OHIO 31-0121318
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. YES X NO
PAGE NO.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets as of June 30, 2002 (unaudited)
and December 31, 2001 3 - 4
Statements of Operations For the Three Months and Six Months
Ended June 30, 2002 and 2001 (unaudited) 5
Statements of Cash Flows For the Six Months
Ended June 30, 2002 and 2001(unaudited) 6 - 7
Notes to Financial Statements (unaudited) 8 - 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 11 - 15
Item 3. Quantitative and Qualitative Disclosures About Market Risk N/A
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. N/A
Item 2. Changes in Securities and Use of Proceeds. N/A
Item 3. Defaults Upon Senior Securities. N/A
Item 4. Submission of Matters to a Vote of Security Holders. 15
Item 5. Other Information. N/A
Item 6. Exhibits and Reports on Form 8-K. 16
Signatures. 16
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ASSETS
------
JUNE 30, DECEMBER 31,
2002 2001
---- ----
(UNAUDITED)
CURRENT ASSETS
Cash $ 20,187 118,083
Accounts and notes receivable
Trade, less allowance for doubtful accounts of $15,000
and $13,000, respectively 391,648 365,141
Related party receivables 7,708 4,616
Employees 14,487 15,625
Other 607 20,814
Inventories 834,003 857,992
Prepaid expenses 67,698 12,851
------------ -----------
Total current assets 1,336,338 1,395,122
------------ -----------
PROPERTY AND EQUIPMENT,
AT COST
Machinery and equipment 2,339,482 2,306,128
Furniture and fixtures 22,124 20,424
Leasehold improvements 346,823 346,823
------------ -----------
2,708,429 2,673,375
Less accumulated depreciation (2,041,072) (1,919,358)
------------ -----------
667,357 754,017
------------ -----------
OTHER ASSETS
Intangibles 43,441 43,992
------------ -----------
TOTAL ASSETS $ 2,047,136 $ 2,193,131
============ ===========
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The accompanying notes are an integral part of these financial statements.
JUNE 30, DECEMBER 31,
2002 2001
---- ----
(UNAUDITED)
CURRENT LIABILITIES
Capital lease obligation, current portion $ 43,487 $ 41,596
Capital lease obligation, shareholder, current portion 36,485 25,161
Note payable shareholders, current portion 58,000 34,000
Accounts payable 318,316 318,954
Accounts payable, shareholders 18,931 7,426
Accrued contract expenses 98,229 179,748
Accrued personal property taxes 54,193 54,384
Accrued expenses 33,079 42,450
----------- -----------
Total current liabilities 660,720 703,719
----------- -----------
CAPITAL LEASE OBLIGATION, NET OF
CURRENT PORTION 81,633 103,865
----------- -----------
CAPITAL LEASE OBLIGATION, SHAREHOLDER, NET OF
CURRENT PORTION 31,943 43,267
----------- -----------
NOTE PAYABLE SHAREHOLDERS, NET OF CURRENT
PORTION 110,270 84,270
----------- -----------
REDEEMABLE CONVERTIBLE PREFERRED
STOCK (Series A)
10% cumulative, nonvoting, no par value,
$1,000 stated value, liquidation and
mandatory redemption at stated value per
share plus unpaid and accumulated
dividends of $238.33 and $188.33 per share respectively 122,595 111,176
----------- -----------
COMMITMENTS AND CONTINGENCIES -- --
----------- -----------
SHAREHOLDERS' EQUITY
Convertible preferred stock, Series B, 10%
cumulative, nonvoting, no par
value, $10 stated value, optional
redemption at 103% 346,907 333,136
Common stock, no par value, authorized 15,000,000
shares; 1,823,256 shares issued and outstanding 6,370,216 6,366,966
Additional paid-in capital 21,938 47,127
Accumulated deficit (5,699,086) (5,600,395)
----------- -----------
1,039,975 1,146,834
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,047,136 $ 2,193,131
=========== ===========
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The accompanying notes are an integral part of these financial statements.
