<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
General Form for Registration of Securities
of Small Business Issuers
Under Section 12(b) or (g) of
the Securities Exchange Act of 1934
BAYNON INTERNATIONAL CORPORATION
--------------------------------
(Name of Small Business Issuer)
Nevada 88-0285718
------ ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Number)
Organization)
266 Cedar Street
Cedar Grove, New Jersey 07009
-----------------------------------------------------------
(Address of Principal Executive Offices including Zip Code)
973-239-2952
---------------------------
(Issuer's Telephone Number)
Securities to be Registered Under Section 12(b) of the Act: None
Securities to be Registered Under Section 12(g) of the Act:
Common Stock, $.001 Par Value
-----------------------------
(Title of Class)
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
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. Despite the Company's trading and
operating history, the Company is considered a blank check company for purposes
of this filing.
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 seeks to provide a method for a foreign or domestic
private company to become a reporting ("public") company whose securities are
qualified for trading in the United States secondary market.
Perceived Benefits
There are certain perceived benefits to being a reporting company with a
class of publicly-traded securities. These are commonly thought to include the
following:
* the ability to use registered securities to make acquisition of assets
or businesses;
* increased visibility;
* the facilitation of borrowing from financial institutions;
* improved trading efficiency;
* shareholder liquidity;
* greater case in subsequently raising capital;
* compensation of key employees through stock options;
* enhanced corporate image; and
* a presence in the United States capital market.
2
<PAGE>
Potential Target Companies
A potential target entity which may be interested in a business combination
with the Company, if any, may possess some or all of the following
characteristics:
* a company for whom a primary purpose of becoming public is the use of
its securities for the acquisition of assets or businesses;
* a company which is unable to find an underwriter of its securities or is
unable to find an underwriter of securities on terms acceptable to it to
conduct a public offering;
* a company which wishes to become public with less dilution of its common
stock than would occur upon an underwriting;
* a company which believes that it will be able obtain investment capital
on more favorable terms after it has become public;
* a foreign company seeking an initial entry into the United States
securities market;
* a special situation company, such as a company seeking a public market
to satisfy redemption requirements under a qualified Employee Stock
Option Plan; and
* a company seeking one or more of the other perceived benefits of
becoming a public company.
A business combination with a target company will normally involve the
transfer to the target company of the majority of the issued and outstanding
common stock of the Company, and the substitution by the target company of its
own management and board of directors. No assurances can be given that the
Company will be able to enter into a business combination, or, if the Company
does enter into such a business combination no assurances can be given as to the
terms of a business combination, or as to the nature of the target company.
The Company has not engaged in any business operations for at least the
last two years, and has no operations to date. The current and proposed business
activities described herein classify the Company as a blank check company. See
3
<PAGE>
"GLOSSARY". The Securities and Exchange Commission and many states have enacted
statutes, rules and regulations limiting the sale of securities of blank check
companies. Management does not intend to undertake any efforts to cause a market
to develop in the Company's securities until such time as the Company has
successfully implemented its business plan described herein.
The Company is voluntarily filing this Registration Statement with the
Securities and Exchange Commission and is under no obligation to do so under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
Risk Factors
The Company's business is subject to numerous risk factors, including the
following:
No Operating History Or Revenue And Minimal Assets. The Company has had no
operating history nor any revenues or earnings from operations for at least the
last two years. The Company has no significant assets or financial resources.
The Company will, in all likelihood, sustain operating expenses without
corresponding revenues, at least until the consummation of a business
combination. This may result in the Company incurring a net operating loss which
will increase continuously until the Company can consummate a business
combination with a target company. There is no assurance that the Company will
be able to identify such a target company and consummate such a business
combination on acceptable terms.
Speculative Nature Of The Company's Proposed Operations. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified target company.
While management intends to seek business combinations with entities having
established operating histories, there can be no assurance that the Company will
be able to identify a candidate satisfying such criteria and of such. In the
event the Company completes a business combination, of which there can be no
assurance, the success of the Company's operations may be dependent upon
management of the target company and numerous other factors beyond the Company's
control.
Scarcity Of And Competition For Business Opportunities And Combinations.
The Company is and will continue to be an insignificant participant in the
business of seeking mergers with and acquisitions of business entities. A large
number of established and well-financed entities, including venture capital
firms, are active in mergers and acquisitions of companies which may be merger
or acquisition target candidates for the Company. Nearly all such entities have
significantly greater financial resources, technical expertise and managerial
capabilities than the Company and, consequently, the Company will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Moreover, the Company will also
compete with numerous other small public companies in seeking merger or
acquisition candidates.
4
<PAGE>
No Agreement For Business Combination Or Other Transaction--No Standards
For Business Combination. The Company has no current arrangement, agreement or
understanding with respect to engaging in a merger with or acquisition of a
specific business entity. There can be no assurance that the Company will be
successful in identifying and evaluating suitable business opportunities or in
concluding a business combination. Management has not identified any particular
industry or specific business within an industry for evaluation by the Company.
There is no assurance that the Company will be able to negotiate a business
combination on terms favorable to the Company. The Company has not established a
specific length of operating history or a specified level of earnings, assets,
net worth or other criteria which it will require a target company opportunity
to have achieved, or without which the Company would not consider a business
combination with such business entity. Accordingly, the Company may enter into a
business combination with a business entity having no significant operating
history, losses, limited or no potential for earnings, limited assets, negative
net worth or other negative characteristics.
Continued Management Control, Limited Time Availability. While seeking a
business combination, management anticipates devoting up to five (5) hours per
month to the business of the Company. The Company's only officers are the
President, Mr. Pasquale Catizone, and Mr. Carmine Catizone, the Secretary and
Treasurer, neither of which have entered into written employment agreements with
the Company and are not expected to do so in the foreseeable future. The Company
has not obtained key man life insurance on its officers and directors.
