UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended June 30, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 0-16052
Quadrax Corporation
(Exact name of registrant as specified in its charter)
Delaware 05-0420158
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
300 High Point Avenue Portsmouth, Rhode Island 02871
(Address of principal executive offices) (Zip Code)
(401) 683-6600
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 x No__
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at August 2, 1996
Common Stock, par value 24,745,704 shares
$.000009 per share
1
<PAGE>
QUADRAX CORPORATION
INDEX TO FORM 10-QSB
Part I - Financial Information Page
Item 1 Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at
June 30, 1996 and at December 31, 1995 3-4
Condensed Consolidated Statements of Operations
for the three and six months ended June 30, 1996 and
June 30, 1995 5
Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 1996 and
June 30, 1995 6-7
Notes to Condensed Consolidated Financial Statements 8-10
Item 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-15
Part II - Other Information
Item 6
Exhibits and Reports on Form 8-K 16
Signatures 17
2
<PAGE>
Quadrax Corporation
Consolidated Balance Sheets
(Unaudited)
ASSETS
June 30, December 31,
1996 1995
Current assets:
Cash and cash equivalents, including
$100,000 and $481,146 of
restricted cash, respectively $ 2,332,730 $ 2,613,555
Accounts receivable, net of allowances
for doubtful accounts of $24,000 1,084,038 1,265,301
Inventories 1,890,675 1,466,813
Other current assets 193,580 134,197
---------- ----------
TOTAL CURRENT ASSETS 5,501,023 5,479,866
Property and equipment, at cost:
Machinery and equipment 3,416,620 3,319,881
Office equipment 891,537 851,160
Leasehold improvements 1,085,728 1,071,532
Construction-in-progress 872,188 0
---------- ----------
6,266,073 5,242,573
Less accumulated depreciation
and amortization 3,298,204 3,000,093
---------- ----------
NET PROPERTY AND EQUIPMENT 2,967,869 2,242,480
Goodwill, net of amortization of $3,952
at June 30, 1996 114,601 118,553
Other assets 290,627 267,855
License agreement, net of amortization of
$180,000 and $120,000, respectively 420,000 480,000
Deferred assets, net of amortization of
$66,187 and $61,912, respectively 217,801 211,498
---------- ----------
TOTAL ASSETS $9,511,921 $8,800,252
========== ==========
See accompanying notes.
3
<PAGE> Quadrax Corporation
Consolidated Balance Sheets
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31,
1996 1995
Current liabilities:
Accounts payable $ 748,876 $ 870,988
Accrued expenses 755,520 1,200,779
Notes payable to related party 0 300,000
Notes payable 1,035,623 1,114,301
------------ ------------
TOTAL CURRENT LIABILITIES 2,540,019 3,486,068
Long-term debt, less current portion 349,858 356,034
Convertible debentures payable 1,050,000 2,250,000
------------ ------------
TOTAL LIABILITIES 3,939,877 6,092,102
============ ============
Stockholders' equity:
Original convertible preferred stock 0 6
Class B convertible preferred stock 3,500,000 0
Common stock 219 160
Additional paid-in capital 60,460,208 57,179,364
Retained earnings (deficit) (56,271,033) (53,088,602)
------------ -----------
7,689,394 4,090,928
Less:
Treasury stock, at cost (1,043,009) (1,043,009)
Unearned compensation and
deferred expenses (586,981) (339,769)
Notes receivable for the exercise
of stock options (487,360) 0
------------ ----------
TOTAL STOCKHOLDERS' EQUITY 5,572,044 2,708,150
------------ ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $9,511,921 $8,800,252
============ ===========
See accompanying notes.
