SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended Commission File Number 333-7242
June 30, 1999
TRB SYSTEMS INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-3522572
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6 REGENT STREET, LIVINGSTON, NEW JERSEY 07039
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 994-4488
Securities registered pursuant to Section 12 (b) of the Act:: None.
Securities registered pursuant to Section 12 (g) of the Act:: None.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), YES X NO and (2) had been
subject to such filing requirements for the past 90 days YES X NO .
The aggregate market value of voting stock held by non-affiliates of the
Registrant was $10,434,940 based on the average price per share of $0.875
paid for shares on the NASDAQ Bulletin Board on June 30, 1999. The Company
trades under the symbol TRBX.
There were 11,925,626 shares of common stock outstanding having a par value
of $0.001 per share as of JUNE 30, 1998.
DOCUMENTS INCORPORATED BY REFERENCE:
Registration Statement on Form SB-2, filed on July 27, 1998, declared
effective August 12, 1998; Articles of Incorporation of the Registrant
dated April 9, 1997, and Bylaws of Registrant, previously filed as an
exhibit to the Company's Form SB-2, made effective August 12, 1998.
PART I
ITEM 1 GENERAL DEVELOPMENT OF BUSINESS.
TRB Systems International Inc. (the "Company") was incorporated in
the State of Delaware on April 9, 1997. Currently, the Company is a holding
company with one subsidiary, TRB Systems Inc., (TRB), a development stage
company, which was purchased on April 18, 1997.
TRB Systems Inc. is a Delaware corporation, formed in April 1994, to
market and manufacture, worldwide, the Transbar Power System (TPS)
technology and its applications to the bicycle, exercycle, electric
bicycle and wheelchair. These technology rights were licensed by TRB Systems
Inc. from ABL Properties Company, the owner of the patent rights to the TPS
technology (See Licenses, Patents). TRB commenced taking orders in March
1998, and became a fully operational company in July of 1998. The current
report on Form 10-K is for the first operational year of the Company.
Neither the Company nor TRB have ever 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 TRB's acquisition by the Company.
Background Information
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. In April, 1994, TRB Systems Inc. was
incorporated to continue TPS technology development, and to manufacture
and market the finished product lines worldwide. To date 1,060
bicycles have been produced and sold.
TRB, licensed from ABL Properties Corp., the company owning the
patent rights to the TPS technology, the exclusive rights to market and
enhance products using the Transbar Power System (See Licenses). TRB
intends to create what management believes is a new generation of cycling
and fitness products using the patented TPS technology. The characteristics
of the TPS technology are similar to that used in stepper machines, which
are currently one of the fastest growing segments of exercise equipment
industry. In short the technology allows the users of TRB's products to
exercise using a natural walking or jogging motion. Management believes this
produces the results the user wants- but alleviates the damage to the lower
back, hips, knees, and ankles that traditional biking ,or jogging on
pavement, produce.
TRB's technology allows users to engage in a 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 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.
Business Development
Over the past year TRB has focussed on developing the Bicycle sales segment
of its product line. Agreements were signed with TriCom Pictures and Shop
T.V., both of Florida, for the production of infomercials and commercials
which aired in the second quarter of the fiscal year. These served both to
educate the public with respect to the TPS technology, and to generate
direct sales of product.
TRB has signed an agreement with the U. S. Taekwondo Union (USTU) allowing
TRB to directly market its bicycles to the students of the over 20,000
member and non-member Taekwondo Centers. The USTU used TRB bicycles to enter
the stadium at the 1998 World Taekwondo Championships, and at the annual
meeting of the USTU in California in November, 1998, TRB was allowed to make
a presentation regarding TRB's products and their benefits, to the attendees.
The Company has prepared marketing material for the individual Taekwondo
Centers, and it is anticipated that active sales will commence in the second
quarter of the 1999-2000 fiscal year.
TRB has also commenced active sales during the current fiscal year, with
sales of over $600,000 in bicycles in its first operational year, and
income recognition for over $1,323,000 in distributorship and license fees.
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 patents are pending
in Europe and Canada. TRB has the exclusive worldwide licensing rights
under all TPS patents, except for Taiwan and South Korea. A copy of the
patents has been files as a exhibits to the Registration on Form SB-2 files
on July 27, 1998.
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.
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 two main components:
TRANSBAR Two opposing bars that are attached directly to the
pedal levers. The pedal lever is attached to the
Transbar at a precise angle to allow maximum power
transfer from rider to machine.
REAR HUB A dual ratcheting sprocket which is engaged by the
drive chain.
The TRB BIKE is offered in five (5) models; Mountain Bike(MTB), Leisure Bike,
BMX(Children), ATB(all-terrain), and CROSS TRAINING-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 year. TRB will attack
the high-end professional rider market in the second phase of our business
plan. TRB is currently conducting care research to verify the speed and
efficiency of our racing prototype (i.e., longer pedal arm, therefore greater
force stroke).
