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 quarterly period ended June 30, 1996.
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 0-16355
DeNOVO CORPORATION
(Exact name of small business as specified in its charter)
Ontario, Canada 98-0082860
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
214 Brazilian Avenue #300, Palm Beach, Florida 33480
(Address of principal executive offices)
(561) 659-0121
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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______
At August 16, 1996, 14,964,997 common shares were outstanding.
Transitional Small Business Disclosure Format: Yes ____ No X
DeNOVO CORPORATION
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3-6
Notes to Financial Statements 7-10
Item 2. Management's Discussion and Analysis
or Plan of Operation 10-11
PART II. OTHER INFORMATION
Item 6. Reports on Form 8-K 11
Signatures 12
PART I. FINANCIAL INFORMATION
Item 1: Financial Statements:
All Financial information, unless specifically stated otherwise, is
expressed in United States dollars.
The following statements have been attached to this form:
Unaudited Consolidated Balance Sheet as of June 30, 1996
Unaudited Statements of Operations For the Six Months and
Three Months Ended June 30, 1996 and 1995
Unaudited Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1996 and 1995
Unaudited Consolidated Statement of Stockholders' Equity
For the Six Months Ended June 30, 1996
Notes to Unaudited Consolidated Financial Statements
<TABLE>
DeNOVO CORPORATION
Consolidated Balance Sheets
June 30,1996 December 31, 1995
Unaudited Audited
<S> <C> <C>
Assets
Current assets
Cash $ 313,825 $ 15,498
Accounts receivable, net 935,711 22,178
Inventories 159,082
Total current assets 1,408,618 37,676
Property, plant and equipment, net 1,789,444 34,234
Other assets
Debt issue costs 101,614 -
Deposits 29,945 -
Trademarks, copyrights and other intangibles, net 5,275,463 -
Total assets $ 8,605,084 $ 71,910
Liabilities
Current liabilities
Accounts payable $ 978,565 $ 933,475
Accrued expenses 271,478 33,081
Deferred revenue 96,677 37,497
Convertible debentures payable, net of unamortized
debt discount 404,292 -
Accrued interest 131,986 -
Total current liabilities 1,882,998 1,004,053
Note payable 5,000,000 -
SHAREHOLDERS' EQUITY:
Series A Preference Shares 28,923 28,923
Series C Preference Shares 739,696 739,696
Common Stock 6,961,387 4,258,755
Accumulated deficit (6,007,920) (5,959,517)
Total Stockholders' equity 1,722,086 (932,143)
Total liabilities and stockholders' equity $ 8,605,084 $ 71,910
See accompanying notes to financial statements.
</TABLE>
<TABLE>
DeNOVO CORPORATION
Consolidated Statements of Operations
Unaudited
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Sales $ 2,143,105 $ 544,594 $ 2,143,537 $ 836,711
Cost of sales 1,037,523 226,792 1,039,069 496,667
Gross profit 1,105,582 317,802 1,104,468 340,044
Operating expenses 653,345 251,592 659,980 771,859
Non-recurring operating expenses 310,960 29,155 348,254 29,155
Income (loss) from operations 141,277 37,055 96,234 (460,970)
Interest and other income 860 17,453 13,580 21,924
Interest and other expense (139,308) (11,874) (158,217) ( 22,745)
Net income(loss) 2,829 42,634 (48,403) (461,791)
Net income (loss) per share $.00 ($.02) ($.01) ($.16)
Weighted average number of
shares outstanding 6,892,619 2,874,057 5,698,768 2,933,865
See accompanying notes to financial statements.
