<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 3, 1997
File No. 333-17037
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
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QUADRAX CORPORATION
(Exact name of registrant as specified in charter)
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DELAWARE 05-0420158
(State of incorporation) (IRS Employer Identification Number)
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300 HIGH POINT AVENUE
PORTSMOUTH, RHODE ISLAND 02871
(401) 683-6600
(Address and telephone number of registrant's
principal executive offices)
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:
STEPHEN I. GLOVER, ESQ.
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
1001 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20004
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Approximate date of commencement of proposed sale to the public: As
soon as practicable after the Registration Statement becomes effective.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, check the
following box: / /
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: /X/
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(Cover continued on next page)
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(Cover continued from previous page)
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
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PROPOSED
TITLE OF EACH CLASS OF PROPOSED MAXIMUM MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE(6)
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Common Stock, $.000009 1,346,376 $ 0.77 $ 1,036,709.52 $ 314.15
par value(1)
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Common Stock, $.000009 135,000 $ 1.03 $ 139,168.12 $ 42.17
par value(2)
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Common Stock, $.000009 500,000 $ 0.68 $ 340,000.00 $ 103.03
par value(3)
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Common Stock, $.000009 250,000 $ 0.01 $ 2,500.00 $ 0.76
par value(4)
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Common Stock, $.000009 75,000 $ 0.75 $ 56,250.00 $ 17.05
par value(5)
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Total 2,306,376 $ 1,574,627.64 $ 477.16
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(1) For shares issuable upon exercise of 311,199 outstanding Class C
Warrants calculated pursuant to Rule 457(g) based on the amended
exercise price of such Class C Warrants. Includes all additional
shares of Common Stock which may be issued pursuant to the application
of anti-dilution protections, pursuant to Rule 416(a).
(2) For shares held by certain selling shareholders. Estimated pursuant to
Rule 457(c) solely for the purpose of computing the registration fee
based upon the average of the high and low prices of the Common Stock,
as reported on the NASDAQ Small Cap Market on January 30, 1997.
(3) For shares that will be held by a certain selling shareholder upon
exercise of outstanding warrants to purchase 500,000 shares of Common
Stock at $0.68 per share, calculated pursuant to Rule 457(g). Includes
all additional shares of Common Stock which may be issued pursuant to
the application of anti-dilution protections, pursuant to Rule 416(a).
(4) For shares that will be held by a certain selling shareholder upon
exercise of outstanding warrants to purchase 250,000 shares of Common
Stock at $0.01 per share, calculated pursuant to Rule 457(g).
Includes all additional shares of Common Stock which may be issued
pursuant to the application of anti-dilution protections, pursuant to
Rule 416(a).
(5) For shares that will be held by a certain selling shareholder upon
exercise of outstanding options to purchase 75,000 shares of Common
Stock at $0.75 per share, calculated pursuant to Rule 457(g).
Includes all additional shares of Common Stock which may be issued
pursuant to the application of anti-dilution protections, pursuant to
Rule 416(a).
(6) A Registration Fee of $466.89 was paid with the original filing
of the Form S-3 based on a proposed maximum offering price of $0.78 per
share (for shares offered by certain selling shareholders, as set forth
in note 2 above), which had been based on the average of the high and
low prices for the Common Stock as reported on the Nasdaq National
Market on November 22, 1996 in accordance with Rule 457(c) under the
Securities Act of 1933. An additional Registration Fee of $10.27 is
submitted with this Amendment No. 1 to reflect an increase in the
proposed maximum offering price to $1.03 per share based on the average
of the high and low prices for the Common Stock as reported on the
Nasdaq National Market on January 30, 1997 in accordance with Rule
457(c) under the Securities Act of 1993.
<PAGE> 3
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE> 4
2,306,376 SHARES
QUADRAX CORPORATION
COMMON STOCK
This Prospectus relates to the public offering, which is not being
underwritten, of up to 2,306,376 shares (the "Shares") of common stock, par
value $.000009 per share (the "Common Stock") of Quadrax Corporation ("Quadrax"
or the "Company"). Of these Shares, 1,346,376 Shares are issuable by the
Company upon the exercise of 311,199 outstanding Non-Callable 10-Year Class C
Warrants (the "Class C Warrants"). Each Class C Warrant entitles the holder to
purchase 4.3264 shares of Common Stock at an exercise price of $3.33 per Class
C Warrant (or $0.77 per Share of Common Stock), subject to adjustment pursuant
to certain dilution protections.
