/2ÿqñH7  d 1$&%*ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ'ñ'SUPERCONDUCTIVE COMPONENTS, INC.ñ'BALANCE SHEETSñ^June 30,ñ^December 31, ñ'ASSETS ñ^2001 ñ^2000ñ^(Unaudited)ñ'CURRENT ASSETS ñ'Cashñ'$26,760ñ'$202,406$ñ'Accounts and notes receivableAñ 'Trade, less allowance for doubtful accounts of $17,000 andñ '$26,000, respectivelyñ '392,390ñ '386,567 ñ 'Related party receivables ñ '3,439 ñ '4,283-ñ 'Contract research receivables, currentñ '113,306ñ '-ñ 'Employees ñ '11,747ñ '-ñ'Inventoriesñ'904,880ñ'617,468ñ'Prepaid expenses ñ'23,320 ñ'39,766ñ'Total current assetsñ'1,475,842ñ'1,250,490ñ'PROPERTY AND EQUIPMENT,ñ'AT COSTñ'Machinery and equipmentñ'2,148,853ñ'1,959,086ñ'Furniture and fixtures ñ'17,170 ñ'15,250ñ'Leasehold improvementsñ'319,675ñ'305,586ñ'2,485,698ñ'2,279,922$ñ'Less accumulated depreciationñ'1,801,886ñ'1,701,150ñ'683,812ñ'578,772ñ 'OTHER ASSETSñ!'Intangibles ñ!'39,534 ñ!'38,688/ñ"'Contract research receivables, long-term ñ"'43,315ñ"'- ñ$'82,849 ñ$'38,688ñ&'TOTAL ASSETSñ&'$2,242,503ñ&'$1,867,950Qñ)'The accompanying notes are an integral part of these financial statements.'ñ+'SUPERCONDUCTIVE COMPONENTS, INC.ñ,'BALANCE SHEETSñ.^June 30,ñ.^December 31,+ñ/'LIABILITIES AND SHAREHOLDERS' EQUITY ñ/^2001 ñ/^2000ñ0^(Unaudited)ñ2'CURRENT LIABILITIES0ñ3'Capital lease obligation, current portionñ3'$41,687ñ3'$26,2791ñ4'Note payable shareholders, current portion ñ4'24,000 ñ4'10,869ñ5'Accounts payableñ5'478,067ñ5'294,028%ñ6'Accounts payable, shareholders ñ6'5,983 ñ6'1,803ñ7'Accrued expensesñ7'126,382ñ7'156,916 ñ9'Total current liabilitiesñ9'676,119ñ9'489,895'ñ='CAPITAL LEASE OBLIGATION, NET OFñ>'CURRENT PORTIONñ>'124,928 ñ>'57,9650ñA'NOTE PAYABLE SHAREHOLDERS, NET OF CURRENTñB'PORTION ñB'96,270ñB'121,401'ñE'REDEEMABLE CONVERTIBLE PREFERREDñF'STOCK (Series A)PñG'10% cumulative, nonvoting, no par value, $1,000 stated value, liquidationIñH'and mandatory redemption at stated value per share plus unpaid and?ñI'accumulated dividends $100.00 and $260.96, respectively ñI'98,464 ñI'87,658$ñL'COMMITMENTS AND CONTINGENCIESñN'SHAREHOLDERS' EQUITYOñO'Convertible preferred stock, Series B, 10% cumulative, nonvoting, no par(ñP'value, $10 stated value, optionalñQ'redemption at 103%ñQ'351,200ñQ'338,4248ñR'Common stock, no par value, authorized 15,000,000EñS'shares; 1,821,727 and 1,816,977 shares issued and outstanding,ñT'respectivelyñT'6,356,970ñT'6,334,696!