UNITED STATES
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 THE FISCAL YEAR ENDED DECEMBER 31, 2008
Commission File Number: 0-4006
BAYNON INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)
NEVADA 88-0285718
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
266 CEDAR STREET, CEDAR GROVE, NEW JERSEY 07009
(Address of principal executive offices, including zip code)
(973) 239-2952
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Exchange Act:
Common Stock, par value $0.001 per share
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in 405 of the Securities Act. Yes [ ] No [x]
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes [ ] No [x]
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),
and (2) has been subject to such filing requirements for the past 90
days. Yes [x] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
2
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of "large accelerated filer,"
"accelerated filer," and "smaller reporting company" in Rule 12b-2 of
the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-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 [ ]
As of June 30, 2008, no market price existed for voting and non-
voting common equity held by non-affiliates of the registrant.
As of March 19, 2009, the Registrant had outstanding 23,272,692
shares of Common Stock with a par value of $0.001 per share.
DOCUMENTS INCORPORATED BY REFERENCE
None
3
TABLE OF CONTENTS
ITEM PAGE
PART I
1. BUSINESS 4
2. PROPERTIES 4
3. LEGAL PROCEEDINGS 5
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 5
PART II
5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASE OF EQUITY SECURITIES 6
6. SELECTED FINANCIAL DATA 6
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION 6
8. FINANCIAL STATEMENTS 10
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES 10
9A(T). CONTROLS AND PROCEDURES 10
9B. OTHER INFORMATION 11
PART III
10. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, CONTROL
PERSONS, AND CORPORATE GOVERNANCE; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT 12
11. EXECUTIVE COMPENSATION 14
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT 14
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE 16
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 17
15. EXHIBITS 17
4
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Baynon International Corp., ("Baynon" or the "Company") formerly known
as "Technology Associates Corporation", was originally incorporated on
February 29, 1968, under the laws of the Commonwealth of Massachusetts.
On December 28, 1989, Baynon reincorporated under the laws of the State
of Nevada. Baynon was formerly engaged in the technology marketing
business. Baynon has not engaged in any business operations for at
least the last five years.
Baynon is considered a blank check company for purposes of this report.
As defined in Section 7(b)(3) of the Securities Act of 1933, as
amended, a blank check company is a development stage company that has
no specific business plan or purpose or has indicated that its business
plan is to engage in a merger or an acquisition with an unidentified
company or companies and is issuing "penny stock" securities as defined
in Rule 3(a)(51) of the Securities Exchange Act of 1934, as amended.
Baynon's current business plan is to attempt to identify and negotiate
with a business target for the merger of that entity with and into
Baynon. In certain instances, a target company may wish to become a
subsidiary of Baynon or may wish to contribute or sell assets to Baynon
rather than to merge. No assurances can be given that Baynon will be
successful in identifying or negotiating with any target company.
Baynon seeks to provide a method for a foreign or domestic private
company to become a reporting or public company whose securities are
qualified for trading in the United States secondary markets.
A business combination with a target company normally will involve the
transfer to the target company of the majority of the issued and
outstanding common stock of Baynon, and the substitution by the target
company of its own management and board of directors. No assurances can
be given that Baynon will be able to enter into a business combination,
or, if Baynon does enter into such a business combination, no
assurances can be given as to the terms of a business combination, or
as to the nature of the target company.
Baynon has not engaged in any business operations for at least the last
five years. The current and proposed business activities described
herein classify Baynon as a blank check company. The Securities and
Exchange Commission and many states have enacted statutes, rules and
regulations limiting the sale of securities of blank check companies.
Management does not intend to undertake any efforts to cause a market
to develop in Baynon's securities until such time as Baynon has
successfully implemented its business plan described herein.
ITEM 2. DESCRIPTION OF PROPERTY
Baynon has no properties and at this time has no agreements to acquire
any properties. Baynon currently uses for its principal place of
business the home office of Mr. Catizone, an officer and director of
Baynon, at no cost to Baynon, an arrangement which management expects
will continue until Baynon completes an acquisition or merger.
5
ITEM 3. LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against Baynon.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this report, no
matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise.