135,000 Shares of Common Stock may be offered for resale from time to
time by certain shareholders of the Company. An additional 825,000 Shares may
be offered for resale from time to time by certain shareholders of the Company
assuming such shareholders exercise all of the outstanding options or warrants
(the "Other Warrants") held by them. (See "Selling Shareholders.")
The Company will receive approximately $1,036,710 if all Class C
Warrants are exercised and $398,750 if all the Other Warrants held by the
Selling Shareholders are exercised. Aggregate net proceeds from the exercise
of all of the Class C Warrants and Other Warrants would be $1,425,046. The
Company will receive no proceeds from the sale of Shares by the Selling
Shareholders.
The Company has no knowledge of any plans of any Class C Warrant
holder or Selling Shareholder to actually sell any Shares.
The Selling Shareholders and any broker-dealers, agents or
underwriters that participate with the Selling Shareholders may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act of
1933 (the "Securities Act"), and any commissions received by them and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution."
On January 30, 1997, the closing price for the Common Stock as quoted
on the NASDAQ Small-Cap Market, under the symbol "QDRX," was $1.03 per share.
AN INVESTMENT IN THE COMMON STOCK OFFERED PURSUANT
TO THIS PROSPECTUS IS SPECULATIVE AND INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 7
FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE
CONSIDERED BY INVESTORS BEFORE PURCHASING
THE COMMON STOCK OFFERED HEREBY.
-------------------------
<PAGE> 5
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
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 February 3, 1997
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TABLE OF CONTENTS
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PAGE
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Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Description of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Indemnification for Securities Act Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
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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; 75 Park Place, New York,
New York 10007; and Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60604. 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. In addition, the Commission
maintains a Web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding companies that file
electronically with the Commission through the Electronic Data Gathering,
Analysis and Retrieval System.
The Company has filed with the Commission in Washington, D.C. a
Registration Statement on Form S-3 (Registration No. 333-17037) 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 from 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/A 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 Company's Quarterly Report on Form 10-QSB for the
quarter ended June 30, 1996.
(4) The Company's Quarterly Report on Form 10-QSB/A for the
quarter ended September 30, 1996.
(5) The description of the Company's Common Stock 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.
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(6) The Company's Current Reports on Form 8-K filed on
January 16, 1996, March 14, 1996, July 2, 1996, July 3,
1996, July 31, 1996, September 10, 1996, October 9,
1996 and December 3, 1996.
(7) The Company's Proxy Statement in connection with the
Annual Meeting of Stockholders held May 10, 1996.
(8) 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.
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.
Structural substrates are composite materials made from continuous fibers (such
as carbon, Kevlar, or fiberglass), as opposed to composite materials made from
chopped fibers which tend to produce a weaker material. The Company believes
that Quadrax Composites' functional advantages over other structural substrates
include high strength-to-weight 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 recyclability. In
addition, the Company believes that Quadrax Composites are tougher and less
brittle than traditional thermalset plastics such as epoxies and polyesters.
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 believes that opportunities for
thermoplastics do not currently exist in the defense and aerospace markets, but
if attractive opportunities arise in the future, the Company will pursue them.
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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'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 continued dependence on outside financing to provide the funds
needed to meet its expenses.
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.
RECENT DEVELOPMENTS
In late 1995, the Company acquired Lion Golf, a "low-end" importer and
manufacturer of sporting goods utilizing non-proprietary materials, in order to
gain greater industry knowledge and to enhance the Company's name recognition
in the industry. Lion Golf has not performed up to the Company's expectations,
however, and as a result, the Company is currently in the process of
negotiating the sale of Lion Golf back to its former principal stockholder.
The Company expects the terms of the sale to include a release from Lion Golf's
$600,000 bank line of credit. The line of credit was to have terminated in
December 1996 but has been extended by the bank to March 31, 1997. The Company
has advanced approximately $600,000 to fund the operations of Lion Golf, which
sum the Company does not expect to recover.
The Company remains committed to the golf products market. In August
1996, the Company entered into a $180,000 six-month development contract with
Taylor Made Golf Company pursuant to which Quadrax will conduct research and
development with respect to golf products that can be manufactured from
thermoplastic materials.
