As filed with the Securities and Exchange Commission on February 7, 1999
Registration No. 333-94053
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
to
FORM S-2
REGISTRATION STATEMENT
SUPERCONDUCTOR TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 3679 77-0158076
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Classification Code Number) Identification Number)
Organization)
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460 Ward Drive
Santa Barbara, CA 93111-2310
(805) 683-7646
(Address, Including Zip Code, And Telephone Number, Including Area Code,
Of Registrant's Principal Executive Offices)
M. Peter Thomas
President and Chief Executive Officer
SUPERCONDUCTOR TECHNOLOGIES INC.
460 Ward Drive
Santa Barbara, CA 93111-2310
(805) 683-7646
(Name, Address, Including Zip Code, And Telephone Number,
Including Area Code, Of Agent For Service)
Copy to:
Theodore R. Maloney
NIDA & MALONEY, LLP
800 Anacapa Street
Santa Barbara, CA 93101-2212
(805) 568-1151
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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, check the following box: [ ]
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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<CAPTION>
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM
CLASS OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED PER SECURITY(1) OFFERING PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------
Common Stock, $0.001 par value 2,473,701 shares $3.25 $8,039,529 $2,123(2)
- -----------------------------------------------------------------------------------------------------------------------
(1) The maximum offering prices are estimated solely for the purpose of computing
the amount of the registration fee pursuant to Rule 457.
(2) $2,480 was previously paid.
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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 OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED __________, 1999
2,473,701 SHARES
LOGO
COMMON STOCK
This prospectus relates to 2,473,701 shares of Superconductor Technologies
Inc. common stock that we are offering to The State of Wisconsin Investment
Board and a limited number of other purchasers. The offering price will be $3.25
per share. Superconductor will receive all of the proceeds from this offering.
Our common stock is traded in the Nasdaq Stock Market National Market
System under the symbol "SCON." On __________, 2000, the last reported sales
price of our common stock on Nasdaq was $____ per share.
Investing in our common stock involves risk. See "Risk Factors" beginning
on page 7.
Proceeds to
Price to Purchasers Superconductor
-------------------- -------------------
Per share.......... $ $
Total.............. $ $
Neither the Securities and Exchange Commission nor any state securities
commission has approved of or disapproved these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
We expect to deliver the shares of common stock to the purchasers on or
about ________, 2000.
The date of this prospectus is February , 2000
<PAGE>
The SuperFilter(R) System
[GRAPHIC SHOWING PRINCIPAL FEATURES OF SUPERFILER (R) SYSTEM OMITTED]
<PAGE>
PROSPECTUS SUMMARY
The following is only a summary. You should refer to the detailed
information and financial statements and accompanying notes contained elsewhere
in this prospectus and in the documents delivered with this prospectus and
referenced under the heading "Information Incorporated by Reference."
SUPERCONDUCTOR TECHNOLOGIES, INC.
Superconductor Technologies Inc. manufactures and markets high performance
subsystems that incorporate high-temperature superconducting, or HTS, materials
and cryogenic technologies. Our principal product line, the SuperFilter(R)
system, is a front-end filter and amplifier system designed to dramatically
improve the performance of wireless telecommunications base stations.
Superconductivity is a physics phenomenon resulting in a lack of electrical
resistance in certain materials when cooled to low temperatures. Zero electrical
resistance can provide fundamental performance improvements for many electrical
and electronic components. Superconductors have the potential for widespread use
in many different applications, ranging from microelectronics, such as radio
frequency circuits, to levitating trains and ultra-efficient power lines.
Several years ago, we identified the wireless telecommunications market as
the most viable path to commercialization of HTS because of the current and
expected rapid growth of the market and our ability to address critical needs of
the market with HTS. Wireless communications markets are growing rapidly on a
global scale with many developing countries deploying wireless technology as an
alternative to wireline networks. In many U.S. and European metropolitan and
rural areas, the growth of traditional cellular and newer digital networks is
leading to coverage, call quality, and capacity problems.
The Cellular Telecommunications Industry Association, or CTIA, reported
approximately 69.2 million wireless phone subscribers in the U.S. as of December
31, 1998. The year-end 1998 number represents a 25.1% annual increase over the
1997 subscribers at year-end and a 34% annual increase over the past five years.
It is anticipated that this growth trend will continue for the next two to three
years, and slightly taper thereafter. The CTIA estimates that there will be
roughly 128 million wireless voice subscribers in the U.S. by year-end 2004,
representing penetration of approximately 45%. Analysts estimate that the
worldwide number of wireless subscribers will increase nearly five-fold over the
next four years - to 975 million in 2003. To provide services to these
customers, it is estimated that the number of installed base stations will
increase from 200,000 in 1998 to 1.1 million in 2003. We believe that this rapid
growth represents a significant market opportunity, as each newly deployed base
station must incorporate a front-end filter and amplifier system, with call
quality issues arguing for an HTS solution in many instances.
In order to penetrate the wireless telecommunications market, we are
marketing our SuperFilter(R) systems to wireless service providers and to large
systems manufacturers, or OEMs, for inclusion in base stations, which are the
basic building blocks of wireless networks. In 1998, our management
significantly expanded our sales and marketing efforts. Field trials of
SuperFilter(R) systems have been conducted with more than 30 cellular service
providers, including all of the top 10 carriers in the U.S. In 1998, these
efforts resulted in orders for more than 100 SuperFilter(R) systems, and in 1999
to December 1, we have received additional orders for more than 110 systems. We
shipped 83 SuperFilter(R) systems in 1998, and 70 systems in the first three
quarters of 1999. In August 1999, we entered into a long-term sales agreement
with United States Cellular Corporation, for a minimum purchase of 100
SuperFilter(R) systems by December 31, 2000 and anticipate U.S. Cellular
purchasing a minimum of an additional 400 SuperFilter(R) systems by August 27,
2004. To prove the economic benefits of the product, we continue to actively
conduct numerous demonstrations and field trials in the U.S.and in Latin
America.
Wireless base station performance is limited by the need for tradeoffs
between interference rejection, or selectivity, and receiver sensitivity. The
SuperFilter(R) system eliminates the need to tradeoff one capability for the
other. Its high selectivity and ultra-low noise figure provide a number of
important benefits for cellular service providers. These include:
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o Increasing uplink coverage by 50% to 100%;
o Reducing dropped calls by up to 50%;
o Reducing interference (improving call quality);
o Increasing handset battery life by up to 100%; and
o Increasing call minutes by up to 100%.
The markets for our products are intensely competitive. Our current and
potential competitors include conventional RF filter manufacturers and both
established and newly emerging companies developing similar or competing
superconducting technologies. We compete primarily with Conductus, Inc. and
Illinois Superconductor Corporation with respect to our superconducting filter
systems.
Due to the proprietary and technological nature of our products and in
order to produce high-quality products, management decided to directly
manufacture the key components of the product line. These key components include
superconducting filters, cryogenic coolers, cryogenic packaging and final
enclosures, as well as system assembly and test, quality and material control
functions. Management believes that this will enable us to better control
manufacturing processes, achieve required cost reductions and produce highly
reliable and quality products.
For more than ten years, we have had a successful government contract
research and development programs business. We are the clear leader in high
performance HTS development for these programs. This technology foundation
places us in a unique position of long-term technical strength. We believe the
government programs business will continue to ensure overall technical
leadership and will enable technology advances. These technological enhancements
will be available to both the government programs and the commercial businesses
- - thus enabling us to exploit the significant market opportunity. Since our
formation in 1987 and through the third quarter of 1999, we have received over
$54.8 million dollars in revenue from government research and development
contracts.
We are a world leader in HTS thin film materials and products technology.
We hold exclusive worldwide rights to the thallium-based high-temperature
superconductors for all applications. These have the highest operating critical
temperature of all manufacturable HTS compounds, up to 127(Degree)K. We have led
the development of processes for the high-yield manufacture of these materials
and hold several broad patents on these materials. We also have led the
development of HTS RF and microwave filters and cryogenic low noise amplifiers,
using proprietary design tools and processes, achieving the high-yield
manufacture of the most selective and lowest noise devices available today. We
have also pioneered the development of efficient, low-cost cryogenic packaging
for RF and microwave circuitry. Cryogenic coolers are a key technology and
manufacturing expertise at Superconductor. We have pioneered the volume
manufacture of long-life Stirling cryocoolers for use in our HTS systems.
As of December 8, 1999, we hold 19 U.S. patents. Nine of our patents are
for technologies directed toward producing thin-film materials, including our
proprietary thin-film process for thallium barium calcium cooper oxide, or
TBCCO, production. In addition, we currently hold six patents for circuit
designs and two patents covering cryogenics and packaging. We have 21 patents
pending, including five related to materials, four covering design and six
related to cryogenics and packaging. As we have developed prototype products, we
have increased the number of design patents applied for in an effort to protect
all phases of product development.
