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-----BEGIN PRIVACY-ENHANCED MESSAGE-----1Proc-Type: 2001,MIC-CLEAR2Originator-Name: [email protected]3Originator-Key-Asymmetric:4MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen5TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB6MIC-Info: RSA-MD5,RSA,7Jtv025Ff0UKesEQzwXQSE5V/5t37oWyor0fixbF6c8JcZ7Hl1ViR/YpzQezYmjFJ8I1Ef59dzf/ioXX4c1WTmUw==910<SEC-DOCUMENT>0000351129-98-000009.txt : 1998060811<SEC-HEADER>0000351129-98-000009.hdr.sgml : 1998060812ACCESSION NUMBER: 0000351129-98-00000913CONFORMED SUBMISSION TYPE: 10-K14PUBLIC DOCUMENT COUNT: 415CONFORMED PERIOD OF REPORT: 1997063016FILED AS OF DATE: 1998060517SROS: NASD1819FILER:2021COMPANY DATA:22COMPANY CONFORMED NAME: CDX CORP23CENTRAL INDEX KEY: 000035112924STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845]25IRS NUMBER: 84077118026STATE OF INCORPORATION: CO27FISCAL YEAR END: 06302829FILING VALUES:30FORM TYPE: 10-K31SEC ACT:32SEC FILE NUMBER: 000-0973533FILM NUMBER: 986427393435BUSINESS ADDRESS:36STREET 1: 75 MCNEIL WAY, NO. 20737STREET 2: NO 2738CITY: DEDHAM39STATE: MA40ZIP: 0202641BUSINESS PHONE: 781-320-05304243MAIL ADDRESS:44STREET 1: 75 MCNEIL WAY45STREET 2: NO 2746CITY: DEDHAM47STATE: MA48ZIP: 0202649</SEC-HEADER>50<DOCUMENT>51<TYPE>10-K52<SEQUENCE>153<TEXT>545556SECURITIES AND EXCHANGE COMMISSION57Washington, D.C. 205495859FORM 10-K60Annual Report Pursuant to Section 13 or 15(d)61of the Securities Exchange Act of 19346263[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF64THE SECURITIES EXCHANGE ACT OF 19346566For the fiscal year ended June 30, 19976768[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF69THE SECURITIES EXCHANGE ACT OF 1934707172For the transition period from ___________ to _____________737475CDX CORPORATION76(Exact name of Registrant as specified in its charter)7778Commission file number 0-97357980Colorado 84-077118081(State or other jurisdiction of (I.R.S. Employer82incorporation or organization Identification No.)8384852 Charles Street 0290486Providence, RI (Zip Code)87(Address of principal executive offices)8889Registrant's telephone number, including area code90(401)274-47009192Securities registered pursuant to Section 12(b) of the Act:9394Title of each class Name of each exchange on which registered95None None9697Securities registered pursuant to 12(g) of the Act:98Common Stock, Par Value $.0199(Title of class)100101Indicate by check mark whether the Registrant (1) has filed all reports102required to be filed by Section 13 or 15(d) of the Securities Exchange Act of1031934 during the preceding 12 months (or for such shorter period that the104Registrant was required to file such reports), and (2) has been subject to105such filing requirements for the past 90 days. Yes ___ No X.106107Indicate by check mark if disclosure of delinquent filers pursuant to Item108405 of Regulation S-K is not contained herein, and will not be contained, to109the best of registrant's knowledge, in definitive proxy or information110statements incorporated by reference in Part III of this Form 10-K or any111amendment to this Form 10-K. [ ]112113Since February of 1986, there have been no published prices of the114Registrant's stock. The total number of shares held by nonaffiliates of the115Registrant as of September 30, 1997 was 1,330,191.116117Indicate the number of shares outstanding of each of the Registrant's classes118of common stock, as of June 30, 19971191204,887,927121122DOCUMENTS INCORPORATED BY REFERENCE123Document Part of 10-K into which incorporated124125None126127CDX CORPORATION1281997 Annual Report on Form 10-K129130Table of Contents Page #131132PART I133134ITEM 1 - Business 3135136A. General 3137B. Products And Services 3138C. Marketing And Customers 4139D. Product Development 4140E. Product Protection 5141F. Backlog 5142G. Competition 5143H. Employees 5144145ITEM 2 - PROPERTIES 5146147ITEM 3 - LEGAL PROCEEDINGS 5148149ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 6150151PART II152153ITEM 5 - MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED154SECURITY HOLDER MATTERS 6155156ITEM 6 - SELECTED FINANCIAL DATA 6157158ITEM 7 - MANAGEMENT DISCUSSIONS AND ANALYSES OF FINANCIAL159CONDITION AND RESULTS OF OPERATIONS 7160161ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 8162163ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON164ACCOUNTING AND FINANCIAL DISCLOSURES 8165166PART III167168ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 9169170ITEM 11 - EXECUTIVE COMPENSATION 10171172ITEM 12 - CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 12173174ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 13175176PART IV177178ITEM 14 - EXHIBITS, FINANCIAL SCHEDULES AND REPORTS ON FORM 8-K 13179180SIGNATURES 14181182<PAGE> 3183184PART I185186Item 1. BUSINESS187188A. General189190CDX Corporation is a Colorado corporation incorporated in 1978 with its191corporate offices headquartered in Providence, Rhode Island.192193The Business of the Company has consisted of the sale of computerized194pulmonary diagnostic equipment which is used in the medical profession to195test for indications of lung or congestive heart disease. Approximately19610,000 units have been sold.197198In December 1994 the Company acquired Compliance Systems, a manufacturer of199infection control products which provide emergency personnel with protection200during trauma response situations and assist compliance with certain OSHA201mandates. In FY96 the Company also introduced a new version of its Instant202Response Mask (IRM) with improved features designed to protect personnel203involved in administering emergency cardio-resuscitation techniques to204compliment the Compliance Systems product line.205206CDX also generates revenue from the sale of consumable and accessory items207associated with its diagnostic equipment. In addition, the Company has208developed an upgrade for its spirometers marketed to existing209customers. The Company has an updated version of its Model 110S spirometer210currently which incorporates the latest technology. This product is211marketed to physician offices, hospitals and industrial sites.212213B. Products And Services214215Approximately 17% of the Company's gross revenues in its most recent fiscal216year was attributable to the sale of its testing machines, 59% of gross217revenues was attributable to sales of consumable and accessory items and 9%218of gross revenues was attributable to repairs and maintenance. Bio-hazard219control products and the IRM comprised 13% of sales.220221The Company's objective is to increase gross revenues with the introduction222of the upgrade and upgraded version of the current spirometer and to223aggressively pursue the export markets. A new version of the Instant Response224Mask was released in December 1995. Although initially well received, this225product has not lived up to the Company's expectations and marketing efforts226and expenditures in connection with it have been greatly reduced.227228The types of products which the Company currently markets are described below.2292301. Instant Response Mask231Provides protection against the transmission of infectious232pathogens during the administration of emergency resuscitation233techniques such as CPR.2342352. 110S Spirometer236Computerized pulmonary diagnostic equipment which is used in237the medical profession to test for indications of lung or238congestive heart disease.239240<PAGE> 42412423. 110M Spirometer243A metric version of the 110S Spirometer specifically designed244for the international markets.2452464. 