<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

 Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
                      For the year ended December 31, 1999

                         Commission File Number 0-25416

                                   BAOA, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in Its Charter)


            CALIFORNIA                         33-0563989
       -------------------               -------------------------
     (State of Incorporation)       (I.R.S. Employer Identification No.)

                      555 Whitehall, Atlanta, Georgia 30381
               ---------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (404) 222-0760
                               ------------------
              (Registrant's telephone number, including area code)


         Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock - .001 Par Value
                                ----------------
                                (Title of Class)



                                        1

<PAGE>   2

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 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     [ ]


Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10 KSB
or any amendment to this Form 10-KSB.


               Yes    [X]                       No     [ ]


The issuer's had no revenues for the year ended December 31, 1999.

The approximate aggregate market value of the voting stock held by
non-affiliates of the registrant as of December 31, 1999, based on the average
of the closing bid and asked prices of one share of the Common Stock of the
Company, as reported on December 31, 1999 was $2,364,495.


                                        2

<PAGE>   3

                                     PART 1

ITEM 1 DESCRIPTION OF BUSINESS

Business Development

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.

There have been no bankruptcy, receivership or similar proceedings.

There have been no material reclassifications, mergers, consolidations, or
purchase or sale of a significant amount of assets not in the ordinary course of
business.

Business of the Issuer

The Company is in the business of operating call centers. The call centers that
will be operating in the United States will all be strategically located within
the boundaries of federally designated empowerment zones.

The call centers will then be eligible to receive job training dollars, grants,
loans and subsidies, as well as tax credits and energy credits. The main
criteria for obtaining these incentives is creating jobs.

The Company anticipates employing 300 - 500 people in each particular city of
operation. These jobs are attainable and they do not require higher education.
Each person must go through a training program which is subsidized by the
Government. These jobs will develop a transferrable skill in the Communications
Industry that will make them employable for not just a job but a career.

The Company has received a commitment for debt financing from the Atlanta
Empowerment Zone. The Company has also received a commitment from the Upper
Manhattan Empowerment Zone for debt financing, subject to certain conditions.
The Company is in the final stages of negotiations with the Figueroa Economic
Development Council in Los Angeles and has begun discussions with the Miami
Empowerment Zone.

The Company anticipates opening the Atlanta call center during the 2nd quarter
of 2000, with the other call centers to open as finances dictate. During these
periods of negotiations with the various Empowerment Zones, the Company has put
a deal together with Jamaica Call



                                        3

<PAGE>   4

Centers Limited. This deal will allow the Company to open a call center in
Montego Bay, Jamaica, and actually start operations in April of 2000. The labor
cost and the lower turnover rate of employees will make locating in Jamaica
highly attractive.

The Company has basically been in research and development stage for the last
two years and is now poised to become a major player in the call center world.

Competition

While the size and financial strength of the Company's competitors are
substantially greater than those of the Company, management believes the Company
will be able to compete effectively because it will incur lower costs and
expenses due to government funding programs and tax incentives as it provides
telecommunications and computer jobs to economically depressed areas of inner
cities. There is currently no direct competition in this inner city market.

Year 2000 Disclosure

During the last five years, almost all users of computers in public and business
applications were made aware that time-sensitive software might cause their
computer systems to recognize a date using "00" as the year 1900 rather than the
year 2000. Computer users were concerned that this software date problem might
result in system failures or miscalculations causing disruption of normal
business activities, primarily in the first weeks of 2000.

The Company's business plan directs the purchase of computer equipment and
software during the second half of 2000. The Company's Management has hands-on
familiarity with all of the software that will be utilized in its business plan
and has experienced no Year 2000 related systems problems as of the date of this
filing. Management has discussed Year 2000 computer systems issues with proposed
goods and services suppliers for the Company's business plan and they have
confirmed their computer related systems are already Year 2000 compatible.

Therefore, Management has made no Year 2000 compliance plans, other than to plan
purchases of computer systems and software which are already Year 2000
compatible. Management has no Year 2000 contingency plans and does not intend to
prepare future contingency plans related to Year 2000 compliance worst case
scenarios. Management reasonably anticipates that the Company will experience no
adverse operational or cash flow effect from Year 2000 computer related software
problems.




                                        4

<PAGE>   5

ITEM 2 DESCRIPTION OF PROPERTY

The Company has a lease on their office space located at 555 Whitehall Street,
Atlanta, Georgia. The Company has an option to purchase this property subject to
certain conditions.


ITEM 3 LEGAL PROCEEDINGS

The Company had no legal proceedings in 1999 and none are pending.


ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There have been no such submissions, as the Company did not have a shareholders
meeting during 1999.


                                     PART II


ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS.

General

The Company's common stock is traded on the OTC Electronic Bulletin Board. The
OTC Electronic Bulletin Board is sponsored by the National Association of
Securities Dealers (NASD). The Electronic Bulletin Board is a network of
security dealers who buy and sell stocks.

For the periods indicated, the following table sets forth the high and low bid
prices per share of common stock. These prices represent inter-dealer quotations
without retail markup, markdown, or commission and may not necessarily represent
actual transactions.

<TABLE>
<CAPTION>
                                    Low            High
<S>                                 <C>            <C>
1998
First Quarter                       .03            .18
Second Quarter                      .04            .28
Third Quarter                       .05            .18
Fourth Quarter                      .03            .11
</TABLE>




                                        5

<PAGE>   6

<TABLE>
<CAPTION>
                                    Low            High
<S>                                 <C>            <C>
1999
First Quarter                       .04            .06
Second Quarter                      .03            .15
Third Quarter                       .03            .06
Fourth Quarter                      .02            .05
</TABLE>

The Company's Board of Directors determines any payment of dividends. The Board
of Directors does not expect to authorize the payment of cash dividends in the
foreseeable future. Any future decision with respect to dividends will depend on
future earnings, operations, capital requirements and availability, restrictions
in future financing agreements, and other business and financial considerations.

As of December 31, 1999, there were approximately 695 holders of record of the
Company's Common Stock. The Board of Directors believe that the number of
beneficial owners is substantially greater than the number of record holders
because a portion of the Company's outstanding Common Stock is held of record in
broker "street names" for the benefit of individual investors.


ITEM 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
       RESULTS OF OPERATIONS

Plan of Operations

As the Company advanced its business plan to open call centers in the Economic
Empowerment Zones, the Company has maintained sufficient cash to sustain
corporate operations through the sale of equity securities and direct advances
from shareholders. During the next twelve months the Company's plans of
operations include opening a call center in Montego Bay, Jamaica with Jamaica
Call Centers Limited. The Company also plans on opening a call center during the
2nd quarter of 2000 in Atlanta, Georgia. The subsequent call centers to open
will be opened as finances dictate.

