NewBridge Global Ventures, Inc. - Quarter Report: 2010 December (Form 10-Q)

f10q_bayhill.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2010

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-11730

BayHill Capital Corporation

(Exact Name of Registrant as Specified in its Charter)

Delaware 84-1089377

(State or Other Jurisdiction of (I.R.S. Employer

Incorporation or Organization) Identification No.)

25 East 200 South

Lehi, Utah 84043

(Address of Principal Executive Offices)

801-592-3000

(Registrant’s Telephone Number, Including Area Code)

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. Yes x No 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. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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 Exchange Act). Yes x No

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.

Class	Outstanding at February 14, 2011

Common Stock, $0.0001 par value	3,254,841

Table of Contents

Part I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets		Page 3
Consolidated Statements of Operations		Page 4
Consolidated Statements of Cash Flows		Page 5
Supplemental Disclosures of Cash Flow Information and Non-Cash Transactions		Page 6
Notes to Consolidated Financial Statements		Page 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		Page 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk		Page 14
Item 4T. Controls and Procedures		Page 14
Part II – OTHER INFORMATION
Item 1A. Risk Factors		Page 15
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		Page 15
Item 6. Exhibits		Page 16
Signature		Page 17

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

BAYHILL CAPITAL CORPORATION

CONSOLIDATED BALANCE SHEETS

ASSETS

	As of
	December 31, 2010 (Unaudited)		June 30, 2010
CURRENT ASSETS
Cash	$	1,915	$	55
Note receivable, current portion		120,000		-
Current assets of discontinued operations		-		488,560
Total current assets		121,915		488,615
NON-CURRENT ASSETS
Investment in BayHill Energy Corporation		11,000		11,000
Note receivable		339,371		-
Long term assets of discontinued operations		-		66,379
Total long-term assets		350,371		77,379
TOTAL ASSETS	$	472,286	$	565,994

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	157,802		$	145,911
Accrued liabilities		127,600			137,080
Financing arrangements		4,000			4,000
Current liabilities of discontinued operations		36,156			869,420
Total current liabilities	$	325,558		$	1,156,411
Commitments and contingencies
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.0001 par value, 400,000 shares authorized, no shares issued and outstanding at December 31, 2010 and June 30, 2010	$	—		$	—
Common stock $.0001 par value, 100,000,000 shares authorized; 3,254,841 and 3,346,609 shares issued and outstanding at December 31, 2010 and June 30, 2010		325			334
Additional paid-in capital		17,635,099			16,748,185
Accumulated deficit		(17,488,696	)		(17,338,936	)
Total stockholders' equity (deficit)		146,728			(590,417	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	472,286		$	565,994

See notes to consolidated financial statements.

BAYHILL CAPITAL CORPORATION

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2010			2009			2010			2009
				(Restated)						(Restated)

Revenue	$	-		$	-		$	-		$	-

Operating expenses:
Selling, general and administrative		74,097			75,455			160,160			282,371
Depreciation and amortization		-			-			-			-
Total operating expenses		74,097			75,455			160,160			282,371

Loss from continuing operations		(74,097	)		(75,455	)		(160,160	)		(282,371	)
Other Income and Expense:
Interest expense		-			-			-			-
Other income		10,399			7,000			10,399			19,000
Total other income		10,399			7,000			10,399			19,000

Loss from continuing operations before income taxes		(63,698	)		(68,455	)		(149,760	)		(263,371	)

Income taxes		-			-			-			-
Net loss from continuing operations		(63,698	)		(68,455	)		(149,760	)		(263,371	)

Net loss from discontinued operations		-			(35,471	)		-			(103,593	)

Loss attributable to
common shareholders	$	(63,698	)	$	(103,926	)	$	(149,760	)	$	(366,964	)

Loss per common share-basic and diluted:
Continuing operations	$	(.02	)	$	(.02	)	$	(.04	)	$	(.09	)
Discontinued operations		-			(.01	)		-			(.03	)
	$	(.02	)	$	(.03	)	$	(.04	)	$	(.12	)
Weighted average number of common shares outstanding: Basic and Diluted		3,254,841			3,346,609			3,404,794			3,026,471