</TABLE>
<TABLE>
DeNOVO CORPORATION
Consolidated Statement of Cash Flows
Unaudited
Six months ended June 30, 1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $(48,403) $(461,791)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities
Depreciation and amortization 220,770 23,055
Gain on forgiveness of debt (866)
Stock issued as payment of commissions 41,496
Stock issued as payment for public
relations services 75,000
Stock issued on exercise of options 420,000
Stock issued as payment for acquisition
and related services 67,734
Changes in assets and liabilities:
Decrease (increase)in accounts receivable (861,989) 475,897
Decrease (increase)in inventories (159,082) 329,202
Increase in other receivables - 10,060
Decrease (increase) in prepaid expenses
and deposits ( 29,945) 47,008
Increase in debt issue costs (387,711)
Increase in other assets (9,861) (20,448)
Increase (decrease) in accounts payable 45,956 (804,842)
Increase (decrease)in accrued expenses 163,398 (5,591)
Decrease in due to related party ( 37,497)
Increase in deferred revenue 96,677
Increase in accrued interest payable 131,986
Net cash (used in) provided by operating
activities (808,833) 129,046
Cash flows from investing activities
Cash paid for acquisition of trademarks, (1,049,640) (5,903)
copyrights and equipment
Net cash used in investing activities (1,049,640) (5,903)<PAGE>
Cash flows from financing activities
Loans from stockholders $ - $ 377,500
Repayment of loan to stockholder (341,284)
Proceeds from investment in DeNovo 115,000
Advance from related party 33,200
Repayment of advance from related party ( 1,750)
Proceeds from issuance of common stock 3,156,800
Payments of short-term note (1,000,000)
Net cash provided by financing activities 2,156,800 182,666
Net increase in cash 298,327 305,809
Cash, beginning of period 15,498 127,889
Cash, end of period $ 313,825 433,698
Supplemental disclosures of cash flow information:
1996 1995
Interest paid $ 25,386 $ 18,029
</TABLE>
The Company purchased equipment appraised at $1,814,000 and trademarks and
copyrights valued at $5,186,000 for $1,000,000 in cash, a 90-day note of
$1,000,000 and a long-term note of $5,000,000. The Company also purchased
trademarks and copyrights valued at $107,390 for $32,390 in cash and an
installment loan payable of $75,000.
See accompanying notes to financial statements.
<TABLE>
DeNovo Corporation
Statement of Shareholders' Equity
Six Months Ended June 30, 1996
Unaudited
Preferred Stock Preferred Stock
Series A Series C Common Stock
Shares Amount Shares Amount Shares Amount Deficit
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 32,500 $28,923 1,100,000 $739,696 4,449,421 $4,258,755 ($5,959,517)
Issuance of Stock - - - - 7,746,518 $2,702,632
Net loss - - - - - - ( 48,403)
Balance at June 30, 1996 32,500 $28,923 1,100,000 $739,696 12,195,939 $6,961,387 ($6,007,920)
See accompanying notes to financial statements.
</TABLE>
DeNOVO CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Description of Business
DeNovo Corporation ("DeNovo" or the "Company") was incorporated under the
laws of the Province of Ontario, Canada in September 1986. Through 1994, the
principal focus of the Company's activities was on the development of industrial
waste heat recovery systems and wastepaper recycling projects. In July 1994, a
subsidiary of DeNovo merged with Ampac International Inc. ("Ampac"), the parent
company of TeleConcepts International Inc. ("TeleConcepts"). During 1994, the
Company divested itself of all industrial waste heat recovery and wastepaper
recycling projects to focus on the development of TeleConcepts.
TeleConcepts International, Inc.
Through October, 1995, TeleConcepts was engaged in the design,
manufacture, marketing and distribution of telephones, and telecommunications
equipment. These products were designed primarily for residential and small
office use and sold typically through mass merchandisers, catalog showrooms,
department stores and telephone operating companies. As a result of the
downturn in the consumer electronics industry during 1995, as well as
TeleConcepts' inability to secure adequate financing, management discontinued
TeleConcepts' operations.
Princeton Publishing, Inc.
On March 29, 1996, the Company purchased from Princeton Publishing, Inc.,
a newly formed Delaware corporation ("Princeton"), 100 shares of common stock,
constituting all of Princeton's issued and outstanding stock, for $1,000,000
cash obtained through the issuance of debt securities. Accordingly, Princeton
became a wholly-owned subsidiary of DeNovo. On the same date, Princeton
purchased from a group of corporations (collectively, the "Seller")
substantially all of their assets and assumed major contracts.
