U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1999
[ ] Transition Report Under to Section 13 or 15(d) of The Securities
Exchange Act of 1934
Commission File Number: 0-16052
Quadrax Corporation
--------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 05-0420158
------------ -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
618 Main Street, West Warwick, Rhode Island 02893
--------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(401) 821-1700
--------------------------------------------------------------
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Check whether the issuer has filed all documents and reports
required to be filed by Section 12,13, or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed
by a court.
Yes No X
As of June 30, 1999, there were outstanding 44,453,334 shares of Common Stock,
par value $.000009 per share.
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<PAGE>
Page
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Part I - Financial Information
Item 1 Consolidated Financial Statements
Consolidated Balance Sheets at June 30, 1999 and at
December 31, 1998 (Unaudited) 3
Consolidated Statements of Operations for the three
and six months ended June 30, 1999 and June 30, 1998
(Unaudited) 5
Consolidated Statements of Cash Flows for the six
months ended June 30, 1999 and June 30, 1998
(Unaudited) 6
Notes to Consolidated Financial Statements
(Unaudited) 8
Item 2 Management's Discussion and Analysis of Financial
Conditions and Results of Operations 12
Part II - Other Information
Item 6 Exhibits and Reports on Form 8-K 16
Signature 17
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<PAGE>
Quadrax Corporation
Consolidated Balance Sheets (Unaudited)
ASSETS
June 30, December 31,
1999 1998
--------- ---------
Current assets:
Cash and cash equivalents $ 37,479 $ 44,805
Accounts receivable, less allowances
of $56,549 at June 30, 1999 and
$113,805 at December 31, 1998 2,306,366 2,105,556
Inventories 1,809,536 1,492,933
Attorney's escrow 1,213,798 1,000,184
Other current assets 166,374 566,386
--------- ---------
TOTAL CURRENT ASSETS 5,533,553 5,209,864
Property, plant and equipment, net 2,380,115 2,497,098
Other assets 110,845 65,495
Deferred assets, net 59,052 69,462
---------- ----------
TOTAL ASSETS $ 8,083,565 $ 7,841,919
========== ==========
See accompanying notes to the consolidated financial statements
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<PAGE>
Quadrax Corporation
Consolidated Balance Sheets (continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31,
1999 1998
--------- ---------
Current liabilities not subject to compromise:
Current portion of long-term debt $ 233,460 $ 206,920
Accounts payable 2,830,323 3,608,858
Accrued expenses 661,183 522,017
--------- ---------
TOTAL CURRENT LIABILITIES 3,724,966 4,337,795
Liabilities subject to compromise 7,004,642 7,004,642
Long-term debt, less current portion 5,963,244 4,289,027
--------- ---------
TOTAL LIABILITIES 16,692,852 15,631,464
--------- ---------
Stockholders' equity:
Common stock 414 414
Additional paid-in capital 73,167,449 73,167,449
Retained earnings, deficit (80,050,601) (79,230,959)
--------- ----------
( 6,882,738) ( 6,062,996)
Less: Treasury stock, at cost (1,726,549) (1,726,549)
--------- --------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (8,609,287) (7,789,545)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,083,565 $ 7,841,919
========== =========
See accompanying notes to the consolidated financial statements
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<PAGE>
<TABLE>
<CAPTION>
Quadrax Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
------------------------------ -----------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES $3,547,330 $4,670,245 $ 7,078,638 $ 8,906,174
COST OF GOODS SOLD 3,243,789 3,933,369 6,569,906 8,159,723
--------- --------- --------- ----------
Gross Profit 303,541 736,876 508,732 746,451
OPERATING EXPENSES:
Selling, general and
administrative 479,440 620,453 1,043,023 1,603,544
--------- --------- --------- ---------
Income(Loss)
from operations (175,899) 116,423 (534,291) (857,093)
OTHER INCOME (EXPENSE):
Interest expense (138,249) (118,543) (271,099) (331,330)
Other, net (21,802) (13,196) (14,352) 18,386
-------- -------- --------- --------
Income(Loss)
Continuing Operations (335,950) (15,316) (819,742) (1,170,037)
Loss From
Discontinued Operations -0- (133,307) -0- (1,097,307)
-------- -------- --------- ---------
NET INCOME(LOSS) ($ 335,950) ($148,623) ($819,742) ($2,267,344)
========= ========= ========= =========
NET LOSS PER COMMON SHARE ($0.01) ($0.00) ($0.02) ($0.05)
========= ========= ========= =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 44,453,334 44,453,334 44,453,334 44,453,334
