10-K 1 trbx10k2010filing.htm FORM 10-K UNITED STATES

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-K

(Mark One)


x

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

 

For the fiscal year ended June 30, 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 or other jurisdiction of

incorporation or organization)

  

(I.R.S. Employer

Identification Number)

 

142 Cedar Drive

Piscataway, New Jersey 08854

(Address of principal executive offices, including zip code)


(877) 852-3600

 (Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:  None


Securities registered pursuant to Section 12(g) of the Act:


Common Stock, $.001 par value




 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  YES  ¨    NO  x


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  YES  ¨    NO  x


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

 

Indicate by check mark whether the registrant has electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this



1



chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files:  The registrant has not been phased into the Interactive Data reporting system.  YES  ¨    NO  ¨


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨


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


Large accelerated filer        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  ¨    NO  x


State the aggregate market value of the voting and non-voting equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter:  Approximately $750,537.  For the purposes of determining this amount only, the registrant has defined affiliates to include: (a) the executive officers named in Part III of this Annual Report on Form 10-K; (b) all directors of the registrant; and (c) each shareholder, if any, that is the beneficial owner of 10% or more of the outstanding shares of common stock of the registrant.



(APPLICABLE ONLY TO CORPORATE REGISTRANT)


Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:  33,119,922 shares of the registrant’s common stock were outstanding as of June 30, 2010.


























2






TRB SYSTEMS INTERNATIONAL INC.


FORM 10-K


 

ITEM

  

Page

PART I

  

  

  

 1.

Business

4

  

  

 

1A.

Risk Factors

7

  

  

 

1B.

Unresolved Staff Comments

10

  

  

 

 2.

Properties

10

  

  

 

 3.

Legal Proceedings

10

  

  

 

 4.

Submission of Matters to a Vote of Security Holders

10

  

  

 

PART II

  

  

  

5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

11

  

  

 

 6.

Selected Financial Data

12

  

  

 

 7.

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

12

  

  

 

7A.

Quantitative and Qualitative Disclosures About Market Risk

15

  

  

 

 8.

Financial Statements and Supplementary Data

16

  

  

 

 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

30

  

  

 

9A(T).

Controls and Procedures

30

  

  

 

9B.

Other Information

31

  

  

 

PART III

  

  

  

 10.

Directors, Executive Officers and Corporate Governance

31

  

  

 

 11.

Executive Compensation

34

  

  

 

 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

36

  

  

 

 13.

Certain Relationships and Related Transactions, and Director Independence

37

  

  

 

 14.

Principal Accounting Fees and Services

38

  

  

 

PART IV

  

  

  

 15.

Exhibits, Financial Statement Schedules

39



3






  

PART I



Item 1.    BUSINESS


General


TRB Systems International Inc. (the "Company") was incorporated in the State of Delaware on April 9, 1997.  On February 22, 2005, the Company established a subsidiary Alenax (Tianjin) Bicycle Corp. in China to conduct its business.  On December 2, 2008, Alenax’s name was changed to Alenax Parts Mfr (Tianjin) Corp. (“Alenax”) in order to reflect its change in business position, which will primarily focus on manufacturing, marketing and selling Uni-Set as a bike part maker. However, the Company will also take orders for manufacturing /assembling completed bicycles if customers ask us to do so.


Through our wholly owned subsidiary Alenax, we develop, market, and manufacture a line of Alenax- bicycles including Alenax-Exercise Bicycle, Alenax -Electric Bicycle, and Alenax-Wheelchair (collectively "Alenax-Bicycles").  The technology applied at our Alenax products is called Natural Motion Technology (“NMT”), which we are exclusively licensed from ABL Properties Company, a company jointly owned by Mr. Byung Yim, our President and Chief Executive Officer, his family members and other individuals.


The characteristics of the NMT are similar to that used in a stepper machine, which allows the users of our Alenax Bicycles to exercise in a natural walking or jogging motion that is the bio-mechanically correct way of exercise without any trauma often associated with many alternate forms of exercise. We believe that our NMT bicycles and fitness trainers are able to provide our customers with the results they want, such as variable stroke and non-impact motion, but with much less the damage to their lower back, hips, knees, and ankles that traditional biking or jogging on pavement, may develop. We believe that our products are particularly good for elderly, because our products are not only safe and gentle, but also cardiovascular and anaerobic.


Our Products


We provide a new generation of cycling and products using our Natural Motion Technology. Our products include NMT’s bicycles, fitness/home trainers, and electric bicycles.


Alenax Bicycles:


Our major products are Alenax bicycles, which are able to provide with more smoother, up and down pumping, or stepping action, similar to our body's natural walking and running motion.


The operating principles of Alenax bicycles are relatively simple. The pedal levers travel up and down through the maximum power range that has an arc of 135 degrees.  As the lever on one side is depressed, the opposing lever is raised.  A full lever stroke or a partial stroke may be applied to propel the bicycle. Lever strokes require far less leg motion than the 360-degree movement required with a conventional bicycle.


Our study showed that Alenax bicycles are able to increase bicycles' propulsion power significantly, compared to their conventional circular pedaling models. The propelling force of the Alenax lever is constant, which is different from those conventional bicycles with variable, circular ascending and descending crank motion. The levers driving the Motion Plus Technology do not revolve. Accordingly, their length can be extended to take advantage of the power of leverage. Since the levers of Alenax bicycles do not revolve, greater ground pedal clearance over rough terrain and around turns is allowed.  Propulsion of a bicycle using the NMT results in significantly greater distance traveled, for a given expenditure of effort, than a bicycle using conventional bicycle technology.


An Alenax bicycle looks like a conventional bicycle. What makes big difference is the NMT applied on the bicycle. An Alenax with NMT bicycle has two main components: (i) Controller: this parts control the 6-different pedaling motions of the multi- function bike and (ii) Rear Hub: a dual ratcheting sprocket which is engaged by a drive chain.




4



We have introduced a line of NMT -bicycle that is propelled exclusively by the NMT. This line of NMT- bicycle is in different models with multiple sizes for men and women, and looks like popular cruisers and mountain bikes that offer comfortable upright riding. In the later stage, we will introduce adult tricycle, outdoor recumbent (reclining) bicycles, and arm/shoulder ergometers. Lightweight, higher performance bicycles will also be introduced to appeal to the performance biking community and to meet the dynamic and continually changing needs of the market.


Therapeutic market is generally driven primarily by product performance, while non-therapeutic markets are more sensitive to price.


We offer five models of NMT- bicycles: Mountain Bike (MTB); Leisure Bike, BMX (Children); ATB (all-terrain); and Cross Trading -Bike. In mass production, Alenax will offer a pedal arm in lengths of either 225 mm or 250 mm. This will increase the force of each stroke and increase speed considerably compared to the conventional pedal length of 165 to 175 mm.  We plan to focus initially on the single action, natural stepping motion in all the bikes with our proprietary multifunctional pedaling motion bikes. Our tricycle will follow within one year. We will tap the high-end professional rider market in the second phase of our business plan. We are currently conducting care research to verify the speed and efficiency of our racing prototype (i.e., longer pedal arm, therefore greater force stroke).


Most conventional bicycles are not structurally or functionally designed specifically for use of rehabilitation. Our technology may fill this huge untapped market, especially in the "middle-aged" population. The NMT configuration in NMT 's bicycle allows the rehabilitating person who uses NMT 's bicycle in a stationary mode (sitting on a stand) to transfer the natural gait motion of 135 degrees from the inside to the outdoor with the same bike (without the stand).


NMT-Fitness/Home Trainers:


Our fitness/home trainers are a natural development of our experience with physical therapists using our "outdoor bike" concept of the natural gait motion for their patients. They wanted a graded capability of ROM (Range of motion) in the stationary bike, as patients move from a narrow range of motion to a wider and eventually to the 360 degree, circular motion that they were accustomed to, in typical rehabilitative procedure. Our Versi-Trainer meets that demand with training and rehabilitative device that provides the following six different sets of exercises:


l

Alternate up and down pumping motion;

l

Simultaneous with both feet parallel to each other;

l

Bilateral-One foot pumps while the other foot rests motionless;

l

One foot pumps 360 degrees while the other foot rests motionless;

l

360-degree rotation-conventional bike pedaling-opposed pedals; and

l

Parallel pedaling-360 degree rotation.


The Versi-Trainer allows individuals to exercise their abdominals, hips (lateral rotators), quadriceps, hamstrings, and gluteus (butt) muscles. All actions are performed in the correct biomechanical positions.


NMT-Electric Bicycles:


POWER+BIKE is an outdoor bike that uses the same "up-down" motion of all the NMT- bicycles but with the ability to, with the twist of the handle, become an electric bike with speed capability of 23 mph. Our POWER+BIKE is strategically positioned, not specifically for the luxury market, which has three new entries this year Bricklin, Mercedes and Porsche. All three are designed similar to a moped, are heavy (50 lbs or more), and costly at a price between $600 and $1,200.  By comparison, NMT 's POWER+BIKE is 23 lbs, light and efficient enough, which can be pedaled comfortably in a business skirt or suit, for the senior citizen and women's market and sleek enough for the "Generation X" market appeal, sophisticated enough for the urban businessman, cool and convenient for the outdoor family and RV enthusiasts, and safe and practical for the recovering heart attack patient who wants to exercise but does not want to be stuck too far from home. With a retail cost of $600 and manufacturing costs of $200, along with the added capabilities of folding the POWER+BIKE into a POWER PACK so it can be hung upon the back of a door, NMT 's management believes the POWER+BIKE can capture a major market share within this emerging market.


Manufacturing Facility


We don't own any manufacturing facility. Currently we intend to manufacture our products through contracts with manufacturers in Korea, China or Taiwan.



