UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2009

or

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

For the transition period from ______________ to ______________

Commission File Number: 333-07242

TRB Systems International Inc.

(Exact name of registrant as specified in its charter)

DELAWARE		22-3522572
(State of incorporation)		(I.R.S. Employer Identification No.)

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

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

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

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

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

Large accelerated filer o		Accelerated filer o		Non-accelerated filer o		Smaller reporting company þ
				(Do not check if a smaller reporting company)

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

Applicable Only to Corporate Issuers

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Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 29,319,922 shares of common stock, par value $0.001, as of February 17, 2010.

 

TRB SYSTEMS INTERNATIONAL INC.

 

PART I – FINANCIAL INFORMATION
Item 1.		Financial Statements	3
		Consolidated Balance Sheets as of December 31, 2009 and June 30, 2009	3
		Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2009 and 2008	4
		Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2009 and 2008	5
		Notes to Consolidated Financial Statements	6
Item 2.		Management’s Discussion and Analysis of Financial Conditions and Results of Operations	11
Item 3.		Quantitative and  Qualitative Disclosure about Market Risk	14
Item 4 (T).		Controls and Procedures	14
PART II – OTHER INFORMATION
Item 6.		Exhibits	14
SIGNATURES			15

 

PART I — FINANCIAL INFORMATION

 

Item 1.  Financial Statements

 

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TRB SYSTEMS INTERNATIONAL INC.

CONSOLIDATED BALANCE SHEETS

		December 31, 2009				June 30, 2009
ASSETS		(Unaudited)
CURRENT ASSETS
Cash		$	2,302				$	1,580
Accounts receivable  and license fee receivable, net			3,238					10,555
Inventory			51,870					49,909
TOTAL CURRENT ASSETS			57,410					62,004
PROPERTY AND EQUIPMENT,  net			128,355					172,188
OTHER ASSETS
Prepaid and other assets			152,243					157,554
TOTAL ASSETS		$	338,008				$	391,776
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities		$	39,481				$	33,279
Notes and interest payable			1,374,122					1,294,606
Advance from a customer			150,000					150,000
Convertible debt			142,611					142,611
Legal judgment payable			381,000					381,000
Corporation income tax payable			935					935
Total Current Liabilities			2,088,149					2,002,431
Indebtedness to related party			435,663					277,688
Notes and interest payable			1,703,641					1,703,641
Total Non-current Liabilities			2,139,304					1,981,329
TOTAL LIABILITIES			4,227,453					3,983,760
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value, 60,000,000 shares authorized;
29,319,922 shares issued and outstanding as of December 31, 2009 and June 30, 2009, respectively			29,320					29,320
Additional paid in capital			3,564,288					3,564,288
Accumulated deficit			(7,468,089)					(7,170,623)			)
Other comprehensive loss-foreign currency			(14,964)	)				(14,969)			)
Total Stockholders' Equity (Deficit)			(3,889,445)	)				(3,591,984)
Total Liabilities and Stockholders' Equity (Deficit)		$	338,008				$	391,776

See Notes to Consolidated Financial Statements

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TRB SYSTEMS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008

(unaudited)

			Three-Months Ended Dec. 31,			Six-Months Ended Dec. 31,
			2009	2008		2009	2008
Sales		$	147	3,961	$	545	7,495
Cost of sales			117	2,798		465	5,420
	Gross Profit		30	1,163		80	2,075
Operating Expenses
	Depreciation expense		21,917	12,500		43,834	25,000
	Selling, general and administrative		69,688	97,073		174,202	142,153
	Total operating expenses		91,605	109,573		218,034	167,153
Operating loss			(91,575)	(108,410)		(217,956)	(165,078)
Other Income and Expenses
	Foreign currency translation		-	(150)		-	(150)
	Interest income		3	-		6	7
	Bad debt expense		-	-		-	9
	Interest expense		(39,758)	(39,758)		(79,510)	(79,516)
	Total other income and expenses		(39,755)	(39,908)		(79,516)	(79,659)
Net Loss Before Income Tax and Benefit			(131,330)	(148,318)		(297,466)	(244,737)
Income Tax			-	-		-	-
Net Loss		$	(131,330)	(148,318)	$	(297,466)	(244,737)
Basic and diluted earnings / (loss) income per common share		$	(0.00)	(0.01)	$	(0.01)	(0.10)
Weighted average common shares outstanding			29,319,922	29,319,922		29,319,922		26,510,465

See Notes to Consolidated Financial Statements

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TRB SYSTEMS INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2009 AND 2008

(Unaudited)