6
PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND
ISSUER PURCHASES OF EQUITY SECURITIES
Item 5(a) Market Information. There has been no trading market
for Baynon's Common Stock for at least the last three years. There can
be no assurance that a trading market will ever develop or, if such a
market does develop, that it will continue.
Holders. There were approximately 540 record holders of Baynon's
common stock as of March 16, 2009. The issued and outstanding shares
of Baynon's common stock were issued in accordance with the exemptions
from registration afforded by Sections 3(b) and 4(2) of the Securities
Act and Rule 506 of Regulation D promulgated thereunder.
Dividends. Holders of the registrant's common stock are entitled to
receive such dividends as may be declared by its board of directors.
No dividends on the registrant's common stock have ever been paid, and
the registrant does not anticipate that dividends will be paid on its
common stock in the foreseeable future.
Securities authorized for issuance under equity compensation plans. No
securities are authorized for issuance by the registrant under equity
compensation plans.
Performance graph. Not applicable.
Sale of unregistered securities. On December 12, 2008, the Board of
Directors authorized the issuance of 2,120,000 shares of common stock
in satisfaction of a note payable to Pasquale Catizone of $20,000 plus
accrued interest of $1,200.
Item 5(b) Use of Proceeds. Not applicable.
Item 5(c) Purchases of Equity Securities by the issuers and
affiliated purchasers. None.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable to a smaller reporting company.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
Statements in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, as well as in certain other parts
of this Annual Report on Form 10-K (as well as information included in
oral statements or other written statements made or to be made by
Baynon) that look forward in time, are forward looking statements made
pursuant to the safe harbor provisions of the Private Litigation Reform
Act of 1995. Forward looking statements include statements concerning
plans, objectives, goals, strategies, future events or performance,
expectations, predictions, and assumptions and other statements which
7
are other than statements of historical facts. Although Baynon believes
such forward-looking statements are reasonable, it can give no
assurance that any forward-looking statements will prove to be correct.
Such forward-looking statements are subject to, and are qualified by,
known and unknown risks, uncertainties and other factors that could
cause actual results, performance or achievements to differ materially
from those expressed or implied by those statements. These risks,
uncertainties and other factors include, but are not limited to
Baynon's ability to estimate the impact of competition and of industry
consolidation and risks, uncertainties and other factors set forth in
Baynon's filings with the Securities and Exchange Commission, including
without limitation this Annual Report on Form 10-K.
Critical Accounting Policies and Estimates
The following discussion as well as disclosures included elsewhere in
this Form 10-K, are based upon our audited financial statements, which
have been prepared in accordance with accounting principles generally
accepted in the United States. These financial statements and
accompanying notes have been prepared in accordance with accounting
principles generally accepted in the United States of America. The
preparation of these consolidated financial statements requires
management to make estimates, judgments and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingencies. Baynon continually evaluates the
accounting policies and estimates used to prepare the financial
statements. Baynon 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.
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 the Baynon's financial
statements.
Liquidity and Capital Resources
At December 31, 2008, Baynon had a cash balance of $22,949, which
represents an $8,436 increase from the $14,513 balance at December 31,
2007. This increase was primarily the result of cash proceeds received
from a note payable, stockholder which enable Baynon to satisfy the
requirements of a reporting company. Baynon's working capital deficit
at December 31, 2008 was $(33,428) as compared to a December 31, 2007
deficit 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
8
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. Baynon's recurring losses
from operations, stockholders' deficiency and working capital
deficiency, and lack of revenue generating operations, raise
substantial doubt about Baynon'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
Baynon, but cannot assure that such financing will be available on
acceptable terms.
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 Year Ended December 31, 2008, Compared to
the Year Ended December 31, 2007.
Baynon incurred a net loss of $29,609 in the current year versus a net
loss of $24,352 in the prior year. General and administrative expenses
were $28,499 compared to $23,409 in the prior year, an increase of
$5,090.
General and administrative expenses, which consist of fees paid for
legal, accounting, and auditing services, 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.
