<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(MARK ONE)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- EXCHANGE ACT OF 1934
FOR THE THREE MONTH PERIOD ENDED JUNE 30, 1997 OR
|_| 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 #0-11915
CONDUCTUS, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0162388
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
969 W. Maude Avenue, Sunnyvale California 94086
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(Address of principal executive offices) (Zip Code)
(408) 523-9950
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(Registrants Telephone Number, including area code)
Not Applicable
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(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 Sections 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
----- ------------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Common shares outstanding at August 4, 1997: 6,898,117
Total pages: 20
Index to Exhibits to be found on page 19
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CONDUCTUS, INC.
Index
PART I: FINANCIAL INFORMATION PAGE
--------------------- ----
ITEM 1 FINANCIAL STATEMENTS
Condensed Balance Sheets at June 30, 1997
and December 31, 1996 3
Condensed Statements of Operations
for the Three and Six Months Ended
June 30, 1997 and 1996 4
Condensed Statements of Cash Flows
for the Six Months Ended
June 30, 1997 and 1996 5
Notes to Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. 9
PART II: OTHER INFORMATION
-----------------
ITEM 1: LEGAL PROCEEDINGS 14
ITEM 2: CHANGES IN SECURITIES 14
ITEM 3: DEFAULTS UPON SENIOR SECURITIES 14
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 15
ITEM 5: OTHER INFORMATION 17
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K 17
Signatures 18
Exhibit Index 19
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PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
CONDUCTUS, INC.
CONDENSED BALANCE SHEETS
June 30, December 31,
1997 1996
----------- ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 787,446 $ 1,119,991
Short-term investments 4,054,385 6,516,401
Accounts receivable, net 3,088,658 3,756,586
Inventory 1,066,153 1,220,873
Prepaid and other assets 293,163 397,556
----------- ------------
Total current assets 9,289,805 13,011,407
Property, plant and equipment, net 2,926,303 2,941,685
Other assets 117,762 127,763
----------- ------------
Total assets $12,333,870 $ 16,080,855
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 1,173,857 $ 1,119,330
Accounts payable 1,475,767 1,710,762
Other accrued liabilities 1,231,081 1,045,916
----------- ------------
Total current liabilities 3,880,705 3,876,008
Long-term debt, net of current portion 834,124 1,021,781
----------- ------------
Total liabilities 4,714,829 4,897,789
Stockholders equity:
Common stock 703 683
Additional paid-in capital 40,597,448 40,405,381
Unrealized gain on investments, net 326 3,808
Accumulated deficit (32,979,436) (29,226,806)
----------- ------------
Total stockholders' equity 7,619,041 11,183,066
----------- ------------
Total liabilities and stockholders' equity $12,333,870 $ 16,080,855
----------- ------------
----------- ------------
See accompanying notes.
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CONDUCTUS, INC.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1997 1996 1997 1996
---------- ----------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Contract $ 1,836,928 $ 2,406,751 $ 4,110,898 $ 4,620,513
Product 648,385 604,095 1,514,045 1,001,592
------------ ------------ ------------ ------------
Total revenues 2,485,313 3,010,846 5,624,943 5,622,105
------------ ------------ ------------ ------------
Operating expenses:
Cost of product 845,973 407,384 1,281,046 663,684
Research and Development 2,898,263 2,970,733 5,876,217 5,713,863
Selling, general and administrative 1,020,652 951,194 2,146,011 1,957,712
Writedown of property, plant & equipment 100,000 100,000
------------ ------------ ------------ ------------
Total operating expenses 4,864,888 4,329,311 9,403,274 8,335,259
------------ ------------ ------------ ------------
Loss from operations (2,379,575) (1,318,465) (3,778,331) (2,713,154)
Interest income 79,438 22,014 176,153 49,341
Other income (expense) (21,314) 321 (25,393) 24,842
Interest expense (68,123) (50,392) (125,059) (86,678)
------------ ------------ ------------ ------------
Net loss $ (2,389,574) $ (1,346,522) $ (3,752,630) $ (2,725,649)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net loss per common share $ (0.35) $ (0.23) $ (0.55) $ (0.48)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Shares used in computing per share amounts 6,864,000 5,749,000 6,853,000 5,728,000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes.
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CONDUCTUS, INC.
