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As filed with the Securities and Exchange Commission on November 17, 1998
Registration No. 333-65035
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SECURITIES AND EXCHANGE COMMISSION
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AMENDMENT NO. 1
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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SUPERCONDUCTOR TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0158076
(State of incorporation) (I.R.S. Employer Identification No.)
460 WARD DRIVE, SUITE F
SANTA BARBARA, CALIFORNIA 93111-2310
(805) 683-7646
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
M. PETER THOMAS
CHIEF EXECUTIVE OFFICER
SUPERCONDUCTOR TECHNOLOGIES INC.
460 WARD DRIVE, SUITE F
SANTA BARBARA, CALIFORNIA 93111-2310
(805) 683-7646
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
JOHN V. ROOS, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304-1050
(650) 493-9300
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Approximate date of commencement of proposed sale to the public: FROM
TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(1)(2) REGISTRATION FEE
--------------------------- ------------- ---------------- -------------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.001
per share . . . . . . . . . . . 2,978,333 $4.719 $14,054,753 $4,147
================================= ============== ==================== ==================== ===================
</TABLE>
(1) Pursuant to Rule 416 under the Securities Act, this Registration Statement
also relates to a presumably indeterminate number of shares of Common Stock
which are issuable upon stock splits, stock dividends , recapitalizations or
other similar transactions.
(2) Estimated solely for the purpose of computing the registration fee required
by Section 6(b) of the Securities Act and computed pursuant to Rule 457(c)
under the Securities Act based upon the average of the high and low prices
of the Common Stock on September 28, 1998, as reported on the Nasdaq
National Market.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION
8(a), MAY DETERMINE.
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
PROSPECTUS
(Subject to completion, dated November 17, 1998)
2,978,333 SHARES
SUPERCONDUCTOR TECHNOLOGIES INC.
COMMON STOCK
The shares (the "Shares") of Common Stock, $.001 par value (the "Common
Stock"), of Superconductor Technologies Inc. (the "Company") covered by this
Prospectus may be sold from time to time by the stockholders specified in this
Prospectus or their pledgees, donees, transferees or other successors in
interest (the "Selling Stockholders"). See "Selling Stockholders." This
Prospectus relates to (a) 2,978,333 Shares, of which (i) 1,291,666 are Shares
which may in the future be issued to certain Selling Stockholders upon the
conversion of outstanding shares of the Company's Series A Preferred Stock (the
"Series A Stock"), (ii) 250,000 are Shares which may in the future be issued to
certain Selling Stockholders upon the conversion of outstanding shares of the
Company's Series A-1 Preferred Stock (the "Series A-1 Stock"), (iii) 1,000,000
are Shares which may in the future be issued to certain Selling Stockholders
upon the conversion of outstanding shares of the Company's Series B Preferred
Stock (the "Series B Stock") and (iv) 436,667 are Shares which may in the future
be issued to the Selling Stockholders upon the exercise of outstanding warrants
held by the Selling Stockholders (the "Warrants"), and (b) such presently
indeterminate number of additional Shares as may be issuable upon stock splits,
stock dividends, recapitalizations or other similar transactions, in accordance
with Rule 416 under the Securities Act of 1933, as amended (the "Securities
Act"). Such number of Shares as to which this Prospectus relates to is based on
the conversion of Series A Stock, Series A-1 Stock and Series B Stock at the
current applicable conversion rate for each such series of preferred stock;
however, the Shares issuable upon conversion of the Series A Stock , Series A-1
Stock and Series B Stock are subject to adjustment and could be more or less
than the estimated amount listed herein depending on factors which cannot be
predicted at this time. The Company will not receive any of the proceeds from
the sale of the Shares by the Selling Stockholders, but the Company may receive
the proceeds from the exercise of the Warrants by the Selling Stockholders. See
"Use of Proceeds." None of the Shares offered pursuant to this Prospectus have
been registered prior to the filing of the Registration Statement of which this
Prospectus is a part.
The Selling Stockholders have not advised the Company of any specific plans
for the distribution of the Shares covered by this Prospectus. It is
anticipated, however, that the Shares may be offered by the Selling Stockholders
from time to time in one or more transactions on the Nasdaq National Market, in
privately negotiated transactions at such prices as may be agreed upon, or in a
combination of such methods of sale. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders or the purchasers of the Shares for
whom such broker-dealers may act as agent or to whom they sell as principal or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions). See "Plan of Distribution." The price at which any of
the Shares may be sold, and the commissions, if any, paid in connection with any
such sale, are unknown and may vary from transaction to transaction. The Company
will pay all expenses incident to the offering and sale of the Shares to the
public other than any commissions and discounts of underwriters, dealers or
agents and any transfer taxes. See "Selling Stockholders" and "Plan of
Distribution."
The Common Stock is listed on the Nasdaq National Market under the symbol
"SCON." On November 16, 1998, the last sale price of the Common Stock was $4.25
per share.
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AN INVESTMENT IN THE SHARES OFFERED HEREBY ENTAILS A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR INFORMATION THAT SHOULD BE CONSIDERED
BY PROSPECTIVE INVESTORS.
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The Securities and Exchange Commission (the "Commission") may take the view
that, under certain circumstances, the Selling Stockholders and any
broker-dealers or agents that participate with the Selling Stockholders in the
distribution of the Shares may be deemed to be "underwriters" within the meaning
of the Securities Act. Commissions, discounts or concessions received by any
such broker-dealer or agent may be deemed to be underwriting commissions under
the Securities Act. The Company and the Selling Stockholders have agreed to
certain indemnification arrangements. See "Plan of Distribution."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS NOVEMBER 17, 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Commission. Such reports, proxy and information statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
NW, Washington, D.C. 20549, and at the following Regional Offices of the
Commission: New York Regional Office, Seven World Trade Center, Suite 1300, New
York, New York 10048 and Chicago Regional Office, Northwest Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may be obtained by mail at prescribed rates from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, NW, Washington,
D.C. 20549. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of the site is
http://www.sec.gov. The Common Stock of the Company is listed on the Nasdaq
National Market, and such reports, proxy and information statements and other
information concerning the Company may be inspected at the offices of Nasdaq
Operations, 1735 K Street, NW, Washington, D.C. 20006.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the shares of Common Stock offered
hereby, reference is hereby made to the Registration Statement. The Registration
Statement may be inspected at the public reference facilities maintained by the
Commission at the addresses set forth in the preceding paragraph. Statements
contained herein concerning any document filed as an exhibit are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by the Company
pursuant to the Exchange Act are hereby incorporated by reference in this
Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(2) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 28, 1998 , June 27, 1998 and September 26, 1998;
(3) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A filed with the Commission on January
4, 1993; and
(4) All other reports filed by the Company pursuant to Sections 13(a)
or 15(d) of the Exchange Act since December 31, 1997.
All reports and other documents subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference into this Prospectus, to the extent required, and to
be a part of this Prospectus from the date of filing of such reports and
documents.
Any statement contained in a document incorporated by reference into this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
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The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon written or oral request of such person, a copy of any or all of
the foregoing documents incorporated by reference into this Prospectus (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be submitted in writing to Investor Relations, Superconductor
Technologies Inc., 460 Ward Drive, Suite F, Santa Barbara, 93111-2310, or by
telephone at (805) 683-7646.
THE COMPANY
Superconductor Technologies Inc. (the "Company") develops, manufactures
and markets superconductor materials and related cryogenics. High-temperature
superconductors ("HTS") are materials that have the ability to conduct
electrical energy with little or no resistance when cooled to "critical"
temperatures. The Company believes that the growing worldwide wireless
communications market offers the most viable commercialization opportunities for
its superconducting products. To capitalize on these opportunities the Company
has developed its SuperFilter (TM) products, which combine specialized
superconducting filters with a proprietary cryogenic cooler and, in many cases,
a low noise amplifier ("LNA") in a highly compact system. The SuperFilter (TM)
products, when incorporated into wireless base stations, offer significant
advantages over conventional filter products for wireless applications,
including reduced size, increased range and reduced interference.