The acquired assets consisted of intellectual property, fixed assets, and
contract rights. Trademarks acquired are the names of periodical magazines,
primarily targeted to the adult sports, entertainment, and lifestyle
marketplace. The fixed assets include furniture, fixtures and equipment,
chiefly, printing equipment. The contracts assumed are magazine distribution
contracts and leases to real property in New York City and Sussex, Wisconsin.
The Seller was in the business of publishing, printing and selling
periodical magazines. The Company, through its subsidiary, Princeton, is
continuing such use of the acquired assets.
Princeton paid $1,000,000 in cash at the closing and signed two promissory
notes for the remainder of the purchase price. The first note was in the
principal amount of $1,000,000, and was paid off on June 28, 1996 with interest
at the rate of 10.25% per annum. The second note is in the principal amount of
$5,000,000, payable over 10 years, with interest payments only for the first
three years, 30-year amortized payments for the next seven years, with a balloon
payment on the 10th anniversary. The interest rate on the second note is prime
plus 2%, maximum 12%, adjustable two times per year. The second note is
collateralized by a security interest in all the purchased assets.
On the date of closing, Princeton transferred all purchased intellectual
property including trademarks to Princeton Trademarks, Inc., a newly-formed
Delaware corporation, in exchange for 100 shares in Princeton Trademarks, Inc.,
making that company a wholly-owned subsidiary of Princeton. Also on the same
date, Princeton transferred all equipment and other fixed assets located in
Sussex, Wisconsin, to Kingston Press, Inc., a newly-formed Delaware corporation,
in exchange for 100 shares in Kingston Press, Inc. making that company also a
wholly-owned subsidiary of Princeton.
2. Summary of Significant Accounting Policies
(A) Basis of Presentation
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. During 1995, as result of continuing
losses and the inability of the Company to obtain additional financing to
support operations, the Company ceased operations of its only operating
subsidiary, Teleconcepts. As of December 31, 1995, all assets and liabilities
were written down and presented at their net realizable value. On March 29,
1996, the Company acquired a new operating subsidiary, Princeton Publishing,
Inc., as detailed in Note 1. The interim consolidated financial statements
have not been audited by independent public accountants. In the opinion of the
Company, the unaudited consolidated financial statements incorporate all
transactions and adjustments (consisting only of normal, recurring adjustments)
necessary to present fairly the financial position of the Company as of June
30, 1996 and the results of operations and cash flows for the three and six
months ended June 30, 1996 and 1995. The consolidated financial statements
should be read in conjunction with the summary of significant accounting
policies and notes to consolidated financial statements included in the
Company's Form 10-KSB for the year ended December 31, 1995.
The results of operations for the interim period are not necessarily
indicative of the results to be expected for the full year.
(B) Basis of Consolidation
The consolidated financial statements include the accounts of DeNovo
Corporation and its wholly owned subsidiaries, Teleconcepts International, Inc.,
and Princeton Publishing, Inc. and subsidiaries. All significant intercompany
transactions and balances have been eliminated.
(C) Cash and Cash Equivalents
The Company considers cash equivalents to include short-term, highly
liquid investments with original maturities of three months or less.
(D) Accounts Receivable
Accounts receivable are recorded net of estimated returns of periodicals,
credits and allowances of $2,811,366.
(E) Inventories
Inventories, including paper and other materials used in the production of
the Company's publications, are valued at the lower of cost (on a FIFO basis) or
market.
(F) Property, Plant and Equipment
Machinery, furniture and equipment are stated at cost less accumulated
depreciation. Depreciation is provided at rates based on the estimated useful
lives using the straight-line method. Expenditures for maintenance and repairs
are charged to expense as incurred; replacements and major improvements are
capitalized. Machinery and equipment were purchased for $1,814,000 by Princeton
Publishing on March 29, 1996. At June 30, 1996 and December 31, 1995 remaining
equipment of TeleConcepts consists of computer equipment with a five year life
depreciated using the straight line method. Property, plant and equipment is
shown net of accumulated depreciation of $74,785 as of June 30, 1996.
(G) Trademarks and Copyrights
On March 29, 1996 the Company purchased the trademarks and copyrights of
sixteen magazines for $5,186,000 and in June, 1996, purchased the trademark and
copyright of another publication for $107,387. Trademarks and copyrights are
carried at cost and are being amortized on a straight-line basis over 35 years.
