U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended April 30,
1996.
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
(Issuers' 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 require-
ments for the past 90 days. YES [X] NO [ ]
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, April 30,
1996: 39,943,073 shares of Common Stock, $0.01 par value.
[CAPTION]
PART I - 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, ROVAC began to build an inventory of Cinch-
Lock(tm) rings for future sale of the CinchLock(tm) pipe connecting
devices. The Company generated a limited number of sales of samples
of the CinchLock(tm) pipe connectors. The Company continues discus-
sions with major pipe manufacturers and distributors for sales con-
tracts 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 negotiations will result in receiving a
major contract for the Company's CinchLock(tm) pipe connecting tech-
nology.
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. Be-
cause the Company has insufficient liquidity to meet its capital
requirements, management has funded the capital requirements of the
Company. However, there can be no assurance that such practice will
continue.
(b) Results of Operations for the quarter ended April 30, 1996
General and Administrative Costs were $43,101 for the quarter
ending April 30, 1996, as compared to $90,769 for the corresponding
quarter in 1995, a decrease of $47,668. The decrease of 53% was
primarily due to reduction in legal costs. Research and Development
Costs were $15,488 for the quarter ending April 30, 1996, as compared
to $3,957 for the corresponding quarter in 1995, an increase of
$11,531. The increase of 291% was due to activity related to the pre-
production of CinchLock(tm) components.
(c) Results of Operations for Nine Months Ending April 30, 1996
General and Administrative Costs decreased by $62,516 (33%) and
Research and Development Costs increased $19,099 (113%) during the nine
months ending April 30, 1996 as compared with the same period in 1995.
The decrease in General and Administrative Costs is attributable to
reduction in legal costs associated with customer agreements. The
increase in Research and Development Costs is attributable to activity
related to the pre-production of CinchLock(tm) components.
THE ROVAC CORPORATION
Item 1 - Financial Information
Condensed Balance Sheets
April 30, 1996 July 31, 1995
(Unaudited)
Assets
Current Assets
Cash - 1,939
Accounts receivable 386 1,665
Accounts receivable - other 871 -
Loan receivable - officer 387 233
Inventory 3,534 475
Prepaid expenses 1,300 7,150
___________ ____________
Total current assets 6,478 11,462
___________ ____________
Property and equipment
Machinery and equipment 69,804 69,094
Furniture and fixtures 30,283 30,283
Leasehold improvements 28,121 28,121
___________ ____________
Total property and
equipment 128,208 127,498
Less accumulated depreciation -114,520 -112,721
___________ ____________
13,688 14,777
___________ ____________
Patent and patent applications
net of accumulated amortization
of $55,955 ($50,105 at July 31,
1995) 84,506 82,661
___________ ____________
84,506 82,661
___________ ____________
104,672 108,900
=========== ============
See accompanying notes to condensed financial statements.
THE ROVAC CORPORATION
Item 1 - Financial Information
Condensed Balance Sheets
April 30, 1996 July 31, 1995
(Unaudited)
Liabilities and Stockholders'
Deficiency
Current Liabilities
Bank overdraft 2,020 -
Notes payable - officers 648,140 647,021
Notes payable - other 3,250 3,250
Accounts payable
Trade 106,074 110,846
Parent company 513,447 401,908
Accrued expenses 611,986 544,298
____________ ____________
Total current
liabilities 1,884,917 1,707,323
____________ ____________
Stockholders' deficiency
8% nonvoting preferred stock 1,200,000 1,200,000
$100 par value. Authorized
25,000 shares, 12,000 shares
issued.
Common stock, $.01 par value 399,431 395,467
value. Authorized 40,000,000
shares, issued and outstanding
39,943,073 shares & 39,546,681
shares.
Common stock issuable, $.01 par 250 2,775
value, 25,000 shares and 277,500
shares.
Additional paid-in capital 8,266,882 8,243,276
Accumulated deficit -11,646,808 -11,439,941
___________ ___________
Total stockholders'
deficiency -1,780,245 -1,598,423
___________ ___________
104,672 108,900
=========== ===========
See accompanying notes to condensed financial statements.
THE ROVAC CORPORATION
Statement of Operations
(Unaudited)
Three Months Nine Months
Ended April 30 Ended April 30
1996 1995 1996 1995
______________________________________________
Total revenues:
Sales 460 - 7,582 -
Technology sale 3,360 3,000 14,160 11,900
______________________________________________
Total revenues 3,820 3,000 21,742 11,900
Operating expenses
General & Administrative 43,101 90,769 124,695 187,211
Research & Development 15,488 3,957 36,036 16,937
Depreciation & amort. 2,550 2,481 7,650 7,443
______________________________________________
Total operating
expenses 61,139 97,207 168,381 211,591
______________________________________________
Operating profit
(loss) -57,319 -94,207 -146,639 -199,691
______________________________________________
Other income (expense)
Interest expense -19,818 -23,569 -60,278 -63,058
Miscellaneous income 7 0 50 400
______________________________________________
-19,811 -23,569 -60,228 -62,658
______________________________________________
-77,130 -117,776 -206,867 -262,349
==============================================
Net loss per share of
common stock -0.00 -0.00 -0.01 -0.00
==============================================
Weighted average number
of common shares
outstanding and
issuable 39,927,948 39,382,611 39,883,766 39,376,821
==============================================
See accompanying notes to condensed financial statements.
THE ROVAC CORPORATION
Statement of Cash Flows
(Unaudited)
Nine Months
Ended April 30
1996 1995
_____________ ______________
Cash flows from operating activities
Net loss -206,867 -262,349
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation & amortization 7,650 7,443
Services in exchange for common
stock 15,045 -
(Increase) decrease in assets:
Receivables 254 33
Prepaid expenses 5,850 6,000
Inventory -3,059 -
Parts and supplies - -723
Increase (decrease) in liabilities:
Accounts payable -4,772 31,942
Accrued expenses 67,688 69,442
_____________ ______________
Net cash provided by
operating activities -118,211 -148,212
_____________ ______________
Cash flows from investing activities:
Acquisition of patents and
patent applications -7,695 -20,391
Acquisition of property and equipment -711 -7,000
_____________ ______________
Net cash used in investing
activities: -8,406 -27,391
_____________ ______________
Cash flows from financing activities:
Proceeds from issuance of notes
payable officers, net 1,119 45,222
Advances from parent company 111,539 126,647
Proceeds from private placement
purchases of stock 10,000 -
_____________ ______________
122,658 171,869
_____________ ______________
Net change in cash -3,959 -3,734
Cash (bank overdraft) at beginning
of period 1,939 -814
_____________ ______________
Cash (bank overdraft) at end of
period -2,020 -4,548
============= ==============
Supplemental disclosure of noncash
investing and financing activities:
Common stock issued for services 15,045 6,000
See accompanying notes to condensed financial statements.
[CAPTION]
THE ROVAC CORPORATION
Notes to Condensed Financial Statements
(Unaudited)
(1) Basis of Presentation
The unaudited financial statements for the nine months and three
months ended April 30, 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 nine months and three months ended
April 30, 1996 and 1995 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, 1995 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 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 on Form 8-K.
Exhibit 27, Financial Data Schedule for quarter ending 4/30/96.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the under-
signed, thereunto duly authorized.
THE ROVAC CORPORATION
(Registrant)
Date:_____________________ _____________________________________
Raymond E. Shea, Jr.
Vice President/Treasurer