similar to ours in identifying, evaluating and selecting
another target business. Many of these entities are well established and have extensive experience identifying and effecting business
combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than
us and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe
there may be numerous potential target businesses that we could acquire with the net proceeds of our initial public offering, our
ability to compete in acquiring certain sizable target businesses may be limited by our available financial resources.
The following also may not be viewed favorably
by certain target businesses:
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our obligation to seek stockholder approval of a business
combination or enter into a tender offer may delay the completion of a transaction;
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our obligation to convert or repurchase shares of common
stock held by our public stockholders may reduce the resources available to us for a business combination; and
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our outstanding warrants and unit purchase option, and
the potential future dilution they represent.
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In addition, if the business combination
with SAE is not completed, we will have limited period of time to negotiate and consummate another business combination. Any of
these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our management believes,
however, that our status as a public entity and potential access to the United States public equity markets may give us a competitive
advantage over privately-held entities having a similar business objective as ours in acquiring a target business with significant
growth potential on favorable terms.
Facilities
We maintain our principal executive offices
at 777 Third Avenue, 37th Floor, New York, New York 10017. The cost for this space is included in the $10,000 per-month fee Crescendo
Advisors II, LLC began charging us for general and administrative services commencing on June 24, 2011 pursuant to a letter agreement
between us and Crescendo. We believe, based on rents and fees for similar services in New York, that the fee charged by Crescendo
is at least as favorable as we could have obtained from an unaffiliated person. We consider our current office space, combined
with the other office space otherwise available to our executive officers, adequate for our current operations. As of December
31, 2012, the aggregate cash fee paid to Crescendo Advisors II was $162,000 and an additional $20,000 has been accrued. Trio will
cease to pay this fee upon the closing of the business combination with SAE. Upon consummation of the business combination with
SAE, the principal executive offices of Trio will be located at 3333 8th Street SE, 3rd floor, Calgary Alberta, T2G 3A4.
Employees
We have two executive officers. These individuals
are not obligated to devote any specific number of hours to our matters and intend to devote only as much time as they deem necessary
to our affairs. We do not intend to have any full time employees prior to the consummation of the business combination with SAE
or another business combination.
An investment in our securities involves
a high degree of risk. You should consider carefully the material risks described below, which we believe represent the material
risks related to our business and our securities, together with the other information contained in this Form 10-K, before making
a decision to invest in our securities. This Form 10-K also contains forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors,
including the risks described below.
In addition to the risks and uncertainties
set forth below, we face certain material risks and uncertainties related to the merger with SAE. In addition, if we succeed in
effecting the merger, we will face additional and different risks and uncertainties related to the business of SAE. Such material
risks will be set forth in the proxy statement that we will file with the SEC in connection with the meeting to be called to approve
the merger.
We are a development stage company with no operating
history, and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business objective.
We are a development stage company with
no operating results to date. Our business objective is to acquire an operating business; however, until such time as SAE or another
operating business is acquired, you will have no basis of evaluating the value of your investment. We have no present revenue,
and our cash and working capital as of December 31, 2012 are not sufficient to complete our planned activities for the upcoming
year. These conditions raise substantial doubt about our ability to continue as a going concern.
If we are unable to consummate a business combination,
our public stockholders may be forced to wait until June 24, 2013 or later before receiving distributions from the trust account.
We have until June 24, 2013 to complete
the business combination with SAE or another target business. We have no obligation to return funds to investors prior to such
date unless we consummate a business combination prior thereto and only then in cases where investors have sought to tender or
convert their shares. Only after the expiration of this full time period will public stockholders be entitled to distributions
from the trust account if we are unable to complete a business combination. Accordingly, investors’ funds may be unavailable
to them until after such date.
While our board of directors has decided to seek
stockholder approval of the business combination with SAE, if such business combination is not consummated, our public stockholders
may not be afforded an opportunity to vote on another proposed business combination.
While our board of directors has decided
to seek stockholder approval of the business combination with SAE, if such business combination is not consummated, in connection
with another proposed business combination, we will either (i) seek stockholder approval of an initial business combination at
a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for or
against the proposed business combination, or (ii) provide our stockholders with the opportunity to sell their shares to us by
means of a tender offer (and thereby avoid the need for a stockholder vote), in each case subject to the limitations described
elsewhere in this Form 10-K and the prospectus for our initial public offering. Accordingly, it is possible that we will consummate
an initial business combination even if holders of a majority of our public shares do not approve of the business combination we
consummate. The decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders
to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors
such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval.
In connection with the business combination with
SAE, we will issue shares of common stock and debt securities, which will reduce the equity interest of our stockholders and cause
a change in control of our ownership.
Our amended and restated certificate of
incorporation authorize the issuance of up to 55,000,000 shares of common stock, par value $.0001 per share, and 1,000,000 shares
of preferred stock, par value $.0001 per share. There are 31,958,145 authorized but unissued shares of common stock available for
issuance (after appropriate reservation for the issuance of the shares upon full exercise of our outstanding warrants and unit
purchase options). Upon consummation of the business combination with SAE, we have agreed to issue 6,448,413 shares of common stock
(and up to 992,064 additional shares if certain EBITDA targets are achieved by the combined company) and a promissory note for
$17,500,000 to the holders of SAE’s common stock, as well as a cash payment of $7,500,000 to SAE’s common stockholders
and a cash payment of $5,000,000 to SAE’s Series A preferred stockholder.
