<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d) of
Securities Exchange Act of 1934
For Quarter ended March 31, 1996
Commission File Number 0-25416
BAOA, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0563989
- -------------------------------- ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
1011 Camino Del Rio South, Suite 520, San Diego, California 92108
- ----------------------------------------------------------- ---------------
(Address of Principal Executive Offices) (Zip Code)
(619) 686-8660 FAX (619) 686-8666
-------------- -------------------
(Registrant's telephone and fax 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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock at the latest practicable date.
As of March 31, 1996, the registrant had 13,948,600 shares of common stock,
$.001 par value, issued and outstanding.
<PAGE> 2
PART 1 FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BAOA, INC.
BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
March 31
1996
--------
<S> <C>
ASSETS
CURRENT ASSETS
CASH 2,449
ACCOUNTS RECEIVABLE 103,894
INVENTORY 203,207
--------
TOTAL CURRENT ASSETS 309,550
FIXED ASSETS
FURNITURE AND EQUIPMENT 45,856
LESS DEPRECIATION (20,163)
--------
NET FIXED ASSETS 25,693
OTHER ASSETS
DEPOSITS 3,493
ORGANIZATION COSTS 20,000
LESS AMORTIZATION (11,000)
--------
TOTAL OTHER ASSETS 12,493
--------
TOTAL ASSETS 347,736
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 3
FINANCIAL STATEMENTS (continued)
BAOA, INC.
BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
March 31
1996
--------
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE 195,205
ACCRUED LIABILITIES 56,786
SALES TAX PAYABLE 311
ACCRUED INCOME TAXES 1,600
NOTE PAYABLE 139,000
NOTES PAYABLE - SHAREHOLDERS 509,225
ACCRUED ROYALTIES 172,857
----------
TOTAL CURRENT LIABILITIES 1,074,984
LONG TERM LIABILITIES
----------
TOTAL LONG TERM LIABILITIES 0
----------
TOTAL LIABILITIES 1,074,984
STOCKHOLDERS' EQUITY
COMMON STOCK - $.001 PAR. 13,949
25,000,000 SHARES AUTHORIZED,
13,948,600 ISSUED
ADDITIONAL PAID IN CAPITAL 2,169,805
BEGINNING RETAINED EARNINGS (2,714,909)
NET INCOME (LOSS) (196,093)
ENDING RETAINED EARNINGS (2,911,002)
----------
TOTAL STOCKHOLDERS' EQUITY (727,248)
----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 347,736
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 4
FINANCIAL STATEMENTS (continued)
BAOA, INC.
INCOME STATEMENT
UNAUDITED
<TABLE>
<CAPTION>
March 31 March
1996 1995
-------- --------
<S> <C> <C>
REVENUE
SALES 10,635 10,664
-------- --------
TOTAL REVENUE 10,635 10,664
COST OF SALES 7,509 7,754
-------- --------
GROSS PROFIT (LOSS) 3,126 2,910
OPERATING EXPENSES
SALARIES & WAGES 69,609
SALES & MARKETING 157,938 47,327
ROYALTIES 3,159 2,712
CONSULTING & OUTSIDE SERVICES 1,100 9,700
TRAVEL 1,000 4,229
LEGAL & ACCOUNTING 1,331 16,722
GENERAL & ADMINISTRATIVE 18,776 50,121
AMORTIZATION 1,000 999
DEPRECIATION 2,087 2,151
-------- --------
TOTAL OPERATING EXPENSES 186,391 203,570
-------- --------
INCOME (LOSS) FROM OPERATIONS (183,265) (200,660)
OTHER INCOME & EXPENSE
INTEREST EARNED 6
INTEREST EXPENSE (12,828) (8,105)
-------- --------
TOTAL OTHER INCOME & EXPENSE (12,828) (8,099)
INCOME (LOSS) BEFORE TAXES (196,093) (208,759)
PROVISION FOR TAXES 800
-------- --------
NET INCOME (LOSS) (196,093) (209,559)
======== ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
FINANCIAL STATEMENTS (continued)
BAOA, INC.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS) (196,093) (209,559)
ADJUSTMENT TO RECONCILE NET INCOME (LOSS) TO NET
CASH USED IN OPERATING ACTIVITIES:
DEPRECIATION & AMORTIZATION 2,087 3,150
(INCREASE) DECREASE IN ACCOUNTS RECEIVABLE (3,636) 24,375
DECREASE IN INVENTORY 46,728 8,615
INCREASE IN ACCOUNTS PAYABLE 22,270 101,644
INCREASE (DECREASE) IN ACCRUED LIABILITIES 16,886 11,757
INCREASE (DECREASE) IN INCOME TAXES PAYABLE 800
PAYMENTS FOR SERVICES BY COMMON STOCK 85,553
-------- --------
NET CASH FLOWS FROM OPERATING ACTIVITIES (26,205) (59,218)
CASH FLOWS FROM FINANCING ACTIVITIES
NOTES PAYABLE 27,000 50,000
-------- --------
NET CASH FLOWS FROM FINANCING ACTIVITIES 27,000 50,000
NET INCREASE (DECREASE) IN CASH 795 (9,218)
CASH AT BEGINNING OF PERIOD 1,654 15,459
CASH AT END OF PERIOD 2,449 6,241
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
FINANCIAL STATEMENTS (continued)
NOTES TO FINANCIAL STATEMENTS
Note 1: Management's opinion
In the opinion of management, the accompanying financial statements contain all
adjustments necessary to present fairly the financial position of the company
as of March 31, 1996 and the results of operations for the three months ended
March 31, 1996 and 1995 and changes in cash for the three months ended March
31, 1996 and 1995.
