Rovac (ROVCE) 10QSB 1998 Q2 Quarterly report (small business)

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, 1998

[ ] 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, 1998	July 31, 1997
		(Unaudited)	*
	Assets
Current Assets
Cash		-	-
Accounts receivable		872	833
Accounts receivable - other		36,484	2,705
	Total current assets	37,356	3,538
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		119,359	118,018
	Net property and equipment	11,156	12,498
Patents and patent applications, net of
Accumulated amortization of $10,335.
($9,029 at July 31, 1997)		63,173	61,433
	Total assets	111,685	77,469
See accompanying notes to financial statements.

THE ROVAC CORPORATION
Item 1 - Financial Information
Condensed Balance Sheets
		January 31, 1998	July 31, 1997
		(Unaudited)	*
Liabilities and Stockholders' Deficiency
Current liabilities
Bank overdraft		4,387	2,944
Notes payable - officer		663,141	660,341
Notes payable - other		11,250	11,250
Accounts payable:
	Trade	100,932	107,580
	Parent company	679,666	594,535
Accrued expenses		786,431	734,895
	Total current liabilities	2,245,807	2,111,545
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		(12,003,385)	(11,903,339)
	Total stockholders' deficit	(2,134,122)	(2,034,076)
	Total liabilities and stockholders' deficit	111,685	77,469
See accompanying notes to condensed financial statements.

THE ROVAC CORPORATION
Statement of Operations
(Unaudited)
		Three months		Six months
		ended January 31		ended January 31
		1998	1997	1998	1997
Revenues:
Contract Income		9,000	4,000	18,000	9,500
Product		230	142	1,080	2,942
	Total revenues	9,230	4,142	19,080	12,442
Operating expenses:
Cost of sales		-	-	-	22
General and administrative		37,647	29,267	67,385	66,046
Research and development		3,549	11,316	7,396	24,640
Depreciation and amortization		1,324	1,185	2,648	2,371
	Total operating expenses	42,520	41,768	77,429	93,079
	Operating loss	(33,290)	(37,626)	(58,349)	(80,637)
Other income (expense)
Interest expense		(20,935)	(20,233)	(41,697)	(40,377)
Miscellaneous income		-	-	-	-
		(20,935)	(20,233)	(41,697)	(40,377)
Net Loss		(54,225)	(57,859)	(100,046)	(121,014)
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 January 31	Ended Jan 31
		1998	1997
Cash flows from operating activities:
Net loss		(100,046)	(121,014)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization		2,648	2,370
(Increase) decrease in assets:
Accounts and loan receivable		(33,818)	498
Inventory		-	(234)
Increase (decrease) in liabilities:
Accounts payable		(6,648)	4,997
Accrued expenses		51,536	42,764
	Total adjustments	13,718	50,395
	Net cash provided by (used in)
	operating activities:	(86,328)	(70,619)
Cash flows from investing activities:
Costs of patents and patent applications		(3,046)	(7,795)
	Net cash used in investing activities	(3,046)	(7,795)
Cash flows from financing activities:
Proceeds from notes payable - officers		2,800	(113)
Proceeds from notes payable - other		-	8,000
Advance from parent		85,131	58,975
	Net cash provided by financing activities	87,931	66,861
Net change in cash		(1,443)	(11,552)
Cash (bank overdraft), beginning of period		(2,944)	9,747
Cash (bank overdraft), end of period		(4,387)	(1,805)
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, 1998 and 1997 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, 1998 and 1997 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, 1997 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

During the quarter, the company earned revenues in accordance with the NIBCO Agreement signed in the quarter ended October 31, 1997. The company also continued to 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 tooling 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, 1997

The total operating expenses are approximately $42,000 for the quarter ending January 31, 1998 as compared to approximately $42,000 for the corresponding quarter in 1997. The expenses for the quarter ended January 1998 were comparable to the expenses for quarter ended January 1997.

(c) Results of Operations for the six-month period ended January 31, 1998

The total operating expenses were approximately $77,000 for the six-month period ending January 31, 1998 as compared to approximately $93,000 for the corresponding six-month period in 1997. The $16,000 decrease in operating expenses for the six-months ended January 31, 1998 as compared to the six-months ended January 31, 1997 is mainly attributable to the company's decrease in research and development expenses.

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. 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 1, 2000

Raymond E. Shea, Jr.

Vice President and Treasurer