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TRBX TRB Systems International Inc (CE)

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Share Name Share Symbol Market Type
TRB Systems International Inc (CE) USOTC:TRBX OTCMarkets Common Stock
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 0.0002 0.00 01:00:00

- Quarterly Report (10-Q)

13/05/2010 3:39pm

Edgar (US Regulatory)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549


FORM 10-Q


(Mark One)


 

 

 

þ

 

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


For the quarterly period ended March 31, 2010

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 of incorporation)

 

(I.R.S. Employer Identification No.)


142 Cedarwood Drive
Piscataway, New Jersey 08854
(Address of principal executive offices) (Zip Code)


Registrant’s telephone number, including area code: (877) 852-3600


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


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


 

 

 

 

 

 

 

     Large accelerated filer o

 

Accelerated filer o

 

Non-accelerated filer o

 

Smaller reporting company þ

 

 

 

 

(Do not check if a smaller reporting company)

 

 


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





Applicable Only to Corporate Issuers




1



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 May 12, 2010.



 


TRB SYSTEMS INTERNATIONAL, INC.



 

PART I – FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements

3

 

 

 

 

Consolidated Balance Sheets as of March 31, 2010 and June 30, 2009

3

 

Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2010 and 2009

4

 

Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2010 and 2009

5

 

Notes to Consolidated Financial Statements

6

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Conditions and Results of Operations

10

 

 

 

Item 3.

 Quantitative and  Qualitative Disclosure about Market Risk

13

 

 

 

Item 4 (T).

Controls and Procedures

13

 

 

 

PART II – OTHER INFORMATION

 

 

 

Item 6.

Exhibits

14

 

 

 

SIGNATURES

14

 

 

 

 









 

PART I — FINANCIAL INFORMATION

 




Item 1.  Financial Statements

 



2



TRB SYSTEMS INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS



 

 

March 31, 2010

 

 

June 30, 2009

 

ASSETS

 

(Unaudited)

 

 

 

 

CURRENT ASSETS 

 

 

 

 

 

 

Cash 

 

1,164

 

 

1,580 

 

Accounts receivable, net 

 

 

3,239

 

 

 

10,555 

 

Inventory 

 

 

44,500

 

 

 

49,909 

 

    TOTAL CURRENT ASSETS 

 

 

48,903

 

 

 

62,004 

 

 

 

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT,  net  

 

 

121,918

 

 

 

172,188 

 

 

 

 

 

 

 

 

 

 

OTHER ASSETS 

 

 

 

 

 

 

 

 

Prepaid and other assets 

 

 

152,285

 

 

 

157,554 

 

TOTAL ASSETS 

 

323,106

 

 

391,776 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

CURRENT LIABILITIES 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities 

 

41,995

 

 

33,279 

 

Notes and interest payable 

 

 

1,413,880

 

 

 

1,294,606 

 

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 

 

 

2,130,421

 

 

 

2,002,431 

 

 

 

 

 

 

 

 

 

 

Indebtedness to related party 

 

 

460,615

 

 

 

277,688 

 

Notes and interest payable 

 

 

1,703,641

 

 

 

1,703,641 

 

   Total Non-current Liabilities

 

 

4,294,677

 

 

 

1,981,329

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES 

 

 

4,294,677

 

 

 

3,983,760 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Common stock, $0.001 par value, 60,000,000 shares authorized; 

 

 

 

 

 

 

 

 

29,319,922 shares issued and outstanding as of March 31, 2010 and June 30, 2009, respectively 

 

 

29,320

 

 

 

29,320 

 

Additional paid in capital 

 

 

3,564,288

 

 

 

3,564,288 

 

Accumulated deficit 

 

 

(7,550,140)

 

 

 

(7,170,623)

)

Other comprehensive loss-foreign currency 

 

 

(15,039)

)

 

 

(14,969)

)

    Total Stockholders' Equity (Deficit)

 

 

(3,971,571)

)

 

 

(3,591,984)

 

 

 

 

 

 

 

 

 

 