110MAX Spirometer247An upscale version of the 110S Spirometer with additional248features.2492505. Biosponse251A portable bio-hazard spill kit for bloodborne pathogens which252complies with OSHA regulation.2532546. Biopail255A complete clean up and personal protection for first reponders256against blood pathogens contained in a refillable two gallon257pail meeting OSHA Regulations.258259Additionally, the Company provides for sale of disposable and accessory items260associated with its testing equipment as well as maintenance and service261agreements; it also offers disposable items for the infection control markets.262263C. Marketing And Customers264265The Company's principal customers have historically been primary care266physicians, group practices, clinic, and medical centers. Portable267spirometers are typically used by internists, family physicians, and general268practitioners in their offices to conduct preliminary diagnostic tests of a269patients pulmonary function. Spirometers are also used extensively in270industry to provide screening diagnosis, establish baselines and monitor271pulmonary function in the workplace. The Company's customer base includes272pulmonologists, allergists, and cardiologists who require the speed,273accuracy, and flexibility of hospital-based systems in a small, light-weight,274portable system.275276During the year ended June 30, 1997, the Company did not have any one277customer responsible for 10% or more of sales activity or revenues.278279The Company currently markets its products directly to retail customers from280its Rhode Island office and through medical equipment dealers and281distributors, supported through a network of factory trained manufacturer's282representatives. The Company supports this sales network through direct mail,283advertising in clinical and trade publications, and participation in national284and regional trade shows.285286Relative to the IRM mask, the Company held exclusive worldwide distribution287rights under terms of an agreement with Valley Forge Scientific. During FYE2886.30.96 the Company relinquished its exclusive rights and has undertaken to289co-distribute the IRM with Valley Forge in return for a 10% royalty on all290IRM sales by Valley Forge.291292D. Product Development293294The Company has undertaken a product development program with the ultimate295objective of the following:296297The development of products specifically targeted at the equipment needs of298the physician's office. During the year ended June 30, 1996, the Company299spent $8,657 on research and development.300301<PAGE> 5302303Further, in March 1995 the Company acquired all rights to certain technology304relating to the firefighting and industrial markets from Global Environmental305Technologies, Inc. The Company had planned to develop prototype units and306was involved in strategic discussions with several interested parties which307have established presence in these markets. The Company has abandoned308pursuit of this project.309310E. Products Protection311312The company holds a patent issued by the U.S. Patent office in 1981 for the313overall structure and function of its remote pulmonary function tester known314as the CDX 110. The Company's current products have protection under certain315claims of this patent. The patent does not apply outside the United States.316317The Company holds a federal trademark "CDX" which is used on its products.318The Company uses additional trademarks related to the IRM mask.319320The Company's developmental efforts on the IRM mask has resulted in a U.S.321patent application. As per the terms of an agreement between the Company and322Valley Forge Scientific this patent has been assigned to Valley Forge. Under323the further terms of this agreement, the Company received the exclusive324worldwide distribution rights for the IRM mask.325326F. Backlog327328The Company does not currently have any backlog of sales orders or delays of329shipments due to lack of parts or supplies.330331G. Competition332333The market for the Company's products is characterized by rapid advancements334in technology and by intense competition among a number of manufacturers and335distributors. The Company believes that it competes favorably in the market;336however, no assurance can be given that the Company will have the financial337resources, marketing, distribution, service or support capabilities, depth of338key personnel or technological expertise to compete successfully in the339future.340341H. Employees342343As of June 30, 1997, the Company employed two full-time employees.344345Item 2. PROPERTIES346347The Company's administrative offices and manufacturing facilities consist348of approximately 3,500 square feet of office, manufacturing and storage space349which it leases from a related party. The Company believes that its rental350costs are equal to or less than those which would be charged for comparable351space on month to month basis by a third party. The facilities have been352rented on a month to month basis since March 1, 1995. Rental space is353available in the area, and the Company expects to be able to continue to354obtain a lease for adequate space at costs comparable to its current rent.355356Item 3. LEGAL PROCEEDINGS357358There are no legal proceedings pending against the Company.359360<PAGE> 6361362Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS363364The corporation did not submit any matter to a vote of security holders365during the year ended June 30, 1997.366367PART II368369Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND370RELATED SECURITY HOLDERS MATTERS371372There is no established public trading market for the Corporation's373common stock. The stock is traded over-the-counter in privately negotiated374transactions between market makers and brokers. Prices are published in the375pink sheets issued by the National Quotation Bureau, but sales are not376systematically reported by market makers and brokers.377378Holders379380Based upon the number of record holders, the approximate number of381shareholders of the common stock of the Corporation as of June 30, 1997382was 809.383384Dividends385386No dividends have been declared during the past fiscal years with387respect to common stock.388389Item 6. SELECTED FINANCIAL DATA390391<TABLE>392<S> <C> <C> <C> <C> <C>3931997 1996 1995 1994 1993394395Net Sales &396Operating397Revenues $379,608 $394,043 $445,285 $514,825 $568,925398399Profit (Loss) $(122,372) (206,413) (75,028) (259,143) (171,709)400401Profit (Loss)402per Common Share (.028) (.057) (.022) (.076) (.051)403404Total Assets 185,918 184,081 303, 838 248,727 288,749405406Long Term407Obligations 25,000 25,000 25,000 0 0408409Cash Dividend410Declared411per Share 0.00 0.00 0.00 0.00 0.00412413Weighted average414number of415Common Shares416outstanding 4,339,434 3,587,927 3,472,094 3,397,927 3,397,927417418</TABLE>419420<PAGE> 7421422MARKET INFORMATION423424CDX Corporation's common stock is traded over-the-counter in privately425negotiated transactions between makers and brokers.426427<TABLE>428<CAPTION>429430Price Range (closing bid) For fiscal year ending June 30:4314321997 1996 1995433<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>434435436Bid Prices Asked Prices Bid Prices Asked Prices Bid Prices Asked Prices437Quarter High Low High Low High Low High Low High Low High Low4384391st .1562 .125 .1875 .1875 .1875 .1875 .3125 .3125 .1875 .15625 .25 .18754402nd .125 .125 .1875 .1875 .15625 .15625 .25 .25 .1875 .15625 .25 .18754413rd .125 .125 .1875 .1875 .15625 .15625 .25 .25 .25 .1875 .25 .18754424th .125 .125 .1875 .175 .15625 .125 .1875 .1875 .1875 .1875 .3125 .3125443444</TABLE>445446These market quotations are from the National Daily Quotation Service. They447reflect