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.
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).
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, which are summarized below:
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
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, a
long 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 50: 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
2.5 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.
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.
The Market
TRB will focus on the six markets indicated below in its next 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 TRB 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.
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, as can be seen from
the table outlining historical and projected U.S. population demographics, on
the next page.
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.
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 Percentage of
Facility U.S. Hospitals(1) Facility U.S. Hospitals(1)
Physical Therapy Services 78.4% Orthopedic Surgery 66.0
Comprehensive Geriatric Assessmt 20.3 Outpatient Rehabilitation Unit 48.2
Occupational Therapy Service 54.3 Inpatient Rehabilitation Unit 13.4
Cardiac Rehabilitation Program 39.0 Geriatric Clinic 8.1
Sports Medical Clinic 18.2 Fitness Center 14.6
(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.
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 use regional distributors in the U. S. market
and licensees overseas to sell its products through a network of specialized
bike and sporting goods shops.
In the current fiscal year, the Company hired an advertising and
public relations firm, as well as TRICOM Pictures and SHOP T.V. of Florida,
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 established market awareness through
these efforts, as well as over $600,000 in bicycle sales. TRB is currently
negotiation with QVC for television sales of its bicycles and electric
bicycles. The Company is also currently hiring sales personnel to augment
its distribution channels to increase sales in the next fiscal year. 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 ergometers and electric bicycles through a
network of bike retailers, in accordance with the Company's long term strategy.
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
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.
TRB's ergometers are currently ready for mass production by Pretty
Wheel Ind. Co., Ltd., a leading sports equipment manufacturer based in Taiwan.
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
Patents
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 patents are pending in
Europe and Canada. TRB has the exclusive worldwide licensing rights under
all TPS patents, except for Taiwan and South Korea. A copy of the patents is
included as an exhibit to the Registration Statement on Form SB-2 filed
with the Securities and Exchange Commission on July 27, 1998.
Licenses
The TPS technology rights were Licenses from ABL Properties, the
owner of the patent rights to the TPS technology, by 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. ABL is 100% owned
by Byung Yim, President and CEO of TRB Systems International Inc.
Copies of the license and underlying patents are included as
exhibits to the Registration Statement on Form SB-2 filed on July 27, 1998,
and are included herein by reference.
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,
other than those 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 $1,000 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.
Number of Total Employees and Number of Full Time Employee
The Company has 4 full time employees, and no part time employees.
Equipment
The fixed assets of the Company as valued for accounting purposes
have a depreciated book value of $559,497, and an non-depreciated book value
of $758,275. The assets are principally comprised of tools and dies for the
manufacture of the components for the TPS system.
Operating Subsidiaries of the Company
The subsidiary of the Company, TRB, 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.
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.
Item 2 PROPERTIES.
The Company currently rents approximately 1,000 square feet for its
staff, at 6 Regent Street, in New Jersey, as well as 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, 1999.
Item 3 LEGAL PROCEEDINGS.
There is an outstanding action in the Supreme Court of New York with
respect to Hyun Hong. This action is, in management's opinion, without merit.
It refers to a claim made for a return of funds that were never
advanced to TRB in the first place. It would appear highly unlikely that
this will result in any judgment as against the Company.
There exists an outstanding action in the Supreme Court of New Jersey for
the collection of a debt by Bernard Koff for moneys lent to TRB in 1995.
The action appears premature, and has been settled as of this date for the
issue of shares as against the debt, in the total sum of $190,000. The
settlement is for shares already paid to Mr. Koff, and it is unlikely the
Company will have to pay any further sums to him.
There is an action in the Supreme Court of New Jersey by Cherinson Group for
fees and disbursements incurred in their role as Public Relations Specialists
for the Company. They seek recovery of approximately $110,000. They have
indicated that there may be a settlement for $60,000. It is likely that the
Company will settle this claim in the vicinity of $50,000.
Sawtooth Group of New Jersey has commenced an action in New Jersey Supreme
Court for $111,000 for services rendered as Public Relations Consultants for
the Company. It is believed that this is a meritless claim, as Sawtooth
failed to provide the services contracted for in a professional manner,
and caused the Company to suffer losses. It is however likely that this
claim will eventually be settled for some amount inn the vicinity of $40,000.
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
NONE.
PART II
Item 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
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 278 persons as
of June 30, 1999. 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.
Price Range of Common Stock and Dividends
The Common Stock of the Company commenced trading in the United
States on the NASDAQ over-the-counter market on August 21, 1998. At the end
of the 1997-1998 fiscal year there was no market for the shares of the
Company, and to the best of the Company's knowledge no shares were sold by
any shareholder to any third party. As a result of the foregoing it was
impossible to set any price for the stock of the company for the said year.