Intangible assets are shown net of accumulated amortization of $37,785 as of
June 30, 1996.
(H) Revenue Recognition
Revenues from commercial printing are recognized at the time the printing
of a customer order is completed. Any billings in advance of that time are
recorded as deferred revenue. The sale of magazine subscriptions are recorded
as unearned revenue at the gross subscription price at the time the order is
received, and subscription revenue is then recognized over the term of the
subscription. Sales of magazines (net of estimated returns) are recorded when
each issue goes on sale.
(I) Income Taxes
The Company uses the liability method of accounting for deferred
income taxes. Under this method, deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using tax rates in effect for the year in which the
differences are expected to reverse.
(J) Use of Estimates
Management of the Company has made estimates and assumptions in the
preparation of the accompanying consolidated financial statements in conformity
with generally accepted accounting principles that affect the reported amounts
of assets and liabilities and disclosures at the dates of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
(K) Advertising Costs
The costs of advertising are expenses as incurred.
(L) Loss Per Share
Loss per share is computed by adding cumulative preferred dividends to
net loss in order to determine net loss attributable to common stockholders.
This amount is then divided by the weighted average number of common shares
outstanding.
Common stock equivalents for preferred stock are considered anti-dilutive
and therefore not considered in the computation of Loss Per Share. In
addition, loss per share does not give effect to common
stock equivalents arising from exercising stock options or warrants due to the
exercise price of the common stock exceeding the average market price.
3. Capital Stock
(A) Preferred Stock:
Unlimited number of preference shares, issuable in series, without par
value. The rights, privileges, restrictions and conditions of each series to be
issued shall be fixed from time to time by the directors.
Series A:
32,500 shares issued and outstanding at June 30, 1996, redeemable at the
option of the Company at any time at a price of $1.24 per share, convertible at
the option of the holder at any time into common share of the Company at a price
equivalent to $1.24 per common share. Upon liquidation Series A preference
shares are entitled to receive from the assets of the Comany an amount equal to
$1.24 for each preference share held before any of the assets of the Company are
distributed to holders of Common shares or any other class of the Company
ranking junior to the Series A preference shares.
Series C:
1,100,000 $8.00 Series C voting preference shares issued and outstanding
at June 30, 1996, redeemable at the option of the Company until January 31, 1998
under certain conditions pertaining to the trading prices of the Company's
common shares, and convertible at the option of the holder at any time into
common shares of the Company on a share-for-share basis. The conversion ratio
is subject to adjustment under certain conditions, including conditions relating
to trading prices and subsequent share issues. Holders of Series C preference
shares are entitled to receive a cumulative dividend of US $.04 per share
annually, payable in cash or common shares of the Company. Dividends in arrears
totaled $162,000 at June 30, 1996. Upon liquidation Series C preference shares
are entitled to receive from the assets of the Company an amount equal to $.80
for each preference share held plus all accrued and unpaid dividends before any
of the assets of the Company are distributed to holders of Common shares or any
other class of the Company ranking junior to the Series C preference shares.
(B) Common Stock:
Unlimited number of common shares without par value.
(C) Issued and outstanding - June 30,1996 December 31,1995
32,500 Series A Preference Shares $ 28,923 $ 28,923
1,100,000 Series C Preference Shares 739,696 739,696
12,195,939 and 4,449,421 common
shares, respectively 6,961,387 4,258,755
$ 7,730,006 $5,027,374
From July 1, 1996 to August 16, 1996 an additional 2,769,058 shares of common
stock were issued by the Company, primarily pursuant to conversion of
convertible debentures previously issued and sold pursuant to Regulation S.
5. Loss Per Share
The loss per share amounts have been calculated using the weighted average
number of shares outstanding. They are as follows:
June 30, 1996 5,755,497
June 30, 1995 2,933,865
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
PLAN OF OPERATION
General
The Company, through its wholly-owned subsidiary, Princeton Publishing,
Inc., is engaged in the publishing and distribution of 17 periodical
consumer lifestyle magazines. Princeton's editorial staff and offices are
located in New York City. A wholly-owned subsidiary of Princeton,
Kingston Press, Inc., owns and maintains a printing plant in Sussex, Wisconsin.
