<PAGE>   1

                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION

                          Washington, D. C.  20549
   
                                FORM 10-QSB/A-1
    
   
                               Amendment No. 1
    


[X]   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 For the period ended June 30, 1996

[ ]   Transition Report Pursuant to Section 13 or 15(d) of The Securities
      Exchange Act of 1934

For the transition period from ___________________________ to _________________


                     Commission File Number:     0-16052   
                                            -------------

                              QUADRAX CORPORATION
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             Delaware                                      05-0420158
-------------------------------------               ------------------------
(State or other jurisdiction of                      (I.R.S. Employer
incorporation or organization)                       Identification Number)

       300 High Point Avenue   Portsmouth, Rhode Island          02871      
--------------------------------------------------------------------------
      (Address of principal executive offices)                 (Zip Code)

                                (401) 683-6600
-------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)


-------------------------------------------------------------------------------
  (Former name, former address and former fiscal year, if changed since last
   report)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes x  No
                                              ---   ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

   Class                                         Outstanding at August 2, 1996
   -------------------------------------         -----------------------------
   Common Stock, par value                       24,745,704 shares
   $.000009 per share                       
<PAGE>   2

                             QUADRAX CORPORATION

   
                           INDEX TO FORM 10-QSB/A-1
    


<TABLE>
<CAPTION>
 PART I - FINANCIAL INFORMATION                                                                  PAGE
 <S>                                                                                             <C>
    ITEM 1      Condensed Consolidated Financial Statements
   
                Condensed Consolidated Balance Sheets at June 30, 1996 and at
                December 31, 1995                                                                3-4   
                                                                                                       
                Condensed Consolidated Statements of Operations for the three and six                  
                months ended June 30, 1996 and June 30, 1995                                     5     
                                                                                                       
                Condensed Consolidated Statements of Cash Flows for the six months                     
                ended June 30, 1996 and June 30, 1995                                            6-7   
                                                                                                       
                Notes to Condensed Consolidated Financial Statements                             8-9   
                                                                                                       
    Item 2      Management's Discussion and Analysis of Financial Condition and                        
                Results of Operations                                                            10-14 
                                                                                                       
                                                                                                       
 PART II - OTHER INFORMATION                                                                           
                                                                                                       
                                                                                                       
    Item 6      Exhibits and Reports on Form 8-K                                                 15    
                                                                                                       
    Signatures                                                                                   16                    

                                     -2-
</TABLE>
<PAGE>   3
                              QUADRAX CORPORATION

                          CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)

                                    ASSETS

<TABLE>
<CAPTION>
                                                                        JUNE 30,                DECEMBER 31,
                                                                          1996                    1995
                                                                      -------------            --------------
 <S>                                                                    <C>                       <C>
 Current assets:
         Cash and cash equivalents, including $100,000
          and $481,146 of restricted cash, respectively                 $ 2,332,730               $ 2,613,555
         Accounts receivable, net of allowances for
          doubtful accounts of $24,000                                    1,084,038                 1,265,301
 Inventories                                                              1,890,675                 1,466,813
 Other current assets                                                       193,580                   134,197
                                                                      -------------            --------------
                                         TOTAL CURRENT ASSETS             5,501,023                 5,479,866
                                                                      -------------            --------------
 Property and equipment, at cost:
         Machinery and equipment                                          3,416,620                 3,319,881
         Office equipment                                                   891,537                   851,160
         Leasehold improvements                                           1,085,728                 1,071,532
         Construction-in-progress                                           872,188                         0
                                                                          6,266,073                 5,242,573
                                                                      -------------            --------------
               Less accumulated depreciation and amortization             3,298,204                 3,000,093
                                                                      -------------            --------------
                                   NET PROPERTY AND EQUIPMENT             2,967,869                 2,242,480
                                                                      -------------            --------------

 Goodwill, net of amortization of $3,952
    at June 30, 1996                                                        114,601                   118,553


 Other assets                                                               290,627                   267,855

 License agreement, net of amortization of $180,000
    and $120,000, respectively                                              420,000                   480,000

 Deferred assets, net of amortization of $66,187 and $61,912,
 respectively                                                               217,801                   211,498
                                                                      -------------            --------------
                                                 TOTAL ASSETS            $9,511,921                $8,800,252
                                                                      -------------            --------------
</TABLE>




                            See accompanying notes.


