- Quarterly Report (10-Q)

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, 2011

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.)

1472 Cedarwood Drive
Piscataway, New Jersey 08854
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: [phone]

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

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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 19, 2011.

EXPLANATORY NOTE

We have received a comment letter from the US Securities and Exchange Commission (“Commission”) dated April 1, 2011.  As of the date of this Report, we have not completed our response to those comments and have not completed our amendment to our Annual Report on the Form 10-K for the year ended June 30, 2010, which was filed on October 13, 2010.  As a result, this Quarterly Report on the Form 10-Q for the quarter ended March 31, 2011 has not reflected those changes.  We intend to amend this Form 10-Q as soon as we complete our response to the Commission’s comments and complete our amendment to the 10-K for the year ended June 30, 2010.

TRB SYSTEMS INTERNATIONAL, INC.

 

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of March 31, 2011 and June 30, 2010	3
		Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2011 and 2010	4
	Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2011 and 2010	5
		Notes to Consolidated Financial Statements	6
Item 2.		Management’s Discussion and Analysis of Financial Conditions and Results of Operations	7
Item 3.		Quantitative and  Qualitative Disclosure about Market Risk	9
Item 4 .		Controls and Procedures	9
PART II – OTHER INFORMATION
Item 6.		Exhibits	10
SIGNATURES			11

 

PART I — FINANCIAL INFORMATION

 

Item 1.  Financial Statements

 

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TRB SYSTEMS INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

		March 31, 2011			June 30, 2010
ASSETS		(unaudited)
CURRENT ASSETS
Cash		$	-				$	840
Trade accounts, net			6,512				6,512
License fee receivable			1,522,615					1,522,615
Inventory			35,768				35,768
Total Current Assets			1,564,895					1,565,735
PROPERTY AND EQUIPMENT ,  net			94,563					116,114
OTHER ASSETS
Prepaid and other assets			157,544				157,544
Total Other Assets			157,544					157,544
TOTAL ASSETS		$	1,817,002				$	1,839,393
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities		$	18,703				$	18,703
Notes and interest payable			2,077,577				1,959,665
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			2,770,826					2,652,914
Indebtedness to related party			1,337,808					1,263,520
TOTAL LIABILITIES			4,108,634				3,916,434
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value, 60,000,000 shares authorized; 33,119,922 shares
issued and outstanding as of March 31, 2011 and June 30, 2010, respectively			33,120					33,120
Additional paid in capital			3,750,488				3,750,488
Retained earnings (deficit)			(6,068,551)					(5,853,097)	)
Other comprehensive loss-foreign currency			(6,689)	)			(7,552)	)
Total Stockholders' Equity (Deficit)			(2,291,632)	)				(2,077,041)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)		$	1,817,002				$	1,839,393

See Notes to Consolidated Financial Statements

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TRB SYSTEMS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2011 AND 2010

(UNAUDITED)

			Three-Months Ended March 31,			Nine-Months Ended March 31,
			2011	2010		2011	2010
Sales		$	-	4,814	$	-	5,360
Cost of sales		-	7,549		-	8,015
	Gross Profit		-	(2,735)		-	(2,655)
Operating Expenses
	Salary expense		3,766	6,437		11,298	50,270
	Selling, general and administrative		18,824	32,987		85,750	207,184
	Total operating expenses		22,590	39,424		97,048	257,454
Net loss from operations			(22,590)	(42,159)		(97,048)	(260,109)
Other Income and Expenses
	Foreign currency translation		-	-		863	(75)
	Interest income		-	23		5	-
	Interest expense		(39,758)	(39,758)		(119,274)	(119,135)
	Bank charge		-	(111)		-	(198)
	Total other income and expenses		(39,758)	(39,892)		(118,406)	(119,408)
Net Loss Before Income Tax and Benefit		(62,348)	(82,051)		(215,454)	(379,517)
Income Tax		-	-		-	-
Net Loss	$	(62,348)	(82,051)	$	(215,454)	(379,517)
Basic and diluted earnings / (loss) income per common share		$	(0.002)	(0.003)	$	(0.007)	(0.013)
Weighted average common shares outstanding			31,119,922	29,319,922		31,119,922	29,319,922

See Notes to Consolidated Financial Statements

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TRB SYSTEMS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED MARCH 31, 2011 AND 2010

(Unaudited)