See Notes to Consolidated Financial Statements

BAYHILL CAPITAL CORPORATION

Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	December 31,
	2010			2009
Cash flows from operating activities
Net loss	$	(149,760	)	$	(366,964	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Changes in assets and liabilities:
Accounts payable		57,971			150,649
Accrued liabilities		48,020			8,000
		105,991			158,649
Net cash used in continuing operations		(43,769	)		(208,315	)
Net cash provided by discontinued operations		-			126,725
Net cash used in operating activities		(43,769	)		(81,590	)

Cash flows from investing activities
Proceeds from sale of Commission River		15,000			-
Payment on notes receivable from Commission River		30,629			-
Investment in BayHill Energy Corporation		-			(11,000	)
Net cash flows provided by (used in) investing activities		45,629			(11,000	)

Cash flows from financing activities
Proceeds from sale of common stock		-			85,000
Net cash provided by financing activities		-			85,000

Net increase in cash		1,860			(7,590	)

Cash - beginning of period		55			7,911

Cash - end of period	$	1,915		$	321

See Notes to Consolidated Financial Statements

BAYHILL CAPITAL CORPORATION

Supplemental Disclosures of Cash Flow Information and Non-Cash Transactions

During the six months ended December 31, 2010, we issued the following unregistered shares of our common stock for the reasons and values identified below.

	Shares		Value
Issued to outside board of directors for accrued director fees		133,334	$	76,000
Issued to management for accrued salaries		212,963	$	121,389
Issued to consultants for accrued consulting fees		51,919	$	29,594

The values we recorded for the settlement of accrued payables and director fees payable were at the “last sale” market price for free-trading shares of our common stock on the date our Board of Directors approved the issuances, which was $0.57 per share. The difference between the market price and the amount of liabilities settled was booked to additional paid in capital, since all parties were affiliates of the Company.

On September 2, 2010, we announced the sale on August 31, 2010, the effective date of the sale, of our operating subsidiary, Commission River. As part of the consideration of the purchase price the parties agreed to the cancelation of 489,984 common shares of BHCC, owned by Edwards and Oborrn, which was agreed by both parties to have a value of $105,000.

During the six months ended December 31, 2009, we issued the following restricted shares of our common stock for the reasons and values identified below.

	Shares		Value
Issued to outside board of directors for accrued director fees		57,333	$	17,200
Issued to management for accrued salaries		110,000	$	33,000
Issued to director for accrued legal and consulting fees		130,383	$	39,115
Issued to consultants for accrued consulting fees		73,333	$	22,000

The values we recorded for the settlement of accrued payables and director fees payable were at the “last sale” market price for free-trading shares of our common stock on the date our Board of Directors approved the issuances, which was $0.40 per share. The difference between the market price and the amount of liabilities settled was booked to additional paid in capital, since all parties were affiliates of the Company.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Description of Business

BayHill Capital Corporation (“we,” “us” or “BHCC”, formerly Cognigen Networks, Inc.), was incorporated in May 1983 in the state of Colorado. Our wholly-owned subsidiary, Commission River Corporation (“Commission River”), was our only active business and we sold that business effective August 31, 2010. Prior to the sale of Commission River we marketed and sold services and products through commission-based marketing agents who used the Internet as a platform to provide customers and subscribers with a variety of telecommunications and technology-based products and services. Historically, we generated revenues in two ways:

First, we generated marketing commission revenues from vendors who are represented on web sites operated by independent agents and for whom we sold products and services via contractual agreements. Historic numbers reflect this line of business. Second, we have, at times, also generated revenues from sales of proprietary products and services. We were not offering any such products or services at the time of the sale of Commission River.

Beginning September 1, 2010, following the sale of Commission River, we have been a “shell corporation” under SEC regulations.