Notwithstanding the combined limited experience and time commitment of
management, loss of the services of its President, Mr. Pasquale Catizone, would
adversely affect development of the Company's business and its likelihood of
consummating a business combination.
Conflicts Of Interest--General. The Company's two officers and directors
participate in other business ventures which may compete directly with the
Company. Although none are anticipated, conflicts of interest and non-arms
length transactions may also arise in the future. Management does not anticipate
that the Company will seek a merger with, or acquisition of, any entity in which
any member of management serves as an officer, director or partner, or in which
they or their family members own or hold any ownership interest. See "ITEM 5.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS--Conflicts of
Interest."
Reporting Requirements May Delay Or Preclude Acquisition. Section 13 of the
Exchange Act requires companies subject thereto to provide certain information
about significant acquisitions including certified financial statements for the
company acquired covering one or two years, depending on the relative size of
the acquisition. The time and additional costs that may be incurred by some
target companies to prepare such financial statements may significantly delay or
essentially preclude consummation of an otherwise desirable acquisition by the
Company. Acquisition prospects that do not have or are unable to obtain the
required audited statements may not be appropriate for acquisition so long as
the reporting requirements of the Exchange Act are applicable.
5
<PAGE>
Lack Of Market Research Or Marketing Organization. The Company has neither
conducted, nor have others made available to it, market research indicating that
demand exists for the transactions contemplated by the Company. Even in the
event demand exists for a merger or acquisition of the type contemplated by the
Company, there is no assurance the Company will be successful in completing any
such business combination.
Lack Of Diversification. The Company's proposed operations, even if
successful, will, at least in the short term and in all likelihood, result in
the Company engaging in a business combination with only one business
opportunity. Consequently, the Company's activities will be limited to those
engaged in by the business opportunity which the Company merges with or
acquires. The Company's inability to diversify its activities into a number of
areas may subject the Company to economic fluctuations within a particular
business or industry and therefore increase the risks associated with the
Company's operations.
Regulation Under Investment Company Act. Although the Company will be
subject to regulation under the Exchange Act, management believes the Company
will not be subject to regulation under the Investment Company Act of 1940,
insofar as the Company will not be engaged in the business of investing or
trading in securities. In the event the Company engages in business combinations
which result in the Company holding passive investment interests in a number of
entities, the Company could become subject to regulation under the Investment
Company Act of 1940. In such event, the Company would be required to register as
an investment company and could be expected to incur significant registration
and compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940 and, consequently, any violation of such Act
could subject the Company to material adverse consequences.
Probable Change In Control And Management. A business combination involving
the issuance of the Company's common stock will, in all likelihood, result in
shareholders of a target company obtaining a controlling interest in the
Company. Any such business combination may require shareholders of the Company
to sell or transfer all or a portion of the Company's common stock held by them.
The resulting change in control of the Company will likely result in removal of
the present officers and directors of the Company and a corresponding reduction
in or elimination of their participation in the future affairs of the Company.
Reduction Of Percentage Share Ownership Following Business Combination. The
Company's primary plan of operation is based upon the consummation of a business
combination with a business entity which, in all likelihood, will result in the
Company issuing securities to shareholders of such business entity. The issuance
of previously authorized and unissued common stock of the Company would result
in reduction in percentage of shares owned by the present shareholders of the
Company and would most likely result in a change in control or management of the
Company.
6
<PAGE>
Aspects Of Blank Check Offering. The Company may enter into a business
combination with a business entity that desires to establish a public trading
market for its shares. A target company may attempt to avoid what it deems to be
adverse consequences of undertaking its own public offering by seeking a
business combination with the Company. Such consequences may include, but are
not limited to, time delays of the registration process, significant expenses to
be incurred in such an offering, loss of voting control to public shareholders
or the inability to obtain an underwriter or to obtain an underwriter on terms
satisfactory to the Company.
Taxation. Federal and state tax consequences will, in all likelihood, be
major considerations in any business combination the Company may undertake.
Currently, such transactions may be structured so as to result in tax-free
treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as to
minimize the federal and state tax consequences to both the Company and the
target company; however, there can be no assurance that such business
combination will meet the statutory requirements of a tax-free reorganization or
that the parties will obtain the intended tax-free treatment upon a transfer of
stock or assets. A non-qualifying reorganization could result in the imposition
of both federal and state taxes which may have an adverse effect on both parties
to the transaction.
Requirement Of Audited Financial Statements May Disqualify Business
Opportunities. Management of the Company will request that any potential
business opportunity provide audited financial statements. One or more potential
combination candidates may opt to forego pursuing a business combination with
the Company rather than incur the burdens associated with preparing audited
financial statements. In such case, the Company may choose to obtain certain
assurances as to the target company's assets, liabilities, revenues and expenses
prior to consummating a business combination, with further assurances that an
audited financial statement would be provided after closing of such a
transaction. Closing documents for such a transaction may include
representations that the audited financial statements will not materially differ
from the representations included in such closing documents.
ITEM 2. PLAN OF OPERATION
The Company will seek to merge with or acquire a business entity in
exchange for the Company's securities. The Company has no particular
acquisitions in mind and has not entered into any negotiations regarding such an
acquisition. Neither the Company's officer nor directors nor any affiliates has
engaged in any negotiations with any representative of any company regarding the
possibility of an acquisition or merger between the Company and such other
company.
Mr. Pasquale Catizone, the principal shareholder of the Company,
anticipates seeking out a target company through solicitation. Such solicitation
may include newspaper or magazine advertisements, mailings and other
distributions to law firms, accounting firms, investment bankers, financial
advisors and similar persons, the use of one or more World Wide Web sites and
7
<PAGE>
similar methods. No estimate can be made as to the number of persons who will be
contacted or solicited. Any such solicitation will be at the expense of the
Company. The Company may pay referral fees to consultants and others who refer
target businesses for mergers into blank check companies in which the Company
has an interest. Payments are made if a merger occurs, and may consist of cash
or a portion of the stock in the Company or both.