5



Sale and Marketing


We plan to market our products to the following markets, both domestically and internationally:


(a)

Stepper Users: In this industry, the stepper market is one of the fastest growing segment. Our MTS-bicycles are attractive to this segment because our NMT- bicycles allow the stepper motion and muscle conditioning to be taken outdoors.


(b)

Health and Fitness Facilities: To stay competitive, commercial health and fitness facilities must offer their members with state-of-the-art equipment and programs continuously.  As a consequence, health and fitness facilities typically will spend increasingly more on equipment just to keep pace. Our recumbent ergometer (Versi-Trainer) will offer health club goers the opportunity to combine conventional circular motion with the NMT stepper motion in a single machine.


(c)

Senior Citizens: The aging population combined with the rapidly escalating cost of health care services has resulted in an intensifying concern about the efficiency and effectiveness of the U.S. health care system. As a result, there is a growing need for individuals, particularly elderly, to participate regularly in safe, functional and efficient exercise that combines aerobic conditioning and resistance training.


(d)

Rehabilitation & Therapeutic Market:  The rehabilitation and therapeutic market consists of four segments: post surgical (hip or knee); acute injury; individuals with a restrictive ROM (range of motion); and other (arthritic, biomechanical). Today, the major form of therapy for post hip and knee surgery is the conventional stationary bicycle. The 360-degree fixed stroke is limiting because initial therapy methods keep ROM within less than 120-degree of bound. This causes a time lag before the conventional 360-degree bike can be implemented. If they use our Fitness Versi-Trainer and the NMT- bicycles, they will get more favorable results.


The ROM of the NMT is variable and can accommodate all ROM restrictions, which allows patients to begin rehabilitation sooner. The biomechanical design of the NMT also puts less strain on limbs and joints by generating a force along the muscle belly, rather than at the insertion (joints). This enables patients to recover from surgery faster than with current techniques, while reducing the probability of re-injury.


Distribution Agreements


We plan to sell our products continuously through regional distributors, and we have entered into license and distribution agreements with distributors in Japan, Indian, Nigeria, Benin, Canada, Ivory Coast, Tanzania, Brazil, Vietnam, Korea, Taiwan and the United States.


Those 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. Please see Note 2 to the financial statements for details.


We intend to hire sales personnel continuously to expand our distribution channels. We also plan to look for possible alliances with existing sporting goods manufacturers. It is anticipated that we are able to market our ergometers and electric bicycles through a network of bike retailers after brand awareness and an established corporate image have been achieved.


Research and Development


We focus our R&D activities on three main product groups, a select line of bicycles, electric bicycles, and three types of exercise bicycle. For the years ended June 30, 2010 and 2009, we spent $-0- and $4,184, respectively, on our research and development activities.


Patents, Licenses and Other Intellectual Rights


ABL Properties Co., a company controlled by our president, owns patents of Natural Motion Technology which covers the speed change and/or propulsion mechanism of the NMT. ABL has obtained or patent pending such patent from the U.S., China, India, Australia, Taiwan, Japan, and Korea, Europe and Brazil. We have exclusive worldwide licensing rights under all NMT patents, except for Taiwan and South Korea.



6




Under the licensing agreement, we shall pay ABL $200,000 in the first year of our active sales, thereafter a 1% royalty on annual sales up to $10 million or 0.75% on sales over $10 million but under $20 million, and 0.5% on all sales thereafter, and all profits gleaned from international sales to an aggregate limit of $3,325,000.


Competition


We are not aware of any direct competition for the products offered by us. The general competition is the bicycle industry, which is, as aforementioned, differentiable from our NMT product line.


Government Regulations


To our best knowledge, there are no special requirements for government approval of its principal products or services, other than those generally applicable to normal business operations. We are not aware of any probable regulation of its business, other than as will apply to businesses in general.


Impact of Inflation


We do not anticipate that inflation will have a material impact on our current operations.


Employees


As of June 30, 2010, we had 12 full-time employees. We believe that we have good relations with our employees.



Item 1A.     RISK FACTORS


Our business, financial condition and operating results, or the value of any investment you make in the stock of our Company, or both, could be adversely affected by any of the factors listed and described below. These risks and uncertainties, however, are not the only ones that we face. Additional risks and uncertainties not currently known to us, or that we currently think are immaterial, may also impair our business operations or the value of your investment.


Our operations have been devoted to marketing our products and we have not launched our products to a large number of customers, making it difficult to evaluate our future prospects and results of operations.


We dedicated our resources to development and marketing our Alenax bicycles until recently and have not yet launched a product to a large number of customers. Accordingly, you should consider our future prospects in light of the risks and uncertainties experienced by early stage companies in evolving industries.  Some of these risks and uncertainties relate to our ability to:


· offer new and innovative products to attract and retain a larger customer base;

· increase awareness of our brand and continue to develop user and customer loyalty;

· respond to competitive market conditions;

· manage risks associated with intellectual property rights;

· maintain effective control of our costs and expenses;

· raise sufficient capital to sustain and expand our business;

· attract, retain and motivate qualified personnel; and

· upgrade our technology to support additional research and development of new products. 


If we are unsuccessful in addressing any of these risks and uncertainties, our business may be materially and adversely affected.


We have only recently begun production of our product and may encounter manufacturing problems during the production process, which would adversely affect our results of operations and financial condition.


Our Alenax product is a new product. The manufacture of our Alenax product involves complex and precise processes, which we have subcontracted to another company. To date, we have only initiated a limited production of this product



7



and so we do not yet know whether we will encounter any serious problems during the production process in the long-term. Any significant problems in manufacturing, assembling or testing of this product could delay the roll-out of the Alenax product and have an adverse impact on our business and prospects. The willingness of manufacturers to make the product or lack of availability of manufacturing capacity may have an adverse impact on our ability to go to market, and as a result we may not be able to grow our business as we expect, and our ability to compete could be harmed, adversely affecting our results of operations and financial condition.


We currently lack liquidity and have limited revenues. We will need to raise additional capital, which will result in substantial dilution to existing stockholders.


As of June 30, 2010 we had cash and cash equivalents of approximately $840. Substantially all of our cash has been raised through capital raising transactions rather than operations.  In order to manufacture and sell our products and to implement our business plan, we need substantial additional capital. We are currently considering possible sources for additional capital, including raising capital through the issuance of equity securities. Although the exact amount we intend to raise has not yet been determined, we are contemplating an amount in excess of $500,000. 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. If we issue equity securities in order to raise additional capital in the amounts currently contemplated, the stockholders will experience immediate and substantial dilution in their ownership percentage of the combined company. In addition, to raise the capital we need, we may need to issue additional shares at a discount to the current market price. If the terms of such financing are unfavorable to us or our stockholders, the stockholders may experience substantial dilution in the net tangible book value of their stock. In addition, any new equity securities may have rights, preferences or privileges senior to those of existing holders of common stock. If we cannot raise funds on acceptable terms, we may not be able to develop or enhance our products, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements, all of which could have a material adverse effect on us.


Our Alenax products may contain unknown defects that could result in numerous adverse consequences, resulting in costly litigation or diverting management's attention and resources.

 

As to date we have not experienced any defects in our Alenax products. However, there can be no assurance that, despite testing, defects will not be found in the current version, or in any new versions or enhancements of our products, any of which could result in damage to our reputation, the loss of sales, a diversion of our product development resources, and/or a delay in market acceptance, and thereby materially adversely affecting our business, operating results and financial condition. Furthermore, there can be no assurance that our products will meet all of the expectations and demands of our customers. The failure of our products to perform to customer expectations could give rise to warranty claims. Any of these claims, even if not meritorious, could result in costly litigation or divert management's attention and resources.  Any product liability insurance that we may carry could be insufficient to protect us from all liability that may be imposed under any asserted claims.

 

We depend on our key personnel to manage our business effectively in a rapidly changing market. If we are unable to retain our key employees, our business, financial condition and results of operations could be harmed.

 

Our future success depends to a significant degree on the skills, efforts and continued services of our executive officers and other key engineering, manufacturing, operations, sales, marketing and support personnel who have critical industry experience and relationships. If we were to lose the services of one or more of our key executive officers and senior management members, we may not be able to grow our business as we expect, and our ability to compete could be harmed, adversely affecting our business and prospects.


Our markets are highly competitive, and our failure to compete successfully would limit our ability to sell our products, attract and retain customers and grow our business.


The market for our products is intensely competitive and subject to technological change. Competitors vary in size and in the scope and breadth of the products and services they offer. We compete primarily in China with many large and small companies. Some of our competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, engineering, technical, marketing and other resources than we do. As a result, they may be able to respond more quickly to new or emerging technologies and changes in customer demands or to devote greater resources to the development, promotion and sale of their products or services than we can.  If we cannot compete effectively, we may never become profitable.




8



Fluctuations in operating results could adversely affect the market price of our common stock.

 

Our revenues and operating results are likely to fluctuate significantly in the future. The timing of order placement, size of orders and satisfaction of contractual customer acceptance criteria, as well as order delays or deferrals and shipment delays and deferrals, may cause material fluctuations in revenue. Because of these and other factors, investors should not rely on quarter-to-quarter comparisons of our results of operations, our results of operations or the pro forma financial information as an indication of future performance. It is possible that, in future periods, results of operations will differ from the estimates of public market analysts and investors. Such a discrepancy could cause the market price of our common stock to decline significantly.


All our officers and directors reside outside of the United States which could make it difficult to enforce potential civil liabilities and judgments.


All our officers and directors are residents of countries other than the United States, and all of our assets are located outside the United States.  As a result, it may not be possible for investors to effect service of process within the United States upon such persons or enforce in the United States against such persons judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of United States federal securities laws or state securities laws.


Risks Related to Investment in Our Securities


There is a limited market for our common stock.  Our common stock is thinly traded and, you may be unable to sell at or near “ask” prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.


