File No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
QUADRAX CORPORATION
(Exact name of registrant as specified in charter)
DELAWARE 05-0420158
(State of incorporation) (IRS Employer Identification Number)
300 High Point Avenue,
Portsmouth, Rhode Island 02871
(401) 683-6600
(Address and telephone number of registrant's
principal executive offices)
QUADRAX CORPORATION
1993 STOCK PLAN
(Full title of the Plan)
JAMES J. PALERMO
Chairman of the Board and Chief Executive Officer
Quadrax Corporation
300 High Point Avenue
Portsmouth, Rhode Island 02871
(401) 683-6600
(Address and telephone number of
agent for service)
Please send copies of all communications to:
JOSEPH A. SMITH, Esq.
Campbell & Fleming, P.C.
250 Park Avenue, 12th Floor
New York, New York 10177
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(Cover continued from previous page)
CALCULATION OF REGISTRATION FEE
Title of Proposed Proposed
each Maximum Maximum Amount
class of Amount to offering aggregate of
securities be price offering registration
to be registered per Unit price fee
registered
--------------------------------------------------------------------------
Common Stock,
$.000009 par
value(1) 46,666 $ .68 $ 31,733 $ 10.94
Common Stock,
$.000009 par
value(1) 280,000 $1.81 $ 506,800 $174.76
Common Stock,
$.000009 par
value(1) 130,000 $ .84 $ 109,200 $ 37.66
Common Stock,
$.000009 par
value(1) 966,998 $1.81 $1,750,266 $603.54
-----------------------------------------------
Total 1,423,664 $2,397,999 $826.90
================================================
(1) For shares issuable pursuant to stock options outstanding at May 15, 1996,
repriced to $.68, which repricing was agreed to on January 10, 1996, and
ratified by the Board of Directors in February, 1996, and calculated
pursuant to Rule 457(h) based on the amended exercise price of such
options.
(2) For shares issuable pursuant to stock options outstanding at May 15, 1996,
calculated pursuant to Rule 457(h) based on the amended exercise price of
such options.
<PAGE>
REOFFER PROSPECTUS
1,423,664 Shares of Common Stock
QUADRAX CORPORATION
300 High Point Avenue
Portsmouth, RI 02817
The persons named or otherwise identified under "Selling Shareholders"
herein propose to sell an aggregate of 1,423,664 shares of Common Stock (the
"Shares") of Quadrax Corporation (the "Company") (i) in one or more
transactions (which may include block transactions) at negotiated prices or at
a price or prices related to the then current market price of the Company's
Common Stock, or (ii) to a broker (for resale by such broker as principal) at a
price or prices related to the then current market price of the Company's
Common Stock, less such discount as shall be agreed upon by a Selling
Shareholder and the Broker, or (iii) by a combination of the methods described
in clauses (i) and (ii). Selling Shareholders may also make sales from time to
time pursuant to Rule 144 under the Securities Act of 1933, as amended, if such
Rule is otherwise available to such particular Selling Shareholder.
The 1,423,664 Shares offered hereby may be issued by the Company from time
to time upon the exercise of options to purchase the Shares pursuant to the
Company's 1993 Stock Plan. Sellers of "control securities" as defined under
Instruction C to Form S-8 promulgated by the Securities and Exchange
Commission, are indentified herein or in a supplement hereto by name. Other
selling shareholders may be identified by status as employees of the Company.
The Selling Shareholders, and the brokers and dealers through which the
Shares may be offered, may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, as amended, in which event any
compensation received by such brokers and dealers may be deemed to be
underwriters' compensation under such Act.
The Common Stock is listed on the NASDAQ Small-Cap Market under the symbol
"QDRX". On April 30, 1996, the closing price for the Common Stock on NASDAQ
was $1.875 per share.
AN INVESTMENT IN THE SECURITIES OFFERED PURSUANT
TO THIS PROSPECTUS IS SPECULATIVE AND INVOLVES
A HIGH DEGREE OF RISK. SEE "RISK FACTORS" ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May 28, 1996
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549; Room 1204, Everett
McKinley Dirksen Building, 210 South Dearborn Street, Chicago, Illinois 60604;
7 World Trade Center, New York, New York 10048; and Suite 500 East, Museum
Square Building, 5757 Wilshire Boulevard, Los Angeles, California 90036.
Copies of such material can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street N.W., Washington, D.C. 20549 at prescribed
rates.
