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, 2010
-March 31, 2011
-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 has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (section 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes [X ] No [ ]
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-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, November 3, 2010:May
2, 2011: 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 September 30, 2010March 31, 2011
and December 31, 20092010 3
Statements of Operations for the three and
nine months
ended September 30,March 31, 2011 and 2010 and 2009 4
Statements of Cash Flows for the ninethree months
ended September 30,March 31, 2011 and 2010 and 2009 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 1110
Item 4. 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. (Removed and Reserved) 12
Item 5. Other Information 12
Item 6. Exhibits 12
SIGNATURES 12
3
PART I
Item I - FINANCIAL STATEMENTS
1
BAYNON INTERNATIONAL CORP.
BALANCE SHEETS
September 30,March 31, December 31,
2011 2010
2009
------------ --------------------- ---------
(Unaudited)
ASSETS
CURRENT ASSETSASSETS:
Cash and cash equivalents $ 24,9115,094 $ 4,631
--------- ---------7,890
-------- --------
TOTAL CURRENT ASSETS 24,911 4,631
--------- ---------5,094 7,890
-------- --------
TOTAL ASSETS $ 24,911 $ 4,631
========= =========5,094 7,890
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIESLIABILITIES:
Accounts payable and accrued expenses $ 17,70715,675 $ 14,74714,049
Convertible notes payable - stockholders 45,000 20,00045,000
Accrued interest - stockholders 1,422 398
--------- ---------2,798 2,132
-------- --------
TOTAL CURRENT LIABILITIES 64,129 35,145
--------- ---------
TOTAL LIABILITIES 64,129 35,145
--------- ---------63,473 61,181
-------- --------
STOCKHOLDERS' DEFICIENCYDEFICIENCY:
Common stock, par value $.001, authorized
50,000,000 shares, issued and outstanding
25,860,192 shares 25,860 25,860
Additional paid-in capital 178,947 178,947178,948 178,948
Accumulated deficit (244,026) (235,321)
--------- ---------(263,187) (258,099)
-------- --------
TOTAL STOCKHOLDERS' DEFICIENCY (39,217) (30,514)
--------- ---------(58,379) (53,291)
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIENCY $ 24,9115,094 $ 4,631
========= =========7,890
======== ========
The accompanying notes are an integral part of these
financial statements
4
BANYONBAYNON INTERNATIONAL CORP.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
Nine Months Ended
September 30, September 30,
------------------ ------------------March 31
2011 2010
2009 2010 2009
--------- --------- --------- ------------------- ----------
Revenues $ - $ - $ - $ -
Cost of revenue --------- --------- --------- ---------- -
---------- ----------
Gross Profit - -
- -
--------- --------- --------- ------------------- ----------
Other CostsCosts:
General and administrative expenses 2,768 4,864 7,695 17,956
--------- --------- --------- ---------4,426 2,102
---------- ----------
Total Other Costs 2,768 4,864 7,695 17,956
--------- --------- --------- ---------other costs 4,426 2,102
---------- ----------
Operating loss (2,768) (4,864) (7,695) (17,956)
--------- --------- --------- ---------(4,426) (2,102)
---------- ----------
Other Income (Expense):
Interest income 10 7 15 464 4
Interest expense - stockholders (429) (98) (1,024) (779)
--------- --------- --------- ---------(666) (296)
---------- ----------
Total Other Income (Expense) (419) (91) (1,009) (733)
--------- --------- --------- ---------(662) (292)
---------- ----------
Net Loss $ (3,187)(5,088) $ (4,955) $ (8,704) $ (18,689)
========= ========= ========= =========(2,394)
========== ==========
Loss per shareshare:
Basic and diluted loss per common share $ - $ -
$ - $ -
========= ========= ========= =================== ==========
Basic and diluted common shares outstanding 25,860,192 25,860,192 25,860,192 24,286,840
========== ==========
========== ==========
The accompanying notes are an integral part of these
financial statements
5
BAYNON INTERNATIONAL CORP.
STATEMENTS OF CASH FLOWS
FOR THE NINETHREE MONTHS ENDED SEPTEMBER 30,MARCH 31, 2011 AND 2010
AND 2009
(UNAUDITED)
2011 2010
2009
---------- ----------------- -------
Cash flows from Operating ActivitiesActivities:
Net loss $ (8,704) $(18,689)$(5,088) $(2,394)
Adjustments to reconcile net loss to net
cash used in operating activities:
Common stock issued for accrued interest - 843
Increase (decrease) in accounts payable
and accrued expenses 2,960 (19,450)1,626 (302)
Increase in accrued interest - stockholders 1,024 98
-------- --------666 296
------- -------
Net cash used in operating activities (4,192) (37,198)
-------- --------
Cash flows from Financing Activities:
Proceeds from note payable - stockholder 25,000 20,000
-------- --------
Increase (Decrease)(2,796) (2,400)
------- -------
Decrease in Cash and Cash Equivalents 20,280 (17,198)(2,796) (2,400)
Cash and Cash Equivalents, beginning of period 7,890 4,631
22,949
-------- --------------- -------
Cash and Cash Equivalents, end of period $ 24,9115,094 $ 5,751
======== ========
Schedule2,231
======= =======
Supplemental Disclosures of Non-cash Activities
Common stock issued for not payablesCash Flow Information:
Cash paid during the period for:
Income taxes $ 500 $ 500
======= =======
Interest $ - $ 25,000
======== ========
Common stock issued for accrued interest $ -
$ 32
======== =============== =======
The accompanying notes are an integral part of these
financial statements
6
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,MARCH 31, 2011 AND 2010 and 2009
(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 eight 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, 20092010 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, 2010,March 31, 2011, its results of
operations for the three ended March 31, 2011 and nine months ended September 30, 2010
and 2009 and its cash
flows for the ninethree months ended September 30,
2010March 31, 2011 and 2009.2010.