Our common stock is currently listed on the OTC Bulletin Board under the symbol “TRBX”; our stock has been trading since August 1998.  We cannot predict the extent to which an active public market for our common stock will be sustained.  If a trading market is sustained, we expect our common stock to continue to be “thinly-traded” on the OTC Bulletin Board, meaning that the number of persons interested in purchasing our common stock at or near bid prices at any given time may be relatively small or nonexistent. This is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-adverse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we become more seasoned and viable. As a consequence, if a market for our common stock is sustained, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained.


The market price of our common stock will be particularly volatile given our status as a relatively small company with a small and thinly traded “float” that could lead to wide fluctuations in our share price. The price at which you purchase our common stock may not be indicative of the price that will prevail in the trading market. You may be unable to sell your common stock at or above your purchase price if at all, which may result in substantial losses to you.


Volatility in our common stock price may subject us to securities litigation.


The market for our common stock may be characterized by significant price volatility when compared to seasoned issuers, and we expect our share price will be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities.  We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.


The application of the “penny stock” rules could adversely affect the market price of our common stock and increase your transaction costs to sell those shares.


As long as the trading price of our common shares is below $5 per share, the open-market trading of our common shares will be subject to the “penny stock” rules. The “penny stock” rules impose additional sales practice requirements on



9



broker-dealers who sell securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of securities and have received the purchaser’s written consent to the transaction before the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the broker-dealer must deliver, before the transaction, a disclosure schedule prescribed by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks. These additional burdens imposed on broker-dealers may restrict the ability or decrease the willingness of broker-dealers to sell our common stock, and may result in decreased liquidity for our common stock and increased transaction costs for sales and purchases of our common stock as compared to other securities.


We do not expect to pay dividends for the foreseeable future, and we may never pay dividends. Investors seeking cash dividends should not purchase our common stock.


We currently intend to retain any future earnings, if any, to support the development of our business and do not anticipate paying cash dividends in the foreseeable future. Our payment of any future dividends will be at the discretion of our board of directors after taking into account various factors, including but not limited to our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize a return on their investment. Investors seeking cash dividends should not purchase our common stock.




Item 1B.    UNRESOLVED STAFF COMMENTS



None.




Item 2.  PROPERTIES



We lease approximately 280 square meters of office at Rome Garden Bldg, B-1, Suite 1302, Yongan Road, Tianjin 300204, China, under a lease which expires on February 28, 2011.  The monthly rent is $1,000. We do not own any real estate. We believe the leased facilities will be sufficient to meet our needs for the next twelve months.


We also lease approximately 1,400 square meters of R&D facility at 84 Ui Meon-Rd. Taichung, Taiwan. The monthly rent is $500.


We maintain a mailing address in the United States at 1472 Cedarwood Drive, Piscataway, NJ 08854, which is provided to us free of charge by a third party.




Item 3.   LEGAL PROCEEDINGS


As of June 30, 2010, there were four outstanding judgments against the Company totaling in the amount of $381,000, from unpaid loans (Bernard Koff , $192,000), attorney fees (Cole, Schotz, Meiser, Forman & Leonard, $89,000 and David, Kessler & Associates, LLC, $44,000), and marketing service fees (Sawtooth Marketing Group, $56,000). All judgments were back to 2000-2001.  Other than the judgments disclosed as above, there are no actions, suits, proceedings or claims pending against or materially affecting the Company.







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Item 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


None.




PART II




Item 5.      MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


Market Information


Our common stock is quoted on the OTC Bulletin Board under the symbol “TRBX.OB.” Trading in our common stock has been minimal with limited or sporadic quotations. The following table sets forth the high and low sales prices for our common stock, as reported by the OTB Bulletin Board, for the periods indicated.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

2010

 

 

2009

  

  

  

High

 

 

Low

 

 

High

 

 

Low

  

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter

  

0.01 

 

 

0.01 

 

 

0.05 

 

 

0.02 

  

Third Quarter

  

 

0.06 

 

 

 

0.02 

 

 

 

0.06 

 

 

 

0.02 

  

Second Quarter

  

 

0.02 

 

 

 

0.01 

 

 

 

0.02 

 

 

 

0.01 

  

First Quarter

  

 

0.01 

 

 

 

0.01 

 

 

 

0.01 

 

 

 

0.01 

  

 

Holders


As of June 30, 2010, there were 33,119,922 shares of Common Stock issued and outstanding, held by approximately 320 holders of record as indicated on the records of our transfer agent, which is Island Stock Transfer, St. Petersburg, Florida 33701.


Dividend


We have never paid cash dividends and have no plans to do so in the foreseeable future. Our future dividend policy will be determined by our board of directors and will depend upon a number of factors, including our financial condition and performance, our cash needs and expansion plans, income tax consequences, and the restrictions that applicable laws, and our future credit arrangements may then impose.


Currently under Delaware law, unless further restricted in its certificate of incorporation, a corporation may declare and pay dividends out of surplus, or if no surplus exists, out of net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year (provided that the amount of capital of the corporation is not less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets).


Options and Warrants


There are no outstanding options or warrants to purchase securities of the Company.


Securities Authorized for Issuance under Equity Compensation Plans


We do not have any compensation plan under which equity securities are authorized for issuance.






11



 Recent Sales of Unregistered Securities


On May 22, 2007, we issued 130,000 common shares to two (2) individuals at a price of $0.04 per share for services provided.


On May 22, 2007, we issued 786,920 common shares to thirteen (13) individual investors in a private placement at a price of $0.15 per share for an aggregate of $118,038 in cash.


From July 2008 to June 2009, we issued 5,620,000 common shares to seven (7) individual investors in a private placement at an average price of $0.06 per share for an aggregate of $341,098 in cash.


On May 11, 2010, we issued 3,800,000 common shares to a person in a private placement at an average price of $0.05 per share for an aggregate of $190,000 in cash.


All abovementioned shares were issued under the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended. No public offering was involved. The shares so issued bear a restrictive legend. The investors took the shares for investment and not resale. No underwriters or agents were involved in the issuances and we did not pay any underwriting discounts or commissions.


Purchases of Equity Securities by the Company and Affiliated Purchasers


During the fourth quarter of the Company’s fiscal year covered by this report, there was no purchase made by or on behalf of the Company or any affiliated purchaser of shares or other units of any class of the Company’s equity securities that is registered by the Company pursuant to Section 12 of the Exchange Act.




Item 6.  SELECTED FINANCIAL DATA



Not applicable to smaller reporting companies.




Item 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                AND RESULTS OF OPERATIONS


This annual report on Form 10-K 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 year ended June 30, 2010 and 2009, the Company had net sales of $8,436 and $8,980, 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



12



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.


On May 4, 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. Under the agreement, the Company is granting licensee the exclusive right and license in the Territory to assemble, use, import, sell/market and distribute product containing the inventions and improvements covered by the Patents.


There is no royalty payment due to the Company but the licensee is obligated to meet minimum sales quota; Year 1: 10,000 bikes except Uni-Set products, Year 2, 25,000, and Year 3 and thereafter, 50,000.


As of the date of this report, the Company finished the completion of the test as for commercial product for top quality lines of the most of Alenax Uni-Set, however we still need another three to six months to complete the entire top quality lines of Uni-Set.


The Company is also making the X-Bike model through the Morning-Star company for obtaining possible orders from their customers and for the home shopping sales in Korea and China. On marketing side, we are working with The Nike Inc, Portland, Oregon, the Reebok, Korea and China Basket Ball Association for sales and marketing.  


Results of Operations


For the Year Ended June 30, 2010 Compared to the Year Ended June 30, 2009


Revenues


For the year ended June 30, 2010, we had total revenue of $1,799,747, which consists $8,436 of product sales, and $1,791,311 of license fee as mentioned above. For the same period of 2009, the Company had revenue of $8,980 form product sales.


Cost of Revenues


Cost of goods sold consists primarily of the material cost of goods sold, direct overhead, direct wages, and direct depreciation expense. Cost of goods sold for the year ended June 30, 2010 was $19,157. Because of customer request and we made special samples, our cost of goods sold for the period went over the sales revenue by $11,521.  The cost of goods sold for the same period of 2009 was $6,360.   


Operating Costs and Expenses


For the year ended June 30, 2010, our total operating costs and expenses significantly decreased from $435,103 in fiscal 2009 to $310,867 in fiscal 2010. The decrease in operating expenses was primarily as a result of a decrease of $96,685, or 28%, in general, administrative and selling expense. Additionally, during the period, the depreciation expense was decreased to $59,074, or 36%, in fiscal 2010 from $87,668 in fiscal 2009.


Other Income and Expenses


For the year ended June 30, 2010, our total other expenses were $151,397, which was $159,990 of interest expense paid to promissory note-holders and offset by $14,571 of income from forgiven of debts.  For fiscal 2009, the total other expenses were $159,968, which primarily consisted of $159,990 of interest expense, and partially offset by interest income of $22.


Net Income (Loss)


Net income for the years ended June 30, 2010 were $1,317,526, or $0.04 per share, as compared to net loss of $592,736, or $0.02 per share, for the same period of the prior year.




13



For the Year Ended June 30, 2009 Compared to the Year Ended June 30, 2008


Revenues


For the year ended June 30, 2009, we had total revenue of $8,980, as compared to $110,365 for the year ended June 30, 2008. Of the total revenues generated in fiscal 2008, $56,400 was derived from license and distributor revenue, and $53,965 was from product sale.

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 year ended June 30, 2009 and 2008, our cost of revenues was $6,360 (for the sale of $8,980) and $45,970 (for the sale of $53,965) respectively, approximately 70.8% and 85.2% of the revenues.  


