10QSB 1 edbaynon-q103.txt QUARTERLY REPORT FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . --------- --------- Commission file number 000-26653 -------------- BAYNON INTERNATIONAL CORPORATION ---------------------------------------------------------------- (Exact name of registrant as specified in its charter) Nevada 88-0285718 ----------- ---------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 266 Cedar Street, 07009 Cedar Grove, New Jersey (Address of principal executive offices) (Zip Code) (973) 239-2952 (Registrant's telephone number, including area code) Not applicable -------------------- (Former name, former address and former fiscal year, if changed since last report) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Common Stock, $0.001 par value Outstanding at May 1, 2003: 17,532,692 BAYNON INTERNATIONAL CORPORATION Index Page No. Part I Financial Information Item 1 Financial Statements: Balance Sheets - March 31, 2003, and December 31, 2002 3 Statements of Operations - For the Three Months Ended March 31, 2003 and 2002 4 Statements of Cash Flows - For the Three Months Ended March 31, 2003 and 2002 5 Notes to Financial Statements 6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3 Controls and Procedures Part II Other Information Item 1 Legal Proceedings 9 Item 2 Changes in Securities and Use of Proceeds 9 Item 3 Defaults Upon Senior Securities 9 Item 4 Submission of Matters to a Vote of Security Holders 9 Item 5 Other Information 9 Item 6 Exhibits and Reports on Form 8-K 9 BAYNON INTERNATIONAL CORPORATION BALANCE SHEETS
March 31, December 31, ASSETS 2003 2002 ------ ---- ---- (Unaudited) (Audited) Current Assets: Cash and cash equivalents $ 56,959 $ 59,400 --------------- ------------------- Total Current Assets 56,959 59,400 --------------- ------------------- Total Assets $ 56,959 $ 59,400 =============== =================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued expenses $ 12,161 $ 9,476 --------------- ------------------- Total Current Liabilities 12,161 9,476 --------------- ------------------- Total Liabilities 12,161 9,476 --------------- ------------------- Stockholders' Equity: Common stock, $.001 par value, 50,000,000 shares authorized, 17,532,692 shares issued and outstanding at March 31, 2003 and December 31, 2002 17,533 17,533 Additional paid-in capital 104,000 104,000 Retained earnings (deficit) (76,735) (71,609) --------------- ------------------- Total Stockholders' Equity 44,798 49,924 --------------- ------------------- Total Liabilities and Stockholders' Equity $ 56,959 $ 59,400 =============== ===================
-------------------- The accompanying notes are an integral part of these financial statements. 3 BAYNON INTERNATIONAL CORPORATION STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended March 31, 2003 2002 ------------------ ------------------ Revenues $ - $ - Cost of Revenues - - ------------------ ------------------ Gross Profit - - ------------------ ------------------ Other Costs: General and administrative expenses 5,461 6,073 ------------------ ------------------ Total Other Costs 5,461 6,073 Other Income and Expense: Interest income 335 401 ------------------ ------------------ Net Loss before Income Taxes (5,126) (5,672) Income Taxes - - ------------------ ------------------ Net Loss $ (5,126) $ (5,672) ================== ================== Earnings (Loss) Per Share: Basic and diluted earnings (loss) per common share $ - $ - ================== ================== Basic and diluted common shares outstanding 17,532,692 14,810,469 ================== ==================
-------------------- The accompanying notes are an integral part of these financial statements. 4 BAYNON INTERNATIONAL CORPORATION STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended March 31, 2003 2002 --------------- --------------- Cash Flows from Operating Activities: Net loss $ (5,126) $(5,672) Adjustments to reconcile net loss to net cash used in operating activities: Increase in accounts payable and accrued expenses 2,685 5,057 --------------- --------------- Net cash used in operating activities (2,441) (615) --------------- --------------- Cash Flows from Investing Activities - - --------------- --------------- Cash Flows from Financing Activities: Issuance of common stock - 58,000 --------------- --------------- Net cash provided by financing activities - 58,000 --------------- --------------- Net Increase (Decrease) in Cash and Cash Equivalents (2,441) 57,385 Cash and Cash Equivalents, beginning of period 59,400 16,945 --------------- --------------- Cash and Cash Equivalents, end of period $ 56,959 $ 74,330 =============== =============== Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $ - $ - =============== =============== Income taxes $ - $ - =============== ===============
-------------------- The accompanying notes are an integral part of these financial statements. 5 BAYNON INTERNATIONAL CORPORATION NOTES TO FINANCIAL STATEMENTS MARCH 31, 2003 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company Baynon International Corporation (formerly known as Technology Associates Corporation and hereinafter referred to as 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 two 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 may wish to contribute assets to the Company rather than merge. No assurances 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. Earnings (Loss) Per Share The Company computes earnings or loss per share in accordance with Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128). 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. Impairment of Long-Lived Assets The Company adopted Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS 144). SFAS 144 is effective for fiscal years beginning after December 15, 2001. SFAS 144 supersedes SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of". SFAS 144 requires that if events or changes in circumstances indicate that the cost of long-lived assets or asset groups may be impaired, an evaluation of recoverability would be performed by comparing the estimated future undiscounted cash flows associated with the asset to the asset's carrying value to determine if a write-down to market value would be required. Long-lived assets or asset groups that meet the criteria in SFAS 144 as being held for disposal by sale are reflected at the lower of their carrying amount or fair market value, less costs to sell. 6 BAYNON INTERNATIONAL CORPORATION NOTES TO FINANCIAL STATEMENTS MARCH 31, 2003 (Continued) 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Recent Accounting Pronouncements In December 2002 the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure, (An Amendment to FASB Statement No. 123)," (SFAS 148). SFAS 148 amends SFAS 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS 148 is effective for the Company beginning January 1, 2003. The adoption of SFAS 148 had no impact on the Company's financial position or results of operations for the three months ended March 31, 2003, nor is it expected to have a significant impact in the future. 