U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2010

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

For the transition period from ____ to ____

Commission file number 000-150613

TRAI THIEN USA INC.

(Exact name of small business issuer as specified in its charter)

Issuer's telephone number, including area code: (848) 3975-3070

No Change

(Former name, former address and former

fiscal year, if changed since last report)

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  X . No      .

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.

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

Indicate the number of shares outstanding of each of the issuer's classes of Common Stock as of the latest practicable date: 241,500,000 shares of Common Stock, $.001 par value as of December 20, 2010.

INDEX

PART I. - FINANCIAL INFORMATION

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TRAI THIEN USA INC.

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

3

TRAI THIEN USA INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2010 AND DECEMBER 31, 2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

See accompanying notes to condensed consolidated financial statements.

4

TRAI THIEN USA INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE (LOSS) INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

5

TRAI THIEN USA INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars (“US$”))

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

6

TRAI THIEN USA INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

7

TRAI THIEN USA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States of America (“GAAP”) and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

In the opinion of management, the consolidated balance sheet as of December 31, 2009 which has been derived from audited consolidated financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended September 30, 2010 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2010 or for any future period.

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2009.

NOTE 2 – ORGANIZATION AND BUSINESS BACKGROUND

Trai Thien USA Inc. (“TRTH” or the “Company”) was incorporated under the laws of the State of Nevada on January 23, 2004. In September 2004, it filed a notice with the Securities and Exchange Commission (File No.: 814-00674) of its intent to elect in good faith to be regulated as a Business Development Company (“BDC”) under the Investment Company Act of 1940 and be subject to Sections 54 through 65 of the said Act. In July 2008, it began steps to withdraw its election and ceased being a BDC. On January 13, 2010, the Company changed its name to “Trai Thien USA Inc.”

The Company operates its chartered and owned vessels in the ocean transportation in Vietnam and throughout Southeast Asia, through its variable interest entity (“VIE”), Trai Thien, which is registered as a joint stock company under the Enterprise Law of the Socialist Republic of Vietnam on June 11, 2007, which primarily charters vessels from the ship-owners and operates the vessels in the ocean transportation of a broad range of major and minor bulk cargoes including iron ore, coal, grain, cement and fertilizer, along Asian shipping routes.

On August 23, 2010, the Company effectuated a forward stock split of its common stock at a split ratio of 7-for-1, pursuant to a plan approved by the Company’s Board of Directors. All common stock and per share data for all periods presented in these condensed consolidated financial statements have been restated to give effect to the reverse stock split.

The Company and its VIE are hereinafter referred to as (the "Company").

NOTE 3 - GOING CONCERN UNCERTAINTIES

The Company’s condensed consolidated financial statements are presented on a going concern basis, which contemplates the continuity of operations and realization of assets and satisfaction of liabilities and commitments in the normal course of business.

The Company has committed and contracted for the construction of six vessels in Vietnam with a combined carrying capacity of 45,600 deadweight tons in the aggregate value of approximately $60.7 million (equivalent to VND1,170 billion), which are expected to be delivered between 2010 and 2011. As of September 30, 2010, the Company has $58,522 available cash and cash equivalents and suffers from negative working capital of $12,532,154, whereas the Company may not have sufficient working capital to meet with these capital commitments. Also, the Company has defaulted on repayment of certain short-term bank borrowings. The Company plans to finance the construction of these six newly-built vessels and repay the borrowings through additional capital injection from its shareholders or external financing from banks or a mix of financing sources. However, there can be no assurance that the Company will be able to obtain sufficient funds to meet its obligations on a timely basis towards the delivery of the vessels.

These factors raise substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.

8

TRAI THIEN USA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated financial statements and notes.

·

Use of estimates

In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the periods reported. Actual results may differ from these estimates.

·

Basis of consolidation

The condensed consolidated financial statements include the financial statements of TRTH and its VIE. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.

The Company has adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810-10-5-8, “Variable Interest Entities” which requires a variable interest entity or VIE to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIEs or is entitled to receive a majority of the VIE’s residual returns.

