U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB [ X ] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 1998 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from: to: Commission file number: 33-26899-D BEST OF AMERICA CORPORATION ------------------------------------------------------- (Exact Name of Registrant as specified in its charter) COLORADO 84-1082394 - -------------------------------- ---------------------- (State or other jurisdiction (IRS Employer Identi- of incorporation or organization fication Number) 6748 Renoir Baton Rouge, Louisiana 70816 --------------------------------------------- (Address code of principal executive offices) (504) 926-0596 --------------------------- (Issuer's telephone number) Check mark whether the Issuer (1) has filed all reports required by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. YES: __X__ NO: _____ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PREVIOUS FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by the court. YES: _____ NO: _____ APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuers classes of common stock, as of the last practicable date: 8,731,000 Transitional Small Business Disclosure Format. YES: _____ NO:__X__ BEST OF AMERICA CORPORATION Index PART I FINANCIAL INFORMATION Balance Sheet September 30, 1998 3 Statements of Operations Nine Months Ended September 30, 1998 and 1997 4 Statements of Cash Flows Nine Months Ended September 30, 1998 and 1997 5 Notes to Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7-8 PART II Other Information 9 Signatures 10 2 Best of America Corporation Balance Sheet September 30, 1998 (Unaudited) ASSETS Current assets: Cash $ 1,746 Accounts receivable, net of allowance for doubtful accounts of $ 0 3,655 Inventory 14,161 Note receivable - trade 27,743 Contract receivable 48,925 Prepaid expenses 181 ------------ Total current assets 96,411 Property and equipment, at cost, net of accumulated depreciation of $32,857 4,532 Land 469,151 Patents and formulas, at cost, net of accumulated amortization of $6,791 3,296 Deposits 25,215 ------------ $ 598,605 ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 340,816 Due to related parties 13,136 Note payable-current portion 13,313 Customer deposits 10,000 ------------ Total current liabilities 377,265 Note payable-net of current portion 30,183 Commitments and contingencies Stockholders' equity: Preferred stock, $10 par value, non-voting, non-cumulative, non participating, convertible, 50,000,000 shares authorized 216,200 shares issued and outstanding 2,162,000 Discount below par on preferred stock (1,732,532) Common stock, no par value, 1,000,000,000 shares authorized, 8,731,000 shares issued and outstanding 446,930 Paid in capital 26,647 Accumulated deficit (711,888) ------------ 191,157 ------------ $ 598,605 ============ See accompanying notes to financial statements. 3 Best of America Corporation Statements of Operations For the Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited) Nine Months Three Months ---------------------------------- --------------------------------- 1998 1997 1998 1997 ------------ ------------ ------------ ------------- Sales $ 55,091 $ 79,599 $ 16,782 $ 23,206 Cost of sales 20,536 41,840 2,829 10,556 ------------ ------------ ------------ ------------- Gross margin 34,555 37,759 13,953 12,650 General and administrative expenses 208,873 138,194 50,731 55,401 ------------ ------------ ------------ ------------- Income (loss) from operations (174,318) (100,435) (36,778) (42,751) Other income and (expense): Miscellaneous income 1,052 9 0 1 Interest expense (33,167) (25,121) (5,897) (9,697) Intercompany write-off 125,596 0 125,596 0 ------------ ------------ ------------ ------------- 93,481 (25,112) 119,699 (9,696) ------------ ------------ ------------ ------------- Net income (loss) $ (80,837) $ (125,547) $ 82,921 $ (52,447) ============ ============ ============ ============= Basic (loss) per share ($0.01) ($0.02) $0.01 ($0.01) ============ ============ ============ ============= Weighted average shares outstanding 9,440,558 8,129,000 9,063,667 8,129,000 ============ ============ ============ ============= See accompanying notes to financial statements. 4 Best of America Corporation Statement of Cash Flows For the Three and Nine Months Ended September 30, 1998 and 1997 (Unaudited) Nine Months Three Months ------------------------------- -------------------------- 1998 1997 1998 1997 ----------- ---------- --------- --------- Net cash provided by (used in) operating activities $ (175,109) $ (88,479) $ (6,955) $ 34,040 Cash flows from investing activities: Note receivable - trade issued (500) 0 0 0 (Acquisition)sale of office equipment 4,269 (1,293) 0 0 Acquisition of option on real estate 0 (4,000) 0 (1,000) ----------- ---------- --------- --------- Net cash (used in) investing activities 3,769 (5,293) 0 (1,000) Cash flows from financing activities: Proceeds from (payments to) related parties 71,641 47,043 6,503 (29,030) Proceeds from note payable 2,976 0 992 0 Common stock issued for cash 96,000 0 0 0 ----------- ---------- --------- --------- Net cash provided by financing activities 170,617 47,043 7,495 (29,030) ----------- ---------- --------- --------- Increase (decrease) in cash (723) (46,729) 540 4,010 Cash and cash equivalents, beginning of period 2,469 51,437 1,206 698 ----------- ---------- --------- --------- Cash and cash equivalents, end of period $ 1,746 $ 4,708 $ 1,746 $ 4,708 =========== ========== ========= ========= See accompanying notes to financial statements. 