prices between dealers without retail mark up, mark down or448commission. They do not represent actual transactions. No dividends have449been declared during the past two fiscal years with respect to common stock.450451Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND452RESULTS OF OPERATIONS453454Results of Operations455456Net Sales and Operating Revenues for FY 97 decreased by $14,402457which is down approximately 4% from the previous fiscal year. This compares458with a decrease of $51,242, or approximately 12%, in similar figures for FY45996 to FY 95. Cost of Sales decreased by $47,648 for FY 97 compared to FY 96,460with the Company sustaining an Operating Loss of $104,327. During the461previous fiscal year, costs and expenses increased by $78,439 from those of462FY 95 resulting in an Operating Loss of $195,928. FY 95 also showed an463Operating Loss of $66,193. Operating Losses as a percentage of Net Sales464were 27.5%, 49.7% and 14.9% for FY 97, FY 96 and FY 95, respectively.465Management plans to renew its efforts to reduce expenses and bring them into466line with margins as was successfully implemented in FY95 resulting in467reduction of $254,460 in Operating Costs and Expenses compared with FY 94.468469Cost of Goods Sold as a percent of Net Sales decreased from 59.8%470(235,441) in FY 96 to 49.5% ($187,793) in FY 97 due primarily to decreased471cost of raw materials and greater use of contract services. Similar costs472for FY 95 to FY 96 increased from 52.3% ($232,924) to 62.7% ($247,463) of473Revenues.474475Selling and Administrative Expenses decreased overall by $58,388, to476$296,142 for FY 97 from $354,430 for FY 96. As a percentage of Net Sales477these figures were 78.0% and 90.0% respectively which represents a 12.0%478decrease in such expenses between the two years. Comparable expenses for FY47995 were 62.6% ($278,554). The decrease in percentages of expenses shown in480FY 97 and FY 96 reflects a decrease in certain marginal advertising.481482Interest expense for FY 97 increased $7,635 to $18,065 for the483entire year. In FY 96, interest expense decreased $1,358. Interest income484decreased by $75 in FY 97 from the prior year due to reduced cash levels485during FY 97. FY 96 interest income of $95 represented a $248 decrease from486FY 95.487488<PAGE> 8489490Inflation has had a minimum impact upon the Revenues and Costs of491the Company.492493Liquidity And Capital Resources494495In fiscal year 1997, the Company's liquidity remained constant.496This compares with a decrease of $150,440 for FY 96. In FY96 this was due to497favorable working capital changes related to collections on accounts498receivable and increases in inventory which were offset by operating losses499and increases in accounts payable in connection with marketing efforts for500the IRM mask and increased borrowing from an officer. In FY97 the stabilizing501liquidity was the result of consistency in inventories, prepaid expenses and502certain capitalized development costs offset by operating losses and consistency503in accounts payable, accrued expenses and short term borrowings from an504officer.505506The Company expects that its current working capital position is507sufficient to continue to meet operating requirements during the coming508fiscal year and that it has sufficient reserves to meet some unforeseen509contingencies given a continued willingness on the part of several of its510officers to fund deficits with loans.511512Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA513514See Item 14 of this report.515516Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND517FINANCIAL DISCLOSURE518519None.520521<PAGE> 9522523PART III524525Item 10. DIRECTORS AND EXECUTIVE OFFICERS526527The current directors and executive officers of the Corporation, their528ages, their positions held in the Corporation and the term during which each529served in such position are as follows:530531DIRECTORS532533534Year First Elected535Name and All Positions or Nominated to536Held With the Corporation Age Become a Director537538539Harold I. Schein 61 1985540Chairman of the Board,541Treasurer and Director542543544Philip D. Schein 33 1989545President, Secretary546and Director547548Officers and directors are elected on an annual basis. The present term549of office for each director will expire at the next annual meeting of the550Company's stockholders at such time as his successor is duly elected.551552Officers serve at the discretion of the Board of Directors.553554555EXECUTIVE OFFICERS556557Name and All Positions Year First Term of558Currently Held Elected to Office559With the Corporation Age This Office Expiring560561Harold I. Schein (2) 61562Chairman of the Board, 1989 (1)563Chief Executive Officer, 1989 (1)564Treasurer, 1989 (1)565Director 1985 (1)566567Philip D. Schein (2) 33568President, 1992 (1)569Secretary, 1989 (1)570Director 1989 (1)571572(1) The executive officers serve at the pleasure of the board of directors573and do not have fixed terms.574575<PAGE> 10576577(2) Philip D. Schein is the son of Harold I. Schein578579HAROLD I. SCHEIN, 61, serves as Chairman of the Board, Chief Executive580Officer, Treasurer and a Director. Mr. Schein, since January 1990, has been581President of Richmond Square Capital Corporation, a Small Business Investment582corporation which is licensed by the SBA. Prior to 1990, Mr. Schein served583as chairman and chief executive officer of William Bloom & Son, Inc, a584manufacturer of store fixtures. From March 1989 to September 1992, Mr. Schein585also served as chairman of Piezo Electric Products, Inc. of Metuchen, New586Jersey, a publicly owned company. He is also a developer of commercial real587estate. Mr. Schein became chairman of the board of directors and treasurer588of the Corporation in March 1989.589590PHILIP D. SCHEIN, 33, serves as President, Secretary and a Director. Mr.591Schein became secretary of the corporation in March 1989 and assumed the592office of president in October 1992. Prior to this, Mr. Schein held the593position of Executive Vice President of William Bloom & Son, a manufacturer594of custom store fixtures, where he was in charge of sales and manufacturing.595He is a 1985 graduate of Boston University.596597Item 11. EXECUTIVE COMPENSATION598599No executive officer received in excess of $100,000.600601No executive officer of the Corporation received other compensation not602reported in the above cash compensation table in excess of $25,000 or 10% of603the compensation reported in the above cash compensation table.604605Directors who are not regular, full-time employees may be compensated606for service on the board of directors at the rate of $1,500 per director per607quarter, i.e., $6,000 annually. In order to qualify for quarterly608compensation, a director must attend the majority of meetings held within the609quarter. No such payments have been made since 1989.610611SUMMARY COMPENSATION TABLE612Annual Compensation613614Long Term615Compensation616Awards617618Securities619Name & Principal Fiscal Other Annual Underlying620Position Year Salary Compensation(1) Option/SARS(#)621________________ ______ _______ ____________ ______________622623Philip D. Schein 1997 $65,000 5,000624President & CEO 1996 65,000 15,0006251995 65,000 0626627Harold I. Schein 1997 $ 0 17,500628Chairman & 1996 0 0629Treasurer 1995 0 5,000630631(1) Certain perquisites provided to each of the named executive officers632totaled less than 10 percent of each officer's total salary and633Stock Option Grants.634635<PAGE> 11636637OPTION/SAR GRANTS TABLE638<TABLE>639<CAPTION>640641Option/SAR Grants in Last Fiscal Year642643Individual Grants644645<S> <C> <C> <C> <C> <C>646Percent