The Company has issued 10,340,063 shares of Common Stock during the
period from January 1, 1996 through the present. The proceeds from the
issuance of these shares were used for working capital, to finance operating
losses, to make capital expenditures, and to settle litigation. The following
chart sets forth the circumstances of each issuance and the number of shares
issued:
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TRANSACTION NUMBER OF SHARES
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Conversion of 9% subordinated debentures into
common stock by the Barrett/Wissman Group 3,815,029
Shares issued for compensation and services
rendered 252,026
Exercise of stock options by Company employees
1,035,767
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Conversion of 8% subordinated debentures into
common stock by Flurina Development S.A. 2,540,947
Conversion of Series B Convertible Preferred
Stock into common stock by RBB Bank 1,597,556
Common stock issued in connection with the
acquisition of Vega, U.S.A. 300,000
Common stock issued to former McManis
shareholders to compromise put option 522,738
Common stock issued to former original
preferred stock shareholders to compromise
their claim for damages re: Quadrax
abandonment of the 1995 SB-2 276,000
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10,340,063
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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.
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 Prospectus 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.
OPERATING LOSSES; LIMITED REVENUES; GOING CONCERN QUALIFICATION
The Company 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
estimates a net loss of approximately $6,500,000 for the fiscal year 1996.
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 revenues were approximately
$4,635,000, $860,000, $1,555,000 and $850,000, respectively. Of these revenues
for 1995, 1994, 1993, and 1992, approximately 33%, 46%, 28%, and 33%,
respectively, were generated from consumer markets. The Company estimates that
its total revenue for fiscal year 1996 will be approximately $3,300,000, of
which approximately 99% will be generated from consumer markets. There can be
no assurance that sales of the Company's products will generate
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<PAGE> 11
significant revenue in the future. Consequently, there 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.
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 with companies such as Taylor Made Golf
Company and Golfsmith, Inc., to sell goods in the consumer sporting goods
market, the contracts are contingent on the Company being able to meet
contractual specifications such as performance, weight, and appearance
standards, 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 a material adverse effect
on the Company's operations and financial condition. For example, the Company
recently failed to satisfy the performance standards of a contract with
Cannondale Corporation for the production of handlebars. The Company initially
received a $40,000 purchase order from Cannondale for the production of 1,300
handlebars. Cannondale then made a change order revising the physical
specifications of the handlebars. Quadrax manufactured 5 handlebars meeting
the new specifications but the handlebars, as built to the new specifications,
failed the performance tests. The Company continues to manufacture bicycle
handlebars, however, and sells them in limited amounts under its own name to
sports equipment retailers.
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
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<PAGE> 12
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.
The Company's consumer products compete in a large market with
numerous competitors, some of which are large, well-capitalized companies with
wide brand recognition, and some of which are small. The golf equipment
industry is characterized by products which are differentiated primarily by
marketing strategies.
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, the
Company has raised a total of approximately $44.7 million in equity capital.
The Company raised approximately $4.5 million in equity and debt capital during
fiscal 1996, and $9.2 million through sales of stock and convertible debt
during fiscal 1995. In fiscal 1994, the Company raised $5.9 million of equity
capital. Management believes that the funds raised to date, together with cash
provided by revenues, will be sufficient to meet the Company's near-term cash
requirements. The Company does, however, continue to seek sources of outside
financing. For fiscal 1997, management estimates that the Company will require
approximately $2-3 million in outside financing. Management expects the
Company's capital needs to be less in 1997 than in 1995-96 because the Company
has resolved and paid for the financial settlements with its former chairman,
Mr. Hayton, and its founder and former chief executive officer, Mr. Fisher.
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. There can be no assurance, however, that the
Company will be able to raise additional funds from third parties, or even that
if raised, such funds will be sufficient to fund the Company's product programs
until such programs are able to generate enough revenue to support themselves.
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
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<PAGE> 13
significant quantities of Quadrax Composites for evaluation and testing and has
completed three major production contracts to date, all of which were defense
related. Those contracts were with the Lockheed Aeronautical Systems Company
for thermalplastic biaxial tape, EAR Special Composite Company for submarine
sound dampening tiles, and United Defense, L.P., for thermalplastic materials.
While management believes that significant technological barriers to full scale
production have been overcome, there 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 of trade shows sponsored by members of the plastics and advanced
materials industries. The Company currently has only a small sales and
marketing force. While initial efforts to break into the consumer markets have
been successful, insofar as the Company has already produced and delivered to
the marketplace lacrosse sticks, hockey sticks, tennis racquets, and bicycle
handlebars, 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.
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 management believes that Quadrax
Composites offer several advantages over competing materials, they are also
more expensive. In addition, Quadrax Composites 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
multi-national 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. du 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 will
not devote significantly greater financial, technical, marketing and other
resources to develop and market sporting goods and athletic equipment more
aggressively than the Company.
