SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) Securities
Exchange Act of 1934 for Quarterly Period Ended September 30, 2008March 31, 2009
- -OR-
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities And Exchange Act of 1934 for the transaction period from
_________ to________
Commission File Number 0-4006
Baynon International Corp.
(Exact name of Registrant
in its charter)
Nevada 88-0285718
- ------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
266 Cedar Street, Cedar Grove, New Jersey 07009
- ----------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Baynon's Telephone Number, Including Area Code: (973) 239-2952
Indicate by check mark whether the issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerate filer, or a small
reporting company as defined by Rule 12b-2 of the Exchange Act):
Large accelerated filer [ ] Non-accelerated filer [ ]
Accelerated filer [ ] Smaller reporting company [x]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [x] No [ ]
The number of outstanding shares of the registrant's common stock,
October 31, 2008:April 30, 2009: Common Stock - 21,152,69223,272,692
2
BAYNON INTERNATIONAL CORP.
FORM 10-Q
For the quarterly period ended September 30, 2008
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets at March 31, 2009 (Unaudited)
and December 31, 2008 (Audited) 3
Statements of Operations for the three months
ended March 31, 2009 and 2008 (Unaudited) 4
Statements of Cash Flows for the three months
ended March 31, 2009 and 2008 (Unaudited) 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 128
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 149
Item 4T. Controls and Procedures 1410
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 1711
Item 1A. Risk Factors 1711
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds 1711
Item 3. Defaults upon Senior Securities 1711
Item 4. Submission of Matters to a Vote of Security
Holders 1711
Item 5. Other Information 1711
Item 6. Exhibits 1711
SIGNATURES 11
3
PART I
Item I - FINANCIAL STATEMENTS
BAYNON INTERNATIONAL CORP.
BALANCE SHEETS
SEPTEMBER 30, December 31,
2008 2007
------------- ------------
(UNAUDITED) (AUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,594 $ 14,513
------------ ------------
TOTAL CURRENT ASSETS 5,594 14,513
------------ ------------
TOTAL ASSETS $ 5,594 $ 14,513March 31, December 31,
2009 2008
------------- ------------
(UNAUDITED) (AUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,483 $ 22,949
------------ ------------
TOTAL CURRENT ASSETS 4,483 22,949
------------ ------------
TOTAL ASSETS $ 4,483 $ 22,949
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Accounts payable and accrued
expenses $ 18,420 $ 31,345
Convertible notes payable -
stockholders 25,000 25,000
Accrued interest - stockholders 401 32
------------ ------------
TOTAL CURRENT LIABILITIES 43,821 56,377
------------ ------------
TOTAL LIABILITIES 43,821 56,377
------------ ------------
STOCKHOLDERS' DEFICIENCY:
Common stock, par value $.001,
authorized 50,000,000 shares, issued
and outstanding 23,272,692 shares 23,273 23,273
Additional paid-in capital 155,660 155,660
Accumulated deficit (218,271) (212,361)
------------ ------------
TOTAL STOCKHOLDERS' DEFICIENCY (39,338) (33,428)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIENCY $ 4,483 $ 22,949
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 24,726 $ 19,470
Related party loan 5,000 -
Note payable, stockholder 20,000 20,000
Accrued interest, stockholder 1,072 62
------------ ------------
TOTAL CURRENT LIABILITIES 50,798 39,532
------------ ------------
TOTAL LIABILITIES 50,798 39,532
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIENCY):
Common stock, par value $.001,
authorized 50,000,000 shares, issued
and outstanding 21,152,692 shares 21,153 21,153
Additional paid-in-capital 136,580 136,580
Accumulated deficit (202,937) (182,752)
------------ ------------
TOTAL STOCKHOLDERS' DEFICIENCY (45,204) (25,019)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 5,594 $ 14,513
============ ============
The accompanying notes are an integral part
of these financial statements
4
