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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
APRIL 28, 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 April 28, 1999, Illinois Superconductor Corporation (the "Company")
issued a press release announcing the Company's financial results for the first
quarter ended March 31, 1999. The Company also announced in such press release
its hiring of Mesirow Financial, Inc. to assist the Company with raising
additional capital and evaluating strategic alternatives. A copy of the April
28, 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 April 28, 1999 announcing the Company's financial
results for the first quarter ended March 31, 1999. The Company also announced
in such press release its hiring of Mesirow Financial, Inc. to assist the
Company with raising additional capital and evaluating strategic alternatives.
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: April 28, 1999
3
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION OF EXHIBITS
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99.1 Press Release issued by Illinois Superconductor Corporation (the
"Company") on April 28, 1999 announcing the Company's financial
results for the first quarter ended March 31, 1999. The Company
also announced in such press release its hiring of Mesirow
Financial, Inc. to assist the Company with raising additional
capital and evaluating strategic alternatives.
4
<PAGE> 1
[ILLINOIS SUPERCONDUCTOR LOGO]
NEWS RELEASE
CONTACT: Monique Showalter
PHONE: (847) 391 9426
FOR IMMEDIATE RELEASE INTERNET: [email protected]
ILLINOIS SUPERCONDUCTOR ANNOUNCES FIRST QUARTER RESULTS;
ANNOUNCES HIRING OF MESIROW FINANCIAL AS INVESTMENT ADVISORY FIRM
Mount Prospect, IL, April 28, 1999 -- Illinois Superconductor Corporation
(Nasdaq: ISCO), a leading supplier of high performance filters for the wireless
telecommunications industry, today reported financial results for the first
quarter ended March 31, 1999. The Company also announced that it has hired
Mesirow Financial to provide financial advisory services and assist with raising
capital to support ISC's future growth plans.
The Company reported net revenues of $511,900 for the first quarter of
1999, versus revenues of $697,169 during the comparable period in 1998. Stated
revenues are net of the Company's return product reserve. ISC reported a first
quarter net loss of $2.3 million, or $0.19 per basic and diluted share, compared
to a net loss of $2.2 million, or $0.29 per basic and diluted share, in the
first quarter of 1998.
Ted Laves, ISC chairman, president and chief executive officer,
commented, "Market acceptance of our award winning products continues to grow as
demonstrated by continued repeat orders from existing customers and the addition
of new operators, including one of the country's largest providers, to our
customer base. We are especially pleased at our continued progress with the
largest system suppliers of cellular and PCS equipment, several of which have
recently agreed to test our products. We are also starting to receive orders for
CDMA deployment from major operators, which should lead to increasing future
orders with the accelerating digital network buildout now underway."
Laves continued, "We also shipped five units of our new SpectrumMaster(R)
6-Pack product, which incorporates six filter paths into one unit and provides a
more cost effective alternative for denser cell sites. This product once again
clearly demonstrates ISC's industry leadership in the design, engineering and
manufacturing of high performance filters. This product evolved from initial
concept to product shipment in less than 8 weeks, a record short amount of time,
and minimized product development costs by utilizing 92% of existing
components."
"Order volumes continue to vary from quarter to quarter due to the high
level of customer concentration within the market," Laves continued. "But we
believe that market trends are increasingly positive. Our confidence for the
future is based on the established
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ILLINOIS SUPERCONDUCTOR
ANNOUNCES FIRST QUARTER RESULTS
PAGE 2
benefits of our industry-leading products which result in typical paybacks for
our customers within approximately 2 months. We are very proud that we have the
highest performing filter products on the market, the broadest portfolio of
superconducting RF products, the most economical high performance filters in the
world and the largest customer base of any filter vendor in our segment. We
remain committed to achieving our goal of cash flow breakeven in the year 2000."
ISC also announced the signing of an agreement with Mesirow Financial, a
Chicago-based investment banking firm which specializes in assisting
middle-market companies in merger and acquisition transactions and strategic
partnering, as well as in raising capital through private and public financings.
"We are looking forward to working closely with Mesirow Financial,"
commented Mr. Laves. "With their help, we are now considering such strategic
alternatives as corporate alliances and strategic partnering with companies that
may have an interest in incorporating our products with their product and
marketing efforts. Mesirow Financial has the experience and capability to advise
us as we consider a variety of strategic and financial alternatives in our push
to attain critical sales volume and profitability."
