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




<PAGE>





                                   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

<TABLE>
<CAPTION>

                                                                                                     Page of
                                                                                                   Form 10-QSB
<S>      <C>                                                                                            <C>                     
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

</TABLE>
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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
<PAGE>



                                 PLAYORENA INC.
                            STATEMENT OF OPERATIONS
                                  (UNAUDITED)



<TABLE>
<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
<PAGE>

                                 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             $  --
                                                              =========             ========

</TABLE>

                       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

<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. 
                  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

<PAGE>



                                   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

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