The Company has no full time employees. The Company's president has agreed
to allocate a portion of his time to the activities of the Company, without
compensation. The president anticipates that the business plan of the Company
can be implemented by his devoting approximately five (5) hours per month to the
business affairs of the Company and, consequently, conflicts of interest may
arise with respect to the limited time commitment by such officer.
Management is not currently involved with other established blank check
companies, and is not currently involved in creating additional blank check
companies similar to this one. Management may, however, become involved in
creating or acquiring other blank check companies in the future. A conflict may
arise in the event that another blank check company with which management is
affiliated is formed and actively seeks a target company. Other blank check
companies that may be formed may differ from the Company in certain items such
as place of incorporation, number of shares and shareholders, working capital,
types of authorized securities, or other items. It may be that a particular
target company may be more suitable for or may prefer a certain blank check
company formed after the Company. In such case, a business combination might be
negotiated on behalf of the more suitable or preferred blank check company
regardless of date of formation. See "ITEM 5, DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS--Current Blank Check Companies."
The Certificate of Incorporation of the Company provides that the Company
may indemnify officers and/or directors of the Company for liabilities, which
can include liabilities arising under the securities laws. Therefore, assets of
the Company could be used or attached to satisfy any liabilities subject to such
indemnification.
General Business Plan
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in a business entity presented to it by persons or
firms who or which desire to seek the perceived advantages of a corporation
which has a class of securities registered under the Exchange Act. The Company
will not restrict its search to any specific business, industry, or geographical
location and the Company may participate in a business venture of virtually any
kind or nature. This discussion of the proposed business is not meant to be
restrictive of the Company's broad discretion to search for and enter into
potential business opportunities. Management anticipates that it will be able to
participate in only one potential business venture in the near future because
the Company has nominal assets and limited financial resources. See ITEM F/S,
"FINANCIAL STATEMENTS." This lack of diversification should be considered a
8
<PAGE>
substantial risk to the shareholders of the Company because it will not permit
the Company to offset potential losses from one venture against gains from
another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company may acquire assets and establish wholly-owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Management believes
(but has not conducted any research to confirm) that there are business entities
seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, increasing the opportunity
to use securities for acquisitions, providing liquidity for shareholders and
other factors. Business opportunities may be available in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
difficult and complex.
The Company has, and will continue to have, very limited to no capital with
which to provide the owners of business opportunities with any cash or other
assets. However, management believes the Company will be able to offer owners of
acquisition candidates the opportunity to acquire a controlling ownership
interest in a publicly registered company without incurring the cost and time
required to conduct an initial public offering. Management has not conducted
market research and is not aware of statistical data to support the perceived
benefits of a merger or acquisition transaction for the owners of a business
opportunity.
The analysis of new business opportunities will be undertaken by, or under
the supervision of, the President of the Company, who is not a professional
business analyst. In analyzing prospective business opportunities, Management
will consider such matters as the available technical, financial and managerial
resources; working capital and other financial requirements; history of
operations, if any; prospects for the future; nature of present and expected
competition; the quality and experience of management services which may be
available and the depth of that management; the potential for further research,
development or exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the Company; the
potential for growth or expansion; the potential for profit; the perceived
public recognition or acceptance of products, services, or trades; name
identification; and other relevant factors. To the extent possible, management
intends to utilize written reports and personal investigation to evaluate the
above factors. The Exchange Act requires that any merger or acquisition
candidate comply with certain reporting requirements, which include providing
audited financial statements to be included in the reporting filings made under
the Exchange Act.
9
<PAGE>
The Company will not acquire or merge with any company for which audited
financial statement cannot be obtained at or within a reasonable period of time
after closing of the proposed transaction.
The Company will not restrict its search for any specific kind of firms,
but may acquire a venture which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its business life.
It is impossible to predict at this time the status of any business in which the
Company may become engaged, in that such business may need to seek additional
capital, may desire to have its shares publicly traded, or may seek other
perceived advantages which the Company may offer.
Management of the Company, which may not have experience in matters
relating to the business of a target company, will rely upon its own efforts in
accomplishing the business purposes of the Company. Outside consultants or
advisors may be utilized by the Company to assist in the search for qualified
target companies. If the Company does retain such an outside consultant or
advisor, any cash fee earned by such person is likely to be assumed by the
target company, as the Company has limited cash assets with which to pay such
obligation.
If management decides to utilize the services of a consultant in the
selection of a target company, such consultant will likely be used to supplement
the business experience of management, including perhaps accountants, technical
experts, appraisers, attorneys or others. Management's considerations in
selecting such a consultant may be based on the nature of the target company's
business, the form and amount of compensation required by the consultant, the
length and breadth of such consultant's experience and rate of success in
matching target companies with acquiring companies. If a consultant were
retained, management would expect that any such consultant would provide the
Company with a selection of target companies, would provide due diligence
assistance for study of the target company, would assist in negotiating the
terms of a business combination, and would serve to facilitate the negotiation
process. More than one consultant could be used in locating a target company.
The Company has no agreements or understandings currently with any
consultant to provide services and does not intend to have any such relationship
prior to acquisition of a target company. If requested by a target company,
management may recommend one or more underwriters, financial advisors,
accountants, public relations firms or other consultants.
A potential target company may have an existing agreement with a consultant
or advisor providing that services of the consultant or advisor be continued
after any business combination. Additionally, a target company may be presented
to the Company only on the condition that the services of a consultant or
advisor be continued after a merger or acquisition. Such preexisting agreements
of target companies for the continuation of the services of attorneys,
accountants, advisors or consultants could be a factor in the Company's
selection of a target company.
