10QSB 1 baynon_1q07.txt FORM 10QSB ================================================================================ BAYNON INTERNATIONAL CORPORATION NOTES TO FINANCIAL STATEMENTS MARCH 31, 2007 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 March 31, 2007 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 May 7, 2007: 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 - March 31, 2007 (Unaudited) and December 31, 2006 (audited) 3 Unaudited Statements of Operations - For the Three Months Ended March 31, 2007 4 Unaudited Statements of Cash Flows - For the Three Months Ended March 31, 2007 5 Notes to Financial Statements 6 Item 2 Management's Discussion and Analysis or Plan of Operation 8 Item 3 Controls and Procedures 9 Part II Other Information Item 6 Exhibits 9 2 BAYNON INTERNATIONAL CORP. BALANCE SHEETS
MARCH 31, DECEMBER 31, 2007 2006 ------------ ------------ (UNAUDITED) (AUDITED) ASSETS Current Assets: Cash and cash equivalents $ 8,805 $ 12,940 ------------ ------------ Total Current Assets 8,805 12,940 ------------ ------------ Total Assets $ 8,805 $ 12,940 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIENCY Current Liabilities: Accounts payable and accrued expenses $ 21,167 $ 14,745 Convertible note payable, stockholder 20,000 20,000 Accrued interest, stockholder 358 62 ------------ ------------ Total Current Liabilities 41,525 34,807 ------------ ------------ Total Liabilities 41,525 34,807 ------------ ------------ Stockholders' Deficiency: Common stock, $.001 par value, 50,000,000 shares authorized, 19,032,692 shares issued and outstanding 19,033 19,033 Additional paid-in capital 117,500 117,500 Accumulated deficit (169,253) (158,400) ------------ ------------ Total Stockholders' Deficiency (32,720) (21,867) ------------ ------------ Total Liabilities and Stockholders' Deficiency $ 8,805 $ 12,940 ============ ============
The accompanying notes are an integral part of these financial statements 3 BAYNON INTERNATIONAL CORP. STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)
2007 2006 ------------ ------------ Revenues $ - $ - Cost of Revenues - - ------------ ------------ Gross Profit - - ------------ ------------ Other Costs: General and administrative expenses 10,704 7,141 ------------ ------------ Total Other Costs 10,704 7,141 ------------ ------------ Other Income (Expense): Interest income 147 103 Interest expense - stockholder (296) - ------------ ------------ Total Other Income (Expense) (149) 103 ------------ ------------ Net Loss $ (10,853) $ (7,038) ============ ============ Earnings (loss) per share: Basic and diluted earnings (loss) per share $ 0.00 $ 0.00 ============ ============ Basic and diluted weighted average common shares outstanding 19,032,692 19,032,692 ============ ============
The accompanying notes are an integral part of these financial statements 4 BAYNON INTERNATIONAL CORP. STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)
2007 2006 ------------ ------------ Cash Flows from Operating activities: Net loss $ (10,853) $ (7,038) Adjustments to reconcile net loss to net cash used in operating activities: Increase in accounts payable and accrued expenses 6,718 2,108 ------------ ------------ Net cash used in operating activities (4,135) (4,930) ------------ ------------ Cash Flows from Investing Activities - - ------------ ------------ Cash Flows from Financing Activities - - ------------ ------------ Decrease in Cash and Cash Equivalents (4,135) (4,930) Cash and Cash Equivalents, beginning of period 12,940 16,805 ------------ ------------ Cash and Cash Equivalents, end of period $ 8,805 $ 11,875 ============ ============ Supplemental Disclosures of Cash Flow Information: Cash paid during year for: Interest $ - $ - ============ ============ Income Taxes $ - $ - ============ ============
The accompanying notes are an integral part of these financial statements 5 BAYNON INTERNATIONAL CORP. NOTES TO FINANCIAL STATEMENTS MARCH 31, 2007 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 five 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. 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 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 net income per share, as their effect would be anti-dilutive: March 31, ---------------------------- 2007 2006 ------------ ------------ Convertible note payable and accrued interest - stockholder (weighted average) 2,013,660 - ============ ============ 6 BAYNON INTERNATIONAL CORP. NOTES TO FINANCIAL STATEMENTS MARCH 31, 2007 2. INTERIM PRESENTATION The December 31, 2006 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, 2007, its results of operations for the three months ended March 31, 2007 and 2006 and its cash flows for the three months ended March 31, 2007 and 2006. The statements of operations for the three months ended March 31, 2007 and 2006 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, 2006. 3. GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred continuing operating losses and has an accumulated deficit of $169,253 at March 31, 2007. The Company has no revenue generating operations and has limited cash resources available. Additionally, the Company has a working capital deficiency of $32,720 at March 31, 2007. 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 liquidiity to meet the Company's obligations through December 31, 2007 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. 4. CONVERTIBLE NOTE PAYABLE - STOCKHOLDER On December 13, 2006, the Company issued an unsecured note payable to a stockholder in exchange for $20,000 in cash, in order for the Company to pay current invoices. The note bears interest at 6% per annum and matures on December 13, 2007. The stockholder has the option to convert the note and accrued interest into the Company's common stock at $.01 per share. The option expires on December 13, 2007. At March 31, 2007, accrued interest on the note was $358. Interest expense amounted to $296 for the three months ended March 31, 2007. 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 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, 2007, the Company had a cash balance of $8,805 which represents a $4,135 decrease from the $12,940 balance at December 31, 2006. This decrease was primarily the result of cash used in operating activities which were expenses incurred primarily to enable the Registrant to satisfy the requirements of a reporting company net of the proceeds from the issuance of a note payable to a stockholder of the Company. The Company's working capital position at March 31, 2007 was a deficit of ($32,720) as compared to a deficit of ($21,867) at December 31, 2006. The focus of the Registrant'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 Registrant. The Registrant 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 Registrant 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 Registrant presently owns no real property and at this time has no intention of acquiring any such property. The Registrant's sole expected expenses are comprised of professional fees primarily incident to its reporting requirements. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred operating losses in 2006 and 2005. At March 31, 2007, the Company had an accumulated deficit of $169,253. Net cash used in operating activities was $4,135 for the three months ended March 31, 2007. At March 31, 2007, the Company had cash and cash equivalents of $8,805. The Company has no revenue generating operations and has limited cash resources available. Additionally the Company has a working capital deficiency of $32,720 at March 31, 2007. These factors raise substantial doubt about the ability of the Company to continue as a going concern. Our auditors have included a "going concern" qualification in their auditors' report for the year ended December 31, 2006. Management believes that it will be able to achieve a satisfactory level of liquidity to meet the Company's obligations through December 31, 2007 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. 8 RESULTS OF OPERATIONS Three Months Ended March 31, 2007 compared to March 31, 2006 The Registrant incurred a net loss of $10,853 for the 2007 period versus a net loss of $7,038 for the 2006 period. General and administrative expenses were $10,704 in the 2007 period compared to $7,141 in the 2005 period, a decrease of $3,609. 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 increased accounting, auditing and legal expenses. Interest income increased $44 to $147 primarily due to higher cash balances. Interest expense in 2007 of $296 represents interest on a convertible note payable to a stockholder. 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 32.1 Certification Under Section 906 of Sarbanes-Oxley Act of 2002 32.2 Certification Under Section 906 of 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 7, 2007 By: /s/ PASQUALE CATIZONE ----------------------------- Pasquale Catizone, President and Chairman (on behalf of the registrant) 10