The Company has filed with the Commission in Washington, D.C. a
Registration Statement on Form S-8 (Registration No. 333- ) under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Shares of which this Prospectus is a part. As permitted by the rules and
regulations of the Commission, this Prospectus does not contain all the
information set forth in the Registration Statement, including the exhibits
filed as part thereof and otherwise incorporated therein to which reference is
hereby made. Copies of the Registration Statement and the exhibits may be
inspected at the offices of the Commission, and may be obtained form the Public
Reference Section of the Commission at 450 Fifth Street, N.W. Washington, D.C.
20549 upon payment of the prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1995.
(2) The Company's Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1996.
(3) The description of the Company's Common Shares which is
contained in the registration statement on Form 8-A filed by the
Company to register such securities under Section 12(g) of the
Securities Exchange Act of 1934, as amended, including any amendment
or report filed for the purpose of updating such description.
(4) The Company's Current Reports on Form 8-K dated January 15, 1996
and March 15, 1996.
(5) The Company's Proxy Statement in connection with the Annual
Meeting of Stockholders held May 10, 1996.
(6) All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the Offering made hereby
shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or any other subsequently filed document which is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owners, to whom this Prospectus is delivered, upon the written or
oral request of any such person, a copy of any and all of the information that
has been incorporated herein by reference, other than exhibits to such
information (unless such exhibits are specifically incorporated by reference
into the information that the Prospectus incorporates). Requests for such
information should be directed to the Secretary of the Company at 300 High
Point Avenue, Portsmouth, Rhode Island 02871, (401) 683-6600.
THE COMPANY
The Company, which prior to fiscal year 1995 was a development stage
company, designs, develops, fabricates and sells fiber-reinforced thermoplastic
polymer composite materials ("Quadrax Composites") and products manufactured
from Quadrax Composites. Quadrax Composites are synthetic materials made using
patented and other proprietary, as well as non-proprietary, chemical processes
and manufacturing technologies. Management believes that Quadrax Composites
are functionally superior to other structural substrates for most applications
in which abrasion resistance and extreme heat tolerance are not critical.
Quadrax Composites' functional advantages include high strength-to-weigth
ratios, chemical stability in a variety of ambient conditions (imperviousness
to rust, rot or reaction with most commonly used chemical solvents), ease and
safety of manufacture using modified conventional heat and compression molding
techniques, virtually unlimited shelf life without special storage or handling
requirements, and recyclablity.
The Company commenced limited commercial production in mid-1993. Although
the Company historically was dedicated to the formatting of composite materials
for defense and aerospace markets, it began redirecting its business in 1994
and 1995 to focus on commercial and consumer markets for value-added, high-
performance products. The Company's independent accountants, Livingston &
Haynes, P.C., included a "going concern" qualification in their report on the
Company's financial statements for fiscal 1995, as they did for fiscal 1994
(the period from January 3, 1994 to December 31, 1994), reflecting the
Company's history of losses and its continuing dependence on financing
activities to provide the cash needed to meet its expenses.
The Company is organized in a holding company structure, operating through
two wholly owned subsidiaries: Quadrax Advanced Materials Systems, Inc. and
Lion Golf of Oregon, Inc. ("Lion Golf"). It also wholly owns and operates
Quadrax Sports, Inc. as a marketing company.
The Company was incorporated under the laws of Delaware in March 1986.
Its principal executive offices are located at 300 High Point Avenue,
Portsmouth, Rhode Island 02871, and its telephone number is (401) 683-6600.
RISK FACTORS
In addition to the other information in this Prospectus, the following
risk factors should be considered carefully in evaluating the Company and its
business before purchasing any of the shares of Common Stock offered hereby.
Operating Losses; Limited Revenues; Going Concern Qualification
Quadrax Corporation has not achieved profitability in any fiscal quarter
since its incorporation in March 1986. From incorporation through December 31,
1995, the Company incurred a cumulative net loss from continuing operations of
approximately $53,089,000. During the fiscal years 1995, 1994, 1993 and 1992,
the Company incurred net losses from continuing operations of approximately
$8,998,000, $11,517,000, $5,713,000 and $7,266,000, respectively.
The Company has generated only limited revenue to date. In particular,
Quadrax has recently redirected its development and marketing efforts from
aerospace and defense markets to consumer markets and commenced limited
production for these markets in mid-1993. During fiscal years 1995, 1994, 1993
and 1992, the Company's total revenue was approximately $4,635,000, $860,000,
$1,555,000 and $850,000 respectively. There can be no assurance that sales of
the Company's products will generate significant revenue in the future.
