Company Seeking Cash, Merger : Rosscomp in Default to Noteholders

Financially troubled Rosscomp Corp. disclosed late Wednesday that it is in default for non-payment of interest due holders of two-year convertible subordinated notes the company issued last August.

The noteholders, whom Rosscomp President Rod Hoslick described as a “fairly small group” of venture capitalists, are demanding full payment of about $950,000 in principal and unpaid interest on the notes.

In a letter delivered to Rosscomp this week, however, the noteholders say they will take no action to collect the money before Jan. 25 “unless the company takes a turn for the worse.”

Rosscomp posted a net loss of $2.1 million for the nine months ended Aug. 31 compared to a net loss of $2.6 million for that period a year earlier. Revenues for the nine-month period were $564,862, compared to $189,873 during that period in 1984.

The company said it is unable to pay its remaining 10 employees regularly and probably will be unable to continue its operations without additional cash.

Hoslick said in a telephone interview that Rosscomp is holding merger talks with other firms but that “there have been no written offers.” In addition, he said, the company is seeking more money from investors.

Hoslick declined to comment on Rosscomp’s short-term outlook, but he said negotiations are under way with the disgruntled noteholders. “We’re in discussion with those investors, and we may not have to pay that interest on Jan. 25,” he said.

Rosscomp continues to market its line of backup tape drives and continues to make shipments to customers, but it remains essentially a start-up company.

“We are a development-stage company, and our products are just now getting to the marketplace,” Hoslick said. “As such, we’re just not profitable.”