ROVAC CORP, 10QSB, 2000-03-06

ROVAC CORP
10QSB, 2000-03-06
COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH

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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-QSB

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 1999

[ ] TRANSITION REPORT UNDER SECTION 13 or 15 (d) OF THE

EXCHANGE ACT

For the transition period from _____ to _____

Commission File No. 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 incorporation 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 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. January 31, 2000, was 39,943,073 shares of Common Stock, $0.01 par value.

THE ROVAC CORPORATION
Item 1 - Financial Information
Condensed Balance Sheets




		January 31, 1999	July 31, 1998
		(Unaudited)	*

	Assets

Current Assets
Accounts receivable		3,690	695
Accounts receivable - other		67,479	37,188

	Total current assets	71,169	37,883

Property and equipment
Machinery and equipment		72,112	72,112
Furniture and fixtures		30,283	30,283
Leasehold improvements		28,121	28,121

		130,516	130,516

Less accumulated depreciation		122,043	120,701

	Net property and equipment	8,473	9,815

Patents and patent applications, net of
accumulated amortization of $12,283
($11,641 at July 31, 1998)		65,165	66,144




	Total assets	144,807	113,842


See accompanying notes to financial statements.

THE ROVAC CORPORATION
Item 1 - Financial Information
Condensed Balance Sheets




		January 31, 1999	July 31, 1998
		(Unaudited)	*

Liabilities and Stockholders' Deficiency

Current liabilities
Bank overdraft		22,184	4,830
Notes payable - officer		663,014	663,141
Notes payable - other		3,250	3,250
Accounts payable:
	Trade	82,741	101,187
	Parent company	751,866	719,914
Accrued expenses		892,981	841,607

	Total current liabilities	2,416,036	2,333,929

Stockholders' deficiency
8% nonvoting preferred stock, $100 par		1,200,000	1,200,000
value. Authorized 25,000 shares,
12,000 shares issued.
Common stock, $.01 par value.		399,431	399,431
Authorized 40,000,000 shares, issued and
outstanding 39,943,073 shares
Common stock issuable, $.01 par value,		400	400
40,000 shares
Additional paid-in capital		8,269,432	8,269,432
Accumulated deficit		(12,140,492)	(12,089,350)

	Total stockholders' deficit	(2,271,229)	(2,220,087)

	Total liabilities and stockholders' deficit	144,807	113,842


See accompanying notes to condensed financial statements.

THE ROVAC CORPORATION

Statement of Operations
(Unaudited)

		Three months		Six months
		ended January 31		ended January 31
		1999	1998	1999	1998

Revenues:
Contract Income		59,000	9,000	68,000	18,000
Product		2,234	230	4,673	1,080

	Total revenues	61,234	9,230	72,673	19,080

Operating expenses:
Cost of sales		2,804	-	5,866	-
General and administrative		36,598	37,647	69,192	67,385
Research and development		3,416	3,549	7,297	7,396
Depreciation and amortization		1,313	1,324	2,625	2,648

	Total operating expenses	44,131	42,520	84,980	77,429

	Operating income (loss)	17,103	(33,290)	(12,307)	(58,349)

Other income (expense)
Interest expense		(19,206)	(20,935)	(38,835)	(41,697)


Net Loss		(2,103)	(54,225)	(51,142)	(100,046)

Net loss per share of
common stock		(0.00)	(0.00)	(0.00)	(0.00)

Weighted average number of
common shares outstanding
and issuable		39,983,073	39,983,073	39,983,073	39,983,073




See accompanying notes to condensed financial statements.

THE ROVAC CORPORATION

Statement of Cash Flows
(Unaudited)

		Six Months	Six Months
		Ended Jan 31	Ended Jan 31
		1999	1998
Cash flows from operating activities:
Net loss		(51,142)	(100,046)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization		2,625	2,648
(Increase) decrease in assets:
Accounts and loan receivable		(33,286)	(33,818)
Inventory		-	-
Increase (decrease) in liabilities:
Accounts payable		(18,446)	(6,648)
Accrued expenses		51,374	51,536

	Total adjustments	2,267	13,718

	Net cash provided by (used in)
	operating activities:	(48,875)	(86,328)

Cash flows from investing activities:
Costs of patents and patent applications		(304)	(3,046)

	Net cash used in investing activities	(304)	(3,046)

Cash flows from financing activities:
Proceeds (payments) from notes payable - officers		(127)	2,800
Proceeds from notes payable - other		-	-
Advance from parent		31,952	85,131

	Net cash provided by financing activities	31,825	87,931

Net change in cash		(17,354)	(1,443)

Cash (cash overdraft), beginning of period		(4,830)	(2,944)

Cash (cash overdraft), end of period		(22,184)	(4,387)


See accompanying notes to condensed financial statements.

THE ROVAC CORPORATION

Notes to Condensed Financial Statements

(Unaudited)

(1) Basis of Presentation

The unaudited financial statements for the three months and six months ended January 31, 1999 and 1998 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 three months and six months ended January 31, 1999 and 1998 are not necessarily indicative 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, 1998 as contained in the Company's Form 10KSB, 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.

â
The company continued with discussions and negotiations for financing and capital sources in order to meet its working capital requirements and manufacturing cost to implement proposed projects. Management and/or affiliate continues to fund the capital requirements of the Company, as they become necessary.

(b) Results of Operations for the quarter ended January 31, 1999

The total operating expenses are approximately $44,000 for the quarter ending January 31, 1999 as compared to approximately $43,000 for the corr

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 earned revenues in accordance with the NIBCO Agreement signed in the quarter ended October 31, 1997. During the quarter the company announced an exclusive sales agreement for products sold in Europe in its entirety. This multi-year agreement represents an important entrance into numerous European markets for ROVAC technology. A non-refundable fee for geographical exclusivity and minimum product purchases for key components of the CinchLockâ connecting device were elements of the agreement. Upon completion of testing/acceptance, the German firm will market and distribute products containing CinchLockâ components to their customers in piping systems for water supply and disposal, hot water radiant systems, natural and manufactured gas, acid and bases, food and beverage, chemical mixtures, pharmaceuticals and cosmetics and oils. The Licensee's comprehensive testing program will analyze 6 or 7 types of plastic materials for end market applications. The company also received contract income pursuant to its European agreement. The company also continued tto produce key CinchLockâ components for field testing.

The company continued with discussions and negotiations for financing and capital sources in order to meet its working capital requirements and manufacturing cost to implement proposed projects. Management and/or affiliate continues to fund the capital requirements of the Company, as they become necessary.

(b) Results of Operations for teh quarter ended January 31, 1999

The toal operating expenses are approximately $44,000 for the quarter ending January 31, 1999 as compared to approximately $43,000 for the corresponding quarter in 1998. The expenses for each quarter were comparable. The increase in operating results for three months ended January 31, 1999 as compared to January 31, 1998 is attributable to a non-refundable fee received during the quarter.

The total operating expenses were approximately $85,000 for the six-month period ending January 31, 1999 as compared to approximately $77,000 for the corresponding six-month period in 1998. The increased expenses for the six months ended January 31, 1999 as compared to January 31, 1998 is mainly attributable to manufacturing cost. The increase in operating results for the six months ended January 31, 1999 as compared to January 31, 1998 is attributable to a non-refundable fee received.

PART II - OTHER INFORMATION

Item 1. Legal Preoceedings.

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. Other Information.

None.

Item 6. Exhibits and Reports of Form 8-K.

None.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

THE ROVAC CORPORATION

(Registrant)

Date: March 3, 2000

Raymond E. Shea, Jr.

Vice President and Treasurer