U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended January 31,
1996.
Commission file number : 0-8289
THE ROVAC CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 59-1461320
(State or other jurisdiction (I.R.S. Employer
of incorp. or organization) Identification No.)
1030 Stafford Street, Rochdale, MA 01542
(Address of principal executive offices)
(508)892-1121
(Issuer's telephone number)
Check whether the issuer (1) has 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 requirement for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date,
January 31, 1996: 39,570,406 shares of Common Stock, $0.01 par
value.
[CAPTION]
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
See attached.
Item 2. Management's Discussion and Analysis or Plan of
Operation.
(a) Liquidity and Capital Resources
During the quarter, the Company continued to produce Cinch-
Lock(tm) pipe connector components for field testing. The Com-
pany successfully completed field tests with one of its customers
and continued contacting other potential customers for its Cinch-
Lock(tm) pipe connectors. The Company began discussions with a
major pipe distributor for a sales contract for the connectors
and while there can be no assurance that such discussions will
result in a successful conclusion, management of the Company
believes that the current negotiations will result in receiving a
reasonably favorable sales contract for the Company's
CinchLock(tm) pipe connectors.
The Company also continued discussions and negotiations for
financing and capital sources in order to meet its working capi-
tal requirements and tooling costs to implement proposed
projects. Management continues to fund the capital requirements
of the Company as they become necessary.
(b) Results of Operations for the second quarter ended
January 31, 1996
General and Administrative Costs were $40,572 for the quar-
ter ending January 31, 1996, as compared to $54,172 for the
corresponding quarter in 1995, a decrease of $13,600. The de-
crease of 25% was primarily due to reduction in legal costs.
Research and Development Costs were $8,960 for the quarter ending
January 31, 1996, as compared to $10,277 for the corresponding
quarter in 1995, a decrease of $1,317. The decrease was due to a
reduction in materials used.
(c) Results of Operations for the six-month period ended
January 31, 1996
General and Administrative Costs decreased by $14,847 (15%)
and Research and Development Costs increased $7,569 (58%) during
the six-months ending January 31, 1996 as compared to the same
period in 1995. The decrease in General and Administrative Costs
are attributable to reduction of legal fees. The increase in
Research and Development Costs are attributable to increased
expenses related to the CinchLock(tm).
<TABLE>
THE ROVAC CORPORATION
Item 1 - Financial Information
Condensed Balance Sheets
<CAPTION>
January 31, 1996 July 31, 1995
(Unaudited)
<S> <C> <C>
Assets
Current Assets
Cash 1,504 1,939
Accounts receivable 3,269 1,665
Loan receivable-officer 698 233
Other receivables 173 -
Inventory 3,533 475
Prepaid expenses 3,250 7,150
__________ __________
Total current assets 12,427 11,462
Property and equipment
Machinery and equipment 69,094 69,094
Furniture and fixtures 30,283 30,283
Leasehold improvements 28,121 28,121
__________ __________
Total property and equipment 127,498 127,498
Less accumulated depreciation -113,921 -112,721
__________ __________
13,577 14,777
__________ __________
Patent and patent applications, net
of accumulated amortization of
$54,005 ($50,105 at July 31, 1995) 85,686 82,661
__________ __________
85,686 82,661
__________ __________
111,690 108,900
========== ==========
See accompanying notes to condensed financial statements.
</TABLE>
<TABLE>
THE ROVAC CORPORATION
Item 1 - Financial Information
Condensed Balance Sheets
<CAPTION>
January 31, 1996 July 31, 1995
(Unaudited)
<S> <C> <C>
Liabilities and Stockholders'
Deficiency
Current liabilities
Notes payable-officers 646,918 647,021
Notes payable-other 3,250 3,250
Accounts payable
Trade 108,753 110,846
Parent company 478,387 401,908
Accrued expenses 587,797 544,298
__________ __________
Total current liabilities 1,825,105 1,707,323
Stockholders' deficiency
8% nonvoting preferred stock,
$100 par value. Authorized
25,000 shares, 12,000 shares
issued. 1,200,000 1,200,000
Common stock, $.01 par value.
Authorized 40,000,000 shares,
issued and outstanding
39,570,406 and 39,546,681
shares. 395,704 395,467
Common stock issuable, $.01
par value, 344,167 and
277,500 shares. 3,442 2,775
Additional paid-in capital 8,257,117 8,243,276
Accumulated deficit -11,569,678 -11,439,941
__________ __________
Total stockholders'
deficiency -1,713,415 -1,598,423
__________ __________
111,690 108,900
========== ==========
See accompanying notes to condensed financial statements.
