As filed with the Securities and Exchange Commission on January 14, 1998
Registration Number 333-7242
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2/A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
TRB SYSTEMS INTERNATIONAL INC.
(Exact name of Registrant as specified in its charter)
Delaware __________________ 22-3522572
(State or other jurisdiction of Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
Code Number)
TRB Systems International Inc. Byung Yim, Chairman
4 Becker Farm Road, Roseland, NJ 07068 TRB Systems International Inc.
(973) 994-4488 4 Becker Farm Road, Roseland,
NJ 07068 (973) 994-4488
(Address, including zip code, and
telephone number and including (Address, including zip code,
area code, of Registrants principal telephone number including
place of business) area code,executive principle,
or agent for service)
Approximate date of commencement of the proposed sale to the public:
The business day after the date on which this Registration Statement becomes
effective. If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, please check the following box: |_|
CALCULATION OF REGISTRATION FEE
============================================================================
Proposed Maximum
Title of Each Class Amount Offering Aggregate Amount
of Securities to be to be Price Offering of Regis-
to Registered Registered Per Unit Price tration Fee.
(,000's)
============================================================================
Common Stock, with
par value of $0.001(1) 250 $0.1 $25,000 $ 100.00
Common Stock, with
par value of $0.001(2) 594.009 $0.001 $ 594 $ 100.00
Totals 844.009 $25,594 $ 200.00
============================================================================
(1) Represents 250,000 shares of common stock issued to Alpha Bytes, Inc.
a Creditor of TRB Systems Inc., the sole subsidiary of the Registrant.
(2) Represents 594,009 shares of common stock of the Registrant issued on
October 2, 1997, to persons having invested funds in TRB Systems Inc., the
sole subsidiary of the Corporation, said shares having a 7 day right of
rescission from the date of receipt of the prospectus.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
will file a further amendment which specifically states that this Registration
Statement will thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933. or until the Registration Statement becomes
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
This registration statement is comprised of 97 consecutively
numbered pages, including exhibits. The exhibit index called for by Item 601
of Regulation SB is located at page 56.
<PAGE> 01
Pursuant to Item 601 of Regulation S-B showing location in the
Prospectus of information required by Items 101 through 510 of
Regulation SB-2.
Registration Statement
Item Number and Caption Prospectus Caption
101. Description of Business THE COMPANY
102. Description of Property THE COMPANY - PROPERTY
103. Legal Proceedings LITIGATION
201. Market for Common Stock and CERTAIN MARKET INFORMATION
Related Stockholder Matters
202. Description of Securities to DESCRIPTION OF SECURITIES
be Registered
303. Management's Discussion and MANAGEMENTS DISCUSSION AND ANALYSIS
Analysis or Plan of Operation OF OPERATIONS & CHANGES IN FINANCIAL
CONDITION
304. Changes in and Disagreements
With Accountants on Accounting
and Financial Disclosure. NOT APPLICABLE
310. Financial Statements FINANCIAL STATEMENTS
401. Directors, Executive MANAGEMENT;
Officers, Promoters and PRINCIPAL STOCKHOLDERS; CERTAIN
Control Persons TRANSACTIONS; CONFLICTS OF INTEREST
402. Executive Compensation MANAGEMENT
403. Security Ownership of Certain PRINCIPAL STOCKHOLDERS; CERTAIN
Beneficial Owners TRANSACTIONS
and Management
404. Certain Relationships and CERTAIN TRANSACTIONS; CONFLICTS OF
Related Transactions INTEREST
405. Compliance with Section
16(a) of the Exchange Act MANAGEMENT
501. Forepart of the Registration COVER PAGE
Statement and Outside Front
Cover Page of Prospectus
502. Inside Front Cover and Outside COVER PAGE; INSIDE FRONT COVER AND
Back Cover Pages of OUTSIDE BACK COVER PAGES
Prospectus
503. Summary Information SUMMARY OF THE PROSPECTUS;
& Risk Factors RISK FACTORS
504. Use of Proceeds USE OF PROCEEDS
505. Determination of Offering COVER PAGE; DILUTION; CERTAIN MARKET
Price INFORMATION
506. Dilution DILUTION
507. Selling Securities Holders PLAN OF DISTRIBUTION
508. Plan of Distribution COVER PAGE; INSIDE FRONT COVER; PLAN
OF DISTRIBUTION
509. Interests of Named Experts CERTAIN TRANSACTIONS
and Counsel
510. Disclosure of Commission INDEMNIFICATION ARRANGEMENTS
<PAGE> 02
TRB SYSTEMS INTERNATIONAL INC.
(a Delaware Corporation)
844,009 Shares of Common Stock, with a Par Value of $0.001
This offering involves the registration of 250,000 Shares issued to
Alpha Bytes, Inc., the Selling Shareholder, which were distributed as a
dividend to the shareholders of Alpha Bytes, Inc., and the registration of
594,009 shares issued to investors in TRB Systems Inc. on October 2, 1997,
with a 7 day right of rescission from the date of receipt of the prospectus.
The Company is a holding corporation with one wholly owned operating
subsidiary, TRB Systems Inc., organized pursuant to the laws of Delaware in
1994, and involved, worldwide, in the manufacture, sale, and distribution of
bicycles, exercise equipment, and motorized two-wheeled transportation
systems.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
============================================================================
PRICE PER AGGRAGATE PRICE EXPENSES & PROCEEDS TO
SHARE TO PUBLIC COMMISSIONS COMPANY
============================================================================
Shares (1) Unknown (2) Unknown (3) None
============================================================================
(1) The price per Share to the public of the Selling Shareholder's Shares
will be based on the bid price for the Company's common stock on the dates of
specific sales, unless shares are sold in private transactions. Consequently,
no determination can be made as to actual pricing matters. The price per share
to Investors in TRB Systems Inc. was $0.001 per share.
(2) It is anticipated that normal brokerage commissions will be charged
by firms that sell any of the Selling Stockholders' Shares for the account of
the Selling Stockholders and that such commissions will be tied to a
percentage of the sales price; however, no specific information pertaining
thereto can be provided. The shares to investors in TRB Systems Inc. were
sold by the Registrant, and there are no anticipated expenses associated with
these shares. The Company estimates that it will pay approximately $50,000 in
fixed expenses pertaining to the offering, including accounting fees,
Securities and Exchange Commission, National Association of Securities
Dealers, Inc., printing expenses, transfer agent fees and expenses and
miscellaneous costs.
(3) The shares will be sold by the Selling Stockholders. Therefor, there
will be no direct proceeds to the Company. The shares sold to the investors
yielded, at $0.001 per share, $594.
<PAGE> 03
TRB SYSTEMS INTERNATIONAL INC.
(a Delaware Corporation)
TRB Systems International Inc.
4 Becker Farm Road, Roseland, NJ 07068
(973) 994-4488
The date of this Prospectus is December 9, 1997
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form SB-2 (adopted
under authority of the Securities Act of 1933, as amended) with respect to
the securities offered hereby, with the United States Securities and Exchange
Commission (S. E. C.). This Prospectus does not contain all the information
set forth in the Registration Statement and the exhibits and schedules
thereto. For further information, reference is hereby made to the
Registration Statement. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily complete, and
in each instance reference is made to the copy of such contract filed as an
exhibit to the Registration Statement, each such statement may be inspected
without charge at the Public Reference Section of the Commission in its
Washington, D.C. office and copies of all or any part thereof may be obtained
from the Commission at prescribed rates, and may be perused at the S. E. C.'s
Web Site, whose address is http://www.sec.gov. Copies of the Registration
Statement and the Exhibits appended thereto will be provided without charge
upon written or oral request addressed to Charles C. Khym, Esq., General
Counsel; TRB Systems International Inc., 39-01 Main Street, Suite 605,
Flushing, New York 11354, or by calling (718) 445-1300.
The Company currently does not furnish its stockholders with annual
reports containing financial statements certified by its independent public
accountants and quarterly reports containing unaudited financial information
for the first three quarters of each fiscal year. Prior to the sale of the
Registered Securities, the Company was not subject to the informational
requirements of the Securities Exchange Act of 1934 since its securities were
not registered with the Commission pursuant to the requirements of Sections
13 or 15(d) of the Securities Exchange Act of 1934, as amended.
Commission.
No dealer, salesman or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus. Any information or representation not contained herein, if
given or made, must not be relied upon as having been authorized by the
Company or by the Selling Stockholders. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances create
any implication that there has been no change in the affairs of the Company
since the date hereof. This Prospectus does not constitute an offer or a
solicitation of any offer to buy any securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such an offer or
solicitation in such jurisdiction.
Until June 30, 1998, all dealers effecting transactions in the
registered securities, whether or not participating in this distribution, may
be required to deliver a Prospectus. This is in addition to the obligation
of dealers to deliver a Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
None of the investors in TRB Systems Inc. to receive shares as a
result of this Registration statement are affiliates of the Registrant,
related to any shareholders in the Registrant, or hold any stock in the
Registrant or its affiliate.
<PAGE> 04
Introductory Page 1
"COLOR PLATE"
<PAGE> 05
Introductory Page 2
"COLOR PLATE"
<PAGE> 06
Introductory Page 3
GLOSSARY OF TERMS
AS USED HEREIN, THE FOLLOWING HAVE THE MEANINGS SET FORTH BELOW:
TRB. The collective and generic term for the Company's
subsidiary, TRB Systems Inc., organized in 1994, pursuant
to the laws of the State of Delaware.
Capital Stock. The generic term for the Company's Common Stock.
Common Stock. The shares of the Company's common stock, with a par value
of $0.001, of which 30,000,000 shares are authorized and
11,925,626 are issued and outstanding (see "DESCRIPTION OF
SECURITIES").
NASD. National Association of Securities Dealers, Inc. The
self-regulatory body registered under the Securities
Exchange Act of 1934, as amended, responsible for
regulation of securities brokers and dealers, and the
operator of the NASDAQ inter-dealer automated quotation
system's bulletin board over which Company securities are
traded.
Registered The generic and collective term for the 843,998 shares
Securities. held by the Selling Shareholders and investors in TRB
Systems International Inc. being registered.
Selling Alpha Bytes, Inc.
Shareholders.
The Company. TRB Systems International Inc., a Delaware Corporation and
the issuer of the securities registered hereby.
<PAGE> 07
Prospectus Page 1
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
Prospectus and is qualified in its entirety by the more detailed information
and financial statements (including notes thereto) appearing elsewhere herein.
THE COMPANY
The Company was incorporated in the State of Delaware on April 9,
1997. The Company was organized as a purchaser of TRB Systems Inc., and
purchased the said company on April 18, 1997.
The Company is currently a holding company with one operating
subsidiary, TRB Systems Inc., organized pursuant to the laws of the State of
Delaware. TRB Systems Inc. has never been a party to any material
reclassification, merger, consolidation, or purchase or sale of a significant
amount of assets not in the ordinary course of business other than with
respect to its acquisition by the Company. For purposes of this prospectus,
the Company's subsidiary are sometimes referred to as "TRB".
TRB Systems Inc., a Delaware corporation formed in April 1994, was
formed to market, worldwide, the Transbar Power System (TPS) technology and
its applications to the bicycle, exercycle, electric bicycle and wheelchair.
These technology rights were licensed from ABL Properties Company, the owner
of the patent rights to the TPS technology, to TRB Systems Inc. (See
"Organization"; "Business").
Between 1983 and 1993, over $7.9 million was spent by Alenax
Corporation (TRB's predecessor), owned and operated by Mr. Byung Yim,
president of both TRB and TRB Systems International Inc., developing and
marketing a line of TPS bicycles, and in 1988 the company sold a total of
8,500 TPS bicycles. During a corporate relocation from Rochester, NY to
Piscataway, NJ, the company moving the inventory and corporate documents
lost all inventory and blueprints. An ensuing lawsuit resulted in a judgment
in excess of $10,000,000 by Alenax. Unfortunately , the transport
company threatened bankruptcy immediately upon the judgment being filed
againstthem, and there was a settlement for $100,000. Due to the capital
loss, Alenax, while continuing development of the TPS System, ceased active
operations. In April, 1994, TRB Systems Inc. was incorporated to continue TPS
technology development, and to manufacture and market the finished product
lines.
TRB, having been assigned by ABL Properties Corp. (ABL) the exclusive
rights to market and enhance the vehicles using the Transbar Power System
(TPS) (See, "Business") intends to create what management believes to be a
new generation of cycling and fitness products using the patented (by ABL)
Transbar Power System technology (See, "Business", "Patents"). Although TRB
is a new company, as can be seen from the foregoing, its TPS technology has
undergone considerable development over the years. The characteristic of the
TPS technology is similar, to that used in stepper machines, which is
currently one of the fastest growing segments of exercise equipment.
TRB's technology allows users to engage in biomechanically correct
exercise without the trauma associated with many alternate forms of exercise.
Orthopedic doctors and physical therapists have prescribed the TPS bike for
patients because of the variable stroke, non-impact motion it provides.
TRB's products are also, management believes, appealing to older
consumers and TRB is well-positioned to benefit from the aging of the U.S.
population. The TPS motion provides older consumers with an exercise that is
cardiovascular and anaerobic, while at the same time is safe and gentle.
<PAGE> 08
Prospectus Page 2
TRB's immediate goals are (i) to conduct product test marketing in
target market segments, (ii) to identify and establish strategic relationships
domestically and internationally, (iii) to develop initial sales/marketing
materials, literature and programs, (iv) to accomplish regional product
introduction in 1998, and (v) to license its technology internationally.