BAYNON INTERNATIONAL CORP.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
---------- ---------- ---------- ---------
Revenues $ - $ - $ - $ -
Cost of revenue - - - -
-------- -------- -------- --------
Gross Profit - - - -
-------- -------- -------- --------
Other Costs:
General and administrative
expenses 4,430 11,769 19,223 27,365
-------- -------- -------- --------
Total Other Cost 4,430 11,769 19,223 27,365
-------- -------- -------- --------
Other Income(Expense):
Interest income 10 14 49 233
Interest expense (378) (302) (1,010) (897)
-------- -------- -------- --------
Total Other Income (Expense) (368) (288) (961) (664)
-------- -------- -------- --------
Net Loss $ (4,798) $(12,057) $(20,184) $ (28,029)
======== ======== ======== ========
Earning (loss)Three Months Ended
March 31,
2009 2008
-------- --------
Revenues $ - $ -
Cost of revenue - -
-------- --------
Gross Profit - -
-------- --------
Other Costs:
General and administrative
expenses 5,575 8,380
-------- --------
Total Other Costs 5,575 8,380
-------- --------
Operating loss (5,575) (8,380)
-------- --------
Other Income(Expense):
Interest income 34 31
Interest expense - stockholders (369) (300)
-------- --------
Total Other Income(Expense) (335) (269)
-------- --------
Net Loss $ (5,910) $ (8,649)
======== ========
Earnings(Loss) per share:
Basic and diluted earnings
(loss) per common share $ - $ - $ - $ -
======== ========
======== ========
Basic and diluted common
shares outstanding 23,272,692 21,152,692 19,032,692 21,152,692 19,032,692
========== ========== ========== ==========
The accompanying notes are an integral part
of these financial statements.statements
5
BAYNON INTERNATIONAL CORP.
STATEMENTS OF CASH FLOWS
FOR THE NINETHREE MONTHS ENDED SEPTEMBER 30,MARCH 31, 2009 AND 2008
AND 2007
(UNAUDITED)
2008 2007
---- ----
Cash Flows from Operating Activities:
Net loss $ (20,184) $ (28,029)
Adjustments to reconcile net loss to net cash used
in operating activities:
Increase in accounts payable and accrued expenses 6,265 22,688
----------- -----------
Net cash used in operating activities (13,919) (5,341)
----------- -----------
Cash Flows from Financing Activities
Proceeds from related party loan 5,000 -
----------- -----------
Decrease in Cash and Cash Equivalents (8,919) (5,341)
Cash and Cash Equivalents, beginning of period 14,513 12,940
----------- -----------
Cash and Cash Equivalents, end of period $ 5,594 $ 7,599
=========== ===========
Supplemental Disclosures of Cash Flow Information:
Cash paid during year for:
Income Taxes $ 520 $ -
=========== ===========
2009 2008
---- ----
Cash Flows from Operating Activities:
Net loss $ (5,910) $ (8,649)
Adjustments to reconcile net loss to net
cash used in operating activities:
Decrease in accounts payable and accrued
expenses (12,925) (3,200)
Increase in accrued interest - stockholders 369 300
---------- ----------
Net cash used in operating activities (18,466) (11,549)
---------- ----------
Decrease in Cash and Cash Equivalents (18,466) (11,549)
Cash and Cash Equivalents, beginning of period 22,949 14,513
---------- ----------
Cash and Cash Equivalents, end of period $ 4,483 $ 2,964
========== ==========
Supplemental Disclosures of Cash Flow Information:
Cash paid during year for:
Income Taxes $ - $ -
========== ==========
Interest $ - $ -
========== ==========
The accompanying notes are an integral part
of these financial statements
6
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,MARCH 31, 2009 AND 2008
(UNAUDITED)
1. THE COMPANY
Baynon International CorporationCorp. formerly known as Technology Associates
Corporation (the "Company"), was originally incorporated on February
29, 1968 under the laws of the Commonwealth of Massachusetts to engage
in any lawful corporate undertaking. On December 28, 1989, the Company
reincorporated under the laws of the State of Nevada. The Company was
formerly engaged in the technology marketing business and its
securities traded on the National Association of Securities Dealers OTC
Bulletin Board. The Company has not engaged in any business operations
for at least the last sixseven fiscal years and has no operations to date.