		Six Months				Six Months
		Ended Dec. 31,				Ended Dec. 31,
		2009				2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(297,466)			$	(244,737)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			43,833				25,000
Foreign currency translation			5				23,817
Changes in operating assets and liabilities
(Increase) decrease in accounts receivable			7,317				5,121
(Increase) decrease in inventories			(1,961)				(2,354)
Increase (decrease) in indebtness of related party			-				12,966
Increase (decrease) in accounts payable and accrued liabilities			6,202				(13,331)
Net cash used in operating activities			(242,070)				(206,018)
CASH FLOWS FROM INVESTING ACTIVITIES:
Retirement of property and equipment			-				12,500
Increase (decrease) in prepaid and other assets			5,301				(59,379)
Increase in advance from a customer			-				16,884
Decrease in  indebtedness of related party			-				(114,458)
Net cash provided by (used) in investing activities			5,301				(144,453)
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions			-				244,860
Increase in notes and accrued interest			79,516				104,516
Increase in director’s loans			157,975				-
Net cash provided by financing activities			237,491				349,376
Net Increase (decrease) in Cash			722				(1,095)
Cash at beginning of year			1,580				2,064
Cash at End of Year		$	2,302			$	969
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid during year for interest		$	79,516			$	79,516
Cash paid during year for income taxes		$	-			$	-

  

See Notes to Consolidated Financial Statements

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TRB SYSTEMS INTERNATIONAL INC.

Notes to Consolidated Financial Statements

December 31, 2009

1.  ORGANIZATION AND NATURE OF BUSINESS

TRB Systems International Inc. ("the Company") is a holding company incorporated in Delaware on April 11, 1997. The Company has established a new subsidiary, Alenax (Tianjin) Bicycle Corp. ("Alenax") to conduct business in China. Alenax was incorporated on February 22, 2005 under the laws of People's Republic of China or PROC.  On December 22, 2008, Alenax’s name was changed to Alenax Parts Mfr. (Tianjin) Corp.

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

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

a.  Liquidity

As of December 31, 2009, the Company had cash and cash equivalents totaling $2,302 as compared to $969 as of December 31, 2008. As of December 31, 2009, the Company had working capital of $(2,030,739) compared to a working capital of $(397,216) at December 31, 2008. The Company has outstanding judgments in the amount of $381,000 that is unable to pay within one-year period.

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

b.  Going Concern

The Company incurred accumulated net losses of $ 7,468,089 from the period of April 11, 1997 (Date of Inception) through December 31, 2009, has recently commenced limited operations, and is rather, still in the development stages, thus raising substantial doubt about the Company's ability to continue as a going concern. The Company may seek additional sources of capital through the issuance of debt or equity financing, but there can be no assurance the Company will be successful in accomplishing its objectives.

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

c.  Basis of Presentation

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

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d.  Principles of Consolidation

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

e.  Use of Estimates

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

f.  Cash and Cash equivalents

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

g.  Allowance for Doubtful Accounts

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

h.  Inventories

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

i.  Property and Equipment

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

    Machinery and equipment        3-10

    Furniture and fixtures               3-10

    Engineering equipment            3-10

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

j.  Impairment of Long-Lived Assets

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

k.  Intangible Assets

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

l.  Income Tax

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credits carry-forward. Deferred tax assets

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and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

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

m.  Comprehensive Income

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

n.  Revenue Recognition

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

o.  License and Distributor Agreements

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

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

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

 

Future Commitments Per Agreements

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

p.  Research and Development

Research and product development costs are expensed as incurred. The Company incurred expense of $81,408 for the six-month period ended December 31, 2009 as compared to $4,206 for the same period ended December 31, 2008.

q.  Net Operating Loss Carry-forward

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

r.  Reclassification

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

NEW ACCOUNTING PRONOUNCEMENTS:

 In June 2009, the FASB issued the FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles (the “Codification”). The Codification became the single official source of authoritative, nongovernmental U.S. generally accepted accounting principles (“GAAP”). The Codification did not change GAAP but reorganizes the literature. The Codification is effective for interim and annual periods ending after September 15, 2009, and the Company adopted the Codification during the three months ended September 30, 2009.

 

In August 2009, the FASB issued authoritative guidance regarding accounting and disclosures related to the fair value measurement of liabilities.  The new guidance establishes valuation techniques in circumstances in which a quoted price in an active market for the identical liability is not available.  Additionally, it clarifies appropriate valuation techniques when restrictions exist that prevent the transfer of liabilities measured at fair value.  Finally, it provides further guidance on the classification of liabilities measured at fair value within the fair value hierarchy.  The new guidance is effective for interim periods ending after August 26, 2009.  The adoption of the guidance did not have a material impact on the Company’s results of operations or financial position.

 

In May 2009, the FASB issued authoritative guidance on subsequent events.  This guidance establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  This guidance is effective for interim or annual financial periods ending after June 15, 2009.  The adoption of the guidance did not have an impact on the Company’s results of operations or financial position.