4
<PAGE>
Quadrax Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<S> <C>Three Months <C>Three Months <C> Six Months <C> Six Months
Ended June 30, Ended June 30, Ended June 30, Ended June 30,
1996 1995 1996 1995
-------------------------------------------------------------------
Revenue:
Sales $840,327 $1,234,786 $1,927,344 $2,309,429
Interest income 15,389 0 30,961 8,995
Other income 43,549 0 43,945 0
-------------------------------------------------------------------
TOTAL REVENUE 899,265 1,234,786 2,002,250 2,318,424
-------------------------------------------------------------------
Expenses:
Cost of goods sold 836,223 1,043,208 1,772,662 1,757,628
Research and development 39,044 (24,833) 258,611 211,240
Selling, general and administrative 1,219,438 1,422,334 2,657,823 2,833,940
Depreciation and amortization 182,228 220,245 370,039 423,917
Interest expense 61,701 5,025 125,547 9,415
-------------------------------------------------------------------
TOTAL EXPENSES 2,338,634 2,665,979 5,184,682 5,236,140
-------------------------------------------------------------------
NET LOSS ($1,439,369) ($1,431,193) ($3,182,432) ($2,917,716)
===================================================================
NET LOSS PER COMMON SHARE ($0.06) ($0.14) ($0.15) ($0.25)
===================================================================
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 22,470,365 13,008,872 20,876,573 11,900,316
===================================================================
</TABLE>
See accompanying notes
5
<PAGE>
<TABLE>
Quadrax Corporation
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<S> <C> Six Months <C> Six Months
Ended Ended
June 30, 1996 June 30, 1995
Cash flows from operating activities:
Net loss ($3,182,432) ($2,917,716)
Adjustments to reconcile net income to net cash used
in operating activities:
Depreciation & amortization of fixed assets 302,158 246,521
Amortization of intangibles 67,881 95,065
Amortization of unearned compensation 52,788 82,331
Common stock issued for expenses 160,854 258,274
Effect on cash flows of changes in assets and liabilities:
Accounts receivable and other 181,263 (701,015)
Inventories (423,862) 207,361
Prepaid expenses and other assets (59,383) (134,649)
Receivables/payables from officers and employees (300,000) (225,000)
Accounts payable (122,112) (48,342)
Accrued expenses (507,129) (786,739)
--------------- --------------
Net cash used in operating activities (3,829,974) (3,923,909)
--------------- --------------
Cash flows from investing activities:
Capital expenditures, net (1,023,500) (672,977)
Other intangible assets purchased (33,350) 0
Payments for businesses acquired
net of cash acquired 0 140,000
--------------- --------------
Net cash provided by (used in) investing activities (1,056,850) (532,977)
--------------- --------------
Cash flows from financing activities:
Proceeds from exercise of common stock options 4,187 25,300
Net proceeds from sale of stock and warrants 0 5,137,522
Issuance of convertible debt, net of costs 1,536,666 0
Issuance of convertible preferred stock, net of costs 3,150,000 1,339,200
Repayment of debt (84,854) (60,000)
--------------- --------------
Net cash provided by financing activities 4,605,999 6,442,022
--------------- --------------
Net increase (decrease) in cash and cash equivalents (280,825) 1,985,136
Cash and cash equivalents at beginning of period 2,613,555 382,721
--------------- --------------
Cash and cash equivalents at end of period $2,332,730 $2,367,857
=============== ==============
</TABLE>
See accompanying notes
6
<PAGE>
QUADRAX CORPORATION
Consolidated Statements of Cash Flows (continued)
for the Six Months Ended
June 30, 1996 and June 30, 1995
Supplemental schedule of significant noncash transactions:
1996:
The Company issued 4,450,285 shares of its common stock in
exchange for the cancellation of $2,866,666 of its convertible
debentures.
The Company issued 67,026 shares of its common stock for payment
in full for $61,870
of accrued liabilities.
1995:
The Company assumed $750,000 of debt due its former chairman from
Conagher & Co., Inc. for Conagher's purchase of the original preferred
stock.
7
<PAGE>
Quadrax Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. The unaudited condensed consolidated financial statements
presented herein have been prepared in accordance with the instructions to
Form 10-Q and do not include all of the information and note disclosures
required by generally accepted accounting principles. In the opinion of
management, such condensed consolidated financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the Company's financial position as of June 30, 1996 and the
results of operations for the six months ended June 30, 1996 and
June 30, 1995. The results of operations for the six month period ended
June 30, 1996 may not be indicative of the results that may be expected for the
year ending December 31, 1996. It is suggested that these Condensed
Consolidated Financial Statements be read in conjunction with the Consolidated
Financial Statements and the notes thereto included in the Company's latest
annual report to the Securities and Exchange Commission on Form 10-KSB for
the year ended December 31, 1995.