Recently Issued Accounting Standards
In December 2007, the FASB issued FAS 141(R), "Business Combinations -
a replacement of FASB Statement No. 141" ("SFAS 141R"), which
significantly changes the principles and requirements for how the
acquirer of a business recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed,
and any non-controlling interest in the acquiree. The statement also
provides guidance for recognizing and measuring the goodwill acquired
in the business combination and determines what information to disclose
9
to enable users of the financial statements to evaluate the nature and
financial effects of the business combination. This statement is
effective prospectively, except for certain retrospective adjustments
to deferred tax balances, for fiscal years beginning after December 15,
2008. Beginning January 1, 2009, Baynon will adopt SFAS 141R and the
impact of implementing this statement will depend on the nature and
significance of business combinations consummated that would be subject
to this statement.
Baynon 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
Baynon.
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 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 May 2008, the FASB issued SFAS No. 162 "The Hierarchy of Generally
Accepted Accounting Principles" ("SFAS 162"). SFAS 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 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." Baynon does not expect the
adoption of SFAS 162 to change it current practice nor does Baynon
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.
Off Balance Sheet Arrangements
None.
Tabular Disclosure of Contractual Obligations
None.
10
ITEM 8. FINANCIAL STATEMENTS
Baynon's financial statements and associated notes are set forth
beginning on page 19.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
ITEM 9A(T). CONTROLS AND PROCEDURES
Changes in Internal Controls
During the year ended December 31, 2008, there were no changes in our
internal controls over financial reporting (as defined in Rule 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 December 31, 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 December 31, 2008 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.
Management's Report on Internal Control over Financial Reporting
Management of Baynon is responsible for establishing and maintaining
adequate internal control over financial reporting as derived in Rule
13a-15(f) under the Securities Exchange Act of 1934. We have assessed
the effectiveness of those internal controls as of December 31, 2008,
using the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") Internal Control Intergrated Framework as a basis
for our assessment.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may
deteriorate. All internal control systems, no matter how well
11
designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.
A material weakness in internal controls is a deficiency in internal
control, or combination of control deficiencies, that adversely affects
Baynon's ability to initiate, authorize, record, process, or report
external financial data reliably in accordance with accounting
principles generally accepted in the United States of America such that
there is more than a remote likelihood that a material misstatement of
Baynon's annual or interim financial statements that is more than
inconsequential will not be prevented or detected. In the course of
making our assessment of the effectiveness of internal controls over
financial reporting, we did not identify any material weakness in our
internal control over financial reporting. Therefore, it is our
conclusion that Baynon's internal controls over financial reporting
were effective as of December 31, 2008.
This annual report does not include an attestation report of Baynon's
registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation
by Baynon's registered public accounting firm pursuant to temporary
rules of the Securities and Exchange Commission that permit Baynon to
provide only management's report in this annual report.
ITEM 9B. Other Information
None.
12
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS,
AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT
(a) Identity of Officers and Directors
During the fiscal year ended December 31, 2008, Baynon had three (3)
directors and two (2) officers as follows:
During the fiscal year ended December 31, 2007, Baynon had three (3)
directors and two (2) officers as follows:
Name Age Position and Offices Held Director Since
- ---- --- ------------------------- --------------
Pasquale Catizone 68 President, Director May 1988
Daniel Generelli 45 Secretary, Treasurer October 1, 2001
Director
Robert L. Miller 52 Director March 12, 2002
Set forth below are the names of the directors and officers of Baynon,
all positions and offices with Baynon held, the period during which he
has served as such, and his business experience during at least the
last five (5) years:
Pasquale Catizone. Mr. Catizone has been President and a Director of
Baynon since May 1998. Mr. Catizone has been self-employed as a
financial consultant for more than five (5) years.
Daniel Generelli. Mr. Generelli has been Baynon's Secretary, Treasurer,
Chief Financial Officer, and a director since October 1, 2001. Since
February 1, 2002, Mr. Generelli has been employed as a data base
analyst in the Totowa, New Jersey office of IMS Health Inc., a New York
Stock Exchange listed firm engaged in data management and processing.
Simultaneously therewith and since 1995, Mr Generelli has been the
Secretary, Treasurer, and a director of Creative Beauty Supply, Inc., a
retail and wholesale beauty supply distributor in Totowa, New Jersey.
Prior thereto from December 1989 to July 1996, Mr. Generelli was
Secretary, Treasurer, and a director of J & E Beauty Supply, Inc., a
retail and wholesale beauty supply distributor. Prior thereto since
1984, Mr. Generelli was employed as a distribution supervisor by Tags
Beauty Supply, a retail and wholesale beauty supply distributor in
Fairfield, New Jersey. Mr. Generelli received a Bachelor of Science
degree in Business Administration from Ramapo College of New Jersey in
June 1984.
