- Quarterly Report (10-Q)

ITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

(Mark One)

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2009

  or

 

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                         to                         

 

Commission File Number 333-07242

 

 

TRB Systems International, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware		22-3522572
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)
142 Cedarwood Drive Piscataway, New Jersey		08854
(Address of Principal Executive Offices)		(Zip Code)

 

[phone]

(Registrant’s Telephone Number, Including Area Code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

 

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

 

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

 

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x

 

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

 

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Applicable Only to Corporate Issuers

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 29,319,922 shares of common stock, par value $0.001, as of November 13, 2009.

 

TRB SYSTEMS INTERNATIONAL, INC.

 

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of September 30, 2009 and June 30, 2009	3
	Consolidated Statements of Operations for the Three Months Ended September 30, 2009 and 2008	4
	Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2009 and 2008	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Conditions and Results of Operations	9
Item 3.	Quantitative and  Qualitative Disclosure about Market Risk	11
Item 4 (T).	Controls and Procedures	11
PART II – OTHER INFORMATION
Item 6.	Exhibits	12
SIGNATURES	12

 

PART I — FINANCIAL INFORMATION

 

Item 1.  Financial Statements

 

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TRB SYSTEMS INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

		September 30, 2009			June 30, 2009
ASSETS		(Unaudited)
CURRENT ASSETS
Cash		$	12,582			$	1,580
Accounts receivable  and license fee receivable, net			3,238				10,555
Inventory			50,869				49,909
TOTAL CURRENT ASSETS			66,689				62,004
PROPERTY AND EQUIPMENT,  net			150,271				172,188
OTHER ASSETS
Prepaid and other assets			153,183				157,554
TOTAL ASSETS		$	370,143			$	391,776
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities		$	36,402			$	33,274
Notes and interest payable			1,334,364				1,294606
Advance from a customer			150,000				150,000
Convertible debt			142,611				142,611
Legal judgment payable			381,000				381,000
Corporation income tax payable			935				935
Total Current Liabilities			2,045,312				2,002,426
Indebtedness to related party			391,529				277,688
Notes and interest payable			1,703,641				1,703,641
Total Non-current Liabilities			2,095,170				1,981,329
TOTAL LIABILITIES			4,140,482				3,983,755
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value, 60,000,000 shares authorized;
29,319,922 shares issued and outstanding as of September 30, 2009 and June 30, 2009, respectively			29,320				29,320
Additional paid in capital			3,564,288				3,564,288
Accumulated deficit			(7,348,983)				(7,170,623)
Other comprehensive loss-foreign currency			(14,964)				(14,969)
Total Stockholders' Equity (Deficit)			(3,770,339)				(3,591,979)
Total Liabilities and Stockholders' Equity (Deficit)		$	370,143			$	391,776

See Notes to Consolidated Financial Statements

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TRB SYSTEMS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

(unaudited)

		Three Months Ended			Three Months Ended
		September 30,			September 30,
		2009			2008
REVENUE:
Sales		$	403			$	3,961
License and distributor revenue			0				0
Total Revenue			403				3,961
COST OF REVENUE			348				2,789
GROSS PROFIT			55				1,163
OPERATING EXPENSES:
General & administrative and selling expenses			116,710				97,073
Depreciation expense			21,917				12,500
Total operating expenses			138,627				109,573
LOSS FROM OPERATIONS			(138,572)				(108,410)
OTHER INCOME (EXPENSE)
Interest income			4				-
Interest expense			(39,758)				(39,758)
Foreign currency transaction			(34)				(150)
Total Other Income & (Expenses)			(39,788)				(39,908)
NET LOSS BEFORE INCOME TAX AND BENEFIT			(178,360)				(148,318)
Income taxes			-				-
NET LOSS		$	(178,360)			$	(148,318)
Basic and diluted loss per common share		$	(0.01)			$	(0.01)
Weighted average number of common shares outstanding :			29,319,922				26,479,922

See Notes to Consolidated Financial Statements

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TRB SYSTEMS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