-10-
<PAGE> 14
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.
NO ASSURANCE OF PROTECTION OF 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, some 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.
-11-
<PAGE> 15
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. In
addition, the Company has entered into employment contracts with two other key
employees, Edward A. Stoltenberg, the Company's Senior Vice President and Chief
Financial Officer, and John A. McQuade, the Company's Vice President of
Administration. Both contracts expire on December 31, 1998. The loss of the
services of a key employee could have a material adverse effect on the
Company's business and financial condition. The Company has not obtained, and
does not currently plan to obtain, "key-man" insurance on any of its
executives. 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 December 31,
1996 were to be exercised, an aggregate of 1,320,083 shares of Common Stock
would be issuable for a total of $737,156, resulting in a reduction in the
percentage of voting rights and interest in equity profits represented by a
share of Common Stock. If all of the issued and outstanding convertible
debentures were converted into shares of the Company's Common Stock based on
the closing price of the Company's Common Stock on the Nasdaq SmallCap Market
on December 31, 1996, 2,666,666 shares of Common Stock would be issuable,
resulting in a reduction in the percentage of voting rights and interest in
equity 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 approximately 32,700,000 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
-12-
<PAGE> 16
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.
USE OF PROCEEDS
The net proceeds to the Company from the exercise of all 311,199 Class
C Warrants would be $1,036,709. The net proceeds to the Company from the
exercise of all of the Other Warrants would be $398,750. Aggregate net
proceeds from the exercise of all of the Class C Warrants and Other Warrants
could be $1,435,459. Such proceeds, if any, will be used for general corporate
purposes. All proceeds from any sale of Shares offered by the Selling
Shareholders will be received by the Selling Shareholders and not by the
Company.
SELLING SHAREHOLDERS
135,000 Shares are being offered for resale by certain shareholders of
the Company. An additional 825,000 Shares are being offered for resale by
certain shareholders of the Company assuming such shareholders exercise all of
the Other Warrants. All 960,000 Shares, to the extent they are being offered,
are being offered for the account of the following shareholders and their
donees or pledgees (the "Selling Shareholders"). The following table sets
forth certain information with respect to the Selling Shareholders. The
Company has no knowledge of the intentions of any Selling Shareholder to
actually sell any of the Shares listed under the column "Shares to be Sold."
-13-
<PAGE> 17
<TABLE>
<CAPTION>
OWNERSHIP SHARES OWNERSHIP PERCENTAGE OF
PRIOR TO BE AFTER CLASS OWNED
SELLING SHAREHOLDER TO OFFERING(1) SOLD OFFERING AFTER OFFERING
- ------------------- -------------- ----- --------- --------------
<S> <C> <C> <C> <C>
John Clarke 125,000 125,000 -- *
H. David Cowherd 125,000 125,000 -- *
Joss Company 250,000 250,000 -- *
Harold M. Levine 75,000 75,000 -- *
Paul Mannion 125,000 125,000 -- *
Thomas McLaughlin 35,000 35,000 -- *
Max Morgulis 25,000 25,000 -- *
Nancy Nelson 30,000 30,000 -- *
Roger Nelson 20,000 20,000 -- *
Edward A. Stoltenberg(2) 157,400(3) 50,000 -- *
Sutherland, Asbill & Brennan
as escrow agent for
Paul Mannion and
John Clarke 100,000 100,000 -- *
------- -------
TOTAL 960,000 960,000
======= =======
</TABLE>
(1) The column headed "Shares to be Sold" includes only otherwise
unregistered shares registered by this Prospectus. The column headed
"Ownership After Offering" is shown as zero for each Selling
Shareholder only to indicate that all shares beneficially owned by
such person have been registered for resale, and do not necessarily
indicate any actual intent to sell any shares.
(2) Mr. Stoltenberg is Senior Vice President and Chief Financial Officer
of the Company.
(3) Includes 50,000 shares issued to Mr. Stoltenberg for services
rendered, 30,000 shares issued to Mr. Stoltenberg pursuant to the
Company's 1993 Stock Option Plan, 72,000 shares issued pursuant to the
Company's 1994 Stock Option Plan, 5,400 shares that Mr. Stoltenberg
purchased on the open market (which includes 400 shares held for the
benefit of Mr. Stoltenberg's children).
* Ownership is less than one percent of class.