Consequently, thee can be no assurance that the Company will achieve or sustain
profitability in the future. The future operating results of the Company will
depend on its ability to develop and market new products in the commercial
markets. The Company's independent accountants have included a "going concern"
qualification in their reports on the Company's financial statements for fiscal
1995 and 1994, reflecting the Company's history of losses as a development
stage company and its continuing dependence on financing activities to provide
the cash needed to meet its expenses. Under the Company's current business
plan, management believes that the Company's revenues and earnings will be
sufficient to make the going concern qualification unnecessary by December 31,
1996, although there can be no assurance that such qualification will in fact
be unnecessary by that date.
Dependence on New Products
The Company historically has marketed its products to the U.S. Government.
The Company began to apply its technology in consumer markets in 1993, and
since that time has taken a number of actions aimed at entering the sporting
goods and athletic equipment market. The Company has only commenced limited
commercial production of consumer products and therefore has not yet had an
opportunity to fully determine the extent to which Quadrax Composites can be
successfully applied to the development and production of consumer products.
While management believes that Quadrax Composites are functionally superior to
other structural substrates for many commercial applications, any failure of
Quadrax Composites to perform to standards anticipated by the Company would
have a material adverse affect on the Company's operations and financial
condition.
Although the Company has entered into several joint development and
exclusive manufacturing contracts to sell goods in the consumer sporting goods
market, the contracts are contingent on the Company being able to meet
contractual specifications in a timely manner and there can be no assurance
that the Company will be able to do so in the future. A delay in the
successful development, completion or production of any of the Company's
sporting good products may result in the cancellation of existing contracts and
prevent the Company from entering into additional contracts. This would have
material adverse effect on the Company's operations and financial condition.
In addition, selling Quadrax Composites and products manufactured from
Quadrax Composites to consumer and commercial markets, the Company faces
significant institutional resistance to working with new materials and products
and to investing in the re-tooling needed to integrate these materials and
products into existing production and product lines. Successful entrance into
new markets will require substantial investments by the Company in fabrication
and marketing of Quadrax Composites and in the design, development, fabrication
and marketing of products manufactured from Quadrax Composites. There can be
no assurance that the Company will be able to overcome such institutional
resistance or that it will have sufficient resources to make the necessary
investments in its new products.
Capital Requirements
The Company has not achieved profitability in any fiscal quarter and has
been required to raise substantial amounts of capital in order to support its
on-going development activities. As the Company continues to focus on consumer
markets and progresses from the development of prototypes of products
manufactured from Quadrax Composites to the production of finished goods, it
will continue to be dependent on outside financing sources.
From its incorporation in March 1986 through December 31, 1995, Quadrax
raised a total of $37.9 million in equity capital. The Company raised
approximately $5.9 million of equity capital in fiscal 1994 and an additional
$7.3 million through sales of stock and convertible debt during fiscal 1995.
Management estimates that its capital needs for the fiscal year 1996 will be
between $2-10 million, subject to new product development programs,
acquisitions, and the expansion of sales and marketing programs. The Company
is seeking alternative sources of public and private equity financing to meet
its needs. While management believes that the funds raised to date, together
with cash provided by revenues, will be sufficient to meet the Company's cash
requirements for fiscal 1996, there can be no assurance that such funds, if
raised, will meet its cash requirements. If the Company is unable to meet its
cash requirements, it may be required to defer for a period of time, or
indefinitely, the design, development, fabrication and marketing of new
products and the marketing of existing products and materials in new markets.
In addition, the Company's capital requirements may increase materially
from those now planned depending on numerous factors, including the level of
its research and development expenses, the rate of market acceptance of the
Company's products, and the success of the Company's sales, marketing and
distribution strategy. There can be no assurance that the Company will be
successful in raising such additional capital.
Limited Production and Sales Experience
Quadrax has limited experience producing Quadrax Composites and
fabricating finished products and components made from Quadrax Composites. The
Company has delivered significant quantities of Quadrax Composites for
evaluation and testing, but has completed only one production contract to date,
for a subcontractor to the Department of the Navy, which it completed at a
substantial loss. Quadrax is currently performing several production
contracts, including one contract under which composite tape fabrication is
being performed at a third party's facility. While management believes that
significant technological barriers to full scale production have been overcome,
thee can be no assurance that significant unforeseen difficulties will not be
encountered at commercial production levels.