Furthermore, if the business combination
with SAE is not consummated, in connection with another business combination, we may issue a substantial number of shares of common
stock or shares of preferred stock, or a combination of shares of common stock and shares of preferred stock, to complete such
business combination. The issuance of shares of common stock or preferred stock:
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may significantly reduce the equity interest of our existing
investors;
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may subordinate the rights of holders of shares of common
stock if we issue shares of preferred stock with rights senior to those afforded to our shares of common stock;
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may cause a change in control if a substantial number
of shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards,
if any, and could result in the resignation or removal of our present officers and directors; and
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may adversely affect prevailing market prices for our
shares of common stock.
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Similarly, if we issue debt securities,
it could result in:
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default and foreclosure on our assets if our operating
revenues after a business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness
even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain
financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest,
if any, if the debt security is payable on demand; and
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our inability to obtain necessary additional financing
if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding.
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Notwithstanding the foregoing, prior to
the consummation of our initial business combination, we may not issue any shares of common stock or any securities convertible
into common stock or any securities which participate in or are otherwise entitled in any manner to any of the proceeds in the
trust account.
The funds held in the trust account have not earned
significant interest and, as a result, we have been forced to rely on loans from our initial stockholders to complete our business
combination with SAE (or to fund our search for another target business and complete a business combination with such business).
Our initial stockholders are not obligated to provide any additional loans.
As of December 31, 2012, we had approximately
$8,400 available to us outside the trust account to fund our working capital requirements; however, we also had approximately $905,700
in payables. We are permitted to withdraw interest being earned on the proceeds held in the trust account to provide us with additional
working capital to complete our business combination with SAE (or to identify one or more other target businesses and to complete
our initial business combination with such businesses), as well as to pay any tax obligations that we may owe. However, interest
rates on permissible investments for us have been less than 0.2% over the last several months. Accordingly, the funds held outside
of the trust account and the interest earned on the funds held in the trust account have not been sufficient to finance our operations
to date and, as of December 31, 2012, we have borrowed $300,000 from Eric S. Rosenfeld, our chairman and chief executive officer,
on substantially the terms described below. It is likely that we will need to borrow additional funds from our officers, directors,
initial stockholders or their affiliates prior to the completion of a business combination. Our officers, directors, initial stockholders
or their affiliates may, but are not obligated to, loan us such funds, from time to time or at any time, in whatever amount they
deem reasonable in their sole discretion for our working capital needs. Each loan would be evidenced by a promissory note. The
notes would either be paid upon consummation of our initial business combination, without interest, or, at the holder’s discretion,
up to $500,000 of the notes (an additional $200,000 in excess of the $300,000 already issued to Mr. Rosenfeld) may be converted
into warrants at a price of $0.50 per warrant. If our officers, directors, initial stockholders and their affiliates decline to
make such further loans, we may be forced to cease our efforts to complete the business combination with SAE or search for another
target business.
If third parties bring claims against us, the proceeds
held in trust could be reduced and the per-share redemption price received by stockholders may be less than $10.08.
Our placing of funds in trust may not protect
those funds from third party claims against us. Although we will seek to have all vendors and service providers we engage and prospective
target businesses we negotiate with execute agreements with us waiving any right, title, interest or claim of any kind in or to
any monies held in the trust account for the benefit of our public stockholders, they may not execute such agreements. Furthermore,
even if such entities execute such agreements with us, they may seek recourse against the trust account. A court may not uphold
the validity of such agreements. Accordingly, the proceeds held in trust could be subject to claims which could take priority over
those of our public stockholders. If we are unable to complete a business combination within the required time periods, Eric S.
Rosenfeld has agreed that he will be personally liable to ensure that the proceeds in the trust account are not reduced by the
claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted
for or products sold to us, but only if such a vendor or prospective target business does not execute such a waiver. However, he
may not be able to meet such obligation. Therefore, the per-share distribution from the trust account in such a situation may be
less than the $10.08 per share held in the trust account as of December 31, 2012, plus any additional interest, due to such claims.
Additionally, if we are forced to file a
bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, or if we otherwise enter compulsory
or court supervised liquidation, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may
be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
To the extent any bankruptcy claims deplete the trust account, we may not be able to return to our public stockholders at least
the $10.08 per share held in the trust account as of December 31, 2012.
Our stockholders may be held liable for claims by
third parties against us to the extent of distributions received by them.
Under our amended and restated certificate
of incorporation provides that we will continue in existence only until June 24, 2013. If we have not completed a business combination
by such date, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but
not more than five business days thereafter, redeem 100% of the outstanding public shares, which redemption will completely extinguish
public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject
to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining
stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations
under Delaware law to provide for claims of creditors and the requirements of other applicable law. We cannot assure you that we
will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable
for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well
beyond the third anniversary of the date of distribution. Accordingly, we cannot assure you that third parties will not seek to
recover from our stockholders amounts owed to them by us.
If we are forced to file a bankruptcy case
or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could
be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent
conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore,
because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after expiration of
the deadlines set forth above, this may be viewed or interpreted as giving preference to our public stockholders over any potential
creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed as having breached their
fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of
punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure
you that claims will not be brought against us for these reasons.
If we do not maintain a current and effective prospectus
relating to the shares of common stock issuable upon exercise of the warrants, public holders who do not elect to exchange their
warrants in the warrant exchange that will commence shortly after the proposed merger with SAE is completed will only be able to
exercise such warrants on a “cashless basis.”
