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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, 1998
Commission File Number 0-25416
BAOA, INC.
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(Exact name of registrant as specified in its charter)
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CALIFORNIA 33-0563989
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(State of Incorporation) (I.R.S. Employer Identification No.)
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2635 Camino Del Rio South, Suite 210, San Diego, California 92108
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(Address of Principal Executive Offices) (Zip Code)
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(619) 291-2262 FAX (619) 291-2290
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(Registrant's telephone and fax number, including area code)
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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 March 31, 1998, the registrant had 33,851,000 shares of common stock,
$.001 par value, issued and outstanding.
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PART 1 FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BAOA, INC.
BALANCE SHEET
UNAUDITED
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<CAPTION>
March 31
1998
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ASSETS
CURRENT ASSETS
CASH 4,761
ACCOUNTS RECEIVABLE 6,540
DUE FROM SHAREHOLDERS 5,000
EMPLOYEE ADVANCES 200
INVENTORY 0
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TOTAL CURRENT ASSETS 16,501
FIXED ASSETS
FURNITURE AND EQUIPMENT 47,367
LESS DEPRECIATION -34,186
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NET FIXED ASSETS 13,181
OTHER ASSETS
DEPOSITS 88,014
ORGANIZATION COSTS 20,000
LESS AMORTIZATION -18,462
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TOTAL OTHER ASSETS 89,552
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TOTAL ASSETS 119,234
=======
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SEE NOTES TO FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS (continued)
BAOA, INC.
BALANCE SHEET
UNAUDITED
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<CAPTION>
March 31
1998
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
DEPOSITS 72,500
ACCOUNTS PAYABLE 93,168
ACCRUED INCOME TAXES 1,263
ACCRUED ROYALTIES 55,103
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TOTAL CURRENT LIABILITIES 222,034
LONG TERM LIABILITIES
CONTRACTS PAYABLE 130,325
ACCRUED LIABILITIES 166,028
NOTES PAYABLE 196,500
NOTES PAYABLE - SHAREHOLDERS 598,626
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TOTAL LONG TERM LIABILITIES 1,091,479
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TOTAL LIABILITIES 1,313,513
STOCKHOLDERS' EQUITY
COMMON STOCK - $.001 PAR 33,851
50,000,000 SHARES AUTHORIZED,
33,851,000 ISSUED"
ADDITIONAL PAID IN CAPITAL 3,757,731
BEGINNING RETAINED EARNINGS -4,555,054
NET INCOME (LOSS) -430,807
ENDING RETAINED EARNINGS -4,985,861
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TOTAL STOCKHOLDERS' EQUITY -1,194,279
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TOTAL LIAB & STOCKHOLDERS' EQUITY 119,234
=========
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SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 4
FINANCIAL STATEMENTS (continued)
BAOA, INC.
INCOME STATEMENT
UNAUDITED
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<CAPTION>
March 31 March 31
1998 1997
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REVENUE
SALES 0 17,009
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TOTAL REVENUE 0 17,009
COST OF SALES 0 22,261
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GROSS PROFIT (LOSS) 0 -5,252
OPERATING EXPENSES
SALARIES & WAGES 3,444 0
SALES & MARKETING 353,555 112,834
ROYALTIES 0 -106,853
CONSULTING & OUTSIDE SERVICES 17,786 3,500
TRAVEL 5,266 3,335
LEGAL & ACCOUNTING 3,782 5,137
GENERAL & ADMINISTRATIVE 29,224 19,073
AMORTIZATION 462 1,000
DEPRECIATION 2,009 2,087
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TOTAL OPERATING EXPENSES 415,528 40,113
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INCOME (LOSS) FROM OPERATIONS -415,528 -45,365
OTHER INCOME & EXPENSE
INTEREST EARNED 0 0
INTEREST EXPENSE -15,015 -13,200
PENALTIES -264 0
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TOTAL OTHER INCOME & EXPENSE -15,279 -13,200
INCOME (LOSS) BEFORE TAXES -430,807 -58,565
PROVISION FOR TAXES 0
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NET INCOME (LOSS) -430,807 -58,565
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SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
FINANCIAL STATEMENTS (continued)
BAOA, INC.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31
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1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS) -430,807 -58,565
ADJ TO RECONCILE NET INCOME (LOSS) TO NET
CASH USED IN OPERATING ACTIVITIES:
DEPRECIATION & AMORTIZATION 2,471 3,087
(INCREASE) DECREASE IN ACCTS RECEIVABLE -13,129
(INCREASE) DECREASE IN DUE FROM SHAREHOLDERS -5,000
DECREASE IN INVENTORY 21,072
(INCREASE) DECREASE IN INVESTMENTS 1
(INCREASE) DECREASE IN DEPOSITS ASSETS -83,757