Prior to 1994, Quadrax concentrated almost all its product marketing and
customer calling efforts on the sale of materials within the defense
contracting community. Efforts to move into consumer applications were limited
to attendance at trade shows sponsored by various members of the plastics and
advanced materials industries. The Company currently has only a small sales
and marketing force. While initial efforts have been successful, there can be
no assurance that these successes can be duplicated and expanded upon to the
extent necessary for Quadrax to achieve a profitable level of operation.
SEC Inquiry
The Company is involved in an ongoing, informal investigation being
conducted by the Staff of the Securities and Exchange Commission. The
following discussion is based on the information learned by the Company as a
result of its involvement in the Commission's activities. There may be other
significant information regarding these matters of which the Company is, at
this time, not aware.
The inquiry, being conducted by the Commission's Denver office, is
believed to have as its principal focus, insofar as it relates to the Company,
activities by the Company's former Chairman of the Board involving certain
transactions in the Company's stock and certain expenditures of Company funds,
during his term as Chairman, from July 1994 through February 1995.
The Company has cooperated fully with the inquiry described above,
providing documents and other information in response to the Staff's requests.
At this time, the Company does not know what conclusions the Staff will reach
or what action, if any, the Staff will recommend to the Commission upon the
termination of the inquiry.
Competition
Quadrax Composites compete with conventional materials (including wood,
stone, steel and aluminum), less common metals (such as titanium), and
thermoset (epoxy-based) composites. While Quadrax Composites offer several
advantages over competing materials, they are also more expensive. In
addition, Quadrax Composites also suffer from institutional resistance to
working with new materials and investing in the re-tooling needed to integrate
Quadrax Composites into existing product and production lines.
The Company faces competition from three of the world's largest
multinational chemical companies-E.I. du Pont de Nemours & Co., Imperial
Chemical Industries PLC and Saint Gobain, S.A.-each of which develops composite
product offerings that may compete with the Company's product offerings. In
addition, the Company faces potential competition from new companies as well as
from established companies that may migrate from related industries. Many of
the Company's current and prospective competitors, including E.I. de Pont de
Nemours & Co., Imperial Chemical Industries PLC and Saint Gobain, S.A., have
significantly greater financial, manufacturing and marketing resources than the
Company. There can be no assurance that the Company's products will compete
effectively with products offered by established and new competitors of the
Company.
Competition in the sporting goods and athletic equipment market is
intense. The industry consists primarily of major domestic and international
companies that have financial, technical, marketing, sales, manufacturing,
distribution and other resources substantially greater than those of the
Company. Many of the Company's competitors in this industry have entrenched
market positions and established trade names, trademarks and other intellectual
property rights. There can be no assurance that the Company's competitors in
this industry will not devote their significantly greater financial, technical,
marketing and other resources to develop and market sporting goods and athletic
equipment more aggressively than the Company.
In general, management believes it can compete effectively by offering
products with superior performance characteristics to products offered by other
suppliers, at prices substantially equivalent to those charged by other
suppliers. The Company believes that the success of its efforts will depend on
a variety of elements both within and outside its control, including the
success and timing of new product development and introduction by the Company
and its competitors, product performance and price, distribution, and customer
support. There can be no assurance that the Company will be able to compete
successfully with respect to these factors. Although management believes that
it has certain technological advantages over its competitors, maintaining such
advantages 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 or that the Company will be able to make the technological advances
necessary to maintain its competitive advantages. In addition, as the Company
enters new markets, distribution channels, technical requirements and levels
and bases of competition may be different than those in the Company's current
markets and there can be no assurance that the Company will be able to compete
favorably.
Patents and Proprietary Technologies
The Company currently holds patents on its Quadrax Biaxial Tape materials
formats and on certain aspects of tennis racquets manufactured from Quadrax
aXial Tape. The Company either owns, licenses or has applied for patents on
certain aspects of the other technology underlying the Company's products. The
Company's patents, patent rights and patent applications do not ensure a
competitive advantage to the Company, particularly inasmuch as several of the
patents are licensed on a non-exclusive basis. No assurance can be given that
any issued or licensed patents will not be designed around, infringed or
successfully challenged by others, or that the Company will have sufficient
resources to enforce any proprietary protection afforded by its patents.