Operating Costs and Expenses


For the year ended June 30, 2009, our total operating costs and expenses significantly decreased from $2,437,713 in fiscal 2008 to $435,103 in fiscal 2009. The decrease in operating expenses was primarily there was no bad debt item in fiscal 2009, which was $1,969,369 for the year ended June 30, 2008. During the period, the depreciation expense was increased from $19,750 in fiscal 2008 to $87,668 in fiscal 2009.


Other Income and Expenses


For the year ended June 30, 2009, our total other expenses were $159,968, of which $159,990 was interest expenses. For fiscal 2008, the total other expenses were $139,921, which included write-off of deferred taxes, $159,031 of interest expense, and partially offset by income from forgiveness of debts in an amount of $241,559.


Net Loss


Net loss for the years ended June 30, 2009 and 2008 were $592,736, or $0.02 per share, and $2,513,239, or $0.11 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.


On May 14, 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 June 30, 2010, the Company’s cash and cash equivalents balance was $840. For the year ended June 30, 2010, the Company’s net cash provided in operating activities was $829,657, primarily due to our net income of $1,317,526, offset by increase in depreciation and amortization expense of $56,074, stock issued for debt conversion of $190,000, increase in license fee receivable of $1,522,615, and increase in notes and interest payable reclassified from long-term of $785,059. During the year ended June 30, 2010, the Company had no investing activities. During the same period, the Company’s financing activities used net cash of $837,809, which primarily consisted of notes and interest payable reclassified of $1,823,641, and offset by increase in accrued interest payable of $159,990 and notes payable reclassified for the related party portion in the amount of $1,094,538.


As disclosed on Note 9 of our Notes to Financial Statements, as of June 30, 2010, 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.




14



Off-balance sheet arrangements:


As of June 30, 2010 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 7A.   Quantitative and Qualitative Disclosures About Market Risk



Not applicable to smaller reporting companies.



































15



Item 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Management of

TRB Systems International, Inc. and Subsidiary;


We have audited the accompanying consolidated balance sheets of TRB Systems International, Inc. and a subsidiary as of June 30, 2010 and 2009 and the related consolidated statements of operations, changes in shareholders' equity (deficit), and cash flows for the years ended June 30, 2010 and 2009. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.  


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amount and disclosures in the combined financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of TRB Systems International, Inc. and a subsidiary as of June 30, 2010 and 2009 and the results of their operations and their cash flows for the fiscal years then ended in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in the notes, the Company’s continuing significant operating losses and lack of liquidity raise substantial doubt about its ability to continue as a going concern.  The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.



/s/ Stan J.H. Lee, CPA

Stan J.H. Lee

Certified Public Accountants

Fort Lee, NJ

October 10, 2010



















16



TRB SYSTEMS INTERNATIONAL, INC.

Statements of Financial Position


 

 

June 30, 2010

 

 

June 30, 2009

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS 

 

 

 

 

 

 

Cash 

 

$

840 

 

 

$

1,580

 

Trade accounts, net 

 

 

6,512 

 

 

 

10,555

 

License fee receivable

 

 

1,522,615

 

 

 

-

 

Inventory 

 

 

35,768 

 

 

 

49,909

 

      Total Current Assets 

 

 

1,565,735 

 

 

 

62,044

 

 

 

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT,  net of accumulated depreciation of $1,046,740 as of  June 30, 2010 and $990,666 as of June 30, 2009

 

 

116,114 

 

 

 

172,188

 

 

 

 

 

 

 

 

 

 

OTHER ASSETS 

 

 

 

 

 

 

 

 

Prepaid and other assets 

 

 

157,554 

 

 

 

157,544

 

        Total Other Assets

 

 

157,544

 

 

 

157,544

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS 

 

$

1,839,393 

 

 

$

391,776

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

CURRENT LIABILITIES 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities 

 

$

18,703 

 

 

$

33,274

 

Notes and interest payable 

 

 

1,959,665 

 

 

 

1,174,606

 

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 

 

 

2,652,914

 

 

 

1,882,426

 

 

 

 

 

 

 

 

 

 

Indebtedness to related party 

 

 

1,263,520 

 

 

 

277,688

 

Notes and interest payable 

 

 

-

 

 

 

1,823,641

 

Total Non-Current Liabilities

 

 

1,263,520 

 

 

 

2,101,329

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES 

 

 

3,916,434

 

 

 

3,983,755

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Common stock, $0.001 par value, 60,000,000 shares authorized; 33,119,922 shares and

 

 

 

 

 

 

 

 

29,319,922 shares issued and outstanding as of June 30, 201 and 2009, respectively 

 

 

33,120 

 

 

 

29,320

 

Additional paid in capital 

 

 

3,750,488 

 

 

 

3,564,288

 

Retained earnings (deficit) 

 

 

(5,853,097)

 

 

 

(7,170,623)

)

Other comprehensive loss-foreign currency 

 

 

(7,552)

)

 

 

(14,964)

)

    Total Stockholders' Equity (Deficit)

 

 

(2,077,041)

)

 

 

(3,591,979)

 

 

 

 

 

 

 

 

 

 

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 

1,839,393 

 

 

391,776

 



See Notes to the Financial Statements









17



TRB SYSTEMS INTERNATIONAL, INC.

STATEMENTS OF OPERATIONS

For The Years Ended June 30, 2010 and 2009


  

 

2010

 

 

2009

 

REVENUES

 

 

 

 

 

 

Sales

 

$

8,436 

 

 

8,980 

 

Cost of revenues

 

 

19,957

 

 

 

6,360 

 

GROSS PROFIT

 

 

(11,521)

 

 

 

2,620 

 

 

 

 

 

 

 

 

 

 

License fee and distribution revenue

 

 

1,791,311

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 TOTAL OPERATING REVENUES

 

 

1,779,790

 

 

 

2,620 

 

 

 

 

 

 

 

 

 

 

OPERATING COSTS

 

 

 

 

 

 

 

 

General, administrative and selling expenses

 

 

250,750

 

 

 

347,435 

 

Bad debt

 

 

4,043

 

 

 

 

Depreciation expense

 

 

56,074

 

 

 

87,668

 

      Total operating costs

 

 

310,867

 

 

 

435,103

 

  

 

 

 

 

 

 

 

 

OPERATING INCOME (LOSS)

 

 

1,468,923

 

 

 

(432,483) 

 

  

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

Income from forgiveness of debts

 

 

14,571 

 

 

 

-

 

Expense of converting debts to equity

 

 

(6,000) 

 

 

 

-

 

Interest income

 

 

22

 

 

 

22 

 

Interest expense

 

 

(159,990)

 

 

 

(159,990) 

 

  Total Other Income & (Expenses)

 

 

(151,397)

 

 

 

(159,968) 

 

 

 

 

 

 

 

 

 

 

NET LOSS BEFORE INCOME TAX & BENEFIT

 

 

1,317,526

 

 

 

(592,452) 

 

 

 

 

 

 

 

 

 

 

  Current income taxes

 

 

-

 

 

 

284 

 

NET INCOME (LOSS)

 

1,317,526

 

 

(592,736) 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE LOSS

 

 

 

 

 

 

 

 

Unrealized foreign currency transaction loss

 

 

7,412

 

 

 

8,853

 

COMPREHENSIVE INCOME (LOSS)

 

$

1,324,938

 

 

 

(583,883)

 

  

 

 

 

 

 

 

 

 

Basic and Diluted Loss Per Common Share

 

$

0.04

 

 

 

(0.02) 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding :

 

 

29,840,470 

 

 

 

26,509,922 

 

 

 

 

 

 

 

 

 

See Notes to the Financial Statements






18






TRB SYSTEMS INTERNATIONAL, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)





  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 Additional

 

 

Retained

 

 

 

 

 

Total

 

  

 

Common

 

 

Common

 

 

Paid-in

 

 

Earnings

 

 

Other

 

 

Stockholders'

 

  

 

Shares

 

 

Stock

 

 

Capital

 

 

(Deficit)

 

 

Items

 

 

Equity (Deficit)

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, July 1, 2008 (Restated)

 

 

23,699,922 

 

 

23,700 

 

 

3,228,810 

 

 

(6,577,887) 

)

 

1,183 

 

 

(3,324,194) 

)

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued

 

 

5,620,000 

 

 

 

5,620 

 

 

 

335,478 

 

 

 

 

 

 

-

 

 

 

341,098 

)

Common stock previously subscribed and issued during the period

 

 

 

 

 

 

 

 

 

 

 

-

)

 

 

(25,000) 

 

 

 

(25,000) 

)

Net loss for the year ended June 30, 2009

 

 

 

 

 

 

 

 

 

 

 

(592,736) 

)

 

 

 

 

 

(592,736) 

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

-

)

 

 

8,853 

 

 

 

8,853

 

Balance, June 30, 2009

 

 

29,319,922 

 

 

 

29,320 

 

 

 

3,564,288 

 

 

 

(7,170,623) 

 

 

 

(14,964)

 

 

 

(3,591,979)

 

Common stock issued, May11, 2010

 

 

3,800,000

 

 

 

3,800 

 

 

 

186,200 

 

 

 

-

 

 

 

-

 

 

 

190,000 

 

Net loss for the year ended June 30, 2010

 

 

 

 

 

 

 

 

 

 

 

1,317,526

)

 

 

 

 

 

1,317,526 

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,412 

 

 

 

7,412 

 

Balance, June 30, 2010

 

 

33,119,922 

 

 

33,120 

 

 

3,750,488

 

 

(5,853,097) 

 

 

(7,552) 

)

 

(2,077,041) 

)






See Notes to Financial Statements.