The Company will face considerable risk in each of its business plan steps, such
as difficulty of building site renovations within its budget, difficulty of
completing its build-out within its timetable and budget, difficulty of hiring
competent personnel within its budget and a lack of funding due to the Company's
inability to raise capital in the Equity Securities Market. If no funding is
received during the next twelve months, the Company will be forced to rely on
its existing cash in the bank and funds loaned to the Company. In such a
restricted cash flow scenario, the Company would be unable to complete its
business plan steps and would instead



                                        6

<PAGE>   7

delay all cash intensive activities. It should be noted that funds are in place
for the Jamaica Call Center.


Results of  Operations

As of December 31, 1999, the Company had $4,755 cash on hand and in the bank.
The primary sources of cash and financing for the Company for the year ended
December 31, 1999 were $214,500 from issuance of stock and shareholders' loans
to the Company of $106,500. The primary uses of cash during 1999 were $291,851
to finance the Company's operations, $21,467 for an option to purchase a
building in the City of Atlanta for the Company's call center business, and
$2,255 to purchase property and equipment. The Company had no full time
employees during 1999.

Significant losses in 1999 were primarily due to managements decision to utilize
operating funds to advance the Company's business plan of opening call centers
inside Economic Empowerment Zones. Management believes the Company will achieve
revenue and profit goals in 2000 through the operations of the Jamaica Call
Center and the anticipated operations of the Atlanta Call Center.


ITEM 7 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The audited financial statements of the Company and related Notes which are
included in this filing have been examined by S.W. Hatfield, Certified Public
Accountants, and have been so included in reliance upon the opinion of such
accountants given upon their authority as experts in auditing and accounting.





                                        7

<PAGE>   8

                                   BAOA, INC.
                                AND SUBSIDIARIES

                              Financial Statements
                                       and
                                Auditor's Report

                           December 31, 1999 and 1998





                               S. W. HATFIELD, CPA
                          certified public accountants

                    Use our past to assist your future (sm)


<PAGE>   9


                           BAOA, INC. AND SUBSIDIARIES

                          INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           ----
<S>                                                                       <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                         F-3

CONSOLIDATED FINANCIAL STATEMENTS

   Consolidated Balance Sheets
     as of December 31, 1999 and 1998                                      F-4

   Consolidated Statements of Operations and Comprehensive Income
     for the years ended December 31, 1999 and 1998                        F-5

   Consolidated Statement of Changes in Shareholders' Equity
     for the years ended December 31, 1999 and 1998                        F-6

   Consolidated Statements of Cash Flows
     for the years ended December 31, 1999 and 1998                        F-7

   Notes to Consolidated Financial Statements                              F-8
</TABLE>


                                                                             F-2
<PAGE>   10

S. W. HATFIELD, CPA
certified public accountants

Member:  American Institute of Certified Public Accountants
            SEC Practice Section
            Information Technology Section
         Texas Society of Certified Public Accountants


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



Shareholders and Board of Directors
BAOA, Inc. and Subsidiaries

We have audited the consolidated balance sheets of BAOA, Inc. (a California
corporation) and Subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of operations and comprehensive income, changes in
shareholders' equity, and cash flows for each of the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit also includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of BAOA,
Inc. and Subsidiaries as of December 31, 1999 and 1998 and the results of its
consolidated operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note B to the
financial statements, the Company has suffered losses in prior years, working
capital deficiencies and continues to experience liquidity problems that raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note B. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.




                                            S. W. HATFIELD, CPA

Dallas, Texas
March 23, 2000


                    Use our past to assist your future (sm)

P. O. Box 820395                               9002 Green Oaks Circle, 2nd Floor
Dallas, Texas  75382-0395                               Dallas, Texas 75243-7212
214-342-9635 (voice)                                          (fax) 214-342-9601
800-244-0639                          F-3                         SWHCPA@aol.com

<PAGE>   11

                           BAOA, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                     ASSETS

                                                                          1999                1998
                                                                       -----------         -----------
<S>                                                                    <C>                 <C>
CURRENT ASSETS
   Cash and cash equivalents                                           $     4,755         $        --
                                                                       -----------         -----------
     TOTAL CURRENT ASSETS                                                    4,755                  --
                                                                       -----------         -----------
PROPERTY AND EQUIPMENT - AT COST
   Furniture                                                                14,402              14,402
   Equipment                                                                37,378              35,123
                                                                       -----------         -----------
                                                                            51,780              49,525
   Accumulated depreciation                                                (45,979)            (40,430)
                                                                       -----------         -----------
     NET PROPERTY AND EQUIPMENT                                              5,801               9,095
                                                                       -----------         -----------
OTHER ASSETS
   Option to acquire real property                                         115,684              94,217
   Organization costs, net of accumulated amortization
     of approximately $20,000 and $20,000, respectively                         --                  --
   Deposits and other assets                                                10,703               2,258
                                                                       -----------         -----------
     TOTAL OTHER ASSETS                                                    126,387              96,475
                                                                       -----------         -----------
TOTAL ASSETS                                                           $   136,943         $   105,570
                                                                       ===========         ===========
               LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
   Cash overdraft                                                      $        --         $       672
   Accounts payable                                                        103,762             110,553
   Accrued expenses                                                         54,555              55,103
   Advances and notes payable to affiliates and related parties                 --             108,700
   Interest payable to affiliates and related parties                       28,222              10,436
   Income taxes payable                                                      4,363               3,563
                                                                       -----------         -----------
     TOTAL CURRENT LIABILITIES                                             190,902             289,207
                                                                       -----------         -----------
LONG-TERM LIABILITIES
   Notes payable to affiliates and related parties                         208,200                  --
                                                                       -----------         -----------
     TOTAL LIABILITIES                                                     399,102             289,207
                                                                       -----------         -----------
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY (DEFICIT)
   Preferred stock - $0.001 par value.  10,000,000 shares
     authorized.  None issued and outstanding                                   --                  --
   Common stock - $0.001 par value 90,000,000
     shares authorized. 76,082,015 and 45,191,295
     shares issued and outstanding, respectively                            76,082              45,191
   Additional paid-in capital                                            5,479,072           4,309,941
   Accumulated deficit                                                  (5,817,313)         (4,538,589)
                                                                       -----------         -----------
     TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                                 (262,159)           (183,457)
                                                                       -----------         -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                             $   136,943         $   105,570
                                                                       ===========         ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                                                             F-4
<PAGE>   12

                           BAOA, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                     Years ended December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                                        1999                1998
                                                                     -----------         ----------
<S>                                                                  <C>                 <C>
REVENUES, NET                                                        $        --         $       --

