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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
AUGUST 5, 1999
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Date of Report (Date of earliest event reported)
ILLINOIS SUPERCONDUCTOR CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 0-22302 36-3688459
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(State of Incorporation) (Commission File No.) (IRS Employer Identification No.)
451 KINGSTON COURT, MT. PROSPECT, ILLINOIS 60056
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(Address of principal executive offices) (Zip Code)
(847) 391-9400
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On August 5, 1999, Illinois Superconductor Corporation (the "Company")
issued a press release announcing the Company's financial results for the second
quarter ended June 30, 1999. The Company also announced in such press release
that the previously disclosed Delaware derivative lawsuit filed in 1998 by
Jonathan Greenwald against the Company and several of its current and former
directors has been dismissed. A copy of the August 5, 1999 press release is
attached hereto as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit 99.1: Press Release issued by Illinois Superconductor
Corporation (the "Company") on August 5, 1999 announcing the Company's financial
results for the second quarter ended June 30, 1999. The Company also announced
in such press release that the previously disclosed Delaware derivative lawsuit
filed in 1998 by Jonathan Greenwald against the Company and several of its
current and former directors has been dismissed.
2
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SIGNATURE
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.
ILLINOIS SUPERCONDUCTOR CORPORATION
By: /s/ William M. Kochlefl
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William M. Kochlefl
Vice President, General Counsel and Secretary
Date: August 5, 1999
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EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBITS
NO. -----------------------
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99.1 Press Release issued by Illinois Superconductor Corporation (the
"Company") on August 5, 1999 announcing the Company's financial
results for the second quarter ended June 30, 1999. The Company
also announced in such press release that the previously
disclosed Delaware derivative lawsuit filed in 1998 by Jonathan
Greenwald against the Company and several of its current and
former directors has been dismissed.
4
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EXHIBIT 99.1
NEWS
RELEASE
CONTACT: Monique Showalter
PHONE: (847) 391 9426
FOR IMMEDIATE RELEASE INTERNET: [email protected]
ILLINOIS SUPERCONDUCTOR ANNOUNCES SECOND QUARTER RESULTS;
DELAWARE LAWSUIT AGAINST COMPANY DIRECTORS DISMISSED
Mount Prospect, IL, August 5, 1999 -- Illinois Superconductor Corporation
(OTC BB: ISCO), a leading supplier of high performance filters for the wireless
telecommunications industry, today reported financial results for the second
quarter of 1999 and the six months ended June 30, 1999.
Second quarter 1999 net revenues were $317,159. For the first half of
1999, the Company's net revenues were $829,059. Stated revenues are net of the
Company's return product reserve. Purchase orders aggregating an additional
$440,000 of the Company's products have been received and scheduled for third
and fourth quarter shipment, although some of those orders are contingent upon
successful trial installations which are now underway.
ISC reported a second quarter 1999 net loss of $2.4 million, or $0.19 per
basic and diluted share. For the first half of 1999, net losses were $4.8
million, or $0.38 per basic and undiluted share. By comparison, net losses for
the second quarter of 1998 were $5.5 million, or $0.44 per basic and diluted
share, and net losses for the first half of 1998 were $7.8 million, or $0.76 per
basic and undiluted share.
Ted Laves, ISC chairman, president and chief executive officer,
commented, "We are encouraged by the continued expansion of our customer list as
well as ongoing sales to our existing customers. Although first half sales were
slowed primarily by market seasonality, we received significant orders in the
final weeks of the second quarter and within the past month. We are also
encouraged by the volume of customer trials currently underway, many of which
are for the deployment of our products in CDMA, TDMA, GSM and 3G digital
networks. In addition, because we have successfully reduced by half the cycle
time required to produce our products, we are now building product to order
rather than to forecast, which allows us to reduce our inventory, conserve our
cash and yet continue to meet customer expectations for delivery."
Laves continued, "We are also working diligently with Mesirow Financial,
Inc., a Chicago-based investment banking firm, to secure additional financing
during the fourth quarter of 1999. We expect that these efforts will provide us
with a number of strategic and financial alternatives as we push to achieve
critical sales volume and profitability."
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ILLINOIS SUPERCONDUCTOR ANNOUNCES
SECOND QUARTER RESULTS
PAGE 2
In a separate development, the Company announced that the previously
disclosed lawsuit filed in 1998 by Jonathan Greenwald against ISC and several of
its current and former directors has been dismissed. In a written opinion, the
Court of Chancery of the State of Delaware granted the defendants' motion to
dismiss the lawsuit, finding that the plaintiff had failed to satisfy the
prerequisites for maintaining a shareholder derivative action under Delaware
law.