·

Cash and cash equivalents

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

·

Accounts receivable and allowance for doubtful accounts

Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the existing accounts receivable. The Company determines the allowance based on historical write-off experience of the Company. The Company reviews its allowance for doubtful accounts on a regular basis. All other balances are reviewed on a specific basis based on the aging of receivables, payment history, the customer’s current credit worthiness and the economic environment. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers.

As of September 30, 2010 and December 31, 2009, the allowance for doubtful accounts was $9,192 and $9,665, respectively.

·

Vessel construction in progress

Vessel construction in progress represents the cost of contracts to build vessels and other direct costs relating to acquiring and placing the vessels in service. No depreciation is provided for until the vessel is substantially complete and ready for its intended use. No capitalized interest is incurred during the period of vessel construction.

·

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational:

9

TRAI THIEN USA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

Expenditure for maintenance and repairs is expensed as incurred. The gain or loss on the disposal of plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in the statement of operations.

As of September 30, 2010, two vessels and six motor vehicles with the aggregate carrying values of $8,812,542 were pledged as securities in connection with the outstanding long-term borrowings.

Depreciation expenses for the three months ended September 30, 2010 and 2009 were $165,986 and $6,011, respectively.

Depreciation expenses for the nine months ended September 30, 2010 and 2009 were $449,380 and $10,326, respectively.

·

Impairment of long-lived assets

Long-lived assets primarily include property, plant and equipment and vessel construction in progress. In accordance with the provisions of ASC Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets”, the Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There has been no impairment as of September 30, 2010.

·

Revenue recognition

In accordance with the ASC Topic 605, “Revenue Recognition”, the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured.

(a)

Cargo transportation revenue

Recognition of cargo transportation revenue is based upon ASC Topic 605-20-25-13, “Services for Freight-in-Transit at the End of a Reporting Period”. The Company recorded both transportation revenue and its direct costs when the shipment is completed.

Revenue represents the invoiced value of services, net of value-added tax (“VAT”) and brokerage commission payable to unaffiliated shipping agents.

(b)

Interest income

Interest income is recognized on a time apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable.

·

Comprehensive income or loss

ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income or loss, its components and accumulated balances. Comprehensive income or loss as defined includes all changes in equity during a period from non-owner sources. Accumulated comprehensive income or loss, as presented in the accompanying condensed statements of stockholders’ equity consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income or loss is not included in the computation of income tax expense or benefit.

·

Income taxes

Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this 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 basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any 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.

10

TRAI THIEN USA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

For the nine months ended September 30, 2010 and 2009, the Company did not have any interest and penalties associated with tax positions. As of September 30, 2010, the Company did not have any significant unrecognized uncertain tax positions.

The Company conducts major businesses in Vietnam and is subject to tax in its own jurisdiction. As a result of its business activities, the Company files separate tax returns that are subject to examination by the foreign tax authority.

·

Foreign currencies translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.

The reporting currency of the Company is United States Dollars ("US$") and the accompanying financial statements have been expressed in US$. In addition, the Company maintains its books and record in a local currency, Vietnamese Dong ("VND"), which is functional currency as being the primary currency of the economic environment in which its operation is conducted. In accordance with ASC Topic 830-30, “Translation of Financial Statement”, assets and liabilities of the Company whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

Translation of amounts from VND into US$1 has been made at the following exchange rates for the respective period:

·

Related parties

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

·

Segment reporting

ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. The Company operates in one reportable operating segment in Vietnam.

11

TRAI THIEN USA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

·

Fair value measurement

ASC Topic 820-10, “Fair Value Measurements and Disclosures” ("ASC 820-10") establishes a new framework for measuring fair value and expands related disclosures. Broadly, ASC 820-10 framework requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC 820-10 establishes a three-level valuation hierarchy based upon observable and non-observable inputs. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

For financial assets and liabilities, fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. In the absence of active markets for the identical assets or liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date.

·

Fair value of financial instruments

The carrying value of the Company’s financial instruments include cash and cash equivalents, accounts receivable, prepayments and other current assets, accounts payable, amounts due to a stockholder, promissory note, income tax payable, accrued liabilities and other payables. Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair values. The carrying value of the Company’s short-term and long-term bank borrowings approximated its fair value based on the current market conditions for similar debt instruments.