The statements of operations for the three months ended March 31, 2011
and nine months ended
September 30, 2010 and 2009 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, 2009.2010.
Loss Per Share
The Company computes loss per share in accordance with Financial
Accounting Standards Board ("FASB") Accounting Standards Codification
("ASC") 260, "Earnings Per Share".
7
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,MARCH 31, 2011 AND 2010 and 2009
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 warrants. The
following securities have been excluded from the calculation of loss
per share for the ninethree months ended September 30,March 31, 2011 and 2010 and 2009 as their
effect would be anti-dilutive:
September 30
---------------------2011 2010
2009
---------- ---------------------
Convertible debtnote payable and accrued interest
Interest - stockholder 4,642,200 2,009,80022,912,658 2,069,370
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 $244,025$263,187 at September 30, 2010.March
31, 2011. 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 September
30, 2011March 31,
2012 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.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheet for cash and cash
equivalents, accounts payable, notes payable, and accrued expenses
approximate fair value based on the short-term maturity of those
instruments.
Recently Issued Accounting Standards
Management does not believe that any recently issued but not yet
effective accounting standards, if currently adopted, would have a
material effect on the accompanying financial statements.
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 bored interest at 6% per annum and
matured on December 13, 2009. The stockholder had the option to
convert the note and accrued interest into the Company's common stock
8
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,MARCH 31, 2011 AND 2010 and 2009
(UNAUDITED)
3. CONVERTIBLE NOTES PAYABLEPAYALE - STOCKHOLDERS (Continued)
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 bored interest at 6% per annum, and
matured on December 26, 2009. The stockholder had 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.STOCKHOLDER
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 bearsbored interest at 6% per annum and matured on
September 1, 2010. The stockholder had the option to convert the note
and accrued interest into the Company's common stock at $.01 per share.
On September 1, 2010, the note was extended (renewed) to September 1,
2011, with the same terms as the original note. The option expires on
September 1, 2011.
On August 23, 2010, the Company issued an unsecured note payable to athe
same stockholder in exchange for $25,000 in cash, for the Company's
working capital needs. The notenot bears interest at 6% per annum, and
maturesmatured on August 23, 2011. The stockholder has the option to convert
the note and accrued interest into the Company's common stock at
$.01$.00125 per share. The option expires on August 23, 2011.
At September 30, 2010March 31, 2011 and December 31, 2009,2010, accrued interest on the notes
was $1,422$2,797 and $398,$2,132, respectively. Interest expense amounted to $1,024$666
and $779$296 for the ninethree months ended September 30,March 31, 2011 and 2010, and 2009,
respectively.
4. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date that the
financial statements were issued.
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 has been prepared in accordance with accounting principles
generally accepted in the United States with certain amount 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 theythat 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, 2009.2010. There have been no
material changes to our critical accounting policies as of and for the
ninethree months ended September 30, 2010.March 31, 2011.
Trends and Uncertainties
There are no material commitments for capital expendituresexpenditure 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 September 30, 2010,March 31, 2011, Baynon had a cash balance of $24,911,$5,094, which
represents a $20,280 increase$2,796 decrease from the $4,631$7,890 balance at December 31,
2009.2010. This increasedecrease was primarily the result of cash received fromused to satisfy
the issuancerequirements of a note payable to a stockholder.reporting company. Baynon's working capital
deficit at September 30, 2010March 31, 2011 was $39,218$58,379 as compared to a December 31,
20092010 deficit of $30,514.$53,291.
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 statement has been prepared assuming Baynon
will continue as a going concern. As shown in the accompanying
financial statements, Baynon has incurred losses of $8,704$5,088 and $18,689$2,394
for the ninethree months ended September 30,March 31, 2011 and 2010, and 2009, 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 15, 2010.23, 2011.
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 NineThree Months Ended September 30, 2010,March 31, 2011,
compared to the NineThree months ended September 30, 2009.March 31, 2010.
Baynon incurred a net loss of $8,704$5,088 in the current period versus a net
loss of $18,689$2,394 in the prior period. General and administrative
expenses were $7,695$4,426 compared to $17,956$2,102 in the prior period, a
decreasean
increase of $10,261.$2,324. 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.
Results of operations for the Three Months Ended September 30, 2010,
compared to the Three Months Ended September 30, 2009.
Baynon incurred a net loss of $3,187 in the current period versus a net
loss of $4,955 in prior period. General and administrative expenses
were $2,768 compared to $4,864 in the prior period, a decrease of
$4,927. General and administrative expenses were incurred primarily to
satisfy reporting requirements.
11
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable for a smaller reporting company.
11
Item 4. Controls and Procedures.
During the three months ended September 30, 2010,March 31, 2011, 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 June 30, 2010.March 31, 2011. 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, 2010March 31, 2011 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 smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. (Removed and Reserved)
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 3, 2010May 2, 2011
BAYNON INTERNATIONAL CORP.
By: /s/Pasquale Catizone
-
-------------------------
Pasquale Catizone, Principal Executive Officer
/s/Daniel Generelli
- -----------------------------
Daniel Generelli
Chief Financial Officer