We were incorporated in Delaware in May 1987. Our facilities and executive
offices are located at 460 Ward Drive, Santa Barbara, California 93111-2310, and
our telephone number is (805) 683-7646.
4
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<CAPTION>
THE OFFERING
<S> <C>
Total common stock offered........................... 2,473,701 shares
Offering price....................................... $3.25 per share
Outstanding common stock
Before offering................................ 7,739,218 shares, exclusive of options and
warrants and before conversion of preferred stock
After offering................................. 10,212,919 shares, exclusive of options and
warrants and before conversion of preferred stock
Preferred stock conversion..................... The holder of series A-2, A-3, and C preferred stock,
representing 118,751 shares of outstanding
preferred stock, has agreed to convert those
shares into an aggregate of 2,458,491 shares of common stock,
conditional upon and effective concurrently with the
consummation of the offering. We have agreed to
issue to that holder warrants to purchase up
to an aggregate of 250,000 shares of common
stock in connection with that conversion. The
exercise price of the warrants will be 110% of
the sales price for the common stock in the
offering and the warrants will be exercisable
for five years.
Use of proceeds...................................... To fund the purchase of capital equipment and
the further development of commercial products,
and for working capital and other general
corporate purposes
Nasdaq National Market symbol........................ SCON
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5
<PAGE>
SUMMARY FINANCIAL DATA
(Dollars thousands, except per share amounts)
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Nine Months Ended
---------------------------
Years Ended December 31, September 26, October 2,
-----------------------------------
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1996 1997 1998 1998 1999
------- ------ ------ ---------- -----------
(unaudited) (unaudited)
Statement of Operations Data:
Net Revenues:
Government contract revenues................ $7,104 $8,104 $6,029 $5,178 $3,674
Commercial product revenues................. 250 175 1,954 1,031 1,265
Sub license royalties....................... 38 38 0 0 0
----- ----- ----- ----- -----
Total net revenues....................... 7,392 8,317 7,983 6,209 4,939
Costs and expenses:
Cost of commercial product revenues......... 0 0 5,873 4,266 4,512
Contract research and development........... 5,721 6,218 4,693 3,575 2,424
Other research and development.............. 2,260 1,809 1,161 892 1,323
Selling, general and administrative......... 2,967 4,076 5,435 4,035 4,404
------ ------ ------ ------ ------
Total operating expenses................ 10,948 12,103 17,162 12,768 12,663
====== ====== ====== ====== ======
Loss from operations........................... (3,556) (3,786) (9,179) (6,559) (7,724)
Other income (expense), net.................... 85 245 17 39 (164)
------ ------- ------ ------- -------
Net loss....................................... ($3,471) ($3,541) ($9,162) ($6,520) ($7,888)
Redeemable preferred stock dividends........... 0 0 (273) 0 0
Deemed distribution for accounting purposes 0 0 0 0 (456)
------- ------- ------- ------- -------
Net loss available for common stockholders.... ($3.471) ($3.541) ($9,335) ($6,520) ($8,344)
======= ======= ======= ======= =======
Basic and diluted loss per share:
Net loss................................... ($0.57) ($0.40) ($1.19) ($.87) ($1.02)
Preferred stock dividends.................. (0.03)
Deemed distribution........................ 0 0 0 0 (0.06)
-------- -------- ------- ------- --------
Net loss available to common stockholders.. ($0.57) ($0.40) ($1.22) ($0.87) ($1.08)
========= ========= ========= ========= =========
Weighted average of number of shares outstanding 6,117,126 7,701,405 7,724,829 7,723,340 7,741,425
========= ========= ========= ========= =========
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October 2, 1999
-----------------------------
Actual As Adjusted(1)
------------ ------------
(unaudited)
------------------------------
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Balance Sheet Data:
Cash and cash equivalents........................................................... $ 1,064 $ 8,946
Working capital .................................................................... 2,536 10,418
Total assets........................................................................ 12,808 20,690
Notes payable, long-term debt....................................................... 809 809
Total stockholders' equity.......................................................... 8,302 16,184
__________
(1) To reflect net proceeds of $7,890,000, after deducting estimated offering
expenses, on sale of 2,319,855 shares of common stock to the State of
Wisconsin Investment Board and an exchange of 153,846 shares of common
stock for short term indebtedness of $500,000 incurred December 1, 1999 to
Wilmington Securities.
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6
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RISK FACTORS
This prospectus contains forward-looking statements that involve risks and
uncertainties. Superconductor's actual results could differ materially from
those anticipated in these forward-looking statements as a result of numerous
factors, including those set forth in the following risk factors and elsewhere
in this prospectus and the documents incorporated in this prospectus. In
evaluating our business, you should consider carefully the following factors in
addition to the other information set forth or incorporated in this prospectus.
We need to raise money in order to continue operating.
We increased our sales and marketing departments and developed
manufacturing operations to support anticipated increased sales of our
SuperFilter(R) products. We need additional debt or equity financing to fully
implement our business plan. Raising additional money is not guaranteed, and if
we fail to do so we will have insufficient cash to fund operations. Our
independent accountants have indicated in their report accompanying our 1998
year-end financial statements that, based on generally accepted auditing
standards, there is substantial doubt about our ability to continue as a going
concern. If we are successful in obtaining additional equity financing, future
dilution to existing or future stockholders is likely to result.
We are in the early stages of commercializing our products, and if we do not
successfully manufacture and market our products or if our products do not
receive market acceptance, our business will be seriously affected.
The commercial superconductor product market is limited. Moreover, in the
past we have principally engaged in research and development activities and our
commercial experience is limited. Our ability to grow depends on a successful
transition of our expertise in superconducting filter and cryogenics
technologies and applications to commercial markets, including the wireless
communications market. We may not be able to produce enough products to meet
market demand or our products may not achieve market acceptance. If we fail to
manufacture and market our products successfully, we will be adversely affected.
We are dependent for our revenues on successfully selling our products to
wireless communication providers and original equipment manufactures of
wireless based station manufacturers.
Most of our products, including those developed for wireless communications
base stations and government applications, are intended for use as components in
base station systems or other complex systems. Therefore, we must demonstrate
that our products provide advantages to the service providers who utilize base
station systems and the original equipment manufacturers, or OEMs, of base
station systems. These benefits include a decrease in system size, an increase
in base station range and a reduction in interference. We may not be able to
achieve any of these advantages. Moreover, even if we demonstrate these
advantages, the service providers and OEMs may not choose to incorporate our
products into their systems or, if they do, related system and manufacturing
requirements may not be met.
Our manufacturing experience is limited.
We have sold products only in limited quantities, and primarily for limited
deployment. During 1998, we significantly increased our manufacturing capacity
in order to meet the increased demand for our products as well as expected
future requirements. While we have increased our manufacturing capacity, we may
not be successful in overcoming the technological, engineering and management
challenges associated with producing commercial quantities of superconducting or
cryogenic products for large-scale deployment at acceptable costs and on a
timely basis. As a result, we may not be able to reduce our manufacturing costs
sufficiently below our selling price or to generate a positive gross profit.
We are dependent for our revenue on government contracts.
91% of our past net revenues have been from research and development
contract sales directly to the government or to resellers to the government.
While we have recently devoted substantial resources to developing commercial
markets for our products, we are, and expect to continue to be in the near term,
dependent on government funding for our research and development projects.
Government contracts may be reduced or eliminated at any time, and receipt of
7
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all or any part of the funds under any of our existing government contracts not
yet performed is not guaranteed. If we fail to increase revenues from commercial
sales, a significant loss of government funding would severally harm us.
Government contracts may be terminated or suspended for noncompliance or other
events beyond our control.
The government may cancel virtually all of our government contracts and are
terminable at the option of the government. While we have complied with
applicable government rules and regulations and contract provisions in the past,
we could fail to comply 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, we could
be prohibited from competing for or being awarded any contract by any government
agency. The termination of our significant government contracts, the imposition
of fines, damages, suspension or debarment, or the adoption of new or modified
procurement regulations or practices could adversely affect us.
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. These licenses and rights may result in a loss
of potential revenues or the disclosure of our proprietary information, either
of which could adversely affect us.
We have incurred significant losses and expect to continue experiencing losses
due to significant marketing, manufacturing and research and development
costs.
We have incurred net losses every year and, as of December 31, 1998, had an
accumulated deficit of $36,215,000. We expect to continue to incur significant
operating losses over the next several quarters as we continue to devote
significant financial resources to commercializing our products, expanding our
operations and product development activities. Our success depends on
successfully commercializing our high temperature superconductor filter systems
for the worldwide wireless communications market, which is not guaranteed.
We are highly dependent on our technical work force and senior management.
Due to the specialized technical nature of our business, we are highly
dependent upon our attracting and retaining qualified technical personnel and
senior management, primarily in the areas of wireless communications and
cryogenics. The loss of the services of one or more members of the senior
management or technical teams could damage our ability to achieve our product
development and commercialization objectives. There is also intense competition
for qualified personnel in the areas of our activities and our ability to
attract and retain qualified personnel necessary for the development of its
business is uncertain.