  



19



TRB SYSTEMS INTERNATIONAL, INC.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 2010 AND 2009


  

 

2010

 

 

2009

 

  

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income (loss)

 

$

1,317,526 

 

 

(592,736) 

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

56,074

 

 

 

87,668

 

Stock issued for debt conversion

 

 

190,000

 

 

 

-

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

      (Increase) decrease in accounts receivable

 

 

4,043

 

 

 

9,740

 

(Increase) decrease in license fee receivable

 

 

(1,522,615)

 

 

 

-

 

(Increase) decrease in inventory

 

 

14,141

 

 

 

35,423

 

Increase in prepaid expense and other assets

 

 

-

 

 

 

3,374

 

Increase (decrease) in accounts payable and accrued liabilities

 

 

(14,571)

 

 

 

11,389

 

Increase (decrease) in notes and interest payable – reclassified to long term

 

 

785,059

 

 

 

-

 

Net cash used in operating activities

 

 

829,657

 

 

 

(445,142)

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

 

 

 

-

 

    Net cash used in investing activities

 

 

-

 

 

 

-

 

  

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Increase in accrued interest payable

 

 

159,990

 

 

 

159,968 

 

Notes payable reclassified for the related party portion

 

 

1,094,538

 

 

 

779,055 

 

 Notes and interest payable reclassified

 

 

(1,823,641)

 

 

 

(754,992)

 

     Indebtness to related party repaid

 

 

(268,696)

 

 

 

(84,324)

 

     Issuance of common stock

 

 

-

 

 

 

316,098 

 

Net cash provided by financing activities

 

 

(837,809)

 

 

 

435,805 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate on cash

 

 

7,412

 

 

 

8,853 

 

 

 

 

 

 

 

 

 

 

 Net Increase (Decrease) in Cash

 

 

(740)

 

 

 

(484)

 

  

 

 

 

 

 

 

 

 

Cash at Beginning of Year

 

 

1,580

 

 

 

2,064 

 

  

 

 

 

 

 

 

 

 

Cash at End of Year

 

$

840

 

 

1,580 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW DISCLOSURE:

 

 

 

 

 

 

 

 

Cash paid during year for interest

 

$

159,990

 

 

$

159,968

 

Cash paid during year for income taxes

 

$

-

 

 

$

284

 



See Notes to the Financial Statements






20



TRB SYSTEMS INTERNATIONAL, INC.

Notes to Consolidated Financial Statements

June 30, 2010



1. 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.


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 June 30, 2010, the Company had cash and cash equivalents totaling $ 840 as compared to $1,580 at June 30, 2009. As of June 30, 2010, the Company had working capital of $ (2,609,794) compared to a working capital of $ (1,820,382) at June 30, 2009. 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 and loans from related party(ies)  will be sufficient  to meet its anticipated capital requirements which consist mainly on-going working capital needs. 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 that $ 500,000 would be needed within the next 12 months for this purpose.   


The Company believes there may be a number of alternatives available to meet the continuing capital requirements 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 $5,853,097 from the period of April 11, 1997 (Date of Inception) through June 30, 2010. It has recently commenced operations of active sales and it is not profitable yet 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.




21



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.  Principles of Presentation and 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. The year ended June 30, 2010 is referred to as "2010", the year ended June 30, 2009 is referred to as "2009". 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


d.  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.


e.  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.


f. Concentration of Credit Risks


Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. The Company places its cash with high credit quality financial institutions in the United States and China. As of June 30, 2010 , the Company has no bank account in the United States.


At June 30, 2010, the Company had deposits of $ 301 in banks in China. In China, there is no equivalent federal deposit insurance as in United States; as such these amounts held in banks in China are not insured. The Company has not experienced any losses in such bank accounts through June 30, 2010. At June 30, 2010 and 2009, our bank deposits by geographic area were as follows:


Country

2010

 

2009

 

 

 

 

 

 

United States

$          -0-

-0-%

 

$            -0-

-0-%

China

1,556

100%

 

301

100%

 

 

 

 

 

 

Total cash in banks

$      1,556

100%

 

$         301

100%


In an effort to mitigate any potential risk, the Company periodically evaluates the credit quality of the financial institutions at which it holds deposits in China.


g.   Accounts Receivable


Accounts receivable are presented net of an allowance for doubtful accounts. The Company maintains allowances for doubtful accounts for estimated losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, customer's historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. As of June 30, 2010 and 2009, the Company has recorded nil for an allowance for doubtful accounts.




22



h.   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


i.   Inventories


Inventories consist of bicycles and bicycle parts. Inventories are stated at the lower of cost or market using FIFO (First In, First Out). The Company writes down inventory for estimated obsolescence or unmarketable inventory based upon assumptions and estimates about future demand and market conditions. If actual market conditions are less favorable than those projected by the Company, additional inventory write-downs may be required.


j. Prepaid Expenses and Other Current Assets


Prepaid expenses and other current assets consist primarily of prepayments to vendors for merchandise that had not yet been shipped. At June 30, 2010 and 2009, our consolidated balance sheet includes prepaid expenses and other current assets of $ 157,544, respectively.


k.  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



23



the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs as charged to expense as incurred.


l.   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.


m.   Revenue Recognition


Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements". In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company:


The Company generates revenue from the sale of its products and records revenues from the sale of products when the goods are shipped, title passes, and collectability is reasonably assured.


Revenue from periodic maintenance agreements is generally recognized ratably over the respective maintenance periods provided no significant obligations remain and collectability of the related receivable is probable.


Revenue from the performance of services is recognized upon completion of the service.


n.   Income Tax


We accounted for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes". SFAS No. 109 requires the recognition of deferred tax assets and liabilities to reflect the future tax consequences of events that have been recognized in the Company's financial statements or tax returns. Measurement of the deferred items is based on enacted tax laws. In the event the future consequences of differences between the financial reporting basis and tax bases of the Company's assets and liabilities result in a deferred tax asset, SFAS No.109 requires an evaluation of the probability of our being able to realize the future benefits indicated by such assets. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some or the entire deferred tax asset will not be realized.


o.  Foreign Currency Translation


Transactions and balances originally denominated in U.S. dollars are presented at their original amounts. Transactions and balances in other currencies are converted into U.S. dollars in accordance with Statement of Financial Accounting Standards (SFAS) No. 52, "Foreign Currency Translation", and are included in determining net income or loss.


The Company's reporting currency is the U.S. dollar. The functional currency of the Company's Chinese subsidiaries is the Chinese dollar or Renminbi ("RMB"). For foreign operations with the local currency as the functional currency,assets and liabilities are translated from the local currencies into U.S. dollars at the exchange rate prevailing at the balance sheet date and weighted average rates of exchange for the period for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations. The cumulative translation adjustment and effect of exchange rate changes on cash at June 30, 2010 was $ 7,552. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining accumulated comprehensive loss. As of June 30, 2010, the exchange rate for the local currency, the Chinese dollar or RMB was $ 1 USD for 6.7909RMB.


p.  Fair Value of Financial Instruments


Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments", requires disclosures of information about the fair value of certain financial instruments for which it is practicable to



24



estimate the value. For the purpose of this disclosure, the fair value of a financial instrument is the amount at which an instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.


The carrying amounts reported in the balance sheet for cash, accounts and notes receivable, due from related party, accounts payable and accrued expenses, advances from customers, notes payable, loans and amounts due from related parties approximate their fair market value based on the short term maturity of these instruments.


q.    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.


 r.   Advertising


Advertising is expensed as incurred and were $ nil for the year 2010 and $ 8,339 for the year 2009.


s.   Research and Development


Research and product development costs are expensed as incurred. The Company incurred expense of $ nil for the year 2010 and $4,184 for the year 2009.


 t.    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.


u.   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.


v.   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 flow.


3.   ACCOUNTS AND LICENSE FEE RECEIVABLE


Accounts Receivable represents the balance due from the customers during the normal course of business.

 

 

2010

 

2009

Accounts Receivable

$                 6,512 

 

$               10,555 

Less: Allowance for doubtful accounts

 

Net Accounts Receivable

$                 6,512 

 

$               10,555 



 

2010

 

2009

License Fee Receivable

$                 1,522,615 

 

             $                     -

Less: Reserve for uncollectible

 

Net Accounts Receivable

$               1,522,615 

 

$                     - 



On May 4, 2010, the Company has entered into an exclusive license agreement with Ssolriche Co. Ltd, licensee, for the territory of South Korea valued at $ 1,791,312 of which $ 268,696 has been paid upon signing of agreement. The



25



remaining balance of $ 1,522,616 is due in 2 installments within 1 year with the final installment being due on May 2, 2011.


The Company is granting licensee the exclusive right and license in the Territory to assemble, use, import, sell/market and distribute product containing the inventions and improvements covered by the Patents.


There is no royalty payment due to the Company but the licensee is obligated to meet minimum sales quota; Year 1: 10,000 bikes except Uni-Set products, Year 2, 25,000, and Year 3 and thereafter, 50,000.



NOTE 4 -  INVENTORIES


At June 30, 2010 and 2009, inventories consisted of:

 

  


 

2010

 

2009

 

 

 

 

Parts

$               16,096 

 

$                6,129 

Finished goods

19,672 

 

43,780 

 

35,768 

 

49,909 

Less: Reserve for slow moving inventory

 

 

$               35,768 

 

$              49,909 



5.    PROPERTY AND EQUIPMENT


Fixed assets are summarized by classifications as follows:


 

2010

 

2009

 

 

 

 

Office equipment

$           77,598

 

$           77,598

Tools and machinery

79,321

 

79,321

Automobile

50,947

 

50,947

Moldings

765,823

 

767,518

Booth for show

137,470

 

137,470

Informational tapes and other promotional materials

 51,695

 

 50,000

 

1,162,854

 

1,162,854

Less: Accumulated depreciation

(1,046,740)

 

(990,666)

 

$         116,114

 

$         172,188



6.   RELATED PARTY TRANSACTIONS


ABL Properties, 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 Properties Company, 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 Properties and the Company initially agreed to defer payment of the $200,000 until TRB Systems Inc has suitable cash flow to meet its current needs. However, during the year ended June 30, 2007, considered to be first year of active sales, Company became liable for $ 200,000 patent payment and the same amount was offset to indebtness to related parties.