During the past 19 months, the Company has transitioned from focusing
on research and development to introducing its first commercial product line and
establishing the manufacturing infrastructure to support the product. The
Company introduced the SuperFilter (TM) system for application in the AMPS/B
segment of the cellular market in March 1997 and completed the cellular
offerings by introducing the AMPS/A product in February 1998.
As a result of the product introductions, the Company has significantly
expanded its sales and marketing efforts. The Company has added four Regional
Sales Executives to cover the United States and Latin America. The Company's
sales and marketing effort has been directed primarily at rural and suburban
cellular providers as the Company believes they will be the early deployers of
product. The Company's product addresses the two most critical needs of these
service providers: range coverage and call quality. In addition, the Company
continues to pursue and develop urban applications and its relationship with the
base station original equipment manufacturers ("OEMs").
In order to support the SuperFilter (TM) product introductions, the
Company began the establishment of a manufacturing infrastructure in 1997 which
includes operating units to support the production of all critical components
including the superconducting filters, cryogenic coolers, cryogenic packaging
and final enclosures, and quality and material control functions. In addition,
the Company has expanded its manufacturing space and has procured the necessary
equipment and tooling to produce its product in greater volume.
A critical component of any superconducting application is cryogenic
cooling. The Company has developed a proprietary cryogenic cooler which, in
addition to being integrated into its SuperFilter (TM) systems, has the
potential to be used in other applications. These other applications include
home medical products, cold computing to increase the processing speeds of
computers, and components of various kinds of instrumentation. The Company
believes that the successful commercialization of its cryogenic coolers as stand
alone products will assist in its ability to achieve economies of scale
associated with volume production.
Since its formation in 1987 and through September 26, 1998, the Company
has received over $50.2 million in revenue from government research and
development contracts, through which it has developed much of the technology
used in its commercial products. The Company continues to secure government
contracts, primarily to fund its research and development efforts, and also to
address potential wireless product opportunities in the government section.
The principal executive officers of the Company are located at 460 Ward
Drive, Suite F, Santa Barbara, California 93111-2310, 805-683-7646.
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RISK FACTORS
THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE CONTAIN
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE STATEMENTS
CONTAINED IN THIS PROSPECTUS THAT ARE NOT PURELY HISTORICAL ARE FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION
21E OF THE EXCHANGE ACT, INCLUDING WITHOUT LIMITATION, STATEMENTS REGARDING THE
COMPANY'S EXPECTATIONS, BELIEFS, ESTIMATES, INTENTIONS AND STRATEGIES ABOUT THE
FUTURE. WORDS SUCH AS "ANTICIPATES," "EXPECTS," "INTENDS," "PLANS," "BELIEVES,"
"SEEKS," "ESTIMATES," VARIATIONS OF SUCH WORDS AND SIMILAR EXPRESSIONS ARE
INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE STATEMENTS ARE NOT
GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES
AND ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT; THEREFORE, ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THOSE EXPRESSED OR FORECASTED IN ANY SUCH FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH IN THE
FOLLOWING RISK FACTORS, ELSEWHERE IN THIS PROSPECTUS AND IN THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE
PUBLICLY ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION,
FUTURE EVENTS OR OTHERWISE. POTENTIAL INVESTORS SHOULD CONSIDER CAREFULLY THE
FOLLOWING FACTORS, AS WELL AS THE MORE DETAILED INFORMATION CONTAINED ELSEWHERE
IN THIS PROSPECTUS AND IN THE DOCUMENTS INCORPORATED BY REFERENCE, BEFORE MAKING
A DECISION TO INVEST IN THE SHARES OFFERED HEREBY.
EARLY STAGE OF THE COMMERCIAL SUPERCONDUCTOR PRODUCTS MARKET: MARKET ACCEPTANCE
AND RELIABILITY
The commercial superconductor products market has experienced limited
product commercialization to date. Moreover, since inception, the Company has
been principally engaged in research and development activities and has only
limited experience in the commercialization of its products. The Company's
ability to grow will depend on its ability to successfully transition its
expertise in superconducting filter and cryogenics technologies and applications
to commercial markets, including the wireless communications market. The
Company's success in this regard will depend upon a number of factors, including
successful product testing by its potential customers, the success of the
Company's sales and marketing efforts into the wireless communications market,
the ability of the Company's products to achieve its anticipated benefits, its
ability to attract and retain qualified personnel, successful and rapid scale-up
of the Company's manufacturing capacity, the establishment of satisfactory
vendor relationships to ensure continual supply of key components which are
sourced outside the company, reduction of manufacturing expenses in order to
price products competitively and continued product development to meet customer
demands. While the Company's product has been field tested by its customers and
has passed performance and reliability testing, there can be no assurances that
the product will continue to pass these tests or meet the customers' performance
expectations in the future. If such problems occur, the Company could experience
increased costs, delays, reductions or cancellations of orders and shipments,
and product returns and discounts. There can be no assurance that the Company
will be able to produce its products in sufficient volume to meet market demand
or that any of the Company's products will achieve full market acceptance. If
the Company is unable to manufacture and market its products for its target
markets successfully, its business, results of operations and financial
condition will be materially and adversely affected.
DEPENDENCE ON SALES TO SERVICE PROVIDERS AND OEMS
Most of the Company's products, including those developed for wireless
communications base stations and government applications, are intended for use
as components or subsystems in base station systems or other complex systems.
Therefore, to gain market acceptance, particularly in the wireless market, the
Company must demonstrate that its products will provide advantages to the
service providers who utilize base station systems and the OEMs that manufacture
base station systems. These benefits include a decrease in system size, an
increase in base station range and a reduction in interference. There can be no
assurance that upon acceptance, the Company's products will be able to achieve
any of these advantages. Moreover, even if the Company is able to demonstrate
such advantages, there can be
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no assurance that service providers and OEMs will elect to incorporate the
Company's products into their systems or, if they do, that related system and
manufacturing requirements can or will be met. Failure of service providers or
OEMs to incorporate the Company's products into their systems or failure of such
systems including the SuperFilter(TM) product to achieve market acceptance would
have a material adverse effect on the Company's business, results of operations
and financial condition.
LIMITED MANUFACTURING EXPERIENCE
To date, the Company has sold products only in limited quantities,
primarily for use in field-testing as well as development and prototypes. During
the first nine months of 1998, the Company significantly increased its
manufacturing capacity in order to meet the increased demand for its products as
well as expected future requirements. While the company has increased its
manufacturing capacity, there can be no assurances that the Company will be
successful in overcoming the technological, engineering and management
challenges associated with the production of commercial quantities of
superconducting or cryogenic products at acceptable costs and on a timely basis.
For example, the Company could incur significant ramp-up costs and unforeseen
expenses and delays in connection with attempts to manufacture commercial
quantities of superconducting and cryogenic products, which could have a
material adverse effect on the Company's business, results of operations and
financial condition. In addition, a portion of the components of the SuperFilter
(TM) system will be manufactured outside the Company. There can be no assurances
that the Company will, if at all, be able to identify manufacturers of these
components that will meet the Company's requirements as to reliability,
timeliness and cost-effectiveness.
Any such failure will limit the Company's ability to satisfy customer
orders and would have a material adverse effect on the Company's business,
results of operations and financial condition.
HIGH DEGREE OF DEPENDENCE ON GOVERNMENT CONTRACTS
Since inception and through September 26, 1998, 94% of the Company's net
revenues have been from research and development contract sales directly to the
government or to resellers to the government. Nearly all of such revenues were
earned under contracts between the Company and the United States Department of
Defense (the "DOD"). The Company uses these contracts to help fund its research
and development programs. Although the Company recently has been devoting
substantial resources to the development of commercial markets for its products,
the Company is, and expects to continue to be in the near term, dependent on
government funding for its research and development projects. The DOD has been
reducing total expenditures over the past few years, and while to date DOD
research and development funding for electronics has been relatively stable
despite overall cutbacks, there can be no assurance that such funding will not
be reduced in the future. Absent significant future revenues from commercial
sales, a significant loss of government funding would have a material adverse
effect on the Company's business, results of operations and financial condition.
