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 June 30, 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 [ ] 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, July
29, 2011: Common Stock - 25,860,192
2
BAYNON INTERNATIONAL CORP.
FORM 10-Q
INDEX
Page
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets at June 30, 2011
and December 31, 2010 3
Statements of Operations for the three and
six months ended June 30, 2011 and 2010 4
Statements of Cash Flows for the six months
ended June 30, 2011 and 2010 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 13
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
BAYNON INTERNATIONAL CORP.
BALANCE SHEETS
June 30, December 31,
2011 2010
--------- ----------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 4,597 $ 7,890
-------- --------
Total Current Assets 4,597 7,890
-------- --------
TOTAL ASSETS $ 4,597 $7,890
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accounts payable and accrued expenses $ 18,550 $ 14,049
Convertible notes payable - stockholder 45,000 45,000
Accrued interest - stockholder 3,471 2,132
-------- --------
Total Current Liabilities 67,021 61,181
-------- --------
Stockholders' Deficiency:
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 178,948 178,948
Accumulated deficit (267,232) (258,099)
-------- --------
Total Stockholders' Deficiency (62,424) (53,291)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ $4,597 $ 7,890
======== ========
The accompanying notes are an integral part
of these financial statements
4
BAYNON INTERNATIONAL CORP.
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
2011 2010 2011 2010
---------- ---------- ---------- ----------
<s> <c> <c> <c> <c>
Revenues $ - $ - $ - $ -
Cost of revenue - - - -
---------- ---------- ---------- ----------
Gross Profit - - - -
---------- ---------- ---------- ----------
Other Costs:
General and administrative
expenses 3,375 2,825 7,801 4,927
---------- ---------- ---------- ----------
Total Other Costs 3,375 2,825 7,801 4,927
---------- ---------- ---------- ----------
Operating loss (3,375) (2,825) (7,801) (4,927)
---------- ---------- ---------- ----------
Other Income (Expense):
Interest income 3 1 7 5
Interest expense - stockholders (673) (299) (1,339) (595)
---------- ---------- ---------- ----------
Total Other Income (Expense) (670) (298) (1,332) (590)
---------- ---------- ---------- ----------
Net Loss $ (4,045) $ (3,123) $ (9,133) $ (5,517)
========== ========== ========== ==========
Loss per share:
Basic and diluted loss
per common share $ - $ - $ - $ -
========== ========== ========== ==========
Basic and diluted common
shares outstanding 25,860,192 25,860,192 25,860,192 25,860,192
========== ========== ========== ==========
The accompanying notes are an integral
part of these financial statements
5
BAYNON INTERNATIONAL CORP.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010
(UNAUDITED)
2011 2010
------- -------
Cash Flows from Operating Activities:
Net loss $(9,133) $(5,517)
Adjustments to reconcile net loss to
net cash used in operating activities:
Increase in accounts payable and
accrued expenses 4,501 2,023
Increase in accrued interest - stockholders 1,339 595
------- -------
Net cash used in operating activities (3,293) (2,899)
------- -------
Decrease in Cash and Cash Equivalents (3,293) (2,899)
Cash and Cash Equivalents, beginning of period 7,890 4,631
------- -------
Cash and Cash Equivalents, end of period $ 4,597 $ 1,732
======= =======
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Income taxes $ 500 $ 500
======= =======
Interest $ - $ -
======= =======
The accompanying notes are an integral
part of these financial statements
6
BAYNON INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
(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, 2010 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 June 30, 2011, its results of
operations for the six months ended June 30, 2011 and 2010 and its cash
flows for the six months ended June 30, 2011 and 2010.
The statements of operations for the six months ended June 30, 2011 and
2010 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, 2010.
7
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". 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 six months
ended June 30, 2011 and 2010 as their effect would be anti-dilutive:
2011 2010
--------- ---------
Convertible note payable and accrued
interest - stockholder 3,877,677 2,099,288
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 $267,232 at June 30,
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 June 30,
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.
8
3. CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS
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 bored 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 with the exception of
the option to convert changed to $.0125 per share. The option expires
on September 1, 2011.
