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, 1998
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.)
150 Vanderbilt Motor Parkway, Suite 311, Hauppauge, NY 11788
(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 X No .
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: 1,466,824 shares of
Common Stock, par value $.001, outstanding as of September 30, 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, 1998
The following financial statements and schedules of the registrant and
its consolidated subsidiaries are submitted herewith:
PART I- FINANCIAL INFORMATION
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<CAPTION>
Page of
Form 10-QSB
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Item 1. Financial Statements:
Balance Sheet -- August 31, 1998(unaudited) 3
Statement of Operations for the three months and nine months ended August 31, 1998,
and 1997(unaudited) 4
Statement of Cash Flows for the nine months ended August 31, 1998, and 1997(unaudited) 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of Operation 7
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REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
2
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BALANCE SHEET
AUGUST 31, 1998
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash $ 3,879
----------
TOTAL ASSETS $ 3,879
==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Notes payable $ 725,333
Net liabilities of discontinued operations 66,226
Accrued expenses 471,759
Officer's advances 36,176
----------
TOTAL CURRENT LIABILITIES 1,299,494
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIENCY):
Common stock, $ .001 par value;
15,000,000 shares authorized,
1,466,824 shares issued and outstanding 1,467
Additional paid-in-capital 4,354,285
Accumulated deficit (5,651,367)
----------
TOTAL SHAREHOLDERS' DEFICIENCY (1,295,615)
----------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY $ 3,879
==========
See notes to financial statements.
3
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PLAYORENA INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
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<CAPTION>
Three months ended Nine months ended
--------------------------------- ---------------------------------
August 31, August 31, August 31, August 31,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
EXPENSES:
General and administrative $ 37,297 $ 2,273 $ 47,297 $ 7,641
Interest Expense 20,217 21,884 63,985 65,652
----------- ----------- ----------- -----------
TOTAL EXPENSES 57,514 24,157 111,282 73,293
----------- ----------- ----------- -----------
INCOME (LOSS) FROM CONTINUING OPERATIONS (57,514) (24,157) (111,282) (73,293)
----------- ----------- ----------- -----------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS 430,357 -- 430,357 12,517
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 372,843 $ (24,157) $ 319,075 $ (60,776)
=========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE - BASIC:
Continuing operations $ (.06) $ (.04) $ (.14) $ (.12)
Discontinued operations .41 -- .55 .02
----------- ----------- ----------- -----------
NET INCOME (LOSS) PER SHARE $ .35 $ (.04) $ .41 $ (.10)
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES USED IN COMPUTATION 1,052,485 638,146 776,259 638,146
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
4
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PLAYORENA INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended
-----------------------------------
August 31, August 31,
1998 1997
------------ ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 319,075 $(60,776)
Adjustments to reconcile net loss to net cash
used by operating activities:
Non-cash stock compensation -- 45,000
Gain on liabilities extinguished (430,357) --
Gain (loss) on sale of equipment -- (2,900)
Change in operating assets and liabilities:
Increase (decrease) in accrued expenses 78,985 65,008
--------- --------
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (32,297) 46,332
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of equipment -- 2,900
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES -- 2,900
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from officer's advances 36,176 --
Cash overdraft -- (49,232)
--------- --------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 36,176 (49,232)
--------- --------
NET INCREASE (DECREASE) IN CASH 3,879 --
CASH AT BEGINNING OF PERIOD -- --
--------- --------
CASH AT END OF PERIOD $ 3,879 $ --
========= ========
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See notes to financial statements.
5
<PAGE>
PLAYORENA, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED AUGUST 31, 1998
(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. Unless noted, 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. INCOME (LOSS) PER SHARE
Basic income (loss) per share is computed based on the
weighted average number of shares outstanding during the period.
Dilution is predicated on the effect of dilutive instruments on income
(loss) from continuing operations.
3. ASSET SALE
The company consummated the sale of its discontinued business
in July 1998.
In connection with the consummation of the asset sale of the
Company recorded gains on discontinued operations for the extinguishment
of certain liabilities aggregating $430,357.
4. DEBT CONVERSION
Effective July 31, 1998, bridge loans aggregating $150,000
together with accrued interest aggregating $62,706 was converted to
828,678 of shares (post-split) of common stock.
5. REVERSE SPLIT
In connection with the consummation of the asset sale, and as
previously approved by the Company's shareholders, a reverse stock split
of 1 for 20 was effected on July 31, 1998. All per share data in the
financial statements has been retroactively re-stated to reflect this
reverse split.
6
<PAGE>
ITEM 2
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
In light of the fact that the Company divested all of its operations
and sold all of its assets in July 1998, 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 recently disposed of. 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.
In light of the fact that the Company has discontinued its operations,
no remedial measures will be necessary or taken to address the Year 2000
computer issue.
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 31, 1998 AND AUGUST 31, 1997
During the nine months ended August 31, 1998, revenues of discontinued
business decreased to $ 0 from $ 335,482 in the nine months ended August 31,
1997.
The Company stopped operating its discontinued business in fiscal year
ended November 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
At August 31, 1998, the Company had a working capital deficit of
$1,295,615 compared to $1,827,395 at November 30, 1997. The Company is seeking
an acquisition or merger with an operating business. Given the Company's
retention of substantial liabilities following the consummation of the sale of
substantially all its assets in July 1998, the Company is concerned about its
ability to attract such an operating company, and is examining all options
available to it in response thereto.
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 consummated the sale of
assets pursuant to the Asset Purchase Agreement in July 1998.
As a result thereof, as previously approved by the
shareholders, a reverse stock split of 1 for 20 was effected
on July 31, 1998. As part of such consummation, an additional
828,678 shares (on a post-split basis) were issued to certain
secured creditors of the Company in exchange for the
cancellation of $150,000 in principal amount of indebtedness
(plus accrued interest thereon). Additional stock issuances
to other creditors and service providers are anticipated in
the near future.
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: October 20, 1998 PLAYORENA, INC.
By: /s/ Lawrence Kaplan
Lawrence Kaplan, President and
Secretary
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<PERIOD-START> DEC-01-1997
<PERIOD-END> AUG-31-1998
<FISCAL-YEAR-END> NOV-30-1998
<CASH> 3,879
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,879
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,879
<CURRENT-LIABILITIES> 1,299,494
<BONDS> 0
0
0
<COMMON> 1,467
<OTHER-SE> (1,297,082)
<TOTAL-LIABILITY-AND-EQUITY> 3,879
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63,985
<INCOME-PRETAX> (111,282)
<INCOME-TAX> 0
<INCOME-CONTINUING> (111,282)
<DISCONTINUED> 430,357
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 319,075
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