Summary of Market Activity for the Current Fiscal Year:
Bid
Quarter Ended High Low
June 31, 1998 none none
September 30, 1998 $5.00 $5.00
December 31, 1998 1 15/16 1 15/16
March 31, 1999 1.50 1.265
June 30, 1999 0.875 0.625
The number of Share Holders of Common Stock of the Company as of
June 30, 1999 was 278.
Holders of Common Stock are entitled to receive dividends as may be
declared by the Board of Directors out of funds legally available therefore.
No dividends have been declared to date by the Company, nor does the Company
anticipate declaring and paying cash dividends in the foreseeable future.
Item 6 SELECTED FINANCIAL DATA.
Set forth below is selected financial information of the Company and
its consolidated subsidiary. The provided information is derived from the
more detailed consolidated financial statements as of June 30, 1998,
and should be read in conjunction with the consolidated financial statements
included elsewhere in this Report and are qualified in their entirety by
reference thereto (see "FINANCIAL STATEMENTS").
OPERATING RESULTS*
Cumulative Fiscal year ended June 30
Since 1998 1999
Inception
to June 30,
1998
Revenues:
Sales $161,354 $ 0 $639,023
Cost of Sales 146,362 0 (460,541)
Gross Profit 14,992 0 178,482
Other Income 346 33 32
License and Distribution Fees 0 0 1,323,000
Total Income 15,338 33 1,501,482
Expenses:
Total Expenses 1,781,700 515,456 601,869
Net profit (loss) before
taxes (1,766,362) (515,423) 899,545
Net Profit(loss) (1,364,156) (340,312) 630,380
Net profit (loss) per share $(0.03) $0.05
FINANCIAL POSITION:
Current Assets 432,275 1,447,959
Other Assets 651,085 611,274
Total Assets 1,083,360 2,089,233
Current Liabilities 442,248 740,722
Other Liabilities 176,794 253,813
Total Liabilities 619,042 994,535
Stockholder's equity 464,318 1,094,698
Item 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF 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 its years ended June 30, 1998 and June 30, 1999.
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
The Company has no active income save for the operational activities
of TRB. Therefore, the financial information regarding the parent company
and its subsidiary are presented on a consolidated basis.
TRB has emerged as an operating entity in the current fiscal year.
International licenses for marketing TRB's products totaling $1,125,000 have
been granted to 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
(the details of the license agreements, as well as the payment and royalty
arrangements are fully discussed in "Manufacturing/Technology Licensing
Agreements" at page 9).
For the fiscal years ended June 30, 1999, revenues totalled
$1,501,482, as compared to the previous fiscal year, when there were no
revenues.
The overall loss during the development period to the end of June
30, 1998 was $1,364,156, with losses during the fiscal year June 30, 1998
being $340,312 as compared to a profit before taxes of $899,645 for
the fiscal year ended June 30, 1999. Total operating expenses were $515,456
for the year ended June 30, 1998, as compared to 592,120 for the year ended
June 30, 1999. For the development period to June 30, 1998, expenses were
$1,762,232, with the major costs being consulting fees, R&D, and professional
fees. The major operating expenses in the year ended June 30, 1998 reflected
TRB readying itself for emergence from the development phase, with
promotions and show and exhibition expenses accounting for 40% of the year's
expenditures. In the current fiscal year, expenses were evenly distributed
with travel, advertising, show related expenses, as a group, accounting for
about 20% of the overall expenses of the Company. Both fiscal periods
had amortization and depreciation costs of about 15% of total expenses.
The cash and investment certificate position of the Company was
$3,041 on June 30, 1998 as compared to $0 on June 30, 1999. Current assets,
as a whole, increased significantly, from $432,275 on June 30,1998, to
$1,477,959 on June 30, 1999.
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 Corporation, a Delaware Corporation, its owner, to the
Company. Motion Plus International is a holding company, 20% of whose shares
are owned by Byung Yim, President and CEO of the Company. Mr. Yim's
children, Alexander B. Yim (age-21)and Lena B. Yim (age-19),
hold 39% interest in MPI each, with the remaining 2% held by Hee J. Yim.
Sales to Investors in TRB
The Company issued 594,009 shares to 54 individuals who had invested
in TRB and were unrelated parties on October 2, 1997. These persons had
invested money between 1994-1997 in TRB, in the sum of $305,814, and their
investment was converted into equity at the rate of $.514 per share. This is
reflected in the financial statements, and described in Note 16 of the said
statements. The said shares were duly registered for resale on Form SB-2,
declared effective on August 12, 1998.
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 of the Securities
and Exchange Commission (the "Commission"). The issuance of shares to the
employees was exempt from registration through reliance on Rule 701 of the
Commission.