========= ========= ========= =========
</TABLE>
See accompanying notes to the consolidated financial statements
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<PAGE>
<TABLE>
<CAPTION>
Quadrax Corporation
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
Six Months Six Months
Ended Ended
June 30, 1999 June 30, 1998
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($ 819,742) ($2,267,344)
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation & amortization of fixed assets 236,921 360,910
Amortization of intangibles 10,320 14,250
Provision for bad debt -0- 40,000
Increase (decrease) in cash resulting from changes in:
Accounts receivable (200,810) (170,838)
Inventories (316,603) (355,565)
Prepaid expenses and other 186,398 26,927
Accounts payable and accrued expenses (639,369) 2,003,887
----------- -----------
Net cash used in operating activities (1,542,885) (347,773)
----------- -----------
Cash flows from investing activities:
Capital expenditures, net (119,938) (4,668)
Other intangible assets purchased (34,940) (23,419)
----------- -----------
Net cash used in investing activities (154,878) (28,087)
----------- -----------
Cash flows from financing activities:
Advances by private investor 1,035,000 -0-
Issuance of debt 7,778,600 872,580
Repayment of debt (7,123,163) (538,066)
----------- -----------
Net cash provided by financing activities 1,690,437 334,514
----------- -----------
Net increase (decrease) in cash
and cash equivalents (7,326) (41,346)
Cash and cash equivalents at
beginning of period 44,805 53,042
----------- -----------
Cash and cash equivalents
at end of period $ 37,479 $ 11,696
=========== ===========
Supplemental cash flow information:
Cash interest paid $ 166,357 $ 211,636
=========== ===========
</TABLE>
See accompanying notes to the consolidated financial statements
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<PAGE>
QUADRAX CORPORATION
Consolidated Statements of Cash Flows (continued
for the Six Months Ended
June 30, 1999 and June 30, 1998
Supplemental schedule of significant noncash transactions:
1999:
None
1998:
None
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<PAGE>
Quadrax Corporation
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies.
The unaudited condensed consolidated financial statements presented herein have
been prepared in accordance with the instructions to Form 10-QSB and do not
include all of the information and note disclosures required by generally
accepted accounting principles. In the opinion of management, such condensed
consolidated financial statements include all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the Company's
financial position as of June 30, 1999 and the results of operations for the six
months ended June 30, 1999 and June 30, 1998. The results of operations for the
six month period ended June 30, 1999 may not be indicative of the results that
may be expected for the year ending December 31, 1999. These Condensed
Consolidated Financial Statements should be read in conjunction with the
Consolidated Financial Statements and the notes thereto included in the
Company's latest annual report to the Securities and Exchange Commission on Form
10-KSB for the year ended December 31, 1998 and the Company's Form 10-QSB for
the three months ended March 31, 1999.
2. Debt
Note Payable - Revolver and Bank
The Company's wholly-owned subsidiary, Victor Electric Wire & Cable Corporation
("Victor"), a New York corporation, has entered into a $5,000,000 loan agreement
with Congress Financial Corporation ("Congress"). The loan arrangement with
Congress provides for a three-year revolving credit facility of up to
$3,550,000, a $950,000 fully amortizing five-year term loan and an equipment
financing facility of up to $500,000, also based upon a five year fully
amortizing repayment schedule. All of such loans bear interest at a rate of
prime plus 1.5%. The Company has guaranteed all of the obligations of Victor to
Congress. The total amount due Congress pursuant to this loan agreement was
$3,222,892 and $2,945,947 as of June 30, 1999 and December 31, 1998,
respectively.
This Agreement is secured by substantially all of Victor's assets including, but
not limited to, inventory, receivables, and fixed assets. The amount available
under the revolving loan is limited by a formula based on accounts receivable
and inventory. The Company intends that the monies required could remain
outstanding under this agreement for an uninterrupted period extending beyond
one year from June 30, 1999 and December 31, 1998. As a result, the amounts
under the revolving loan agreement have been classified as long-term debt.