26



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 June 30, 2010, ABL Properties owes the Company $ 301,166 and $ 200,000 is owed to ABL Properties.

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 June 30, 2010, the outstanding amount due was $ 120,678. Balance of loan to a shareholder was $ 892,935


7.    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 June 30, 2010 the accounts payable and accrued expenses were $18,703 and $33,274 as of June 30, 2008. During the year ended June 30, 2008, management as written off  $220,119 accrued expenses originating from prior to year 2000 under the basis that no creditor has pursued collection to date and internal determination that these payable will ever be paid. Such a transaction resulted in reduction of accounts payable and recognition as income from forgiveness of debts in the statements of operations.


8.   ADVANCE FROM A CUSTOMER


The company received advance from a customer in anticipation of future shipment. The terms depend case by case in that it may be refundable or forfeited as stipulated by related provision in the sales contracts.


Advance from a customer is refundable in case if the shipment doesn’t occur within the specified time. Advance becomes earned revenue when the goods are shipped and invoiced.


9.   NOTES AND INTEREST PAYABLE


Notes payable are unsecured notes to individuals from whom the Company borrowed funds for working capital.  As of June 30, 2009, the Company had notes payable in the amount of $2,053,856 and accrued interest payable of $944,391. Interest expense attributable to notes payable totaled $159,990 during the year 2009. Company has successful renegotiated with all of the creditors for its modification of interest rates lower and extension of maturity.  As of June 30, 2010:


 


Notes Payable

 


Rate - Simple

Accrued Interest


Note Holder


Balance

Maturity Date

Interest

Amount

In W. Whang

$100,00 

6/30/2009 

10%

$108,750 

Byung K. Cho

30,215 

6/30/2009 

10%

22,661 

Janak Shah

120,000 

5/10/2010 

10%

107,400 

Hwa Suk Kim

12,931 

11/26/2009 

10%

11,896 

Seok Nyu Lee

12,931 

10/09/2010 

10% 

11,219 

Xiao Wei Lu

45,000 

12/30/2010 

10%

34,494 

Young Sik Kwon

695,652 

12/31/2010 

10%

466,084 

Kil Ja Bark

99,138 

02/09/2011 

10%

81,294 

Total

$1,115,867 

 

 

$843,798 

Current portion

$1,115,867 

 

 

$843,798 



10.  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 which carry annual interest rate equivalent to U.S. bank’s prime rate.


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



27



$1, at which time the Company will have to repay the face amount of the notes plus (10%) ten percent. As of June 30, 2010 the lenders have not exercised their option, management is negotiating an extension on the notes.


11.  PENDING SUITS AND JUDGMENT


As of June 30, 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.   


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 


12.  CAPITAL STOCK


The company is authorized to issue 30,000,000 at $0.001 par value share. As of June 30, 2010 the number of voting common shares issued and outstanding are 33,119,922 and 29,319,922 in 2009. Additional paid in capital of $3,570,488 in 2010 and 3,564,288 in 2009. During the fiscal year ended June 30, 2010, 3,800,000 common shares were issued to an individual as part of conversion agreement from note to equity. The price of such issuance was $0.05 per share.


13.   NET LOSS PER SHARE


Net loss per common share for the years ended June 30, 2010 and 2009 is calculated using the weighted-average number of common shares outstanding and common shares equivalents during the periods.



14.   INCOME TAX

 

The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carryforwards. SFAS 109 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Realization of deferred tax assets, including those related to the U.S. net operating loss carryforwards, are dependent upon future earnings, if any, of which the timing and amount are uncertain. Accordingly, the net deferred tax asset related to the U.S. net operating loss carryforward has been fully offset by a valuation allowance. The Company is governed by the Income Tax Law of the People's Republic of China and the United States.

 

The Company has a US net operating loss carry forward for tax purposes totaling approximately $ 7,644,408 at June 30, 2010. The net operating loss carries forwards for United States income taxes, which may be available to reduce future years' taxable income. These carry forwards will expire, if not utilize, through 2027 and are subject to the Internal Revenue Code Section 382, which places a limitation on the amount of taxable income that can be offset by net operating losses after a change in ownership. . Management believes that the realization of the benefits from these losses appears uncertain due to the Company's continuing losses for United States income tax purposes. Accordingly, the Company has provided a 100% valuation allowance on the deferred tax asset benefit to reduce the asset to zero. Management will review this valuation allowance periodically and make adjustments as warranted.


The Company's subsidiary in China is governed by the Income Tax Law of the Peoples Republic of China concerning Foreign Investment Enterprises and Foreign Enterprises and local income tax laws (the "PRC Income Tax Law"). Pursuant to the PRC Income Tax Law, wholly foreign owned enterprises are subject to tax at a statutory rate of



28



approximately 25 %. The Company intends to utilize profits earned by its Chinese based subsidiary in China to expand its PRC based operations.  


NOTE 15- OPERATING RISK


(a) Concentration of credit risk


Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash, accounts and notes receivable. The Company places its cash with financial institutions with high credit ratings. Substantially all of the Company's cash accounts are located in Tianjin, of the Peoples Republic of China ("PRC").


(b) Country risk


Revenues of Alenax are mainly derived from the sale of finished bikes and parts in the PRC. The Company hopes to expand its operations to countries outside the PRC, however, such expansion has not been commenced and there are no assurances that the Company will be able to achieve such an expansion successfully. Therefore, a downturn or stagnation in the economic environment of the PRC could have a material adverse effect on the Company's financial condition.


(c) Product risk


Alenax might have to compete with larger companies who have greater funds available for expansion, marketing, research and development and the ability to attract more qualified personnel.  There can be no assurance that Alenax will remain competitive should this occur.


(d) Exchange risk


The Company cannot guarantee that the current exchange rate will remain steady, therefore there is a possibility that the Company could post the same amount of profit for two comparable periods and because of a fluctuating exchange rate actually post higher or lower profit depending on exchange rate of Chinese Renminbi (RMB) converted to U.S. dollars on that date. The exchange rate could fluctuate depending on changes in the political and economic environments without notice.


(e) Key personnel risk


The Company's future success depends on the continued services of Mr. Byung D. Yim, both in China and in the United States. The loss of his service would be detrimental to the Company and could have an adverse effect on business development. The Company does not currently maintain key man insurance on his life. Future success is also dependent on the ability to identify, hire, train and retain other qualified managerial and other employees.


NOTE 16 - SEGMENT INFORMATION


The following information is presented in accordance with SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information. In the year ended June 30, 2010, the Company operated in two reportable business segments - (1) licensing and (2) wholesale of finished bikes and parts segment.


The Company's reportable segments are strategic business units that offer different products. The Company's reportable segments, although integral to the success of the others, offer distinctly different products and services and require different types of management focus. As such, these segments are managed separately.


Condensed information with respect to these reportable business segments for the year ended June 30, 2010 is as follows:









29






 

 


Licensing  

 

Wholesale of Bikes

 


Consolidated

 

 

Segment (1)

 

Segment (2)

 

Total

 

 

 

 

 

 

 

Net revenues

 

$         1,791,311 

 

$             8,436 

 

$   1,799,747 

Cost of sales

 

 

(19,957)

 

(19,957)

Operating expenses (excluding depreciation and amortization)

 

 

(254,793)

 

(254,793)

Interest expense

 

 

(159,990)

 

(159,990)

 

 

 

 

 

 

 

Segment Assets

 

$      1,,522,612 

 

$         316,778 

 

$   1,839,393 



17.  COMMITMENTS AND CONTINGENCIES


17.1    Lease Commitments


Company leases its office space in Tianjin China on a month-to-month basis. Its monthly minimum rental is $1,000.  


17.2    Litigation


As per the Company, as of June 30, 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 11.


NOTE 18 - SUBSEQUENT EVENTS


 There is no subsequent event(s) management believes it is to be disclosed.




Item 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACOUNTING AND FINANCIAL DISCLOSURE


None.




Item 9A(T).    CONTROL AND PROCEDURES


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.  


Management’s Report on Internal Control Over Financial Reporting


The Company’s management, including its Principal Executive Officer and Principal Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting.  Our internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with the United States generally accepted accounting principles.


We assessed the effectiveness of the Company's internal control over financial reporting as of June 30, 2010 based on the framework in “Internal Control Over Financial Reporting – Guidance for Smaller Public Companies” issued by the



30



Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, we determined that, as of June 30, 2010, the Company's internal control over financial reporting is effective, based on those criteria.


This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.


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.




Item 9B.   OTHER INFORMATION



None.




PART III



Item 10.   DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE



The following table sets forth certain information concerning directors, executive officers and key employees of the Company:


Name

 

Age

 

Positions

Byung D. Yim

 

69

 

President, Chief Executive Officer, Chief Financial Officer, and Director

Marn T. Seol

 

71

 

Vice Chairman of the Board of Research and Development

August Rheem

 

75

 

Vice President & Director

Joon Ki Moon

 

31

 

Secretary & Director


Byung D. Yim, has been our Chief Executive Officer, President, Chief Financial Officer, Secretary, and Chairman of the Board of Directors since 1997.  From January 2006 to present Mr. Yim also serves as President and CEO of Alenax Parts Mfr (Tianjin) Corp., our operating subsidiary.  Mr. Yim graduated from of Han Yang University of Korea with a B.A. degree in Nuclear Engineering and Electronics.