The Consultants were Certified Public Accountants who had provided
financial consulting services to TRB. The consultants are Andy Chapkin,
Stephen Nappen, and Jeffrey Zudack of 4 Becker Farm Road, Roseland New Jersey,
and each received 1,599 shares at a price of $0.50 per share. The issuance of
shares to these consultants was exempt from registration through reliance on
Section 4(2) of the Securities Act of 1933, in that these were each
sophisticated purchasers. The said shares were duly registered for resale on
Form SB-2, declared effective on August 12, 1998.
Sale to Byung Yim
500,000 shares were issued to Byung Yim, the Company President, The
said shares were restricted, exempt from Registration through reliance on
Section 4(2) of the Securities Act of 1933, in that Mr. Yim was a
sophisticated purchaser, 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 (See:
"SECURITY OWNERSHIP OF MANAGEMENT" at page 33 of this Registration Statement).
Purchase of Equipment from M.T. Seol
500,000 shares were issued to M.T. Seol for the purchase of
property and equipment 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 an informercial tape and
other promotional materials for $50,000. The purchase took place in April of
1997. The said shares were restricted and issued subject to Rule 144, and
exempt from registration through reliance on Section 4(2) of the Securities
Act of 1933, in that Mr. Seol was a sophisticated purchaser.
The equipment value was strictly based on book value of the goods, as this
was a non-arms length transaction in that Mr. Seol is an employee of the
Company (SEE: FINANCIAL STATEMENTS, BALANCE SHEET, ASSETS and the
accompanying footnote).
Sale of Shares to Alpha Bytes, Inc.
Alpha Bytes, Inc., 7050 Woodbine Ave., Suite 205, Markham, Ont., Canada L3R
4G8, 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 for consideration in the sum of $25,000, which sum
Alpha Bytes invested in the Company for 250,000 shares acquired on April 18,
1997. The shares issued were exempt from registration pursuant to Rule 504
of Regulation D of the SEC, in that the total investment in TRB for the year
was less thanthe maximum allowed by the rule. The holdings accounted for
less than 2.2% of the outstanding shares of the Company.
Alpha Bytes subsequently issued the shares as a dividend to its
shareholders on October 2, 1997. As the shares were free trading and fully
paid for, and the distribution was to its own shareholders for no
consideration, Alpha Bytes felt that the shares were exempt from
registration as free trading shares. However, the Company feels that there
was a potential violation of Section 5 of the Securities Act of 1933 as well
as the various State rules for the sale of shares, and it was decided that
Alpha Bytes would treat the transaction as if the violations had occurred.
For this reason, Alpha Bytes offered its shareholders a 30 day right of
rescission, commencing on August 12, 1998, the effective date Registration
Statement on Form SB-2, registering the said shares. Alpha Bytes had
informed the Company that it would retain any shares that were returned.
The thirty day period expired on September 12, 1998, and no shares were
returned to Alpha Bytes for rescission of their issuance.
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.
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, to maintain domestic
inventory levels, as well as for the continued development of the TPS
technology. It is felt that the money would 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 to stockpiling inventory 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 distributors 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 now ready to commence active
marketing to USTU member and non-member taekwondo centers.
Over $1,000,000 in distributorships and license issuances have
been sold by the company and recognized as income for the 1998-1999 fiscal
year, the first operational year for the Company. These distributors and
licensees will commence active sales in the 1999-2000 fiscal years.
The American Chiropractic Association has agreed to use and actively
market TRB products through its membership, due to the products' therapeutic
benefits. This program will be actively and aggressively pursued and
supported by TRB, and should significantly impact the profits of the Company
during the next fiscal year.
The company is preparing a major sales campaign through the 20,000
affiliated and non affiliated centers of the U. S. Taekwondo Union to
commence in December 1999, with the full backing of the Union, which
management and the Taekwondo Union both feel will yield over $10,000,000 in
sales during the ensuing year.
The Company has begun to penetrate the Far Eastern market, and has
received $200,000 in orders from South Korea which it plans to fill in the
second quarter of the next fiscal year. As well, the Company has established
TRB Systems (China) as a wholly owned subsidiary, which should commence
active manufacturing and sales operations in the next fiscal year.
Currently, the company is negotiating with NISSHO IWAI of Japan,
Japan's eighth largest corporation, for sales representation in the Japanese
market.
The Company plans to continue its work with the NFL Alumni in
support of children's charities.
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.
Principles of Consolidation
All Financial Statements are produced on a consolidated basis, as
the subsidiary, TRB, accounts for all operating revenue of the Company.
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").
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Included at Pages 24 through 38 hereof.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
The Company has not had any reported or material disagreement with
its accountants on any matter of accounting principals, practices, or
financial statement disclosure.
