U .S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1998
[ ] 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
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Hauppauge, NY 11788
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(Address of principal executive offices)
(516) 273-0058
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section
12(b) of the Act:
Common Stock $. 001 Par Value
(Title of Class)
Common Stock Purchase Warrants (Expired January 1996)
(Title of Class)
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 __.
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $--.
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: As of March 1, 1999 the average bid price of common stock was $.001 and
the average asked price was $.05.
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: As of March 15, 1999 the number of
shares of common stock outstanding was 9,198,679.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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PURPOSE OF AMENDMENT
The purpose of this Amendment No. 1 to the registrant's Form 10-KSB for
the year ended November 30, 1998, is to correct certain errors and omissions and
conforming changes which were not included in the original filing. All
information contained herein is as of the date of the original filing, March 15,
1999 and does not purport to provide an update of any information after such
date.
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PLAYORENA, INC.
Item 7. Financial Statements
INDEX TO FINANCIAL STATEMENTS
Page
Auditors' report on financial statements....................................F-2
Balance sheet as of November 30, 1998.......................................F-3
Statements of operations for the years
ended November 30, 1998 and 1997.........................................F-4
Statement of changes in shareholders'
equity (deficiency) for the years ended
November 30, 1998 and 1997...............................................F-5
Statements of cash flows for the years
ended November 30, 1998 and 1997.........................................F-6
Notes to financial statements...............................................F-7
F-1
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INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Playorena, Inc.
We have audited the accompanying balance sheet of Playorena, Inc. as of
November 30, 1998, and the related statements of operations, shareholders'
deficiency and cash flows for the years ended November 30, 1998 and 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Playorena, Inc. as
of November 30, 1998, and the results of its operations and cash flows for the
years ended November 30, 1998 and 1997, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raises substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are described in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ Feldman Sherb Ehrlich & Co., P.C.
Feldman Sherb Ehrlich & Co., P.C.
Certified Public Accountants
New York, New York
March 8, 1999
F-2
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PLAYORENA
BALANCE SHEET
NOVEMBER 30, 1998
ASSETS
CASH $ 678
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LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Notes payable $ 85,000
Liabilities of discontinued operations 66,226
Accrued expenses 228,376
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TOTAL CURRENT LIABILITIES 379,602
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIENCY):
Common stock, $.001 par value;
15,000,000 shares authorized,
9,198,679 shares issued and outstanding 9,199
Additional paid-in-capital 5,273,780
Accumulated deficit (5,661,903)
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TOTAL SHAREHOLDERS' DEFICIENCY (378,924)
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$ 678
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See Notes to Financial Statements.
F-3
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PLAYORENA INC.
STATEMENTS OF OPERATIONS
Years ended November 30,
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1998 1997
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EXPENSES:
General and administrative $ 66,246 $ 27,241
Interest expense 55,573 87,536
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TOTAL EXPENSES 121,819 114,777
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LOSS FROM CONTINUING OPERATIONS (121,819) (114,777)
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INCOME FROM DISCONTINUED OPERATIONS:
Income from discontinued operations 430,357 5,756
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TOTAL INCOME FROM DISCONTINUED OPERATIONS 430,357 4,756
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NET INCOME (LOSS) $ 308,538 $(109,021)
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NET INCOME (LOSS) PER SHARE:
Continuing operations $ (0.03) $ (0.24)
Discontinued operations 0.12 0.01
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NET INCOME (LOSS) PER SHARE: $ 0.09 $ (0.22)
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WEIGHTED AVERAGE SHARES USED IN COMPUTATION 3,522,928 488,146
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See Notes to Financial Statements.
F-4
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PLAYORENA INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>
Common Stock
-------------------- Additional Accumulated
Shares Amount Paid-in Capital Deficit Total
-------------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, November 30, 1996 638,145 638 $4,142,408 $(5,861,420) $(1,718,374)
Net loss - - - (109,021) (109,021)
--------- ------ ---------- ----------- -----------
Balance, November 30, 1997 638,145 638 4,142,408 (5,970,441) (1,827,395)
Debt and other liabilities converted to
stock 8,612,624 8,613 1,131,320 - 1,139,933
Stock cancelled (52,090) (52) 52 - -
Net income - - - 308,538 308,538
--------- ------ ---------- ----------- -----------
Balance, November 30, 1998 9,198,679 $9,199 $5,273,780 $(5,661,903) $ (378,924)
--------- ------ ---------- ----------- -----------
--------- ------ ---------- ----------- -----------
</TABLE>
See Notes to Financial Statements.