                                     -3-
<PAGE>   4
                              QUADRAX CORPORATION

                          CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)

                      LIABILITIES AND STOCKHOLDERS' EQUITY


   
<TABLE>
<CAPTION>
                                                                            JUNE 30,              DECEMBER 31,
                                                                              1996                   1995
                                                                          -------------          ---------------
 <S>                                                                     <C>                       <C>
 Current liabilities:
 Accounts payable                                                        $    748,876              $    870,988

 Accrued expenses                                                             755,520                 1,200,779
 Notes payable to related party                                                     0                   300,000
 Notes payable                                                              1,035,623                 1,114,301
                                                                          -------------          ---------------
                                       TOTAL CURRENT LIABILITIES            2,540,019                 3,486,068

 Long-term debt, less current portion                                         349,858                   356,034

 Convertible debentures payable                                             1,050,000                 2,250,000
                                                                                                               
                                               TOTAL LIABILITIES            3,939,877                 6,092,102
                                                                          -------------          ---------------
 Stockholders' equity:
         Original convertible preferred stock                                       0                         6
         Class B convertible preferred stock                                3,500,000                         0
         Common stock                                                             219                       160
         Additional paid-in capital                                        63,450,741                58,288,953
                                                                          -------------          ---------------
         Retained earnings (deficit)                                     (59,261,566)              (54,198,191)
                                                                          -------------          ---------------
                                                                            7,689,394                 4,090,928
 Less:
         Treasury stock, at cost                                          (1,043,009)               (1,043,009)
         Unearned compensation and deferred expenses                        (586,981)                 (339,769)
         Notes receivable for the exercise of stock options                 (487,360)                         0
                                                                          -------------          ---------------
                                      TOTAL STOCKHOLDERS' EQUITY            5,572,044                 2,708,150

                                                                          -------------          ---------------       
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                $9,511,921                $8,800,252
                                                                          =============           ==============
</TABLE>
    

                            See accompanying notes.


                                     -4-
<PAGE>   5
                              QUADRAX CORPORATION

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

   
<TABLE>
<CAPTION>
                                                     Three Months      Three Months       Six Months         Six Months
                                                    Ended June 30,    Ended June 30,    Ended June 30,     Ended June 30,
                                                         1996              1995              1996               1995
                                                    --------------    --------------    ---------------    ---------------
 <S>          <C>                                     <C>               <C>                <C>                <C>
 Revenue:
              Sales                                      $840,327        $1,234,786         $1,927,344         $2,309,429
              Interest income                              15,389                 0             30,961              8,995
              Other income                                 43,549                 0             43,945                  0
                                                    --------------    --------------    ---------------    ---------------
              TOTAL REVENUE                               899,265         1,234,786          2,002,250          2,318,424
                                                    --------------    --------------    ---------------    ---------------
 Expenses:
              Cost of goods sold                          836,223         1,043,208          1,772,662          1,757,628
              Research and development                     39,044           (24,833)           258,611            211,240
              Selling, general and administrative       1,219,438         1,422,334          2,657,823          2,833,94
              Depreciation and amortization               182,228           220,245            370,039            423,917
              Interest expense                            775,978             5,025            839,824              9,415
                                                    --------------    --------------    ---------------    ---------------
              TOTAL EXPENSES                            3,052,911         2,665,979          5,898,959          5,236,140
                                                    --------------    --------------    ---------------    ---------------
              NET LOSS                                ($2,153,646)      ($1,431,193)       ($3,896,709)       ($2,917,716)
                                                    ==============    ==============    ===============    ===============
              NET LOSS PER COMMON                          ($0.09)           ($0.14)            ($0.19)            ($0.25)
               SHARE                                ==============    ==============    ===============    ===============
                                                                                                                          
              WEIGHTED AVERAGE            
                COMMON
              SHARES OUTSTANDING                       22,470,365        13,008,872         20,876,573         11,900,316
                                                    ==============    ==============    ===============    ===============
</TABLE>
    