The plant is used for the printing of the Company's magazines and to perform
printing work for third parties on a contract basis. The Company's executive
offices are located in Palm Beach, Florida.
The Company has discontinued the operations of its subsidiary,
TeleConcepts, Inc., as of December 31, 1995. TeleConcepts was engaged in the
design, manufacture, marketing and distribution of telephones and
telecommunications equipment.
Results of Operations
Six-Month Period Ended June 30, 1996 Compared to Six-Month Period Ended June 30,
1995
Revenues for the six-month period ended June 30, 1996 amounted to
$2,143,537 compared to $836,711 for the six-month period ended June 30, 1995,
reflecting an increase of $1,306,826. Revenues are almost wholly derived from
magazine sales, subscriptions and advertising. The increase in revenues
reflected for the six-month period ended June 30, 1996 is a result of the
Company's acquisition of magazine publishing assets in March of 1996 and the
Company's continuing use of those assets in the same business. Costs and
expenses of revenues for the six-month period ended June 30, 1996 were
$2,047,403, compared to $1,297,681 for the six-month period ended June 30,
1995, resulting in an increase $749,722. The increase is attributable
to the combination of non-recurring acquisition costs and continuing operations
in connection with the change in business of the Company from telecommunications
equipment sales to magazine publishing, printing and distribution. See
"Liquidity and Capital Resources."
During the six-month period ended June 30, 1996, $158,217 in interest
expense was charged to operations compared to $22,745 for the six-month period
ended June 30, 1995, reflecting an increase of $135,472. The increase was due
to interest paid pursuant to a promissory note delivered by Princeton as part of
the purchase price of the magazine publishing assets purchased by Princeton in
March of 1996.
Net losses for the six-month period ended June 30, 1996 were $48,403
which represents a decrease of $413,388 from the net loss of $461,791 for
the six-month period ended June 30, 1995. This decrease in losses is
attributable to the operations and revenue of the Company's subsidiary,
Princeton Publishing, Inc. and discontinuation of the operations of
TeleConcepts, Inc.
Liquidity and Capital Resources
The Company intends to continue the operations of its wholly-owned
subsidiary, Princeton Publishing, Inc. and that company's wholly-owned
subsidiaries, Princeton Trademarks, Inc. and Kingston Press, Inc. Management
anticipates net sales of approximately $7,500,000 for calendar year 1996 from
these operations. While there can be no assurance, the Company is confident
that revenues from these operations will be substantially greater than revenues
from the Company's previous business. Interest payments of approximately
$43,000 each are due monthly pursuant to a promissory note executed upon
acquisition of the publishing assets. The Company anticipates that cash flows
from operations will be sufficient to maintain all debt service of Princeton.
As indicated in its Form 8-K dated July 18, 1996, the Company, through
another wholly-owned subsidiary, Firestone Publishing, Inc., has entered into a
contract to purchase substantially all of the assets and operations of Dugent
Publishing Corporation, which reported gross revenues of $7.2 million and net
taxable income of $1.8 million for calendar year 1995. Firestone paid
$1,000,000 to the seller upon entering into the contract. The purchase will be
consummated if the Company pays an additional $2,000,000 in cash and executes a
promissory note in the amount of $4,000,000 with interest, on or before October
15, 1996. If the Company fails to do so, the purchase will not be consummated
and the Company will not be entitled to any refund of the $1,000,000 paid.
Management anticipates consummation of the purchase and intends to finance the
$2,000,000 payment with either a short-term loan, which has been arranged, or
additional sales of the Company's common stock. If the purchase is consummated,
all operations will continue with the same assets and employees without
interruption upon closing on or before October 16, 1996. In addition, net income
from those operations during the period July 18, 1996 until consummation of the
purchase will be paid to Firestone in connection with the acquisition.
Management anticipates additional cash flow from this acquisition.
In August 1996 management arranged the sale of all of the stock of
TeleConcepts, Inc., a wholly-owned subsidiary with substantial accumulated
deficit. Management anticipates consummation of this sale on or before
September 1, 1996. This sale, if consummated, will increase shareholders' equity
in the Company.