Victor Corporation was notified of events of default on its Congress loan as a
result of Quadrax Corporation filing for protection under Chapter 11 of the
Bankruptcy Code on February 27, 1998 and the net worth covenant of the loan
arrangement. The lender has not provided notice seeking acceleration of the
loan.
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<PAGE>
3. Stockholders' Equity
The Company's capital shares are as follows:
Class A Convertible Preferred Stock, $10.00 par value, 300,000 shares authorized
at June 30, 1999 and December 31, 1998, and -0- shares issued and outstanding at
June 30, 1999 and December 31, 1998.
Common Stock, $.000009 par value, 90,000,000 shares authorized June 30, 1999 and
December 31, 1998, 45,544,177 shares were issued at June 30, 1999 and December
31, 1998, respectively, and 44,453,334, shares outstanding at June 30, 1999 and
December 31, 1998, respectively. The treasury shares of 1,090,843 account for
the difference in the issued and outstanding shares.
4. Earnings Per Share
For the fiscal periods ending June 30, 1999 and June 30, 1998, the net loss per
share was computed using the weighted number of average shares outstanding
during the respective periods. Common Stock equivalents did not enter into the
computation because the impact would have been anti-dilutive.
5. Bankruptcy Proceedings
On February 27, 1998 (the "Petition Date"), the Company filed a Voluntary
Petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy
Court, District of Rhode Island. The Company's wholly owned subsidiaries Victor
and Victel were not party to the bankruptcy filing on the Petition Date.
Pursuant to the filing of the voluntary petition, the Company filed a petition
for financial reorganization in December 1998.
At the time of the bankruptcy filing, Quadrax was prohibited from paying and
creditors were prohibited from attempting to collect claims or debts arising
prior to the Petition Date without approval of the Bankruptcy Court. The primary
objective of the Company during the Chapter 11 Bankruptcy was to develop a
Reorganization Plan (the "Plan") which, with the concurrence of its creditors,
would allow the Company to operate without the supervision of the Bankruptcy
Court. Such a plan was developed and approved by the United States Bankruptcy
Court on October 21, 1999, with an effective date of November 5, 1999.
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<PAGE>
The implementation of the Plan calls for the following:
(1) The merging of Victel and Victor into the Company with the assets and
liabilities of Victel and Victor being assumed by the Company.
(2) Payment in full to certain creditors of approximately $260,512.
(3) The general unsecured creditors of the Company holding allowed claims of
$6,744,130 receiving 11,500,000 newly issued shares, 46% of the outstanding new
common stock, on a pro-rata basis, plus cash equal to their pro-rata portion of
$500,000 held in escrow. Pond Equities, Inc. ( Pond ), a licensed NASDAQ dealer,
located in New York, New York has offered to purchase from the unsecured
creditors all or part of the 11,500,000 shares issued for $0.05 per share with
no commissions payable by such creditors, provided such shares are tendered
within one year of the confirmation date of the Plan. Payments for these shares
tendered within one year are guaranteed by an irrevocable letter of credit in
the amount of $575,000 issued by Chase Manhattan Bank. No creditor is required
to tender their shares and the Company has not taken any position as to the
adequacy of the Pond's offer.
The total pre-petition claims of approximately $7,004,642 has been recorded
as "liabilities subject to compromise" in the balance sheet.
(4) The existing shareholders of the Company, approximately 11,000 beneficial
owners, currently holding 44,453,334 shares of common stock, receiving 1,250,000
shares of newly issued stock, 5%, of the common stock of the Company on a
pro-rata basis. All outstanding warrants have been cancelled.
