U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM 10-QSB
(Mark One)
[x] Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2002
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[ ] Transition Report under Section 13 or 15(d)of the Exchange Act For the
Transition Period from ________ to ___________
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Commission File Number: 333-52418
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BAYLOR INDUSTRIES, INC.
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(Name of small business issuer in its charter)
Nevada 76-0639842
- ------------------------ --------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
14601 Bellaire Blvd. Suite 338, Houston, TX 77083
- ------------------------------------------------------ ---------
(Address of principal executive offices) (Zip Code)
(281) 564-6418
----------------------
(Issuer's telephone number)
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Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months
(or 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the Registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.
Yes [ ] No [ ]
1
The Registrant has 20,000,000 Common Stock, authorized, 2,000,000 shares
of common stock issued and outstanding, par value $0.001 per share as of
March 31, 2002. Preferred stock, $0.001 par value per share, 5,000,000
shares authorized, no preferred stock issued nor outstanding as of
March 31, 2002.
Traditional Small Business Disclosure Format (check one) Yes [ ] No [X]
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements................................. 4
Balance Sheet (unaudited)............................ 5
Statements of Operations (unaudited)................. 6
Statement of Shareholders' Equity (unaudited) ....... 7
Statements of Cash Flows (unaudited)................. 8
Notes to Financial Statements........................ 9
Item 2. Management's Discussion and Analysis of Plan
of Operation.......................................... 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................... 16
Item 2. Changes in Securities and Use of Proceeds............ 16
Item 3. Defaults upon Senior Securities...................... 16
Item 4. Submission of Matters to a Vote
of Security Holders.................................. 16
Item 5. Other Information..................................... 16
Item 6. Exhibits and Reports on Form 8-K...................... 16
Signatures...................................................... 17
3
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
As prescribed by Item 310 of Regulation S-B, the independent auditor has
reviewed these unaudited interim financial statements of the registrant
for the three months ended March 31, 2002. The financial statements
reflect all adjustments which are, in the opinion of management, necessary
to a fair statement of the results for the interim period presented. The
unaudited financial statements of registrant for the three months ended
March 31, 2002, follow.
4
BAYLOR INDUSTRIES, INC..
(A Development Stage Company)
BALANCE SHEET
(UNAUDITED)
BALANCE SHEET
March 31, December 31,
2002 2001
------------- ------------
ASSETS
Cash and cash equivalents $ 1,524 $ 2,386
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued expenses 85 85
Advances by shareholder 1,000 1,000
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Total current liabilities 1,085 1,085
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STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value;
5,000,000 shares authorized,
-0- shares issued and outstanding - -
Common stock, $0.001 par value;
20,000,000 shares authorized,
2,000,000 shares issued and outstanding 2,000 2,000
Additional paid-in capital 3,750 3,750
Deficit accumulated during
the development stage (5,311) (4,449)
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Total stockholders' equity 439 1,301
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Total liabilities and stockholders' equity $ 1,524 $ 2,386
============= ============
The accompanying notes are an integral part of these financial statements.
5
BAYLOR INDUSTRIES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(UNAUDITED)
STATEMENTS OF OPERATIONS
March 29, 2000
(Inception) to
March 31, March 31,
2002 2001 2002
---------- ----------- --------------
Revenue $ - $ - $ -
General and administrative expenses 862 237 5,311
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Loss from operations before provision
for income taxes (862) (237) (5,311)
Provision for income taxes - - -
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Net loss $ (862) $ (237) (5,311)
========== =========== ==============
Net loss per share - basic and diluted $ - $ - $ -
========== =========== ==============
Weighted average number of common shares 2,000,000 2,000,000 2,000,000
========== =========== ==============
The accompanying notes are an integral part of these financial statements.
6
BAYLOR INDUSTRIES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
Additional During the Total
Common Stock Paid-In Development Stockholders'
-----------------
Shares Amount Capital Stage Equity
--------- ------ ---------- ----------- -------------
Mar 31,2000 (Inception) - $ - $ - $ - $ -
Issued for cash 2,000,000 2,000 - - 2,000
Net Loss - - - (1,581) (1,581)
--------- ------ ---------- ----------- -------------
Balance Dec 31,2000 2,000,000 2,000 - (1,581) (419)
Shareholder Contribution - - 3,750 - 3,750
Net Loss - - - (2,868) (2,868)
--------- ------ ---------- ----------- -------------
Balance, Dec 31, 2001 2,000,000 2,000 3,750 (4,449) 1,301
Net loss - - - (862) (862)
--------- ------ ---------- ----------- -------------
Balance, Mar 31, 2002 2,000,000 $2,000 $ 3,750 $ (5,311) $ 439
========= ====== ========== =========== =============
The accompanying notes are an integral part of these financial statements.