THREE MONTHS ENDED SIX MONTHS ENDED
2002 2001 2002 2001
---- ---- ---- ----
SALES REVENUE $ 642,445 $ 801,366 $ 1,356,593 $ 1,691,110
CONTRACT RESEARCH REVENUE 74,302 103,705 143,533 274,141
----------- ----------- ----------- -----------
716,747 905,071 1,500,126 1,965,251
----------- ----------- ----------- -----------
COST OF SALES REVENUE 424,225 471,134 952,003 1,072,409
COST OF CONTRACT RESEARCH 69,230 100,769 138,461 223,686
----------- ----------- ----------- -----------
493,455 571,903 1,090,464 1,296,095
----------- ----------- ----------- -----------
GROSS MARGIN 223,292 333,168 409,662 669,156
GENERAL AND ADMINISTRATIVE EXPENSES 230,475 262,360 443,082 407,612
SALES AND PROMOTIONAL EXPENSES 52,975 60,127 94,488 126,095
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS (60,158) 10,681 (127,908) 135,449
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest, net (4,854) (3,275) (9,010) (10,280)
Insurance proceeds 39,083 -- 39,083 --
Miscellaneous, net (428) (838) (856) 49
----------- ----------- ----------- -----------
33,801 (4,113) 29,217 (10,231)
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAX (26,357) 6,568 (98,691) 125,218
INCOME TAX EXPENSE -- -- -- --
----------- ----------- ----------- -----------
NET INCOME (LOSS) (26,357) 6,568 (98,691) 125,218
DIVIDENDS ON PREFERRED STOCK (9,361) (9,360) (18,721) (18,721)
ACCRETION OF REDEEMABLE CONVERTIBLE
PREFERRED (SERIES A) (2,587) (2,928) (6,468) (5,856)
----------- ----------- ----------- -----------
INCOME (LOSS) APPLICABLE TO COMMON
SHARES $ (38,305) (5,720) $ (123,880) $ 100,641
=========== =========== =========== ===========
EARNINGS PER SHARE - BASIC AND DILUTIVE
(Note 2)
NET INCOME (LOSS) PER COMMON SHARE
Basic $ (0.02) (0.00) $ (0.07) $ 0.06
=========== =========== =========== ===========
Dilutive $ (0.02) (0.00) $ (0.07) $ 0.06
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 1,823,256 1,821,858 1,823,256 1,819,963
=========== =========== =========== ===========
Dilutive 1,823,256 1,821,858 1,823,256 1,819,963
=========== =========== =========== ===========
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The accompanying notes are an integral part of these financial statements.
2002 2001
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (98,691) $ 125,218
--------- ---------
Adjustments to reconcile net income (loss) to net cash used in operating
activities:
Depreciation 121,714 100,737
Amortization 1,485 1,226
Inventory reserve -- (21,000)
Provision for doubtful accounts
2,000 (9,000)
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (7,003) (164,347)
Inventories 23,989 (266,412)
Prepaid expenses (54,847) 16,446
Other assets (935) (2,072)
Increase (decrease) in liabilities:
Accounts payable 10,867 207,219
Accrued expenses (91,080) (30,534)
--------- ---------
Total adjustments 6,190 (167,737)
--------- ---------
Net cash used in operating activities (92,501) (42,519)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (35,054) (107,866)
--------- ---------
Net cash used in investing activities (35,054) (107,866)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (payments) on note payable, shareholders
50,000 (12,000)
Principal payments on capital lease obligations
(20,341) (15,540)
Proceeds from exercise of common stock options -- 2,279
--------- ---------
Net cash provided by (used in) financing activities 29,659 (25,261)
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The accompanying notes are an integral part of these financial statements.
2002 2001
---- ----
NET DECREASE IN CASH (97,896) (175,646)
CASH - Beginning of period 118,083 202,406
--------- ---------
CASH - End of period $ 20,187 $ 26,760
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash paid during the years for:
Interest $ 11,696 $ 11,059
Income taxes $ -- $ --
SUPPLEMENTAL DISCLOSURES OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Common stock was issued as partial payment for accounts payable $ -- $ 19,000
Property and equipment was purchased by capital lease $ -- $ 97,911
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The accompanying notes are an integral part of these financial statements.