·

Recent accounting pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

In September 2009, the Financial Accounting Standard Board (“FASB”) issued certain amendments as codified in ASC Topic 605-25, “Revenue Recognition; Multiple-Element Arrangements.” These amendments provide clarification on whether multiple deliverables exist, how the arrangement should be separated, and the consideration allocated. An entity is required to allocate revenue in an arrangement using estimated selling prices of deliverables in the absence of vendor-specific objective evidence or third-party evidence of selling price. These amendments also eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method.  The amendments significantly expand the disclosure requirements for multiple-deliverable revenue arrangements. These provisions are to be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with earlier application permitted. The Company will adopt the provisions of these amendments in its fiscal year 2011 and is currently evaluating the impact of these amendments to its consolidated financial statements.

 In April 2010, the FASB issued ASU 2010-13, Compensation – Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades. ASU 2010-13 provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based payment that contains a condition that is not a market, performance, or service condition is required to be classified as a liability. ASU 2010-13 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010 and is not expected to have a significant impact on the Company’s financial statements.

In July 2010, the FASB issued new accounting guidance that will require additional disclosures about the credit quality of loans, lease receivables and other long-term receivables and the related allowance for credit losses. Certain additional disclosures in this new accounting guidance will be effective for the Company on December 31, 2010 with certain other additional disclosures that will be effective on March 31, 2011. The Company does not expect the adoption of this new accounting guidance to have a material impact on its consolidated financial statements.

12

TRAI THIEN USA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

NOTE 5 – PREPAYMENTS AND OTHER CURRENT ASSETS

Prepayments and other current assets consisted of the following:

NOTE 6 – VESSEL CONSTRUCTION IN PROGRESS

During 2007, the Company contracted for the construction of 6 vessels in Vietnam with a combined carrying capacity of 45,600 deadweight tons. The total cost of the contracts for 6 vessels under construction at two unaffiliated shipyards in Vietnam is approximately $60,656,000 (equivalent to VND1,170 billion). These vessels are expected to be delivered between 2010 and 2011. The Company will incur additional associated costs relating to the construction of these vessels under the contracts.

During 2009, the Company contracted for the construction of the additional 1 vessel with a carrying capacity of 4,300 deadweight tons. The construction cost of the vessel is approximately $4,861,000 (equivalent to VND93.9 billion) at the unaffiliated shipyard in Vietnam. The vessel is expected to be delivered in 2010, subject to the full settlement of outstanding payment. However, on June 8, 2010, the Company agreed with the shipyard to terminate the construction contract with no compensation or liquidated damage.

As of September 30, 2010, the aggregate vessel construction in progress was amounted to $17,275,788.

NOTE 7 – PROMISSORY NOTE

On March 30, 2010, the Company entered into a promissory note (“the Note”) with GRM Mal-Sin Shipping (M) Sdn, Bhd, (“GRM”), one of the Company’s major customers, for a principal amount of $1,437,912 (equivalent to VND 28 billion). The Note was unsecured and interest-free. In connection with the Note, the Company agreed to provide its vessel on a basis of first priority to serve GRM and reserved the right to set-off the transportation charges against the Note as repayment. For the nine months ended September 30, 2010, the promissory note was mostly repaid by offsetting accounts receivable.  As of September 30, 2010, the balance of promissory note was to $11,619 (equivalent to VND 228,087,021).

13

TRAI THIEN USA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

NOTE 8 – BANK BORROWINGS

Bank borrowings consisted of the following:

(a)

Short-term bank borrowings payable to financial institutions in Vietnam:

(i)

In June 2010, the Company received a short-term facility of $724,750 (equal to VND 14 billion) from Trust Bank in a term of three months, which carried interest rate of 14.4% per annum, payable monthly. The facility is secured by the Company’s owned vessel with its caryying value of $4.3 million as of September 30, 2010. As of September 30, 2010, the facility became due and the Company is subject to penalty interest at 1.5 times of its annual interest rate, payable monthly. The Company has been in negotiations with the bank, but has not yet reached an agreement as to repayment of principal and interest.

(ii)

The Company received a short term bank loan from AgriBank in a term of 12 months for working capital purposes. Interest was carried at an annual rate of 14%, subject to changes by the State Bank of Vietnam, payable monthly. The line is secured by the real properties including residential house and land use rights with the aggregate carrying values of $3.8 million which are personally owned by the major stockholder and the director of the Company, Mr. Nguyen Quoc Khanh.

