<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, 1999
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.)
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
-------------- -------------------
(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, 1999, the registrant had 44,991,295 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 March 31
1999 1998
<S> <C> <C>
ASSETS
CURRENT ASSETS
CASH 1,374 4,761
ACCOUNTS RECEIVABLE 0 6,540
DUE FROM SHAREHOLDERS 0 5,000
EMPLOYEE ADVANCES 0 200
----------------------
TOTAL CURRENT ASSETS 1,374 16,501
FIXED ASSETS
FURNITURE AND EQUIPMENT 51,781 47,367
LESS DEPRECIATION -41,803 -34,186
----------------------
NET FIXED ASSETS 9,978 13,181
OTHER ASSETS
DEPOSITS 12,961 88,014
INVESTMENTS 101,404 0
ORGANIZATION COSTS 20,000 20,000
LESS AMORTIZATION -20,000 -18,462
----------------------
TOTAL OTHER ASSETS 114,365 89,552
----------------------
TOTAL ASSETS 125,717 119,234
======================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 3
FINANCIAL STATEMENTS (continued)
BAOA, INC.
BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
March 31 March 31
1999 1998
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE 94,777 93,168
DEPOSITS 84,000 72,500
ACCRUED INCOME TAXES 3,563 1,263
NOTES PAYABLE 102,700 0
NOTES PAYABLE - SHAREHOLDERS 6,000 0
ACCRUED ROYALTIES 55,103 55,103
---------------------------
TOTAL CURRENT LIABILITIES 346,143 222,034
LONG TERM LIABILITIES
CONTRACTS PAYABLE 0 130,325
ACCRUED LIABILITIES 10,557 166,028
NOTES PAYABLE 0 196,500
NOTES PAYABLE - SHAREHOLDERS 0 598,626
---------------------------
TOTAL LONG TERM LIABILITIES 10,557 1,091,479
---------------------------
TOTAL LIABILITIES 356,700 1,313,513
STOCKHOLDERS' EQUITY
PREFERRED STOCK - $.001 PAR 0 0
10,000,000 SHARES AUTHORIZED,
NONE ISSUED
COMMON STOCK - $.001 PAR 44,991 33,851
90,000,000 SHARES AUTHORIZED,
44,991,295 AND 33,851,000 SHARES ISSUED,
RESPECTIVELY
ADDITIONAL PAID IN CAPITAL 4,310,141 3,757,731
BEGINNING RETAINED EARNINGS -4,538,589 -4,555,054
NET INCOME (LOSS) -47,526 -430,807
ENDING RETAINED EARNINGS -4,586,115 -4,985,861
---------------------------
TOTAL STOCKHOLDERS' EQUITY -230,983 -1,194,279
---------------------------
TOTAL LIAB & STOCKHOLDERS' EQUITY 125,717 119,234
===========================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 4
FINANCIAL STATEMENTS (continued)
BAOA , INC.
INCOME STATEMENT
UNAUDITED
<TABLE>
<CAPTION>
March 31 March 31
1999 1998
<S> <C> <C>
REVENUE
SALES 0 0
----------------------------
TOTAL REVENUE 0 0
COST OF SALES 0 0
----------------------------
GROSS PROFIT (LOSS) 0 0
OPERATING EXPENSES
SALARIES & WAGES 0 3,444
SALES & MARKETING 15,840 353,555
CONSULTING & OUTSIDE SERVICES 8,485 17,786
TRAVEL 6,615 5,266
LEGAL & ACCOUNTING 400 3,782
GENERAL & ADMINISTRATIVE 14,692 29,224
AMORTIZATION 0 462
DEPRECIATION 1,373 2,009
----------------------------
TOTAL OPERATING EXPENSES 47,405 415,528
----------------------------
INCOME (LOSS) FROM OPERATIONS -47,405 -415,528
OTHER INCOME & EXPENSE
INTEREST EXPENSE -121 -15,015
PENALTIES 0 -264
----------------------------
TOTAL OTHER INCOME & EXPENSE -121 -15,279
INCOME (LOSS) BEFORE TAXES -47,526 -430,807
PROVISION FOR TAXES 0 0
----------------------------
NET INCOME (LOSS) -47,526 -430,807
============================
Income (Loss) per weighted-average share of common
stock outstanding, computed on net loss nil -0.01
============================
Weighted-average number of shares of common stock
outstanding 36,287,379 33,330,640
============================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
FINANCIAL STATEMENTS (continued)
BAOA, INC.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS) -47,526 -430,807
ADJ TO RECONCILE NET INCOME (LOSS) TO NET
CASH USED IN OPERATING ACTIVITIES:
DEPRECIATION & AMORTIZATION 1,373 2,471
(INCREASE) DECREASE IN ACCTS RECEIVABLE 0
(INCREASE) DECREASE IN DUE FROM SHAREHOLDERS 0 -5,000
(INCREASE) DECREASE IN FIXED ASSETS -2,255
(INCREASE) DECREASE IN INVESTMENTS -7,187 1
(INCREASE) DECREASE IN DEPOSITS ASSETS -10,703 -83,757
INCREASE (DECREASE) IN DEPOSITS LIABILITY 84,000 67,500
INCREASE (DECREASE) IN CASH OVERDRAFT -672 0
INCREASE (DECREASE) IN ACCTS PAYABLE -15,776 17,843
INCREASE (DECREASE) IN SALES TAX PAYABLE 0 -7
INCREASE (DECREASE) IN INCOME TAX PAYABLE 0 463
INCREASE (DECREASE) IN ACCRUED LIAB 120 14,816
PAYMENTS FOR SERVICES BY COMMON STOCK 0 336,825
----------------------
NET CASH FLOWS FROM OPERATING ACTIVITIES 1,374 -79,652
CASH FLOWS FROM FINANCING ACTIVITIES
INCREASE (DECREASE) IN NOTES PAYABLE 0 68,000
COMMON STOCK PURCHASES 0 15,000
----------------------
NET CASH FLOWS FROM FINANCING ACTIVITIES 0 83,000
NET INCREASE (DECREASE) IN CASH 1,374 3,348
CASH AT BEGINNING OF PERIOD 0 1,413
CASH AT END OF PERIOD 1,374 4,761
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS
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, 1999 and 1998, and the results of operations for the three months
ended March 31, 1999 and 1998 and changes in cash for the three months ended
March 31, 1999 and 1998.