(5) For payment of $100,000, the Company is issuing 12,250,000 new shares, 49%
of the outstanding new common stock of the Company ( the "Private Placement
Securities"), to a third party private investor group (the "Private Investor
Group"). These Private Placement Securities are restricted securities within the
meaning of the Securities Act of 1933, as amended. The Private Investor Group
after the effective date of the Plan may resell these restricted securities
without registration in accordance with Rule 144 promulgated under the
Securities Act of 1933, as amended. The Private Investor Group acquiring the
Private Placement Securities will be entitled to contractual transferable
anti-dilution rights such that in the event the Company issues additional shares
of stock, the Private Investor Group will also be issued additional shares of
stock so that the Private Investor Group continues to retain a 49% interest in
the total outstanding shares of Company. Additionally, the Private Investor
Group will have demand registration rights for the Private Placement Securities
on Form S-3 commencing when the Company becomes eligible to use such form under
the Securities Act of 1933, as amended. The Private Investor Group will also be
entitled to piggyback registration rights for the Private Placement Securities.
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<PAGE>
(6) The Company continuing the Quadrax Composites business by leasing equipment
that is used to manufacture and produce its thermoplastic tape to an outside
third party manufacturer who will utilize the tape produced to build their own
unique product. The Company will receive fees equal to $0.50 per pound for
thermoplastic tape manufactured and utilized by the outside third party lessee
and $1.00 per pound for thermoplastic tape produced by the lessee and sold to
other users of the tape. It is expected that this agreement will insure the
continuation of the Company's Quadrax Composites business and will add the
support of a substantial end user of its thermoplastic tape to further the
marketing strength of Quadrax Composites.
(7) The Company issuing a Note Obligation ("Note") for all advances from the
Private Investor Group. This Note shall bear interest at a rate of 8% per annum
until maturity. The Note will be collateralized by all the assets of the
Company, but will be subordinated to the security interest of the Company's
primary lender, Congress Financial Corporation. Through June 30, 1999, the
Company has received $2,585,000 in cash pursuant to the Note Obligation of which
$1,035,000 was received in the six months ending June 30, 1999.
(8) The Company maintaining so-called Directors and Liability Insurance,
including company reimbursement, in the amount of at least $5,000,000 ("D&O
Insurance") for the protection of the former and current officers and directors
of the Company. The Company has purchased continued D&O Insurance coverage for
former and current officers and directors of the Company.
(9) That all claims and debts against the Company originating prior to the
Petition Date which were not accepted by the Company during the Chapter 11
Bankruptcy are dismissed and are no longer a liability of the Company.
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<PAGE>
ITEM II
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain matters discussed in this section and
elsewhere in this Form 10-QSB 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.
Bankruptcy Filing
Since the Petition Date, the Company has operated as a Debtor-in-Possession
under Chapter 11 of the Bankruptcy Code. Accordingly, claims which were the
subject of pre-petition litigation were stayed and those claims together with
claims arising from pre-petition defaults and events of default caused by the
filing of the petition were resolved in the bankruptcy proceedings. The
bankruptcy case itself was resolved by a confirmation of a plan of
reorganization proposed by the Company and agreed to by its creditors and
confirmed by the United States Bankruptcy Court on October 21, 1999. (See Note
5. Bankruptcy Proceedings)
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1999 AS COMPARED TO
THE THREE MONTHS ENDED JUNE 30, 1998
Total revenues recognized during the three months ended June 30, 1999 ("1999
Period") were $3,547,000, a decline of $1,123,000 from revenues of $4,670,000
for the three months ended June 30, 1998, ("1998 Period"). Total revenues
recognized during the 1999 Period were $3,531,000, a decline of $705,000 from
revenues of $4,236,000 for the 1998 Period. This decrease in sales is primarily
attributable to the fact that one of the Company's large domestic customers did
not place orders with the Company in this period as a result of their decision
to stop using Victor's electric cords in their products.
Cost of goods sold for the 1999 Period of $3,244,000 decreased $690,000 compared
to the 1998 Period from $3,933,000. The reason for this decrease is reflective
of the change in the Company's product mix and the decrease in revenues.
Selling, general and administrative expenses incurred in the 1999 Period were
$479,000 compared to $620,000 in the 1998 Period, a decrease of $141,000. The
primary reason for this decrease is that the executive and administrative
personnel of the Company's thermoplastic operation were no longer employed by
the Company in the 1999 Period.
Interest expense for the 1999 period of $138,000 was an increase of $20,000 over
the 1998 Period of $118,000. The reason for this increase is the advances made
by the Private Investor Group to the Company during the fiscal 1999 quarter.