We have limited marketing and sales capabilities.
To successfully market our products, we must continue to develop
appropriate marketing, sales, technical, customer service and distribution
capabilities, or enter into agreements with third parties to provide these
services. Our failure to develop these capabilities or obtain third-party
agreements could adversely affect us.
Our revenues are dependent upon patents and proprietary rights which may not be
enforceable.
We rely on a combination of patent, trademark, trade secret and copyright
law and internal procedures and nondisclosure agreements to protect our
intellectual property. These may be invalidated, circumvented or challenged. In
addition, the laws of some foreign countries in which our products may be
produced or sold do not protect our intellectual property rights to the same
extent as the laws of the United States. Our failure to protect our proprietary
information could adversely affect us.
We are dependent on specific patents and licenses to technologies and we will
need additional technologies that we may not be able to access.
We have an exclusive, worldwide license, in all fields of use, to
formulations covered by patents held by the University of Arkansas covering
thallium barium calcium cooper oxide, or TBCCO, the material upon which we
8
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primarily rely for our high-temperature superconductor products and product
development. These patents may 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 our
exclusive license, we agreed to assume litigation expenses for infringement
actions, subject to a right of setoff against future royalty obligations. If we
are required to incur significant expenses under this agreement, we may be
adversely affected. In addition, we granted each of DuPont and Superconducting
Core Technologies, Inc. and its affiliates a non-exclusive worldwide sublicense
under our 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 us.
We believe that a number of patent applications are pending that cover the
composition yttrium barium cooper oxide, or YBCO, including applications filed
by IBM, AT&T and other large potential competitors of ours. YBCO is a high-
temperature superconductor material which we rely upon, although to a lesser
extent than TBCCO. We understand that these applications are the subject of
interference proceedings currently pending in the U.S. Patent and Trademark
Office. We are not involved in these proceedings. In addition, we have been
issued patents for specific compounds that we use. We believe 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 our use of these materials may require a license.
As with other patents, we may not be able to obtain licenses to any patents for
YBCO or other materials or these licenses may not be available on commercially
reasonable terms. Our efforts to develop products based on YBCO would be
impaired by our failure to obtain a license for YBCO, which could adversely
affect us.
Rights we have to patents and pending patent applications may be challenged.
We own or have rights under a number of patents and pending patent
applications related to the processing of TBCCO and YBCO. The patent
applications we filed may not result in patents being issued, and any patents
issued may not afford meaningful protection against competitors with similar
technology, and may be challenged by third parties. Because U.S. patent
applications are maintained in secret until patents are issued, and because
publications of discoveries in the scientific or patent literature tend to lag
behind actual discoveries by several months, we may not be the first creator of
inventions covered by issued patents or pending patent applications or the first
to file patent applications for such inventions. Moreover, other parties may
independently develop similar technologies, duplicate our technologies or, if
patents are issued to us or rights licensed by us, design around the patented
aspects of any technologies we developed or licensed. We 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.
Litigation may also be necessary to enforce any patents held by or issued to us
or to determine the scope and validity of others' proprietary rights, which
could result in substantial costs.
The rapid rate of inventions and discoveries in the superconductivity field has
raised many unresolved patent issues that may negatively affect our
business.
The claims in 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 high temperature superconductor field is
unusually complex. It is likely that there will be patents held by third parties
relating to our products or technology. We may need to acquire licenses to
design around or successfully contest the validity or enforceability of those
patents. It is also possible that because of the number and scope of patents
pending or issued, we may be required to obtain multiple licenses in order to
use a single material. If we are required to obtain multiple licenses, our costs
will increase. Furthermore, licenses may not be available on commercially
reasonable terms or at all. The likelihood of successfully contesting the
validity or enforceability of those patents is also uncertain; and, in any
event, we could incur substantial costs in defending the validity or scope of
our patents or challenging the patents of others.
The rapid technological changes of our industry may adversely affect us if we
do not keep pace with advancing technology.
The field of superconductivity is characterized by rapidly advancing
technology. Our success depends upon our ability to keep pace with advancing
superconductor technology, including superconducting materials and processes and
9
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industry standards. We have focused our development efforts on TBCCO and, to a
lesser extent, YBCO. TBCCO or YBCO may not ultimately be commercially
competitive against other currently known materials or materials that may be
discovered in the future. We intend to continue to develop and integrate
advances in wireless filter and cryogenic cooling technologies in the
manufacture of commercial quantities of products. However, our development
efforts may be rendered obsolete by research efforts and technological advances
made by others, and materials other than those we currently use may prove more
advantageous for the commercialization of high-temperature superconductor
products.
We have focused our efforts on one material for our products, and rely primarily
on specific vendors for components of that material.
To date, we have principally focused our development efforts on TBCCO.
Although TBCCO has one of the highest critical temperatures of any
high-temperature superconductor material verified by the scientific community to
date, other materials are currently known to have advantages over TBCCO for some
applications. TBCCO may not ultimately prove commercially competitive against
YBCO or against other currently known materials. Furthermore, other materials
may be discovered with higher critical temperatures or other superior qualities,
and we may not be able to obtain the rights to those superior materials.
We currently purchase substrates for growth of high-temperature
superconductor thin-films from two primary suppliers because of the quality of
the substrate provided by them. A thin film is a thin layer of high-temperature
superconductor material. There are additional components that we source from a
single vendor due to the present volume. While we are aware of alternative
sources for our substrates, the establishment of relationships with additional
or replacement suppliers could be time consuming and result in a supply
interruption, which would have an adverse effect on our ability to manufacture
our products in commercial quantities.
Because our operations are housed in a single U.S. facility we may be subject to
business interruption.
Our 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 our
operations, whether due to fire, natural disaster or otherwise, could adversely
affect us.
We use hazardous materials in our operations which subjects us to potential
liability under various laws and regulations.
We use hazardous materials in our research, development and manufacturing
operations. As a result, we are subject to stringent federal, state and local
regulations governing the storage, use and disposal of those materials. Current
or future laws and regulations may require us to make substantial expenditures
for preventive or remedial action, reduction of chemical exposure, or waste
treatment or disposal. We can be adversely affected by the interpretation and
enforcement of current or future environmental laws and regulations. In
addition, although we believe that our safety procedures for handling and
disposing of hazardous materials comply with state and federal standards, there
is the risk of accidental contamination or injury from these materials. To date,
we have not incurred substantial expenditures for preventive action with respect
to hazardous materials or for remedial action with respect to any hazardous
materials accident. If an accident occurred, we could be held liable for any
resulting damages. Furthermore, the use and disposal of hazardous materials
involves the risk that we could be required to incur substantial expenditures
for preventive or remedial actions. The liability in the event of an accident or
the costs of related actions could exceed our resources or otherwise adversely
affect us.
The market value of our shares of common stock will likely be diluted due to
conversions of preferred stock
The market value of our common stock will likely be diluted by the issuance
of common stock upon the conversion of our series A-2, A-3, B-1, C and D
preferred stock and the exercise of options and warrants for the purchase of our
common stock, including the warrants issued in connection with our preferred
stock financings and the related share exchange. At our annual meeting of
stockholders that was held on June 2, 1999, we received stockholder approval of
the elimination of limitations on conversions of our preferred stock and
exercises of warrants issued in connection with the series C preferred stock
financing and the related exchange agreement. Similarly, and at the special
meeting of stockholders held on August 6, 1999, our stockholders approved the
issuance of series D preferred stock and related warrants. As a result, the
series A-2, A-3, B-1, C and D preferred stock may be fully converted into shares
10
<PAGE>
of common stock, potentially at a discount to the market price of the common
stock on the date of conversion. Specifically, we anticipate that the series
A-2, A-3 and C preferred stock will be converted into 2,458,491 shares of common
stock in connection with this offering. Also, the holders of warrants issued in
connection with the preferred stock financings and the related exchange
agreement may fully exercise warrants for the purchase of our common stock at
prices that may be below the market value of our common stock on the date of
exercise. The total number of shares that may be issued upon those preferred
stock conversions and warrant exercises is currently 6,336,624 shares. This
number of shares is subject to adjustment for future dilutive stock issuances
and for recapitalizations, stock combinations, stock dividends, stock splits and
the like.
We anticipate issuing additional securities in the foreseeable future to
satisfy our capital requirements. In addition, to obtain benefits without
spending cash, we have in the past and may in the future offer stock to parties
in connection with debt, leasing, supply agreements or similar arrangements. In
those cases, we may issue warrants or other securities providing for the
purchase of common stock. These future financing and operating arrangements will
likely result in the eventual issuance common stock that may dilute the
interests of the current holders of common stock.
We have never paid dividends on our common stock and our preferred stock limits
our ability to pay dividends.