PLAN OF DISTRIBUTION
The purpose of this Prospectus is to permit (a) the Company to offer
and sell Shares of Common Stock reserved for issuance upon exercise from time
to time of the Class C Warrants and the Additional Options and Warrants, and
(b) the Selling Shareholders, if they desire, to offer and sell their 960,000
Shares (the "Selling Shareholder Shares") at such times and at such places as
the Selling Shareholders choose.
-14-
<PAGE> 18
The decision to exercise Class C Warrants is within the sole
discretion of the holders thereof. There can be no assurance that any of such
Class C Warrants will be exercised.
The distribution of the Selling Shareholder Shares may be effected
from time to time in one or more transactions. Any of the Selling Shareholder
Shares may be offered for sale, from time to time, by the Selling Shareholders,
or by permitted transferees or successors of the Selling Shareholders, on the
NASDAQ SmallCap Market, or otherwise, at prices and on terms then obtainable,
at fixed prices, at prices then prevailing at the time of sale, at prices
related to such prevailing prices, or in negotiated transactions at negotiated
prices or otherwise. The Selling Shareholder Shares offered hereby may be sold
by one or more of the following: (i) through underwriters, or through
underwriting syndicates; (ii) through one or more dealers or agents (which may
include one or more underwriters), including, but not limited to: (a) block
trades in which the broker or dealer act as principal to facilitate the
transactions; (b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus; (c) ordinary
brokerage transactions; and (d) transactions in which the broker solicits
purchasers; (iii) directly to one or more purchasers; or (iv) a combination of
these methods. The names of any underwriters or agents involved in the sale of
the Selling Shareholder Shares will be set forth in a Prospectus Supplement.
In connection with the distribution of the Selling Shareholder Shares or
otherwise, the Selling Shareholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in
short sales of Common Stock in the course of hedging the positions they assume
with the Selling Shareholders. The Selling Shareholders may also sell Common
Stock short and redeliver the shares to close out such short positions. The
Selling Shareholders may also enter into options or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealers or other financial institutions of the Selling Shareholder
Shares, which shares such broker-dealers or financial institutions may resell
pursuant to this Prospectus (as supplemented or amended to reflect this
transaction). The Selling Shareholders may also pledge the Selling Shareholder
Shares registered hereunder to a broker-dealer or other financial institution
and, upon a default, such broker-dealer or other financial institution may
effect sales of the pledged shares pursuant to this Prospectus (as supplemented
or amended to reflect such transaction). In addition, any Selling Shareholder
Shares covered by this Prospectus that qualify for sale pursuant to Rule 144
under the Securities Act may be sold under Rule 144 rather than pursuant to
this Prospectus.
The Selling Shareholders or their underwriters, dealers or agents may
sell the Selling Shareholder Shares to or through underwriters, dealers or
agents, and such underwriters, dealers or agents may receive compensation in
the form of discounts or concessions allowed or reallowed. Underwriters,
dealers, brokers or other agents engaged by the Selling Shareholders may
arrange for other such persons to participate. Any fixed public offering price
and any discounts and concessions may be changed from time to time.
Underwriters, dealers and agents who participate in the distribution of the
Selling Shareholder Shares may be deemed to be underwriters within the meaning
of the Securities Act, and any discounts or commissions received by them or any
profit on the resale of shares by them may be deemed to be underwriting
discounts and commissions thereunder. The proposed amounts of Selling
Shareholder Shares, if any, to be purchased by underwriters and the
compensation, if any, of underwriters, dealers or agents will be set forth in a
Prospectus Supplement.
-15-
<PAGE> 19
Unless granted an exemption by the Commission from Rule 10b-6 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or unless
otherwise permitted under Rule 10b-6A, the Selling Shareholders will not engage
in any stabilization activity in connection with the Company's securities, will
furnish each broker or dealer engaged by the Selling Shareholders and each
other participating broker or dealer the number of copies of this Prospectus
required by such broker or dealer, and will not bid for or purchase any
securities of the Company or attempt to induce any person to purchase any of
the Company's securities other than as permitted under the Exchange Act.
The Company will not receive any proceeds from any sales of the
Selling Shareholder Shares, but will receive the proceeds from the exercise of
the Class C Warrants and from the exercise of the Other Warrants held by the
Selling Shareholders, which proceeds, if any, will be used for general
corporate purposes.
In connection with the registration by the Company, the Company shall
use its best efforts to prepare and file with the Commission such amendments
and supplements to the registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of the Shares covered by the registration statement for the
period required to effect the distribution of such Shares.