Furthermore, there can be no assurance that patents will issue with respect to
any pending patent application. Moreover, various of the Company's actual and
potential competitors have obtained patents and could seek to enforce them
against the Company. An infringement action, if brought, would be costly to
defend and there can be no assurance that the Company would prevail. Failure
to obtain or to be able to enforce patent protection in favor of the Company,
or failure to defend successfully a patent infringement claim against the
Company, could have a material adverse effect on the Company's business. In
addition, despite the Company's precautions to the contrary, there can be no
assurance that the trade secrecy protections which may be asserted by the
Company to protect other aspects of its intellectual property will not be
breached or will be enforceable.
Key Employees
The Company's success depends to a significant extent upon a number of key
management and technical personnel, including James J. Palermo, the Company's
Chief Executive Officer. Mr Palermo has signed an employment agreement with
the Company that is effective through December 1999. The loss of the services
of a key employee could have a material adverse effect on the Company's
business and financial condition. In addition, the Company's future success
will depend in part on its ability to attract and retain highly skilled
technical, managerial and marketing personnel. Competition for such personnel
is intense, and there can be no assurance that the Company will be successful
in hiring or retaining the personnel it requires to continue to grow and
operate profitably.
Potential Dilution
Quadrax has a complex capital structure that includes a number of classes
of outstanding warrants and options to purchase Common Stock. If all of the
warrants and options having exercise prices less than the reported last sale
price of the Common Stock on the Nasdaq SmallCap Market on April 30, 1996 were
to be exercised, an aggregate of 1,648,039 shares of Common Stock would be
issuable for a total of $1,724,000, resulting in a reduction in the percentage
of voting rights and interest in profits represented by a share of Common
Stock.
In addition, the Company is authorized to issue up to a total of
90,000,000 shares of Common Stock, of which fewer than 22,000,000 shares are
outstanding as of the date hereof. Issuance of a significant number of
additional shares of Common Stock would result in a substantial reduction in
the percentage of voting rights and interests in profits currently represented
by a share of Common Stock.
Technological Obsolescence
The structural composites market in which Quadrax competes is
characterized by rapid technological development. There can be no assurance
that Quadrax's products will not be rendered obsolete or that Quadrax will be
successful in developing new products to meet changing market needs.
Product Liability
Sales of Quadrax Composites and parts manufactured therefrom may expose
the Company to liability for substantial damages in the event of accident or
injury shown to have been caused by defective materials. Management believes
that its limited product liability insurance is currently adequate, but no
assurance can be given that such insurance is sufficient in scope and amount to
cover any and all damages that are incurred in the future. Further, the
Company expects that it will be necessary for the Company to increase its
product liability insurance coverage as shipments to commercial markets
increase, and there can be no assurance that such coverage will be available
or, if available, that it will be available on terms that are economically
acceptable to the Company.
Volatility of Stock Price; Depressive Effective of Future Sales of Common Stock
The trading price of the Common Stock has been subject to wide
fluctuations for a number of reasons, including the financial difficulties and
subsequent cessation in 1991 of market-making activities by its former
principal market maker and changes in control of the Company in 1994 and 1995.
In addition, the stock market has from time to time experienced extreme price
and volume fluctuations that particularly affected the market price for many
technology companies and that often have been unrelated to operating
performance of these companies. These broad market fluctuations may adversely
affect the market price of the Common Stock. In addition, future sales by the
Company of newly issued Common Stock (or securities convertible into or
exchangeable for Common Stock) in the public market could place downward
pressure on the market price of the Common Stock.
Possible Delisting of Common Stock from Nasdaq SmallCap Market
The Common Stock is listed on the Nasdaq SmallCap Market. Listing on the
Nasdaq SmallCap Market permits a company's securities to be quoted over the
automated electronic quotation system maintained by the National Association of
Securities Dealers, Inc., which makes current quotations of an issuer's
securities available to brokers and dealers nationwide. The requirements for
continued listing of common stock on the Nasdaq SmallCap Market include (i) the
presence of at least two registered and active market makers for the stock,
(ii) total assets of the issuer of at lease $2,000,000, (iii) total capital and
surplus of the issuer of at least $1,000,000, (iv) a minimum bid price per
share of the stock of at least $1.00 (or, alternatively, $1,000,000 market
value of public float and $2,000,000 in total capital and surplus), (v) the
existence of at least 300 record holders of the stock, and (vi) the existence
of at least 100,000 publicly-held shares of the stock. The National
Association of Securities Dealers, Inc. also has discretionary power to delist
companies for other reasons in keeping with the integrity of the market system.
