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EX-31.1 - CERTIFICATION - Bay Acquisition Corp.f10k2009a1ex31i_bayacq.htm
EX-32.1 - CERTIFICATION - Bay Acquisition Corp.f10k2009a1ex32i_bayacq.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

———————
FORM 10-K/A
(Amendment No. 1)
———————

x  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the fiscal year ended: December 31, 2009
or
   
  o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from: _____________ to _____________

———————

BAY ACQUISITION CORP.
(Exact name of registrant as specified in its charter)

———————

Nevada
001- 28099
77-0571784
(State or Other Jurisdiction of Incorporation or Organization)
(Commission File Number)
(I.R.S. Employer Identification No.)
     
 
420 Lexington Avenue, Suite 2320, New York, NY 10170
(Address of Principal Executive Office) (Zip Code)
 
(212) 661-6800
Registrant’s telephone number, including area code)


(Former name or former address, if changed since last report)
———————
 
Securities registered pursuant to Section 12(b) of the Act:
     
Title of each class
 
Name of each exchange on which registered
Common Stock, $0.0001 Par Value
 
OTC.BB
     
Securities registered pursuant to Section 12(g) of the Act:
     
Common Stock
 
(Title of Class)
 
———————
 
 
 

 
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
    o
 Yes
x
 No
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
    o
 Yes
x
 No
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
x
 Yes
   o
 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 (¤ 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).
 
   o
 Yes
x
 No
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
 
   o  
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
   
Large accelerated filer
  o    
Accelerated filer
o  
Non-accelerated filer
  o    
Smaller reporting company
x
 
   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
x
 Yes
  o
 No
   
As of June 30, 2009 the aggregate value of the voting common stock held by non-affiliates of the registrant was approximately $1,873,814 based on the closing market price of the registrants common stock of $0.08 on that day.
 
As of April 15, 2010 there were 23,422,663 shares outstanding with a par value of $0.001.
 
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
 
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
    o
 Yes
  o
 No
 
 
 

 
 

 
 
Explanatory Note
 
Bay Acquisition Corp. (which may be referred to herein as we, us or the Company) is filing this Amendment No. 1to its Annual Report on Form 10-K (this “Form 10-K/A”) for the fiscal year ended December 31, 2009 (the “Annual Report”) to revise Item 15, Exhibits, Financial Statement Schedules to replace the Reports of Independent Registered Public Accounting Firms with revised reports.   The remainder of the Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 15, 2010 remains unchanged and this Form 10-K/A should be read in conjunction with the Form 10-K.
 
 
 
 
1

 
 
Item 15. Exhibits, Financial Statement Schedules

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 

 
The Board of Directors and Stockholders
Bay Acquisition Corp.
 
We have audited the accompanying balance sheet of Bay Acquisition Corp. (the “Company”), as of December 31, 2009 and the related statement of operations, changes in stockholders’ equity and cash flows for the year ended December 31, 2009. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Bay Acquisition Corp. as of December 31, 2008, and for the year then ended were audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those financial statements, dated April 15, 2009 and included an explanatory paragraph relating to the existence of substantial doubt about the Company’s ability to continue as a going concern.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Bay Acquisition Corp., as of December 31, 2009 and the results of its operations and cash flows for the year ended December 31, 2009, in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has experienced recurring losses and deficiency of cash flows from operations. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans with regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome.


/s/ Friedman LLP
Marlton, NJ 08053
April 15, 2010
 
 
2

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of Bay Acquisition Corp.

We have audited the accompanying consolidated balance sheet of Bay Acquisition Corp. (a Delaware corporation) (the “Company”) as of December 31, 2008 and the related consolidated statements of operations, retained earnings and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We did not audit the financial statements of Space Logic, Ltd and Secure Logic, Ltd., wholly owned subsidiaries, which statements reflect total assets of $1,186 (U.S. dollars in thousands, except share data) as of June 30, 2008, and total revenues of $1,793 (U.S. dollars in thousands, except share data) for the six month period then ended and are presented as discontinued operations because of the shareholder settlement requiring the acquisition be reversed. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Space Logic, Ltd. and Secure Logic, Ltd., is based solely on the report of the other auditors.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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 Bay Acquisition Corp. as of December 31, 2008, and the results of its operations and its cash flows for the year ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has incurred recurring losses and experiences deficiency of cash flow from operations. These conditions raise substantial doubt about its ability to continue as a going concern. Management plans regarding those matters also are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.

