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 March 31,
2011



OR



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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from  to



Commission File Number 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
        May 2, 2011
|------------------------------- | ------------------------------------------
|                                |                                           
|Common Stock, $0.0001 par value | 3,254,841                                 






1











|Part I - FINANCIAL INFORMATION                                                                |  |        
|--------------------------------------------------------------------------------------------- |  | -------
|                                                                                              |  |        
|Item 1. Consolidated Financial Statements                                                     |  |        
|Consolidated Balance Sheets                                                                   |  | Page 3 
|Unaudited Consolidated Statements of Operations                                               |  | Page 4 
|Unaudited Consolidated Statements of Cash Flows                                               |  | Page 5 
|Supplemental Disclosures of Cash Flow Information and Non-Cash Transactions                   |  | Page 6 
|Notes to Unaudited 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 15
|Item 4T.  Controls and Procedures                                                             |  | Page 15
|Part II –OTHER INFORMATION                                                                    |  |        
|Item 1A.  Risk Factors                                                                        |  | Page 16
|Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                          |  | Page 16
|Item 6.  Exhibits                                                                             |  | Page 17
|Signature                                                                                     |  | Page 18







2







PART I – FINANCIAL INFORMATION



Item 1.  Consolidated Financial Statements



BAYHILL CAPITAL CORPORATION



Consolidated
Balance Sheets



Assets

|                                            |  | As of                     
|------------------------------------------- |  | --------------------------
|                                            |  | March 31, 2011 (Unaudited)
|CURRENT ASSETS                              |  |                           
|Cash                                        |  | $                         
|Note receivable, current portion            |  |                           
|Current assets of discontinued operations   |  |                           
|Total current assets                        |  |                           
|NON-CURRENT ASSETS                          |  |                           
|Investment in BayHill Energy Corporation    |  |                           
|Note receivable                             |  |                           
|Long term assets of discontinued operations |  |                           
|Total long-term assets                      |  |                           
|TOTAL ASSETS                                |  | $                         



Liabilities
and Stockholders' Equity

|Current liabilities                                                                                                                                     |  |   |             |   |  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ----------- | - |  | - | ----------- | -
|Accounts payable                                                                                                                                        |  | $ | 156,652     |   |  | $ | 145,911     |  
|Accrued liabilities                                                                                                                                     |  |   | 150,100     |   |  |   | 137,080     |  
|Financing arrangements                                                                                                                                  |  |   | 4,000       |   |  |   | 4,000       |  
|Current liabilities of discontinued operations                                                                                                          |  |   | 36,156      |   |  |   | 869,420     |  
|Total current liabilities                                                                                                                               |  | $ | 346,908     |   |  | $ | 1,156,411   |  
|Commitments and contingencies                                                                                                                           |  |   |             |   |  |   |             |  
|Stockholders' equity (deficit)                                                                                                                          |  |   |             |   |  |   |             |  
|Preferred stock, $.0001 par value, 400,000 shares authorized, no shares issued and outstanding at March 31, 2011 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 March 31, 2011 and June 30, 2010 |  |   | 325         |   |  |   | 334         |  
|Additional paid-in capital                                                                                                                              |  |   | 17,635,099  |   |  |   | 16,748,185  |  
|Accumulated deficit                                                                                                                                     |  |   | (17,530,920 | ) |  |   | (17,338,936 | )
|Total stockholders' equity (deficit)                                                                                                                    |  |   | 104,504     |   |  |   | (590,417    | )
|Total liabilities and stockholders' equity                                                                                                              |  | $ | 451,412     |   |  | $ | 565,994     |  
|                                                                                                                                                        |  |   |             |   |  |   |             |  







See notes to consolidated financial statements.