2. Debt
Long-term debt consists of the following:
June 30, December 31,
1996 1995
Note payable - bank $ 716,000 $ 801,000
Notes payable - Lion shareholders 318,031 331,634
Equipment notes payable 101,450 87,701
Other non-interest bearing note 250,000 250,000
--------- ----------
1,385,481 1,470,335
Less current maturities (1,035,623) (1,114,301)
---------- ---------
$ 349,858 $ 356,034
8
<PAGE>
Quadrax Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note Payable - Bank
The Company's wholly-owned subsidiary, Lion Golf of Oregon, Inc., an
Oregon corporation ("Lion Golf"), has a $1,000,000 revolving line of credit
with its bank. The line of credit is secured by substantially all of Lion
Golf's assets and is guaranteed by the Company and the former majority
shareholder of Lion Golf. The note was renewed January 2, 1996 and bears
interest at 10.75% per annum. Loan advances are limited to 75% of "eligible
accounts receivable" plus 45% of "eligible inventories" up to a maximum of
$500,000, as such terms are defined under the line of credit. The Company's
current outstanding balance due on the line of credit is approximately
$716,000.
Notes Payable - Lion Shareholders
Lion Golf has three unsecured notes bearing interest at the rate of
8% per annum, payable to its former shareholders. These notes are subordinated
to the bank credit line. The first of the notes, for the principal amount of
$270,000, has annual principal payments of $54,000 commencing March 31, 1997.
These annual payments can be limited to the extent of Lion Golf's pretax
profits as defined in the Purchase Agreement among the Company, Lion Golf, and
Lion Golf's former shareholders dated December 29, 1995 (the "Purchase
Agreement"). The second note for the principal amount of $50,200, has monthly
principal payments of $2,400 until paid-in-full. The third note is a demand
note in the principal amount of $10,500.
Convertible Debentures
In April 1996, the Company issued $1,666,666 of its Convertible
Debentures bearing interest at the rate of 8% per annum for net proceeds to the
Company of $1,536,666. The debentures are convertible at the option of the
holders on or after the forty-first day of issuance into a number of shares of
common stock that can be purchased for a price equal to seventy percent of the
average closing bid price of the common stock on the five trading days
immediately prior to the conversion date. At June 30, 1996, the holders of the
convertible debentures had converted $616,666 of the debentures into 635,255
shares of common stock of the Company.
3. Shareholders Equity
The Company's capital shares are as follows:
Original Convertible Preferred Stock, $0.01 par value, -0- shares
authorized at June 30, 1996 and 1,172 shares authorized at December 31, 1995,
318 shares issued and outstanding at December 31, 1995. Subsequent to December
31, 1995 all shares of Original Convertible Preferred Stock were converted into
common stock which were then redeemed by the Company for a nominal consideration
Series B Convertible Preferred Stock, $0.01 par value, 7,000 shares
and -0- shares authorized at June 30, 1996 and December 31, 1995, respectively,
and 3,500 shares issued and outstanding at June 30, 1996.
Common Stock, $.000009 par value, 90,000,000 shares authorized at
June 30, 1996 and December 31, 1995, and 23,986,941 and 17,772,812 shares
outstanding at June 30, 1996 and December 31, 1995, respectively.
4. Earnings Per Share
For the fiscal quarters ending June 30, 1996 and June 30, 1995, the
net loss per share was computed using the weighted number of average shares
outstanding during the respective periods. Common Stock equivalents did not
enter into the computation because the impact would have been anti-dilutive.
9
<PAGE>
Item II
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain matters discussed in this
section and elsewhere in this Form 10-Q are forward-looking statements. These
forward-looking statements involve risks and uncertainties including, but not
limited to, economic conditions, product demand and industry capacity,
competition, and other risks.
Competition. As the Company enters the sporting goods and
recreational equipment market, it faces competition from other materials used in
the manufacture of such goods and equipment, and from other suppliers of
thermoplastic composites. The Company's success in entering this market will
depend largely upon its ability to displace other materials currently in use.
If the Company is unsuccessful in creating a niche within the sporting goods and
recreational equipment market by convincing the market of the strategic
benefits of thermoplastic composites, the Company would be adversely affected.
Many of the companies whose product offerings compete with the Company's product
offerings have significantly greater financial, manufacturing and marketing
resources than the Company.
Development of Distribution Channels. Success in the sporting goods
and recreational equipment market will also hinge on the Company's ability to
develop distribution channels, including both retailers and distributors, and
there can be no assurance that the Company will be able to effectively develop
such channels.