TRB intends to target four markets during its first year:
1) Alternative Transportation, Recreation & Leisure, Health & Fitness
2) Senior Citizens
3) Rehabilitation & Therapeutic
4) International
TRB already has over one million dollars worth of sales from licensing
agreements, as well as sales commitments by licensees (SEE "Selected Financial
Information")
The Company's current mailing address is 4 Becker Farm Road, Roseland,
NJ 07068; and its phone number is (973) 994-4488.
SELECTED FINANCIAL INFORMATION
Set forth below is selected financial information of the Company and
its consolidated subsidiary. The provided information is derived from the
more detailed audited consolidated financial statements as of September 30,
1997, and should be read in conjunction with the audited consolidated
financial statements included elsewhere in this Prospectus and are qualified
in their entirety by reference thereto (see "FINANCIAL STATEMENTS").
3 Months Annual Annual Annual
Ended Ended Ended Ended
Sept. 30 June 30 June 30 June 30
1997 1997 1996 1995
OPERATING RESULTS*
(all data is in $US)
Continuing Operations
Sales $ 0 $ 0 $161,354 $ 0
Cost of Sales 0 0 146,363 0
Gross Profit 0 0 14,982 0
Licensing Fees 0 1,060,000 65,000 60,000
Other Income 46 59 135 45
Total Income 46 1,060,059 387,834 60,045
Expenses:
Total Expenses 103,750 454,443 229,734 298,510
Net profit (loss)
before taxes (103,704) 605,616 (149,617) (238,465)
Income taxes(recovery
R&D credit)) 0 25,375 59,019 82,646
Net Profit(Loss) (103,704) 630,991 (90,598) (155,819)
<PAGE> 09
Prospectus Page 3
Net profit (loss) $(0.00874) $0.25931 $(0.009) $(0.013)
Per Share
FINANCIAL POSITION
Current Assets 1,101,171 1,091,894 7,200 7,482
Other Assets 621,557 628,038 307,644 240,769
Total Assets 1,722,728 1,719,932 314,844 248,251
Current Liabilities 195,441 195,441 464,455 361,816
Other Liabilities 305,500 314,000 218,126 163,574
Total Liabilities 500,941 509,441 682,581 525,390
Stockholder's 1,221,787 1,210,491 367,737 277,139
Equity
________
SECURITIES OUTSTANDING
As of the date of this Prospectus, 11,925,626 shares of Common stock
were issued and outstanding. (see "CAPITALIZATION", "PLAN OF DISTRIBUTION"
and "PRINCIPAL STOCKHOLDERS")
CURRENT STOCKHOLDERS
Approximately 278 persons own shares of the Company's Common Stock
(see "CERTAIN TRANSACTIONS" and "PRINCIPAL STOCKHOLDERS").
DEFINITION OF TERMS
Certain terms used in this Prospectus, usually identified by initial
capital letters, are defined in the section of this Prospectus captioned
"GLOSSARY OF TERMS."
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A
DEGREE OF RISK. THEY SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO
LOSE THEIR INVESTMENT IN THE COMPANY WITHOUT A MATERIALLY ADVERSE IMPACT ON
THEIR STANDARD OF LIVING OR FINANCIAL SECURITY. THEREFORE, PRIOR TO PURCHASE
EACH PROSPECTIVE INVESTOR SHOULD CONSIDER THE FOLLOWING RISK FACTORS, AS WELL
AS ALL OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS.
RISKS OF THE OFFERING
Potential Future Sales Pursuant To Rule 144
Generally, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period may, under certain
circumstances, sell within any three month period a number of shares which
does not exceed the greater of one percent (1%) of the then outstanding
Common Stock or the average weekly trading volume during the four calendar
weeks prior to such sale. Rule 144 also permits, under certain circumstances,
the sale of shares without any quantity limitation by a person who has not
been an affiliate of the Company for at least 90 days and who has satisfied a
one year holding period.
<PAGE> 10
Prospectus Page 4
The one year holding period for all the Company's currently
outstanding restricted shares required by Rule 144 will expire during October
of 1998 and thereafter, the holders may periodically sell their Company
securities, subject to applicable volume limitations, restrictions on the
manner of sale and applicable reporting requirements (see "CERTAIN
TRANSACTIONS").
Absence of a Trading Market
At present, there is no market for the securities of the Company,
and there can be no assurance that an established trading market or any
public market will develop in the future, or that if developed, it could be
sustained, or the securities of the Company resold at any price. Any market
the Company may develop will, in all likelihood, be a substantially limited
one.
Adverse effects of Penny Stock Regulations
Securities, generally, with a price $5.00 per share or less are
referred to as penny stock. These securities are unsuitable for investors
with low fixed incomes and limited net worth, or for accounts held in a
fiduciary or custodial capacity. As well, they are not suitable for investors
who are risk aversive or have income as their sole investment objective.
Investment broker/dealers must satisfy special sales practice requirements,
including making written suitability determinations regarding any persons
wishing to invest in penny stock; written consent of the purchaser prior to
purchasing penny stock; delivery of a disclosure statement outlining the
risks associated with penny stock prior to any transaction; a written current
bid and ask quotation and commissions to be earned by the broker/dealer in the
transaction; and monthly statements stating the market value of any penny
stock held in a portfolio. These requirements, if applicable to the Company,
may adversely effect any market for the Registrant's shares.
Absence of Underwriter
The Selling Stockholders' Shares will be sold directly by the Selling
Stockholders, consequently, no underwriter is expected to be involved
therewith. The absence of an underwriter means that there will be less due
diligence in conjunction with this offering than would be performed in an
underwritten offering, and furthermore, that there are no brokers committed
to stabilizing the market for the Company's securities.
Concentration of Share Ownership
Where approximately 86% of the shares in the Company are currently
held by Motion Plus International Corporation, a corporation 98% of whose
stock are owned by Byung Yim and his two children, the effective control of
the Registrant rests with these parties. Byung Yim is also the President and
sole director of the Company. Thus Mr. Yim, and his two children will be in
a position to substantially control the election of the Board of Directors
of the Company and the management and policies of the Company.
Financial Risks
No assurance can be given that the Company's future sales will meet
the Company's expectations or that the Company will be able to operate
profitably. The Company has a history of operating losses, and lacking future
profitable operations, will need additional capital, which the Company has no
assurance whatsoever of being able to obtain. The inability to obtain such
financing would have a material adverse effect on the Company's results of
operations. (See "Financial Statements", "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION, CHANGES IN FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.")
<PAGE> 11
Prospectus Page 5
BUSINESS RISKS
No Dividends
The Company has never paid dividends on its Common Stock. The
Company does not anticipate paying dividends for the foreseeable future and
intends to devote earnings, if any, to the development of the Company's
business. The payment of dividends in the future rests within the discretion
of the Company's Board of Directors and will depend on the existence of
substantial earnings, the Company's financial requirements and other factors.
TRB has paid no substantial dividends in the past; and earnings for the
foreseeable future are expected to be retained to finance corporate business
expansion.
Material Reliance Upon Officers
The Company is wholly dependent upon the personal efforts and
abilities of its officers and directors, especially Mr. Byung Yim. The loss
of or unavailability to the Company of the services of any of its officers or
directors would have a materially adverse effect on the Company's business
prospects and potential earning capacity. The Company does not carry any
insurance to compensate for any such loss, nor does it intend to obtain "key
man" life insurance covering its officers or directors.
Possible Loss of Entire Investment
Prospective investors should be aware that if the Company is not
successful in its endeavors, their entire investment in the Company could
become worthless. Even if the Company is successful in its programs there
can be no assurances that investors will derive a profit from their investment.
The Company has only one operating subsidiary, and as of yet no sales
of product has taken place. It is possible that there will never be any sales
of products, in which case the total investment of investors may be lost.
FOR ALL OF THE AFORESAID REASONS, AND OTHERS SET FORTH HEREIN, THESE
SECURITIES INVOLVE A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING AN
INVESTMENT IN THE SECURITIES OFFERED HEREBY SHOULD BE AWARE OF THESE AND
OTHER FACTORS SET FORTH IN THIS PROSPECTUS. THESE SECURITIES SHOULD ONLY BE
PURCHASED BY PERSONS WHO CAN AFFORD A TOTAL LOSS OF THEIR INVESTMENT IN THE
COMPANY AND HAVE NO IMMEDIATE NEED FOR A RETURN ON THEIR INVESTMENT.
SELLING SHAREHOLDERS
Alpha Bytes, Inc., a Colorado public corporation presently traded on
the NASDAQ Bulletin Board market, provided consulting services to the Company
regarding software development for the inventory control and Management
Information Systems to be used by the Company. It was agreed that Alpha
Bytes, Inc. would receive 250,000 shares for its services. Management felt
that this arrangement was appropriate as it allowed the Company to use its
cash elsewhere, and at the same time set up the computer systems which would
monitor the Company's activities.
Alpha Bytes, Inc., its subsidiaries, and shareholders had no interest
in the Company, its subsidiary, or any business or personal relationship with
any shareholder of the Company or its subsidiary or affiliates, prior to the
above described transaction. The shares given to Alpha Bytes represented 2.5%
of the Company's outstanding shares, and if sold, will leave Alpha Bytes,
Inc. with no interest in the Company.
<PAGE> 12
Prospectus Page 6
CERTAIN MARKET INFORMATION
MARKET FOR COMMON EQUITY
At present, there is no market, public or private, for the trading of
the Company's common stock. The Company anticipates registering its shares
on the NASDAQ Bulletin Board System by March of 1998.
SECURITY HOLDERS
As of December, 30, 1997, the latest practicable date for which
information is available, the Company had approximately 278 common stock
holders. Of these, 180 were shareholders of Alpha Bytes, Inc. (See "Selling
Shareholders"), who received 250,000 shares in the Company as a dividend from
Alpha Bytes, Inc., which received the said shares as payment for consulting
services rendered to the Company with respect to computer software systems.
The shareholders of Alpha Bytes, Inc. received their shares in the Company
based on the number of shares each shareholder held in Alpha Bytes, Inc.
divided by the total number of outstanding shares in Alpha Bytes, Inc.
There are 40 shareholders holding 11,081,628 restricted shares, and
57 shareholders holding 594,009 shares issued on October 2, 1997, which
shares are part of the securities to which this Prospectus refers (See
"Certain Transactions", Principal Stockholders").
DIVIDENDS
There have been no cash dividends declared or paid since the
inception the Company and no dividends are contemplated to be paid in the
foreseeable future. No dividends were paid by the Company's subsidiaries,
prior to their acquisition by the Company; however, it is anticipated that
for the foreseeable future, the Company's profits (if any) will be reinvested
in the Company rather than distributed as dividends.
OFFERING PRICE
No offering price has been pre-established for the shares registered
by the Selling Shareholders. Rather, it is anticipated that the Selling
Stockholders will sell them into the public market at such times as the price
is deemed favorable, when considered in light of the recipients' capital
requirements. The recipients will be the sole determiners of appropriate
pricing, on a case by case basis.
CAPITALIZATION
The following table sets forth the capitalization of the Company as
of September 30, 1997.
September
Title of Class 30, 1997
Stockholders' Equity $1,221,787
Debt
Total Liabilities $ 500,941
<PAGE> 13
Prospectus Page 7
THE COMPANY
BUSINESS (GENERAL)
TRB Systems International Inc., organized under the laws of the State
of Delaware in 1997, is a holding company for TRB Systems Inc., a Delaware
corporation formed in April 1994, formed to market, Worldwide, the Transbar
Power System (TPS) technology and its applications to the bicycle, exercycle,
electric bicycle and wheelchair. These technology rights were assigned from
ABL Properties, the owner of the patent rights to the TPS technology, to TRB
Systems Inc.
BUSINESS DEVELOPMENT
TRB, a corporation organized under a Delaware corporation, was
organized in 1994. It has never been a party to any material
reclassification, merger, consolidation, or purchase or sale of a significant
amount of assets not in the ordinary course of business.
Background Information
The Company was incorporated in the State of Delaware on April 9,
1997. The Company was organized as a purchaser of TRB Systems Inc., and
purchased the said company on April 18, 1997.
The Company is currently a holding company with one operating
subsidiaries, TRB Systems Inc., organized pursuant to the laws of the State
of Delaware. TRB Systems Inc. has never been a party to any material
reclassification, merger, consolidation, or purchase or sale of a significant
amount of assets not in the ordinary course of business other than with
respect to its acquisition by the Company. For purposes of this prospectus,
the Company's subsidiary are sometimes referred to as "TRB".
TRB Systems Inc., a Delaware corporation formed in April 1994, was
formed to market, Worldwide, the Transbar Power System (TPS) technology and
its applications to the bicycle, exercycle, electric bicycle and wheelchair.
These technology rights were Licenses from ABL Properties, the owner of the
patent rights to the TPS technology, by TRB Systems Inc. (See "Organization").
The rights licensed to TRB by ABL Properties Company call for a payment of
$200,000 during the first year of active sales, a 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 is 100% owned by Byung Yim,
President & CEO of TRB Systems International Inc.
Between 1983 and 1993, over $7.9 million was spent by Alenax
Corporation (TRB's predecessor), owned and operated by Mr. Byung Yim,
president of both TRB and TRB Systems International Inc., developing and
marketing a line of TPS bicycles, and in 1988 the company sold a total of
8,500 TPS bicycles. This experience has given rise to the new product line
that TRB is ready to market. To date 1,060 bicycles have been produced and
sold.