Note 2: Interim reporting
The results of operations for the three months ended March 31, 1996 and 1995
are not necessarily indicative of the results to be expected for the remainder
of the year.
Note 3: Components of Inventory
As of March 31, 1995, inventory consisted of $203,207 of finished products.
<PAGE> 7
PART 1 FINANCIAL INFORMATION
ITEM 2: Management's Discussion and Analysis of financial condition and
results of operations.
Material changes in financial condition:
- ----------------------------------------
As of March 31,1996: the Company had $2,449 cash on hand and in the bank. The
primary sources of cash and financing for the Company for the three months then
ended were $10,635 from sales, and $27,000 from shareholder loans. The primary
uses of cash during that period were $32,207 to finance the company's
operations.
The Company currently maintains a positive cash balance through payables and
notes due to shareholders. The Company has recruited several new key officers
in order to finalize contracts with major distributors and sponsors. All
officers are currently serving without salaries.
Material changes in the results of operations:
- ----------------------------------------------
Losses in the current period are mitigated by the fact that the majority of
costs and expenses are non-cash accruals. These accrued liabilities will only
be paid down upon the Company's achievement of necessary gross profit from
sales.
The Board of Directors is working with new officers in order to finalize new
contracts and sponsorships in 1996. In addition, the Company has expanded its
products and marketing by entering into computerized game development and
Internet sales. Management believes that the Company should return to
profitability in 1996.
<PAGE> 8
PART II OTHER INFORMATION
ITEM 1 The Company has been named as a defendant in three legal proceedings
arising in the ordinary course of business. The Company intends to
vigorously defend itself against such claims. All three proceedings
involve a former officer and major shareholder involved with the
daily operations of the Company since 1993. In the opinion of the
Board of Directors and management, the outcome of such proceedings
and litigation will not materially affect the Company's financial
position.
ITEMS 2-4: Not applicable
ITEM 5: Information required in lieu of Form 8-K: None
ITEM 6: Exhibits and Reports on 8-K:
(a) Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K were filed during the fiscal quarter
ended March 31, 1995
<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Dated: July 12, 1996 /s/ STEVEN R. WRIGHT
-------------------------------
Steven R. Wright,
Treasurer and Principal
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,449
<SECURITIES> 0
<RECEIVABLES> 103,894
<ALLOWANCES> 0
<INVENTORY> 203,207
<CURRENT-ASSETS> 309,550
<PP&E> 45,856
<DEPRECIATION> 20,163
<TOTAL-ASSETS> 347,736
<CURRENT-LIABILITIES> 1,074,984
<BONDS> 0
0
0
<COMMON> 13,949
<OTHER-SE> 2,169,805
<TOTAL-LIABILITY-AND-EQUITY> 347,736
<SALES> 10,664
<TOTAL-REVENUES> 10,664
<CGS> 7,509
<TOTAL-COSTS> 7,509
<OTHER-EXPENSES> 186,391
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,828
<INCOME-PRETAX> (196,093)
<INCOME-TAX> 0
<INCOME-CONTINUING> (196,093)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (196,093)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
