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, 1997
[ ] 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
Assets January 31, 1997 July 31,1996
Current assets:
Cash $ - $ 9,747
Accounts receivable 1,346 1,845
Accounts receivable - other 11,461 935
Inventory 234 -
Prepaid expenses _ - _________
Total current assets 13,041 12,527
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 116,676 115,335
Net property and equipment 13,839 15,181
Patents and patent applications, net of
accumulated amortization of $8000
($6,971 at July 31, 1996) 58,323 51,557
Total assets $ 85,203 $ 79,265
See accompanying notes to financial statements.
THE ROVAC CORPORATION
Item 1 - Financial Information
Condensed Balance Sheets
January 31, 1997 July 31,1996
(Unaudited)
Liabilities and Stockholders' Deficiency
Current liabilities:
Bank overdraft $ 1,804 -
Notes payable - officer 658,140 648,141
Notes payable - other 11,250 3,250
Accounts payable:
Trade 108,600 103,602
Parent company 538,944 479,970
Accrued expenses 678,257 635,080
Total current liabilities 1,996,995 1,870,043
Stockholders' deficiency: 1,200,000 1,200,000
8%, nonvoting preferred stock, $100 par
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 ( 11,781,055) (11,660,041)
Total stockholders' deficit (1,911,792) (1,790,778)
Total liabilities and stockholders' deficit $ 85,203 $ 79,265
See accompanying notes to financial statements.
THE ROVAC CORPORATION
Statements of Operations
(Unaudited)
Three months Six months
Ended January 31 ended January 31
1997 1996 1997 1996
Revenues:
Contract income 4,000 6,000 9,500 7,122
Product 142 - 2,942 10,800
Total revenues 4,142 6,000 12,442 17,922
Operating expenses:
Cost of sales - - 22 -
General and administrative 29,267 40,572 66,046 81,594
Research and development 11,316 8,960 24,640 20,548
Depreciation and amortization 1,185 2,550 2,371 5,100
Total operating expenses 41,768 52,082 93,079 107,242
Operating loss (37,626) (46,082) (80,637) (89,320)
Other income (expense)
Interest expense (20,233) (20,238) (40,377) (40,460)
Miscellaneous income - 43 - 43
(20,233) (20,195) (40,377) (40,417)
Net loss (57,859) (66,277) (121,014) (129,737)
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 39,368,135 39,983,073 39,862,920
See accompanying notes to financial statements.
THE ROVAC CORPORATION
Statements of Cash Flows
(Unaudited)
Six Months
Ended January 31
1997 1996
Cash flows from operating activities:
Net loss $(121,014) $(129,737)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 2,371 5,100
Services in exchange for common stock - 4,745
(Increase) decrease in assets:
Accounts and loan receivable 498 (2,242)
Inventory (234) (3,058)
Prepaid expenses - 3,900
Increase (decrease) in liabilities:
Accounts payable 4,997 (2,093)
Accrued expenses 42,764 43,499
Total adjustments 50,396 49,851
Net cash provided by (used in)
operating activities: (70,618) (79,886)
Cash flows from investing activities:
Capital expenditures - -
Costs of patents and patent applications (7,795) (6,925)
Net cash used in investing activities (7,795) ( 6,925)
Cash flows from financing activities:
Proceeds from notes payable - officers (113) (103)
Proceeds from notes payable - other 8,000 -
Advance from affiliate 58,975 76,479
Proceeds from private placement
purchases of stock _________ 10,000
Net cash provided by financing activities 66,861 86,376
Net change in cash (11,551) (435)
Cash, beginning of period 9,747 1,939
Cash (bank overdraft), end of period $ (1,804) $ 1,504
Supplemental disclosure of noncash
Operating and financing activities
Common stock issued for services 4,745
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 ended January 31, 1997 and 1996
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 ended January 31, 1997 and 1996 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, 1996 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.
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
ROVAC produced key CinchLockâ pipe connector components for field testing. The
Company continued to contact potential customers to enter into discussions for test marketing
programs. ROVAC identified a number of markets for its CinchLockâ connectors and has
supplied metal and plastic samples of the connectors to potential manufacturers, wholesalers and
distributors for evaluation. The company continues to receive favorable field test results for the
company's CinchLockâ pipe connectors.
The company also continued discussions and negotiations for financing and capital
sources in order to meet its working capital requirements and tooling costs 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, 1997
The total operating expenses are approximately $42,000 for the quarter ending January 31,
1997 as compared to approximately $52,000 for the corresponding quarter in 1996. The expenses
for each quarter were comparable with the exception of rent, which was reduced due to a
reduction of leased space.
(c) Results of Operations for the six-month period ended January 31, 1997
The total operating expenses were approximately $93,000 for the six-month period ending
January 31, 1997 as compared to approximately $107,000 for the corresponding six-month period
in 1996. The expenses for each period were comparable with the exception of rent, which was
reduced due to a reduction of leased space.
PART II - OTHER INFORAMTION
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. 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: _________________________________________
Raymond E. Shea, Jr.
Vice President and Treasurer