10
<PAGE>
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may also
acquire stock or assets of an existing business. On the consummation of such a
transaction, it is probable that the present management and shareholders of the
Company will no longer be in control of the Company. In addition, it is likely
that the Company's officers and directors will, as part of the terms of the
acquisition transaction, resign and be replaced by one or more new officers and
directors.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, of which there can be
no assurance, it will be undertaken by the surviving entity after the Company
has entered into an agreement for a business combination or has consummated a
business combination and the Company is no longer considered a blank check
company. Until such time as this occurs, the Company will not attempt to
register any additional securities. The issuance of substantial additional
securities and their potential sale into any trading market which may develop in
the Company's securities may have a depressive effect on the market value of the
Company's securities in the future if such a market develops, of which there is
no assurance.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a "tax-free" reorganization under Sections
351 or 368 of the Internal Revenue Code of 1986, as amended (the "Code").
With respect to any merger or acquisition negotiations with a target
company, management expects to focus on the percentage of the Company which
target company shareholders would acquire in exchange for their holdings in the
target company. Depending upon, among other things, the target company's assets
and liabilities, the Company's shareholders will in all likelihood hold a
substantially lesser percentage ownership interest in the Company following any
merger or acquisition. The percentage of ownership may be subject to significant
reduction in the event the Company acquires a target company with substantial
assets. Any merger or acquisition effected by the Company can be expected to
have a significant dilutive effect on the percentage of shares held by the
Company's shareholders at such time.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require certain
representations and warranties of the parties thereto, will specify certain
events of default, will detail the terms of closing and the conditions which
must be satisfied by the parties prior to and after such closing, will outline
11
<PAGE>
the manner of bearing costs, including costs associated with the Company's
attorneys and accountants, and will include miscellaneous other terms.
The Company will not acquire or merge with any entity which cannot provide
audited financial statements at or within a reasonable period of time after
closing of the proposed transaction. The Company shall be subject to all of the
reporting requirements included in the Exchange Act. Included in these
requirements is the duty of the Company to file audited financial statements as
part of its Form 8-K to be filed with the Securities and Exchange Commission
upon consummation of a merger or acquisition, as well as the Company's audited
financial statements included in its annual report on Form 10-K (or 10-KSB, as
applicable). If such audited financial statements are not available at closing,
or within time parameters necessary to insure the Company's compliance with the
requirements of the Exchange Act, or if the audited financial statements
provided do not conform to the representations made by the target company, the
closing documents may provide that the proposed transaction will be voidable at
the discretion of the present management of the Company.
In the event that the Company needs any additional funds for operating
capital or for costs in connection with searching for or completing an
acquisition or merger, management contemplates that it will seek to issue
additional shares of the Company. There is no fixed minimum or maximum amount
that management will raise in connection with such an issuance. The Company does
not intend to borrow any funds to make any payments to the Company's promoters,
management or their affiliates or associates.
Competition
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than the Company. In
view of the Company's combined extremely limited financial resources and limited
management availability, the Company will continue to be at a significant
competitive disadvantage compared to the Company's competitors.
ITEM 3. DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no agreements to acquire
any properties. The Company currently uses the home office of Mr. Pasquale
Catizone at no cost to the Company, an arrangement which management expects will
continue until the Company completes an acquisition or merger.
12
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 1, 1999, each person known by
the Company to be the beneficial owner of five percent or more of the Company's
Common Stock, all directors individually and all directors and officers of the
Company as a group. Except as noted, each person has sole voting and investment
power with respect to the shares shown.
Amount of
Name and Address Beneficial Percentage of
of Beneficial Owner Ownership Class
- ------------------- --------- -----
Pasquale Catizone (1) (3) 3,547,815 37.2%
266 Cedar Street
Cedar Grove, NJ 07009
Carmine Catizone (2) (3) 4,000,000 42.0%
10 1/2Walker Avenue
Morristown, NJ 07960
All Executive Officers and 7,547,815 79.2%
Directors as a Group
(1) Includes (a) 1,000,000 shares held of record by Mr. Catizone's minor
daughter, and (b) 1,000,000 shares held of record by Pasquale Catizone's
wife, Barbara Catizone.
(2) Includes (i) 500,000 shares held in a custodial account for the benefit of
his daughter Carrie Catizone; and (ii) 500,000 shares held in a custodial
account for the benefit of his daughter Sherri Catizone.
(3) Carmine Catizone and Pasquale Catizone are brothers.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The Company has two Directors and two Officers as follows:
Name Age Positions and Offices Held
- ---- --- --------------------------
Pasquale Catizone 58 President, Director
Carmine Catizone 53 Secretary, Treasurer,
Director
13
<PAGE>
There are no agreements or understandings for an officer or director to
resign at the request of another person and the above-named officers and
directors are not acting on behalf of nor will act at the direction of any other
person.
Set forth below are the names of the directors and officers of the Company,
all positions and offices with the Company held, the period during which he has
served as such, and the business experience during at least the last five years:
Pasquale Catizone. Mr. Catizone has been president and a director of the
Company since May 1998. Mr. Catizone has been self-employed as a financial
consultant for the last ten years. He served as president and a director of
First Equity of New Jersey, Inc., from its organization in May 1983 until
September 1992. Mr. Catizone was also the president and a director of Phonics
Corporation (f/k/a Taris, Inc.) from September 1985 until May 1994.
Carmine Catizone. Mr. Catizone has been secretary and director of the
Company since May 1998. From June 1988 to July 1994, Mr. Catizone was the
president and director of J&E Beauty Supply, Inc., a retail and wholesale beauty
supply distributor. Mr. Catizone formerly served as president and a director of
C&C Investments, a blank check company (n/k/a T.O.P.S. Medical Corp.) from July
1977 until December 1984.
Other Blank Check Companies
Carmine Catizone formerly served as president and a director of C&C
Investments, a blank check company (now known as T.O.P.S. Medical Corp.) from
July 1977 until December 1984. In December 1987, C&C Investments changed its
name to T.O.P.S. Medical Corp. He is not presently involved with T.O.P.S.