BUSINESS
The Company's primary focus is to manufacture, through agreements
with manufacturers, and, eventually in its own facilities, all of its
products. The Company plans to distribute and sell its products to the public
through distributors and licensees. All sales and promotional material will
be provided to the distributors and licensees by the Company.
<PAGE> 14
Prospectus Page 8
Principal Products or Services and Their Market
Product Development
Preliminary market research indicates that the therapeutic market is
driven primarily by product performance, while non-therapeutic markets are
more sensitive to price. The Company intends to focus its product development
and production efforts for the first year on three lines of products:
bicycles, electric bicycles, and ergometers. TRB's introductory bicycle
line, propelled exclusively by the TPS, will consist of models with multiple
sizes for men and women. This initial line will closely resemble the current
popular cruiser and mountain bikes that offer a comfortable upright riding.
Product development will continue with the introduction of an adult
tricycle. Lightweight, higher performance bicycles will eventually also be
introduced to appeal to the performance biking community. Other term
products will be developed to meet the dynamic and continually changing needs
of the market.
Patent Protection
Patents covering the speed change and/or propulsion mechanism of the
Transbar Power System have been obtained and are owned by ABL in the U.S.,
China, India, Australia, Taiwan, Japan, and Korea, and a patents are pending
in Europe and Canada. TRB has the exclusive worldwide licensing rights under
all TPS patents, except for Taiwan and South Korea.
TRB Products and Technology
The TPS technology has many applications. TRB will initially focus
on three main product groups; a select line of bicycles, electric bicycles,
and two types of ergometers. Other new product lines and licensing
opportunities will be pursued through third party alliances.
TPS Bicycle
TPS bicycles are high quality, sophisticated products that closely
resemble conventional bicycles. The TPS bicycle's unique design provides a
smooth, up and down pumping, or stepping action which closely resembles the
body's natural walking and running motion. This is the most powerful
movement a leg can make, reaching a maximum when almost fully extended.
TRB's system takes advantage of these biomechanical facts.
The bicycle's operating principles are relatively simple. The pedal
levers travel up and down through the maximum power range that has an arc of
135 degrees. As the lever on one side is depressed, the opposing lever is
raised. A full lever stroke or a partial stroke may be applied to propel the
bicycle. Lever strokes require far less leg motion than the 360 degree
movement required with a conventional bicycle.
Research conducted by TRB leads management to believe that the TPS
bicycle provides a significant increase in propulsion power versus
conventional circular pedaling models. The propelling force of the TPS lever
is constant, as opposed to the variable, circular ascending and descending
crank motion of conventional bicycles. The levers which drive the transbar
system do not revolve, and their length can therefore be increased to take
advantage of the power of leverage. Since the levers do not revolve, the TPS
bike permits greater ground pedal clearance over rough terrain and around
turns. Propulsion of a bicycle using the TPS results in significantly
greater distance traveled, for a given expenditure of effort, than on the
same bicycle using conventional bicycle technology.
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Prospectus Page 9
The overall appearance of the TRB bicycle closely resembles that of
the conventional bicycle. The major difference between TRB's bike and
conventional bikes is the TPS, which has three main components:
TRANSBAR Two opposing bars that are attached directly to the pedal
levers. Each Transbar is interconnected by a chain cable to
the hub assembly.
REAR HUB A dual ratcheting sprocket which is engaged by chains that
connect the two opposing Transbars.
SEE-SAW IDLER The component allowing for the opposing movement of
the two Transbars.
TPS gear changes are always sequential, and the chain is always in
line with the drive sprockets making it virtually impossible to "throw a
chain," as with conventional bicycles. Changing gears is accomplished by a
single, positive shift control as compared to dual levers on a conventional
21 or 24 speed. The pedal lever is attached to the Transbar at a precise
angle to allow maximum power transfer from rider to machine.
The TRB BIKE is offered in five (5) models; Mountain Bike(MTB), Leisure Bike,
BMX(Children), ATB(all-terrain), and CROSS-BIKE. In mass production, TRB
will offer a pedal arm in lengths of either 225mm or 250mm. This will
increase the force of each stroke and increase speed considerably compared to
the conventional pedal length of 170mm. TRB plans to focus initially on the
single action, natural stepping motion in all the bikes with the exception of
a 20" JUVENILE BIKE that will be introduced with our proprietary
multifunctional pedal action within a 9-12 months train after the TRB rollout.
Our tricycle will follow within one (1) year.
TRB's in house research, consisting of trials on the bicycle and
questionnaires responded to by over 100 people indicates that first time
riders or the older population like the feel of the TRB BIKE better than a
conventional bike. Women like the fact they can wear a skirt with comfort
while riding, and those with stiff joints, limited range of motion will
attest to the ease of natural motion of TRB BIKE's pedal action compared to
that of the conventional bike. The most conventional bikes are not
structurally or functionally designed specifically for rehabilitation per se.
The "transbar technology" fills a large void in this huge untapped market,
especially in the "middle-aged" population. It also is an easier motion for
the beginner.
The transbar configuration in TRB's bike allows the rehabilitating person
(a market with growth of 430,000 annually in the US) who uses TRB's bike in a
stationary mode (sitting on a stand) to transfer the natural gait motion of
135 degrees from the inside to the outdoor with the same bike (without the
stand). TRB will attack the high-end professional rider market in the second
phase of our business plan. TRB is conducting care research to verify the
speed and efficiency of our racing prototype (i.e., longer pedal arm,
therefore greater force stroke).
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Prospectus Page 10
Fitness/ Home Trainer
TRB's fitness and home trainer was an outgrowth of the Company's experience
with physical therapists who used our "outdoor bike" concept of the natural
gait motion for their patients. They wanted a graded capability of ROM
(Range of Motion) in the stationary bike, as the patient moved from a narrow
range of motion to a wider and eventually to the 360 degree, circular motion
that they were accustomed to, in typical rehabilitative procedure. TRB's
VersiTraniner meets that demand with a training and rehabilitative device
that provides six (6) different sets of exercises.
Lever Propulsion-Action
1. Alternate up and down pumping motion
2. Simultaneous with both feet parallel to each other
3. Bilateral-One foot pumps while the other foot rests motionless
4. One foot pumps 360 degrees while the other foot rest motionless
Conventional Motion-Conventional Rotary Pedal Action
5. 360 degree rotation-conventional bike pedaling-opposed pedals
6. Parallel pedaling-360 degree rotation
The Versi-Trainer allows an individual to exercise their abdominals,
hips (lateral rotators), quadriceps, hamstrings, and gluteus (butt) muscles.
All actions are performed in the correct biomechanical positions.
Electric Bike
POWER+BIKE is an outdoor bike that uses the same natural "up-down" motion of
all the TRB bicycles but with the ability to, with the twist of the handle,
become an electric bike with speed capability of 23mph. TRB's POWER+BIKE is
strategically positioned, not specifically for the luxury market, which has
three new entries this year Bricklin, Mercedes, and Porsche. All three are
designed similar to a moped, are heavy (50lbs or more), and costly, at prices
between $1400-$5000. By comparison, TRB's POWER+BIKE is 23lbs, light and
efficient enough for the senior citizen and women's market (can be pedaled
comfortably in a business skirt or suit) and sleek enough for the
"Generation X" market appeal, sophisticated enough for the urban businessman,
cool and convenience for the outdoor family and RV enthusiasts, and safe and
practical for the recovering heart attack patient who wants to exercise but
does not want to be struck too far from home. With a retail cost of $600 and
manufacturing costs at $200, along with the added capabilities of folding the
POWER+BIKE into a POWER PACK so it can be hung upon the back of a door, TRB's
management believes the POWER+BIKE can capture a major market share within
this emerging market.
The marketing strategy for this product is as follows:
Senior Market over the age of 55: TRB will focus on the Sunbelt
States: Florida, Arizona, New Mexico, Nevada, California, Texas as well as
North Carolina, South Carolina, and Virginia. Organization such as AARP
(American Association of Retired Persons) with over 5 million members will
be a main target. This market will be cross-prospected by other major
pyschographics such Recreational Vehicle and TimeShare enthusiasts.
Recreation Vehicle Enthusiasts: Reports by the Recreational Vehicle
International Association (RVIA) have shown that there are 9 million RVs with
2 1/2 users per RV, making a total of 22.5 million RV enthusiasts. TRB has
targeted RV camps in Palms Desert (California), Lake Conroe (Houston), as well
as KOA (Campgrounds of America) and Coast-to-Coast Florida, two of the larger
leaders in RV and Campgrounds.
<PAGE> 17
Prospectus Page 11
TimeShare Market: There are 2,500 TimeShare Properties. TRB has
contacted key sales personnel in a new site and are currently involved in
preliminary negotiations to have the TRB POWER PLUS BIKE be a promotional
premium when buying a TimeShare unit.
Universities/Colleges: Nationally, there are 14 million university/
college students. Alenax had set-up a College Campus Student Leader Program
in the past with the TPS outdoor bicycle (Alenax), and TRB intends to mimic
the same marketing and sales campaign to colleges and universities. TRB will
roll-out a similar campaign at a later date to the Prep School market, a
market with close to 1 million students.
TRB will also select large specialty stores, as well as a consortium
that sell Health Clubs in over 19 Western States. TRB plans to develop a
campaign with International Spa, a professional Spa organization and will
exhibit at their international trade show. There are over 2,500 Spas in this
organization.
Future Product Development
The TPS technology has many applications for future products. Some
products under consideration include:
1. wheelchair
2. adult tricycles
3. outdoor recumbent (reclining) bicycles
4. arm/shoulder ergometers
The outdoor recumbent bicycle has been extremely well received by
several Fortune 500 companies, based on a working prototype presented to such
companies by Dr. Dennis Colacino, COO of the Ergometer Division of TRB. (See
"Management").
The Market
TRB will focus on four markets in its first year of operation.
Alternative Transportation, Recreation & Leisure, Health & Fitness
This market is made up of more than 60 million individuals who
currently exercise regularly. The TRB products that will appeal to this
market are the Versi-Trainer and the outdoor TPS bicycle.
Retail Market
From 1985 to 1995, the U.S. bike market grew at close to a 6% annual
rate. The retail industry has averaged approximately $3 billion annually
through the 1980's and is expected to reach $5 billion by 2000. According to
the National Sporting Goods Association ("NSGA"), the retail market for home
exercise and fitness equipment grew at a compound annual growth rate of
10.5%, from approximately $1.2 billion in 1987 to an estimated $2.5 billion
in 1997. The sale of aerobic conditioning equipment, including stair
climbing equipment, treadmills, cross country ski exercisers, etc., accounted
for $2.0 billion in 1995, or 73.7% of this total. In this industry, the
stepper market is the fastest growing segment. The TPS bicycle will be
attractive to this segment because it allows the stepper motion and muscle
conditioning to be taken outdoors.
<PAGE> 18
Prospectus Page 12
Health and Fitness Facilities
To stay competitive, commercial health and fitness facilities
have generally found that they must continue to offer their members state-of-
the-art equipment and programs. As a consequence, health and fitness
facilities typically will spend increasingly more on equipment just to keep
pace. With the number of health and fitness facilities in the U.S. estimated
at 12,500 (IRSA estimate), there is significant competition among
neighboring clubs that are facing a saturated market. These facilities find
they must offer their members every possible means of motivation to keep them
coming back. Consequently, health and fitness facilities are driven by the
market to respond very quickly to new products. TRB's recumbent ergometer
(Versi-Trainer) will offer health club goers the opportunity to combine
conventional circular motion with the TPS stepper motion in a single machine.
Senior Citizens
The senior market is the segment of the population over the age of
50, which includes approximately 64 million Americans (25.6% of the U.S.
population). With the aging of the Baby Boomers, this number is going to
change markedly over the next two decades. By 2010, it is projected that 96
million Americans (32.1% of the population) will be over the age of 50.
The aging of the U.S. population, combined with the rapidly
escalating cost of health care services, has resulted in an intensifying
concern about the efficiency and effectiveness of the U.S. health care
system. As a result, there is a growing need for individuals, particularly
older adults, to participate regularly in safe, functional and efficient
exercise which combines aerobic conditioning and resistance training.
Historical and Projected U.S. Population Demographics
(in millions)
1970 1992 2000 2005 2010
Total Population 204.0 254.8 274.2 286.3 298.9
Population Age 50 & Over 49.9 65.2 75.6 85.0 95.8
% of Total 24.5 25.6 27.6 29.7 32.1
Population Age 65 & Over 20.0 32.1 34.4 35.8 38.8
% of Total 9.8 12.6 12.5 12.5 13.0
Historical data from U.S. Department of Commerce. Projected data
from Woods & Poole Economics.
Only recently has the medical community begun seriously to evaluate
and appreciate the importance of exercise for older adults. Properly
prescribed, exercise can combat the muscular atrophy associated with aging,
improve cardiovascular conditioning, and strengthen and protect the body
against injury. In addition, exercise can preserve and extend an
individual's level of physical independence and quality of life.
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Prospectus Page 13
To date, walking has been the number one form of exercise for
seniors. Walking is practiced more than twice as much as any other activity,
and almost 50% of all seniors walk for exercise on a regular basis. TRB's
TPS technology offers these individuals an alternative form of exercise,
comparable to walking, that generates better cardiovascular results while
using similar muscles with less joint impact.