INCREASE (DECREASE) IN DEPOSITS LIABILITY 67,500 10,000
INCREASE (DECREASE) IN ACCTS PAYABLE 17,843 -32,300
INCREASE (DECREASE) IN SALES TAX PAYABLE -7
INCREASE (DECREASE) IN INCOME TAX PAYABLE 463
INCREASE (DECREASE) IN ACCRUED LIAB 14,816 -94,200
PAYMENTS FOR SERVICES BY COMMON STOCK 336,825 103,000
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NET CASH FLOWS FROM OPERATING ACTIVITIES -79,652 -61,035
CASH FLOWS FROM FINANCING ACTIVITIES
INCREASE (DECREASE) IN NOTES PAYABLE 68,000 30,500
COMMON STOCK PURCHASES 15,000 30,000
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NET CASH FLOWS FROM FINANCING ACTIVITIES 83,000 60,500
NET INCREASE (DECREASE) IN CASH 3,348 -535
CASH AT BEGINNING OF PERIOD 1,413 1,371
CASH AT END OF PERIOD 4,761 836
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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, 1998 and the results of operations for the three months ended March
31, 1998 and 1997 and changes in cash for the three months ended March 31, 1998
and 1997.
Note 2: Interim reporting
The results of operations for the three months ended March 31, 1998 and 1997 are
not necessarily indicative of the results to be expected for the remainder of
the year.
<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, 1998: the Company had $4,761 cash on hand and in the bank. The
primary sources of cash and financing for the Company for the three months then
ended was $15,000 from sales of common stock. The primary uses of cash during
that period were $11,652 to finance the company's operations. The Company
currently maintains a positive cash balance through sales of common stock.
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.
Material changes in business products and services:
The Company has secured major purchase orders and contracts for BAOA call center
services to be operated throughout the United States, with the first call center
to be located in Atlanta, Georgia. The BAOA Atlanta Call Center will be a
leading distributor of products and services through direct-to-consumer
telemarketing for corporate clients and for BAOA's own line of future products.
BAOA has formed business alliances with a major telemarketing and call center
management companies, First National Communications Network, Inc. and USA
Telecorp, to assist BAOA in marketing and managing its call center. Management
anticipates opening the call center in the fourth quarter of 1998. This call
center is expected to eventually employ up to 400 people and generate revenue in
the first quarter of 1999.
BAOA's strategy is to operate its call centers in federally designated
empowerment zones. Its first call center will be located in the Atlanta
empowerment zone. These empowerment zones are designed to help inner-cities and
the residents of the empowerment zones, as well as provide substantial revenues
to the Company. The Company's niche in the call center business will be enhanced
by the empowerment zone benefits that include job training subsidies, grants,
loans, investment tax credits and energy credits. These incentives significantly
reduce start up and direct costs of operations.
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BAOA has secured a centrally located building in downtown Atlanta. With over
40,000 square feet available, BAOA intends to operate its call center and
sublease facilities for job training, day care, and after school youth
development centers. These additional centers combined with planned commercial
ventures such as food and other service outlets should enable BAOA to
dramatically improve the quality of life and the economic conditions in the
surrounding neighborhood. The intent is for BAOA to greatly benefit the people
in the neighborhood empowerment zone through its role as a major employer and
neighborhood developer, while generating a reasonable return for its investors.
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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) None required
b) No reports on Form 8-K were filed during the fiscal quarter
ended March 31, 1998
<PAGE> 10
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: May 15, 1998 /s/ STEVEN R. WRIGHT
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Steven R. Wright,
Treasurer and Principal Financial Officer
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM
FINANCIAL STATEMENTS FOR FIRST QUARTER 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH BAOA, INC. 10Q-SB.
</LEGEND>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 4,761
<SECURITIES> 0
<RECEIVABLES> 6,540
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,501
<PP&E> 47,367
<DEPRECIATION> 34,186
<TOTAL-ASSETS> 119,234
<CURRENT-LIABILITIES> 222,034
<BONDS> 1,091,479
0
0
<COMMON> 33,851
<OTHER-SE> 3,757,731
<TOTAL-LIABILITY-AND-EQUITY> 119,234
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 415,528
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,015
<INCOME-PRETAX> (430,807)
<INCOME-TAX> 0
<INCOME-CONTINUING> (430,807)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (430,807)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
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