Bagell, Josephs, Levine & Company, L.L.C.
Marlton, NJ 08053
April 15, 2009
 
 
3

 
 
BAY ACQUISITION CORP
(FORMERLY: SECURELOGIC CORP.)
BALANCE SHEETS
(U.S. Dollars in thousands, except share data)
 
   
December 31,
   
Consolidated
December 31,
 
   
2009
   
2008
 
             
Assets
           
Current assets:
           
  Cash
  $ 4     $ 215  
  Loan to shareholder
    171       -  
  Interest receivable
    11       -  
                 
        Total current assets
    186       215  
                 
        Total assets
  $ 186     $ 215  
                 
Liabilities and Shareholders' Equity
               
Current liabilities:
               
  Trade payables
  $ 36     $ 16  
                 
                 
        Total current liabilities
    36       16  
                 
                 
Commitments and contingencies
               
                 
Shareholders' equity:
               
  Common stock $0.0001 par value; 100,000,000 shares authorized,
               
    23,422,663 issued and outstanding at December 31, 2009 and 2008
    23       23  
  Additional paid-in capital
    14,247       14,247  
  Treasury stock (32,899,667 shares) at cost
    (4,957 )     (4,957 )
  Accumulated deficit
    (9,163 )     (9,114 )
  Accumulated other comprehensive income
    -       -  
                 
        Total shareholders'  equity
    150       199  
                 
        Total liabilities and shareholders'  equity
  $ 186     $ 215  
 
The accompanying notes are an integral part of these financial statements.
 
 
4

 

BAY ACQUISITION CORP.
(FORMERLY: SECURELOGIC CORP.)
STATEMENTS OF OPERATIONS
(U.S. Dollars in thousands, except share and per share data)

   
Year Ended
 
   
December 31,
   
Consolidated
December 31,
 
   
2009
   
2008
 
             
Revenue
  $ -     $ -  
                 
Cost of revenue
    -       -  
                 
Gross profit
    -       -  
                 
General and administrative expenses
    60       39  
                 
Loss from continuing operations
    (60 )     (39 )
                 
Interest income
    11       -  
                 
                 
Net loss from continuing operations
    (49 )     (39 )
                 
Loss from discontinued operations
    -       (251 )
                 
                 
Net loss applicable to common shares
  $ (49 )   $ (290 )
                 
                 
Net loss per share:
               
 Continuing Operations
  $ (0.00 )   $ (0.01 )
 Discontinued Operations
  $ (0.00 )   $ (0.01 )
                 
Weighted average shares outstanding
               
   Basic and Diluted
    23,422,663       39,434,523  

The accompanying notes are an integral part of these financial statements
 
 
5

 
 
BAY ACQUISITION CORP.
(FORMERLY: SECURELOGIC CORP.)
STATEMENT OF STOCKHOLDERS’ EQUITY
For the years ended December 2008 and 2009
(U.S. Dollars in thousands, except share data)
 
 
               
Additional
               
Other
             
   
Common
   
Par
   
Paid-in
   
Treasury
   
Accumulated
   
Comprehensive
   
Comprehensive
       
   
Stock
   
Value
   
Capital
   
Stock
   
Deficit
   
Income (loss)
   
Income (loss)
   
Total
 
                                                 
Consolidated Balance December 31, 2007
    55,947,331     $ 56     $ 7,366     $ -     $ (8,824 )   $ (95 )         $ (1,497 )
                                                               
 Reversal of May 2005 acquisition
    (32,524,668 )     (33 )     6,881       (4,957 )                           1,891  
                                                               
 Net Loss
                                    (290 )             (290 )     (290 )
                                                                 
Translation adjustment
                                            95       95       95  
                                                                 
Comprehensive loss
                                                  $ (195 )        
                                                                 
                                                                 
Consolidated Balance December 31, 2008
    23,422,663     $ 23     $ 14,247     $ (4,957 )   $ (9,114 )   $ -             $ 199  
                                                                 
 Net Loss
                                    (49 )                     (49 )
                                                                 
Translation adjustment
                                            -               -  
                                                                 
Comprehensive loss
                                                               
                                                                 
                                                                 
Balance December 31, 2009
    23,422,663     $ 23     $ 14,247     $ (4,957 )   $ (9,163 )   $ -             $ 150  
 
The accompanying notes are an integral part of these financial statements.
 