If a warrantholder does not elect to exchange
their warrants in the warrant exchange that will commence shortly after the consummation of the proposed merger between Trio and
SAE, and we do not maintain a current and effective prospectus relating to the shares of common stock issuable upon exercise of
the public warrants at the time that holders wish to exercise such warrants, such holder will only be able to exercise its warrants
on a “cashless basis” pursuant to the exemption provided by Section 3(a)(9) of the Securities Act of 1933. As a result,
the number of shares of common stock that holders will receive upon exercise of the public warrants will be fewer than it would
have been had such holder exercised his warrants for cash. Under the terms of the warrant agreement, we have agreed to use our
best efforts to meet these conditions and to maintain a current and effective prospectus relating to the shares of common stock
issuable upon exercise of the warrants until the expiration of the warrants. However, we cannot assure you that we will be able
to do so. If we are unable to do so, the potential “upside” of the holder’s investment in our company may be
reduced.
Investors who elect not to exchange their warrants
in the warrant exchange that will commence shortly after the proposed merger with SAE is completed will only be able to exercise
their warrants if the issuance of shares of common stock upon such exercise has been registered or qualified or is deemed exempt
under the securities laws of their states of residence.
No public warrants will be exercisable for
cash and we will not be obligated to issue shares of common stock unless the shares of common stock issuable upon such exercise
has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the
warrants. If a warrantholder does not elect to exchange their warrants in the warrant exchange that will commence shortly after
the consummation of the proposed merger between Trio and SAE, and the shares of common stock issuable upon exercise of the warrants
are not qualified or exempt from qualification in the jurisdictions in which the holder resides, the warrants may be deprived of
any value, the market for the warrants may be limited and they may expire worthless if they cannot be sold.
We amended the exercise price and redemption price
of the warrants by written consent of a majority of the registered holders, effective upon the completion of the business combination
with SAE. We may further amend the terms of the warrants in a way that may be adverse to holders with the approval by the holders
of a majority of the then outstanding warrants.
Our warrants are issued in registered form
under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement
provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective
provision. The warrant agreement requires the approval by the holders of a majority of the then outstanding warrants (including
the insider warrants and EBC warrants) in order to make any change that adversely affects the interests of the registered holders.
In accordance with this provision, pursuant to a written consent from registered holders of a majority of Trio’s outstanding
warrants, we amended the warrants to increase the exercise price of such warrants to $12.00 per share and increase the redemption
price of such warrants to $15.00 per share, effective upon the completion of the business combination with SAE. We may further
amend the terms of the warrants in a manner adverse to a holder if the holders of a majority of the warrants approve of such amendment.
If we do not complete the business combination with
SAE, since we are not limited to a particular industry or target business with which to complete a business combination, we are
unable to currently ascertain the merits or risks of the industry or business in which we may ultimately operate.
If we do not complete the business combination
with SAE, we may consummate a business combination with a company in any region or industry we choose. Accordingly, if we do not
complete the business combination with SAE, there is no current basis for you to evaluate the possible merits or risks of the particular
industry in which we may ultimately operate or the target business which we may ultimately acquire. To the extent we complete a
business combination with a financially unstable company or an entity in its development stage, we may be affected by numerous
risks inherent in the business operations of those entities. If we complete a business combination with an entity in an industry
characterized by a high level of risk, we may be affected by the currently unascertainable risks of that industry. Although our
management will endeavor to evaluate the risks inherent in a particular industry or target business, we cannot assure you that
we will properly ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our securities
will not ultimately prove to be less favorable than a direct investment, if an opportunity were available, in a target business.
Our ability to successfully effect a business combination
and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following
a business combination. While we intend to closely scrutinize any individuals we engage after a business combination, we cannot
assure you that our assessment of these individuals will prove to be correct.
Our ability to successfully effect a business
combination is dependent upon the efforts of our key personnel. We believe that our success depends on the continued service of
our key personnel, at least until we have consummated our business combination with SAE or another initial business combination.
We cannot assure you that any of our key personnel will remain with us for the immediate or foreseeable future. In addition, none
of our officers are required to commit any specified amount of time to our affairs (although we expect them to devote approximately
10 hours per week to our business) and, accordingly, they will have conflicts of interest in allocating management time among various
business activities, including completing the business combination with SAE or, if such business combination is not completed,
identifying another potential business combination and monitoring the related due diligence. We do not have employment agreements
with, or key-man insurance on the life of, any of our officers. The unexpected loss of the services of our key personnel could
have a detrimental effect on us.
If we consummate the business combination
with SAE, Eric S. Rosenfeld, our chief executive officer, and David D. Sgro, our chief financial adviser, will remain as members
of our board of directors and Arnaud Ajdler, one of our initial stockholders, will become a member of the board. If the business
combination with SAE is not completed, the role of our key personnel after a business combination cannot presently be ascertained.
Although Messrs. Rosenfeld, Sgro and Ajdler will serve as directors following the business combination with SAE (and some of our
key personnel may serve in senior management or advisory positions following another business combination, if the business combination
with SAE is not completed), most of the management of SAE (or of another target business, if the business combination with SAE
is not completed) will remain in place. While we have closely scrutinized the individuals from SAE who will remain in senior management
and advisory positions after the business combination with SAE, we cannot assure you that our assessment of these individuals will
prove to be correct. These individuals are not familiar with the requirements of operating a public company which could cause us
to have to expend time and resources helping them become familiar with such requirements. This could be expensive and time-consuming
and could lead to various regulatory issues which may adversely affect our operations. Similar risks could arise with individuals
that remain in senior management and advisory positions after another business combination, if the business combination with SAE
is not completed.
