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EXHIBIT 99.1
[ILLINOIS SUPERCONDUCTOR CORPORATION LOGO] NEWS RELEASE
FOR IMMEDIATE RELEASE CONTACT: MAUREEN MURNANE
PHONE: 847-391-9426
INTERNET: [email protected]
ILLINOIS SUPERCONDUCTOR REPORTS
FISCAL 2000 SECOND QUARTER RESULTS
Mt. Prospect, IL (August 11, 2000) -- Illinois Superconductor
Corporation (OTC: ISCO.OB), a leading supplier of superconducting radio
frequency (RF) products for the wireless telecommunications industry, today
reported financial results for the second quarter of 2000.
The Company reported net revenues of $14,800 for the quarter ending
June 30, 2000 versus net revenues of $317,159 for the same period in 1999. Net
revenues for the first six months of 2000 were $187,163 versus $829,059 for the
same six-month period in 1999. All revenues resulted from commercial product
sales and not from government research contracts.
The operating loss for the second quarter 2000 was $2,746,213, versus
$2,242,061 for the second quarter of 1999. The increased operating loss reflects
the decrease in net revenue and an increase in research and development costs
and general and administrative costs during the quarter. The increase in
research and development costs is mainly related to prototype development for
the 3G market in Asia. The increase in general and administrative costs largely
reflects costs associated with the acquisition of Spectral Solutions, Inc. and
the recently completed proxy solicitation.
Net loss for the second quarter of 2000 was $3,781,954 compared to a
net loss in the same period in 1999 of $2,424,014. The increased net loss is
reflective of the increased operating loss as explained previously and an
increase in non-cash interest expense related to the senior convertible note
financing secured in the first quarter of 2000 and fourth quarter of 1999. The
non-cash interest expense increased from $228,450 in the second quarter 1999 to
$1,083,752 in the second quarter 2000.
The net losses, excluding non-cash interest expense and extraordinary
items, for the second quarter 2000 and the first six months of 2000 were
$2,698,202 and $4,700,252, respectively. For the same periods in 1999, the net
losses, excluding non-cash interest expense and extraordinary items, were
$2,195,564 and $4,347,777, respectively.
Net loss on a per share basis improved from $0.19 to $0.12 for the
second quarter comparative periods 1999 and 2000. Loss on a per share basis for
the first six months of 2000 improved to $0.23 from $0.38 for the same period in
1999. The weighted-average number of shares outstanding increased from
12,594,105 to 27,585,386 for the six months ending June 30,
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1999 and June 30, 2000, respectively. The increase in shares outstanding is as a
result of conversion of notes and exercise of warrants and options.
Dr. George Calhoun, Chief Executive Officer of Illinois Superconductor
Corporation, said: "We are clearly not in a position yet to boast about our
revenue numbers, and I don't want to sidestep this point. Our shareholders
should understand that we understand that sales success is a crucial part of our
turnaround process. We have taken quite a few steps in recent months to get
ourselves in position to re-start the domestic sales effort, and now that we
have completed the SSI transaction I think we are in a position to do so. I
believe that we have by far the strongest product offerings in our industry. We
have the only tower-top receiver front-end product, and we are the only ones who
can offer the fail-safe architecture embodied in our ATP technology, which can
operate even in the event of a power failure and loss of cooling. We have the
best filter performance in the industry, and we have the products with the
smallest size configuration. We are the only company with thin film and thick
film HTS products. But even good products don't sell themselves, and our next
task is to build a top-quality sales & marketing team, which we are doing. I
expect to show results and I expect that we will return to our traditional
position as the market leader as this industry really takes off."
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 and other wireless telecommunications services. 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 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 ability to integrate SSI's and ISC's businesses; 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 the NASDAQ National Market
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, 1999. The Company undertakes no obligation to update or
revise these forward-looking statements to reflect new events or uncertainties.
2
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ILLINOIS SUPERCONDUCTOR CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 14,800 $ 317,159 $ 187,163 $ 829,059
Costs and expenses:
Cost of sales 330,162 946,550 979,245 1,955,576
Research and development 713,793 440,057 1,020,121 961,620
Selling and marketing 215,279 447,257 399,804 903,772
General and administrative 1,501,779 725,356 2,567,009 1,433,875
------------ ------------ ------------ ------------
Total costs and expenses 2,761,013 2,559,220 4,966,179 5,254,843
------------ ------------ ------------ ------------
Operating loss (2,746,213) (2,242,061) (4,779,016) (4,425,784)
Other income (expense):
Interest income 67,487 48,690 91,867 87,046
Non-cash interest expense on Senior
Convertible Notes (1,083,752) (228,450) (1,484,632) (351,021)
Other interest expense (15,559) (2,193) (17,143) (9,039)
Other income (expense), net (3,917) -- 4,040 --
------------ ------------ ------------ ------------
(1,035,741) (181,953) (1,405,868) (273,014)
------------ ------------ ------------ ------------
Loss before extraordinary item (3,781,954) (2,424,014) (6,184,884) (4,698,798)
Extraordinary item - debt extinguishment
-- -- (28,297) (73,000)
------------ ------------ ------------ ------------
Net loss $ (3,781,954) $ (2,424,014) $ (6,213,181) $ (4,771,798)
============ ============ ============ ============
Basic and diluted loss per share before
extraordinary item $ (0.12) $ (0.19) $ (0.23) $ (0.37)
Extraordinary item - debt extinguishment
-- -- -- (0.01)
------------ ------------ ------------ ------------
Basic and diluted loss per share $ (0.12) $ (0.19) $ (0.23) $ (0.38)
============ ============ ============ ============
Weighted average number of common shares
outstanding 30,560,776 12,630,461 27,585,386 12,594,105
============ ============ ============ ============
</TABLE>