(Unaudited)

		Thee months			Three-Months
		Ended Sept. 30,			Ended Sept. 30,
		2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(178,360)			$	(148,318)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			21,917				12,500
Foreign currency translation			-				(150)
Changes in operating assets and liabilities
(Increase) decrease in accounts receivable			7,317				5,121
(Increase) decrease in inventories			(960)				1,419
Increase in other current assets			4,361				-
(Increase) decrease in deferred tax asset
Increase (decrease) in accounts payable and accrued liabilities			3,128				(12,806)
Increase (decrease) in customer advance			-				17,346
Net cash used in operating activities			(142,597)				(124,888)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in prepaid and other assets			-				(70,091)
Increase indebtedness of related party			113,841				(101,492)
Net cash used in investing activities			113,841				(171,583)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions			-				232,462
Increase of notes and accrued interest			39,758				64,758
Net cash provided by financing activities			39,758				297,220
Net Increase (decrease) in Cash			11,002				749
Cash at beginning of year			1,580				2,064
Cash at End of Year		$	12,582			$	2,813

  

SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid during year for interest		$	-			$	39,758
Cash paid during year for income taxes		$	-			$	-

See Notes to Consolidated Financial Statements

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TRB SYSTEMS INTERNATIONAL, INC.

(A Development Stage Company)

Notes to Consolidated Financial Statements

September 30, 2009

1.  ORGANIZATION AND NATURE OF BUSINESS

TRB Systems International Inc. ("the Company") is a holding company incorporated in Delaware on April 11, 1997. The Company has established a new subsidiary, Alenax Parts Mfr (Tianjin) Corp. ("Alenax") to conduct business in China. Alenax was incorporated on February 22, 2005 under the laws of People's Republic of China or PROC.

The Company was established to produce and market bicycle, fitness and motorized two wheel transportation products. For the period from its inception to date, the Company has been a development stage enterprise, and accordingly, the operations have been directed primarily toward developing business strategies, raising capital, research and development activities, conducting testing of its products, exploring marketing channels and recruiting personnel.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant account policies of TRB Systems International, Inc., is presented to assist in understanding the Company's financial statements. The financial statements and the notes are the representation of the Company's management, who are responsible for their integrity and objectivity. These accounting policies conform to U.S. generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.

a.  Liquidity

As of September 30, 2009, the Company had cash and cash equivalents totaling $12,582 as compared to $2,813 as of September 30, 2008. As of September 30, 2009, the Company had working capital of $(1,978,623) compared to a working capital of $(860,374) at September 30, 2008. The Company has outstanding judgments in the amount of $ 381,000 that is unable to pay within one-year period.

The Company believes its available cash, cash equivalents, in combination with additional license and distributor payments will be sufficient to meet its anticipated capital requirements. Prior to the commercialization of its products, substantial capital resources will be required to fund continuing operations related to the Company's research, development, manufacturing and business development activities. The Company believes there may be a number of alternatives available to meet the continuing capital requirements to its operations, such as public and private financings. Further, the Company placed the first order of its products and believes that will generate new license and distributor agreements. There can be no assurance that any of these findings will be consummated in the time frames needed for continuing operations or on terms favorable to the Company. If adequate funds in the future are not available, the Company will be required to significantly curtail its operating plans and may have to sell or license out significant portions of the Company's technology or potential products, and possibly cease operations.

b. Going Concern

The Company incurred accumulated net losses of $ 7,348,983 from the period of April 11, 1997 (Date of Inception) through September 30, 2009, has recently commenced limited operations, and is rather, still in the development stages, thus raising substantial doubt about the Company's ability to continue as a going concern. The Company may seek additional sources of capital through the issuance of debt or equity financing, but there can be no assurance the Company will be successful in accomplishing its objectives.