                             See accompanying notes

                                     -5-
<PAGE>   6

                              QUADRAX CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                                  (UNAUDITED)

   
<TABLE>
<CAPTION>
                                                                                  Six Months         Six Months         
                                                                                     Ended             Ended            
                                                                                 June 30, 1996     June 30, 1995        
                                                                                 --------------    ---------------      
 <S>                                                                            <C>               <C>                   
 Cash flows from operating activities:                                                                                  
                                                                                                                        
 Net loss                                                                          ($3,896,709)      ($2,917,716)       
    Adjustments to reconcile net income to net cash used                                                                
       in operating activities:                                                                                         
       Depreciation & amortization of fixed assets                                     302,158           246,521        
       Amortization of intangibles                                                      67,881            95,065        
       Amortization of unearned compensation                                            52,788            82,331        
       Common stock issued for expenses                                                875,131           258,274        
       Effect on cash flows of changes in assets and liabilities:                                                       
          Accounts receivable and other                                                181,263          (701,015)       
          Inventories                                                                 (423,862)          207,361        
          Prepaid expenses and other assets                                            (59,383)         (134,649)       
          Receivables/payables from officers and employees                            (300,000)         (225,000)       
          Accounts payable                                                            (122,112)          (48,342)       
          Accrued expenses                                                            (507,129)         (786,739)       
                                                                                 --------------    ---------------      
                    Net cash used in operating activities                           (3,829,974)       (3,923,909)       
                                                                                 --------------    ---------------      
 Cash flows from investing activities:                                                                                  
     Capital expenditures, net                                                      (1,023,500)         (672,977)       
     Other intangible assets purchased                                                 (33,350)                0        
     Payments for businesses acquired                                                                                   
       net of cash acquired                                                                  0           140,000        
                                                                                 --------------    ---------------      
                    Net cash provided by (used in) investing activities             (1,056,850)         (532,977)       
                                                                                 --------------    ---------------      
 Cash flows from financing activities:                                                                                  
     Proceeds from exercise of common stock options                                      4,187            25,300        
     Net proceeds from sale of stock and warrants                                            0         5,137,522        
     Issuance of convertible debt, net of costs                                      1,536,666                 0        
     Issuance of convertible preferred stock, net of costs                           3,150,000         1,339,200        
     Repayment of debt                                                                 (84,854)          (60,000)       
                                                                                 --------------    ---------------      
                    Net cash provided by financing activities                        4,605,999         6,442,022        
                                                                                 --------------    ---------------      
 Net increase (decrease) in cash and cash equivalents                                 (280,825)        1,985,136        
                                                                                                                        
 Cash and cash equivalents at beginning of period                                    2,613,555           382,721        
                                                                                 --------------    ---------------      
 Cash and cash equivalents at end of period                                         $2,332,730        $2,367,857        
                                                                                                                        
                                                                                 ==============    ===============      
                                                                                                                        

</TABLE>
    

                             See accompanying notes

                                     -6-

<PAGE>   7



                              QUADRAX CORPORATION



               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                            FOR THE SIX MONTHS ENDED
                        JUNE 30, 1996 AND JUNE 30, 1995




  Supplemental schedule of significant noncash transactions:

  1996:

          The Company issued 4,450,285 shares of its common stock in exchange
          for the cancellation of $2,866,666 of its convertible debentures.

          The Company issued 67,026 shares of its common stock for payment in
          full for $61,870 of accrued liabilities.

  1995:

          The Company assumed $750,000 of debt due its former chairman from 
          Conagher & Co., Inc. for Conagher's purchase of the original 
          preferred stock.      