Virtually all of the Company's government contracts are terminable at
any time at the option of the government. Although the Company historically has
complied with applicable government regulations and contract provisions, there
can be no assurance as to such compliance in the future. Noncompliance with
government procurement regulations or contract provisions could result in
termination of government contracts, substantial monetary fines or damages,
suspension or debarment from doing business with the government and possible
civil or criminal liability. During the term of any suspension or debarment by a
government agency, the Company could be prohibited from competing for or being
awarded any contract by any government agency. The termination of the Company's
significant government contracts, the imposition of fines, damages, suspension
or debarment, or the adoption of new or modified procurement regulations or
practices could have a material adverse effect on the Company's business,
results of operations and financial condition.
Inventions conceived or actually reduced to practice under a government
contract generally result in the government obtaining a royalty-free, paid-up,
non-exclusive license to practice the invention. Similarly, technologies
developed in whole or in part at government expense generally result in the
government obtaining unlimited rights to use, duplicate or disclose technical
data produced under the contract. There can be no assurance that such licenses
and rights will not result in a loss by the Company of potential revenues or the
disclosure of any of the Company's
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proprietary information, either of which could have a material adverse effect on
the Company's business, results of operations and financial condition.
INTENSE COMPETITION
The markets for the Company's products are intensely competitive. The
Company faces competition in various aspects of its technology and product
development and in each of the markets targeted by the Company. The Company's
current and potential competitors include conventional RF filter manufacturers
and both established and newly emerging companies developing similar or
competing superconducting technologies. The Company competes primarily with
Conductus, Inc. and Illinois Superconductor Corporation, with respect to its
superconducting filter systems. The Company also competes with alternative means
of enhancing base stations range and selectivity other than by superconducting
filter. The primary competition comes from tower mount and ground mount
amplifiers and "smart" antennas. Tower mount and ground mount amplifiers pass
the signal received by the antenna through a broad low level filter which then
amplifies the signal. These units are produced by a number of companies, which
include most of the OEMs of base stations such as Motorola, Lucent, Nortel and
Nokia. These units are also produced by filter manufacturers including Allen
Telecom and Cellwave. The "smart" antennas allow the antennas to focus on the
signal they are trying to receive to enhance the ability to receive the signal.
Among the companies that produce these systems are Metawave and Arraycom.
In addition, the Company currently supplies components and licenses
technology to large companies and industry leaders that may decide to
manufacture or design their own superconducting components instead of purchasing
them, or licensing the technology, from the Company. The Company competes with
IBM, DuPont, Matsushita and Amtel, a Japanese consortium, among others, with
respect to its HTS materials. In the government sector, the Company competes
with universities, national laboratories and both large and small companies for
research and development contracts. The Company expects increased competition
both from existing competitors and a number of companies that may enter the
wireless communications market.
The Company also competes in cryogenic coolers with companies such as
CTI Cryogenics, Leybold and Ricor. CTI Cryogenics uses another cooling method
than is employed by the Company, which is not as efficient and thus requires
additional power. Leybold and Ricor have produced similar units to one produced
by the Company in limited or prototype quantities.
The Company believes that it competes on the basis of technological
sophistication, product performance, reliability, quality, cost-effectiveness
and product availability. Many of the Company's current and potential
competitors have significantly greater financial, technical, manufacturing and
marketing resources than the Company. The Company's ability to effectively
compete will require it to successfully manufacture and market its current
products at a sufficiently low cost to achieve commercial acceptance, develop
and maintain technologically advanced products, attract and retain highly
qualified personnel and obtain patent or other protection for its technology and
products. There can be no assurance that the Company will be able to compete
successfully in the future.
ACCUMULATED DEFICIT AND ANTICIPATED FUTURE LOSSES
The Company has incurred net losses each year since its inception and,
as of September 26, 1998, had an accumulated deficit of $33,573,000. The Company
expects to continue to incur significant operating losses over the next several
quarters as it continues to devote significant financial resources to the
commercialization of wireless and cold computing products, the expansion of
Company operations and product development activities. The success of the
Company in this regard is dependent upon the Company's successful
commercialization of its HTS filter systems for the worldwide wireless
communications market, and there can be no assurance that the Company will be
able to successfully commercialize such products. As a result, the timing of
when the Company will be profitable and the amount of net losses until that time
are uncertain.
DEPENDENCE OF KEY PERSONNEL
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The Company is highly dependent upon the efforts of its technical
workforce and senior management. Due to the specialized technical nature of the
Company's business, the Company is also highly dependent upon its ability to
attract and retain qualified technical personnel, primarily in the areas of
wireless communications and cold computing. The loss of the services of one or
more members of the senior management or technical teams could impede STI's
ability to achieve its product development and commercialization objectives.
There is intense competition for qualified personnel in the areas of the
Company's activities and there can be no assurance that the Company will be able
to continue to attract and retain qualified personnel necessary for the
development of its business.
LIMITED MARKETING AND SALES CAPABILITIES
In order for the Company to successfully reach full market acceptance
in its targeted markets, it must continue to develop appropriate marketing,
sales, technical, customer service and distribution capabilities, or it must
enter into agreements with third parties to provide such services. There can be
no assurance that the Company's continuing efforts in developing its marketing
and sales capabilities, including customer service and distribution, will be
successful. Furthermore, there can be no assurance that such third party
agreements can be obtained upon acceptable terms. Failure to develop such
capabilities or obtain such third party agreements could have a material adverse
effect on the acceptance of the Company's products in the commercial markets
and, as a result, on the Company's business, results of operations and financial
condition.
UNCERTAINTY OF PATENTS AND PROPRIETARY RIGHTS
The Company relies on a combination of patent, trademark, trade secret
and copyright law and internal procedures and nondisclosure agreements to
protect its intellectual property. There can be no assurance that the Company's
intellectual property rights can be successfully asserted in the future or will
not be invalidated, circumvented or challenged. In addition, the laws of certain
foreign countries in which the Company's products may be produced or sold do not
protect the Company's intellectual property rights to the same extent as the
laws of the United States. The failure of the Company to protect its proprietary
information could have a material adverse effect on the Company's business,
results of operations and financial condition.
The Company has an exclusive, worldwide license, in all fields of use,
to formulations covered by patents held by the University of Arkansas covering
thallium barium calcium copper oxide ("TBCCO"), the material upon which the
Company primarily relies for its HTS, products and product development. There
can be no assurance that the validity of these patents will not be subject to
challenge. In addition, other parties may have developed similar materials
utilizing TBCCO formulations and may design around the patented aspects of this
material. Under the terms of its exclusive license, the Company has agreed to
assume litigation expenses for infringement actions, subject to a right of set
off against future royalty obligations. If the Company is required to incur
significant expenses under this agreement, the Company's results of operations
and financial condition could be materially and adversely affected. In addition,
the Company has granted each of DuPont and Superconducting Core Technologies,
Inc. and its affiliates a non-exclusive worldwide sublicense under its license
with the University of Arkansas to develop and market TBCCO materials and
superconducting technologies. There can be no assurance that these sublicenses
will not adversely affect the Company's business, results of operations and
financial condition.
The Company believes that a number of patent applications are pending
that cover the composition yttrium barium copper oxide ("YBCO") including
applications filed by IBM, AT&T and other large potential competitors of the
Company. YBCO is an HTS material upon which the Company also relies, although to
a lesser extent than TBCCO. The Company understands that such applications are
the subject of interference proceedings currently pending in the U.S. Patent and
Trademark Office. The Company is not involved in these proceedings. In addition,
the Company has been issued patents for specific compounds that it uses. The
Company believes that a number of international patents may be pending regarding
other specific YBCO compounds. There is a substantial risk that one or more
third parties will be granted patents covering YBCO and that the Company's use
of these materials may require a license. As with other patents, there can be no
assurance that the Company will be able to obtain licenses to any such patents
for YBCO or other materials or that such licenses would be available on
commercially reasonable terms. The Company's efforts to develop products based
on YBCO would be substantially impaired by its failure to obtain any such
license for YBCO,
-7-
<PAGE> 9
and such failure could have a material adverse effect on the Company's business,
results of operations and financial condition.