ñU'Additional paid-in capital ñU'73,610 ñU'98,187ñV'Accumulated deficitñV'(5,535,058)ñV'(5,660,276)ñX'1,246,722ñX'1,111,0311ñZ'TOTAL LIABILITIES AND SHAREHOLDERS' EQUITYñZ'$2,242,503ñZ'$1,867,950Qñ]'The accompanying notes are an integral part of these financial statements.'ñ_'SUPERCONDUCTIVE COMPONENTS, INC.ñ`'STATEMENTS OF OPERATIONS'ñb'Three Months Ended June 30, 2001<ñc' and 2000 and Six Months Ended June 30, 2001 and 2000ñd'(Unaudited)ñh^Three Months ñi^Endedñi^Six Months Endedñj^June 30,ñj^June 30,ñj^June 30,ñj^June 30, ñk^2001 ñk^2000 ñk^2001 ñk^2000ñl^(Restated)ñl^(Restated)7ñm'SALES REVENUE ñm'$801,366ñm'$525,470ñm'$1,691,110ñm'$1,197,678 ñn'CONTRACT RESEARCH REVENUEñn'103,705ñn'177,899ñn'274,141ñn'302,037ñp'905,071ñp'703,369ñp'1,965,251ñp'1,499,715ñs'COST OF SALES REVENUEñs'471,134ñs'428,524ñs'1,072,409ñs'959,605(ñt'COST OF CONTRACT RESEARCH REVENUEñt'100,769ñt'118,983ñt'223,686ñt'238,428ñv'571,903ñv'547,507ñv'1,296,095ñv'1,198,033ñy'GROSS MARGINñy'333,168ñy'155,862ñy'669,156ñy'301,682*ñ{'GENERAL AND ADMINISTRATIVE EXPENSESñ{'262,360ñ{'113,316ñ{'407,612ñ{'223,211%ñ}'SALES AND PROMOTIONAL EXPENSES ñ}'60,127 ñ}'57,855ñ}'126,095ñ}'132,235$ñ€'INCOME (LOSS) FROM OPERATIONS ñ€'10,681ñ€'(15,309)ñ€'135,449ñ€'(53,764)ñƒ'OTHER INCOME (EXPENSE)ñ„'Interest, netñ„'(3,275)ñ„'(21,260)ñ„'(10,280)ñ„'(33,633)ñ…'Miscellaneous, net ñ…'(838) ñ…'4,109 ñ…'49 ñ…'5,704ñ‡'(4,113)ñ‡'(17,151)ñ‡'(10,231)ñ‡'(27,929)&ñŠ'INCOME (LOSS) BEFORE INCOME TAX ñŠ'6,568ñŠ'(32,460)ñŠ'125,218ñŠ'(81,693)ñŒ'INCOME TAX EXPENSEñŒ'-ñŒ'-ñŒ'-ñŒ'-ñ'NET INCOME (LOSS ) ñ'6,568ñ'(32,460)ñ'125,218ñ'(81,693)#ñ‘'DIVIDENDS ON PREFERRED STOCKñ‘'(9,360)ñ‘'(30,747)ñ‘'(18,721)ñ‘'(51,671)*ñ“'ACCRETION OF REDEEMABLE CONVERTIBLEñ”'PREFERRED (SERIES A)ñ”'(2,928)ñ”'(2,928)ñ”'(5,856)ñ”'(5,856))ñ—'INCOME (LOSS) APPLICABLE TO COMMON ñ˜'SHARESñ˜'$(5,720)ñ˜'$(66,135)ñ˜'$100,641ñ˜'$(139,220)7ñ›'EARNINGS PER SHARE - BASIC AND DILUTIVE (Note 2))ñ'NET INCOME (LOSS) PER COMMON SHARE ñž'Basic ñž'$0.00ñž'$(0.05) ñž'$0.06ñž'$(0.10)ñ 'Diluted ñ '$0.00ñ '$(0.05) ñ '$0.06ñ '$(0.10)*ñ£'WEIGHTED AVERAGE SHARES OUTSTANDING ñ¤'Basicñ¤'1,821,858ñ¤'1,397,398ñ¤'1,819,963ñ¤'1,344,030ñ¦'Dilutedñ¦'1,821,858ñ¦'1,397,398ñ¦'1,819,963ñ¦'1,344,030Qñ©'The accompanying notes are an integral part of these financial statements.'ñ«'SUPERCONDUCTIVE COMPONENTS, INC.ñ¬'STATEMENTS OF CASH FLOWS.