NOTE 1. BUSINESS ORGANIZATION AND PURPOSE
Superconductive Components, Inc. (the "Company") is an Ohio corporation that was incorporated in May 1987. The Company was formed to develop, manufacture and sell materials using superconductive principles. Operations have since been expanded to include the manufacture and sale of non-superconductive materials. The Company's domestic and international customer base is primarily in the thin film battery, high temperature superconductor, lens and optical coatings, research, electronics and functional coatings industries.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with instructions to Form 10-QSB and Article 10 of Regulation S-X. Accordingly they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments considered necessary for fair presentation of the results of operations for the periods presented have been included. The financial statements should be read in conjunction with the audited financial statements and the notes thereto for the fiscal year ended December 31, 2001. Interim results are not necessarily indicative of results for the full year.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
NOTE 3. INVENTORY
Inventory is comprised of the following:
JUNE 30, DECEMBER 31,
2002 2001
---- ----
(unaudited)
Raw materials $ 562,992 $ 562,327
Work-in-progress 148,839 121,908
Finished goods 159,961 211,546
Inventory reserve (37,789) (37,789)
--------- ---------
$ 834,003 $ 857,992
========= =========
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NOTE 4. COMMON STOCK AND STOCK OPTIONS
The following options were granted under the 1995 Stock Option Plan during the period:
GRANT DATE # OPTIONS GRANTED OPTION PRICE ---------- ----------------- ------------ May 9, 2002 40,000 $ 1.55 |
NOTE 5. EARNINGS PER SHARE
Basic income (loss) per share is calculated as income available to common stockholders divided by the weighted average of common shares outstanding. Diluted earnings per share is calculated as diluted income (loss) available to common stockholders divided by the diluted weighted average number of common shares. Diluted weighted average number of common shares has been calculated using the treasury stock method for Common Stock equivalents, which includes Common Stock issuable pursuant to stock options and Common Stock warrants. The following is provided to reconcile the earnings per share calculations:
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
2002 2001 2002 2001
---- ---- ---- ----
Income (loss) applicable
to common shares $ (38,305) $ (5,720) $ (123,880) $ 100,641
=========== =========== =========== ===========
Weighted average
common shares
outstanding - basic 1,823,256 1,821,858 1,823,256 1,819,963
Effect of dilutions
stock options -- -- -- --
----------- ----------- ----------- -----------
Weighted average
shares outstanding -
diluted 1,823,256 1,821,858 1,823,256 1,819,963
=========== =========== =========== ===========
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NOTE 6. SEGMENT REPORTING
The Company has, in the past, reported financial results in terms of TMI and SCI segments. In the Company's Form 10-KSB for the year ended December 31, 2001, the Company announced that it would no longer operate the TMI and SCI divisions separately, but rather, would combine the divisions into a single operating unit, and therefore, would cease reporting financial results separate for the two divisions beginning in 2002. Accordingly, this report does not report financial results separate for the two divisions. It was management's opinion that a single streamlined company will benefit in the following areas: manufacturing efficiencies and manufacturing cost containment;
improved sales through the merging of the strengths of the two material businesses; and improvements in quality through increased availability of analytical equipment and personnel.
The Company publicly announced its new corporate structure on July 1, 2002 and stated that SCI Engineered Materials would become the trade name of the Company.
NOTE 7. RELATED PARTY TRANSACTIONS
The Company retained a related party to provide management assistance for a fee of $14,550 per month beginning January 15, 2002. This agreement was terminated after three (3) months and all fees have been paid.
NOTE 8. REDEEMABLE CONVERTIBLE PREFERRED STOCK (SERIES A)
Effective May 31, 2002, the 99 shares of Series A redeemable convertible preferred stock ($99,000) and accrued dividends ($23,595) became fully redeemable by the Company.
The Chairman of the Board owns these shares. At June 30, 2002, the Company still owes the total outstanding balance of $122,595.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Financial Statements and Notes contained herein.
The following section contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as will likely result, are expected to, will continue, is anticipated, estimated, projection, outlook) are not statements of historical fact and may be forward looking. Forward-looking statements involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. These forward-looking statements are based largely on the Company's expectations and are subject to a number of risks and uncertainties, including but not limited to economic, competitive, regulatory, growth strategies, available financing and other factors discussed elsewhere in this report and in other documents filed by the Company with the Securities and Exchange Commission. Many of these factors are beyond the Company's control. Actual results could differ materially from the forward-looking statements made. In light of these risks and uncertainties, there can be no assurance that the results anticipated in the forward-looking information contained in this report will, in fact, occur.
Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statements are made or reflect the occurrence of unanticipated events, unless necessary to prevent such statements from becoming misleading. New factors emerge from time to time and it is not possible for management to predict all factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in the Financial Statements and accompanying notes. Note 2 to the Financial Statements in the Annual Report on Form 10-KSB for the year ended December 31, 2001 describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, accounting for doubtful accounts, inventory allowances, property and equipment depreciable lives, patents and licenses useful lives and assessing changes in which impairment of certain long-lived assets may occur. Actual results could differ from these estimates. The following critical accounting policies are impacted significantly by judgments, assumptions and estimates used in the preparation of the Financial Statements. The allowance for doubtful accounts is based on our assessment of the collectibility of specific customer accounts and the aging of the accounts receivable. If there is a deterioration of a major customer's credit worthiness or actual defaults are higher than our historical experience, our estimates of the recoverability of amounts due us
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
could be adversely affected. Inventory purchases and commitments are based upon future demand forecasts. If there is a sudden and significant decrease in demand for our products or there is a higher risk of inventory obsolescence because of rapidly changing technology and customer requirements, we may be required to increase our inventory allowances and our gross margin could be adversely affected. Depreciable and useful lives estimated for property and equipment, licenses and patents are based on initial expectations of the period of time these assets and intangibles will provide benefit to our Company. Changes in circumstances related to a change in our business, change in technology or other factors could result in these assets becoming impaired, which could adversely affect the value of these assets.
To date, the Company has received revenue predominantly from commercial sales, government research contracts and non-government research contracts. The Company has incurred cumulative losses of $5,699,086 from inception to June 30, 2002.
Revenues for the six months ended June 30, 2002 were $1,500,126 compared to $1,965,251, a decrease of $465,125 or 23.7% from the six months ended June 30, 2001.
Product revenues decreased to $1,356,593 in 2002 from $1,691,110 in 2001 or a decrease of 19.8%. The decline in revenues for the first six months is due to lower product shipments as a result of the weak U.S. economy and lower sales of tantalum and various scrap metals compared to the same period last year.
Contract research revenues were $143,533 in 2002 as compared to $274,141 in 2001. The decrease is due to a Phase I SBIR grant from the National Science Foundation that expired in the first half of 2001. Revenues of $100,000 from this grant are included in first half 2001 revenues. In addition, the first quarter 2001 includes revenues from a Phase II SBIR grant from the National Aeronautics and Space Administration. This grant ended March 31, 2001 and $70,454 of revenue was recognized in the first half of 2001.
The Company was awarded a $300,000 extension to a Phase II SBIR grant from the National Science Foundation in the third quarter of 2001 and $138,462 of revenue was recognized in the first six months of 2002.
The Company was awarded a $100,000 Phase I SBIR grant from the Department of Energy in May 2002. This grant will be executed in the third quarter of 2002.
Total gross margin in 2002 was $409,662 or 27.3% of total revenue compared to $669,156 or 34.0% in 2001.
Gross margin on product revenue was 29.8% in 2002 versus 36.6% in 2001. The decrease is due to sales of scrap metal in the first half of 2001.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Gross margin on contract research revenue was 3.5% for 2002 compared to 18.4% in 2001. The decrease in gross margin on contract research revenue was due to the expiration of a Phase I SBIR grant from the National Science Foundation, which began in January 2001, and lower sub-contractor costs in the first half of 2001.
Selling expense in 2002 decreased to $94,488 from $126,095 in 2001, a decrease of 25.1%. The decrease is due to a reduced staff and lower commission expense compared to first quarter 2001.
General and administrative expense in 2002 increased to $443,082 from $407,612 or 8.7%. The increase in these costs is due primarily to consulting services for management assistance and for the use of production utilization consultants and implementing their suggestions for lean manufacturing. These two projects represented $31,906 for the first half of 2002.
Internal research and development costs are expensed as incurred. Research and development costs, including testing, for 2002 was $88,395 compared to $76,617 in 2001, an increase of 15.4%. Internal research and development costs increased due to an increase in staff.
Interest expense was $11,696 for the six months ended June 30, 2002 compared to $11,861 for the six months ended June 30, 2001.
Net income (loss) per common share based on the income (loss) applicable to common shares for the six months ended June 30, 2002 and 2001 was $(0.07) and $0.06, respectively. The income (loss) applicable to common shares includes the net income (loss) from operations, Series A and B preferred stock dividends and the accretion of Series A preferred stock. The net income (loss) per common share from operations was $(0.05) and $0.07, respectively. The difference between the net loss from operations and the loss applicable to common shares of $(0.02) and $(0.01), respectively, is a result of the preferred position that the preferred shareholders have in comparison to the common shareholders.