The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company's plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Basis of Presentation

The financial statements of TRB Systems International Inc. are prepared using the accrual basis of accounting whereas revenues are recognized when earned and expenses are recognized when incurred. This basis of accounting conforms to generally accepted accounting principles in the United States of America.

d.  Principles of Consolidation

The accompanying consolidated financial statements include the accounts of TRB Systems International Inc., a non-operating holding company and Alenax Parts Mfr (Tianjin) Corp., the operating company.

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e.  Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used when accounting for certain items, such as allowances for doubtful accounts, depreciation and amortization, income taxes and contingencies. Actual results could differ from those estimates.

f.  Cash and Cash equivalents

For the purpose of the statements of cash flows, the Company considers as cash equivalents:  cash on hand, cash in banks, time deposits and all highly liquid short-term investments with maturity of three months or less.

g.  Allowance for Doubtful Accounts

The allowance for doubtful accounts is established through a charge to an expense account. The Company reserves based on experience and the risk assessed to each account.

h.  Inventories

Inventories consist of bicycles and bicycle parts. Inventories are stated at the lower of cost or market using FIFO (First In, First Out).

i.  Property and Equipment

Property and equipment are carried at cost. Depreciation of property and equipment is computed using the straight-line method for financial reporting purposes at rates based on the following estimated useful lives.

    Machinery and equipment        3-10

    Furniture and fixtures               3-10

    Engineering equipment            3-10

For federal income tax purposes, depreciation is computed using the Modified Accelerated Cost Recovery System method (MACRS) therefore temporary differences exist. Expenditures for major renewals and betterment that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs as charged to expense as incurred.

j.  Impairment of Long-Lived Assets

The Company has adopted FASB Statements No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the total fair value is less than the carrying value of the asset, a loss is recognized for the difference. Fair value is determined based on market quotes, if available, or is based on valuation techniques.

k.  Intangible Assets

Intangible assets subject to amortization include organization costs, loan closing costs, and in-force leasehold costs. Organization costs and in-force costs are being amortized using the interest method over the life of the related loan.

l.  Income Tax

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credits carry-forward. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

A valuation allowance is established to reduce the deferred tax asset if it is more likely than not the related tax benefits will not be realized in the future.

m.  Comprehensive Income

The Company adopted SFAS No. 130, Reporting Comprehensive Income, which establishes standards for the reporting and display of comprehensive income and its components in the financial statements.

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n.  Revenue Recognition

License and distributor fees are earned and recognized according to the terms of each agreement.

o.   License and Distributor Agreements

The Company's license and distributor agreements provide for compensation to be paid during the first year of the agreements and eventual royalties on the sale of the products. Terms of the agreements typically commence as of the date executed and continue for a period of three years, renewable every three years.

The Company has license agreements in the following countries: Japan, India, Nigeria & Benin, Canada, Ivory Coast, Tanzania, Brazil, Vietnam and Korea.

The Company has distributor agreements in the following states in the United States: California in Orange County and Los Angeles County, Maryland, Delaware and New York in Long Island County and Queens County.

 

Future Commitments Per Agreements

	First Year	Second Year	Third Year
Countries	(Bikes)	(Bikes)	(Bikes)	Total
Licenses
Japan	40,000	80,000	200,000	320,000
India	50,000	90,000	200,000	340,000
Nigeria & Benin	5,000	9,000	10,000	24,000
Tanzania	1,000	2,000	3,000	6,000
Vietnam	4,000	7,000	10,000	21,000
Korea	13,000	31,000	62,000	106,000
Distributors
USA
CA-Orange County	1,500	3,000	5,000	9,500
CA-LA County	3,000	5,000	7,000	15,000
Maryland & Delaware	1,000	2,000	2,840	5,840
New York
Long Island / Queens	1,000	2,000	3,000	6,000

p.  Research and Development

Research and product development costs are expensed as incurred. The Company incurred expense of $43,810 for the three-month period ended September 30, 2009 as compared to $4,206 for the same period ended September 30, 2008.

q.  Net Operating Loss Carry-forward

Income taxes are provided for the tax effects of transactions reported in the financial statements and consists of taxes currently due plus deferred taxes for operating losses that are available to offset future taxable income.

r.  Reclassification

Certain account reclassifications have been made to the financial statements of the prior year in order to conform to classifications used in the current year. These changes had no impact on previously stated financial statements of the Company.