 

In April 2009, the FASB issued guidance regarding the determination of fair value when the volume and level of activity for an asset or liability have significantly decreased and identifying transactions that are not orderly.  The new guidance provides for estimating fair value when the volume and level of activity for an asset or liability have significantly decreased in relation to normal market activity.  Additionally, the new guidance identifies circumstances that indicate a transaction is not orderly. The new guidance requires interim disclosures of the inputs and valuation techniques used to measure fair value reflecting changes in the valuation techniques and related inputs.   The guidance is effective for interim and annual reporting periods ending after June 15, 2009, and is to be applied prospectively.  The adoption of the guidance did not have a material impact on the Company’s results of operations or financial position.

 

In April 2009, the FASB issued guidance requiring companies to disclose information about fair value of financial instruments not measured on the balance sheet at fair value in interim financial statements as well as in annual financial statements.  Prior to this guidance, fair value for these assets and liabilities was only disclosed annually.  The guidance requires all entities to disclose the methods and significant assumptions used to estimate the fair value of financial instruments.  The new guidance is effective for interim periods ending after June 15, 2009.  In periods after initial adoption, the guidance requires comparative disclosures only for periods ending after initial adoption.  The adoption of the new guidance did not have a material impact on the Company’s results of operations or financial position.

3.  ACCOUNTS RECEIVABLE

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

                                                                       

	December 31, 2009		December 31, 2008
Accounts Receivable	$3,238		$15,174
Less: Allowance for doubtful accounts	-		-
Net Accounts Receivable	$3,238		$15,174

4. PROPERTY AND EQUIPMENT

Fixed assets are summarized by classifications as follows:

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	December 31, 2009
Office equipment	$77,598
Tools and machinery	79,321
Automobile	50,947
Moldings	767,518
Booth for show	137,470
Informational tapes and other promotional materials	50,000
	1,162,854
Less: Accumulated depreciation	(1,034,499)
	$128,355

5. 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 International Inc. for the worldwide manufacture and sale of the Transbar Power System (TPS). The timing, methodology and general details of the manufacture and sales are left to TRB, as is the design and utilization of the goods employing the technology. The rights, licensed to TRB by ABL 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 agreed to defer payment of the $200,000 until TRB Systems International Inc has suitable cash flow to meet its current needs.

Any cost incurred by TRB Systems International Inc. to maintain the patents and that calls for reimbursement by ABL according to the agreement, will be used as a credit toward the $200,000 license fees due to ABL on the first anniversary following the commencement of active bicycle sales. As of December 31, 2009 ABL Properties owes the Company $245,971 Net.

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 December 31, 2009 the outstanding amount due was $ 632,182.

 6.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses also include the capitalized portion of legal and consulting expenses incurred in the development of standardized contacts, promotional materials and the filling and registration of patents, and are amortized over a sixty-month period. As of December 31, 2009 the accounts payable and accrued expenses were $39,481 and $8,554 as of December 31, 2008.

7.  NOTES AND INTEREST PAYABLE

Notes payable are unsecured notes to individuals.  As of December 31, 2009, the Company had notes payable in the amount of $2,053,856 and accrued interest payable of $1,023,907.  Interest expense attributable to notes payable totaled $79,516 for the six-month period ended December 31, 2009.  Interest rate on the notes ranged from zero to 10%.

8.  CONVERTIBLE DEBT

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

9.  PENDING SUITS AND JUDGMENT

As of December 31, 2009, there are outstanding judgments in the amount of $381,000 against the Company. Management asserts that negotiations have been initiated to have the amounts reduced but the outcome of such

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negotiations is uncertain. Management believes the company is not in the financial position to pay these amounts within one-year period and therefore classified the legal judgments payable to long term.

The outstanding judgments consist of:

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

10.  CAPITAL STOCK

The company is authorized to issue 60,000,000 at $0.001 par value share. As of December 31, 2009 the amount of voting common shares issued and outstanding are 29,319,922 and additional paid in capital of $3,564,288.

11.  NET LOSS PER SHARE

Net loss per common share for the years ended December 31, 2009 and 2008 is calculated using the weighted-average number of common shares outstanding and common shares equivalents during the periods.

12.  COMMITMENTS AND CONTINGENCIES

12.1  Lease Commitments

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

12.2  Litigation

As per the Company, as of December 31, 2009, there are no material actions, suits, proceedings or claims pending against or materially affecting the Company, which if adversely determined, would have a material adverse effect on the financial condition of TRB International Systems, Inc. other than the judgments in note 9.