COST OF SALES                                                                 --                 --
                                                                     -----------         ----------
GROSS PROFIT                                                                  --                 --

OPERATING EXPENSES
   Sales and marketing expenses                                           24,146              1,801
   Marketing and consulting fees to related parties                      919,613             65,768
   General and administrative expenses                                   224,548            889,052
   Bad debt expense                                                           --              6,140
   Depreciation                                                            5,549              8,253
   Amortization                                                               --              2,000
                                                                     -----------         ----------
     TOTAL OPERATING EXPENSES                                          1,173,856            973,014
                                                                     -----------         ----------

LOSS FROM OPERATIONS                                                  (1,173,856)          (973,014)

OTHER INCOME (EXPENSE)
   Interest expense                                                      (20,296)           128,078
   Other                                                                      --              2,750
   Compensation expense related
     to common stock sales at less
     than "fair value"                                                   (83,772)                --
   Forgiveness of debt                                                        --            859,452
                                                                     -----------         ----------
     TOTAL OTHER INCOME (EXPENSE)                                       (104,068)           990,279
                                                                     -----------         ----------

INCOME (LOSS) BEFORE INCOME TAXES                                     (1,277,924)            17,266

Federal and state income taxes                                              (800)              (800)
                                                                     -----------         ----------

NET INCOME (LOSS) BEFORE COMPREHENSIVE INCOME                         (1,278,724)            16,466

OTHER COMPREHENSIVE INCOME                                                    --                 --
                                                                     -----------         ----------

COMPREHENSIVE INCOME (LOSS)                                          $(1,278,724)        $   16,466
                                                                     ===========         ==========

Income (Loss) per weighted-average share of common
   stock outstanding, computed on net loss
   Basic                                                             $     (0.02)               nil
                                                                     ===========         ==========
   Diluted                                                           $     (0.02)               nil
                                                                     ===========         ==========
Weighted-average number of shares of common stock outstanding
   Basic                                                              61,114,785         36,287,379
                                                                     ===========         ==========
   Diluted                                                            61,114,785         38,437,379
                                                                     ===========         ==========
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.


                                                                             F-5
<PAGE>   13

                           BAOA, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                     Years ended December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                 Common Stock              Additional
                                          -------------------------          paid-in          Accumulated
                                            Shares          Amount           capital            deficit              Total
                                          ----------        -------        ----------         -----------         -----------
<S>                                       <C>               <C>            <C>                <C>                 <C>
BALANCES AT JANUARY 1, 1998               30,246,386        $30,246        $3,409,511         $(4,555,055)        $(1,115,298)

Sales of common stock, as reported         6,441,659          6,442           332,858                  --             339,300
  Correction of clerical error
  discovered during 1999                     200,000            200              (200)                 --                  --

Common stock issued for
  Consulting and other services            8,103,250          8,103           555,472                  --             563,575
  Payment of interest                        200,000            200            12,300                  --              12,500

Net income for the year                           --             --                --              16,466              16,466
                                          ----------        -------        ----------         -----------         -----------
BALANCES AT DECEMBER 31, 1998             45,191,295         45,191         4,309,941          (4,538,589)           (183,457)

Sales of common stock                      9,980,720          9,981           288,291                  --             298,272

Common stock issued for
  Consulting and other services           20,650,000         20,650           871,850                  --             892,500
  Payment of interest and
  retirement of note payable                 260,000            260             8,990                  --               9,250

Net loss for the year                             --             --                --          (1,278,724)         (1,278,724)
                                          ----------        -------        ----------         -----------         -----------
BALANCES AT DECEMBER 31, 1999             76,082,015        $76,082        $5,479,072         $(5,817,313)        $  (262,159)
                                          ==========        =======        ==========         ===========         ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                                                             F-6
<PAGE>   14

                           BAOA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     Years ended December 31, 1999 and 1998

<TABLE>
<CAPTION>
                                                                     1999               1998
                                                                  -----------         ---------
<S>                                                               <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss) for the year                                 $(1,278,724)        $  16,466
   Adjustments to reconcile net income to net cash
     provided by operating activities
        Depreciation and amortization                                   5,549            10,253
        Bad debt expense                                                   --             6,140
        Common stock issued for fees and services                     892,500           563,575
        Common stock issued for interest expense                        2,250            12,500
        Compensation expense related to common
          stock sales at less than "fair value"                        83,772                --
        Forgiveness of debt                                                --          (859,452)
        Forgiveness of accrued interest to related parties                 --          (140,776)
     (Increase) decrease in
        Accounts receivable                                                --               400
        Deposits and other assets                                      (8,445)              200
     Increase (decrease) in
        Accounts payable                                               (6,791)           37,228
        Accrued liabilities and other                                  17,238            (5,007)
        Income taxes payable                                              800             2,763
                                                                  -----------         ---------
NET CASH USED IN OPERATING ACTIVITIES                                (291,851)         (355,710)
                                                                  -----------         ---------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of property and equipment                                 (2,255)           (2,158)
   Cash paid for option to acquire real property                      (21,467)          (92,217)
                                                                  -----------         ---------
NET CASH USED IN INVESTING ACTIVITIES                                 (23,722)          (94,375)
                                                                  -----------         ---------
CASH FLOWS FROM FINANCING ACTIVITIES
   Increase (decrease) in cash overdrafts                                (672)              672
   Proceeds from advances from related parties                        106,500           112,700
   Payments on advances from related parties                               --            (4,000)
   Proceeds from sale of common stock                                 214,500           339,300
                                                                  -----------         ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES                             320,328           448,672
                                                                  -----------         ---------
INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS                          4,755            (1,413)

Cash and cash equivalents at beginning of year                             --             1,413
                                                                  -----------         ---------
Cash and cash equivalents at end of year                          $     4,755         $      --
                                                                  -----------         =========
SUPPLEMENTAL DISCLOSURES OF INTEREST AND INCOME TAXES PAID
   Interest paid                                                  $       260         $     198
                                                                  ===========         =========
   Income taxes paid (refunded), net                              $        --         $    (463)
                                                                  ===========         =========
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.


                                                                             F-7
<PAGE>   15

                           BAOA, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


NOTE A - BACKGROUND AND ORGANIZATION

BAOA, Inc. (BAOA) was originally incorporated on August 15, 1983 according to
the laws of the State of California. BAOA was dormant until 1993. From 1993
through 1997, BAOA was engaged in the development, sale and marketing of an
educational and entertainment board game, the marketing of an affinity credit
card, the licensing of its trademarked logo "Black Americans of Achievement" and
the development for production of a television game show.

