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EX-32 - EXHIBIT 32 - BAYNON INTERNATIONAL CORPbaynon10q2q13ex32.htm

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, 2013


-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      000-26653


Baynon International Corp.

(Exact name of Registrant

in its charter)


Nevada

 

88-0285718

(State or Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer 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, August 12, 2013:  Common Stock – 29,772,192


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BAYNON INTERNATIONAL CORP.

FORM 10-Q

INDEX

Page

PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements (Unaudited)

 

 

 

 

 

    Balance Sheets at June 30, 2013 and December 31, 2012

 

4

 

 

 

    Statements of Operations for the three and six months ended June 30, 2013 and 2012

 

5

 

 

 

    Statements of Cash Flows for the six months ended June 30, 2013 and 2012

 

6

 

 

 

Notes to Financial Statements

 

7

 

 

 

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

 

10

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

 

13

Item 4.  Controls and Procedures

 

13


PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

 

16

Item 1A. Risk Factors

 

16

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

 

16

Item 3.  Defaults Upon Senior Securities

 

16

Item 4.  Mine Safety Disclosures

 

16

Item 5.  Other Information

 

16

Item 6.  Exhibits

 

16

 

 

 

SIGNATURES

 

17



3




BAYNON INTERNATIONAL CORP.

BALANCE SHEETS


 

June 30,

December 31,

 

2013

2012

 

(Unaudited)

 

 ASSETS

 



CURRENT ASSETS:



Cash and cash equivalents

$        4,080

$        22,219

TOTAL CURRENT ASSETS

          4,080

          22,219

 



TOTAL ASSETS

$        4,080

$        22,219

 



 



LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

 



CURRENT LIABILITIES:



Accounts payable and accrued expenses

$      19,950

$        27,307

Convertible notes payable – stockholder

50,000

50,000

Accrued interest – stockholder

          3,674

           2,186

TOTAL CURRENT LIABILITIES

        73,624

         79,493

 



TOTAL LIABILITIES

        73,624

         79,493

   

COMMITMENTS AND CONTINGENCIES



STOCKHOLDERS’ DEFICIENCY:



Common stock, par value $.001,



Authorized 50,000,000 shares, issued



and outstanding 29,772,192 shares at June 30, 2013 and

      December 31, 2012

   Common stock to be issued, 1,000,000 shares at June 30, 2013

29,772

29,772

   And December 31, 2012


Additional paid-in capital

1,000


223,936

1,000


223,936

Accumulated deficit

    (324,252)

      (311,982)

TOTAL STOCKHOLDERS’ DEFICIENCY

      (69,544)

        (57,274)

 



TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

$        4,080

$       22,219



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,

 

2013

2012

2013

2012

 





Revenues

$         -      

$         -      

$         -      

$         -      

Cost of revenue

            -      

           -      

           -      

           -      

 





Gross Profit

             -     

            -     

            -     

            -     

 





Other Costs:





General and administrative expenses

          4,280

         3,743

      10,788

         8,094






Total Other Costs

          4,280

        3,743

      10,788

         8,094

 





Operating loss

        (4,280)

       (3,743)

     (10,788)

        (8,094)

 





Other Income (Expense):





Interest income

1

11

5

11

Interest expense – stockholders

           (747)

           (674)

         (1,487)

           (674)

 





Total Other Income (Expense)

           (746)

          (663)

         (1,482)

           (663)

 





Net Loss

$      (5,026)

$     (4,406)

$    (12,270)

$      (8,757)

 





Loss per share:





Basic and diluted loss  per common share

$           -     

$          -     

$          -     

$          -     

 





Basic and diluted common shares outstanding

 30,772,192

 30,662,301

30,772,192

30,217,247


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, 2013 AND 2012

(UNAUDITED)


 

2013

2012

 

 

 

Cash flows from Operating Activities:

 

 

Net loss

 $(12,270)

 $   (8,757)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Decrease in accounts payable and accrued expenses

 (7,357)

 (16,092)

Increase in accrued interest – stockholders

 1,488 

 674


 

 

Net cash used in operating activities

 (18,139)

 (24,175)

 

 

 

Cash flows from Financing Activities:

 

 

       Proceeds from stockholder note payable

 -

 50,000

       Proceeds from issuance of common stock

 -

 1,000

 

 

 

           Net cash from financing activities

 -

 51,000

 

 

 

(Decrease) increase in Cash and Cash Equivalents

 (18,139)

 26,825

 

 

 

Cash and Cash Equivalents, beginning of  period

 22,219

 1,520

 

 

 

Cash and Cash Equivalents, end of  period

 $      4,080

 $     28,345

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

Cash paid during year 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, 2013 AND 2012

(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 nine 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, 2012 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, 2013, its results of operations for the three and six months ended June 30, 2013 and 2012 and its cash flows for the six months ended June 30, 2013 and 2012.


The statements of operations for the three and six months ended June 30, 2013 and 2012 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, 2012.


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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, 2013 and 2012 as their effect would be anti-dilutive:


 

2013

2012

Convertible note payable and accrued interest - stockholder (weighted average)

4,293,918

4,053,918


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 $324,252 at June 30, 2013.  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, 2014 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.


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3.

CONVERTIBLE NOTES PAYABLE - STOCKHOLDERS


On April 10, 2012, the Company issued an unsecured convertible note payable to a stockholder in exchange for $50,000 in cash for the Company’s working capital needs. The note bore interest at 6% per annum and matured on April 10, 2013. The stockholder had the option to convert the note and accrued interest into the Company’s common stock at $.0125 per share.