Other income increased $9,000 in the 1999 period to $22,000 from $13,000 in the
1998 Period, an insignificant fluctuation.
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<PAGE>
Loss for discontinued operations decreased $133,000 in the 1999 Period to zero.
The reason for this decrease is that certain of the Company's thermoplastic
operations were discontinued and accounted for during fiscal year 1998. (See
Note 5. Bankruptcy Proceedings)
The Company's net loss in the 1999 Period of $336,000 increased $187,000 as
compared to the 1998 Period loss of $149,000 primarily for the reasons discussed
above.
RESULTS OF OPERATIONS FOR SIX MONTHS ENDED JUNE 30, 1999 AS COMPARED TO SIX
MONTHS ENDED JUNE 30, 1998
Total revenues recognized during the six months ending June 30, 1999 ("1999
Period") were $7,079,000, a decline of $1,828,000 from revenues of $8,906,000
for the 1998 Period. This decrease in sales is primarily attributable to the
fact that one of the Company's large domestic customers did not place orders
with the Company in this Period as a result of their decision to stop using
Victor's electric cords in their products.
The cost of goods sold for the 1999 Period was $6,570,000, which represented
92.8% of sales. The cost of goods sold for the 1998 Period was $8,160,000, which
represented 91.6% of sales. The primary reason for this decrease in gross
margins in the 1999 Period is due to a change in the Company's product mix where
the small appliance cordset products with their smaller profit margins comprised
a larger portion of the Company's sales, as opposed to sales of power tool
cordsets which generally produce higher profit margins.
Selling, general and administrative expenses ("SG&A") decreased by $561,000 in
the 1999 Period to $1,043.000, compared to $1,604,000 in the 1998 Period. The
primary reason for this decrease is that the executive and administrative
personnel of the Company's thermoplastic operation were no longer employed by
the Company in the 1999 Period.
Interest expense decreased $60,000 to $271,000 in the 1999 Period from $331,000
in the 1998 Period. The reason for this decrease is that the 1998 Period
includes an accrual for penalty interest of $75,000 pursuant to a contractual
provision which required the Company to file with the Securities and Exchange
Commission, and have declared effective, a registration statement covering the
resale of shares of common stock issuable upon conversion of convertible
debentures issued in fiscal 1997.
Other net decreased $33,000 to an expense of $14,000 in the 1999 Period. The
primary reason for this fluctuation was the monies the Company paid for remedial
environmental work at its plant in West Warwick, Rhode Island.
Loss from discontinued operations decreased $1,097,000 in the 1999 Period to
zero. The reason for this decrease is the termination of certain of the
Company's thermoplastic operations which was accounted for in fiscal 1998. (See
Note 5 - Bankruptcy Proceedings).
The Company's net loss in the 1999 Period of $820,000 decreased by $1,448,000,
as compared to the 1998 Period loss of $2,267,000, primarily for the reasons
discussed above.
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<PAGE>
Financial Position, Liquidity and Capital Resources
At June 30, 1999, the Company had total assets of $8,083,565 and a stockholders
deficit of $8,609,287. Current assets were $5,533,553 and current liabilities
were $3,724,966, resulting in working capital of $1,808,587. The current
liabilities reflect the outstanding liabilities of the Victor subsidiary and
Quadrax Debtor-in-Possession post-petition liabilities. The liabilities subject
to compromise, $7,004,642, represent the pre-petition liabilities of Quadrax
Debtor- in-Possession that are eligible for compromise because they are either
unsecured, disputed, contingent or under secured and subject to compromise in
the Chapter 11 reorganization.
Cash and cash equivalents decreased by $7,000 from December 31, 1998 to $37,000
at June 30, 1999, an insignificant fluctuation.
Accounts receivable increased by $201,000, principally due to the operations
gearing up for higher cyclical sales experienced during the mid and later
quarters of the calendar year.
Inventories increased by $317,000. The reason for this is an increase in
Victor's inventories due to build-up of product required for Victor's
anticipated higher cyclical shipments during the mid and later quarters of the
calendar year.
Attorney's escrow increased $214,000 to $1,214,000 at June 30, 1999. The reason
for this reflects the collection by the Company of the proceeds from the auction
of the Company's thermoplastic assets in the 1999 Period of approximately
$400,000. Offsetting this collection was the payment of certain post petition
liabilities as ordered by the Court.