 
6

 
 
BAY ACQUISITION CORP.
(FORMERLY: SECURELOGIC CORP.)
STATEMENTS OF CASH FLOWS
(U.S. Dollars in thousands)
 
   
Years Ended
 
   
December 31,
   
Consolidated
December 31,
 
   
2009
   
2008
 
Cash flows from operating activities:
           
  Net loss
  $ (49 )   $ (39 )
  Adjustments to reconcile net loss to net cash (used in) operating activities:
               
  Increase in interest receivable
    (11 )     -  
  Increase in accounts payable
    20       16  
Net cash (used in) continuing operations
    (40 )     (23 )
                 
Discontinued Operations
               
Loss from discontinued operations
    -       (251 )
  Adjustments to reconcile net cash provided by discontinued operations
    -       359  
                 
Net cash provided by operating activities - discontinued operations
    -       108  
Net cash provided by (used in) operating activities
    (40 )     85  
                 
Cash flows from investing activities:
               
Discontinued Operations
               
  Adjustments to reconcile net cash (used in) discontinued operations
    -       (119 )
Net cash used in investing activities
    -       (119 )
                 
Cash flows from financing activities:
               
  Loan to stockholder
    (171 )     -  
                 
Net cash provided by financing activities
    (171 )     -  
                 
Effect of exchange rates changes on cash
    -       95  
                 
Net increase (decrease) in cash
    (211 )     61  
Cash at beginning of year
    215       154  
                 
Cash at end of year
  $ 4     $ 215  
                 
                 
Supplemental Cash Flow Information
               
During the period, cash was paid for the following:
               
    Interest
  $ -     $ -  
    Income taxes
  $ -     $ -  
The accompanying note are an integral part of these financial statements.
 
 
 
 
7

 

BAY ACQUISITION CORP.
(FORMERLY SECURELOGIC CORP.)
NOTES TO THE FINANCIAL STATEMENTS
(U.S. dollars in thousands, except share and per share data)

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Bay Acquisition Corp. (formerly: SecureLogic Corp) (“the Company”) is incorporated in Nevada.  In 2005, the Company acquired SpaceLogic, an Israeli-based company, in exchange for a total of 33,253,611 newly issued shares of the Company’s common stock, which represented 59.8% of the Company’s common shares. The acquisition was accounted for as a reverse acquisition.  SpaceLogic is in the business of developing Airport Baggage Handling Systems, as well as Automated Materials Handling Systems.

In July, 2008, as further described in NOTE 4 below, as a result of the settlement of certain litigation, and upon the approval by the court and the Company’s shareholders, the SpaceLogic acquisition that closed in May 2005 was reversed and the Company’s business operations associated with the airport security screening and handling markets that were acquired in 2005 was returned to the previous owners as were the shares of the Company’s common stock issued in that acquisition.

The Company is actively seeking to merge, invest in or acquire other companies to generate revenues and profits.

All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements present those of Bay Acquisition Corp.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The financial statements shown for the year ended December 31, 2008 are consolidated.  The financial statements as of December 31, 2009 are not.

FINANCIAL STATEMENTS IN U.S. DOLLARS

The reporting currency of the Company is the U.S. dollar (“dollar").
 
The dollar is the functional currency of the Company and its subsidiary in the United States. Transactions and balances originally denominated in dollars are presented at their original amounts. Non-dollar transactions and balances have been measured in United States dollars in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 830, “Foreign Currency Matters.” All transaction gains and losses from the measurement of monetary balance sheet items denominated in non-dollar currencies are reflected in the statement of operations as financial income or expenses, as appropriate.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported and disclosure of contingent assets and liabilities in the financial statements and accompanying notes. Actual results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its majority owned subsidiary (the “Group”). Intercompany transactions and balances have been eliminated upon consolidation.

CASH AND CASH EQUIVALENTS

Cash equivalents include unrestricted, short-term, highly liquid investments that are readily convertible to cash with maturities of three months or less at the date of acquisition.
 
 
8

 
 
CONCENTRATION OF CREDIT RISKS

Financial instruments that potentially subject the Group to concentrations of credit risk consist principally of cash and cash equivalents.

The Group maintains cash and cash equivalents and investments with major financial institutions and are insured by the Federal Deposit Insurance Corporation up to federally insured limits.

STOCK-BASED COMPENSATION
 
The Company records compensation expense associated with stock options and other forms of equity compensation in accordance with FASB ASC 718, “Compensation – Stock Compensation.” Under the fair value recognition provision of FASB ASC Topic 718, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options granted using the Black-Scholes-Merton option pricing model.

The following table summarizes the effects of stock-based compensation resulting from the application of SFAS No. 123R (revised 2004) included in discontinued operations in the Statement of Operations as follows:
 
   
YEAR ENDED DECEMBER 31,
 
   
2009
   
2008
 
Operating expenses
    -       95  
Total
  $ -     $ 95  

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount reported in the balance sheet for cash and cash equivalents, short-term bank deposits, note receivables, trade payables and other accounts payable approximates their fair value.