Dividends on the Series A and B preferred stock accrue at 10% annually on the outstanding shares. Dividends on the Series A preferred stock totaled $4,950 for each period. Dividends on the Series B preferred stock totaled $13,771 for each period. The accretion of Series A preferred stock represents issue costs of $70,277 that were netted against the proceeds of Series A preferred stock. The issue costs are being
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
amortized over the payout period of seven years of income (loss) applicable to common shares and additional paid-in capital. The accretion totaled $6,468 for the first half of 2002 and $5,856 for the first half of 2001.
Basic earnings per common share for the six months ended June 30, 2002 were $(0.07) per share with 1,823,256 average common shares outstanding as compared to $0.06 per share and 1,819,963 weighted average common shares outstanding for the six months ended June 30, 2001.
Diluted earnings per common share for the six months ended June 30, 2002 were $(0.07) per share with 1,823,256 average common shares outstanding as compared to $0.06 per share and 1,819,963 weighted average common shares outstanding for the six months ended June 30, 2001. For the six months ended June 30, 2002, all outstanding common stock equivalents are anti-dilutive due to the net loss.
At June 30, 2002, working capital was $675,618 compared to $799,723 at June 30, 2001. The Company utilized cash from operations for the six months ended June 30, 2002 and 2001 of approximately $93,000 and $42,000, respectively. Significant non-cash items including depreciation and inventory reserve on excess and obsolete inventory were approximately $123,000 and $80,000, respectively, for the six months ended June 30, 2002 and 2001. Overall, accounts receivable, inventory, and prepaids increased in excess of accounts payable and accrued expenses by approximately $118,000 and $238,000, respectively, as a result of timing of receipt of inventory versus required scheduled payments on this inventory and increased prepaid expenses.
For investing activities, the Company used cash of approximately $35,000 and $108,000, for the six months ended June 30, 2002 and June 30, 2001, respectively. The amounts invested were used to purchase machinery and equipment for increased production capacity.
For financing activity for the six months ended June 30, 2002, the Company provided cash of approximately $30,000. Cash payments to third parties for capital lease obligations approximated $20,000; proceeds from notes payable from shareholders totaled $50,000.
For financing activity for the six months ended June 30, 2001, the Company utilized cash of approximately $25,000. Cash payments to third parties for capital lease obligations approximated $16,000; cash payments to shareholders totaled $12,000; and cash proceeds for the exercise of stock options totaled $2,279.
Series A redeemable convertible preferred stock and accrued dividends in the amount of $122,595 is outstanding at June 30, 2002 and was due May 31, 2002. Management is working with the Chairman of the Board, who owns all of the Series A redeemable convertible preferred stock, to negotiate repayment terms.
Officers of the Company have advanced funds in the form of notes payable and accounts
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
payable and guaranteeing bank debt in the past. There is no commitment by these individuals to continue funding the Company or guaranteeing bank debt in the future. However, the Company believes that its current operations and its pursuit of new financing arrangements will allow management to continue to pursue its current plans. However, the Company cannot be certain that it will be successful in efforts to raise additional new funds.
Investors are referred to and should specifically consider the risks and speculative factors inherent in and affecting the business of the Company and the Company's common stock as set forth in the Company's 10-KSB for the year ended December 31, 2001 at pages 21-24.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its annual meeting of shareholders on May 9, 2002, for the purpose of electing four directors to the board of directors of the Company and to approve and adopt an amendment to the Company's 1995 Stock Option Plan.
(b) At the annual meeting of shareholders all directors nominated were elected.
(c) The following table shows the voting tabulation for each matter voted upon at the annual meeting of shareholders:
Proposal 1: The election of four directors, each to serve for terms expiring at the next annual meeting of shareholders.
NUMBER OF SHARES
WITHHOLD
NOMINEES FOR AUTHORITY
-------- --- ---------
Robert J. Baker, Jr. 1,395,974 1,010
Edward R. Funk 1,396,054 930
Daniel Rooney 1,336,044 60,940
Edward W. Ungar 1,396,054 930
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Proposal 2: To approve and adopt an amendment to the Company's 1995 Stock Option Plan to increase the shares available for issuance under the plan from 600,000 to 900,000 shares.