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

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

Overview

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

For the past two years, the Company focused its efforts on redesigning products, improving product quality, conducting product tests, including strength, durability and road tests. To date, this process is basically completed, and the Company has started to focus on market and sales of our products, but the Company has not been successful in selling

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its products. As a result, the Company recently changed its business plan from being a high-end bicycle manufacturer and marketer to being a bicycle part manufacturer. The Company will mainly focus on selling and marketing Uni-Set as a bike part maker. Accordingly, the name of the Company’s operating subsidiary, Alenax (Tianjin) Bicycle Corp., was changed to Alenax Parts Mfr (Tianjin) Corp. on December 2, 2008. However, the Company will also take orders for manufacturing /assembling completed bicycles if customers ask us to do so.

As of December 31, 2009, we have finished the complete tests for commercial level of our entire top quality lines of the Alenax Uni-Set.

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

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

Results of Operations

For the Three-Month Periods Ended December 31, 2009 and 2008

Revenues

For the three months ended December 31, 2009, we had total revenue of $144, as compared to $3,961for the same period of the prior year.

Cost of Revenues

Cost of goods sold consists primarily of the material cost of goods sold, direct overhead, direct wages, and direct depreciation expense.  For the three months ended December 31, 2009 and 2008, our cost of revenues was $117 and $2,798, respectively, approximately 79.6% and 70.6% of the revenues.  

Operating Costs and Expenses

For the three months ended December 31, 2009, our total operating costs and expenses decreased $17,968, or 16%, from $109,573 for the three months ended December 31, 2009 to $91,605 for the same period of this year. The decrease in operating expenses was primarily due to decreases in marketing expense and professional fees.

Other Income and Expenses

For the three months ended December 31, 2009, our total other expenses were $39,755, which primarily consisted of $39,758 of interest expenses.  For the same period of 2008, our total other expenses were $39,908, which consisted of $39,758 of interest expenses and loss of $150 from foreign currency translations.  

Net Loss

Net loss for the three months ended December 31, 2009 and 2008 were $131,330, or $0.00 per share, and $148,318, or $0.01 per share, respectively.

For the Six-Month Periods Ended December 31, 2009 and 2008

Revenues

For the six months ended December 31, 2009, we had total revenue of $545, as compared to $7,495 for the same period of the prior year.

Cost of Revenues

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Cost of goods sold consists primarily of the material cost of goods sold, direct overhead, direct wages, and direct depreciation expense.  For the six months ended December 31, 2009 and 2008, our cost of revenues was $465 and $5,420, respectively, approximately 85% and 72% of the revenues.  

Operating Costs and Expenses

For the six months ended December 31, 2009, our total operating costs and expenses increased to $218,036, approximately 30%, from $167,153 for the same period of the last yea. The increase in operating expenses was primarily due to an increase in depreciation expense by an amount of $18,834 and an increase in research and development expenses by an amount of $77,202.

Other Income and Expenses

For the six months ended December 31, 2009, our total other expenses were $79,516, which consisted of interest expenses.  For the same period of 2008, our total other expenses were $79,659, which consisted of $79,516 of interest expenses and loss of $150 from foreign currency translations.  

Net Loss

Net loss for the six months ended December 31, 2009 and 2008 were $297,466, or $0.01 per share, and $$244,737, or $0.01 per share, respectively.

Liquidity and Capital Resources:

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

As of December 31, 2009, the Company’s cash and cash equivalents balance was $2,302.

For the six months ended December 31, 2009, the Company’s net cash used in operating activities was $242,070, primarily due to our net loss of $297,466, offset by increase in depreciation and amortization expense of $43,833. During the six-month period ended December 31, 2009, our investing activities provided net cash of $5,301 from decrease in prepaid and other assets. During the same period, our financing activities provided net cash of $237,491 from loans from the Company’s directors of $157,975, and from increase in notes and accrued interest of $79,516.  

As disclosed on Note 9 of our Notes to Financial Statements, as of December 31, 2009, we had outstanding judgment in a total of $381,000 incurred in 2000-2001.

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

Off-balance sheet arrangements:

As of December 31, 2009, there were no off-balance sheet arrangements.

Critical Accounting Policies:

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

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.

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Item 3.  Quantitative and Qualitative Disclosures about Market Risk

Not applicable for smaller reporting companies.

Item 4 (T).  Controls and Procedures

(a) Disclosure Controls and Procedures

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

(b) Changes in internal controls over financial reporting

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None

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

None

Item 3. Defaults Upon Senior Securities

None

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

None

Item 5. Other Information

None

 

Item 6.  Exhibits

Exhibit No.                                                Title of Document

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

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

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SIGNATURES

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

TRB SYSTEMS INTERNATIONAL INC.

By : /s/ Byung Yim

Byung Yim, President, Chief Executive Officer and

Chief Financial Officer   

Date:   February 17, 2010

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