Other current assets decreased $400,000 in the 1999 Period to $166,000 at June
30, 1999. The primary reason for this decrease is the remittance of the proceeds
of the thermoplastic division assets auction sale to the Company's bankruptcy
attorney escrow account.
The current portion of long-term debt increased by $27,000 due to the financing
lease the Company entered into to pay for its new computer system and the
related software acquired in the 1999 Period.
Accounts payable and accrued expenses decreased by $639,000. The primary reasons
for this decrease include the payment by the Company of a portion of its
post-petition thermoplastic liabilities incurred pursuant to court orders, which
amounted to approximately $200,000, and the payment by the Company of past due
vendor's accounts payable along with a reduction of past due amounts to vendors
in the approximate amount of $400,000.
Liabilities subject to compromise amounted to $7,005,000 at June 30, 1999 and
December 31, 1998. These liabilities subject to compromise represent the
pre-petition liabilities of Quadrax Debtor-in-Possession that are eligible for
compromise because they are either unsecured, disputed, contingent or under
secured and subject to compromise in the Chapter 11 reorganization. (See Note 5.
Bankruptcy Proceedings)
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<PAGE>
Long term debt, net of the current portion, increased $1,674,000 to
approximately $5,963,000 at June 30, 1999. The reason for this increase is the
additional monies in the amount of $1,035,000 borrowed by the Company from the
Private Investor Group pursuant to the Bankruptcy Reorganization, The balance of
the increase in long term debt reflects additional borrowing from the Company's
primary lender, Congress Financial Corporation, to fund working capital for the
Company's seasonal business.
In the first six months of fiscal 1999, capital expenditures were approximately
$120,000. These monies were used to purchase a new computer system and
applicable software.
The Company generated revenues of approximately $7,079,000 in the first six
months of fiscal 1999 and, as a result, operations were not a total source of
funds or liquidity for the Company. The Company continues to depend on outside
financing for the cash required to fund its operations. Net funds provided by
financing activities in the first six months of fiscal 1999, after giving effect
to the repayment of debt, totaled approximately $1,690,000, as compared to
$335,000 during the six months ended June 30, 1998.
YEAR 2000 ISSUES
The Company initiated its efforts to obtain Year 2000 compliance in the
information systems area in September 1997. This project is expected to be
completed on or about September 30, 1999. The internal and external expenses the
Company incurred for the operational compliance on this project were not
significant.
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<PAGE>
QUADRAX CORPORATION
Part II - Other Information
Item 3. Defaults Upon Senior Securities
As of March 30, 1998, Quadrax was notified that the Bankruptcy filing by Quadrax
Corporation, on February 27, 1998, caused an event of default on its Congress
debt. The amount of the Congress debt outstanding at June 30, 1999 was
approximately $3,222,892. The lender has not accelerated the loan.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
Exhibit 27. Financial Data Schedule
<PAGE>
QUADRAX CORPORATION
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
QUADRAX CORPORATION
By: /s/ James J. Palermo
------------------------
James J. Palermo
President and Chief Executive Officer
(Principal Executive Officer)
Dated: February 18, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> Jun-30-1999
<CASH> 37,479
<SECURITIES> 0
<RECEIVABLES> 2,306,366
<ALLOWANCES> 56,549
<INVENTORY> 1,809,536
<CURRENT-ASSETS> 5,533,553
<PP&E> 9,626,186
<DEPRECIATION> 7,452,221
<TOTAL-ASSETS> 8,083,565
<CURRENT-LIABILITIES> 3,724,966
<BONDS> 5,963,244
0
0
<COMMON> 414
<OTHER-SE> (8,609,701)
<TOTAL-LIABILITY-AND-EQUITY> 8,083,565
<SALES> 7,078,638
<TOTAL-REVENUES> 7,078,638
<CGS> 6,569,906
<TOTAL-COSTS> 6,569,906
<OTHER-EXPENSES> 1,043,023
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 271,099
<INCOME-PRETAX> (819,742)
<INCOME-TAX> 0
<INCOME-CONTINUING> (819,742)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (819,742)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