FOR AGAINST ABSTAIN --- ------- ------- 978,242 9,414 6,396 |
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS.
10(a) Department of Energy Award dated May 29, 2002.
99(a) Certification of CEO under Section 906 of Sarbanes-
Oxley Act of 2002.
99(b) Certification of CFO under Section 906 of Sarbanes-
Oxley Act of 2002.
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(B) REPORTS ON FORM 8-K.
None.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 14, 2002 /s/ Daniel Rooney
-----------------------------------
Daniel Rooney, President and Chief Executive
Officer
(Principal Executive Officer)
/s/ Gerald S. Blaskie
--------------------------------------------
Gerald S. Blaskie, Chief Financial Officer
(Principal Financial Officer)
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Mr. J.R. Gaines, Jr.
Superconductive Components, Inc.
1145 Chesapeake Avenue
Columbus, OH 43212-2284
Reference: Application Number 70375S02-I, "Feasibility of Cost Effective, Long Length, BSCCO 2212 Round Wires, for Very High Field Magnets, Beyond 12 Tesla at 4.2 Kelvin"
Dear Mr. Gaines:
I am please to inform you that the subject grant application, submitted by your company to the Department of Energy (DOE), has been selected for a Small Business Innovation Research (SBIR) award. Effective this year, the project period for SBIR Phase I grants has been changed to nine months. This letter sets out some guidelines for SBIR awardees. We would appreciate your careful consideration.
First, you will be contacted by one of the DOE Operations Offices that conduct award negotiations. That office will request your completion of the enclosed PI certification and the other required certification forms, which can be found on our Website at http://sbir.er.doe.gov/sbir, click on FY 2002 Solicitation, then Certifications. They can provide you with blank copies if you do not have Internet access.
Second, we need you to send us an electronic copy of Appendix B (enclosed), the Project Summary, of the above-referenced grant application, in Microsoft Word format. A blank summary form is available on the Web at http://sbir.er.doe.gov/sbir, click on FY 2002 Solicitation, then Forms, and then Project Summary. Once you have downloaded the form and filled it in, PLEASE SEND IT VIA E-MAIL TO sbir-sttr@science.doc.gov no later than June 21, 2002. After the above materials are received and negotiations are completed, we would expect your grant to be executed on or near July 22, 2002.
Third, if you are collaborating with a DOE national laboratory on the research project, the laboratory may require an up front payment for the full cost of the first 90 days of work they perform. These funds may be obtained in an advance payment which may include the entirety of your project's actual needs for the first three months of the grant, or even a lump sum payment of the entire grant. To obtain this advance payment, provide a written request to the DOE Operations Office that explains why the funds are needed.
Lastly, I have enclosed copies of the reviewers' comments used in the evaluation of your grant application. Some comments contain suggestions for improving the research effort. If you believe that the suggestions would support your project's research goals, please inform the Technical Project Manager, whose name and phone number can be obtained from the Operations Office. If the scope of the work would be substantially changed, please also inform the Operations Office.
You will be eligible to apply for Phase II funding in fiscal year 2003. During the nine month Phase I project period, our office will provide instructions on how to submit a Phase II application. QUESTIONS PERTAINING TO THE PHASE I GRANT ITSELF SHOULD BE DIRECTED TO THE OPERATIONS OFFICE.
Even though the Department assumes no financial responsibility until a grant is properly executed, let me take this opportunity to congratulate you on winning an extremely tough competition.
Sincerely,
/s/ Robert E. Berger ---------------------------- Robert E. Berger SBIR/STTR Program Manager |
3 Enclosures PI Certification Reviewers' Comments Project Summary, Appendix B
In connection with the Quarterly Report of Superconductive Components, Inc. (the "Company") on Form 10-QSB for the period ending June 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Daniel Rooney, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ Daniel Rooney ------------------------------ Daniel Rooney Chief Executive Officer August 14, 2002 |
EXHIBIT 99(b)
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Superconductive Components, Inc. (the "Company"), on Form 10-QSB for the period ending June 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gerald S. Blaskie, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ Gerald S. Blaskie ------------------------- Gerald S. Blaskie Chief Financial Officer August 14, 2002 |