2. INTERIM REPORTING
The results of operations for the three months ended March 31, 1999 and 1998 are
not necessarily indicative of the results to be expected for the remainder of
the year.
3. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization and Nature of Operations
The Company was incorporated in California on August 15, 1983 using the name of
Tahoe Lake Concessions, Inc. The Company did not conduct any business activities
until 1993. On June 21, 1993, the Company's shareholders approved a name change
to BAOA, Inc. From 1993 through 1997, BAOA was engaged in the development,
marketing, and sales of an educational and entertainment board game.
Beginning in 1997, the Company changed the primary focus of the company from the
marketing and sales of a board game to telemarketing through its own call
centers to be operated throughout the United States in federally designated
empowerment zones.
4. Basis of Accounting
The Company's policy is to use the accrual method of accounting and to prepare
and present financial statements which conform to generally accepted accounting
principles. The preparation of financial statements in conformity with generally
accepted accounting principles requires management 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 reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
<PAGE> 7
5. Cash and equivalents
For purpose of the statements of cash flows, all highly liquid investments with
a maturity of three months or less are considered to be cash equivalents. There
were no cash equivalents as of March 31, 1999 and 1998.
6. Property and Equipment
Property and equipment are recorded at cost. Depreciation and amortization of
property and equipment is provided using the straight line method over estimated
useful lives ranging from five to seven years. Upon retirement or disposal of
depreciated assets, the cost and related depreciation are removed and the
resulting gain or loss is reflected in income. Major renewals and betterments
are capitalized while maintenance costs and repairs are expensed in the year
incurred. Any assets acquired from shareholders are recorded at historical cost
at the time of transfer.
7. Income Taxes
Income taxes are provided for using the liability method of accounting in
accordance with Statement of Financial Accounting Standards No. 109 (SFAS 109),
"Accounting for Income Taxes." A deferred tax asset or liability is recorded for
all temporary differences between financial and tax reporting. Deferred tax
expense (benefit) results from the net change during the year of deferred tax
assets and liabilities.
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 31,1999: the Company had $1,374 cash on hand and in the bank. The
primary source of cash and financing for the Company for the three months then
ended was $84,000 from deposits for the purchase of common stock. The primary
uses of cash during that period were $46,032 to finance the Company's
operations, $15,776 to pay down accounts payable, $17,890 for deposits and
investments, and $2,255 to purchase fixed assets. The Company currently
maintains a positive cash balance through sales of common stock.
Material changes in the results of operations:
As the Company had no revenues for the three months ended March 31, 1999 and
1998, losses were primarily from operating expenses of approximately $46,000 for
the three months ended March 31, 1999, and from operating expenses of
approximately $76,000 for the three months ended March 31, 1998. The remaining
costs and expenses reported for the three months ended March 31, 1998 were
primarily non-cash accruals.
<PAGE> 8
Material changes in business products and services:
The Company has customer contracts to provide telemarketing services commencing
with the opening of its planned call centers in Atlanta, Georgia and New York.
The Cities of Atlanta, Georgia and New York have each issued final site and
financial assistance approvals to BAOA for its call center locations. 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 a business alliance with a major telemarketing management and
call center operating company, MKT Communications Corp., to assist BAOA in
marketing and managing its call center. Management anticipates opening a call
center in Atlanta, Georgia in the third quarter of 1999, and a second call
center in New York in the first quarter of 2000.
BAOA's strategy is to operate its call centers in federally designated
empowerment zones. 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.
BAOA has secured a centrally located building in downtown Atlanta for its call
center business. 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.
<PAGE> 9
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, 1999
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..
BAOA, INC.
Date: July 16, 1999 /s/ PETER VAN BRUNT
--------------------------------------------
Peter Van Brunt,
President, Principal Executive Officer,
Director
Dated: July 16, 1999 /s/ STEVEN R. WRIGHT
--------------------------------------------
Steven R. Wright,
Treasurer and Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM
FINANCIAL STATEMENTS FOR FIRST QUARTER 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH BAOA, INC. 10-QSB
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,374
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,374
<PP&E> 51,781
<DEPRECIATION> (41,803)
<TOTAL-ASSETS> 125,717
<CURRENT-LIABILITIES> 346,143
<BONDS> 0
0
0
<COMMON> 44,991
<OTHER-SE> 4,310,141
<TOTAL-LIABILITY-AND-EQUITY> 125,717
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 47,405
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 121
<INCOME-PRETAX> (47,526)
<INCOME-TAX> 0
<INCOME-CONTINUING> (47,526)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (47,526)
<EPS-BASIC> .00
<EPS-DILUTED> .00
</TABLE>