Note 2 – Summary of Significant Accounting Policies

The accompanying consolidated financial statements include the accounts of our wholly owned subsidiary, Commission River Corporation, and our former subsidiaries, Cognigen Business Systems, Inc. (“CBSi”), and Intandem Communications Corp. (“Intandem”). For purposes of the accompanying financial statements, we have treated these former subsidiaries as discontinued operations (see Note 3). All intercompany accounts and transactions have been eliminated in consolidation. Our position in BayHill Energy Corporation (“BEC”) is reflected only as an investment as our holdings on a “common equivalent” basis amounted to eighteen percent (18%) of outstanding shares of BEC (see Note 9).

In our opinion, we have made all adjustments, consisting only of normal recurring adjustments, to (a) the unaudited consolidated statements of operations for the three months and six months ended December 31, 2010 and 2009, respectively, (b) the unaudited and audited consolidated balance sheets as of December 31, 2010 and June 30, 2010, respectively, and (c) the unaudited consolidated statements of cash flows for the six months ended December 31, 2010 and 2009, respectively, in order to make such financial statements not misleading.

We have prepared the accompanying unaudited consolidated financial statements in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for financial statements. For further information, refer to the audited consolidated financial statements and notes thereto for the year ended June 30, 2010, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The results for the six months and three months ended December 31, 2010 may not necessarily be indicative of our actual results for the fiscal year ending June 30, 2011. This is particularly important to note because we became a “shell corporation” for SEC regulatory purposes on September 1, 2010 and have no continuing operations on which to report financial results for periods beginning on that date and thereafter. All share and per-share amounts reflected in this report have been restated to reflect the 1 for 50 reverse stock split effected in 2008 (see Note 6) unless otherwise indicated.

Note 3 – Discontinued Operations

Commission River

On September 2, 2010, we announced the sale on August 31, 2010, the effective date of the sale, of our operating subsidiary, Commission River. The transaction included the redemption by Commission River, of 800 shares of its common stock held by the Company in exchange for a secured negotiable promissory note in the amount of $490,000, with varying interest rates beginning at 6% and required monthly payments of $10,000, and in addition, Commission River forgave an intercompany receivable in the amount of $274,396. The remaining 200 shares of Commission River common stock was sold to its current management team, Adam Edwards and Patrick Oborn, who were also shareholders of the Company, for $15,000 and the cancelation of 489,984 common shares of BHCC, owned by Edwards and Oborrn, which was agreed by both parties to have a value of $105,000. No gain was recorded on the transaction as it was with related parties. The offset to the transaction of $884,386 was recorded as an increase in additional paid in capital. This sale concludes the Company’s activity in the telecommunications and affiliate marketing fields and included substantially all of the Company’s assets and operations.

The information set forth in the financial statements for the quarter ended December 31, 2009 has been restated to show discontinued operations. The results for the six months ended December 31, 2010 may not necessarily be indicative of our actual results for the fiscal year ending June 30, 2011. This is particularly important to note because we became a “shell corporation” for SEC regulatory purposes on September 1, 2010 and have no continuing operations on which to report financial results for periods beginning on that date and thereafter.

Cognigen Business Systems, Inc.

In September 2008, we repurchased 24,921 of our common shares as partial consideration for the sale of 100% of the equity interests of our subsidiary CBSi. Immediately following the repurchase of these common shares, we cancelled such shares, which we deemed to have a net value of $42,984.

Sale of Proprietary Telecommunications Accounts

On October 13, 2006, we agreed to sell our interest in the majority of our telecommunications “one plus” accounts for which we recorded telecommunications revenue through sales of proprietary products and services.

The following is financial information relative to the discontinued operations described above.