Marn T. Seol has been our Vice Chairman of Research and Development since July 1993. Mr. Seol is the inventor of both propulsion for lever propelled bicycles and multi-purpose transmission mechanisms for bicycles. Mr. Seol began pursuing his interest in designing bicycles in 1976 by opening Dong Yang Industrial Co., Ltd. in Korea.  


August Rheem has been our Vice President since January 1996 and elected to new board of director in May, 2006. Mr. Rheem graduated with a BA degree in Economics from Yen Se University in Seoul, Korea.  Prior to his joining the Company, he had served as President of Leisure Dynamic Corp. for eight years, and President of H.J. Sports, Inc. for twelve years.


Joon Ki Moon has been served our Secretary since December 15, 2006. Prior to his joining the Company from March 2002 to December 2003, he was Team Chief of General Management Department at TRB Global Corp., a bicycle manufacturer in Seoul, Korea. From January 2004 through September 2006, Mr. Moon held various part-time or internship positions at Alenax Parts Mfr (Tianjin) Corp., the subsidiary of the Company, most recently as Assistant to President of Alenax (Tianjin) Bicycle Corp. Mr. Moon holds a Bachelor degree in Economics from Kang Won University in Kang Won-Do, Korea and a Bachelor degree in Chinese from Nankai University in Tianjin, China.



31



Family Relationships


August Rheem is a brother of Byung Yim, the President and CEO of the Company.


Significant Employees


There are no significant employees other than our executive officers.



CORPORATE GOVERNANCE


The business, properties and affairs of the Company are managed by the Chief Executive Officer under the direction of the Board of Directors. The Board has responsibility for establishing broad corporate policies and for overall performance and direction of the Company. Members of the Board keep informed of the Company’s business by participating in Board meetings, by reviewing analyses and reports sent to them regularly, and through discussions with the Chief Executive Officer and other officers.


Board Leadership Structure


The Board of Directors believes that our Chief Executive Officer is best situated to serve as Chairman because, as one of our founders, he possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing the Company and its businesses and is best positioned to develop agendas that ensure that the Board's time and attention are focused on the most critical matters. His combined role, along with his significant ownership in the Company, ensures clear accountability and enhances the Company's ability to communicate its message and strategy clearly and consistently to the relevant stakeholders. The Board of Directors believes that currently combining the role of the Chairman and Chief Executive Officer promotes strategy development and execution, and facilitates information flow between management and the Board of Directors, which are essential to effective governance. Our CEO and Chairman positions are combined, and there is no lead independent director.


The Board's Role in Risk Oversight


The Board of Directors as a whole is responsible for risk management oversight of the Company. The involvement of the full Board of Directors in setting the Company's business strategy and objectives is integral to the Board's assessment of our risk and also a determination of what constitutes an appropriate level of risk and how best to manage any such risk. This involves receiving reports and/or presentations from applicable members of management and the committees of the board. The full Board of Directors conducts on-going risk assessment of the Company's financial risk, legal/compliance risk and operational/strategic risk and addresses individual risk issues with management throughout the year as necessary


The Board currently does not have standing Audit, Nominating or Compensation Committees, or committees performing similar functions. The Board as a whole is responsible for risk oversight. In particular, the Board (i) oversees risk management in the areas of internal control over financial reporting, disclosure controls and procedures, and legal and regulatory compliance, reviews with management and our independent registered public accounting firm our policies and practices with respect to risk assessment and management, and our exposure to material financial risk and management’s efforts to monitor and control such exposure; (ii) oversees the organization, membership and structure of our Board of Directors and the our corporate governance practices; and (iii) oversees our compensation policies and reviews the conduct incented by those programs, including the impact on risk-taking by our executive officers and employees. The Board regularly receives management updates on our business operations, financial results and strategy and discusses risks related to the business. The Board also regularly receives reports from our internal personnel and independent accountants.


Committees of the Board of Directors


The Company currently does not have standing Nominating, Compensation or Audit committees, or committees performing similar functions. Nor do we have a written Nominating, Compensation or Audit committee charter. The Company intends to seek qualified independent directors to serve on the board and ultimately form standing audit, nominating and compensation committees.




32



Director and Nominee Qualifications


Our Board of Directors is responsible for identifying individuals qualified to become Board members and recommending to the Board director nominees for the next annual meeting of stockholders and candidates to fill vacancies on the Board. Additionally, in selecting nominees for directors, the Board will review candidates recommended by stockholders using the same general criteria as other candidates.


There has not been any defined policy or procedure requirements for stockholders to submit recommendations or nomination for directors. There are no specific, minimum qualifications that the board of directors believes must be met by a candidate recommended by the board of directors. The entire board of directors will assess candidates, whether submitted by management or stockholders, and make recommendations for election or appointment.  


Stockholders may recommend director nominee candidates by sending the following information to the Board of Directors, TRB Systems International, Inc., 142 Cedarwood Drive, Piscataway, New Jersey 08854: shareholder’s name, number of shares owned, length of period held, and proof of ownership; name, age and address of candidate; candidate’s detailed resume; description of any arrangements or understandings between the stockholder and the candidate; and signed statement from the candidate confirming his or her willingness to serve on the Board of Directors.


Audit Committee Financial Expert


The Board of Directors of the Company determined that we do not have a board member that qualifies as an "audit committee financial expert" as defined in Item 407(d)(5)(i) of Regulation S-K, nor do we have a board member that qualifies as "independent" as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended. We believe that our board of directors is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not currently warranted.


Director Independence


The Company is presently not required to comply with the director independence requirements of any securities exchange, which requires that a majority of a company's directors be independent.  Our Board of Directors intends to appoint additional members, each of whom will satisfy the director independence guidelines in a manner consistent with the definitions of “independence” set forth in SEC Rule 10A-3 under the Securities Exchange Act of 1934, as amended.


Compensation of Non-Employee Directors


Directors do not receive any compensation for their services as directors. Our Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity. As of the date of this report, no guidelines for the compensation of our non-employee directors have been adopted.


Compensation Interlocks and Insider Participation


There were no compensation committee or board interlocks among the members of our Board.


Legal Proceedings


During the last five years:


1.

No director, officer, significant employee or consultant has been convicted in a criminal proceeding, exclusive of traffic violations.


2.

No bankruptcy petitions have been filed by or against any business or property of any director, officer, significant employee or consultant of the Company nor has any bankruptcy petition been filed against a partnership or business association where these persons were general partners or executive officers.


3.

No director, officer, significant employee or consultant has been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities or banking activities.



33




4.

No director, officer or significant employee has been convicted of violating a federal or state securities or commodities law.


Code of Business Conduct and Ethics


The Company has adopted a Code of Business Conduct and Ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.  Such Code has been filed with the Commission as Exhibit 14.


Section 16(a) Beneficial Ownership Reporting Compliance


Section 16(a) of the Securities Exchange Act of 1934 requires our executive Officers, directors and persons who beneficially own more than 10% of our Stock, to file initial reports of ownership and reports of changes in ownership with the Securities and Exchange Commission. Executive officers, directors and greater than 10% beneficial owners are required by applicable regulations to furnish us with copies of all Section 16(a) forms they file.




Item 11.    EXECUTIVE COMPENSATION


Compensation Discussion and Analysis


The Company does not currently have a Compensation Committee of the Board of Directors. Until a formal committee is established, our entire Board of Directors has responsibility for establishing, implementing and continually monitoring adherence with the Company’s compensation philosophy. The Board ensures that the total compensation paid to the executives is fair, reasonable and competitive.


Compensation Philosophy and Objectives


The Board believes that the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals by the Company, and which aligns executives’ interests with those of the stockholders by rewarding performance above established goals, with the ultimate objective of improving stockholder value. As a result of the size of the Company, the Board evaluates both performance and compensation on an informal basis. For the last three fiscal years, the Company's chief executive officer and chief financial officer receives annual salary of $50,000 from the Company, and there have been no any other kind of compensation paid to him from the Company. In the future, the Board intends to establish a Compensation Committee to evaluate both performance and compensation to ensure that the Company maintains its ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly-situated executives of our peer companies. To that end, the Board believes executive compensation packages provided by the Company to its executives, including the named executive officers, should include both cash and stock-based compensation that reward performance as measured against established goals.


Role of Executive Officers in Compensation Decisions


The Board makes all compensation decisions for, and approves recommendations regarding equity awards to, the executive officers and Directors of the Company. Decisions regarding the non-equity compensation of other employees of the Company are made by management.


Compensation-Related Risk


For the last three fiscal years, Mr. Byung Yim, our Chief Executive Officer and Chief Financial Officer, receives annual salary of $50,000 from the Company, and there have been no any other kind of compensation paid to him from the Company. The Board, together with management, has reviewed the Company’s broad-based compensation practices and policies and has concluded that such practices and policies do not create risks that are likely to have a material adverse effect on the Company.





34



Summary Compensation Table


The following table sets forth all compensation paid in respect of our Chief Executive Officer and those individuals who received compensation in excess of $100,000 per year (collectively, the “Named Executive Officers”) for our last two completed fiscal years.


Summary Compensation Table


  

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-

Equity

 

 

Nonqualified

 

 

 

 

 

 

 

  

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

Incentive

 

 

Deferred

 

 

All

 

 

 

 

Name and

 

  

 

 

 

 

 

 

 

Stock

 

 

Option

 

 

Plan

 

 

Compensation

 

 

Other

 

 

 

 

Principal

 

  

 

Salary

 

 

Bonus

 

 

Awards

 

 

Awards

 

 

Compensation

 

 

Earnings

 

 

Compensation

 

 

Total

 

Position

 

Year

 

($)

 

 

($)

 

 

($)

 

 

($)

 

 

($)

 

 

($)

 

 

($)

 

 

($)

 

Byung Yim

 

2010

 

 

50,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

50,000

 

CEO,

 

2009

 

 

50,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

50,000

 

President

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

& CFO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Equity Compensation Plans


The Company has no equity compensation plans at present, and there have been no grants of plan-based award made to a named executive officer in the last two completed fiscal years under any plan.