CONDENSED STATEMENTS OF CASHFLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
-------------------------------
JUNE 30, JUNE 30,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (3,752,630) $ (2,725,649)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 430,796 504,425
Writedown of property, plant, and equipment 100,000
(Increase) decrease in:
Accounts receivable 667,928 80,180
Inventory 154,720 (455,339)
Prepaid expenses and other current assets 104,393 110,736
Other assets 10,001 (2,261)
Increase, (decrease) in:
Accounts payable and other accrued liabilities (49,830) 513,853
------------ ------------
Net cash used in operating activities (2,334,622) (1,974,055)
------------ ------------
Cash flows from investing activities:
Proceeds from sales of short-term investments 19,924,912 5,394,351
Purchases of short-term investments (17,466,378) (3,564,255)
Acquisition of property and equipment (515,414) (627,653)
Proceeds from sales of assets 29,196
------------ ------------
Net cash provided by investing activities 1,943,120 1,231,639
------------ ------------
Cash flows from financing activities:
Proceeds from borrowings 410,133 706,657
Net proceeds from issuance of common stock 192,087 250,451
Principal payments on long-term debt (543,263) (31,394)
Principal payments under capital lease obligations (343,868)
------------ ------------
Net cash provided by financing activities 58,957 581,846
------------ ------------
Net decrease in cash and cash
equivalents (332,545) (160,570)
Cash and cash equivalents at beginning of period 1,119,991 272,410
------------ ------------
Cash and cash equivalents at end of period $ 787,446 $ 111,840
------------ ------------
------------ ------------
</TABLE>
See accompanying notes.
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CONDUCTUS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
FISCAL YEAR:
The Company uses a 52-53 week fiscal year ending on the last Friday of
the year. For convenience of presentation, the accompanying financial
statements have been shown as ending on the last day of the calendar month
of each applicable period.
UNAUDITED INTERIM FINANCIAL INFORMATION:
The accompanying unaudited interim financial statements have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosure normally
included in the financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
such rules and regulations, although management believes that the
disclosures are adequate to make the information presented not misleading.
The unaudited financial statements as of June 30, 1997 and for the three
and six months ended June 30, 1997 and 1996 include, in the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary to present fairly the financial information set herein. The
results of operations for the interim periods are not necessarily
indicative of the results to be expected for an entire year. The
December 31, 1996 balance sheet was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles.
INVENTORIES:
Inventories are stated at the lower of cost (determined on a first-in,
first-out basis) or market. Appropriate consideration is given to
obsolescence, excessive levels and other factors in evaluating net
realizable value.
COMPUTATION OF NET LOSS PER COMMON SHARE:
Net loss per common share is based upon the weighted average number of
common and common equivalent shares outstanding. Common equivalent shares
are included in the per share calculations where the effect of their
inclusion would be dilutive.
RECENT PRONOUNCEMENTS:
During February of 1997, the Financial Accounting Standards Board
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issued Statement No. 128 (SFAS 128) "Earnings Per Share", and in March
issued Statement No. 129 (SFAS 129) "Disclosures of Information about
Capital Structure", both of which specify the computation, presentation and
disclosure requirements for Earnings per Share. SFAS 128 and SFAS 129 will
become effective for the first quarter of fiscal 1998.
In June 1997, the Financial Accounting Standards Board issued
Statement No. 130 (SFAS 130) "Reporting Comprehensive Income". SFAS No. 130
establishes standards for the reporting and display of comprehensive income
and its components in a full set of general purpose financial statements.
Comprehensive income is defined as the change in equity of a business
enterprise during a period from transactions and other events and
circumstances from nonowner sources. SFAS 130 will become effective for
the Company's 1998 fiscal year.
In June 1997, the Financial Accounting Standards Board issued
Statement No. 131 (SFAS 131) "Disclosures about Segments of an Enterprise
and Other Information". SFAS No. 131 requires publicly-held companies to
report financial and other information about key revenue-producing segments
of the entity for which such information is available and is utilized by
the chief operation decision makers. Specific information to be reported
for individual segments includes profit and loss, certain revenue and
expense items and total assets. A reconciliation of segment financial
information to amounts reported in the financial statements would be
provided. SFAS 131 will become effective for the Company's 1998 fiscal
year.
The Company is currently studying the implications of these statements
and has not yet determined the impact of their adoption.