Robert L. Miller. Mr. Miller joined the Company's Board of Directors on
March 12, 2002. Since June 1995, he has been President of Trippoak
Advisors, Inc., and President of The Trippoak Group, Inc. (since May
2002), where he has worked as a consultant and private investor. Since
May 1999, he has also been Chairman of DM Management, LLC, where he has
worked as an investment advisor.
13
Other than Mr. Catizone and Mr. Generelli, Baynon did not have any
significant employees as of the date of this Report. There were no
family relationships between any of the officers or directors of the
Baynon. During the fiscal year covered by this Report, there were no
changes to the procedures by which security holders could recommend
nominees to Baynon's Board of Directors.
At this time, Baynon does not have an audit committee because Baynon
has not engaged in any business operations for at least the last five
years. Baynon's board of directors acts as Baynon's audit committee.
Similarly, Baynon's board of directors has determined that Baynon does
not have an audit committee financial expert as defined under
Securities and Exchange Commission rules.
Current Blank Check Companies
Daniel Generelli is currently an officer and director of Creative
Beauty Supply of New Jersey Corporation ("Creative NJ"). On November
30, 2007 Creative NJ's board of directors approved a plan to dispose of
its wholesale and retail beauty supply business. As of December 31,
2008, Creative NJ disposed of all its inventory by way of sales,
returns to suppliers and sale to inventory liquidator and ceased its
operations.
Other than as disclosed above, no directors or officers of Baynon are
presently officers, directors or shareholders in any blank check
companies except for Baynon. However, one or all of the
officers/directors may, in the future, become involved with additional
blank check companies.
(b) Compliance with Section 16(a) of the Securities Exchange Act of
1934.
Section 16(a) of the Securities Exchange Act requires Baynon's officers
and directors, and persons who beneficially own more than ten (10%)
percent of a class of equity securities registered pursuant to Section
12 of the Exchange Act, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the principal
exchange upon which such securities are traded or quoted. Reporting
Persons are also required to furnish copies of such reports filed
pursuant to Section 16(a) of the Exchange Act with Baynon.
Based solely on review of the copies of such forms furnished to Baynon,
each of Baynon's three (3) directors did not file their reports on a
timely basis. All three directors filed Form 5.
Code of Ethics. Baynon has not yet adopted a code of ethics. The board
of directors anticipates that it will adopt a code of ethics upon
identifying and negotiating with a business target for the merger of
that entity with and into Baynon, although there is no guarantee that
Baynon will be able to enter into such a transaction.
14
ITEM 11. EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
As of the date of this report, while seeking a business combination,
Baynon's management anticipates devoting up to five (5) hours per month
to the business of Baynon. Baynon's current officers and directors do
not receive any compensation for their services rendered to Baynon,
have not received such compensation in the past, and are not accruing
any compensation pursuant to any agreement with Baynon.
The officers and directors of Baynon will not receive any finder's
fees, either directly or indirectly, as a result of their efforts to
implement Baynon's business plan outlined herein. However, the
officers and directors of Baynon anticipate receiving benefits as
shareholders of Baynon.
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by Baynon for the
benefit of its employees.
Baynon has not entered into any employment agreements with any of its
officers, directors, or other persons, and no such agreements are
anticipated in the immediate future.
Baynon has no other executive compensation elements which would require
the inclusion of tabular disclosure or narrative discussion.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 16, 2009 certain
information regarding the ownership of the common stock by (i) each
person known by Baynon to be the beneficial owner of more than five
(5%) percent of Common Stock, (ii) each of Baynon's Directors and Named
Executive Officers, as such term is defined under Item 402(a)(3)
ofRegulation S-K under the Securities Act, and (iii) all of Baynon's
Executive Officers and Directors as a group. Beneficial ownership has
been determined in accordance with Rule 13d-3 under the Exchange Act.