The Company owns or has rights under a number of patents and pending
patent applications related to the processing of TBCCO and YBCO. There can be no
assurance that the patent applications filed by the Company will result in
patents being issued, that any patents issued will afford meaningful protection
against competitors with similar technology, or that any patents issued will not
be challenged by third parties. Since U.S. patent applications are maintained in
secrecy until patents are issued, and since publications of discoveries in the
scientific or patent literature tend to lag behind actual discoveries by several
months, the Company cannot be certain that it was the first creator of
inventions covered by issued patents or pending patent applications or that it
was the first to file patent applications for such inventions. Moreover, there
can be no assurance that other parties will not independently develop similar
technologies, duplicate the Company's technologies or, if patents are issued to
the Company or rights licensed by the Company, design around the patented
aspects of any technologies developed or licensed by the Company. The Company
may have to participate in interference proceedings declared by the U.S. Patent
and Trademark Office to determine the priority of inventions, which could result
in substantial costs to the Company. Litigation may also be necessary to enforce
any patents held by or issued to the Company or to determine the scope and
validity of others' proprietary rights, which could result in substantial costs
to the Company.
The rapid rate of inventions and discoveries in the superconductivity
field has raised many patent issues which are not resolved at this time. The
claims in the granted patents often overlap and there are disputes involving
rights to inventions claimed in pending patent applications. As a result, the
patent situation in the HTS field is unusually complex. It is likely that there
will be patents held by third parties relating to the Company's products or
technology. Therefore, the Company may need to acquire licenses to design around
or successfully contest the validity or enforceability of such patents. The
extent to which the Company may be able to acquire necessary licenses is not
known. It is also possible that because of the number and scope of patents
pending or issued, the Company may be required to obtain multiple licenses in
order to use a single material. If the Company is required to obtain multiple
licenses, the cost to the Company of HTS materials will increase. Furthermore,
there can be no assurance that such licenses would be available on commercially
reasonable terms or at all. The likelihood of successfully contesting the
validity or enforceability of such patents is also uncertain, and, in any event,
the Company could incur substantial costs in defending the validity or scope of
its patents or challenging the patents of others.
RAPID TECHNOLOGICAL CHANGE
The field of superconductivity is characterized by rapidly advancing
technology. The future success of the Company will depend in large part upon its
ability to keep pace with advancing superconductor technology, including
superconducting materials and processes and industry standards. The Company has
focused its development efforts on TBCCO and, to a lesser extent, YBCO. There
can be no assurance that either TBCCO or YBCO will ultimately prove commercially
competitive against other currently known materials or materials that may be
discovered in the future. The Company intends to continue to develop and
integrate advances in wireless filter and cryogenic cooling technologies in the
manufacture of commercial quantities of products. The Company will also need to
continue to develop and integrate advances in complementary technologies,
particularly in the wireless communication industry. There can be no assurance
that the Company's development efforts will not be rendered obsolete by research
efforts and technological advances made by others or that materials other than
those currently used by the Company will not prove more advantageous for the
commercialization of HTS products.
MATERIALS RISKS
To date, the Company has principally focused its development efforts on
TBCCO. Although TBCCO has one of the highest critical temperatures of any HTS
material verified by the scientific community to date, other HTS materials are
currently known to have advantages over TBCCO with respect to certain
applications. There can be no assurance that TBCCO will ultimately prove
commercially competitive against YBCO or against other currently known
materials. Moreover, there is no assurance that other materials will not be
discovered with higher critical temperatures or other superior qualities or that
the Company will be able to obtain the rights to any such superior material.
-8-
<PAGE> 10
The Company currently purchases substrates for growth of HTS thin films
from two primary suppliers because of the quality of the substrate provided by
such suppliers. There are additional components which the Company sources from a
single vendor due to the present volume. While the Company is aware of
alternative sources for its components, the establishment of relationships with
additional or replacement suppliers could be time consuming and result in a
supply interruption which would have a material adverse effect on the Company's
ability to manufacture its products in commercial quantities and,
correspondingly, upon its business, results of operations and financial
condition.
BUSINESS INTERRUPTIONS AND DEPENDENCE ON A SINGLE U.S. FACILITY
The Company's primary operations, including engineering, manufacturing,
customer service, distribution and general administration, are housed in a
single facility in Santa Barbara, California. Any material disruption in the
Company's operations, whether due to fire, natural disaster or otherwise, could
have a material adverse effect on the Company's business, results of operations
and financial condition.
HAZARDOUS MATERIALS; ENVIRONMENTAL REGULATIONS
The Company uses certain hazardous materials in its research,
development and manufacturing operations. As a result, the Company is subject to
stringent federal, state and local regulations governing the storage, use and
disposal of such materials. It is possible that current or future laws and
regulations could require the Company to make substantial expenditures for
preventive or remedial action, reduction of chemical exposure, or waste
treatment or disposal. There can be no assurance that the operations, business
or assets of the Company will not be materially and adversely affected by the
interpretation and enforcement of current or future environmental laws and
regulations. In addition, although the Company believes that its safety
procedures for handling and disposing of such materials comply with the
standards prescribed by state and federal regulations, nevertheless there is the
risk of accidental contamination or injury from these materials. To date, the
Company has not incurred substantial expenditures for preventive action with
respect to hazardous materials or for remedial action with respect to any
hazardous materials accident. If such an accident occurred, the Company could be
held liable for any resulting damages. Furthermore, the use and disposal of
hazardous materials involves the risk that the Company could be required to
incur substantial expenditures for such preventive or remedial actions. The
liability in the event of an accident or the costs of such actions could exceed
the Company's resources or otherwise have a material adverse effect on the
Company's business, results of operations and financial condition.
FUTURE CAPITAL NEEDS
To date, the Company has financed its operations primarily through equity,
debt, equipment and lease financings. To date, the Company has raised $44
million in equity, net of related expenses. In addition, as of September 26,
1998, the Company had outstanding indebtedness and lease financings of $811,000
and an additional $350,000 available under debt and lease financings. The
Company is currently in discussions with two companies to provide an additional
$1.2 million of lease financing for equipment either in place or to be acquired
over the next several months. The Company is also in negotiation for a working
capital line of credit for approximately $1.5 million. The Company believes that
the additional financing, coupled with the aggregate of $8.875 million of
proceeds from its sales of the Series A Stock, Series A-1 Stock, and Series B
Stock to certain Selling Stockholders on March 26, 1998, August 11, 1998 and
September 2, 1998, respectively, will provide adequate capital for its
operational needs over the next 12 months. However, in the event that the debt
financing is not successfully completed, the Company will be required to seek
alternative financing. There can be no assurances that the negotiations in
process will result in execution of credit agreements or that other additional
financing would be available on terms agreeable to the Company, if at all. Also,
depending upon the timing of market acceptance of the Company's products and the
additional manufacturing ramp-up necessary to support the market acceptance,
additional working capital financing may be required within the next 12 months
to fully implement the Company's business plan. Under such circumstances, the
Company's inability to fully implement its business plan, including the
procurement of additional financing, would have a material adverse effect on the
Company's business, operating results and financial condition. In addition,
certain
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<PAGE> 11
Selling Stockholders have been granted certain rights of first refusal to
participate in certain future issuances of equity securities. These rights of
first refusal could impair the Company's ability to obtain additional equity
financings. If additional funds are raised by issuing other equity securities,
further dilution to existing or future stockholders is likely to result.