The Company will attempt to identify and negotiate with a business
target for the merger of that entity with and into the Company. In
certain instances, a target company may wish to become a subsidiary of
the Company or wish to contribute assets to the Company rather than
merge.
No assurance can be given that the Company will be successful in
identifying or negotiating with any target company. The Company
provides a means for a foreign or domestic private company to become a
reporting (public) company whose securities would be qualified for
trading in the United States secondary market.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Presentation
The December 31, 20072008 balance sheet data was derived from audited
financial statements but does not include all disclosures required by
generally accepted accounting principles. In the opinion of
management, the accompanying unaudited financial statements contain all
normal and recurring adjustments necessary to present fairly the
financial position of the Company as of September 30, 2008,March 31, 2009, its results of
operations for the three and nine months ended September 30,March 31, 2009 and 2008
and 2007 and its
cash flows for the ninethree months ended September 30,
2008March 31, 2009 and 2007.2008.
The statements of operations for the three and nine months ended September 30,March 31, 2009
and 2008 and 2007 are not necessarily indicative of the results for the full
year.
While the Company believes that the disclosures presented are adequate
to make the information not misleading, these financial statements
should be read in conjunction with the financial statements and
accompanying notes included in the Company's annual Report on Form 10-
KSB10-K
for the year ended December 31, 2007.
7
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
These financial statements and accompanying notes have been prepared in
accordance with GAAP. The preparation of these financial statements
requires management to make estimates, judgments and assumptions that
affect the reported amounts of assets, liabilities, revenues, and
expenses. The Company continually evaluates the accounting policies
and estimates used to prepare the consolidated financial statements.
The Company bases its estimates on historical experiences and
assumptions believed to be reasonable under current facts and
circumstances. Actual amounts and results could differ from these
estimates made by management.2008.
Earnings (Loss) Per Share
The Company computes earnings or loss per share in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 128, (SFAS 128), "Earnings
Per Share". Basic earnings per share is computed by dividing income
available to common stockholders by the weighted average number of
common shares outstanding. Diluted earnings per share reflects the
potential dilution that could occur if securities or other agreements
to issue common stock were exercised or converted into common stock.
Diluted earnings per share is computed based upon the weighted average
number of common shares and dilutive common equivalent shares
outstanding, which includes convertible debentures, stock options and
7
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2009 AND 2008
(UNAUDITED)
warrants. The following securities have been excluded from the
calculation of loss per share for the three and nine months ended September 30,March 31, 2009
and 2008 and 2007 as their effect would be antidilutive:
Three and Nine Months Ended
September 30,March 31,
---------------------------
2009 2008 2007
---- ----
Convertible debt and accrued
interest - stockholder 2,107,200 2,066,000708,603 633,096
Going Concern
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As shown in the
accompanying financial statements, the Company has incurred continuing
operating losses and has an accumulated deficit of $202,937$218,271 at September 30, 2008.March
31, 2009. The Company has no revenue generating operations and has
limited cash resources. These factors raise substantial doubt about
the ability of the Company to continue as a going concern. Management
believes that it will be able to achieve a satisfactory level of
liquidity to meet the Company's obligations through December 31, 20082009
by obtaining additional financing from key officers, directors and
certain investors. However, there can be no assurance that the8
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Going Concern (Continued) Company
will be able to generate sufficient liquidity to maintain its
operations. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
Recently Issued Accounting Standards
The Company adopted SFAS No. 157, "Fair Value Measurements" as of
January 1, 2008. This statement defines fair value, establishes a
framework for measuring fair value, and expands disclosures about fair
value measurements. The adoption of this pronouncement did not have a
material effect on the financial position and results of operations of
the Company.
On January 1, 2008 we adopted SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an Amendment of
FASB Statement No. 115" (SFAS No. 159), which permits a company to
measure certain financial assets and financial liabilities at fair
value that were not previously required to be measured at fair value.