PART III
Item 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
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 57 April 18, 1997* President
* Elected on December 18, 1994, by the board of directors at the
recommendation of the Company's stockholders, to serve as a director until
the next annual meeting of the Company's stockholders, and until her
successors are elected, qualified and assume their offices. Service as an
officer is at the pleasure of the board of directors.________________
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.
Item 11 EXECUTIVE 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 ofreceipts 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 named executive officer's responsibilities
following a chance-in-control, which, including all periodic payments or
installments, exceeds $100,000.
Mr. Yim was entitled to draw a salary of $50,000 during the fiscal
year ending June 30, 1999. 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 $6,784.
Prior to the 1998 fiscal year, Mr. Yim took no salaries, and infused
$163,126 into the TRB. In lieu of the repayment of the loan, and charging
the company for salaries not claimed in previous years, Mr. Yim was
issued 500,000 shares in the capital stock of the Company.
SUMMARY, COMPENSATION TABLE
Annual Compensation Awards Payouts
Other Rest-
Annual ricted
Compen-Stock Aw- SU SA
Name and sation ards OP RS LTIP Other
Position Year* Salary ($) Bonus($) (#) ($) __ ($) ___ ($)
Byung YIM** 1999+ 0++ 0 6,784*** 0 0 0 0 0 0
Byung YIM** 1998 50,000 0 6,285*** **** 0 0 0 0 0
+ Fiscal year ended June 30, 1999.
++ This sum is due and owing to Mr. Yim, and has been converted to a
director's loan. See Note 9 in the accompanying financial statements.
* Fiscal Year Ending June 30, 1998
** 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.
Item 12 Security Ownership of Certain Beneficial Owners and Management
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.
Basis Percentage of Other Basis
Name For Control Voting Securities owned For Control
Motion Plus Int'l.
Corporation(MPI) Share Ownership 86% None
NOTE: Motion Plus International Corporation (MPI) 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 MPI, 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
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):
Name and Address Amount and Nature of Percent
Title of Class of Beneficial Owner Beneficial Ownership of Class
Common Byung Yim 2,450,000 Shares* 20.9
Stock 21 Hutton Ave., Apt. 3
West Orange NJ 07025
Common Alexander B. Yim 3,802,500 Shares* 33.5
Stock 595 Windflower Court
Morganville, NJ 07751
Common Lena B. Yim 3,802,500 Shares* 33.5
Stock Address as for A. B. Yim
* Motion Plus International Corporation (MPI), 4 Becker Farm Road,
Roseland, NJ 07068 owns 9,750,000 shares of the Company. Byung Yim, the
president of the Company , owns 20% of the shares in MPI. Mr. Yim's
children, Alexander B. Yim (age-21) and Lena B. Yim (age-19), each hold a
39% interest in MPI. Mr. Yim received a further 500,000 shares from the
Company.
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 9,750,000* 86%*
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.
Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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 year ended June 30, 1998, and the director's loan (See
"Financial Statements") reflects the company's indebtedness to Mr. Yim for
$13,128 advanced to TRB and for his salary.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a) The following documents are filed as a part
of this Report:
(1) Financial Statement. The following Financial Statements are filed
as part of this Report:
Page
Report of Independent Public Accountants. 26
Balance Sheets: June 30, 1998, June 30, 1997, June 30, 1996. 27
Statements of Operations: Year Ended June 30, 1998,
Year Ended June 30, 1997 and June 30,1996. 28
Statement of Cash Flows: Year Ended June 30, 1998,
Year Ended June 30, 1997, and Year Ended June 30, 1996. 30
Statement of Stockholders' equity: July 1, 1995- June 30, 1998. 31
Notes to Financial Statements. 32
(2) Exhibits. The following exhibits are filed as part of
this Report:
Exhibit No. Item Page
2.0 + Registration Statement on Form SB-2.
2.1 ++ Exhibits to Registration Statement on Form SB-2.
3.1 * Articles of Incorporation of Registrant dated
April 9, 1997.
3.2 ** Bylaws of Registrant.
27 Financial Data Schedule 35
__________________________________
Notes:
+ Filed on July 27, 1998, and declared effective on August 12, 1998, and
incorporated by reference.
++ Filed on July 27, 1998, and declared effective on August 12, 1998, and
incorporated by reference.
* Filed as an Exhibit to the Registration Statement on Form SB-2 on July
27, 1998, and declared effective on August 12, 1998, and incorporated
by reference.
** Filed as an Exhibit to the Registration Statement on Form SB-2 on
July 27, 1998, and declared effective on August 12, 1998, and
incorporated by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized.
TRB SYSTEMS INTERNATIONAL INC.
By /s/ BYUNG YIM /s/
Byung Yim, President and Director
(Principal Executive Officer)
Date: September 24, 1999.
Pursuant to the requirements of the Securities Exchange Act of 1934,
This report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
TRB SYSTEMS INTERNATIONAL INC.