Balance Sheet:

	December 31, 2010		June 30, 2010
Cash	$	-	$	122,314
Commissions receivable		-		366,246
Current assets	$	-	$	488,560

Intangible assets, net	$	-	$	55,559
Other assets		-		10,820
Net long terms assets of discontinued operations	$	-	$	66,379

Accrued liabilities	$	13,156	$	221,801
Commissions payable		-		647,619
Current liabilities	$	36,156	$	869,420

Intangible assets, net	$	-	$	55,559
Other assets		-		10,820
Net long terms assets of discontinued operations	$	-	$	66,379

Statement of Operations:

	Three Months Ended					Six Months Ended
	December 31,					December 31,
	2010		2009			2010			2009
			(Restated)						(Restated)

Commission revenues	$	-	$	635,084		$	398,058		$	1,268,554

Commission expenses		-		(432,393	)		(261,398	)		(888,510	)

Gross revenue		-		202,691			127,660			380,044
Other expenses		-		(238,163	)		(127,660	)		(483,637	)
Net losses from discontinued operations	$	-	$	(35,471	)	$	-		$	(103,593	)

Note 4 – Management’s Plan

Starting September 1, 2010 we became a “shell corporation” for SEC regulatory purposes. Management is now working only part time for the Company and, with the board of directors, continues to look for opportunities to acquire one or more businesses that will be beneficial to the Company and its shareholders. There can be no assurance that we will be able to secure additional debt or equity financing, or that we will be able to find appropriate operating companies to acquire.

Cash flows generated from operations and cash received from the issuance of common stock were sufficient to meet our working capital requirements for the six months ended December 31, 2010, but will not likely be sufficient to meet our working capital requirements for the foreseeable future or provide for expansion opportunities. We incurred $149,760 in losses from operations and used $43,769 in cash for operations for the six months ended December 31, 2010. Net cash flows generated from our investing activities for the six months ended December 31, 2010 were $45,629, from the sale of Commission River. These conditions raise substantial doubt about our ability to continue as a going concern.

In July 2009, we formed a subsidiary, BayHill Energy Corporation (“BEC”) to pursue the exploration and development of oil and gas. During the quarter ended September 30, 2009 we invested $1,000 to acquire 100,000 shares of common stock and $10,000 to acquire 100,000 shares of preferred stock in BEC. At September 30, 2009, BEC issued an additional 885,000 shares of its common stock to six individuals who became members of the BEC management team. Following these transactions, and at December 31, 2010 we held a non controlling interest in BEC of 18%.

During the quarter ended September 30, 2009 we entered into an Administrative and Accounting Services Agreement with a third party and received $19,000 cash for services relating to the Agreement, of which $7,000 related to future services and was recorded in the quarter ended December 31, 2009 (see also Note 9 below).

Note 5 – Financing Arrangements

As of December 31, 2010, we owed Cardelco $4,000 on a Note Payable relating to a prior office lease arrangement.

Note 6 - Stockholders' Equity

Special Meeting of the Stockholders

On March 31, 2008, we held a special meeting of shareholders at which our shareholders approved a series of proposals previously approved by our Board of Directors. These proposals consisted of (i) a proposal to amend our Articles of Incorporation to effect a reverse split of the outstanding shares of our common stock pursuant to which each 50 shares of our pre-split common stock issued and outstanding as of the effective date of the reverse split would be exchanged for one

share of our post-split common stock, (ii) a proposal to amend our Articles of Incorporation to reduce the number of authorized shares of our common stock from 300,000,000 shares, $.001 par value per share, to 100,000,000 shares, $.0001 par value per share, and the number of authorized shares of our preferred stock from 20,000,000 shares, no par value per share, to 400,000 shares, $.0001 par value per share, (iii) a proposal to amend our Articles of Incorporation to change our name to BayHill Capital Corporation and make other changes necessary to facilitate the foregoing actions and the reincorporation of BHCC, (iv) a proposal to reincorporate BHCC under the laws of the State of Delaware, and (v) a proposal to adopt the Cognigen Networks, Inc. 2008 Stock Incentive Plan.

Based upon the approval of our shareholders at the March 31, 2008 special meeting, effective April 23, 2008 our management completed the actions necessary to effect the name change, reverse stock split, Delaware reincorporation and reduction in the number of authorized shares of common and preferred stock. Our common stock began trading on April 23, 2008 on a post-split basis under the symbol "BYHL." All share and per-share amounts reflected in this report have been restated to reflect the 1 for 50 reverse stock split unless otherwise indicated.

