BAP Acquisition Corp. 
 
Item 2.  Management's Discussion and Analysis of Financial Condition and
Results of Operations
 
Recapitalization
        Effective November 21, 1995, pursuant to the terms and
conditions of an Agreement and Plan of Reorganization by and between BAP
Acquisition Corp. (the Company) and Ricketts Enterprises International,
Inc. (REI), REI became a wholly owned subsidiary of the Company.  The
transaction was accounted for as a recapitalization, resulting in the
historical operations of REI being treated as the historical operations
of the Company.  Prior to the recapitalization, the Company had not
engaged in any form of business activity and as a result, had no
operating history.  Subsequent to the recapitalization, the principal
business activities of the Company were carried out through its
wholly-owned subsidiary, REI.  All discussions below concerning the
Company prior to the recapitalization relate to and reflect the
operations of REI only.
 
Revenue Sources
        The company generates revenue primarily from the rental of
residential property, representing approximately 70% of total revenues
and real estate management services, representing approximately 30% of
total revenues.  The Company plans to increase revenues by acquiring
existing and/or developing new residential properties and commercial
real estate.
 
Financial Condition and Liquidity
        The Company's long-term debt to capital (long-term debt and
stockholders' equity) ratio at March 31, 1998 and 1997 was 52.8% and
51.9%, respectively.
 
        The Company's source of working capital is from rental operating
activities and capital contributions from stockholders.  The Company has
not borrowed any moneys from financial institutions for working capital
needs.  All debt of the Company is from first mortgages on the income
producing properties acquired as a result of the recapitalization of
REI.
 
Net cash provided by operating activities for the three month periods
ended March 31, 1998 and 1997 was negative $15,628 and negative $4,847,
respectively.  The negative cash flows were primarily due to payment of
current liabilities in 1998 and an increase in prepaid expenses in 1997.
 
Management of the Company believes that there are no commitments,
uncertainties, or contingent liabilities that will have a materially
adverse effect on the consolidated financial position or results of
operations of the Company.
 
Capital Expenditures and Financing Requirements
        Capital expenditures during the three month periods ended March
31, 1998 and 1997 totaled $1,271 and $1,782, respectively, which were
for purchases of office equipment and furniture.  There were no real
property acquisitions or investments thereof.
 
        The Company currently has an agreement represented by a Letter
of Intent dated January 15, 1996 to purchase 26 residential rental
properties and one commercial office property from Garfield Ricketts, a
majority stockholder.  Total purchase price of the 27 properties per the
agreement is $2,482,800, based on the lower of cost or market value of
the properties.  Market value was determined based on Multiple Listing
Service's market analysis, which tracks sales prices of comparable
properties within the area.  Terms of the agreement require the Company
to assume, refinance, or pay off the balance due on the first mortgages
on the properties in the amount of $1,322,102 as of December 31, 1997,
less any debt reduction since that date, and pay the balance of the
purchase price as of January 15, 1996 to Garfield Ricketts in cash or
other form of payment acceptable to him.  All properties to be acquired
will be subject to a current appraisal; purchase price will be amended
accordingly for any material changes in value of the properties before
proceeding with the terms of the agreement.  
 
The Company will require funds to acquire additional income producing
properties and/or real estate related entities and also to cover the
legal and accounting costs of meeting its reporting obligations under
the Securities Exchange Act.  The Company will seek to borrow funds from
financial institutions or raise money through the offering of its common
stock in order to acquire the 27 properties represented by the agreement
and Letter of Intent described above.  Management believes that the
Company can continue to operate and meet its obligations via working
capital from operating and financing activities.  Management is of the
opinion that inflation has not and will not have a material effect on
the operations of the Company.
 
Results of Operations
        The following table sets forth for the periods indicated, the
percentages which selected items in the Company's Statements of
Operations bear to total revenues:
<TABLE> 
                            Three Month Period                      
                              Ended March 31             
                                       1998              1997                      
                                   ____________     ____________
Revenues:                                 <C>              <C>
Rental Income                            70.3%            74.5%        
Management Services                      29.7%            25.0%        
Interest and Other                        ---               .5%        
                                   _____________    _____________
     Total Revenues                     100.0%           100.0%        
 
Expenses: 
        Direct Expenses:
Depreciation and Amortization            22.8%            24.4%        
Interest                                 18.7%            20.5%        
Real Estate Taxes                        12.0%            12.6%        
Repairs & Maintenance                    25.8%             7.6%        
Utilities                                 3.2%             7.2%        
Insurance                                 8.0%             8.1%         
Other Direct Expenses                     1.3%             1.7%        
                                     ___________      __________
     Total Direct Expenses               91.8%            82.1%        
 
        General and Administrative Expenses:
Office Occupancy Expense                 11.8%             9.5%        
Office Supplies & Expense                 2.9%             4.5%        
Professional Fees                         4.2%             1.4%
Telephone                                 4.9%             5.1%        
Dues & Subscriptions                      5.7%             5.2%        
License, Dues, and Fees                   5.3%             2.9%
Travel & Entertainment                     .5%              .6%        
Other Administrative Expenses             2.3%             1.6%        
                                      __________      ___________
Total General & Administrative Expenses  37.6%             30.8%
        
     Total Expenses                     129.4%            112.9%        
        
Income (Loss) Before Taxes             (29.4)%           (12.9)%        
 
Provision for Income Taxes                ---               ---        
 
Net Income (Loss)                      (29.4)%           (12.9)%        
 
 
Three Months Ended March 31, 1998 Compared With Three Months Ended March
31, 1997
 
Net Income (Loss)
        The Company reported a net loss of $5,689 for the three months
ended March 31, 1998, compared to a net loss of $2,345 for the three
months ended March 31, 1997.  The losses are primarily due to the fact
that revenues from the income producing properties were not sufficient
to cover both the direct expenses of those properties and the general
and administrative expenses of the Company.
 
Revenues
Total revenues for the three months ended March 31, 1998 increased by
$1,182 (6.5%) to $19,307 from $18,125 for the three months ended March
31, 1997.  The increase is due primarily to an increase in management
services revenue received in 1998.
 
Direct Expenses
Direct expenses for the three months ended March 31, 1998 increased by
$2,844 (19.1%) to $17,732 (91.8% of total revenues) from $14,888 (82.1%
of total revenues) for the three months ended March 31, 1997.  The
increase is due primarily to interior maintenance of the rental
properties performed in 1998.
 
General and Administrative Expenses
General and administrative expenses for the three months ended March 31,
1998 increased by $1,682 (30.1%) to $7,264 (37.6% of total revenues)
from $5,582 (30.8% of total revenues) for the three months ended March
31, 1997.  The increase is due primarily to fees that the Company
incurred to meet its reporting obligations under the Securities Exchange
Act.
 
Income Taxes
There were no provisions for Federal Income Tax for the three month
periods ended March 31, 1998 and 1997 because the Company was operating
at a loss.
 
 
 


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