<PAGE> 1
2
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
March 14, 2000
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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)
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<CAPTION>
<S> <C> <C>
Delaware 0-22302 36-3688459
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
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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)
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ITEM 5. OTHER EVENTS.
On March 14, 2000, Illinois Superconductor Corporation issued a press
release reporting its earnings for the quarter and year ended December 31, 1999.
A copy of the March 14, 2000 press release is attached hereto as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Items (a) and (b) are inapplicable.
(c) Exhibits.
99.1 Press Release issued by Illinois Superconductor Corporation on
March 14, 2000 reporting earnings for the quarter and year
ended December 31, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities and 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
By: /s/ CYNTHIA QUIGLEY
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Cynthia Quigley, Chief Financial Officer
Dated: March 16, 2000
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EXHIBIT INDEX
- ----------- ----------------------------------------------------------- --------
EXHIBIT DESCRIPTION
NO.
- ----------- ----------------------------------------------------------- --------
99.1 Press Release issued by Illinois Superconductor Corporation
on March 14, 2000 reporting earnings for the quarter and
year ended December 31, 1999.
- ----------- ----------------------------------------------------------- --------
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EXHIBIT 99.1
[ILLINOIS SUPERCONDUCTOR CORPORATION LOGO]
FOR IMMEDIATE RELEASE CONTACT: CYNTHIA QUIGLEY
PHONE: (847) 391-9405
INTERNET: [email protected]
ILLINOIS SUPERCONDUCTOR REPORTS FOURTH QUARTER
AND FULL-YEAR 1999 RESULTS
Mount Prospect, IL (March 14, 2000) -- Illinois Superconductor
Corporation (OTC BB: ISCO), a leading supplier of superconducting filter
technology for the wireless telecommunications industry, today reported
financial results for the fourth quarter and the year ended December 31, 1999.
The Company's net revenues in the fourth quarter of 1999 were $452,812, a
decrease of 69.9% from the $1.5 million reported in the fourth quarter of 1998.
Net revenues for the full 1999 year totaled $2.4 million, a 25.7% decrease from
the $3.2 million reported in 1998. All revenues resulted from commercial sales
of the Company's high-performance filter products and not from government
research contracts.
For the fourth quarter of 1999, the Company experienced a net loss of $15.3
million, or $1.14 per share, compared to a net loss of $6.1 million, or $0.49
per share, in the fourth quarter of 1998. The net loss in 1999 was largely
composed of two non-cash charges pertaining to the Company's previously
announced financing activity in the fourth quarter. The first of these was a
$672,197 non-cash extraordinary charge related to modifications to the terms of
some convertible notes. The second was a non-cash interest charge of $12.0
million related principally to the conversion feature of the convertible notes.
A similar charge of $1.5 million of non-cash interest charges was included in
the fourth quarter 1998 net loss.
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Disregarding financing-related activity, the Company experienced a
fourth quarter 1999 operating loss of $2.6 million, or $0.20 per share, compared
to an operating loss of $4.7 million, or $0.37 per share, in the fourth quarter
of 1998. This improvement in operating results was driven by manufacturing
efficiencies and cost-cutting programs, primarily in the general and
administrative, and sales and marketing areas.
For the 1999 fiscal year, results followed a similar pattern. Net losses
increased over 1998 as a result of non-cash financing-related charges, while
operating losses declined. For the 1999 fiscal year, the Company experienced a
net loss of $22.7 million, or $1.77 share, compared to a 1998 net loss of $21.9
million, or $1.93 share. The 1999 results include a $745,197 non-cash
extraordinary charge related to the senior convertible notes. The full year
results include non-cash interest charges of $12.6 million in 1999 and $10.1
million in 1998. Operating losses for the fiscal year were $9.5 million for 1999
compared to $12.0 million for 1998.
In addition, the Company reported that subsequent to 1999 it has continued
to make significant progress in improving its financial position. During 2000,
the Company has received approximately $2.7 million of cash from the exercise of
various outstanding warrants; approximately $4.3 million principal amount of
debt has been converted into equity in accordance with its terms; and the
Company has both brought current and dramatically reduced its accounts payable.