Medical Corp. in any capacity whatsoever. Pasquale Catizone served as president
and a director of First Equity of New Jersey, Inc., from its organization in May
1983 until September 1992. First Equity was formed as a blank check company.
Current Blank Check Companies
Except for the Company, no directors or officers of the Company are
presently officers, directors or shareholders in any blank check companies. One
or both of the officers/directors may, in the future become involved with
additional blank check companies.
Conflicts Of Interest
Although there are no plans to do so at this time, the Company's officers
and directors may in the future organize other companies of a similar nature and
with a similar purpose as the Company. Consequently, there are potential
inherent conflicts of interest in acting as an officer and director of the
Company. Insofar as the officers and directors are engaged in other business
activities, management anticipates that it will devote only a minor amount of
time to the Company's affairs. The Company does not have a right of first
14
<PAGE>
refusal pertaining to opportunities that come to management's attention insofar
as such opportunities may relate to the Company's proposed business operations.
A conflict may arise in the event that another blank check company with
which management becomes affiliated is formed and actively seeks a target
company. It is anticipated that target companies will be located for the Company
and other blank check companies in chronological order of the date of formation
of such blank check companies. However, any blank check companies that may be
formed may differ from the Company in certain items such as place of
incorporation, number of shares and shareholders, working capital, types of
authorized securities, or other items. It may be that a target company may be
more suitable for or may prefer a certain blank check company formed after the
Company. In such case, a business combination might be negotiated on behalf of
the more suitable or preferred blank check company regardless of date of
formation. Mr. Pasquale Catizone will be responsible for seeking, evaluating,
negotiating and consummating a business combination with a target company which
may result in terms providing benefits to any officer or director.
Mr. Pasquale Catizone is currently a self-employed financial consultant. As
such, demands may be placed on the time of Mr. Catizone which will detract from
the amount of time he is able to devote to the Company. Mr. Catizone intends to
devote as much time to the activities of the Company as required. However,
should such a conflict arise, there is no assurance that Mr. Catizone would not
attend to other matters prior to those of the Company. Mr. Catizone projects
that initially approximately five (5) hours per month of his time may be spent
locating a target company which amount of time would increase when the analysis
of, and negotiations and consummation with, a target company are conducted.
In the event the Company needs additional funds for operating capital
and/or for costs in connection with a business combination, the Company may opt
to issue additional common stock. Except in connection with the foregoing
financing possibility, no other securities, or rights to securities, of the
Company will be issued to management or promoters, or their affiliates or
associates, prior to the completion of a business combination. At the time of a
business combination, management expects that some or all of the shares of
Common Stock owned by the officers and directors will be purchased by the target
company. The amount of Common Stock sold or continued to be owned by the
officers and directors cannot be determined at this time.
The terms of business combination may include such terms as one or more of
the present directors remaining a director or officer of the Company. The terms
of a business combination may provide for a payment by cash or otherwise to one
or more of the present directors for the purchase of all or part of their
holdings of common stock of the Company by a target company. In such event, one
or more directors would directly benefit from such employment or payment, and
such benefits may influence management's choice of a target company.
The Company may agree to pay finder's fees, as appropriate and allowed, to
unaffiliated persons who may bring a target company to the Company where that
reference results in a business combination. The amount of any finder's will be
subject to negotiation, and cannot be estimated at this time. No finder's fee of
15
<PAGE>
any kind will be paid to management or promoters of the Company or to their
associates or affiliates. No loans of any type have, or will be, made to
management or promoters of the Company or to any of their associates or
affiliates.
The Company's officers and directors, its promoters and their affiliates or
associates have not had any negotiations with and there are no present
arrangements or understandings with any representatives of the owners of any
business or company regarding the possibility of a business combination with the
Company.
The Company will not enter into a business combination, or acquire any
assets of any kind for its securities, in which management or promoters of the
Company or any affiliates or associates have any interest, direct or indirect.
The Company will not pay any finder's fees to members of management in
connection with identifying an entity to a successful business combination.
There are no binding guidelines or procedures for resolving potential
conflicts of interest. Failure by management to resolve conflicts of interest in
favor of the Company could result in liability of management to the Company.
However, any attempt by shareholders to enforce a liability of management to the
Company would most likely be prohibitively expensive and time consuming.
Investment Company Act of 1940
Although the Company will be subject to regulation under the Securities
Act, management believes the Company will not be subject to regulation under the
Investment Company Act of 1940 insofar as the Company will not be engaged in the
business of investing or trading in securities. In the event the Company engages
in business combinations which result in the Company holding passive investment
interests in a number of entities the Company could be subject to regulation
under the Investment Company Act of 1940. In such event the Company would be
required to register as an investment company and could be expected to incur
significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act of 1940, any violation of
which would subject the Company to material adverse consequences.
ITEM 6. EXECUTIVE COMPENSATION
The Company's current officers and directors do not receive any
compensation for their services rendered to the Company, have not received such
compensation in the past, and are not accruing any compensation pursuant to any
agreement with the Company.
The officers and directors of the Company will not receive any finder's
fee, either directly or indirectly, as a result of his efforts to implement the
Company's business plan outlined herein. However, the officers and directors of
the Company anticipate receiving benefits as beneficial shareholders of the
Company. See "ITEM 4. SECURITY OWNERSHIP."
16
<PAGE>
No retirement, pension, profit sharing, stock option or insurance programs
or other similar programs have been adopted by the Company for the benefit of
its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to a certain Securities Purchase Agreement dated as of May 11,
1998, Mr. Pasquale Catizone purchased from the former president and director of
the Company an aggregate of 2,597,714 shares of Common Stock for an aggregate
purchase price of $23,000. Simultaneous with the closing of the Securities
Purchase Agreement, the then officers and directors of the Company tendered
resignations from their respective positions, at which time Pasquale Catizone
became president and director and Carmine Catizone became secretary, treasurer
and director of the Company. Also simultaneous with the closing of the
Securities Purchase Agreement, the Company issued to Pasquale Catizone a Common
Stock Purchase Warrant for 6,000,000 shares of Common Stock (the "Warrant")
which was exercised on September 17, 1998. The shares of Common Stock underlying
the warrant were distributed to Pasquale Catizone and his nominees, including
Carmine Catizone and other family members. Pasquale Catizone and Carmine
Catizone are brothers.