BASIC AND DILUTED NET LOSS PER SHARE

Basic and diluted net loss per share has been computed using the weighted-average number of ordinary shares outstanding during the year. Outstanding share options and shares issued and reserved for outstanding share options have been excluded from the calculation of basic and diluted net loss per share to the extent such securities are anti-dilutive
 
 RECENT ACCOUNTING PRONOUNCEMENTS

Effective July 1, 2009, the FASB's ASC became the single official source of authoritative, nongovernmental generally accepted accounting principles in the United States ("GAAP"). The historical GAAP hierarchy was eliminated and the ASC became the only level of authoritative GAAP, other than guidance issued by the Securities and Exchange Commission. Our accounting policies were not affected by the conversion to ASC. However, references to specific accounting standards in the footnotes to our financial statements have been changed to refer to the appropriate section of ASC.

Management does not believe that any other recently issued, but not yet effective, accounting standard if currently adopted would have a material effect on the accompanying financial statements.

INCOME TAXES

The Company accounts for income taxes under the provisions of FASB ASC 740, “Income Taxes.” This pronouncement requires recognition of deferred tax assets and liabilities for the estimated future tax consequences of events attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the statement of operations in the period in which the enactment rate changes. Deferred tax assets and liabilities are reduced through the establishment of a valuation allowance at such time as, based on available evidence, it is more likely than not that the deferred tax assets will not be realized.
 
 
9

 
 
Effective January 1, 2007, the Company adopted the provisions of FASB ASC 740-10-05, “Accounting for Uncertainties in Income Taxes” The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Federal, state and local income tax returns for years prior to 2007 are no longer subject to examination by tax authorities.

NOTE 3 – GOING CONCERN

As reflected in the accompanying financial statements, the Company’s operations for the years ended December 31, 2009 and 2008 resulted in a net loss of $49,000 and $39,000, respectively.  The Company’s ability to continue operating as a “going concern” is dependent on its ability to raise sufficient additional working capital. Management’s plans in this regard include raising additional cash from current stockholders and potential investors and lenders.

These financials statements do not include adjustments relating to the recoverability and classifications of recorded asset amounts and reclassification of liabilities that might be necessary should the Company be unable to continue its existence.

NOTE 4 – SETTLEMENT OF SHAREHOLDER SUITS

On November 14, 2006, Michael Gardner, a stockholder holding approximately 7.9% of the Company’s Common Stock, filed a complaint in the Supreme Court of New York for the County of New York against defendants, which include certain officers and directors of the Company, Gary Koren, Shalom Dolev, Cathal L. Flynn, Iftach Yeffet, Tony Gross and Michael Klein and SecureLogic, as a nominal defendant.  The complaint purported to be a shareholder derivative action, alleging that the Defendants breached their fiduciary duties as directors and officers, committed waste, and were unjustly enriched (the “Baytree Action”). 
 
On November 15, 2006, Treeline Investment Partners and David Jaroslawicz filed a complaint in the Supreme Court of New York for New York County against Gary Koren and Killy Koren regarding two transactions for the purchase of shares of the Company’s Common Stock performed in 2005. While the Company is not a party to this litigation, the Company may be obligated to indemnify Mr. Koren for some or all of his litigation expenses (the “Treeline Action”).

On December 28, 2007, the parties in both the Baytree Action and the Treeline Action entered into a comprehensive Settlement Agreement and Release to settle the lawsuits. On May 1, 2008, the United States District Court for the Southern District of New York approved the Settlement Agreement.  Thereafter, the stockholders of the Company approved the Settlement Agreement and the transactions called for in the Settlement Agreement.

Pursuant to the Settlement Agreement, on or about July 15, 2008, the parties effectively reversed the May 2005 acquisition whereby the Company acquired the outstanding capital stock and business of SpaceLogic Ltd. and its subsidiary SecureLogic Ltd. in exchange for shares of the Company’s Common Stock.  Pursuant to the Settlement Agreement, on or about July 15, 2008, the following events occurred: (i) the individual Defendants surrendered their Common Stock to the Company for cancellation with Mr. Koren transferring 1,200,000 of his shares to Treeline Investment Partners, L.P. and Mr. Jaroslowicz, and (ii) the Company transferred to a new entity beneficially owned by Messrs. Koren, Dolev, Yeffet, Gross and Klein (“Newco”), all of the business and assets of the Company other than (a) $350,000 in cash, (b) accounts in existence prior to the acquisition in 2005, (c) corporate and tax records, and (d) 75% of the proceeds from the Company’s directors and officers insurance policy after payment of certain legal fees and expenses. Newco assumed all liabilities and obligations of the Company except certain liabilities and obligations of the Plaintiffs, other shareholders, and tax and Securities and Exchange Commission filings not to exceed $5,000 in the aggregate.  The Settlement Agreement also includes mutual general releases and non-disparagement provisions.
 