Illinois Superconductor Corporation is a leader in the commercialization
of high temperature superconducting technology for the wireless
telecommunications industry. The Company develops, manufactures and markets
radio frequency (RF) products to enhance the quality and capacity of cellular
telephone, personal communications services (PCS) and other wireless
telecommunications services. With more than 30 different configurations, ISC is
well equipped to satisfy the demanding and ever changing technological
requirements of both rural and urban applications of carriers nationwide. The
benefits of the ISC products which have been clearly documented by a number of
customers include: increased coverage (as much as 70%), increased revenues per
cell site (as much as 18% based on minutes per use), easier location of new cell
sites due to tolerance of interference, improved voice quality, and reduced
dropped calls (up to 40%). More information about Illinois Superconductor
Corporation 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. Such forward-looking statements reflect
the Company's current expectations regarding the future results of operations,
performance and achievements of the Company. The Company has tried, whenever
possible, to identify these forward-looking statements by using words such as
"anticipates," "believes," "estimates," "expects," "plans," "intends" and
similar expressions. These statements reflect the Company's current beliefs and
are based on information currently available to it. Accordingly, these
statements are subject to certain risks, uncertainties, and contingencies which
could cause the Company's actual results, performance or achievements for 1999
and beyond to differ materially from those expressed in, or implied by, such
statements. These important factors include, without limitation, the Company's
ability to obtain additional financing in the near future; the Company's history
of net losses and the lack of assurance that the Company's earnings will be
sufficient to cover fixed charges in the future; the degree to which the Company
is leveraged and restrictions imposed on the Company under its existing debt
instruments which may adversely affect the Company's ability to finance its
future operations, to compete effectively against better capitalized competitors
and to withstand downturns in its business or the economy generally; continued
downward pressure on the prices charged for the Company's products due to
competition of rival manufacturers of filters for the wireless
telecommunications market; the timing and receipt of customer orders; the
Company's ability to attract and retain key personnel; and the effects of legal
proceedings. A more complete description of these risks, uncertainties and
assumptions are included in the Company's filings with the Securities and
Exchange Commission, including those described under the heading "Risk Factors"
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1998, and those disclosed under the heading "Risk Factors" in the Company's
Registration Statement on Form S-2, as amended, filed on July 9, 1999. The
Company undertakes no obligation to update or revise these forward-looking
statements to reflect new events or uncertainties.
(TABLES TO FOLLOW)
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ILLINOIS SUPERCONDUCTOR ANNOUNCES
SECOND QUARTER RESULTS
PAGE 3
ILLINOIS SUPERCONDUCTOR CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------------- -----------------------------------
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Net revenues $317,159 $814,532 $829,059 $1,511,701
Costs and expenses:
Cost of revenues 946,550 1,402,896 1,955,576 2,448,093
Research and development 440,057 587,343 961,620 1,338,383
Selling and marketing 447,257 461,834 903,772 829,588
General and administrative 725,356 813,608 1,433,875 1,494,825
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Total costs and expenses 2,559,220 3,265,681 5,254,843 6,110,889
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Operating income (loss) (2,242,061) (2,451,149) (4,425,784) (4,599,188)
Other income (expense):
Interest income 35,939 60,604 74,295 67,986
Interest expense (217,892) (3,157,267) (347,309) (3,161,300)
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(181,953) (3,096,663) (273,014) (3,093,314)
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Loss before extraordinary (2,424,014) (5,547,812) (4,698,798) (7,692,502)
Extraordinary item - debt extinguishment 0 0 (73,000) 0
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Net loss (2,424,014) (5,547,812) (4,771,798) (7,692,502)
Preferred Stock dividends 0 (94) 0 (61,834)
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Net loss plus Preferred Stock dividends ($2,424,014) ($5,547,906) ($4,771,798) ($7,754,336)
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Basic and diluted loss per common share ($0.19) ($0.44) ($0.38) ($0.76)
============== ============== ============== =============
Weighted average number of
common shares outstanding 12,630,461 12,481,244 12,594,105 10,113,927
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</TABLE>
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ILLINOIS SUPERCONDUCTOR ANNOUNCES
SECOND QUARTER RESULTS
PAGE 4
ILLINOIS SUPERCONDUCTOR CORPORATION
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
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(Unaudited)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $1,276,329 $2,152,595
Inventories 3,182,827 1,424,427
Accounts receivable, net 347,434 1,494,418
Prepaid expenses and other 288,904 479,311
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Total current assets 5,095,494 5,550,751
Property and equipment:
Property and equipment 8,180,116 8,285,710
Less: accumulated depreciation 5,049,045 4,761,599
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Net property and equipment 3,131,071 3,524,111
Other assets:
Restricted certificates of deposit 345,194 337,347
Patents and trademarks, net 646,191 615,879
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991,385 953,226
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Total assets $9,217,950 $10,028,088
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LIABILITIES AND STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY):
Current liabilities:
Accounts payable $1,009,209 $464,752
Accrued liabilities 476,488 799,569
Accrued interest 330,821 129,375
Current portion of other long-term debt 8,374 13,497
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Total current liabilities 1,824,892 1,407,193
Other long term debt, less current portion 14,701 0
Senior Convertible Notes 13,450,000 10,350,000
Discount on Senior Convertible Notes (1,151,137) (1,047,349)
Deferred occupancy costs 91,111 91,212
Stockholders' equity (net capital deficiency):
Common stock ($.001 par value); 60,000,000 shares authorized 12,761 12,557
at June 30, 1999 and 30,000,000 shares authorized at December 31,
1998; 12,760,908 shares issued and outstanding at June 30, 1999
and 12,557,344 shares issued and outstanding at December 31, 1998
Additional paid-in capital 60,588,266 60,055,321
Notes receivable from stockholders (680,696) (680,696)
Accumulated deficit (64,931,948) (60,160,150)
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Total stockholders' equity (net capital deficiency) (5,011,617) (772,968)
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Total liabilities and stockholders' equity (net capital deficiency) $9,217,950 $10,028,088
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</TABLE>
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