(iii)

The Company received its revolving credit facility from VID Public Bank in a term of 12 months, with a maximum available borrowing up to $3 million for working capital purposes. Interest was carried at minimum interest rate of 5% per annum, or subject to floating rates, which equal to the higher of SIBOR plus 2.5% per annum or fixed deposit rate plus 2.5%. The outstanding balance under the credit facility becomes matured in 150 days from the drawdown date and the facility will be extended or renewed subject to an annual review at the option of the bank. Weighted average interest rate approximately 5% per annum for the period ended September 30, 2010, payable monthly. The credit facility is personally guaranteed by the major stockholder and the director of the Company, Mr. Nguyen Quoc Khanh and secured by his real properties with the aggregate carrying value of $10.5 million. As of September 30, 2010, the facility became due and the Company is subject to penalty interest at 1.5 times of its annual interest rate, payable monthly. The Company has been in negotiations with the bank, but has not yet reached an agreement as to repayment of principal and interest.

14

TRAI THIEN USA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

(b)

Long-term bank borrowings payable to financial institutions in Vietnam:

(i)

The Company received an aggregate long-term facility of $5.4 million from Trust Bank. These facilities are secured by the Company’s two owned vessels with the aggregate net book value of $8.6 million as of September 30, 2010.

(ii)

The Company received a long-term facility of $0.14 million from Kien Long Bank. The facility is secured by the Company’s six motor vehicles with the carrying values of $196,030 as of September 30, 2010.

As of September 30, 2010, the maturities of the long-term bank borrowings for the next five years are as follows:

NOTE 9 – ACCRUED LIABILITIES AND OTHER PAYABLES

Accrued liabilities and other payables consisted of the following:

15

TRAI THIEN USA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

NOTE 10 – STOCK BASED COMPENSATION

On April 16, 2010, the Company issued 3,500,000 shares (post forward stock split) of its common stock to its attorney for legal services rendered, at a fair market price of $0.002 per share or a total value of $7,143.

On July 25, 2010, the Company issued 28,000,000 shares (post forward stock split) of its common stock to a consultant for marketing services in the shipping and airline transportation sectors for a term of 3 years, at a fair market price of $0.0063 per share or a total value of $177,200.

NOTE 11 – INCOME TAXES

For the nine months ended September 30, 2010 and 2009, the local (“United States of America”) and foreign components of (loss) income before income taxes were comprised of the following:

The provision for income tax consisted of the following:

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company operates in various countries: United States of America and Vietnam that are subject to tax in the jurisdictions in which they operate, as follows:

United States of America

The Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. The Company does not incur any operation in the United States.

Socialist Republic of Vietnam

Effective from January 1, 2009, the Company’s VIE, Trai Thien is subject to the new income rate of 25% on the taxable income under the Law on Corporate Income Tax of the Socialist Republic of Vietnam.

16

TRAI THIEN USA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

Pursuant to the New CIT Law, the Company is eligible for corporate income tax holiday, whereas its business is established in a special development zone or considered as encouraged investment. Under such tax holiday, the Company is exempted from corporate income tax for the first two years starting from its first profit-making year, entitled to a reduced corporate income tax rate of 10% for the following three years and a preferential corporate income tax rate of 20% for the remaining five years. Trai Thien continues to enjoy the tax holiday expiring through fiscal year 2016.

The reconciliation of income tax rate to the effective income tax rate based on (loss) income before income taxes for the nine months ended September 30, 2010 and 2009 is as follows:

The following table sets forth the significant components of the aggregate deferred tax assets of the Company as of September 30, 2010 and December 31, 2009:

NOTE 12 – CONCENTRATIONS OF RISK

The Company is exposed to the following concentrations of risk:

(a)

Major customers

For the three and nine months ended September 30, 2010 and 2009, the customer who accounts for 10% or more of the Company’s revenues and its outstanding balance as at period-end dates, are presented as follows:

17

TRAI THIEN USA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

(b)

Credit risk

No financial instruments that potentially subject the Company to significant concentrations of credit risk. Concentrations of credit risk are limited due to the Company’s large number of transactions are on the cash basis.