2. INTERIM PRESENTATION The December 31, 2002 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 March 31, 2003 and its results of operations and cash flows for the three months ended March 31, 2003 and 2002. The statements of operations for the three months ended March 31, 2003 and 2002 are not necessarily indicative of 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-KSB for the year ended December 31, 2002. 3. STOCKHOLDERS' EQUITY On January 8, 2002 the Company issued 4,000,000 shares of common stock, $.001 par value and received net proceeds of $28,000. These shares were sold in a private placement without registration under Rule 506 of Regulation D and pursuant to exemptions contained in the Securities Act of 1933 On March 12, 2002 the Company issued 3,000,000 shares of common stock, $.001 par value and received proceeds of $30,000. These shares were sold in a private placement without registration under Rule 506 of Regulation D and pursuant to exemptions contained in the Securities Act. In connection with this sale the Company agreed to the following: (a) the Company would not issue any additional common stock, preferred stock or any warrants, rights or any securities convertible into common stock without the prior written consent of this investor; (b) the Company would reimburse this investor up to $1,000 for expenses incurred while conducting its due diligence investigation prior to this purchase; (c) this investor will be entitled to name an individual to the Board of Directors, as long as it owns at least eight percent (8%) of the issued and outstanding common stock of the Company, and (d) the Company will retain a securities counsel as specified by the investor. Pursuant to this agreement, the President of this investor was appointed a director of the Company on March 12, 2002. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies and Estimates The following "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as disclosures included elsewhere in this Form 10-QSB, are based upon our unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingencies. On an on-going basis, we evaluate the estimates used, including those related to impairments of tangible and intangible assets, income taxes, accruals, and contingencies. We base our estimates on historical experience, current conditions and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources as well as identifying and assessing our accounting treatment with respect to commitments and contingencies. Actual results may differ from these estimates under different assumptions or conditions. Liquidity and Capital Resources At March 31, 2003, the Company had a cash balance of $56,959, which represents a $2,441 decrease from the $59,400 balance at December 31, 2002. This $2,441 decrease was the result of cash used in operations.. The Company's working capital position at March 31, 2003, was $44,798 as compared to its position at December 31, 2002, of $49,924. The focus of the Company'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 the Company. The Company has considered various business alternatives including the possible acquisition of an existing business, but to date has found possible opportunities unsuitable or excessively priced. The Company 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. The Company presently owns no real property and at this time has no intention of acquiring any such property. Results of Operations Three Months Ended March 31, 2003, compared to Three Months Ended March 31, 2002 Net income (loss) Net loss for the three ended March 31, 2003, was $5,126 compared with $5,672 for the comparable period in 2002. The decrease in net loss of $546 for the three months ended March 31, 2003, compared to the same period in 2002 was primarily due to somewhat lower expenses required to meet public filing requirements (see general and administrative expense). Item 3. Controls and Procedures 8 Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 240.13a-14(c) and 15d-14(c)) as of a date within 90 days before the filing date of this quarterly report. Based on that evaluation, they have concluded that our current disclosure controls and procedures are effective in providing the material information required to be disclosed in the reports we file or submit under the Exchange Act. Changes in Internal Controls. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date we carried out this evaluation. PART II. Other Information Item 1. Legal Proceedings Not Applicable. Item 2. Change in Securities and Use of Proceeds Not Applicable. Item 3. Defaults Upon Senior Securities Not Applicable. Item 4. Submission of Matters to a Vote of Security Holders Not Applicable. Item 5. Other Information Not Applicable. Item 6. Exhibits and Reports on Form 8-K Reports on Form 8-K - None Exhibits 99.1 Certification Pursuant To 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 9 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. BAYNON INTERNATIONAL CORPORATION Registrant Date: May 14, 2003 By: /s/ Pasquale Catizone ----------------------------------------------------- Pasquale Catizone, President and Chairman (on behalf of the registrant) CERTIFICATION OF CHIEF EXECUTIVE OFFICER OF BAYNON INTERNATIONAL, INC. PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Pasquale Catizone, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Baynon International, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 14, 2003 /s/ Pasquale Catizone ---------------------------------------- Pasquale Catizone President (Principal Executive Officer) CERTIFICATION OF CHIEF FINANCIAL OFFICER OF BAYNON INTERNATIONAL, INC. PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Daniel Generelli, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Baynon International, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 14, 2003 /s/ Daniel Generelli ---------------------------------------- Daniel Generelli Chief Financial Officer(Principal Financial Officer)