On April 10, 2013, the note was extended its unsecured note payable to a stockholder for $50,000 for an additional twelve months. The note bears interest at 6% per annum and matures on April 10, 2014. The stockholder has the option to convert the note and accrued interest into the Company’s common stock at $.0125 per share.


At June 30, 2013 and December 31, 2012, accrued interest on the notes was $3,674 and $2,186, respectively.  Interest expense amounted to $747 and $674 for the three months ended June 30, 2013 and 2012, respectively.  Interest expense amounted to $1,487 and $674 for the six months ended June 30, 2013 and 2012, respectively.


4.

COMMON STOCK


On April 10, 2012, the Company received cash in the amount of $1,000 for the issuance of 1,000,000 shares ($0.001 per share) of common stock to an investor.  The shares were not issued as of June 30, 2013 and the amount was classified as common stock to be issued at both June 30, 2013 and December 31, 2012.


5.

SUBSEQUENT EVENTS


The Company has evaluated subsequent events through the date of this filing.



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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, 2012.  There have been no material changes to our critical accounting policies as of and for the six months ended June 30, 2013.


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, 2013, Baynon had a cash balance of $4,080, which represents an $18,139 decrease from the $22,219 balance at December 31, 2012.  This decrease was primarily the result of cash used to satisfy the requirements of a reporting company. Baynon’s


10



working capital deficit at June 30, 2013 was $69,544 as compared to a December 31, 2012 deficit of $57,274.


During the six months ended June 30, 2013 and 2012, we did not pursue any investing activities.


During the six months ended June 30, 2013, we did not pursue any financing activities.  During the six months ended June 30, 2012, we received $50,000 as proceeds from stockholder note payable and $1,000 as proceeds from the issuance of common stock.  As a result, we had net cash from financing activities of $51,000 for the six months ended June 30, 2012.


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 $12,270 and $8,757 for the six months ended June 30, 2013 and 2012, 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 13, 2013. 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.


11



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 six months ended June 30, 2013, compared to the six months ended June 30, 2012.


For the six months ended June 30, 2013, we did not earn any revenues.  We had general and administrative expenses of $10,788 and interest expense – stockholders of $1,487.  We earned interest income of $5.  As a result, we had net loss of $12,270 for the six months ended June 30, 2013.


Comparatively, for the six months ended June 30, 2012, we did not earn any revenues.  We had general and administrative expenses of $8,094 and interest expense – stockholders of $674.  We earned interest income of $11.  As a result, we had a net loss of $8,757 for the six months ended June 30, 2012.


The $2,694 increase in general and administrative expenses 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.


Results of Operations for the three months ended June 30, 2013, compared to the three months ended June 30, 2012.


For the three months ended June 30, 2013, we did not earn any revenues.  We had general and administrative expenses of $4,280 and interest expense – stockholders of $747.  We earned interest income of $1.  As a result, we had a net loss of $5,026 for the three months ended June 30, 2013.


Comparatively, for the three months ended June 30, 2012, we did not earn any revenues.  We had general and administrative expenses of $3,743 and interest expense – stockholders of $674.  We earned interest income of $11.  As a result, we had a net loss of $4,406 for the three months ended June 30, 2012.


The $537 increase in general and administrative expenses 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.


12



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, 2013, 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, 2013.  We do not have sufficient segregation of duties within accounting functions, which is a basic internal control.  Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible.  However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals.  Based on this evaluation, our chief executive officer and chief financial officer have concluded such controls and procedures to be not effective as of June 30, 2013 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.


Management’s Annual Report on Internal Control over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  Our internal control over financial reporting is the process designed by and under the supervision of our chief executive officer and chief financial officer, or the persons performing similar functions, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America.  These officers have evaluated the effectiveness


13



of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control over Financial Reporting – Guidance for Smaller Public Companies.


Our chief executive officer and chief financial officer have assessed the effectiveness of our internal control over financial reporting as of June 30, 2013 and concluded that it was not effective because of the material weakness described below:


In connection with the preparation of our financial statements for the years ended December 31, 2012 and 2011, due to resource constraints, material weaknesses became evident to management regarding our inability to generate all the necessary disclosure for inclusion in our filings with the Securities and Exchange Commission due to the lack of resources and segregation of duties.  A material weakness is a significant deficiency in one or more of the internal control components that alone or in the aggregate precludes our internal controls from reducing to an appropriately low level the risk that material misstatements in our consolidated financial statements will not be prevented or detected on a timely basis.


We will aggressively recruit experienced professionals to ensure that we include all necessary disclosures in our filings with the Securities and Exchange Commission. Although we believe that this corrective step will enable management to conclude that the internal controls over our financial reporting are effective when the staff is trained, we cannot assure you these steps will be sufficient. We may be required to expend additional resources to identify, assess and correct any additional weaknesses in internal control.


Evaluation of Changes in Internal Control over Financial Reporting


Our chief executive officer and chief financial officer have evaluated changes in our internal controls over financial reporting that occurred during the year ended June 30, 2013.  Based on that evaluation, our chief executive officer and chief financial officer, or those persons performing similar functions, did not identify any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


Important Considerations


The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the


14



risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.



           15



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.  Mine Safety Disclosure

Not Applicable


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.


16



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 12, 2013


BAYNON INTERNATIONAL CORP.


By:     /s/Pasquale Catizone

Pasquale Catizone,

Principal Executive Officer


/s/Daniel Generelli

Daniel Generelli,

Principal Financial Officer





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