3







BAYHILL CAPITAL CORPORATION



Consolidated Statements of Operations

(Unaudited)





|                                                                         |  | Three Months Ended |           | Nine Months Ended
|------------------------------------------------------------------------ |  | ------------------ | --------- | -----------------
|                                                                         |  | March 31,          |           | March 31,        
|                                                                         |  | 2011               |           | 2010             
|                                                                         |  |                    |           |                  
|                                                                         |  |                    |           |                  
|                                                                         |  |                    |           |                  
|                                                                         |  |                    |           |                  
|Operating expenses:                                                      |  |                    |           |                  
|Selling, general and administrative                                      |  |                    | 48,847    |                  
|                                                                         |  |                    |           |                  
|Total operating expenses                                                 |  |                    | 48,847    |                  
|                                                                         |  |                    |           |                  
|Loss from continuing operations                                          |  |                    | (48,847   | )                
|Other Income and Expense:                                                |  |                    |           |                  
|Other income                                                             |  |                    | 6,623     |                  
|Total other income                                                       |  |                    | 6,623     |                  
|                                                                         |  |                    |           |                  
|                                                                         |  |                    |           |                  
|                                                                         |  |                    |           |                  
|                                                                         |  |                    |           |                  
|Net loss from continuing operations                                      |  |                    | (42,224   | )                
|                                                                         |  |                    |           |                  
|Net loss from discontinued operations                                    |  |                    | —         |                  
|                                                                         |  |                    |           |                  
|Loss attributable to                                                     |  |                    |           |                  
|common shareholders                                                      |  | $                  | (42,224   | )                
|                                                                         |  |                    |           |                  
|Loss per common share-basic and diluted:                                 |  |                    |           |                  
|Continuing operations                                                    |  | $                  | (.01      | )                
|Discontinued operations                                                  |  |                    | —         |                  
|                                                                         |  | $                  | (.01      | )                
|Weighted average number of common shares outstanding:  Basic and Diluted |  |                    | 3,254,841 |                  
|                                                                         |  |                    |           |                  





See Notes to Consolidated Financial Statements



4





BAYHILL CAPITAL CORPORATION



Consolidated Statements of Cash Flows

(Unaudited)



|                                                                            |  | Nine Months Ended
|--------------------------------------------------------------------------- |  | -----------------
|                                                                            |  | March 31,        
|                                                                            |  | 2011             
|Cash flows from operating activities                                        |  |                  
|Net loss                                                                    |  | $                
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                  
|Changes in assets and liabilities:                                          |  |                  
|Accounts payable                                                            |  |                  
|Accrued liabilities                                                         |  |                  
|                                                                            |  |                  
|Net cash used in continuing operations                                      |  |                  
|Net cash provided by discontinued operations                                |  |                  
|Net cash used in operating activities                                       |  |                  
|                                                                            |  |                  
|Cash flows from investing activities                                        |  |                  
|Proceeds upon sale of Commission River                                      |  |                  
|Principle payment on notes receivable from Commission River                 |  |                  
|Investment in BayHill Energy Corporation                                    |  |                  
|Net cash flows provided by (used in) investing activities                   |  |                  
|                                                                            |  |                  
|Cash flows from financing activities                                        |  |                  
|Proceeds from sale of common stock                                          |  |                  
|Net cash provided by financing activities                                   |  |                  
|                                                                            |  |                  
|Net increase (decrease) in cash                                             |  |                  
|                                                                            |  |                  
|Cash - beginning of period                                                  |  |                  
|                                                                            |  |                  
|Cash - end of period                                                        |  | $                



See Notes to Consolidated Financial Statements





5





BAYHILL CAPITAL CORPORATION



Supplemental Disclosures of Cash Flow Information
and Non-Cash Transactions





During the nine months ended
March 31, 2011, we issued the following unregistered shares of our common stock for the reasons and values identified below.



|                                                               | Shares  | Val ue  
|-------------------------------------------------------------- | ------- | --------
|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 Oborn, which
was agreed by both parties to have a value of $105,000.



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



|                                                               | Shares  | Val ue 
|-------------------------------------------------------------- | ------- | -------
|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.





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 a majority
of the consideration, we received a secured negotiable promissory note of $490,000 in exchange for the forgiveness of $274,396
in payables to Commission River and the cancellation of 489,984 common shares of BHCC, owned by the principals of Commission River.











6





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 (see Note 10—Sale of Commission River Corporation).



On March 3, 2011, we announced the execution
of a non-binding letter of intent (LOI) to acquire all of the outstanding shares of Proteus Energy Corporation (“Proteus”),
a California-based privately held independent oil company (see Note 12—Letter of Intent to Acquire Proteus Energy Corporation).