of total647options/SARs648granted to Exercise or649Options/SARs employees in base price Grant date650Name Granted(#) fiscal year ($/sh) Expiration Date Value(1)651________________ ____________ ________________ ___________ _______________ ___________652653Philip D. Schein 5,000 22.2 $0.25 10/98 $0654655Harold I. Schein 17,500 77.8 0.25 04/98 0656</TABLE>657658(1) Market value of underlying securities at grant date discounted by659two-thirds to reflect restrictive provisions, minus exercise or base price.660661<TABLE>662<CAPTION>663664AGGREGATED OPTION EXERCISES IN 1997665AND666OPTION/SAR VALUES667668<S> <C> <C>669Number of unexercised Value of unexercised in-the-money670options/SARs at fiscal year-end(#) options/SARs at fiscal year end($)671Name Exercisable/unexercisable Exercisable/unexercisable672_________________ __________________________________ __________________________________673674Philip D. Schein 253,333/0 $6,000/$0675676Harold I. Schein 602,500/0 $9,000/$0677678</TABLE>679680(1) Market value of underlying securities at FYE 6.30.97 discounted by681two-thirds to reflect restrictive provisions, minus exercise or base price.682683Stock Option Plan684685In November, 1987, the Shareholders of the Corporation approved an686incentive stock option plan which provides that options may be granted to687officers and employees, with a maximum aggregate number of 150,000 shares688issuable under the plan. Shares underlying granted options are exercisable68925% on the date of grant and 25% each year thereafter on a cumulative basis.690Unexercised options lapse ten years after the date of grant or expire within69190 days of termination of employment. Exercise price is fair market value of692a share of common stock at date of grant. The plan has a term of ten years.693694In November 1987, the Directors of the Corporation approved a695Non-Qualified Stock Option Plan for employees, consultants and directors.696The Corporation has reserved 60,000 unregistered shares of its common stock697for use in this plan. During 1993, the Board of Directors reserved another6981,440,000 unregistered shares of its common stock for use in this plan. Each699of the four outside directors were granted options for 15,000 shares at $.10700per share exercisable during their continuation as an employee, director or701advisory member of, or consultant to the Company, and for the three year702period thereafter. In addition, during 1993, the Company granted one of its703704<PAGE> 12705706directors options for 250,000 shares at $.10 per share and granted one of its707consultants options for 77,800 shares at $.05 per share.708709A summary of the plans at June 30, 1997 is as follows:710711TOTAL SHARES SHARES AT OPTION OPTION712RESERVED OUTSTANDING PRICE713____________ ________________ _______7147157161987 Incentive Stock 150,000 0 n/a717Option Plan7187191987 Non-Qualified720Stock Option Plan 1,500,000 310,000 $.1072177,800 $.05722100,000 $.2572315,000 $.2572422,500 $.25725726In December 1992, the Company issued 600,000 warrants for its common727stock to certain of its officers and consultants in return for services. The728warrants are exercisable at $.02 per share with an expiration date of December72931, 1998. Also, in February 1995, the Company issued 75,000 warrants for730its common stock to an investor in connection with a loan. The warrants are731divided into three equal classes with exercise prices of $0.25, $0.375 and732$0.50 respectively with all classes expiring in February 1998.733734735Item 12. CERTAIN BENEFICIAL OWNERS AND MANAGEMENT736737SECURITY OWNERSHIP OF CERTAIN BENEFICIAL738OWNERS AND MANAGEMENT739740The following table sets forth information as to persons other than management741(see the following table) who are known to management to beneficially own742more than 5% of the outstanding voting stock as of June 30, 1997.743744Title Name and Address Amount and Nature of Percent of745of Class of Beneficial Owner Beneficial Ownership Class746________ ___________________ ____________________ __________747748Common Mendel S. Kaliff 247,223 Direct 5.6%749Stock 70 N.E. Loop 410750No. 450751San Antonio, TX 78216752753The following table sets forth the security ownership of all directors and754executive officers of the corporation as of June 30, 1997.755756Title Name of Amount and Nature of Percent of757of Class Beneficial Owner Beneficial Ownership of Class Position758________ ________________ ____________________ __________ ________759760Common Harold I. Schein 2,616,737 (1) 59.6% Treasurer,761Stock Director, and762Chairman of763the Board764765<PAGE> 13766767Common Philip D. Schein 426,000 (2) 9.7% President,768Stock Secretary,769Director770771Common Directors and 3,042,737 69.3%772Stock Officers as a773Group (2 persons)774____________________________775776(1) Shares subject to sole investment and voting power. Includes options777and warrants granted by the corporation to purchase 585,000 shares, as to778which option shares the optionee/warrantholder disclaims beneficial ownership.779780(2) Shares subject to sole investment and voting power. Includes options781and warrants granted by the corporation to purchase 215,000 shares, as to782which option shares the optionee/warrantholder disclaims beneficial ownership.783784Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS785786The Company entered into a lease agreement on March 26, 1990 with a787related party to rent its facilities in Providence, Rhode Island. Base788monthly rental payments were modified to $2,500 beginning October 1995 and the789lease term is five years, expiring on February 28, 1995. In May of 1996 the790Company and related party modified the terms of the lease to month to month791rental payments of $1,500. The Company subleases a part of this space to an792unrelated party for $500 per month. The Company believes this to be at or793below the rent for comparable space.794795PART IV796797Item 14. EXHIBITS, FINANCIAL SCHEDULES AND REPORTS ON FORM 8-K798799(a) The following documents are filed as part of this report:8008011. Financial Statements:802803Opinions of independent public accountants dated804May 27, 1998 on the financial statements as follows:805806Balance Sheets, June 30, 1997 and 1996.807808Statements of Earnings for the years ended June 30, 1997,8091996 and 1995.810811Statements of Cash Flows for the years ended June 30, 1997,8121996 and 1995.813814<PAGE> 14815816Statements of Changes in Stockholders' Equity for the years817ended June 30, 1997, 1996 and 1995.8188192. Financial Statement Schedules:820All schedules for which provision is made in the applicable821regulations of the Securities and Exchange Commission have822been omitted because they are not required if the823information is shown in the financial statements and notes824thereto.825826(b) Reports on form 8-K827No reports on Form 8-K were filed.828829(c) Exhibits830831See the Index of Exhibits immediately preceding the exhibits832attached to this report. The exhibits are incorporated herein833by this reference.834835SIGNATURES836837Pursuant to the requirements of Section 13 or 15(d) of the Securities and838Exchange Act of 1934, the Registrant has duly caused this report to be signed839on its behalf by the undersigned, thereunto duly authorized.840841CDX CORPORATION842(Registrant)843844/s/Philip D.. Schein845846By: __________________847Philip D. Schein848President849850Dated: May 31, 1998851852Pursuant to the requirements of the Securities Exchange Act of 1934,853this report has been signed by the following persons on behalf of the854Registrant and in the capacities and on the dates indicated.855856Signature Title Date857858/s/Harold