We have never paid a cash dividend on our common stock and do not expect to
do so in the foreseeable future. Cumulative dividends on the series A-2, A-3,
B-1, C and D preferred stock are payable at the rates of 6%, 6%, 7%, 7% and 6%
per annum, respectively. While the series A-2, A-3, B-1, C and D preferred stock
are outstanding, we are limited in our ability to pay dividends on the common
stock. Equipment financing agreements also prohibit us from paying cash
dividends.
The market price of our stock is volatile and fluctuates significantly
The market price of our 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 us 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 impact the market price
of our common stock. In addition, the securities markets have experienced
volatility that 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 litigation could
negatively affect us.
Anti-takeover provisions in our certificate of incorporation and bylaws may
delay, deter or prevent a merger or other business combination.
Our certificate of incorporation and bylaws contain provisions that could
delay, deter or prevent a merger, tender offer or other business combination or
change in control 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 our stockholders receiving a premium over the market price
of the common stock. Our certificate of incorporation and bylaws, among other
things,
o 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 a meeting to call a meeting;
o eliminate the right to call stockholders meetings if our shares of
capital stock are (A) designated as qualified for trading on the
Nasdaq National Market and (B) we have at least 800 holders of shares
of our capital stock;
o preclude stockholders from raising new business for consideration at
stockholders meetings unless the proponent has provided us notice not
less than 90 days prior to the meeting; and
o limit business which may be conducted at stockholders meetings to
those matters properly specified in notices to us.
Moreover, we have not opted out of Section 203 of the Delaware General
Corporation Law, which prohibits mergers, sales of material assets and some
self-dealing transactions between the corporation and a holder of 15% or more of
a corporation's outstanding voting stock for a period of three years following
the date the stockholder became a 15% holder, subject to specified
qualifications. This may prevent or delay a change in control.
11
<PAGE>
USE OF PROCEEDS
This prospectus relates to the registration of 2,473,701 shares of common
stock, of which 2,319,855 shares are being offered to The State of Wisconsin
Investment Board and 153,846 shares are being offered in exchange for short-term
indebtedness of $500,000 bearing 8% interest per annum. This debt was incurred
by us on December 1, 1999 to provide for general working capital. The net cash
proceeds from the sale of the 2,319,855 shares of common stock, based on the
offering price of $3.25 per share, and after deducting estimated offering
expenses payable by us, are estimated to be approximately $7.39 million. We
expect to use the net cash proceeds from the offering:
o to fund the purchase of capital equipment necessary to increase
production volume;
o to fund the further development of commercial products; and
o for working capital and other general corporate purposes.
We may also consider using the net cash proceeds for the acquisition of
complementary businesses, products or technologies, although we presently have
no specific plans for any acquisition. Pending use of the net proceeds of the
offering, we intend to invest the funds in short-term, interest-bearing,
investment-grade obligations.
PRICE RANGE OF COMMON STOCK
In connection with our initial public offering, our common stock commenced
trading on the Nasdaq National Market on March 9, 1993. Our common stock is
listed on the Nasdaq National Market under the symbol "SCON." The following
table sets forth for the periods indicated the high and low sales prices for the
common stock as reported on the Nasdaq National Market.
High Low
------- -------
Fiscal 1997
Quarter ended March 29, 1997............. $4.75 $3.38
Quarter ended June 28, 1997.............. $4.13 $2.50
Quarter ended September 27, 1997......... $5.31 $2.00
Quarter ended December 31, 1997.......... $4.25 $2.19
Fiscal 1998
Quarter ended March 28, 1998............. $3.75 $2.50
Quarter ended June 27, 1998.............. $6.63 $3.41
Quarter ended September 26, 1998......... $6.56 $4.00
Quarter ended December 31, 1998.......... $5.75 $3.25
Fiscal 1999
Quarter ended April 3, 1999.............. $4.63 $3.25
Quarter ended July 3, 1999............... $3.88 $2.19
Quarter ended October 2, 1999............ $5.50 $2.63
Quarter ended January 1, 2000............ $5.22 $2.75
On January 31, 2000, the last sale price of the common stock as reported on
the Nasdaq National Market was $7.813 per share. As of January 1, 2000, there
were approximately 161 holders of record of our common stock.
DIVIDEND POLICY
We have not paid cash dividends on our common stock and do not expect to
pay any dividends on the common stock in the foreseeable future. Furthermore,
12
<PAGE>
our equipment financing agreement prohibits us from paying cash dividends and
the series A-2, A-3, B-1, C and D preferred stock limit our ability to pay
dividends on our common stock. We intend to retain future earnings, if any, for
use in our business.
CAPITALIZATION
The following table sets forth our capitalization as of October 2, 1999:
o on an actual basis;
o on a pro forma basis to reflect interim short-term borrowings of
$500,000 bearing interest at 8% per annum incurred by us on
December 1, 1999 to provide for general working capital and the
issuance of warrants to purchase 20,000 shares of common stock to
vest over a five year period, at $3.00 per share recognized as
debt issue costs at their fair market value of $38,000 as
determined by the Black-Scholes option pricing model; and
o on a pro forma as adjusted basis to reflect (i) the cancellation
of $500,000 of short-term indebtedness in exchange for 153,846
shares of common stock at the offering price of $3.25 per share,
(ii) the sale of 2,319,855 shares of common stock to The State of
Wisconsin Investment Board at the offering price of $3.25 per
share, resulting in net cash proceeds of $7,389,529 and (iii) the
conversion, conditioned upon the consummation of the offering, of
64,584 shares of preferred stock series A-2, 12,500 shares of
preferred stock series A-3, 41,667 shares of preferred stock
series C into 1,322,539, 263,852 and 872,100 shares of common
stock, respectively, aggregating 2,458,491 shares of common
stock. In addition, the pro forma as adjusted basis reflects the
issuance of warrants for the purchase of 250,000 shares of common
stock at $3.58 per share, based on 110% of the offering price of
$3.25 per share, recognized as a deemed distribution of
$1,547,500 reflecting the Fair Market Value of the warrant issued
as an inducment to convert the preferred stock to common stock.
These warrants vest over a five year period.
This table should be read in conjunction with the financial statements and
the accompanying notes incorporated in this prospectus.
<TABLE>
<CAPTION>
October 2, 1999
---------------------------------------------------------
<S> <C> <C> <C>
Pro forma
Actual Pro forma As Adjusted
--------------- --------------- ------------------
Short-term borrowings................................ $1,378,000 $1,878,000 $1,378,000
---------- ----------- -----------
Long-term debt....................................... $809,000 $ 809,000 $809,000
Stockholders' equity
Convertible preferred stock, $.001 par value;
2,000,000 shares authorized; Series A-2, 64,584,
Series A-3, 12,500, Series B-1, 50,000, Series C,
41,667 and Series D, 106,000 shares issued and
outstanding actual and pro forma; Series B-1,
12,500, Series D, 106,000 shares issued and
outstanding pro forma as adjusted............... 15,903,000 15,903,000 8,028,000
Common stock, $0.001 par value;
30,000,000 shares authorized, 7,739,218
shares issued and outstanding actual and
pro forma, 12,671,410 shares issued and
outstanding pro forma as adjusted............... 8,000 8,000 13,000
Capital in excess of par value....................... 36,950,000 36,988,000 54,296,000
Deficit accumulated during development stage......... (44,559,000) (44,597,000) (46,153,000)
----------- ----------- -------------
Total stockholders' equity........................... 8,302,000 8,302,000 16,184,000
----------- ----------- -------------
Total capitalization................................. $ 9,111,000 $ 9,111,000 $ 16,993,000
=========== =========== =============
</TABLE>
13
<PAGE>
DILUTION
As of October 2, 1999, there were 7,739,068 shares of common stock
outstanding, having a net tangible book value of $6,351,000 or $0.82 per share.
Net tangible book value per share is determined by dividing the net tangible
book value (total tangible assets less total liabilities) by the number of
outstanding shares of common stock at that date.