The Company is paying certain expenses (other than commissions and
discounts of underwriters, dealers or agents) incident to the offering and sale
of the Shares to the public, which are estimated to be approximately $65,950.
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 registration or qualification is available and is complied
with.
DESCRIPTION OF SECURITIES
The Company is authorized to issue 90,000,000 shares of Common Stock,
$0.000009 par value per share. As of December 31, 1996, there were
approximately 32,680,817 shares of Common Stock issued and outstanding and held
of record by approximately 1,600 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
outstanding
-16-
<PAGE> 20
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.
The Company is authorized to issue 10,000,000 shares of Class A
Preferred Stock, par value $.01 per share. There are currently no shares of
Class A Preferred Stock issued and outstanding.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The Company's certificate of incorporation and bylaws provide broadly
for the indemnification of the directors and officers of the Company for
certain liabilities and costs incurred by them in connection with the
performance of their duties. This indemnification may include indemnification
for liabilities arising under the Securities Act.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Fried, Frank, Harris, Shriver & Jacobson, 1001 Pennsylvania Avenue,
N.W., Washington, D.C. 20004.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report on Form 10-KSB for the years ended December 31, 1994
and 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.
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.
-17-
<PAGE> 21
2,306,376
COMMON SHARES
QUADRAX CORPORATION
FEBRUARY 3, 1997
-18-
<PAGE> 22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration Fee . . . . . . . . . . . . . . . . . . . . $ 450
Printing Expenses . . . . . . . . . . . . . . . . . . . $ --
Blue Sky Fees and Expenses . . . . . . . . . . . . . . . $25,000
Legal Fees and Expenses . . . . . . . . . . . . . . . . $35,000
Accounting Fees and Expenses . . . . . . . . . . . . . . $ 500
Transfer Agent Fees . . . . . . . . . . . . . . . . . . $ 5,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . $ --
------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . $65,950
======
</TABLE>
ITEM 15. 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 is 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 16. EXHIBITS
The following documents are filed as exhibits to this Registration
Statement:
4.1 Specimen Common Share Certificate*
5.1 Opinion of Fried, Frank, Harris, Shriver & Jacobson**
- -------------
* Filed as an Exhibit to the Company's Registration Statement on
Form S-1, File No. 33-14275 and incorporated herein by reference.
-19-
<PAGE> 23
24.1 Consent of Livingston & Haynes, P.C.
24.2 Consent of Fried, Frank, Harris, Shriver & Jacobson (see Exhibit
5.1)**
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that it will:
(1) File, during any period in which it offers to sells
securities, a post-effective amendment to this registration statement to
include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act,
treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
initial bona-fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
- ----------------
** Previously filed.
-20-
<PAGE> 24
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-3 and has duly caused 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: February 3, 1997
------------
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.
<TABLE>
<S> <C> <C>
/s/ James J. Palermo Chairman of the February 3, 1997
- ------------------------------ Board of Directors, ----------
James J. Palermo and Chief
Executive Officer
(Principal Executive
Officer)
/s/ EDWARD A. STOLTENBERG Senior Vice President February 3, 1997
- ------------------------------ and Chief Financial ----------
Edward A. Stoltenberg Officer (Principal Accounting
and Financial Officer)
/s/ WILLIAM G. CONWAY Director February 3, 1997
- ------------------------------ ----------
William G. Conway
/s/ SVEN KRAUMANIS Director February 3, 1997
- ------------------------------ ----------
Sven Kraumanis
/s/ ALAN MILTON Director February 3, 1997
- -------------------------------- ----------
Alan Milton
/s/ EUGENE L. SCOTT Director February 3, 1997
- -------------------------------- ----------
Eugene L. Scott
/s/ GORDON WERNER Director February 3, 1997
- -------------------------------- ----------
Gordon Werner
</TABLE>
-21-
<PAGE> 1
[LIVINGSTON & HAYNES, P.C. LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-3 (relating to 2,306,376 shares of Quadrax Corporation common stock, par
value $.000009) of our report, dated March 26, 1996, which expresses an
unqualified opinion and includes an explanatory paragraph relating to the
ability of Quadrax Corporation to continue as a going concern, accompanying
the Annual Report on Form 10-KSB of Quadrax Corporation for the year ended
December 31, 1995 and to the reference to us in the Prospectus, which is part
of this Registration Statement, under the caption entitled "Experts".
/s/ LIVINGSTON & HAYNES, P.C.
Wellesley, Massachusetts
February 3, 1997