Our officers and directors may not have significant
experience or knowledge regarding the jurisdiction or industry of the target business we may seek to acquire.
SAE operates in the seismic data acquisition
industry in the U.S. and certain foreign markets. We cannot assure you that our officers and directors have enough experience or
sufficient knowledge relating to SAE or its industry to make an informed decision regarding the business combination with SAE,
and we did not engage consultants or advisors with experience in the industry. Accordingly, our management may not have properly
analyzed the risks attendant with SAE’s business. While our board of directors believes that the business combination with
SAE is in our stockholders’ best interest, as a result of the foregoing, the business combination with SAE may not prove
to be so. If we do not complete the business combination with SAE, we may consummate a business combination with a target business
in any geographic location or industry we choose and, therefore, similar risks may arise. If we become aware of another potential
business combination outside of the geographic location or industry where our officers and directors have their most experience,
our management may determine to retain consultants and advisors with experience in such industries to assist in the evaluation
of such business combination and in our determination of whether or not to proceed with such a business combination. However, our
management is not required to engage such consultants and advisors in any situation.
If the business combination with SAE is not completed
and we enter into a business combination with another target business, our key personnel may negotiate employment or consulting
agreements with a target business in connection with another business combination. These agreements may provide for them to receive
compensation following a business combination and as a result, may cause them to have conflicts of interest in determining whether
a particular business combination is the most advantageous.
Our key personnel have not entered into
any employment or consulting agreements with us or SAE in connection with the proposed business combination with SAE. However,
if the business combination with SAE is not completed and we enter into a business combination with another target business, our
key personnel will be able to remain with the company after the consummation of a business combination only if they are able to
negotiate employment or consulting agreements or other appropriate arrangements in connection with the business combination. Such
negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals
to receive compensation in the form of cash payments and/or our securities for services they would render to the company after
the consummation of the business combination. The personal and financial interests of such individuals may influence their motivation
in identifying and selecting a target business.
Our officers and directors will allocate their time
to other businesses thereby potentially limiting the amount of time they devote to our affairs.
Our officers and directors are not required
to commit their full time to our affairs, which could create a conflict of interest when allocating their time between our operations
and their other commitments. We presently expect each of our employees to devote such amount of time as they reasonably believe
is necessary to our business. We do not intend to have any full time employees prior to the consummation of our initial business
combination. All of our officers and directors are engaged in several other business endeavors and are not obligated to devote
any specific number of hours to our affairs. If our officers’ and directors’ other business affairs require them to
devote more substantial amounts of time to such affairs, it could limit their ability to devote time to our affairs and could have
a negative impact on our ability to consummate our initial business combination.
Our officers, directors and their respective affiliates
may in the future become affiliated with entities engaged in business activities similar to those intended to be conducted by us
and accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Our officers and directors may in the future
become affiliated with entities, including other “blank check” companies, engaged in business activities similar to
those intended to be conducted by us. Additionally, our officers and directors may become aware of business opportunities which,
if the business combination with SAE is not completed, may be appropriate for presentation to us and the other entities to which
they owe fiduciary duties. As a result, a potential target business may be presented to another entity prior to its presentation
to us and this may negatively impact our ability to complete a business combination.
Our officers’ and directors’ personal
and financial interests may influence their motivation in determining whether a particular target business is appropriate for a
business combination.
All of our officers and directors own initial
shares. Such individuals have waived their right to receive distributions from the trust account with respect to their initial
shares if we are unable to consummate a business combination. Accordingly, the initial shares, as well as the insider warrants,
and any warrants purchased by our officers or directors in the aftermarket will be worthless if we do not consummate a business
combination with SAE or another target business. The personal and financial interests of our directors and officers may have influenced
their motivation in entering into a business combination with SAE and may influence their motivation in timely identifying and
selecting a target business and completing another business combination if the business combination with SAE is not completed.
Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target business may result
in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate
and in our stockholders’ best interest.
Unless we complete a business combination with SAE
or another target business, our officers, directors, initial stockholders and their affiliates will not receive reimbursement for
any out-of-pocket expenses they incur on our behalf if such expenses exceed the available funds held outside of the trust and the
interest income that may be released to us to fund our expenses relating to investigating and selecting a target business and other
working capital requirements. Therefore, they may have a conflict of interest in determining whether a particular target business
is appropriate for a business combination and in the public stockholders’ best interest.
Our officers, directors, initial stockholders
and their affiliates will be entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities
on our behalf, such as identifying and investigating possible business targets and business combinations. However, they will not
receive such reimbursement to the extent that such expenses exceed the amount held outside of the trust account and interest income
on the trust account balance that may be released to us to fund our expenses relating to investigating and selecting a target business
and other working capital requirements. These individuals have negotiated the repayment of any such expenses upon completion of
the business combination with SAE, which may have caused them to view the business combination with SAE more favorably. If the
business combination with SAE is not completed, these individuals may negotiate the repayment of some or all of any such expenses
in connection with another business combination. If the target business’ owners do not agree to such repayment, this could
cause our officers and directors to view such potential business combination unfavorably. Additionally, in order to meet our working
capital needs, if the funds not held in the trust account are insufficient, our officers, directors, initial stockholders or their
affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount they deem reasonable
in their sole discretion. If we do not complete a business combination, the loans will be forgiven. As of February 21, 2013, Eric
S. Rosenfeld, our chairman of the board and chief executive officer, has made an aggregate of $300,000 of such loans. Accordingly,
the personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting
a target business and completing a business combination with SAE or another target business.