After giving effect to:
o the cancellation of $500,000 of short-term indebtedness in
exchange for 153,846 shares of common stock at the offering price
of $3.25 per share;
o the sale of 2,319,855 shares of common stock to The State of
Wisconsin Investment Board at the offering price of $3.25 per
share, resulting in net cash proceeds of $7,389,529, after
deducting estimated offering expenses; and
o the conversion, conditioned upon the consummation of the
offering, of 64,584 shares of series A-2 preferred stock, 12,500
shares of series A-3 preferred stock, and 41,667 shares of series
C preferred stock, into 1,322,539, 263,852 and 872,100 shares of
common stock, respectively, aggregating to 2,458,491 shares of
common stock, and the issuance to the preferred stock holder of
warrants for the purchase of 250,000 shares of common stock at
$3.58 per share, based on 110% of the offering price of $3.25 per
share, recognized as a deemed distribution of $1,547,500
reflecting the Fair Market Value of the warrant issued as an
inducment to convert the preferred stock to common stock;
there will be a total of 12,671,410 shares of common stock outstanding with a
net tangible book value of $1.39 per share. This represents an immediate
increase in net tangible book value to existing stockholders of $0.57 per share
and an immediate dilution to new investors of $1.86 per share. The following
table illustrates the per share dilution:
<TABLE>
<CAPTION>
<S> <C>
Public offering price per share........................................ $3.25
Net tangible book value per share as of October 2, 1999, pro forma..... 0.82
Increase in net tangible book value per share attributable to new
investors......................................................... 0.57
--------
Net tangible book value per share after this offering.................. 1.39
--------
Dilution per share to new investors.................................... $1.86
========
</TABLE>
The following table summarizes as of October 2, 1999, the difference
between the existing stockholders and the new investors with respect to the
number of shares of common stock purchased in this offering, the total
consideration paid and the average price per share:
14
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Shares Purchased Total Consideration Average
--------------------------- -------------------------- Price
Number Percent Amount Percent Per Share
---------- -------- ----------- -------- ----------
Existing stockholders.. 7,739,068 76% $36,958,000 82% $ 4.776
New investors.......... 2,473,701 24% $ 8,040,000 18% $ 3.250
Total.............. 10,212,769 100% $44,998,000 100%
========== ======== =========== ========
</TABLE>
The preceding tables assume no exercise of stock options or warrants
outstanding at October 2, 1999. As of October 2, 1999, there were options
outstanding to purchase a total of 1,900,593 shares of common stock at a
weighted average exercise price of $4.28 per share, of which options to purchase
1,111,961 shares at a weighted average exercise price of $4.50 per share were
exercisable, and 981,809 shares reserved for grant of future options under our
stock plans. In addition, as of October 2, 1999, there were warrants outstanding
to purchase 1,017,355 shares of common stock at a weighted average exercise
price of $4.26 per share. If all options and warrants outstanding as of October
2, 1999 had been exercised, the dilution per share to new investors in the
offering would be $0.98. In addition, subsequent to October 2, 1999, we issued
warrants to purchase an additional 20,000 shares of common stock at an exercise
price of $3.00, all of which were immediately exercisable. If these warrants had
been outstanding as of October 2, 1999, the dilution per share to new investors
in the offering would be $0.97. Warrants to purchase 250,000 shares of common
stock, at an exercise price of 110% of the closing sales price in the offering,
to be issued to the holder of series A-2, A-3 and C preferred stock in
connection with the conversion into common stock conditioned upon and concurrent
with this offering are also excluded from the preceding table.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Superconductor consists of 30,000,000
shares of common stock, $0.001 par value per share, and 2,000,000 shares of
preferred stock, $0.001 par value per share.
Common stock
As of January 1, 2000, there were 7,739,218 shares of common stock
outstanding and held of record by approximately 161 stockholders of record.
Holders of common stock are entitled to one vote per share on all matters to be
voted upon by the stockholders. Subject to the rights of holders of preferred
stock, the holders of common stock are entitled to receive ratably any dividends
that may be declared from time to time by the board of directors out of funds
legally available for that purpose. In the event of a liquidation, dissolution
or winding up of Superconductor, subject to the rights of the holders of
preferred stock, the holders of common stock are entitled to share ratably in
all assets. The common stock has no preemptive or conversion rights or other
subscription rights. There are no redemption or sinking fund provisions
applicable to the common stock. All outstanding shares of common stock are fully
paid and non-assessable, and the shares of common stock to be outstanding upon
consummation of the offering will be fully paid and non-assessable.
Preferred stock
Under our certificate of incorporation, the board of directors is
authorized to issue up to 2,000,000 shares of preferred stock in one or more
series and to fix the rights, preferences, privileges and restrictions,
15
<PAGE>
including the dividend rights, conversion rights, voting rights, redemption
price or prices, liquidation preferences, and the number of shares constituting
any series or the designations of the series, without further vote or action by
the stockholders. The issuance of preferred stock may have the effect of
delaying, deferring or preventing a change of control of Superconductor without
further action of the stockholders. The issuance of preferred stock with voting
and conversion rights may adversely affect the voting power of the holders of
common stock, including the loss of voting control to others.
Under this authority, the board of directors has authorized the issuance of
series A, A-1, A-2, A-3, B, B-1, C and D preferred stock and fixed the rights,
preferences, privileges and restrictions, including the dividend rights,
conversion rights, voting rights, redemption prices, liquidation preferences,
and the number of shares constituting each series. In 1998, we completed:
o a $3 million private placement of 500,000 shares of series A 6%
cumulative convertible preferred stock;
o a $1 million private placement of 125,000 shares of series A-1 6%
cumulative convertible preferred stock; and
o a $4 million private placement of 500,000 shares of series B 7%
cumulative convertible preferred stock.
Each share of preferred stock was initially convertible into two shares of
common stock. The preferred stock carried cumulative per annum dividends as set
forth above and had liquidation preferences of $6, $8 and $8 per share,
respectively. The preferred stock also had voting rights under which the holders
of the preferred stock vote together with the holders of common stock on an
as-converted basis. The preferred stock was not redeemable by us prior to March
26, 2001. Thereafter, we could redeem the preferred stock at 110% of the
liquidation preference plus accrued and unpaid dividends. Subsequent to March
26, 2005, until fully redeemed, the holders of the preferred stock had the
option to cause us to redeem the preferred stock at its liquidation preference
plus accrued and unpaid dividends.
On February 26, 1999, we entered into exchange agreements with the holders
of the series A, series A-1 and series B preferred stock. In the exchange, all
of the series A, series A-1 and series B preferred stock were exchanged for new
series of preferred stock, as follows:
Outstanding Series Exchanged for New Series
------------------- ------------------------
Series A Series A-2
Series A-1 Series A-3
Series B Series B-1
The features of the series A-2, series A-3 and series B-1 are similar to
the series A, series A-1 and series B, except for convertibility, redemption and
dividends. Unlike the old preferred, the new preferred stock is not redeemable
and was not freely convertible unless and until our stockholders approved the
convertibility. The series A-2 and series A-3 each carry a cumulative dividend
of 6% per annum and the series B-1 carries a cumulative dividend of 7% per
annum, but each was entitled to dividends of 20% per annum if our stockholders
did not approve the convertibility into common stock. Our stockholders approved
the convertibility of each series on June 2, 1999.
In 1999, we completed:
o a $3 million private placement of 41,667 shares of series C 7%
cumulative convertible preferred stock; and
o a $5.3 million private placement of 106,000 shares of series D 6%
cumulative convertible preferred stock.
Each share of series C preferred stock was initially convertible into 20
shares of common stock. The series C preferred stock has a liquidation
preference of $72 per share. The series C preferred stock was not originally
freely convertible into common stock, pending stockholder approval of the
convertibility. The series C preferred stock bears a dividend of 7% per annum
that would have increased to 20% per annum if our stockholders did not approve
of the convertibility. Our stockholders approved the convertibility of the
series C preferred stock restrictions on June 2, 1999. The series C preferred
stock also has voting rights under which the holders of the preferred stock vote
together with the holders of common stock on an as-converted basis.
Each share of series D preferred stock is initially convertible into 20
shares of common stock. The series D preferred stock has a liquidation
preference equal to the greater of $65.00 per share or $50.00 plus all accrued
and unpaid dividends on the shares. The series D preferred stock bears a
dividend of 6% per annum. The series D preferred stock also has voting rights
under which the holders of the preferred stock vote together with the holders of
16
<PAGE>
common stock on an as-converted basis. So long as 25% of the authorized shares
of series D preferred stock are outstanding, we must obtain approval of the
holders of 60% of the outstanding series D shares prior to redeeming,
repurchasing or paying dividends on our securities, making specified types of
amendments to our certificate of incorporation or bylaws, and creating or
issuing specified types of new securities.
As a result of the anti-dilution provisions of the series A-1, A-2 and C
preferred stock, those series are presently convertible into approximately 21
shares of common stock for each share of preferred stock.
The following table provides information about our outstanding preferred
stock:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Common Stock
Issuable upon
Series of Number of Conversion of
Preferred Stock Shares Issued Preferred Shares Liquidation
Dividend Preference Redeemable
- ------------------ -------------- ------------------ ------------ ------------------ ---------------
Series A-2 64,584 1,322,539 6% $6 No
Series A-3 12,500 263,852 6% $8 No
Series B-1 50,000 1,055,409 7% $8 No
Series C 41,667 872,100 7% $72 No
Series D 106,000 2,120,000 6% >$65 or $50 plus No
dividends
</TABLE>
The holder of all of the series A-2, A-3 and C preferred stock has agreed
to convert all of that preferred stock into 2,458,491 shares of common stock in
consideration of the issuance to that holder of a warrant to purchase 250,000
shares of common stock. This conversion is conditioned upon and will occur
concurrently with the consummation of this offering.