2. INVESTMENTS:
Investments are summarized below:
June 30, 1997 December 31, 1996
---------------------- ----------------------
Cost Market Cost Market
Basis Value Basis Value
---------------------- ----------------------
Debt securities:
Corporate bonds $1,351,182 $1,351,508 $2,356,259 $2,359,453
Preferred bonds 2,600,000 2,600,000 2,000,000 2,000,000
Commercial paper 0 0 2,078,596 2,079,210
Accrued interest 38,333 38,333 59,193 59,193
Other 64,544 64,544 18,545 18,545
----------------------------------------------
Total 4,054,059 4,054,385 6,512,593 6,516,401
Allowance for unrealized gain 326 - 3,808 -
----------------------------------------------
Total $4,054,385 $4,054,385 $6,516,401 $6,516,401
----------------------------------------------
----------------------------------------------
3. INVENTORIES:
Inventories net of reserves of $404,000 at June 30, 1997 and $81,000
at December 31, 1996 comprise:
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June 30, 1997 December 31, 1996
------------- -----------------
Raw materials $ 358,524 $ 393,464
Work in process 592,359 728,603
Finished goods 115,270 98,806
---------- ----------
$1,066,153 $1,220,873
---------- ----------
---------- ----------
4. LONG TERM DEBT:
The Company has term loan credit facilities with a financial
institution primarily to finance costs associated with the acquisition
of equipment. Borrowings are at the bank's prime rate plus 1.0% (9.5%
at June 30, 1997) with interest paid monthly, and are collateralized by
the related equipment. Principal installments are scheduled over a
thirty month period. At June 30, 1997, approximately $400,000 was
available until September 30, 1997, under that credit facility.
In addition, the Company has a line of credit facility that provides
for borrowings up to the lesser of $1,000,000 or 75% of eligible
receivables. Borrowings under this agreement bear interest at the
bank's prime rate plus 1%, and are collateralized by accounts
receivable, equipment and other assets of the Company. At June 30,
1997, there were no borrowings under this facility. The Company
received a waiver in August 1997 from the institution with respect to
default that occurred in the second quarter of fiscal 1997 on certain
financial covenants, due to the events described in Note 5.
5. ASSET WRITEDOWN:
In connection with the decision to dispose of most of the assets of
its Instrument and Systems Division, the Company has recorded a $500,000
charge in the second quarter of 1997 to writedown certain receivables
($100,000), inventories ($300,000), and property, plant, and equipment
($100,000) of the division to estimated net realizable value.
6. SUBSEQUENT EVENT:
On August 4, 1997, the Company completed the sale of its NMR product
line to Bruker Instruments, Inc. for cash and future payments based on
sales of Bruker products incorporating this technology.
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ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIS REPORT ON FORM 10Q CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT
MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DISCUSSED IN "RISK FACTORS" IN PART 1 OF THE COMPANY'S ANNUAL REPORT ON FORM
10K AT AND FOR THE YEAR ENDED DECEMBER 31, 1996 AND IN THE FINAL PROSPECTUS
DATED JUNE 26, 1996 INCLUDED AS PART OF THE COMPANY'S REGISTRATION STATEMENT
ON FORM S-1 (NO. 333-3815). THE FOLLOWING DISCUSSION SHOULD BE READ IN
CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES THERETO APPEARING
ELSEWHERE IN THIS PROSPECTUS.
OVERVIEW
Conductus develops, manufactures and markets electronic components and
systems based on superconductors for applications in the communications and
healthcare markets. In June 1994, Tristan became the Conductus
Instrument and Systems division. As of June 30, 1997, Conductus had
accumulated losses of $32,979,436 and expects to incur additional losses at
least during 1997 due to the Company's planned expansion of operations.
Conductus, alone or with collaborative partners, must successfully develop,
manufacture, introduce and market its potential products in order to
achieve profitability. Conductus does not expect to recognize meaningful
product sales until it successfully develops and commercializes
superconductive components, systems and subsystems that address significant
market needs. In the second quarter of 1997, Conductus decided to
sell its San Diego based Instrument and Systems division that
designs, manufactures, and sells large-scale magnetic sensing
systems and instrumentation. In July 1997, Conductus sold its
NMR product line.
RESULTS OF OPERATIONS FOR THE PERIODS ENDED JUNE 30, 1997 AND 1996
The Company's total revenues decreased to $2,485,000 for the second
quarter of 1997, a 17% decrease over the $3,011,000 for the same period
in 1996. For the six month period ended June 30, 1997, total revenues of
$5,625,000 were flat compared to the same period in the prior year.