F-5
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PLAYORENA INC.
STATEMENTS OF CASH FLOWS
Years Ended November 30,
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1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 308,538 $(109,021)
Adjustments to reconcile net loss to net cash
used by operating activities:
Gain on liabilities extinguished (430,357) -
Change in operating assets and liabilities 86,321 109,021
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CASH USED IN OPERATING ACTIVITIES (35,498) -
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from officer's advances 36,176 -
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CASH PROVIDED BY FINANCING ACTIVITIES 36,176 -
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NET INCREASE IN CASH 678 -
CASH AT BEGINNING OF YEAR - -
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CASH AT END OF YEAR $ 678 $ -
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SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Non Cash Activity - See note 1 with respect to
conversion of debt to common stock.
See Notes to Financial Statements.
F-6
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PLAYORENA, INC.
NOTES TO FINANCIAL STATEMENTS
November 30, 1998
1. DISCONTINUED OPERATIONS
Playorena, Inc. (the "Company") was incorporated on December 4, 1981,
under the laws of the State of New York. The Company formerly operated
recreational play and exercise programs specifically designed for
children between three months and four years of age. During the fiscal
year ended November 30, 1997, the Company discontinued those
operations.
On April 14, 1995, the Company entered into an Asset Purchase Agreement
(the "Agreement") with Michael Astor (who, along with his wife, Susan
Astor, comprised all of the current officers and members of the Board
of Directors of the Company), pursuant to which an entity formed by Mr.
and Mrs. Astor agreed to acquire all of the assets and properties of
the Company, including, without limitation, all copyrights, trademarks,
trade names (including the name "Playorena"), accounts receivable,
equipment, inventory, cash and cash equivalents, in exchange for the
assumption of certain liabilities of the Company and the transfer to
the Company of 1,041,800 shares of Common Stock of the Company,
representing all of the Common Stock of the Company owned by Mr. and
Mrs. Astor. The Agreement was consummated on July 24, 1998.
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 24, 1998. All references in the
financial statements referring to shares, share price and per share
amounts have been retroactively restated to reflect this reverse split.
Shortly after the consummation of the Agreement, liabilities owed to
certain affiliates of the Company aggregating $790,333 and accrued
interest of $313,424 were converted into 8,612,624 shares of common
stock.
Following the closing of the Agreement the Company has no assets or
business and has liabilities aggregating $380,000 at November 30, 1998
plus possible liabilities with respect to certain heretofore unasserted
claims against the Company. Since the Company does not have any
business or assets with which to generate revenue and with the
exception of $75,000 of notes payable which will be converted into
common stock of the Company, the Company does not have any means to
satisfy such liabilities or obligations unless and until the Company is
able to raise additional capital or acquire a profitable business.
There can be no assurance that raising such capital or acquiring a new
business will be possible.
F-7
<PAGE>
The Company has written off all the remaining assets of the
discontinued business, consisting mainly of the undepreciated cost of
play equipment, at November 30, 1998. Gain from extinguishment of
liabilities aggregated $430,000. Liabilities of the discontinued
business consist of accounts payable and accrued expenses aggregating
$66,226. The Company will remain contingently liable to the extent
that assumed liabilities are not satisfied. In this regard, the
Company has not recognized any gain at November 30, 1998 for these
liabilities.
Revenues of the discontinued business were $117,866 in the fiscal year
ended November 30, 1997.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation - Going Concern - The Company's
financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal
course of business.
The Company has no assets and has a working capital
deficiency of $379,000 at November 30, 1998. The Company's
viability as a going concern is dependent upon the
restructuring of its obligations and a return to
profitability. Accordingly, the financial statements do not
include any adjustments relating to the recoverability of
assets and classification of liabilities or any other
adjustments that might be necessary should the Company be
unable to continue as a going concern in its present form.
(b) Earnings (Loss) Per Share - The computation of earnings (loss)
per common share is based on the weighted average number of
common shares outstanding during the period. Contingently
issuable shares are included in the computation where the
effect is dilutive.
(c) Accounting Estimates - The preparation of financial statements
in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amount of
revenues and expenses during the period. Actual results could
differ from those estimates.
(d) Stock Based Compensation - The Company accounts for stock
transactions in accordance with APB Opinion No. 25,
"Accounting for Stock Issued to Employees". In accordance with
Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation", the Company has
adopted the pro forma disclosure requirements of this
statement.