NEW ACCOUNTING PRONOUNCEMENTS - IMPACT OF NEW ACCOUNTING STANDARDS    

The  Company  does  not  expect  the  adoption of  recently  issued  accounting pronouncements  to  have  a significant impact  on  the Company's  results  of operations, financial position, or cash flows.

3.  ACCOUNTS RECEIVABLE

Accounts Receivable represents the balance due from the License and Distributor agreements.

                                                                          

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	September 30, 2009		September 30, 2008
Accounts Receivable	$3,238		$365,194
Less: Allowance for doubtful accounts	-		-
Net Accounts Receivable	$3,238		$365,174

4. PROPERTY AND EQUIPMENT

Fixed assets are summarized by classifications as follows:

	2009
Office equipment	$77,598
Tools and machinery	79,321
Automobile	50,947
Moldings	765,823
Booth for show	137,470
Informational tapes and other promotional materials	51,695
	1,162,854
Less: Accumulated depreciation	(1,012,583)
	$150,271

5. RELATED PARTY TRANSACTIONS

ABL Properties Company (ABL), wholly owned by Byung Yim, President, CEO of TRB Systems International, Inc., and under common control with the Company, owns the patents. These patents are exclusively licensed to TRB Systems Inc, the subsidiary (TRB) for the worldwide manufacture and sale of the Transbar Power System (TPS). The timing, methodology and general details of the manufacture and sales are left to TRB, as is the design and utilization of the goods employing the technology. The rights, licensed to TRB by ABL, call for a payment of $200,000 during the first year of active sales, 1% royalty on annual sales to $10,000,000, 0.75% on sales over $10,000,000 but under $20,000,000, and 0.5% on all sales thereafter. And all profits gleaned from international sales to an aggregate limit of $3,325,000. ABL and the Company agreed to defer payment of the $200,000 until TRB Systems Inc has suitable cash flow to meet its current needs.

Any cost incurred by TRB Systems Inc. to maintain the patents and that calls for reimbursement by ABL according to the agreement, will be used as a credit toward the $200,000 license fees due to ABL on the first anniversary following the commencement of active bicycle sales. As of September 30, 2009 ABL owes the Company $144,805.

During the year Byung Yim, CEO and director of the Company made loans to the Company as the need for additional capital arose. As of September 30, 2009 the outstanding amount due was $391,529.

6.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses also include the capitalized portion of legal and consulting expenses incurred in the development of standardized contacts, promotional materials and the filling and registration of patents, and are amortized over a sixty-month period. As of September 30, 2009 the accounts payable and accrued expenses were $36,402 and $9,079, as of September 30, 2008.

7.  NOTES AND INTEREST PAYABLE

Notes payable are unsecured notes to individuals.  As of September 30, 2009, the Company had notes payable in the amount of $2,053,856 and accrued interest payable of $984,149.  Interest expense attributable to notes payable totaled $39,758 for the three-month period ended September 30, 2009.  Interest rate on the notes ranged from zero to 10%.

8.  CONVERTIBLE DEBT

The Company entered into three loan agreements, two for $50,000 on February 29, 2003 and one for $42,611 on January 17, 2003 in the total amount of $142,611. The notes are convertible into shares of the Company's common stock at a price of $1 per share at the lenders option on December 31, 2004. The notes may be required to be repaid if the value per share at the time of conversion falls below $1, at which time the Company will have to repay the face amount of the notes plus (10%) ten percent. As of September 30, 2009 the lenders have not exercised their option, management is negotiating an extension on the notes.

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9.  PENDING SUITS AND JUDGMENT

As of September 30, 2009, there are outstanding judgments in the amount of $381,000 against the Company. Management asserts that negotiations have been initiated to have the amounts reduced but the outcome of such negotiations is uncertain. Management believes the company is not in the financial position to pay these amounts within one-year period and therefore classified the legal judgments payable to long term.