Total revenue consists primarily of contract revenue and, to a lesser
extent, product sales. Revenues under U.S. government research and
development contracts decreased to $1,837,000 for the second quarter of
1997 from $2,407,000 in the same period in the prior year and
represented 74% and 80% of total revenue for the periods, respectively.
The decrease was due to the completion of several contracts during 1997.
For the six months ended June 30, 1997, contract revenue was $4,111,000
a decrease of $510,000, or 11% compared to the prior year period, and
represented 73% and 82% of total revenue respectively. This decrease
was also due to the completion of several contracts. At June 30, 1997,
Conductus had a backlog of $1,787,000 under existing U. S. Government
contracts, most of which is to be performed in the next 12 months, and
$7,595,000 in awards from U. S. Government agencies for which such
agencies had not yet entered into research contracts with the Company.
The Company does not anticipate that contract revenues for the third and
fourth quarters of 1997 will exceed those of the second quarter of
1997 although there can be no assurance as to the level of
contract revenue in any future period. The
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recognition of revenue and receipt of payment pursuant to these contracts
and awards are subject to numerous risks.
Product revenues increased to $648,000 in the second quarter of
1997, a 7% increase over the $604,000 of product sales in same period in
the prior year. The increase in product revenues came primarily from
shipments of magnetic sensor products but was partially offset by
decreased sales of instrumentation products. For the six months ended
June 30, 1997, product revenues were $1,514,000, an increase of $512,000
or 51% from the prior year period, due primarily to increased sales of
superconducting sensors in the first quarter of 1997. Conductus does not
expect to recognize significant product sales until it successfully
develops and commercializes superconductive components and systems
addressing significant markets.
Cost of product sales increased to $846,000 for the second quarter of
1997, a 108% increase over the same period in 1996. The increase in cost of
product sales was related to increased product sales but primarily to
increased costs related to a $300,000 inventory writedown at the
Instruments and Systems division and higher manufacturing costs for
products produced by the Instrument and Systems division during the
second quarter of 1997. Gross margins decreased to (30)% in the second
quarter of 1997 from 33% in the prior year. The reduction reflects
changes in commercial product mix for both quarters but also the
increased costs incurred at the Instruments and Systems division
referred to above. For the six months ended June 30, 1997, cost of
product sales was $1,281,000, an increase of $617,000 or 93% over the
same period in 1996. Gross margins were 15% and 34% respectively. The
increased cost of product sales and lower gross margins were related to
increased product sales, inventory writedown, and higher manufacturing
costs discussed above. Margins are expected to improve to the extent
unit volumes increase. Costs of contract revenues are included in
research and development expenses.
Research and development expenses decreased to $2,898,000 in the
second quarter of 1997, a 2% decrease from the $2,971,000 for the same
period in 1996. The decrease is partly attributable to decreased
headcount and expenditures for the Instruments and Systems and NMR
product lines, partially offset by increases in headcount and
expenditures for the wireless product areas. For the six months ended
June 30, 1997, research and development expenses were $5,876,000,
increased $162,000 or 3% from the same period in 1996. This increase
was primarily due to increased spending in the first quarter of 1997 in
the wireless product development area. The Company expects to continue
to incur significant research and development expenses as it seeks to
develop and market additional products.
Selling, general and administrative expenses increased to $1,021,000
for the second quarter period of 1997, a 7% increase over the same period
in 1996. These expenses increased in 1997 compared to the prior year
primarily due to a $100,000 writedown of receivables in the Instrument
and Systems division and increased
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recruiting, sales and marketing activity. For the six months ended June
30, 1997, selling, general, and administrative expenses were $2,146,000,
an increase of $188,000 or 10% from the same period in 1996. This
increase was primarily due to increased spending in the first quarter of
1997 for sales and marketing, recruiting, and consulting costs for
business development, and the receivable writedown in the second quarter
of 1997. Total headcount decreased to 115 at June 30, 1997 from 120 at
June 30, 1996 reflecting reductions in personnel in the Instruments and
NMR product lines, partially offset by increases in the wireless product
areas. As the Company begins to market commercial products, there will
be additional sales and marketing costs above those incurred in 1996.
In connection with the decision to dispose of certain assets of the
Instrument and Systems Division, the Company has recorded a $100,000 charge
in the second quarter of 1997 to writedown the property, plant, and
equipment of the division to estimated net realizable value. (See further
discussion below.)
The Company's total operating expenses increased to $4,865,000 for the
second quarter period in 1997, a 12% increase over the $4,329,000 for the
same period in 1996 for the reasons described above. For the six months
ended June 30, 1997, total operating expenses were $9,403,000, an increase
of $1,068,000, or 13% from the same period of the prior year for the
reasons described above.