                                     -7-
<PAGE>   8
                              QUADRAX CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                  (UNAUDITED)


1.  The unaudited condensed consolidated financial statements presented herein
    have been prepared in accordance with the instructions to Form 10-Q and do
    not include all of the information and note disclosures required by
    generally accepted accounting principles.  In the opinion of management,
    such condensed consolidated financial statements include all adjustments,
    consisting only of normal recurring adjustments, necessary to present
    fairly the Company's financial position as of June 30, 1996 and the results
    of operations for the six months ended June 30, 1996 and June 30, 1995.
    The results of operations for the six month period ended June 30, 1996 may
    not be indicative of the results that may be expected for the year ending
    December 31, 1996.  It is suggested that these Condensed Consolidated
    Financial Statements be read in conjunction with the Consolidated Financial
    Statements and the notes thereto included in the Company's latest annual
    report to the Securities and Exchange Commission on Form 10-KSB for the
    year ended December 31, 1995.

2.  Debt

    Long-term debt consists of the following:

   
<TABLE>
<CAPTION>
                                                                June 30,                  December 31,
                                                                 1996                       1995
                                                            ---------------           ---------------
               <S>                                           <C>                        <C>
                    Note payable - bank                       $  801,000                  $ 716,000
                    Notes payable - Lion shareholders            318,031                    331,634
                    Equipment notes payable                      101,450                     87,701
                    Other non-interest bearing note              250,000                    250,000
                                                                 -------                    -------
                                                               1,385,481                  1,470,335
           
                            Less current maturities          (1,035,623)                (1,114,301)
                                                            ------------               ------------
                                                              $  349,858                 $  356,034
                                                              ==========                 ==========
           
</TABLE>
    

    Note Payable - Bank

    The Company's wholly-owned subsidiary, Lion Golf of Oregon, Inc., an Oregon
    corporation ("Lion Golf"), has a $1,000,000 revolving line of credit with
    its bank.  The line of credit is secured by substantially all of Lion
    Golf's assets and is guaranteed by the Company and the former majority
    shareholder of Lion Golf.  The note was renewed January 2, 1996 and bears
    interest at 10.75% per annum.  Loan advances are limited to 75% of
    "eligible accounts receivable" plus 45% of "eligible inventories" up to a
    maximum of $500,000, as such terms are defined under the line of credit.
    The Company's current outstanding balance due on the line of credit is
    approximately $716,000.




                                     -8-
<PAGE>   9

                              QUADRAX CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


    Notes Payable - Lion Shareholders

    Lion Golf has three unsecured notes bearing interest at the rate of 8% per
    annum, payable to its former shareholders.  These notes are subordinated to
    the bank credit line.  The first of the notes,  for the principal amount of
    $270,000, has annual principal payments of $54,000 commencing March 31,
    1997.  These annual payments can be limited to the extent of Lion Golf's
    pretax profits as defined in the Purchase Agreement among the Company, Lion
    Golf, and Lion Golf's former shareholders dated December 29, 1995 (the
    "Purchase Agreement").  The second note for the principal amount of
    $50,200, has monthly principal payments of $2,400 until paid-in-full.  The
    third note is a demand note in the principal amount of $10,500.

   CONVERTIBLE DEBENTURES

    In April 1996, the Company issued $1,666,666 of its Convertible Debentures
    bearing interest at the rate of 8% per annum for net proceeds to the
    Company of $1,536,666.  The debentures are convertible at the option of the
    holders on or after the forty-first day of issuance into a number of shares
    of common stock that can be purchased for a price equal to seventy percent
    of the average closing bid price of the common stock on the five trading
    days immediately prior to the conversion date.  At June 30, 1996, the
    holders of the convertible debentures had converted $616,666 of the
    debentures into 635,255 shares of common stock of the Company.


3.  Shareholders Equity

    The Company's capital shares are as follows:

   
    Original Convertible Preferred Stock, $0.01 par value, -0- shares
    authorized at June 30, 1996 and 1,172 shares authorized at December 31,
    1995, 318 shares issued and outstanding at December 31, 1995.  Subsequent
    to December 31, 1995, all shares of Original Convertible Preferred Stock
    were converted into common stock which were then redeemed by the Company
    for a nominal consideration.  
    

   
    Series B Convertible Preferred Stock, $0.01 par value, 7,000 shares and -0-
    shares authorized at June 30, 1996 and December 31, 1995, respectively, and
    3,500 shares issued and outstanding at June 30, 1996.  During the fiscal
    quarter ended June 30,1996, the Company paid a dividend in kind of
    Common Stock of $1,166,666 to the Series B Preferred Stock shareholders.
    

