<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED AUGUST 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from.................... to ....................
Commission File number 0-18412
PLAYORENA INC.
(Name of small business issuer in its charter)
NEW YORK 11-2602120
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
22 MANHASSET AVENUE, PORT WASHINGTON, NEW YORK 11050
(Address of principal executive offices) (Zip Code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 No X .
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 12,762,910 SHARES OF COMMON
STOCK, PAR VALUE $.001, OUTSTANDING AS OF JANUARY 27, 1998.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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FORM 10-QSB
FINANCIAL STATEMENTS AND SCHEDULES
PLAYORENA, INC.
For the Quarter ended August 31, 1997
The following financial statements and schedules of the registrant and its
consolidated subsidiaries are submitted herewith:
PART I- FINANCIAL INFORMATION
Page of
FORM 10-QSB
Item 1. Financial Statements:
Balance Sheets/Liabilities and
Shareholder's Equity -- August 31, 1997 3
Statement of Operations for the three
months ended August 31, 1997, 1996 and
the nine months ended August 31, 1997, 1996 4
Statement of Cash Flows for the nine months
ended August 31, 1997, 1996 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis or
Plan of Operation 7
- -------------------------------------------------------------------------------
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
2
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PLAYORENA INC.
BALANCE SHEET
AUGUST 31, 1997
(UNAUDITED)
ASSETS
Cash -
-----------
TOTAL ASSETS $ -
-----------
-----------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Notes payable $ 875,333
Liabilities of discountinued operations 496,583
Accured expenses 407,235
-----------
TOTAL CURRENT LIABILITIES 1,779,151
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIENCY):
Common stock, $.001 par value;
15,000,000 shares authorized,
12,762,910 shares issued and outstanding 12,763
Additional paid-in-capital 4,130,283
Accumulated deficit (5,922,197)
-----------
TOTAL SHAREHOLDERS' DEFICIENCY (1,779,151)
-----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ -
-----------
-----------
See notes to financial statements.
3
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STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Three months ended Nine Months Ended
----------------------- --------------------
August 31, August 31, August 31, August 31,
1997 1996 1997 1996
----------- ----------- ---------- ---------
EXPENSES:
General and administrative $ 2,273 $ 1,549 $ 7,641 $ 10,120
Interest Expense 21,884 22,256 65,652 66,768
----------- ----------- ---------- ---------
TOTAL EXPENSES 22,157 23,805 73,293 76,888
----------- ----------- ---------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS (22,157) (23,805) (73,293) (76,888)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS - (36,572) 12,517 (61,006)
----------- ----------- ---------- ---------
NET INCOME (LOSS) $ (24,157) $(60,377) $(60,776) $ (137,894)
----------- ----------- ---------- ---------
NET INCOME (LOSS) PER SHARE:
Continuing operations $ (0.00) $ (0.00) $ (0.01) $ (0.01)
Discontinued operations - (0.00) 0.00 (0.01)
----------- ----------- ---------- ---------
NET INCOME (LOSS) PER SHARE $ (0.00) $(0.00) $ (0.00) $ (0.02)
----------- ----------- ---------- ---------
----------- ----------- ---------- ---------
WEIGHTED AVERAGE SHARES USED IN COMPUTATION 12,762,910 8,262,910 12,762,910 8,262,910
----------- ----------- ---------- ---------
----------- ----------- ---------- ---------
</TABLE>
See notes to financial statements.
4
<PAGE>
PLAYORENA INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
Nine months ended
-----------------------
August 31, August 31,
1997 1996
------------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (60,776) $(137,894)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization - 45,969
Change in operating assets and liabilities 60,776 129,194
------------- ---------
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES - 37,269
------------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment - -
------------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES - -
------------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayment of) debt financing (6,000)
Decrease of capital lease obligations - -
------------- ---------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES - (6,000)
------------- ---------
NET INCREASE (DECREASE) IN CASH - 31,269
CASH AT BEGINNING OF PERIOD - 1,329
------------- ---------
CASH AT END OF PERIOD $ - $ 32,598
------------- ---------
------------- ---------
</TABLE>
See notes to financial statements.
5
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PLAYORENA, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED AUGUST 31, 1997
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying financial statements are unaudited, but reflect all
adjustments which, in the opinion of management, are necessary for a fair
presentation of financial position and the results of operations for the
interim periods presented. All such adjustments are of a normal and
recurring nature. The results of operations for any interim period are not
necessarily indicative of the results attainable for a full fiscal year.
2. LOSS PER SHARE
Per share information is computed based on the weighted average number
of shares outstanding during the period.
6
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ITEM 2
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
In light of the fact that the Company has decided to divest all of its
operations and has agreed to sell substantially all of its assets pursuant to an
Asset Purchase Agreement with an affiliate of Michael Astor and Susan Astor (the
sole current officers and directors of the Company)(the "Asset Purchase
Agreement"), the Company is accounting for the historical results of the
business as discontinued operations. In this regard, the following discussion
and analysis presents a general, overall financial summary of the discontinued
operations, rather than a detailed discussion of the results of operations to be
disposed of in the near future. As presented in the Company's recast financial
statements, certain expenses, consisting of minimal general and administrative
expense and debt service costs have been evaluated to be expenses attributable
to the continuing entity after consideration of the divestiture of operations.
The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this report.
RESULTS OF OPERATIONS -
COMPARISON OF QUARTERS ENDED AUGUST 1997 AND AUGUST 1996
During the nine months ended August 31, 1997, revenues of discontinued
business increased to $335,482 from $288,725 in nine months ended August 31,
1996.
The Company has significantly decreased the number of locations by
terminating many locations in the United States.
LIQUIDITY AND CAPITAL RESOURCES
At August 31, 1997, the Company had a working capital deficit of $1,779,151
compared to $1,454,791 at August 31, 1996. In its operation of the discontinued
operations, management has been attempting to reverse this downward trend by
significantly decreasing the number of Company owned centers in operation,
implementing staff reductions and seeking additional capital for the placement
of Playorena programs in alternative outlets.
7
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PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS. To the best knowledge of the officers and
directors, neither the Company nor any of its officers and directors
are party to any legal proceeding or litigation. The officers and
directors know of no such litigation being threatened or contemplated.
Item 2. CHANGES IN SECURITIES. None.
Item 3. DEFAULTS UPON SENIOR SECURITIES. None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.
Item 5. OTHER INFORMATION. The Company expects to consummate the sale of
assets pursuant to the Asset Purchase Agreement in January or February
1998.
Item 6. (A) EXHIBITS
EXHIBIT NO. DESCRIPTION
27.1 Financial Data Schedule
(B) REPORTS ON FORM 8-K. None.
8
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: January 29, 1998 PLAYORENA, INC.
By: /S/ MICHAEL ASTOR
-----------------------------
Michael Astor, President and
Chief Financial Officer
9
<PAGE>
EXHIBIT INDEX
27.1 Financial Data Schedule
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> AUG-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 1,779,151
<BONDS> 0
0
0
<COMMON> 12,763
<OTHER-SE> (1,766,914)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (73,293)
<INCOME-TAX> 0
<INCOME-CONTINUING> (73,293)
<DISCONTINUED> 12,517
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (60,776)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