VOLATILITY OF COMMON STOCK PRICE
The market price of the Common Stock, like that of many other
high-technology companies, has fluctuated significantly and is likely to
continue to fluctuate in the future. Announcements by the Company or others
regarding the receipt of customer orders, quarterly variations in operating
results, additional equity financings, changes in recommendations of securities
analysts, results of customer field trials, scientific discoveries,
technological innovations, litigation, product developments, patent or
proprietary rights, government regulation and general market conditions may have
a significant impact on the market price of the Common Stock. In addition, the
securities markets have experienced volatility which is often unrelated to the
operating performance of particular companies. In the past, following a period
of volatility in the market price of a company's securities, securities class
action lawsuits have been instituted against some companies. If brought, the
costs of defending such litigation could have a material adverse effect on the
Company's business, results of operation and financial condition.
SUBSTANTIAL NUMBER OF SHARES ELIGIBLE FOR FUTURE SALE
On March 26, 1998, August 11, 1998 and September 2, 1998, the Company sold
645,833 shares of Series A Stock, 125,000 shares of Series A-1 Stock and 500,000
shares of Series B Stock, respectively, to certain Selling Stockholders in
private placements pursuant to three convertible preferred stock purchase
agreements. Each share of Series A Stock, Series A-1 Stock and Series B Stock is
initially convertible into two shares of Common Stock. No shares of Series A
Stock, Series A-1 Stock or Series B Stock have been converted into shares of
Common Stock as of the date hereof. In connection with the issuances of the
Series A Stock, Series A-1 Stock and Series B Stock, Warrants exercisable for an
aggregate of 286,667 shares of Common Stock were also issued to certain Selling
Stockholders. Also, in connection with a pubic offering of the Common Stock in
November 1996, Warrants exercisable for an aggregate of 150,000 shares of Common
Stock were issued to a certain Selling Stockholder. The Warrants have not been
exercised for shares of Common Stock as of the date hereof. By the terms of the
Warrants, the Warrants become unexercisable (i) upon their respective expiration
dates, (ii) upon consummation of any transaction or series of transactions,
including without limitation, the sale, transfer or disposition of all or
substantially all of the Company's assets or the merger of the Company with or
into, or consolidation with, any other corporation, whereby the holders of the
Company's voting securities prior to such transaction do not hold more than 50%
of the voting securities of the surviving entity following the consummation of
any such transaction or transactions and (iii) in the case of some of the
Warrants, in the event that upon exercise the holder and its affiliates would
beneficially own more than 4.9% of the outstanding Common Stock (unless such
holder waives such limitation on exercisability by written notice to the
Company).
Pursuant to the securities purchase agreement in connection with the Series
B Stock financing, the Company may be obligated to grant additional warrants
exercisable for up to 454,545 shares of Common Stock in the event that the
average closing bid price of the Common Stock on the ten trading days ending on
March 2, 1999 is less than $4.00 per share. The Company may also issue
additional capital stock, warrants and/or other securities to raise capital in
the future. In order to attract and retain key personnel, the Company may also
issue additional securities, including stock options, in connection with its
employee benefit plans. During the terms of such options, warrants, Series A
Stock, Series A-1 Stock and Series B Stock, if any, the holders thereof are
given the opportunity to benefit from a rise in the market price of the Common
Stock.
The sale of a substantial number of shares of Common Stock by the Company
or any of its significant stockholders, or the perception that such sales could
occur, could adversely affect the prevailing market price of the Common Stock.
In connection with the Registration Statement of which this Prospectus is a
part, 2,978,333 Shares are being registered by the Company for public resale, of
which (i) 1,291,666 are Shares which may in the future be issued to certain
Selling Stockholders upon the conversion of outstanding shares of Series A
Stock, (ii) 250,000 are Shares which may in the future be issued to certain
Selling Stockholders upon the conversion of outstanding shares of Series A-1
Stock, (iii) 1,000,000 are Shares which may be issued to certain Selling
Stockholders upon the conversion of
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<PAGE> 12
outstanding shares of Series B Stock and (iv) 436,667 are Shares which may in
the future be issued to the Selling Stockholders upon the exercise of Warrants.
In addition, in connection with the Registration Statement of which this
Prospectus is a part, a presently indeterminate number of additional Shares as
may be issuable upon stock splits, stock dividends, recapitalizations or other
similar transactions are being registered by the Company for public resale in
accordance with Rule 416 under the Securities Act. There can be no assurance
that the Company will not be obligated to register additional shares of Common
Stock for public resale prior to or upon conversion of the Series A Stock, the
Series A-1 Stock and the Series B Stock depending on, among other factors, the
future market price of the Common Stock. The increase in the number of
outstanding shares of Common Stock that are available for sale without
restriction due to the registration of the Shares and the perception that a
substantial number of the Shares may be sold by the Selling Stockholders, or the
actual sale of a substantial number of the Shares by the Selling Stockholders,
could adversely affect the market price of the Common Stock. The Company is
unable to make any prediction as to the effect, if any, that future sales of
Common Stock or the availability of Common Stock for sale may have on the market
price of the Common Stock prevailing from time to time. In addition, any such
sale or such perception could make it more difficult for the Company to sell
equity securities in the future at a time and price that the Company deems
appropriate.
As of September 26, 1998, the Company had outstanding warrants to purchase
436,667 shares of Common Stock at a weighted average exercise price of $4.64 per
share and options to purchase 1,800,726 shares of Common Stock at a weighted
average exercise price of $4.40 per share (956,909 of which have not yet vested)
issued to employees, directors and consultants pursuant to the Company's various
stock option plans and individual agreements with management and directors of
the Company.
DILUTION AND DIVIDEND POLICY
The conversion of Series A Stock, Series A-1 Stock or Series B Stock, or
the exercise of options and warrants, including the Warrants, as well as the
sale by the Company of additional securities and/or rights to purchase such
securities, would likely have an adverse or dilutive effect on the market value
of the Common Stock, including the shares of Common Stock being offered hereby.
The Series A Stock, Series A-1 Stock and Series B Stock may be converted into
shares of Common Stock at a discount to the market price of the Common Stock on
the particular date of conversion. The Company also may in the future offer
equity participation in connection with the obtaining of non-equity financing,
such as debt or leasing arrangements accompanied by warrants to purchase equity
securities of the Company. This could also have a dilutive effect upon the
holders of Common Stock.
The Company has never paid a cash dividend on its Common Stock and does not
expect to do so in the foreseeable future. Cumulative dividends on the Series A
Stock, Series A-1 Stock and Series B Stock are payable at the rates of 6%, 6%
and 7% per annum, respectively. While the Series A Stock, Series A-1 Stock and
Series B Stock are outstanding, the Company is limited in its ability to pay
dividends on the Common Stock.
ANTI-TAKEOVER PROVISIONS
The Company's Certificate of Incorporation and Bylaws, each as amended to
date, contain provisions that could delay, deter or prevent a merger, tender
offer or other business combination or change in control involving the Company
that some or a majority of the stockholders might consider to be in their best
interests, including offers or attempted takeovers that might otherwise result
in such stockholders receiving a premium over the market price of the Common
Stock. The Company's Certificate of Incorporation and Bylaws, among other
things, (i) restrict the ability of stockholders to call stockholders meetings
by allowing only stockholders holding shares in the aggregate entitled to cast
not less than 10% of the votes at such meetings to call such meetings, (ii)
eliminate such right to call stockholders meetings if the shares of capital
stock of the Company are (A) designated as qualified for trading on the Nasdaq
National Market and (B) the Company has at least 800 holders of shares of its
capital stock, (iii) preclude stockholders from raising new business for
consideration at stockholders meetings unless the proponent has provided notice
to the company not less than 90 days prior to the meeting and (iv) limit
business which may be conducted at stockholders meetings to those matters
properly specified in notices to the Company. Moreover, the Company has not
opted out of Section 203 of the Delaware General Corporation Law, which
prohibits mergers, sales of material assets and certain self-dealing
transactions between the corporation and a holder of 15% or more of the
corporation's outstanding voting
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<PAGE> 13
stock for a period of three years following the date the stockholder became a
15% holder, subject to certain qualifications.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded
to accept only two-digit entries in the date code filed. Beginning in the year
2000, these date code fields will need to accept four-digit entries to
distinguish 21st century date from 20th century dates. As a result, in
approximately two years, computer systems and/or software used by many companies
may need to be upgraded to comply with such "Year 2000" requirements.