		Nine Months			Nine Months
		Ended March 31,				Ended March 31,
		2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(215,454)			$	(379,517)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			21,551				50,270
Foreign currency translation			863				(75)
Changes in operating assets and liabilities			-
(Increase) decrease in accounts receivable			-				7,316
(Increase) decrease in inventories			-				5,409
Increase (decrease) in accounts payable and accrued liabilities			-				8,721
Net cash used in operating activities			(193,040)				(307,876)
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in prepaid and other assets			-				5,259
Net cash provided by in investing activities			-				5,259
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in notes and accrued interest			117,912				119,943
Increase in indebtness to related party			74,288				182,927
Net cash provided by financing activities			192,200				302,870
Net Increase (decrease) in Cash			(840)				253
Cash at beginning of the period			840				911
Cash at End of the period		$	-			$	1,164
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid  for interest		$	119,274			$	79,516
Cash paid for income taxes		$	-			$	-

  

See Notes to Consolidated Financial Statements

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TRB SYSTEMS INTERNATIONAL, INC.

Notes to Consolidated Financial Statements

March 31, 2011

1.  UNAUDITED INFORMATION

The consolidated balance sheet of TRB Systems International Inc. (the “Company”) as of March 31, 2011, and the consolidated statements of operations for the three and nine -month period ended March 31, 2011 and 2010, have not been audited.  However, in the opinion of management, such information includes all adjustments (consisting only of normal recurring adjustments) which are necessary to properly reflect the financial position of the Company as of March 31, 2011, and the results of operations for the three and nine-months ended March 31, 2011 and 2010.

Certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, although management believes that the disclosures are adequate to make the information presented not misleading.  Interim period results are not necessarily indicative of the results to be achieved for an entire year.  These financial statements should be read in conjunction with the financial  statements and notes to financial statements included in the Company’s consolidated financial statements as filed on Form 10-K for the year ended June 30, 2010.

2.   ORGANIZATION, 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 (Tianjing) 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.

3.   PRINCIPLES OF CONSOLIDATION  

The consolidated financial statements include the accounts of TRB Systems International Inc. and its subsidiary. Significant intercompany accounts and transactions have been eliminated in consolidation.

The consolidated financial statements include TRB Systems International, Inc., non-operating company and its wholly-owned subsidiary operating outside the United States of America. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Our year end is June 30th. Our consolidated statements include the accounts of the Company and its  wholly-owned subsidiary. All significant inter-company account balances and transactions have been eliminated.

4.  EARNINGS PER SHARE

Basic earnings per share are calculated on the weighted average number of common shares outstanding during each period.  Diluted earnings per share is computed by dividing net income by the weighted average number of common shares and common stock equivalents outstanding for the period. Common stock equivalents are excluded from the computation if such inclusion would have an anti-dilutive effect.

5.  RELATED PARTY TRANSACTION

A shareholder of the Company paid expenses during the quarter ended March 31, 2011 in the amount of $20,147. The Company currently has no agreement with the shareholder and the loan bears no interest and is due on demand.

6.   SUBSEQUENT EVENT

None.

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7.  GOING CONCERN

The Company will need working capital for its future planned activity, which raises substantial doubt about its ability to continue as a going concern. Continuation of the Company as a going concern is dependent upon obtaining sufficient working capital to be successful in that effort. The management of the Company has developed a strategy, which it believes will accomplish this objective, through short term loans, and equity funding, which will enable the Company to operate for the coming year. In order to continue as a going concern, we require additional financing. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to continue as a going concern, we would likely be unable to realize the carrying value of our assets reflected in the balances set out in the preparation of the consolidated financial statements.

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 three and nine month ended March 31, 2011, 2010, the Company had net sales of $-0- and $4,814, respectively.

For the past two years, the Company has 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. If Alenax Uni-Set parts replace the conventional BB set, you can ride with six different pedaling motion. You don’t have to buy new ALENAX bike. With the advent of the 21st century, the Alenax Uni-Set brings about a revolutionary change in the bicycle bottom bracket component, by combining conventional and fitness functions in the form of six different pedaling strokes. With patents acquired in many countries, we offer our prospective marketing partners a promising opportunity to expand your markets.  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.

During the quarter ended March 31, 2011, the Company finished top quality lines of new mockup sample of Alenax Uni -Set from Chinghaur Precision Company which made it by new design lately for high quality bike market.  We are still working the X-Bike model through the Morning Star shopping sales in Korea and China, but this project is going very slowly due to their management problems.

Results of Operations

For the Three Months Ended March 31, 2011 Compared to the Same Period of 2010

Revenues

For the three months ended March 31, 2011, the Company had no sales as compared to $4,814 for the same period of the prior year.

