10QSB 1 baynon_2q06.txt 10-QSB FORM 10-QSB UNITED STATES 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 June 30, 2006 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 incorporation or organization) Identification No.) 266 Cedar Street, Cedar Grove, New Jersey 07009 ---------------------------------------- ---------- (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) Check 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 July 28, 2006: 19,032,692 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [X] Yes [ ] No BAYNON INTERNATIONAL CORPORATION Index Page No. Part I Financial Information Item 1 Financial Statements: Balance Sheets - June 30, 2006 (Unaudited) and December 31, 2005 (audited) 3 Unaudited Statements of Operations - For the Six and Three Months Ended June 30, 2006 and 2005 4 Unaudited Statements of Cash Flows - For the Six Months Ended June 30, 2006 and 2005 5 Notes to Financial Statements 6 Item 2 Management's Discussion and Analysis or Plan of Operation 7 Item 3 Controls and Procedures 8 Part II Other Information Item 6 Exhibits and Reports on Form 8-K 8 2
BAYNON INTERNATIONAL CORP. BALANCE SHEETS JUNE 30, DECEMBER 31, 2006 2005 ------------ ------------ (UNAUDITED) (AUDITED) ASSETS Current Assets: Cash and cash equivalents $ 4,857 $ 16,805 ------------ ------------ Total Current Assets 4,857 16,805 ------------ ------------ Total Assets $ 4,857 $ 16,805 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) Current Liabilities: Accounts payable and accrued expenses $ 15,000 $ 13,381 ------------ ------------ Total Current Liabilities 15,000 13,381 ------------ ------------ Total Liabilities 15,000 13,381 ------------ ------------ Stockholders' Equity (Deficiency): Common stock, $.001 par value, 50,000,000 shares authorized, 19,032,692 shares issued and outstanding at June 30, 2006 and December 31, 2005 19,033 19,033 Additional paid-in capital 117,500 117,500 Accumulated deficit (146,676) (133,109) ------------ ------------ Total Stockholders' Equity (Deficiency) (10,143) 3,424 ------------ ------------ Total Liabilities and Stockholders' Equity (Deficiency) $ 4,857 $ 16,805 ============ ============
The accompanying notes are an integral part of these financial statements. 3
BAYNON INTERNATIONAL CORP. STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended June 30, Six Months Ended June 30, ---------------------------- ---------------------------- 2006 2005 2006 2005 ------------ ------------ ------------ ------------ Revenues $ -- $ -- $ -- $ -- Cost of Revenue -- -- -- -- ------------ ------------ ------------ ------------ Gross Profit -- -- -- -- ------------ ------------ ------------ ------------ Other Costs: General and administrative expenses 6,564 6,381 13,705 17,131 ------------ ------------ ------------ ------------ Total Other Costs 6,564 6,381 13,705 17,131 ------------ ------------ ------------ ------------ Operating Loss (6,564) (6,381) (13,705) (17,131) Other Income: Interest income 35 38 138 94 ------------ ------------ ------------ ------------ Net Loss $ (6,529) $ (6,343) $ (13,567) $ (17,037) ============ ============ ============ ============ Earnings (Loss) Per Share: Basic and diluted earnings (loss) per common share $ 0.00 $ 0.00 $ 0.00 $ 0.00 ============ ============ ============ ============ Basic and diluted common shares outstanding 19,032,692 17,532,692 19,032,692 17,532,692 ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements. 4
BAYNON INTERNATIONAL CORP. STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED) 2006 2005 ------------ ------------ Cash Flows from Operating activities: Net Loss $ (13,567) (17,037) Adjustments to reconcile net loss to net cash used in operating activities: Increase in accounts payable and accrued expenses 1,619 7,700 ------------ ------------ Net cash used in operating activities (11,948) (9,337) ------------ ------------ Cash Flows from Investing Activities -- -- ------------ ------------ Cash Flows from Financing Activities -- -- ------------ ------------ Decrease in Cash and Cash Equivalents (11,948) (9,337) Cash and Cash Equivalents, beginning of period 16,805 16,364 ------------ ------------ Cash and Cash Equivalents, end of period $ 4,857 $ 7,027 ============ ============ Supplemental Disclosures of Cash Flow Information: Cash paid during year for: Interest $ -- $ -- ============ ============ Taxes $ -- $ -- ============ ============
The accompanying notes are an integral part of these financial statements. 5 BAYNON INTERNATIONAL CORPORATION NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 1. THE COMPANY AND SUMMARRY 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 four 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 whoses securities would be qualified for trading in the United States secondary market. Earning (Loss) Per Share The Company computes earnings or loss per share in accordance with Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earning Per Share". Basic earnings per share is computed by diving income available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings per share reflects the potential dilution that could occur if securities or other agreements to issue common stock were exercised or converted into common stock. Diluted earnings per share is computed based upon the weighted average number of common shares and dilutive common equivalent shares outstanding, which includes convertible debentures, stock options and warrants. 2. INTERIM PRESENTATION The December 31, 2005 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, 2006, its results of operations for the three and six months ended June 30, 2006 and 2005 and its cash flows for the three and six months ended June 30, 2006 and 2005. The statements of operations for the six months ended June 30, 2006 and 2005 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-KSB for the year ended December 31, 2005. 6 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 June 30, 2006, the Company had a cash balance of $4,857 which represents a $11,948 decrease from the $16,805 balance at December 31, 2005. The decrease was the result of cash used in operations. The Company's working capital position at June 30, 2006 was a deficit of ($10,143) as compared to its position at December 31, 2005 of $3,424. We believe that we will be able to fund our operations through December 2006. Any cash shortfalls that might arise will be funded by the officers and management of the Company as needed. 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 Six Months Ended June 30, 2006 compared to June 30, 2005 The Registrant incurred a net loss of $13,567 for the 2006 period versus a net loss of $17,037 for the 2005 period. Interest income increased $44 to $138 primarily due to higher cash balances. General and administrative expenses were $13,705 in the 2006 period compared to $17,131 in the 2005 period, a decrease of $3,426. General and administrative expenses were incurred primarily to enable the Registrant to satisfy the requirements of a reporting company. The expenses were lower in 2006 due to reduced legal and accounting expenses. 7 Three Months Ended June 30, 2006 compared to June 30, 2005 The Registrant incurred a net loss of $6,529 for the 2006 period versus a net loss of $6,343 for the 2005 period. General and administrative expenses were $6,564 in the 2006 period compared to $6,381 in the 2005 period, a increase of $183. General and administrative expenses were incurred primarily to enable the Registrant to satisfy the requirements of a reporting company. Item 3. Controls and Procedures 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 the end of the period covered by 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. While our disclosure controls and procedures provide reasonable assurance that the appropriate information will be available on a timely basis, this assurance is subject to limitations inherent in any control system, no matter how well designed and administered. 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 6. Exhibits (a) Exhibits 31.1 Certification of Pasquale Catizone 31.2 Certification of Daniel Generelli 32 Certifications Under Section 906 of 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. BAYNON INTERNATIONAL CORPORATION Registrant Date: July 28, 2006 By: /s/ PASQUALE CATIZONE ----------------------------------------- Pasquale Catizone, President and Chairman (on behalf of the registrant) 8