We have not elected to measure any financial assets and financial
liabilities at fair value which were not previously required to be
measured at fair value. Therefore, the adoption of this standard has
had no effect on our results of operations.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling
Interests in Consolidated Financial Statements - an amendment of ARB
No. 51," ("SFAS No. 160"). SFAS No. 160 amends Accounting Research
Bulletin No. 51, "Consolidated Financial Statements," to establish
accounting and reporting standards for any noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160
clarifies that a noncontrolling interest in a subsidiary should be
reported as a component of equity in the consolidated financial
statements and requires disclosure, on the face of the consolidated
statement of income, of the amounts of consolidated net income
attributable to the parent and to the noncontrolled interest. SFAS No.
160 is effective for the Company beginning January 1, 2009 and is to be
applied prospectively, except for the presentation and disclosure
requirements, which upon adoption will be applied retrospectively for
all periods presented. Early adoption of SFAS No. 160 is prohibited.
The Company does not expect the adoption of this pronouncement to have
a material effect on its financial statements.
In April 2008, the FASB issued FSP FAS 142-3, "Determination of the
Useful Life of Intangible Assets" ("FSP FAS 142-3"). FSP FAS 142-3
amends FASB Statement No. 142, "Goodwill and Other Intangible Assets"
("SFAS No. 142") to improve the consistency between the useful life of
a recognized intangible asset under SFAS No. 142 and the period of
9
BAYNON INTERNATIONAL CORP.3. CONVERTIBLE NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Issued Accounting Standards (Continued)
expected cash flows used to measure the fair value of the asset under
FASB Statement No 141, "Business Combinations" ("SFAS No. 141") and
other U.S. GAAP. This FSP is effective for fiscal years beginning
after December 15, 2008. The guidance for determining the useful life
of a recognized intangible asset is to be applied prospectively,
therefore, the impact of the implementation of this pronouncement
cannot be determined until the transactions occur.
In May 2008, the FASB issued SFAS No. 162 "The Hierarchy of Generally
Accepted Accounting Principles". SFAS No. 162 identifies the sources
of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with
generally accepted accounting principles. SFAS No. 162 is effective 60
days following the Securities and Exchange Commission's approval of the
Public Company Accounting Oversight Board Auditing amendments to AU
Section 411, "The Meaning of Present Fairly in Conformity with
Generally Accepted Accounting Principles." The Company does not expect
the adoption of SFAS No. 162 to change its current practice nor does
the Company anticipate an effect on its results of operations or
financial position.
Management does not believe that any other recently issued, but not yet
effective, accounting standard if currently adopted would have a
material effect on the accompanying financial statements.
3. RELATED PARTY TRANSACTIONS
The related party loan is due to the principle executive officer, is
unsecured, bears interest at 6% per annum and has no specific terms for
repayment.
4. CONVERTIBLE NOTE PAYABLE - STOCKHOLDERSTOCKHOLDERS
On December 13, 2006,2008, the Company issued an unsecured note payable to a
stockholder in exchange for $20,000$5,000 in cash, in order for the Company to
pay current invoices. The note borebears interest at 6% per annum and
maturedmatures on December 13, 2007.2009. The stockholder hadhas the option to
convert the note and accrued interest into the Company's common stock
at $.01 per share. The option was exercisedexpires on December 12, 2007 and 2,120,000
shares of common stock were issued in satisfaction for the note and
accrued interest.
10
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
4. CONVERTIBLE NOTE PAYABLE - STOCKHOLDER (Continued)13, 2009.
On December 13, 2007,26, 2008, the Company issued an unsecured note payable to a
stockholder in exchange for $20,000 in cash, in order for the Company
to pay current invoices. The note bears interest at 6% per annum and
matures on December 13, 2008.26, 2009. The stockholder has the option to
convert the note and accrued interest into the Company's common stock
at $.01 per share. The option expires on December 13, 2008.26, 2009.