Continued Investment. Maintaining the Company's technological and
strategic advantages over its competitors will require continued investment by
the Company in design and development, sales and marketing, and customer service
and support. There can be no assurance that the Company will have sufficient
resources to make such investments.
Technological Advances. The Company's ability to maintain a
competitive edge by making technological advances ahead of its
competition will have a significant impact on the success of the Company.
Outside Financing. The Company believes that it will need significant
outside financing over the next five years. There can be no assurance that it
will be able to obtain such financing.
Results of Operations for Quarter Ended June 30, 1996 as compared to
Quarter Ended June 30, 1995
The Company's net loss from operations for the quarter ended June 30,
1996 ("1996 second quarter") of approximately $1,439,000 was approximately
$8,000 greater than its net loss from operations of approximately $1,431,000 for
the quarter ended June 30, 1995, ("1995 second quarter"), an insignificant
fluctuation.
10
<PAGE>
Total revenue recognized during the 1996 second quarter was $899,265
compared to $1,234,786 in the 1995 second quarter, a decrease of $335,521. An
increase in sales of approximately $588,000 for the 1996 second quarter for the
Company's Consumer Products Group, which includes Lion Golf, was more than
offset by a decline in sales for the Company's Advanced Materials Systems
division, ("AMS") of approximately $942,000. The decrease in the AMS division
reflects the completion of the defense programs late in 1995 with no
corresponding increase in consumer product shipments in 1996. The AMS 1996
second quarter sales are primarily thermoplastic tape of approximately $45,000.
Interest income increased by approximately $15,000 in the three months
ended June 30, 1996, as compared to the same period one year ago because of the
greater amount of money the Company had on deposit in interest bearing paper in
1996.
Other income increased approximately $44,000 in the 1996 second
quarter. The primary reason for this increase is that the Company's Lion Golf
subsidiary settled a product dispute with a competitor and received a lump-sum
settlement of $40,000 from that entity.
Cost of goods sold for the second quarter of 1996 of $836,223
decreased approximately $207,000 in the three months ended June 30, 1996
vis-a-vis the three months ended June 30, 1995. The reason for the decrease is
the decline in revenues during the 1996 second quarter as compared to the 1995
second quarter, thereby, resulting in a lower dollar cost of goods sold.
Notwithstanding the decline in cost of goods sold in the 1996 second quarter
gross margins tightened in the 1996 second quarter because there was no
corresponding decline in fixed manufacturing costs during the 1996 second
quarter.
Research and development expenses were $39,044 in the 1996 second
quarter, which was $64,000 higher than in the 1995 second quarter. The reason
for this increase in the 1996 second quarter is that the Company was
capitalizing product development costs in the 1995 second quarter. These 1995
product development costs were subsequently expensed in FYE December 31, 1995.
Selling, general and administrative expenses decreased by
approximately $203,000 to $1,219,438 in the three months ended June 30, 1996
over the comparable period a year ago. The primary reasons for this decrease
are threefold: professional fees declined $55,000; travel and entertainment
costs decreased $92,000 and sales commissions were down $68,000.
Depreciation and amortization expense decreased by approximately
$38,000 to $182,228 in the second quarter of 1996. This decrease is due
primarily to the Company's write-off of the book value of the CMI machine in
fiscal 1995.
Interest expense for the second quarter of 1996 increased by
approximately $57,000 to $61,701. This reflects the Company's 1996 subordinated
debt, along with the financing costs associated with the financing leases which
the Company entered into during the past year.
Results of Operations for Six Months Ended June 30, 1996 as compared
to the Six Months Ended June 30, 1995
The Company's net loss from operations for the six months ended
June 30, 1996 ("1996 first half") of approximately $3,183,000 was approximately
$265,000 more than its net loss from operations of approximately $2,918,000 for
the six months ended June 30, 1995 ("1995 first half"). The increase in net
loss was caused by the reduction in gross margins which has resulted from the
change in the Company's primary source of revenues from defense related
products to consumer oriented products in the 1996 first half.
11
<PAGE>
Total revenue recognized during the 1996 first half was $2,002,250
compared to $2,318,424 in the 1995 first half. This decrease of approximately
$316,000 from the 1995 first half resulted from the Company shipping
approximately $1,728,000 in product to its defense related customers in 1995,
while in the 1996 first half, there were no defense related sales. The decline
in defense sales, was mostly offset by Lion Golf's sales of $1,448,000 in the
1996 first half.