7
BAYLOR INDUSTRIES, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(UNAUDITED)
STATEMENT OF CASH FLOWS
March 29, 2000
For the Three Months Ended (inception)to
March 31, March 31,
--------------------
2002 2001 2002
--------- --------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (862) $ (237) $ (5,311)
Increase in accounts payable and
accrued expenses - - 85
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NET CASH USED IN OPERATING ACTIVITIES (862) (237) (5,226)
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CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock - - 2,000
Increase in advances by shareholder - 1,000 1,000
Funds paid into capital by officer - - 3,750
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NET CASH PROVIDED BY FINANCING ACTIVITIES - 1,000 6,750
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(Decrease) increase in cash and
cash equivalents (862) 763 1,524
Cash and cash equivalents -
beginning of period 2,386 504 -
--------- --------- -------------
Cash and cash equivalents -
end of period $ 1,524 $ 1,267 $ 1,524
========= ========= =============
Supplemental Information:
Cash payments made for:
Income taxes $ - $ - $ -
========= ========= =============
Interest $ - $ - $ -
========= ========= =============
The accompanying notes are an integral part of these financial statements.
8
BAYLOR INDUSTRIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Nature of Operations
--------------------
Baylor Industries, Inc. (the "Company") is currently a development-
stage company under the provisions of the Financial Accounting
Standards Board ("FASB") Statement of Financial Accounting
Standards ("SFAS") No. 7. The Company was incorporated under the
laws of the state of Nevada on March 29, 2000.
General
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The accompanying unaudited financial statements have been prepared
in accordance with the instructions to Form 10-QSB and, therefore,
do not include all the information necessary for a fair
presentation of financial position, results of operations and cash
flows in conformity with accounting principles generally accepted
in the United States of America.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three month period
ended March 31, 2002, are not necessarily indicative of the results
that may be expected for the year ended December 31, 2002. The
unaudited condensed financial statements and footnotes thereto
included in the Company's December 31, 2001 annual report are
included in SEC form 10-KSB.
Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash
equivalents.
Income Taxes
------------
Income taxes are provided for based on the liability method of
accounting pursuant to SFAS No. 109, "Accounting for Income
Taxes." Deferred income taxes, if any, are recorded to reflect
the tax consequences on future years of differences between the
tax bases of assets and liabilities and their financial reporting
amounts at each year-end.
9
BAYLOR INDUSTRIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Earnings Per Share
------------------
The Company calculates earnings per share in accordance with SFAS
No. 128, "Earnings Per Share," which requires presentation of
basic earnings per share ("BEPS") and diluted earnings per share
("DEPS"). The computation of BEPS is computed by dividing income
available to common stockholders by the weighted average number of
outstanding common shares during the period. DEPS gives effect to
all dilutive potential common shares outstanding during the
period. The computation of DEPS does not assume conversion,
exercise or contingent exercise of securities that would have an
antidilutive effect on earnings. As of March 31, 2002, the
Company had no securities that would effect loss per share if they
were to be dilutive.
Comprehensive Income
--------------------
SFAS No. 130, "Reporting Comprehensive Income," establishes
standards for the reporting and display of comprehensive income
and its components in the financial statements. The Company had
no items of other comprehensive income and therefore has not
presented a statement of comprehensive income.
NOTE 2 - INCOME TAXES
The components of the provision for income taxes for the period
from January 1, 2001 to March 31, 2002 are as follows:
Current Tax Expense
U.S. Federal $ -
State and Local -
-------------
Total Current -
-------------
Deferred Tax Expense
U.S. Federal -
State and Local -
-------------
Total Deferred -
-------------
Total Tax Provision (Benefit) from
Continuing Operations $ -
=============
The reconciliation of the effective income tax rate to the Federal
statutory rate is as follows:
10
BAYLOR INDUSTRIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
NOTE 2 - INCOME TAXES (Continued)
Federal Income Tax Rate 34.0%
Effect of Valuation Allowance ( 34.0)%
---------
Effective Income Tax Rate 0.0%
=========
At March 31, 2002, the Company had net carryforward losses of
$5,311. Because of the current uncertainty of realizing the
benefits of the tax carryforward, a valuation allowance equal to
the tax benefits for deferred taxes has been established. The full
realization of the tax benefit associated with the carryforward
depends predominantly upon the Company's ability to generate
taxable income during the carryforward period.