At September 30,March 31, 2009 and December 31, 2008, and 2007, accrued interest on the loan
and note was $1,072$401 and $960$32, respectively. Interest expense amounted to
$378,
$302, $1,010$369 and $897$300 for the three and nine months ended September 30,March 31, 2009 and 2008,
and 2007, respectively.
5. COMMON STOCK
The authorized capital stock of the Company consist of 50,000,000
shares of common stock, par value $.001 per share, of which 21,152,692
shares were issued and outstanding at September 30, 2008 and December
31, 2007.
On December 12, 2007, the Board of Directors authorized the issuance of
2,120,000 shares of common stock in payment for a note payable of
$20,000 plus accrued interest of $1,200.
Holders of shares of common stock are entitled to one vote for each
share on all matters to be voted on by the stockholders. Holders of
common stock do not have cumulative voting rights. Holders of common
stock are entitled to share ratably in dividends, if any, as may be
declared from time to time by the Board of Directors in its discretion
from funds legally available therefore. In the event of liquidation,
dissolution or winding up of the Company, the holders of common stock
are entitled to share pro rata in all assets remaining after payment in
full of all liabilities. All of the outstanding shares of common stock
are fully paid and non-assessable. Holders of common stock have no
preemptive rights to purchase the Company's common stock. There are no
conversions or redemption rights or sinking fund provisions with
respect to the common stock.
6. INCOME TAXES
The component of deferred tax assets is as follows:
September 30, December 31,
2008 2007
------------- -----------
(Unaudited) (Audited)
--------- -------
Net operating loss carry forwards $ 65,700 $ 57,700
Less: Valuation allowance (65,700) (57,700)
--------- ---------
$ - $ -
========= =========
11
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2008
6. INCOME TAXES (Continued)
A 100% valuation allowance was provided at September 30, 2008 and
December 31, 2007 as it is uncertain if the deferred tax assets would
be utilized. The increase in the valuation allowance was as a result of
the increase in the Company's net operating loss.
At September 30, 2008, the Company has unused federal net operating
loss carry forwards of approximately $199,000 expiring between 2019 and
2028 and unused New Jersey net operating loss carry forwards of
approximately $164,000 expiring between 2008 and 2015.
128
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Trends and Uncertainties
There are no material commitments for capital expenditure at this time.
There are no trends, events or uncertainties that have had or are
reasonably expected to have a material impact on our limited
operations. There are no known causes for any material changes from
period to period in one or more line items of Baynon International
Corp.'s financial statements.
Liquidity and Capital Resources
At September 30, 2008, Baynon International Corp. had a cash balance of
$5,594, which represents an $8,919 decrease from the $14,513 balance at
December 31, 2007. This decrease was primarily the result of cash
proceeds used to satisfy the requirements of a reporting company.
Baynon's working capital position at September 30, 2008 was ($45,204)
as compared to a December 31, 2007 balance of ($25,019).
The focus of Baynon's efforts is to acquire or develop an operating
business. Despite no active operations at this time, management intends
to continue in business and has no intention to liquidate Baynon.
Baynon has considered various business alternatives including the
possible acquisition of an existing business, but to date has found
possible opportunities unsuitable or excessively priced. Baynon does
not contemplate limiting the scope of its search to any particular
industry. Management has considered the risk of possible opportunities
as well as their potential rewards. Management has invested time
evaluating several proposals for possible acquisition or combination,
however, none of these opportunities were pursued. Baynon presently
owns no real property and at this time has no intention of acquiring
any such property. Baynon's sole expected expenses are comprised of
professional fees primarily incident to its reporting requirements.
The accompanying financial statements have been prepared assuming
Baynon will continue as a going concern. As shown in the accompanying
financial statements, Baynon has incurred losses of $20,184 and $28,029
for the nine months ended September 30, 2008 and 2007, respectively,
and a working capital deficiency which raises substantial doubt about
the Company's ability to continue as a going concern.
Management believes Baynon will continue to incur losses and negative
cash flows from operating activities for the foreseeable future and
will need additional equity or debt financing to sustain its operations
until it can achieve profitability and positive cash flows, if ever.