Liquidity and capital resources are hereinafter discussed in three broad
categories: operating activities, investing activities and financing
activities.
Cash decreased $119,873 to $313,825 at June 30, 1996 from $433,698 at
June 30, 1995. Net cash used for operating activities was $808,833 during
the six-month period ended June 30, 1996 compared to cash provided by operating
activities of $129,046 during the six-month period ended June 30, 1995. The
increase is attributable to the combination of non-recurring acquisition costs
and continuing operations in connection with the change in business of the
Company from telecommunications equipment sales to magazine publishing, printing
and distribution.
During the six-month period ended June 30, 1996, net cash used for
investing activities was $1,049,640, compared with $5,903 used for investing
activities during the six-month period ended June 30, 1995. The increase of
$1,043,737 is due to purchase of trademarks, copyrights and equipment for the
Company's publishing operations.
During the six-month period ended June 30, 1996, net cash provided by
financing activities was $2,156,800, representing an increase of $1,974,134 from
net cash provided by financing activities of $182,666 during the six-month
period ended June 30, 1995. The increase is a result primarily of the net
proceeds from the sales of the Company's securities which were made in order to
capitalize Princeton Publishing, Inc., so that it could consummate the purchase
of the magazine publishing assets, and also to capitalize the Company's wholly-
owned subsidiary, Firestone Publishing, Inc.
CAUTION: Statements contained in these notes and accompanying financial
statements regarding the Company's future prospects or profitability constitute
forward-looking statements and as such, must be considered with caution and with
the understanding that various factors could cause actual results to differ
materially from those in such forward-looking statements. Such factors include
changes in revenues from distribution, advertising and subscriptions; changes
in costs of materials and operations; and failure of pending or anticipated
acquisitions to be consummated.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit
Number Exhibit
2.1 Asset Purchase and Sale Agreement with Dugent Publishing Corp. dated
July 18, 1996, filed as Exhibit 2.1 to the Company's Report on Form
8-K dated July 18, 1996, File No. 0-16355, filed with the Securities
and Exchange Commission on August 1, 1996.
(b) The following reports on Form 8-K were filed during the quarter ended
June 30, 1996 by the Company:
<TABLE>
<S> <C> <C> <C>
Date of Report Date Filed Items Reported Financial Statements Filed
March 29, 1996 April 12, 1996 Princeton Publishing None
Acquisition
March 29, 1996 June 10, 1996 Princeton Publishing Audited Combined Financial
(Amendment) Acquisition Statements of Business
Acquired; Unaudited Pro
Forma Condensed Combined
Financial Statement of
Business Acquired; Unaudited
Pro Forma Financial
Statements of DeNovo and
Subsidiaries
May 21, 1996 June 18, 1996 Current Balance Sheets Unaudited Pro Forma
(for Nasdaq purposes) Consolidated Balance Sheets
July 18, 1996 August 1, 1996 Dugent Publishing None
Acquisition Agreement
August 5, 1996 August 6, 1996 Current Balance Sheets Unaudited Pro Forma
(for Nasdaq purposes) Consolidated Balance Sheets
</TABLE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: August 19, 1996
DeNOVO CORPORATION
/s/ Michael D. Herman
By: Michael D. Herman,
President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS INCLUDED IN FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 313,825
<SECURITIES> 0
<RECEIVABLES> 935,711
<ALLOWANCES> 0
<INVENTORY> 159,082
<CURRENT-ASSETS> 1,408,618
<PP&E> 1,864,229
<DEPRECIATION> 74,785
<TOTAL-ASSETS> 8,605,084
<CURRENT-LIABILITIES> 1,882,998
<BONDS> 5,000,000
739,696
28,923
<COMMON> 6,961,387
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8,605,084
<SALES> 2,143,537
<TOTAL-REVENUES> 2,143,537
<CGS> 1,039,069
<TOTAL-COSTS> 1,039,069
<OTHER-EXPENSES> 1,008,234
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 158,217
<INCOME-PRETAX> (48,403)
<INCOME-TAX> 0
<INCOME-CONTINUING> (48,403)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (48,403)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