    Total Liabilities and Stockholders' Equity (Deficit)

 

323,106

 

 

391,776 

 




See Notes to Consolidated Financial Statements







3



TRB SYSTEMS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)



 

 

 

 

 

 

 

Three-Months Ended March 31,

 

Nine-Months

Ended March 31,

 

 

 

2010

2009

 

2010

2009

 

 

 

(Restated)

 

 

(Restated)

 

 

 

 

 

 

 

Sales

$

4,814

531

$

5,360

8,026

Cost of sales

 

7,549

346

 

8,015

5,766

 

Gross Profit

 

(2,735)

185

 

(2,655)

2,260

Operating Expenses

 

 

 

 

 

 

 

Salary expense

 

11,578

20,023

 

38,514

45,499

 

Selling, general and administrative

 

27,846

50,926

 

218,940

192,603

 

Total operating expenses

 

39,424

70,949

 

257,454

238,102

 

 

 

 

 

 

 

 

Net loss from operations

 

(42,159)

(70,764)

 

(260,109)

(235,842)

 

 

 

 

 

 

 

 

Other Income and Expenses

 

 

 

 

 

 

 

Foreign currency translation

 

-

146

 

975)

(4)

 

Interest income

 

(23)

1

 

-

8

 

Interest expense

 

(39,758)

(39,757)

 

(119,135)

(119,273)

 

Bank charge

 

(111)

(28)

 

(198)

(28)

 

Total other income and expenses

 

(39,892)

(39,638)

 

(119,408)

(119,297)

 

 

 

 

 

 

 

 

Net Loss Before Income Tax and Benefit

 

(82,051)

(110,402)

 

(379,517)

(355,139)

 

 

 

 

 

 

 

 

Income Tax

 

-

-

 

-

-

 

 

 

 

 

 

 

 

Net Loss

$

(82,051)

(110,402)

$

(379,517)

(355,139)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings / (loss) income per common share

$

(0.00)

(0.00)

$

(0.01)

(0.01)

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

29,319,922

29,319,922

 

29,319,922

26,509,922













See Notes to Consolidated Financial Statements



4



TRB SYSTEMS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(Unaudited)



  

 

Nine Months

 

 

Nine Months

 

 

 

Ended March 31,

 

 

Ended March 31,

 

  

 

2010

 

 

2009

 

 

 

 

 

 

(Restated)

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(379,517)

 

 

(355,139)

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

50,270

 

 

 

37,500

 

       Foreign currency translation

 

 

(75)

 

 

 

23,614

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

      (Increase) decrease in accounts receivable

 

 

7,316

 

 

 

5,121

 

(Increase) decrease in inventories

 

 

5,409

 

 

 

(1,804)

 

Increase (decrease) in customer advance

 

 

-

 

 

 

16,845

 

Increase (decrease) in accounts payable and accrued liabilities

 

 

8,721

 

 

 

(8,848)

 

Net cash used in operating activities

 

 

(307,876)

 

 

 

(282,711)

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Increase (decrease) in prepaid and other assets

 

 

5,259

 

 

 

(59,159)

 

Decrease in  indebtedness of related party

 

 

-

 

 

 

(104,727)

 

    Net cash provided by (used) in investing activities

 

 

5,259

 

 

 

(163,886)

 

  

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Increase in paid in capital

 

 

-

 

 

 

326,171

 

Decrease in common stock subscription

 

 

-

 

 

 

(25,000)

 

Increase in notes and accrued interest

 

 

119,943

 

 

 

143,273

 

Increase in director’s loans

 

 

182,927

 

 

 

-

 

Net cash provided by financing activities

 

 

302,870

 

 

 

445,444

 

 

 

 

 

 

 

 

 

 

 Net Increase (decrease) in Cash

 

 

253

 

 

 

(1,153)

 

 

 

 

 

 

 

 

 

 

 Cash at beginning of year

 

 

911

 

 

 

2,064

 

  

 

 

 

 

 

 

 

 

Cash at End of Year

 

$

1,164

 

 

911

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW DISCLOSURE:

 

 

 

 

 

 

 

 

Cash paid during year for interest

 

$

79,516

 

 

$

119,135

 

 

 

 

 

 

 

 

 

 

Cash paid during year for income taxes

 

$

-

 

 

$

-

 


  




See Notes to Consolidated Financial Statements





5



TRB SYSTEMS INTERNATIONAL, INC.