Management plans to seek additional debt and/or equity financing for
the Company, but cannot assure that such financing will be available on
acceptable terms. Baynon's continuation as a going concern is
dependent upon its ability to ultimately attain profitable operations,
generate sufficient cash flow to meet its obligations, and obtain
additional financing as may be required. The outcome of this
uncertainty cannot be assured.
13
The accompanying financial statements do not include any adjustments
that might result from the outcome of this uncertainty. There can be
no assurance that management will be successful in implementing its
business plan or that the successful implementation of such business
plan will actually improve Baynon's operating results.
Results of Operations for the Nine Months Ended September 30, 2008,
compared to the Nine Months Ended September 30, 2007.
Baynon incurred a net loss of $20,184 in the current year versus a net
loss of $28,029 in the prior year. General and administrative expenses
were $19,223 compared to $27,365 in the prior year, a decrease of
$8,142. General and administrative expenses were incurred primarily to
enable Baynon to satisfy the requirements of a reporting company.
During the current and prior year, Baynon did not record an income tax
benefit due to the uncertainty associated with Baynon's ability to
merge with an operating company, which might permit Baynon to avail
itself of those advantages.
Results of Operations for the Three Months Ended September 30, 2008,
Compared to the Three Months Ended September 30, 2007.
Baynon incurred a net loss of $4,798 in the current year versus a net
loss of $12,057 in the prior year. General and administrative expenses
were $4,430 compared to $11,769 in the prior year, a decrease of
$7,339. General and administrative expenses were incurred primarily to
enable Baynon to satisfy the requirements of a reporting company.
The accompanying financial statements have been prepared assuming
Baynon will continue as a going concern. As shown in the accompanying
financial statements, Baynon has incurred a working capital deficiency
which raises substantial doubt about Baynon's ability to continue as a
going concern.
Management believes the Company will continue to incur losses and
negative cash flows from operating activities for the foreseeable
future and will need additional equity or debt financing to sustain its
operations until it can achieve profitability and positive cash flows,
if ever. Management plans to seek additional debt and/or equity
financing for Baynon, but cannot assure that such financing will be
available on acceptable terms. Baynon's continuation as a going
concern is dependent upon its ability to ultimately attain profitable
operations, generate sufficient cash flow to meet its obligations, and
obtain additional financing as may be required. The outcome of this
uncertainty cannot be assured.
14
The accompanying financial statements do not include any adjustments
that might result from the outcome of this uncertainty. There can be no
assurance that management will be successful in implementing its
business plan or that the successful implementation of such business
plan will actually improve our operating results.
Recently Issued Accounting Standards
The Company adopted SFAS No. 157, "Fair Value Measurements" as of
January 1, 2008. This statement defines fair value, establishes a
framework for measuring fair value, and expands disclosures about fair
value measurements. The adoption of this pronouncement did not have a
material effect on the financial position and results of operations of
the Company.
On January 1, 2008 we adopted SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an Amendment of
FASB Statement No. 115" (SFAS No. 159), which permits a company to
measure certain financial assets and financial liabilities at fair
value that were not previously required to be measured at fair value.
We have not elected to measure any financial assets and financial
liabilities at fair value which were not previously required to be
measured at fair value. Therefore, the adoption of this standard has
had no effect on our results of operations.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling
Interests in Consolidated Financial Statements - an amendment of ARB
No. 51," ("SFAS No. 160"). SFAS No. 160 amends Accounting Research
Bulletin No. 51, "Consolidated Financial Statements," to establish
accounting and reporting standards for any noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160
clarifies that a noncontrolling interest in a subsidiary should be
reported as a component of equity in the consolidated financial
statements and requires disclosure, on the face of the consolidated
statement of income, of the amounts of consolidated net income
attributable to the parent and to the noncontrolled interest. SFAS No.
160 is effective for the Company beginning January 1, 2009 and is to be
applied prospectively, except for the presentation and disclosure
requirements, which upon adoption will be applied retrospectively for
all periods presented. Early adoption of SFAS No. 160 is prohibited.
