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 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
Preventia, Inc.
(Exact name of Registrant
in its charter)
Nevada 27-2438013
------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
8900 W. Olympic Blvd., Beverly Hills, CA 90211
----------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Preventia's Telephone Number, Including Area Code: (877) 660-6463
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 [ ] No [x]
The number of outstanding shares of the registrant's common stock, May
13, 2011: Common Stock - 8,000,000
2
BAYNON INTERNATIONAL CORP.
FORM 10-Q
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets at March 31, 2011
and December 31, 2010 3
Statements of Income for the three months
ended March 31, 2011 and the period April 9, 2010
(inception) to March 31, 2011 4
Statements of Stockholder's Deficiency for the three
Months ended March 31, 2011 and the period April
9, 2010 (inception) to March 31, 2011 5
Statements of Cash Flows for the three months
ended March 31, 2011 and the period April 9, 2010
(inception) to March 31, 2011 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 12
Item 4. Controls and Procedures 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 1A. Risk Factors 14
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. (Removed and Reserved) 14
Item 5. Other Information 14
Item 6. Exhibits 14
SIGNATURES 14
3
PREVENTIA, INC.
(A Development Stage Company)
Balance Sheets
March 31, 2011 and December 31, 2010
(unaudited)
March 31 December 31,
2011 2010
-------- -----------
ASSETS
Current assets
Cash $ 509 $ 509
Other assets:
Deposit 2,500 2,500
--------- ---------
TOTAL ASSETS $ 3,009 $ 3009
========= =========
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
Current liabilities:
Accrued expenses $ 5,000 $ 3,500
Advances from officer, including accrued
interest 9,761 9,570
--------- ---------
Total current liabilities 14,761 13,070
--------- ---------
Stockholder's deficiency
Common stock, authorized: 25,000,000
shares; 8,000,000 shares issued and
outstanding 800 800
Additional paid-in capital 7,200 7,200
Deficit accumulated during development
stage (Inception: April 9, 2010) (19,752) (18,061)
--------- ---------
Total stockholder's deficiency (11,752) (10,061)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDER'S
DEFICIENCY $ 3,009 $ 3,009
========= =========
The accompanying notes are an integral
part of these financial statements
4
PREVENTIA, INC.
(A Development Stage Company)
Statements of Income
For the Three Months Ended March 31, 2011
And the Period April 9, 2010 (inception) to March 31, 2011
(unaudited)
Three Months Apr 9, 2010
Ended (Inception) to
March 31, March 31,
2011 2011
-------- -------------
Operating Expenses:
Legal and Professional $ - $ 12,916
Accounting - 3,000
Rent 1,500 3,000
--------- ---------
Total Operating Expenses 1,500 18,916
--------- ---------
Operating loss (1,500) (18,916)
Other expense:
Interest expense 191 836
--------- ---------
Net loss before income taxes (1,691) (19,752)
Provision for income taxes - -
--------- ---------
Net loss $ (1,691) $(19,752)
========= =========
Net loss per share-Basic and Diluted - -
========== =========
Weighted average number of common
shares outstanding 8,000,000 7,507,003
========== =========
The accompanying notes are an integral
part of these financial statements
5
PREVENTIA, INC.
(A Development Stage Company)
Statements of Stockholder's Deficiency
For the Three Months Ended March 31, 2001
And the Period April 9, 2010 (inception) to March 31, 2011
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital deficit Total
------ ------ ---------- ----------- -----
<s> <c> <c> <c> <c> <c>
Balance, April 9, 2010
(inception ) - $ - $ - $ - $ -
Issuance of common stock,
May 1, 2010 8,000,000 800 7,200 - 8,000
Net loss - - - (18,061) (18,061)
--------- ------- ------- -------- --------
Balance, December 31,
2010 8,000,000 800 7,200 (18,061) (10,061)
Net loss (unaudited) - - - (1,691) (1,691)
--------- ------- ------- -------- --------
Balance, March 31, 2011 8,000,000 $ 800 $ 7,200 $(19,752) $(11,752)
========= ======= ======= ======== ========
The accompanying notes are an integral
part of these financial statements
6
PREVENTIA, INC.