Notes to Consolidated Financial Statements

March 31, 2010



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 (Tianjin) Bicycle 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. On December 22, 2008, Alenax’s name was changed to Alenax Parts Mfr. (Tianjin) Corp.


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 March 31, 2010, the Company had cash and cash equivalents totaling $1,164 compared to $911 at March 31, 2009.  As of March 31, 2010, the Company had working capital deficiency of $(2,081,518) compared to a working capital of $(442,025) at March 31, 2009. The Company has outstanding judgments in the amount of $381,000 that is unable to pay within one-year period.

 

b. Going Concern


The Company incurred accumulated net losses of $ 7,550,140 from the period of April 11, 1997 (Date of Inception) through March 31, 2010 and has recently commenced limited operations, 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.


c. 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.


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



6



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.




7



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.


 

 

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 $10,320 for the three-month period ended March 31, 2010 as compared to $0 for the same period ended March 31, 2009.


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.


s. New Accounting Pronouncements and 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 flow.


3.  ACCOUNTS RECEIVABLE


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




8






 

March 31, 2010

 

March 31, 2009

Accounts Receivable

$3,239 

 

$365,174 

Less: Allowance for doubtful accounts

 

Net Accounts Receivable

$3,239 

 

$365,174 



4. PROPERTY AND EQUIPMENT


Fixed assets are summarized by classifications as follows:



 

March 31, 2010

 

 

Office equipment

$77,598

Tools and machinery

79,321

Automobile

50,947

Moldings

767,518

Booth for show

137,470

Informational tapes and other promotional materials

50,000

 

1,162,854

 

 

Less: Accumulated depreciation

     (1,040,936)

 

$121,918


5. RELATED PARTY TRANSACTIONS


ABL Properties (ABL), owned by Byung Yim, President, CEO of TRB Systems International, Inc (TRB) with 3 other persons, and under common control with the Company, owns the patents. These patents are exclusively licensed to TRB Systems International Inc 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 International Inc has suitable cash flow to meet its current needs.


Any cost incurred by TRB Systems International 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 March 31, 2010 ABL owes the Company $148,040.


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 March 31, 2010, the outstanding amount due was $460,615

.

6.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES


As of March 31, 2010 the accounts payable and accrued expenses were $41,995 and $13,037, as of March 31, 2009.


7.  NOTES AND INTEREST PAYABLE


Notes payable are unsecured notes to individuals.  As of March 31, 2010, the Company had notes payable and accrued interest in the amount of $ 3,117,521.  Interest expense attributable to notes payable totaled $119,135 for the nine-month period ended March 31, 2010.  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



9



amount of the notes plus (10%) ten percent. As of March 31, 2010 the lenders have not exercised their option, management is negotiating an extension on the notes.


9.  JUDGMENTS OUTSTANDING


As of March 31, 2010, 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

 

2010

2009

 

 

 

 

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 March 31, 2010, 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 March 31, 2010 and 2009 is calculated using the weighted-average number of common shares outstanding and common shares equivalents during the periods.


12.  INCOME TAX


The net deferred tax asset in the accompanying consolidated balance sheet includes the following components:


 

 

2010

2009

 

 

 

 

Net deferred tax asset

 

1,508,682

1,508,682

Deferred tax asset valuation allowance

 

(1,508,682)

(1,508,682)

 

 

-

-

Deferred Tax Benefit

 

-

-



13.  COMMITMENTS AND CONTINGENCIES


13.1  Lease Commitments


The Company's future annual commitments at March 31, 2010 under an operating lease for office space is $1,000 monthly on a month-to-month basis.


13.2   Litigation


As per the Company, as of March 31, 2010 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.