During 1997, BAOA redirected its efforts to the operation of telemarketing call
centers located in Federally designated "Empowerment Zones" throughout the
United States. BAOA has entered into a strategic alliance with MKT
Communications Corp., a telemarketing and call center management entity, to
assist the Company in marketing and managing its call centers. As of December
31, 1999, the Company has no call centers in operation and remains in
negotiation for the opening of call centers in Atlanta, Georgia and New York
City, New York.

In anticipation of opening the Atlanta center and others to be established, the
Company has incorporated wholly- owned subsidiaries: Call Atlanta, Inc. and Call
Harlem, Inc.

The Company's wholly-owned subsidiary, Call Atlanta, Inc. was incorporated on
January 7, 1998 under the laws of the State of Georgia. Call Atlanta, Inc. will
operate the Company's telemarketing call center operations domiciled in the
Atlanta Georgia designated "Empowerment Zone".

The Company's wholly-owned subsidiary, Call Harlem, Inc. was incorporated on
September 29, 1998 under the laws of the State of Delaware. Call Harlem, Inc.
will operate the Company's telemarketing call center operations domiciled in the
New York City designated "Empowerment Zone".

The accompanying financial statements present the consolidated financial
condition, operations and cash flows of BAOA, Inc. and its wholly-owned
subsidiaries, Call Atlanta, Inc. and Call Harlem, Inc. All significant
intercompany transactions have been eliminated in consolidation. The
consolidated entities are collectively referred to as the "Company".

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
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.


NOTE B - GOING CONCERN UNCERTAINTY

The Company has had continuing losses from operations and experienced negative
cash flows from operating activities since 1993. Further, the Company has
limited ability to utilize traditional financing methods. The Company's survival
in the current and prior years has been substantially dependent upon advances
from related parties and other individuals and the sale of equity securities
through the efforts of Management.

The Company's continued existence is dependent upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis.


                                                                             F-8
<PAGE>   16

                           BAOA, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 1999 and 1998


NOTE B - GOING CONCERN UNCERTAINTY - CONTINUED

The Company has customer contracts to provide telemarketing services commencing
with the opening of its two (2) planned call centers. The City of Atlanta,
Georgia has issued final site and financial commitment approval for the
Company's Atlanta Empowerment Zone call center. The City of New York City, New
York has issued its final site and financial commitment approval for the
Company's New York Empowerment Zone call center.

On February 22, 1999, the Company received a financing commitment letter from
the Atlanta Empowerment Zone Corporation for a development loan of approximately
$3.5 million at an interest rate of 8.0% and a term of ten (10) years. As of
March 23, 2000, the loan, and related documentation, has been executed and the
initial funding has been made.

On September 3, 1998, the Company was approved by the Upper Manhattan
Empowerment Zone Development Corporation for a development loan of approximately
$800,000. As of March 23, 2000, the loan, and related documentation, has not
been executed or funded.

Additionally, management believes that its ongoing efforts to raise additional
capital through the sale of equity securities and/or debt instruments will
provide additional cash flows. However, there can be no assurance that the
Company will be able to obtain additional funding or, that such funding, if
available, will be obtained on terms favorable to or affordable by the Company.


NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Cash and Cash Equivalents

        For Statement of Cash Flows purposes, the Company considers all cash on
        hand and in banks, including accounts in book overdraft positions,
        certificates of deposit and other highly-liquid investments with
        maturities of three months or less, when purchased, to be cash and cash
        equivalents.

        Cash overdraft positions may occur from time to time due to the timing
        of making bank deposits and releasing checks, in accordance with the
        Company's cash management policies.

2. Accounts Receivable

        In the normal course of business, the Company extends unsecured credit
        to virtually all of its clients which are located throughout the United
        States. Because of the credit risk involved, management has provided an
        allowance for doubtful accounts which reflects its opinion of amounts
        which will eventually become uncollectible. In the event of complete
        non-performance, the maximum exposure to the Company is the recorded
        amount of trade accounts receivable shown on the balance sheet at the
        date of non-performance.

3. Property and Equipment

        Property and equipment are recorded at cost and are depreciated on a
        straight-line basis, over their estimated useful lives (generally 5 to 7
        years). Major additions and betterments are capitalized and depreciated
        over the remaining estimated useful lives of the related assets.
        Maintenance, repairs, and minor improvements are charged to expense as
        incurred.


                                                                             F-9
<PAGE>   17

                           BAOA, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 1999 and 1998


NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

4. Organization costs

        Organization costs are being amortized using the straight-line method
        over five years.

5. Income Taxes

        The Company uses the asset and liability method of accounting for income
        taxes. At December 31, 1999 and 1998, respectively, the deferred tax
        asset and deferred tax liability accounts, as recorded when material to
        the financial statements, are entirely the result of temporary
        differences. Temporary differences represent differences in the
        recognition of assets and liabilities for tax and financial reporting
        purposes, primarily accumulated depreciation and amortization, allowance
        for doubtful accounts and vacation accruals.

        As of December 31, 1999 and 1998, the deferred tax asset related to the
        Company's net operating loss carryforward is fully reserved. If these
        carryforwards are not utilized, they will begin to expire in 2007.

6. Earnings (loss) per share

        Basic earnings (loss) per share is computed by dividing the net income
        (loss) by the weighted-average number of shares of common stock and
        common stock equivalents (primarily outstanding options and warrants).
        Common stock equivalents represent the dilutive effect of the assumed
        exercise of the outstanding stock options and warrants, using the
        treasury stock method. The calculation of fully diluted earnings (loss)
        per share assumes the dilutive effect of the exercise of outstanding
        options and warrants at either the beginning of the respective period
        presented or the date of issuance, whichever is later. As of December
        31, 1999, the outstanding warrants and options are deemed to be
        anti-dilutive due to the Company's net operating loss position.

7. Stock Options

        During 1997, the Company adopted a method of accounting for stock-based
        compensation as required by Statement of Financial Accounting Standards
        No. 123 (SFAS 123), "Accounting for Stock Based Compensation". SFAS 123
        allows for two methods of valuing stock-based compensation. The first
        method allows for the continued application of Accounting Principle
        Board Opinion No. 25 (APB 25). The second method uses an option pricing
        model to value stock compensation and record such valuation as
        compensation expense within the financial statements over the
        anticipated period that the options will be outstanding. The Company has
        elected to apply the tenets of APB 25 and the supplemental disclosure
        standards of SFAS 123.

8. Advertising

        The Company expenses direct advertising and marketing costs as incurred.
        Advertising expenses of approximately $450 and $1,801 are included in
        the accompanying financial statements as a component of sales and
        marketing expense for the years ended December 31, 1999 and 1998,
        respectively.