Interest income in the 1996 first half was approximately $31,000, an
increase of $22,000 from the 1995 first half. The reason for this increase was
the Company had a greater amount of money invested in interest bearing paper in
1996.
Other income increased approximately $44,000 in the 1996 first half.
This increase resulted primarily from Lion Golf's settlement of a product
trademark dispute with a competitor pursuant to which Lion Golf received a
lump-sum settlement of $40,000 from that entity.
Costs of goods sold increased approximately $15,000 in the 1996 first
half to $1,772,662. The reason for this increase is the reduction in gross
margins in 1996 due to the Company's change in revenue source from defense
related products to consumer oriented products.
Research and development expenses were $259,000 in the 1996 first
half, an increase of $48,000 as compared to approximately $211,000 in the 1995
first half. The reason for this increase is that the Company capitalized
product development costs in 1995, while in 1996, these costs were expensed as
incurred. The 1995 product development costs were subsequently expensed later
in FYE December 31, 1995.
Selling, general and administrative expenses decreased by
approximately $176,000 in the 1996 first half. The primary reasons for this
decrease are twofold: one, travel and entertainment decreased $68,000 in 1996;
and two, professional and consulting fees decreased $101,000.
Depreciation and amortization expense decreased by $53,000 to $370,000
in the first half of 1996, primarily due to the amortization in 1995 of a non-
competition agreement with the Company's former chief executive officer in the
amount of $67,000. This write-off was completed in 1995.
Interest expense for the first half of 1996 was $126,000, while in
1995, it was $9,000, an increase of approximately $117,000. This increase was
caused by the Company's payment of interest on Lion Golf's working capital line
of credit in 1996, and with the interest paid on the Company's convertible
debentures.
Financial Position, Liquidity and Capital Resources
At June 30, 1996, the Company had total assets of $9,511,921 and
stockholders' equity of $5,572,044. Current assets were $5,501,023 and current
liabilities were $2,540,019 resulting in working capital of approximately
$3 million which is an increase of approximately $1 million from December 31,
1995, when working capital was approximately $2 million. This increase in
working capital resulted from the Company's sale of convertible debentures,
$1,666,666, in April 1996 and Series B Convertible Stock in June 1996 of
$3,500,000.
12
<PAGE>
Cash and cash equivalents decreased by approximately $281,000 from
December 31, 1995. This decrease is due to the Company's use of approximately
$3,830,000 to fund its operations and the expenditure of approximately
$1,057,000 to prepare and equip its golf shaft manufacturing facility in Vista,
California and to purchase hockey stick manufacturing equipment from Vega,
U.S.A. These expenditures were offset by the Company's raising of additional
capital of approximately $4,600,000.
Accounts receivable decreased by approximately $181,000. The primary
reason for this decrease is that the Company collected its trade receivables
from its defense customers which were outstanding at December 31, 1995.
Inventories increased by approximately $424,000. This increase is
due to the build-up of product for the Company's consumer sales.
Other current assets increased by approximately $59,000 between
June 30, 1996 and December 31, 1995. This increase was caused by the Company's
renewal of its general liability insurance policy as of June 30, 1996, and
prepayment of the premium.
Notes payable decreased by approximately $79,000. This reflects
decreased usage of the Company's line of credit with the Bank of the Cascades.
Accounts payable and accrued expenses decreased approximately
$567,000 from $2,072,000 at December 31, 1995. This decrease was caused by
payments made to trade vendors and to former employees in 1996. The employee
payments were charged against the reserve for restructuring costs accrued for as
of December 31, 1995.
Notes payable to related parties decreased $300,000 to zero at
June 30, 1996. The reason for this decrease is that the Company paid Richard
Fisher, its former chairman and chief executive officer, in full in
February 1996 pursuant to the December 1995 settlement agreement.
Long term debt decreased approximately $6,000 to about $349,858 at
June 30, 1996. The reasons for this decrease are the payments the Company made
on its Advanced Materials Systems division financing leases, along with several
payments made on the subordinated debt of Lion Golf to the former Lion Golf
shareholders.