    Common Stock, $.000009 par value, 90,000,000 shares authorized at June 30,
    1996 and December 31, 1995, and 23,986,941 and 17,772,812 shares
    outstanding at June 30, 1996 and December 31, 1995, respectively.




                                     -9-
<PAGE>   10
4.  Earnings Per Share

    For the fiscal quarters ending June 30, 1996 and June 30, 1995, the net
    loss per share was computed using the weighted number of average shares
    outstanding during the respective periods.  Common Stock equivalents did
    not enter into the computation because the impact would have been
    anti-dilutive.

   
5.  Accounting Changes
    

   
    Previously the Company accounted for the conversion of convertible
    debentures, which are issued with conversion rights at a discount to 
    market, as sales of securities and treated the discount as a cost of 
    capital.  The Company has restated its financial statements for the year 
    ended December 31, 1995 to reclassify the discount as interest and record 
    it as a cost of borrowing.  The effect on income for the year ended 
    December 31, 1995 was $1,109,589 in additional interest expense.
    







                                     -10-
<PAGE>   11
      ITEM II



                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS


    The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements.  Certain matters discussed in this
section and elsewhere in this Form 10-Q are forward-looking statements.  These
forward-looking statements involve risks and uncertainties including, but not
limited to, economic conditions, product demand and industry capacity,
competition, and other risks.

    Competition.  As the Company enters the sporting goods and recreational
equipment market, it faces competition from other materials used in the
manufacture of such goods and equipment, and from other suppliers of
thermoplastic composites.  The Company's success in entering this market will
depend largely upon its ability to displace other materials currently in use.
If the Company is unsuccessful in creating a niche within the sporting goods
and recreational equipment market by convincing the market of the strategic
benefits of thermoplastic composites, the Company would be adversely affected.
Many of the companies whose product offerings compete with the Company's
product offerings have significantly greater financial, manufacturing and
marketing resources than the Company.

    Development of Distribution Channels.  Success in the sporting goods and
recreational equipment market will also hinge on the Company's ability to
develop distribution channels, including both retailers and distributors, and
there can be no assurance that the Company will be able to effectively develop
such channels.

    Continued Investment.  Maintaining the Company's technological and
strategic advantages over its competitors will require continued investment by
the Company in design and development, sales and marketing, and customer
service and support.  There can be no assurance that the Company will have
sufficient resources to make such investments.

    Technological Advances.  The Company's ability to maintain a competitive
edge by making technological advances ahead of its competition will have a
significant impact on the success of the Company.

    Outside Financing.  The Company believes that it will need significant
outside financing over the next five years.  There can be no assurance that it
will be able to obtain such financing.


 RESULTS OF OPERATIONS FOR QUARTER ENDED JUNE 30, 1996 AS COMPARED TO QUARTER
 ENDED JUNE 30, 1995

   
    The Company's net loss from operations for the quarter ended June 30, 1996
("1996 second quarter") of approximately $2,154,000 was approximately $723,000
greater than its net loss from operations of approximately $1,431,000 for the
quarter ended June 30, 1995, ("1995 second quarter").  The reason for this
increase is the higher interest cost the Company incurred during the 1996
second quarter.
    



                                     -11-

<PAGE>   12
    Total revenue recognized during the 1996 second quarter was $899,265
compared to $1,234,786 in the 1995 second quarter,  a decrease of $335,521.  An
increase in sales of approximately $588,000 for the 1996 second quarter for the
Company's Consumer Products Group, which includes Lion Golf, was more than
offset by a decline in sales for the Company's Advanced Materials Systems
division, ("AMS") of approximately $942,000. The decrease in the AMS division
reflects the completion of the defense programs late in 1995 with no
corresponding increase in consumer product shipments in 1996.  The AMS 1996
second quarter sales are primarily thermoplastic tape of approximately $45,000.

    Interest income increased by approximately $15,000 in the three months
ended June 30, 1996, as compared to the same period one year ago because of the
greater amount of money the Company had on deposit in interest bearing paper in
1996.

