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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 February 28, 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)
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<CAPTION>
New York 11-2602120
<S> <C>
(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)
</TABLE>
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
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FORM 10-QSB
FINANCIAL STATEMENTS AND SCHEDULES
PLAYORENA, INC.
For the Quarter ended February 28, 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/Liabilities and Shareholder's Equity -- February 28, 1998 (unaudited) 3
Statement of Operations for the three months ended February 28, 1998, and 1997 (unaudited) 4
Statement of Cash Flows for the three months ended February 28, 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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PLAYORENA INC.
BALANCE SHEET
FEBRUARY 28, 1998
(UNAUDITED)
ASSETS
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<CAPTION>
<S> <C>
$ -
--
--
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Notes payable $ 875,333
Liabilities of discontinued operations 496,582
Accrued expenses 482,364
-------
TOTAL CURRENT LIABILITIES 1,854,279
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 (5,997,325)
----------
TOTAL SHAREHOLDERS' DEFICIENCY (1,854,279)
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$ -
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----------
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3
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PLAYORENA INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
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<CAPTION>
Three months ended
------------------------------------
February 28, February 28,
1998 1997
--------------- ----------------
<S> <C> <C>
EXPENSES:
General and administrative $ 5,000 $ 4,288
Interest expense 21,884 21,884
------------ ------------
TOTAL EXPENSES 26,884 26,172
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LOSS FROM CONTINUING OPERATIONS (26,884) (26,172)
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LOSS FROM DISCONTINUED OPERATIONS -- (11,762)
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NET LOSS $ (26,884) $ (37,934)
------------ ------------
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NET LOSS PER SHARE:
Continuing operations $ (0.00) $ (0.00)
Discontinued operations -- (0.00)
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NET LOSS PER SHARE $ (0.00) $ (0.00)
------------ ------------
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WEIGHTED AVERAGE SHARES USED IN COMPUTATION 12,762,910 10,887,910
------------ ------------
------------ ------------
</TABLE>
Seen notes to financial statements.
4
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PLAYORENA INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
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<CAPTION>
Three months ended
--------------------------------------
February 28, February 28,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(26,884) $(37,934)
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 26,884 42,166
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CASH USED IN OPERATING ACTIVITIES -- 46,332
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment -- --
Proceeds from the sale of equipment -- 2,900
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CASH FLOWS FROM INVESTING ACTIVITIES -- 2,900
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (repayment of) debt financing -- --
Decrease of capital lease obligations -- --
Proceeds from officers -- --
Cash overdraft -- (49,232)
--------- ---------
CASH PROVIDED BY FINANCING ACTIVITIES -- (49,232)
--------- ---------
NET INCREASE (DECREASE) IN CASH -- --
CASH AT BEGINNING OF PERIOD -- --
--------- ---------
CASH AT END OF PERIOD $ -- $ --
--------- ---------
--------- ---------
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See notes to financial statements.
5
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PLAYORENA, INC.
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED FEBRUARY 28, 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. 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. As discussed in the
Company's Annual Report on Form 10-KSB, management has agreed on a plan to
discontinue the Company's operations and in this regard has executed an Asset
Sale Agreement. Accordingly, the accompanying financial statements present such
operations as discontinued operations.
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 FEBRUARY 1998 AND FEBRUARY 1997
During the quarter ended February 28, 1998, revenues of discontinued
business decreased to $0 from $118,072 in quarter ended February 28, 1997.
The Company stopped operating its discontinued business in fiscal year
ended November 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
At February 28, 1998, the Company had a working capital deficit of
$1,854,279 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
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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.
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: August 15, 1998 PLAYORENA, INC.
By: /s/ Lawrence Kaplan
------------------------
Lawrence Kaplan, President and
Secretary
9
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EXHIBIT INDEX
27.1 Financial Data Schedule
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> FEB-28-1998
<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> 1,854,279
<BONDS> 0
12,763
0
<COMMON> 0
<OTHER-SE> (1,867,042)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,884
<INCOME-PRETAX> (26,884)
<INCOME-TAX> 0
<INCOME-CONTINUING> (26,884)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (26,884)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