We may only be able to complete one business combination
with the proceeds of our initial public offering, which will cause us to be solely dependent on a single business which may have
a limited number of products or services.
We will acquire a single business in the
business combination with SAE. If the business combination with SAE is not completed, we still may only be able to complete one
business combination with the proceeds of our initial public offering. By consummating a business combination with only a single
entity, our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would
not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities
which may have the resources to complete several business combinations in different industries or different areas of a single industry.
Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business,
or
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dependent upon the development or market acceptance of
a single or limited number of products, processes or services.
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This lack of diversification may subject
us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon
the particular industry in which we may operate subsequent to a business combination.
Alternatively, if the business combination
with SAE is not completed and we determine to simultaneously acquire several businesses and such businesses are owned by different
sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings
of the other business combinations, which may make it more difficult for us, and delay our ability, to complete the business combination.
With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to
possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated
with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business.
If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
The ability of our stockholders to exercise their
conversion rights or sell their shares to us in a tender offer may not allow us to effectuate the most desirable business combination
or optimize our capital structure.
If the business combination with SAE is
not completed and another business combination requires us to use substantially all of our cash to pay the purchase price, because
we will not know how many stockholders may exercise conversion rights or alternatively seek to sell their shares to us in a tender
offer, we may either need to reserve part of the trust account for possible payment upon such conversion or sales, or we may need
to arrange third party financing to help fund our business transaction. In the event that the business combination involves the
issuance of our shares as consideration, we may be required to issue a higher percentage of our shares to make up for a shortfall
in funds. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher
than desirable levels. This may limit our ability to effectuate the most attractive business combination available to us.
Under the terms of the Merger Agreement,
the business combination with SAE requires us to use $7,500,000 of our cash to pay a portion of the merger consideration to the
holders of SAE’s common stock and $5,000,000 of our cash to pay the merger consideration to the holder of SAE’s Series
A preferred stock. If, because of payments made to converting stockholders and other transaction costs, there are insufficient
funds to pay the $12,500,000 cash portion of the merger consideration (and SAE has not elected to terminate the Merger Agreement
because we will have less than $30,000,000 in cash on hand immediately prior to the merger, after accounting for certain payments,
including the payments to converting stockholders), we may need to raise additional financing in order to consummate the merger.
There can be no assurance that we will be able to raise such additional financing on favorable terms or at all.
At the meeting to be called to approve the business
combination with SAE, public stockholders, together with any affiliates of theirs or any other person with whom they are acting
in concert or as a “group,” will be restricted from seeking conversion rights with respect to more than 12.5% of the
public shares.
At the meeting to be called to approve the
business combination with SAE (or at a meeting to be called to approve another business combination, if the business combination
with SAE is not completed and we determine to seek stockholder approval of such business combination), we will offer each public
stockholder (but not holders of our initial shares) the right to have his, her, or its shares of common stock converted into cash.
Notwithstanding the foregoing, a public stockholder, together with any affiliate of his or any other person with whom he is acting
in concert or as a “group” will be restricted from seeking conversion rights with respect to more than 12.5% of the
public shares. Accordingly, if you hold more than 12.5% of the public shares and a proposed business combination is approved, you
will not be able to seek conversion rights with respect to the full amount of your shares and may be forced to hold the shares
in excess of 12.5% or sell them in the open market. We cannot assure you that the value of such excess shares will appreciate over
time following a business combination or that the market price of our shares of common stock will exceed the per-share conversion
price.
We have purchased shares using trust fund proceeds
outside the safe harbor provisions of Rule 10b-18 under the Exchange Act, which could subject us to liability under the Exchange
Act. This could cause the proceeds held in the trust account to be reduced and the per-share redemption price received by stockholders
to be less than approximately $10.08.
As described elsewhere in this Form 10-K,
we were permitted to withdraw, and withdrew, trust fund proceeds to purchase shares of common stock. Such purchases were not made
under Rule 10b-18 under the Exchange Act, which provides for a safe harbor from liability for manipulation under Section 9(a)(2)
and Rule 10b-5 of the Exchange Act. Accordingly, we may be subject to liability as a result of our purchases, which could cause
the proceeds held in the trust account to be reduced and the per-share redemption price received by stockholders to be less than
approximately $10.08 per share held in the trust account as of December 31, 2012.
We may use funds in our trust account to repurchase
shares at the closing of our business combination with SAE or another target business from holders who have indicated an intention
to convert their shares.
If holders of public shares indicate an
intention to vote against the business combination with SAE (or, if the business combination with SAE is not completed, against
another proposed business combination for which we seek stockholder approval) and/or seek conversion of their shares into cash,
we may privately negotiate arrangements to provide for the repurchase of such shares at the closing of the business combination
using funds held in the trust account provided that any such purchases will not reduce the per-share amount otherwise payable to
holders that have properly effectuated their conversion rights. We will pay no more than the pro rata portion of the trust account
to repurchase such shares (plus any fees we may need to pay an aggregator to assist us with repurchasing such shares). The purpose
of such arrangements would be to increase the likelihood of satisfaction of the requirements that the holders of a majority of
our shares of common stock outstanding vote in favor of a proposed business combination and that holders of fewer than 5,620,923
shares (approximately 91.9% of the total number of public shares currently outstanding) demand conversion of their shares into
cash where it appears that such requirements would otherwise not be met. This may result in the approval of a business combination
that may not otherwise have been possible. Additionally, as a consequence of such repurchases,
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the funds in our trust account that are so used will not be available to us after the merger; and
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the public “float” of our shares of common stock may be reduced and the number of beneficial holders of our securities
may be reduced, which may make it difficult to obtain the quotation, listing or trading of our securities on a national securities
exchange.