9. Research and development

        The Company expenses research and development costs as incurred.
        Research and development costs of approximately $-0- and $41,949 are
        included in the accompanying financial statements as a component of
        general and administrative expenses for the year ended December 31, 1999
        and 1998, respectively.


                                                                            F-10
<PAGE>   18

                           BAOA, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 1999 and 1998


NOTE D - RELATED PARTY TRANSACTIONS

The Company has both advances and notes payable to related parties, who are also
stockholders or related to stockholders of the Company. The advances arose from
the direct payment of expenses paid on behalf of the Company and for various
cash advances made directly to the Company. The advances are not formally
documented, unsecured, non-interest bearing and are due upon demand based on the
initial understanding of the Company and the related parties.

During 1998, the Company, with advice of legal counsel, determined that no
formal documents related to various notes and/or advances existed. Additionally,
no demand for payment had been made within a time period specified in the
Uniform Commercial Code from the inception of the advances through December 31,
1998. Accordingly, the Company, upon the advice of legal counsel, wrote off
these advances as forgiveness of debt in the accompanying financial statements.

During 1999 and 1998, the Company has received additional loans from other
related parties, who are also stockholders or entities controlled by
stockholders of the Company. The loans bear interest at rates ranging from 5.0%
to 30.0%. All notes are due on terms between two (2) years and three (3) years
from the funding date of the respective loan advance.

The following summarizes these amounts as of December 31, 1999 and 1998:

<TABLE>
<CAPTION>
                                 1999          1998
                               --------      --------
<S>                            <C>           <C>
     Advances                  $     --      $108,700
     Notes                      208,200            --
                               --------      --------
                                208,200       108,700
     Interest                    28,222        10,436
                               --------      --------
                               $236,422      $119,136
                               ========      ========
</TABLE>

Additionally, the Company has paid, in cash and/or common stock, certain amounts
to related parties, including members of management, officers and directors of
the Company for various consulting, marketing and management services. These
amounts are shown as "Marketing and consulting fees to related parties" in the
accompanying Statement of Operations and Comprehensive Income.


NOTE E - OPTION TO ACQUIRE REAL PROPERTY

In 1997, the Company entered into an contractual agreement, which was
subsequently modified and extended, to purchase a building in Atlanta, Georgia
to house its administrative offices and its initial telemarketing call center.
On March 23, 1998, the building was purchased by an affiliated individual, who
intends to deed the property to the Company at a future date to be determined.
Since the closing date, the Company funded all initial deposits, closing costs
and debt service payments on behalf of the owning party. The monies advanced on
behalf of the owning party have been classified as "Option to acquire real
property" in the accompanying balance sheets and statements of cash flows.


                                                                            F-11
<PAGE>   19

                           BAOA, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 1999 and 1998


NOTE F- INCOME TAXES

The components of income tax (benefit) expense for the years ended December 31,
1999 and 1998, respectively, are as follows:

<TABLE>
<CAPTION>
                                      1999        1998
                                      ----        ----
<S>                                   <C>         <C>
                  Federal:
                      Current         $ --        $ --
                      Deferred          --          --
                                      ----        ----
                                      ----        ----
                                      ----        ----
                  State:
                      Current          800         800
                      Deferred          --          --
                                      ----        ----
                                       800         800
                                      ----        ----
                      Total           $800        $800
                                      ====        ====
</TABLE>

As of December 31, 1999, the Company has a net operating loss carryforward of
approximately $2,600,000 to offset future taxable income. Subject to current
regulations, this carryforward will begin to expire in 2007 for Federal purposes
and 1999 for State purposes.

The Company's income tax expense for the years ended December 31, 1999 and 1998,
respectively, differed from the statutory federal rate of 34 percent as follows:

<TABLE>
                                                                      1999             1998
                                                                    ---------        -------
<S>                                                                 <C>              <C>
Statutory rate applied to earnings (loss) before income taxes       $(434,494)       $ 5,598

Increase (decrease) in income taxes resulting from:
  State income taxes                                                      800            800
  Other, including reserves for deferred tax asset                    434,494         (5,598)
                                                                    ---------        -------
    Income tax expense                                              $     800        $   800
                                                                    =========        =======
</TABLE>

The Company's deferred tax asset as of December 31, 1999 and 1998, respectively,
is as follows:

<TABLE>
<CAPTION>
<S>                                     <C>                 <C>
Net operating loss carryforwards        $ 2,614,000         $ 1,336,100
Valuation allowance                      (2,614,000)         (1,336,100)
                                        -----------         -----------
Net deferred tax asset                  $        --         $        --
                                        ===========         ===========
</TABLE>

The valuation allowance estimate increased (decreased) by approximately
$1,277,900 and $(5,600) for the years ended December 31, 1999 and 1998,
respectively. Management is of the opinion that it's valuation estimate is
reasonably possible of changing in future periods.


                                                                            F-12
<PAGE>   20

                           BAOA, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 1999 and 1998


NOTE G - CAPITAL STOCK TRANSACTIONS

In October 1998, the Company's Articles of Incorporation (Articles) were amended
to increase the number of shares which may be issued. As amended in 1998, the
Articles increased the number of shares which may be issued from 50,000,000 to
100,000,000. Of the 100,000,000 shares authorized, 90,000,000 shares of $0.001
par value common stock and 10,000,000 shares of $0.001 preferred stock may be
issued. This amendment designated 4,000,000 shares of the authorized preferred
stock as "Series A Convertible Preferred Stock". The remaining undesignated
preferred stock may be designated and/or issued from time to time in one or more
series as determined by the Company's Board of Directors.

Series A Convertible Preferred Stock

The Company's Board of Directors has designated 4,000,000 shares of its
authorized preferred stock as "Series A Convertible Preferred Stock". As of
December 31, 1999 and 1998, no shares have been issued by the Company. Each
outstanding share of Class A Convertible Preferred Stock shall be converted, at
the sole option of the holder, at any time into common stock at an initial
conversion rate of one share of common stock for each share of preferred stock
outstanding. The conversion rate will be adjusted for the effects of any future
stock dividends, combinations or subdivisions of the Company's common stock
which may occur subsequent to the issuance of the Preferred Stock. Holders of
the Class A Convertible Preferred Stock shall also be entitled to receive, when
declared by the Company's Board of Directors, dividends at par with holders of
the Company's common stock had been converted into common stock as of the record
date of the dividend.

In the event of liquidation, dissolution or winding up of the Company, the
holders of Series A Convertible Preferred Stock shall be entitled to receive,
prior and in preference to any distribution to the holders of common stock,
$1.00 per share plus all declared and unpaid dividends on each issued and
outstanding share.