Convertible debentures decreased to $1,050,000 at June 30, 1996 from
$2,250,000 at December 31, 1995. This reflects the debenture holder's
conversion of its debentures to common stock during the six months ended
June 30, 1996, along with the issuance of an additional $1,666,666 of
convertible debentures in April 1996.
In the first six months of fiscal 1996, capital expenditures were
approximately $1,050,000. These capital expenditures are an integral part of
the Company's program to construct a golf shaft manufacturing line and a
thermoplastic tape manufacturing line. These equipment acquisitions are expected
to be paid for through equipment leasing programs and from funds raised through
the placement of the Company's securities.
The Company generated revenues of approximately $2,000,000 in the
first six months of fiscal 1996, and as a result, operations were not a source
of funds or liquidity for the Company. The Company continues to depend on
outside financing for the cash required to fund its operations. Net funds
provided by financing activities in the first half of fiscal 1996, after giving
effect to the repayment of debt, totaled approximately $4,600,000 during the
period ended June 30, 1996.
13
<PAGE>
The Company believes that funds provided by operations and cash on
hand (approximately $2,300,000 at June 30, 1996), will be sufficient to meet the
Company's near-term cash requirements. In addition, the Company believes that
it will be able to raise, if necessary, an additional $3,300,000 from the sale
of convertible debentures prior to the end of fiscal 1996.
The Company received a going concern qualification from its outside
independent auditors on its fiscal 1995 audited financial statements. While the
Company believes it has made and will continue to make substantial progress
towards achieving profitability, the results to date have not yet been
sufficient to negate the auditors' qualifications. During this transition,
management continues to redirect the Company's focus from the defense related
products to consumer oriented products. Management believes that the Company
will be able to continue to raise money from outside third parties in
sufficient amounts to support its operations until the time in
which the Company's consumer product programs generate sufficient revenues.
The Company believes that it can achieve viability and profitability
by continuing to expand sales of golf and tennis products, as well as other
products that employ its thermoplastic materials. Management believes that the
Company's acquisition of Lion Golf in late 1995 will further this strategy
because of Lion Golf's manufacturing expertise and access to new distribution
channels, such as golf and tennis pro shops. Sales of composite based lacrosse
sticks and continuing efforts to develop and market other consumer products,
will also contribute to its efforts.
There is no assurance that the Company's efforts to achieve viability
and profitability or to raise money will be successful or that the forecasts
will be achieved. It is difficult for the Company to predict with accuracy the
point at which the Company will be viable and profitable or whether it can
achieve viability or profitability at all, due to the difficulty of predicting
accurately the amount of revenues that the Company will generate, the amount of
expenses that will be required by its operations, and the Company's ability to
raise additional capital.
14
<PAGE>
QUADRAX CORPORATION
Part II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
None since Form 10-KSB for fiscal year ended
December 31, 1995 was filed on April 12, 1996.
27.1 Financial Data Schedule
(Electronic Filing Only)
(b) Reports on Form 8-K
The following Current Reports on Form 8-K were
filed with the Securities and Exchange Commission
since April 12, 1996, the date of the Company's
Form 10-KSB for fiscal year ended December 31, 1995.
On July 2, 1996, the Company filed a Form 8-K dated
June 21, 1996 with respect to the dismissal with
prejudice of a defamation suit against Quadrax by its
former chairman, Pat Hayton.
On July 3, 1996, the Company filed a Form 8-K with
respect to its acquisition of certain assets of Vega,
U.S.A., ("Vega"), pursuant to the terms of an Asset
Purchase Agreement.
On July 31, 1996, the Company filed a Form 8-K with
respect to its press release announcing that it had
received an initial order from Cannondale Corporation,
the manufacturer of high performance bicycles, for
thermoplastic composite handlebars.
15
< page>
QUADRAX CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
QUADRAX CORPORATION
(Registrant)
August 14, 1996 /s/ James J. Palermo
(Date) James J. Palermo,
Chairman and
Chief Executive Officer
August 14, 1996 /s/ Edward A. Stoltenberg
(Date) Edward A. Stoltenberg,
Senior Vice President, and Chief
Financial Officer
(Principal Accounting Officer)
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,332,730
<SECURITIES> 0
<RECEIVABLES> 1,108,038
<ALLOWANCES> 24,000
<INVENTORY> 1,890,675
<CURRENT-ASSETS> 5,501,023
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0
3,500,000
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<INCOME-TAX> (3,182,432)
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</TABLE>