Under Rule 13d-3 certain shares may be deemed to be beneficially owned
by more than one person (such as where persons share voting power or
investment power). In addition, shares are deemed to be beneficially
owned by a person if the person has the right to acquire the shares
(for example, upon the exercise of an option) within sixty (60) days of
the date as of which the information is provided. In computing the
ownership percentage of any person, the amount of shares outstanding is
deemed to include the amount of shares beneficially owned by such
person (and only such person) by reason of these acquisition rights.
As a result, the percentage of outstanding shares of any person as
shown in the following table does not necessarily reflect the person's
actual ownership or voting power at any particular date.
15
Name and Address Amount and Nature Percentage of
of Beneficial Owner of Beneficial Ownership Class
- ------------------- ----------------------- -------------
Pasquale Catizone (1)(3)(6) 9,917,815 38.26%
266 Cedar Street
Cedar Grove, NY 07009
Carmine Catizone (2)(3)(7) 6,120,000 23.61%
10 1/2 Walker Avenue
Morristown, NJ 07960
Robert L. Miller (4) 3,750,000 14.47%
94 Anderson Avenue
Demarest, NJ 07627
Shawshank Holdings, Limited (5) 3,750,000 14.47%
94 Anderson Avenue
Demarest, NJ 07627
Daniel Generelli 50,000 *
c/o Baynon International Corp.
266 Cedar Street
Cedar Grove, NY 07009
Robyn Conforth 1,850,000 7.14%
266 Cedar Street
Cedar Grove, NJ 07009
All Executive Officers and 13,717,815 52.92%
Directors as a Group
(Consisting of three persons)
* Less than 1%.
(1) Includes: (a) 1,000,000 shares (10.12% of the class) held of record
by Barbara Catizone, wife of Pasquale Catizone; and (b) an aggregate of
1,850,000 shares (18.73% of the class) held of record by Robyn
Conforth, Mr. Catizone's adult step daughter. Mr. Catizone disclaims
beneficial ownership of the shares of Baynon owned by his adult
daughters.
(2) Includes: (a)an aggregate of 500,000 shares held in a custodial
account for the benefit of Carrie Catizone, Mr. Carmine Catizone's
adult daughter who does not reside with him; and (b) 500,000 shares
held in a custodial account for the benefit of Sherri Catizone, Mr.
Carmine Catizone's adult daughter who does not reside with him. Mr.
Carmine Catizone served as an executive officer and director of Baynon
from May 1998 through October 1, 2001.
(3) Pasquale and Carmine Catizone are brothers.
(4) Robert L. Miller was named to Baynon's board of directors on March
12, 2002. He is the president of Shawshank Holdings, Limited, a New
York corporation.
16
(5) A New York corporation controlled by or under common control of
Robert L. Miller, a director of Baynon.
(6) Includes 530,000 shares which may be issued as satisfaction of a
note payable plus accrued interest upon request of the stockholder any
time before December 13, 2009.
(7) Includes 2,120,000 shares which may be issued as satisfaction of a
note payable plus accrued interest upon request of the stockholder any
time before December 26, 2009.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Certain Relationships and Related Transactions
None.
Director Independence
There has been no trading market for Baynon's Common Stock for at least
the last three years. As such, there are no applicable standards to
determine whether Baynon's directors are independent. Nevertheless,
Baynon has one director who Baynon believes is independent under the
NASDAQ Marketplace Rules and those standards applicable to companies
trading on NASDAQ.
Specifically, Mr. Miller has not:
- been at any time during the past three years, employed by Baynon
or by any parent or subsidiary of Baynon;
- accepted or had a family member who accepted any compensation from
Baynon in excess of $60,000 during any period of twelve consecutive
months within the three years preceding the determination of
independence;
- been a family member of an individual who is, or at any time
during the past three years was, employed by Baynon as an executive
officer;
- been, or had a Family Member who is, a partner in, or a
controlling shareholder or an executive officer of, any organization to
which Baynon made, or from which the company received, payments for
property or services in the current or any of the past three fiscal
years that exceed 5% of the recipient's consolidated gross revenues for
that year, or $200,000, whichever is more;
- been, or had a family member who is, employed as an executive
officer of another entity where at any time during the past three years
any of the executive officers of Baynon serve on the compensation
committee of such other entity; or
- been, or had a family member who is, a current partner of Baynon's
outside auditor, or was a partner or employee of Baynon 's outside
auditor who worked on Baynon 's audit at any time during any of the
past three years.