Interest income was $79,000 in the second quarter period of 1997
compared to $22,000 during the same period in 1996. The increase is due
to increased amounts of cash and investments. Interest charges
increased on the Company's debt financing to approximately $68,000 in
the second quarter period of 1997 compared to $50,000 for the same
period in 1996, due to higher borrowings to finance purchases of capital
equipment. For the six months ended June 30, 1997, interest income was
$176,000, an increase of $127,000 or 257% from the same period in 1996.
This increase was primarily due to increased cash and investments
resulting from the Company's financing activities in 1996. Interest
expense for the first six months of 1997 was $125,000, an increase of
$38,000 or 44% from the same period in 1996 due to higher borrowings to
finance purchases of capital equipment.
The Company's loss from operations for the second quarter of 1997 was
substantially higher due to much higher than anticipated losses associated
with its Instrument and Systems Division. The Company initially
planned to sell the entire division to one buyer but is now in the
process of selling segments to several different buyers. In the second
quarter of 1997, this division incurred a $735,000 loss from operations
and a $500,000 asset writedown. The Company anticipates that it will
incur additional losses during the quarter ended September 30, 1997 as
it completes the disposal of this division.
The Company has not paid income taxes since inception due to its
cumulative operating losses.
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LIQUIDITY AND CAPITAL RESOURCES
The Company had financed its operations since inception primarily
through $13,251,000 in net proceeds from its initial public offering of
Common Stock in August 1993, $9,892,000 in net proceeds from its follow-on
public offering of Common Stock in June of 1996, $14,645,000 raised in
private placement financings, $37,116,000 from U.S. government contracts,
$5,721,000 in aggregate borrowings under three equipment lease lines of
credit and equipment term loans and $3,595,000 in interest income. As of
June 30, 1997, the Company's aggregate cash, cash equivalents and
short-term investments totaled $4,842,000.
Net cash used in operations was $2,335,000 for the first six months of
1997 as compared to $1,974,000 for the same period in 1996. The increase
in net cash used in operating activities in the first six months of 1997
was primarily due to significantly higher losses from operations,
offset partially by decreases in accounts receivable and inventory.
The Company anticipates that its accounts receivable and inventories
may increase during 1997 as a result of increased working capital
requirements to support wireless product areas. Such increases will
result in the use of additional cash in operating activities.
Net cash provided by investing activities was $1,943,000 for the first
six months of 1997 compared to $1,232,000 for the first six months of 1996.
During both periods, net cash was provided by net reductions in short-term
investments, offset to some extent by purchases of property and equipment.
Net cash provided by financing activities was $59,000 for the first
six months of 1997 compared to $582,000 in the first six months of prior
year. Net cash provided by financing activities in the first six months of
1997 were primarily due to borrowings under the Company's equipment term
loan and proceeds from insuance of common stock offset by increased
principal payments required under long term debt agreements.
The Company to date has received limited revenues from product sales.
The development of the Company's potential products will require a
commitment of substantial funds to conduct further research and
development and testing of its potential products, to establish
commercial-scale manufacturing and to market any resulting product. The
actual amount of the Company's future capital requirements will depend on
many factors that affect its business. Conductus anticipates that its
existing available cash should be adequate to fund the Company's operations
at least through 1997. There can be no assurance that additional funding
will be available on acceptable terms or at all, if required.
During February of 1997, the Financial Accounting Standards Board
issued Statement No. 128 (SFAS 128) "Earnings Per Share", and in March
issued Statement No. 129 (SFAS 129) "Disclosures of Information about
Capital Structure", both of which specify the computation, presentation
and disclosure
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requirements for Earnings per Share. SFAS 128 and SFAS 129 will become
effective for the first quarter of fiscal 1998.
In June 1997, the Financial Accounting Standards Board issued
Statement No. 130 (SFAS 130) "Reporting Comprehensive Income". SFAS No. 130
establishes standards for the reporting and display of comprehensive income
and its components in a full set of general purpose financial statements.
Comprehensive income is defined as the change in equity of a business
enterprise during a period from transactions and other events and
circumstances from nonowner sources. SFAS 130 will become effective for
the Company's 1998 fiscal year.