Rehabilitation & Therapeutic
The Rehabilitation & Therapeutic market consists of four segments: 1) post
surgical (i.e. hip and knee), 2) acute injury, 3) individuals with a
restrictive ROM (range of motion), and 4) other (i.e. arthritic,
biomechanical). There are approximately 500,000 surgeries and 1.5 million hip
and knee injuries every year. According to a recent survey conducted by the
American Hospital Association, there are approximately 6,600 registered
hospitals in the U.S. The following table sets forth, by type of facility,
the percentage of hospitals which make use of therapeutic exercise as a form
of treatment:
Percentage of
Facility U.S. Hospitals(1)
Physical Therapy Services 78.4%
Orthopedic Surgery 66.0
Occupational Therapy Service 54.3
Outpatient Rehabilitation Unit 48.2
Cardiac Rehabilitation Program 39.0
Comprehensive Geriatric Assessment 20.3
Sports Medical Clinic 18.2
Fitness Center 14.6
Inpatient Rehabilitation Unit 13.4
Geriatric Clinic 8.1
(1) AHA, 1992 Annual Survey.
In addition, according to statistics compiled by the U.S. Department
of Health and Human Services, there were approximately 16,000 nursing homes
in the U.S. in 1995, with an aggregate total of approximately 1.7 million
beds. This market segment, including all categories, exceeds 8 million
people. To be successful in this market requires that exercise equipment be
both medically sound and appropriate for a wide array of therapeutic
applications. Medical institutions are acutely aware of the need for
accurate and reliable feedback from the exercise equipment used in the
therapeutic process. Product characteristics such as restrictive ROM,
precise variable resistance, and the accurate control and measurement of
workout intensity are of critical importance.
The TRB product that will address the needs of this market is the
Fitness Versi-Trainer and the TPS bike. Today the major form of therapy for
post hip and knee surgery is the conventional stationary bike. The 360
degree fixed stroke is limiting because initial therapy methods limit ROM to
less than 120 degrees. This causes a time lag before the conventional 360
degree bike can be implemented.
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Prospectus Page 14
The ROM of the TPS is variable and can accommodate all ROM
restrictions, which allows patients to begin rehabilitation sooner. The
biomechanical design of the TPS also puts less strain on limbs and joints by
generating a force along the muscle belly, rather than at the insertion
(joints). This enables patients to recover from surgery faster than with
current techniques, while reducing the probability of reinjury.
International
In 1995, worldwide bicycle sales were over $15 billion, equating to
over 120 million bicycles sold. Based on historical trends, worldwide sales
are expected to grow at a rate of 5% annually over the next five years. The
two largest international markets, in units, are China and India, with the
U.S. placing third.
40 million bicycles were sold in China in 1995. Because of China's
population and its use of the bicycle as a primary source of transportation,
compound five year growth has been over 6%. India's market growth is similar
to China. In 1995, 20 million bicycles were sold in India.
Japan, with approximately 7 million units sold in 1995, represents a
market that is skewed toward higher priced bicycles. Europe, if looked at as
one market, is similar in both dollars and units to the U.S.; however, the
number of bicycles per capita is double that of the U.S. (55 bikes per 1,000
people in Europe versus 25 in the U.S.)
The international market offers TRB a tremendous opportunity in
producing short term and long term revenue with its TPS products.
Distribution Methods of the Products or Services
Marketing Plans & Products
Currently, bicycles are sold mainly through retail outlets and
specialty bike shops; while institutional exercise equipment is sold through
trade shows, magazines and direct mail. The bicycle industry has seen many
significant changes over the past decade in how products are distributed.
TRB intends to take advantage of the newest techniques. The Company's
long-term strategy is to sell through a network of specialized bike and
sporting goods shops.
In the near term, however, the Company, plans to hire The Sawtooth
Group, a privately held advertising and new products consulting company
established in 1988, having over 80 employees, and having as some of its
major clients Sandoz, Tetly USA, AT&T and Radisson- Seven Seas, to begin to
promote ergometers, electric bicycles, and bicycles through a variety of
media, i.e. infomercials on cable television and general television
commercials. TRB will establish market awareness through such direct
marketing and will generate cash flow. For the line of ergometers, TRB plans
to investigate possible alliances with existing sporting goods manufacturers.
The Company anticipates that after brand awareness and an established
corporate image have been achieved, TRB will be able to market its bicycles,
ergometers and electric bicycles through a network of bike retailers,
in accordance with the Company's long term strategy.
<PAGE> 21
Prospectus Page 15
Manufacturing/Technology Licensing Agreements
In order to gain access to international and domestic markets, TRB's
products will be manufactured through contracts with existing manufacturers
around the world. Licensing and marketing agreements will be established
with capable individuals and enterprises in selected markets. Ongoing royalty
fees will also be received from licensees. These royalties are 6% in the
first year, 5% in the second year, and 4% thereafter, with a minimum royalty
payment per year (see table below) TRB's licensing agreement requires the
licensees to meet minimum volume and quality standards. The quality standards
refer to obligatory training in the products and their maintenance as well as
customer service, which TRB shall monitor through comment sheets, and
tracking complaints.
The royalty/volume requirements are presented below:
1st Year 2nd Year 3rd Year
Min. Royalties Min. Royalties Min. Royalties
Country
India $100,000 $220,000 $350,000
Benin/Nigeria $15,000 $25,000 $40,000
Ivory Coast & $10,000 $10,000 $10,000
5 other countries
Tanzania $10,000 $20,000 $30,000
Vietnam $10,000 $20,000 $30,000
Orange County 1,500 bikes 3,000 bikes 5,000 bikes
Moreover, the agreement also provides that any product enhancement
developed by TRB's licensees becomes the property of TRB.
TRB is manufacturing its proprietary parts through a non-exclusive
relationship with Kun Teng Industries (Taiwan) to produce medium and high\end
bicycles, and plans to use Sino-Danish Enterprises Co., Ltd.(China) as a
supplier of proprietary parts and assembled bicycles in the lower price
ranges. Sino-Danish is now ready to begin mass production and TRB has
received a line of credit in China for $2 million to support these production
plans.
International licensing and marketing agreements have been reached
with licensees for a total of $1,125,000 from the Ivory Coast Tanzania,
Benin/Nigeria, Vietnam and India, and payments totaling $210,000 have
already been received, as well as $10,000 for the right of first refusal to
be the licensee in Canada. In addition, TRB is negotiating agreements with a
potential licensee in China. Under the terms of the Chinese license proposal,
Sino-Danish Enterprises Co., Ltd. will sell a minimum of 100,000 bicycles in
the first year. Sino-Danish intends to achieve its sales goals by advertising
the product throughout China on television during prime time hours, for one
full year. TRB expects to sign this agreement, thereby granting Sino-Danish
with an exclusive sales and marketing right for China.
TRB's ergometers are currently ready for mass production by Pretty
Wheel Ind. Co., Ltd., a leading sports equipment manufacturer based in Taiwan.
<PAGE> 22
Prospectus Page 16
Competitive Business Conditions and Competitive Position in the Industry and
Methods of Competition
There is no direct competition for the products offered by TRB. The general
competition is the bicycle industry, which is, as aforementioned,
differentiable from the TRB product line.
Sources and Availability of Raw Materials and the Names of Principal Suppliers
TRB uses commercially available raw materials, and does not foresee any
shortage in supply. No Supplier accounts for greater than 5% of the raw
material needs of TRB.
Dependence on One or a Few Major Customers
No customer of the Company accounts for more than 5% of its business.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
Labor Contracts, Including Duration
Licenses
TRB has an exclusive license, as aforementioned, for the worldwide
distribution, manufacture, and sale of the TPS system from ABL, the patent
holder.
Other Intellectual Rights
No other patents, trademarks, licenses, franchises, concessions,
royalty agreements or labor contracts are used by the Company.
Need for Any Government Approval of Principal Products or Services
To the best of the Company's knowledge, there are no special
requirements for government approval of its principal products or services,
not generally applicable to normal business operations.
Effect of Existing or Probable Governmental Regulations on the Business
The Company is unaware of any probable regulation of its business,
other than as will apply to businesses in general.
Estimate of the Amount Spent During Each of the Last Two Fiscal Years on
Research and Development Activities, and if Applicable the Extent to Which
the Cost of Such Activities are Borne Directly by Customers
During the past two years TRB spent approximately $111,100 on R&D,
all of which will be borne by the customer as reflected in the price of the
products of TRB.
Costs and Effects of Compliance with Federal, State and Local Environmental
Laws
The Company, is not aware of any expenses directly attributable to
compliance with federal, state or local environment laws or regulations.
<PAGE> 23
Prospectus Page 17
Number of Total Employees and Number of Full Time Employee
The Company has 4 full time employees, and no part time employees.
Description of Real Estate and Operating Data
The Company currently rents approximately 500 square feet for its
staff, at 4 Becker Road, in New Jersey. As well the company has 2,500 square
foot R&D facility in Taiwan, with a rent of $12,864 per anum.
Management is of the opinion that its current facilities are adequate
for its immediate needs. As the Company's business increases, additional
facilities will be required, however the current facilities are expected to
suffice until after December 31, 1998.
Equipment
The fixed assets of the Company as valued for accounting purposes
have a depreciated book value of $536,513, and an non-depreciated book value
of $545,000. The assets are principally comprised of tools and dies for the
manufacture of the components for the TPS system.
Investment Policies
The Company has no investment policies with respect to investments in
real estate or interests in real estate or investments in real estate
mortgages.
Litigation
The Company is not a party to any material litigation.
Operating Subsidiaries of the Company
The subsidiary of the Company generates all revenue for the Company,
and the discussions and tables referring to operations in this prospectus
refer to the revenues generated by the subsidiary.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION,
CHANGES IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis relate to factors which have
affected the financial condition and results of operations of the Company for
the three months ended September 30, 1997 and the four previous fiscal years,
ending June 30, 1997, 1996, 1995, and 1994.
On April 18, 1997 the Company purchased 100% of all the outstanding
shares of TRB, as fully described in Material Events, below. As a result of
the aforementioned transaction, the Company. gained TRB, whose activities are
fully described herein.
Discussion of Financial Information
TRB is the active operating entity, producing, marketing,
manufacturing, and supporting the products of the Company. The Company has no
active income save for the activities of TRB. Therefore, the financial
information regarding the parent company and its subsidiary are presented on
a consolidated basis.
<PAGE> 24
Prospectus Page 18
For the fiscal year ended June 30, 1997 the Company had revenues of
$1,060,000 generating a gross profit of $1,060,000. There was no revenue
generated in the three month period ended September 30, 1997.In the preceding
3 fiscal years (the development period) ending on June 30,1996, revenues were
$161,354 with a gross profit of $14,982 from bicycle sales, and $190,000 from
the sale of licenses. Cost of goods sold was $0 for the periods ended
September 30, 1997 and June 30, 1997, as compared to $146,363 for the period
ending for the development period. During the development period, 1,060
bicycles were produced and sold.
Earnings for the fiscal year ended June 30, 1997 were $630,991, and
a loss of $103,750 was reported for the quarter ended September 30,1997. A
loss of $368,737 was reported for the development period ending on June 30,
1996. Expenses were $103,750 for the quarter ending September 30, 1997 as
compared to $791,888 for the developmental period, and $454,443 for the
fiscal year ended June 30, 1997. Overall, the major costs were consulting
fees, R&D, and professional fees in the quarter ended September 30, 1997,
depreciation and travel accounted for approximately 1/3 of the expenses of
the Company. The travel expense was necessary to conduct meetings which
management believes will lead to a license agreement in Mainland China.
Generally, the expenses from the fiscal period ended June 30,1997 and
September 30,1997 remained relatively constant, with the travel expense
being the only key variance. The key variances between the development period
ended June 30,1996 and the fiscal year ended June 30, 1997 were the consulting
expenses, commissions, officers salary and depreciation. These were, except
for consulting fees, indicative of the Company becoming an operational
company, and reflect anticipated future expenses from year to year that the
company should approximate. The expenses experienced in the quarter ended
September 30, 1997, except for consulting and travel, fall into line with the
expenses of the fiscal year ended June 30, 1997. The consulting fees were
primarily one time fees associated with developing marketing plans for the
sale of TRB products.
The cash and investment certificate position of the company increased
to $8,091 on September 30, 1997 from $7,200 on June 30, 1997. Retained
earnings changed from ($368,737) on June 30, 1996 to $360,395 on April 30,
1997, reflecting a very successful year of operation for the company. Current
assets, as a whole, increased from $7,200 during the developmental period to
$1,127,585.
Material Events
Acquisition of TRB
On April 18, 1997, in exchange for 9,750,000 shares in the common
stock of Company, 100% of the stock in TRB was sold by Motion Plus
International, a Delaware Corporation, its owner, to the Company.
Liquidity
Management believes that the Company has the cash funds and necessary
liquidity to meet the needs of the company over the next year, assuming sales
and development efforts conform to the standards historically set (See table
on page 15 for minimum royalty payments). Primarily, as TRB is now ready to
deliver bicycles, liquidity needs will be met through the sale of bicycles
internationally. This will be done on a letter of credit basis, and through
credit arrangements with the manufacturers in China, who have given TRB a
$2,000,000 line of credit to apply against orders for bicycles. As well,
royalty payments will become due from the distributors and licensees. On
March 1, 1998 American distributors will be given all material necessary to
commence domestic sales.