17
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(1) AUDIT FEES
The aggregate fees billed and estimated to be billed for the fiscal
years ended December 31, 2008 and 2007, for professional services
rendered by Rotenberg, Meril, Solomon, Bertiger & Gutilla, P.C.
("RMSB&G"), for the audit of Baynon's annual financial statements and
review of the financial statements included in Baynon's Form 10-Q or
services that are normally provided by the accountant in connection
with statutory and regulatory filings or engagements for the fiscal
years were $10,000 and $10,000, respectively.
(2) AUDIT-RELATED FEES
The aggregate fees billed for the fiscal years ended December 31, 2008
and 2007 for assurance and related services by RMSB&G that are
reasonably related to the performance of the audit or review of
Baynon's financial statements for that fiscal year were $0 and $0,
respectively.
(3) TAX FEES
The aggregate fees billed for the fiscal years ended December 31, 2008
and 2007 for professional services rendered by RMSB&G for tax
compliance, tax advice, and tax planning for that fiscal year were $0
and $0, respectively.
(4) ALL OTHER FEES
The aggregate fees billed in each of the fiscal years ended December
31, 2008 and 2007, for products and services provided by RMSB&G other
than those services reported above, for that fiscal year were $0 and
$0, respectively.
(
5) AUDIT COMMITTEE POLICIES AND PROCEDURES
The board of directors, acting as the Audit Committee considered
whether, and determined that, the auditor's provision of non-audit
services was compatible with maintaining the auditor's independence.
All of the services described above for fiscal year 2008 were approved
by the Board of Directors pursuant to its policies and procedures. They
intend to continue using RMSB&G solely for audit and audit-related
services, tax consultation and tax compliance services, and, as needed,
for due diligence in acquisitions.
ITEM 15. EXHIBITS
(a) Exhibits
Exhibit No. Description of Exhibit
- ----------- ----------------------
3.1 Certificate of Incorporation of Baynon, as
amended (filed with Baynon's Form 10-SB on
July 8, 1999, File No. 000-26653, and incorporated
herein by reference).
3.2 Bylaws of Baynon, as amended (filed with the
Baynon's Form 10-SB on July 8, 1999, File No.
000-26653, and incorporated herein by reference).
31 302 Certifications
32 906 Certifications.
18
SIGNATURES
BAYNON INTERNATIONAL CORP.
In accordance with the Securities Exchange Act of 1934, this Report has
been signed below by the following persons on behalf of Baynon and in
the capacities and on the dates indicated.
By: /s/ PASQUALE CATIZONE
-------------------------------
Pasquale Catizone,
President
(Principal Executive Officer)
Dated: March 19, 2009
By: /s/ DANIEL GENERELLI
-------------------------------
Daniel Generelli
Secretary, Treasurer
(Principal Financial Officer, Principal Accounting Officer)
Dated: March 19, 2009
By: /s/ ROBERT L. MILLER
-------------------------------
Robert L. Miller
Director
Dated: March 19, 2009
19
BAYNON INTERNATIONAL CORP.
INDEX TO FINANCIAL STATEMENTS
Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 20
FINANCIAL STATEMENTS:
Balance Sheets as of December 31, 2008 and 2007 21
Statements of Operations for the years ended 22
December 31, 2008 and 2007
Statements of Changes in Stockholders' 23
Deficiency for the years ended December 31, 2008 and 2007
Statements of Cash Flows for the years ended December 24
31, 2008 and 2007
Notes to Financial Statements 25
20
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Baynon International
Corporation:
We have audited the accompanying balance sheets of Baynon International
Corporation (the "Company") as of December 31, 2008 and 2007, and the
related statements of operations, changes in stockholders' deficiency
and cash flows for the years then ended. The financial statements are
the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over
financial reporting. Accordingly, we express no such opinion. An audit
also 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 financial statements referred to above present
fairly, in all material respects, the financial position of the Company
as of December 31, 2008 and 2007 and the results of its operations and
cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's recurring losses from operations,
stockholders deficiency and working capital deficiency, and lack of
revenue generating operations, raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans
concerning these matters are also described in Note 2. The accompanying
financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/Rotenberg Meril Solomon Bertiger & Guttilla, P.C.