(A Development Stage Company)
Statements of Cash Flows
For the Three Months Ended March 31, 2001
And the Period April 9, 2010 (inception) to March 31, 2011
(unaudited)
Apr 9, 2010
(Inception) to
March 31, March 31,
2011 2011
-------- -------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss $ (1,691) $(19,752)
Adjustments to reconcile net loss to
net cash used in operating activities:
Increase in accrued expenses 1,500 5,000
Interest accrued on advances from
Officer 191 191
-------- --------
Net cash used in operating
activities - (14,561)
CASH FLOW FROM INVESTING ACTIVITIES:
Deposit paid - (2,500)
-------- --------
Net cash provided by investing
activities - (2,500)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from officer advances - 9,570
Proceeds from issuance of common stock - 8,000
-------- --------
Net cash provided by financing
activities - 17,570
-------- --------
Net cash activity - 509
CASH AT BEGINNING OF PERIOD - -
-------- --------
CASH AT END OF PERIOD $ 509 $ 509
======== ========
The accompanying notes are an integral
part of these financial statements
7
PREVENTIA, INC.
(A Development Stage Company)
Notes to the Financial Statements
(unaudited)
1. Summary of significant accounting policies
This summary of significant accounting policies of Preventia, Inc. (the
Company) is presented to assist in understanding the Company's
financial statements
Nature of the Company
--------------------
Preventia Inc. was incorporated under the laws of the state of Nevada
on April 9, 2010.
The Company was formed to be an educational software provider and build
software tools for improving occupational and brain health and
performance. The Company is in the development of its product.
Basis of presentation
---------------------
The accompanying unaudited interim financial statements and information
have been prepared in accordance with accounting principles generally
accepted in the United States and in accordance with the instructions
for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and disclosures required by
accounting principles generally accepted in the United States for
complete financial statements. In the opinion of management, these
financial statements contain all normal and recurring adjustments
considered necessary to present fairly the financial position, results
of operations and cash flows for the periods presented. The results
for the three month period ended March 31, 2011 are not necessarily
indicative of the results to be expected for the full year. These
statements should be read in conjunction with the Company's audited
financial statements for the period from April 9, 2010 (inception) to
December 31, 2010, which are included in Amendment 6 to Form S-1/A
filed by the Company on April 20, 2011 that became effective on April
22, 2011.
Cash Equivalents
----------------
For purposes of the statement of cash flows, cash equivalents include
time deposits, certificates of deposit, and all highly liquid debt
instruments with original maturities of three months or less.
Fair value of financial instruments
-----------------------------------
All financial instruments are carried at amounts that approximate their
estimated fair value.
Income Taxes
------------
Income tax expense is based on pretax financial accounting income.
Deferred tax assets and liabilities are recognized for the expected tax
consequences of temporary differences between the tax bases of assets
and liabilities and their reported amounts. Financial Accounting
Standards Board Accounting Standards Codification ASC 740, "Income
Tax," requires the recognition of the impact of a tax position in the
financial statements only if that position is more likely than not of
being sustained on a tax return upon examination by the relevant taxing
8
PREVENTIA, INC.
(A Development Stage Company)
Notes to the Financial Statements
(unaudited)
1. Summary of significant accounting policies (continued)
authority, based on the technical merits of the position. At March 31,
2011, the Company had no unrecognized tax benefits. The Company
recognizes interest and penalties related to income tax matters in
interest expense and operating expenses, respectively. As of March 31,
2011, the Company had no accrued interest or penalties related to
uncertain tax positions.
Net Loss Per Share
------------------
Basic net loss per share includes no dilution and is computed by
dividing net loss available to common stockholders by the weighted
average number of common stock outstanding for the period. Diluted net
loss per share does not differ from basic net loss per share as the
Company did not have dilutive items during the reporting period.
Credit risk
-----------
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist primarily of cash and cash
equivalents.
The Company places its cash and temporary cash investments with high
credit quality institutions. At times, balances in the Company's cash
accounts may exceed the Federal Deposit Insurance Corporation (FDIC)
limit of $250,000.
Estimates
---------
The preparation of the accompanying financial statements in conformity
with accounting principles generally accepted in the United States
requires management to make certain estimates and assumptions that
directly affect the results of reported assets, liabilities, revenue,
and expenses. Actual results may differ from these estimates.
