SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q10-Q/A
[x] Quarterly Report Pursuant to Section 13 or 15(d) Securities
Exchange Act of 1934 for Quarterly Period Ended SeptemberJune 30, 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, OctoberJuly
31, 2009: Common Stock - 25,860,192
2
BAYNON INTERNATIONAL CORP.
FORM 10-Q
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
(Unaudited)
Balance Sheets at SeptemberJune 30, 2009 (Unaudited)
and December 31, 2008 (Audited) 3
Statements of Operations for the three and ninesix months
ended SeptemberJune 30, 2009 and 2008 (Unaudited) 4
Statements of Cash Flows for the ninesix months
ended SeptemberJune 30, 2009 and 2008 (Unaudited) 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 11
Item 4T. Controls and Procedures 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 1A. Risk Factors 12
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security
Holders 12
Item 5. Other Information 12
Item 6. Exhibits 12
SIGNATURES 12
EXPLANATORY NOTE
The Registrant is amending its quarterly Report on Form 10-Q for the quarter
ended June 30, 2009, to correct the 302 certification attached as an exhibit.
Except for the foregoing, no other information included in our original Form
10-Q for the quarter ended June 30, 2009 as amended and filed on September
29, 2009, is amended by the Form 10-Q/A.
3
PART I
Item I - FINANCIAL STATEMENTS
BAYNON INTERNATIONAL CORP.
BALANCE SHEETS
SeptemberJune 30, December 31,
2009 2008
------------- ------------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,75133 $ 22,949
------------ ------------
TOTAL CURRENT ASSETS 5,75133 22,949
------------ ------------
TOTAL ASSETS $ 5,75133 $ 22,949
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Accounts payable and accrued
expenses $ 11,89521,320 $ 31,345
Convertible notes payable -
stockholders 20,000- 25,000
Accrued interest - stockholders 98- 32
------------ ------------
TOTAL CURRENT LIABILITIES 31,99321,320 56,377
------------ ------------
TOTAL LIABILITIES 31,99321,320 56,377
------------ ------------
STOCKHOLDERS' DEFICIENCY:
Common stock, par value $.001,
50,000,000 shares authorized, 25,860,192
issued and outstanding at SeptemberJune 30, 2009
and 23,272,692 shares issued and out-
standing at December 31, 2008 25,860 23,273
Additional paid-in capital 178,948 155,660
Accumulated deficit (231,050)(226,095) (212,361)
------------ ------------
TOTAL STOCKHOLDERS' DEFICIENCY (26,242)(21,287) (33,428)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIENCY $ 5,75133 $ 22,949
============ ============
The accompanying notes are an integral part
of these financial statements
4
BAYNON INTERNATIONAL CORP.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended NineSix Months Ended
SeptemberJune 30, SeptemberJune 30,
2009 2008 2009 2008
--------- ---------- ---------- ---------
Revenues $ - $ - $ - $ -
--------- ---------- ---------- ----------
General and administrative
expenses 4,864 4,430 17,956 19,223$ 7,518 $ 6,413 $ 13,092 $ 14,793
-------- -------- -------- --------
Operating loss (4,864) (4,430) (17,956) (19,223)(7,518) (6,413) (13,092) (14,793)
-------- -------- -------- --------
Other Income (Expense):
Interest income 7 10 46 495 8 39 39
Interest expense - stockholders (98) (378) (779) (1,010)(312) (332) (681) (632)
-------- -------- -------- --------
Total Other Income (Expense) (91) (368) (733) (961)(307) (324) (642) (593)
-------- -------- -------- --------
Net Loss $ (4,955)(7,825) $ (4,798) $(18,689) $(20,184)(6,737) $(13,734) $(15,386)
======== ======== ======== ========
Loss per share:
Basic and diluted loss
per common share $ - $ - $ - $ -
======== ======== ======== ========
Basic and diluted weighted
average common
shares outstanding 25,860,192 21,152,692 24,286,840 21,152,69223,699,203 10,431,465 23,487,126 10,431,465
========== ========== ========== ==========
The accompanying notes are an integral part
of these financial statements
5
BAYNON INTERNATIONAL CORP.
STATEMENTS OF CASH FLOWS
FOR THE NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 2009 AND 2008
(UNAUDITED)
2009 2008
---- ----
Cash Flows from Operating Activities:
Net loss $ (18,689)(13,734) $ (20,184)(15,386)
Adjustments to reconcile net loss to net
cash used in operating activities:
Common stock issued for accrued interest 843 -
(Decrease) increase in accounts payable
and accrued expenses (19,450) 6,265(10,025) 889
Increase in accrued interest
- stockholders 98 - 632
---------- ----------
Net cash used in operating activities (37,198) (13,919)(22,916) (13,865)
---------- ----------
Cash flows from Financing Activities:
Proceeds from related party loan 20,000- 5,000
---------- ----------
Net cash provided by financing activities 20,000- 5,000
---------- ----------
Decrease in Cash and Cash Equivalents (17,198) (8,919)(22,916) (8,865)
Cash and Cash Equivalents, beginning of period 22,949 14,513
---------- ----------
Cash and Cash Equivalents, end of period $ 5,75133 $ 5,5945,648
========== ==========
Schedule of Non-cash Activities
Common stock issued for notes payable
- stockholders $ 25,000 $ -
========== ==========
Common stock issued for prior year accrued interest-interest
- stockholders $ 32 $ -
========== ==========
The accompanying notes are an integral part
of these financial statements
6
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBERJUNE 30, 2009 AND 2008
(UNAUDITED)
1. THE COMPANY
Baynon International Corp. 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 seven 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, 2008 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 SeptemberJune 30, 2009, its results of
operations for the three and ninesix months ended SeptemberJune 30, 2009 and 2008
and its cash flows for the ninesix months ended SeptemberJune 30, 2009 and 2008.