(c)

Interest rate risk

As the Company has no significant interest-bearing assets, the Company’s income and operating cash flows are substantially independent of changes in market interest rates.

The Company’s interest-rate risk arises from bank borrowings. Borrowings issued at variable rates expose the Company to cash flow interest-rate risk. Borrowings issued at fixed rates expose the Company to fair value interest-rate risk. The Company’s policy is to obtain the most favorable interest rates available for its borrowings. At the period-end, all of borrowings were at floating and fixed rates.

(d)

Exchange rate risk

The reporting currency of the Company is US$, to date the majority of the revenues and costs are denominated in VND and a significant portion of the assets and liabilities are denominated in VND. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$ and VND. If VND depreciates against US$, the value of VND revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.

18

TRAI THIEN USA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

(e)

Economic and political risks

Substantially all of the Company’s services are conducted in Vietnam and Asian region. The Company’s operations are subject to various political, economic, and other risks and uncertainties inherent in Vietnam. Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations in Vietnam.

NOTE 13 – COMMITMENTS AND CONTINGENCIES

(a)

Capital commitments

The Company is committed and contracted with two unaffiliated shipyards, Dai Duong Joint Stock Ocean Transportation Company and Hai Ha Road and Water Transport Company Limited, respectively, for the construction of six vessels in Vietnam. The total estimated construction cost for six vessels was approximately $60.7 million. These vessels are expected to be delivered between 2010 and 2011.

As of September 30, 2010, the aggregate future minimum payments to the shipyards in the next two years are as follows:

(b)

Operating lease commitments

As of the date of the report, the Company is committed to four vessel charter agreements to operate four oceangoing vessels for a term of four to six months, all expiring December 31, 2010, with a fixed monthly rental rate and generally did not contain significant renewal options. For the nine months ended September 30, 2010 and 2009, the Company incurred and paid vessel rental of $1,220,400 and $1,561,830, respectively. The Company has the future minimum rental payments of $291,121 under the operating lease agreement within the next 12 months.

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Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

Some of the statements contained in this Form 10-Q that are not historical facts are "forward-looking statements" which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Form 10-Q, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:

·

Our ability to attract and retain management, and to integrate and maintain technical information and management information systems;

·

Our ability to raise capital when needed and on acceptable terms and conditions;

·

The intensity of competition; and

·

General economic conditions.

All written and oral forward-looking statements made in connection with this Form 10-Q that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.

Plan of Operations

We are a Vietnam-based sea cargo company, formed in 2007, specializing in the transport of dry bulk commodities within Southeast Asia. As of 30 September, 2010, we had a fleet of six vessels with an average size of 3,666 dead weight tonnage (“DWT”), or total capacity of 21,998 DWT. Of these, two vessels of 4,300 DWT each are owner-operated, one of 3,612 DWT is term-leased and three vessels with average capacity of 3,262 DWT are on monthly charter-in and charter-out basis. Due to the current capacity of our ships, most of our business is conducted within Southeast Asia and southern China.

We have made deposits for building six new cargo ships with a capacity of 7,600 DWT each. These vessels are expected to be delivered between 2010 and 2011.

As of September 30, 2010, the Company is required to make aggregate future minimum payments of $23,221,385 and $19,102,440 to the shipyards in the years ending September 30, 2011 and 2012, respectively. As of September 30, 2010, the Company has available $58,522 cash and cash equivalents. The Company plans to finance the construction of these six newly-built vessels through additional capital injection from its shareholders or external financing from banks or a mix of financing sources. However, there can be no assurance that the Company will be able to obtain sufficient funds to meet with its obligations on a timely basis towards the delivery of the vessels.

With our expansion plan, Trai Thien’s total capacity is expected to significantly increase to 67,598 DWT by 2011. Given the larger size and young age of our cargo ships, we believe we can further distance ourselves from locally-owned and foreign-owned competitors in Vietnam and greater South East Asia.