Deferred tax assets and liabilities reflect the net tax effect of
temporary differences between the carrying amount of assets and
liabilities for financial reporting purposes and amounts used for
income tax purposes. Significant components of the Company's
deferred tax assets and liabilities as of March 31, 2002 are as
follows:
Deferred Tax Assets
Loss Carryforwards $ 1,800
Less: Valuation Allowance (1,800)
----------
Net Deferred Tax Assets $ -
==========
Net operating loss carryforwards expire in 2021.
NOTE 3 - COMMON STOCK
On March 14, 2000, the Company issued 2,000,000 shares of its $.001
par value common stock for $2,000.
In April 2001, a shareholder contributed $3,750 to the Company as
additional paid-in capital.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property.
The officers/directors of the Company provide office and other
services without charge. Such costs are immaterial to the
financial statements and, accordingly, have not been reflected
therein. These individuals are involved in other business
activities and may, in the future, become involved in other
business opportunities. If specific business opportunity becomes
available, such persons may face a conflict in selecting between
the Company and their other business interest. The Company has not
formulated a policy for the resolution of such conflicts.
11
BAYLOR INDUSTRIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
NOTE 4 - RELATED PARTY TRANSACTIONS (Continued)
A stockholder has advanced the Company funds in the amount of
$1,000. These funds were used in operations. The advance due the
stockholder bears no interest and is payable upon demand.
In April 2001, a shareholder contributed $3,750 to the Company as
additional paid-in capital.
12
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
The current core business of Baylor Industries, Inc. is to develop
and contract manufacture generic prescription pharmaceutical products.
The Company hopes to develop a generic pharmaceutical product, utilizing an
FDA approved contract laboratory and contract manufacturing facilities. The
Company hopes to obtain an Abbreviated New Drug Application (ANDA) for its
generic pharmaceutical product. The Company has limited itself to the
development of one product; however, this does not preclude the company from
seeking other product opportunities. At this time, it does not have the
resources to pursue multiple products. The Company plans to target a low
volume pharmaceuticals product, in which its U.S. patent recently expired.
Generally speaking, low volume pharmaceutical products are not quickly
brought to the market as generic products by the larger generic
pharmaceutical drug facilities, since the cost to produce a low volume
generic product outweighs its return on investment. Barrington
Laboratories, Inc., believes it can minimize the cost of producing generic
pharmaceutical products by out-sourcing the steps necessary to obtain Food
and Drug Administration (FDA) approval.
The goal of Baylor Industries, Inc. is to obtain an ANDA (Abbreviated
New Drug Application) from the FDA to produce and market a pharmaceutical
product where the patent on the brand name product has expired, and then
market its generic version. The FDA requires one holder (a primary contact)
of the ANDA. The Company needs to consider where or not the contract
manufacturer will submit the submission package to the FDA, and be the
holder of the ANDA for this product. If this becomes the case, the Company
would need to enter into a contract with the contract manufacturer to be the
exclusive distributor of this product.
The Company is seeking a contract manufacturer to produce a generic
pharmaceutical product. Management needs to conduct further work to
determine whether the work will be subcontracted to a particular contract
pharmaceutical manufacturer. Since this is a lengthy process, the Company
believes it is too premature to determine the actual holder of the ANDA for
this product.
Going Concern - The Company experienced operating losses for the period
ended March 31, 2002. The financial statements have been prepared
assuming the Company will continue to operate as a going concern which
contemplates the realization of assets and the settlement of liabilities
in the normal course of business. No adjustment has been made to the
recorded amount of assets or the recorded amount or classification of
liabilities which would be required if the Company were unable to
continue its operations.
13
Loss Per Share - The Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" that
established standards for the computation, presentation and disclosure of
earnings per share ("EPS"), replacing the presentation of Primary EPS with
a presentation of Basic EPS. It also requires dual presentation of Basic
EPS and Diluted EPS on the face of the income statement for entities with
complex capital structures. The Company did not present Diluted EPS since
it has a simple capital structure.
The Company has not pursued or explored any opportunities for an acquisition
or merger. This does not preclude that the Company may not explore any
opportunities in the future.
Results of Operations
- ---------------------
As a research and development Company, the Company has yet to generate any
revenues. In addition, the Company does not expect to generate any revenues
over the next approximately to eighteen (18) months. During the quarter
ended March 31, 2002, the Company experienced net losses $862, this compares
to a loss of $237 for the same period last year. Since the Company's
inception on March 29, 2000 the Company has lost $5,311. These expenses
included general and administrative fees. The Company does not have any
material commitments for capital expenditures.