Common stock issuances

During the years ended December 31, 1999 and 1998, respectively, the Company
issued 20,650,000 and 8,103,250 shares of common stock in exchange for various
marketing and consulting services. These transactions were valued at a
cumulative approximate $892,500 and $563,575, respectively, which approximates
the fair market value of the shares given in payment and the value of the
services.

During the years ended December 31, 1999 and 1998, respectively, the Company
sold an aggregate 9,980,720 and 6,441,659 shares of common stock to various
unrelated third party investors for gross aggregate proceeds of approximately
$214,500 and $339,300. The Company charged operations approximately $83,800 for
differences between the estimated fair value of the stock sold during 1999 and
the cash proceeds received by the Company. It is the intent of the Company to
price the sale of restricted securities at or near the closing market price of
the Company's securities. Differences may occur due to the timing of the receipt
of funds on restricted securities sales and market fluctuations in the Company's
quoted market prices. In conjunction with the sale of common stock during 1998,
the Company granted a cumulative 800,333 options to purchase an additional
800,333 shares of restricted, unregistered common stock at prices ranging from
$0.04 to $0.50 per share. During 1999, these options expired and no options were
exercised and, accordingly, no shares of common stock were issued.

During the year ended December 31, 1999, the Company issued 260,000 shares of
restricted, unregistered common stock in payment of a $7,000 note payable and
$2,250 in accrued interest.

During the year ended December 31, 1998, the Company issued 200,000 shares of
restricted, unregistered common stock as payment for accrued interest in the
amount of $12,500.


                                                                            F-13
<PAGE>   21

                           BAOA, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 1999 and 1998


NOTE H - STOCK OPTIONS

The Company granted various stock options to purchase shares of the Company's
common stock at specified prices in 1998 and 1997 as compensation for services.
The options generally expire one year from the date of the grant and become
exercisable immediately. At December 31, 1999 and 1998, a total of 50,000 and
840,333 options were outstanding, respectively. The following table lists the
status of the various option and warrant programs in effect at December 31, 1999
and 1998, respectively:

<TABLE>
<CAPTION>
                                                                 Expired or
                                  Balance at        Granted       Exercised      Balance at       Exercise price
       Program                December 31, 1997   during 1998    during 1998  December 31, 1998     per share
       -------                -----------------   -----------    -----------  -----------------   --------------
<S>                           <C>                 <C>            <C>          <C>                 <C>
1997 Consultant options            200,000               --        (200,000)             --             N/A
1998 Consultant options                 --           50,000              --          50,000            $0.35
1998 Stock sale options                 --          800,333         (10,000)        799,333        $0.04 - $0.50
                                   -------          -------        --------         -------
Totals at December 31, 1998        200,000          850,333        (210,000)        840,333        $0.25 - $0.50
                                   =======          =======        ========         =======
</TABLE>

Weighted average price of outstanding options at December 31, 1998: $0.22 per
share.

<TABLE>
<CAPTION>
                                                                 Expired or
                                  Balance at        Granted       Exercised      Balance at       Exercise price
       Program                December 31, 1998   during 1999    during 1999  December 31, 1999     per share
       -------                -----------------   -----------    -----------  -----------------   --------------
<S>                           <C>                 <C>            <C>          <C>                 <C>
1998 Consultant options            50,000                --             --          50,000             $0.35
1998 Stock sale options           799,333                --       (799,333)             --         $0.04 - $0.50
                                  -------          --------       --------          ------
Totals at December 31, 1999       840,333                --       (799,333)         50,000         $0.25 - $0.50
                                  =======          ========       ========          ======
</TABLE>

Weighted average price of outstanding options at December 31, 1998: $0.35 per
share.

As of March 23, 2000, the Company had the following outstanding options.
Additionally, none of the options issued and outstanding as of March 23, 2000
and/or December 31, 1999 had been exercised by the option holders.

<TABLE>
<CAPTION>
                     Expiring as of              Options outstanding
                     --------------              -------------------
<S>                                              <C>
                     August 31, 2000                   50,000
                                                       ------
                                                       50,000
                                                       ======
</TABLE>

Had compensation cost for options granted in 1999 and 1998, respectively, been
determined based on the fair values at the grant dates, as prescribed by SFAS
123, the Company's net loss and net loss per share would not have changed due to
the fact that the exercise price of the options was substantially higher than
the market price at the grant date.

The calculations to estimate the fair value of the options were made using the
Black-Scholes pricing model which required making significant assumptions. These
assumptions include the expected life of the options, which was determined to be
one year, the expected volatility, which was based on fluctuations of the stock
price over a 12 month period, the expected dividends, determined to be zero
based on past performance, and the risk free interest rate, which was estimated
using the bond equivalent yield of 6.0% at December 31, 1999 and 1998,
respectively.


                                                                            F-14
<PAGE>   22

                           BAOA, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 1999 and 1998


NOTE I - COMMITMENTS

Operating leases

The Company leases office facilities in Atlanta, Georgia under an operating
lease. The lease was for an initial term of 180 days from March 13, 1999 and
contained a single renewal term of an additional 180 days, which was exercised.
The lease requires monthly payments of $5,703 per month plus, as additional
rent, one half of all real estate taxes, general assessments, utility billings,
maintenance, cleaning, security and trash bills imposed upon the property. As of
December 31, 1999, the Company had terminated and settled all other lease
agreements which were previously in effect. The accompanying financial
statements include rent expense for operating leases of approximately $84,493
and $47,415, as a component of general and administrative expenses, for the year
ended December 31, 1999 and 1998, respectively. Future minimum lease payments
due under noncancellable leases as of December 31, 1999 are as follows:

<TABLE>
<CAPTION>
                              Year ending
                              December 31,         Amount
                              ------------        -------
<S>                           <C>                 <C>
                                 2000             $17,109
                                                  =======
</TABLE>

Marketing and consulting contracts

In December 1998, the Company entered into an agreement with an independent
consultant to provide various business development services. The terms of this
agreement require the payment of an aggregate 250,000 shares of common stock, on
dates prescribed in the agreement, and the granting of 50,000 options to
purchase 50,000 shares of common stock at a price of not more than $0.35 per
share, commencing on August 5, 1999 and expiring on August 5, 2000. As of
December 31, 1999 and 1998, respectively, no shares have been issued pursuant to
this agreement.