Results of Operations for the Three Months Ended September 30, 2010 and 2009

Revenues for the three months ended September 30, 2010 increased by $1,345,945, or 82%, to $2,997,243 compared to $1,651,298 for the three months ended September 30, 2009. This increase was primarily due to the launching of an owner-operated vessel with capacity of 4,300 DWT in November 2009, and another vessel of 4,300 DWT in April 2010, attributing to an increase of 64% in the total capacity of our fleet from 13,398 DWT during the three months ended September 30, 2009 to 21,998 DWT during the three months ended September 30, 2010. With the increase in our fleet dead weight tonnage, we were able to increase the number of our nautical trips from 10 trips during the three months ended September 30, 2009 to 28 trips during the three months ended September 30, 2010, or an increase of 180%.

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Voyage expenses for the three months ended September 30, 2010 were $1,309,557 compared to $555,614 for the three months ended September 30, 2009, an increase of $ 753,943, or 136%. Voyage expenses mainly include fuel, pilot, towage and port fees. We attributed the increase of voyage expenses to the increase in the number of our vessels and the increase in the number of our nautical trips during the three months ended September 30, 2010 compared to the same period last year. Fuel expense for the three months ended September 30, 2010 increased by $837,697, or 363%, to $1,068,487 compared to $230,790 for the same period last year. Pilot, towage and port fees for the three months ended September 30, 2010 decreased by $38,133, or 14%, to $225,003 compared to $263,136 for the same period last year.

Vessel operating expenses for the three months ended September 30, 2010 were $760,511 compared to $407,066 for the three months ended September 30, 2009, an increase of $353,445, or 87%. Vessel operating expenses mainly include crewing expenses, ship administrative expenses, vessel depreciation expense and vessel insurance. We attributed the increase of vessel operating expenses to the increase in the number of our vessels during the three months ended September 30, 2010 compared to the same period last year. Crewing expenses for the three months ended September 30, 2010 increased by $227,320, or 142%, to $387,708 compared to $160,388 for the same period last year. The crewing expense increase was attributable to the increase in the number of crewmen of 52% from 69 people for the three months ended September 30, 2009 to 105 people for the three months ended September 30, 2010 and the increase in crew salaries.

Rental expense for the three months ended September 30, 2010 was $243,919 compared to $517,695 for the same period last year. The decrease of $273,776, or 53%, was attributable to the Company’s ability to negotiate at lower prices for its four charter-in vessels. The Company currently leases out three of these four vessels at a minimal markup over its charter-in rates.

Selling, general and administrative expenses for the three months ended September 30, 2010 were $253,079 compared to $45,125 for the three months ended September 30, 2009, an increase of $207,954, or 461%. Selling, general and administrative expenses mainly included office expenses, salary of administration staff, audit fees and consultancy fees.

Interest expense for the three months ended September 30, 2010 was $355,415 compared to $66,636 for the three months ended September 30, 2009. We attribute the increase of $288,779, or 433%, to the increase in short-term borrowing and long-term borrowing for the financing of working capital needs and acquisition and building of new vessels.

Income tax expense for the three months ended September 30, 2010 was $88,326 compared to income tax credit of $13,326 for the three months ended September 30, 2009.

As a result of the foregoing, the Company incurred a loss of $13,550 for the three months ended September 30, 2010 while posted a net income of $72,544 for the three months ended September 30, 2009.

Results of Operations for the Nine Months ended September 30, 2010 and 2009

Revenues increased by $3,745,627 or 65% to $9,466,849 for the nine months ended September 30, 2010 compared to $5,721,222 for the prior year period. This increase was primarily due to the launching of an owner-operated vessel with capacity of 4,300 DWT in November 2009, and another vessel of 4,300 DWT in April 2010, attributing to an increase of 64% in the total capacity of our fleet from 13,398 DWT during the nine months ended September 30, 2009 to 21,998 DWT during the nine months ended September 30, 2010. With the increase in our fleet dead weight tonnage, we were able to increase the number of our nautical trips from 93 trips during the nine months ended September 30, 2009 to 46 trips during the nine months ended September 30, 2010, or an increase of 102%.

Voyage expenses for the nine months ended September 30, 2010 were $5,024,366 compared to $2,360,188 for the nine months ended September 30, 2009, an increase of $2,664,178, or 113%. Voyage expenses mainly include fuel, pilot, towage and port fees. We attributed the increase of voyage expenses to the increase in the number of our vessels and the increase in the number of our nautical trips during the nine months ended September 30, 2010 compared to the same period last year. Fuel expense for the nine months ended September 30, 2010 increased by $2,578,214, or 225%, to $3,726,423 compared to $1,148,209 for the same period last year. Pilot, towage and port fees for the nine months ended September 30, 2010 increased by $151,034, or 14%, to $1,235,135 compared to $1,084,101 for the same period last year.