On August 23, 2010, the Company issued an unsecured note payable to the
same stockholder in exchange for $25,000 in cash, for the Company's
working capital needs. The note bears interest at 6% per annum, and
matured on August 23, 2011. The stockholder has the option to convert
the note and accrued interest into the Company's common stock at $.0125
per share. The option expires on August 23, 2011.
At June 30, 2011 and December 31, 2010, accrued interest on the notes
was #3,471 and $2,132 respectively. Interest expense amounted to
$1,339 and $595 for the six months ended June 30, 2011 and 2010,
respectively.
4. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date that the
financials 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 that 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, 2010. There have been no
material changes to our critical accounting policies as of and for the
six months ended June 30, 2011.
Trends and Uncertainties
There are no material commitments for capital expenditure at this time.
There are no trends, events or uncertainties that have had or are
reasonably expected to have a material impact on our limited
operations. There are no known causes for any material changes from
period to period in one or more line items of Baynon's financial
statements.
Liquidity and Capital Resources
At June 30, 2011, Baynon had a cash balance of $4,597, which represents
a $3,293 decrease from the $7,890 balance at December 31, 2010. This
decrease was primarily the result of cash used to satisfy the
requirements of a reporting company. Baynon's working capital deficit
at June 30, 2011 was $62,424 as compared to a December 31, 2010 deficit
of $53,291.
10
The focus of Baynon's efforts is to acquire or develop an operating
business. Despite no active operations at this time, management intends
to continue in business and has no intention to liquidate Baynon.
Baynon has considered various business alternatives including the
possible acquisition of an existing business, but to date has found
possible opportunities unsuitable or excessively priced. Baynon does
not contemplate limiting the scope of its search to any particular
industry. Management has considered the risk of possible opportunities
as well as their potential rewards. Management has invested time
evaluating several proposals for possible acquisition or combination;
however, none of these opportunities were pursued. Baynon presently
owns no real property and at this time has no intention of acquiring
any such property. Baynon's sole expected expenses are comprised of
professional fees primarily incident to its reporting requirements.
The accompanying financial statement has been prepared assuming Baynon
will continue as a going concern. As shown in the accompanying
financial statements, Baynon has incurred losses of $9,133 and $5,517
for the six months ended June 30, 2011 and 2010, 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 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 three months ended June 30, 2011 compared to
the three months ended June 30, 2010.
Baynon incurred a net loss of $4,045 in the current period versus a net loss
of $3,123 in the prior period. General and administrative expenses were
$3,375 compared to $2,825 in the prior period, an increase of $550. General
and administrative expenses, which consist of fees for legal and accounting
and auditing services, 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.
11
Results of Operations for the six months ended June 30, 2011 compared to the
six months ended June 30, 2010.
Baynon incurred a net loss of $9,133 in the current period versus a net loss
of $5,517 in the prior period. General and administrative expenses were
$7,801 compared to $4,927 in the prior period, an increase of $2,874.
General and administrative expenses, which consist of fees for legal and
accounting and auditing services, were incurred primarily to enable Baynon to
satisfy the requirements of a reporting company.
During the current and prior period, Baynon did not record an income tax
benefit due to the uncertainty associated with Baynon's ability to merge with
an operating company, which might permit Baynon to avail itself of those
advantages.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable for a smaller reporting company.
Item 4. Controls and Procedures.
During the three months ended June 30, 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 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, 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 June 30, 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-
Oxley Act of 2002
Exhibit 32* - Certifications pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
101.INS** XBRL Instance Document
101.SCH** XBRL Taxonomy Extension Schema Document
101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF** XBRL Taxonomy Extension Definition Linkbase Document
101.LAB** XBRL Taxonomy Extension Label Linkbase Document
101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document
* Filed herewith
**XBRL (Extensible Business Reporting Language) information is furnished and
not filed or a part of a registration statement or prospectus for purposes of
Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not
filed for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, and otherwise is not subject to liability under these sections.
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: August 15, 2011
BAYNON INTERNATIONAL CORP.
By: /s/Pasquale Catizone
-------------------------
Pasquale Catizone, Principal Executive Officer
/s/Daniel Generelli
-----------------------------
Daniel Generelli
Chief Financial Officer