5 Best of America Corporation Notes to Financial Statements The accompanying condensed unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to form 10-QSB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. The accompanying financial statements should be read in conjunction with the Company's form 10-KSB filed for the year ended December 31, 1997. Basic (loss) per share was computed using the weighted average number of common shares outstanding. BASIS OF PRESENTATION The accompanying financial statements have been prepared on a "going concern" basis which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business. The Company has incurred operating losses during the nine months ended September 30, 1998, and 1997, aggregating $80,837 and $125,547, and has negative working capital of $280,854 at September 30, 1998. During the periods presented, the Company has not generated positive cash flow from operations and there can be no assurance that the trend will not continue. Profitable operations are dependent upon, among other factors, the Company's ability to obtain equity or debt financing. The Company is unable to project a level of revenue which would allow a reversal of its history of operating losses in the near future. The Company's continued operations are dependent upon its ability to restructure its existing debt and to obtaining financing. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Trends and Uncertainties: The Company has tried to eliminate the major variables of interest rates and operating expenses. Capital and Sources of Liquidity: During the nine months ended September 30, 1998 the Company's principal source of funding was derived from operations, loans from shareholders and proceeds from the sale of common stock. The Company currently has no material commitments for capital expenditures. The Company recently terminated its office lease which the Company had previously been leasing at a base rental of $1,200 per month. The Company leases 400 square feet of storage space for its parts and chemicals on a month to month basis for a monthly rent of $110. The Company received proceeds from the sale of office equipment of $5,731, purchased office equipment of $1,462 and paid $500 for a trade note receivable during the nine months ended September 30, 1998, resulting in net cash provided by investing activities of $3,769. The Company purchased office equipment of $1,293 and acquired options on real estate for $4,000 during the nine months ended September 30, 1997, resulting in net cash used in investing activities of $5,293. The Company received advances from shareholders of $71,641, proceeds from the sale of common stock of $96,000, and proceeds from a note payable of $2,976 during the nine months ended September 30, 1998, resulting in net cash provided by financing activities of $170,617. The Company received advances from shareholders of $47,043 during the nine months ended September 30, 1997, resulting in net cash provided by financing activities of $47,043. 7 Results of Operations: The Company has not generated positive cash flow from operations and there can be no assurance that the trend will not continue. The Company is unable to project a level of revenue which would allow a reversal of its history of operating losses in the near future. In this regard, the Company is attempting to restructure its existing debt. 1998 Compared to 1997: For the nine months ended September 30, 1998, the Company experienced a net loss of $80,837 compared to a net loss of $125,547 for the nine months ended September 30, 1997. The Company experienced negative cash flow from operations of $175,109 for the nine months ended September 30, 1998 compared to negative cash flow from operations of $88,479 for the nine months ended September 30, 1997. The Company received revenue of $55,091 for the nine months ended September 30, 1998, compared to $79,599 for the nine months ended September 30, 1997. Cost of sales decreased from $41,840 during the nine months ended September 30, 1997, to $20,536 during the nine months ended September 30, 1998, due to decreased merchandise sales. General and administrative expenses increased from $138,194 during the nine months ended September 30, 1997, to $208,873 during the nine months ended September 30, 1998, due to more money spent to acquire financing. The Company's interest expense increased from $25,121 during the nine months ended September 30, 1997, to $33,167 during the nine months ended September 30, 1998. 8 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. Not applicable. ITEM 2. CHANGES IN SECURITIES. Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. ITEM 5. OTHER INFORMATION. Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibit 27 - Finanical Data Schedule. (b) Not applicable. 9 SIGNATURES Pursuant to the requirements 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. Best of America Corporation (Registrant) Dated: November 23, 1998 By: /s/ Edwin Cantin ____________________________ Edwin Cantin, President 10