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 on the cost method 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 nine months ended March 31, 2011 and 2010, respectively, (b) the unaudited and audited consolidated balance
sheets as of March 31, 2011 and June 30, 2010, respectively, and (c) the unaudited consolidated statements of cash flows for the
nine months ended March 31, 2011 and 2010, 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 three and nine months ended
March 31, 2011 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.



We recognize deferred tax
liabilities and assets for the expected future tax consequences of events that have been included in its financial statements or
tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax
basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse.
The measurement of deferred tax assets is reduced, if necessary, by the amount of any

7





tax benefits that are not expected to be
realized based on available evidence. The Company has not reported taxable income in

the past several years and has no expectations
for taxable income in the immediate future, therefore we do not recognize any deferred tax assets at March
31, 2011.





Note 3 –
Discontinued Operations



Commission River



Commission River, our operating subsidiary was sold on September
2, 2010, and we announced this sale on September 2, 2010. (see Note 10—Sale of Commission River Corporation). Beginning September
1, 2010, following the sale of Commission River, we have been a “shell corporation” under SEC regulations.





The information set forth
in the financial statements as of June 30, 2010 and for the three and nine months ended March 31, 2010 has been restated to show
discontinued operations.The results for the three and nine months ended March 31, 2011 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.





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



Balance Sheet:



|                                              |  | March 31, 2011 |        | June 30, 2010
|--------------------------------------------- |  | -------------- | ------ | -------------
|Cash                                          |  | $              | —      |              
|Commissions receivable                        |  |                | —      |              
|Current assets of discontinued operations     |  | $              | —      |              
|                                              |  |                |        |              
|Accrued liabilities                           |  | $              | 36,156 |              
|Commissions payable                           |  |                | —      |              
|Current liabilities of discontinued operation |  | $              | 36,156 |              
|                                              |  |                |        |              
|Intangible assets, net                        |  | $              | —      |              
|Other assets                                  |  |                | —      |              
|Long term assets of discontinued operations   |  | $              | —      |              
|                                              |  |                |        |              
|                                              |  |                |        |              

Statement of Operations:



|                                        |  | Three Months Ended |   | Nine Months Ended
|--------------------------------------- |  | ------------------ | - | -----------------
|                                        |  | March 31,          |   | March 31,        
|                                        |  | 2011               |   | 2010             
|                                        |  |                    |   |                  
|                                        |  |                    |   |                  
|Commission revenues                     |  | $                  | — |                  
|                                        |  |                    |   |                  
|Commission expenses                     |  |                    | — |                  
|                                        |  |                    |   |                  
|Gross revenue                           |  |                    | — |                  
|Other expenses                          |  |                    | — |                  
|Net losses from discontinued operations |  | $                  | — |                  



8







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 nine months ended March
31, 2011, but will not likely be sufficient to meet our working capital requirements for the foreseeable future or provide for
expansion opportunities. Our net loss was $191,984 and we used $64,643 in cash for operating activities for the nine months ended
March 31, 2011. Net cash flows generated from our investing activities for the nine months ended March 31, 2011 were $69,005, from
the sale of Commission River. These conditions raise substantial doubt about our ability to continue as a going concern.



Note 5 – Financing Arrangements



As of March 31, 2011, we were delinquent in
paying Cardelco $4,000 on a Note Payable relating to a prior office lease arrangement.



Note 6 – Stockholders’ Equity



Preferred Stock



As of March 31, 2011, we had
authorized 400,000 shares of Preferred Stock. There are currently no shares of Preferred Stock outstanding.



Common Stock



As of March 31,
2011, we had authorized 100,000,000 shares of Common Stock to be issued, of which 3,254,841 were outstanding.



During the nine months ended
March 31, 2011, 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 |         | Val ue
|--------------------------------------------------- |  | ------ | ------- | ------
|James U. Jensen for payment of director fees        |  |        | 48,148  |       
|John D. Thomas for payment of director fees         |  |        | 42,593  |       
|John M. Knab for payment of director fees           |  |        | 42,593  |       
|Robert Bench for payment of accrued salary          |  |        | 155,556 |       
|Robyn Farnsworth for payment of accrued salary      |  |        | 57,407  |       
|Taylor Bench for payment of accrued consulting fees |  |        | 51,919  |       



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.