I. Schein859860_______________________ Chairman of the Board, May 31, 1998861Harold I. Schein Treasurer and Director862863864/s/Philip D. Schein865866_______________________ President, Secretary and May 31, 1998867Philip D. Schein Director868869<PAGE> 15870871INDEX TO EXHIBITS872873(a) Exhibits:874875The following documents are filed herewith or have been included as876exhibits to previous filings with the Commission and are incorporated877herein by this reference:878879Exhibit No. Document880* 3.1 Restated Articles of Incorporation dated881July 3, 1985882(incorporated by reference to the exhibits883and Registrant's report filed on Form 10-K884dated September 25, 1985)885886* 3.2 Articles of Amendment dated December 4, 1987887to the Restated Articles of Incorporation888(incorporated by reference to the exhibits889to Registrant's report filed on Form 10-K890dated September 15, 1989)891892* 3.3 Bylaws dated July 5, 1985893(incorporated by reference to the exhibits894to Registrant's report filed on Form 10-K895dated September 15, 1989)896897x 23.1 Consent of Counsel, Mark T. Thatcher, P.C.898899x 23.2 Consent of Cayer, Prescott, Clune & Chatellier,900LLP, Independent Certified Public Accountants901902x 27.0 Financial Data Schedule903______________904905* Incorporated by reference from the issuer's Annual Report Pursuant906to Section 13 or 15(d) of the Securities Exchange Act of 1934907908x Filed herewith909910<PAGE>911912CDX CORPORATION913914FINANCIAL STATEMENTS915YEARS ENDED916JUNE 30, 1997, 1996, and 1995917918<PAGE>919920REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS921922To the Stockholders and Board of Directors923CDX Corporation924925We have audited the balance sheets of CDX Corporation as of June 30, 1997 and9261996, and the related statements of operations, stockholders' equity and cash927flows for the years ended June 30, 1997, 1996, and 1995. These financial928statements are the responsibility of the Company's management. Our929responsibility is to express an opinion on these financial statements based930on our audits.931932We conducted our audits in accordance with generally accepted auditing933standards. Those standards require that we plan and perform the audits to934obtain reasonable assurance about whether the financial statements are free of935material misstatement. An audit includes examining, on a test basis, evidence936supporting the amounts and disclosures in the financial statements. An audit937also includes assessing the accounting principles used and significant938estimates made by management, as well as evaluating the overall financial939statement presentation. We believe that our audits provide a reasonable940basis for our opinion.941942In our opinion, the financial statements referred to above present fairly, in943all material respects, the financial position of CDX Corporation as of June94430, 1997 and 1996, and the results of its operations and its cash flows for945the years ended June 30, 1997, 1996, and 1995 in conformity with generally946accepted accounting principles.947948The accompanying financial statements have been prepared assuming that the949Company will continue as a going concern. As discussed in Note 13 to the950financial statements, the Company has suffered recurring losses from951operations and has a net capital deficiency, which raises substantial doubt952about its ability to continue as a going concern. Management's plans953regarding those matters are also described in Note 13. The financial954statements do not include any adjustments that might result from this955uncertainty.956957958May 27, 1998 /s/ Cayer, Prescott, Clune & Chatellier, LLP959960<PAGE>961962CDX CORPORATION963964BALANCE SHEETS965JUNE 30, 1997 and 1996966967ASSETS9689691997 1996970___________ __________971Current assets:972Cash $ 1,305 $ 69973Accounts receivable - trade (net of allowance974for doubtful accounts of $2,010975in 1997 and $1,560 in 1996) 39,488 53,177976Inventory 46,555 73,587977Prepaid expenses and other 17,473 6,497978Total current assets 104,821 133,330979980Property and equipment -981net of accumulated depreciation 20,228 22,806982983Other assets:984Invention rights and deferred product985development costs (less accumulated986amortization of $435,340 in 1997 and987$432,298 in 1996) 60,869 27,945988989TOTAL ASSETS $ 185,918 $ 184,081990991992LIABILITIES AND STOCKHOLDERS' EQUITY993994Current liabilities:995Accounts payable - trade $ 159,617 $ 182,659996Accounts payable - shareholder 270,500 243,544997Accrued interest payable 48,816 31,302998Accrued expenses 36,458 33,523999Total current liabilities 515,391 491,02810001001Other liabilities:1002Notes payable - officers 206,705 119,8591003Notes payable 55,000 55,0001004Total other liabilities 261,705 174,85910051006Stockholders' equity:1007Common stock, $.01 par value; 10,000,0001008shares authorized, 4,888,093 and 3,588,0931009shares issued at June 30, 1997 and 1996 48,881 35,8811010Capital surplus 4,771,798 4,771,7981011Deficit (5,411,857) (5,289,485)1012Less treasury stock; 166 shares,1013no assigned value ___________ ___________1014Total stockholders' equity (591,178) (481,806)1015TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 185,918 $ 184,08110161017SEE NOTES TO FINANCIAL STATEMENTS.10181019<PAGE>10201021CDX CORPORATION10221023STATEMENTS OF OPERATIONS1024YEARS ENDED June 30, 1997, 1996, and 1995102510261997 1996 19951027___________ ___________ ___________1028Revenues:1029Net sales and other revenues $ 379,608 $ 394,043 $ 445,2851030Operating costs and expenses:1031Cost of sales 187,793 235,441 232,9241032Selling & administrative expenses 296,142 354,430 278,5541033Total operating1034costs and expenses 483,935 589,971 511,47810351036Operating loss (104,327) (195,928) (66,193)10371038Other income (expense):1039Interest expense (18,065) (10,430) (11,788)1040Interest income 20 95 3431041Loss on investment (150) 2,6101042Net other expense (18,045) (10,485) (8,835)10431044Net loss $ (122,372) (206,412) $ (75,028)10451046Net loss per common share $ (.028) $ (.057) $ (.022)10471048Weighted-average number of1049common shares outstanding 4,339,434 3,587,927 3,472,09410501051SEE NOTES TO FINANCIAL STATEMENTS.10521053<PAGE>10541055CDX CORPORATION10561057<TABLE>1058<CAPTION>10591060STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY1061YEARS ENDED JUNE 30, 1997, 1996 AND 199510621063<C> <C> <C> <C> <C> <C>1064Shares1065Shares Par Capital Accumulated Treasury1066Outstanding Value Surplus Deficit Stock Total1067<S> ___________ __________ ___________ ____________ ________ ___________1068Balance, June 30, 1995 3,588,093 $ 35,881 $ 4,771,798 $(5,083,072) 166 $ (275,393)10691070Net Loss (206,413) (206,413)10711072Balance, June 30, 1996 3,588,093 35,881 4,771,798 (5,289,485) 166 (481,806)10731074Common Stock Issued 1,300,000 13,000 13,00010751076Net Loss (122,372) (122,372)10771078Balance, June 30, 1997 4,888,093 $ 48,881 $ 4,771,798 $ 5,411,857 166 $ (591,178)10791080SEE NOTES TO FINANCIAL STATEMENTS10811082<PAGE>10831084CDX CORPORATION10851086STATEMENTS OF CASH FLOWS1087YEARS ENDED June 30, 1997,10881996, and 19951089109010911997 1996 19951092___________ ___________ ___________10931094Cash was provided by (used for):1095Operating activities:1096Net loss $ (122,372) $ (206,413) $ (75,028)1097Items in net loss not1098affecting cash:1099Depreciation and amortization 10,321 20,797 24,5961100Stock Based Compensation 13,0001101Increase (decrease) in cash from1102changes in assets and liabilities:1103Accounts receivable 13,689 2,966 10,2211104Inventory 27,032 36,372 (3,387)1105Prepaid expenses and other (10,976) 8,134 (8,257)1106Other assets (39,424) 17,176 (39,757)1107Accounts payable - trade (23,042) 11,231 3,0071108Accounts payable - shareholder 26,956 40,713 53,3251109Other current liabilities 20,449 14,952 14,8891110Total cash used for operations (84,367) (54,072) (23,001)1111__________ __________ _________11121113Investing activities:1114Purchase of property and equipment (1,243) (1,760) (2,385)1115Total cash provided by1116(used for) investing activities (1,243) (1,760) 22511171118Financing activities:1119Cash overdraft (83)1120Issuance of capital stock 1,9011121Additional paid-in capital 45,6001122Proceeds from notes payable -1123officers 90,000 22,500 15,0001124Proceeds from notes payable 39,0091125Payments on notes payable (3,154) (2,741) (42,509)1126Total cash provided by (used1127for) financing activities 86,846 19,759 58,91811281129Increase (decrease) in cash1130during the year 1,236 (36,073) 36,14211311132Cash balance, beginning of the year 69 36,14211331134Cash balance, end of the year $ 1,305 $ 69 $ 36,14211351136Supplemental disclosures of1137cash flow information:1138Cash paid during the year1139for interest $ 551 $ 79 $ 2,98011401141SEE NOTES TO FINANCIAL STATEMENTS11421143<PAGE>11441145CDX CORPORATION11461147NOTES TO FINANCIAL STATEMENTS1148YEARS ENDED JUNE 30, 1997, 1996 and 19951149115011511. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES11521153Background11541155CDX Corporation (the Company) was incorporated in June, 1978 to1156engage in the manufacture and sale of computerized pulmonary diagnostic1157equipment used in the medical profession. This equipment tests for1158indications of lung or congestive heart disease. The Company also1159manufactures and sells other medical and sanitization equipment.11601161Invention Rights11621163In 1978, the Company's two founding shareholders granted to the1164Company partial invention rights relating to its pulmonary function screening1165devices in exchange for 185,625 shares of common stock. In 1980, they1166granted full rights to the device in exchange for an additional 75,000 shares1167of common stock at a price of $1.332 per share. For financial accounting1168purposes, the invention rights have been recorded at an estimated fair value1169of $350,532 or $1.332 per share for the 260,625 shares of common stock issued,1170and $3,380 for legal fees pertaining to the patent application. Such value is1171considered appropriate based upon the substantial amount of cash invested by1172shareholders at $1.332 per share, other than those who were issued common1173stock in exchange for invention rights. Until fiscal year 1987, amortization1174had been provided on a straight-line basis over an estimated useful life of1175nineteen years. In 1987, Management reviewed the economic benefit of the1176invention rights and accelerated the remaining amortization over a five year1177period in order to represent fairly the remaining economic life of the1178invention rights. The entire effect of this change in estimate is reflected1179in the year ended June 30, 1987 and subsequent years.11801181In July of 1989, the Company entered into a contract for the1182development of technological enhancements to its computerized pulmonary1183equipment. For financial accounting purposes, these enhancements have been1184recorded at cost, in accordance with Statement of Financial Accounting1185Standards No. 86. Amortization is provided on a straight-line basis over the1186estimated useful life of five years. Amortization began in January of 19911187with the introduction of the new Spiro-Max.11881189Revenue Recognition11901191Revenue is recognized upon the invoicing and shipping of equipment.11921193Accounts Receivable11941195An allowance for doubtful accounts receivable is provided equal to1196the estimated collection losses that will be incurred in collection of all1197receivables. Estimated losses are based on historical collection experience1198coupled with review of the current status of the existing receivables and1199amounted to $2,010 and $1,560 at June 30, 1997 and 1996, respectively. The1200Company grants credit to customers who are located throughout the United1201States.12021203(CONTINUED)12041205<PAGE>12061207CDX CORPORATION12081209NOTES TO FINANCIAL STATEMENTS1210YEARS ENDED JUNE 30, 1997, 1996, and 1995121112121. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)12131214Inventories12151216Inventories are valued at the lower of cost or market using the1217first-in, first-out method. Work in process and finished goods are valued at1218production cost represented by materials, labor and overhead.12191220Property and Equipment12211222Property and equipment are recorded at cost. Depreciation and1223amortization are recorded using the straight line and double declining1224balance methods over the estimated useful lives of the assets.12251226Income Taxes12271228Effective July 1, 1993, the Company adopted Statement of Financial1229Accounting No. 109, "Accounting for Income Taxes" (FAS 109). Under the1230provisions of FAS 109, an entity recognizes deferred tax assets and1231liabilities for the future tax consequences of events that have been1232previously recognized in the Company's financial statements or tax returns.1233The measurement of deferred tax assets and liabilities is based on provisions1234of the enacted tax law; the effects of future changes in tax laws or rates1235are not anticipated. The adoption of FAS 109 did not have an effect on the1236Company's financial statements, nor have any prior year financial statements1237been restated.12381239Per Share Data12401241Loss per common share was computed by dividing the net loss by the1242weighted average number of shares of common stock outstanding and common1243stock equivalents (unless antidilutive) during the periods (4,888,093 shares1244at June 30, 1997 and 3,588,093 shares at June 30, 1996 and 3,588,093 shares1245at June 30, 1995).12461247Use of Estimates12481249The preparation of financial statements in conformity with generally1250accepted accounting principles requires management to make estimates and1251assumptions that affect the reported amounts of assets and liabilities and1252disclosure of contingent assets and liabilities at the date of the financial1253statements and the reported amounts of revenues and expenses during the1254reporting period. Actual results could differ from those estimates.12551256(CONTINUED)12571258<PAGE>12591260CDX CORPORATION12611262NOTES TO FINANCIAL STATEMENTS1263YEARS ENDED JUNE 30, 1997, 1996, and 1995126412652. INVENTORY12661267Inventory consisted of the following at June 30:126812691997 19961270____ ____12711272Finished goods $27,557 34,2241273Raw materials 17,229 35,7201274Work-in-progress 1,769 3,64312751276Total $46,555 $73,587127712783. PROPERTY AND EQUIPMENT12791280Property and equipment consists of the following at June 30:128112821997 19961283____ ____1284Office equipment and furniture $66,400 $ 65,8391285Production equipment 35,257 35,2571286Computer equipment 70,084 69,4021287Leasehold improvements 16,256 16,2561288Total 187,997 186,7541289Less: accumulated depreciation 167,769 163,94812901291Net property and equipment $20,228 $ 22,80612921293Depreciation expense for the years ended June 30, 1997 and 1996 was1294$3,821 and $5,052, respectively.129512964. INCOME TAXES12971298Due primarily to the utilization of net operating loss carryforwards, the1299Company has no provisions for income taxes for 1997, 1996, and 1995.13001301(CONTINUED)13021303<PAGE>13041305CDX CORPORATION13061307NOTES TO FINANCIAL STATEMENTS1308YEARS ENDED JUNE 30, 1997, 1996, and 1995130913104. INCOME TAXES (Continued)13111312Deferred income taxes reflect the net tax effects of temporary differences1313between the carrying