The proposed business activities described herein classify the Company as a
blank check company. See "GLOSSARY". The Securities and Exchange Commission and
many states have enacted statutes, rules and regulations limiting the sale of
securities of blank check companies. Other than making the Company's securities
eligible to trade, management does not intend to undertake any efforts to cause
a market to develop in the Company's securities until such time as the Company
has successfully implemented its business plan described herein.
ITEM 8. DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 50,000,000 shares
of Common Stock, par value $.001 per share, of which 9,522,692 shares are issued
and outstanding. The following statements relating to the capital stock are
summaries and do not purport to be complete. Reference is made to the more
detailed provisions of, and such statements are qualified in their entirety by
reference to, the Certificate of Incorporation and the By-laws, copies of which
are filed as exhibits to this registration statement.
Common Stock
Holders of shares of common stock are entitled to one vote for each share
on all matters to be voted on by the stockholders. Holders of common stock do
not have cumulative voting rights. Holders of common stock are entitled to share
ratably in dividends, if any, as may be declared from time to time by the Board
of Directors in its discretion from funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company, the holders of
17
<PAGE>
common stock are entitled to share pro rata all assets remaining after payment
in full of all liabilities. All of the outstanding shares of common stock are,
and the shares of common stock offered by the Company pursuant to this offering
will be, when issued and delivered, fully paid and non-assessable. Holders of
common stock have no preemptive rights to purchase the Company's common stock.
There are no conversion or redemption rights or sinking fund provisions with
respect to the common stock.
Dividends
Dividends, if any, will be contingent upon the Company's revenues and
earnings, capital requirements and financial conditions. The payment of
dividends, if any, will be within the discretion of the Company's Board of
Directors. The Company presently intends to retain all earnings, if any, for use
in its business operations and accordingly, the Board of Directors does not
anticipate declaring any dividends prior to a business combination.
Glossary
"Blank Check" Company As defined in Section 7(b)(3) of the Securities Act,
a "blank check" company is a development stage
company that has no specific business plan or
purpose or has indicated that its business plan is
to engage in a merger or acquisition with an
unidentified company or companies and is issuing
"penny stock" securities as defined in Rule 3(a)(51)
of the Exchange Act.
The Company Baynon International Corporation, the company whose
common stock is the subject of this registration
statement.
Exchange Act The Securities Exchange Act of 1934, as amended.
"Penny Stock" Security As defined in Rule 3(a)(51) of the Exchange Act a
"penny stock" security is any equity security other
than a security (i) that is a reported security (ii)
that is issued by an investment company (iii) that
is a put or call issued by the Options Clearing
Corporation (iv) that has a price of $5.00 or more
(except for purposes of Rule 419 of the Securities
Act) (v) that is registered on a national securities
exchange (vi) that is authorized for quotation on
the Nasdaq Stock Market, unless other provisions of
Rule 3a5l-l are not satisfied, or (vii) that is
18
<PAGE>
issued by an issuer with (a) net tangible assets in
excess of $2,000,000, if in continuous operation for
more than three years or $5,000,000 if in operation
for less than three years or (b) average revenue of
at least $6,000,000 for the last three years.
Securities Act The Securities Act of 1933, as amended.
Small Business Issuer As defined in Rule 12b-2 of the Exchange Act, a
"Small Business Issuer" is an entity (i) which has
revenues of less than $25,000,000 (ii) whose public
float (the outstanding securities not held by
affiliates) has a value of less than $25,000,000
(iii) which is a United States or Canadian issuer
(iv) which is not an Investment Company and (v) if a
majority-owned subsidiary, whose parent corporation
is also a small business issuer.
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) Market Price. There has been no trading market for the Company's Common
Stock for at least the last two years. There is no assurance that a trading
market will ever develop or, if such a market does develop, that it will
continue.
The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
19
<PAGE>
made about the risks of investing in penny stocks in both public offerings and
in secondary trading, and about commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
In order to qualify for listing on the Nasdaq SmallCap Market, a company
must have at least (i) net tangible assets of $4,000,000 or market
capitalization of $50,000,000 or net income for two of the last three years of
$750,000; (ii) public float of 1,000,000 shares with a market value of
$5,000,000; (iii) a bid price of $4.00; (iv) three market makers; (v) 300
shareholders and (vi) an operating history of one year or, if less than one
year, $50,000,000 in market capitalization. For continued listing on the Nasdaq
SmallCap Market, a company must have at least (i) net tangible assets of
$2,000,000 or market capitalization of $35,000,000 or net income for two of the
last three years of $500,000; (ii) a public float of 500,000 shares with a
market value of $1,000,000; (iii) a bid price of $1.00; (iv) two market makers;
and (v) 300 shareholders.
If, after a merger or acquisition, the Company does not meet the
qualifications for listing on the Nasdaq SmallCap Market, the Company's
securities may be traded in the NASD's over-the-counter ("OTC") market. The OTC
market differs from national and regional stock exchanges in that it (1) is not
cited in a single location but operates through communication of bids, offers
and confirmations between broker-dealers and (2) securities admitted to
quotation are offered by one or more broker-dealers rather than the "specialist"
common to stock exchanges. The Company may apply for listing on the NASD OTC
Bulletin Board or may offer its securities in what are commonly referred to as
the "pink sheets" of the National Quotation Bureau, Inc. To qualify for listing
on the NASD OTC Bulletin Board, an equity security must have one registered
broker-dealer, known as the market maker, willing to list bid or sale quotations
and to sponsor the company for listing on the Bulletin Board.