Although the Company believes it is currently in compliance with each of these
requirements with respect to the Common Stock, and management is prepared to
take steps to assure continued compliance with the listing requirements for the
Nasdaq SmallCap Market, no assurance can be provided that management's efforts,
if required, would be successful or that the Common Stock will continue to be
listed on the Nasdaq SmallCap Market.
If the Common Stock were to be delisted from the Nasdaq SmallCap Market,
current information regarding the bid and asked prices for the Common Stock
would become less readily available to brokers, dealers and their customers.
As a result of the reduced availability of current information, it is likely
that there would be a reduction in the liquidity of the market for the Common
Stock which could, in turn, result in decreased demand for the Common Stock, a
decrease in the price of the Common Stock, and an increased spread between the
bid and asked prices for the Common Stock.
USE OF PROCEEDS
All proceeds from the sale of Shares offered hereby will be received by
the Selling Shareholders and not by the Company. To the extent that any Shares
represent unexercised options, the Company will receive the exercise price
thereof. Such proceeds, if any, will be used for general corporate purposes.
SELLING SHAREHOLDERS
All of the Shares registered are to be offered for the account of the
following shareholders and their donees or pledgees (the "Selling
Shareholders"). The following sets forth certain information with respect to
the Selling Shareholders. The Company has no knowledge of the intentions of
any of the Selling Shareholders to actually sell any of the shares listed under
the column "Shares to be Sold."
Ownership Shares Ownership Percentage of
Prior to be After Class Owned
Selling Shareholder to Offering(1) Sold Offering After
Offering
William Conway 93,333 93,333 -0- *
Sven Kraumanis 93,333 83,333 10,000 *
Alan Milton 105,000 50,000 55,000 *
Eugene Scott 51,000 50,000 1,000 *
Gordon Werner 53,794 50,000 3,794 *
James Palermo 740,000 100,000 640,000 2.85%
Edward A. Stoltenberg 157,100 30,000 127,100 *
(1) The column headed "Shares to be Sold" includes only shares issued or
issuable pursuant to options under the Company's 1993 Stock Plan
registered by this Prospectus.
* Ownership is less than one percent of class.
<PAGE>
PLAN OF DISTRIBUTION
Any or all of the Shares may be sold from time to time directly to
purchasers by the Selling Shareholders. The sale of the Shares by the Selling
Shareholders may be effected from time to time in transactions (which may
include block transactions) in the NASDAQ market, in negotiated transactions,
or a combination of such methods of sale, at fixed prices which may be changed,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Shareholders may
effect such transactions by selling shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Shareholder and/or the
purchasers of Shares for whom such broker-dealers may act as agent or to whom
they sell as principal, or both (which compensation as to a particular broker-
dealer might be in excess of customary commissions). Selling Shareholders may
also make sales from time to time pursuant to Rule 144 under the Securities
Act, if such Rule is otherwise available to such particular Selling
Shareholder.
The Selling Shareholders and any broker-dealers that act in connection
with the sale of the Shares hereunder might be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, and any discounts,
concessions or commissions received by them and any profit on the resale of
Shares as principal might be deemed to be underwriting discounts and
commissions under the Securities Act.
At the time a particular offer of Shares is made, to the extent required,
a supplement to this Prospectus will be distributed which will set forth the
terms of the offering, including the name or names of any underwriters, dealers
or agents, the purchase price paid by any underwriter for Shares purchased from
the Selling Shareholder and any discounts, concessions or commissions and other
items constituting compensation from the Selling Shareholder and any discounts,
concessions or commissions allowed or reallowed or paid to dealers, including
the proposed selling price to the public.
The Company is paying certain expenses (other than commissions and
discounts of underwriters, dealers or agents) incident to the offering and sale
for the Shares to the public, which are estimated to be approximately $5,000.
If the Company is required to update this Prospectus during such period, it may
incur additional expenses in excess of the amount estimated above.
In order to comply with certain states' securities laws, if applicable,
the Shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states the Shares may not be sold
unless they have been registered or qualify for sale in such state or an
exemption from regulation or qualification is available and is complied with.