Preferred Stock

As of December 31, 2010 we had authorized 400,000 shares of Preferred Stock. There are currently no shares of Preferred Stock outstanding.

Common Stock

During the six months ended December 31, 2010, we issued the following unregistered shares of our common stock to officers and directors of the Company, for the reasons and values identified below.

	Shares		Value
James U. Jensen for payment of director fees		48,148	$	27,444
John D. Thomas for payment of director fees		42,593	$	24,278
John M. Knab for payment of director fees		42,593	$	24,278
Robert Bench for payment of accrued salary		155,556	$	88,667
Robyn Farnsworth for payment of accrued salary		57,407	$	32,722
Taylor Bench for payment of accrued consulting fees		51,919	$	29,594

During the six months ended December 31, 2009, we issued the following unregistered common shares to officers and directors of the Company, for the reasons and values identified below:

	Shares		Value
Robert Bench as participant in a private placement of common stock		40,000	$	10,000
Robert Bench for payment of accrued salary		100,000	$	30,000
Robyn Farnsworth for payment of accrued salary		10,000	$	3,000
Taylor Bench for payment of accrued consulting fees		23,333	$	7,000
David Keller for payment of accrued consulting fees		50,000	$	15,000
James U. Jensen for payment of accrued legal and consulting fees from Woodbury & Kesler, PC		100,383	$	30,115
James U. Jensen for payment of accrued consulting fees from ClearWater Group		30,000	$	9,000
James U. Jensen for payment of director fees		20,667	$	6,200
John D. Thomas for payment of director fees		18,333	$	5,500
John M. Knab for payment of director fees		18,333	$	5,500

The values we recorded for the settlement of accrued payables and director fees payable were recorded at the ”last sale” market price for free-trading shares of our common stock on the date our Board of Directors approved the issuances, which was $0.40 per share. The difference between the the amount of liabilities settled and the market price was booked to Additional Paid in Capital since all parties were affiliates of the Company. The values we recorded for the cash received was at $0.25 per share as set forth in the private placement through which the shares were sold.

Stock Options

We did not grant any stock options during the six months ended December 31, 2010. As of December 31, 2010 there were no outstanding options to purchase shares of our common stock.

Warrants

We did not grant any warrants during the six months ended December 31, 2010. As of December 31, 2010 there were no outstanding warrants to purchase shares of our common stock.

Note 7 - Commitments and Contingencies

Operating Leases

We were not obligated to pay any future minimum lease payments under any leases as of December 31, 2010.

Note 8 – Related Party Activity

Payments to Commission River and Telarus, Inc.

No payments involving Commission River, it management team (the buyers of Commission River in a transaction effective August 31, 2010) or a company controlled by such management team were made in the period ended December 31, 2010 or thereafter. During the three months ended September 30, 2009, we accrued $4,255 for payments made to Talarus, Inc., a company owned by the Management of Commission River.

Stock Issuance for Payment of Liabilities to Officers and Directors

During the six months ended December 31, 2010, we issued the following unregistered shares of our common stock to officers and directors of the Company, for the reasons and values identified below.

	Shares		Value
James U. Jensen for payment of director fees		48,148	$	27,444
John D. Thomas for payment of director fees		42,593	$	24,278
John M. Knab for payment of director fees		42,593	$	24,278
Robert Bench for payment of accrued salary		155,556	$	88,667
Robyn Farnsworth for payment of accrued salary		57,407	$	32,722
Taylor Bench for payment of accrued consulting fees		51,919	$	29,594

During the six months ended December 31, 2009, we issued the following unregistered common shares to officers and directors of the Company, for the reasons and values identified below:

	Shares		Value
Robert Bench as participant in a private placement of common stock		40,000	$	10,000
Robert Bench for payment of accrued salary		100,000	$	30,000
Robyn Farnsworth for payment of accrued salary		10,000	$	3,000
Taylor Bench for payment of accrued consulting fees		23,333	$	7,000
David Keller for payment of accrued consulting fees		50,000	$	15,000
James U. Jensen for payment of accrued legal and consulting fees from Woodbury & Kesler, PC		100,383	$	30,115
James U. Jensen for payment of accrued consulting fees from ClearWater Group		30,000	$	9,000
James U. Jensen for payment of director fees		20,667	$	6,200
John D. Thomas for payment of director fees		18,333	$	5,500
John M. Knab for payment of director fees		18,333	$	5,500

Note 9 – Formation of BayHill Energy Corporation

In July 2009, we formed a subsidiary, BayHill Energy Corporation (“BEC”) to pursue the exploration and development of oil and gas properties. During the three months ended September 30, 2009, we invested $1,000 to acquire 100,000 shares of common stock and invested $10,000 plus the assignment of any interests that the Company may have had in the oil and gas initiative, to acquire 100,000 shares of preferred stock in BEC. BEC issued an additional 885,000 shares of its common stock to six individuals, including 260,000 shares to Robert Bench, who was appointed President, and 90,000 shares to Robyn Farnsworth, who was appointed Secretary. The six individuals will form the management team and pursue the intended oil and gas exploration and development strategy.

At December 31, 2009 we held a minority interest in BEC of 18%. The preferred stock is convertible into 10% of BEC outstanding common stock until BEC has acquire over $50 million of value in assets, thus preserving our interest in this strategic initiative without further dilution to the shareholders of the Company.

During the three months ended September 30, 2009, the Company executed an Accounting and Administrative Agreement with Genesis Petroleum US, Inc. (“Genesis”), to act as their bookkeeper and perform office administration duties. The Company recognized $19,000 of other income, for the six months ended December 31, 2009. During September 2009, the Accounting and Administrative Agreement was cancelled and a Management, Administrative, and Operations Agreement was entered into between Genesis and BEC to act as Genesis agent in their oil and gas operations.

Note 10 – Sale of Commission River Corporation

On September 2, 2010, we announced the sale on August 31, 2010, the effective date of the sale, of our operating subsidiary, Commission River. The transaction included the redemption by Commission River, of 800 shares of its common stock held by the Company in exchange for a secured negotiable promissory note in the amount of $490,000, with varying interest rates beginning at 6% and required monthly payments of $10,000, and in addition, Commission River forgave an intercompany receivable in the amount of $274,396. The remaining 200 shares of Commission River common stock was sold to its current management team, Adam Edwards and Patrick Oborn, who were also shareholders of the Company, for $15,000 and the cancelation of 489,984 common shares of BHCC, owned by Edwards and Oborrn, which was agreed by both parties to have a value of $105,000. This sale concludes the Company’s activity in the telecommunications and affiliate marketing fields and included substantially all of the Company’s assets and operations.

Note 11 – Advance to Potential Acquisition Candidate

On October 19, 2010, we extended credit to a possible acquisition candidate in the form of a secured and guaranteed promissory note in the amount of $100,000. We received the cash to make that advance from a potential financer, for the same amount and under substantially similar terms. We subsequently concluded that the acquisition could not be completed. The acquisition candidate assumed the loan from the financer and at December 31, 2010 the Company has no further liabilities or connection with the candidate or financer.

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

Cautionary Statement Concerning Forward-Looking Statements

Certain of the information discussed herein, and in particular in this section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” contains forward-looking statements that involve risks and uncertainties that might adversely affect our operating results in the future in a material way. Such risks and uncertainties include, without limitation, our ability to implement, and obtain funding to carry out our business and growth strategy, the consequences of the corporate restructuring associated with the actions approved by our stockholders at a special meeting of stockholders held on March 31, 2008, the integration and operation of the assets we acquired from Commission River in November 2007 and our conduct of business based thereon, our possible inability to become or remain certified as a reseller in all jurisdictions in which we apply or are currently certified, the possibility that our proprietary customer base will not grow as management currently expects, our possible inability to obtain additional financing, the possible lack of producing agent growth, our possible lack of revenue growth, our possible inability to add new products and services that generate increased sales, our possible lack of cash flows, our possible loss of key personnel, the possibility of telecommunication rate changes and technological changes and the possibility of increased competition. Many of these risks are beyond our control.