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Public stockholders that either vote against a proposed
initial business combination or seek to sell their shares to us in a tender offer may receive less than public stockholders that
either voted in favor of such initial business combination or did not seek to sell their shares to us in a tender offer.
At the meeting to be called to approve the
business combination with SAE (or if the business combination with SAE is not completed, at a meeting called to approve another
business combination), any public stockholder voting against such proposed business combination will be entitled to demand that
his shares be converted for $10.00 per share. In addition, any public stockholder will have the right to vote for the proposed
business combination and demand that his shares be converted for a full pro rata portion of the amount then in the trust account
(as of December 31, 2012, $10.08 per share), plus any additional pro rata interest earned on the funds held in the trust account
and not released to us or necessary to pay our taxes.
If we are unable to complete an initial
business combination within the required time periods and are forced to redeem the then outstanding public shares and we previously
presented a proposed business combination to public stockholders, public stockholders that either voted against the last proposed
business combination before redemption, or did not vote on such business combination, or sought to sell their shares to us in any
tender offer commenced in connection with such proposed business combination shall be entitled to receive only $10.00 per share,
and those public stockholders who either voted for the proposed business combination or did not seek to sell their shares to us
in any tender offer and continued to hold their shares until redemption shall be entitled to receive a pro rata share of the trust
account (as of December 31, 2012, $10.08 per share) plus any additional pro rata interest earned on the funds held in the trust
account and not released to us for our working capital requirements or necessary to pay our taxes.
The foregoing provides a financial incentive
to public stockholders to vote in favor of any proposed initial business combination and potentially to not seek to sell their
shares to us in a tender offer. Accordingly, this may make it more likely that we will be able to consummate our initial business
combination.
In connection with the meeting to be called to approve
the business combination with SAE, we may require stockholders who wish to convert their shares in connection with a proposed business
combination to comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion
rights prior to the deadline for exercising their rights.
In connection with the meeting to be called
to approve the business combination with SAE (or if the business combination with SAE is not completed, at a meeting called to
approve another business combination), we may require public stockholders who wish to convert their shares in connection with a
proposed business combination to either tender their certificates to our transfer agent at any time prior to the vote taken at
the stockholder meeting relating to such business combination or to deliver their shares to the transfer agent electronically using
the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System. In order to obtain a physical stock certificate,
a stockholder’s broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It
is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer
agent. However, because we do not have any control over this process or over the brokers or DTC, it may take significantly longer
than two weeks to obtain a physical stock certificate. While we have been advised that it takes a short time to deliver shares
through the DWAC System, we cannot assure you of this fact. Accordingly, if it takes longer than we anticipate for stockholders
to deliver their shares, stockholders who wish to convert may be unable to meet the deadline for exercising their conversion rights
and thus may be unable to convert their shares.
If, in connection with the meeting to be called
to approve the business combination with SAE, we require public stockholders who wish to convert their shares to comply with specific
requirements for conversion, such converting stockholders may be unable to sell their securities when they wish to in the event
that the proposed business combination is not approved.
If, in connection with the meeting to be
called to approve the business combination with SAE (or if the business combination with SAE is not completed, in connection with
a meeting called to approve another business combination), we require public stockholders who wish to convert their shares to comply
with specific requirements for conversion and such proposed business combination is not consummated, we will promptly return such
certificates to the tendering public stockholders. Accordingly, investors who attempted to convert their shares in such a circumstance
will be unable to sell their securities after the failed acquisition until we have returned their securities to them. The market
price for our shares of common stock may decline during this time and you may not be able to sell your securities when you wish
to, even while other stockholders that did not seek conversion may be able to sell their securities.
If the business combination with SAE is not consummated,
because of our limited resources and structure, other companies may have a competitive advantage and we may not be able to consummate
an attractive business combination.
If the business combination with SAE is
not consummated, we expect to encounter intense competition from entities other than blank check companies having a business objective
similar to ours, including venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many
of these entities are well established and have extensive experience in identifying and effecting business combinations directly
or through affiliates. Many of these competitors possess greater technical, human and other resources than we do and our financial
resources will be relatively limited when contrasted with those of many of these competitors. While we believe that, if the business
combination with SAE is not consummated, there are numerous potential target businesses that we could acquire with the net proceeds
of our initial public offering, our ability to compete in acquiring certain sizable target businesses will be limited by our available
financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target
businesses. Furthermore, seeking stockholder approval of a business combination or engaging in a tender offer in connection with
a business combination may delay the consummation of a transaction. Additionally, our outstanding warrants and unit purchase options,
and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. In addition, if the
business combination with SAE is not completed, we will have a limited period of time to negotiate and consummate another business
combination. Any of the foregoing may place us at a competitive disadvantage in successfully negotiating a business combination.
We may be unable to obtain additional financing,
if required, to complete a business combination or to fund the operations and growth of the target business, which could compel
us to restructure or abandon a particular business combination.
If, because of payments made to converting
stockholders and other transaction costs, there are insufficient funds to pay the $12,500,000 cash portion of the merger consideration,
and SAE has not elected to terminate the Merger Agreement because we will have less than $30,000,000 in cash on hand immediately
prior to the merger, we may need to raise additional financing. In addition, if the business combination with SAE is not completed,
we cannot ascertain the capital requirements for any particular future transaction. We may be required to seek additional financing
to complete any such transaction. Such financing may not be available on acceptable terms, if at all. To the extent that additional
financing proves to be unavailable when needed to consummate a particular business combination, we would be compelled to either
restructure the transaction or abandon that particular business combination and seek an alternative target business candidate.