Warrants
As of January 1, 2000, we had outstanding warrants to purchase up to
2,037,488 shares of common stock.
On March 26, 1998, August 11, 1998, and September 2, 1998, in conjunction
with our private placements series A-2, A-3 and B-1 of preferred stock, we
issued warrants to purchase up to 100,000, 66,667 and 129,057 shares of common
stock, respectively, at prices of $4.00, $4.00 and $5.30 per share,
respectively. These warrants are exercisable for five-year periods beginning
March 26, 1998, August 11, 1998, and September 2, 1998, respectively.
On March 5, 1999, in connection with our private placements of series C
preferred stock, we issued warrants to purchase up to 120,000 shares of common
stock at $4.50 per share. The warrants are exercisable for a five-year period
beginning March 5, 1999.
On June 23, 1999 and August 17, 1999, in connection with our private
placements of series D preferred stock in two traunches, we issued warrants for
the purchase of up to 212,000 shares of common stock at a price of $3.00 per
share. The warrants are exercisable for a five-year period beginning June 23,
1999 or August 17, 1999 depending upon the traunch in which the warrant holder
purchased the series D preferred stock.
In connection with the preferred stock exchanges described above, we issued
warrants to purchase 75,000 shares of common stock at a price of $7.00 per
share, expiring February 26, 2004. In December 1998, we amended our loan and
security agreement to include a revolving line of credit. For this commitment,
we issued warrants to purchase 40,000 shares of common stock at a price of $4.00
per share. These warrants are exercisable for a five-year period beginning
December 21, 1998. In November 1996, we issued warrants to the underwriter of
our secondary offering for the purchase of 150,000 shares of common stock at a
price of $4.50 per share. These warrants are exercisable for a period of four
years beginning November 22, 1996. In August 1999, we issued warrants to United
States Cellular Corporation to purchase 1,000,000 shares of common stock at a
price of $4.00 per share. The warrants are subject to vesting conditions based
on U.S. Cellular's purchases of our SuperFilter(R) systems. At January 1, 2000,
warrants with respect to 49,200 shares of common stock had vested and were
exercisable under that agreement. These warrants are exercisable until August
17
<PAGE>
24, 2004. We also had outstanding at January 1, 2000 warrants to purchase an
additional 144,764 shares of common stock at a weighted average exercise price
of $3.24 per share expiring from March 5, 2004 to December 12, 2004.
The following table provides information about the terms of the warrants
outstanding at January 1, 2000.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Weighted
Average Number of Shares
Exercise Price Issued Upon Exercise
Description Expiration Date(s)
--------------------------------------- ---------------------- --------------- ---------------------
Warrants related to Preferred Stock
Series A-2.................... March 26, 2003 $ 4.00 100,000
Series A-3.................... August 11,2003 $ 4.00 66,667
Series B-1.................... September 2, 2003 $ 5.30 129,057
Series C...................... March 5, 2004 $ 4.50 120,000
Series D...................... June 23, 2004 or $ 3.00 212,000
August 15, 2004
Exchange Warrants............. February 26, 2004 $ 7.00 75,000
Other Warrants
Underwriter Warrants.......... November 22, 2001 $ 4.50 150,000
Silicon Valley Bank........... December 21, 2003 $ 4.00 40,000
U.S. Cellular................. August 27, 2004 $ 4.00 1,000,000
Others...................... March 5, 2004 $ 3.24 144,764
through December 12,
2004
Total.............................. 2,037,488
</TABLE>
In addition, in connection with the conversion of 118,751 shares of
preferred stock that is conditioned upon and to be effected concurrently with
the offering, we have agreed to issue to the holder of that converted preferred
stock warrants to purchase an aggregate of 250,000 shares of common stock at an
exercise price equal to 110% of the sales price of the common stock in the
offering. The warrants will be exercisable for five years from the date of
issuance.
Anti-takeover matters
We are a Delaware corporation and are subject to Section 203 of the
Delaware General Corporation Law. In general, Section 203 prohibits a Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years following the date that the stockholder
became an interested stockholder, unless (i) prior to the acquisition date the
board of directors of the corporation approved either the business combination
or the transaction which resulted in the stockholder becoming an interested
stockholder, or (ii) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding for purposes of determining the number of
shares outstanding those shares owned by (x) persons who are directors and also
officers and (y) employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer), or (iii) on or subsequent to
the acquisition date the business combination is approved by the board of
directors and authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least 66-2/3% of the
outstanding voting stock which is not owned by the interested stockholder.
Section 203 defines a "business combination" to include mergers, consolidations,
asset sales and stock issuances and other transactions resulting in a financial
benefit to an "interested stockholder." In addition, Section 203 defines an
"interested stockholder" to include any entity or person beneficially owning 15%
or more of the outstanding voting stock of the corporation and any entity or
person affiliated with that entity or person.
18
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, including the conversion of preferred
stock into common stock to occur concurrently with the closing of the offering,
Superconductor will have 12,671,410 shares of common stock outstanding.
10,212,919 of these shares will be freely tradable without restriction or
further registration under the Securities Act unless such shares are owned by
"affiliates" as that term is defined under Rule 144 under the Securities Act or
unless such securities are "restricted securities" as that term is defined under
Rule 144.
Shares of common stock that are deemed to be "restricted securities" within
the meaning of the Securities Act may be publicly sold only if registered under
the Securities Act or sold in accordance with an applicable exemption from
registration, such as those provided by Rule 144 promulgated under the
Securities Act, as described below.
In general, under Rule 144 as currently in effect, a person or persons
whose shares are aggregated, including any affiliate of Superconductor, who has
beneficially owned restricted securities for at least one year, including the
holding period of any prior owner other than an affiliate of Superconductor,
would be entitled to sell within any three-month period, a number of shares that
does not exceed the greater of:
(1) one percent of the number of shares of common stock then
outstanding--approximately 12,671,410 shares immediately after the
offering; or
(2) the average weekly trading volume of the common stock during the four
calendar weeks preceding the filing of a Form 144 with respect to the
sale.
Sales under Rule 144 are also subject to manner of sale and notice
requirements and to the availability of current public information about
Superconductor. Under Rule 144(k), a person who is not deemed to have been an
affiliate of Superconductor at any time during the three months preceding a
sale, and who has beneficially owned restricted securities for at least two
years, including the holding period of any prior owner other than an affiliate
of Superconductor, is entitled to sell the shares without complying with the
volume limitations or the manner of sale, public information or notice
requirements of Rule 144. Sales of shares by affiliates of Superconductor will
continue to be subject to the volume limitations and the manner of sale, notice
and public information requirements.
We cannot predict the effect, if any, that sales of shares under Rule 144
or the availability of shares for sale will have on the market price of the
common stock prevailing from time to time after the offering. We are unable to
estimate the number of shares that may be sold in the public market under Rule
144, because that amount will depend on the trading volume in, and market price
for, the common stock and other factors. Nevertheless, sales of substantial
amounts of shares in the public market, or the perception that those sales could
occur, could adversely affect the market price of the common stock.
PLAN OF DISTRIBUTION
All of the shares being offered by this prospectus are being offered by
Superconductor to a limited number of institutional investors at the price set
forth on the cover of this prospectus. The State of Wisconsin Investment Board
has indicated its desire to purchase substantially all of the shares of common
stock described in this prospectus; provided that it will own not more than
19.9% of the shares of common stock outstanding immediately after this offering.
The shares have been registered on Superconductor's registration statement
on Form S-2 (File No. 333-94053) of which this prospectus forms a part.
Superconductor will pay all expenses incident to the offering and sale of the
shares to the purchasers. In some cases, Superconductor will agree to indemnify
the purchasers against certain liabilities, including liabilities under the
Securities Act of 1933.
LEGAL MATTERS
Some legal matters with respect to the legality of the issuance of the
shares of common stock offered by this prospectus will be passed upon for
Superconductor by Nida & Maloney, LLP, Santa Barbara, California.
19
<PAGE>
EXPERTS
The financial statements incorporated in this Registration Statement on
Form S-2 by reference to the Annual Report on Form 10-K of Superconductor
Technologies Inc. for the year ended December 31, 1998 have been so incorporated
in reliance on the report (which contains an explanatory paragraph relating to
the Company's ability to continue as a going concern as described in Note 11 to
the financial statements) of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" information that we file
with them, which means that we can disclose important information to you by
referring you to those other documents. The information incorporated by
reference is an important part of this prospectus, and information that we file
later with the SEC will automatically update and supercede this information. The
following documents previously filed with the Commission by the Company pursuant
to the Exchange Act are hereby incorporated by reference in this prospectus:
o our Annual Report on Form 10-K for the year ended December 31,
1998;
o our Current Report on Form 8-K dated February 26, 1999;
o our definitive Proxy Statement for our annual meeting held on
June 2, 1999;
o our definitive Proxy Statement for our special meeting held on
August 6, 1999; and
o our Quarterly Reports on Form 10-Q for the quarters ended April
3, 1999, July 3, 1999 and October 2, 1999, as amended.