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Vessel operating expenses for the nine months ended September 30, 2010 were $1,707,000 compared to $777,876 for the nine months ended September 30, 2009, an increase of $929,124, or 119%. Vessel operating expenses mainly include crewing expenses, ship administrative expenses, vessel depreciation expense and vessel insurance. We attributed the increase of vessel operating expenses to the increase in the number of our vessels during the nine months ended September 30, 2010 compared to the same period last year. Crewing expenses for the nine months ended September 30, 2010 increased by $389,800, or 91%, to $817,209 compared to $427,409 for the same period last year. The crewing expense increase was attributable to the increase in the number of crewmen of 52% from 69 people for the nine months ended September 30, 2009 to 105 people for the nine months ended September 30, 2010 and the increase in crew salaries.

Rental expense for the nine months ended September 30, 2010 was $1,220,400 compared to $1,561,830 for the same period last year. The decrease of $341,430, or 22%, was attributable to the Company’s ability to negotiate at lower prices for its four charter-in vessels. The Company currently leases out three of these four vessels at a minimal markup over its charter-in rates.

Selling, general and administrative expenses for the nine months ended September 30, 2010 were $844,505 compared to $613,554 for the nine months ended September 30, 2009, an increase of $230,951, or 38%. Selling, general and administrative expenses mainly included office expenses, salary of administration staff, audit fees and consultancy fees.

Interest expense for the nine months ended September 30, 2010 was $1,120,396 compared to $93,231 for the nine months ended September 30, 2009. We attribute the increase of $1,027,165, or 1102%, to the increase in short-term borrowing and long-term borrowing for the financing of working capital needs and acquisition and building of new vessels.

Income tax expense for the nine months ended September 30, 2010 was $109,880 compared to income tax credit of $14,992 for the nine months ended September 30, 2009.

As a result of the foregoing, the Company incurred a loss of $549,983 for the nine months ended September 30, 2010 while posted a net income of $330,244 for the nine months ended September 30, 2009.

Liquidity and Capital Resources

As of September 30, 2010, cash and cash equivalents were $58,522 compared to $102,484 as of January 1, 2010.

The Company generated cash of $3,620,112 in operating activities for the nine months ended September 30, 2010 while used cash of $517,821 in operating activities for the same period in 2009. The major reasons were the receipt of an advance that was previously made to a supplier of $2,611,027, an increase in trade accounts payable of $2,128,161 and an increase in accrued liabilities and other payables of $1,297,604, offset by an increase in trade accounts receivable of $1,546,717 and an increase in prepayment and other current assets of $1,073,250.

The Company used cash of $7,468,767 in investing activities for the nine months ended September 30, 2010 while used cash of $4,269,921 for the same period in 2009 which were primarily payments to shipyards on vessel building and for vessel purchase.

During the nine months ended September 30, 2010, the Company generated net cash of $3,807,441 from financing activities. The cash inflows were attributable to proceeds from bank borrowings of $6,699,142, of which $3,266,112 was long term, and proceed from promissory note of $1,454,662 to primarily finance vessel acquisition. Repayments of short term borrowings were $4,275,215 and repayments of long term borrowings were $83,953. During the nine months ended September 30, 2009, the Company generated net cash of $5,651,680, of which proceeds from short term bank borrowings were $4,189,008 and advance from a stockholder was $1,551,982.

The Company has committed and contracted for the construction of six vessels in Vietnam with a combined carrying capacity of 45,600 deadweight tons in the aggregate value of approximately $60.7 million (equivalent to VND1,170 billion), which are expected to be delivered between 2010 and 2011. As of September 30, 2010, the Company has $58,522 available cash and cash equivalents and suffers from negative working capital of $12,532,154, whereas the Company may not have sufficient working capital to meet with these capital commitments. The Company plans to finance the construction of these six newly-built vessels through additional capital injection from its shareholders or external financing from banks or a mix of financing sources. However, there can be no assurance that the Company will be able to obtain sufficient funds to meet with its obligations on a timely basis towards the delivery of the vessels.