The outstanding judgments consist of:

Creditors/Creditors’ attorneys		2009	2008
Cherenson, Carroll & Holzer		$44,000	$44,000
The Sawtooth Marketing Group Inc.		56,000	56,000
Hong		89,000	89,000
Bernard & Koff		192,000	192,000
	Total	$381,000	$381,000

10.  CAPITAL STOCK

The company is authorized to issue 60,000,000 at $0.001 par value share. As of September 30, 2009 the amount of voting common shares issued and outstanding are 29,319,922 and additional paid in capital of $3,564,288.

11.  NET LOSS PER SHARE

Net loss per common share for the years ended September 30, 2009 and 2008 is calculated using the weighted-average number of common shares outstanding and common shares equivalents during the periods.

12.  COMMITMENTS AND CONTINGENCIES

12.1  Lease Commitments

The Company's future annual commitments at September 30 under an operating lease for office space is $1,000 monthly on a month-to-month basis.

12.2   Litigation

As per the Company, as of September 30, 2009, there are no material actions, suits, proceedings or claims pending against or materially affecting the Company, which if adversely determined, would have a material adverse effect on the financial condition of TRB International Systems, Inc. other than the judgments in note 9.

Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                AND RESULTS OF OPERATIONS

This quarterly report on Form 10-Q and the materials incorporated herein by reference contain forward-looking statements that involve risks and uncertainties. We use words such as "may," "assumes," "forecasts," "positions," "predicts," "strategy," "will," "expects," "estimates," "anticipates," "believes," "projects," "intends," "plans," "potential," and variations thereof, regarding matters that are not historical facts and are forward-looking statements. Because these statements involve risks and uncertainties, as well as certain assumptions, actual results may differ materially from those expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date that they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

The Company conducts its business through its wholly owned subsidiary, Alenax Parts Mfr (Tianjin) Corp., which develops, markets, and manufactures a line of NMT product.

For the past two years, the Company focused its efforts on redesigning products, improving product quality, conducting product tests, including strength, durability and road tests. To date, this process is basically completed, and the Company has started to focus on market and sales of our products, but the Company has not been successful in selling its products. As a result, the Company recently changed its business plan from being a high-end bicycle manufacturer and marketer to being a bicycle part manufacturer. The Company will mainly focus on selling and marketing Uni-Set as a bike part maker. Accordingly, the name of the Company’s operating subsidiary, Alenax (Tianjin) Bicycle Corp., was

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changed to Alenax Parts Mfr (Tianjin) Corp. on December 2, 2008. However, the Company will also take orders for manufacturing /assembling completed bicycles if customers ask us to do so.

As of September 30, 2009, we have finished the complete tests for commercial level of our entire top quality lines of the Alenax Uni-Set.

Jeonnam Advanced Materials Industrialization Center of Jeonnam Technopark in Korea (“JAMIC”) has developed the newest, lighter, stronger and cheaper material “AZ 80 (mg)”. Recently we signed up with JAMIC an Occupancy Agreement.  We plan to move our R&D office into JAMIC Building in Korea and work with them as consortium business partner.

We are also (1) working with the Incheon-City in Korea for participation of a competitive bidding for the public bike. If we win, we will get an order of 50,000 public bikes worth of $10 million, (2) making the X-Bike model through The Morning Star Company, a leading fitness manufacturer in Taiwan and China, for obtaining orders from their customers and for the home shopping sales in Korea and China; and (3) working with The Nike Inc, Portland, Oregon, the Reebok, Korea and China Basket Ball Association for sales and marketing.

Results of Operations

For the Three Months Ended September 30, 2009 Compared to the Three Months Ended September 30, 2008

Revenues

For the three months ended September 30, 2009, we had total revenue of $403, as compared to $3,961 for the same period of the prior year.