By /s/ BYUNG YIM /s/
Byung Yim, President and Director
(Principal Executive Officer)
Date: September 24, 1999.
TRB SYSTEMS INTERNATIONAL INC.
Consolidated Financial Statements and
Accountant's Audit Report
For the Fiscal Year Ended June 30, 1999
TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
TABLE OF CONTENTS
______________________________________________________________________________
Page
Accountant's Audit Report 26
Financial Statements:
Balance Sheet 27
Statements of Operations and Retained Earning 28
Statement of Stockholder's Equity 30
Statements of Cash Flows 31
Notes to Financial Statements 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 June 30, 1999, the consolidated related statement
of operations and deficits,consolidated statement of stockholders' equity
and consolidated statement of cash flows for the fiscal year 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
Systems International Inc. at June 30, 1999, and the results of
its operations and its cash flow for the fiscal year then ended in
conformity with generally accepted accounting principles.
_______________________
Stan J.H. Lee, CPA
September 14, 1999
Fort Lee, N.J.
TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1999 AND JUNE 30 1998
(Notes 1,2,3)
6/30/98 6/30/99
ASSETS
CURRENT ASSETS:
Cash $ 3,041
Accounts Recievable (Note 4) 1,323,450
Inventories 26,462 21,002
Deferred Tax Assets 402,772 133,507
432,275 1,477,959
OTHER ASSETS:
Prepaid Expenses (Note 5) 38,052 38,052
Property & Equipment- net (Note 6) 74,136 559,497
Organization Costs, net of 37,854 12,682
Security Deposits 1,043 1,043
651,085 611,274
TOTAL ASSETS $1,083,360 2,089,233
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts Payable and Accrued Expenses
(Note 7) 210,939 328,818
Bank Overdraft 6,819
Loan Payable 395,289
Corporation Income Taxes Payable 200 200
Obligation to Distributors 230,000
Payroll Taxes 1,109 9,596
442,248 740,722
Long-Term Liabilities:
Loans from Individuals (Note 9) 58,200 75,510
Director's Loan (Note 9) 118,594 168,058
Auto Loan 10,245
176,794 253,813
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value 30,000,000
shares authorized (Note 10) $11,926 $11,926
Additional paid-in-capital 1,816,548 1,816,548
Retained earnings (Deficit) ($1,364,156) ($733,776)
$464,318 $1,094,698
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,083,360 $2,089,233
See Accompanying Notes which are an Integral Part of Financial Statements
TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF EARNINGS AND DEFICIT
FOR THE FISCAL YEAR ENDED JUNE 30, 1999 AND JUNE 30, 1998
6/30/98 6/30/99
REVENUE FROM PRODUCT SALES $639,023
COST OF GOODS SOLD (460,541)
GROSS PROFIT 178,482
LICENSE AND DISTRIBUTOR FEES (Note 4) 1,323,000
1,501,482
OPERATING EXPENSES:
Consulting 4,313 12,100
Professional fees 24,215 44,009
Advertising 5,657 72,618
Amortization Expenses 25,173 25,172
Auto Expenses (Note 11) 6,001 6,784
Bank Charges 4,165 5,631
Promotion Expenses 85,223 50,769
Commission 12,198 11,009
Stock Issuance and Transfer 6,285 1,975
Contract Labor 39,399
Contribution 600 10,150
Depreciation 90,918 106,138
Employee Benefits 2,363
Employee Salaries 2,308 23,890
Oversea Operating Expenses 12,400 1,500
Insurance 2,638 5,125
Leasing Expenses 7,330
Meals & Entertainment 19,333 23,764
Miscellaneous Expenses 307 6,291
Other Operating Expenses 7,356 5,906
Show and Exhibition 120,056 24,140
Office Expenses 11,500 10,056
Postage 2,234 2,399
Rents (Note 12) 5,470 22,440
Research and Development 1,000
Supplies 3,836 3,378
Sponsorship 25,500 5,000
Payroll Taxes 585 3,596
Shipping & Delivery 13,186
Travel 20,112 30,207
Communication 9,423 21,936
Utilities 320 189
Total Operating Expenses $515,456 $592,120
See Accompanying Notes which are an Integral Part of Financial Statements
TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS (CONTINUED)
6/30/98 6/30/99
INCOME (LOSS) FROM
OPERATIONS BEFORE
OTHER INCOME AND INCOME
TAX EXPENSE (515,456) 909,362
OTHER INCOME AND EXPENSE:
Dividend Income 33 32
Interest Expense (9,749)
INCOME BEFORE INCOME TAXES (515,423) 899,645
Income Tax Expenses:
Deferred Income Taxes (269,265)
Current Income Taxes (200)
Benefit due to Loss Carryforward
(Note 8) 175,311
Net Income (Loss) (340,312) 630,380
ACCUMULATED DEFICIT, at Beginning (1,023,844) (1,364,156)
ACCUMULATED DEFICIT, at End (1,364,156) (733,776)
Earnings (Loss) per Share (Note 13) $ (0.03) (0.05)
See Accompanying Notes which are an Integral Part of Financial Statements
TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE FISCAL YEAR ENDED
JUNE 30, 1999 AND JUNE 30, 1998
(Note 14)
RETAINED TOTAL