Outstanding Equity Awards at Fiscal Year-End


The Company does not have any equity incentive plans. There were no outstanding equity awards at fiscal years ended June 30, 2010 and 2009.


Option Exercises and Stock Vested


The Company does not have any equity incentive plans. There have been no exercise of stock options, SARs and similar instruments, and no vesting of stock, including restricted stock, restricted stock units and similar instruments, during the last two completed fiscal year for each of the named executive officers.


Employment Contracts, Termination of Employment, Change-in-Control Arrangements


The Company does not have employment agreements in place with its executive officers and directors. There are no contracts, agreements, plans or arrangements, whether written or unwritten, that provides for payment(s) to a named executive officer at, following, or in connection with the resignation, retirement or other termination of a named executive officer, or a change in control of the Company or a change in the named executive officer's responsibilities following a change in control, with respect to each named executive officer.


Employee Benefits Plans


The Company does not sponsor any qualified or non-qualified pension benefit plans, and the Company does not maintain any non-qualified defined contribution or deferred compensation plans.  At this time the Company does not have a tax qualified defined contribution 401(k) plan in which all eligible executive officers and employees may participate.


Securities Authorized for Issuance under Equity Compensation Plans


As of the end of the most recently completed fiscal year, there were no compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance.





35



Potential Conflicts of Interest of Compensation Consultants


No compensation consultants have ever been hired to advise the Company and its Board of Directors.



Item 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


Security Ownership of Certain Beneficial Owners


The following table sets forth certain information regarding the beneficial ownership of our common stock as of June 30, 2010, each person who is known by us to own beneficially more than 5% of our outstanding common stock. We have only one class of securities outstanding. The beneficial owners of the common stock listed below, based on information furnished by such persons, have sole investment and voting power with respect to such shares, subject to community property laws where applicable.


 

 

 

 


Title of Class


Name and Address of Beneficial Owner

Amount and Nature of Beneficial Owner


Percent of Class


Common Stock

Byung D. Yim

1 Yong An Road

Tianjin, 300204, China


6,950,000


21.0%


Common Stock

Motion Plus International (2)

1472 Cedarwood Dr.

Piscataway, NJ 08854

5,752,998

17.4%

Common Stock

Alexander B. Yim (3)

6721 Washington Ave. Apt. 191

Ocean Spring, MS 39564

3,802,500

11.5%


 (1)  Based on 33,119,922 shares of common stock outstanding as of June 30, 2010.

 (2)  5,752,998 shares owned by Motion Plus International Corp. and Byung Yim is president of the company.

 (3)  Alexander B. Yim is the son of Byung Yim.


Security Ownership of Management


The table below set forth certain information, as of June 30, 2010, all of our directors and executive officers who beneficially owned our voting securities and the amount of our voting securities owned by the directors and executive officers as a group.


 

 

 

 


Title of Class


Name and Address of Beneficial Owner

Amount and Nature of Beneficial Owner


Percent of Class (1)


Common Stock

Byung D. Yim(2)

One Yong An Road

Tianjin, 300204, China


6,950,000


21.0%


Common Stock

Marn T. Seol (3)

One Yong An Road

Tianjin, 300204, China


1,003,000


3.0%


Common Stock

August Rheem (4)

19591 Aspendale Sq.

Ashburn, VA 20147


25,000


0.1%

Common Stock

Joon K. Moon (5)

Rome Garden D902

Tianjin, 300204, China


123,950


0.4%

Common Stock

All officers and directors

as a group(a)


8,101,950


24.5%



36






Note:


(1)   Based on 33,119,922 shares of common stock outstanding as of June 30, 2010.

(2)   Byung Yim is Chairman and CEO of the Company.

(3)   Marn T. Seol is our Vice Chairman of R&D.

(4)   August Rheem is our Vice President and Director

(5)   Joon K. Moon is our Secretary and Director



Item 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE


ABL Properties, wholly owned by Byung Yim, the President and CEO of the Company, 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 Properties Company, 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 Properties and the Company initially agreed to defer payment of the $200,000 until TRB Systems Inc has suitable cash flow to meet its current needs. However, during the year ended June 30, 2007, considered to be first year of active sales, Company became liable for $ 200,000 patent payment and the same amount was offset to indebtness to related parties.


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 June 30, 2010, ABL Properties owes the Company $301,166 and $200,000 is owed to ABL Properties.


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 June 30, 2010, the outstanding amount due was $120,678. Balance of loan to a shareholder was $ 892,935


Procedures for Approval of Transactions with Related Persons


The Company does not have a written policy relating to the approval of transactions with related persons, and any such transactions are pre-approved by our Board of Directors in accordance with applicable law. Following the Board of Director’s review of the potential transaction, it will determine whether these transactions are in, or not inconsistent with, the best interests of the Company and its stockholders, taking into consideration whether they are on terms no less favorable to the Company than those available with other parties and the related person’s interest in the transaction.



Item 14.   PRINCIPAL ACCOUNTING FEES AND SERVICES


(1)   Audit Fees.  The aggregate fees billed us for each of the last two fiscal years for professional services rendered by our principal accountant for the audit of our annual financial statements and review of our quarterly financial statements included in our reports on 10Q and other services typically provided by an accountant in connection with statutory and regulatory filings or engagements for fiscal 2010 and 2009 were $19,750 and $16,500, respectively.


(2)  Audit-Related Fees:   None.


(3)  Tax Fees:   None.


(4)  All Other Fees:   None.


(5)  Audit Committee's Pre-Approval Policies and Procedures




37



Inasmuch as we do not have an audit committee, our board of directors performs the functions of its Audit Committee. Section 10A(i) of the Securities Exchange Act of 1934 prohibits our auditors from performing audit services for us as well as any services not considered to be "audit services" unless such services are pre-approved by the board of directors in lieu of the audit committee) or unless the services meet certain de minimum standards.


The board of directors has adopted resolutions that provide that the board must:


(i)    Pre-approve all audit services that the auditor may provide to us as required by Section 10A(i)(1)(A) of the Securities Exchange Act of 1934, as amended by the Sarbanes-Oxley Act of 2002.


(ii)   Pre-approve all non-audit services (other than certain de minim services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, as amended by the Sarbanes-Oxley Act of 2002), that the auditors propose to provide to us.


The board of directors considers at each of its meetings whether to approve any audit services or non-audit services. The percentage of hours expended on the principal accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full time, permanent employees was 0%.




PART IV



Item 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULE



Exhibit No.

Description

 

 

3.1

Article of Incorporation (Incorporated by reference to Registration Statement on Form SB-2/A filed on February 25, 1998, Commission File No. 333-7242).

 

 


3.2

Bylaws (Incorporated by reference to Registration Statement on Form SB-2/A filed on February 25, 1998, Commission File No. 333-7242).


 

 


10.1

Lease of Taiwan Office (Incorporated by reference to Registration Statement on Form SB-2/A filed on February 25, 1998, Commission File No. 333-7242).

 

 


10.2

Exclusive Licensing Agreement between TRB Systems International Inc. and ABL Properties Company (Incorporated by reference to Registration Statement on Form SB-2/A filed on February 25, 1998, Commission File No. 333-7242).


 

 


10.3

Patent Registration and Assignment to ABL Properties Company (Incorporated by reference to Registration Statement on Form SB-2/A filed on February 25, 1998, Commission File No. 333-7242).

 

 

10.4

License and Marketing Agreement with Mr. Konan Kouadio Simeon for Ivory Coast (Incorporated by reference to Registration Statement on Form SB-2/A filed on February 25, 1998, Commission File No. 333-7242).

 

 

10.5

Joint Venture Agreement between with Mr. Janak Shah for India (Incorporated by reference to Registration Statement on Form SB-2/A filed on February 25, 1998, Commission File No. 333-7242).

 

 

10.6

License and Marketing Agreement with Mr. Abbas R. Datoo for Tanzania (Incorporated by reference to Registration Statement on Form SB-2/A filed on February 25, 1998, Commission File No. 333-7242)

 

 

10.7

Distributorship Agreement with Mr. Kishor M. and Gira K. Dattani for Countries in California (Incorporated by reference to Registration Statement on Form SB-2/A filed on February 25, 1998, Commission File No. 333-7242).

 

 

10.8

Licensing and Marketing Agreement with Stella Kujembola for Benin and Nigeria (Incorporated by reference to Registration Statement on Form SB-2/A filed on February 25, 1998, Commission File No. 333-7242).

 

 

10.9

Sino-Danish Manufacturing Agreement (Incorporated by reference to Registration Statement on Form SB-2/A filed on February 25, 1998, Commission File No. 333-7242).

 

 

10.10

Kun Teng Industries Agreement (Incorporated by reference to Registration Statement on Form SB-2/A filed on February 25, 1998, Commission File No. 333-7242).

 

 



38






14

Code of Business Conduct and Ethics ((Incorporated by reference to the Form 8-K filed on September 28, 2010)

 

 

21

Subsidiaries of the registrant (Incorporated by reference to Annual Report on Form 10-KSB filed on June 22, 2006, Commission File No. 333-7242).

 

 


31.1

Certification pursuant to Section 13a-14 of the Securities Exchange Act of 1934


 

 



32.1

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 USC 1830)


 

 



 (2)  Financial Statement Schedule


       None.





SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has 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:   October 13, 2010




Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:



By: /s/ Byung Yim

Byung Yim, President, CEO, CFO and Director


Date:   October 13, 2010



By: /s/ Augustin Rheem

Augustin Rheem, Vice President and Director


Date:  October 13, 2010



39