amounts of assets and liabilities for financial reporting1314purposes and the amounts used for income tax purposes. The Company's net1315deferred tax asset balances are primarily attributable net operating loss1316carryforwards and tax credits. At June 30, 1997, 1996, and 1995, the1317Company's deferred tax assets consisted of the following:131813191997 1996 19951320____ ____ ____13211322Deferred tax assets $ 807,423 $1,157,131 $1,209,2511323Valuation allowance (807,423) (1,157,131) (1,209,251)13241325Net deferred tax assets1326recognized on the1327accompanying balance sheets $ 0 $ 0 $ 013281329The components of the income tax (benefit) consisted of the following for the1330years ended June 30, 1997, 1996, and 1995:133113321997 1996 19951333____ ____ ____13341335Current $(28,868) $(49,539) $(18,007)1336Deferred - using a blended1337federal and state rate of 24% 0 0 01338Tentative tax provision (benefit) (28,868) (49,539) (18,007)1339Less: valuation allowance 28,868 49,539 18,00713401341Net income tax provision (benefit) $ 0 $ 0 $ 013421343At June 30, 1997, the Company had net operating loss carryforwards of1344approximately $3,281,059 available to offset future income that would1345otherwise be subject to federal income taxes. Net operating loss carry-1346forwards in the amounts of $810,624, $1,453,610 and $421,786 will expire1347in 1997, 1996, and 1995 respectively.13481349The Company has investment tax credit carryforwards of approximately1350$1,532 which will expire in years 1997 through 2001 and approximately1351$18,437 of research and development costs that will expire in years 19971352through 2001.13531354If certain substantial changes in the Company's ownership should occur,1355there would be an annual limitation on the amount of net operating loss1356and investment tax credit carryforwards which could be utilized.13571358(CONTINUED)13591360<PAGE>13611362CDX CORPORATION13631364NOTES TO FINANCIAL STATEMENTS1365YEARS ENDED JUNE 30, 1997, 1996, and 1995136613674. INCOME TAXES13681369At June 30, 1996, the Company had various credits and net operating1370loss carry-forwards which may be offset against taxable income or federal1371income tax of future years as follows:13721373Net Investment Development1374Operating Loss Tax Credit Cost Credit1375Expiration Carry - Carry - Carry -1376Year Forwards Forwards Forwards1377__________ ______________ ___________ __________137813791997-98 810,624 502 2,66013801998-99 358,582 23713811999-00 362,574 15813822000-01 42,226 3413832001-02 142,408 601 15,77713842005-06 95,31713852006-07 348,94913862007-08 334,60613872008-09 207,26613882009-10 253,27313892010-11 204,95013902011-12 120,28413911392Total $3,281,059 $ 1,532 $ 18,437139313941395Reductions in Investment Tax Credits carry-forwards are due to the1396reduction of benefits provided by the Tax Reform Act of 1986.13971398The Company has a capital loss carryover of $80,000.139914005. ACCRUED EXPENSES14011402Accrued expenses are as follows for June 30:140314041997 19961405_______ _______1406Accrued vacation $ 5,394 $ 4,2121407Accrued taxes 1,814 6,1571408Accrued payroll and commissions 1,0641409Accrued professional and utilities 29,250 22,09014101411Total $36,458 $33,52314121413(CONTINUED)14141415<PAGE>14161417CDX CORPORATION1418NOTES TO FINANCIAL STATEMENTS1419YEARS ENDED JUNE 30, 1997, 1996 AND 1995142014216. NOTES PAYABLE - OFFICERS14221423During 1993, an officer of the Company loaned the Company $80,100,1424with interest to be paid at 8%. During 1994, the same officer loaned the1425Company an additional $5,000 at 8% interest. No payments are expected1426during the next fiscal year per a forbearance agreement on December 2,14271996.14281429During 1995, an officer of the Company loaned the Company $15,000,1430with interest to be paid at 8%. No payments are expected during the next1431fiscal year.14321433During 1996, officers of the Company loaned the Company $22,500 with1434interest to be paid at 9%, monthly principal and interest payments will1435continue to be made during the next fiscal year.14361437During 1997, an officer of the Company loaned the Company $75,000,1438with interest to be paid at 9%, monthly principal and interest payments1439will continue to be made during the next fiscal year. Another officer1440of the Company loaned the Company $15,000 with interest to be paid at144113.99%, monthly principal and interest payments will continue to be made1442during the next fiscal year.144314447. NOTES PAYABLE14451446At June 30, notes payable consisted of the following:144714481997 19961449_______ _______145014516% interest bearing note payable to a related party $25,000 $25,0001452145310% interest bearing note payable to a1454related party.145525,000 25,00014561457Non-interest bearing payable to investor.1458Repayment is based on product sales 5,000 5,00014591460Total $55,000 $55,000146114628. STOCKHOLDERS' EQUITY14631464In November 1987, the Shareholders of the Company approved an1465incentive stock option plan which provides that options may be granted to1466officers and employees, with a maximum aggregate number of 150,000 shares1467issuable under the plan. Shares underlying granted options are exercisable146825% on the date of grant and 25% each year thereafter on a cumulative basis.1469Unexercisable options lapse ten years after the date of grant or expire within147090 days of termination of employment. Exercise price is fair market value of1471a share of common stock at date of grant. The plan has a term of ten years.14721473(CONTINUED)14741475<PAGE>14761477CDX CORPORATION14781479NOTES TO FINANCIAL STATEMENTS1480YEARS ENDED JUNE 30, 1997, 1996, and 1995148114828. STOCKHOLDERS' EQUITY (Continued)14831484In November 1987, the Directors of the Company approved a Non-Qualified1485Stock Option Plan for employees, consultants and directors. The Company has1486reserved 60,000 unregistered shares of its common stock for use in this plan.1487During 1992, the Board of Directors reserved another 1,440,0001488unregistered shares of its common stock for use in this plan. Each of the1489four outside directors were granted options for 15,000 shares at $.10 per1490share exercisable during their continuation as an employee, director or1491advisory member of, or consultant to the Company, and for the three year1492period thereafter. In addition, during 1993, the Company granted one of its1493directors options for 250,000 shares at $.10 per share and granted one of its1494consultants options for 77,800 shares at $.05 per share, and in 1994, the1495Company granted to a related party options for 100,000 shares at $.25 per1496share. In 1995 the Company granted to an officer of the Company a five year1497option to purchase 15,000 shares at $.25 per share. In 1996, the Company1498granted to officers of the Company five year options to purchase 22,5001499shares at $.25 a share.15001501In addition, in 1992, the Company issued 600,000 warrants for its1502common stock with an exercise price of $.02 to certain of its officers and1503consultants in return for forbearance and modification of certain notes and1504accounts payable and services. The warrants expire December 31, 1998.1505Further, during 1995, the Company issued 75,000 warrants for its common stock1506to an unrelated party in connection with a loan. The warrants are divided1507equally into three classes of 25,000 each designated A, B, C with exercise1508prices of $.25, $.375 and $.50, respectively, all of which expire in February1509of 1998. The Company has reserved 675,000 of its authorized common stock in1510connection with its warrants.15111512In December 1996, the Directors of the Company issued 1,300,000 shares1513of