COMMON STOCK EARNINGS STOCKHOLDERS'
NUMBER OF SHARES AMOUNT (DEFICITS) EQUITY
BEGINNING BALAN-
CE AS OF 6/30/98 11,925,646 $1,828,474 ($1,364,156) $464,318
Shares issued between
7/1/98 and 3/31/99
Net Income (Loss) $630,380
Balance as of 6/30/99 11,925,646 $1,828,474 ($733,776) $1,094,698
See Accompanying Notes which are an Integral Part of Financial Statements
TRB SYSTEMS INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED
JUNE 30, 1999 AND JUNE 30, 1998
CASH FLOWS FROM 6/30/98 6/30/99
OPERATING ACTIVITIES:
(Net Loss) Earnings ($340,312) $630,380
Noncash item included in (Net
Loss) Earnings (59,220) 472,412
Increase (Decrease) in Accounts
Recievable 12,500 (1,117,114)
Increase (Decrease) in Inventory (18,962) (2,000)
Increase (Decrease) in Acct's Payable
and Other Payables 16,807 117,879
Increase (Decrease) in Obligation
to Distributors 70,000 (230,000)
(319,187) (128,443)
CASH FLOWS FROM
INVESTING ACTIVITIES:
Expenditure for Prepaid Expenses (13,645)
Purchase of Property and Equipment (145,762) (91,500)
(159,407) (91,500)
CASH FLOW FROM
FINANCING ACTIVITIES:
Bank Overdraft (18,106) 6,819
Loans Payable 146,350
Loans from Individuals (200,800) 17,310
Director's Loan 63,594 49,454
Issuance of Common Stocks 636,947
481,635 219,943
Net Increase(Decrease) in Balance
of Cash 3,041 0
Cash at Beginning of Period
Cash at End of Period $3,041 $0
See Accompanying Notes which are an Integral Part of Financial Statements
TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 1999
1. Incorporation and Business Activity
TRB Systems International Inc., a Delaware corporation incorporated on April
11, 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 Livingston,
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 referred to
in Note 3 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 Fiscal Year Ended June 30, l999.
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 Accompanying Accountant's Audit Report, which is an Integral Part of
Financial Statements.
TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 1999
2. Summary of Significant Accounting Policies - continued
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 Carry-forward
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
betterment that extend the useful lives of property and equipment are
capitalized. Expenditures for maintenance and repairs are charged to expense
as incurred.
j) Inventories
Inventories are stated at the lower of cost (determined on the first-in,
first-out basis) or market.
See Accompanying Accountant's Audit Report, which is an Integral Part of
Financial Statements
TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 1999
3. 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.
4. Accounts Receivable
Accounts Receivable reflect the non-cash portion of Licensing and
Distributorship agreements totaling $1,323,450 from the Ivory Coast,
Tanzania, Benin/Nigeria, Vietnam, India, Massachusetts, Maryland
Delaware, and Orange County, California.
The licenses are for three years duration with automatic renewals so long as
minimum loyalties are paid and by agreement with all licensees, the
effective date of each contract was January 1, 1998. The contracts call
for an ongoing royalty payment of 6% in the first year, and 4% thereafter,
with a minimum royalty payment per year as set out in the following table:
1st Year 2nd Year 3rd Year
Country Min.Royalties Min. Royalties Min. Royalties
______________________________________________________________________________
India $ 100,000 $ 220,000 $ 350,000
Benin/Nigeria $ 15,000 $ 25,000 $ 4,000
Ivory Coast $ 10,000 $ 10,000 $ 10,000
Tanzania $ 10,000 $ 20,000 $ 30,000
Vietnam $ 10,000 $ 20,000 $ 30,000
5. Prepaid Expenses
ABL Properties, wholly owned by Byung Yim, President and CEO of the Company,
and under common control with the Company, owns the patents which are
exclusively licensed to TRB Systems Inc.(TRB) for the worldwide manufacture
and sale of the Transbar Power System(TPS). The timing, methodology and
general details of the manufacture and sales are left to TRB, as is the
design and utilization of the goods employing the technology. The rights
licensed to TRB by ABL Properties Company, call for a payment of $200,000
during the first year of active sales, 1% royalty on annual sales to
$10,000,000, 0.75% on sales over $10,000,000 but under $20,000,000, and
0.5% on all sales thereafter. And all profits gleaned from international sales
to an aggregate limit of $3,325,000. 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 incurred 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.