The statements of operations for the three and ninesix months ended SeptemberJune
30, 2009 and 2008 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-K
for the year ended December 31, 2008.
We have evaluated subsequent events through November 4, 2009, the date
of issuance of the financial statements.
Earnings (Loss) Per Share
The Company computes earnings or loss per share in accordance with
theStatement of Financial Accounting Standards Board's ("FASB"SFAS") Accounting Standards
Codification ("ASC") 260.No. 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 7
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(UNAUDITED)
other agreements
to issue common stock were exercised or converted into common stock.
Diluted earnings 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
JUNE 30, 2009
(UNAUDITED)
warrants. The following securities have been excluded from the
calculation of loss per share for the ninesix months ended SeptemberJune 30, 2009
and 2008 as their effect would be antidilutive:
NineSix Months Ended
SeptemberJune 30,
---------------------------------------------------------
2009 2008
---- ----
Convertible debt and accrued
interest - stockholder (Weighted average) 174,247 1,696,000- 1,155,836
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheet for cash and cash
equivalents, accounts payable and accrued expenses, and notes payable
approximate fair value based on the short-term maturity of these
instruments.
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 $231,050$226,095 at SeptemberJune 30,
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, 2009
by obtaining additional financing from key officers, directors and
certain investors. However, there can be no assurance that the 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
Effective July 1, 2009, the FASB's ASC became the single official
source of authoritative, nongovernmental generally accepted accounting
principles in the United States ("GAAP"). The historical GAAP
hierarchy was eliminated and the ASC became the only level of
authoritative GAAP, other than guidance issued by the Securities and
Exchange Commission. Our accounting policies were not affected by the
conversion to ASC. However, references to specific accounting
standards in the footnotes to our financial statements have been
changed to refer to the appropriate section of ASC.
3. CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS
On December 13, 2008, the Company issued an unsecured note payable to a
stockholder in exchange for $5,000 in cash, in order for the Company to
pay current invoices. The note bears interest at 6% per annum and
matures on December 13, 2009. The stockholder has the option to8
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(UNAUDITED)
convert the note and accrued interest into the Company's common stock
at $.01 per share. The option was exercised on June 15, 2009 and
517,500 shares of common stock were issued in satisfaction of the note
and accrued interest.
On December 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 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 was exercised on June 15, 2009 and
2,070,000 shares of common stock were issued in satisfaction of the
note and accrued interest.
On September 1, 2009, the Company issued an unsecured note payable to a
stockholder in exchange for $20,000 in cash, for the Company's working
capital needs. The note bears interest at 6% per annum, and matures on
September 1, 2010. 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 September 1, 2010.8
At SeptemberJune 30, 2009 and December 31, 2008, accrued interest on the notesloan
and note was $98$0 and $32, respectively. Interest expense amounted to
$98$312 and $378$332 for the three months ended SeptemberJune 30, 2009 and 2008,
respectively. Interest expense amounted to $779$681 and $1,010$632 for the ninesix
months ended SeptemberJune 30, 2009 and 2008, respectively.
9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
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
ninesix months ended SeptemberJune 30, 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 SeptemberJune 30, 2009, Baynon had a cash balance of $5,751,$33, which represents a
$17,198$22,916 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.
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
10
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 $18,689$13,734 and $20,184$15,386
for the ninesix months ended SeptemberJune 30, 2009 and 2008, respectively, and a
working capital and shareholders' 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 SeptemberJune 30, 2009,
compared to the Three Months Ended SeptemberJune 30, 2008.
Baynon incurred a net loss of $4,955$7,825 in the current period versus a net
loss of $4,798$6,737 in the prior period. General and administrative
expenses were $4,864$7,518 compared to $4,430$6,413 in the prior period, an
increase of $434.$1,105. General and administrative expenses were incurred
primarily to satisfy reporting requirements.
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.
Results of Operation for the NineSix Months Ended SeptemberJune 30, 2009, compared
to the NineSix Months Ended SeptemberJune 30, 2008.
Baynon incurred a net loss of $18,689$13,734 in the current period versus a
net loss of $20,184$15,386 in the prior period. General and administrative
expenses were $17,956$13,092 compared to $19,223$14,793 in the prior period, a
11
decrease of $1,267.$1,701. 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.
Item 4T. Controls and Procedures.
During the threesix months ended SeptemberJune 30, 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.
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 SeptemberJune 30, 2009. Based on this evaluation, our chief executive
officer and chief principal financial officers have concluded such
controls and procedures to be effective as of SeptemberJune 30, 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.
12
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.
On September 1, 2009,December 13, 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's working
capital needs.Company to
pay current invoices. The note bears interest at 6% per annum and
matures on September 1, 2010.December 13, 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 expireswas exercised on September 1, 2010.June 15, 2009 and
517,500 shares of common stock were issued in satisfaction of the note
and accrued interest.
On December 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 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 was exercised on June 15, 2009 and
2,070,000 shares of common stock were issued in satisfaction of the
note and accrued interest.
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-
Oxley Act of 2002
Exhibit 32 - Certifications pursuant to Section 906 of the Sarbanes-
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 4,September 29, 2009
BAYNON INTERNATIONAL CORP.
By: /s/ Pasquale Catizone
- -------------------------
Pasquale Catizone, Principal Executive Officer