ROTENBERG MERIL SOLOMON BERTIGER & GUTTILLA, P.C.
Saddle Brook, New Jersey
March 16, 2009
21
BAYNON INTERNATIONAL CORP.
BALANCE SHEETS
DECEMBER 31, 2008 AND 2007
2008 2007
------------ -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 22,949 $ 14,513
--------- ---------
Total Current Assets 22,949 14,513
--------- ---------
Total Assets $ 22,949 $ 14,513
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accounts payable and accrued expenses $ 31,345 $ 19,470
Convertible notes payable - stockholders 25,000 20,000
Accrued interest - stockholders 32 62
--------- ---------
Total Current Liabilities 56,377 39,532
--------- ---------
Total Liabilities 56,377 39,532
--------- ---------
Commitments and Contingencies
Stockholders' Deficiency:
Common stock, $.001 par value, 50,000,000
shares authorized, 23,272,692 shares issued
and outstanding at December 31, 2008 and
21,152,692 shares issued and outstanding at
December 31, 2007 23,273 21,153
Additional paid-in capital 155,660 136,580
Accumulated deficit (212,361) (182,752)
--------- ---------
Total Stockholders' Deficiency (33,428) (25,019)
--------- ---------
Total Liabilities and Stockholders'
Deficiency $ 22,949 $ 14,513
========= =========
The accompanying notes are an integral part
of these financial statements
22
BAYNON INTERNATIONAL CORP.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
2008 2007
---------- -----------
Revenues $ -- $ --
----------- -----------
Cost of Revenue -- --
----------- -----------
Gross Profit -- --
----------- -----------
Other Costs:
General and administrative expenses 28,499 23,409
----------- -----------
Total Other Costs 28,499 23,409
----------- -----------
Operating loss (28,499) (23,409)
----------- -----------
Other Income (Expense):
Interest income 60 257
Interest expense - stockholders (1,170) (1,200)
----------- -----------
Total Other Income (Expense) (1,110) (943)
----------- -----------
Net loss $ (29,609) $ (24,352)
=========== ===========
Earnings (Loss) Per Share:
Basic and diluted earnings (loss) per
common share $ - $ -
=========== ===========
Basic and diluted common shares
outstanding 21,263,048 19,143,048
=========== ===========
The accompanying notes are an integral part
of these financial statements
23
BAYNON INTERNATIONAL CORP.
STATEMENT OF STOCKHOLDERS' DEFICIENCY
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
Common Stock
$.001 Par Value
---------------------------
Common Additional
Number Stock Paid-in Accumulated
of Shares Amount Capital Deficit Total
---------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Balance - January 1, 2007 19,032,692 $ 19,033 $ 117,500 $(158,400) $ (21,867)
Issuance of common stock -
repayment of debt 2,120,000 2,120 19,080 - 21,200
Net loss for the year ended
December 31, 2007 - - - (24,352) (24,352)
---------- --------- -------- ---------- --------
Balance - December 31, 2007 21,152,692 $ 21,153 $136,580 $(182,752) $(25,019)
Issuance of common stock -
repayment of debt 2,120,000 2,120 19,080 - 21,200
Net loss for the year ended
December 31, 2008 - - - (29,609) (29,609)
---------- --------- -------- --------- --------
Balance - December 31, 2008 23,272,692 $ 23,273 $155,660 $(212,361) $(33,428)
========== ========= ======== ========= ========
The accompanying notes are an integral part
of these financial statements
24
BAYNON INTERNATIONAL CORP.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
2008 2007
------------ ------------
Cash Flows from Operating Activities:
Net loss $ (29,609) $ (24,352)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Increase paid with common stock 1,200 1,200
Increase in accounts payable
and accrued expenses 11,875 4,725
Increase in accrued interest - stockholder (30) -
--------- ---------
Net cash used in operating activities (16,564) (18,427)
--------- ---------
Cash Flows from Financing Activities:
Proceeds from note payable, stockholders 25,000 20,000
--------- ---------
Net cash provided by financing activities 25,000 20,000
--------- ---------
Increase in Cash and Cash Equivalents 8,436 1,573
Cash and Cash Equivalents, beginning of year 14,513 12,940
--------- ---------
Cash and Cash Equivalents, end of year $ 22,949 $ 14,513
========= =========
Schedule of Non-cash Activities:
Common stock issued for note payable
- stockholder $ 20,000 $ 20,000
========= =========
Common stock issued for accrued interest
- stockholder $ 1,200 $ 1,200
========= =========
Supplemental Disclosures of Cash Flow Information:
Cash paid during year for:
Interest $ - $ -
========= =========
Income Taxes $ 520 $ -
========= =========
The accompanying notes are an integral part
of these financial statements.