The financial institutions that provided $2 million of financing in the fourth
quarter of 1999 have the right until August 5, 2000 to provide another $4
million on the same terms. At March 7, 2000 the Company had 30,254,915 common
shares outstanding and approximately another 66 million shares potentially
issuable upon exercise of various outstanding conversion rights, warrants,
options and contingent stock awards, including the financial institutions'
option to invest $4 million mentioned above and employee equity grants.
The Company intends to raise additional capital to support and expand its
strategic programs. Toward this end, the Company has commenced discussions with
investment banks and sources of strategic capital.
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The Company also confirmed that it has applied for re-listing on
NASDAQ. NASDAQ has requested certain additional information from the Company,
which will be forthcoming.
Dr. George Calhoun, the Company's Chief Executive Officer, said, "These
historical results reflect very little of the dramatic change that has recently
occurred at Illinois Superconductor Corporation, and of the exciting
opportunities we are pursuing. In just a few months, the Company has received
renewed support from its financial backers; retained a new CEO; reconstituted
its Board of Directors; introduced a new product line incorporating proprietary
ATP(TM) (All Temperature Performance) technology (available only with thick-film
products); positioned itself to focus on potential opportunities (such as third
generation (3G) wireless) for large-scale deployments; and commenced discussions
on potential new strategic relationships. We expect that the emerging
applications of superconducting filter technology in the wireless industry will
ultimately be far more substantial than those of the past."
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, wherever 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 2000 and beyond to differ materially from those expressed in,
or implied by, such statements. These important factors include, without
limitation, 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, uncertainty about the
Company's ability to compete effectively against better capitalized competitors
and to withstand downturns in its business or the economy generally; the adverse
effects on liquidity of the Company's common stock because of its de-listing
from Nasdaq in June 1999; continued downward pressure on the prices charged for
the Company's products due to the competition of rival manufacturers of front
end systems 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 is 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.
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ILLINOIS SUPERCONDUCTOR CORPORTATION
CONDENSED STATEMENTS OF OPERATIONS
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THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
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1999 1998 1999 1998
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UNAUDITED
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Net sales $ 452,812 $ 1,504,497 $ 2,408,604 $ 3,242,930
Costs and expenses:
Cost of sales 1,831,781 3,582,277 5,923,173 7,047,347
Research and development 393,046 953,086 1,757,214 2,934,784
Selling and marketing 370,701 599,407 1,581,545 1,847,680
General and administrative 487,357 1,031,968 2,617,809 3,370,058
------------ ------------ ------------ ------------
Total costs and expenses 3,082,885 6,166,738 11,879,741 15,199,869
------------ ------------ ------------ ------------
Operating loss (2,630,073) (4,662,241) (9,471,137) (11,956,939)
Other income (expense):
Interest income 10,620 163,017 98,194 354,738
Non-cash interest expense on Senior
convertible notes (12,007,223) (1,540,401) (12,608,355) (10,101,401)
Other interest expense (18,131) (61,442) (26,390) (146,518)
Other income, net
5,230 -- 36,623 --
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(12,009,504) (1,438,826) (12,499,928) (9,893,181)
------------ ------------ ------------ ------------
Loss before extraordinary item (14,639,577) (6,101,067) (21,971,065) (21,850,120)
Extraordinary item - debt extinguishment (672,197) -- (745,197)
------------ ------------ ------------ ------------
Net loss (15,311,774) (6,101,067) (22,716,262) (21,850,120)
Preferred Stock dividends
-- -- -- (61,834)
------------ ------------ ------------ ------------
Net loss plus Preferred Stock dividends $(15,311,774) $ (6,101,067) $(22,716,262) $(21,911,954)
============ ============ ============ ============
Basic and diluted loss per common share
before extraordinary item $ (1.09) $ (0.49) $ (1.71) $ (1.93)
Extraordinary item - debt extinguishment
(0.05) -- (0.06) --
============ ============ ============ ============
Basic and diluted loss per common share $ (1.14) $ (0.49) $ (1.77) $ (1.93)
============ ============ ============ ============
Weighted average number of common
shares outstanding 13,390,777 12,557,344 12,841,497 11,345,540
============ ============ ============ ============
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