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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): May 15, 1998
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Illinois Superconductor Corporation
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(Exact Name of Registrant as Specified in Charter
Delaware 0-22302 36-3688459
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(State or Other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
451 Kingston Court, Mount Prospect, Illinois 60056
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(Address of Principal Executive Offices (Zip Code)
Registrant's telephone number, including area code (847) 391-9400
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ITEM 5. OTHER EVENTS.
On May 15, 1998, the Registrant issued the press release attached hereto as
Exhibit 99.1 announcing (i) its financial results for the first quarter of 1998
and (ii) its issuance of $10.35 million of senior convertible notes to six
investors. The information contained in this press release is incorporated
herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Press Release of Registrant dated May 15, 1998.
2
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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 hereunto duly authorized.
Illinois Superconductor Corporation
Dated: May 15, 1998 By: /s/ EDWARD W. LAVES
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Edward W. Laves
President and Chief Executive Officer
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Exhibit Index
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Exhibit # Item
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99.1 Press Release
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EXHIBIT 99.1
ILLINOIS SUPERCONDUCTOR REPORTS FIRST QUARTER RESULTS;
ANNOUNCES $10.35 MILLION FINANCING
Mount Prospect, IL (may 15, 1998) -- Illinois Superconductor Corporation
Nasdaq: ISCO), a leading supplier of very high performance filters for the
wireless telephony industry, today reported financial results for the first
quarter of 1998. In addition, the Company reported that it has consummated a
$10.35 million fixed price convertible debt financing. The financing proceeds
will be used for working capital and general corporate purposes.
Financial Results
The Company reported increased net revenues of $697,169 during the first
quarter of 1998, a 54.9% increase over the $450,000 posted in last years'
quarter.
Net loss for the quarter narrowed to $2.1 million, or $0.28 per basic and
diluted share, compared with a net loss of $3.14 million or $0.62 per basic and
diluted share in the first quarter of 1997.
"We are pleased with the solid sales momentum and market penetration of
our performance enhancing radio filter products, "said Edward W. Laves,
president and chief executive officer. "We made notable progress adding two
new customers during the quarter and are extremely pleased to have signed our
first corporate purchase agreement with Bell Atlantic Mobile during the
quarter. The revenue increase for the first quarter reflects that our products
are gaining market acceptance due to their ability to both dramatically improve
the quality of calls made on cellular networks and to reduce capital
expenditures."
"During the quarter we extended our technological lead with the
introduction of new product lines and our firt PCS field trials, and also
expanded our leadership team with new
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additions to our board of directors and management," Laves continued.
New Financing
Under the terms of the financing announced today, Illinois Superconductor
issued $10.35 million of four year term Senior Convertible Notes to a syndicate
which includes Alexander Finance, LP, Elliott Associates, L.P., Spring Point
Offshore Fund, Spring Point Partners, L.P., State Farm Mutual Automobile
Insurance Company and Westgate International, L.P. The Notes, which carry a 2%
coupon, are convertible into Illinois Superconductor Corporation Common Stock at
$1.50 per share, with one-half convertible after 90 days and the remainder being
convertible after 180 days.
The Notes are callable at par by the Company after two years under certain
conditions. In connection with the transaction, the investors may nominate two
new members to the Company's board of directors. The investors were also
issued three year warrants to purchase 4.14 million shares of the Company's
common stock at an exercise price of $3.75 per share.
Because the stated conversion price of the Notes is below the current
trading price of the Company's common stock, and because the time required to
obtain stockholder approval would seriously jeopardize Illinois
Superconductor's continued financial viability, the Company has requested and
received written authorization from the Nasdaq Stock Market to proceed with
this financing without first receiving stockholder approval. Such an exception
is permitted under NASD bylaws.
Commenting on the financing, Laves said, "This financing provides us with
the stability to further penetrate the cellular and PCS markets and provides the
working capital needed to maintain the technological lead enjoyed by our
SpectrumMaster(R), RangeMaster(R) and PowerMaster(TM) lines of wireless filter
products. Obtaining financing was critical to the Company
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as sales of our products begin to accelerate. With financing in place, we can
now concentrate our energies on attaining break-even and profitability."
The securities issued have not been registered under the Securities Act of
1933 and may not be offered or sold in the United States absent registration or
an applicable exemption from the registration requirements of the Securities
Act of 1933.
Illinois Superconductor Corporation is a leader in the commercialization
of high temperature superconducting technology for the wireless telephony
industry. The Company develops, manufactures and markets radio frequency (RF)
products to enhance the quality and capacity of cellular telephone, personal
communications services and other wireless telecommunications services. More
information about Illinois Superconductor is available on the Company's
internet web site at http://www.ilsc.com
Statements contained in this news release that are not historical facts
are forward looking statements that are made pursuant to the Safe Harbor
Provisions of the Private Securities Litigation Reform Act of 1995. The
Company cautions that a number of important factors could cause the Company's
actual results for 1998 and beyond to differ materially from those expressed in
any forward looking statements made by, or on behalf of, the Company. These
important factors and other factors which could affect the Company's results
are detailed in the Company's filings with the Securities and Exchange
Commission and are included herein by reference. The Company assumes no
obligation to update the information in this press release.
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ILLINOIS SUPERCONDUCTOR CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
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1998 1997
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<S> <C> <C>
Net revenues $ 697,169 $ 450,000
Costs and expenses:
Cost of revenues 1,045,197 1,175,757
Research and development 751,040 1,264,534
Selling and marketing 367,754 566,502
General and administrative 681,217 658,559
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Total costs and expenses 2,845,208 3,665,352
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Operating income (loss) (2,148,039) (3,215,352)
Other income (expense):
Investment income 7,382 83,014
Interest expense (4,033) (6,428)
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3,349 76,586
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Net Loss $ (2,144,690) $ (3,138,766)
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Preferred Stock dividends (61,740) -
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Net loss plus Preferred Stock dividends $ (2,206,430) $ (3,138,766)
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Basic and diluted loss per common share $ (0.29) $ (0.62)
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Weighted average number of common shares
outstanding 7,714,379 5,023,510
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