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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 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 March 31, 2010, 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.


After several months of negotiation, the Company finally signed a construction agreement to build Alenax bike factory in Sun Chun- City, Korea. The Woo Jong Synthesis Construction Company in Gwang Ju-City will build the Alenax bike factory with their own finance first and they will take out the construction cost after building is done through their financing.  The construction will be started upon Factory Lay-Out is done which is expected around the end of June 2010.


The Company is also focus on its marketing sides for possible sales and marketing opportunities.


Results of Operations


For the Three-Month Periods Ended March 31, 2010 and 2009


Revenues


For the three months ended March 31, 2010, we had total revenue of $4,814, as compared to $5311for the same period of the prior year.


Cost of Goods Sold


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 March 31, 2010 and 2009, our cost of goods sold was $7,549 and $346, respectively.  


Operating Costs and Expenses




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For the three months ended March 31, 2010, our total operating costs and expenses decreased $31,525, or 44%, from $70,949 for the three months ended March 31, 2009 to $39,424 for the same period of this year. The decrease in operating expenses was primarily due to decreases in marketing expense, depreciation and salary expense.


Other Income and Expenses


For the three months ended March 31, 2010, our total other expenses were $39,892, which primarily consisted of $39,758 of interest expenses.  For the same period of 2009, our total other expenses were $39,638, which consisted of $39,757 of interest expenses and gain on foreign currency translation.  


Net Loss


Net loss for the three months ended March 31, 2010 and 2009 were $82,051, or ($0.00) per share, and $110,402, or ($0.00) per share, respectively.


For the Nine-Month Periods Ended March 31, 2010 and 2009


Revenues


For the nine months ended March 31, 2009, we had total revenue of $5,360 as compared to $8,026 for the same period of the prior year.


Cost of Goods Sold


Cost of goods sold consists primarily of the material cost of goods sold, direct overhead, direct wages, and direct depreciation expense.  For the nine months ended March 31, 2010 and 2009, our cost of goods sold was $8,015 and $5,766, respectively.  


Operating Costs and Expenses


For the nine months ended March 31, 2010, our total operating costs and expenses increased to $257,454, approximately 8%, from $238,102 for the same period of the last yea. The increase in operating expenses was primarily due to an increase in depreciation expense by an amount of $12,770 and an increase in research and development expenses by an amount of $74,415 and offset by certain decrease in rent and marketing expense.


Other Income and Expenses


For the nine months ended March 31, 2010, our total other expenses were $119,408, which primarily consisted of interest expenses.  For the same period of 2009, our total other expenses were $119,297, which mainly consisted of $119,273 of interest expenses.  


Net Loss


Net loss for the nine months ended March 31, 2010 and 2009 were $379,517, or ($0.01) per share, and $$355,139, 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 March 31, 2010, the Company’s cash and cash equivalents balance was $1,164. For the nine months ended March 31, 2010, the Company’s net cash used in operating activities was $307,876, primarily due to our net loss of $379,517, offset by increase in depreciation and amortization expense of $50,270. During the nine-month period ended March 31, 2010, our investing activities provided net cash of $5,259 from decrease in prepaid and other assets. During the same period, our financing activities provided net cash of $302,8701 from loans from the Company’s directors of $182,927, and from increase in notes and accrued interest of $119,943.  


As disclosed on Note 9 of our Notes to Financial Statements, as of March 31, 2010, we had outstanding judgment in a total of $381,000 incurred in 2000-2001.




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The Company lacks liquidity and has limited revenues.  We are currently actively seeking 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 March 31, 2010, 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.


The accounting policies that we follow are set forth in Note 2 to our financial statements as included in this report.  These accounting policies conform to accounting principles generally accepted in the United States, and have been consistently applied in the preparation of the financial statements.



Item 3.  Quantitative and Qualitative Disclosures about Market Risk



Not applicable for smaller reporting companies.



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 1A. Risk Factors


Not applicable


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


Exhibit No.                                                

Title of Document


      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:   May 12, 2010




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