authorized common stock at $.01 per share to officers of the Company1514and a related party for services.15151516A summary of the plans at June 30, 1997 is as follows:15171518Total Shares Share Options1519Option1520Reserved Outstanding Price1521____________ _____________ ______152215231987 Incentive Stock Option Plan 150,000 75,000 $.225152415251987 Non-Qualified Stock Option Plan 1,500,000 310,000 $.10152677,800 $.051527100,000 $.25152815,000 $.25152922,500 $.25153015311992 Stock Warrants Plan 600,000 600,000 $.0215321995 Stock Warrants Plan 75,000 25,000 $.25153325,000 $.375153425,000 $.5015351536(CONTINUED)15371538<PAGE>15391540CDX CORPORATION1541NOTES TO FINANCIAL STATEMENTS1542YEARS ENDED JUNE 30, 1997, 1996, and 19951543154415459. LEASE AGREEMENT - RELATED PARTY15461547The Company entered into a lease agreement on March 26, 1990 with a1548related party to rent its facilities in Providence, Rhode Island. Original1549base monthly rental payments total $4,594 and the lease term is five years,1550expiring on February 28, 1995. On September 1, 1994, the related party agreed1551to reduce base monthly rental to $2,500 on June 1, 1996. The lease agreement1552was not renewed and the Company is renting the facilities on a monthly basis.15531554Minimum lease payments and rental expense charged to operations are1555as follows:15561557Date Minimum lease payments Rental expense1558____ ______________________ ______________15591997 $19,45215601996 29,63215611995 $34,188 32,19815621563156410. SEGMENT INFORMATION15651566Industry Segments15671568Approximately 92% of the Company's business consists of sales of1569computerized pulmonary diagnostic equipment and supplies. The rest of the1570Company's business consists of sales of infection and bio-hazard control1571products. The Company does not operate in other industry segments. The1572Company has no foreign operations.15731574Major Customers15751576The Company has sold its products primarily through an independent1577national distribution network. In May of 1989, management put into effect a1578plan to phase out the independent distributors and move towards a nationwide1579team of commissioned representatives. During 1991, current management has1580begun to restore the independent network of distribution and currently has in1581excess of one hundred distributors. The final market for the Company's1582products is the medical field, i.e. physicians, hospitals and the occupational1583health sector. No distributor or customer accounted for 10% or more of the1584Company's sales in 1997, 1996 or 1995.1585158611. SUPPLEMENTARY INCOME STATEMENT INFORMATION15871588For the years ended June 30, the following supplemental expense1589information is presented for analysis.159015911997 1996 19951592____ ____ ____15931594Repairs and maintenance $ 988 2,160 $11,4851595Advertising 8,053 67,633 8,0541596Sales and property taxes 2,489 2,355 18,9171597Provision for doubtful accounts 1,800 1,800 1,34915981599(CONTINUED)16001601<PAGE>16021603CDX CORPORATION16041605NOTES TO FINANCIAL STATEMENTS1606YEARS ENDED JUNE 30, 1997, 1996, AND 19951607160812. FINANCIAL INSTRUMENTS16091610The Company is engaged primarily in the distribution of specialized1611medical equipment in North America. The Company performs ongoing credit1612evaluations of its customers' financial condition and, generally, requires1613no collateral from its customers.16141615Financial instruments that potentially subject the Company to1616concentrations of credit risk consist principally of trade accounts1617receivable. Concentrations of credit risk with respect to trade receivables1618are limited due to the number of customers comprising the customer base1619and their dispersion across geographic areas.16201621The carrying amounts relected in the balance sheets for cash and1622notes payable approximate the respective fair values due to the short1623maturities of those instruments.1624162513. FUTURE OPERATIONS16261627The accompanying financial statements have been prepared in1628conformity with generally accepted accounting principles, which contemplate1629continuation of the Company as a going concern. However, the Company suffered1630losses of $122,372, $206,413, and $75,028 during the years ended June 30,16311997, 1996, and 1995, respectively. In addition, the Company has a net1632stockholders' deficiency of $591,178 at June 30, 1997.16331634The Company has been in the process of developing new and innovative1635products. The development of these products has taken longer than planned.1636The Company brought some of these products to market, which have been1637met with a demand for improvements and changes to the products. Management1638plans to develop upgrades and improvements to existing products utilizing1639state of the art technology and to re-market these products to a substantial1640existing client base. Management expects sales and profits to significantly1641increase when the improved products are re-marketed.16421643While management is confident that the new products will increase1644cash flow and make the Company profitable, there can be no assurance that the1645expected magnitude of growth will be experienced. Should the Company's1646expectations materialize, however, additional capital will not be required1647in order for it to continue operations.16481649(CONCLUDED)165016511652</TABLE>1653</TEXT>1654</DOCUMENT>1655<DOCUMENT>1656<TYPE>EX-23.11657<SEQUENCE>21658<TEXT>165916601661CONSENT OF COUNSEL16621663I hereby consent to the use of my name as legal counsel in the Annual1664Report filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of16651934 for the fiscal year ended June 30, 1997 by CDX Corporation on Form166610-KSB.16671668MARK T. THATCHER, P.C.16691670/s/ Mark T. Thatcher16711672By:___________________1673MARK T. THATCHER, ESQ.16741675Newport, RI16761677</TEXT>1678</DOCUMENT>1679<DOCUMENT>1680<TYPE>EX-23.21681<SEQUENCE>31682<TEXT>168316841685CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS16861687We hereby consent to the use of our name as auditing firm in the1688Annual Report filed pursuant to Section 13 or 15(d) of the Securities1689Exchange Act of 1934 for the fiscal year ended June 30, 1997 by1690CDX Corporation on Form 10-KSB.16911692CAYER, PRESCOTT, CLUNE & CHATELLIER, LLP16931694/S/ Cayer, Prescott, Clune & Chatellier, LLP16951696May 27, 19981697Providence, Rhode Island16981699</TEXT>1700</DOCUMENT>1701<DOCUMENT>1702<TYPE>EX-271703<SEQUENCE>41704<DESCRIPTION>ARTICLE 5 FIN. DATA SCHEDULE FOR FISCAL YEAR1705ENDING JUNE 30, 19971706<TEXT>17071708<TABLE> <S> <C>17091710<ARTICLE> 51711<CIK> 00003511291712<NAME> CDX Corporation1713<MULTIPLIER> 11714<CURRENCY> U.S.17151716<S> <C>1717<PERIOD-TYPE> 12-MOS1718<FISCAL-YEAR-END> JUN-30-19971719<PERIOD-START> JUL-01-19961720<PERIOD-END> JUN-30-19971721<EXCHANGE-RATE> 11722<CASH> 1,3051723<SECURITIES> 01724<RECEIVABLES> 39,4881725<ALLOWANCES> 01726<INVENTORY> 46,5551727<CURRENT-ASSETS> 104,8211728<PP&E> 20,2281729<DEPRECIATION> 01730<TOTAL-ASSETS> 185,9181731<CURRENT-LIABILITIES> 515,3911732<BONDS> 261,7051733<PREFERRED-MANDATORY> 01734<PREFERRED> 01735<COMMON> 48,8811736<OTHER-SE> 01737<TOTAL-LIABILITY-AND-EQUITY> 185,9181738<SALES> 379,6081739<TOTAL-REVENUES> 379,6081740<CGS> 187,7931741<TOTAL-COSTS> 483,9351742<OTHER-EXPENSES> 18,0451743<LOSS-PROVISION> (122,372)1744<INTEREST-EXPENSE> (18,065)1745<INCOME-PRETAX> (122,372)1746<INCOME-TAX> 01747<INCOME-CONTINUING> 01748<DISCONTINUED> 01749<EXTRAORDINARY> 01750<CHANGES> 01751<NET-INCOME> (122,372)1752<EPS-PRIMARY> (.028)1753<EPS-DILUTED> (.028)1754175517561757</TEXT>1758</DOCUMENT>1759</SEC-DOCUMENT>1760-----END PRIVACY-ENHANCED MESSAGE-----176117621763