<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 September 30, 1999
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.)
555 Whitehall, Atlanta, Georgia 30381
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(Address of Principal Executive Offices) (Zip Code)
(404) 222-0760 FAX
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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 September 30, 1999, the registrant had 63,172,013 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
<TABLE>
<CAPTION>
September 30 September 30
1999 1998
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<S> <C> <C>
ASSETS
CURRENT ASSETS
CASH 99 378
ACCOUNTS RECEIVABLE 0 6,540
DUE FROM SHAREHOLDERS 0 10,000
TOTAL CURRENT ASSETS 99 16,918
FIXED ASSETS
FURNITURE AND EQUIPMENT 51,781 49,525
LESS DEPRECIATION -44,588 -38,328
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NET FIXED ASSETS 7,193 11,197
OTHER ASSETS
DEPOSITS 12,960 4,258
INVESTMENTS 108,544 93,457
ORGANIZATION COSTS 20,000 20,000
LESS AMORTIZATION -20,000 -19,385
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TOTAL OTHER ASSETS 121,504 98,330
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TOTAL ASSETS 128,796 126,445
=========================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 3
FINANCIAL STATEMENTS (continued)
BAOA, INC.
BALANCE SHEET
UNAUDITED
<TABLE>
<CAPTION>
September 30 September 30
1999 1998
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<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
DEPOSITS 66,500 97,050
ACCOUNTS PAYABLE 100,642 101,589
PAYROLL TAXES PAYABLE 0 41
ACCRUED INCOME TAXES 4,363 2,063
ACCRUED ROYALTIES 54,555 55,103
-------------------------
TOTAL CURRENT LIABILITIES 226,060 255,846
LONG TERM LIABILITIES
CONTRACTS PAYABLE 0 130,325
ACCRUED LIABILITIES 10,798 195,553
NOTES PAYABLE 134,500 196,500
NOTES PAYABLE - SHAREHOLDERS 6,000 598,625
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TOTAL LONG TERM LIABILITIES 151,298 1,121,003
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TOTAL LIABILITIES 377,358 1,376,849
STOCKHOLDERS' EQUITY
PREFERRED STOCK - $.001 PAR, 0 0
10,000,000 SHARES AUTHORIZED,
NONE ISSUED
COMMON STOCK - $.001 PAR, 63,172 39,015
90,000,000 SHARES AUTHORIZED,
63,172,013 AND 39,014,462 SHARES ISSUED
RESPECTIVELY
ADDITIONAL PAID IN CAPITAL 4,873,210 4,030,068
BEGINNING RETAINED DEFICIT -4,538,589 -4,555,054
NET INCOME (LOSS) -646,355 -764,433
ENDING RETAINED DEFICIT -5,184,944 -5,319,487
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TOTAL STOCKHOLDERS' EQUITY -248,562 -1,250,404
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TOTAL LIAB & STOCKHOLDERS' EQUITY 128,796 126,445
=========================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 4
FINANCIAL STATEMENTS (continued)
BAOA , INC.