If the Company is unable initially to satisfy the requirements for
quotation on the Nasdaq SmallCap Market or becomes unable to satisfy the
requirements for continued quotation thereon, and trading, if any, is conducted
in the OTC market, a shareholder may find it more difficult to dispose of, or to
obtain accurate quotations as to the market value of, the Company's securities.
(b) Holders. There are approximately 450 holders of the Company's Common
Stock. The issued and outstanding shares of the Company's Common Stock were
issued in accordance with the exemptions from registration afforded by Sections
3(b) and 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder.
(c) Dividends. The Company has not paid any dividends in the past two
years, and has no plans to do so in the immediate future.
20
<PAGE>
ITEM 2. LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Subsequent to the closing of the Securities Purchase Agreement, the Company
changed accountants at which time the firm of Samuel Klein and Company was
retained. Management had no disagreements with the findings of its former
accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
Except in connection with the exercise of the Warrant, the Company has not
sold securities which were not registered during the past three years.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.7502 of the Nevada Revised Statutes provides that a Nevada
corporation has the power, under specified circumstances, to indemnify its
directors, officers, employees and agents, against expenses incurred in any
action, suit or proceeding. The Certificate of Incorporation and the by-laws of
the Company provide for indemnification of directors and officers to the fullest
extent permitted by the General Corporation Law of the State of Nevada.
The General Corporation Law of the State of Nevada provides that a
certificate of incorporation may contain a provision eliminating the personal
liability of a director or officer to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director or officer provided
that such provision shall not eliminate or limit the liability of a director (i)
for acts or omissions which involve intentional misconduct, fraud or a knowing
violation of law, or (ii) under Section 78.300 (relating to liability for
unauthorized distributions on capital stock) of the Nevada revised statutes. The
Company's Certificate of Incorporation contains such a provision.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING
THE COMEPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE
SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC
POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
21
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
(2) Articles of Incorporation and By-laws:
2.1* Articles of Incorporation as amended
2.2* By-laws as amended
(23) Consents - Experts:
23.1* Consent of Accountants
* filed herewith.
22
<PAGE>
INDEX TO FINANCIAL STATEMENTS
BAYNON INTERNATIONAL CORPORATION
FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants F-1
Financial Statements:
Assets F-3
Stockholders' Equity F-4
Notes to Financial Statement F-6
23
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, as
amended, the Registrant caused this registration statement to be signed on its
behalf by the undersigned thereunto duly authorized.
BAYNON INTERNATIONAL CORPORATION
By: /s/ Pasquale Catizone
-----------------------------------------
Pasquale Catizone, Director and President
By: /s/ Carmine Catizone
-----------------------------------------
Carmine Catizone, Director and Secretary
September 9, 1999
24
<PAGE>
BAYNON INTERNATIONAL CORPORATION
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
AND FOR THE SIX MONTHS PERIODS ENDED JUNE 30, 1999 AND 1998
<PAGE>
SAMUEL KLEIN AND COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
ONE NEWARK CENTER
NEWARK, N.J. 07102-5255
(973) 624-6100
(212) 269-6214
FAX NUMBER
(973) 624-6101
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Baynon International Corporation
We have audited the accompanying balance sheets of Baynon International
Corporation (formerly Technology Associates Corporation) as of December 31, 1998
and 1997, and the related statements of operations, stockholders' equity and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Baynon International
Corporation as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ Samuel Klein and Company
SAMUEL KLEIN AND COMPANY
Newark, New Jersey
April 5, 1999
MEMBERS AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
1
<PAGE>
BAYNON INTERNATIONAL CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1998 1997 1999
---- ---- --------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $50,892 $ - $49,658
------- -------- -------
Total Current Assets 50,892 - 49,658
------- -------- ------
Total Assets $50,892 $ - $49,658
======= ======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 1,215 $ - $ 2,500
------- -------- -------
Total Current Liabilities 1,215 - 2,500
------- -------- -------
Total Liabilities 1,215 - 2,500
------- -------- -------
Stockholders' Equity:
Common stock, $.001 par value, 50,000,000
shares authorized, 9,532,692 and 3,532,692
shares issued and outstanding at December
31, 1998 and 1997 and 9,532,692 at June
30, 1999 9,533 3,533 9,533
Additional paid-in-capital 44,000 - 44,000
Retained earnings (deficit) (3,856) (3,533) (6,375)
------- -------- -------
Total Stockholders' Equity 49,677 - 47,158
------- -------- -------
Total Liabilities and Stockholders' Equity $50,892 $ - $49,658
======= ======== =======
</TABLE>
- --------------------
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
BAYNON INTERNATIONAL CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years Ended For the Six Months Ended
December 31, June 30,
1998 1997 1999 1998
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Revenues $ - $ - $ - $ -
Cost of Revenues - - - -
------ ------ ------- ------
Gross Profit - - - -
Other Costs:
General and administrative
expenses 1,500 - 3,910 -
------ ------ ------- ------
Total Other Costs 1,500 - 3,910 -
Other Income and Expense:
Interest income 1,177 - 1,391 -
------ ------ ------- ------
Net Loss before Income Taxes (323) - (2,519) -
Income Taxes - - - -
------ ------ ------- ------
Net Loss $ (323) $ - $(2,519) $ -
====== ====== ======= ======
</TABLE>
- --------------------
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
BAYNON INTERNATIONAL CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
AND
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock
$.001 Par Value
----------------------------
Common Additional Retained Total
Number Stock Paid-In- Earnings Stockholders'
of Shares Amount Capital (Deficit) Equity
--------- -------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1997 3,532,692 $3,533 $ - $(3,533) $ -
Issuance of Common Shares - - - - -
Net Income (Loss) for the Year
Ended December 31, 1997 - - - - -
--------- ------ ------- ------- -------
Balances, December 31, 1997 3,532,692 3,533 - (3,533) -
Issuance of Common Shares
Upon Exercise of Warrant 6,000,000 6,000 44,000 - 50,000
Net Income (Loss) for the Year
Ended December 31, 1998 - - - (323) (323)
--------- ------ ------- ------- -------
Balances, December 31, 1998 9,532,692 9,533 44,000 (3,856) 49,677
Net Loss for the Six Months Ended
June 30, 1999 (Unaudited) - - - (2,519) (2,519)
--------- ------ ------- ------- -------
Balances, June 30, 1999 9,532,692 $9,533 $44,000 $(6,375) $47,158
========= ====== ======= ======= =======
</TABLE>
- --------------------
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
BAYNON INTERNATIONAL CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year Ended For the Six Months Ended
December 31, June 30,
1998 1997 1999 1998
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (323) $ - $(2,519) $ -
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Increase in accounts payable and
accrued expenses 1,215 - 1,285 -
------- -------- ------- --------
Net Cash Provided by (Used in)
Operating Activities 892 - (1,234) -
------- -------- ------- --------
Cash Flows from Financing Activities:
Issuance of common stock 50,000 - - -
------- -------- ------- --------
Net cash provided by financing
activities 50,000 - - -
------- -------- ------- --------
Net Increase (Decrease) in Cash and
Cash Equivalents 50,892 - (1,234) -
Cash and Cash Equivalents, beginning
of year - - 50,892 -
------- -------- ------- --------
Cash and Cash Equivalents, end of year $50,892 $ - $49,658 $ -
======= ======== ======= ========
</TABLE>
- --------------------
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
BAYNON INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
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 seeks to provide a method for a foreign or domestic
private company to become a reporting (public) company whose securities are
qualified for trading in the United States secondary market.