During the nine months ended
March 31, 2010, we issued the following unregistered common shares to officers and directors of the Company, for the reasons and
values identified below:



|                                                                                                          |  | Shares |         | Val ue
|--------------------------------------------------------------------------------------------------------- |  | ------ | ------- | ------
|Robert Bench as participant in a private placement of common stock                                        |  |        | 40,000  |       
|Robert Bench for payment of accrued salary                                                                |  |        | 100,000 |       
|Robyn Farnsworth for payment of accrued salary                                                            |  |        | 10,000  |       
|Taylor Bench for payment of accrued consulting fees                                                       |  |        | 23,333  |       
|David Keller for payment of accrued consulting fees                                                       |  |        | 50,000  |       
|James U. Jensen for payment of accrued legal and consulting fees               from Woodbury & Kesler, PC |  |        | 100,383 |       







9









|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 amount of liabilities settled and the market price was booked to Additional Paid in Capital since
all parties were affiliates of the Company.



Stock Options



We did not grant
any stock options during the nine months ended March 31, 2011. As of March 31, 2011 there were no outstanding options to purchase
shares of our capital stock.



Note 7 - Commitments
and Contingencies



Operating Leases



We were not obligated to pay any future minimum
lease payments under any leases as of March 31, 2011.



Note 8 – Related Party Activity



Stock Issuance for Payment of Liabilities to Officers and Directors



During the nine months ended
March 31, 2011 and 2010, we issued the following unregistered shares of our common stock to officers, directors, and consultants
of the Company, for the reasons and values identified in Note 6.



Note 9 –
Formation of BayHill Energy Corporation



In 2009, we formed a subsidiary, BayHill Energy
Corporation (“BEC”) to pursue the exploration and development of oil and gas properties. We invested $1,000 to acquire
100,000 shares of common stock and $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.



As of March 31, 2011 we held a minority interest
in BEC of 18%. The preferred stock is convertible into 10% of BEC’s outstanding common stock until BEC has acquired over
$50 million of value in assets, thus preserving our interest in this strategic initiative without further dilution to the shareholders
of the Company. In addition, as of March 31, 2011, we had a liability to BEC of $25,317 for short term cash advances they made
to the Company.



Note 10 –
Sale of Commission River Corporation



Commission River, our operating subsidiary was
sold on September 2, 2010, and we announced this sale on September 2, 2010. 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 were
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 the Company, owned by Edwards and Oborn. The parties agreed that the cancelled shares
had a value of $105,000. No gain was recorded on the transaction as it was with related parties. The offset to the total consideration
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.
Beginning September 1, 2010, following the sale of Commission River, we have been a “shell corporation” under SEC regulations.



10





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, as agreed
to by the financer, and as of March 31, 2011, the Company has no further liabilities or connection with the candidate or financer.



Note 12 –
Letter of Intent to Acquire Proteus Energy Corporation.



On March 3, 2011, we announced the execution
of a non-binding letter of intent to acquire all of the outstanding shares of Proteus Energy Corporation (“Proteus”
and the “Proteus Transaction”), a California-based privately held independent oil company. Under the Proteus Transaction,
BayHill will issue 27,805,474 unregistered shares of its common stock to acquire all of the outstanding shares, stock options,
and warrants presently outstanding of Proteus. In addition, BayHill will issue an additional 695,137 unregistered shares of its
common stock to the placement agents responsible for bringing the parties together. The Parties plan to conduct additional due
diligence and will seek $5 million of additional funding through a private placement to accredited investors only of BayHill common
stock, in a private investment in public equity transaction (a “PIPE” offering) that will be registered for resale.
The PIPE offering is contemplated to be completed contemporaneously with the closing of the Proteus Transaction. Following the
closing, BayHill will seek additional capital necessary to develop oil prospects presently owned by Proteus and explore additional
opportunities in furtherance of the Proteus business.



As a condition precedent to closing of the Proteus
Transaction, BayHill plans to complete a private placement to accredited investors only of 900,000 unregistered shares of its common
stock (the “Private Placement Round” or the “PP Round”) prior to closing of the Proteus Transaction. The
funds raised in the Private Placement Round will be used to settle liabilities and fund activities related to the Proteus Transaction
and preparation for the anticipated capital raise of $5 million to be completed contemporaneously with the closing of the Proteus
acquisition. The non-binding nature of the letter of intent for the Proteus Transaction becomes binding upon the completion of
the Private Placement Round of 900,000 unregistered shares of BayHill common stock. At that time, the Company will have 90 days
to complete the anticipated PIPE of $5 million, which is required to complete the Proteus Transaction..