DESCRIPTION OF SECURITIES
General
The Company is authorized to issue 90,000,000 shares of Common Stock,
$.000009 par value per share. As of April 1, 1996, there were 21,737,842
shares of Common Stock issued and outstanding and held as of record by
approximately 1,469 holders.
The holders of the Common Stock have one vote for each share held of
record on all matters to be voted on by stockholders, including the election of
directors. Stockholders are not entitled to cumulate their votes in the
election of directors.
Holders of Common Stock are entitled to receive dividends when, as and if
declared by the Board of Directors out of funds legally available therefor and
upon liquidation of the Company, to share ratably in the net assets available
for distribution after the payment of creditors and any liquidation preferences
to the holders of preferred stock. Shares of Common Stock are not redeemable
and have no preemptive, conversion or similar rights. All outstadning shares
of Common Stock are, and the Shares offered hereby upon issuance and receipt of
payment in full by the Company will be, fully paid and non-assessable.
LEGAL MATTERS
The law firm of Campbell & Fleming, P.C., 250 Park Avenue, New York, New
York 10177 has acted as counsel for the Company in connection with the validity
of the Common Stock offered hereby.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report (Form 10-KSB) for the year ended December 31, 1995,
have been audited by Livingston & Haynes, P.C., independent auditors, as set
forth in its report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
<PAGE>
No dealer, salesman or other person has been authorized to give any
information or to make any representation in connection with this offering
other than those contained in this Prospectus, and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of these securities in any state to any
person to whom it is unlawful to make such offer or solicitation in such state.
The delivery of this Prospectus at any time does not imply that information
herein is correct as of any time subsequent its date.
TABLE OF CONTENTS
Page
Available Information . . . . . . . . . . . . . . . . . . . . .2
Incorporation of Certain Documents by Reference . . . . . . . .2
The Company . . . . . . . . . . . . . . . . . . . . . . . . . .3
Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . .5
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 13
Selling Shareholders. . . . . . . . . . . . . . . . . . . . . 14
Plan of Distribution. . . . . . . . . . . . . . . . . . . . . 14
Description of Securities . . . . . . . . . . . . . . . . . . 16
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . 16
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Until , 1996, all dealers effecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
<PAGE>
1,423,664
Common Shares
QUADRAX CORPORATION
MAY 28, 1996<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. Incorporation of Certain Documents by Reference.
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1995.
(2) The Company's Annual Report on Form 10-QSB for the quarter
ended March 31, 1996.
(3) The description of the Company's Common Shares which is
contained in the registration statement on Form 8-A filed by the
Company to register such securities under Section 12(g) of the
Securities Exchange Act of 1934, as amended, including any amendment
or report filed for the purpose of updating such description.
(4) The Company's Current Reports on Form 8-K dated January 15,
1996 and March 15, 1996.
(5) The Company's Proxy Statement in connection with the Annual
Meeting of Stockholders held May 10, 1996.
(6) All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the Offering made hereby
shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date of filing such documents.
Item 4. Not applicable.
Item 5. Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of Delaware (the "GCL")
authorizes and empowers the Company to indemnify the directors, officers,
employees and agents of the Company against liabilities incurred in connection
with, and related expenses resulting from, any claim or suit brought against
any such person as a result of his relationship with the Company, provided that
such persons acted in accordance with a stated standard of conduct in
connection with the acts or events on which such claim, action or suit is
based. The finding of either civil or criminal liability on the part of such
persons in connection with such acts or events in not necessarily determinative
of the questions of whether such persons have met the required standard of
conduct and are accordingly, entitled to be indemnified.
In addition, Section 10 of the Company's by-laws requires the Company to
indemnify its officers and directors to the fullest extent permitted by the
GCL, and permits the Company to indemnify other persons as it chooses, to the
same extent. Such indemnity shall not extend to such persons, however, (i) for
any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for actions
contravening Section 174 of the GCL (relating to unlawful dividend stock
purchases or stock redemptions), or (iv) for any transaction from which the
director derived an improper personal benefit.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits
Exhibit No.
4.1 Relevant portion of Certificate of Incorporation of the Company, as
amended (1)
4.2 By-laws of the Company, as amended (2)
5.1 Opinion of Campbell & Fleming, P.C.
24.1 Consent of Livingston & Haynes, P.C.
24.2 Consent of Campbell & Fleming, P.C. (see Exhibit 5.1)
(1) Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q
dated November 10, 1992, and incorporated herein by reference.