New Accounting Pronouncements
-----------------------------
The Company does not believe newly issued accounting pronouncements
will have any material impact on these financial statements.
2. Going concern
The Company's financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of
business. In the near term, the Company expects operating costs to
continue to exceed funds generated from operations. As a result, the
Company expects to continue to incur operating losses, and the
operations in the near future are expected to continue to use working
capital.
The Company is a development stage company and management of the
Company is devoting substantially all of its current efforts to
establish a new educational software business, and its planned
9
principal operations have not yet commenced. As such, the Company has
not generated any revenues from operations and has no assurance of any
future revenues. The ability of the Company to continue as a going
concern is dependent on its ability to raise capital to meet its
operating requirements. The financial statements do not include any
adjustments that might be necessary if the Company is unable to
continue as a going concern.
The report from the Company's independent registered public accounting
firm relating to the financial statements for the period April 9, 2010
(inception) to December 31, 2010 states that there is substantial doubt
about the Company's ability to continue as a going concern.
3. Accrued expenses
Following is a summary of accrued and other current liabilities at
March 31, 2011:
Mar 31 Dec 31
2011 2010
------ ------
Accrued professional fees $ 2,000 $ 2,000
Accrued rent 3,000 1,500
------- -------
$ 5,000 $ 3,500
======= =======
4. Net loss per share
The following table sets forth the computation of basic and diluted net
loss per share:
Apr 9, 2010
(Inception)
Mar 31 Mar 31
2011 2011
------ -----------
Net loss (numberator) $ (1,691) $ (19,752)
Weighted average of common shares
(demominator) 8,000,000 7,507,003
---------- ----------
Net loss per share - basic and diluted $ - $ -
========== ==========
5. Related party transactions
Advances from officer
---------------------
As of March 31, 2011, the Company owed $9,761 to an officer of the
Company. The advances are unsecured, due on demand and bear interest
at 8% per annum.
Lease
-----
The Company leases its office premise from an officer of the Company on
a month-to-month basis. Total rent expense charged by the officer
amounted to $1,500 for the period January 1, 2011 through March 31,
2011, all of which was unpaid and included in accrued expenses.
10
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.
The registrant is a cognitive learning and development company that
intends to build software tools for improving occupational and brain
health and performance. Our performance will be significantly affected
by changes in general economic conditions and, specifically, shifts in
consumer confidence and spending. Additionally, our performance will
be affected by competition. Management believes that as the industry
continues to consolidate, competition with respect to price will
intensify. Such a heightened competitive pricing environment will make
it increasingly important for us to successfully distinguish us from
competitors based on quality and superior service and operating
efficiency.
We have neither engaged in any material operations nor generated any
revenues to date. Our only activities since inception have been
organizational activities and those necessary to prepare for this
offering.
We are currently not aware of any other known material trends, demands,
commitments, events or uncertainties that will have, or are reasonable
likely to have, a material impact on our financial condition, operating
performance, revenues and/or income, or results in our liquidity
decreasing or increasing in any material way.
Results of Operations
---------------------
For the three months ended March 31, 2011, we did not receive any
revenue and had operating expenses of $1,500 resulting in an operating
loss of $1,500. Operating expenses consisted of rent expense of $1,500.
Management expects operating expenses will increase as we implement
sales and marketing initiatives.
For the period April 9, 2010 (inception) to March 31, 2011, we did not
receive any revenue and had operating expenses of $18,916 resulting in
an operating loss of $18,916. Operating expenses consisted of legal
and professional fees of $12,916, accounting fees of $3,000 and rent
expense of $3,000. Management expects operating expenses will increase
as we implement sales and marketing initiatives.
11
Liquidity and Capital Resources
-------------------------------
We have not received any revenues to date. Until we are able to raise
funds to pursue our business plan and generate material revenues, our
activities will be restricted.
For the three months ended March 31, 2011, we did not pursue any
investing activities.
For the period April 9, 2010 (inception) to March 31, 2011, we paid a
deposit of $2,500 resulting in net cash used by investing activities of
$2,500.
For the three months ended March 31, 2011, we did not pursue any
financing activities.