All other reports and documents filed by us after the date of this
prospectus under Sections 13(a), 14 and 15(d) of the Securities Exchange Act of
1934 prior to the termination of the offering of the common stock covered by
this prospectus are also incorporated by reference in this prospectus and are
considered to be part of this prospectus from the date those documents are
filed.
We are delivering with this prospectus a copy of our Annual Report on Form
10-K for the fiscal year ended December 31, 1998 and our Quarterly Report on
Form 10-Q for the fiscal quarter ended October 2, 1999. You may request a copy
of the other filings incorporated in this prospectus by reference at no cost, by
writing or telephoning us at the following address:
Superconductor Technologies Inc.
Attn: M. Peter Thomas, CEO
460 Ward Drive
Santa Barbara, CA 93111
(805) 683-7646
This prospectus is part of a registration statement we have filed with the
SEC. You should rely only on the information incorporated by reference or
provided in this prospectus. No one else is authorized to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front of this document.
WHERE YOU CAN FIND MORE INFORMATION
We are a reporting company and file annual, quarterly and current reports,
proxy materials and other information with the SEC. You may read and copy these
reports, proxy materials and other information at the SEC's public reference
room at 450 Fifth Street, N.W., Washington, DC 20549, New York, NY, and Chicago,
IL. You can request copies of these documents by writing to the SEC and paying a
fee for the copying costs. Please call the SEC at 1-800-SEC-0330 for more
information about the operation of the public reference room. Our SEC filings
are also available at the SEC's internet web site at "http:\\www.sec.gov." You
may also visit our web site at "http:\\www.suptech.com."
20
<PAGE>
No dealer, salesperson, or other person has been authorized to give any
information or to make any representations other than those 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. This prospectus does
not constitute an offer to sell or the solicitation of an offer to buy any
securities other than the securities to which it relates or any offer to sell or
the solicitation of an offer to buy securities in any circumstances in which an
offer or solicitation is unlawful. Neither the delivery of this prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the company since the date of
this prospectus or that the information contained in this prospectus is correct
as of any date subsequent to its date.
TABLE OF CONTENTS
PAGE
------
Prospectus Summary.......................................... 3
Risk Factors................................................ 7
Use of Proceeds............................................. 12
Price Range of Common Stock................................. 12
Dividend Policy............................................. 12
Capitalization.............................................. 13
Dilution.................................................... 14
Description of Capital Stock................................ 15
Shares Eligible for Future Sale............................. 19
Plan of Distribution........................................ 19
Legal Matters............................................... 19
Experts..................................................... 20
Information Incorporated By Reference....................... 20
Where You Can Find More Information......................... 20
SUPERCONDUCTOR TECHNOLOGIES INC.
2,473,701 SHARES
COMMON STOCK
PROSPECTUS
, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discount, payable by the Registrant in connection with the sale of
common stock being registered. All amounts are estimates except the SEC
registration fee and the Nasdaq listing fee.
AMOUNT TO BE
PAID
--------------
SEC registration fee...................................... $ 2,480
Nasdaq additional listing application fee................. 17,500
Printing and engraving expenses........................... 2,000
Legal fees and expenses................................... 60,000
Accounting fees and expenses.............................. 50,000
Transfer agent and registrar fees......................... 2,500
Miscellaneous fees........................................ 15,520
Total.................................................. $150,000
==========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware Law General Corporation (the "Delaware
Law") provides that a corporation may indemnify directors and officers as well
as other employees and individuals against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation -- a
"derivative action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with
defense or settlement of such action, and the statute requires court approval
before there can be any indemnification where the person seeking indemnification
has been found liable to the corporation. Under Section 145, a corporation shall
indemnify an agent of the corporation for expenses actually and reasonably
incurred if and to the extent such person was successful on the merits in a
proceeding or in defense of any claim, issue or matter therein.
The Registrant's is presently subject to Section 2115 of the California
Corporations Code (the "California Code"), according to which Section 317 of the
California Code applies to the indemnification of officers and directors of the
Registrant. Under Section 317 of the California Code, permissible
indemnification by a corporation of its officers and directors is substantially
the same as permissible indemnification under Section 145 of the Delaware Law,
except that (i) permissible indemnification does not cover actions the person
reasonably believed were not opposed to the best interests of the corporation,
as opposed to those the person believed were in fact in the best interests of
the corporation, (ii) the Delaware Law permits advancement of expenses to agents
other than officers and directors only upon approval of the board of directors,
(iii) in a case of stockholder approval of indemnification, the California Code
requires certain minimum votes in favor of such indemnification and excludes the
vote of the potentially indemnified person, and (iv) the California Code only
permits independent counsel to approve indemnification if an independent quorum
of directors is not obtainable, while the Delaware Law permits the directors in
any circumstances to appoint counsel to undertake such determination.
Section 145 of the Delaware Law and Section 317 of the California Code
provide that they are not exclusive of other indemnification that may be granted
by a corporation's charter, bylaws, disinterested director vote, stockholder
vote, agreement or otherwise. The limitation of liability contained in the
II-1
<PAGE>
Registrant's Certificate of Incorporation and the indemnification provision
included in the Registrant's bylaws are consistent with Delaware Law Sections
102(b)(7) and 145 and California Code Section 317. The Registrant has purchased
directors and officers liability insurance.
Section 145 of the Delaware 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. The Registrant's Certificate of
Incorporation and the Registrant's Bylaws provide for indemnification of its
directors, officers, employees and other agents to the maximum extent permitted
by the Delaware Law. In addition, the Registrant has entered into
indemnification agreements with its officers and directors.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to such provisions, the Registrant has been informed that in
the opinion of the Commission such indemnification is against public policy as
expressed in such Act and is therefore unenforceable.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since December 1, 1996, the Registrant raised a total of $17.2 million
through the sale of securities to institutional investors in private offerings
(the "Financings") of Preferred Stock and warrants for the purchase of Common
Stock. The Registrant issued Series A, Series A-1 and Series B Preferred Stock
and related warrants that were exchanged for Series A-2, Series A-3, Series B-1,
and modified warrants, respectively, on February 26, 1999 (the "Exchange").
Following the Exchange, the Registrant, by action of its Board of Directors,
eliminated the Series A, Series A-1 and Series B Preferred Stock. On March 5,
1999, the Registrant issued Series C Preferred Stock and related warrants. From
June through August 1999, the Registrant issued Series D Preferred Stock and
related warrants. The chart below reflects the private securities outstanding
following completion of the Financings and the Exchange.
<TABLE>
Common Stock
Number of Issuable upon Warrants for Total
Series of Shares Conversion of Purchase of Consideration Date of Issuance
Preferred Stock Issued Preferred Shares Common Stock Received
- ----------------- ----------- ------------------ ------------- ---------------- ---------------------
<S> <C> <C> <C> <C> <C>
Series A-2 64,584 1,322,539 100,000 $3,875,000 February 26, 1999
Series A-3 12,500 263,852 66,667 $1,000,000 February 26, 1999
Series B-1 50,000 1,055,409 120,000 $4,000,000 February 26, 1999
Series C 41,667 872,100 120,000 $3,000,000 March 5, 1999
Series D 106,000 2,120,000 212,000 $5,300,000 June/August 1999
</TABLE>
The Exchange occurred on February 26, 1999. The Series A-2 Preferred Stock
was exchanged for 500,000 shares of Series A Preferred Stock issued on March 26,
1998 and 145,833 shares of Series A Preferred Stock issued on September 3, 1998.
The Series A-3 Preferred Stock was exchanged for Series A-1 Preferred Stock
issued on August 11, 1998 and the Series B-1 Preferred Stock was exchanged for
Series B Preferred Stock issued on September 2, 1998. In connection with the
Exchange, the Registrant issued warrants to purchase 75,000 shares of common
stock.
All of the Financings were effected pursuant to the exemption from
registration provided under Section 4(2) of the Securities Act and Rule 506 of
Regulation D. The purchaser in each case was an accredited investor. The
Exchange was effected through an exemption from registration for exchanges with
existing security holders provided under Section 3(a)(9) of the Securities Act.
During the past three years the Registrant has also issued warrants in
private placements in connection with the Registrant's commercial, leasing and
financing activities. On December 21, 1998, the Registrant issued warrants to
Silicon Valley Bank for the purchase of 40,000 shares of Common Stock at a price
II-2
<PAGE>
of $4.00 per share. In August 1999, the Registrant issued warrants to United
States Cellular Corporation to purchase 1,000,000 shares of common stock at a
price of $4.00 per share in connection with a long-term sales contract. During
the last three years the Registrant also issued warrants to purchase an
additional 144,764 shares of common stock at a weighted average exercise price
of $3.24 per share in connection with commercial or leasing activities.