<PAGE> 25
Prospectus Page 19
However, to fully maximize the potential presented by the TPS
technology, management believes that approximately $10,000,000 will need to
be raised. The funds will be primarily used to increase the marketing effort
and for the production of marketing material, maintain domestic inventory
levels, as well as the continued development of the TPS technology. It is
felt that the money will be utilized over a three year period. In the event
only part of the funds are raised, then it will be allocated to marketing and
inventory stockpiled to meet anticipated domestic demand. The money will
likely be raised through private placements of shares. In the event the
funds are not raised, TRB will continue with its sales activities, and,
management believes, meet its liquidity demands. The funds, as noted above,
are for increased activity and sales, not for primary liquidity demands.
Current Plans
The key events that are anticipated by management to occur over the
next year are the aggressive marketing of TPS based bicycles by the licensees
and through active infomercial campaigns, as well as the aggressive sales of
licenses for territorial exclusivity in the sale of TRB products. As well,
TRB is ready to deliver its bicycles to the current licensees, and plans to
aggressively market its products through its licensees.
Accounting Policies and Procedures
The Company follows generally accepted accounting principles in
preparing its financial statements, and has audited statements produced
annually, with its quarterly statements produced by its management and
accountants.
Revenue Recognition
Revenue is recognized using the accrual method of accounting.
Statements of Cash Flows
Statements of Cash Flow are prepared quarterly, on a consolidated
basis, using generally accepted accounting principles and guidelines.
Inventory
The Company keeps minimal inventory, manufacturing goods in response
to orders.
Fixed Assets
Fixed assets are valued based on their depreciated value. Depreciation
is calculated using the straight line method.
Production Inventory
Low levels are kept, and ordered as manufacturing orders are received.
Principles of Consolidation
All Financial Statements are produced on a consolidated basis, as the
subsidiary, TRB, accounts for all operating revenue of the Company.
<PAGE> 26
Prospectus Page 20
Income/Loss Per Share
The Computation of loss per share of common stock is based on the
weighted average number of shares outstanding during the periods presented.
Statement Re Computation of Earnings Per Share
The Company has a simple capital structure as defined by APB Opinion
Number 15. Accordingly, earnings per share is calculated by dividing net
income by the weighted average shares outstanding.
Provision for Income Taxes
Provisions for income tax are computed quarterly using the guidelines
as defined in the Federal and State Statutes.
The Company's Immediate Capital Requirements
The Company requires about $10,000,000 to continue the growth and
market penetration of its TPS products and its R&D (For discussion, See
"Liquidity").
CONFLICTS OF INTEREST
Byung Yim is the sole Executive Officer and director of the Company,
and as such has a majority of the votes on all matters which the Board will
vote upon the next annual meeting of the Company's Stockholders. He, and
members of his immediate family also hold or control a majority of the
Company's outstanding common stock. Because the Company's sole officer and
director will be voting upon matters of personal interest to him (e.g.,
salaries, bonuses and other benefits), the outcome of such votes will not be
based on arm's length negotiations. While the Company's current officer
intends to exercise fairness in determining their compensation and all other
matters, there can be no assurance that the Company would not have negotiated
more favorable arrangements had persons other than its current officer been
responsible for ultimate determinations.
MANAGEMENT
Directors and Executive Officers
The following sets forth the names and ages of all the Directors and
Executive Officers of the Company, positions held by such person, length of
service, when first elected or appointed and term of office.
First Elected
Name Age or Appointed/Term Position
Byung D. Yim 55 April 18, 1997 President
<PAGE> 27
Prospectus Page 21
Biographies of Directors, Officers and Director Nominees
Byung D. Yim, Chairman/CEO
Mr. Yim's responsibilities include long term vision and international
development. He was the founder of both ProMaster Corp. and Alenax Corp.
He directly managed the development and prototype manufacturing, market
research and business planning for Transbar Power System products in the past.
Mr. Yim has experience with the U.S. import/export business, marketing and
distribution of products from the Far East. He was the exclusive Middle
Eastern distributor of perma stamp lines of Johnson Wax products. Mr. Yim's
experience in the bicycle industry is extensive, including having been the
exclusive sales and distribution agent for Upstate New York and Eastern
Pennsylvania for H.J. Sports, Inc., the exclusive agent for the third
largest bicycle manufacturer in Japan. Mr. Yim is a graduate of Han Yang
University with a B.A. in Nuclear Engineering and Electronics. For the last
five years Mr. Yim served as president of TRB Systems, Inc., and its
predecessor, Alenax Corp., devoting his full time to the bicycle industry
and developing and bringing the TPS technology to market.
Augustine Rheem, Chief Operating Officer, Bicycle Division
Mr. Rheem's duties include the overseeing of all day to day
operations, design and manufacturing projects, quality control, and overall
marketing and sales strategy and implementation of the bicycle division.
Mr. Rheem holds a graduate degree in Business Administration, and
brings to the Company a wealth of experience in the Bicycle marketing field.
He has been directly involved in the manufacture of bicycles, having owned
and operated his own bicycle assembly plant in New Jersey. Mr. Rheem was also
the exclusive sales and marketing distributor for Maruish Cycle Co., the
third largest Japanese manufacturer of bicycles. Overall Mr. Rheem has over
25 years of national and international experience in all facets of the
bicycle and sporting goods industry, including sales/marketing, general
management, and product development. For the last five years Mr. Rheem has
been with Leisure Dynamics Corp., a New Jersey company, involved in the sale
of sporting goods. He is 61 years of age.
Dr. Dennis Colacino, Chief Operating Officer, Ergometer and Exercise
Equipment Division
Dr. Colacino's duties include the day to day running of the ergometer
and exercise equipment division, with full responsibility for the performance
of this division, including overall sales and marketing strategies and
implementation.
Dr. Colacino has over 25 years working in the preventive medicine,
rehabilitation, and fitness field. His earlier work focused on cardiac
rehabilitation, as Executive Director of Life Clinic (Brandon, FL) and
designer and Executive Director of HEART, a cardiac rehabilitation and
physical therapy facility of New York Medical. He remains a professor of
Preventive Medicine at New York Medical.
For 12 years, Dr. Colacino designed and managed the Cardiovascular
Programs at Texaco and PepsiCo., overseeing the health and fitness for
150,000 employees at PepsiCo. From 1986 to the present, he has been
President of the Colacino Group which helps companies with start-ups,
marketing and sales. During this time, he has developed proformas and
strategic planning, negotiated contracts, and developed products and
equipment with the major companies in the sports and fitness industry.
<PAGE> 28
Prospectus Page 22
As a founder and member of the Board of Trustees of the Association
of Fitness in Business, Dr. Colacino remains active in the health care field.
Presently, he serves on many boards.
Dr. Colacino is a graduate of Western Washington State College.
He has a Masters degree from the University of Mexico in Physical Education,
and a Ph.D. from the University of Wisconsin in Physiology. He is 53 years
old, and for the last five years has acted as an independent consultant in
the fitness and health field.
Amelia B. Eclavia, Chief Financial Officer
Ms. Eclavia's responsibility is to oversee the financial health ofTRB.
Ms. Eclavia is a CPA, holding a Bachelor of Science Degree in
Business Administration. She was Senior Accountant at Thompson Professional
Publishing and Information Technology from 1973 to 1996. In late 1966 she
formed her own consulting company and joined TRB in May of 1997. This company
is the operating unit in the United States of Thompson Corporation, a
multi-billion dollar, multi-national corporation. Her duties involved the
preparation of financial statements for the company president, management of
the royalty system, accounting for short term investments, supervision of
Accounts Payable, and the analysis and control of Accounts Receivable. Prior
to this position, from 1971 to 1973 Ms. Eclavia was Assistant Controller of
Genesee Management Corporation, managers, owners, and developers of
multi-million dollar real estate projects. Her tasks included the preparation
of financial statements, budgets, cash flow analyses, and the supervision of
the staff accounting clerks.
Ms. Eclavia has a wealth of experience in managing the finances of
major corporations, as well as in leveraged buy-outs, acquisitions, and
divestitures, and will bring a useful insight to TRB. She is 57 years old.
Marn T. Seol, Vice-president, R&D
Mr. Seol is 57 years old and is the inventor of both "propulsion
mechanisms for lever propelled bicycles", and "multi purpose transmission
mechanisms for bicycles". Mr. Seol began pursuing his interest in designing
bicycles in 1976 by opening Dong Yang Industrial Co., Ltd. in Korea. In 1983
he joined forces with Mr. Yim, and since that time has worked for Mr. Yim in
developing the research and development division of his companies, and has
worked for TRB since its inception.
Mr. Seol will be responsible for overseeing the design and
technological advancements in all TRB product lines, as well as directly
involved in developing new products and product lines.
Family Relationships
Augustine Rheem and Byung Yim are brothers.
Involvement in Certain Legal Proceedings
During the past five years no current director, person nominated to
become a director, executive officer, promoter or control person of the
Company has been a party to or the subject of:
(1) Any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of
the bankruptcy or within two years prior to that time;
(2) Any conviction in a criminal proceeding or has been subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
<PAGE> 29
Prospectus Page 23
(3) Any order, judgment, or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoying, barring suspending or otherwise limiting his
involvement in any type of business, securities or banking activities; and
(4) Been found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgement has not
been reversed, suspended, or vacated.
Compensation
Compensation of Directors
Standard Arrangements
All members of the Company's board of directors are paid a per diem
fee of for attendance at meetings of the board of directors and committees
thereof. In addition, if required, they are reimbursed for travel expenses
and lodging is arranged for them, at the Company's expense. At such time as
adequate funds are available, all director (and officers) of the Company will
be covered by liability insurance. Directors are reimbursed for all out of
pocket expenses incurred in the performance of their roles, subject to
provision of receipts in form and substance adequate to satisfy Internal
Revenue Service audit requirements (e.g., long distance telephone, postage,
etc.).
Other Arrangements
Neither the Company nor any of its subsidiaries have any other
arrangements to compensate its directors.
Employment contracts, termination of employment & change-in-control
arrangements
The Company does not have any compensatory plan or arrangement,
including payments to be received from the Company, with respect to a named
executive officer that results or will result from the resignation,
retirement or any other termination of such executive officer's employment
with the Company and its subsidiaries or from a change-in-control of the
Company or a change in the name executive officer's responsibilities
following a chance-in-control, which, including all periodic payments or
installments, exceeds $100,000.
Mr. Yim was entitled to a salary of $50,000 during the fiscal year
ending June 30, 1997. As well, he was provided with an automobile and
operating expenses for the said automobile were paid on his behalf. The
value of this was $4,370.
Mr. Yim will draw a salary of $50,000 during the fiscal year ending
June 30, 1998, although no salary was drawn in the first quarter of the
fiscal year. Automobile expenses for the car provided to Mr. Yim by the
Company were $3,127.
Prior to the 1996 fiscal year, Mr. Yim took no salaries, and infused
$163,126 into the TRB. In lieu of the repayment of the loan, and charging
the company for salaries not claimed in previous years, Mr. Yim was issued
500,000 shares in the capital stock of the Company.
<PAGE> 30
Prospectus Page 24
SUMMARY, COMPENSATION TABLE
Annual Compensation Awards Payouts
Other Rest-
Annual ricted
Compen- Stock Aw- SU SA
Name and sation ards OP RS LTIP Other
Position Year* Salary ($) Bonus ($) (#) ($) __ ($) ___ ($)
Byung YIM** 1997 50,000 0 4,370*** **** 0 0 0 0 0
Byung YIM** 1996 0 0 11,302*** 0 0 0 0 0 0
* Fiscal Year Ending
** President, CEO, and Sole Director
*** Automobile Expenses
**** Received 500,000 shares of common stock in the Company in lieu of
$163,126 loaned to the Company as Operating Expenses in 1994-1996, and
in lieu of Executive Compensation for the same years, during which he
did not draw a salary.
Resignations of Officers and Directors
In conjunction with the acquisition of TRB, the Company's then
serving officers and directors agreed to resign in favor of persons
designated by Mr. Byung Yim. In conjunction therewith, all of the Company's
officers and directors resigned during April, 1997.
CERTAIN TRANSACTIONS
The following information pertains to all transaction during the
last two year, or proposed transactions, to which the Company was or is to be
a party, in which any of the following persons had or is to have a direct or
indirect material interest: any director or executive officer of the
Company: any nominee for election as a director; any principal security
holder listed below; and, any member of the immediate family (including
spouse, parents, children, siblings, and in-laws) of any of the foregoing
persons.
Relationship Nature of Interest Amount of Fiscal
Name to Company in the Transaction Interest Year Ending
Byung Yim* President and Conversion of 500,000 1997
Sole Director loan to equity * Shares
Byung Yim* President and Salary and funds $55,000** 1997
Sole Director advanced to TRB
* Mr. Yim was owed $163,126 for monies advanced to TRB, and drew no salary
during the development period. The 500,000 shares represent the retirement of
the liability and recognition of salary for the years 1994-1997.
** Mr. Yim did not draw his salary during the fiscal period ended June 30,
1997 or the quarter ended September 30, 1997, and the director's loan (See
"Financial Statements") reflects the company's indebtedness to Mr. Yim for
$5,000 advanced to TRB and for his salary.
<PAGE> 31
Prospectus Page 25
Parents of the Company
The following table discloses all persons who are parent of the
Company (as such term is defined in Securities and Exchange Commission
Regulation C), showing the basis of control and as to each parent, the
percentage of voting securities owned or other basis of control by its
immediate parent if any.
Percentage Other
of Voting Basis
Basis for Securities For
Name Control Owned Control
Motion Plus Int'l.