The Company does not expect the adoption of this pronouncement to have
a material effect on its financial statements.
In April 2008, the FASB issued FSP FAS 142-3, "Determination of the
Useful Life of Intangible Assets" ("FSP FAS 142-3"). FSP FAS 142-3
amends FASB Statement No. 142, "Goodwill and Other Intangible Assets"
("SFAS No. 142") to improve the consistency between the useful life of
a recognized intangible asset under SFAS No. 142 and the period of
expected cash flows used to measure the fair value of the asset under
FASB Statement No 141, "Business Combinations" ("SFAS No. 141") and
other U.S. GAAP. This FSP is effective for fiscal years beginning
after December 15, 2008. The guidance for determining the useful life
of a recognized intangible asset is to be applied prospectively,
therefore, the impact of the implementation of this pronouncement
cannot be determined until the transactions occur.
15
In May 2008, the FASB issued SFAS No. 162 "The Hierarchy of Generally
Accepted Accounting Principles". SFAS No. 162 identifies the sources
of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with
generally accepted accounting principles. SFAS No. 162 is effective 60
days following the Securities and Exchange Commission's approval of the
Public Company Accounting Oversight Board Auditing amendments to AU
Section 411, "The Meaning of Present Fairly in Conformity with
Generally Accepted Accounting Principles." The Company does not expect
the adoption of SFAS No. 162 to change its current practice nor does
the Company anticipate an effect on its results of operations or
financial position.
Forward-Looking Statements
This Form 10-Q contains forward-looking statements within the meaning
of the federal securities laws. These statements include those
concerning the following: Our intentions, beliefs and expectations
regarding the fair value of all assets and liabilities recorded; our
strategies; growth opportunities; product development and introduction
relating to new and existing products; the enterprise market and
related opportunities; competition and competitive advantages and
disadvantages; industry standards and compatibility of our products;
relationships with our employees; our facilities, operating lease and
our ability to secure additional space; cash dividends; excess
inventory, our expenses; interest and other income; our beliefs and
expectations about our future success and results; our operating
results; our belief that our cash and cash equivalents will be
sufficient to satisfy our anticipated cash requirements; our
expectations regarding our revenues and customers; investments and
interest rates. These statements are subject to risk and uncertainties
that could cause actual results and events to differ materially.
Baynon undertakes no obligation to update forward-looking statements to
reflect events or circumstances occurring after the date of this Form
10-Q.
Critical Accounting Policies
The financial statements and accompanying footnotes included in this
report have been prepared in accordance with accounting principles
generally accepted in the United States with certain amounts based on
management's best estimates and judgments. To determine appropriate
carrying values of assets and liabilities that are not readily
available from other sources, management uses assumptions based on
historical results and other factors that they believe are reasonable.
Actual results could differ from those estimates.
Our critical accounting policies are described in our Annual Report on
Form 10-K for the year ended December 31, 2008. There have been no
material changes to our critical accounting policies as of and for the
three months ended March 31, 2009.
Trends and Uncertainties
There are no material commitments for capital expenditure at this time.
There are no trends, events or uncertainties that have had or are
reasonably expected to have a material impact on our limited
operations. There are no known causes for any material changes from
period to period in one or more line items of Baynon's financial
statements.
Liquidity and Capital Resources
At March 31, 2009, Baynon had a cash balance of $4,483, which
represents an $18,466 decrease from the $22,949 balance at December 31,
2008. This decrease was primarily the result of cash used to satisfy
the requirements of a reporting company. Baynon's working capital
deficit at March 31, 2009 was $39,338 as compared to a December 31,
2008 deficit of $33,428.
The focus of Baynon's efforts is to acquire or develop an operating
business. Despite no active operations at this time, management intends
to continue in business and has no intention to liquidate Baynon.
Baynon has considered various business alternatives including the
possible acquisition of an existing business, but to date has found
9
possible opportunities unsuitable or excessively priced. Baynon does
not contemplate limiting the scope of its search to any particular
industry. Management has considered the risk of possible opportunities
as well as their potential rewards. Management has invested time
evaluating several proposals for possible acquisition or combination;
however, none of these opportunities were pursued. Baynon presently
owns no real property and at this time has no intention of acquiring
any such property. Baynon's sole expected expenses are comprised of
professional fees primarily incident to its reporting requirements.