    Other income increased approximately $44,000 in the 1996 second quarter.
The primary reason for this increase is that the Company's Lion Golf subsidiary
settled a product dispute with a competitor and received a lump-sum settlement
of $40,000 from that entity.

    Cost of goods sold for the second quarter of 1996 of $836,223 decreased
approximately $207,000 in the three months ended June 30, 1996 vis-a-vis the
three months ended June 30, 1995.  The reason for the decrease is the decline
in revenues during the 1996 second quarter as compared to the 1995 second
quarter, thereby, resulting in a lower dollar cost of goods sold.
Notwithstanding the decline in cost of goods sold in the 1996 second quarter
gross margins tightened in the 1996 second quarter because there was no
corresponding decline in fixed manufacturing costs during the 1996 second
quarter.

    Research and development expenses were $39,044 in the 1996 second quarter,
which was $64,000 higher than in the 1995 second quarter.  The reason for this
increase in the 1996 second quarter is that the Company was capitalizing
product development costs in the 1995 second quarter.  These 1995 product
development costs were subsequently expensed in FYE December 31, 1995.

    Selling, general and administrative expenses decreased by approximately
$203,000 to $1,219,438 in the three months ended June 30, 1996 over the
comparable period a year ago.  The primary reasons for this decrease are
threefold:  professional fees declined $55,000; travel and entertainment costs
decreased $92,000 and sales commissions were down $68,000.

    Depreciation and amortization expense decreased by approximately $38,000 to
$182,228 in the second quarter of 1996.  This decrease is due primarily to the
Company's write-off of the book value of the CMI machine in fiscal 1995.

   
    Interest expense for the second quarter of 1996 increased by approximately
$772,000 to $776,000.  This increase reflects the cash costs of the Company's
1996 subordinated debt, the financing costs associated with the financing
leases which the Company entered into during the past year, and the imputed
interest costs, approximately $714,000, relating to the discount that
convertible debenture investors received from the Company in private placement
transactions.
    

RESULTS OF OPERATIONS FOR SIX MONTHS ENDED JUNE 30, 1996 AS COMPARED TO THE SIX
MONTHS ENDED JUNE 30, 1995

   
    The Company's net loss from operations for the six months ended June 30,
1996 ("1996 first half") of approximately $3,897,000 was approximately $979,000
more than its net loss from operations of
    


                                     -12-
<PAGE>   13
   
approximately $2,918,000 for the six months ended June 30, 1995 ("1995 first
half").  The increase in net loss was caused by the reduction in gross margins
which has resulted from the change in the Company's primary source of revenues
from defense related products to consumer oriented products in the 1996 first
half. A second reason for the increased loss was the increase in interest
expense in the 1996 first half.
    

    Total revenue recognized during the 1996 first half was $2,002,250 compared
to $2,318,424 in the 1995 first half.  This decrease of approximately $316,000
from the 1995 first half resulted from the Company shipping approximately
$1,728,000 in product to its defense related customers in 1995, while in the
1996 first half, there were no defense related sales. The decline in defense
sales, was mostly offset by Lion Golf's sales of $1,448,000 in the 1996 first
half.

    Interest income in the 1996 first half  was approximately $31,000, an
increase of $22,000 from the 1995 first half.  The reason for this increase was
the Company had a greater amount of money invested in interest bearing paper in
1996.

    Other income increased approximately $44,000 in the 1996 first half.  This
increase resulted primarily from Lion Golf's settlement of a product trademark
dispute with a competitor pursuant to which Lion Golf received a lump-sum
settlement of $40,000.

    Costs of goods sold increased approximately $15,000 in the 1996 first half
to $1,772,662.  The reason for this increase is the reduction in gross margins
in 1996 due to the Company's change in revenue source from defense related
products to consumer oriented products.

    Research and development expenses were $259,000 in the 1996 first half, an
increase of $48,000 as compared to approximately $211,000 in the 1995 first
half.  The reason for this increase is that the Company capitalized product
development costs in 1995, while in 1996, these costs were expensed as
incurred.  The 1995 product development costs were subsequently expensed later
in FYE December 31, 1995.