Corporation(MPI) Share Ownership 86% None
NOTE: Motion Plus International Corporation is controlled by Byung Yim, the
president of the Company, and his children. Mr. Yim's children, Alexander B.
Yim (age-21)and Lena B. Yim (age-19), hold 39% interest in MPI each. Mr. Yim
has a 20% interest in the Corporation, and the remaining 2% is held by Hee J.
Yim. Alexander and Lena Yim reside at 595 Windflower Court, Morganville, NJ
07751.
Transaction with Promoters, if Organized Within the Past Five Years
There have been no transactions with Promoters over the past five
years.
PRINCIPAL STOCKHOLDERS
The following sets forth the security ownership of Management of the
Company and any holders of the Company's common stock known to own 5% or more
of the Company's issued and outstanding common stock, as of September 30,
1997.
PRINCIPAL STOCKHOLDERS
As of the date of this Prospectus, the following persons (including
any "group" are, based on information available to the Company, beneficial
owners of more than five percent of the Company's common stock (its only
class of voting securities):
Title Name and Amount and
Title Address of Nature of Percent
of Beneficial Beneficial of
Class Owner Owner Class
Common MPI* 9,750,000 86%
Stock Shares
NOTE: Motion Plus International Corporation, 4 Becker Farm Road, Roseland,
NJ 07068 is controlled by Byung Yim, the president of the Company who resides
at 21 Hutton Ave., Apt. 3, West Orange NJ 07025, and his children. Mr. Yim's
children, Alexander B. Yim (age-21)and Lena B. Yim (age-19), hold 39%
interest in MPI each. Mr. Yim has a 20% interest in the Corporation, and
the remaining 2% is held by Hee J. Yim. Alexander and Lena Yim reside at 595
Windflower Court, Morganville, NJ 07751.
<PAGE> 32
Prospectus Page 26
SECURITY OWNERSHIP OF MANAGEMENT
As of the date of this Prospectus, the following table discloses, as
to each class of equity securities of the registrant or any of its parents
or subsidiaries other than directors' qualifying shares, beneficially owned
by all directors and nominees, the names of each executive officer (as
defined in Item 402[a][2] of Securities and Exchange Commission regulation
S-B), and directors and executive officers of the registrant as a group, the
total number of shares beneficially owned and the percent of class so owned.
Of the number of shares shown, the associated footnotes indicate the amount
of shares with respect to which such persons have the right to acquire
beneficial ownership as specified in Securities and Exchange Commission Rule
13(d)(1).
Name and Amount and
Title Address of Nature of Percent
of Beneficial Beneficial of
Class Owner Owner Class
Common
Stock Byung Yim * *
Common
Stock Byung Yim 500,000** 4.3
* Motion Plus International Corporation, 4 Becker Farm Road, Roseland, NJ
07068 owns 86% of the stock on the Company and Byung Yim, the president and
sole director of the Company who resides at 21 Hutton Ave., Apt. 3, West
Orange, NJ 07025, has a 20% interest in MPI.
** Mr. Yim Received the shares as compensation for funds loaned to the
Company between 1994-1996 and in lieu of salary which he did not draw during
those years ( See "CERTAIN TRANSACTIONS", at Prospectus page 24.)
COMMON STOCK
The Company is authorized to issue 30,000,000 shares of Common Stock,
with a par value of $.001. Immediately prior to this offering 11,925,626
shares of Common Stock were outstanding and held of record by more than 274
persons as of September 30, 1997. The holders of Common Stock have one vote
per share on all matters (including election of directors) without provision
for cumulative voting. Thus, holders of more than fifty percent (50%) of the
shares voting for the election of directors can elect all of the directors,
if they choose to do so. The Common Stock currently is not redeemable and
has no conversion or pre-emptive rights. The Common Stock currently
outstanding is (and the Shares being issued pursuant to this prospectus will
be) validly issued, fully paid and non-assessable.
In the event of liquidation of the Company's assets available for
Common Stock will share equally in any balance of the Company's assets
available for distribution to them after satisfaction of creditors and the
holders of the Company's senior securities. The Company may pay dividends,
in cash or in securities or other property when and as declared by the board
of directors from funds legally available therefor, but has paid no cash
dividends on its Common Stock.
TRANSFER AGENT
The transfer agent for the Company's Capital Stock is Continental
Stock Transfer Company of New York.
<PAGE> 33
Prospectus Page 27
SHARES ELIGIBLE FOR FUTURE SALE
Generally, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period may, under certain
circumstances, sell within any three month period a number of shares which
does not exceed the greater of one percent (1%) of the then outstanding
Common Stock or the average weekly trading volume during the four calendar
weeks prior to such sale. Rule 144 also permits, under certain circumstances,
the sale of shares without any quantity limitation by a person who has not
been an affiliate of the Company for at least 90 days and who has satisfied a
one year holding period.
There are 40 shareholders holding 11,081,628 shares which will be
eligible for sale in October of 1998, pursuant to fulfilling the terms as set
down in Rule 144.
ADDITIONAL INFORMATION
The foregoing statement is a summary of the rights and privileges of
the holders of the Company's Stock. It does not purport to be complete and
is subject to the provisions of the Delaware General Corporation Act, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and,. the rules, regulations and bylaws of the National Association
of Securities Dealers, Inc.. The foregoing statements are qualified in
their entirely by such references.
PLAN OF DISTRIBUTION
GENERAL
The Shares registered by the Registration Statement of which this
Prospectus is a part are being registered as a result of demand registration
rights granted by the Company to the Selling Stockholders at the time that
Selling Stockholders subscribed for the subject securities. As well, the
Company issued 549,009 shares to 45 individuals who had invested in TRB
and were unrelated parties. These persons had invested money between 1994-
1997 in TRB, in the sum of $305,814, and their dept was converted into
equity at the rate of $.514 per share. This is reflected in the finacial
statements, and described in Note 12 of the said statements. The issue was
to be subject of the instant registration. However, the shares were issued
on October 2, 1997, and are being retroactively registered herein giving
each shareholder a seven day right of rescission. These Shares will be
distributed in the same manner as the shares being registered on behalf
of the Selling Shareholders.
The Selling Shareholders will sell their stock from time to time in
the public forum, at the prices then prevailing. The Shares will be sold
through broker/dealers, at market prices with cusomary commissions being
charged.
Although there is no current market for the shares, and they are not
currently traded in the public market, it is anticipated that the shares will
be registered and sold on the NASDAQ Bulletin Board System within 4 months of
the effective date of the Registration Statement of which this Prospectus
forms a part.
It is also anticipated that the shares may be sold on NIPHIX, a
trading forum for the shares of small emerging companies, within 30 days of
the effective date of the Registration Statement of which this Prospectus
forms a part.
SELLING STOCKHOLDERS
The following table provides information concerning the identity of
the Selling Stockholders, the quantity of common stock being registered for
them, the date such common stock was acquired, and the consideration for
which it was issued.
<PAGE> 34
Prospectus Page 28
SELLING STOCKHOLDERS
The following table provides information concerning the identity
of the Selling Stockholders, the quantity of common stock being registered
for them, the date such common stock was acquired, and the consideration
for which it was issued.
Selling Stockholders
Names & Addresses Shares Registered Date Acquired Consideration
Alpha Bytes, Inc. 250,000 April 18, 1997 $25,000
7050 Woodbine Ave
Suite 205
Markham, Ont.
Canada L3R 4G8
Alpha Bytes, Inc., a Colorado public corporation presently traded on
the NASDAQ Bulletin Board market, provided consulting services to the Company
regarding software development for the inventory control and Management
Information Systems to be used by the Company. It was agreed that Alpha
Bytes, Inc. would receive 250,000 shares for its services. Management felt
that this arrangement was appropriate as it allowed the Company to use its
cash elsewhere, and at the same time set up the computer systems which would
monitor the Company's activities.
Alpha Bytes, Inc., its subsidiaries, and shareholders had no
interest in the Company, its subsidiary, or any business or personal
relationship with any shareholder of the Company or its subsidiary or
affiliates, prior to the above described transaction. The shares given to
Alpha Bytes represented 2.5% of the Company's outstanding shares, and if
sold, will leave Alpha Bytes, Inc. with no interest in the Company. Alpha
Bytes, Inc.'s principals are Anton Stephens and his spouse Christine
Stephens, who together control 75.5% of Alpha Bytes, Inc. voting shares.
Mr. Stephens is the president of Alpha Bytes, Inc.
INDEMNIFICATION ARRANGEMENTS
The Company's articles of incorporation and bylaws provide for
indemnification of the Company's officers, directors and agents to the
fullest extent permitted by law. The Company's articles of incorporation
also limit the right of stockholders to sue Company officers, directors and
agents. In addition, the Company's employment agreements with its officers
all require the Company to defend the contracting parties against all
liabilities resulting from their association with the Company, to the
greatest extent legally permitted.
Insofar as indemnification for liabilities arising under the
Securities Act Of 1933, as amended, may be permitted to directors, officers
or persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the United States Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
<PAGE> 35
Prospectus Page 29
LITIGATION
The Company is not a party to any material pending legal proceedings.
LEGAL OPINIONS
Charles C. Khym, Esquire, attorney at law, has rendered his opinion
that the shares of Common Stock reserved as described herein when issued
will be validly issued, fully paid and non-assessable, and that future
purchasers thereof will not be subject to personal liability as a result of
their ownership thereof.
EXPERTS
The audited financial statements of the Company appearing in this
Prospectus and in the Registration Statement have been examined by chartered
accountants, as set forth in their report appearing elsewhere herein, and
are included in reliance upon such report the authority of such firm as
expert in auditing and accounting.
FINANCIAL STATEMENTS
(See following pages)
<PAGE> 36
Prospectus Page 30
TRB SYSTEMS INTERNATIONAL INC.
Consolidated Financial Statements and Accountant's Audit Report For
the Fiscal Years Ended June 30, 1997, June 30, 1996, June 30, 1995 and
June 30, 1994, and for the Fiscal Quarter ended September 30, 1997
<PAGE> 37
Prospectus Page 31
TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
______________________________________________________________________
Prospectus
Page
Accountant's Audit Report 32
Financial Statements:
Balance Sheet 33
Statements of Operations and Retained Earning 35
Statement of Stockholder's Equity 37
Statements of Cash Flows 39
Notes to Financial Statements 41
______________________________________________________________________
<PAGE> 38
Prospectus Page 32
Stan J.H. Lee & Co. , CPA, CMA Tel) 201-944-7246
440 West St. 3rd Fl. Fax) 201-944-7759
Fort Lee, N.J. 07024-5058 E-Mail) [email protected]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders of TRB Systems International Inc.
Roseland, New Jersey
We have audited the accompanying consolidated balance sheet of TRB Systems
International Inc. as of September 30, 1997, June 30, l997, June 30, 1996,
June 30, 1995, and June 30, 1994, the consolidated related statement of
operations and retained earnings, consolidated statement of stockholders'
equity and consolidated statement of cash flows for the periods then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of TRB
International Inc. at the dates abovementioned, and the results of its
operations and its cash flow for the periods then ended in conformity with
generally accepted accounting principles.
_______________________
Stan J.H. Lee, CPA
October 31, 1997
Fort Lee, N.J.
<PAGE> 39
Prospectus Page 33
TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEET
THREE MONTH PERIOD ENDING SEPT. 30, 1997 AND FISCAL YEARS ENDING
JUNE 30, 1997, JUNE 30, 1996, JUNE 30, 1995, JUNE 30, 1994.
9/30/97 6/30/97 6/30/96 6/30/95 6/30/94
ASSETS
CURRENT ASSETS:
Cash $3,671 ($18,106) $206 $488 $1,235
Accounts recievable-
Trade (Note 14) 1,090,000 1,090,000 0 0 0
Accounts recievable-
other 12,500 0 0 0
Inventory 7,500 7,500 6,994 6,994 6,994
1,101,171 1,091,894 7,200 7,482 8,229
OTHER ASSETS:
Prepaid expenses 27,267 24,407 14,547 17,053 2,129
(Note 10)
Property & equipment 536,513 539,561 0 0 0
(Note 17 )
Organization costs,
net of accumulated
Amortization 56,734 63,027 75,182 64,820 48,011
Security deposits 1,043 1,043 0 0 0
Deferred tax assets 0 0 217,915 158,896 76,250
(Note 5 & 11)
621,557 628,038 307,644 240,769 126,390
TOTAL ASSETS- 1,722,728 1,719,932 314,844 248,251 134,619
LIABILITIES:
CURRENT LIABILITIES:
Accounts payable and
accrued expenses (Note 8) 195,192 195,192 464,455 361,816 223,848
Accrued corporation income
tax payable 249 249 0 0 0
195,441 195,441 464,455 361,816 223,848
Loans from individuals 250,500 259,000 0 0 0
(Note 9)
Director's loan 55,000 55,000 218,126 163,574 32,091
(Note 9)
305,500 314,000 682,581 525,390 225,939
See accompanying notes which are an integral part of financial statements
<PAGE> 40
Prospectus Page 34
TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEET
(CONTINUED)
9/30/97 6/30/97 6/30/96 6/30/95 6/30/94
SHAREHOLDER'S EQUITY:
Common stock, $.001 par
value, (Note 15) $11,926 $11,863 $9,750 $9,750 $9,750
Additional paid-in-capital 1,051,311 936,374 490 490 490
Retained earnings (Deficit) 158,550 262,254 (368,737) (278,139) (122,320)
Total shareholders equity
(Deficit) $1,221,787 $1,210,491 ($367,737) ($277,139(($121,320)
TOTAL LIABILITIES
AND SHAREHOLDERS
EQUITY 1,722,728 1,719,932 318,844 248,251 134,619
See accompanying notes which are an integral part of financial statements.