Liquidity and Capital Resources
- -------------------------------
The Company is authorized to issue 20,000,000 shares of its $0.001 par
value common stock and 5,000,000 shares of its $0.001 par value preferred
stock.
On March 14, 2000, the Company issued 2,000,000 shares of its $.001 par
value common stock for cash of $2,000.
On December 21, 2000, the Company filed with the U. S. Securities and
Exchange Commission for their review and approval a SB-2 Registration to
further capitalize the Company by offering for sale 3,000,000 shares of
common stock, at a purchase price of $0.025 per share. The completion
of this offering would further capitalize the Company by $75,000, less
$6,000 in offering costs for a net to the Company of $69,000. Without
this funding, the Company will be unable to move its business plan further.
To further capitalize the Company's sole shareholder contributed $4,750 to
the Company as additional paid-in capital.
The Company's ability to continue as a going concern is contingent upon the
successful completion of additional financing arrangements and its ability
to achieve and maintain profitable operations. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Market For Company's Common Stock
The common stock of the Company is currently not traded on the NASDAQ OTC
Bulletin Board or any other formal or national securities exchange. There
is no trading market for the Company's Common Stock at present and there has
been no trading market to date.
14
There is currently no Common Stock which is subject to outstanding options
or warrants to purchase, or securities convertible into, the Company's
common stock.
Dividend Policy
The Company has not yet adopted any policy regarding payment of dividends.
No dividends have been paid since inception.
Forward-Looking Statements
This Form 10-QSB includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in
this Form 10-QSB which address activities, events or developments which the
Company expects or anticipates will or may occur in the future, including
such things as future capital expenditures (including the amount and nature
thereof), finding suitable merger or acquisition candidates, expansion and
growth of the Company's business and operations, and other such matters are
forward-looking statements. These statements are based on certain
assumptions and analyses made by the Company in light of its experience and
its perception of historical trends, current conditions and expected future
developments as well as other factors it believes are appropriate in the
circumstances. However, whether actual results or developments will conform
with the Company's expectations and predictions is subject to a number of
risks and uncertainties, general economic market and business conditions;
the business opportunities (or lack thereof) that may be presented to and
pursued by the Company; changes in laws or regulation; and other factors,
most of which are beyond the control of the Company.
Consequently, all of the forward-looking statements made in this Form 10-QSB
are qualified by these cautionary statements and there can be no assurance
that the actual results or developments anticipated by the Company will be
realized or, even if substantially realized, that they will have the
expected consequence to or effects on the Company or its business or
operations. The Company assumes no obligations to update any such forward-
looking statements.
15
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is not a party to any legal proceedings.
ITEM 2. Changes in Securities and Use of Proceeds
None.
ITEM 3. Defaults upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
During the quarter ended March 31, 2002, no matters were submitted to the
Company's security holders.
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
3 Articles of Incorporation & By-Laws
(a)Articles of Incorporation of the Company filed March
29, 2000. Incorporated by reference to the exhibits to
the Company's General Form For Registration Of Securities
Of Small Business Issuers on Form SB-2, previously filed
with the Commission on December 21, 2000.
(b)By-Laws of the Company adopted March 29, 2000.
Incorporated by reference to the exhibits to the Company's
General Form For Registration Of Securities Of Small
Business Issuers on Form SB-2, previously filed with the
Commission on December 21, 2000.
13 Annual or Quarterly Reports
(a) Form 10-KSB for the year ended December 31, 2000
and December 31, 2001, incorporated by reference to the
Company's Annual Report for Small Business Issuers on
Form 10-KSB, previously filed with the Commission.
(b) Form 10-QSB for the quarters ended March 31, 2001,
June 30, 2001 and September 30, 2001, incorporated by
reference to the Company's Quarterly Report for Small
Business Issuers on Form 10-QSB, previously filed with
the Commission.
16
(b) Reports on Form 8-K
The Company filed a Current Report dated March 18, 2002, pursuant to Item 4
("Changes in Accountants") entitled "Changes in Registrant's Certifying
Account."
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
BAYLOR INDUSTRIES, INC.
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(Registrant)
Date: May 16, 2002 By: /s/ Candace J. Sherman
-----------------------
Candace J. Sherman
President/
principal executive officer/
principal accounting officer
and sole director
17