The accompanying financial statements have been prepared assuming
Baynon will continue as a going concern. As shown in the accompanying
financial statements, Baynon has incurred losses of $5,910 and $8,649
for the three months ended March 31, 2009 and 2008, respectively, and a
working capital deficiency which raises substantial doubt about the
Company's ability to continue as a going concern.
Management believes Baynon will continue to incur losses and negative
cash flows from operating activities for the foreseeable future and
will need additional equity or debt financing to sustain its operations
until it can achieve profitability and positive cash flows, if ever.
Management plans to seek additional debt and/or equity financing for
the Company, but cannot assure that such financing will be available on
acceptable terms. Baynon's continuation as a going concern is
dependent upon its ability to ultimately attain profitable operations,
generate sufficient cash flow to meet its obligations, and obtain
additional financing as may be required. Our auditors have included a
"going concern" qualification in their auditors' report dated March 16,
2009. Such a "going concern" qualification may make it more difficult
for us to raise funds when needed. The outcome of this uncertainty
cannot be assured.
The accompanying financial statements do not include any adjustments
that might result from the outcome of this uncertainty. There can be
no assurance that management will be successful in implementing its
business plan or that the successful implementation of such business
plan will actually improve Baynon's operating results.
Results of Operations for the Three Months Ended March 31, 2009,
compared to the Three Months Ended March 31, 2008.
Baynon incurred a net loss of $5,910 in the current period versus a net
loss of $8,649 in the prior period. General and administrative
expenses were $5,575 compared to $8,380 in the prior period, a decrease
of $2,805. General and administrative expenses were incurred primarily
to enable Baynon to satisfy the requirements of a reporting company.
During the current and prior period, Baynon did not record an income
tax benefit due to the uncertainty associated with Baynon's ability to
merge with an operating company, which might permit Baynon to avail
itself of those advantages.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We do not consider the effects of interest rate movements to be a
material risk to our financial condition. We do not hold any derivative
instruments and do not engage in any hedging activities.
10
Item 4T. Controls and Procedures.
During the ninethree months ended September 30, 2008,March 31, 2009, there were no changes in
our internal controls over financial reporting (as defined in Rule 13a-15(f)13a-
15(f) and 15d-15(f) under the Exchange Act) that have materially
affected, or are reasonably likely to materially affect, our internal
control over financial reporting.16
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management,
including our chief executive officer and chief financial officer, we
conducted an evaluation of our disclosure controls and procedures, as
such term is defined under Rule 13a-15(e) and Rule 15d-15(e)
promulgated under the Securities Exchange Act of 1934, as amended, as
of September 30, 2008. Based on this evaluation, our chief executive
officer and chief principal financial officers have concluded such
controls and procedures to be effective as of September 30, 2008March 31, 2009 to ensure
that information required to be disclosed by the issuer in the reports
that it files or submits under the Act is recorded, processed,
summarized and reported, within the time periods specified in the
Commission's rules and forms and to ensure that information required to
be disclosed by an issuer in the reports that it files or submits under
the Act is accumulated and communicated to the issuer's management,
including its principal executive and principal financial officers, or
persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
1711
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 1A. Risk Factors. Not applicable for small reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6. Exhibits
Exhibit 31 - Certifications pursuant to Section 302 of the Sarbanes-OxleySarbanes-
Oxley Act of 2002
Exhibit 32 - Certifications pursuant to Section 906 of the Sarbanes-OxleySarbanes-
Oxley Act of 2002
SIGNATURES
Pursuant to the requirements 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.
Dated: November 19, 2008May 12, 2009
BAYNON INTERNATIONAL CORP.
By: /s/ Pasquale Catizone
- ----------------------------------------------------
Pasquale Catizone, Principal Executive Officer
Please check page numbers before filing