In July 1997, the Company entered into two agreements with independent
consultants to establish marketing and distribution systems for the Company's
board game and telecommunication products. The terms of the agreements provide
for compensation through the issuance of 225,000 shares of the Company's common
stock, the granting of 200,000 options to acquire 200,000 shares of the
Company's common stock at exercise prices ranging from $0.25 to $0.50 per share,
and the reimbursement for approved travel expenses incurred on the Company's
behalf. Under one of the agreements, the consultant is entitled to receive a
5.0% commission on revenues received from corporate sponsors through the direct
efforts of the consultant. As of December 31, 1997, the Company has issued
50,000 shares of common stock valued at $0.10 per share and 50,000 valued at
$0.09 per share as compensation on these contracts. Further, as of December 31,
1998 and 1997, respectively, no options were exercised and all issued options
have expired and no commissions have been paid related to any Company products.

In July 1997, the Company entered into an agreement with an independent
consultant to establish and implement a distribution system for the Company's
board game and telecommunication products in the Southeastern United States. The
terms of the agreement provide for compensation through the issuance of 125,000
shares of the Company's common stock. The agreement may be terminated at any
time by either the consultant or the Company. As of December 31, 1997, the
Company has issued two blocks of 50,000 shares of the Company's common stock,
valued at $0.10 and $0.09 per share, respectively.


                                                                            F-15
<PAGE>   23

                           BAOA, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 1999 and 1998


NOTE I - COMMITMENTS - CONTINUED

Marketing and consulting contracts - continued

In May 1997, the Company entered into an agreement with an independent
consultant to provide advisory and marketing services for the Company. The terms
of the agreement provide for compensation through the issuance of 100,000 shares
of the Company's common stock, a 5.0% commission on gross sales to the
consultant which do not require payment of additional commissions to other third
party sales representatives, a 1.5% commission on sales which do require the
payment of additional commissions to other third party sales representatives and
a $1,500 per month advance against future commissions. This agreement may be
terminated at any time by either the consultant or the Company. As of December
31, 1997, the Company had issued the required 100,000 shares of common stock in
two blocks of 50,000 shares each, valued at $0.10 and $0.09 per share each.

In February 1997, the Company entered into an agreement with an individual to
serve as an advisory director and provide various business advisory services.
The agreement is for a period of two (2) years and provides for compensation
through the issuance of 100,000 shares of the Company's common stock. As of
December 31, 1997, 100,000 shares of common stock, valued at $0.10 per share,
had been issued pursuant to this agreement.

In January 1996, the Company entered into an agreement with an independent
consultant for the design and maintenance of an Internet web site and other
Internet-related consulting services. The contract provides for compensation
through the issuance of 150,000 shares of the Company's common stock. At
December 31, 1997, the Company has issued 87,500 and 37,500 shares of the
Company's common stock at $0.10 and $0.09 per share, respectively.

Call center contracts

In August 1997, the Company entered into an agreement with a telecommunications
company to design, develop, set-up and managing a completely functioning
teleservice center (Call Center) for the Company. This agreement is for a period
of three (3) years, beginning August 22, 1997. The Company is required to pay
$50,000 in advance for services and work to be performed plus travel advances
for expenses to be incurred on behalf of the Company. This agreement requires
additional compensation through the issuance of 3,000,000 shares of the
Company's unregistered, restricted common stock as follows: 1,000,000 shares
upon submission of a business plan for the initial Call Center; 1,000,000 shares
upon delivery of a completely functioning Call Center; and 1,000,000 shares upon
delivery of a purchase order for telemarketing services representing collectable
revenue of at least $2,400,000. Further, the Company will issue an additional
1,000,000 shares of unregistered, restricted common stock upon the opening of a
second Call Center and an additional 1,000,000 shares of unregistered,
restricted common stock when the second Call Center earns an annual gross
revenue of $900,000. The telecommunications company will also provide ongoing
management on the Call Center for $20,000 per month plus 10.0% of the gross
telemarketing billings. Additionally, this agreement requires future issuances
of common stock and warrants to purchase common stock in amounts and at prices
to be mutually agreed upon at a future date not specified in this agreement. In
the event that the telecommunications company fails to provide an initial Call
Center, all rights to common stock pursuant to this agreement shall be
forfeited. As of July 14, 1999, performance on this agreement had not begun,
and, accordingly, no common stock has been issued nor had any required payments
been made.


                                                                            F-16
<PAGE>   24

                           BAOA, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 1999 and 1998


NOTE I - COMMITMENTS - CONTINUED

Financial services contracts

In March 1999, the Company formalized an agreement with an entity to provide
capital development services. The contractor is to raise approximately
$1,000,000 through the sale of equity securities to new and existing investors.
For these services, the Company is obligated to pay the contractor 7,000,000
shares of common stock and a sum of money equal to 5.0% of the gross money
received. This agreement is for a period of five (5) years from January 1997.

In March 1998, the Company entered into an underwriting contract with a
brokerage firm whereby the brokerage firm was to use its best efforts in raising
approximately $600,000 for the Company through a Private Placement Memorandum.
The funds were to be raised through the sale of Units, consisting of 100,000
shares of common stock, 100,000 Class A Warrants and 100,000 Class B Warrants,
at a price of $25,000 per Unit. Pursuant to the terms of the Agreement, these
efforts were not completed by May 15, 1998 and the Agreement terminated with no
further obligation to the Company.


NOTE J - EARNINGS (LOSS) PER SHARE

The following reconciles amounts reported in the accompanying financial
statements for the years ended December 31, 1999 and 1998, respectively:

<TABLE>
<CAPTION>
                                                                Income (Loss)        Shares        Per share
                                                                 (numerator)      (denominator)      amount
                                                                -------------     -------------    ---------
<S>                                                             <C>               <C>              <C>
Year ended December 31, 1999 - Basic
    Net income (loss)                                           $(1,278,724)
    Less: Preferred Stock dividends                                      --
        Net income available to common shareholders             $(1,278,724)       61,114,785       $(0.02)
                                                                ===========        ==========       ======

Year ended December 31, 1999 - Diluted
    Net income available to common shareholders                 $(1,278,724)
    Add: Preferred Stock dividends                                       --
        Effect of assumed conversions/redemptions               $(1,278,724)
                                                                ===========
    Weighted-average shares issued and outstanding                                 61,114,785
    Plus: Incremental shares from assumed conversions
        Options                                                                            --
        Dilutive potential common shares                                                   --

    Adjusted weighted-average shares issued and outstanding                        61,114,785       $(0.02)
                                                                                   ==========       ======
</TABLE>


                                                                            F-17
<PAGE>   25

                           BAOA, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 1999 and 1998


NOTE J - EARNINGS (LOSS) PER SHARE - CONTINUED

<TABLE>
<S>                                                                <C>            <C>              <C>
Year ended December 31, 1998 - Basic
    Net income (loss)                                              $16,466
    Less: Class A Preferred Stock dividends                             --
        Net income available to common shareholders                $16,466        36,287,379        nil
                                                                   =======        ==========        ===

Year ended December 31, 1998 - Diluted
    Net income available to common shareholders                    $16,466
    Add: Class A Preferred Stock dividends                              --
                                                                   -------
        Effect of assumed conversions/redemptions                  $16,466
                                                                   =======
    Weighted-average shares issued and outstanding                                36,287,379
    Plus: Incremental shares from assumed conversions
        Options                                                                    2,125,000

    Adjusted weighted-average shares issued and outstanding                       38,437,379        nil
                                                                                  ==========        ===
</TABLE>

NOTE K- SUBSEQUENT EVENTS

During the period from January 1, 2000 through March 23, 2000, the Company has
sold a total of approximately 6,800,000 shares of common stock for gross
proceeds of approximately $179,000.