Cost of Revenues

Cost of goods sold consists primarily of the material cost of goods sold, direct overhead, direct wages, and direct depreciation expense.  For the three months ended September 30, 2009 and 2008, our cost of revenues was $348 and $2,798, respectively, approximately 86.4% and 70.6% of the revenues.  

Operating Costs and Expenses

For the three months ended September 30, 2009, our total operating costs and expenses increased to $138,627, approximately 26.5%, from $109,573 for the same period of the last yea. The increase in operating expenses was primarily due to an increase in marketing and advertising expenses by an amount of $14,945 and an increase in research and development expenses by an amount of $39,604.

Other Income and Expenses

For the three months ended September 30, 2009, our total other expenses were $39,788, which consisted of 39,758 of interest expenses and loss of $34 from foreign currency translations.  For the same period of 2008, our total other expenses were $39,908, which consisted of 39,758 of interest expenses and loss of $150 from foreign currency translations.  

Net Loss

Net loss for the three months ended September 30, 2009 and 2008 were $178,360, or $0.01 per share, and $148,318, or $0.01 per share, respectively.

Liquidity and Capital Resources:

Since inception, our operations have been primarily funded by equity capital and unsecured short-term loans from directors and shareholders.

As of September 30, 2009, the Company’s cash and cash equivalents balance was $12,582.

For the three months ended September 30, 2009, the Company’s net cash used in operating activities was $142,597, primarily due to our net loss of $178,360, offset by increase in depreciation and amortization expense of $21,917. During the quarter, our investing activities provided net cash of $113,841 from borrowing from our related party. During the same period, our financing activities provided net cash of $39,758 from an increase in accrued interest payable.  

As disclosed on Note 9 of our Notes to Financial Statements, as of September 30, 2009, we had outstanding judgment in a total of $381,000 incurred in 2000-2001.

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The Company currently lack liquidity and has limited revenues. We will need to raise additional capital, and we are currently considering possible sources of financing, including raising capital through the issuance of equity securities.  There can be no assurance that we will be able to raise sufficient additional capital at all or on terms favorable to our stockholders or us.

Off-balance sheet arrangements:

As of September 30, 2009, there were no off-balance sheet arrangements.

Critical Accounting Policies:

The discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires estimates and assumptions that affect the reported amounts and disclosures. We believe the following, among others, to be critical accounting policies. That is, they are both important to the portrayal of our financial condition and results of operations, and they require critical management judgments and estimates about matters that are inherently uncertain. Although we believe our judgments and estimates are appropriate and correct, actual future results may differ from our estimates.

Revenue recognition:  We principally derive our revenue from license and distribution fees, we recognize revenue on an accrual basis as earned under contract terms in accordance with the Securities and Exchange Commission (SEC) Staff Accounting Bulletin 104.  Fees received prior to such license are reflected as deferred revenue.

Allowance for doubtful accounts :  Our allowance for doubtful accounts relates to trade accounts receivable. We perform ongoing evaluations of our customers and we extend or limit credit based upon payment history and the customer's current credit worthiness. The allowance for doubtful accounts is an estimate prepared by management based on analyses of historical bad debts, receivable aging, current economic trends and any specific customer collection issues that have been identified. The allowance for doubtful accounts is reviewed periodically and adjustments are recorded as deemed necessary.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

A smaller reporting company is not required to provide the information in this Item.

Item 4 (T).  Controls and Procedures

(a) Disclosure Controls and Procedures

The principal executive officer and principal financial officer of the Company has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the Company has concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective.  

(b) Changes in internal controls over financial reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.   Legal Proceedings

None

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

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Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a Vote of Security Holders

None

Item 5. Other Information

None

 

Item 6.  Exhibits

 (a)    Exhibits:

Exhibit No.                                                Title of Document

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      31.1     Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

      32.1     Certification pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TRB SYSTEMS INTERNATIONAL INC.

By:/s Byung Yim

Byung Yim, President, Chief Executive Officer and

Chief Financial Officer   

Date:   November 13, 2009

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