ñ®'Six Months Ended June 30, 2001 and 2000ñ¯'(Unaudited)ñ±^June 30,ñ±^June 30, ñ²^2001 ñ²^2000ñ³^(Restated)+ñ´'CASH FLOWS FROM OPERATING ACTIVITIESñµ'Net income (loss)ñµ'$125,218ñµ'$(81,693)Sñ·'Adjustments to reconcile net income (loss) to net cash provided by operatingñ¸'activities:ñ¹'Depreciationñ¹'100,737ñ¹'148,802ñº'Amortization ñº'1,226 ñº'700ñ»'Inventory reserveñ»'(21,000) ñ»'40,074&ñ¼'Provision for doubtful accountsñ¼'(9,000) ñ¼'19,9473ñ½'Changes in operating assets and liabilities:%ñ¾'(Increase) decrease in assets:ñ¿'Accounts receivableñ¿'(164,347)ñ¿'(83,274)ñÀ'InventoriesñÀ'(266,412)ñÀ'(92,813)ñÁ'Prepaid expenses ñÁ'16,446ñÁ'(46,196)ñÂ'Other assetsñÂ'(2,072)ñÂ'(2,870)*ñÃ'Increase (decrease) in liabilities:ñÄ'Accounts payableñÄ'207,219ñÄ'146,436ñÅ'Accrued expensesñÅ'(30,534)ñÅ'(2,133)ñÇ'Total adjustmentsñÇ'(167,737)ñÇ'128,673:ñÉ'Net cash provided by (used in) operating activitiesñÉ'(42,519) ñÉ'46,980+ñÌ'CASH FLOWS FROM INVESTING ACTIVITIES*ñÍ'Purchases of property and equipmentñÍ'(107,866)ñÍ'(38,114),ñÏ'Net cash used in investing activitiesñÏ'(107,866)ñÏ'(38,114)+ñÒ'CASH FLOWS FROM FINANCING ACTIVITIESñÓ'Bank overdraftñÓ'- ñÓ'31,0302ñÔ'Principal repayments on notes payable, bankñÔ'-ñÔ'(95,025)/ñÕ'Proceeds from subordinated notes payableñÕ'- ñÕ'89,408:ñÖ'Principal repayments on long-term debt, shareholderñÖ'(12,000)ñÖ'-5ñ×'Principal payments on capital lease obligationñ×'(15,540)ñ×'(43,954)5ñØ'Proceeds from exercise of common stock options ñØ'2,279 ñØ'79,800&ñÙ'Payment of cumulative dividendsñÙ'-ñÙ'(15,675)-ñÚ'Redemption of Series A preferred stockñÚ'-ñÚ'(54,450),ñÜ'Net cash used in financing activitiesñÜ'(25,261)ñÜ'(8,866)Qñß'The accompanying notes are an integral part of these financial statements.'ñá'SUPERCONDUCTIVE COMPONENTS, INC.+ñâ'STATEMENTS OF CASH FLOWS (CONTINUED)7ñä'Six Months Ended June 30, 2001 and June 30, 2000ñå'(Unaudited)ñç^June 30,ñç^June 30, ñè^2001 ñè^2000ñé^(Restated)ñê'NET DECREASE IN CASHñê'(175,646)ñê'-!ñì'CASH - Beginning of periodñì'202,406ñì'-ñï'CASH - End of periodñï'$26,760 ñï'$-'ñò'SUPPLEMENTAL DISCLOSURES OF CASHñó'FLOW INFORMATION'ñô'Cash paid during the period for:ñõ'Interestñõ'$11,059ñõ'$33,633ñö'Income taxes ñö'$- ñö'$-*ñø'SUPPLEMENTAL DISCLOSURES OF NONCASH)ñù'INVESTING AND FINANCING ACTIVITIESFñú'Common stock was issued as partial payment for accounts payableñú'$19,000 ñú'$-:ñü'Preferred stock, series A converted to common stock ñü'$- ñü'$8,275Lñþ'Subordinate debt was issued to a shareholder as reimbursement for the7ñÿ'shareholder paying a note payable to the Company ñÿ'$-ñÿ'$89,408<ñ'Property and equipment was purchased by capital lease ñ'97,911ñ'-Qñ'The accompanying notes are an integral part of these financial statements.