<PAGE> 41
Prospectus Page 35
TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
THREE MONTH PERIOD ENDING SEPT. 30, 1997, AND FISCAL YEARS ENDING JUNE 30,
1997, JUNE 30, 1996, JUNE 30, 1995, AND JUNE 30, 1994.
CUMULATIVE
FROM
INCEPTION-
9/30/97 6/30/97 TO 6/30/96 6/30/96 6/30/95 6/30/94
SALES $0 $0 $161,354 $161,354 $0 $0
COST OF SALES 0 0 146,363 146,363 0 0
GROSS PROFIT 0 0 14,982 14,982 0 0
LICENSING FEES 0 1,060,00 190,000 65,000 60,000 65,000
(Note 14)
OPERATING EXPENSES
Promotion expense 0 0 4,275 1,484 1,353 1,438
Consulting 4,200 97,000 135,470 38,000 39,970 57,500
Commission 10,775 29,582 15,000 15,000 0 0
Research & development 0 29,600 325,738 81,494 156,885 87,359
(Note 7)
Professional fees
(Note 8) 15,671 46,164 50,000 0 0 50,000
Travel 14,995 13,979 11,513 4,511 3,364 3,638
Business gifts 0 0 2,329 1,791 538 0
Meals & entertainment 8,328 6,918 36,266 6,086 15,017 15,163
Auto expense (Note 6) 627 4,370 44,829 11,302 13,062 20,465
Corporation taxes 0 0 366 366 0 0
Officer's salaries 0 50,000 0 0 0 0
Payroll taxes 0 5,857 0 0 0 0
Leasing expense 2,500 16,825 0 0 0 0
Rent (Note 3) 925 5,395 10,666 5,249 2,872 2,545
Telephone 2,264 7,298 20,242 6,062 7,516 6,664
Office 4,947 17,795 55,877 14,270 28,617 12,990
Insurance expense 829 2,925 2,801 1,289 1,512 0
Bank charges 970 2,611 4,147 1,827 1,910 410
Postage 625 1,798 2,034 580 1,317 137
Miscellaneous 400 0 6,697 5,504 1,193 0
Sample charges 0 0 2,866 0 2,866 0
Interest expense 0 0 19,468 12,672 6,796 0
Shipping & Delivery 0 0 460 460 0 0
Dues & Fees 0 0 1,896 1,896 0 0
Contributions 0 0 100 100 0 0
Advertising 0 63,479 0 0 0 0
Depreciation 20,323 19,984 0 0 0 0
Amortization 6,293 23,990 38,848 19,791 13,722 5,335
Overseas operating
expense 5,000 5,000 0 0 0 0
Other operating
expense 4,078 3,873 0 0 0 0
TOTAL OPERATING
EXPENSE $103,750 $454,443 $791,888 $229,734 $298,510 $263,644
See accompanying notes which are an integral part of financial statements.
<PAGE> 42
Prospectus Page 36
TRB SYSTEMS INTERNATIONAL INC
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(CONTINUED, all figures in $US)
CUMULATIVE
FROM
INCEPTION-
9/30/97 6/30/97 TO 6/30/96 6/30/96 6/30/95 6/30/94
INCOME (LOSS) FROM
OPERATIONS BEFORE
OTHER INCOME AND INCOME
TAX EXPENSE (103,750) 605,557 (586,906)(149,752)(238,510)(198,570)
Dividend income 46 59 254 135 45 74
INCOME (LOSS) BEFORE
TAX EXPENSE (103,704) 605,616 (586,652)(149,617)(238,465)(198,570)
Income tax expense 0 (249,834) 0 0 0 0
Research and development
tax credit applied (Note-
5, & 11) 0 21,414 18,215 8,149 1,568 8,736
Tax Benefits from net
operating loss carry-
forward applied
net of tax (Note 5) 0 253,795 199,700 50,870 81,078 67,514
NET INCOME (LOSS) (103,704) 630,991 (368,737) (90,598)(155,819)(122,320)
RETAINED EARNINGS or
DEFICIT at beginning 262,254 (368,737) 0 (278,139)(122,320) 0
RETAINED EARNINGS or
DEFICIT at end 158,550 262,254 (368,737)(368,737)(278,139)(122,320)
Earnings (Loss) per
share (Note 16) 0.00874 0.25931 (0.009) (0.016) (0.013)
See Accompanying Notes Which Are An Integral Part of Financial Statements.
<PAGE> 43
Prospectus Page 37
TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF
STOCKHOLDERS' EQUITY
FOR THE FISCAL QUARTER ENDED
SEPTEMBER 30, 1997
CAPITAL STOCKS RETAINED
NUMBER OF SHARES AMOUNT EARNINGS TOTAL
BEGINNING BALAN-
CE AS OF 7/01/97 11,863,363 SHARES $948,237 $262,254 $1,210,491
NET LOSS FOR THE
PERIOD (103,704) (103,704)
SHARES ISSUED
TO VARIOUS
INDIVIDUALS 62,263 115,000 115,000
11,925,626 SHARES $1,063,237 $158,550 $1,221,787
See accompanying notes which are an integral part of financial statements.
<PAGE> 44
Prospectus Page 38
TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE FISCAL YEAR ENDED
JUNE 30, l997
Capital Stocks
Number of shares Amount Retained Earnings Total
Retained earnings
as of June 30, l997 $262,254 $262,254
Shares issued as
compensation for
consulting services 250,000 shares $ 25,000 -0- 25,000
Shares issued as
repayment of
director's loans 500,000 163,126 -0- 163,126
Shares issued for
purchase of
property and
equipment 500,000 559,545 -0- 559,545
Shares issued in
exchange for 100%
of TRB Systems
Inc.'s voting
shares 9,750,000 9,750 -0- 9,750
Shares issued to
various
individuals 863,363 190,816 -0- 190,816
11,863,363 shares $ 948,237 $ 262,254 $1,210,491
========== ======== ======= ==========
See accompanying notes which are an integral part of financial statements.
<PAGE> 45
Prospectus Page 39
TRB SYSTEMS INTERNATIONAL INC.
CUMULATIVE STATEMENTS OF CASH FLOW
FOR THREE MONTH PERIOD ENDING SEPT. 30, 1997 AND
FISCAL YEARS ENDING JUNE 30, 1997, JUNE 30, 1996,
JUNE 30, 1995, JUNE 30, 1994
CUMULATIVE
FROM
INCEPTION-
9/30/97 6/30/97 TO 6/30/96 6/30/96 6/30/95 6/30/94
CASH FLOWS FROM OPER-
ATING ACTIVITIES:
Net Loss (Earnings) ($103,704) $630,991 ($368,737)($90,598)($155,819)($122,320)
Noncash item included
in net Loss (Earnings) 26,616 43,974 38,848 19,791 13,722 5,335
Increase in acc'ts
recievable- trade 0 (1,090,000) 0 0 0 0
Increase (Decrease)in
acct's recievable-
other 12,500 (12,500) 0 0 0 0
Increase in inventory 0 (506) (6,994) 0 0 (6,994)
Increase in pre-paid
expense (2,860) (9,860) (14,547) 2,506 (14,924) (2,129)
Decrease (Increase)in
deferred tax assets 0 217,915 (217,915) (59,019) (82,646) (76,250)
Decrease (Increase)in
acct's payable and
accrued expense 0 (269,263) 463,891 102,075 137,968 223,848
Increase in accrued
corporate income taxes 0 249 0 0 0 0
(67,448) (489,000)(105,454) (25,245) (101,699) 21,490
CASH FLOWS FROM
FINANCING ACTIVITIES:
Increase in loans from
a director 0 0 218,126 54,552 131,483 32,091
See accompanying notes which are an integral part of financial statements.
<PAGE> 46
Prospectus Page 40
TRB SYSTEMS INTERNATIONAL INC.
CUMULATIVE STATEMENTS OF CASH FLOW
(CONTINUED)
CUMULATIVE
FROM
INCEPTION-
9/30/97 6/30/97 TO 6/30/96 6/30/96 6/30/95 6/30/94
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of property
and equipment ($17,275) 0 0 0 0 0
Increase in security
deposits 0 (1,043) 0 0 0 0
Issuance of common stock 115,000 224,566 1,000 0 0 1,000
Expenditure for organ-
ization cost 0 (11,835) (113,466) (29,589)(30,531)(53,346)
Conversion of current
liabilities to long-term
liabilities 0 259,000 0 0 0 0
97,725 470,688 (112,446) (29,589)(30,531)(52,346)
Net increase in balance 21,777 0 206 0 0 1,235
Net decrease in balance 0 (18,312) 0 (282) (747) 0
Cash at beginning of period (18,106) 206 0 488 1,235 0
Cash at end of period 3,671 (18,106) 3,671 206 488 1,235
CASH FLOWS FROM FINAN-
CING ACTIVITIES:
Loan repayment (8,500) 0 0 0 0 0
SUPPLEMENTAL DISCLOSURES:
Conversion of director's
loans to equity shares 0 (163,126) 0 0 0 0
Acquisition of property and
equipment in exchange for
equity shares 0 (559,545) 0 0 0 0
Issuance of common stock 0 722,671 0 0 0 0
NET 0 0 0 0 0 0
See accompanying notes which are an integral part of financial statements.
<PAGE> 47
Prospectus Page 41
TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
1. Incorporation and Business Activity
TRB Systems International Inc., a Delaware corp. incorporated on April
9, 1997, is a holding company whose only asset is 100 % of voting common
stocks in TRB Systems Inc.
TRB Systems Inc. was incorporated under the laws of Delaware on April
7, 1994, on which day it merged with TRB Systems Inc., a Corporation
incorporated under the laws of New York on July 12, 1993, to form TRB Systems
Inc., a Delaware Corporation.
TRB Systems Inc. is in the business of manufacturing, distributing,
and selling bicycle, fitness, and motorized two wheel transportation products.
Currently all operations are run from the head office facilities in Roseland,
New Jersey.
2. Summary of Significant Accounting Policies
a) Principles of Consolidations
TRB Systems Inc., the only subsidiary of TRB Systems International
Inc. has been included in the consolidated financial statements, as it is the
operating entity, with TRB Systems International Inc., a non-operating holding
company.
In accordance with the reverse takeover method of accounting, as
deferred to in note 4 these consolidated financial statements of the Company
include the accounts of TRB Systems International Inc. together with the
results of TRB Systems Inc. for the three-month period ended September 30,
l997.
b) Revenue and Expense Recognition
The Company prepares its financial statements on the accrual
accounting basis. Consequently, certain revenue and related assets are
recognized when earned rather than when received, and certain expenses are
recognized when the obligation is incurred or the asset consumed, rather than
when paid.
c) Accounting Method
The Company recognizes income and expenses on accrual basis.
d) Depreciation
Depreciation is computed by using the straight-line method for
financial reporting purposes and the modified accelerated cost recovery
method for federal income tax purposes.
See acompanying notes which are an integral part of financial statements.
<PAGE> 48
Prospectus Page 42
TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
e) Income Taxes
Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently due plus
deferred taxes related primarily to differences between the bases of certain
assets and liabilities for financial and tax reporting. The deferred taxes
represent the future tax return consequences of those differences, which will
either be taxable when the assets and liabilities are recovered or settled.
f) Net Operating Loss Carryforward
Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently due plus
deferred taxes for operating losses that are available to offset future
taxable income.
g) Intangible Assets
Intangible assets subject to amortization include organization costs,
loan closing costs, and in-force leasehold costs. Organization costs and
in-force leasehold costs are being amortized using the interest method over
the life of the related loan.
h) Reclassifications
Certain accounts in the prior-year financial statements have been
reclassified for comparative purposes to conform with the presentation in the
current-year financial statements.
i) Property and Equipment
Property and equipment are carried at cost. Depreciation of property
and equipment is provided 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. Expenditures for major renewals
and betterments that extend the useful lives of property and equipment are
capitalized. Expenditures for maintenance and repairs are charged to expense
as incurred.
See acompanying notes which are an integral part of financial statements.
<PAGE> 49
Prospectus Page 43
TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
j) Inventories
Inventories are stated at the lower of cost (determined on the first-
in, first-out basis) or market.
3) Description of Leasing Arrangements
The Company leases its executive office facilities under non-
cancelable short-term operating leases.
The future minimum lease payments required under the leases is
minimal and immaterial in amount.
4) Business Combination
Pursuant to an Agreement dated April 18, 1997, and effective on that
date, TRB Systems International Inc. issued 9,750,000 common shares in
exchange for all outstanding shares in the capital of TRB Systems Inc. As a
result of this transaction, control of the combined companies passed to the
former shareholders of TRB Systems Inc.
This business combination situation is referred to as a "Reverse
Takeover". Legally, TRB Systems International Inc. is the parent or
continuing corporation; however, Generally Accepted Accounting Principles
require that the former shareholders of TRB Systems Inc. be identified as the
acquirer and that TRB Systems International Inc. and be treated as the
acquired company. Accordingly, control of the assets and business of TRB
Systems International Inc. has been acquired by TRB Systems Inc.in
consideration for the issuance of common shares.
5) Operating Loss and Tax Credit Carryforwards
The Company had loss carryforwards totaling $ 586,787 that have been
offset in full against current taxable income and R & D tax credits totaling
$ 21,414 which were fully applied against the current tax liability.