If
the Proteus Transaction is completed on the terms contemplated, the Company would have 32,655,452 common shares issued and outstanding,
prior to any share issuances for the anticipated PIPE of $5 million. Terms of the Proteus acquisition contemplate that the current
BayHill shareholders would own approximately 10% of the issued and outstanding common shares of the Company after closing of the
contemplated PIPE transaction. Of course, no assurance can be given that the Company can complete the PIPE or other components
of the Proteus acquisition. It is anticipated that the name of the Company will be changed to Proteus Energy Corporation.



The terms of the Proteus Transaction envision
that Proteus executives will head the Company. It is anticipated that James U. Jensen, current board chairman for the Company will
continue serving as board member and Bob Bench will assume the role as CFO, with a change in other board members as appropriate
for the company’s expanded operations. The Directors of each company have approved the transaction subject to any required
shareholder approvals.



11





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, our possible inability to obtain additional financing,
our possible lack of cash flows, our possible loss of key personnel. Many of these risks are beyond our control.



Overview



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. Commission
River, our operating subsidiary was sold on September 2, 2010, and we announced this sale on September 2, 2010. 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 were 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 the Company, owned by Edwards and Oborn. The parties agreed
that the cancelled shares had a value of $105,000. No gain was recorded on the transaction as it was with related parties. The
offset to the total consideration 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. Beginning September 1, 2010, following the sale of Commission River, we have been a “shell corporation”
under SEC regulations.



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.



On March 3, 2011, we announced the execution
of a non-binding letter of intent to acquire all of the outstanding shares of Proteus Energy Corporation (“Proteus”
and the “Proteus Transaction”), a California-based privately held independent oil company. Under the Proteus Transaction,
, BayHill will issue 27,805,474 unregistered shares of its common stock to acquire all of the outstanding shares, stock options,
and warrants presently outstanding of Proteus. In addition, BayHill will issue an additional 695,137 unregistered shares of its
common stock to the placement agents responsible for bringing the parties together. The Parties plan to conduct additional due
diligence and will seek $5 million of additional funding through a private placement to accredited investors only of BayHill common
stock, in a private investment in public equity transaction (a “PIPE” offering) that will be registered for resale.
The PIPE offering is contemplated to be completed contemporaneously with the closing of the Proteus Transaction. Following the
closing, BayHill will seek additional capital necessary to develop oil prospects presently owned by Proteus and explore additional
opportunities in furtherance of the Proteus business.



As a condition precedent to closing of the Proteus
Transaction, BayHill plans to complete a private placement to accredited investors only of 900,000 unregistered shares of its common
stock (the “Private Placement Round” or the “PP Round”) prior to closing of the Proteus Transaction. The
funds raised in the Private Placement Round will be used to settle liabilities and fund activities related to the Proteus Transaction
and preparation for the anticipated capital raise of $5 million to be completed contemporaneously with the closing of the Proteus
acquisition. The non-binding nature of the letter of intent for the Proteus Transaction becomes binding upon the completion of
the Private Placement Round of 900,000 unregistered shares of BayHill common stock. At that time, the Company will have 90 days
to complete the anticipated PIPE of $5 million, which is required to complete the Proteus Transaction.



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If
the Proteus Transaction is completed on the terms contemplated, the Company would have 32,655,452 common shares issued and outstanding,
prior to any share issuances for the anticipated PIPE of $5 million. Terms of the Proteuacquisition contemplate that the current
BayHill shareholders would own approximately 10% of the issued and outstanding common shares of the Company after closing of the
contemplated PIPE transaction. Of course, no assurance can be given that the Company can complete the PIPE or other components
of the Proteus acquisition. It is anticipated that the name of the Company will be changed to Proteus Energy Corporation.



The terms of the Proteus Transaction envision
that Proteus executives will head the Company. It is anticipated that James U. Jensen, current board chairman for the Company will
continue serving as board member and Bob Bench will assume the role as CFO, with a change in other board members as appropriate
for the company’s expanded operations. The Directors of each company have approved the transaction subject to any required
shareholder approvals.