 
10

 
 
As December 31, 2008, all shares which were surrendered to the Company and  are being held as treasury shares.
 
In addition, Newco granted the Company or a designated subsidiary four non-exclusive licenses for individual iScreen Systems. Pursuant to these licenses, the Company will not market the iScreen Systems except through Newco or its designee. Each license will give the Company or its designated subsidiary the right to receive the first $200,000 in proceeds from the sale of the licensed iScreen System and an equal portion in any amount in excess of $200,000.

On July 22, 2008, the Company amended its Articles of Incorporation to change the Company’s name to “Bay Acquisition Corp.”

NOTE 5 – DISPOSAL OF BUSINESS

On July 15, 2008, as described in NOTE 4, the Company ceased operations of its subsidiaries.  The Company’s consolidated financial statements have been reclassified to reflect this sale as discontinued operations, for all periods presented.  The gain on the sale was $6,884,000, which is included in the Additional Paid-in-Capital.  However, the parties involved in the transaction are deemed to be related parties. As such, the gain has been reclassified to Additional Paid-in-Capital on the consolidated balance sheet.

NOTE 6 – RELATED PARTY TRANSACTIONS

The President and CEO of the Company, Mr. Paul Goodman, had performed legal services for the Company and received remuneration in the amount of $8,500 and $14,250 for the years ended December 31, 2009 and 2008, respectively.

NOTE 7 – LOAN TO SHAREHOLDER

On February 11, 2009, the Company made a short term bridge loan to a stockholder of the Company in the amount of $171,000. The loan bears interest at a rate of 8% per annum and is due and payable on May 15, 2010. The loan is classified as “Note receivable” on the accompanying consolidated balance sheet of the Company.

NOTE 8 – DISCONTINUED OPERATIONS

As previously disclosed in Note 4, the Company completed the reversal of the May 2005 acquisition.

The summarized results of operations for the six months ended June 30, 2008 are as follows:

   
Six Months
 
   
Ended
 
   
June 30,
 
   
2008
 
       
Revenues
  $ 1,793  
Cost of Revenues
    1,057  
Gross Profit
    736  
Operating Expenses
    819  
Operating Loss
    (83 )
Other Income (Expense), net
    (3 )
Provision for Taxes
    216  
Net Income (Loss)
  $ 130  
 
 
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NOTE 9 – INCOME TAXES

The tax effect of temporary differences, primarily net operating loss carryforwards, gave rise to the Company's deferred tax asset in the accompanying December 31, 2009 and December 31, 2008 balance sheets.

Deferred income taxes are recognized for the tax consequence of such temporary differences at the enacted tax rate expected to be in effect when the differences reverse. Because of the current uncertainty of realizing the benefit of the tax carry forward, a valuation allowance equal to the tax benefit for deferred taxes has been established. The full realization of the tax benefit associated with the carry forward depends predominantly upon the Company's ability to generate taxable income during the carry forward period.

As of December 31, 2009, the Company has net operating loss carry forwards of approximately $9,163,000 that can be utilized to offset future taxable income for Federal income tax purposes through 2029. Utilization of these net loss carry forwards is subject to the limitations of Internal Revenue Code Section 382.  
 
 
Deferred tax assets and liabilities reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes.  Significant components of the Company's deferred tax assets and liabilities are summarized as follows:

   
December 31,
 
   
2009
   
2008
 
Deferred tax asset:
           
             
Net operating loss carryforwards
  $ 3,207,000     $ 3,190,000  
Less: Vaulation allowance
    (3,207,000 )     (3,190,000 )
                 
Net Deferred Tax Asset
  $ -     $ -  


Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities.  Deferred income taxes will be measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return.  Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.

NOTE 10 – SUBSEQUENT EVENT

The Company has evaluated subsequent events in accordance with ASC Topic 855, “Subsequent Events” through April 15, 2010 which is the date the financial statements are available to be issued. During the evaluation no subsequent events were identified.
 
 
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SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) 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.

Date: December 6, 2010
 
         
BAY ACQUISITION CORP.
  
 
  
  
   
 
By:  
/s/ Paul Goodman
   
Paul Goodman
   
President (Principal Executive Officer and Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature
 
Title
 
Date
         
/s/ Paul Goodman
 
Director
 
December 6, 2010
Paul Goodman
       
         
         
         
         
         
         

 
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