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We estimate that our operational expenses over the next twelve months will be approximately $9,377,498, consisting of voyage expenses of $5,191,233, vessel operating expenses of $3,049,526 and selling, general and administrative expenses of $1,136,740. We estimate that our long term operational expenses will be approximately $781,458 a month, consisting of voyage expenses of $432,603, vessel operating expenses of $254,127 and selling, general and administrative expenses of $94,728. The Company expects to meet such expenses through a mix of the additional capital from its shareholders and external financing from the banks and its internally generated cash flows. Over the next twelve months, we estimate that the Company would generate cash of $2,552,880 from operating activities and $24,009,211 from financing activities while using $23,477,335 in investing activities.

As of September 30, 2010, total current assets were $1,791,612 compared to total current liabilities of $14,323,766, translating to a current ratio of 0.13 times. As of September 30, 2010, short-term bank borrowings were $6,362,029 and the current portion of long term bank borrowings was $2,785,238. As of September 30, 2010, overdue loans amounted to $3,713,158. The Company is in the process of negotiating with the banks and is dependent on its ability in reaching agreements with banks to either refinance or reschedule when these short-term borrowings are due. However, there can be no assurance that the Company will be able to reach such agreements.

These factors raise substantial doubt about the Company’s ability to continue as a going concern. These condensed financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.

Critical Accounting Policies

The preparation of financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.

Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements.  There are no critical policies or decisions that rely on judgments that are based on assumptions about matters that are highly uncertain at the time the estimate is made.  Note 4 to the consolidated financial statements as of September 30, 2010 includes a summary of the significant accounting policies and methods used in the preparation of our financial statements. 

Off-Balance Sheet Arrangements

Since our inception, except for standard operating leases and the Vietnamese variable interest entity, Trai Thien, we have not engaged in any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K, including the use of structured finance, special purpose entities or other variable interest entities.

Capital commitments

The Company is committed and contracted with two unaffiliated shipyards, Dai Duong Joint Stock Ocean Transportation Company and Hai Ha Road and Water Transport Company Limited, respectively, for the construction of six vessels in Vietnam. The total estimated construction cost for six vessels was approximately $60.7 million. These vessels are expected to be delivered between 2010 and 2011.

As of September 30, 2010, the Company is required to make aggregate future minimum payments of $23,221,385 and $19,102,440 to the shipyards in the years ending September 30, 2011 and 2012, respectively.

Operating lease commitments

As of the date of the report, the Company is committed to four vessel charter agreements to operate four oceangoing vessels for a term of four to six months all due December 31, 2010, with fixed monthly rental rates and generally did not contain significant renewal options. For the nine months ended September 30, 2010 and 2009, the Company incurred and paid vessel rental of $1,220,400 and $1,561,830, respectively. The Company has the future minimum rental payments of $291,121 under the operating lease agreements within the next 12 months.

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Item 3. Quantitative and Qualitative Disclosure About Market Risk

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our President, Chief Financial Officer and Secretary, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the period covered by this report. Based upon that evaluation, our President, Chief Financial Officer and Secretary concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to our management to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in Internal Control Over Financial Reporting. During the most recent quarter ended September 30, 2010, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 4t Controls and Procedures

The information required pursuant to item 4(t) has been provided in Item 4.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors

There have been no material changes to our risk factors from those set forth in our annual report for the year ended December 31, 2009.

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

On April 16, 2010, the Company issued 3,500,000 shares (post forward stock split) of its common stock to its attorney for legal services rendered, at a fair market price of $0.002 per share or a total value of $7,143.

On July 25, 2010, the Company issued 28,000,000 shares (post forward stock split) of its common stock to a consultant for marketing services in the shipping and airline transportation sectors for a period of three years at a fair market price of $0.0063 per share, or a total value of $177,200.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Reserved

Item 5. Other Information.

None.

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Item 6. Exhibits.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused the Report to be signed on its behalf by the undersigned thereunto duly authorized.

TRAI THIEN USA INC.

Dated: December 22, 2010

By:

/s/ Haley Manchester      

Haley Manchester

Chief Executive Officer

Date: December 22, 2010

/s/ Nguyen Van Thong    

Nguyen Van Thong

Chief Financial Officer

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