    Selling, general and administrative expenses decreased by approximately
$176,000 in the 1996 first half.   The primary reasons for this decrease are
twofold: travel and entertainment decreased $68,000 in 1996 and professional
and consulting fees decreased $101,000.

    Depreciation and amortization expense decreased by $53,000 to $370,000 in
the first half of 1996, primarily due to the amortization in 1995 of a
non-competition agreement with the Company's former chief executive officer in
the amount of $67,000.  This write-off was completed in 1995.

   
    Interest expense for the first half of 1996 was $840,000, while in 1995, it
was $9,000, an increase of approximately $831,000.  This increase was caused by
the Company's payment of interest on Lion Golf's working capital line of credit
in 1996, interest paid on the Company's convertible debentures, and the imputed
interest cost of approximately $714,000 for the discount that convertible
debenture investors received from the Company in private placement transactions.
    


FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

    At June 30, 1996, the Company had total assets of $9,511,921 and
stockholders' equity of $5,572,044.  Current assets were $5,501,023 and current
liabilities were $2,540,019 resulting in working capital of approximately $3
million which is an increase of approximately $1 million from December 31,
1995, when working capital was approximately $2 million.  This increase in
working capital resulted from the Company's


                                     -13-
<PAGE>   14
sale of convertible debentures, $1,666,666, in April 1996 and Series B
Convertible Stock in June 1996 of $3,500,000.

    Cash and cash equivalents decreased by approximately $281,000 from December
31, 1995.  This decrease is due to the Company's use of approximately
$3,830,000 to fund its operations and the expenditure of approximately
$1,057,000 to prepare and equip its golf shaft manufacturing facility in Vista,
California and to purchase hockey stick manufacturing equipment from Vega,
U.S.A.  These expenditures were offset by the Company's raising of additional
capital of approximately $4,600,000.

    Accounts receivable decreased by approximately $181,000.  The primary
reason for this decrease is that the Company collected its trade receivables
from its defense customers which were outstanding at December 31, 1995.

    Inventories increased by approximately $424,000.  This increase is due to
the build-up of product for the Company's consumer sales.

    Other current assets increased by approximately $59,000 between June 30,
1996 and December 31, 1995.  This increase was caused by the Company's renewal
of its general liability insurance policy as of June 30, 1996, and prepayment
of the premium.

    Notes payable decreased by approximately $79,000.  This reflects decreased
usage of the Company's line of credit with the Bank of the Cascades.

    Accounts payable and accrued expenses decreased approximately $567,000 from
$2,072,000 at December 31, 1995. This decrease was caused by payments made to
trade vendors and to former employees in 1996.  The employee payments were
charged against the reserve for restructuring costs accrued for as of December
31, 1995.

    Notes payable to related parties decreased $300,000 to zero at June 30,
1996.  The reason for this decrease is that the Company paid Richard Fisher,
its former chairman and chief executive officer, in full in February 1996
pursuant to the December 1995 settlement agreement.

    Long term debt decreased approximately $6,000 to about $349,858 at June 30,
1996.  The reasons for this decrease are the payments the Company made on its
Advanced Materials Systems division financing leases, along with several
payments made on the subordinated debt of Lion Golf to the former Lion Golf
shareholders.

    Convertible debentures decreased to $1,050,000 at June 30, 1996 from
$2,250,000 at December 31, 1995.  This reflects the debenture holder's
conversion of its debentures to common stock during the six months ended June
30, 1996, along with the issuance of an additional $1,666,666 of convertible
debentures in April 1996.

    In the first six months of fiscal 1996, capital expenditures were
approximately $1,050,000.  These capital expenditures are an integral part of
the Company's program to construct a golf shaft manufacturing line and a
thermoplastic tape manufacturing line.  These equipment acquisitions are
expected to be paid for through equipment leasing programs and from funds
raised through the placement of the Company's securities.


                                    -14-

<PAGE>   15
    The Company generated revenues of approximately $2,000,000 in the first six
months of fiscal 1996, and as a result, operations were not a source of funds
or liquidity for the Company.  The Company continues to depend on outside
financing for the cash required to fund its operations.  Net funds provided by
financing activities in the first half of fiscal 1996, after giving effect to
the repayment of debt, totaled approximately $4,600,000 during the period ended
June 30, 1996.