Significant uncertainty exists concerning the potential effects associated with
compliance. The Company currently uses a limited number of software products
that are not Year 2000 compliant. However, the Company has acquired
manufacturing software, which replaces substantially all non-Year 2000 compliant
software, in order to support its expansion efforts. The software developer has
represented that the new software is Year 2000 compliant. The Company has
reviewed the remaining software programs that are not Year 2000 compliant and
believes that with modification to existing software or cessation of utilization
of non-compliant software, the Year 2000 problem will not pose significant
operational problems. Nonetheless, there can be no assurances that coding errors
or other defects will not be discovered in the future and any Year 2000
compliance problem of the Company could result in a material adverse effect on
the Company's business, operating results and financial conditions. The Company
currently does not expect the amounts required to be incurred to become Year
2000 compliant to have a material effect on its financial position or results of
operations.
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<PAGE> 14
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by
the Selling Stockholders. If and when all or a portion of the Warrants are
exercised and up to 436,667 Shares are issued to the Selling Stockholders, the
Company will receive the proceeds from the sale of such Shares to the Selling
Stockholders to the extent that such warrants are exercised with cash
consideration and not through warrant conversion. If the warrants are exercised
in full and with cash consideration, the Company will receive $2,025,668. Such
amount is intended to be used by the Company for working capital and other
general corporate purposes. See "Selling Stockholders" and "Plan of
Distribution" described below.
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<PAGE> 15
SELLING STOCKHOLDERS
The following table sets forth, as of September 30, 1998, certain
information regarding the beneficial ownership of the outstanding Common Stock
by the Selling Stockholders, consisting of the Shares which the Selling
Stockholders may be issued upon conversion of the Series A Stock, the Series A-1
Stock and the Series B Stock and the Shares which the Selling Stockholders may
acquire upon exercise of the Warrants, both before the offering of the Shares
and as adjusted to reflect the sale of the Shares.
The Company has agreed to initially register 2,978,333 Shares for resale by
the Selling Stockholders. The Shares being offered by the Selling Stockholders
were acquired from the Company (i) in private placement transactions pursuant to
the Series A Preferred Stock Purchase Agreement dated March 26, 1998 (the
"Series A Agreement"), Series A-1 Preferred Stock Purchase Agreement dated
August 11, 1998 (the "Series A-1 Agreement") and Securities Purchase Agreement
dated September 2, 1998 (the "Series B Agreement", and collectively, with the
Series A Agreement and Series A-1 Agreement, the "Purchase Agreements") and (ii)
upon exercise of the Warrants. Each Selling Stockholder that purchased the
Shares pursuant to the Purchase Agreements represented to the Company that it
would acquire the Shares for investment and with no present intention of
distributing any such Shares except pursuant to this Prospectus or sales exempt
from the registration requirements of the Securities Act. Pursuant to its
obligation under the Registration Rights Agreement dated September 2, 1998 (the
"Registration Rights Agreement"), the Company filed with the Commission, under
the Securities Act, a Registration Statement on Form S-3, of which this
Prospectus forms a part, with respect to the resale of the Shares from time to
time on the Nasdaq National Market or in privately-negotiated transactions and
has agreed to use its best efforts to keep such Registration Statement effective
until the earlier of (i) a date on which all the Shares may be immediately
sold without restriction (including without limitation as to volume by each
holder thereof) and without registration under the Securities Act, or (ii) the
date all of the Shares have been sold.
None of the Selling Stockholders has held any position or office or had a
material relationship with the Company or any of its affiliates within the past
three years other than as a result of the ownership of the Common Stock. The
Company may amend or supplement this Prospectus from time to time to update the
disclosure set forth herein.
<TABLE>
<CAPTION>
Beneficial Ownership
Shares Beneficially Shares After Offering(3)
Owned Prior to Being ------------------------
Selling Stockholder Offering(1) Offered(2) Number Percent
- ------------------------------------ ------------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Wilmington Securities, Inc.(4) 2,819,333 2,044,333 775,000 7.95
Henry L. Hillman, Elsie Hilliard
Hillman and C.G. Grefenstette, Trust
of the Henry L. Hillman Trust under
Agreement dated November 18, 1985
(the "Henry L. Hillman Trust")(5) 441,000 336,000 105,000 1.3
Thomas G. Bigley and C.G.
Grefenstette, Trustees under Agreeme
of Trust dated December 30, 1976 for
Children of Juliet Lea Hillman Simonnt
(the "Juliet Lea Hillman Simonds
Trust")(6) 127,000 112,000 15,000 *
</TABLE>
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<PAGE> 16
<TABLE>
<CAPTION>
Beneficial Ownership
Shares Beneficially Shares After Offering(3)
Owned Prior to Being ------------------------
Selling Stockholder Offering(1) Offered(2) Number Percent
- ------------------------------------ ------------------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Thomas G. Bigley and C.G.
Grefenstette, Trustees under Agreeme
of Trust dated December 30, 1976 for
Children of Audrey Hillman
Fisher (the "Audrey Hillman
Fisher Trust")(7) 127,000 112,000 15,000 *
Thomas G. Bigley and C.G.
Grefenstette, Trustees under Agreeme
of Trust dated December 30, 1976 fornt
Children of Henry Lea Hillman, Jr. (the
"Henry Lea Hillman, Jr. Trust")(8) 127,000 112,000 15,000 *
Thomas G. Bigley and C.G.
Grefenstette, Trustees under Agreement
of Trust dated December 30, 1976 for
Children of William Talbott Hillman
(the "William Talbott Hillman Trust")(9) 127,000 112,000 15,000 *
Van Kasper & Company(10) 150,000 150,000 -- --
Total....................... 3,878,333 2,978,333 900,000 8.42
</TABLE>
- ----------------------
* Less than one percent.
(1) Henry L. Hillman, as settlor and trustee of the Henry L. Hillman Trust,
and Elsie Hilliard Hillman and C.G. Grefenstette, as trustees of the
Henry L. Hillman Trust, may be deemed to share voting and disposition
power regarding 2,819,333 shares of Common Stock held beneficially by
Wilmington Securities, Inc. and 436,000 shares (exclusive of 5,000
shares of Common Stock owned of record and beneficially by C.G.
Grefenstette) of Common Stock held beneficially by the Henry L. Hillman
Trust. As trustees of the Juliet Lea Hillman Simonds Trust, the Audrey
Hillman Fisher Trust, the Henry Lea Hillman, Jr. Trust and the William
Talbott Hillman Trust, Thomas G. Bigley and C.G. Grefenstette may be
deemed to share voting and disposition power regarding 448,000 shares
(exclusive of 5,000 shares of Common Stock owned of record and
beneficially by C.G. Grefenstette) of Common Stock held beneficially by
each of such trusts.
(2) Represents the specified number of Shares that may be sold by the
Selling Stockholders pursuant to this Prospectus; provided, however,
that, pursuant to Rule 416 under the Securities Act, the Registration
Statement of which this Prospectus is a part shall also cover any
additional shares of Common Stock which become issuable in connection
with the Shares registered for sale hereby by reason of any stock
dividend, stock split, recapitalization or other similar transaction
effected without the receipt of consideration which results in an
increase in the Company's number of outstanding shares of Common Stock.
(3) Assumes the Selling Stockholders sell all of their Shares offered
hereby to unaffiliated third parties pursuant to this Prospectus. The
Selling Stockholders may sell all or part of their Shares.
