<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 June 30, 1997
Commission File Number 0-25416
BAOA, INC.
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(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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock at the latest practicable date.
As of June 30, 1997, the registrant had 20,538,100 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 June 30, 1997 and the results of operations for the six months ended June 30,
1997 and 1996 and changes in cash for the six months ended June 30, 1997 and
1996.
Note 2: Interim reporting
The results of operations for the six months ended June 30, 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 June 30, 1997, inventory consisted of $23,896 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 June 30,1997: the Company had $5,472 cash on hand and in the bank. The
primary sources of cash and financing for the Company for the six months then
ended were $17,926 from sales, $41,400 loans from shareholders, and $45,100 from
sale of common stock. The primary uses of cash during that period were $73,627
to finance the company's operations, and $25,799 to pay down current
liabilities.
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, officers, and the advisory board of notable African
American business and professional leaders have negotiated and signed several
contracts and letters of intent which will provide revenue from
telecommunications and entertainment sources beginning 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. Financial Data Schedule
b) No reports on Form 8-K were filed during the fiscal quarter
ended March 31, 1997
<PAGE> 5
SIGNATURES
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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: August 14, 1997 /s/ Steven R. Wright
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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>
June 30
1997
-------
<S> <C>
ASSETS
CURRENT ASSETS
CASH 5,472
ACCOUNTS RECEIVABLE 54,062
INVENTORY 23,896
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TOTAL CURRENT ASSETS 83,430
FIXED ASSETS
FURNITURE AND EQUIPMENT 45,856
LESS DEPRECIATION -30,598
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NET FIXED ASSETS 15,258
OTHER ASSETS
DEPOSITS 2,259
ORGANIZATION COSTS 20,000
LESS AMORTIZATION -16,000
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TOTAL OTHER ASSETS 6,259
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TOTAL ASSETS 104,947
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
FINANCIAL STATEMENTS (continued)
BAOA, INC.
BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
June 30
1997
----------
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
DEPOSITS 38,500
ACCOUNTS PAYABLE 183,276
ACCRUED LIABILITIES 122,679
SALES TAX PAYABLE 6
ACCRUED INCOME TAXES 1,600
NOTE PAYABLE 136,500
NOTES PAYABLE - SHAREHOLDERS 550,625
ACCRUED ROYALTIES 57,587
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TOTAL CURRENT LIABILITIES 1,090,773
LONG TERM LIABILITIES
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TOTAL LONG TERM LIABILITIES 0
----------
TOTAL LIABILITIES 1,090,773
STOCKHOLDERS' EQUITY
COMMON STOCK - $.001 PAR 20,539
25,000,000 SHARES AUTHORIZED,
20,538,100 ISSUED
ADDITIONAL PAID IN CAPITAL 2,837,065
BEGINNING RETAINED EARNINGS -3,672,376
NET INCOME (LOSS) -171,054
ENDING RETAINED EARNINGS -3,843,430
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TOTAL STOCKHOLDERS' EQUITY -985,826
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TOTAL LIAB & STOCKHOLDERS' EQUITY 104,947
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
FINANCIAL STATEMENTS (continued)
BAOA , INC.
INCOME STATEMENT
UNAUDITED
<TABLE>
<CAPTION>
June 30 June 30
1997 1996
<S> <C> <C>
REVENUE
SALES 17,926 22,942
-----------------------
TOTAL REVENUE 17,926 22,942
COST OF SALES 25,689 30,100
-----------------------
GROSS PROFIT (LOSS) -7,763 -7,158
OPERATING EXPENSES
SALARIES & WAGES
SALES & MARKETING 193,657 188,438
ROYALTIES -136,677 6,606
CONSULTING & OUTSIDE SERVICES 6,900 3,750
TRAVEL 9,656 1,000
LEGAL & ACCOUNTING 12,663 4,455
GENERAL & ADMINISTRATIVE 44,039 42,525
AMORTIZATION 2,000 2,000
DEPRECIATION 4,174 4,175
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TOTAL OPERATING EXPENSES 136,412 252,949
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INCOME (LOSS) FROM OPERATIONS -144,175 -260,107
OTHER INCOME & EXPENSE
INTEREST EARNED 1 2
INTEREST EXPENSE -26,880 -26,013
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TOTAL OTHER INCOME & EXPENSE -26,879 -26,011
INCOME (LOSS) BEFORE TAXES -171,054 -286,118
PROVISION FOR TAXES
-----------------------
NET INCOME (LOSS) -171,054 -286,118
=======================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
FINANCIAL STATEMENTS (continued)
BAOA, INC.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS) -171,054 -286,118
ADJ TO RECONCILE NET INCOME (LOSS) TO NET
CASH USED IN OPERATING ACTIVITIES:
DEPRECIATION & AMORTIZATION 6,174 6,174
(INCREASE) DECREASE IN ACCTS RECEIVABLE -6,492 -5,915
DECREASE IN INVENTORY 21,360 66,293
INCREASE (DECREASE) IN ACCTS PAYABLE -25,799 65,034
INCREASE (DECREASE) IN ACCRUED LIAB -71,838 32,828
INCREASE IN INCOME TAXES PAYABLE
PAYMENTS FOR SERVICES BY COMMON STOCK 165,250 85,553
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NET CASH FLOWS FROM OPERATING ACTIVITIES -82,399 -36,151
CASH FLOWS FROM FINANCING ACTIVITIES
NOTES PAYABLE 41,400 37,000
COMMON STOCK PURCHASES 45,100
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NET CASH FLOWS FROM FINANCING ACTIVITIES 86,500 37,000
NET INCREASE (DECREASE) IN CASH 4,101 849
CASH AT BEGINNING OF PERIOD 1,371 1,654
CASH AT END OF PERIOD 5,472 2,503
ACTUAL CASH 5,472
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM
FINANCIAL STATEMENTS FOR SECOND QUARTER 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH BAOA, INS. 10Q-SB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,472
<SECURITIES> 0
<RECEIVABLES> 54,062
<ALLOWANCES> 0
<INVENTORY> 23,896
<CURRENT-ASSETS> 83,430
<PP&E> 45,856
<DEPRECIATION> 30,598
<TOTAL-ASSETS> 104,947
<CURRENT-LIABILITIES> 1,090,773
<BONDS> 0
0
0
<COMMON> 20,539
<OTHER-SE> 2,837,065
<TOTAL-LIABILITY-AND-EQUITY> 104,947
<SALES> 17,926
<TOTAL-REVENUES> 17,926
<CGS> 25,689
<TOTAL-COSTS> 25,689
<OTHER-EXPENSES> 136,412
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,880
<INCOME-PRETAX> (171,054)
<INCOME-TAX> 0
<INCOME-CONTINUING> (171,054)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (171,054)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