For the period April 9, 2010 (inception) to March 31, 2011, we received
proceeds from officer advances of $9,570 and proceeds from the issuance
of common stock of $8,000. As a result, for the period April 9, 2010
(inception) to March 31, 2011, we had net cash provided by financing
activities of $17,570.
As a public entity, subject to the reporting requirements of the
Exchange Act of 1934, we incur ongoing expenses associated with
professional fees for accounting, legal and a host of other expenses
for annual reports and proxy statements. We estimate that these costs
could range up to $35,000 per year for the next few years and will be
higher if our business volume and activity increases but lower during
the first year of being public because we have not yet completed
development of our product line, and we will not yet be subject to the
requirements of Section 404 of the Sarbanes-Oxley Act of 2002.
Plan of Operations
------------------
The registrant has not yet developed its products. Although Dr.
Friedman has completed the necessary research, the development of the
product line will take approximately nine to twelve months and cost at
least $100,000 per product line to bring to market. Products will be
developed by outside contracts, so we will not have to hire staff to
produce and develop product. We are in the process of working on
developing a website. We believe we can be ready to sell product
within one year.
Over the next twelve months, we intend to:
Step Timeframe Estimated $
---- --------- -----------
1. Interview different companies that would
be best suited to work with use to create our
website, with all of the features we will need
in making our site user friendly and easy for
people to download the software directly from
the site. 1-2 months minimal
2. Develop the website 6-8 months $25,000
3. Create short clips of the software for
clients to be able to see and test these
mini versions 6-8 months $20,000
4. Locate software contractor to develop
Software 6-8 months minimal
12
5. Launch first product 9-12 months $100,000
per product
line
The main uncertainties or obstacles involved before planned operations
can commence include
- raising sufficient funds to contact with the website creator
and/or software contractor,
- completing the website in a timely fashion and
- difficulties in completing software that properly operates as we
envision it.
If we are unable to raise sufficient funds or obtain alternate
financing, we may never complete development and become profitable.
After our product lines are developed, we will need to
- create net sales and gross margin by designing, developing,
manufacturing or sourcing quality products;
- execute our marketing strategy to enhance customer awareness and
appreciation of the Preventia brand;
- provide a superior client experience through consistent
outstanding customer service that will ensure customer satisfaction and
promote the frequency and value of customer spending;
- expand distribution channels.
Our current cash balance is estimated not to be sufficient to fund our
current operations. Along with an estimated $100,000 per product line,
the registrant estimates that an additional $100,000 would be required
for working capital, reporting requirement fees, website and
development fees. Dr. Friedman has verbally agreed to personally loan
any amounts up to the $100,000 needed to run operations until the
product lines are developed. Any loan provided by Dr. Friedman shall
be binding, with an interest rate of five percent per annum and a term
of one year. There are no written agreements with Dr. Friedman.
However, we still need to raise sufficient funds to complete the
development of our product line. No other financing plans are in
place. We may never obtain the necessary financing to complete product
development and begin operations.
In the event we are not successful in selling all of the securities in
our current public offering to raise $1,000,000, we would give priority
to allocating capital to sales and marketing, research and development
and to develop sales in the industry. Any remaining capital would be
used to fund our working capital needs.
In the event we are not successful in selling all of the securities in
our current public offering to raise at least $125,000, we would
utilize any available funds raised the following order of priority:
- for general and administrative expenses, including legal and
accounting fees and administrative support expenses incurred in
connection with our reporting obligations with the SEC.
- for sales and marketing; and
- for research and development.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable for a smaller reporting company.
13
Item 4. Controls and Procedures.
During the three months ended March 31, 2011, 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 principal 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 March 31, 2011. Based on this evaluation, our chief executive
officer and principal financial officers were not able to conclude that
the Company's disclosure controls and procedures are effective to
ensure that information required to be included in the Company's
periodic Securities and Exchange Commission filings is recorded,
processed, summarized, and reported within the time periods specified
in the SEC rules and forms. Therefore, under Section 404 of the
Sarbannes-Oxley Act of 2002, the Company must conclude that these
controls and procedures are not effective.
14
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-
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: May 13, 2011
By: /s/Murray Friedman, DDS
-------------------
Murray Friedman, DDS
CEO, Principal Financial Officer,
Controller and Director