In addition, if we consummate a business combination, we may require additional financing to fund the operations or growth of the
target business. The failure to secure additional financing could have a material adverse effect on the continued development or
growth of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection
with or after a business combination.
Our initial stockholders control a substantial interest
in us and thus may influence certain actions requiring a stockholder vote.
Our initial stockholders collectively own
22.0% of our issued and outstanding shares of common stock. None of our officers, directors, initial stockholders or their affiliates
has indicated any intention to purchase any shares of common stock from persons in the open market or in private transactions.
However, our officers, directors, initial stockholders or their affiliates could determine in the future to make such purchases
in the open market or in private transactions, to the extent permitted by law, in order to assist us in consummating our initial
business combination. In connection with any vote for a proposed business combination, all of our initial stockholders, as well
as all of our officers and directors, have agreed to vote their initial shares as well as any shares of common stock acquired in
the aftermarket in favor of such proposed business combination.
Our board of directors is and will be divided
into three classes, each of which will generally serve for a term of three years with only one class of directors being elected
in each year. It is unlikely that there will be an annual meeting of stockholders to elect new directors prior to the consummation
of a business combination, in which case all of the current directors will continue in office until at least the consummation of
the business combination. At the meeting to be called to approve the business combination with SAE, though we intend to retain
our “staggered” board, we intend to elect directors to all three classes, with the first class expiring at the first
annual meeting thereafter, the second class expiring at the second annual meeting thereafter, and the third class expiring at the
third annual meeting thereafter, with each class then serving for a term of three years. However, if we do not hold the meeting
or we do not elect directors at the meeting, because we have not held an annual meeting since our formation, a stockholder could
submit an application to the Delaware Court of Chancery after March 2012 to require us to hold such a meeting. This application
would be summarily approved by the Court of Chancery and such Court could then issue orders calling for the meeting to be held
and setting forth the time and place of such meeting and the record date for determination of stockholders entitled to vote at
such meeting. If there is an annual meeting, as a consequence of our “staggered” board of directors, only a minority
of the board of directors will be considered for election and our initial stockholders, because of their ownership position, will
have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to exert control at least
until the consummation of a business combination.
Our outstanding warrants and unit purchase option
and the warrants issuable upon conversion of our outstanding promissory notes, may have an adverse effect on the market price of
shares of common stock and make it more difficult to effect a business combination.
We have issued the warrants to purchase
6,900,000 shares of common stock as part of the units sold in our initial public offering, the insider warrants to purchase 6,500,000
shares of common stock and the EBC warrants to purchase 600,000 shares of common stock. We also have issued a unit purchase options
to purchase 600,000 units to the underwriters, which, if exercised, will result in the issuance of 600,000 shares and 600,000 warrants
to purchase an additional 600,000 shares. We may also issue additional warrants to our officers, directors, initial stockholders
or their affiliates upon conversion of promissory notes issued to such persons for loans made to supplement our working capital
requirements, as described elsewhere in this Form 10-K and the prospectus for our initial public offering. As of February 21, 2013,
$300,000 in promissory notes were outstanding. If the business combination with SAE is not completed, to the extent we issue shares
of common stock to effect a business combination, the potential for the issuance of a substantial number of additional shares upon
exercise of these warrants and options could make us a less attractive acquisition vehicle in the eyes of another target business.
Such securities, when exercised, will increase the number of issued and outstanding shares of common stock and reduce the value
of the shares issued to complete the business combination. Accordingly, our warrants and unit purchase option may make it more
difficult to effectuate a business combination or increase the cost of acquiring the target business. Additionally, the sale, or
even the possibility of sale, of the shares underlying the warrants or the unit purchase options could have an adverse effect on
the market price for our securities or on our ability to obtain future financing. Furthermore, if the business combination with
SAE is completed, the underwriters and the holders of the insider warrants have agreed to exchange the unit purchase options, the
insider warrants and the EBC warrants for shares of our common stock, as described above (which would result in the issuance of
810,000 shares of common stock upon completion of the exchange). If and to the extent the insider warrants or the public warrants
are exercised or the shares are issued in the warrant exchange, you may experience dilution to your holdings.
We may redeem the warrants at a time that is not
beneficial to public investors.
If a warrantholder does not elect to exchange
its warrants in the warrant exchange, we may call such warrants for redemption at any time after Trio’s stock trades at or
above $15.00 for any 20 out of 30 consecutive trading days. If we call the public warrants for redemption, public stockholders
who do not elect to exchange their warrants in the warrant exchange may be forced to accept a nominal redemption price or sell
or exercise the warrants when they may not wish to do so.
Our management’s ability to require holders
of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares of common stock upon their
exercise of the warrants than they would have received had they been able to exercise their warrants for cash.
If a warrantholder does not elect to exchange
its warrants in the warrant exchange, and we call our public warrants for redemption after the redemption criteria have been satisfied,
our management will have the option to require any holder that wishes to exercise its warrant (including any warrants held by our
initial stockholders or their permitted transferees) to do so on a “cashless basis.” If our management chooses to require
holders to exercise their warrants on a cashless basis, the number of shares of common stock received by a holder upon exercise
will be fewer than it would have been had such holder exercised his warrant for cash. This will have the effect of reducing the
potential “upside” of the holder’s investment in our company.