INCOME STATEMENT
UNAUDITED
<TABLE>
<CAPTION>
September 30 September 30
1999 1998
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<S> <C> <C>
REVENUE
SALES 0 0
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TOTAL REVENUE 0
COST OF SALES 0 0
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GROSS PROFIT (LOSS) 0 0
OPERATING EXPENSES
SALARIES & WAGES 0 9,677
SALES & MARKETING 504,923 454,938
CONSULTING & OUTSIDE SERVICES 40,998 58,085
TRAVEL 9,603 63,065
LEGAL & ACCOUNTING 21,891 10,984
GENERAL & ADMINISTRATIVE 63,620 105,545
AMORTIZATION 0 1,385
DEPRECIATION 4,158 6,151
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TOTAL OPERATING EXPENSES 645,193 709,830
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INCOME (LOSS) FROM OPERATIONS -645,193 -709,830
OTHER INCOME & EXPENSE
INTEREST EXPENSE -362 -54,539
PENALTIES 0 -264
RENTAL INCOME 0 1,000
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TOTAL OTHER INCOME & EXPENSE -362 -53,803
INCOME (LOSS) BEFORE TAXES -645,555 -763,633
PROVISION FOR TAXES 800 800
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NET INCOME (LOSS) -646,355 -764,433
==========================
Income (Loss) per weighted-average share of common
stock outstanding, computed on net loss nil nil
==========================
Weighted-average number of shares of common stock
outstanding 53,905,435 34,606,598
==========================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
FINANCIAL STATEMENTS (continued)
BAOA, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
1999 1998
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME (LOSS) -646,355 -764,433
ADJ TO RECONCILE NET INCOME (LOSS) TO NET
CASH USED IN OPERATING ACTIVITIES:
DEPRECIATION & AMORTIZATION 4,158 7,536
(INCREASE) DECREASE IN DUE FROM SHAREHOLDERS 0 -10,000
(INCREASE) DECREASE IN EMPLOYEE ADVANCES 0 200
(INCREASE) DECREASE IN FIXED ASSETS -2,255 -2,159
(INCREASE) DECREASE IN INVESTMENTS -14,327 -93,457
(INCREASE) DECREASE IN DEPOSITS ASSETS -10,703 0
INCREASE (DECREASE) IN DEPOSITS LIABILITY 66,500 92,050
INCREASE (DECREASE) IN CASH OVERDRAFT -672 0
INCREASE (DECREASE) IN ACCTS PAYABLE -9,911 26,265
INCREASE (DECREASE) IN SALARIES & WAGES PAYABLE 0 0
INCREASE (DECREASE) IN PAYROLL TAXES PAYABLE 0 41
INCREASE (DECREASE) IN SALES TAX PAYABLE 0 -7
INCREASE (DECREASE) IN INCOME TAX PAYABLE 800 1,263
INCREASE (DECREASE) IN ACCRUED ROYALTIES -548 0
INCREASE (DECREASE) IN ACCRUED LIAB 362 44,341
PAYMENTS FOR SERVICES BY COMMON STOCK 479,750 399,325
PAYMENTS FOR INTEREST BY COMMON STOCK 0 10,000
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NET CASH FLOWS FROM OPERATING ACTIVITIES -133,201 -289,035
CASH FLOWS FROM FINANCING ACTIVITIES
INCREASE (DECREASE) IN NOTES PAYABLE 31,800 68,000
COMMON STOCK PURCHASES 101,500 220,000
----------------------
NET CASH FLOWS FROM FINANCING ACTIVITIES 133,300 288,000
NET INCREASE (DECREASE) IN CASH 99 -1,035
CASH AT BEGINNING OF PERIOD 0 1,413
CASH AT END OF PERIOD 99 378
</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 September 30, 1999 and 1998, and the results of operations for the nine
months ended September 30, 1999 and 1998 and changes in cash for the nine months
ended September 30, 1999 and 1998.
2. Interim Reporting
The results of operations for the nine months ended September 30, 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.
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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 September 30, 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 September 30,1999: the Company had $99 cash on hand and in the bank. The
primary sources of cash and financing for the Company for the nine months then
ended were $168,000 from sales of common stock and deposits for the purchase of
common stock, and $31,800 from loans. The primary uses of cash during that
period were $172,400 to finance the Company's operations, $25,000 for deposits
and investments, and $2,300 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 nine months ended September 30, 1999 and
1998, losses were primarily from operating expenses of approximately $161,000
for the nine months ended September 30, 1999, and from operating expenses of
approximately $313,000 for the nine months ended September 30, 1998. The
remaining costs and expenses reported for the nine months ended September 30,
1999 and 1998 were primarily the non-cash issuance of stock for services.
<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.
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 September 30, 1999
SIGNATURES
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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: November 11, 1999 /s/ Peter Van Brunt
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Peter Van Brunt,
President, Principal Executive Officer,
Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM
FINANCIAL STATEMENTS FOR THIRD QUARTER 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH BAOA, INC. 10-QSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 99
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 99
<PP&E> 51,781
<DEPRECIATION> (44,588)
<TOTAL-ASSETS> 128,796
<CURRENT-LIABILITIES> 226,060
<BONDS> 0
0
0
<COMMON> 63,172
<OTHER-SE> 4,873,210
<TOTAL-LIABILITY-AND-EQUITY> 128,796
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 645,193
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 362
<INCOME-PRETAX> (645,555)
<INCOME-TAX> 800
<INCOME-CONTINUING> (646,355)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (646,355)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