Overview

Beginning September 1, 2010, following the sale of Commission River, we have been a “shell corporation” under SEC regulations.

Results of Operations

Three Months Ended December 31, 2010 Compared to Three Months Ended December 31, 2009

Total revenue, included as Other Income, for the three months ended December 31, 2010, was $10,399 which related to interest income from the note payments received from the sale of Commission River. For the three months ended December 31, 2009 we received $7,000 in fees as part of an Administrative and Accounting Agreement with a third party. The Company generated no other revenue during the three months ended December 31, 2010 and 2009.

Selling, general and administrative expenses decreased $1,358, or 2% for the three months ended December 31, 2010 compared to the comparable period of 2009. Operations for the two periods were very comparable in activities.

Six Months Ended December 31, 2010 Compared to Six Months Ended December 31, 2009

Total revenue, included as Other Income, for the six months ended December 31, 2010, was $10,399 which related to interest income from the note payments received from the sale of Commission River. For the six months ended December 31, 2009 we received $19,000 in fees as part of an Administrative and Accounting Agreement with a third party. The Company generated no other revenue during the six months ended December 31, 2010 and 2009.

Selling, general and administrative expenses decreased $122,211, or 43% for the six months ended December 31, 2010 compared to the comparable period of 2009. This decrease was mainly attributable to the decrease in legal expenses and consulting expenses related to the Company ending its oil and gas initiative and the decrease in organizational and restructuring activities.

Liquidity and Capital Resources

Cash flows generated from operations and issuance of common stock for the payment of accrued costs and expenses, were sufficient to meet our working capital requirements for the six months ended December 31, 2010, but will not likely be sufficient to meet our working capital requirements for the foreseeable future or provide for acquisition opportunities. We incurred $149,760 in losses from operations and used $43,769 in cash for operations during the six months ended December 31, 2010. Net cash flows generated from investment activities for the six months ended December 31, 2010 were $45,629, from the sale of Commission River.

In July 2009, we formed a subsidiary, BayHill Energy Corporation (“BEC”) to pursue the exploration and development of oil and gas. As part of this initiative we entered into Letters of Intent (“LOI”) with five parties to acquire certain oil and gas properties. As of September 30, 2009 all LOIs expired without our entering into any acquisition transactions. During the quarter ended September 30, 2009 we invested $1,000 to acquire 100,000 shares of common stock and $10,000 to acquire 100,000 shares of preferred stock in BEC. At September 30, 2009, BEC issued an additional 885,000 shares of its common stock to six individuals who became members of the BEC management team. Following these transactions, and at December 31, 2010, we held a non controlling interest in BEC of 18%.

During the quarter ended September 30, 2009 we entered into an Administrative and Accounting Services Agreement with one of the parties to the LOIs and received $19,000 cash for services relating to the Agreement, of which $7,000 related to future services and is recorded as Deferred Revenue. (see also Note 9 to the financial statements).

We intend to move forward with our plans and activities in an effort to secure additional equity financing and search for appropriate operating companies that we could acquire.

There can be no assurance that we will be able to secure additional debt or equity financing and find appropriate acquisitions.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for a Small Reporting Company.