(2) Filed as an Exhibit to the Company's Registration Statement on Form
S-1, File No. 33-14275 and incorporated herein by reference.
<PAGE>
Item 9. Undertakings.
The undersigned registrant hereby undertakes that it will:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of this Registration Statement ( or the
most recent post- effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement (or the most
recent post-effective amendment thereof); and notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total value of the securities offered would not exceed
that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospects filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in the
volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (i) and (ii) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of Exchange Act that are incorporated by reference
in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing this to Form S-8 and has duly caused this
post-effective amendment to this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Portsmouth, Rhode Island.
QUADRAX CORPORATION
By:/S/James J. Palermo
James J. Palermo
Chairman of the Board of Directors,
and Chief Executive Officer
Date: May 28, 1996
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
/S/James J. Palermo
Chairman of the May 28, 1996
James J. Palermo Board of Directors,
and Chief
Executive Officer
(Principal Executive
Officer)
/S/Edward A. Stoltenberg
Senior Vice President May 28, 1996
Edward A. Stoltenberg and Chief Financial
Officer (Principal
Accounting and
Financial Officer)
/S/William G. Conway
Director May 28, 1996
William G. Conway
/S/Sven Kraumanis
Director May 28, 1996
Sven Kraumanis
Alan Milton
Director May 28, 1996
Alan Milton
/S/Eugene L. Scott
Director May 28, 1996
Eugene L. Scott
/S/Gordon Werner
Director May 28, 1996
Gordon Werner
June 6, 1996
Quadrax Corporation
300 High Point Avenue
Portsmouth, Rhode Island 02817
Re: Registration Statement on Form S-8
Quadrax Corporation
Ladies and Gentlemen:
We refer to the registration by the Company of up to 1,423,664 shares
(the "Shares") of Common Stock (the "Common Stock") of Quadrax Corporation, a
Delaware corporation (the "Company"), pursuant to the Registration Statement on
Form S-8 filed with the Securities and Exchange Commission on or about June 6,
1996 (the "Registration Statement"), as subsequently amended from time to time.
We have examined copies of said Registration Statement on Form S-8 under
the Securities Act of 1933, as amended. We have conferred with officers of the
Company and have examined the originals, or photostatic, certified or conformed
copies, of such records of the Company, certificates of officers of the
Company, certificates of public officials, and such other documents as we have
deemed relevant and necessary, as a basis for the opinions set forth herein.
In connection with such examinations, we have assumed the authenticity of all
documents submitted to us as originals or duplicate originals, the conformity
to original documents of all document copies, the authenticity of the
respective originals of such latter documents, and the correctness and
completeness of such certificates. Finally, we have obtained from officers of
the Company such assurances as we have considered necessary for the purposes of
this opinion.
Quadrax Corporation
June 6, 1995
Page 2
On the basis of the foregoing, and such other matters of fact and
questions of law as we have deemed relevant in the circumstances, and in
reliance thereon, it is our opinion that the shares issuable upon the exercise
of options authorized under the Company's 1993 Stock Plan and registered by
the Registration Statement have been duly reserved for issuance, and upon
exercise in accordance with the terms of the individual option grants, the
shares issued will be duly authorized, validly issued, fully paid and non-
assessable.
The undersigned hereby consent to the use of their name in the
Registration Statement and in the Prospectus forming a part of the Registration
Statement, and to references to this opinion contained
therein under the caption of the Prospectus entitled "Legal Matters".
This opinion is limited to the matters herein, and may not be relied upon
by any other person or for any other purpose other than in connection with the
corporate authority for and the validity of the issuance of the Shares.
Very truly yours,
/S/CAMPBELL & FLEMING, P.C.
CAMPBELL & FLEMING, P.C.
INDEPENDENT AUDITORS' CONSENT
We consent to the inclusion by reference in this Registration Statement of
Quadrax Corporation on Form S-8 for the registration of 1,423,664 shares of its
common stock of our report dated March 26, 1996, (which contained an
explanatory paragraph with respect to the ability to continue as a going
concern) referenced in the Prospectus, which is part of such Registration
Statement, and to the reference to us under the captions "Experts" in such
prospectus.
/S/LIVINGSTON & HAYNES, P.C.
Livingston & Haynes, P.C.
Wellesley Hills, Massachusetts
June 11, 1996
Consent of Campbell & Fleming, P.C.
See Exhibit 5.1