Results of Operations



Three Months Ended March 31, 2011 Compared to Three
Months Ended March 31, 2010



For the three months ended
March 31, 2011 and 2010, there were no operating activities from continuing operations that generated revenue.



Selling, general and administrative
expenses decreased $26,230, or 35% for the three months ended March 31, 2011 compared to the comparable period of 2010. Administrative
operations decreased in activity substantially after the sale of Commission River.



Other Income, for the three
months ended March 31, 2011, was $6,623 which related to interest income from the note payments received from the sale of Commission
River.



The loss from discontinued
operations related primarily to Commissions River. Commission River was sold effective August 31, 2011.



Nine Months Ended March 31, 2011
Compared to Nine Months Ended March 31, 2010



The Company had no operating
activities from continuing operations that generated revenue during the nine months ended March 31, 2011 and 2010.



Selling, general and administrative
expenses decreased $151,247, or 42% for the nine months ended March 31, 2011 compared to the comparable period of 2010. 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 reduced expenses from organizational and restructuring activities.



Other Income, for the nine
months ended March 31, 2011, was $17,023 which related to interest income from the note payments received from the sale of Commission
River and another third party. For the nine months ended March 31, 2010 we received $19,000 in fees as part of an Administrative
and Accounting Agreement with a third party.



The loss from discontinued
operations related primarily to Commissions River. Commission River was sold effective August 31, 2011.





Liquidity and Capital Resources



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 nine months ended March
31, 2011, but will not likely be sufficient to meet our working capital requirements for the foreseeable future or provide for
expansion opportunities. Our net loss was $191,984 and

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we used $64,643 in cash for operating activities for the nine months ended
March 31, 2011. Net cash flows generated from our investing activities for the nine months ended March 31, 2011 were $69,005, from
the sale of Commission River. These conditions raise substantial doubt about our ability to continue as a going concern.



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 during the quarter ended March 31, 2011. Following the sale of Commission River, our
staff became limited and in order to maintain a system of internal control, we engaged a third party outside consultant to review
our financial transactions to add the second review of our accounting transactions and review the information included in our financial
reports. 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 with the addition of the third party review, the controls and procedures
were effective as of March 31, 2011 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



Following the sale of Commission River
which decreased our staff, we hired a third party, experienced financial consultant to augment our staff and review our financial
reporting prior to publishing our financial reports. There were no other significant changes 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.



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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 nine months ended
March 31, 2011, 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 |         | Val ue
|--------------------------------------------------- |  | ------ | ------- | ------
|James U. Jensen for payment of director fees        |  |        | 48,148  |       
|John D. Thomas for payment of director fees         |  |        | 42,593  |       
|John M. Knab for payment of director fees           |  |        | 42,593  |       
|Robert Bench for payment of accrued salary          |  |        | 155,556 |       
|Robyn Farnsworth for payment of accrued salary      |  |        | 57,407  |       
|Taylor Bench for payment of accrued consulting fees |  |        | 51,919  |       



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.



During the nine months ended
March 31, 2010, we issued the following unregistered common shares to officers and directors of the Company, for the reasons and
values identified below:



|                                                                                            |  | Shares |         | Val ue
|------------------------------------------------------------------------------------------- |  | ------ | ------- | ------
|Robert Bench as participant in a private placement of common stock                          |  |        | 40,000  |       
|Robert Bench for payment of accrued salary                                                  |  |        | 100,000 |       
|Robyn Farnsworth for payment of accrued salary                                              |  |        | 10,000  |       
|Taylor Bench for payment of accrued consulting fees                                         |  |        | 23,333  |       
|David Keller for payment of accrued consulting fees                                         |  |        | 50,000  |       
|James U. Jensen for payment of accrued legal and consulting fees from Woodbury & Kesler, PC |  |        | 100,383 |       
|James U. Jensen for payment of accrued consulting fees from ClearWater Group                |  |        | 30,000  |       
|James U. Jensen for payment of director fees                                                |  |        | 20,667  |       
|John D. Thomas for payment of director fees                                                 |  |        | 18,333  |       
|John M. Knab for payment of director fees                                                   |  |        | 18,333  |       



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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 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.



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

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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







By:
/s/ Robert K. Bench	Date: May 2, 2011

Robert K. Bench

Chief Executive Officer





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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















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