In June 1997, the Financial Accounting Standards Board issued
Statement No. 131 (SFAS 131) "Disclosures about Segments of an Enterprise
and Other Information". SFAS No. 131 requires publicly-held companies to
report financial and other information about key revenue-producing segments
of the enitiy for which such information is available and is utilized by
the chief operation decision makers. Specific information to be reported
for individual segments includes profit and loss, certain revenue and
expense items and total assets. A reconciliation of segment financial
information to amounts reported in the financial statements would be
provided. SFAS 131 will become effective for the Company's 1998 fiscal
year.
The Company is currently studying the implications of these statements
and has not yet determined the impact of their adoption.
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PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS - NOT APPLICABLE.
ITEM 2: CHANGES IN SECURITIES - NOT APPLICABLE.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES - NOT APPLICABLE.
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ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders was held on May 22, 1997
(b) The meeting included the election of the Board of Directors,
submitted as Item No.1, whose names are as follows:
John F. Shoch
Martin Cooper
Charles E. Shalvoy
Robert N. Janowiak
Martin A. Kaplan
(c) Other matters voted upon at the stockholders meeting were:
Item No. 2, Approval of Amendments to 1992 Stock Option/Stock Issuance
Plan;
Item No. 3, Approval of Amendments to 1994 Employee Stock Purchase Plan;
Item No. 4, Ratification of the selection of Coopers & Lybrand L.L.P. as
the Company's Independent Accountants for the year ended
December 31, 1997.
Shares of Common Stock voted were as follows:
Item No. 1 (Election of Board of Directors)
Total Vote For Total Vote Withheld
Each Director From Each Director
-------------- -------------------
John F. Shoch 5,661,750 178,696
Martin Cooper 5,660,250 180,196
Charles E. Shalvoy 5,661,750 178,696
Robert N. Janowiak 5,660,412 180,034
Martin A. Kaplan 5,660,250 180,196
For Against Abstain No Vote
------- ------------ ----------- ----------
Item No. 2
(Amendment to
1992 Stock Option/
Stock Issuance
Plan) 2,634,737 800,447 17,081 2,388,181
Item No. 3
(Amendment to
1994 Employee
Stock Purchase
Plan) 2,753,836 683,118 15,311 2,388,181
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Item No. 4
(Selection of
Independent
Accountants) 5,828,550 4,285 7,611 --
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ITEM 5: OTHER INFORMATION - NOT APPLICABLE.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS - SEE BELOW
(b) REPORTS ON FORM 8-K - NOT APPLICABLE.
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<PAGE>
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.
CONDUCTUS, INC.
---------------
Registrant
Dated: August 11, 1997 /S/ William J. Tamblyn
-----------------------------------------
William J. Tamblyn
Chief Financial Officer and
Duly Authorized Officer
/S/ Charles E. Shalvoy
-----------------------------------------
Charles E. Shalvoy
President and Chief Executive Officer
and Duly Authorized Officer
-18-
<PAGE>
EXHIBIT INDEX
-------------
Sequential
Exhibits Page Number
- -------- -----------
11.01 Statements of Computation of 20
Loss Per Share
-19-
<PAGE>
EXHIBIT 11.01
CONDUCTUS, INC.
STATEMENTS OF COMPUTATION OF LOSS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
Net loss $(2,390) $(1,347) $(3,753) $(2,726)
------- ------- ------- -------
Weighted average number
of shares outstanding 6,864 5,749 6,853 5,728
------- ------- ------- -------
Common and common
equivalent shares used in
computing per share 6,864 5,749 6,853 5,728
amounts ------- ------- ------- -------
------- ------- ------- -------
Net loss per share $ (0.35) $ (0.23) $ (0.55) $ (0.48)
------- ------- ------- -------
------- ------- ------- -------
-20-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 787,446
<SECURITIES> 4,054,385
<RECEIVABLES> 3,088,658
<ALLOWANCES> 0
<INVENTORY> 1,066,153
<CURRENT-ASSETS> 9,289,805
<PP&E> 2,926,303
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,333,870
<CURRENT-LIABILITIES> 3,880,705
<BONDS> 0
0
0
<COMMON> 703
<OTHER-SE> 40,597,448
<TOTAL-LIABILITY-AND-EQUITY> 12,333,870
<SALES> 1,514,045
<TOTAL-REVENUES> 5,624,943
<CGS> 1,281,046
<TOTAL-COSTS> 9,403,274
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,752,630)
<EPS-PRIMARY> (0.55)
<EPS-DILUTED> 0
</TABLE>