Cash and Cash Equivalents
For financial statement purposes, short-term investments with a maturity of
ninety days or less and highly liquid investments are considered cash
equivalents.
Use of Management's 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 liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Income Taxes
The Company follows Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns. Under
this method, deferred tax liabilities and assets are determined based on the
difference between the financial statement carrying amounts and tax bases of
assets and liabilities using enacted tax rates in effect in the years in which
the differences are expected to reverse. Valuation allowances are established
when necessary to reduce deferred tax assets to the amount expected to be
realized.
6
<PAGE>
BAYNON INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Continued)
1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Impairment of Long-Lived Assets
The Company adopted Statement of Financial Accounting Standards No. 121 (SFAS
121), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of". SFAS 121 requires that if facts and circumstances
indicate that the cost of fixed assets or other assets may be impaired, an
evaluation of recoverability would be performed by comparing the estimated
future undiscounted pre-tax cash flows associated with the asset to the asset's
carrying value to determine if a write-down to market value or discounted
pre-tax cash flow value would be required.
Comprehensive Income
For the year ended December 31, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS 130"). This
statement establishes rules for the reporting of comprehensive income and its
components which require that certain items such as foreign currency translation
adjustments, unrealized gains and losses on certain investments in debt and
equity securities, minimum pension liability adjustments and unearned
compensation expense related to stock issuances to employees be presented as
separate components of stockholders' equity. The adoption of SFAS 130 had no
impact on total stockholders' equity for either of the years presented in these
financial statements.
2. COMMON STOCK
The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock, par value $.001 per share, of which 9,532,692 shares are issued
and outstanding at December 31, 1998.
Holders of shares of common stock are entitled to one vote for each share on all
matters to be voted on by the stockholders. Holders of common stock do not have
cumulative voting rights. Holders of common stock are entitled to share ratably
in dividends, if any, as may be declared from time to time by the Board of
Directors in its discretion from funds legally available therefor. In the event
of a liquidation, dissolution or winding up of the Company, the holders of
common stock are entitled to share pro rata all assets remaining after payment
in full of all liabilities. All of the outstanding shares of common stock are
fully paid and nonassessable. Holders of common stock have no preemptive rights
to purchase the Company's common stock. There are no conversion or redemption
rights or sinking fund provisions with respect to the common stock.
Pursuant to a certain Securities Purchase Agreement dated as of May 11, 1998,
Mr. Pasquale Catizone purchased from the former president and director of the
Company an aggregate of 2,597,714 shares of Common Stock for an aggregate
purchase price of $23,000. Simultaneous with the closing of the Securities
Purchase Agreement, the then officers and directors of the Company tendered
resignations from their respective positions, at which time Pasquale Catizone
became president and director and Carmine Catizone became secretary, treasurer
and director of the Company. Also simultaneous with the closing of the
Securities Purchase Agreement, the Company issued to Pasquale Catizone a Common
Stock Purchase Warrant for 6,000,000 shares of Common Stock which was exercised
on September 17, 1998, and the Company received net proceeds of $50,000. The
shares of Common Stock underlying the warrant were distributed to Pasquale
Catizone and his nominees, including Carmine Catizone and other family members.
Pasquale Catizone and Carmine Catizone are brothers.
7
<PAGE>
BAYNON INTERNATIONAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Continued)
3. YEAR 2000 ISSUES
The year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
2000 dates is processed. In addition, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than a date. The
effects of the Year 2000 Issue may be experienced before, on, or after January
1, 2000, and, if not addressed, the impact on operations and financial reporting
may range from minor errors to significant systems failure which could affect an
entity's ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the Company, including
those related to the efforts of customers, suppliers, or third parties, will be
fully resolved.
8
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Baynon International Corporation
266 Cedar Street
Cedar Grove, New Jersey 07009
We hereby consent to the use of our report dated April 5, 1999 related to the
financial statements of Baynon International Corporation as of December 31, 1998
and 1997 included in this Registration Statement on Form 10-SB.
We also consent to the reference to our firm under the caption "Changes In and
Disagreements with Accountants" included in the Registration Statement.
/s/ Samuel Klein
--------------------------------
SAMUEL KLEIN AND COMPANY
August 26, 1999