    The Company believes that funds provided by operations and cash on hand
(approximately $2,300,000 at June 30, 1996), will be sufficient to meet the
Company's near-term cash requirements.  In addition, the Company believes that
it will be able to raise, if necessary, an additional $3,300,000 from the sale
of convertible debentures prior to the end of fiscal 1996.

    The Company received a going concern qualification from its outside
independent auditors on its fiscal 1995 audited financial statements.  While
the Company believes it has made and will continue to make substantial progress
towards achieving profitability, the results to date have not yet been
sufficient to negate the auditors' qualifications. During this transition,
management continues to redirect the Company's focus from the defense related
products to consumer oriented products.  Management believes that the Company
will be able to continue to raise money from outside third parties in
sufficient amounts to support its operations until the time in which the
Company's consumer product programs generate sufficient revenues.

    The Company believes that it can achieve viability and profitability by
continuing to expand sales of golf and tennis products, as well as other
products that employ its thermoplastic materials.  Management believes that the
Company's acquisition of Lion Golf in late 1995 will further this strategy
because of Lion Golf's manufacturing expertise and access to new distribution
channels, such as golf and tennis pro shops. Sales of composite based lacrosse
sticks and continuing efforts to develop and market other consumer products,
will also contribute to its efforts.

    There is no assurance that the Company's efforts to achieve viability and
profitability or to raise money will be successful or that the forecasts will
be achieved.  It is difficult for the Company to predict with accuracy the
point at which the Company will be viable and profitable or whether it can
achieve viability or profitability at all, due to the difficulty of predicting
accurately the amount of revenues that the Company will generate, the amount of
expenses that will be required by its operations, and the Company's ability to
raise additional capital.


                                     -15-
<PAGE>   16
                              QUADRAX CORPORATION


PART II - OTHER INFORMATION



      Item 6 - Exhibits and Reports on Form 8-K

             (a)  Exhibits

      None since Form 10-KSB for fiscal year ended December 31, 1995 was filed
on April 12, 1996.

      27.1                  Financial Data Schedule
                            (Electronic Filing Only)


             (b)  Reports on Form 8-K

      The following Current Reports on Form 8-K were filed with the Securities
                            and Exchange Commission since April 12, 1996, the
                            date of the Company's

      Form 10-KSB for fiscal year ended December 31, 1995.



                                     -16-
<PAGE>   17
                            On July 2, 1996, the Company filed a Form 8-K dated
                                June 21, 1996 with respect to the dismissal
                                with prejudice of a defamation suit against
                                Quadrax by its former chairman, Pat Hayton.

                            On July 3, 1996, the Company filed a Form 8-K with
                                respect to its acquisition of certain assets of
                                Vega, U.S.A., ("Vega"), pursuant to the terms
                                of an Asset Purchase Agreement.

                            On July 31, 1996, the Company filed a Form 8-K with
                                respect to its press release announcing that it
                                had received an initial order from Cannondale
                                Corporation, the manufacturer of high
                                performance bicycles, for thermoplastic
                                composite handlebars.



                                     -17-
<PAGE>   18



                              QUADRAX CORPORATION



                                   SIGNATURES



  Pursuant to the requirements of the Securities Exchange Act of 1934, the
  registrant has duly caused this report to be signed on its behalf by the
  undersigned thereunto duly authorized.





                                        QUADRAX CORPORATION
                                        -------------------
                                           (Registrant)
                                    
                                    
                                    
                                    
                                    
   
     February 13, 1997                    /s/ James J. Palermo
    
 ---------------------------              -------------------------------
        (Date)                            James J. Palermo, Chairman and
                                          Chief Executive Officer
                                    
                                    
   
     February 13, 1997                    /s/ Edward A. Stoltenberg      
    
 ---------------------------              -------------------------------
        (Date)                            Edward A. Stoltenberg,  Senior Vice
                                          President, and Chief Financial Officer
                                          (Principal Accounting Officer)






                                     -18-