During the period from January 1, 2000 through March 23, 2000, the Company has
issued an aggregate 5,316,667 shares of common stock for various consulting
services. These transactions were valued at approximately $213,500, or $0.04 per
share, which approximates the fair market value of the shares given in payment
and the value of the services.


NOTE L - SELECTED FINANCIAL DATA (UNAUDITED)

The following is a summary of the quarterly results of operations for the years
ended December 31, 1999 and 1998, respectively.

<TABLE>
<CAPTION>
                               Quarter ended   Quarter ended   Quarter ended    Quarter ended     Year ended
                                  March 31,       June 30,     September 30,     December 31,     December 31,
                               -------------   -------------   -------------    -------------    -------------
<S>                            <C>             <C>             <C>              <C>              <C>
1999
  Revenues                     $        --     $        --     $        --       $       --       $        --
  Gross profit                          --              --              --               --                --
  Net earnings
    from operations                (47,405)       (550,286)        (47,502)         (528,663)      (1,173,856)
  Basic and fully
    diluted earnings
    per share                          nil             nil             nil             (0.02)           (0.02)
  Weighted-average
    number of shares
    issued and outstanding      36,287,379      56,267,226      53,905,435        74,257,287       61,114,785
</TABLE>


                                                                            F-18
<PAGE>   26

                           BAOA, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           December 31, 1999 and 1998


NOTE L - SELECTED FINANCIAL DATA (UNAUDITED) - CONTINUED

<TABLE>
<CAPTION>
                               Quarter ended   Quarter ended   Quarter ended    Quarter ended    Year ended
                                  March 31,       June 30,     September 30,     December 31,    December 31,
                               -------------   -------------   -------------    -------------    ------------
<S>                            <C>             <C>             <C>              <C>              <C>
1998
  Revenues                     $        --     $        --     $        --       $        --      $        --
  Gross profit                          --              --              --                --               --
  Net earnings
    from operations               (415,528)       (161,875)       (132,427)         (263,184)        (973,014)
  Basic and fully
    diluted earnings
    per share                        (0.01)            nil             nil               nil              nil
  Weighted-average
    number of shares
    issued and outstanding      33,330,640      32,406,154      34,606,598        41,535,898       36,287,379
</TABLE>



                                                                            F-19
<PAGE>   27


ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
       FINANCIAL DISCLOSURE

There have been no changes in or disagreements with accountants on accounting
and financial disclosure.


                                       8
<PAGE>   28

                                    PART III


ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
       COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

<TABLE>
<CAPTION>
Director                     Age             Date Elected                           Position
<S>                          <C>             <C>                        <C>
Peter Van Brunt              46                 7/20/96                 Director & President
</TABLE>


Mr. Van Brunt is a graduate of Columbia University, completed a J.D. in Law from
the University of La Verne where he made Law Review and has taken postgraduate
studies at Oxford University. He is responsible for overall development,
production, marketing, and distribution of the Company's products. He is using
his established talents in the music and game software industries to establish
BAOA's high visibility as a product leader in the emerging ethnic, urban
contemporary market niche. Mr. Van Brunt has over fifteen years experience as
senior vice president and assistant general counsel for one of the nation's
largest African American owned record labels. He has extensive experience as a
corporate officer conducting commodities transactions and business development
throughout the African continent, dealing with heads of state, political bodies
and the international banking community. He has acted as chief negotiator for
crude petroleum acquisition and distribution projects. He has managed all phases
of business affairs and contract negotiations for one of the largest African
American owned recording companies. His experience includes managing recording
artists through the recording process, selecting material and producers,
promoting and marketing products, and managing tours. He has developed and
negotiated agreements for recording, distribution, label joint ventures,
publishing, and foreign licensing.



                                       9

<PAGE>   29

ITEM 10 EXECUTIVE COMPENSATION

Summary Compensation Table for 1999:

Name                         Peter Van Brunt

Principal Position           Director & President

Salary                       $0

Bonus                        0

Other
Compensation                 $24,973
(see notes)

Restricted stock
awards                       0

Options                      0

LTIP payouts                 0

All other
compensation                 0

Notes: The Company currently has no standard arrangement by which its Officers
and Directors are compensated. Mr. Van Brunt received management fee payments
throughout 1999 for services, lodging, and travel expenses for his extensive
stays away from home in relation to the completion of the Company's call center
business negotiations with the Cities of Atlanta and New York.




                                       10

<PAGE>   30

ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information on the ownership of the Company's
voting securities by Officers, Directors, and Major shareholders as well as
those who own beneficially more than five percent of the Company's common stock.



<TABLE>
<CAPTION>
Name of Beneficial Owner           Number of Shares            Percent of Total
<S>                                <C>                         <C>
None
</TABLE>

(Percentages are based on the number of outstanding shares as of December 31,
1999)


ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the year ended December 31, 1999, the Company had advances and notes
payable from related parties, who are also stockholders or related to
stockholders of the Company. The advances and notes payable from related parties
were for expenses of the Company paid by related parties and for direct loans to
the Company. These advances and notes payable from related parties are not
formally documented. Notes payable bear interest at rates ranging from 5.0% and
30.0% and are due on terms of between two years and three years from the dates
of issue. The Company has paid in cash and common stock certain amounts to
related parties, including company personnel, officers, and directors for
services rendered to the Company.


ITEM 13 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

        Exhibit 27 Financial Data Schedule

        Reports filed on Form 8-K: Changes in Registrant's Certifying Accountant

        Reports required to be filed by Regulation S-X: None




                                       11

<PAGE>   31

                                   SIGNATURES


Pursuant to the requirements of Section 13 and 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                          BAOA, INC.



        Date: March 28, 2000
                                    /s/ Peter Van Brunt,
                                    --------------------------------------------
                                    President, Principal Executive Officer,
                                    Director




                                       12