See Accompanying Accountant's Audit Report, which is an Integral Part of
Financial Statements
TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 1999
6. Property and Equipment
COST
________
Office Equipment $ 6,275
Tools and Machinery 30,000
Automobile 34,000
Moldings 539,062
Booth for Show 137,470
Informational tapes and other
promotional materials 50,000
________
796,807
Less Accumulated Depreciation (237,310)
________
$ 559,497
The purchase of the property and equipment except the office equipment,
booth, $39,000 in molds and automobile were from Marn Seol, a long time
employee of TRB in Taiwan and was thus non-arms length. As a result, the
property was purchased for book value in the sum of $559,000, which was
paid for by the issuance of 500,000 shares of the company to Marn Seol,
said shares restricted and subject to Rule 144.
7. 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.
8. Operating Loss Carry-forwards
The Company has loss carry-forwards, which is expected to offset in its
entirety this year's taxable income.
9. Director's Loans
The loans payable to a director and loans from individuals are unsecured,
non-interest bearing with non-set terms of repayment. They will be retired
as the company has surplus funds to repay these loans.
10. Common Stocks
The Company is authorized to issue 30,000,000 at $ 0.001 par value share,
and, as of June 30, 1999, 11,925,646 voting common shares are issued and
outstanding.
11. Related Party Transaction
The Company has a policy of providing executives with a Company-owned
automobile. Related expenses for business purposes and the amount of such
expense for the Fiscal Year Ended June 30, 1999 was $6,534.
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, 1999.
See Accompanying Accountant's Audit Report, which is an Integral Part of
Financial Statements
TRB SYSTEMS INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 1999
12. 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 are minimal and immaterial in amount.
13. Earnings Per Shares
Earnings (Loss) per share are calculated using the weighted-average number
of common shares outstanding and common shares equivalents. The average
number of shares outstanding under these assumptions would
be 11,909,611 as of June 30, 1998 and 11,925,646 as of June 30, 1999.
14. Payments in Shares of Common Stock
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..
Alpha Bytes subsequently issued the shares as a dividend to its shareholders
on October 2, 1997. As the shares were free trading and fully paid for, and
the distribution was to its own shareholders for no consideration, Alpha
Bytes felt that the shares were exempt from registration as free trading
shares. However, the Company feels that there was a potential violation of
Section 5 of the Securities Act of 1993 as well as the various State rules
for the sales of shares, and it was decided that Alpha Bytes would treat
the transaction as if the violations had occurred. For this reason, Alpha
Bytes will offer its shareholders a 30 day right of rescission (the maximum
period required by any of the states in which shareholders of Alpha Bytes
reside), commencing on the date of the filing of the Registration Statement
on Form SB-2. Alpha Bytes has informed the Company that it will retain any
shares that are returned. Both Alpha Bytes and the Company feel that as
there was no consideration for the said shares, none of the shares will be
returned and the right of rescission is more one of strict compliance and
form rather than a right which will be relied on by any shareholder of Alpha
Bytes. In the event any shares are returned, Alpha Bytes has indicated that
it will be the Selling Shareholder for the said shares, and the Company will
file any documents necessary to give effect to the registration of the said
shares. However, as of March 31, 1999, no shares were rescinded, and the
right has expired. $305,816 of investment in TRB was converted into Equity
by the issue of 594,009 shares to 45 individuals, at the rate of $0.51 per
share. These shares are free trading pursuant to Rule 504 of Regulation
D of the SEC and have been registered with the SEC on Form SB-2 (amended).
The effective date of Registration was August 22, 1998.
See Accompanying Accountant's Audit Report, which is an Integral Part of
Financial Statements.
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] JUN-30-1999
[PERIOD-END] JUN-30-1999
[CASH] 0
[SECURITIES] 0
[RECEIVABLES] 1,323,450
[ALLOWANCES] 0
[INVENTORY] 21,002
[CURRENT-ASSETS] 1,477,959
[PP&E] 559,497
[DEPRECIATION] 0
[TOTAL-ASSETS] 2,089,233
[CURRENT-LIABILITIES] 740,722
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 11,926
[OTHER-SE] 1,082,772
[TOTAL-LIABILITY-AND-EQUITY] 2,089,233
[SALES] 1,962,023
[TOTAL-REVENUES] 1,962,055
[CGS] (460,541)
[TOTAL-COSTS] (460,541)
[OTHER-EXPENSES] (592,120)
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] (9,749)
[INCOME-PRETAX] 899,845
[INCOME-TAX] (269,265)
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 630,380
[EPS-BASIC] 0.05
[EPS-DILUTED] 0.05
</TABLE>