</TABLE>
<TABLE>
THE ROVAC CORPORATION
Statement of Operations
(Unaudited)
<CAPTION>
Three months Six months
ended Jan. 31 ended Jan. 31
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Total revenues:
Sales - - 7,122 -
Technology Sale 6,000 8,900 10,800 8,900
______ ______ ______ ______
Total revenues 6,000 8,900 17,922 8,900
Operating expenses
General & admin. 40,572 54,172 81,594 96,441
Research & development 8,960 10,277 20,548 12,979
Depreciation & amort. 2,550 2,481 5,100 4,962
______ ______ ______ ______
Total operating expense 52,082 66,930 107,242 114,382
Operating loss -46,082 -58,030 -89,320 -105,482
Other income (expenses)
Interest expense -20,238 -18,816 -40,460 -39,491
Misc income 43 - 43 400
______ ______ ______ ______
-66,277 -76,846 -129,737 -144,573
Net loss per share of
common stock -0.00 -0.00 -0.00 -0.00
Weighted average number of
common shares outstanding
and issuable 39891975 39382611 39862920 39374339
See accompanying notes to condensed financial statements.
</TABLE>
<TABLE>
THE ROVAC CORPORATION
Statement of Cash Flows
(Unaudited)
<CAPTION>
Six months
ended January 31
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss -129,737 -144,573
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 5,100 4,962
Services in exchange for
common stock 4,745 -
(Increase) decrease in assets:
Receivables -2,242 -3,498
Prepaid expenses 3,900 4,000
Parts and supplies - -723
Inventory -3,058 -
Increase (decrease) in liabilities:
Accounts Payable -2,093 7,588
Accrued expenses 43,499 45,129
_______ _______
Net cash used in operating
activities -79,886 -87,115
Cash flows from investing activities:
Acquisition of property and
equipment - -7,000
Acquisition of patents and patent
applications -6,925 -
_______ _______
Net cash used in investing
activities -6,925 -7,000
Cash flows from financing activities:
Proceeds from issuance of notes
payable-officers, net -103 18,943
Advances from parent 76,479 77,612
Proceeds from private placement
purchases of stock 10,000 -
Net cash provided by
financing activities 86,376 96,555
______ ______
Net change in cash -435 2,440
Cash (bank overdraft) at beginning of
period 1,939 -814
______ ______
Cash at end of period 1,504 1,626
Supplemental Disclosures of Cash Flow
information
Cash paid during period for:
Interest - 1,448
Supplemental disclosure of noncash
operating and financing activities
Common stock issued for services 4,745 -
See accompanying notes to condensed financial statements.
</TABLE>
[CAPTION]
Notes to Condensed Financial Statements
(Unaudited)
(1) Basis of Presentation
The unaudited financial statements for the six months and
three months ended January 31, 1996 and 1995 are unaudited but
reflect all adjustments (consisting solely of normal recurring
adjustments) which the Company considers necessary for a fair
statement of results for the interim periods.
The results of operations for six months and three months
ended January 31, 1996 and 1995 are not necessarily indicative of
of the results for the entire year.
These financial statements supplement and should be read in
conjunction with the Company's audited financial statements for
the year ended July 31, 1995 as contained in the Company's Form
10-KSB, as filed with the United States Securities and Exchange
Commission.
(2) Income (Loss) Per Share of Common Stock
Income (loss) per share of common stock as computed is based
on the weighted average of the number of shares outstanding and
issuable during the periods.
[CAPTION]
PART II - OTHER INFORMATION
Item 1. Legal proceedings.
None.
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. Exhibits and Reports on Form 8-K.
EX-27
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.
THE ROVAC CORPORATION
(Registrant)
Date: Raymond E. Shea, Jr.
Raymond E. Shea, Jr.
Vice President and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-END> JAN-31-1996
<CASH> 1504
<SECURITIES> 0
<RECEIVABLES> 4140
<ALLOWANCES> 0
<INVENTORY> 3533
<CURRENT-ASSETS> 12427
<PP&E> 127498
<DEPRECIATION> (113921)
<TOTAL-ASSETS> 111690
<CURRENT-LIABILITIES> 1825105
<BONDS> 0
<COMMON> 395704
0
1200000
<OTHER-SE> (3309119)
<TOTAL-LIABILITY-AND-EQUITY> 111690
<SALES> 7122
<TOTAL-REVENUES> 17922
<CGS> 0
<TOTAL-COSTS> 20548
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40460
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (129737)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> 0
</TABLE>