F-8
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4. NOTES PAYABLE
Following is a summary of the balance of notes payable at November 30,
1998:
a. Environmental Resources and Disposal, Ltd. $ 10,000
b. Private Placement 75,000
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$ 85,000
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a. The note originated November 18, 1993, bearing interest at 10% per
annum. The principal and interest were due on February 6, 1994,
and is currently in default. The note holder has not taken action
to enforce payment.
b. In May 1994, the Company commenced and completed a private
placement of five units, each unit costing $50,000 consisted of
a $50,000 promissory note and 22,222 shares of common stock
offered at $.001 per share. The terms of the promissory notes
are interest at 10% per annum with principal and interest due at
the earlier of (i) the closing of any debt or equity offering of
the Company's securities, the gross proceeds of which is not
less than $1,500,000, or (ii) September 30, 1995. The remaining
notes are currently in default and will be converted to common
stock of the Company subsequent to November 30, 1998.
5. INCOME TAXES
The Company has available net operating loss carry forwards for federal
income tax purposes of approximately $5,391,000 that expire from 1999
through 2011. The Company has applied a valuation allowance,
eliminating entirely only tax benefits or tax assets that may arise
from these favorable tax attributes.
Furthermore, annual utilization of net operating losses can be subject
to limitations due to "equity structure shifts" or "owner shifts"
involving 5% stockholders (as these terms are defined in Section 382 of
the Internal Revenue Code), which result in a more than 50% change in
ownership.
6. EMPLOYEE INCENTIVE STOCK OPTION PLAN
The Company's Employee Incentive Stock Option Plan was adopted and
approved as of June 1, 1989. The plan provides for the grant to key
employees, officers and directors of both "incentive stock options"
within the meaning of Section 422A of the Internal Revenue Code of 1986
and non-statutory stock options. The plan provides for the issuance of
up to 600,000 shares of common stock. Each option granted under the
plan has a term of up to five years, is exercisable only at such times
as the board of directors determine at the time of grant for a price at
least equal to the fair market value of the common stock on the date of
the option
F-9
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is granted, will terminate under certain circumstances if the holder
ceases to be an employee of the Company and requires that the exercise
price be paid, in the discretion of the board of directors, in cash,
shares (valued at the fair market value thereof on the date of
exercise) or a combination thereof. The exercise price of "incentive
stock options" granted to 10% or greater shareholders of the Company
must be equal to at least 110% of the fair market value of the
Company's shares of common stock on the date of grant. Any previously
granted options under the plan were terminated upon the closing of the
Asset sale.
7. POTENTIAL ACQUISITIONS
The Company has entered into two agreements for the acquisition of the
business of two corporations who are providers of wireless voice and
data products and systems to the private two-way land mobile radio
industry in exchange for shares of the Company's common stock. The
consummation of the agreements are subject to the raising of capital
and various other conditions.
F-10
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PART II - OTHER INFORMATION
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company incurred net income of $308,538 for the year ended
November 30, 1998. Loss from continuing operations of $121,819 was offset by
income from discontinued operations of $430,357, from a gain on extinguishment
of liabilities.
LIQUIDITY AND CAPITAL RESOURCES
At November 30, 1998, the Company had a working capital deficit of
$378,924, as compared to $1,827,395 at November 30, 1997 and an accumulated
deficit of $5,661,903. Combined with the fact that the Company has no working
capital it is management's assertion that these circumstances may hinder the
Company's ability to continue as a going concern. As of the date of this report,
management has not developed a formal plan to raise funds for the Company's
short or long-term needs.
The Company continues to evaluate merger proposals.
MANAGEMENT'S PLAN OF OPERATIONS
The Company seeks to acquire or merge with another operating business
if it is unsuccessful in consummating the Acquisitions and the Private
Placement. There can be no assurance that the Company will be successful in its
efforts. Without such additional capital or an acquisitions or merger, the
Company will be unable to fund any business activity.
3
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: March 19, 1999 PLAYORENA INC.
By: /s/ Lawrence Kaplan
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Lawrence Kaplan, President and Secretary
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.
Signature Title Date
/s/ Lawrence Kaplan President, Secretary March 19, 1999
- -------------------- & Director
Lawrence Kaplan
/s/ Robert Rubin Director March 19, 1999
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Robert Rubin
/s/ Alfred Romano Director March 19, 1999
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Alfred Romano
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