<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, 1997
Commission File Number 0-25416
BAOA, INC.
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0563989
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(State of Incorporation) (I.R.S. Employer Identification No.)
2635 Camino Del Rio South, Suite 210, San Diego, California 92108
-----------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(619) 291-2262 FAX (619) 291-2290
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(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, 1997, the registrant had 19,520,600 shares of common stock,
$.001 par value, issued and outstanding.
<PAGE> 2
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, 1997 and the results of operations for the three months ended March
31, 1997 and 1996 and changes in cash for the three months ended March 31, 1997
and 1996.
Note 2: Interim reporting
The results of operations for the three months ended March 31, 1997 and 1996 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, 1997, inventory consisted of $24,184 of finished products.
<PAGE> 3
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 31,1997: the Company had $836 cash on hand and in the bank. The
primary sources of cash and financing for the Company for the three months then
ended were $17,009 from sales, and $30,000 from sale of common stock. The
primary uses of cash during that period were $47,500 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 and officers are working with the advisory board of
notable African American business and professional leaders in order to finalize
new contracts and sponsorships in 1997. 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 1997.
<PAGE> 4
PART II OTHER INFORMATION
ITEM 1 Not applicable.
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 27.1 Financial Data Schedule
b) No reports on Form 8-K were filed during the fiscal
quarter ended March 31, 1997
<PAGE> 5
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: May 12, 1997 /s/ STEVEN R. WRIGHT
-----------------------------------------
Steven R. Wright,
Treasurer and Principal Financial Officer
<PAGE> 6
PART 1 FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BAOA, INC.
BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
March 31
1997
<S> <C>
ASSETS
CURRENT ASSETS
CASH 836
ACCOUNTS RECEIVABLE 60,699
INVENTORY 24,184
------------
TOTAL CURRENT ASSETS 85,719
FIXED ASSETS
FURNITURE AND EQUIPMENT 45,856
LESS DEPRECIATION -28,511
------------
NET FIXED ASSETS 17,345
OTHER ASSETS
DEPOSITS 2,259
ORGANIZATION COSTS 20,000
LESS AMORTIZATION -15,000
------------
TOTAL OTHER ASSETS 7,259
------------
TOTAL ASSETS 110,323
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
FINANCIAL STATEMENTS (continued)
BAOA, INC.
BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
March 31
1997
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
DEPOSITS 10,000
ACCOUNTS PAYABLE 176,775
ACCRUED LIABILITIES 108,999
SALES TAX PAYABLE 0
ACCRUED INCOME TAXES 1,600
NOTE PAYABLE 136,500
NOTES PAYABLE - SHAREHOLDERS 539,725
ACCRUED ROYALTIES 87,411
--------------
TOTAL CURRENT LIABILITIES 1,061,010
LONG TERM LIABILITIES
--------------
TOTAL LONG TERM LIABILITIES 0
--------------
TOTAL LIABILITIES 1,061,010
STOCKHOLDERS' EQUITY
COMMON STOCK - $.001 PAR. 19,521
25,000,000 SHARES AUTHORIZED,
19,520,600 ISSUED
ADDITIONAL PAID IN CAPITAL 2,760,733
BEGINNING RETAINED EARNINGS -3,672,376
NET INCOME (LOSS) -58,565
ENDING RETAINED EARNINGS -3,730,941
--------------
TOTAL STOCKHOLDERS' EQUITY -950,687
--------------
TOTAL LIAB & STOCKHOLDERS' EQUITY 110,323
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
FINANCIAL STATEMENTS (continued)
BAOA , INC.
INCOME STATEMENT
UNAUDITED
FOR THE THREE MONTHS ENDED
<TABLE>
<CAPTION>
March 31 March 31
1997 1996
<S> <C> <C>
REVENUE
SALES 17,009 10,635
--------------------------------
TOTAL REVENUE 17,009 10,635
COST OF SALES 22,261 7,509
--------------------------------
GROSS PROFIT (LOSS) -5,252 3,126
OPERATING EXPENSES
SALARIES & WAGES
SALES & MARKETING 112,834 157,938
ROYALTIES -106,853 3,159
CONSULTING & OUTSIDE SERVICES 3,500 1,100
TRAVEL 3,335 1,000
LEGAL & ACCOUNTING 5,137 1,331
GENERAL & ADMINISTRATIVE 19,073 18,776
AMORTIZATION 1,000 1,000
DEPRECIATION 2,087 2,087
--------------------------------
TOTAL OPERATING EXPENSES 40,113 186,391
--------------------------------
INCOME (LOSS) FROM OPERATIONS -45,365 -183,265
OTHER INCOME & EXPENSE
INTEREST EARNED
INTEREST EXPENSE -13,200 -12,828
--------------------------------
TOTAL OTHER INCOME & EXPENSE -13,200 -12,828
INCOME (LOSS) BEFORE TAXES -58,565 -196,093
PROVISION FOR TAXES
--------------------------------
NET INCOME (LOSS) -58,565 -196,093
================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
FINANCIAL STATEMENTS (continued)
BAOA, INC.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS) -58,565 -196,093
ADJ TO RECONCILE NET INCOME (LOSS) TO NET
CASH USED IN OPERATING ACTIVITIES:
DEPRECIATION & AMORTIZATION 3,087 2,087
(INCREASE) DECREASE IN ACCTS RECEIVABLE -13,129 -3,636
DECREASE IN INVENTORY 21,072 46,728
INCREASE (DECREASE) IN DEPOSITS LIABILITY 10,000
INCREASE (DECREASE) IN ACCTS PAYABLE -32,300 22,270
INCREASE (DECREASE) IN ACCRUED LIAB -94,200 16,886
INCREASE (DECREASE) IN INCOME TAXES PAYABLE
PAYMENTS FOR SERVICES BY COMMON STOCK 103,000 85,553
--------------------------
NET CASH FLOWS FROM OPERATING ACTIVITIES -61,035 -26,205
CASH FLOWS FROM FINANCING ACTIVITIES
NOTES PAYABLE 30,500 27,000
COMMON STOCK PURCHASES 30,000
--------------------------
NET CASH FLOWS FROM FINANCING ACTIVITIES 60,500 27,000
NET INCREASE (DECREASE) IN CASH -535 795
CASH AT BEGINNING OF PERIOD 1,371 1,654
CASH AT END OF PERIOD 836 2,449
SEE NOTES TO FINANCIAL STATEMENTS
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM
FINANCIAL STATEMENTS FOR FIRST QUARTER 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH BAOA, INC. 10Q-SB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 836
<SECURITIES> 0
<RECEIVABLES> 60,699
<ALLOWANCES> 0
<INVENTORY> 24,184
<CURRENT-ASSETS> 85,719
<PP&E> 45,856
<DEPRECIATION> 28,511
<TOTAL-ASSETS> 110,323
<CURRENT-LIABILITIES> 1,061,010
<BONDS> 0
0
0
<COMMON> 19,521
<OTHER-SE> 2,760,733
<TOTAL-LIABILITY-AND-EQUITY> 110,323
<SALES> 17,009
<TOTAL-REVENUES> 17,009
<CGS> 22,261
<TOTAL-COSTS> 22,261
<OTHER-EXPENSES> 40,113
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,200
<INCOME-PRETAX> (58,565)
<INCOME-TAX> 0
<INCOME-CONTINUING> (58,565)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (58,565)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