Item 4T. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

Our management performed an evaluation of our disclosure controls and procedures as of December, 2010. Our disclosure controls and procedures have been designed to provide reasonable assurance that the information we are required to disclose in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is accumulated and communicated to our management to allow timely decisions regarding required disclosure, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Our chief executive officer has concluded that the controls and procedures were effective as of December 31, 2010 to reasonably ensure the achievement of these objectives. While our disclosure controls and procedures provide reasonable assurance that material information will be available on a timely basis, this assurance is subject to limitations inherent in any control system, no matter how well it is designed or administered, including, without limitation, resource constraints and the need for management to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

(b) Changes in Internal Control Over Financial Reporting

There were no significant changes (including corrective actions with regard to material weaknesses) in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1A. Risk Factors

The Company is a Shell Company and is subject to attendant risks. See the Risk Factors described in the Company’s most recently filed Form 10-K for the fiscal year ended June 30, 2010 and the description of the sale of the Company’s subsidiary, Commission River, as provided in a form 8-K filed on or about September 2, 2010 and the Company’s Press Release included therein. Additional risks include the concentration of credit risk under the Commission River Secured Promissory Note representing the bulk of the purchase price received by the Company upon sale of Commission River; the potential that future sales of the Company’s shares by affiliates and others may have challenges arising under their possible proposed use of Rule 144; the possibility that a change of control may occur if the Company completes a “reverse merger” with a private company, of which there can be no assurance; and the possibility that the Company’s public press release and SEC filings may be said to fail to comply with the requirement of 20 day prior notice to shareholders as required under Section 14 of the Securities and Exchange Act of 1934 and rules and regulations thereunder and/or the possibility that the Company may be said to have failed to give the “prompt” notice to non-acting shareholders when action is taken, as allowed under the Delaware Corporation Code, by written consent of shareholders holding a majority of outstanding shares, as was done in the Company’s sale of Commission River. The Company plans soon to send to shareholders a statement of these past actions and to file any needed description of this transaction and a description of possible alternatives for the Company.

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

During the six months ended December 31, 2010, we issued the following unregistered shares of our common stock to officers and directors of the Company, for the reasons and values identified below.

	Shares		Value
James U. Jensen for payment of director fees		48,148	$	27,444
John D. Thomas for payment of director fees		42,593	$	24,278
John M. Knab for payment of director fees		42,593	$	24,278
Robert Bench for payment of accrued salary		155,556	$	88,667
Robyn Farnsworth for payment of accrued salary		57,407	$	32,722
Taylor Bench for payment of accrued consulting fees		51,919	$	29,594

During the six months ended December 31, 2009, we issued the following unregistered common shares to officers and directors of the Company, for the reasons and values identified below:

	Shares		Value
Robert Bench as participant in a private placement of common stock		40,000	$	10,000
Robert Bench for payment of accrued salary		100,000	$	30,000
Robyn Farnsworth for payment of accrued salary		10,000	$	3,000
Taylor Bench for payment of accrued consulting fees		23,333	$	7,000
David Keller for payment of accrued consulting fees		50,000	$	15,000
James U. Jensen for payment of accrued legal and consulting fees from Woodbury & Kesler, PC		100,383	$	30,115
James U. Jensen for payment of accrued consulting fees from ClearWater Group		30,000	$	9,000
James U. Jensen for payment of director fees		20,667	$	6,200
John D. Thomas for payment of director fees		18,333	$	5,500
John M. Knab for payment of director fees		18,333	$	5,500

We did not engage the services of an underwriter in connection with the issuance of any of the foregoing shares of common stock.

In agreeing to issue these shares, we relied on the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”). Each of the parties who accepted the shares of our common stock had full information concerning us and our operations and financial condition and took the shares for purposes other than distribution unless the shares or underlying shares are registered under the Securities Act. The certificate evidencing the shares of common stock contained a legend restricting their transfer unless registered under the Securities Act, or unless there is an exemption available for their transfer.

Item 6. Exhibits

Exhibit No.	Description
31.1	Certification of Chief Executive Officer
31.2	Certification of Chief Financial Officer
32.1	Certification of Chief Executive Officer
32.2	Certification of Chief Financial Officer

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BayHill Capital Corporation

Date: February 14, 2011	By:	/s/ Robert K. Bench
		Robert K. Bench
		Chief Executive Officer

EXHIBIT INDEX

Exhibit No.	Description
31.1	Certification of Chief Executive Officer
31.2	Certification of Chief Financial Officer
32.1	Certification of Chief Executive Officer
32.2	Certification of Chief Financial Officer