If our initial stockholders exercise their registration
rights with respect to their securities, it may have an adverse effect on the market price of our shares of common stock and, if
the business combination with SAE is not completed, the existence of these rights may make it more difficult to effect a business
combination with another target business.
Our initial stockholders are entitled to
make a demand that we register the resale of their initial shares at any time commencing three months prior to the date on which
their shares may be released from escrow. Additionally, the purchasers of the insider warrants and EBC warrants are entitled to
demand that we register the resale of the shares of common stock they receive in the warrant exchange at any time after we consummate
a business combination. The presence of these additional shares of common stock trading in the public market may have an adverse
effect on the market price of our securities. In addition, if the business combination with SAE is not completed, the existence
of these rights may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business,
as the stockholders of the target business may be discouraged from entering into a business combination with us or will request
a higher price for their securities because of the potential effect the exercise of such rights may have on the trading market
for our shares of common stock.
If we are deemed to be an investment company, we
may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult
for us to complete a business combination.
A company that, among other things, is or
holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, owning,
trading or holding certain types of securities would be deemed an investment company under the Investment Company Act of 1940,
as amended (“Investment Company Act”). Since we have invested the proceeds held in the trust account, it is possible
that we could be deemed an investment company. Notwithstanding the foregoing, we do not believe that our anticipated principal
activities will subject us to the Investment Company Act. To this end, the proceeds held in trust may be invested by the trustee
only in United States treasuries. By restricting the investment of the proceeds to these instruments, we intend to meet the requirements
for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act.
If we are nevertheless deemed to be an investment
company under the Investment Company Act, we may be subject to certain restrictions that may make it more difficult for us to complete
a business combination, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities.
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In addition, we may have imposed upon us
certain burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and
regulations.
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Compliance with these additional regulatory
burdens would require additional expense for which we have not allotted.
SAE is privately held, which presents certain challenges
to us, including the lack of available information about the company.
SAE is privately held and, if the business
combination with SAE is not completed, we may complete a business combination with another target business that is privately held.
Generally, very little public information exists about such companies, and we are required to rely on the ability of our management
team to obtain adequate information to evaluate the potential returns from investing in one of these companies. If we were unable
to uncover all material information about SAE (or we are unable to do so in connection with another such target business), we may
not have made a fully informed investment decision with respect to SAE (or we may not do so with respect to another such target
business), and we may lose money on our investments.
If we effect the business combination with SAE or
with another company with operations located outside of the United States, we will be subject to a variety of additional risks
that may negatively impact our business operations and financial results.
SAE’s business includes operations
in the United States and foreign jurisdictions, including Canada, Bolivia, Colombia, Peru, Brazil, New Zealand and Papua New Guinea.
If the business combination with SAE is not completed, we may effect a business combination with another target company located
outside of the United States. If the business combination with SAE or another business combination with a foreign company located
outside of the United States is completed, we will be subject to any special considerations or risks associated with companies
operating in the target business’ governing jurisdiction, including any of the following:
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rules and regulations or currency redemption or corporate withholding taxes on individuals;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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tax issues, such as tax law changes and variations in tax laws as compared to the United States;
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challenges in collecting accounts receivable;
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cultural and language differences; and
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employment regulations.
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We cannot assure you that we would be able
to adequately address these additional risks. If we were unable to do so, our operations might suffer.
If we effect a business combination with SAE or
anther company with operations located outside of the United States, the laws applicable to such company will likely govern some
or all of our material agreements and we may not be able to enforce our legal rights.
SAE’s business includes operations
in the United States and foreign jurisdictions, including Canada, Bolivia, Colombia, Peru, Brazil, New Zealand and Papua New Guinea.
If the business combination with SAE is completed or we effect a business combination with another company located outside of the
United States, the laws of the country in which SAE or such other company operates will govern almost all of the material agreements
relating to its operations in such other country. We cannot assure you that SAE or another target business will be able to enforce
any of its material agreements or that remedies will be available in this new jurisdiction. The system of laws and the enforcement
of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability
to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities
or capital. Additionally, after the business combination with SAE, a substantial portion of its assets will be located outside
of the United States. Furthermore, if the business combination with SAE is not completed and we acquire another company located
outside of the United States, it is likely that substantially all of our assets would be located outside of the United States and
a majority of our officers and directors will reside outside of the United States. As a result, it may not be possible for investors
in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments
of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under Federal securities
laws.
Compliance with the Sarbanes-Oxley Act of 2002 will
require substantial financial and management resources and may increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act of
2002 requires that we evaluate and report on our system of internal controls and may require us to have such system audited by
an independent registered public accounting firm. If we fail to maintain the adequacy of our internal controls, we could be subject
to regulatory scrutiny, civil or criminal penalties and/or stockholder litigation. Any inability to provide reliable financial
reports could harm our business. A target may also not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
the adequacy of internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley
Act may increase the time and costs necessary to complete any such acquisition. Furthermore, any failure to implement required
new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes and
reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal
controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect
on the trading price of our securities.
We do not intend to pay any dividends until our
consummation of a business combination at the earliest.
We have not paid any cash dividends on our
shares of common stock to date and do not intend to pay cash dividends prior to the completion of an initial business combination.
The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and
general financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to a business
combination will be within the discretion of our board of directors at such time. It is the present intention of our board of directors
to retain all earnings, if any, for use in our business operations and, accordingly, our board of directors does not anticipate
declaring any dividends in the foreseeable future. As a result, any gain you will realize on our securities will result solely
from the appreciation of such securities.