(4) 775,000 shares of Common Stock are owned of record and beneficially by
Wilmington Securities, Inc. Wilmington Securities, Inc. also holds
645,833 shares of Series A Stock, 125,000 shares of Series A-1 Stock
and 150,000 shares of Series B Stock, each with a stated value of $6,
$8 and $8 per share, respectively, which may be initially converted
into two shares of Common Stock. The number of shares of Common Stock
shown in the table includes 1,841,666 shares of Common Stock, which
represents two times the number of shares of Series A Stock,
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<PAGE> 17
Series A-1 Stock and Series B Stock held by such Selling Stockholder.
Because the number of shares of Common Stock that will ultimately be
issued to Wilmington Securities, Inc. is dependent upon the applicable
conversion ratio at the time of conversion, that number of shares of
Common Stock, and therefore, the number of shares of Common Stock
offered hereby, cannot be determined exactly at this time. The number
of shares of Common Stock shown in the table also includes 202,667
shares of Common Stock issuable upon exercise of presently exercisable
Warrants held by Wilmington Securities, Inc.
(5) 5,000 shares of Common Stock are owned of record and beneficially by
C.G. Grefenstette. 100,000 shares of Common Stock are owned of record
and beneficially by the Henry L. Hillman Trust. The Henry L. Hillman
Trust also holds 150,000 shares of Series B Stock, with a stated value
of $8 per share, which may be initially converted into two shares of
Common Stock. The number of shares of Common Stock shown in the table
includes 300,000 shares of Common Stock, which represents two times the
number of shares of Series B Stock held by such Selling Stockholder.
Because the number of shares of Common Stock that will ultimately be
issued to the Henry L. Hillman Trust is dependent upon the applicable
conversion ratio at the time of conversion, that number of shares of
Common Stock, and therefore, the number of shares of Common Stock
offered hereby, cannot be determined exactly at this time. The number
of shares of Common Stock shown in the table also includes 36,000
shares of Common Stock issuable upon exercise of presently exercisable
Warrants held by the Henry L. Hillman Trust.
(6) 10,000 and 5,000 shares of Common Stock are owned of record and
beneficially by Thomas G. Bigley and C.G. Grefenstette, respectively.
The Juliet Lea Hillman Simonds Trust also holds 50,000 shares of Series
B Stock, with a stated value of $8 per share, which may be initially
converted into two shares of Common Stock. The number of shares of
Common Stock shown in the table includes 100,000 shares of Common
Stock, which represents two times the number of shares of Series B
Stock held by such Selling Stockholder. Because the number of shares of
Common Stock that will ultimately be issued to the Juliet Lea Hillman
Simonds Trust is dependent upon the applicable conversion ratio at the
time of conversion, that number of shares of Common Stock, and
therefore, the number of shares of Common Stock offered hereby, cannot
be determined exactly at this time. The number of shares of Common
Stock shown in the table also includes 12,000 shares of Common Stock
issuable upon exercise of presently exercisable Warrants held by the
Juliet Lea Hillman Simonds Trust.
(7) 10,000 and 5,000 shares of Common Stock are owned of record and
beneficially by Thomas G. Bigley and C.G. Grefenstette, respectively.
The Audrey Hillman Fisher Trust also holds 50,000 shares of Series B
Stock, with a stated value of $8 per share, which may be initially
converted into two shares of Common Stock. The number of shares of
Common Stock shown in the table includes 100,000 shares of Common
Stock, which represents two times the number of shares of Series B
Stock held by such Selling Stockholder. Because the number of shares of
Common Stock that will ultimately be issued to the Audrey Hillman
Fisher Trust is dependent upon the applicable conversion ratio at the
time of conversion, that number of shares of Common Stock, and
therefore, the number of shares of Common Stock offered hereby, cannot
be determined exactly at this time. The number of shares of Common
Stock shown in the table also includes 12,000 shares of Common Stock
issuable upon exercise of presently exercisable Warrants held by the
Audrey Hillman Fisher Trust.
(8) 10,000 and 5,000 shares of Common Stock are owned of record and
beneficially by Thomas G. Bigley and C.G. Grefenstette, respectively.
The Henry Lea Hillman, Jr. Trust also holds 50,000 shares of Series B
Stock, with a stated value of $8 per share, which may be initially
converted into two shares of Common Stock. The number of shares of
Common Stock shown in the table includes 100,000 shares of Common
Stock, which represents two times the number of shares of Series B
Stock held by such Selling Stockholder. Because the number of shares of
Common Stock that will ultimately be issued to the Henry Lea Hillman,
Jr. Trust is dependent upon the applicable conversion ratio at the time
of conversion, that number of shares of Common Stock, and therefore,
the number of shares of Common Stock offered hereby, cannot be
determined exactly at this time. The number of shares of Common Stock
shown in the table also includes 12,000 shares of Common Stock issuable
upon exercise of presently exercisable Warrants held by the Henry Lea
Hillman, Jr. Trust.
(9) 10,000 and 5,000 shares of Common Stock are owned of record and
beneficially by Thomas G. Bigley and C.G. Grefenstette, respectively.
The William Talbott Hillman Trust also holds 50,000 shares of Series B
Stock, with a stated value of $8 per share, which may be initially
converted into two shares of Common Stock. The number of shares of
Common Stock shown in the table includes 100,000 shares of Common
Stock, which represents two times the number of shares of Series B
Stock held by such Selling Stockholder. Because the number of shares of
Common Stock that will ultimately be issued to the William Talbott
Hillman Trust is dependent upon the applicable conversion ratio at the
time of conversion, that number of shares of Common Stock, and
therefore, the number of shares of Common Stock offered hereby, cannot
be determined exactly at this time. The number of
-16-
<PAGE> 18
shares of Common Stock shown in the table also includes 12,000 shares
of Common Stock issuable upon exercise of presently exercisable
Warrants held by the William Talbott Hillman Trust.
(10) The number of shares of Common Stock shown in the table includes
150,000 shares of Common Stock issuable upon exercise of presently
exercisable Warrants held by Van Kasper & Company.
-17-
<PAGE> 19
PLAN OF DISTRIBUTION
The Shares covered by this Prospectus may be offered and sold from time to
time by the Selling Stockholders. The Selling Stockholders will act
independently of the Company in making decisions with respect to the timing,
manner and size of each sale. The Selling Stockholders may sell the Shares being
offered hereby on the Nasdaq National Market, or otherwise, at prices and under
terms then prevailing or at prices related to the then current market price or
at negotiated prices. The Shares may be sold by one or more of the following
means of distribution: (a) block trades in which the broker-dealer so engaged
will attempt to sell Shares as agent, but may position and resell a portion of
the block as principal to facilitate the transaction; (b) purchases by a
broker-dealer as principal and resale by such broker-dealer for its own account
pursuant to this Prospectus; (c) over-the-counter distributions in accordance
with the rules of the Nasdaq National Market; (d) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (e)
privately negotiated transactions. To the extent required, this Prospectus may
be amended and supplemented from time to time to describe a specific plan of
distribution. In connection with distributions of the Shares or otherwise, the
Selling Stockholders may enter into hedging transactions with broker-dealers or
other financial institutions. In connection with such transactions,
broker-dealers or other financial institutions may engage in short sales of the
Common Stock in the course of hedging the positions they assume with Selling
Stockholders. The Selling Stockholders may also sell the Common Stock short and
redeliver the shares to close out such short positions. The Selling Stockholders
may also enter into option or other transactions with broker-dealers or other
financial institutions which require the delivery to such broker-dealer or other
financial institution of Shares offered hereby, which Shares such broker-dealer
or other financial institution may resell pursuant to this Prospectus (as
supplemented or amended to reflect such transaction). The Selling Stockholders
may also pledge Shares to a broker-dealer or other financial institution, and,
upon a default, such broker-dealer or other financial institution, may effect
sales of the pledged Shares pursuant to this Prospectus (as supplemented or
amended to reflect such transaction). In addition, any Shares that qualify for
sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to
this Prospectus.
In effecting sales, brokers, dealers or agents engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Brokers,
dealers or agents may receive commissions, discounts or concessions from the
Selling Stockholders in amounts to be negotiated prior to the sale. Such brokers
or dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales, and any such commissions, discounts or concessions may be deemed to be
underwriting discounts or commissions under the Securities Act. The Company will
pay all reasonable expenses incident to the registration of the Shares other
than any commissions and discounts of underwriters, dealers or agents.