25
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 and 2007
1. THE COMPANY
Baynon International Corporation, 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 six 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
Basis of Presentation
The Company's consolidated financial statements are prepared in
conformity with US generally accepted accounting principles ("GAAP").
Use of Estimates
These consolidated financial statements and accompanying notes have
been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these
consolidated 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.
Cash and Cash Equivalents
For financial statement purposes, short-term investments with an
original maturity of ninety days or less and highly liquid investments
are considered cash and cash equivalents. Cash and cash equivalents
consist of a money market account.
26
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 and 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
The Company utilizes Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires the
recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax
assets and liabilities are determined based on the differences between
the financial statement carrying amounts and tax bases of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount
expected to be realized.
Earning (Loss) Per Share
The Company computes earnings or loss per share in accordance with
Statement of Financial Accounting Standards No. 128 (SFAS 128),
"Earning Per Share". Basic earnings per share is computed by diving
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 net income per share, as their effect would be anti-
dilutive:
2008 2007
------ ------
Convertible note payable and
accrued interest - stockholder
(weighted average) 53,528 98,936
Going Concern
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The Company's recurring
losses from operations, stockholders' deficiency and working capital
deficiency, and lack of revenue generating operations, raise
substantial doubt about the Company'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 the Company, but cannot assure that such financing will
be available on acceptable terms. The Company's continuation as a going
27
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 and 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
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 the Company's operating results.
Recently Issued Accounting Standards
In December 2007, the FASB issued FAS 141(R), "Business Combinations -
a replacement of FASB Statement No. 141" ("SFAS 141R"), which
significantly changes the principles and requirements for how the
acquirer of a business recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed,
and any non-controlling interest in the acquiree. The statement also
provides guidance for recognizing and measuring the goodwill acquired
in the business combination and determines what information to disclose
to enable users of the financial statements to evaluate the nature and
financial effects of the business combination. This statement is
effective prospectively, except for certain retrospective adjustments
to deferred tax balances, for fiscal years beginning after December 15,
2008. Beginning January 1, 2009, the Company will adopt SFAS 141R and
the impact of implementing this statement will depend on the nature and
significance of business combinations consummated that would be subject
to this statement.
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 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.
28
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 and 2007
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In May 2008, the FASB issued SFAS No. 162 "The Hierarchy of Generally
Accepted Accounting Principles" ("SFAS 162"). SFAS 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 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 162 to change it 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. CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS
On December 13, 2007, 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 bore interest at 6% per annum and
matured on December 13, 2008. 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 December 13, 2008 and 2,120,000
shares of common stock were issued in satisfaction of the note and
accrued interest.
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 to convert
the note and accrued interest into the Company's common stock at $.01
per share. The option expires on December 13, 2009.
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 expires on December 26, 2009.
At December 31, 2008 and 2007, accrued interest on the notes was $32
and $62, respectively. Interest expense amounted to $1,170 and $1,200
for the years ended December 31, 2008 and 2007, respectively.
29
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 and 2007
4. COMMON STOCK
On December 13, 2008, the Board of Directors authorized the issuance of
2,120,000 shares of common stock in satisfaction of a note payable to a
stockholder of $20,000 plus accrued interest of $1,200. See Note 3.
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.
5. INCOME TAXES
The component of deferred tax assets at December 31, 2008 and 2007 is
as follows:
2008 2007
------ ------
Net operating loss carry forwards $ 69,500 $ 57,700
Less: Valuation allowance (69,600) (57,700)
--------- ---------
$ - $ -
========= =========
A 100% valuation allowance was provided at December 31, 2008 and 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 December 31, 2008, the Company has unused federal net operating loss
carry forwards of approximately $209,000 expiring between 2018 and 2028
and unused New Jersey net operating loss carry forwards of
approximately $173,000 expiring between 2009 and 2015.