Accordingly there is no longer net operating loss carryforward or tax credit
carryforward for use in the future.
See accompanying notes which are an integral part of financial statements.
<PAGE> 50
Prospectus Page 44
TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
6) Related Party Transaction
The Company has a policy of providing an executive with a Company-
leased automobile for business purposes and the amount of such expense for
the fiscal year ended June 30, l997 was $ 4,370.
There were no other significant non arm's-length basis transactions
between the Company and any related party during the fiscal year ended
June 30, l997, except for the conversion of Directors Loan Equity ( see
Note 9)
7) Research and Development Cost
SFAS No.2 - Accounting for research and development costs, generally,
requires all research and development costs to be charged to expenses when
incurred, rather than recording them as inventory or elements of overhead.
Costs that are expensed as research and development are as follows; a)
intangibles purchased from others, and materials and equipment b) salaries
and related costs of personnel engaged in research and development activities
c) services performed by others in connection with research and development
activities and d) reasonable allocation of indirect costs except general and
administrative costs not clearly related to research and development
activities).
Amount of research and development costs charged to expenses are as
follows:
Fiscal year ended Amount
June 30, l994 87,359
June 30, l995 156,885
June 30, l996 81,494
June 30, l997 29,600
8) Accounts Payable and Accrued Expenses
The accounts payable and accrued expenses also include the capitalized
portion of legal and consulting expenses incurred in the development of
standardized contracts, promotional materials and the filing and registration
of patents, and are amortized over a sixty-month period.
For the fiscal year ended June 30, l997, such capitalized expenditure
amounts to $ 11,835
Payable for legal and other professional
expenses $ 141,000
Other various accrued expenses 54,192 $ 195,192
See accompanying notes which are an integral part of financial statements.
<PAGE> 51
Prospectus Page 45
TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
9) Director's Loans and Loans From Individuals
The loans payable to a director are unsecured, non-interest bearing
with no set terms of repayment.
On April 19, l997, balance of director's loans in the amount of
$ 163,126 has been converted into equity in exchange of 500,000 shares in the
TRB Systems International, Inc. (See Statement of Shareholders Equity at
page 38.
$259,000 of loans from indivduals have been converted from current
liabilities into long-term liabilities. The conversion was made to properly
reflect the status of the loans, namely that they are outstanding liabilities
with no set repayment schedule, to be paid as TRB had the funds to pay for
them.
10) Prepaid Expenses
ABL Properties, wholly owned by Byung Yim, President and CEO of the
Company, owns the patents which are exclusively licensed to TRB Systems Inc.
The rights licensed to TRB by ABL Properties Company call for a payment of
$200,000 during the first year of active sales, a 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. It was agreed between ABL and the Company
that the $200,000 would be deferred until the Company had suitable cash flow
to meet its current needs, or March 1, 1999, whichever date was later.
Any cost ocurred by TRB Systems Inc. to maintain the patents is reimbursable
by ABL and is credited toward the $200,000 license fees due to ABL on the
first anniversary following the commencement of active bicycle sales.
11) Credit For Increased Research Expenditures
Internal Revenue Code allows for claiming a credit for incremental
research expenses incurred before July 1, 1995, or between June 30, 1996 and
June 1, 1997, as one of the components of the general business credit.
The credit is subject to the limitation and the carryback and
carryforward rules and the remaining unused credit at the end of carryforward
period is allowed as a deduction in the year following the expiration of the
carryforward period. (See Note 5 Above)
12) Conversion Of Certain Liabilities And Accrued Expenses To Equity In
Parent Company
$305,816 of investments in TRB were converted into Equity by the issue
of 594,000 shares to 45 individuals, at the rate of $0,51 per share.
(Total to September 30, 1997)
See accompanying notes which are an integral part of financial statements.
<PAGE> 52
Prospectus Page 46
TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
13) Payments In Shares Of Common Stock As Subsequent Event
A contract was signed on April 18, 1997 in which Alpha Bytes Inc.
accepted 250,000 shares, to be issued directly to its shareholders, as
payment for consulting services valued at $ 25,000 and rendered to TRB
Systems, Inc.
14) Account Receivable - Trade and Licensing Fees
The Company recognizes revenue and expenses on accrual basis and
accordingly, treated the balance of licensing fee income receivable from
certain licensing agreement contracts with various distributors in the U.S.
as current income as the Company is now contemplating entering into full
operation, and is thus able to fulfill the terms of the contracts. As of
June 1, 1997, the company was in a position to ship bicycles to Licensees.
It was decided, however, that the first shipments would follow the
International Sports Show in Atlanta Georgia on February 4 through 7, 1998,
so as to maximize on the publicity and general exposure that would follow
the introduction of the TRB product line at the said show.
15) Common Stocks
The Company is authorized to issue 30,000,000 at $ 0.001 par value
share, and, as of June 30, l997 , 11,863,363 voting common shares are issued
and outstanding.
16) Earnings Per Shares
Earnings (loss) per share is calculated using the weighted average
number of common shares outstanding and common shares equivalents. The
average number of shares outstanding under this assumption would be as
2,433,389 shares as of June 30, l997.
17) Property and Equipment
Cost
Office equipment $ 5,000
Tools and machinery 30,000
Automobile 10,000
Moldings 464,545
Informercial tape and other
promotional materials 50,000
559,545
Less accumulated depreciation (19,984)
539,561
=======
Property and equipment were acquired by issuing certain shares of voting
common stocks on June 30, 1997.
See accompanying notes which are an integral part of financial statements.
<PAGE> 53
TABLE OF CONTENTS
PROSPECTUS
ITEM PAGE
Prospectus Summary 1
The Company 1,7
The Offering Front Cover
Stockholders 3
Securities Outstanding 3 TRB Systems
International Inc.
Definition of Terms I-1,3
Selected Financial Information 2
Risk Factors 3 844,009 Shares of
Certain Market Information 6 Common Stock
Capitalization 6
Management's Discussion & Analysis 17
Conflicts of Interest 20
Management 20
Directors and Executive
Officers 20
Biographies of the Company's
Executive Officers and Directors 21
Certain Transactions 24
Principal Stockholders 25 =====================
Securities' Description(Common Stock) 26
Common Stock 26 PROSPECTUS
Dividend Policy 5,6
Transfer Agent 26 =====================
Shares Eligible for Future Sale 27
Additional Information Inside Front Cover, 27
Plan of Distribution 27
Indemnification Arrangements 28
Litigation 28
Legal Opinions 28
Experts 29
Financial Statements 30
TRB Systems International Inc.
4 Becker Farm Road
Roseland, NJ 07068
(973) 994-4488
<PAGE> 54
Part II, Page 1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24: INDEMNIFICATION OF OFFICERS AND
DIRECTORS
In accordance with the General Corporation Laws of the State of
Delaware which were in effect at the time the Registrant was incorporated,
the Registrant's Board of Directors adopted by resolution, as further set
forth in the Registrant's by laws, provisions relative to indemnification of
its Officers and Directors against expenses, judgments, fines, settlements,
and other amounts actually and reasonably incurred in connection with the
defense of any proceeding or threatened proceeding to which such person was
or is a party, or is threatened to be made a party by reason of the fact that
such person was or is an officer or director, provided that, (i) such
director or officers acted in good faith or in a manner reasonably believed
by him to be in the best interests of the corporation to procure a judgment
in its favor. In the latter case, the power to indemnify extends to expenses
actually or reasonably incurred in connection with the defense or settlement
of any proceeding if such person (i) acted in good faith, and (ii) the manner
such officer and director believed to be in the best interest of the
corporation and with such care, including reasonable inquiry, as an ordinary
prudent person would use under similar circumstances. No indemnification
will be made in respect of any claim, issue or matter, as to which such
person shall have been adjudged to be liable for negligence or misconduct in
the performance of his duty to the corporation unless, and only to the extent
that the court in which such action or suit was brought shall determine upon
an application of that, despite the adjudication of liability, but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
Otherwise, indemnification for an officer and director meeting the applicable
standards of conduct is determined by a majority of the disinterested
directors or shareholders or upon application by the corporation, such
officer or director or his attorney, to the court in which such proceeding
was pending.
The Securities & Exchanged Commission is of the opinion that
indemnification of Company officers or directors for matters involving
violation of securities laws is against public policy and that agreements
therefor are consequently unenforceable.
ITEM 25: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with distribution of the securities of
the Company being Registered hereby, other than commissions and
non-accountable expense allowances, will be borne directly by the Company
rather than by the selling stockholder. Such expenses are estimated to be
$50,000.
Item Amount
United States Securities and Exchange Commission filing fee $ 700
Printing Expenses 4,000
Fees and expenses of counsel for the Company 22,000
Accounting fees and expenses 20,000
Transfer agent fees and expenses 3,000
Miscellaneous 300
TOTAL $50,000
<PAGE> 55
Part II, Page 2
ITEM 26 RECENT SALES OF UNREGISTERED SECURITIES
Acquisition of TRB Systems Inc.
On April 18, 1997, in exchange for 9,750,000 shares in the common
stock of Company, 100% of the stock in TRB was sold by Motion Plus
International Corporation, a Delaware Corporation, its owner, to the Company.
These shares were subject to Rule 144, and exempt from registration.
Sales to Investors in TRB
The Company issued 549,009 shares to 45 individuals who had invested
in TRB and were unrelated parties. These persons had invested money between
1994-1997 in TRB, in the sum of $305,814, and their debt was converted
into equity at the rate of $.514 per share. This is reflected in the financial
statements, and described in note 12 of the said statements.
The issue was to be subject of the instant registration. However, the shares
were issued on October 2, 1997, and are being retroactively registered herein
giving each shareholder a seven day right of rescission.
Sales to former Employees and Consultants
44 employees and consultants of TRB who had worked with TRB since 1994
in developing the TPS system were issued 376,617 shares, said shares were
restricted from sale subject to Rule 144, and therefore exempt from
registration.
Sale to Byung Yim
500,000 shares were issued to Byung Yim, the Company president, the
said shares were restricted, exempt from Registration and subject to Rule
144. The shares were to retire $218,162 in debt owed to Mr. Yim, and in lieu
of salaries not drawn during the development period.
Purchase of Equipment from M.T. Steel
500,000 shares were issued to M.T. Steel, an unrelated party for the
purpose of property and equiptment valued at $559,545. This equipment
consisted of office equipment for $5,000, tools and machinery for $30,000, an
automobile for $10,000, moldings for $464,545, and infomercial tape and other
promotional materials for $50,000. The purchase took place in April of 1997.
The said shares were issued subject to Rule 144, and therefor exempt
from registration.
ITEM 27: EXHIBITS
Exhibit
Number Description Page
1. Constituent Document:
.1 Original Article of Incorporation *
.2 Bylaws *
5.1 Opinion of Counsel 61
<PAGE> 56
Part II, Page 3
10. Material Contracts:
.1 Lease of Taiwan Office. 62**
.2 Exclusive Licensing Agreement between TRB Systems Inc. and
ABL Properties Company. *
.3 Patient Registration and Assignment to ABL. 63**
.4 Financing Agreement between TRB Systems Inc., and
Tianjin Worldwide, Inc. for $2,000,000. *
.5 License and Marketing Agreement between TRB Systems Inc. and
Mr. Konan Kouadio Simeon for Ivory Coast. *
.6 Joint Venture Agreement between TRB Systems Inc., and
Mr. Janak Shah for India. *
.7 License and Marketing Agreement between TRB Systems Inc.
and Mr. Abbas R. Datoo for Tanzania. *
.8 Distributorship Agreement between TRB Systems Inc. and
Mr. Kishor M. and Gira K. Dattani for Countries in
California. *
.9 Licensing and Marketing Agreement between TRB Systems Inc.
and Stella Kujembola for Benin and Nigeria. *
.10 Sino-Danishn Manufacturing Agreement. 65
.11 Kun Teng Industries Agreement. 81
22. Subsidiaries of the Registrant *
24.6 Consent of Auditors 64
* Filed as Exhibits appended to the SB2 filing on July 9, 1997 bearing
Registration Number 333-7242
** Filed as Exhibits appended to the SB2 filing on July 9, 1997 bearing
Registration Number 333-7242, English Summary of Oriental Documents.
ITEM 28: UNDERTAKINGS
A. Certificates
The Company hereby undertakes to provide its transfer agent with
certificates in such denominations and registered in such names as required
to permit delivery thereof to each purchaser of the Selling Stockholders'
stock offered hereby, from time to time, as required, starting as of the
close of business on the day immediately following the date of this
Registration Statement.
B. Liabilities
Insofar as indemnification of liabilities arising under the
securities Act of 1933, as amended, may be permitted to directors, officers
and controlling persons of the Company pursuant to the foregoing provisions
or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable. In the event that a claim for indemnification
gainst such liabilities (other than payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such indemnification
by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
<PAGE> 57
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company has duly caused this Registration Statement to be
signed on its behalf by the undersigned in the City of New York, State of
New York on January 12, 1998.
TRB SYSTEMS INTERNATIONAL INC.
By: /s/Byung Yim/s
Byung Yim*
President and Chairman of the Board
of Directors
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Date: January 12, 1998
TRB SYSTEMS INTERNATIONAL INC.
By: /s/Byung Yim/s
Byung Yim*
Chairman, Chief Executive Officer & Director
___________
* Mr. Yim is currently the sole member of the Company's Board of
Directors.
<PAGE> 58