In a separate development, ISC has been notified by Nasdaq that it will
move to delist the Company's common stock for trading on the Nasdaq National
Market due to the Company's current inability to meet the minimum net tangible
assets requirement. ISC has requested an oral hearing to appeal Nasdaq's
determination, which has yet to be scheduled, and the delisting of the Company's
common stock has been stayed pending the results of that hearing.
"Although we do not satisfy Nasdaq's listing requirements at this time,"
Laves commented, "we are evaluating various options, including equity
financings, which would bring ISC back into compliance with such requirements."
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
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ILLINOIS SUPERCONDUCTOR
ANNOUNCES FIRST QUARTER RESULTS
PAGE 3
(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.
Headquartered in Chicago, Mesirow Financial has been a leader in serving
the financial needs of individuals, businesses and institutions since 1937. The
firm provides the following services: Private Equity, Securities Brokerage,
Asset Management, Insurance, Investment Banking and Real Estate.
Statements contained in this news release that are not historical facts
are forward-looking statements. Such forward-looking statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and 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; the Company's current
inability to satisfy the minimum maintenance requirements for the continued
listing of its shares of common stock for trading on the Nasdaq National
Market, which may have a material adverse effect on the liquidity of the
Company's common stock and the Company's ability to obtain additional funding
as needed if such shares are delisted; 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. 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 FIRST QUARTER RESULTS
PAGE 4
ILLINOIS SUPERCONDUCTOR CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
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<S> <C> <C>
Revenues $ 511,900 $ 697,169
Costs and expenses:
Cost of revenues 1,009,026 1,045,197
Research and development 521,563 751,040
Selling and marketing 456,515 367,754
General and administrative 708,519 681,217
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Total costs and expenses 2,695,623 2,845,208
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Operating income (loss) (2,183,723) (2,148,039)
Other income (expense):
Interest income 38,356 7,382
Interest expense (129,417) (4,033)
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(91,061) 3,349
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Loss before extraordinary item $ (2,274,784) $ (2,144,690)
============ ============
Extraordinary item - debt extinguishment (73,000) --
Preferred Stock dividends -- (61,740)
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Net loss $ (2,347,784) $ (2,206,430)
============ ============
Net loss per common share $ (0.19) $ (0.29)
============ ============
Weighted average number of
common shares outstanding 12,557,344 7,714,379
============ ============
</TABLE>
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ILLINOIS SUPERCONDUCTOR
ANNOUNCES FIRST QUARTER RESULTS
PAGE 5
ILLINOIS SUPERCONDUCTOR CORPORATION
CONDENSED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
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(Unaudited)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 3,962,862 $ 2,152,595
Investments -- --
Inventories 2,981,198 1,424,427
Accounts receivable 527,313 1,494,418
Prepaid expenses and other 397,610 396,925
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Total current assets 7,868,983 5,468,365
Property and equipment:
Property and equipment 8,314,348 8,285,710
Less: accumulated depreciation 4,982,639 4,761,599
------------ ------------
Net property and equipment 3,331,709 3,524,111
Other assets:
Restricted certificates of deposit 341,307 337,347
Deferred financing costs, net 77,673 82,386
Patents and trademarks, net 632,440 615,879
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1,051,420 1,035,612
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Total assets $ 12,252,112 $ 10,028,088
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 1,705,037 $ 464,752
Accrued liabilities 615,366 799,569
Accrued interest 181,125 129,375
Current portion of other long-term debt 13,259 13,497
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Total current liabilities 2,514,788 1,407,193
Other long term debt, less current portion 16,919 --
Senior Convertible Notes 13,650,000 10,350,000
Discount on Senior Convertible Notes (1,241,528) (1,047,348)
Deferred occupancy costs 91,161 91,212
Stockholders' equity:
Common stock ($.001 par value); 30,000,000 shares
authorized and 12,557,344 issued and outstanding
at March 31, 1999 and December 31, 1998 12,557 12,557
Additional paid-in capital 60,396,321 60,055,321
Notes receivable from stockholders (680,696) (680,696)
Accumulated deficit (62,507,410) (60,160,150)
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Total stockholders' equity (2,779,228) (772,968)
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Total liabilities and stockholders' equity $ 12,252,112 $ 10,028,089
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</TABLE>
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