In December 1999, the Registrant offered warrants to purchase an aggregate
of 250,000 shares of common stock to holders of preferred stock to induce those
holders to convert the preferred stock. If issued, the exercise price of these
warrants will equal to 110% of the purchase price of the common stock issued in
the public offering to which this Registration Statements relates.
In each commercial, leasing or financing case, the securities were issued
pursuant to a private placement registration exemption under Section 4(2) of the
Securities Act. All of the persons to whom warrants were issued were accredited
investors that obtained the warrants for investment purposes.
ITEM 16. EXHIBITS
See Index to Exhibits at page II-6.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to purchasers on
the closing date of the offering certificates in such denominations and
registered in such names as required by the purchasers.
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 Delaware Law, the Registrant's Certificate of
Incorporation, the Registrant's Bylaws, the Registrant's indemnification
agreements or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission 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 hereunder, 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.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus 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-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonably grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Barbara, State of California, on this 4th day
of February 2000.
SUPERCONDUCTOR TECHNOLOGIES, INC.
By: /s/ M. Peter Thomas
------------------------------------
M. Peter Thomas
President, Chief Executive Officer
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on the 4th
day of February 2000 in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
SIGNATURE TITLE DATE
/s/ M. Peter Thomas President, Chief Executive Officer, February 4, 2000
- ------------------------ Chief Financial Officer and Director
M. Peter Thomas (Principal Executive, Financial and
Accounting Officer)
/s/ Glenn E. Penisten* Chairman of the Board, Director February 4, 2000
- ------------------------
Glenn E. Penisten
/s/ Robert P. Caren* Director February 4, 2000
- -----------------------
Robert P. Caren
/s/ E. Ray Cotten* Director February 4, 2000
- -----------------------
E. Ray Cotten
/s/ Dennis Horowitz* Director February 4, 2000
- ----------------------
Dennis Horowitz
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Richard M. Johnston* Director February 4, 2000
- ----------------------
Richard M. Johnston
/s/ John D. Lockton* Director February 4, 2000
- ----------------------
John D. Lockton
/s/ Joseph C. Manzinger* Director February 4, 2000
- ----------------------
Joseph C. Manzinger
/s/ J. Robert Schrieffer* Director February 4, 2000
- ----------------------
J. Robert Schrieffer
</TABLE>
* By: /s/ M. Peter Thomas
--------------------------
M. Peter Thomas, Attorney-in-fact
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
EXHIBIT NO. DESCRIPTION OF DOCUMENT
<S> <C>
4.1 Form of Common Stock Certificate[1]
4.2 Form of Series A-2 Preferred Stock Certificate[9]
4.3 Form of Series A-3 Preferred Stock Certificate[9]
4.4 Form of Series B-1 Preferred Stock Certificate[9]
4.5 Form of Series C Preferred Stock Certificate[9]
4.6 Form of Representative's Warrant Agreement[1]
4.7 Form of warrant issued to Van Kasper & Company[2]
4.8 Form of warrant issued to holders Series A-2 and Series A-3 Preferred Stock[9]
4.9 Form of warrant issued to holders of Series B-1 Preferred Stock[9]
4.10 Form of warrant issued to holders of Series C Preferred Stock[9]
4.11 Form of warrant issued in connection with the Exchange Agreement dated February 26, 1999[9]
4.12 Form of warrant issued to Silicon Valley Bank dated December 21, 1998[9]
4.13 Series C Preferred Stock Purchase Agreement dated March 5, 1999[9]
4.14 Second Amended and Restated Stockholder Rights Agreement dated February 26, 1999[9]
4.15 Amended and Restated Registration Rights Agreement dated February 26, 1999[9]
4.16 Registration Rights Agreement with Silicon Valley Bank dated December 21, 1998[9]
4.17 Certificate of Designation for Series D Preferred Stock[10]
4.18 Third Amended and Restated Stockholder Rights Agreement [10]
4.19 Form of issued to holders of Series D Preferred Stock[10]
4.20 Form of Series D Preferred Stock Certificate[10]
4.21 Warrant issued to PNC Bank, National Association in connection with Credit Agreement[10]
4.22 Registration Rights Agreement with United States Cellular Corporation[11]
4.23 Form of Warrant issued to United States Cellular Corporation [11]
5.1 Opinion of Nida & Maloney, LLP regarding legality of the securities being issued+
10.1 Technology Agreement between the Registrant and Lockheed Corporation dated January 8, 1988[1]*
10.2 Technical Information Exchange Agreement between the Registrant and Philips dated September 1989[1]
10.3 Standard Industrial Lease between the Registrant and UML Real Estate Partnership dated
January 1, 1990 Sublease between Registrant and Consolidated Packaging Machinery Company d.b.a.
Industrial Automation Corporation dated October 25, 1989[1]
10.4 Form of Consulting Agreement[1]
10.5 Form of Employee Proprietary Information Agreement[10]
10.6 1992 Director Option Plan[1]
10.7 Form of Indemnification Agreement[1]
10.8 License Agreement between the Registrant and the University of Arkansas dated April 9, 1992,
as amended[1]
10.9 Loan and Security Agreement between the Registrant and Silicon Valley Bank dated May 17, 1991,
as amended[1]
10.10 1992 Stock Option Plan[1]
10.11 Proprietary Information & Patents Inventions Agreement among the Registrant, E-Systems, Inc. and various
other parties; Purchase Order dated October 10, 1991[1]
10.12 Joint Venture Company (JVC) Agreement between the Registrant and Sunpower Incorporated dated April 2,
1992[1]*
10.13 Government Contract issued to Registrant by the Defense Advanced Research Projects Agency through the
Office of Naval Research dated September 4, 1991[1]
10.14 License Agreement between the Registrant and E.I. DuPont de Nemours and Company dated December 1992[2*]
10.15 Note and Warrant Purchase Agreement dated December 28, 1992[1]
</TABLE>
II-6
<PAGE>
<TABLE>
EXHIBIT NO. DESCRIPTION OF DOCUMENT
<S> <C>
10.16 Superconductor Technologies Inc. Purchase Agreement[3]*
10.17 Loan and Security Agreement between Registrant and Silicon Valley Bank dated August 26, 1994[4]
10.18 Form of Distribution Agreement[4]
10.19 Amended and Restated 1988 Stock Option Plan, as amended, with form of stock option agreement[4]
10.20 Loan and Security Agreement between Registrant and Silicon Valley Bank dated June 27, 1995[5]
10.21 Joint Venture Agreement between Registrant and Alantac Technologies (S) Pte Ltd., dated May 20, 1996[6]*
10.22 Employment Offer Letter to M. Peter Thomas dated April 3, 1997[7]
10.23 Employment Agreement with E. Ray Cotten dated July 1, 1997[8]
10.24 Amendment dated December 21, 1998 to the Loan and Security Agreement between Registrant and Silicon
Valley Bank dated August 26, 1994[9]
10.25 PNC Bank, National Association Credit Agreement[10]
10.26 United States Cellular Corporation Purchase Agreement[11]
13.1 Quarterly Report on Form 10-Q for the quarter ended October 2, 1999, as amended
23.1 Consent of PriceWaterhouseCoopers LLP
23.2 Consent of Nida & Maloney, LLP+
24.1 Power of Attorney+
- ---------------
</TABLE>
[1] Incorporated by reference from the Registrant's Registration Statement on
Form S-2 (File No. 33-56714).
[2] Incorporated by reference from Amendment No. 1 to the Registrant's
Registration Statement on Form S-2 (File No. 33-56714).
[3] Incorporated by reference from the Registrant's Annual Report on Form
10-K filed for the year ended December 31, 1993.
[4] Incorporated by reference from the Registrant's Annual Report on Form
10-K filed for the year ended December 31, 1994.
[5] Incorporated by reference from the Registrant's Annual Report on Form
10-K filed for the year ended December 31, 1995.
[6] Incorporated by reference from the Registrant's Registration Statement
on Form S-2 (File No. 333-10569).
[7] Incorporated by reference from the Registrant's Report on Form 10-Q filed
on May 8, 1997 for the quarter ended March 29,1997.
[8] Incorporated by reference from the Registrant's Annual Report on Form
10-K filed for the year ended December 31, 1997.
[9] Incorporated by reference from the Registrant's Annual Report on Form
10-K filed for the year ended December 31, 1998.
[10] Incorporated by reference from the Registrant's Quarterly Report on Form
10-Q filed for the quarter ended July 31, 1999
[11] Incorporated by reference from the Registrant's Quarterly Report on Form
10-Q filed for the quarter ended October 2, 1999, as amended.
+ Previously filed.
* Confidential treatment has been previously granted for certain portions of
these exhibits.
II-7
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-2 of our report dated February 19, 1999, except
as to Note 12 which is as of March 26, 1999 relating to the financial
statements, appearing on page 29 of Superconductor Technologies Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1998. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
Los Angeles, California
February 4, 2000