In order to comply with the securities laws of certain states, if
applicable, the Shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and there has been compliance thereof.
The Company has advised the Selling Stockholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of Shares in the
market and to the activities of the Selling Stockholders and their affiliates.
In addition, the Company will make copies of this Prospectus available to the
Selling Stockholders and has informed them of the need for delivery of copies of
this Prospectus to purchasers at or prior to the time of any sale of the Shares
offered hereby. The Selling Stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act.
At the time a particular offer of Shares is made, if required, a Prospectus
Supplement will be distributed that will set forth the number of Shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the proposed selling
price to the public.
-18-
<PAGE> 20
The sale of Shares by the Selling Stockholders is subject to compliance by
the Selling Stockholders with certain contractual restrictions with the Company.
There can be no assurance that the Selling Stockholders will sell all or any of
the Shares.
The Company has agreed to indemnify the Selling Stockholders and any person
controlling a Selling Stockholder against certain liabilities, including
liabilities under the Securities Act. The Selling Stockholders have agreed to
indemnify the Company and certain related persons against certain liabilities,
including liabilities under the Securities Act.
The Company has agreed with certain of the Selling Stockholders to keep the
Registration Statement of which this Prospectus constitutes a part effective
until all the Shares are sold by the Selling Stockholders or all unsold Shares
are immediately saleable without restriction (including without volume
limitations) and without registration under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Shares offered
hereby will be passed upon by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California, counsel to the Company.
EXPERTS
The financial statements incorporated in this Registration Statement by
reference to the Annual Report on Form 10-K for the years ended December 31,
1997 and 1996, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
-19-
<PAGE> 21
================================================================================
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE BY THIS
PROSPECTUS TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED
IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING
STOCKHOLDER OR BY ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES
OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SHARES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION
IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE OF OR OFFER TO SELL THE SHARES MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information ................................................... 2
Incorporation of Certain
Documents By Reference ............................................. 2
Risk Factors ............................................................ 4
Use of Proceeds ......................................................... 13
Selling Stockholders .................................................... 14
Plan of Distribution .................................................... 17
Legal Matters ........................................................... 18
Experts ................................................................. 18
</TABLE>
SUPERCONDUCTOR TECHNOLOGIES INC.
2,978,333 SHARES
OF
COMMON STOCK
-----------------------
PROSPECTUS
-----------------------
November 17, 1998
================================================================================
-20-
<PAGE> 22
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Company will pay all reasonable expenses incident to the registration
of the shares other than any commissions and discounts of underwriters, dealers
or agents. Such expenses are set forth in the following table. All of the
amounts shown are estimates except the Securities and Exchange Commission
("SEC") registration fee.
<TABLE>
<S> <C>
SEC registration fee................................ $ 4,147
Legal fees and expenses............................. 20,000
Accounting fees and expenses ....................... 15,000
Miscellaneous expenses.............................. 3,503
---------
Total........................................... $ 42,650
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act"). Article 10 of the Registrant's Certificate of Incorporation, Article 10
of the Registrant's Restated Certificate of Incorporation and Article VI of the
Registrant's Bylaws provide for indemnification of its directors, officers,
employees and other agents to the maximum extent permitted by the Delaware
General Corporation Law. In addition, the Registrant has entered into
Indemnification Agreements with its officers and directors.
Under the Registration Rights Agreement, the Company has agreed to
indemnify the Selling Stockholders and persons controlling a Selling Stockholder
against certain liabilities, including liabilities under the Securities Act, and
the Selling Stockholders have agreed to indemnify the Company, its directors,
its officers signing the Registration Statement and certain control and related
persons against certain liabilities, including liabilities under the Securities
Act.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
3.1* Amended and Restated Certificate of Incorporation of the
Company.
3.2* Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of the Company.
4.1* Certificate of Designation, Preferences and Rights relating to
the Company's Series B Preferred Stock.
4.2* Series A Preferred Stock Purchase Agreement dated March 26,
1998 between the Company and Wilmington Securities, Inc.
4.3* Series A-1 Preferred Stock Purchase Agreement dated August 11,
1998 between the Company and Wilmington Securities, Inc.
4.4* Amended and Restated Stockholders Rights Agreement dated
August 11, 1998 between the Company and Wilmington Securities,
Inc.
4.5* Securities Purchase Agreement dated September 2, 1998 between
the Company and Wilmington Securities, Inc.
4.6* Registration Rights Agreement dated September 2, 1998 between
the Company and Wilmington Securities, Inc.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
</TABLE>
II-1
<PAGE> 23
<TABLE>
<S> <C>
23.1 Consent of Independent Accountants.
23.2* Consent of Counsel (included in Exhibit 5.1).
</TABLE>
- -------------
*Previously filed exhibits are marked by (*).
ITEM 17. UNDERTAKINGS.
A. UNDERTAKING PURSUANT TO RULE 415.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs A(l)(i) and A(l)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in the Registration
Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of this offering.
B. UNDERTAKING REGARDING FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT
DOCUMENTS BY REFERENCE.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
<PAGE> 24
C. UNDERTAKING IN RESPECT OF INDEMNIFICATION.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Santa Barbara on this 17th day of
November 1998.
SUPERCONDUCTOR TECHNOLOGIES INC.
By: /s/ M. Peter Thomas
-------------------------------------
M. Peter Thomas
President and Chief Executive Officer
II-4
<PAGE> 26
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons on the 17th day of November 1998 in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------- ------------------------------------- -----------------
<S> <C> <C>
* President, Chief Executive Officer (Principal
- ----------------------------------
M. Peter Thomas Executive Officer) and Director November 17, 1998
/s/ James G. Evans, Jr. Vice President, Chief Financial Officer and
- ----------------------------------
James G. Evans, Jr. Secretary, (Principal Financial November 17, 1998
and Accounting Officer)
* Director November 17, 1998
- ----------------------------------
Glenn E. Penisten
* Director November 17, 1998
- ----------------------------------
E. Ray Cotten
* Director November 17, 1998
- ----------------------------------
Robert P. Caren
* Director November 17, 1998
- ----------------------------------
Dennis Horowitz
* Director November 17, 1998
- ----------------------------------
John D. Lockton
* Director November 17, 1998
- ----------------------------------
J. Robert Schrieffer
*By /s/ James G. Evans, Jr .
- ----------------------------------
James G. Evans, Jr.
Attorney-in-fact
</TABLE>
II-5
<PAGE> 27
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
3.1* Amended and Restated Certificate of Incorporation of the Company.
3.2* Certificate of Amendment to the Amended and Restated Certificate of
Incorporation of the Company.
4.1* Certificate of Designation, Preferences and Rights relating to the
Company's Series B Preferred Stock.
4.2* Series A Preferred Stock Purchase Agreement dated March 26, 1998
between the Company and Wilmington Securities, Inc.
4.3* Series A-1 Preferred Stock Purchase Agreement dated August 11, 1998
between the Company and Wilmington Securities, Inc.
4.4* Amended and Restated Stockholders Rights Agreement dated August 11,
1998 between the Company and Wilmington Securities, Inc.
4.5* Securities Purchase Agreement dated September 2, 1998 between the
Company and Wilmington Securities, Inc.
4.6* Registration Rights Agreement dated September 2, 1998 between the
Company and Wilmington Securities, Inc.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
23.1 Consent of Independent Accountants.
23.2* Consent of Counsel (included in Exhibit 5.1).
</TABLE>
*Previously filed exhibits are marked by (*).
II-6
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 1 to Registration Statement on Form S-3
of our report dated February 18, 1998, except as to Note 10 which is as of March
26, 1998 appearing on page 26 of Superconductor Technologies Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1997, which is incorporated
by reference in such Prospectus. We also consent to the reference to us under
the heading "Experts" in such Prospectus.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Los Angeles, California
November 17, 1998