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Cost of Sales

Cost of sales consists primarily of the material cost of goods sold, direct overhead, direct wages, and direct depreciation expense.  The Company had no cost of sales for the three months ended March 31, 2011 because there were no sales. The cost of sales for the same period of 2010 was $7,549, which exceeded sales revenue by $2,735 because of a special order.   

Operating Costs and Expenses

For the three months ended March 31, 2011, our total operating costs and expenses significantly decreased, 42.7%, from $39,424 for the three months ended March 31, 2010 to $22,590 for the same period of this year. The decrease in operating expenses was primarily due to the fact that we failed to generate sales and there were no much business operations.  In addition, during the period, the depreciation expense was decreased to $3,766 for the three months ended March 31, 2011 from $6,437 for the same period of the prior year.

Other Income and Expenses

For the three months ended March 31, 2011, our total other expenses were $39,758, which consisted of interest expense paid to promissory note-holders.  For the same period of the prior year, the total other expenses were $39,892, which also primarily consisted of $39,758 of interest expense.

Net Income (Loss)

Net loss for the three months ended March 31, 2011 were $62,348, or $0.00 per share, as compared to net loss of $82,051, or $0.00 per share, for the same period of the prior year.

For the Nine Months Ended March 31, 2011 Compared to the Same Period of 2010

Revenues

For the nine months ended March 31, 2011, the Company had no sales as compared to $5,360 for the same period of the prior year.

Cost of Sales

Cost of sales consists primarily of the material cost of goods sold, direct overhead, direct wages, and direct depreciation expense.  The Company had no cost of sales for the nine months ended March 31, 2011 because there were no sales. The cost of sales for the same period of 2010 was $8,015, which exceeded sales revenue by $2,655 because of a special order.   

Operating Costs and Expenses

For the nine months ended March 31, 2011, our total operating costs and expenses significantly decreased, 62.3%, from $257,454 for the nine months ended March 31, 2010 to $97,048 for the same period of this year.  The decrease in operating expenses was primarily due to the fact that we failed to generate sales and there were no much business operations.  In addition, during the period, the depreciation expense was decreased to $11,298 for the nine months ended March 31, 2011 from $50,270 for the same period of the prior year.

Other Income and Expenses

For the nine months ended March 31, 2011, our total other expenses were $118,406, which primarily consisted of $119,274 of interest expense paid to promissory note-holders and offset by $863 of foreign currency translation.  For the same period of the prior year, the total other expenses were $119,408, which largely consisted of $119,135 of interest expense.

Net Income (Loss)

Net loss for the nine months ended March 31, 2011 were $215,454, or $0.01 per share, as compared to net loss of $379,517, or $0.01 per share, for the same period of the prior year.

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Liquidity and Capital Resources

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

On May 04, 2010, the Company entered into an exclusive license agreement with Ssolriche Co. Ltd, licensee, for the territory of South Korea valued at $1,791,311 of which $268,696 has been paid upon signing of agreement.  The remaining balance of $1,522,616 is due in two installments within one year with the final installment being due on May 2, 2011.

As of March 31, 2011, the Company’s cash and cash equivalents balance was $-0-. For the nine months ended March 31, 2011, the Company’s net cash used in the operating activities was $193,040, primarily due to our net loss of $215,454, and partially offset by depreciation and amortization expense of $21,551.  By comparison, net cash used in operating activities was $307,896 for the same period of 2010.

For the nine months ended March 31, 2011, the Company had no investing activities and net cash provided by financing activities were $192,200, primarily consisted of increase in notes and accrued interest ($117,912) and increase in indebtness to related party ($74,288).  By comparison, for the same period of the last year, net cash provided by investing activities was $5,259 and net cash provided by financing activities were $302,870.

As of March 31, 2011, the Company had outstanding judgment in a total of $381,000 incurred in 2000-2001.

The Company lacks liquidity and has limited revenues. The Company is currently actively seeking financing, including raising capital through the issuance of equity securities or through debts. 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, 2011 there were no off-balance sheet arrangements.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, such as doubtful accounts, inventories, and impairment of long-lived assets. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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.

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Item 4.  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.   

We will give a detailed description of our deficiencies in internal controls over financial reporting when we complete our response to the commission’s comments and complete our amendment to our Annual Report on the Form 10-K for the year ended June 30, 2010.  As discussed in the Explanatory Note in this Form 10-Q, we intend to amend this Form 10-Q as soon as we complete our response to the Commission’s comments and complete our amendment to the Form 10-K for the year ended June 30, 2010.

(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.

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

Item 3. Defaults Upon Senior Securities

None

Item 4.  Removed and Reserved

Item 5. Other Information

None

 

Item 6.  Exhibits

Exhibit No.                                                

      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

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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 20, 2011

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