<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 May 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.
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(Name of small business issuer in its charter)
New York 11-2602120
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 Vanderbilt Motor Parkway, Suite 311, Hauppauge, NY 11788
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(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 August 15, 1998.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
<PAGE>
FORM 10-QSB
FINANCIAL STATEMENTS AND SCHEDULES
PLAYORENA, INC.
For the Quarter ended May 31, 1998
The following financial statements and schedules of the registrant and
its consolidated subsidiaries are submitted herewith:
PART I- FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page of
Form 10-QSB
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<S> <C>
Item 1. Financial Statements:
Balance Sheet/Liabilities and Shareholder's Equity -- May 31, 1998(unaudited) 3
Statement of Operations for the three and six months ended May 31, 1998, 1997(unaudited) 4
Statement of Cash Flows for the six months ended May 31, 1998, 1997(unaudited) 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of Operation 7
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</TABLE>
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
2
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PLAYORENA INC.
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BALANCE SHEET
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MAY 31, 1998
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(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash --
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TOTAL ASSETS $ --
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LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Notes payable $ 875,333
Liabilities of discontinued operations 496,582
Accrued expenses 509,248
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TOTAL CURRENT LIABILITIES 1,881,163
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 (6,024,209)
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TOTAL SHAREHOLDERS' DEFICIENCY (1,881,163)
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ --
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</TABLE>
See notes to financial statements.
3
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PLAYORENA INC.
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STATEMENT OF OPERATIONS
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(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six months ended
--------------------------------- ---------------------------------
May 31, May 31, May 31, May 31,
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
EXPENSES:
General and administrative $ 5,000 $ 1,080 10,000 $ 5,368
Interest Expense 21,884 21,884 43,768 43,768
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TOTAL EXPENSES 26,884 22,964 53,768 49,136
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INCOME (LOSS) FROM CONTINUING OPERATIONS (26,884) (22,964) (53,768) (49,136)
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INCOME (LOSS) FROM DISCONTINUED OPERATIONS -- 24,279 -- 12,517
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NET INCOME (LOSS) $ (26,884) $ 1,315 (53,768) $ (36,619)
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-------------- -------------- -------------- --------------
NET INCOME (LOSS) PER SHARE:
Continuing operations $ (0.00) $ (0.00) (0.00) $ (0.00)
Discontinued operations -- 0.00 -- 0.00
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NET INCOME (LOSS) PER SHARE $ (0.00) $ 0.00 (0.00) $ (0.00)
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
WEIGHTED AVERAGE SHARES USED IN COMPUTATION 12,762,910 12,012,910 12,762,910 12,012,910
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
See notes to financial statements.
4
<PAGE>
PLAYORENA INC.
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STATEMENT OF CASH FLOWS
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(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended
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May 31, May 31,
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net gain (loss) $ (53,768) $ (36,619)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization -- --
Non-cash stock compensation -- 45,000
Gain (loss) on sale of equipment -- (2,900)
Change in operating assets and liabilities 53,768 40,851
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CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES -- 46,332
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of equipment -- 2,900
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CASH FLOWS FROM INVESTING ACTIVITIES -- 2,900
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CASH FLOWS FROM FINANCING ACTIVITIES:
Cash overdraft -- (49,232)
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CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES -- (49,232)
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NET INCREASE (DECREASE) IN CASH -- --
CASH AT BEGINNING OF PERIOD -- --
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CASH AT END OF PERIOD $ -- $ --
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</TABLE>
See notes to financial statements.
5
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PLAYORENA, INC.
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NOTES TO FINANCIAL STATEMENTS
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SIX MONTHS ENDED MAY 31, 1998
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(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.
3. ASSET SALE
The Company consummated the sale of its discontinued business
in July 1998.
6
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ITEM 6. 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 all of its assets pursuant to the 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 MAY 1998 AND MAY 1997
During the six months ended May 31, 1998, revenues of discontinued
business decreased to $0 from $235,938 in six months ended May 31, 1997.
The Company stopped operating its discontinued business in fiscal year
ended November 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
At May 31, 1998, the Company had a working capital deficit of
$1,881,163 compared to $1,827,395 at November 30, 1997. 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
<PAGE>
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.
Item 6. (A) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C> <C>
27.1 Financial Data Schedule
</TABLE>
(B) Reports on Form 8-K. None.
8
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SIGNATURES
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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: August 15, 1998 PLAYORENA, INC.
By: /s/ Lawrence Kaplan
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Lawrence Kaplan, President and
Secretary
9
<PAGE>
EXHIBIT INDEX
27.1 Financial Data Schedule
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> MAY-31-1998
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 1,881,163
<BONDS> 0
12,763
0
<COMMON> 0
<OTHER-SE> (1,893,926)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43,968
<INCOME-PRETAX> (53,768)
<INCOME-TAX> 0
<INCOME-CONTINUING> (53,768)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (53,768)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
